Volatility continued as key benchmark indices once again slipped into the red from green in afternoon trade. The losses for the benchmark indices were small. The market breadth indicating the overall health of the market was negative. The barometer index, the S&P BSE Sensex, was currently off 29.52 points or 0.1% at 28,664.47. Foreign portfolio investors (FPIs) bought shares worth a net Rs 935.86 crore during the previous trading session on Friday, 28 November 2014, as per provisional data.
Global crude oil prices tumbled. Fall in crude oil prices augur well for India as the country imports 80% of its crude oil requirement. However, the weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
TVS Motor Company rose after reporting strong sales in November. Airline stocks jumped on reports that state-owned oil marketing companies have reduced the prices of aviation turbine fuel (ATF) by 4.1% with effect from 1 December 2014.
On the macro front, the latest data showed India's economic growth eased in Q2 September 2014 mainly due to moderation in the growth of the agricultural and industrial sectors. Meanwhile, the result of a survey today, 1 December 2014, showed that manufacturing operating conditions in India improved for the thirteenth month in a row in November 2014, supported by stronger growth of output and new work intakes.
Earlier, key benchmark indices had trimmed gains amid volatility in early trade. The 50-unit CNX Nifty had trimmed gains after hitting record high.
In overseas markets, Asian stocks fell as a Chinese manufacturing gauge dropped and American holiday spending slowed. Trading in US equity index futures indicated a decline in US stocks at the opening bell later in the global day today, 1 December 2014, as a surge in Thanksgiving Day holiday sales failed to carry through the Black Friday weekend.
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In the foreign exchange market, the rupee edged lower against the dollar on broad strength in the greenback.
Brent crude oil futures hit four-year low, extending a steep sell-off after the Organization of Petroleum Exporting Countries (OPEC) decided not to cut production last week. Indian government's decision in October 2014 to decontrol diesel prices and a sharp decline in global crude oil prices over the past few months will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. The steep slide in global crude oil prices will also help India in containing its current account deficit and fuel price inflation. India imports 80% of its crude oil requirement. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
At 13:16 IST, the Sensex was down 29.52 points or 0.1% at 28,664.47. The index shed 33.62 points at the day's low of 28,660.37 in afternoon trade. The index jumped 115.65 points at the day's high of 28,809.64 in early trade.
The Nifty was down 3.30 points or 0.04% at 8,584.95. The index hit a low of 8,579.05 in intraday trade. The index hit a high of 8,623 in intraday trade, a record high for the index.
The market breadth indicating the overall health of the market was negative. On BSE, 1,393 shares declined and 1,196 shares gained. A total of 81 shares were unchanged.
The BSE Mid-Cap index was up 21.28 points or 0.21% at 10,291.89, outperforming the Sensex. The BSE Small-Cap index was off 13.82 points or 0.12% at 11,256.97. The fall the index was higher than Sensex's decline in percentage terms.
HDFC Bank fell 0.25%. The Foreign Investment Promotion Board (FIPB) has referred HDFC Bank's proposal for maintaining the permissible foreign holding in the bank up to 74% of the total paid up capital to the Cabinet Committee on Economic Affairs (CCEA), as the investment involved in the proposals is above Rs 1200 crore, the finance ministry said today, 1 December 2014. HDFC Bank had sought FIPB's approval for maintaining the permissible foreign holding in the bank up to 74% of the total paid up capital, out of which the FII sub-limit would be 49% and the balance 25% would be FDI.
Ambuja Cements rose 0.2%. The Foreign Investment Promotion Board (FIPB) has deferred a decision on Ambuja Cements' proposal seeking acquisition of 24% shares in its holding company Holcim (India) from the latter's holding company Holderind Investments and subsequent reverse merger through a share swap.
Eicher Motors rose 0.5%. The company reported 52% rise in total motorcycle sales to 27,542 units in November 2014 over November 2013. The company made the announcement during market hours today, 1 December 2014. Eicher Motors reported 54% jump in sales of motorcycles with engine capacity upto 350cc during the month of May 2014 to 24,610 units in November 2014 over November 2013. The company reported 39% growth in sales of motorcycles with engine capacity exceeding 350cc at 2,932 units in November 2014 over November 2013. The company's motorcycle exports fell 9% to 344 units in November 2014 over November 2013.
Meanwhile, VE Commercial Vehicles, a subsidiary of Eicher Motors, reported 23.8% rise in total sales to 2,778 units in November 2014 over November 2013. Domestic sales rose 15.8% to 2,233 units in November 2014 over November 2013. Exports jumped 72.5% to 545 units in November 2014 over November 2013. The sales figures were announced during market hours.
TVS Motor Company jumped 3.77% after reporting strong sales in November. The company said during market hours today, 1 December 2014, that its total sales jumped 36% to 2.2 lakh units in November 2014 over November 2013. Exports jumped 55% to 39,215 units in November 2014 over November 2013. Three wheeler sales of the company registered an increase of 44% to 9,067 units in November 2014 over November 2013. Total two wheeler sales increased by 36% to 2.1 lakh units in November 2014 over November 2013.
Indian Oil Corporation (IOC) declined 0.47%. With respect to recent news item captioned "IOC planning Rs 20000 crore petrochem complex in Odisha", the company clarified during market hours today, 1 December 2014, that Director (P&BD) of Indian Oil in his interaction with press has only observed that a preliminary techno-economic feasibility of value addition petrochemical projects based on the molecules that would be available from the upcoming Paradip Refinery of Indian Oil are currently being explored. However, this is subject to establishment of techno-economic viabilities and approval of the Board of Directors. If the projects get implemented, the order of magnitude of investment would be around Rs 20000 crore. This is only a preliminary estimate and there is nothing definitive at present, IOC said.
Meanwhile, petrol prices were reduced by Rs 0.91 per litre and diesel prices by Rs 0.84 with effect from midnight of 30 November 2014/1 December 2014. The international prices of both petrol and diesel have continued to be on a downtrend, IOCL said in a statement yesterday, 30 November 2014. The rupee dollar exchange rate has however appreciated since the last price change on 1 November 2014, IOCL said. The combined impact of both these factors warrant a decrease in retail selling prices of both petrol and diesel, IOCL said.
Airline stocks jumped on reports that state-owned oil marketing companies have reduced the prices of aviation turbine fuel (ATF) by 4.1% with effect from 1 December 2014. SpiceJet surged 14.11%. Jet Airways (India) rose 6.85%. ATF constitutes over 40% of an airline's operating costs. Prices of jet fuel are directly linked to crude oil prices.
In the foreign exchange market, the rupee edged lower against the dollar on broad strength in the greenback. The partially convertible rupee was hovering at 62.105, compared with its close of 62.035 during the previous trading session on Friday, 28 November 2014.
Brent crude oil futures touched a fresh four-year low, extending a steep sell-off after Organization of Petroleum Exporting Countries (OPEC) decided not to cut production last week. Brent for January settlement was off $1.62 a barrel at $68.53 a barrel. The contract had dropped $2.43 a barrel to settle at $70.15 on Friday, 28 November 2014, the lowest close since 25 May 2010.
Meanwhile, United Arab Emirates' Oil Minister Suhail Mohamed Faraj Al-Mazrouei reportedly said that OPEC has no target price it would seek to defend.
Manufacturing operating conditions in India improved for the thirteenth month in a row in November 2014, supported by stronger growth of output and new work intakes, a survey showed today, 1 December 2014. Rising from 51.6 in October 2014 to 53.3 in November 2014, the headline seasonally adjusted HSBC India Purchasing Managers' Index (PMI) - a composite indicator designed to give an accurate overview of manufacturing operating conditions - reached a 21-month peak in November. The latest improvement in business conditions was solid overall and the thirteenth in consecutive months, the survey showed.
Pranjul Bhandari, Chief India Economist at HSBC said that a sharp rise in input prices paid by manufacturers in November 2014 was surprising, but future prints may be lower as falling commodity prices eventually lead to softer intermediate good prices. He also said that the pick-up in output prices charged by manufacturers in November 2014 could partly be signalling some revival in pricing power among businesses. Higher output and an uptick in final prices should convince the Reserve Bank of India to stay on hold at a monetary policy meeting tomorrow, 2 December 2014, Bhandari said.
India's economic growth eased in Q2 September 2014 mainly due to moderation in the growth of the agricultural and industrial sectors, data released by the Central Statistical Office after trading hours on Friday, 28 November 2014, showed. The GDP grew 5.3% in Q2 September 2014, compared with 5.7% expansion in Q1 June 2014. The services sector growth has shown improvement for the second straight quarter in Q2 September 2014. On the demand side, the net foreign demand weakened, while the domestic investment demand growth slowed sharply to remain flat from 7% in Q1 June 2014. However, the domestic private consumption and government consumption growth improved in Q2 September 2014.
GDP growth in the first half of current fiscal year stood at 5.5%, compared with 4.9% expansion during the corresponding period in the previous year. India's GDP grew 4.7% in 2013-14.
The government plans to introduce the nationwide Goods and Service Tax (GST) in April 2016, the Minister of State for Finance, Jayant Sinha, said in written reply to a question in Lok Sabha on Friday, 28 November 2014. The various aspects of GST design are being discussed in the Empowered Committee of State Finance Ministers so that there is broad consensus regarding modalities of its implementation, the government said. GST has been so designed that credit of taxes paid at every stage of value addition from the point of manufacture to the point of consumptions can be availed at the next stage. GST is essentially a tax on value addition and there is seamless transfer of input tax credit across the value chain. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders.
According to the government, GST will simplify and harmonise the indirect tax regime in the country. It is expected to reduce cost of production and inflation in the economy, therby making the Indian trade and industry more competitive domestically as well as internationally. It is also expected that introduction of GST will foster a common or seamless Indian market and contribute significantly to the growth of the economy, according to the government.
The government is likely to introduce the constitutional amendment bill for GST during the ongoing winter session of parliament.
Sinha also said in written reply to another question in Lok Sabha on Friday, 28 November 2014, that a series of reforms have been initiated by the government and that many more reforms are on the anvil.
The Indian government intends to get the Insurance Laws Amendment Bill that seeks to enhance FDI limit in capital starved insurance sector passed during the winter session of parliament which began on 24 November 2014. The government is also likely to introduce the constitutional amendment bill for the goods & services tax in the winter session of parliament.
The Reserve Bank of India (RBI) undertakes monetary policy review tomorrow, 2 December 2014. The central bank aims to limit consumer-price gains to 8% by January 2015 and 6% by January 2016. Over the longer term, the RBI aims to limit consumer-price gains to 4%, within a 2% band. The annual rate of inflation based on the combined consumer price index (CPI) for urban and rural India eased to 5.52% in October 2014 from 6.46% in September 2014, data released by the government on 12 November 2014 showed.
Asian stocks fell today, 1 December 2014, as a Chinese manufacturing gauge dropped and American holiday spending slowed. Key benchmark indices in Singapore, Taiwan, China, Hong Kong and South Korea were off 0.1% to 2.58%. Key benchmark indices in Indonesia and Japan were up 0.24% to 0.75%.
The HSBC China manufacturing Purchasing Managers' Index, a gauge of nationwide manufacturing activity, fell to a six-month low of 50 in November from 50.4 in October, HSBC Holdings PLC said today, 1 December 2014. A reading below 50 indicates a contraction in manufacturing activity from the previous month, whereas a reading above indicates expansion.
China's official manufacturing Purchasing Managers Index fell to 50.3 in November compared with 50.8 in October, the National Bureau of Statistics, said today, 1 December 2014.
Meanwhile, student protesters in Hong Kong reportedly tried to seize new territory for the first time in weeks, leading to a night of scuffles with police, who cleared the area. The effort by the students, who are pushing for greater democracy in the former British colony, came amid growing public discontent with the occupation of some city roads, which entered its third month.
Japan's economy may have contracted in the third quarter but probably not by as much as surprising preliminary data showed last month, a key survey of business spending suggests. Japanese firms boosted their capital spending by 3.1% in the July to September period from the previous three-month period, the Ministry of Finance's survey of financial statistics of corporations showed today, 1 December 2014.
Trading in US index futures indicated that the Dow could fall 95 points at the opening bell today, 1 December 2014. US stocks posted a mixed finish in a holiday-shortened session on Friday, 28 November 2014, as energy shares got slammed a day after the Organization of the Petroleum Exporting Countries (OPEC) did nothing to alleviate a global supply glut. The Dow Jones Industrial Average eked out a gain of 0.49 point to end at 17,828.24, marking another record close.
Consumer spending in the United States fell to $50.9 billion over the four days through 30 November 2014, down from $57.4 billion in 2013, the National Retail Federation said in a statement today, 1 December 2014. It's the second year in a row that sales declined during the period, which had long been famous for long lines and frenzied crowds.
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