Nifty falls below psychological 6,000 level

A sudden slide pushed key benchmark indices from positive zone to negative zone in mid-morning trade. The 50-unit CNX Nifty fell below the psychological 6,000 mark. The market sentiment was affected adversely by data showing that foreign funds remained sellers of Indian stocks on Wednesday, 5 February 2014. The barometer index, the S&P BSE Sensex, was down 96.83 points or 0.48%, off about 195 points from the day’s high and up close to 80 points from the day’s low. The 50-unit CNX Nifty slipped below the psychological 6,000 mark. The market breadth, indicating the overall health of the market, was positive.

Telecom stocks rose across the board. IT stocks fell as Cognizant Technology Solutions Corp forecast 2014 revenue below analysts’ expectations on Wednesday, 5 February 2014, raising concerns about the sector’s growth prospects. Bank of Baroda rose after announcing its Q3 result.

The market edged higher in early trade on firm Asian stocks. Key benchmark indices retained positive terrain in morning trade. A sudden slide pushed key benchmark indices from positive zone to negative zone in mid-morning trade.

The market sentiment was affected adversely by data showing that foreign funds remained sellers of Indian stocks on Wednesday, 5 February 2014. Foreign institutional investors (FIIs) sold shares worth a net Rs 576.20 crore on Wednesday, 5 February 2014, as per provisional data from the stock exchanges.

At 11:20 IST, the S&P BSE Sensex was down 96.83 points or 0.48% to 20,164.20. The index dropped 181.21 points at the day’s low of 20,079.82 in mid-morning trade. The index rose 97.16 points at the day’s high of 20,358.19 in morning trade, its highest level since 3 February 2014.

The CNX Nifty was down 34.55 points or 0.57% to 5,987.85. The index hit a low of 5,965.40 in intraday trade. The index hit a high of 6,048.35 in intraday trade, its highest level since 3 February 2014.

The BSE Mid-Cap index was up 2.12 points or 0.03% at 6,312.68. The BSE Small-Cap index was up 14.60 points or 0.23% at 6,320.02. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,020 shares rose and 939 shares fell. A total of 121 shares were unchanged.

Among the 30-share Sensex pack, 20 stocks fell and rest rose. Bhel (down 3.15%), ICICI Bank (down 1.63%) and HDFC (down 1.25%) edged lower from the Sensex pack.

Bank of Baroda rose 1.14%. The bank’s net profit rose 3.58% to Rs 1047.84 crore on 9.67% increase in total income to Rs 10622.80 crore in Q3 December 2013 over Q3 December 2012. The result was announced during market hours.

IT stocks fell as Cognizant Technology Solutions Corp forecast 2014 revenue below analysts’ expectations on Wednesday, 5 February 2014, raising concerns about the sector’s growth prospects. TCS (down 1.76%), Tech Mahindra (down 0.5%), Infosys (down 0.97%) and HCL Technologies (down 1.71%) declined. Wipro rose 0.49%.

Cognizant said it expects revenue to grow at least 16.5% in 2014, the slowest growth since 2009 and lower than the 20.4% growth in 2013.

Telecom stocks rose across the board. MTNL (up 2.01%), Tata Teleservices (Maharashtra) (up 0.96%), Reliance Communications (up 1.03%), Idea Cellular (up 1.6%) and Bharti Airtel (up 0.56%) gained.

The auction of spectrum in the 1800 MHz and 900 MHz band that began on 3 February 2014, continued for the 3rd day on Wednesday, 5 February 2014. At the end of day three, 21 rounds of bidding have been completed. Bids have been received in all 22 service areas in 1800 MHz band and in all 3 service areas in 900 MHz band.

Highest demand for 900 MHz was seen from Delhi circle and in 1,800 MHz highest bid was seen in Assam and West Bengal circles.

The provisional winning price per block for the 900 MHz band at the end of round 21 on Wednesday, 5 February 2014, for Delhi telecom circle touched Rs 574.08 crore. Mumbai bid price was Rs 563.09 crore and Kolkata wireless business attracted bids worth Rs 192.71 crore in the 900 MHz band.

Praj Industries rose 1.89% after consolidated net profit surged 275.11% to Rs 24.27 crore on 38.53% growth in income from operations to Rs 269.10 crore in Q3 December 2013 over Q2 September 2013. The Q3 result was announced after market hours on Wednesday, 5 February 2014.

Praj Industries’ consolidated net profit rose 0.2% to Rs 24.27 crore on 15.03% growth in income from operations to Rs 269.10 crore in Q3 December 2013 over Q3 December 2012.

Commenting on the company’s financial performance, Mr. Gajanan Nabar, CEO & MD, Praj Industries said, “As guided earlier, performance has surged this quarter and the second half of fiscal 2014 is on track to be stronger than the first half. While the level of capital investment activity remains moderate we have been able to sustain order backlog through our focus on value engineering and innovative solutions that are customized to client needs. We have also focused on operating excellence which can be seen by overall improvement in EBIDTA margins”.

Blue Dart Express lost 1.89% after net profit declined 48.8% to Rs 23.04 crore on 10.3% growth in net sales to Rs 505.41 crore in the quarter ended 31 December 2013 over the quarter ended 31 December 2012. The Q3 result was announced after market hours on Wednesday, 5 February 2014.

Commenting on the company’s financial performance, Anil Khanna, MD, Blue Dart Express said, “Despite tough economic challenges, Blue Dart has delivered value to its stakeholders by incorporating high benchmarks and quality standards in every aspect of business. Blue Dart has steered through successfully with a clear focus on fundamentals like quality, consistency, reliability, passion and commitment. With this holistic approach, Blue Dart will remain an undisputed leader in the industry and consistently achieve higher growth in the years to come”.

Blue Dart Express’ board of directors at its meeting held on Wednesday, 5 February 2014, declared interim dividend of Rs 35 per share for the year ending 31 March 2014. The record date for the payment of interim dividend is fixed as 17 February 2014.

In the foreign exchange market, the rupee edged higher against the dollar on global risk-on sentiment. The partially convertible rupee was hovering at 62.52, compared with its close of 62.57/58 on Wednesday, 5 February 2014.

Bond prices rose after the Ministry of Finance on Wednesday, 5 February 2014, said that the government has decided to cancel the deferred auction of dated securities worth Rs 15000 crore. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6898%, lower than its close of 8.7066% on Wednesday, 5 February 2014. Bond yield and bond prices move in opposite direction.

On review of the Government of India’s cash position and funding requirement, it has been decided to cancel the deferred auction scheduled on 17 January 2014 for Rs 15,000 crore, the Ministry of Finance said in a statement on Wednesday, 5 February 2014. This would result in decrease in government market borrowing programme for 2013-14 to that extent, it said.

Meanwhile, the Reserve Bank of India (RBI) announced that it has partially completed the debt-switching program at Rs 27000 crore with an institutional investor against budget proposal of Rs 50000 crore.

Finance Minister P Chidambaram will present the Vote-on-Account or interim budget on 17 February 2014. The objective of a Vote-on-Account is to get Parliament’s nod for expenditure to be incurred in the months prior to elections. The next full-fledged budget will be presented by the new government which comes to power after the Lok Sabha polls in April-May 2014.

The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Sighting elevated consumer price inflation, 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 shares edged higher on Thursday, 6 February 2014, as investors weighed earnings and US data showing service-industries growth against a private jobs report that missed estimates. Key benchmark indices in Indonesia, Japan, South Korea, Hong Kong, Singapore and Taiwan rose 0.33% to 0.9%

Stock markets in mainland China remain closed until tomorrow, 7 February 2014 for the Lunar New Year holiday.

Trading in US index futures indicated that the Dow could advance 37 points at the opening bell on Thursday, 6 February 2014. US stocks ended Wednesday’s choppy session lower after a weaker-than-expected report on private-sector employment. Philadelphia Fed President Charles Plosser’s comments urging to speed up the tapering reminded investors that quantitative easing is unlikely to come to aid the markets in 2014.

Growth picked up in the US services sector in January, with steady strength in private-sector hiring, suggesting the winter weather that socked the country over the last several weeks had a limited effect on the economy.

Companies in the US boosted payrolls by 175,000 in January, the ADP Research Institute said on Wednesday, 5 February 2014, before the government’s monthly jobs data tomorrow, 7 February 2014.

Philadelphia President Charles Plosser, who votes on policy this year, on Wednesday, 5 February 2014, said he expects the economy to expand 3% in 2014 as the jobless rate falls to 6.2% by year-end, warranting a quicker tapering to bond purchases by the central bank. Policy makers made the first two cuts to asset purchases in December and January, slowing to $65 billion a month from $85 billion. While welcoming the trims, Plosser said they may prove to be insufficient if growth keeps accelerating. “My preference is to scale back our purchase program at a faster pace to reflect the strengthening economy,” he said in a speech in Rochester, New York. “We must begin to back away from increasing the degree of policy accommodation in a manner commensurate with an improving economy,” said Plosser, who has opposed the bond purchases by the Fed. Labor markets will continue to improve and inflation expectations will be relatively stable as price increases move up toward the Fed’s 2% goal over the next year, Plosser said. The economy has met the criteria of significant improvement in labor market conditions for ending the quantitative easing program, Plosser said. “Further increases in the balance sheet are unlikely to provide appreciable benefits for the recovery, Plosser said.

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. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market.

In Europe, the European Central Bank (ECB) undertakes monthly monetary policy review today, 6 February 2014, amid speculation the ECB will reinforce its commitment to lower rates. The ECB will probably hold the benchmark interest rate at a record-low 0.25% at its policy meeting tomorrow, 6 February 2014, as it faces slowing inflation. After the Jan. 9 policy meeting, ECB President Mario Draghi said the central bank “strongly emphasizes” that it will maintain accommodative measures for as long as necessary.

The Bank of England’s (BoE) Monetary Policy Committee (MPC) undertakes monthly monetary policy review today, 6 February 2014, with markets waiting to see if Governor Mark Carney will alter guidance on lifting its record-low interest rate. The MPC is widely expected to keep the BoE’s main interest rate at a record-low level of 0.5%. It is widely predicted also to maintain quantitative easing at 375 billion ($613 billion, 454 billion euros), opting against following the US Federal Reserve in tapering stimulus.

Britain’s 12-month inflation slowed to 2% in December, recent official data showed, touching the lowest level for more than four years. The BoE’s main task is to use monetary policy as a tool to keep annual inflation close to a government-set target of 2%, to preserve the value of money.