Volatility ruled the roost in late trade as the key benchmark indices turned positive after sinking in negative zone to hit intraday low. The barometer index, the S&P BSE Sensex, was provisionally up 0.38 points, up 50.20 points from the day's low and off 73.69 points from the day's high. The market breadth, indicating the overall health of the market, was positive. In the foreign exchange market, the rupee was little changed against the dollar.
Bank stocks gained after the Reserve Bank of India (RBI) on Thursday, 30 January 2014 laid out a road map to deal with a surge in bad loans in the banking system. State Bank of India (SBI) rose after the state-run bank after market hours on Thursday, 30 January 2014 said that it has raised Rs 8031.64 crore by selling shares through qualified institutional placement. In IT pack, HCL Technologies scaled a record high. Offshore oil services were in demand on fresh buying.
Key benchmark indices alternately swung between positive and negative zone in early trade. Key benchmark indices extended intraday gains and hit fresh intraday high in morning trade. A bout of volatility was witnessed as key benchmark indices reversed intraday gains in mid-morning trade. Key benchmark indices saw divergent trend in early afternoon trade after alternately swinging between positive and negative zone. The barometer index, the S&P BSE Sensex, was slightly lower. The 50-unit CNX Nifty was marginally higher. Key benchmark indices hovered in positive terrain in afternoon trade. Key benchmark indices hovered in positive zone in mid-afternoon trade amid alternate bouts of rise and fall near the flat line. Volatility ruled the roost in late trade as the key benchmark indices turned positive after sinking in negative zone to hit intraday low.
Foreign institutional investors (FIIs) sold shares worth a net Rs 430.20 crore on Thursday, 30 January 2014, as per provisional data from the stock exchanges.
As per provisional closing, the S&P BSE Sensex was up 0.38 points to 20,498.63. The index gained 74.07 points at the day's high of 20,572.32 in morning trade, its highest level since 29 January 2014. The index fell 49.82 points at the day's low of 20,448.43 in late trade.
The CNX Nifty was up 13.20 points or 0.22% to 6,086.90. The index hit a high of 6,097.85 in intraday trade, its highest level since 29 January 2014. The index hit a low of 6,067.35 in intraday trade.
The BSE Mid-Cap was up 101.53 points or 1.63% at 6,312.90. The BSE Small-Cap index was up 81.10 points or 1.31% to 6,262.90. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,565 shares gained and 1,113 shares fell. A total of 151 shares were unchanged.
The total turnover on BSE amounted to Rs 1809 crore, lower than Rs 1974 crore on Thursday, 30 January 2014.
Among the 30-share Sensex pack, 19 stocks gained and rest of them declined.
Bank stocks gained after the Reserve Bank of India (RBI) on Thursday, 30 January 2014 laid out a road map to deal with a surge in bad loans in the banking system.
Among private sector banks, AXIS Bank (up 0.83%) and ICICI Bank (up 1.58%) gained. HDFC Bank shed 0.70%.
State Bank of India (SBI) rose 0.69% to Rs 1,528. The state-run bank after market hours on Thursday, 30 January 2014 said that it has raised Rs 8031.64 crore by selling shares through qualified institutional placement. The bank sold 5.13 crore shares at an average price Rs 1,565 per share, which is at a discount of 3.95% to the floor price of Rs 1629.35, as calculated in terms of Sebi ICDR Regulations.
Punjab National Bank (PNB) gained 6.98% after the state-run bank reported fall in ratio of net non-performing asset to 2.8% as on 31 December 2013 from 3.07% as on 30 September 2013. The bank net profit declined 42.14% to Rs 755.41 crore on 3.68% growth in total income to Rs 11922.30 crore in Q3 December 2013 over Q3 December 2012. The Q3 result hit the market during trading hours today, 31 January 2014.
The bank's provisions and contingencies surged 98.36% to Rs 1590.04 crore in Q3 December 2013 over Q3 December 2012. Provisions and contingencies declined 16.25% on sequential basis. The provision coverage ratio as on 31 December 2013 works out to 58.55%.
RBI circular dated 23 August 2013 on investment portfolio of the Banks -- classification, valuation and provisioning -- gave banks the option of distributing the net depreciation of the entire AFS & HFT portfolios on each of the valuation dates in the current financial year in equal installments during the year. In accordance with this circular, PNB has made adequate provision towards the proportionate additional depreciation on the entire AFS & HFT portfolio as on 31 December 2013.
PNB's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 11.02% as on 31 December 2013 as against 11.62% as on 30 September 2013.
Meanwhile, PNB said its board of directors at its meeting held today, 31 January 2014, has declared an interim dividend of Rs 10 per equity share for the year ending 31 March 2014. The record date has been fixed as 12 February 2014 to ascertain the entitlement of shareholders to receive the interim dividend, PNB said.
Union Bank of India rose 4.48% after net profit rose 15.39% to Rs 348.94 crore on 18.26% increase in total income to Rs 8230.17 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours today, 31 January 2014.
The bank's ratio of net non-performing assets to net advances stood at 2.26% as on 31 December 2013, compared with 2.15% as on 30 September 2013 and 1.70% as on 31 December 2012.
The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 3.85% as on 31 December 2013, compared with 3.64% as on 30 September 2013 and 3.36% as on 31 December 2012.
Provisions and contingencies fell 28.80% to Rs 610.40 crore in 31 December 2013 over 31 December 2012. The provisioning coverage ratio as on 31 December 2013 stood at 59.97%.
The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 10.12% as on 31 December 2013, compared with 9.72% as on 30 September 2013.
Oriental Bank of Commerce rose 5.22%. The bank's net profit fell 31.28% to Rs 224.30 crore on 4.49% increase in total income to Rs 5063.98 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours today, 31 January 2014.
Among other PSU bank stocks, Indian Bank (up 8%), Allahabad Bank (up 4.52%), UCO Bank (up 2.55%), Canara Bank (up 2.59%), Bank of Baroda (up 3.11%), Bank of India (up 2.63%) gained.
The Reserve Bank of India (RBI) on Thursday, 30 January 2014 laid out a road map to deal with a surge in bad loans in the banking system. The framework outlines a corrective action plan that will offer incentives for early identification of stressed assets by banks, timely revamp of accounts considered to be unviable, and prompt steps for recovery or sale of assets in the case of loans at the risk of turning bad.
On Thursday, 30 January 2014 the central bank issued final rules similar to the measures outlined in the working paper after taking public feedback into account. Lenders will need to carve out as special category of assets termed special mention accounts (SMAs) in which early signs of stress are visible.
Accounts within this category will be put under three sub-categories, based on the period for which their principal or interest payments are overdue. The duration of overdue payments can range from under 30 days to 90 days. Loan repayments that are more than 90 days overdue are classified as non-performing assets (NPAs) under existing regulations.
If a borrower's interest or principal payments are overdue by more than 60 days, a joint lenders' forum must be formed by the bankers for early resolution of stress, RBI said.
The new rules also offer incentives to lenders to quickly and collectively agree to a resolution plan by offering better regulatory treatment for stressed assets where such a plan is under implementation. As a way to discourage long-drawn-out negotiations between bankers, RBI said accelerated provisioning will be applicable if no agreement can be reached.
Restructuring proposals in accounts where the aggregate exposure of banks is above Rs 500 crore will now be subjected to assessment by an independent evaluation committee (IEC) of experts. The IEC will look into the viability aspects after ensuring that the terms of restructuring are fair to the lenders, said RBI.
The committee will submit its recommendations to the corporate debt restructuring (CDR) cell within a period of 30 days.
Appropriate incentive structures may be built so as to provide greater role to PE (private equity) firms and other institutions in restructuring of troubled-company accounts. These institutions can be expected not only to bring additional funds for restructuring, but also bring in expertise for management of the business unit in question, RBI said in a statement.
Further, banks will not be allowed to offer finance to such specialized entities put together for acquisition of troubled companies.
In the interest of better information sharing within the banking system, RBI said it will set up a central repository of information on large credits to collect, store and disseminate credit data to lenders. For this, banks will have to furnish credit information on all their borrowers having aggregate fund-based and non-fund-based exposure of Rs 5 crore and above.
HCL Technologies gained 2.06% to Rs 1,463.35 after hitting a record high of Rs 1,470 in intraday trade.
Offshore oil services were in demand on fresh buying. Aban Offshore (up 20%), GOL Offshore (up 11.6%), Global Offshore Services (up 4.99%), Hindustan Oil Exploration Company (up 3.3%), Dolphin Offshore Enterprises (India) (up 13.45%) gained.
In the foreign exchange market, the rupee was little changed against the dollar. The partially convertible rupee was hovering at 62.5650, compared with its close of 62.56/57 /11 on Thursday, 30 January 2014.
Foreign direct investment (FDI) inflows into India rose 54.8% in November to $1.64 billion compared with $1.06 billion a year ago, a government statement said on Friday.
Total FDI inflows in the first eight months for the current fiscal year that ends in March were down 2% from a year earlier at $15.46 billion, compared with $15.85 billion during the year-ago period, the statement said.
India's consumer inflation should ease in the next two months, and will fall to 8% by the end of the year, Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview with TV news channel on Thursday, 30 January 2014. The consumer price index eased to a three-month low of 9.87% in December 2013. "There is some disinflation in the system. What was 9.87 is going to come down further next month, and probably a little further into March," Rajan said. "We are setting rates at a level that we think is consistent with that disinflation for us to get some bite and for the inflation in the system to come down to about 8% at the end of the year," Rajan said.
In an interview to another TV news channel, Rajan on Thursday disputed criticism that lower interest rates would lead to higher growth because banks are fixing interest rates based on inflation. "This notion somehow that the RBI is standing in the way of growth is complete nonsense, Rajan said. "Today what is standing in the way of growth is inflation. Unless we bring inflation down, growth with lower interest rates has no hope," Rajan said.
Rajan warned of a breakdown in global policy coordination after the Federal Reserve further cut stimulus, noting how emerging markets helped pull the global economy out of crisis starting in late 2008. "Industrial countries have to play a part in restoring that, and they can't at this point wash their hands off and say we'll do what we need to and you do the adjustment. Fortunately the IMF has stopped giving this as its mantra, but you hear from the industrial countries: We'll do what we have to do, the markets will adjust and you can decide what you want to do," Rajan said. "We need better cooperation and unfortunately that's not been forthcoming so far," he said.
Rajan said developed countries might not like adjustments emerging markets take to cope with the outflows, without elaborating on specific measures.
European stock markets moved lower on Friday as investors prepared for inflation and unemployment data from the euro zone, which should help gauge whether the region's recovery remains on track. Key benchmark indices in UK, France and Germany were down by 0.36% to 1.02%.
French consumer spending inched down in December, as households cut purchases of clothes and accessories, the national statistics bureau said Friday.
Consumer spending in the euro zone's second-largest economy dropped 0.1% last month, but posted a 1.4% increase on the year.
Spain's inflation rate was unchanged in January from the previous month and continues to be well below the European Central Bank's own target, preliminary data released Friday show.
In its preliminary estimate, the National Statistics Institute, known as INE, said Spain's European Union-harmonized consumer price index rose 0.3% on the year, the same as in December.
The ECB aims to keep the annual inflation rate in the euro zone below but close to 2% over the medium term.
By Spain's own methodology, January's CPI increased by 0.2%, compared with a 0.3% rise in December.
UK consumers were the most optimistic in over six years in January, buoyed by improvements in both personal finances and the economy, a survey showed Friday.
The monthly consumer confidence index from research firm GfK rose to -7 in January from -13 in December. That was the highest level since September 2007 and more than reversed the single-point declines reported in the index in recent months.
Most Asian markets were closed today, 31 January 2014, for the Lunar new year holiday. In Japan, the Nikkei 225 index lost 0.62% to settle at 14,914.53. China's markets remain closed until 7 February 2014 for the Lunar New Year holiday, while Hong Kong is shut until 4 February 2014.
Japanese industrial production rose 1.1% on month in December, the Ministry of Economy, Trade and Industry said Friday, on a demand rush ahead of an April sales tax increase. It also comes after a 0.1% decline in November. The increase in industrial output was due to a rise in production in the general purpose and production machinery sectors as well as electronic parts and devices.
Meanwhile, Japanese consumer prices rose at their sharpest rate in over five years in December, the government said Friday. Consumer prices also increased for the whole of 2013, the first annual increase in five years, according to data released by the Ministry of Internal Affairs and Communications.
The core consumer price index, which excludes volatile fresh-food costs, climbed 1.3% from a year earlier in December, faster than a 1.2% gain in the previous month, according to data released by the Ministry of Internal Affairs and Communications. It was the biggest rise since a 1.9% increase in October 2008. The core index for 2013 increased 0.4% after a 0.1% fall the previous year. The CPI including fresh food prices rose 1.6% on year in December.
Employment data released Friday also suggested a strongly recovering economy. The jobless rate fell to 3.7% of the work force, down from 4% in November and the lowest rate since December 2007. The closely watched ratio of available jobs to applicants also improved to 1.03, meaning 103 jobs were on offer for every 100 job seekers.
Trading in US index futures indicated that the Dow could fall 46 points at the opening bell on Friday, 31 January 2014. US stocks rebounded on Thursday, 30 January 2014, as investors welcomed data showing a robust pace of growth in the economy in the final quarter of last year, while upbeat earnings from Facebook Inc. boosted the tech sector.
The US economy expanded rapidly in the final quarter of 2013, the Commerce Department said on Thursday, 30 January 2014, as consumers shrugged off a government shutdown, with the data fueling hopes of even faster growth ahead. The gross domestic product grew at 3.2% annual pace.
The number of people who sought US unemployment benefits near the end of January rose to the highest level in six weeks, but it's unclear whether the increase is the residue of holiday-season distortions or reflects a deterioration in the labor market. The less-volatile, four-week average rose by a fraction.
Meanwhile, Janet Yellen will be sworn in as chairwoman of the Federal Reserve on Monday, 3 February 2014, the US central bank announced Thursday, 30 January 2014. Yellen will replace outgoing Fed Chairman Ben Bernanke, whose term as chairman expires on Friday, 31 January 2014.
The Federal Reserve on 29 January 2014 took another gradual step toward exiting its controversial bond-buying program. As expected, the Fed decided, after a monetary policy review, to reduce the pace of monthly asset purchases to $65 billion, from January's $75 billion. The Fed also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market.
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