Key benchmark indices edged higher in a volatile trading session as speculation of an upward revision of India's sovereign rating outlook by global rating agency S&P resurfaced after data on Thursday, 21 August 2014, showed foreign funds bought Indian bonds worth a staggering Rs 16071.97 crore (net) in a single trading session on Wednesday, 20 August 2014. The 50-unit CNX Nifty hit record high on closing basis as well as on intraday basis. The index settled above the 7,900 level for the first time. The barometer index, the S&P BSE Sensex, rose 59.44 points or 0.23% to settle at 26,419.55. IT and banking stocks led gains for key indices. The market breadth indicating the overall health of the market was negative. The Reserve Bank of India's announcement on Thursday, 21 August 2014, tightening norms related to lending against shares could curb leveraging of positions by traders.
IT stocks rose on positive economic data in US, the biggest outsourcing market for the Indian IT firms. Tech Mahindra scaled record high. Most hospitality stocks gained after the Ministry of Tourism said it has decided to simplify the hotel classification and re-classification procedure. L&T gained after the company said its water and renewable energy business secured new orders worth Rs 1283 crore in July and August 2014. Among auto shares, Mahindra & Mahindra (M&M) hit record high. PSU OMCs declined on profit taking after recent strong gains. Realty stocks edged lower. PSU bank stocks gained for the second day in a row on reports the Finance Minister Arun Jaitley has approved a draft Cabinet note, which proposes to create a holding company structure for state-run banks towards meeting their long-term capital needs. Shares of private sector banks also gained. Sugar stocks gained on reports that government has increased import duty on sugar to 25% from 15%.
Key indices retained positive zone throughout the session after the 50-unit CNX Nifty surged to fresh record high in mid-morning trade on positive global cues.
Asian stocks rose after reports on US housing and manufacturing showed the world's largest economy is strengthening. European stocks were in red as investors awaited a speech from US Federal Reserve Chair Janet Yellen which could provide cues on the timing of interest rate hike from the US central bank. Crude prices dropped on adequate oil supplies.
The S&P BSE Sensex garnered 59.44 points or 0.23% to settle at 26,419.55, its highest closing level since 19 August 2014. The index jumped 148.16 points at the day's high of 26,508.27 in mid-morning trade. The index rose 23.05 points at the day's low of 26,383.16 in afternoon trade.
The CNX Nifty garnered 22.10 points or 0.28% to settle at 7,913.20, a record closing high for the index. The index hit a high of 7,929.05 in intraday trade, a lifetime high. The index hit a low of 7,900.05 in intraday trade.
The total turnover on BSE amounted to Rs 2816 crore, lower than Rs 3289.69 crore on Thursday, 21 August 2014.
The market breadth indicating the overall health of the market was negative. On BSE, 1,547 shares declined and 1,465 shares gained. A total of 117 shares were unchanged.
The BSE Mid-Cap index garnered 20.32 points or 0.22% to settle at 9,340.87. The BSE Small-Cap index was almost unchanged at 10,298.52. Both these indices underperformed the Sensex.
Capital goods stocks were mixed. ABB (India) (down 0.55%), Bharat Heavy Electricals (Bhel) (down 0.81%), BEML (down 1.55%) and Punj Lloyd (down 2.11%) declined. Thermax (up 1.23%), Siemens (up 0.25%) and Bharat Electronics (up 1.72%) gained.
L&T edged higher in choppy trade after the company said its water and renewable energy business secured new orders worth Rs 1283 crore in July and August 2014. The stock was up 0.3% at Rs 1,536.55. The stock hit high of Rs 1,556 and low of Rs 1,530.95.
Mahindra & Mahindra (M&M) rose 0.87% to Rs 1,388.15 after hitting record high of Rs 1,395.90 in intraday trade.
PSU OMCs declined on profit taking after recent strong rally. HPCL (down 2%), BPCL (down 1.9%) and Indian Oil Corporation (IOC) (down 1.74%) declined.
PSU OMCs suffer under-recovery or revenue loss on domestic sale of diesel, LPG and kerosene at government controlled prices. The government has adopted the policy of gradually increasing diesel prices to eliminate under recovery and deregulate the diesel prices. The government has already freed pricing of petrol.
The under-recovery on High Speed Diesel (HSD) applicable for second fortnight of August 2014, effective from 16 August 2014, will go up to Rs 1.78 per litre. This was Rs 1.33 per litre during first fortnight of August 2014. In the case of PDS Kerosene and Domestic LPG, the under-recoveries for the second fortnight of August 2014 will be Rs 32.98 per litre (Rs 32.98 per litre in first fortnight) and Rs 447.87 per cylinder (Rs 447.87 per cylinder in first fortnight) respectively. Effective from 16 August 2014, PSU OMCs are incurring combined daily under-recovery of about Rs 230 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. This is higher than Rs 226 crore daily under-recoveries during first fortnight of August. The under-recoveries for the financial year 2014-15 are projected to be Rs 91665 crore while the figure was Rs 1.39 lakh crore in 2013-14.
Realty stocks edged lower. DLF (down 0.91%), Housing Development and Infrastructure (down 1.63%), D B Realty (down 2.57%), Godrej Properties (down 1.35%), and Parsvnath Developers (down 2.15%) declined. Unitech was flat.
PSU bank stocks gained for the second day in a row on reports the Finance Minister Arun Jaitley has approved a draft Cabinet note, which proposes to create a holding company structure for state-run banks towards meeting their long-term capital needs. Shares of private sector banks also gained. State Bank of India (SBI) (up 2.36%), Canara Bank (up 1.53%), Union Bank of India (up 3.71%), Indian Bank (up 0.03%), Bank of India (up 1.09%), Punjab National Bank (up 2.06%) Syndicate Bank (up 0.74%), Indian Overseas Bank (up 1.15%), Andhra Bank (up 1.85%), and Oriental Bank of Commerce (up 2.96%) gained.
As per reports, the finance ministry has approved draft Cabinet note, which proposes to create a holding company structure for state-run banks, which will consolidate the entire ownership of PSU banks into one company and will raise money in order to recapitalise various public sector banks.
Among private sector banks, HDFC Bank (up 1.8%), IndusInd Bank (up 0.03%), Yes Bank (up 1.6%), Federal Bank (up 0.2%), Kotak Mahindra Bank (up 1.55%) and Axis Bank (up 0.92%), gained. ICICI Bank fell 0.43%.
ONGC rose 0.2% on reports that a foreign brokerage has maintained buy on the stock stating that the company is a reform play and had maximum potential to gain.
IT stocks rose on positive economic data in US, the biggest outsourcing market for the Indian IT firms. Infosys (up 1.47%), and Wipro (up 1.22%) gained.
Tech Mahindra gained 3.38% to Rs 2,313 after hitting record high of Rs 2,326.80 in intraday trade.
TCS rose 1.11%. The company after market hours on Thursday, 21 August 2014, said that its TCS BaNCS customer, National Employment Savings Trust (NEST) in the UK, has crossed the 1 million member mark. TCS is NEST's IT solutions partner and scheme administrator. NEST was established under UK law as part of the UK government's workplace pension reforms that require all UK employers to enroll their eligible workforce into a qualifying workplace pension scheme and make contributions along with the employee contribution component.
HCL Technologies rose 2.59% on reports that a foreign brokerage has maintained a buy rating on the stock. In its research reports, the foreign brokerage said that concerns over slowdown seem overdone and demand environment remains decent. Near-term catalyst will be pick-up in infrastructure services, added the brokerage.
Sugar stocks gained on reports that government has increased import duty on sugar to 25% from 15%. Bajaj Hindusthan (up 5.32%), Dhampur Sugar Mills (up 2.73%), Sakthi Sugars (up 4.77%), Balrampur Chini Mills (up 2.21%), Triveni Engineering & Industries (up 3.05%), Shree Renuka Sugars (up 4.44%), Simbhaoli Sugar Mills (up 4.84%) and Dwarikesh Sugar Industries (up 7.25%) gained.
Most hospitality stocks gained after the Ministry of Tourism said it has decided to simplify the hotel classification and re-classification procedure by not seeking the licenses and clearances which are issued by various Local, State and Central Government authorities for operation of hotels. Taj GVK Hotels (up 11.49%), Indian Hotels (up 0.35%), and Royal Orchid Hotel (up 1.73%) gained. EIH (down 1.25%) and EIH Associated Hotels (down 0.85%) declined.
Henceforth, while applying for classification and re-classification, the hotels would be required to submit only the current and valid Trade license and bar license, if applicable. This was announced by the Minister of Tourism and Culture Shripad Yesso Naik in New Delhi at the National Conference of State Tourism Ministers. Naik said the step has been taken in consonance with the Prime Minister's directive to cut the red tape. He said the decision would remove unwanted procedure and speed up the classification and re-classification process.
Hotel Leelaventure jumped 4.66% after the company during market hours issued a clarification with regard to news item titled "UK's Carnival Group offers Rs 850 crore to buy Leela Chennai". The company said that the company/senior management continue to evaluate proposals to raise funds/equity by different available options and has been approached by potential investors.
Key indices gained for the second day in a row today, 22 August 2014. From a recent low of 26,314.29 on 20 August 2014, the Sensex has risen 105.26 points or 0.4% in two trading sessions. The Sensex has gained 524.58 points or 2.02% in this month so far (till 22 August 2014). The Sensex has gained 5,248.87 points or 24.79% in calendar year 2014 so far (till 22 August 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 8,970.84 points or 51.41%. The Sensex is off 111.12 points or 0.41% from record high of 26,530.67 hit on 19 August 2014.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 412.77 crore on Thursday, 21 August 2014, as per provisional data from the stock exchanges.
A news agency quoted S&P's associate director of sovereign ratings, Agost Benard calling the Indian government's target to lower the fiscal deficit a positive for the country's ratings. Speculation of an upward revision of India's sovereign outlook by global rating agency S&P has resurfaced after data on Thursday, 21 August 2014, showed foreign funds bought Indian bonds worth a staggering Rs 16071.97 crore (net) in a single trading session on Wednesday, 20 August 2014. This is the largest-ever single day purchase of Indian debt by foreign funds. S&P's current outlook on India is negative and the expectations are that it will be raised to stable as lower crude oil prices will help India in containing its fiscal deficit, current account deficit and fuel price inflation. S&P currently has its lowest investment grade rating on India, with a negative outlook.
Meanwhile, the Reserve Bank of India (RBI) has tightened norms related to lending against shares. In a notification issued on Thursday, 21 August 2014, the RBI said that non-banking finance companies (NBFCs) with asset size of Rs 100 crore and above shall maintain loan to value (LTV) ratio of 50% with regard to lending against shares. RBI further said that lending against shares by NBFCs will be restricted to Group 1 securities as collateral for loans of value more than Rs 5 lakh. The RBI also said that all NBFCs with asset size of Rs 100 crore and above shall report on-line to stock exchanges, information on the shares pledged in their favour by borrowers for availing loans.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 60.56 compared with its close of 60.6725 on Thursday, 21 August 2014.
The Reserve Bank of India in its Annual Report for the year ended 30 June 2014 released after trading hours on Thursday, 21 August 2014, said that the balance of risks around the medium-term inflation path and RBI's target of 6% consumer price inflation by January 2016 are still to the upside. The RBI said it remains committed to supporting the disinflationary process. To secure a sustainable growth of at least 7% over the medium term, microeconomic policies that improve activity levels and productivity will be needed so that they can work in tandem with a supportive macroeconomic regime with a reasonably positive real interest rate, low inflation, moderate CAD and low fiscal deficit, the RBI said.
According to RBI, an increase in interest rates in the United States may trigger a reversal in carry trade flows to emerging market and developing economies (EMDEs) and trigger higher volatility in the foreign exchange, equity and bond markets in EMDEs.
Prime Minister Narendra Modi on Thursday, 21 August 2014, said India is urbanizing rapidly, and he sees this not as a challenge but as an opportunity for economic development. The Prime Minister was addressing a gathering in Nagpur after laying the foundation stone for Nagpur metro.
European stocks slipped today, 22 August 2014, as investors awaited a speech by US Federal Reserve Chair Janet Yellen for clues about US interest-rate outlook. Key benchmark indices in UK, France and Germany were down 0.22% to 0.81%.
Asian stocks rose today, 22 August 2014, after reports on US housing to manufacturing showed the world's largest economy is strengthening. Key benchmark indices in Taiwan, Hong Kong, China, Singapore and South Korea were up 0.04% to 1.37%. Key benchmark indices in Japan and Indonesia were off 0.14% to 0.3%.
Trading in US index futures indicated that the Dow could fall 23 points at the opening bell on Friday, 22 August 2014. US stocks advanced Thursday, 21 August 2014, with the S&P 500 logging its fourth straight daily gain and closing at a record high after a flurry of encouraging economic reports.
A report in the US yesterday showed fewer Americans than forecast applied for unemployment benefits last week. Data yesterday also showed existing home sales rose last month to the most since September, while the Conference Board's gauge of the economic outlook for the next three to six months increased 0.9%. Separately, the Markit Economics preliminary index of US manufacturing in August jumped to the highest level since April 2010.
Federal Reserve Chairwoman Janet Yellen will give a speech today, 22 August 2014, at the annual Fed summit in Jackson Hole, Wyo. Yellen is reportedly expected to acknowledge during the conference that while economic data has generally been supportive, she remains concerned about slack in the labor market.
The minutes from the two-day meeting of the Federal Open Market Committee in late July released on 20 August 2014, showed some officials arguing the groundwork should be laid for raising interest rates sooner than expected. At that meeting, the Fed trimmed its monthly bond-buying program by an additional $10 billion. The US central bank has kept its benchmark rate at almost zero since December 2008.
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