Volatility continued as key benchmark indices pared gains after hitting fresh intraday high in early afternoon trade after the Reserve Bank of India (RBI) after a policy review today, 5 August 2014, kept policy rates and cash reserve ratio unchanged while cut statutory liquidity ratio by 50 basis points. The barometer index, the S&P BSE Sensex, was currently up 42.21 points or 0.16% at 25,765.37. The market breadth indicating the overall health of the market was positive.
Bank stocks reversed intraday losses after the Reserve Bank of India (RBI) after a policy review today, 5 August 2014, kept the policy rates and cash reserve ratio unchanged while cutting statutory liquidity ratio by 50 basis points.
At 12:20 IST, the S&P BSE Sensex was up 42.21 points or 0.16% to 25,765.37. The index gained 108.37 points at the day's high of 25,831.53 in early afternoon trade, its highest level since 1 August 2014. The index fell 68.32 points at the day's low of 25,654.84 in mid-morning trade.
The CNX Nifty was up 16.40 points or 0.21% to 7,700.05. The index hit a high of 7,720 in intraday trade, its highest level since 31 July 2014. The index hit a low of 7,665.30 in intraday trade.
The market breadth indicating the overall health of the market was positive. On BSE, 1,443 shares rose and 1,025 shares fell. A total of 123 shares were unchanged.
The BSE Mid-Cap index was up 36.17 points or 0.39% at 9,232.98. The BSE Small-Cap index was up 53.70 points or 0.54% at 10,053.45. Both these indices outperformed the Sensex.
Bank stocks reversed intraday losses after the Reserve Bank of India (RBI) after a policy review today, 5 August 2014, kept the policy rates and cash reserve ratio unchanged while cutting statutory liquidity ratio by 50 basis points. Among private sector banks, HDFC Bank (up 0.38%), IndusInd Bank (up 0.15%), Yes Bank (up 0.64%), Federal Bank (up 0.67%), Kotak Mahindra Bank (up 0.25%) and Axis Bank (up 0.68%), gained. ICICI Bank fell 0.09%.
Among PSU bank stocks, State Bank of India (SBI) (up 0.53%), Canara Bank (up 1.4%), Union Bank of India (up 1.91%), Bank of India (up 1.32%), Bank of Baroda (up 2%) and Punjab National Bank (up 1.16%) gained.
In the second bi-monthly monetary policy statement of June 2014, the Reserve Bank reduced the SLR to 22.5% of NDTL in anticipation of recovery in economic activity. With the Union Budget for 2014-15 renewing commitment to the medium-term fiscal consolidation roadmap and budgeting 4.1 per cent of GDP as the fiscal deficit for the year, space has opened up further for banks to expand credit to the productive sectors in response to its financing needs as growth picks up. Accordingly, the SLR is reduced by a further 0.5% of NDTL.
In consonance with the calibrated reduction in the SLR, it is necessary to enhance liquidity in the money and debt markets so that financial intermediation expands apace with a growing economy. Currently, banks are permitted to exceed the limit of 25% of total investments under the held to maturity (HTM) category provided the excess comprises only SLR securities, and banks' total holdings of SLR securities in the HTM category is not more than 24.5 per cent of their NDTL as on the last Friday of the second preceding fortnight. In order to enable banks greater participation in financial markets, this ceiling is being brought down to 24% of NDTL with effect from the fortnight beginning 9 August 2014.
Deep Industries rose 1.61% after net profit rose 16.36% to Rs 5.83 crore on 26.35% growth in total income from operations to Rs 26.99 crore in Q1 June 2014 over Q1 June 2013. The Q1 result was announced after market hours on Monday, 4 August 2014.
India Glycols rose 0.48% after the company reported a net profit of Rs 1.31 crore in Q1 June 2014 as against net loss of Rs 26.23 crore in Q1 June 2013. The Q1 result was announced after market hours no Monday, 4 August 2014. India Glycols' total income from operations declined 9.05% to Rs 740.31 crore in Q1 June 2014 over Q1 June 2013.
The Reserve Bank of India (RBI) after a policy review today, 5 August 2014, kept policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8%. It also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL) and reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.5% to 22% of their NDTL with effect from the fortnight beginning 9 August 2014.
Since the second bi-monthly monetary policy statement of June 2014, global economic activity has been picking up at a modest space from a sharp slowdown in Q1. Investor risk appetite has buoyed financial markets, partly drawing strength from assurances of continuing monetary policy support in industrial countries, RBI said.
Sentiment on domestic economic activity appears to be reviving, with incoming data suggesting a firming up of industrial growth and exports. The June round of the Reserve Bank's industrial outlook survey also points to improvement in business expectations in Q2. Leading indicators of the services sector are mixed, although there are early signs of modest strengthening of corporate sales and business flows. While the initial slow progress of the monsoon and its uneven spatial distribution raised serious concerns regarding agricultural production, these have been mitigated, though not entirely dispelled, by the pick-up in the monsoon through much of the country in July. The implementation of government policy actions that have been announced should create a congenial setting for a steady improvement in domestic demand and supply conditions.
Markit Economics said today, 5 August 2014, adjusted for seasonal factors, the HSBC Services Business Activity Index stood at 52.2 in July, down from Junes 17-month peak of 54.4. The latest reading indicated a third successive monthly expansion and was consistent with a modest rise in business activity. The headline HSBC Composite Output Index posted 53 in July, down from Junes 16-month high of 53.8. The latest figure was indicative of a solid expansion in private sector activity, and was the second highest reading since February 2013.Output growth accelerated to a 17-month peak in the manufacturing sector, while activity rose for a third consecutive month at services companies.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 60.855, compared with its close of 60.93 on Monday, 4 August 2014.
Asian stocks dropped today, 5 August 2014, with Shanghai shares retreating from the year's highest close as a private gauge of Chinese services industries fell to a record low. Key benchmark indices in Hong Kong, Japan, Indonesia, South Korea, China and Taiwan were down by 0.34% to 2.02%. Singapore's Straits Times rose 0.2%.
A purchasing managers' index of China's non-manufacturing sector fell to 50 in July, the borderline between expansion and contraction and the lowest reading in data from HSBC Holdings Plc and Markit Economics.
Trading in US index futures indicated that the Dow could fall 27 points at the opening bell on Tuesday, 5 August 2014. US stocks staged a late-day rally Monday, 4 August 2014, helping push the indices higher for the first time in a week on a decent earnings report from Berkshire Hathaway and the announcement of a rescue package for a struggling Portuguese bank.
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