Investors cheered the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate as key equity benchmark indices surged. But, the benchmark indices pared strong intraday gains towards the fag end of the trading session as European stocks reversed intraday gains after Switzerland's central bank the Swiss National Bank shocked global markets by ditching its currency ceiling against the euro and cutting its deposit rate to negative 0.75%. The barometer index, the S&P BSE Sensex, the 50-unit CNX Nifty, both, pared gains after hitting their fresh highest level in more than five weeks. The Sensex provisionally settled below the psychological 28,000 level after moving past that mark in afternoon trade. The Sensex was provisionally up 646.98 points or 2.37% at 27,993.80. The market breadth indicating the overall health of the market was positive. The BSE Mid-Cap index was up 1.21%. The BSE Small-Cap index was up 1.01%.
The RBI surprised financial markets by announcing a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled monetary policy review today, 15 January 2015, morning. Reacting to the RBI's surprise rate cut, the finance ministry today, 15 January 2015, said that along with other policy actions already taken by the government and other that are under its consideration, the RBI move represents one more step towards reviving investment and realizing India's medium term growth potential.
State-run United Bank of India announced a 25 basis points reduction in its base rate after the RBI's surprise repo rate cut. The bank cut its base rate to 10% from 10.25% with effect from 1 February 2015.
Realty, auto and bank stocks surged after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. Bajaj Auto advanced after announcing Q3 December 2014 results.
Foreign portfolio investors sold shares worth a net Rs 69.74 crore yesterday, 14 January 2015, as per provisional data.
In overseas markets, European stocks reversed intraday gains after Switzerland's central bank the Swiss National Bank shocked global markets by ditching its currency ceiling against the euro and cutting its deposit rate to negative 0.75%. Asian stocks rose after India cut interest rates. US stocks fell in choppy trading session yesterday, 14 January 2015, after surprisingly weak December retail sales data, which cast doubt on the pace of economic growth in the world's biggest economy.
In the foreign exchange market, the rupee strengthened past 62 against the dollar after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015.
Brent crude futures edged lower, reversing some of the big rally in prices recorded yesterday, 14 January 2015.
As per provisional figures, the S&P BSE Sensex was up 646.98 points or 2.37% at 27,993.80. The index jumped 847.79 points at the day's high of 28,194.61 in late trade, its highest level since 8 December 2014. The index rose 356.88 points at the day's low of 27,703.70 in early trade.
The CNX Nifty was up 216.60 points or 2.62% at 8,494.15, as per provisional figures. The index hit a high of 8,527.10 in intraday trade, its highest level since 8 December 2014. The index hit a low of 8,380.55 in intraday trade.
The BSE Mid-Cap index was up 126.78 points or 1.21% at 10,598.69. The BSE Small-Cap index was up 113.02 points or 1.01% at 11,314.10. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,694 shares advanced and 1,200 shares declined. A total of 112 shares were unchanged.
The total turnover on BSE amounted to Rs 4293 crore, higher than Rs 3205.62 crore yesterday, 14 January 2015.
Bharti Airtel gained 0.43%. The company today, 15 January 2015, announced that it has successfully integrated yuMobile customers into its network. The process which started in August 2014 has seen the 2.55 million yuMobile customers successfully integrated into the Airtel network. Airtel now consolidates its position as the second largest mobile operator in Kenya with a combined customer base of over 8 million and a 26.6% customer market share.
Bharti Airtel said that yuMobile customers will retain their existing mobile numbers, continue to enjoy their yuMobile services including Ksh3 yuMobile calls to other networks, free yuMobile-toyuMobile calls, SMS rates at Ksh1 yuMobile-to-yuMobile and Ksh2 yuMobile to other networks and valued added services.
Realty stocks surged after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. Oberoi Realty (up 1.56%), Housing Development and Infrastructure (HDIL) (up 18.66%), Unitech (up 6.73%), DLF (up 8.96%), Anant Raj (up 7.85%), D B Realty (up 2.38%), Godrej Properties (up 3.6%), Prestige Estates (up 11.46%), Sobha (up 7.81%), and Sunteck Realty (up 1.72%), edged higher.
Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance.
Bank shares rose after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. Among private sector banks, ICICI Bank (up 4.11%), Axis Bank (up 2.44%), IndusInd Bank (up 1.54%), Kotak Mahindra Bank (up 0.3%) and HDFC Bank (up 2.56%), edged higher.
Yes Bank rose 2.82% after the bank said before market hours that the Board of Directors of the bank at its meeting held yesterday, 14 January 2015, approved the proposal to seek approvals from the regulators for setting up Asset Management Business and Primary Dealership business considering that the bank has established a distribution network of 600 branches as of 31 December 2014 across metro, urban, semi-urban and rural centers with a pan India distribution presence spreading across all states and union territories of the country.
With a view to complete the overall bouquet of financial products to its customer franchise, the bank plans to set up an Asset Management Company (AMC), primarily to channelize the savings of retail investors in equity and debt capital markets. This will complement the bank's retail liabilities strategy, strengthen multi-product customer engagement and also allow the bank to leverage its distribution network for customer acquisition. The bank will simplify and integrate "manufacturing to distribution" of equity and debt investment products for all its customers.
The AMC will complement Yes Securities brokerage business which has now stabilized its operations and is rapidly growing its business footprint. The AMC will also complement the bank's retail strategy and help in leveraging existing infrastructure to provide the necessary retail thrust. This will allow the bank to build a holistic wealth management proposition for its customers and enable the bank to strengthen traction witnessed in building retail market share on the back of its savings account proposition.
Separately, with respect to news item captioned "Yes Bank in talks to buy Deutsche Mutual Fund", the bank clarified during market hours that as a part of the setting up of the AMC, the bank will be open to evaluating acquisition opportunities as well. There is no development of material consequence on any acquisition plans in any business as on date, Yes Bank said.
Among public sector banks, State Bank of India (up 4.28%), Union Bank of India (up 5.93%), Andhra Bank (up 3.34%), Syndicate Bank (up 3.16%), Canara Bank (up 3.8%), Bank of India (up 2.61%), Dena Bank (up 1.52%), Punjab National Bank (up 3.25%), and Bank of Baroda (up 1.88%) edged higher.
United Bank of India rose 3.69% after the state-run bank said during market hours that the Asset Liability Management Committee of the bank has announced reduction in the base rate of the bank from 10.25% to 10% effective from 1 February 2015.
Bajaj Auto rose 2.3% at Rs 2,417.95. The stock hit a high of Rs 2,435 and a low of Rs 2,359.25. Bajaj Auto's net profit fell 4.78% to Rs 861.24 crore on 10.24% growth in total income from operation (net) to Rs 5657.17 crore in Q3 December 2014 over Q3 December 2013. Bajaj Auto's EBITDA (earnings before interest, taxation, depreciation and amortization) before mark-to-market (MTM) loss and CSR spend rose 9.89% to Rs 1200 crore in Q3 December 2014 over Q3 December 2013. EBITDA margin stood at 21.1% in Q3 December 2014, unchanged from the level in the corresponding previous year period. Bajaj Auto's non-operational income fell 57.05% to Rs 95.27 crore in Q3 December 2014 over Q3 December 2013. The company's cash and cash equivalents as on 31 December 2014 stood at Rs 7568 crore, lower than Rs 8313 crore as on 30 September 2014. The result was announced during market hours today, 15 January 2015.
In the foreign exchange market, the rupee strengthened past 62 against the dollar after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. The partially convertible rupee was hovering at 61.76, compared with its close of 62.19 during the previous trading session.
Brent crude futures edged lower, reversing some of the big rally in prices recorded yesterday, 14 January 2015. Brent for February settlement, which expires today, 15 January 2015, was off $1.18 a barrel at $47.75 a barrel. The contract had jumped $2.10 a barrel or 4.5% to settle at $48.69 a barrel during the previous trading session. Brent for March settlement was off $1.42 a barrel at $48.44 a barrel.
The Reserve Bank of India (RBI) surprised financial markets by announcing a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled monetary policy review today, 15 January 2015. The RBI said inflationary pressures as measured by changes in the consumer price index have been easing since July 2014. To some extent, lower than expected inflation has been enabled by the sharper than expected decline in prices of vegetables and fruits since September, ebbing price pressures in respect of cereals and the large fall in international commodity prices, particularly crude oil. Crude prices, barring geo-political shocks, are expected to remain low over the year, RBI Governor Dr. Raghuram G Rajan said in a statement. Weak demand conditions have also moderated inflation excluding food and fuel, especially in the reading for December, Rajan said. Rajan further said that the government has reiterated its commitment to adhering to its fiscal deficit target. These factors have significantly reduced the momentum of inflation, compensating for the widely anticipated ending of favourable base effects, Rajan said. Households' inflation expectations have adapted and both near-term and longer-term inflation expectations have eased to single digits for the first time since September 2009. These developments have provided headroom for a shift in the monetary policy stance, Rajan said.
Inflation outcomes have fallen significantly below the 8% targeted by January 2015, the RBI said. On current policy settings, inflation is likely to be below 6% by January 2016, Rajan said. The RBI Governor said that further easing of monetary policy will be dependent on data that confirms continuing disinflationary pressures. Also critical would be sustained high quality fiscal consolidation as well as steps to overcome supply constraints and assure availability of key inputs such as power, land, minerals and infrastructure. The latter would be needed to ensure that potential output rises above the projected pick-up in growth in coming quarters so as to contain inflation, Rajan said.
The RBI's next monetary policy review is scheduled on 3 February 2015.
Reacting to the RBI's surprise rate cut, the finance ministry today, 15 January 2015, said that the rate cut will provide a fillip to the economy directly by increasing the private sector's ability and willingness to spend. It should also help indirectly by improving balance sheet of the corporate sector and banks, facilitating an increase in the demand for and supply of credit, the Ministry of Finance said in a statement. The finance ministry further stated that along with other policy actions already taken by the government and other that are under its consideration, this move represents one more step towards reviving investment and realizing India's medium term growth potential.
European stocks reversed intraday gains today, 15 January 2015, after Switzerland's central bank the Swiss National Bank shocked global markets by ditching its currency ceiling against the euro and cutting its deposit rate to negative 0.75%. Key benchmark indices in France and UK were off 0.04% to 0.41%. In Germany, the DAX index was up 0.2%
Switzerland's central bank Swiss National Bank today, 15 January 2015, said it is scratching its minimum exchange rate of 1.20 Swiss francs to the euro. The Swiss National Bank adopted the currency cap in 2011 to protect the country's economy, but said in a statement that "enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified", given the depreciation of the euro against the dollar has caused the Swiss franc to weaken. In its announcement, the central bank also cut the interest rate on certain sight deposit account balances to minus 0.75%, and lowered its target range for the three-month Libor range to minus 0.25% to minus 1.25%, from 0.25% to minus 0.75%.
European Central Bank (ECB) President Mario Draghi said in an interview to Germany's Die Zeit newspaper published yesterday, 14 January 2015, that the bank didn't have many options left to expand its monetary policy, an indication that officials are moving toward the launch of purchases of government bonds issued by eurozone countries.
The European Court of Justice yesterday, 14 January 2015, issued an interim decision that allows the European Central Bank to go ahead with a bond-buying program known as Outright Monetary Transactions (OMT) with certain conditions.
Meanwhile, uncertainties over the status of Greece including its possible exit from the eurozone are likely to persist until the early election in the country later this month. Greece is set to hold snap elections on 25 January 2015 after it failed to elect a new president in a third round of voting late last year. The Greek leftist opposition party Syriza leads opinion polls ahead of national elections on 25 January 2015. Syriza has demanded debt relief from the eurozone and promised to roll back the austerity and reform measures that the country has undertaken in exchange for the international bailout that the government negotiated in 2012.
Asian stocks rose today, 15 January 2015, after India cut interest rates. Key benchmark indices in China, Indonesia, Singapore, Hong Kong, South Korea, and Japan were up 0.03% to 3.54%. Taiwan's Taiwan Weighted Average was off 0.16%.
In Japan, Bank of Japan Governor Haruhiko Kuroda reportedly said that a falloff in demand after an increase in the sales tax in April was diminishing, an indication that the economy may be getting over the sluggishness that pushed it into recession.
In China, the latest data showed that Chinese banks issued 697.3 billion yuan ($112.5 billion) worth of new loans in December, down from 852.7 billion yuan in November. Total social financing, a broader measurement of credit in the economy, rose to 1.69 trillion yuan in December from 1.15 trillion yuan in November. China's foreign exchange reserves stood at $3.84 trillion at the end of December, down from $3.89 trillion at the end of September.
Trading in US index futures indicated that the Dow could slide 41 points at the opening bell today, 15 January 2015. US stocks fell yesterday, 14 Janaury 2015, as a deepening commodities rout and an unexpected drop in American retail sales fueled concern over growth.
US retail sales dropped 0.9% in December, the biggest slide since January 2014, following a 0.4% gain in November that was smaller than previously estimated, according to the Commerce Department.
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