Indian stocks made a strong comeback from an initial setback triggered by weakness in Asian stocks and steep losses for US stocks on Monday, 3 February 2014. The market breadth, indicating the overall health of the market turned positive from negative in late trade. Intraday recovery in European shares and gains in US index futures which pointed to a recovery in US stocks later in the global day aided intraday recovery on the domestic bourses after the barometer index, the S&P BSE Sensex, hit its lowest level in nearly 17 weeks below the psychological 20,000 level and the 50-unit CNX Nifty hit its lowest level in nearly 17 weeks below the psychological 6,000 level. The Sensex was provisionally up 44.94 points or 0.22%, up close to 290 points from the day's low.
IT stocks edged lower on weak economic data in US. Realty shares edged higher. Bank stocks gained. Index heavyweight and cigarette maker ITC rose in volatile trade.
Key benchmark indices edged lower in early trade on weak Asian stocks and after sharp decline in US stocks on Monday, 3 February 2014. The 50-unit CNX Nifty fell below the psychological 6,000 level. The Sensex and the Nifty, both, hit their lowest level in almost 17 weeks. The Sensex trimmed intraday losses in mid-morning trade. The barometer index regained the psychological 20,000 level. The Sensex languished in red in early afternoon trade. Key benchmark indices traded off the day's low in afternoon trade. The Sensex moved into positive zone from negative zone in mid-afternoon trade. The Nifty regained the psychological 6,000 level. Key benchmark indices alternately swung between the positive and negative terrain in late trade.
As per provisional figures, the S&P BSE Sensex was up 44.94 points or 0.22% to 20,254.20. The index rose 46.26 points at the day's high of 20,255.52 in late trade. The index tumbled 246.14 points at the day's low of 19,963.12 in early trade, its lowest level since 9 October 2013.
The CNX Nifty was up 9.55 points or 0.16% to 6,011.35, as per provisional figures. The index hit a high of 6,017.80 in intraday trade. The index hit a low of 5,933.30 in intraday trade, its lowest level since 9 October 2013.
The S&P BSE Mid-Cap index rose 26.86 points or 0.43% at 6,284.33. The BSE Small-Cap index rose 17.59 points or 0.28% at 6,251.33. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 1801 crore, higher than Rs 1747.45 crore on Monday, 3 February 2014.
The market breadth, indicating the overall health of the market turned positive from negative in late trade. On BSE, 1,268 shares rose and 1,231 shares fell. A total of 149 shares were unchanged.
Bharti Airtel (up 3.28%), Tata Motors (up 2.64%), and NTPC (up 3.25%) edged higher from the Sensex pack.
IT stocks edged lower on weak economic data in the US, the biggest outsourcing market for the Indian IT firms. Infosys (down 1.45%), TCS (down 1.58%), Wipro (down 1.93%), and HCL Technologies (down 3.42%) declined. Tech Mahindra rose 0.38%.
Realty shares edged higher. HDIL (up 4.36%), Unitech (up 2.6%), DLF (up 0.11%) and Sobha Developers (up 0.49%) gained.
Idea Cellular jumped 7.52%. The Department of Telecommunications (DoT) has on 1 February 2014 transferred the licenses for Punjab and Karnataka service areas held by erstwhile Spice Communications to Idea. This is subject to final outcome of Idea petition at TDSAT challenging penalties imposed by DoT in connection with acquisition of erstwhile Spice which remain stayed, Idea Cellular said in a statement issued today, 4 February 2014. Spice Communications was merged with Idea Cellular with effect from 1 March 2010. The merger was reconfirmed vide a Delhi High Court Division Bench order dated 13 July 2012.
The long pending issue of transfer of Punjab and Karnataka licenses of erstwhile Spice pending since March 2010, thus now stands resolved, Idea Celllur said. The transfer of licenses would enable Idea, the commercial use of 3G spectrum won by it in 2010 auction conducted by DoT and for which it had paid Rs 322 crore to the DoT, Idea Cellular said.
Reliance Infrastructure rose 0.78%. Tata Power Company gained 0.14%.
The Aam Aadmi Party (AAP) led Delhi state government has asked state's power regulator to scrap the licences of two electricity distribution companies in the state viz. BSES Rajdhani Power and BSES Yamuna Power, both units of billionaire Anil Ambani-led Reliance Infrastructure, if they fail to supply power to the city. In a letter to P.D. Sudhakar, chairman of Delhi Electricity Regulatory Commission, Delhi's Power Secretary Puneet Goel asked the regulator to suspend the licenses if it finds the two companies won't be able to supply power in the city. BSES Rajdhani Power and BSES Yamuna Power have been put on notice by state-run power producer NTPC for nonpayment of dues. NTPC is threatening to cut power supplies to the companies from 11 February 2014, if the dues aren't paid. Blackouts could cover most of the capital and last for up to 10 hours. Mr. Goel said if their distribution licenses are going to be suspended then the regulator also needs to quickly start the process of appointing government officers to run the two companies.
Delhi Chief Minister Arvind Kejriwal last month asked private electricity distributors -- which includes Tata Power Delhi Distribution as well as the two BSES companies -- to open their books for an audit by the Comptroller and Auditor General. The distributors have challenged this demand in the Delhi High court as they say their books are already audited by competent authorities.
The AAP came into power in December promising to cut electricity tariffs while providing a regular power supply. It has already announced a 50% cut in electricity tariff for a small percentage of consumers who use little power. The distribution companies will be reimbursed by the Delhi government for the tariff cuts.
Index heavyweight and cigarette maker ITC rose 1.61% to Rs 325.65. The stock hit high of Rs 325.90 and low of Rs 316.35.
Bank stocks gained. Among PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank gained 1.38% to 3.63%.
State Bank of India rose 1.99% to Rs 1519.50, with the stock reversing initial losses. The state-run bank announced after market hours on Monday, 3 February 2014, that in respect of the issue of equity shares to Qualified Institutional Buyers in terms of Chapter VIII of the ICDR Regulations, the duly authorized Committee of Directors of the bank for the QIP (the Committee) has, in its meeting held on 3 February 2014, decided to issue and allot 5.13 crore shares at a price of Rs 1,565 per share (including a premium of Rs 1,555 per share), aggregating Rs 8031.64 crore.
HDFC Bank rose 1.29%. ICICI Bank gained 0.74%. AXIS Bank rose 0.13%.
Kotak Mahindra Bank rose 1.6%. The private sector bank announced after market hors on Monday, 3 February 2014, that it has raised interest rates on domestic term deposits of less than Rs 1 crore for select tenor buckets by upto 25 basis points (bps), with effect from 6 February 2014. The bank now offers 9.25% per annum (p.a.) for the 390 day deposit and 9% p.a. for deposits of 181 days-269 days tenor. Senior citizens deposits of less than Rs 1 crore enjoy an additional 50 basis points across maturities. Kotak Mahindra Bank attributed its decision to raise the deposit rates to hike in key policy rates announced by the Reserve Bank of India after monetary policy review on 28 January 2014.
Whirlpool of India rose 3.68% after net profit jumped 111.02% to Rs 21.25 crore on 8.73% growth in total income from operations to Rs 672.77 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced during trading hours today, 4 February 2014.
Bond prices rose as the government's borrowing program draws to a close and potentially boosts demand for existing debt. The finance ministry will sell a total of Rs 10000 crore of notes maturing in 2020, 2023 and 2032 on Friday, 7 February 2014, at the final auction for the year through March. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6922%, lower than its close of 8.7343% on Monday, 3 February 2014. Bond yield and bond prices move in opposite direction.
On macro front, 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.
The second part of the Winter Session of Parliament begins tomorrow, 5 February 2014. The session, subject to exigencies of business, may conclude on 21 February 2014. The UPA hopes to approve the splitting of the state of Andhra Pradesh into two states as well as a number of corruption bills during the Winter Session of Parliament.
The Finance Ministry will present the Vote-on-Account or interim budget during the Winter Session of Parliament. 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.
European stocks were off intraday low on Tuesday, 4 February 2014, after the latest data showed that euro zone producer price rose in December 2014. Key benchmark indices in Germany and UK were off 0.12% to 0.77%. France's CAC 40 index was up 0.06 points at 4,107.81.
The European Union's statistics agency Tuesday said euro zone producer prices rose 0.2% in December 2013 from November 2013, but were 0.8% lower than in December 2012. Energy prices rose most sharply over the month. Excluding energy, producer prices were flat on the month and fell 0.3% when compared with December 2012.
Asian stocks fell on Tuesday, 4 February 2014, after data showing weaker-than-expected growth in US manufacturing worsened already sour sentiment. Key benchmark indices in Hong Kong, Indonesia, Japan, Singapore and South Korea were off 0.78% to 4.18%
The stock market in Taiwan was closed for the Lunar New Year holiday. Stock markets in mainland China remain closed until 7 February 2014 for the Lunar New Year holiday.
Australia's central bank -- the Reserve Bank of Australia (RBA) -- kept its key interest rate at a record low 2.5% after a monetary policy review today, 4 February 2014. RBA also indicated that it is no longer leaning toward cutting interest rates. "In the board's judgement, monetary policy is appropriately configured ... On present indications, the most prudent course is likely to be a period of stability in interest rates," said RBA Gov. Glenn Stevens in the statement accompanying the decision.
Trading in US index futures indicated that the Dow could advance 60 points at the opening bell on Tuesday, 4 February 2014. The US stock market closed with sharp losses on Monday, 3 February 2014, after a much weaker-than-expected reading on manufacturing data as well as concerns over a slowdown in China, triggered the worst selloff in several months. The implied volatility as measured by the CBOE Vix index, which moves inversely to the S&P 500, jumped 14.6% to 21.09, a level not seen since Dec. 28 2012, when the markets confronted the fiscal cliff.
Data showed factory activity in the US expanded in January at the weakest pace in eight months as orders slumped, a sign manufacturing cooled at the start of the year along with the weather. The Institute for Supply Management's factory index decreased to 51.3 from 56.5 the prior month, the Tempe, Arizona-based group's report showed. Readings above 50 indicate expansion.
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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