Key benchmark indices retained positive zone in afternoon trade. The barometer index, the S&P BSE Sensex, was up 57.07 points or 0.28%, up close to 120 points from the day’s low and off about 10 points from the day’s high. The market breadth, indicating the overall health of the market, was positive.
Bank stocks were mostly higher. Tyre stocks rose as rubber futures in Tokyo and Shanghai sank today, 24 February 2014, as concern grew that property prices in China will retreat, weakening raw-material demand from the largest consumer. Apollo Tyres scaled record high. CEAT dropped after the company said there was a major fire at the ram materials store of the company’s plant at Bhandup, Mumbai on Sunday, 23 February 2014.
Key benchmark indices edged lower in early trade on weak Asian stocks. A bout of volatility was witnessed in morning trade as the key benchmark indices trimmed initial losses in morning trade. Intraday volatility continued as key benchmark indices once again slipped into the red after moving into positive zone from negative zone in mid-morning trade. Key benchmark indices once again moved into positive zone from negative zone in early afternoon trade. The Sensex hit its highest level in more than 3-1/2 weeks. The 50-unit CNX Nifty hit four-week high. Key benchmark indices retained positive zone in afternoon trade.
The market may remain volatile this week as traders roll over positions in the futures and options (F&O) segment from the near-month February 2014 series to March 2014 series. The near month February 2014 F&O contracts expire on Wednesday, 26 February 2014. The stock market remains closed on Thursday, 27 February 2014, on account of Mahashivratri.
The market sentiment was boosted by data showing that foreign funds remained buyers of Indian stocks on Friday, 21 February 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 603.41 crore on Friday, 21 February 2014, as per provisional data from the stock exchanges.
At 13:20 IST, the S&P BSE Sensex was up 57.07 points or 0.28% to 20,757.82. The index rose 70.05 points at the day’s high of 20,770.80 in early afternoon trade, its highest level since 29 January 2014. The index fell 63.45 points at the day’s low of 20,637.30 in early trade.
The CNX Nifty was up 13.65 points or 0.22% to 6,169.10. The index hit a high of 6,172.40 in intraday trade, its highest level since 27 January 2014. The index hit a low of 6,130.80 in intraday trade.
The BSE Mid-Cap index was up 20.78 points or 0.32% at 6,442.83. The BSE Small-Cap index was up 23.76 points or 0.37% at 6,417.09. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,222 shares gained and 1,179 shares fell. A total of 158 shares were unchanged.
Tata Power Company (up 5.21%), L&T (up 2.55%) and Bhel (up 2.03%) edged higher from the Sensex pack.
Bank stocks were mostly higher. Among private sector banks, ICICI Bank (up 0.46%), HDFC Bank (up 0.26%), Federal Bank (up 0.01%), and AXIS Bank (up 3.38%), gained.
Among PSU bank stocks, State Bank of India, Canara Bank, Bank of India, Bank of Baroda and Punjab National Bank rose 0.24% to 1.67%.
United Bank of India surged 6.78%. The state-run bank before market hours today, 24 February 2014, said that its board of directors at its meeting held on Saturday, 22 February 2014, has accorded its approval to create, offer, issue and allot by conversion of up to 80000 PNCPS of Rs 100,000 each into such number of equity shares of Rs 10 each at an conversion price as may be determined in accordance with the Regulation 76(1) of SEBI ICDR Regulations on preferential basis to Government of India in one or more tranches.
The Board further approved issuance and allotment by conversion of PNCPS up to 11 crore equity shares of Rs 10 each at such price as may be determined in accordance with the Regulation 76(1) of SEBI ICDR Regulations on preferential basis to the President of India within 31 March 2014.
The approvals of the Board are subject to all applicable approvals/consents from various Regulators and specific approval by the Central Government in this regard.
Union Bank of India edged lower in choppy trade after the state-run bank denied media reports that it is in merger talks with troubled state-run bank United Bank of India. The stock was off 0.39% at Rs 102.75. The scrip hit high of Rs 103.60 and low of Rs 101 so far during the day. “We once again deny the news that United Bank of India may merge with Union Bank of India and no such negotiations are in place. Furthermore, there is no information with us that needs to be submitted to Stock Exchanges in terms of Clause 36 of the Listing Agreement,” Union Bank of India said in a statement.
Tyre stocks rose as rubber futures in Tokyo and Shanghai sank today, 24 February 2014, as concern grew that property prices in China will retreat, weakening raw-material demand from the largest consumer. Natural rubber is a key raw material in tyre making.
Apollo Tyres rose 1.05% to Rs 125.70 after hitting record high of Rs 126.30 in intraday trade.
Among other tyre stocks, MRF (up 0.31%) and Goodyear India (up 1.84%) gained.
JK Tyre & Industries fell 0.11%.
CEAT shed 4.27%. The company said during market hours that company’s plant at Bhandup, Mumbai had an incident of fire at its raw material store on the evening of Sunday, 23 February 2014. The company is in the process of ascertaining the cause of the fire and also the extent of loss. The fire was contained with prompt action of the fire department. As such, there has been no loss of life and damage to the main plant and machinery, CEAT said. While the manufacturing operations have been temporarily suspended at the Bhandup plant, the company is confident to resume the production at the earliest, CEAT said.
In the foreign exchange market, the rupee reversed initial losses against the dollar. The partially convertible rupee was hovering at 62.07, compared with its close of 62.12/13 on Friday, 21 February 2014.
Government bond prices dropped after Reserve Bank of India Governor Raghuram Rajan on Sunday, 23 February 2014, warned that inflation remains the biggest threat to economic growth. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.8527%, higher than its close of 8.7954% on Friday, 21 February 2014. Bond yield and bond prices move in opposite direction.
Rajan said reining in price gains is the Reserve Bank of India’s number one challenge and action will be data dependent. “Even at this point our challenge really is to bring inflation down, because inflation is hurting growth. As inflation comes down, we will get much more possibilities for growth,” Rajan said in Sydney in an interview to a news agency. Rajan, who last month warned of a breakdown in international monetary policy cooperation, said there was “widespread agreement” that advanced economies should worry about spillover effects of central bank actions.
Finance Minister P. Chidambaram last week said that RBI must strike a balance between price stability and growth, while adding that the elected government must determine the pace of growth and policies that help the economy expand.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
Asian stocks edged lower on Monday, 24 February 2014, after a Chinese state-owned newspaper said some Chinese banks curbed loans to property developers. Key benchmark indices in Japan, Indonesia, Taiwan, China, Hong Kong and South Korea fell by 0.13% to 1.75%. In Singapore, the Straits Times index rose 0.07%
Industrial Bank Co. and other unidentified banks have curbed lending to the property sector and related industries such as steel and cement, Shanghai Securities News reported as China said new home prices rose in 69 of 70 cities last month from a year before. But the growth in new-home prices in China’s first-tier cities slowed in January, National Bureau of Statistics data today showed.
Trading in US index futures indicated that the Dow could drop 8 points at the opening bell on Monday, 24 February 2014. US stocks edged lower in choppy trade on Friday, 21 February 2014, after the latest data showed existing-home sales in January showed a bigger-than-expected decline. In other economic news on Friday, Dallas Federal Reserve President Richard Fisher said the central bank should continue to taper its bond-buying program that’s boosted stocks.
Richmond Fed President Jeffrey Lacker on Friday, 21 February 2014, said the 2008 Federal Open Market Committee transcripts released earlier in the day show “me and several other consumers of economic research grappling with some very difficult policy decisions.” In prepared comments at Arizona State, he said there wasn’t enough discussion during the crisis about specific models of banking and financial markets that there could have been, and there wasn’t enough discussion about long-term consequences. Lacker said he still opposes the Fed’s credit market interventions and said he remains “deeply skeptical about the advisability of those actions.” Speaking of the market for asset-backed commercial paper, he said markets were responding in a plausibly efficient manner to significant revisions in expectations about the underlying economic fundamentals. Lacker also said the Fed’s emergency lending program simply reallocated credit and was not like the “lender of last resort” that Henry Thornton and Walter Bagehot wrote about in the 1800s.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion.
Finance leaders from the world’s biggest economies leaned on central banks and governments to help spur growth, reverting to the global economy’s playbook of recent years, in an effort to safeguard a fragile recovery. Group of 20 officials ended their two-day summit on Sunday, 23 February 2014, saying they would look to boost world growth by more than $2 trillion over the next few years under a strategy crafted by the International Monetary Fund.
Under the G-20 plan, advanced economies would continue with their easy-money policies while emerging markets would seek to restructure their economies and tame inflation. In addition, governments everywhere would be expected to channel private-sector finance into new infrastructure projects.
The G-20’s final communiquhighlights agreement among central banks to communicate their stimulus-exit strategies clearly and in a timely fashion. The communiquwarned that the global economy faces a period of potential “excessive volatility” harmful to growth as countries adjust their economic policies. “We do not want any surprises,” Joe Hockey, Australia’s treasurer and G-20 host, said at the conclusion of the summit on Sunday.
Source: Business Standard
Published: 24 Feb 2014