Key benchmark indices moved into positive zone from negative zone in mid-afternoon trade as European markets edged higher in early trade there. The barometer index, the S&P BSE Sensex, was up 30.72 points or 0.15%, up 183.89 points from the day's low and off 57.18 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
Maruti Suzuki India gained after the company announced strong Q3 results. In the pharma pack, IPCA Laboratories scaled record high after declaring strong Q3 result during trading hours today, 28 January 2014.
Key benchmark indices edged higher in early trade on firm Asian stocks. Key benchmark indices trimmed gains after hitting fresh intraday high in morning trade. Volatility ruled the roost in mid-morning trade as the key benchmark indices reversed intraday gains after the Reserve Bank of India (RBI) raised its main lending rate viz. the repo rate by 25 basis points to 8% after Third Quarter Review of Monetary Policy for 2013-14 today, 28 January 2014. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than 8-1/2 weeks. The RBI made the monetary policy announcement at 11:00 IST. Key benchmark indices languished in red in early afternoon trade. The Sensex trimmed losses in afternoon trade. Key benchmark indices moved into positive zone from negative zone in mid-afternoon trade as European markets edged higher in early trade there.
Foreign institutional investors (FIIs) sold shares worth a net Rs 1334.21 crore on Monday, 27 January 2014, as per provisional data from the stock exchanges.
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month January 2014 series to February 2014 series. The January 2014 F&O contracts expire on Thursday, 30 January 2014.
At 14:15 IST, the S&P BSE Sensex was up 30.72 points or 0.15% to 20,738.17. The index lost 153.17 points at the day's low of 20,554.28 in mid-morning trade, its lowest level since 28 November 2013. The index gained 87.90 points at the day's high of 20,795.35 in mid-morning trade.
The 50-unit CNX Nifty was up 5.60 points or 0.09% to 6,141.45. The index hit a low of 6,085.95 in intraday trade, its lowest level since 28 November 2013. The index hit a high of 6,163.60 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,250 shares rose and 1,118 shares dropped. A total of 168 shares were unchanged.
Among the 30-share Sensex pack, 16 stocks declined and rest of them gained.
Axis Bank (down 2.29%), Sun Pharmaceutical Industries (down 1.62%) and Infosys (down 1.46%) edged lower from the Sensex pack.
Maruti Suzuki India gained after the company announced strong Q3 results. The stock was up 2.61% at Rs 1745.80. The company's net profit rose 35.9% to Rs 681.10 crore on 3% fall in net sales (net of excise) to Rs 10619.70 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced during market hours today, 28 January 2014. Higher localization, favorable foreign exchange and cost reduction initiatives by the company contributed significantly to the growth in bottom line in Q3 December 2013, Maruti Suzuki India.
Maruti Suzuki India's total sales fell 4.4% to 2.88 lakh units Q3 December 2013 over Q3 December 2012. Exports dropped 38.6% to 19,966 units in Q3 December 2013 over Q3 December 2012. Maruti said that the company's market share in domestic market stood at 42.8% in Q3 December 2013, gaining 2.5% from Q3 December 2012.
IPCA Laboratories rose 2.52% to Rs 787.80 after hitting a record high of Rs 802 in intraday trade. The company's net profit rose 58% to Rs 139.12 crore on 19% increase in total income to Rs 838.37 crore in Q3 December 2013 over Q3 December 2012. The company announced the result during trading hours today, 28 January 2014.
IPCA Laboratories' EBITDA (earnings before interest, taxes, depreciation and amortization) rose 37% to Rs 217.34 crore in Q3 December 2013 over Q3 December 2012. EBITDA margin stood at 26.09% in Q3 December 2013, higher than 22.59% in Q3 December 2012.
Escorts rose 2.64% after net profit rose 61.9% to Rs 45.56 crore on 12.5% rise in net sales to Rs 1154.45 crore in the quarter ended December 2013 over the quarter ended December 2012. The company announced the result at the fag end of the trading session on Monday, 27 January 2014.
Escorts said the company has extended its financial year by 6 months i.e. up to 31 March 2014 as approved by the board of directors in their meeting held on 2 October 2013. The board had approved the company to extend its financial year to align with the April-March fiscal calendar. Accordingly, financial year 2012-13 will close on 31 March 2014.
Despite a challenging economic environment that included delay in approval of projects, the construction equipment volume rose sequentially by 11.5% to 737 units in the quarter ended December 2013 as compared to 661 in the quarter ended September 2013, the company said.
Indian government bond prices rose after Reserve Bank of India (RBI) Governor Dr. Raghuram Rajan said after the central bank's surprise hike in repo rate that once inflation comes down to comfortable levels, the RBI would have some room to cut rates. He made the comments at a post-policy press conference. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.7528%, lower than its close of 8.7651% on Monday, 27 January 2014. Bond yield and bond prices move in opposite direction. Bond supply will return after a two-week break with the RBI announcing Rs 14000-crore debt sale for Friday, 31 January 2014. The RBI surprised markets by raising its main lending rate viz. the repo rate by 25 basis points to 8% after Third Quarter Review of Monetary Policy for 2013-14 today, 28 January 2014.
In the foreign exchange market, the rupee edged higher against the dollar the Reserve Bank of India (RBI) said that the recent resumption of portfolio flows, both equity and debt, alongside the pick-up in FDI and external commercial borrowings that is underway should help finance the current account deficit comfortably during the current financial year. The partially convertible rupee was hovering at 62.71, compared with its close of 63.10/11 on Monday, 27 January 2014. The RBI said that foreign exchange reserves have been rebuilt since September 2013 and that oil marketing companies have been buying foreign exchange in the market to repay the Reserve Bank of India when their swaps come due. Despite a significantly more comfortable external position than in the summer of 2013, both fiscal and monetary authorities need to continue their efforts at macroeconomic stabilisation, the RBI said.
The Reserve Bank of India (RBI) surprised markets by raising its main lending rate viz. the repo rate by 25 basis points to 8% after Third Quarter Review of Monetary Policy for 2013-14 today, 28 January 2014. Consequently, the reverse repo rate under the LAF stands adjusted at 7% and the marginal standing facility (MSF) rate and the Bank Rate at 9%, the RBI said. The central bank kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL).
While retail inflation measured by the consumer price index (CPI) declined significantly on account of the anticipated disinflation in vegetable and fruit prices, it remains elevated at close to double digits, the RBI said. Moreover, inflation excluding food and fuel has also been high, especially in respect of services, indicative of wage pressures and other second round effects. In terms of the wholesale price index (WPI), headline inflation eased to a four-month low in December on the back of a sharp decline in vegetable and fruit prices. Non-food manufactured products (NFMP) inflation, however, rose in December on an uptick in prices of chemicals, non-metallic minerals and paper products. Hardening prices of services and key intermediates seen in conjunction with rising bank credit, increase in order books, pick-up in capacity utilisation and the decline in inventories of raw materials and finished goods in relation to sales suggests that aggregate demand pressures are still imparting an upside to overall inflation. The RBI said that it is critical to address these risks to the inflation outlook resolutely in order to stabilise and anchor inflation expectations, even while recognizing that the economy is weak and substantial fiscal tightening is likely in Q4 March 2014.
In the Mid-Quarter Review on 18 December 2013, the policy decision was to wait for more data before acting. With the subsequent substantial fall in food prices, especially of vegetables, headline inflation has fallen significantly. Some of these effects will continue into the next round of data readings, the RBI said. CPI inflation excluding food and fuel has, however, remained flat and WPI inflation excluding food and fuel has risen, the central bank said in a statement.
The Dr. Urjit Patel Committee has indicated a "glide path" for disinflation that sets an objective of below 8% CPI inflation by January 2015 and below 6% CPI inflation by January 2016. The Reserve Bank of India's baseline projections set out in the accompanying Review of Macroeconomic and Monetary Developments for Q3 of 2013-14 indicate that over the ensuing 12-month horizon, and with the current policy stance, there are upside risks to the central forecast of 8%, the RBI said. An increase in the policy rate will not only be consistent with the guidance given in the Mid-Quarter Review but also will set the economy securely on the recommended disinflationary path, the RBI said. The extent and direction of further policy steps will be data dependent, though if the disinflationary process evolves according to this baseline projection, further policy tightening in the near term is not anticipated at this juncture, the central bank said in a statement. RBI Governor Dr. Raghuram Rajan said in a statement that if inflation eases at a pace that is faster than the RBI currently anticipates and if that reduction is expected to be sustained, the Reserve Bank of India will have room to become more accommodative.
If policy actions succeed in delivering the desired inflation outcome, real GDP growth can be expected to firm up from a little below 5 per cent in 2013-14 to a range of 5 to 6 per cent in 2014-15, with risks balanced around the central estimate of 5.5 per cent, the RBI said. A pick-up in investment in an environment in which external demand continues to be supportive of export performance could impart an upside to this forecast, the RBI said.
The Reserve Bank is engaged in active management of liquidity to offset frictional and structural pressures so that there is adequate credit flow to the supply side of the economy, the central bank said.
Despite a significantly more comfortable external position than in the summer of 2013, both fiscal and monetary authorities need to continue their efforts at macroeconomic stabilisation, the RBI said.
Since the Mid-Quarter Review of December 2013, the global recovery is gaining traction, led by the strengthening of the US economy, but it is still uneven and subdued in the Euro area and Japan, and a slowdown in China seems to be underway, the RBI said. Notwithstanding the boost from stronger external demand, uncertainty continues to surround the prospects for some emerging economies, with domestic fragilities getting accentuated. Financial market contagion is a clear potential risk, the RBI said.
The RBI said that some loss of momentum of growth in India is expected in Q3 December 2013, despite a strong pick-up in rabi sowing. Industrial activity remains in contractionary mode, mainly on account of manufacturing, which declined for the second month in succession during Q3. Consumption demand continues to weaken and lacklustre capital goods production points to stalled investment demand. Fiscal tightening through Q3 and Q4 is likely to exacerbate the weakness in aggregate demand. Lead indicators of services suggest a subdued outlook, barring some pick-up in transport and communication activity.
Governor Dr. Rajan said that elevated levels of inflation erode household budgets and constrict the purchasing power of consumers. This, in turn, discourages investment and weakens growth. High inflation weakens the rupee, he said. Inflation is also a tax that is grossly inequitable, falling hardest on the very poor, Dr. Rajan said. It is only by bringing down inflation to a low and stable level that monetary policy can contribute to reviving consumption and investment in a sustainable way, Dr. Rajan said. The so-called trade-off between inflation and growth is a false trade-off in the long run, he said. "It is possible to bring inflation under control without a substantial sacrifice of short term growth, provided we do what is necessary, and are patient," Dr. Rajan said in a statement.
European stocks edged higher on Tuesday, 28 January 2014, as miners rose after a broker upgrade and banks recovered from recent sharp losses. Key benchmark indices in UK, France and Germany were up 0.26% to 0.55%.
Asian stocks rose on Tuesday, 28 January 2014, before the Federal Reserve meets to discuss a further reduction in stimulus. Key benchmark indices in Taiwan, Indonesia, Singapore, South Korea and China rose by 0.26% to 0.38%. Key benchmark indices in Hong Kong, Japan and Taiwan fell 0.07% to 1.58%.
Profit at China's industrial companies increased 6 percent in December from a year earlier, after rising 9.7 percent in the previous month, the National Bureau of Statistics said today, 28 January 2014.
Thailand's manufacturing production decreased 6.2 percent in December from a year earlier, according to a report today, 28 January 2014.
Trading in US index futures indicated that the Dow could advance 87 points at the opening bell on Tuesday, 28 January 2014. US stocks edged lower in a volatile session on Monday, 27 January 2014, as worries over emerging-markets currencies unsettled investors. Stocks began the day on a higher note following upbeat results from Caterpillar, but fell after home sales data showed a larger drop in December than anticipated.
Sales of new single-family homes fell in December, but the whole of 2013 saw the highest sales level in five years, the US government reported Monday, 27 January 2014. Sales of new single-family homes dropped 7% in December due to harsh winter weather. The median price of new homes ticked up in December and for 2013, the median price hit $265,800, up 8.4% from the prior year, the strongest annual growth since 2005.
A two-day monetary policy meeting of the Federal Open Market Committee (FOMC) begins today, 28 January 2014. Federal Reserve officials have been scrutinizing US economic data to determine the timing and pace of reductions to asset purchases. The central bank decided at its December gathering to begin cutting its monthly bond buying by $10 billion to $75 billion.
In Turkey, the country's central bank on Monday, 27 January 2014, said it will "take the necessary policy measures for price stability" at a meeting on Tuesday, 28 January 2014. The announcement came after the currency's decline.
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