Nifty regains psychological 6,000 mark

Indian stocks made a strong comeback from an initial setback triggered by weakness in Asian stocks and steep losses for US stocks on Monday, 3 February 2014. The barometer index, the S&P BSE Sensex, was up 11.10 points or 0.05%, up close to 255 points from the day's low and off about 5 points from the day's high. The 50-unit CNX Nifty regained the psychological 6,000 mark, having fallen below that mark earlier in the day. The market breadth, indicating the overall health of the market was negative.

Bank stocks gained. Index heavyweight and cigarette maker ITC rose in volatile trade.

Key benchmark indices edged lower in early trade on weak Asian stocks and after sharp decline in US stocks on Monday, 3 February 2014. The 50-unit CNX Nifty fell below the psychological 6,000 level. The Sensex and the Nifty, both, hit their lowest level in almost 17 weeks. The Sensex trimmed intraday losses in mid-morning trade. The barometer index regained the psychological 20,000 level. The Sensex languished in red in early afternoon trade. Key benchmark indices traded off the day's low in afternoon trade. The Sensex moved into positive zone from negative zone in mid-afternoon trade. The Nifty regained the psychological 6,000 level.

At 14:20 IST, the S&P BSE Sensex was up 11.10 points or 0.05% to 20,220.36. The index rose 15.79 points at the day's high of 20,225.05 in mid-afternoon trade. The index tumbled 246.14 points at the day's low of 19,963.12 in early trade, its lowest level since 9 October 2013.

The CNX Nifty was up 3.80 points or 0.06% to 6,005.60. The index hit a high of 6,007.30 in intraday trade. The index hit a low of 5,933.30 in intraday trade, its lowest level since 9 October 2013.

The S&P BSE Mid-Cap index was up 13.39 points or 0.21% at 6,270.86 and outperformed the Sensex. The BSE Small-Cap index was off 1.09 points or 0.02% at 6,232.65 and underperformed the Sensex.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,287 shares fell and 1,067 shares rose. A total of 141 shares were unchanged.

Bharti Airtel (up 2.76%), Tata Motors (up 2.63%), and NTPC (up 2.46%) edged higher from the Sensex pack.

Index heavyweight and cigarette maker ITC rose 1.4% to Rs 325. The stock hit high of Rs 325.15 and low of Rs 316.35 so far during the day.

Bank stocks gained. Among PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank gained 0.47% to 1.32%.

State Bank of India rose 1.34% to Rs 1509.80, with the stock reversing initial losses. The state-run bank announced after market hours on Monday, 3 February 2014, that in respect of the issue of equity shares to Qualified Institutional Buyers in terms of Chapter VIII of the ICDR Regulations, the duly authorized Committee of Directors of the bank for the QIP (the Committee) has, in its meeting held on 3 February 2014, decided to issue and allot 5.13 crore shares at a price of Rs 1,565 per share (including a premium of Rs 1,555 per share), aggregating Rs 8031.64 crore.

HDFC rose 0.53%. ICICI Bank fell 0.43%. AXIS Bank declined 0.73%.

Kotak Mahindra Bank rose 0.08%. The private sector bank announced after market hors on Monday, 3 February 2014, that it has raised interest rates on domestic term deposits of less than Rs 1 crore for select tenor buckets by upto 25 basis points (bps), with effect from 6 February 2014. The bank now offers 9.25% per annum (p.a.) for the 390 day deposit and 9% p.a. for deposits of 181 days-269 days tenor. Senior citizens deposits of less than Rs 1 crore enjoy an additional 50 basis points across maturities. Kotak Mahindra Bank attributed its decision to raise the deposit rates to hike in key policy rates announced by the Reserve Bank of India after monetary policy review on 28 January 2014.

Wheels India gained 1.45% after the company said its board of directors has approved rights issue of equity shares to the existing shareholders of the company. The announcement was made before market hours today, 4 February 2014.

Wheels India said that the "Committee - Capital Issues" constituted by its board of directors in a meeting held on Monday, 3 February 2014, approved the rights issue of equity shares to the existing shareholders of the company. As per the terms of rights issue, the company will offer 51 equity shares for every 20 equity shares held in the company as on record date. The shares will be issued at Rs 400 per share. All the equity shares to be issued pursuant to the rights issue shall rank pari passu with the existing equity shares of the company. The company will offer a total of 21.62 lakh shares through rights issue.

In the foreign exchange market the rupee edged lower against the dollar on global risk-off sentiment. The partially convertible rupee was hovering at 62.59, compared with its close of 62.56/57 on Monday, 3 February 2014.

Bond prices rose as the government's borrowing program draws to a close and potentially boosts demand for existing debt. The finance ministry will sell a total of Rs 10000 crore of notes maturing in 2020, 2023 and 2032 on Friday, 7 February 2014, at the final auction for the year through March. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.691%, lower than its close of 8.7343% on Monday, 3 February 2014. Bond yield and bond prices move in opposite direction.

On macro front, the Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Sighting elevated consumer price inflation, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.

The second part of the Winter Session of Parliament begins tomorrow, 5 February 2014. The session, subject to exigencies of business, may conclude on 21 February 2014. The UPA hopes to approve the splitting of the state of Andhra Pradesh into two states as well as a number of corruption bills during the Winter Session of Parliament.

The Finance Ministry will present the Vote-on-Account or interim budget during the Winter Session of Parliament. The objective of a Vote-on-Account is to get Parliament's nod for expenditure to be incurred in the months prior to elections. The next full-fledged budget will be presented by the new government which comes to power after the Lok Sabha polls in April-May 2014.

European stocks declined for a third day on Tuesday, 4 February 2014, after a sharp drop on Wall Street overnight triggered by disappointing US economic data. Key benchmark indices in France, Germany and UK were off 0.39% to 0.94%.

Asian stocks fell on Tuesday, 4 February 2014, after data showing weaker-than-expected growth in US manufacturing worsened already sour sentiment. Key benchmark indices in Hong Kong, Indonesia, Japan, Singapore and South Korea were off 0.58% to 4.18%

The stock market in Taiwan was closed for the Lunar New Year holiday. Stock markets in mainland China remain closed until 7 February 2014 for the Lunar New Year holiday.

Australia's central bank -- the Reserve Bank of Australia (RBA) -- kept its key interest rate at a record low 2.5% after a monetary policy review today, 4 February 2014. RBA also indicated that it is no longer leaning toward cutting interest rates. "In the board's judgement, monetary policy is appropriately configured ... On present indications, the most prudent course is likely to be a period of stability in interest rates," said RBA Gov. Glenn Stevens in the statement accompanying the decision.

Trading in US index futures indicated that the Dow could advance 57 points at the opening bell on Tuesday, 4 February 2014. The US stock market closed with sharp losses on Monday, 3 February 2014, after a much weaker-than-expected reading on manufacturing data as well as concerns over a slowdown in China, triggered the worst selloff in several months. The implied volatility as measured by the CBOE Vix index, which moves inversely to the S&P 500, jumped 14.6% to 21.09, a level not seen since Dec. 28 2012, when the markets confronted the fiscal cliff.

Data showed factory activity in the US expanded in January at the weakest pace in eight months as orders slumped, a sign manufacturing cooled at the start of the year along with the weather. The Institute for Supply Management's factory index decreased to 51.3 from 56.5 the prior month, the Tempe, Arizona-based group's report showed. Readings above 50 indicate expansion.

The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market.

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