Volatility continued as key benchmark indices weakened once again after trimming intraday losses in early afternoon trade. The market breadth, indicating the overall health of the market, was weak. Except BSE IT index, all the other sectoral indices on BSE were in the red. The market sentiment was hit adversely by Reserve Bank of India (RBI) governor Raghuram Rajan's comments on Thursday, 23 January 2014, that inflation is a destructive disease which is forcing the central bank to keep interest rates high. Weakness in Asian stocks and overnight losses for US stocks also hit sentiment on the domestic bourses adversely. The barometer index, the S&P BSE Sensex, was down 194.83 points or 0.9%, off close to 155 points from the day's high and up about 35 points from the day's low. The BSE Small-Cap and Mid-Cap indices were off more than 1% each.
Capital goods stocks dropped. Bank stocks dropped across the board after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high.
A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak start triggered by weak Asian stocks. The Sensex languished in negative zone in morning trade. The Sensex extended losses and hit fresh intraday low in mid-morning trade. Volatility continued as key benchmark indices weakened once again after trimming intraday losses in early afternoon trade.
At 12:20 IST, the S&P BSE Sensex was down 194.83 points or 0.9% to 21,178.83. The index dropped 232.11 points at the day's low of 21,141.55 in mid-morning trade, its lowest level since 20 January 2014. The index declined 40 points at the day's high of 21,333.66 in early trade.
The CNX Nifty was down 64.95 points or 1.02% to 6,280.70. The index hit a low of 6,269.15 in intraday trade, its lowest level since 20 January 2014. The index hit a high of 6,331.45 in intraday trade.
The BSE Mid-Cap index was off 1.14%. The BSE Small-Cap index was off 1.13%. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,486 shares fell and 699 shares rose. A total of 104 shares were unchanged.
Among the 30-share Sensex pack, 24 stocks fell and only six rose. Sesa Sterlite (down 3.28%), Tata Motors (down 2.96%) and Tata Steel (down 2.66%) edged lower from the Sensex pack.
Bank stocks dropped across the board after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high. ICICI Bank (down 1.76%), AXIS Bank (down 0.98%), HDFC Bank (down 1.38%) declined.
Among PSU bank stocks, State Bank of India, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank shed 0.81% to 3.45%.
Canara Bank dropped 4.93% as the stock turned ex-dividend today, 24 January 2014, for the interim dividend of Rs 6.50 per share for the year ending 31 March 2014.
L&T Finance Holdings lost 3.94% after consolidated net profit declined 62.77% to Rs 109.68 crore on 30.52% growth in total income to Rs 1283.37 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after trading hours on Thursday, 23 January 2014.
Consolidated net profit (excluding exceptional items) fell 7.3% to Rs 109.70 crore in Q3 December 2013 over Q3 December 2012. L&T Finance Holdings said that the consolidated net profit (excluding exceptional items) has been impacted by higher credit costs compared to previous year.
Gross NPA (non performing assets) stood at Rs 1065.2 crore or 2.93% as a percentage of gross advances as on 31 December 2013 as against Rs 992.9 crore or 2.89% as on 30 September 2013. The continuing stress in the economy has resulted in slippages in asset quality mainly in the construction equipment, commercial vehicle, corporate and restructured assets. Net NPA stood at Rs 739.8 crore or 2.05% as a percentage of gross advances as on 31 December 2013 as against Rs 654.6 crore or 1.93% as on 30th September 2013.
Capital goods stocks dropped. ABB (down 2.32%), Bhel (down 3.04%), Crompton Greaves (down 2.23%) and Thermax (down 1.19%) declined.
L&T fell 1.98%. The company said after market hours on Wednesday, 22 January 2014, that its recurring profit after tax rose 12% to Rs 1136 crore on 12% growth in gross revenue to Rs 14534 crore in Q3 December 2013 over Q3 December 2012. L&T said the results are excluding the performance of the hydrocarbon business segment, which has been transferred to a wholly-owned subsidiary of the company with effect from 1 April 2013. Consequently, the figures for the previous periods have been restated to make a like-to-like comparison, L&T said.
L&T said its order inflow rose 21% to Rs 21722 crore in Q3 December 2013 over Q3 December 2012, shrugging off prevailing weak investment climate. The international order inflow during the quarter at Rs 8237 crore, more than doubled on the back of major orders secured in the Middle East. The order backlog rose 13% year-on-year at Rs 171184 crore as on 31 December 2013. International order book constituted 15% of the total order book.
L&T has pruned its order inflow forecast for the year ending 31 March 2014, to 15% from 20% earlier due to the poor investment climate in India.
L&T said that while the company continues to focus on maximizing the domestic opportunities, it is strengthening its international presence in select overseas markets. Competitive value proposition to the clients and disciplined execution have helped the company sustain its profitable growth momentum, L&T said. Presence in the diverse sectors, healthy order book, proven track record and strong balance sheet are the key enablers for the company to steer through the near to medium challenges and meet its growth aspirations, L&T said in a statement.
Sun Pharma Advanced Research Company rose 1.8% after the company announced that its licensee has received an approval from the Drug Controller General of India for a drug used in treatment of breast cancer. The announcement was made before market hours today, 24 January 2014.
Sun Pharma Advanced Research Company (SPARC) announced that its licensee has received an approval from the Drug Controller General of India (DCGI) for Paclitaxel Injection Concentrate for Nanodispersion (PICN), indicated for the treatment of metastatic breast cancer.
Sun Pharmaceutical Industries declined 0.56%.
MBL Infrastructures jumped 3.49% after the company said it bagged five orders worth Rs 502.28 crore. The company made the announcement after market hours on Thursday, 23 January 2014.
In the foreign exchange market, the rupee edged lower against the dollar on global risk off sentiment. The partially convertible rupee was hovering at 62.1525, compared with its close of 61.9275/9375 on Thursday, 23 January 2014.
Bond prices dropped after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high, according to reports. "Industrialists complain about high interest rates but we don't have a choice but to keep interest at a high rate because inflation is high at 8%", Rajan said. The strong warning against inflation comes ahead of the central bank's policy review early next week. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6883%, higher than its close of 8.6653% on Thursday, 23 January 2014. Bond yield and bond prices move in opposite direction.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
Asian stocks edged lower on Friday, 24 January 2014, amid concern earnings growth will miss estimates on signs of weakness in China's economy. Key benchmark indices in South Korea, Singapore, Indonesia, and Hong Kong were down 0.36% to 0.84%. Taiwan's Taiwan Weighted rose 0.04% in choppy trade.
Japanese stocks slumped after the yen strengthened against the dollar yesterday by the most since Sept. 18. The Nikkei 225 average lost 1.94%.
China's Shanghai Composite rose 0.49%. A preliminary reading of HSBC's January China manufacturing Purchase Manufacturing Index fell to 49.6, below the 50 boundary between expansion and contraction, and down from 50.5 in the final result for December. It was the first contraction for the sector in six months, according to the HSBC data which was released on Thursday, 23 January 2014.
China's central bank on 21 January 2014 announced that it is injecting more liquidity into the system ahead of the Lunar New Year holiday.
Funds investing in emerging markets had outflows of $2.4 billion in the week ended 22 January 2014, according to a report by Citigroup Inc., citing data from EPFR Global.
Trading in US index futures indicated that the Dow could drop 9 points at the opening bell on Friday, 24 January 2014. US stocks closed sharply lower on Thursday as weak economic data from China prompted investors to sell resource stocks and emerging-markets assets and seek safety in bonds, gold, and high-dividend paying sectors.
Among economic data, an early gauge of US manufacturing dipped in January from the prior month, but some of the slowdown was due to cold weather, Markit reported Thursday. The US flash purchasing managers index slipped to 53.7 in January, down from December's level of 55, which was an 11-month high. This is the slowest improvement in conditions since October. US initial jobless claims rose slightly to 326,000 last week. The leading economic index rose 0.1% in December, marking its sixth gain in a row, the nonprofit Conference Board said Thursday. In the housing sector, sales of existing homes rose 1% in December to a 4.98 million annual rate, while the median sale price climbed 9.9% to $198,000.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
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