Volatility ruled the roost as key benchmark indices further trimmed intraday gains in mid-afternoon trade. The barometer index, the S&P BSE Sensex, regained positive zone after slipping into the red for a brief period. The Sensex was up 260.99 points or 1.09%, off close to 1,210 points from the day's high and up about 290 points from the day's low. Indian stocks edged higher today, 16 May 2014, as leads and results of Lok Sabha election showed that Narendra Modi was on course to wrest the top job in the country as a saffron wave swept large swathes of India and leaving Congress in tatters. Trends of Lok Sabha elections showed that Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) is set to form the next government at the Centre. The NDA was leading in 316 seats and was declared winner in 11 seats out of the total of 543 Lok Sabha seats. The Congress-led United Progressive Alliance (UPA) was leading in 57 seats and was declared winner in 5 seats. 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 hoping that the BJP-led government will be better at getting things done and more business-friendly than the Congress-party-led coalition government which was in power during the past ten years. The BSE Mid-Cap index was up more than 1.5%.
Capital goods stocks edged higher with L&T, Bharat Heavy Electricals and Siemens hitting 52-week high. Shares of companies whose fortunes are linked to orders from Indian Railways edged higher.
The market breadth, indicating the overall health of the market was negative.
The market surged in early trade after the early trends of Lok Sabha elections showed that Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) was leading in the elections. The Sensex and the 50-unit CNX Nifty, both, hit record high. A bout of volatility was witnessed as key benchmark indices trimmed gains after extending initial strong gains in morning trade. The Sensex further trimmed intraday gains in mid-morning trade. Firmness continued on the bourses in early afternoon trade as Lok Sabha election trends showed that Narendra Modi was on course to wrest the top job in the country as a saffron wave swept large swathes of India and leaving Congress in tatters. The Sensex trimmed gains in afternoon trade. Volatility ruled the roost as the Sensex regained positive zone after slipping into the red for a brief period in mid-afternoon trade.
The counting of votes for the Lok Sabha elections began at 8:00 IST today, 16 May 2014, and results are expected by today itself. If the NDA comes to power, Narendra Modi will become India's next Prime Minister. Modi 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 Congress-party-led coalition government which was in power during the past ten years.
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.
At 14:20 IST, the S&P BSE Sensex was up 260.99 points or 1.09% to 24,166.59. The index jumped 1,470.03 points at the day's high of 25,375.63 in morning trade, a record high for the index. The index fell 32.44 points at the day's low of 23,873.16 in mid-afternoon trade.
The CNX Nifty was up 107.10 points or 1.5% to 7,230.25. The index hit a high of 7,563.50 in intraday trade, a record high for the index. The index hit a low of 7,130.65 in intraday trade.
The BSE Mid-Cap index was up 135.85 points or 1.78% at 7,775.95, outperforming the Sensex. The BSE Small-Cap index was up 73.47 points or 0.94% at 7,864.59, underperforming the Sensex.
The market breadth, indicating the overall health of the market was negative. On BSE, 1,485 shares fell and 1,224 shares rose. A total of 139 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks gained and rest of them declined. Sesa Sterlite (up 8.22%), State Bank of India (SBI) (up 5.72%) and ICICI Bank (up 4.74%) edged higher from the Sensex pack.
Capital goods stocks gained. Punj Lloyd (up 2.8%) and Thermax (up 2.89%) gained.
L&T rose 2% to Rs 1,405. The stock hit a 52-week high of Rs 1,493.15 in intraday trade today, 16 May 2014.
Bharat Heavy Electricals (Bhel) rose 3.88% to Rs 226.40. The stock hit a 52-week high of Rs 234 in intraday trade today, 16 May 2014.
Siemens rose 1.72% to Rs 832.70. The stock hit a 52-week high of Rs 850.10 in intraday trade today, 16 May 2014.
Shares of companies whose fortunes are linked to orders from Indian Railways rose. Kalindee Rail Nirman (Engineers) (up 10.01%), Kernex Microsystems (India) (up 4.68%), Titagarh Wagons (up 4.97%), Hind Rectifiers (up 1.49%), BEML (up 1.48%), Transformers & Rectifiers (India) (up 0.1%), Container Corporation of India (up 0.99%) and Texmaco Infrastructure & Holdings (up 0.18%), edged higher.
Rail stocks rose as Narendra Modi has been stressing on improving Indian railways. In his campaign speeches, he also highlighted about modernising the railway system, just like Japan. Modi repeatedly referred to bullet rains during his campaign speeches and high-speed trains found a prominent space in BJP's election manifesto.
According to reports, Mumbai-Ahmedabad and New Delhi-Patna (via Varanasi) corridors are on top of the list and the national transporter is planning to accelerate these projects.
In the foreign exchange market, the rupee edged higher against the dollar after the trends of Lok Sabha elections showed that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) is set to form the next government at Centre. The partially convertible rupee was hovering at 59.035, compared with its close of 59.29/30 on Thursday, 15 May 2014.
The India Meteorological Department (IMD) on Thursday, 15 May 2014, said that the southwest monsoon is likely to set over Kerala on 5 June 2014, with a model error of plus/minus 4 days. The normal date of onset of the southwest monsoon in India is 1 June. Advance of southwest monsoon over Andaman Sea normally takes place around 20 May with a standard deviation of about one week. Low level cross equatorial monsoon flow has started appearing over south of Andaman Sea and adjoining south Bay of Bengal, the IMD said in a statement. The monsoon is likely to advance over Andaman Sea during next three days, the IMD said. Past data suggests absence of any one to one association of the date of monsoon advance over Andaman Sea with the date of monsoon onset over Kerala or that with the seasonal monsoon rainfall over the country, the IMD said.
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.
European stocks struggled for direction on Friday as investors digested the latest developments in Ukraine and corporate news. Key benchmark indices in Germany and France were down 0.04% to 0.07%. UK's FTSE 100 rose 0.06%.
Asian stocks were mostly higher on Friday. Key benchmark indices in China, Indonesia, South Korea and Taiwan were up 0.08% to 0.53%. Key benchmark indices in Japan, Singapore and Hong Kong were off 0.08% to 1.41%.
Non-performing loans in Asia's biggest economy rose by 54 billion yuan ($8.7 billion) in the three months through March to 646.1 billion yuan, the highest level since September 2008, according to data released by the China Banking Regulatory Commission yesterday. Bad credit accounted for 1.04% of total lending, up from 1% three months earlier.
Trading in US index futures indicated that the Dow could fall 13 points at the opening bell on Friday, 16 May 2014. US stocks fell a second day on Thursday, with the Dow Jones Industrial Average sinking the most in a month, as investors continued to sell small-cap shares and Wal-Mart Stores Inc. forecast profit that missed estimates.
Economic data showed industrial production in the US unexpectedly declined in April, held back by a plunge in utilities as temperatures warmed and a broad-based decrease in manufacturing. Manufacturing, which makes up 75% of total production, decreased 0.4%. That contrasted with a higher-than-forecast reading on the Fed Bank of New York's gauge of regional manufacturing, which climbed to 19.01 this month, from 1.29 in April. Labor Department data showed the fewest Americans in seven years filed applications for unemployment benefits last week, while a separate report indicated the cost of living in the US rose in April by the most in almost a year.
Federal Reserve Chairwoman Janet Yellen yesterday said the US economy has further to go to achieve full health and predicted small businesses will play a vital role in the recovery.
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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