A bout of volatility was witnessed as key benchmark indices weakened once again after trimming intraday losses in mid-morning trade. The barometer index, the S&P BSE Sensex, Sensex was down 89.86 points or 0.43%, off close to 30 points from the day's high and up about 45 points from the day's low. The market breadth, indicating the overall health of the market, was negative. Weakness in Asian stocks hit sentiment on the domestic bourses adversely.
Capital goods pivotals edged lower. Bank stocks fell across the board. TCS rose after the company said that Diageo has selected the company as its new global IT provider. Among tyre shares, Apollo Tyres hit record high.
The market edged lower in early trade on weak Asian stocks. A bout of volatility was witnessed as key benchmark indices trimmed losses after hitting fresh intraday low in morning trade. Volatility continued as key benchmark indices weakened once again after trimming intraday losses in mid-morning trade.
Asian stocks edged lower on Thursday, 20 February 2014, after a Chinese manufacturing index dropped more than estimated this month.
At 11:20 IST, the S&P BSE Sensex was down 89.86 points or 0.43% to 20,633.11. The index dropped 133.94 points at the day's low of 20,589.03 in early trade, its lowest level since 18 February 2014. The index fell 60.31 points at the day's high of 20,662.66 in mid-morning trade.
The CNX Nifty was down 32.15 points or 0.52% to 6,120.60. The index hit a low of 6,105.50 in intraday trade, its lowest level since 18 February 2014. The index hit a high of 6,129.10 in intraday trade.
The BSE Mid-Cap index was up 7.23 points or 0.11% at 6,384.17. The BSE Small-Cap index was off 2.51 points or 0.04% at 6,369.69. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,119 shares fell and 936 shares rose. A total of 111 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks fell and rest rose. Tata Steel (down 2.28%), Hindalco Industries (down 0.96%) and Bhel (down 0.76%) edged lower from the Sensex pack.
TCS rose 0.74%. The company said during market hours that Diageo, the world's leading premium spirits maker, has selected the company as its new global IT provider. The decision by Diageo to partner with TCS is the latest milestone in a programme to transform the way it provides IS services to around 36,000 employees, operating in 100 countries across the world, TCS and Diageo said in a joint statement. In the future, TCS will manage Diageo's global IT infrastructure, data centres and servers, in addition to providing service desk support to employees. This solution will provide a greater level of flexibility and differentiation of services to meet market needs, allow for swift adoption of future technology trends, and an enhanced current self-serve capability to deliver an improved end user experience, the two companies said.
Ivan Menezes, Chief Executive Officer, Diageo plc, commented: "Our partnership with Tata Consultancy Services is the latest milestone in our strategy to create a world-class IT service to support Diageo's global strategy and deliver efficient growth. Working together, I believe that we can make a significant step change in the way that IS supports our 36,000 employees around the world, giving them the freedom and agility to drive growth for Diageo in each of our markets".
Natarajan Chandrasekaran, Chief Executive Officer and Managing Director of Tata Consultancy Services, commented: "Globally businesses are embracing technology to enhance customer experience, drive innovation and propel their growth. Smarter IT -- from the data centre to the end user's experience -- is critical in this context and we are delighted to work with Diageo to help enable this transformation using our strong industry expertise and technology capabilities".
Bank stocks fell across the board. Among private sector banks, ICICI Bank (down 1.3%), Yes Bank (down 1.11%), Federal Bank (down 2.02%), HDFC Bank (down 0.89%), Kotak Mahindra Bank (down 1.58%) and AXIS Bank (down 0.96%), declined.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank shed 1.57% to 2.72%.
Capital goods pivotals edged lower. Bhel (down 0.7%) and L&T (down 0.48%) declined.
The government announced reduction in excise duty on some capital goods to 10% from 12% in the interim budget on Monday, 17 February 2014. The excise duty has been cut from 12% to 10% for a period up to 30 June 2014 for capital goods and consumer durable falling under chapter 84 and chapter 85 of the Schedule to the Central Excise Tariff Act. The chapter 84/85 includes products like boiler, turbine, transformers, motors, air conditioners, toaster, oven, switches, switchgears etc.
ABB India rose for the 3rd day in a row after company reported strong Q4 December 2013 earnings early this week. The stock was up 0.88%. ABB India's net profit surged 249.37% to Rs 58.59 crore on 5.72% rise in total income to Rs 2204.56 crore in Q4 December 2013 over Q4 December 2012. The result was announced during trading hours on Tuesday, 18 February 2014.
The company said it generated a healthy operating cash flow in the midst of a tight liquidity in the market.
The company received orders worth Rs 1666 crore in Q4 December 2013, which was higher than the order intake of Rs 1579 crore in the corresponding quarter of the previous year. The order intake for the full year 2013 stood at Rs 6717 crore. Base orders from a wider spectrum of customers helped offset dearth of large projects in the market, ABB India said in a statement on Tuesday, 18 February 2014. The company said its exports grew, annulling the effect of a contraction in the domestic market opportunities. The company continued to tap sectors like renewable energy, data center, railways, grid stability, mining, oil and gas that look increasingly promising, the company said in a statement.
The company said it is well positioned with an order backlog of Rs 7709 crore as on 31 December 2013, providing necessary visibility to future revenue.
Apollo Tyres rose 2.01% to Rs 121.95 after hitting record high of Rs 122.80 in intraday trade.
DCM Shriram Consolidated surged 14.94% after the company said that its board will meet on 22 February 2014 to consider various options for rewarding shareholders, including share buyback, bonus issue and dividends. The company made the announcement after market hours on Wednesday, 19 February 2014. DCM Shriram Consolidated announced that a special meeting of the board of directors will be held on 22 February 2014 to consider the report of sub committee of the board to look at all options including share buyback from the existing shareholders, review of dividends policy, bonus issues, etc for rewarding shareholders.
In the foreign exchange market, the rupee edged lower against the dollar on concern inflows will slow after a Federal Reserve report on Wednesday, 19 February 2014, showed support for a plan to reduce monetary stimulus for the US economy. The partially convertible rupee was hovering at 62.28, compared with its close of 62.20/21 on Tuesday, 18 February 2014. The Indian currency, bond and money markets were closed on Wednesday, 19 February 2014, for a holiday.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Citing price pressures, 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.
Asian stocks edged lower on Thursday, 20 February 2014, after a Chinese manufacturing index dropped more than estimated this month. Key benchmark indices in Indonesia, Taiwan, Singapore, Japan, Hong Kong and South Korea were off 0.08% to 2.14%.
China's Shanghai Composite rose 0.73%. A Chinese manufacturing index fell to the lowest level in seven months in February, adding to challenges for Communist Party officials grappling with risks to the financial system from trust defaults and soured loans. The preliminary February reading of 48.3 for a Purchasing Managers' Index released today by HSBC Holdings Plc and Markit Economics compares with January's final figure of 49.5. A number below 50 indicates contraction.
Japan's trade deficit widened to a record in January as surging import costs weigh on Prime Minister Shinzo Abe's campaign to drive a sustained recovery. Imports rose 25% from a year earlier and outbound shipments gained 9.5%.
Singapore's economy expanded last quarter after a pick-up in manufacturing at the year end, with the government predicting an improvement in overseas demand in 2014 amid a global recovery. Gross domestic product rose an annualized 6.1% in the three months through December from the previous quarter, when it climbed a revised 0.3%, the trade ministry said in a statement today.
Trading in US index futures indicated that the Dow could drop 51 points at the opening bell on Thursday, 20 February 2014. US stocks edged lower on Wednesday, 19 February 2014, after data showed US housing starts sank last month by the most in almost three years and after the Federal Reserve indicated stimulus cuts will likely continue. Construction on new US homes tumbled 16% in January to a seasonally adjusted annual rate of 880,000, with drops for single-family homes and apartments, according to Commerce Department. Building permits, a sign of future demand, fell to the lowest rate since August. US producer prices rose in January under the government's new formula for measuring wholesale inflation, the Labor Department said on Wednesday, 19 February 2014.
Federal Reserve policy makers backed away from their year-old commitment to consider raising interest rates when unemployment falls below 6.5%, according to minutes of their January meeting released on Wednesday, 19 February 2014. With joblessness falling faster than expected even as other labor-market indicators show weakness, policy makers agreed it would "soon be appropriate" to revise their guidance about how long the era of record-low interest rates will remain, the minutes showed. "Several" Federal Reserve officials said that in "the absence of an appreciable change in the economic outlook, there should be a clear presumption in favor of continuing to reduce the pace" of bond buying at each meeting, the minutes showed.
Ahead of the release of the Fed minutes, Atlanta Federal Reserve President Dennis Lockhart on Wednesday, 19 February 2014, said he expects a mid-2015 interest-rate hike.
Federal Reserve Chairwoman Janet Yellen said last week that US growth has strengthened and that only a "notable change in the outlook" for the economy would prompt policy makers to slow the pace of cuts to the monthly bond-buying program.
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 International Monetary Fund, in a staff report prepared for central bankers and finance ministers from the Group of 20, said Wednesday, 19 February 2014, that significant downside risks remain for the world economy.
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