A divergent trend was witnessed among the the two key benchmark indices in early afternoon trade. While the barometer index S&P BSE Sensex, languished in red, the 50-unit CNX Nifty was trading just above the flat line. The market breadth indicating the overall health of the market turned negative from positive in early afternoon trade. The Sensex was currently off 53.65 points or 0.18% at 29,307.85. Meanwhile, the outcome of a survey showed that Indian manufacturing activity expanded at its slowest pace in five months in February.
Bank stocks were mixed after the finance ministry said that the Government of India and the Reserve Bank of India (RBI) have signed an agreement on monetary policy framework whereby the two sides have officially decided inflation targeting by the RBI. TCS dropped amid volatility after the company announced the launch of business process innovation and simulation & visualization as a service (VaaS) in a strategic partnership with iRise. Bajaj Auto tumbled after weak sales in February 2015. ITC extended steep losses registered during the previous trading session triggered by the government raising excise duty on cigarettes in the Union Budget 2015-16.
Meanwhile, global credit rating agency Standard and Poor's reportedly said today, 2 March 2015, that a relatively heavy general government debt burden and large budgetary subsidies could constrain its sovereign credit ratings on India. The rating agency said that India's budget for 2015/16 highlighted the government's commitment to keeping the fiscal deficit low.
Meanwhile, the Government of India and the Reserve Bank of India (RBI) have signed an agreement on monetary policy framework whereby the two sides have officially decided inflation targeting by the RBI.
Earlier, the Sensex and the 50-unit CNX Nifty, both, hit their highest level in more than four weeks in morning trade.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 614.03 crore during the previous trading session on Saturday, 28 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 740.74 crore on Saturday, 28 February 2015, as per provisional data. A special live trading session was held on that day due to presentation of the Budget.
In the foreign exchange market, the rupee edged lower against the dollar.
Brent crude oil futures edged lower after previous trading session's sharp rally.
In overseas markets, Asian stocks edged higher, buoyed by an interest rate cut in China.
At 12:17 IST, the S&P BSE Sensex was down 53.65 points or 0.18% at 29,307.85. The index fell 95.48 points at the day's low of 29,266.02 in early afternoon trade. The index jumped 214.82 points at the day's high of 29,576.32 in morning trade, its highest level since 30 January 2015.
The CNX Nifty was up 0.50 point or 0.01% at 8,902.35. The index hit a high of 8,972.35 in intraday trade, its highest level since 30 January 2015. The index hit a low of 8,885.45 in intraday trade.
The BSE Mid-Cap index was up 34.94 points or 0.32% at 10,845.79. The BSE Small-Cap index was up 15.35 points or 0.14% at 11,281.79. 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, 1,161 shares declined and 1,274 shares advanced. A total of 98 shares were unchanged.
ITC extended steep losses registered during the previous trading session triggered by the government raising excise duty on cigarettes in the Union Budget 2015-16. The stock was off 3.97% at Rs 346.90. Shares of ITC had tumbled 8.26% to settle at Rs 361.25 on Saturday, 28 February 2015. Finance Minister Arun Jaitely in the Union Budget 2015-16 on Saturday, 28 February 2015, announced that excise duty on cigarettes is being increased by 25% for cigarette of length not exceeding 65 mm and by 15% for cigarette of other lengths. Similar increases are proposed on cigars, cheroots and cigarillos.
Bajaj Auto fell 4.15% to Rs 2,072 after total sales fell 22% to 2.43 lakh units in February 2015 over February 2014. The announcement was made during trading hours today, 2 March 2015. Motorcycles sales fell 21% to 2.16 lakh units in February 2015 over February 2014. Sales of commercial vehicles fell 32% to 27,242 units in February 2015 over February 2014. Exports fell 20% to 1.12 lakh units in February 2015 over February 2014.
TCS fell 0.31% at Rs 2,667. The stock hit a high of Rs 2,707 and a low of Rs 2,653.25 so far during the day. TCS during market hours today, 2 March 2015 announced the launch of business process innovation and simulation & visualization as a service (VaaS) in a strategic partnership with iRise, the global leader in enterprise visualization and simulation software. TCS' new offerings will enable customers to realize business solutions faster by accelerating time to value, TCS said in a statement.
Bank stocks were mixed after the finance ministry said that the Government of India and the Reserve Bank of India (RBI) have signed an agreement on monetary policy framework whereby the two sides have officially decided inflation targeting by the RBI. PSU banks were mostly lower. Bank of Baroda (down 2.13%), Corporation Bank (down 1.2%), Bank of Maharashtra (down 0.38%), Indian Overseas Bank (down 0.71%), IDBI Bank (down 0.41%), Union Bank of India (down 0.47%), Andhra Bank (down 0.23%), State Bank of India (down 0.53%) and Punjab National Bank (down 0.39%) edged lower. Punjab & Sind Bank (up 0.46%), Canara Bank (up 0.26%), Dena Bank (up 0.18%), Central Bank of India (up 0.19%) edged higher.
The government has allocated Rs 7940 crore for recapitalization of Public Sector Banks in 2015-16 to help them maintain comfortable level of CRAR in compliance with Basel-III norms. Meanwhile, in order to improve the Governance of Public Sector banks, the Government intends to set up an autonomous bank Board Bureau. The Bureau will search and select heads of Public Sector banks and help them in developing differentiated strategies and capital raising plans through innovative financial methods and instruments. This would be an interim step towards establishing a holding and investment company for Banks, Jaitley said while presenting Union Budget 2015-16 in the Lok Sabha on Saturday, 28 February 2015.
Private sector banks edged higher. Among private sector banks, HDFC Bank (up 1.84%), Axis Bank (up 3.2%), ING Vysya Bank (up 0.78%), Kotak Mahindra Bank (up 0.68%), IndusInd Bank (up 0.44%), Yes Bank (up 0.85%) and Federal Bank ( up 2.81%) edged higher. ICICI Bank (down 0.59%) edged lower.
To further simplify the procedures for Indian companies to attract foreign investments, it is decided to do away with the distinction between different types of foreign investments, especially between foreign portfolio investments and foreign direct investments, and replace them with composite caps, Jaitley said while presenting Union Budget 2015-16 in the Lok Sabha on Saturday, 28 February 2015. Banks with foreign investment cap of below 74% would be able to attract more foreign investment.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.835, compared with its close of 61.83 during the previous trading session on Friday, 27 February 2015.
Brent crude oil futures edged lower after previous trading session's sharp rally. Brent for April settlement was off 37 cents at $62.21 a barrel. The contract had jumped $2.53 a barrel or 4.21% to settle at $62.58 a barrel during the previous trading session on Friday, 27 February 2015.
The Government of India and the Reserve Bank of India (RBI) have signed an agreement on monetary policy framework whereby the two sides have officially decided inflation targeting by the RBI. A document dated 20 February 2015 published on the finance ministry's website today, 2 March 2015, showed that the two sides have set consumer price inflation target of 4% with a band of plus or minus 2 percentage points for the financial year 2016-17 and all subsequent years. The RBI will first aim to have consumer inflation fall below 6% by January 2016. The RBI governor will determine the main lending rate viz. the repo rate and any other measures needed to achieve the inflation target. The central bank will be deemed to have missed its target if consumer inflation is at more than 6% for three consecutive quarters, starting from the financial year 2015-16. The central bank will also be deemed to have missed its target if consumer inflation is less than 2% for three consecutive quarters, starting from the financial year 2016-17. If the central bank fails to meet the inflation target, it will have to submit a report to the Government of India stating therein the reasons for the RBI's failure to achieve the inflation target, the remedial actions proposed to be taken by the RBI and an estimate of the time-period within which the inflation target will be achieved pursuant to the timely implementation of the proposed remedial measures.
Meanwhile, the outcome of a survey showed that Indian manufacturing activity expanded at its slowest pace in five months in February, with output and new orders expanding at softer rates than those seen in the past four months. The HSBC Manufacturing Purchasing Managers' Index, compiled by Markit, fell for the second consecutive month, to 51.2 in February from 52.9 in January. A reading above 50 separates growth from contraction. The moderation in the growth rate was evident across the three monitored market groups. Subsequently, employment decreased, reversing the marginal rise seen in January. Output charge inflation was historically muted as some manufacturers offered discounts due to a competitive environment. Furthermore, costs fell for the first time in almost six years. On a positive note, foreign orders rose at a strong and accelerated pace, while the PMI remained in positive territory. These factors brighten the prospects for a rebound in output and employment in coming months, said Pollyanna De Lima, Economist at Markit.
Meanwhile, global credit rating agency Standard and Poor's reportedly said today, 2 March 2015, that a relatively heavy general government debt burden and large budgetary subsidies could constrain its sovereign credit ratings on India. The rating agency said that India's budget for 2015/16 highlighted the government's commitment to keeping the fiscal deficit low.
Finance Minister Arun Jaitley provided a thrust on the infrastructure sector, sharply increased the government's capital expenditure for 2015-16 and announced a road map for cut in corporate tax rate by five per cent over four years when he presented Union Budget 2015-16 in parliament on Saturday, 28 February 2015.
Asian stock markets edged higher today, 2 March 2015, buoyed by an interest rate cut in China. Key indices in China, Japan, Hong Kong, South Korea, and Indonesia were up 0.09% to 0.55%. Key indices in Taiwan and Singapore were off 0.14% to 0.22%.
China's central bank cut benchmark interest rates for the second time in three months as disinflation gives room to step up support for the nation's slowing economy. The People's Bank of China on Saturday, 28 February 2015, cut the benchmark interest rate by 25 basis points (bps) to 5.35% and reduced the benchmark saving rate by a similar margin to 2.5%.
HSBC's final reading of China's manufacturing sector in Febuary came in at 50.7, much higher than the flash reading of 50.1 and the official February reading announced over the weekend, latest data today, 2 March 2015 showed.
Trading in US index futures indicated that the Dow could gain 22 points at the opening bell today, 2 March 2015.
In Europe, German finance minister Wolfgang Schaeuble reportedly softened his hard-line attitude towards Greece, saying its new Left-wing Syriza government needs a bit of time but appears to be able to work towards resolving its debt crisis.
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