Indian stocks surged after the government announced liberalization of foreign direct investment (FDI) norms for property development and construction sector, with the barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hitting record high. The decision to relax FDI norms for the property development and construction sector comes close on the heels of the government's announcement of deregulation of diesel prices on 18 October 2014. The barometer index, the S&P BSE Sensex, was provisionally up 196.81 points or 0.73% at 27,294.98. The market breadth indicating the overall health of the market was positive.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 785.61 crore yesterday, 29 October 2014, as per provisional data. Global credit rating agency Moody's Investors Service today, 30 October 2014, said that the Government of India's and the Reserve Bank of India's recent economic, fiscal and financial measures will, if successfully implemented, sustain higher GDP growth and address some of the constraints on India's sovereign credit profile. Meanwhile, the Finance Ministry yesterday, 29 October 2014, announced measures for fiscal prudence.
Maruti Suzuki India hit record high after reporting strong Q2 results. Index heavyweight Reliance Industries (RIL) gained. Realty shares jumped after the government after trading hours yesterday, 29 October 2014, announced relaxation of rules for foreign investment in property development and construction sector. Construction stocks were mixed. ACC rose after announcing strong Q3 results. ICICI Bank reversed direction after hitting record high as the bank's non-performing assets rose.
A bout of volatility was witnessed in late trade as traders rolled over positions in the futures & options (F&O) segment from October 2014 series to November 2014 series. The October 2014 derivatives contracts expired today, 30 October 2014.
In overseas markets, European stocks reversed initial gains and Asian stocks dropped after the US Federal Reserve after a monetary policy review yesterday, 29 October 2014, announced its decision to end the last round of its recession-era bond buying program and said it could raise US interest rates sooner than markets have forecast, if the US economy expands faster than it expects.
In the foreign exchange market, the rupee edged lower against the dollar on speculation fund flows to emerging markets will slow as the US Federal Reserve moves closer to raising interest rates after ending its asset-purchase program.
Brent crude oil prices edged lower after previous day's sharp rise triggered by weekly data showing that US crude stockpiles rose less than expected last week.
The Sensex and Nifty gained for the third day in a row today, 30 October 2014.
As per provisional figures, the S&P BSE Sensex was up 196.81 points or 0.73% at 27,294.98. The index jumped 292.43 points at the day's high of 27,390.60 in late trade, a record high for the index. The index fell 9.52 points at the day's low of 27,088.65 in early trade.
The CNX Nifty was up 78.75 points or 0.97% at 8,169.20, as per provisional figures. The index hit a high of 8,181.55 in intraday trade, a record high for the index. The index hit a low of 8,085.20 in intraday trade.
The total turnover on BSE amounted to Rs 3127 crore, higher than turnover of Rs 2869.03 crore on Wednesday, 29 October 2014.
The BSE Mid-Cap index was up 64.14 points or 0.66% at 9,714.43. The BSE Small-Cap index was up 37 points or 0.34% at 10,827.46. Both these indcies underperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,575 shares rose while 1,348 shares declined. A total of 119 shares were unchanged.
Maruti Suzuki India rose 1.08% to Rs 3,240 after company reported strong Q2 results. The stock hit record high of Rs 3,297 in intraday trade. The stock hit low of Rs 3,173.95. The company's net profit rose 28.69% to Rs 862.54 crore on 18.24% rise in total income to Rs 12497.03 crore in Q2 September 2014 over Q2 September 2013. Growth in domestic sales and cost reduction initiatives by the company contributed significantly to bottomline growth during Q2 September 2014.
The company's board of directors has recommended an increase in the foreign institutional investors' (FII) limit to 40%, broadly the level of public shareholding in the company. Reserve Bank of India (RBI) has put restriction on further purchases of shares of Maruti by FIIs. RBI had on 3 Mar 2014 notified that the foreign share holding under portfolio investment scheme in Maruti Suzuki India had reached the trigger limit of 22% and therefore fresh purchases of equity shares of this company would be allowed only after obtaining prior approval of the Reserve Bank of India.
Maruti's board also approved dividend payment guidelines in which it said company would endeavour to keep the dividend payout ratio, except for reasons to be recorded, within the range of 18% to 30%.
ACC rose 0.32% to 1,489 after consolidated net profit jumped 61.98% to Rs 192.60 crore on 9.26% increase in total income to Rs 2847.23 crore in Q3 September 2014 over Q3 September 2013. The stock was volatile. The stock hit high of Rs 1,509 and low of Rs 1,474. The result was announced during trading hours today, 30 October 2014.
ICICI Bank reversed direction after hitting record high as the bank's non-performing assets rose. The stock was off 0.18% at Rs 1,601. The stock hit record high of Rs 1,620 in intraday trade. The scrip hit low of Rs 1,584.70. ICICI Bank's net profit rose 15.18% to Rs 2709.01 crore on 14.71% growth in total income to Rs 14888.95 crore in Q2 September 2014 over Q2 September 2013. The Q2 result was announced during market hours today, 30 October 2014.
ICICI Bank's net non-performing assets stood at Rs 3997 crore as on 30 September 2014, higher than Rs 3474 crore as on 30 June 2014 and Rs 2707 crore as on 30 September 2013. The net non-performing asset ratio was 0.96% as on 30 September 2014, higher than 0.87% as on 30 June 2014 and 0.73% as on 30 September 2013. The bank's provision coverage ratio, computed in accordance with RBI guidelines, was 65.9% at end September 2014. Net loans to companies whose facilities have been restructured stood at Rs 11020 crore as on 30 September 2014, lower than Rs 11265 crore as on 30 June 2014, but sharply higher than Rs 6826 crore as on 30 September 2013.
On a consolidated basis, ICICI Bank's net profit rose 13.61% to Rs 3064.62 crore on 16.49% growth in total income to Rs 22150.39 crore in Q2 September 2014 over Q2 September 2013.
Index heavyweight Reliance Industries (RIL) gained 2.73% to Rs 977.25. The stock hit high of Rs 981.45 and low of Rs 948.30.
Realty shares jumped after the government after trading hours yesterday, 29 October 2014, announced relaxation of rules for foreign investment in property development and construction sector. D B Realty (up 1.76%), Unitech (up 8.15%), Housing Development & Infrastructure (HDIL) (up 6.06%), DLF (up 4.19%), Godrej Properties (up 1.19%), Phoenix Mills (up 1.31%), Anant Raj (up 1.82%), Parsvnath Developers (up 1.75%), Oberoi Realty (up 0.93%) and Prestige Estates (up 2.16%), edged higher. Sobha fell 0.37%.
The Union Cabinet yesterday, 29 October 2014, announced relaxation of rules for foreign investment in property development and construction. 100% foreign direct investment (FDI) under automatic route will be permitted in the construction development sector. In case of development of serviced plots, there is no condition of minimum land. In case of construction-development projects, a minimum floor area will be 20,000 sq. meters. The investee company will be required to bring minimum FDI of $5 million within six months of commencement of the project. Subsequent tranches of FDI can be brought till the period of ten years from the commencement of the project or before the completion of the project, whichever expires earlier. The investor will be permitted to exit on completion of the project or after three years from the date of final investment, subject to development of trunk infrastructure.
Meanwhile, the provisional data released by the stock exchanges after trading hours on Wednesday, 29 October 2014, showed that foreign portfolio investors (FPIs) bought shares worth a net Rs 785.61 crore on that day.
In the foreign exchange market, the rupee edged lower against the dollar on speculation fund flows to emerging markets will slow as the US Federal Reserve moves closer to raising interest rates after ending its asset-purchase program. The partially convertible rupee was hovering at 61.4125, compared with its close of 61.36 during the previous trading session.
Brent crude oil prices edged lower after previous day's sharp rise triggered by weekly data showing that US crude stockpiles rose less than expected last week. Brent crude for December delivery was off 72 cents at $86.40 a barrel. The contract had gained $1.09 a barrel to settle at $87.12 a barrel during the previous trading session.
The Union Cabinet yesterday, 29 October 2014, announced relaxation of rules for foreign investment in property development and construction. 100 percent foreign direct investment (FDI) under automatic route will be permitted in the construction development sector. In case of development of serviced plots, there is no condition of minimum land. In case of construction-development projects, a minimum floor area will be 20,000 sq. meters. The investee company will be required to bring minimum FDI of $5 million within six months of commencement of the project. Subsequent tranches of FDI can be brought till the period of ten years from the commencement of the project or before the completion of the project, whichever expires earlier. The investor will be permitted to exit on completion of the project or after three years from the date of final investment, subject to development of trunk infrastructure.
Global credit rating agency Moody's Investors Service today, 30 October 2014, said that the Government of India's and the Reserve Bank of India's recent economic, fiscal and financial measures will, if successfully implemented, sustain higher GDP growth and address some of the constraints on India's sovereign credit profile. Moody's points out that these measures are incremental rather than radical. However, together, the various measures will harness India's economic advantages of size, diversity and a deep pool of labor and savings. They will also improve its investment climate, and allow the economy to reap the benefits of lower global commodity prices and international financial flows seeking real investment assets, Moody's said. Higher investment and lower macro-economic imbalances could sustain growth rates of around 7.5% in India over the next 5-10 years. Such a result would be significantly higher than the 5%-6% growth Moody's expects for India in 2015, the rating agency said.
However, given the early days and the incremental nature of policy change, Moody's expects that it will take several quarters for an improvement in quantitative and qualitative credit metrics to crystallize.
Meanwhile, the Finance Ministry yesterday, 29 October 2014, announced measures for fiscal prudence. For the year 2014-15, every Ministry/Department shall effect a mandatory 10% cut in non-Plan expenditure, the Finance Ministry said. This excludes interest payment, repayment of debt, Defence capital, salaries, pension and Finance Commission grants to the states. No re-appropriation of funds to augment the Non-Plan heads of expenditure on which cuts have been imposed shall be allowed during the current fiscal year, the Finance Ministry said.
European stocks reversed intraday gains today, 30 October 2014, after the US Federal Reserve after a monetary policy review yesterday, 29 October 2014, announced its decision to end the last round of its recession-era bond buying program and said it could raise US interest rates sooner than markets have forecast, if the US economy expands faster than it expects. Key benchmark indices in France, Germany and UK were off 0.46% to 0.79%.
Asian stocks edged lower today, 30 October 2014, after the US Federal Reserve after a monetary policy review yesterday, 29 October 2014, announced its decision to end the last round of its recession-era stimulus program. Key benchmark indices in Indonesia, South Korea, Hong Kong and Taiwan were off 0.11% to 0.49%. Key benchmark indices in Singapore, Japan and China were up 0.38% to 0.76%.
China's international payments were largely balanced in the third quarter with a surplus in the current account offsetting a deficit in the capital account, the latest data showed. China's current-account surplus in the three months ended September rose to $81.5 billion, compared with a revised surplus of $73.4 billion in the second quarter, the country's foreign-exchange regulator said. The nation had a capital and financial account deficit of $81.6 billion in the third quarter, indicating net outflows of investment funds, the State Administration of Foreign Exchange said. The latest data are initial estimates and will likely be revised later.
Trading in US index futures indicated that the Dow could fall 33 points at the opening bell today, 30 October 2014. US stocks closed with slight losses on Wednesday, 29 October 2014, after the Federal Reserve ended its stimulative monthly bond-buying program and expressed confidence in US economic prospects.
The Federal Reserve on Wednesday, 29 October 2014, ended its monthly bond purchase program and signaled confidence the US economic recovery would remain on track despite signs of a slowdown in many parts of the global economy. "The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability," the central bank's policy committee said in a statement following a two-day meeting. The timing and pace of rate hikes would depend on incoming economic data, the Fed said.
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