Key benchmark indices weakened once again after trimming intraday losses in early afternoon trade as firm global crude oil prices and hike in railway freight rates stoked inflation worries. The government after trading hours on Friday, 20 June 2014, announced a steep 14.2% increase in railway passenger fare and 6.5% hike in railway freight rate to boost revenue of the railways to meet its annual expenditure. The barometer index, the S&P BSE Sensex, was down 90.33 points or 0.36%, off close to 180 points from the day's high and up about 35 points from the day's low. The market breadth indicating the overall health of the market was positive.
Index heavyweight and cigarette maker ITC dropped almost 5% on reports that Union health minister Harsh Vardhan has urged Finance Minister Arun Jaitley to raise tax on cigarettes in the upcoming final Union Budget for 2014-15 to deter people from smoking. Metal and mining stocks gained after a preliminary survey showed that manufacturing activity in China's factory sector expanded in June for the first time in six months.
At 12:20 IST, the S&P BSE Sensex was down 90.33 points or 0.36% to 25,015.18. The index shed 124.70 points at the day's low of 24,980.81 in morning trade, its lowest level since 5 June 2014. The index jumped 91.99 points at the day's high of 25,197.50 in early trade.
The CNX Nifty was down 36 points or 0.48% to 7,475.45. The index hit a low of 7,469.05 in intraday trade, its lowest level since 5 June 2014. The index hit a high of 7,534.80 in intraday trade.
The market breadth, indicating the overall health of the market was positive. On BSE, 1,304 shares gained and 1,225 shares fell. A total of 110 shares were unchanged.
Index heavyweight and cigarette maker ITC dropped almost 5% on reports that Union health minister Harsh Vardhan has urged Finance Minister Arun Jaitley to raise tax on cigarettes in the upcoming final Union Budget for 2014-15 to deter people from smoking. The stock was off 4.63% at Rs 320.35. In a letter to the Finance Minister, Vardhan has sought an increase in tax on cigarettes of all lengths by Rs 2 to Rs 3.5 per stick, as per reports.
Metal and mining stocks gained after a preliminary survey showed that manufacturing activity in China's factory sector expanded in June for the first time in six months. China is the World's largest consumer of copper and aluminum. Sesa Sterlite (up 2.3% to Rs 298.50), JSW Steel (up 2.84% to Rs 1,255), Hindalco Industries (up 1.62% to Rs 166.30), Hindustan Zinc (up 1.1% to Rs 164.95), Tata Steel (up 1.4% to Rs 527), Jindal Steel & Power (up 1.73% to Rs 323.50), NMDC (up 0.92% to Rs 175.50) and Hindustan Copper (up 1.95% to Rs 115) gained. Bhushan Steel (down 0.58% to Rs 402), Steel Authority of India (Sail) (down 2.19% to Rs 93.05), and National Aluminum Company (down 0.92% to Rs 55.65) declined.
Infosys lost 1.77% to Rs 3.257. The company said during market hours that FONDEP, one of Morocco's leading microfinance institutions, has chosen Infosys Finacle for its strategic core banking transformation program. The Finacle solution will help FONDEP adapt to changing customer needs by enabling them to offer relevant products to their customer base, Infosys said in a statement today, 23 June 2014.
Gammon Infrastructure Projects hit an upper circuit limit of 5% at Rs 14.23 on BSE after the company said its board has approved a qualified institutional placement issue of equity shares or equity linked instrument to raise upto Rs 500 crore. The company made the announcement after market hours on Friday, 20 June 2014.
The market edged higher amid initial volatility as the government's announcement after trading hours on Friday, 20 June 2014, to raise passenger fare and railway freight fuelled expectations that the Centre has started taking tough decisions which are required to bring the economy on growth path. But, the initial gains proved short lived as firm global crude oil prices and hike in railway freight rates stoked inflation worries. The Sensex and the 50 Nifty, both, hit their lowest level in 2-1/2 weeks in morning trade. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming losses after hitting fresh intraday low in mid-morning trade as firm global crude oil prices and hike in railway freight rates stoked inflation worries. The Sensex regained the psychological 25,000 level after falling below that mark in intraday trade. Key benchmark indices weakened once again after trimming intraday losses in early afternoon trade.
Indian stocks may continue to remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month June 2014 series to July 2014 series. The near-month June 2014 F&O contract expire on Thursday, 26 June 2014.
The Reserve Bank of India (RBI) on Friday, 20 June 2014, issued guidelines allowing foreign portfolio investors (FPIs) exposure in the exchange traded currency derivatives (ETCD) market. FPIs will be allowed access to the currency futures or exchange traded currency options for the purpose of hedging the currency risk arising out of the market value of their exposure to Indian debt and equity securities.
The government on Friday, 20 June 2014, raised passenger fare and freight rates. A flat 10% increase in passenger fare was announced for all classes. In addition, there will be an increase of 4.2% in fares on account of FAC (Fuel Adjustment Component) which is due from April 2014. The overall increase in passenger fare is 14.2%.
There has been a flat 5% increase in freight rates. In addition there will be an increase of 1.4% in fares on account of FAC (Fuel Adjustment Component) which is due from April 2014. The overall increase in freight rates will be about 6.5% for major commodities. The revised passenger fare and freight rates and freight structure rationalization will come into effect from 25 June 2014.
Brent crude oil prices rose as militant violence in Iraq continues, raising concerns of oil supply from a key oil exporter of the world. Brent oil futures for August delivery were up 41 cents or 0.36% at $115.22 a barrel. Brent had dropped on Friday, 20 June 2014, after settling at its highest level in more than nine months at $115.06 a barrel on Thursday, 19 June 2014.
Increase in crude oil prices has sparked worries about India's macroeconomic situation as India imports majority of its crude oil requirements. Increase in crude oil prices has raised concerns of increase in India's current account deficit and fiscal deficit. Firm global crude oil prices and the latest hike in railway freight rate have also stoked inflation worries.
In the foreign exchange market, the rupee was a tad higher against the dollar. The partially convertible rupee was hovering at 60.18, compared with its close of 60.185/195 on Friday, 20 June 2014.
Asian stocks rose on Monday, 23 June 2014, as upbeat news from China's factory sector and fresh highs on Wall Street on Friday, 20 June 2014 fueled appetite for riskier assets. Key benchmark indices in Japan, Indonesia, China, Singapore, and South Korea were up 0.01% to 0.35%. Hong Kong's Hang Seng shed 0.26%. Taiwan's Taiwan Weighted index was off 0.49%.
Activity in China's factory sector expanded in June for the first time in six months as new orders surged, a preliminary HSBC survey showed on Monday, offering new signs the economy is stabilising thanks to Beijing's measures to shore up growth. The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index rose to 50.8 in June from May's final reading of 49.4. It was the first time since December that the PMI was in growth territory, and the highest reading since November, when it was also 50.8.
Trading in US index futures indicated that the Dow could gain 37 points at the opening bell on Monday, 23 June 2014. The Dow Jones Industrial Average and the S&P 500 index closed at record highs on Friday, helped by the prospect of the Federal Reserve keeping interest rates low for a long period of time.
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