Firmness continued on the bourses in morning trade. The mood was upbeat after the government's decision on Saturday, 18 October 2014, to deregulate diesel prices and raise gas prices. The deregulation of diesel prices will reduce the government's fuel subsidy burden. As a result of the gas price hike, the government will get additional revenue of approximately Rs 3800 crore per annum on account of higher royalty, higher profit petroleum and higher taxes. Investors also cheered a strong showing of the Bharatiya Janata Party (BJP) in assembly election in Maharashtra and Haryana. Gains in Asian stocks also boosted sentiment on the domestic bourses. The barometer index, the S&P BSE Sensex, was currently up 334.99 points or 1.28% at 26,443.52. The market breadth was strong, with more than 3 gainers for every loser on BSE. The BSE Mid-Cap index and the BSE Small-Cap index were up 1.41% each. Both these indices outperformed the Sensex.
Meanwhile, a sharp cut in diesel price announced by oil marketing companies on Saturday, 18 October 2014, is expected to bring down freight rates. This could reduce consumer price inflation and provide room for the Reserve Bank of India (RBI) to cut interest rates. Diesel is the main fuel for transporters and directly affects the retail price of items ranging from foodstuffs to white goods that are transported across cities.
The Bharatiya Janata Party (BJP) on Sunday, 19 October 2014, created history in Haryana by securing a clear majority on its own for the first time and is set to form the government in state. For the first time, the BJP emerged with a clear mandate in Haryana, winning 47 seats in the 90-member assembly with a 33.2% vote share. The party emerged as the single largest party in Maharashtra and is set to form the government in state. In Maharashtra, the BJP won 122 seats in the 288-member assembly, falling well short of the 145 seats required for a simple majority. Its ally Rashtriya Samaj Paksha won one. The NCP, which won 41 seats, said it will offer BJP outside support to form a stable government in the state, leaving the former BJP ally and runner up Shiv Sena high and dry. The Shiv Sena won 63 seats. Shiv Sena Chief Uddhav Thackeray said after the election results that nobody from the BJP has approached his party for support, and his party would not approach it with any proposal.
The results of the assembly elections for Maharashtra and Haryana were announced yesterday, 19 October 2014. The polls for the assembly election in these two states were held on 15 October 2014.
IT stocks declined on a firm rupee. Jindal Steel and Power tumbled. LIC Housing Finance rose after good Q2 results.
Earlier, key indices had their highest level in almost a week at the onset of the trading session after the government's decision on Saturday, 18 October 2014, to deregulate diesel prices and raise gas prices.
In overseas markets, Asian stocks started the week on a brighter note after solid US data and earnings calmed tumult in global financial markets and reassured investors worried about the health of the world economy. Trading in US index futures indicated a higher opening of US stocks later in the global day today, 20 October 2014.
Brent crude futures edged higher after robust US data buoyed global financial markets, with a cut in Saudi-Kuwait oil output providing further support.
In the foreign exchange market, the rupee edged higher against the dollarafter the government's decision on Saturday, 18 October 2014, to deregulate diesel prices and raise gas prices.
At 10:25 IST, the S&P BSE Sensex was up 334.99 points or 1.28% at 26,443.52. The index jumped 392.51 points at the day's high of 26,501.04 at the onset of the trading session, its highest level since 14 October 2014. The index rose 291.31 points at the day's low of 26,399.84 in early trade.
The CNX Nifty was up 105.95 points or 1.36% at 7,885.65. The index hit a high of 7,898.80 in intraday trade, its highest level since 14 October 2014. The index hit a low of 7,872.20 in intraday trade.
The BSE Mid-Cap index was up 130.53 points or 1.41% at 9,403.02. The BSE Small-Cap index was up 145.40 points or 1.41% at 10,459.37. Both these indides outperformed the Sensex.
The market breadth indicating the overall health of the market was strong with more than 3 gainers for every loser on BSE. 1,499 shares rose while 463 shares declined. A total of 64 shares were unchanged.
Among the 30 Sensex shares, 25 rose and the remaining shares fell. Hero MotoCorp (down 0.59%) and Reliance Industries (down 0.43%), edged lower from the Sensex pack.
Jindal Steel & Power slumped 7.56% at Rs 136.90.
IT stocks declined on a firm rupee. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports. Infosys (down 1.16%), TCS (down 0.65%) and Wipro (down 0.51%) edged lower. HCL Technologies was up 0.39% at Rs 1,511.45.
Persistent Systems fell 3.24% The company's consolidated net profit rose 3.6% to Rs 71.31 crore on 6.7% rise in total income to Rs 464.17 crore in Q2 September 2014 over Q1 June 2014. The company announced Q2 results on Saturday, 18 October 2014.
LIC Housing Finance rose 0.77%. The company's net profit rose 10.08% to Rs 341.35 crore on 15.47% rise in total income to Rs 2658.69 crore in Q2 September 2014 over Q2 September 2013. The company announced Q2 results on Saturday, 18 October 2014.
Canara Bank rose 2.61%. The state-run bank announced on Saturday, 18 October 2014, that the bank has received approval of the government dated 17 October 2014 for rising of equity capital of Rs 80 crore with additional premium of Rs 5 crore through qualified institutional placement (QIP) during the year ending 31 March 2015 (FY 2015). The bank is taking steps in this direction to raise the equity capital during the current financial year.
Everest Industries fell 1.94%. The company announced on Friday, 17 October 2014, that board of directors of the company at its meeting held on 17 October 2014, has approved the setting up of a 72,000 mtpa Fibre Cement Boards plant in UAE through its wholly owned subsidiary company in Mauritius subject to grant of applicable approvals.
Arvind rose 1.59%. The company announced on Saturday, 18 October 2014, that it has voluntarily sought the delisting of GDRs from Luxembourg Stock Exchange. The GDRs listing have been cancelled from Luxembourg Stock Exchange with effect from 3 October 2014 consequent upon termination of Deposit Agreement with the Depository J P Morgan Chase Bank N. A., New York after its resignation as a Depository. The company has not appointed any Successor Depository and has terminated the Deposit Agreement for lack of liquidity with virtually no trading taking place due to investors' decreasing interest in depositary receipts, Arvind said.
Oberoi Realty rose 2.58%. The company's consolidated net profit rose 9.97% to Rs 70.54 crore on 6.09% fall in total income to Rs 189.37 crore in Q2 September 2014 over Q2 September 2013. The company announced Q2 results on Saturday, 18 October 2014.
Geojit BNP Paribas rose 2.50%. The company reported consolidated net profit of Rs 19.99 crore in Q2 September 2014 compared with net loss of Rs 94.20 crore in Q2 September 2013. Total income from operations rose on 56.67% to Rs 75.55 crore in Q2 September 2014 over Q2 September 2013. The company announced Q2 results on Saturday, 18 October 2014.
Sadbhav Engineering rose 1.36%. The company said after market hours on Friday, 17 October 2014, that the qualified institutional placement (QIP) Committee (the committee) of the board of directors of the company at its meeting held on 17 October 2014 has decided to close the Issue and has accorded its consent for the issue of up to 1.15 crore shares at a price of Rs 216, for an aggregate value of Rs 249.99 crore at a discount of Rs 3.0625 per share to the floor price of Rs 219.0625 per share.
Kolte Patil Developers fell 3.29%. The company's consolidated net profit fell 60.56% to Rs 12.70 crore on 16.28% decline in total income from operations to Rs 157.89 crore in Q2 September 2014 over Q2 September 2013. The company announced Q2 results on Saturday, 18 October 2014.
Meanwhile, provisional data released by the stock exchanges after trading hours on Friday, 17 October 2014, showed that foreign portfolio investors (FPIs) sold shares worth a net Rs 1430.03 crore on that day.
In the foreign exchange market, the rupee edged higher against the dollarafter the government's decision on Saturday, 18 October 2014, to deregulate diesel prices and raise gas prices. The partially convertible rupee was hovering at 61.2175, compared with its close of 61.44 during the previous trading session.
Brent crude futures edged higher after robust US data buoyed global financial markets, with a cut in Saudi-Kuwait oil output providing further support. Brent for December settlement was up 16 cents at $86.32 a barrel. The contract had risen 34 cents to end at $86.16 a barrel on Friday, 17 October 2014.
Japanese stocks led a rally in Asia on Monday, 20 October 2014, after solid US data and earnings reassured investors worried about the health of the world economy. Key benchmark indices in Japan, China, Taiwan, South Korea Hong Kong, Singapore and Indonesia were up 0.25% to 3.53%.
Trading in US index futures indicated that the Dow could gain 84 points at the opening bell today, 20 October 2014. US stocks rallied on Friday, 17 October 2014, as earnings beat estimates, consumer confidence reached a seven-year high and investors speculated that central banks will add more economic stimulus. The Standard & Poor's 500 Index (SPX) rose 1.3% to 1,886.76. The Dow Jones Industrial Average increased 263.17 points, or 1.6%, to 16,380.41. The Nasdaq Composite Index climbed 0.96% to 4,258.
US consumer confidence unexpectedly rose in October to the highest level in seven years, showing a brightening in Americans' moods as gas prices drop and the labor market gains traction. The Thomson Reuters/University of Michigan preliminary sentiment index for this month increased to 86.4, the strongest since July 2007.
The Federal Reserve may want to extend its bond-buying program beyond October to keep its policy options open given falling US inflation expectations, Federal Reserve Bank of St. Louis President James Bullard said on 16 October 2014.
The Federal Open Market Committee (FOMC) next undertakes a monetary policy review at a two-day meeting on 28-29 October 2014.
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