The market may edge higher in early trade on firm Asian stocks. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could gain 28 points at the opening bell. Tata Steel, Tech Mahindra and Asian Paints are schedule to announce results today, 14 May 2014.
L&T after market hours on Tuesday, 13 May 2014, said that the strike at the company's Hazira campus has been called off and workmen have reported to work.
Power Grid Corporation of India announced after market hours on Tuesday, 13 May 2014 that the Board of Directors of the company at its meeting held on 13 May 2014, have approved four investment approvals worth Rs 1776.72 crore.
With reference to the news item appearing in the news channel regarding "The Company wins order to supply coal to NTPC Power Plant", Adani Enterprises after market hours on Tuesday, 13 May 2014, clarified that NTPC has not placed any order on the company in the current financial year i.e. on or after 1 April 2014.
Bank stocks will be in focus as a committee appointed by the Reserve Bank of India (RBI) proposed on Tuesday the government should cut its stakes in state banks to below 50% and establish "fully empowered" bank boards.
The Committee to Review Governance of Boards of Banks in India is constituted by the RBI Governor on 20 January, 2014 and is headed by ex-chairman of Axis Bank PJ Nayak. Nayak panel recommendations on governance of banks' boards was to remove external constraints on state-run banks, upgrade quality of board deliberation of state-run banks, create bank investment company to hold stakes in state-run banks, constitute bank boards bureau for selection of top management, uniform licensing regime desirable, allow profit-based commissions for non-executive directors and maximum age of whole-time directors should be 65.
The committee proposed that the Centre's holding in PSU banks be brought down to below 50%. The move is expected to help the lenders avoid constraints imposed by external vigilance by agencies such as the Central Vigilance Commission and the Right to Information Act, 2005.
The trade-off is worth grasping, as more competitive public sector banks will enhance financial returns to the government with no effective dilution of control, it said. The panel has also recommended the adoption of the model followed in countries such as Singapore where there are intermediate investment companies that hold equity in banks.
This is the model India should aspire to, and vigilance is needed to ensure that such a company is not just a bureaucratic layer in an otherwise unchanged style of the government's control of its banks, the committee said.
It added that the government should empower and also make the board of the investment company autonomous.
The committee suggested that the PSU banks should be brought under the ambit of the Companies Act.
The Expert Committee examined the working of banks' boards including whether adequate time is devoted to issues of strategy, growth, governance and risk management; to review central bank regulatory guidelines on bank ownership, ownership concentration and representation in the board; to analyse the representation on banks' boards to see whether the boards have the appropriate mix of capabilities and the necessary independence to govern the institution, and to investigate possible conflicts of interest in board representation, including among owner representatives and regulators.
The next major trigger for the market is the outcome of Lok Sabha elections. The counting of votes will take place on Friday, 16 May 2014, and the results are expected on the same day. Various exit polls on Monday, 12 May 2014, predicated that the NDA will be able to form the next government at the Centre by winning 272 or more seats or will bag just few seats lower than the majority 272 seats needed to form the next government in a house of 543. The exit polls were out on Monday evening after the 9th and the final phase of Lok Sabha elections got over at 18:00 IST on that day. If exit polls prove correct, NDA's prime ministerial candidate Narendra Modi will become India's next Prime Minister. The term of the current Lok Sabha ends on 1 June and the new House has to be constituted by 31 May.
Modi, the prime ministerial candidate from the NDA, is perceived as being more business-friendly and decisive by the business community. As chief minister for the fast-growing state of Gujarat, Modi has built a reputation for getting things done. While campaigning for the Lok Sabha elections, Modi has pledged to reinvigorate the country's manufacturing sector, create more jobs and overhaul the country's inadequate infrastructure. Investors are hoping that the BJP-led government will be better at getting things done and more business-friendly than the current Congress-party-led coalition government.
Various post-poll surveys on Monday predicted an easy win for NDA with CNN-IBN forecasting about 280 seats, Headlines Today 272 seats, India TV 289 seats, ABP 281 and News 24 predicting up to 340 seats for NDA in a house of 543. The predictions of an NDA victory are primarily based on survey results showing BJP and its allies doing exceedingly well in Uttar Pradesh, Bihar and Maharashtra, which account for 168 seats and also in BJP's strongholds of Gujarat, Madhya Pradesh, Rajasthan and Chhattisgarh. Only Times NOW gave NDA cause for worry by not predicting a simple majority. It gave BJP and its allies 249-265 seats, still putting NDA in a comfortable zone, requiring just 20 or so seats from post-poll allies.
Investors are hoping that when the results of the Lok Sabha elections are out on Friday, 16 May 2014, a stable government which will complete its full term of five years in office comes to power. A party or a pre-poll alliance will need 272 MPs to form government at the Centre, which is a simple majority in 543-member Lok Sabha. Investors are expecting measures for revival of the economy, business-friendly policies and good governance from the new government that comes to power after the elections. Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis.
The BJP in its Lok Sabha polls manifesto has promised more business-friendly policies if the party comes to power after elections. The BJP has said that measures for the revival of the economy are its priority if the party comes to power after elections. India's GDP growth has slowed to a decade low of below 5%. The GDP grew 4.7% in Q3 December 2013.
The rate of inflation based on the wholesale price index is expected to remain at 5.7% in April 2014, at the same level it was in March 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil data on inflation based on the wholesale price index (WPI) for April 2014 at about 12:00 noon tomorrow, 15 May 2014.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.
Key benchmark indices on Tuesday, 13 May 2014, extended their recent strong gains after exit polls on Monday, 12 May 2014, signaled that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) would win a majority in the Lok Sabha elections which concluded on Monday, 12 May 2014. The S&P BSE Sensex garnered 320.23 points or 1.36% to settle at 23,871.23 on that day, a record closing high for the barometer index.
Foreign institutional investors (FIIs) bought shares worth a net Rs 2026.23 crore on Tuesday, 13 May 2014, as per provisional data from the stock exchanges.
Asian stocks rose on Wednesday as US stocks held at record highs and investors weighed earnings. Key benchmark indices in Indonesia, South Korea, Taiwan, Singapore and Hong Kong were up 0.12% to 0.93%. Key benchmark indices in China and Japan fell 0.31% to 0.34%.
China's central bank called on the nation's biggest lenders to accelerate the granting of mortgages, a sign that developers' prices cuts and incentives alone won't boost a slumping housing market and economy. The People's Bank of China told 15 banks yesterday to improve efficiency of service, give timely approval and distribution of mortgages to qualified buyers. It also urged lenders to give priority to families buying their first homes and strengthen their monitoring of credit risks.
US stocks ended mostly higher Tuesday, with the Dow Jones Industrial Average and the S&P 500 index ending at record highs.
US retail sales increased 0.1% in April following a revised 1.5% jump in March that marked the biggest gain in four years, Commerce Department figures showed in Washington.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 17-18 June 2014. The Fed on 30 April 2014 said after a monetary policy review that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends. The FOMC also reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve.
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