A bout of volatilty was witnessed as key benchmark indices pared gains after hitting fresh intraday high in morning trade. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, pared gains after hitting their highest level in three weeks. The Sensex was up 11.40 points or 0.06%, off close to 50 points from the day's high and up about 15 points from the day's low. The market breadth, indicating the overall health of the market, was strong. The market sentiment was supported by data showing that foreign funds were net buyers of Indian stocks on Tuesday, 18 February 2014.
IT stocks edged higher. Capital goods stocks rose for the third day in a row after 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 market edged higher amid initial volatility. It pared gains after hitting fresh intraday high in morning trade.
The market sentiment was boosted by data showing that foreign funds were net buyers of Indian stocks on Tuesday, 18 February 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 292.23 crore on Tuesday, 18 February 2014, as per provisional data from the stock exchanges.
At 10:20 IST, the S&P BSE Sensex was up 11.40 points or 0.06% to 20,629.56. The index gained 60.21 points at the day's high of 20,694.42 in morning trade, its highest level since 29 January 2014. The index fell 4.65 points at the day's low of 20,629.56 in early trade.
The CNX Nifty was up 3.80 points or 0.06% to 6,130.90. The index hit a high of 6,143.75 in intraday trade, its highest level since 29 January 2014. The index hit a low of 6,125.75 in intraday trade.
The BSE Mid-Cap index was up 32.66 points or 0.51% at 6,378.12. The BSE Small-Cap index was up 49.62 points or 0.78% at 6,380.34. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 933 shares rose and 466 shares fell. A total of 80 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks rose and rest fell. Sun Pharmaceutical Industries (up 1.44%), M&M (up 0.96%) and Dr. Reddy's Laboratories (up 0.9%) edged higher from the Sensex pack.
IT stocks edged higher. Wipro (up 0.96%), TCS (up 0.67%), Infosys (up 1.22%) and Tech Mahindra (up 1.21%) gained. HCL Technologies declined 0.85%.
Capital goods stocks rose for the third day in a row after the government announced reduction in excise duty on some capital goods to 10% from 12% in the interim budget on Monday, 17 February 2014. Siemens (up 1.05%), Bharat Heavy Electricals (Bhel) (up 1.37%), Punj Lloyd (up 1.13%) and L&T (up 0.26%) gained. 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.
On political front, the Lok Sabha passed a contentious proposal to split Andhra Pradesh and create the new state of Telangana on Tuesday amid chaotic scenes and uproar in parliament from opponents of the bill. The state capital Hyderabad, where Google, Microsoft and Dell have major sites, will remain the common capital for the two states for a period of 10 years if the bill is passed in the upper house.
The decision to break up the state was made ahead of elections due by May 2014. The Bharatiya Janata Party, which is the frontrunner in the national election race, voted in favor of the bill, allowing it to pass. It still needs approval in the upper house by Friday, when parliament's final session before the election ends. The new state would account for 17 seats in parliament.
The Reserve Bank of India said on Tuesday, 18 February 2014 that in order to address the anticipated tightening in liquidity conditions on account of advance tax payments by corporates commencing mid-March 2014 and with a view to providing flexibility to the banking system in its liquidity management towards March-end 2014, the Reserve Bank of India will conduct term repo auctions of appropriate amount and tenor during March 2014. The details of the term repo auctions will be announced in due course.
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.
Most Asian stocks fell on Wednesday. Key benchmark indices in Hong Kong, Japan, South Korea and Taiwan fell 0.04% to 0.53%. Key benchmark indices in Indonesia, China and Singapore were up 0.37% to 0.53%.
Trading in US index futures indicated that the Dow could fall 15 points at the opening bell on Wednesday, 19 February 2014. US stocks settled mostly higher on Tuesday with the Nasdaq Composite recording its eighth consecutive session of gains, the longest since July 2013.
Manufacturing activity in the New York region gave up most of the strong gains made during the prior month although it remained in positive territory, according to data released Tuesday. The report fits a picture of a manufacturing sector struggling with severe winter weather. The ISM index for the US showed manufacturers suffered from the January chill last month.
A gauge of confidence among home builders plunged in February, dropping to the lowest level in nine months, led by weaker views on present sales of single-family homes, according to data released Tuesday.
The housing-market index dropped to 46 this month from 56, signaling that builders, generally, are pessimistic about sales trends, according to the National Association of Home Builders/Wells Fargo, which cited unusually severe weather conditions, among other factors.
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 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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