Nifty may stage a rally till 6,150 but it may be met with selling
The weakness on the Indian bourses persisted almost all through the session on Thursday. By the end of the session, the stock market tried bouncing back from the day’s low but closed in the negative for the fifth consecutive session. The ongoing negative move has been caused by the scaling back of stimulus by Federal Reserve, decline in global markets and turmoil in select emerging markets like Turkey and Argentina.
The BSE Sensex and NSE Nifty opened in the negative. The Sensex opened 156 points lower at 20,492 while the Nifty opened 53 points lower at 6,067. The range bound move in the negative continued all through and by the end of the session the indices hit its low at 20,344 and 6,027. At that stage the indices pulled back and Sensex hit its days high at 20,528 and closed almost at the same level at 20,498 (down 149 points or 0.72%) while the Nifty hit its high at 6,083 and closed 6,074 (down 47 points or 0.76%). On account of the expiry of the futures and options the NSE recorded a higher volume of 74.48 crore shares.
The Finance Ministry said in a statement that India's economy is better prepared for the consequences, if any, of reduction in bond purchases by the US Federal Reserve and that the Government of India and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets.
India has no target for the rupee's exchange rate and the currency will remain range bound, the economic affairs secretary said, despite recent global market volatility. The government on Thursday increased the subsidy on cooking gas. The government has brought about increase in cylinders to 12 from 9 per household.
US indices closed in the negative on Wednesday. The Federal Reserve on Wednesday took another gradual step toward reducing the pace of monthly asset purchases. The Fed also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market.
Except for Jakarta Composite (up 0.03%) and KLSE Composite (up 0.83%) all the other Asian indices which were trading today closed in the negative. Nikkei 225 was the top loser which fell 2.45%. Taiwan stock markets are closed until 4 February 2014 for the Lunar New Year holiday.
The HSBC China Manufacturing Purchasing Managers' Index fell to a final reading of 49.5 in January 2014 from 50.5 in December 2013, HSBC Holdings PLC said today. New export orders declined for the second straight month and production grew marginally, HSBC said. The final reading was slightly lower than HSBC's preliminary January PMI of 49.6 published on 23 January 2014.
European indices were trading in the red while US Futures were trading in the green. German unemployment declined more than forecast in January as companies grew more confident in the strength of Europe’s largest economy. The number of people out of work decreased by a seasonally-adjusted 28,000 to 2.93 million, after falling a revised 19,000 in December, the Nuremberg-based Federal Labour Agency said today. The adjusted jobless rate unexpectedly fell to 6.8%, unchanged from a revised December figure and matching the lowest rate in at least two decades.
During the December quarter, Shriram Transport Finance reported a decline in its net profit to Rs301.38 crore due to higher finance cost and provisions
Shriram Transport Finance Co Ltd, India's largest asset financing non banking financial company (NBFC) said its third quarter net profit fell 13% due to higher provisions, finance cost, despite healthy growth in its revenues.
For the quarter to end-December, Shriram Transport Finance said, its net profit fell to Rs301.38 crore from Rs345.99crore, while, its total revenues, including interest income, grew 22% to Rs2,032.33 crore from Rs1,673.49 crore, same period last year.
The Shriram group company’s December quarter net interest income (NII) increased 4% to Rs934.65 crore from Rs894.70 crore during the corresponding period last year.
The lender said during the quarter it made 41% higher provisions at Rs302.15 crore when compared with Rs213.79 crore a year ago period.
Driven by healthy inflows, the company’s total asset under management (AUM) increased 15% at Rs53,376.69 crore during the December quarter compared with Rs46,544.60 crore for the same period last year.
During October, Shriram Transport Finance made public issue of secured redeemable non-convertible debentures (NCDs) to raise Rs500 crore which resulted in higher expenditure and finance cost of the company. The finance cost of Shriram Transport Finance increased 42% to Rs1,052.93 crore from Rs741.76 crore a year ago period.
During one year period, between December 2012 and December 2013 foreign institutional investors (FIIs) share holding grew 7.99% to 49.72%; domestic institutional investors (DIIs) shareholding grew 4.04% to 5.59%. On the other hand, public shareholding fell 12.6% to 18.77% as on 31 December 2013.
Shriram Transport Finance paid an interim dividend of Rs3 per equity share during October.
Shriram Transport Finance closed Thursday marginally down at Rs611 on the BSE, while the 30-share benchmark also ended the day marginally down at 20,498.
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Nifty has to close above 6,175 for the downtrend to pause. Intraday rallies are likely
The market was in the green for almost the entire session today except in the last hour of the trading, when it gave up all the gains and plunged into the negative. Yesterday, we had suggested that sellers may get active after a short rally in Nifty but this rally is yet to take place. The Sensex opened at 20,784 while the Nifty opened at 6,161. The indices immediately hit its day’s high at 20,829 and 6,170. The Sensex closed at 20,647 (down 36 points or 0.18%) while the Nifty closed at 6,120 (down 6 points or 0.10%). The fall on the Nifty was on a lower volume of 54.87 crore shares.
The market may witness a volatile session tomorrow on the expiry of futures and options. Globally, the market players also look ahead for the last meeting for Chairman Ben S Bernanke where the Federal Open Market Committee releases a statement on its trimming of its bond buying program. Janet Yellen is set to take over as the US Federal Reserve chairperson.
Justifying yesterday move of rate hike the Reserve Bank Governor Raghuram Rajan said the decision was not to ward off any possible contagion on the domestic financial markets from troubles in some of the emerging market currencies, but to bring down inflation. The governor also said he would have liked to see a stronger reduction in core inflation, which stayed steady in the past few months.
India central bank Governor Raghuram Rajan signaled he’s preparing to follow through on proposals to make inflation the bank’s top priority even at the risk of friction with Prime Minister Manmohan Singh’s government.
US indices closed in the positive on Tuesday. US President Barack Obama on Tuesday vowed aggressive action on helping the US economy, saying he would bypass Congress on key issues including creating a new retirement-savings program and raising the minimum wage for workers on new federal contracts.
Republicans slammed the president for his pledge to go solo to help narrow the economic gap. "Instead of our areas of common ground, the president focused too much on the things that divide us - many we've heard before - and warnings of unilateral action. The president must understand his power is limited by our constitution," House Speaker John Boehner said in a statement.
Consumer confidence climbed in January, with assessments of both the present situation and expectations improving, the Conference Board said Tuesday. The surprise rise took the index to the 80.7 level.
Orders for big-ticket US goods sank 4.3% in December and posted the biggest drop since midsummer, largely because of fewer bookings for autos, large aircraft and military hardware, the government said Tuesday.
US home prices ticked down 0.1% in November, the first decline in a year, with nine of 20 tracked cities posting price drops as winter approached, according to data released Tuesday.
Except for Taiwan Weighted (down 1.58%) and Straits Times (down 0.47%) all the other Asian indices closed in the positive. Nikkei 225 was the top gainer which rose 2.70%.
European indices were trading in the red while the US Futures too were trading lower. Turkey's central bank hiked all of its key interest rates at an emergency midnight policy meeting on Tuesday ignoring opposition from Prime Minister Tayyip Erdogan as it battles to defend the country's crumbling lira.