Published on February 25, 2014
India-Global Market Summary 25-2-2014 • Market closed with small gains, Sensex and Nifty reach their highest closing level in 4-1/2 weeks. The market breadth, indicating the overall health of the market, was negative. Indian stocks edged higher for the third trading session in a row today, 25 February 2014. Market edged higher in early trade on firm Asian stocks. Sensex garnered 0.2% to settle at 20,852.47 and Nifty garnered 0.23% to settle at 6,200.05, • Reserve Bank of India (RBI) Governor Raghuram Rajan said the government and the central bank shared similar views on inflation management, while reiterating a call for the US Federal Reserve to be more sensitive to emerging economies. Rajan's comments come after Finance Minister P. Chidambaram last week chided the central bank over its focus on fighting inflation, saying the RBI needed to abide by government policy to promote economic growth. "It's not as if the government is on a different page on what we've been doing on inflation thus far. They may have different views on what they would like to see done, but there is a process, there is a conversation. I think there is fair amount of coordination at the highest level," Rajan said. • Rajan said the central bank panel report on inflation was consistent with the government's stance. "We have a committee which has suggested a target, which is also by the way, consistent with the process the finance ministry's committee has suggested, so there is no disagreement about the broader need to get a framework in place. I think in terms of how I see the process, is really that the government sets the objective, and the central bank delivers on that objective," Rajan said. • Rajan said he believes India is likely to continue with its major economic policies irrespective of the government at the Centre after the upcoming general elections. "My sense is if there is a stable coalition post election, no matter which persuasion it is, the broad policies will continue. There may be difference in details but they are all for passing the Goods and Services Tax, all for a number of actions that the current government is taking," Rajan said. The central bank is likely to continue the level of coordination and discussion with the government after the elections, Rajan said. • Rajan also reiterated his call for the Federal Reserve to take into account the impact of its withdrawal of monetary stimulus on emerging economies, despite saying he was comfortable with the current pace of tapering. "I actually welcome a measured pace of tapering. The only thing I have been calling for is that in the communication there should be some sensitivity to conditions in emerging markets. And this is not from our perspective, this is broadly emerging markets, some of whom have been in trouble in the last few months. But I am fully prepared for a tapering that continues at this measured pace," Rajan said
• • • • • • • • • • • • • • Sugar stocks rose after raw sugar futures on ICE soared to three-month high on Monday, 25 February 2014, on worries about potential crop damage from dry weather in Brazil. Rising global sugar prices will help domestic sugar companies increase exports and offset the impact of falling production. India's sugar output fell over 13% to 14.4 million tonnes so far this year on delayed crushing. Mills had manufactured 16.58 million tonnes of sugar in the corresponding period of the 2012-13 marketing year (October-September), according to industry body Indian Sugar Mills Association (ISMA). On exports, ISMA said about 850,000 tonnes of sugar has been sold in the overseas market till January of this year. Of this, 450,000 tonnes was raw sugar and the rest refined. Another 1.2 to 2 lakh tonnes, mostly raw sugar, are in transit for getting exported, it added. The country had sugar stock of 11.7 million tonnes till January this year. ISMA, which has pegged sugar output at 25 million tonnes for this year, said it will soon review the estimate figures. In the foreign exchange market, the rupee edged higher against the dollar, tracking gains in other Asian currencies versus the dollar. The partially convertible rupee was hovering at 61.99, compared with its close of 62.07/08 on Monday, 24 February 2014. Metal and mining stocks edged lower. IT stocks rose on continued optimism about US business outlook, with HCL Technologies hitting record high and Wipro hitting 52-week high. Sugar stocks rose after raw sugar futures on ICE soared to three-month high on Monday, 25 February 2014, on worries about potential crop damage from dry weather in Brazil. IT stocks rose on continued optimism about US business outlook. The US is the biggest outsourcing market for Indian IT companies. Infosys rose 0.79%. Infosys on 22 February 2014 announced that it has commenced work on its new campus in Mohali, Punjab. Federal Bank gained 2.31%. The bank said that Cabinet Committee of Economic Affairs have accorded their approval for foreign equity participation upto 74% of the paid up capital of the bank, with sub-limit of 49% by FII's and 24% for NRI's. Ambuja Cements said that the High Court of Himachal Pradesh has granted a stay on the order issued earlier by the Ministry of Environment and Forest and accordingly the mining operations at Himachal Pradesh plants would now be resumed. Cadila Healthcare announced that it has received the final approval from the USFDA to market Clonidine Hcl Injection 0.1 and 0.5 mg/ml, 10 ml in the United States. Hindustan Organic Chemicals was locked at 5% upper circuit after the company said that Maharashtra Industrial Development Corporation has approached it in connection with the sale of a plot owned by the company. Kinetic Engineering was locked at 5% upper circuit after the firm said it has sold its entire shareholding in Mahindra Two Wheelers to Samena Capital, a Private Equity Investment Group focused on Asia and Middle east. Vesuvius India fell 3.61% after net profit fell 23.05% to Rs 13.59 crore on 1.17% increase in total income from operations to Rs 155.34 crore in Q4 December 2013 over Q4 December 2012 Federal Bank rose 1.9% after the bank said that CCEA has accorded its approval for foreign equity participation upto 74% of the paid-up capital of the bank, with sub-limit of 49% by FIIs and 24% for NRIs.
Global news • European stocks edged lower on Tuesday, 25 February 2014, with mining firms sliding as metals prices weakened. Chinese stocks led decline in Asian markets on Tuesday, 25 February 2014, amid speculation a weaker property market and falling yuan will curb corporate earnings in the world's second biggest economy In other Asian markets, key benchmark indices in Indonesia and Singapore were off 0.07% to 1%. Trading in US index futures indicated that the Dow drop 16 points at the opening bell on Tuesday, 25 February 2014. US stocks climbed on Monday, 24 February 2014, boosted by M&A activity, an upbeat German confidence report and bets that the S&P 500's foray into new high ground could spur further buying. The main indexes finished with solid gains, although they ended well off their session highs as buying momentum faded. • In Germany, gross domestic product rose 0.4% in the fourth quarter from the previous three months, final figures showed today, 25 February 2014, confirming a Feb. 14 estimate. • French business confidence in industry remained steady in February, at the same level recorded in the two previous months, a measure from statistics bureau Insee showed Tuesday. The indicator of French business confidence came in at 100, the long-term average for the index. • The monthly survey by Insee found that entrepreneurs in industry are more confident about recent levels of production in February, but their order books fell back a little and their outlook for production in the sector weakened slightly. Insee's wider measure of business confidence-including wholesale, construction, retail and the services sector--was also stable in February at 94. • In Italy, Prime Minister Matteo Renzi won a confidence vote in the Senate, giving his new coalition government a first indication of its backing in parliament. • Ukraine's acting president, Oleksandr Turchynov, told parliament he expects lawmakers to vote today, 25 February 2014, on a national unity government led by a prime minister people would trust. Turchynov indicated on Monday, 24 February 2014, that he expects to move quickly to fill the government vacuum so officials can seek the economic aid needed to fend off default. • 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
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