Key benchmark indices languished in negative terrain in early afternoon trade. The market breadth, indicating the overall health of the market, turned negative from positive. The barometer index, the S&P BSE Sensex, was down 74.93 points or 0.37%, off about 170 points from the day's high and up close to 105 points from the day's low. x The market sentiment was affected adversely by data showing that foreign funds remained sellers of Indian stocks on Wednesday, 5 February 2014.
Most bank stocks edged lower. But, Bank of Baroda rose after announcing a small percentage increase in net profit in Q3 December 2013.
The market edged higher in early trade on firm Asian stocks. Key benchmark indices retained positive terrain in morning trade. A sudden slide pushed key benchmark indices from positive zone to negative zone in mid-morning trade. The 50-unit CNX Nifty fell below the psychological 6,000 mark. The Sensex languished in negative terrain in early afternoon trade.
The market sentiment was affected adversely by data showing that foreign funds remained sellers of Indian stocks on Wednesday, 5 February 2014. Foreign institutional investors (FIIs) sold shares worth a net Rs 576.20 crore on Wednesday, 5 February 2014, as per provisional data from the stock exchanges.
At 12:20 IST, the S&P BSE Sensex was down 74.93 points or 0.37% to 20,186.10. The index dropped 181.21 points at the day's low of 20,079.82 in mid-morning trade. The index rose 97.16 points at the day's high of 20,358.19 in morning trade, its highest level since 3 February 2014.
The CNX Nifty was down 25.45 points or 0.42% to 5,996.95. The index hit a low of 5,965.40 in intraday trade. The index hit a high of 6,048.35 in intraday trade, its highest level since 3 February 2014.
The BSE Mid-Cap index was off 1.79 points or 0.03% at 6,308.87. The BSE Small-Cap index was up 15.91 points or 0.26% at 6,321.67. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, turned negative from positive in early afternoon trade. On BSE, 1,091 shares fell and 1,037 shares rose. A total of 138 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks fell and rest rose. Bhel (down 2.89%), ICICI Bank (down 1.51%) and HDFC (down 1.25%) edged lower from the Sensex pack.
Most bank stocks edged lower. ICICI Bank (down 1.5%), AXIS Bank (down 0.55%) and Kotak Mahindra Bank (down 1.65%) declined.
State Bank of India (SBI) fell 0.76% to Rs 1,509.55. Shares allotted by the state-run bank to institutional investors under the recently concluded qualified institutional placement (QIP) will be admitted for trading on the bourses tomorrow, 7 February 2014. SBI had raised Rs 8031.64 crore from issue of 5.13 crore equity shares to institutional investors at a price of Rs 1,565 per share.
Bank of Baroda rose 1.3%. The bank's net profit rose 3.58% to Rs 1047.84 crore on 9.67% increase in total income to Rs 10622.80 crore in Q3 December 2013 over Q3 December 2012. The result was announced during market hours.
Bank of Baroda (BOB)'s ratio of gross non-performing assets (NPAs) to gross advances stood at 3.32% as on 31 December 2013 as against 3.15% as on 30 September 2013 and 2.41% as on 31 December 2012. The ratio of net NPAs to net advances stood at 1.88% as on 31 December 2013 as against 1.86% as on 30 September 2013 and 1.12% as on 31 December 2012.
The bank's provisions and contingencies declined 26.06% to Rs 761 crore in Q3 December 2013 over Q3 December 2012.
BOB's Capital Adequacy Ratio as per Basel III norms stood at 12.01% as on 31 December 2013 as against 12.07% as on 30 September 2013.
In accordance with RBI circular dated 9 February 2011, out of the additional pension fund liability as on 31 March 2011 of Rs 1829.90 crore towards serving employees who exercised option for pension, a proportionate sum of Rs 91.50 crore has been charged to profit and loss account during Q3 December 2013. The unamortized pension fund liability of Rs 457.47 crore will be charged proportionately in accordance with the directions contained in the said circular, BOB said.
The bank has created deferred tax liability of Rs 272.09 crore during Q3 December 2013 on account of Special Reserve created under Section 36(i)(VIII) of Income Tax Act for the nine months ended 31 December 2013, which is charged to profit and loss account and deferred tax liability of Rs 818.90 crore for special reserve created up to 31 March 2013, by adjustment from general reserve in accordance with Reserve Bank of India circular dated 20 December 2013, BOB said.
Jet Airways (India) spurted 9.6% on reports that the India's competition regulator has approved Etihad Airways' 50.1% stake buy in Jet Privilege, a customer loyalty programme unit of Jet Airways. On Wednesday, 5 February 2014, the Competition Commission of India (CCI) reportedly approved purchase of 50.1% stake in Jet Privilege (JPPL), Jet Airways' loyalty programme, by Etihad Airways PJSC.
Clearing the transaction by a majority, CCI reportedly said that the deal was unlikely to have any adverse impact on market competition, as Etihad's purchase of 24% stake in Jet Airways (India) has already been approved and the two airlines were already partners in their respective frequent flyer programmes.
Under such customer loyalty programmes, airlines generally offer certain benefits to their frequent flyers.
Under this deal, Etihad will acquire 50.1% stake in JPPL subsequent to the hiving off of Jet's loyalty business into the subsidiary on a going concern basis, reports added.
Jet Airways and Etihad Airways, the national carrier of the United Arab Emirates, on 20 November 2013, announced that both airlines closed the transaction for the subscription of a 24% equity stake by Etihad Airways in Jet Airways. All requisite Indian regulatory approvals had been obtained by 12 November 2013.
Astral Poly Technik rose 3.67% after net profit surged 100.9% to Rs 21.32 crore on 28.4% growth in net sales to Rs 264.96 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Wednesday, 5 February 2014.
In the foreign exchange market, the rupee edged higher against the dollar on global risk-on sentiment. The partially convertible rupee was hovering at 62.51, compared with its close of 62.57/58 on Wednesday, 5 February 2014.
Bond prices rose after the Ministry of Finance on Wednesday, 5 February 2014, said that the government has decided to cancel the deferred auction of dated securities worth Rs 15000 crore. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6928%, lower than its close of 8.7066% on Wednesday, 5 February 2014. Bond yield and bond prices move in opposite direction.
On review of the Government of India's cash position and funding requirement, it has been decided to cancel the deferred auction scheduled on 17 January 2014 for Rs 15,000 crore, the Ministry of Finance said in a statement on Wednesday, 5 February 2014. This would result in decrease in government market borrowing programme for 2013-14 to that extent, it said.
Meanwhile, the Reserve Bank of India (RBI) announced that it has partially completed the debt-switching program at Rs 27000 crore with an institutional investor against budget proposal of Rs 50000 crore.
Finance Minister P Chidambaram will present the Vote-on-Account or interim budget on 17 February 2014. 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.
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.
Asian shares edged higher on Thursday, 6 February 2014, as investors weighed earnings and US data showing service-industries growth against a private jobs report that missed estimates. Key benchmark indices in Indonesia, South Korea, Hong Kong, Singapore and Taiwan rose 0.35% to 0.88%. Japan's Nikkei Average fell 0.18%.
Stock markets in mainland China remain closed until tomorrow, 7 February 2014 for the Lunar New Year holiday.
Trading in US index futures indicated that the Dow could advance 24 points at the opening bell on Thursday, 6 February 2014. US stocks ended Wednesday's choppy session lower after a weaker-than-expected report on private-sector employment. Philadelphia Fed President Charles Plosser's comments urging to speed up the tapering reminded investors that quantitative easing is unlikely to come to aid the markets in 2014.
Growth picked up in the US services sector in January, with steady strength in private-sector hiring, suggesting the winter weather that socked the country over the last several weeks had a limited effect on the economy.
Companies in the US boosted payrolls by 175,000 in January, the ADP Research Institute said on Wednesday, 5 February 2014, before the government's monthly jobs data tomorrow, 7 February 2014.
Philadelphia President Charles Plosser, who votes on policy this year, on Wednesday, 5 February 2014, said he expects the economy to expand 3% in 2014 as the jobless rate falls to 6.2% by year-end, warranting a quicker tapering to bond purchases by the central bank. Policy makers made the first two cuts to asset purchases in December and January, slowing to $65 billion a month from $85 billion. While welcoming the trims, Plosser said they may prove to be insufficient if growth keeps accelerating. "My preference is to scale back our purchase program at a faster pace to reflect the strengthening economy," he said in a speech in Rochester, New York. "We must begin to back away from increasing the degree of policy accommodation in a manner commensurate with an improving economy," said Plosser, who has opposed the bond purchases by the Fed. Labor markets will continue to improve and inflation expectations will be relatively stable as price increases move up toward the Fed's 2% goal over the next year, Plosser said. The economy has met the criteria of significant improvement in labor market conditions for ending the quantitative easing program, Plosser said. "Further increases in the balance sheet are unlikely to provide appreciable benefits for the recovery," Plosser said.
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.
In Europe, the European Central Bank (ECB) undertakes monthly monetary policy review today, 6 February 2014, amid speculation the ECB will reinforce its commitment to lower rates. The ECB will probably hold the benchmark interest rate at a record-low 0.25% at its policy meeting tomorrow, 6 February 2014, as it faces slowing inflation. After the Jan. 9 policy meeting, ECB President Mario Draghi said the central bank "strongly emphasizes" that it will maintain accommodative measures for as long as necessary.
The Bank of England's (BoE) Monetary Policy Committee (MPC) undertakes monthly monetary policy review today, 6 February 2014, with markets waiting to see if Governor Mark Carney will alter guidance on lifting its record-low interest rate. The MPC is widely expected to keep the BoE's main interest rate at a record-low level of 0.5%. It is widely predicted also to maintain quantitative easing at 375 billion ($613 billion, 454 billion euros), opting against following the US Federal Reserve in tapering stimulus.
Britain's 12-month inflation slowed to 2% in December, recent official data showed, touching the lowest level for more than four years. The BoE's main task is to use monetary policy as a tool to keep annual inflation close to a government-set target of 2%, to preserve the value of money.
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