Sensex hits highest level in almost a week

Volatility ruled the roost as key benchmark indices extended gains in mid-afternoon trade. The barometer index, the S&P BSE Sensex, hit its highest level in almost a week. While the Sensex, and the 50-unit CNX Nifty, both, surged, there was lack of strength in the broad market. The market breadth indicating the overall health of the market was negative. The Sensex was currently trading above the psychological 29,000 level, having alternately moved above and below that mark earlier during the trading session. The Sensex had fallen below the psychological 29,000 level after yesterday's slide. The Sensex was currently up 339.75 points or 1.18% at 29,222.86.

IT stocks edged higher on renewed buying. Index heavyweights HDFC Bank, L&T, HDFC and ITC edged higher. Another index heavyweight ICICI Bank trimmed intraday losses. Paint makers advanced on decline in crude oil prices. SJVN advanced after strong Q3 earnings.

Brent crude oil futures edged lower, adding to big losses registered during the previous session triggered by a weekly oil inventory report showing increase in oil inventories in the United States.

Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview to a newspaper published today, 5 February 2015, that the RBI still has a way to go in fighting inflation and it is important that the central bank has the credibility to bring down inflation if it picks up.

Foreign portfolio investors sold shares worth a net Rs 83.80 crore yesterday, 4 February 2015, as per provisional data.

In the overseas markets, European stocks edged lower after the European Central Bank fueled an increasingly tense standoff between the Greek government and its international creditors by declaring it would stop accepting Greek bonds as collateral for central bank loans. Asian stocks edged lower after the European Central Bank (ECB) yesterday, 4 February 2015, abruptly pulled back its soft treatment of Greek debt and cancelled its acceptance of the country's bonds in return for funding. Most US stocks dropped yesterday, 4 February 2015, after the ECB pulled back its soft treatment of Greek debt and cancelled its acceptance of the country's bonds in return for funding.

In the foreign exchange market, the rupee edged lower against the dollar.

Brent crude oil futures edged lower, adding to big losses registered during the previous session triggered by a weekly oil inventory report showing increase in oil inventories in the United States. Decline in global crude oil prices augurs well for India. Deregulation of diesel price announced by the Indian government in October 2014 and a sharp decline in global crude oil prices over the past few months will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. The steep slide in global crude oil prices will also help India in containing its current account deficit and fuel price inflation. India imports 80% of its crude oil requirement. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.

At 14:15 IST, the S&P BSE Sensex was up 339.75 points or 1.18% at 29,222.86. The index jumped 394.72 points at the day's high of 29.277.83 in mid-afternoon trade, its highest level since 30 January 2015. The index fell 58.23 points at the day's low of 28,824.88 in early trade.

The CNX Nifty was up 103.90 points or 1.19% at 8,827.60. The index hit a high of 8,838.45 in intraday trade, its highest level since 2 February 2015. The index hit a low of 8,705.05 in intraday trade.

The BSE Mid-Cap index was up 16.94 points or 0.16% at 10,758.32. The BSE Small-Cap index was down 1.27 points or 0.01% at 11,431.13. Both these indices underperformed the Sensex.

The market breadth indicating the overall health of the market was negative. On BSE, 1,409 shares declined and 1,308 shares advanced. A total of 124 shares were unchanged.

Paint makers advanced on decline in crude oil prices. Asian Paints (up 2.28%), Berger Paints India (up 1.87%), Kansai Nerolac Paints (up 0.56%), and Shalimar Paints (up 0.1%) edged higher. Akzo Nobel India (down 0.28%) edged lower.

Falling crude oil prices augur well for paints makers. Titanium dioxide is a key raw material for paint companies and is derived from crude oil.

SJVN rose 0.77% at Rs 26.10. SJVN's net profit rose 28.28% to Rs 270.60 crore on 47.13% growth in total income to Rs 642.94 crore in Q3 December 2014 over Q3 December 2013. The result was announced during market hours today, 5 February 2015. In view of the seasonal nature of business, the financial results for the quarter may not be comparable with the forthcoming quarters, SJVN said.

Index heavyweight L&T rose 0.62% at Rs 1,700.50. L&T during market hours today, 5 Feburary 2015, in a clarification with regard to news item titled "L&T in talks with Hyundai to collaborate on LNG carriers", said that it has no comments to make on market speculation. However, L&T said that it is keen to undertake construction of complex commercial ships such as LPG & LNG carriers, chemical tankers etc. in the shipyard at Kattupallli. L&T said that it has been interacting with concerned companies and customers.

Another index heavyweight ITC rose 1.05% at Rs 370.40.

Shares of index heavyweight and housing finance major HDFC were up 4.52% at Rs 1,288.80.

Great Eastern Shipping Company (GE Shipping) fell 2.95% at Rs 340. The stock hit a high of Rs 362 and a low of Rs 339 so far during the day. GE Shipping's consolidated net profit jumped 79.01% to Rs 181.70 crore on 19.07% growth in total income to Rs 944.25 crore in Q3 December 2014 over Q3 December 2013. The result was announced during market hours today, 5 February 2015.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.7725, compared with its close of 61.7525 during the previous trading session.

Brent crude oil futures edged lower, adding to big losses registered during the previous session triggered by a weekly oil inventory report showing increase in oil inventories in the United States. Brent for March settlement was off 29 cents at $53.87 a barrel. The contract had slumped $3.75 a barrel or 6.47% to settle at $54.16 a barrel during the previous trading session.

Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview to a newspaper published today, 5 February 2015, that the RBI still has a way to go in fighting inflation and it is important that the central bank has the credibility to bring down inflation if it picks up. India has to ensure that if there are supply shocks in future, they don't increase inflationary expectations, Rajan said. Rajan also stressed on the need for the country to accelerate growth, saying India should not settle for anything less than double-digit growth in the medium term. The RBI left its benchmark lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review early this week, as the central bank awaits further evidence to gauge whether the disinflationary process is continuing. Earlier, the RBI had surprised financial markets by announcing a cut in the repo rate by 25 basis points in an unscheduled monetary policy review on 15 January 2015, citing easing of inflationary pressures in the economy.

European stocks edged lower today, 5 February 2015, after the European Central Bank fueled an increasingly tense standoff between the Greek government and its international creditors by declaring it would stop accepting Greek bonds as collateral for central bank loans. Key benchmark indices in Germany, UK, and France were off 0.32% to 0.65%.

Shares and bonds fell sharply in Greece after the European Central Bank (ECB) yesterday, 4 February 2015, announced that it will no longer accept Greek government bonds from banks seeking funds, raising costs and volatility for Greece's lenders at a time of growing deposit outflows. It is currently not possible to assume a successful conclusion of Greece's current bailout, the ECB said, just hours after its president, Mario Draghi, met with Greece's new finance minister, Yanis Varoufakis. The announcement marked the first time since 2012when Athens was locked in another round of acrimonious negotiations with its creditorsthat the central bank has suspended its waiver for Greece's junk-rated bonds. Mr. Varoufakis and newly elected Greek Prime Minister Alexis Tsipras have been touring European capitals, promoting a plan to overhaul the country's sagging economy that relies less on budget cuts and seeks easier terms on repaying debts.

Asian stock markets edged lower today, 5 February 2015, after the European Central Bank (ECB) yesterday, 4 February 2015, abruptly pulled back its soft treatment of Greek debt and cancelled its acceptance of the country's bonds in return for funding. Key indices in Japan, Taiwan, Singapore, South Korea, and Indonesia were off 0.02% to 1.1%. In Hong Kong, the Hang Seng index was up 0.24%.

In China, the Shanghai Composite was off 1.17%. The People's Bank of China (PBOC) yesterday, 4 February 2015, cut its reserve-requirement ratio for banks by 0.5 percentage points, in a bid to boost lending to businesses and bolster the economy. The central bank said the ratio for most banks will fall to 19.5% after the cut takes effect.

Trading in US index futures indicated that the Dow could gain 33 points at opening bell today, 5 February 2015. Most US stocks dropped yesterday, 4 February 2015, after the ECB pulled back its soft treatment of Greek debt and cancelled its acceptance of the country's bonds in return for funding.

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