Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could fall 9 points at the opening bell tracking weak Asian stocks.
In overseas markets, Asian stocks edged lower today, 15 June 2015, after Greece's talks with lenders to avert a default ended with no agreement.US stocks dropped on Friday, 12 June 2015, after upbeat consumer data capped a week of solid economic reports, backing the view that the US Federal Reserve was on track to raise interest rates as early as this autumn.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 670.96 crore on Friday, 12 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 705.58 crore on Friday, 12 June 2015, as per provisional data.
Among corporate news, Vedanta, Cairn India and Vedanta Resources plc (Vedanta plc) together with its subsidiaries on 14 June 2015, announced a merger between Vedanta and Cairn India. As per the scheme, minority shareholders of Cairn India will receive for each equity shares held, one equity share in Vedanta of face value of Rs 1 each and one 7.5% redeemable preference share (RPS) in Vedanta with a face value of Rs 10. No shares will be issued to Vedanta or any of its subsidiaries for their shareholding in Cairn India. Approximately 75.20 crore of each of equity shares and RPS will be issued to the minority shareholders of Cairn India by Vedanta pursuant to the merger. Post completion of the transaction, Vedanta plc ownership in Vedanta is expected to decrease to 50.1% from its current 62.9% shareholding. Cairn India minority shareholders will own 20.2% and Vedanta minority shareholders will own a 29.7% stake in the enlarged entity. The transaction is expected to be tax-neutral for Vedanta, Cairn India and their shareholders under Indian law. Vedanta would further consider consolidation of some of its wholly owned foreign subsidiaries. Vedanta will continue to be listed on the BSE and NSE, with American Depository Shares (ADS) listed on the New York Stock Exchange (NYSE), and Vedanta plc will continue to be premium listed on the London Stock Exchange (LSE). Cairn India's BSE and NSE listings will be cancelled following completion of the transaction.
This merger accounting would be done under pooling of interest method. As part of this accounting treatment, goodwill appearing in the books of Vedanta and Cairn India would be adjusted against reserves including securities premium account. This will have no impact on cash or the profit and loss account. The transaction is expected to close in the first quarter of calendar year (CY) 2016.
Bank stocks will be in focus after public sector banks and private sector banks unanimously expressed at a meeting between Finance Minister Arun Jaitley with CMDs of public sector banks (PSBs), private banks and Financial Institutions (FIs) on Friday, 12 June 2015, that in a period of 2-3 months, greater transmission of lower rates by commercial banks could be seen. The CMDs of banks, both PSBs and private banks expressed that until the cost of funds/deposits for the banks, as reflected in the re-pricing of their liability book at the new rate comes down and liquidity levels at the new lower costs are tested, full transmission would not be viable, according to a statement issued by the finance ministry after trading hours on Friday, 12 June 2015. Commercial banks were responding to a query by Jaitley as to why the banking system, in response to the Reserve Bank of India's (RBI) rate cut of 75 basis points since January 2015, effected a corresponding rate cut of only 25 basis points. The Finance Minister held the Annual Review Meeting with the CEOs of banks (including private banks), insurance companies and FIs for the year ended 31 March 2015 on Friday, 12 June 2015.
Jaitley also expressed his concern over the modest growth of domestic credit of 7% over the previous year registered by PSBs and took stock of the sectoral profile of the total domestic credit flow of Rs 49.01 lakh crore during 2014-15. The Finance Minister urged the bankers to achieve the target of 20% growth in educational loan asset by the Department of Financial Services (DFS), Ministry of Finance and also attempt to even out the huge regional disparity in such loans. The Finance Minister noted the good growth at 16-18% in the housing sector and also strongly advised the PSBs to achieve a 30% growth in priority sector housing loans, which are intrinsically secure loans and which are required to provide a stimulus to overall growth.
As regards non-performing assets (NPAs), the PSBs continue to be under stress on account of their past lending. Jaitley advised that the RBI, Government Departments and the financial institutions should collectively examine solutions that work, so as to de-bottleneck those critical projects of economic value. Jaitley suggested that Secretary, Department of Financial Services (DFS) obtain a list of all major projects stalled purely due to financial reasons and attempt to sort out the sticky issues along with the concerned banks. He also suggested that DFS and RBI should interact to examine and sort out the regulatory issues in NPAs and the scope for their modification to ease the pressure on banks. The Minister of State for Finance Jayant Sinha mentioned an additional view that banks should sell off their non-core assets. Jaitley himself said he would like to sort out issues which relate to state governments and other central government ministries.
In another separate announcement, the finance ministry after trading hours on Friday, 12 June 2015, said that in order to assess capital requirement of PSBs, all PSBs have been requested to make presentations to the Department of Financial Services, Ministry of Finance. Earlier, during the Quarterly Review of Public Sector Banks' performance held on 11 March, 2015, it was discussed that the banks should work-out/find-out their own resources for raising capital and also work-out their own plan for raising capital from market, the finance ministry said.
Reliance Industries (RIL) on Saturday, 13 June 2015 said that its CFO has received summons from Mumbai Police in the matter concerning the road accident involving Ms. Jhanvi Ghadkar. This is being disclosed to the stock exchanges as he is a key managerial personnel, RIL said.
NTPC on Saturday, 13 June 2015 said that th unit no. 4 of 200 megawatts (MW) of Koldam Hydro Power Project has been commissioned on Friday, 12 June 2015. With this, the total installed capacity of Koldam Hydro Power Project has become 800 MW and the total installed capacity of NTPC group has become 44,798 MW, the company said.
Infosys will be in focus. With regard to news item titled "TCS, Infosys face US probe for H-1B visa violations", Infosys after market hours on Friday, 12 June 2015 in a clarification said that it has not received any notification or intimation with respect to H-1B visa violations. Infosys also stated that it is committed to complying with US immigration laws. The US Department of Labor (DOL) regularly selects a percentage of visa and labor condition applications for extra scrutiny in this industry, and the company work closely with the DOL to assist them in this activity in the ordinary course of our business, Infosys said. Infosys said it has received no indication of any broader investigation of the company's visa practices.
Meanwhile, TCS in its clarification with regard to above news item said that the company maintains rigorous internal controls to ensure it is fully compliant with all regulatory requirements related to US immigration laws including those related to H-1B visas.
On macro front, India's Index of industrial production (IIP) rose at an accelerated pace of 4.1% in April 2015 over a year ago compared with the revised growth of 2.5% in March 2015. The IIP growth for March 2015 has been scaled up to 2.5% in the first revision compared with 2.1% reported provisionally. Meanwhile, the growth in January 2015 has been revised slightly upwards to 2.83% in the second and final revision compared with 2.77% at the first revision and 2.55% released provisionally.
Inflation based on consumer price index (CPI) moved up slightly to 5.01% in May 2015 from 4.87% in April 2015. An increase in inflation for transportation and communication contributed to the rise in overall CPI inflation, while food items inflation declined restructuring the increase in overall CPI inflation in May 2015.
The corresponding provisional inflation rate for rural area was 5.5% and urban area 4.4% in May 2015 as against 5.3% and 4.4% in April 2015. The core CPI inflation rose to 4.4% in May 2015 from 4% in April 2015 and 3.9% in March 2015. The data on IIP and CPI were announced after market hours on Friday, 12 June 2015.
Meanwhile, data on the first installment of advance tax payment by corporate taxpayers may provide cues on likely Q1 June 2015 corporate earnings. Companies have to pay 15% of the full year's estimated tax liability as the first installment of the advance tax on or before 15 June every year.
The Reserve Bank of India (RBI) on Friday, 12 June 2015, issued final guidelines for introduction of 6-year and 13-year cash settled interest rate futures (IRF) on Government of India Securities with residual maturity of 4-8 years and 11-15 years respectively. The RBI also expanded the residual maturity for the existing 10-year cash settled IRF from 9-11 years to 8-11 years. This would provide market participants greater choice and flexibility to hedge their interest rate risk across different tenors, the RBI said in a press release.
India Meteorological Department (IMD) in its report on Sunday, 14 June 2015, said that all India rainfall was 5% above Long Term Average for the period of 1 June 2015 to 13 June 2015.
Asian stocks edged lower today, 15 June 2015, after Greece's talks with lenders to avert a default ended with no agreement. Key benchmark indices in China, Singapore, Hong Kong, Taiwan, Indonesia, Japan, and South Korea shed by 0.08% to 1.16%.
US stocks dropped on Friday, 12 June 2015, after upbeat consumer data capped a week of solid economic reports, backing the view that the US Federal Reserve was on track to raise interest rates as early as this autumn.
A two-day meeting of the Federal Open Market Committee (FOMC) to review US monetary policy will start tomorrow, 16 June 2015. The FOMC meeting is being keenly watched for further indication of the timing of an expected rate hike by the US central bank later this calendar year.
In Europe, talks on ending a deadlock between Greece and its international creditors reportedly broke up in failure on Sunday, 14 June 2015, with European leaders venting their frustration as Athens stumbled closer towards a debt default that threatens its future in the euro. European Union officials blamed the collapse of the talks on Athens, which it said had failed to offer any new concessions to secure funding it needs to repay 1.6 billion euros ($1.79 billion) to the International Monetary Fund by the end of this month.
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