A sudden surge took the key benchmark indices to fresh intraday high in early afternoon trade. The barometer index, the S&P BSE Sensex regained the psychological 21,000 mark. The Sensex was up 219.53 points or 1.05%, off close to 30 points from the day's high and up about 250 points from the day's low. The market breadth, indicating the overall health of the market, was strong.
Infosys hit 52-week high. Steel stocks rose after the world's biggest steelmaker ArcelorMittal said at the time of announcing its Q3 result said that the company is cautiously optimistic about the prospects for 2014. Most auto stocks gained. But, Ashok Leyland declined after the company reported reverse turnaround in Q2 September 2013. Small to mid-sized private banks rallied on hopes they could become acquisition targets for foreign banks after the Reserve Bank of India (RBI) released on Wednesday, 6 November 2013, new rules for foreign banks in the country in a bid to increase its oversight of overseas lenders.
A bout of initial volatility was witnessed as key benchmark alternately swung between positive and negative terrain. Volatility continued in morning trade. Key benchmark indices moved in a narrow range in mid-morning trade. A sudden surge took the key benchmark indices to fresh intraday high in early afternoon trade.
The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Wednesday, 6 November 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 271.70 crore on Wednesday, 6 November 2013, as per provisional data from the stock exchanges.
At 12:20 IST, the S&P BSE Sensex was up 219.53 points or 1.05% to 21,114.17. The index jumped 247.91 points at the day's high of 21,142.85 in early afternoon trade, its highest level since 5 November 2013. The index fell 28.06 points at the day's low of 20,866.88 in early trade.
The CNX Nifty was up 65.50 points or 1.05% to 6,280.65. The index hit a high of 6,288.95 in intraday trade, its highest level since 5 November 2013. The index hit a low of 6,207.35 in intraday trade, its lowest level since 29 October 2013.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,249 shares rose and 831 shares fell. A total of 133 shares were unchanged.
Among the 30-share Sensex pack, 25 stocks rose and rest of them fell. L&T (up 1.94%), TCS (up 1.57%) and Hindustan Unilever (up 1.43%), gained.
Steel stocks rose after the world's biggest steelmaker ArcelorMittal said at the time of announcing its Q3 result said that the company is cautiously optimistic about the prospects for 2014. Sail (up 3.76%), JSW Steel (up 2.02%), Jindal Steel & Power (up 0.41%), Bhushan Steel (up 2.02%) and Tata Steel (up 3.63%), gained.
Among other metal stocks, Sesa Sterlite (up 2.41%), Hindalco Industries (up 2.77%) and Hindustan Zinc (up 1.07%), rose.
NMDC rose 0.25%, with the stock reversing intraday losses. The stock turned ex-dividend today, 7 November 2013, for the interim dividend of Rs 3 per share for the year ended 31 March 2014 (FY 2014).
ArcelorMittal, the world's biggest steelmaker, today, 7 November 2013, reported a 19% increase in third-quarter profit and maintained its full-year earnings forecast. Earnings before interest, taxes, depreciation and amortization rose to $1.71 billion from $1.45 billion a year earlier, Luxembourg-based ArcelorMittal said in a statement. "The bottom of the cycle is behind us. Although operating conditions remain challenging, as economic indicators are improving we are cautiously optimistic about the prospects for 2014," Chief Executive Officer Lakshmi Mittal said in the statement.
Infosys rose 1.98% to Rs 3,370.45 after hitting 52-week high of Rs 3,374 in intraday trade.
Most auto stocks gained. M&M (up 1.22%), Maruti Suzuki India (up 0.39%), Hero MotoCorp (up 0.65%) and Bajaj Auto (up 0.95%), gained. But, Tata Motors dropped 0.54%.
Ashok Leyland declined 3.95% after the company reported reverse turnaround in Q2 September 2013. The company reported a net loss of Rs 25.05 crore in Q2 September 2013 compared with net profit of Rs 142.59 crore in Q2 September 2012. The Q2 result was announced after market hours on Wednesday, 6 November 2013. Ashok Leyland's total income from operations declined 23.19% to Rs 2549.62 crore in Q2 September 2013 over Q2 September 2012.
Small to mid-sized private banks rallied on hopes they could become acquisition targets for foreign banks after the Reserve Bank of India (RBI) released on Wednesday, 6 November 2013, new rules for foreign banks in the country in a bid to increase its oversight of overseas lenders. Lakshmi Vilas Bank (up 5.02%), Development Credit Bank (up 2.54%), Karnataka Bank (up 5.07%), Dhanlaxmi Bank (up 3.88%) and City Union Bank (up 1.92%), gained.
The Reserve Bank of India (RBI) released on its website on Wednesday, 6 November 2013, the framework for setting up of Wholly Owned Subsidiaries (WOS) by foreign banks in India. The policy is released in pursuance of the announcement made in the Second Quarter Review of Monetary Policy 2013-14.
The policy is guided by the two cardinal principles of (i) reciprocity and (ii) single mode of presence. As a locally incorporated bank, the WOSs will be given near national treatment which will enable them to open branches anywhere in the country at par with Indian banks (except in certain sensitive areas where the Reserve Bank of India's prior approval would be required). They would also be able to participate fully in the development of the Indian financial sector. The policy incentivises the existing foreign bank branches which operate within the framework of India's commitment to the World Trade organisation (WTO) to convert into WOS due to the attractiveness of near national treatment. Such conversion is also desirable from the financial stability perspective. To provide safeguards against the possibility of the Indian banking system being dominated by foreign banks, the framework has certain measures to contain their expansion if the share of foreign banks exceeds a critical size. Certain measures from corporate governance perspective have also been built in so as to ensure that the public interest is safeguarded.
Under the framework, the banks with complex structures, banks which do not provide adequate disclosure in their home jurisdiction, banks which are not widely held, banks from jurisdictions having legislation giving a preferential claim to depositors of home country in a winding up proceedings, etc., would be mandated entry into India only in the WOS mode. Foreign banks in whose case the above conditions do not apply can opt for a branch or WOS form of presence.
A foreign bank opting for branch form of presence shall convert into a WOS as and when the above conditions become applicable to it or it becomes systemically important on account of its balance sheet size in India. Foreign banks which commenced banking business in India before August 2010 shall have the option to continue their banking business through the branch mode. However, they will be incentivised to convert into WOS because of the attractiveness of the near national treatment afforded to WOS. To prevent domination by foreign banks, restrictions would be placed on further entry of new WOSs of foreign banks/capital infusion, when the capital and reserves of the WOSs and foreign bank branches in India exceed 20 per cent of the capital and reserves of the banking system. The initial minimum paid-up voting equity capital for a WOS shall be Rs 500 crore for new entrants. Existing branches of foreign banks desiring to convert into WOS shall have a minimum net worth of Rs 500 crore. The parent of the WOS would be required to issue a letter of comfort to the RBI for meeting the liabilities of the WOS.
The issue of permitting WOS to enter into M&A transactions with any private sector bank in India subject to the overall investment limit of 74 per cent would be considered after a review is made with regard to the extent of penetration of foreign investment in Indian banks and functioning of foreign banks (branch mode and WOS).
In the foreign exchange market, the rupee hit one-month low against the dollar. The partially convertible rupee was hovering at 62.55, compared with its close of 62.39/40 on Wednesday, 6 November 2013. The rupee had declined sharply on Wednesday on sustained dollar demand from state-run banks, leading to speculation that they were buying on behalf of oil refiners.
Asian stocks fell on Thursday, 7 November 2013, before US economic reports and the European Central Bank's policy meeting. Key benchmark indices in China, Japan, Hong Kong and South Korea shed 0.45% to 0.76%. Key benchmark indices in Taiwan, Indonesia and Singapore rose 0.01% to 0.74%.
China's leaders will meet in Beijing on November 9-12 to map out economic policies as the country heads for its slowest annual growth in more than two decades.
Trading in US index futures indicated that the Dow could fall 8 points at the opening bell on Thursday, 7 November 2013. Most US stocks rose on Wednesday, 6 November 2013, with the Dow Jones Industrial Average notching another record close, as investors bought into optimism that the Federal Reserve would continue its stimulus longer than thought, ahead of economic reports this week on the economy and the labor market.
Data on US GDP growth for Q3 September 2013 is due for release today, 7 November 2013. The GDP grew 2.5% in Q2 June 2013.
The US government will tomorrow, 8 November 2013, release nonfarm payrolls figures for October 2013. The job data is a key economic indicator that has been watched closely in recent months to see whether the US Federal Reserve will roll back its bond-buying program.
In Europe, the European Central Bank (ECB) holds a monetary policy meeting today, 7 November 2013. The ECB is seen retaining its key policy rate at a record-low 0.5%. The Bank of England is expected to keep monetary policy unchanged after a monetary policy review today, 7 November 2013.
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