A bout of volatility was witnessed as key benchmark indices weakened once again after trimming losses after hitting fresh intraday low in mid-morning trade as firm global crude oil prices and hike in railway freight rates stoked inflation worries. The government after trading hours on Friday, 20 June 2014, announced a steep 14.2% increase in railway passenger fare and 6.5% hike in railway freight rate to boost revenue of the railways to meet its annual expenditure. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit 2-1/2-week low. The Sensex regained the psychological 25,000 level after falling below that mark in intraday trade. The Sensex was down 85.99 points or 0.34%, off close to 180 points from the day's high and up about 40 points from the day's low. The market breadth indicating the overall health of the market was positive.
Though shares of big cement firms dropped after the government's announcement of about 6.5% increase in freight rates, the impact was muted.
At 11:25 IST, the S&P BSE Sensex was down 85.99 points or 0.34% to 25,019.52. The index shed 124.70 points at the day's low of 24,980.81 in morning trade, its lowest level since 5 June 2014. The index jumped 91.99 points at the day's high of 25,197.50 in early trade.
The CNX Nifty was down 28.60 points or 0.39% to 7,482.40. The index hit a low of 7,469.05 in intraday trade, its lowest level since 5 June 2014. The index hit a high of 7,534.80 in intraday trade.
The market breadth, indicating the overall health of the market was positive. On BSE, 1,223 shares gained and 1,009 shares fell. A total of 105 shares were unchanged.
The BSE Mid-Cap index was up 35.42 points or 0.4% at 8,997.38. The BSE Small-Cap index was up 34.16 points or 0.35% at 9,795.38. Both these indices outperformed the Sensex.
Though shares of big cement firms dropped after the government's announcement of about 6.5% increase in freight rates, the impact was muted. ACC (down 0.1% to Rs 1,438), Ambuja Cements (down 0.09% to Rs 217.90), Shree Cement (down 0.48% to Rs 7,324.85) and UltraTech Cement (down 0.84% to Rs 2,699) edged lower. Higher freight rates will increase operating cost of the cement companies. Cement industry transports nearly 40% of its cement production by rail.
Coal India rose 0.14% to Rs 387. The stock was volatile. The stock hit high of Rs 390.50 and low of Rs 384.50 so far during the day. Coal India transports coal mainly by rail.
AstraZeneca Pharma India rose 4.15% to Rs 1,156 after the company said its shareholders approved a proposal to delist the company from the bourses. The announcement was made after market hours on Friday, 20 June 2014. In March this year, AstraZeneca Pharma India's board had approved the proposal from AstraZeneca Pharmaceuticals AB, Sweden (AZP AB), the promoter of the company, to delist the equity shares of the company from Indian stock exchanges (BSE, NSE and Bangalore Stock Exchange). AZP AB holds 75% in the Indian unit (as per shareholding pattern as on 31 March 2014).
The market edged higher amid initial volatility as the government's announcement after trading hours on Friday, 20 June 2014, to raise passenger fare and railway freight fuelled expectations that the Centre has started taking tough decisions which are required to bring the economy on growth path. But, the initial gains proved short lived as firm global crude oil prices and hike in railway freight rates stoked inflation worries. The Sensex and the 50 Nifty, both, hit their lowest level in 2-1/2 weeks in morning trade. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming losses after hitting fresh intraday low in mid-morning trade as firm global crude oil prices and hike in railway freight rates stoked inflation worries. The Sensex regained the psychological 25,000 level after falling below that mark in intraday trade.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month June 2014 series to July 2014 series. The near-month June 2014 F&O contract expire on Thursday, 26 June 2014.
The Reserve Bank of India (RBI) on Friday, 20 June 2014, issued guidelines allowing foreign portfolio investors (FPIs) exposure in the exchange traded currency derivatives (ETCD) market. FPIs will be allowed access to the currency futures or exchange traded currency options for the purpose of hedging the currency risk arising out of the market value of their exposure to Indian debt and equity securities. FPIs can take position -- both long (bought) as well as short (sold) in foreign currency up to $10 million or equivalent per exchange without having to establish existence of any underlying exposure. The limit will be both day-end as well as intra-day. An FPI cannot take a short position beyond $10 million at any time. For taking a long position beyond $10 million in any exchange, the concerned FPI will be required to have an underlying exposure on Indian debt and/or equity securities.
The government on Friday, 20 June 2014, raised passenger fare and freight rates. A flat 10% increase in passenger fare was announced in all classes. In addition there will be an increase of 4.2% in fares on account of FAC (Fuel adjustment Component) which is due from April 2014. The overall increase in passenger fare is 14.2%.
There has been a flat 5% increase in freight rates. In addition there will be an increase of 1.4% in fares on account of FAC (Fuel adjustment Component) which is due from April 2014. The overall increase in freight rates will be about 6.5% for major commodities. The revised passenger fare and freight rates and freight structure rationalization will come into effect from 25 June 2014.
Brent crude oil prices rose as militant violence in Iraq continues, raising concerns of oil supply from a key oil exporter of the world. Brent oil futures for August delivery were up 39 cents or 0.34% at $115.20 a barrel. Brent had dropped on Friday, 20 June 2014, after settling at its highest level in more than nine months at $115.06 a barrel on Thursday, 19 June 2014.
Increase in crude oil prices has sparked worries about India's macroeconomic situation as India imports majority of its crude oil requirements. Increase in crude oil prices has raised concerns of increase in India's current account deficit and fiscal deficit. Firm global crude oil prices and the latest hike in railway freight rate have also stoked inflation worries.
In the foreign exchange market, the rupee was almost unchanged against the dollar. The partially convertible rupee was hovering at 60.19, compared with its close of 60.185/195 on Friday, 20 June 2014.
Asian stocks rose on Monday, 23 June 2014, as upbeat news from China's factory sector and fresh highs on Wall Street on Friday, 20 June 2014 fueled appetite for riskier assets. Key benchmark indices in Japan, Indonesia, China, Hong Kong, Singapore, and South Korea were up 0.02% to 0.55%. Taiwan's Taiwan Weighted index was off 0.36%.
Activity in China's factory sector expanded in June for the first time in six months as new orders surged, a preliminary HSBC survey showed on Monday, offering new signs the economy is stabilising thanks to Beijing's measures to shore up growth. The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index rose to 50.8 in June from May's final reading of 49.4. It was the first time since December that the PMI was in growth territory, and the highest reading since November, when it was also 50.8.
Trading in US index futures indicated that the Dow could gain 34 points at the opening bell on Monday, 23 June 2014. The Dow Jones Industrial Average and the S&P 500 index closed at record highs on Friday, helped by the prospect of the Federal Reserve keeping interest rates low for a long period of time.
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