Firmness continued on the bourses with the barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hitting fresh record high in mid-morning trade. The Sensex was currently up 319.55 points or 1.12% at 28,758.46. Overnight steep slide in global crude oil prices triggered fresh rally in benchmark indices today, 28 November 2014. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index was up 1.35%, outperforming the Sensex.
Auto stocks edged higher on hopes PSU OMCs may cut petrol and diesel prices after the latest slump in crude oil prices. Airline stocks jumped after global crude oil prices tumbled yesterday, 27 November 2014. Shares of paint makers were in demand as crude oil prices fell, with Asian Paints hitting record high.
Brent crude traded near a four-year low after OPEC decided to keep the cartel's production levels unchanged at a meeting in Vienna yesterday, 27 November 2014. Indian government's decision last month 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.
The Reserve Bank of India (RBI) yesterday, 27 November 2014, set Rs 100 crore as minimum paid-up equity capital requirement for setting up payments banks and small finance banks.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 389.73 crore yesterday, 27 November 2014, as per provisional data.
In overseas markets, Japanese stocks led gains in Asian stocks after the latest data showed Japan's October retail sales rose 1.4% on year and industrial production beat forecasts with a month-on-month increase of 0.2%.
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In the foreign exchange market, the rupee edged lower against the dollar.
At 11:17 IST, the S&P BSE Sensex was up 319.55 points or 1.12% at 28,758.46. The index jumped 327.13 points at the day's high of 28,766.04 in mid-morning trade, a record high for the index. The index rose 45.08 points at the day's low of 28,483.99 in early trade.
The CNX Nifty was up 101.60 points or 1.2% at 8,595.80. The index hit a high of 8,597.75 in intraday trade, a record high for the index. The index hit a low of 8,516.25 in intraday trade.
The market breadth indicating the overall health of the market was strong. On BSE, 1,558 shares gained and 896 shares fell. A total of 89 shares were unchanged.
The BSE Mid-Cap index was up 136.99 points or 1.35% at 10,308.91, outperforming the Sensex. The BSE Small-Cap index was up 103.01 points or 0.92% at 11,344.66, underperforming the Sensex.
Auto stocks edged higher on hopes PSU OMCs may cut petrol and diesel prices after the latest slump in crude oil prices. Tata Motors (up 1.67%), Maruti Suzuki India (up 1.33 %), TVS Motor Company (up 0.91%), Hero MotoCorp (up 1.44%), Escorts (up 1.04%), Eicher Motors (up 1.33%), Mahindra & Mahindra (up 0.93%) edged higher. Bajaj Auto fell 0.17%.
PSU OMCs review fuel prices during the middle of the month and on the last day of the month based on the average imported oil price in the preceding fortnight.
Meanwhile, as per recent media reports the government may extend excise duty concessions on automobiles beyond 31 December 2014 as the industry continues to struggle with sluggish demand due to high interest rates. In February this year, the Congress led UPA government in its interim budget had reduced excise duty on automobiles for a limited period until 30 June 2014. Later, the new BJP government which came to power in May this year extended the concessional excise duty on automobiles until 31 December 2014. The excise duty on small cars, scooters, motorcycles and commercial vehicles was cut to 8% from 12%. The same for SUVs (sports utility vehicles) was slashed to 24% from 30%, while on large cars it was reduced to 24% from 27% and mid-sized cars to 20% from 24%.
Airline stocks jumped after global crude oil prices tumbled yesterday, 27 November 2014. Jet Airways (India) (up 11.07%) and SpiceJet (up 4.61) surged. Aviation turbine fuel (ATF) or jet fuel price is linked to international crude oil prices. Jet fuel constitutes about 40% of airlines' operating cost. PSU OMCs review jet fuel prices during the middle of the month and on the last day of the month based on the average imported oil price in the preceding fortnight.
Shares of paint makers were in demand as crude oil prices fell. Berger Paints (up 3.27%), Shalimar Paints (up 6.39%), Akzo Nobel India (up 1.49%) and Kansai Nerolac Paints (up 2.16%), edged higher.
Falling crude oil prices augur well for paints makers. Titanium dioxide is a key raw material for paint companies and is derived from crude oil.
Asian Paints surged 5.17% to Rs 741.90 after hitting record high of Rs 748.25 in intraday trade.
Meanwhile, the National Stock Exchange (NSE) yesterday, 27 November 2014, announced that the exchange has decided to provide a flat concession of 40% in the transaction charges on the incremental billable volume (i.e. the Premium value) above Rs 750 crore in a month for a period of 2 months from 1 December 2014 to 31 January 2015 on a pilot basis on NSE's equity options segment. In order to improve the liquidity in the equity options segment and to align with the feedback received from the market, an exercise to review the transaction charges in the equity options segment was carried out by the exchange, NSE said in a circular.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.945, compared with its close of 61.875 during the previous trading session.
Brent crude traded near a four-year low after OPEC decided to keep the cartel's production levels unchanged at a meeting in Vienna yesterday, 27 November 2014. Brent for January settlement was off 18 cents at $72.40 a barrel. The contract dropped $5.17 a barrel to settle at $72.58 yesterday, 27 November 2014, the lowest close since August 2010.
The Organization of Petroleum Exporting Countries (OPEC) will maintain its collective output target at 30 million barrels a day, Saudi Arabia's Oil Minister Ali Al-Naimi said after the group met in Vienna yesterday, 27 November 2014. The 12-member group, which pumps 40% of the world's oil, will convene again on 5 June 2015 in the Austrian capital.
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) yesterday, 27 November 2014, set Rs 100 crore as minimum paid-up equity capital requirement for setting up payments banks and small finance banks. Those eligible for setting up a payments bank include existing non-bank pre-paid payment instrument (PPI) issuers and other entities such as individuals/professionals, non-banking finance companies (NBFCs), corporate Business Correspondents (BCs), mobile telephone companies, super-market chains, companies and real sector cooperatives that are owned and controlled by residents. Public sector entities can also apply to set up payments banks, the RBI said while issuing guidelines on payments banks. A promoter/promoter group can have a joint venture with an existing scheduled commercial bank to set up a payments bank. A scheduled commercial bank can take equity stake in a payments bank only to the extent permitted under Section 19 (2) of the Banking Regulation Act, 1949. Promoter/promoter groups should be 'fit and proper' with a sound track record of professional experience or running their businesses for at least a period of five years in order to be eligible to promote payments banks, according to the RBI guidelines on payments banks.
A payment bank can accept demand deposits. However, it will initially be restricted to holding a maximum balance of Rs 1 lakh per individual customer as demand deposits. A payments bank can issue ATM/debit cards, but cannot issue credit cards. A payments bank will provide payments and remittance services through various channels. A payments bank can act as BC of another bank, subject to the Reserve Bank guidelines on BCs. The payments bank cannot undertake lending activities. Apart from amounts maintained as Cash Reserve Ratio (CRR) with the Reserve Bank of India on its outside demand and time liabilities, a payments bank will be required to invest minimum 75% of its "demand deposit balances" in Statutory Liquidity Ratio (SLR) eligible government securities/treasury bills with maturity up to one year and hold maximum 25% in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.
The payments bank should have a leverage ratio of not less than 3%, i.e., its outside liabilities should not exceed 33.33 times its net worth (paid-up capital and reserves). The promoter's minimum initial contribution to the paid-up equity capital of a payments bank shall at least be 40% for the first five years from the commencement of its business, the RBI said. The operations of a payments bank should be fully networked and technology driven from the beginning, conforming to generally accepted standards and norms, the RBI said.
Those eligible for setting up a small finance bank include resident individuals/professionals with 10 years of experience in banking and finance and companies and societies owned and controlled by residents. Existing NBFCs, Micro Finance Institutions (MFIs) and Local Area Banks (LABs) that are owned and controlled by residents can also opt for conversion into small finance banks. Promoter/promoter groups should be 'fit and proper' with a sound track record of professional experience or of running their businesses for at least a period of five years in order to be eligible to promote small finance banks, according to RBI's guidelines on small finance banks.
The small finance bank shall primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities, the RBI said. There will not be any restriction in the area of operations of small finance banks, the central bank said. If the small finance bank aspires to transit into a universal bank, such transition will not be automatic, but would be subject to fulfilling minimum paid-up capital/net worth requirement as applicable to universal banks, its satisfactory track record of performance as a small finance bank and the outcome of the RBI's due diligence exercise. The promoter's minimum initial contribution to the paid-up equity capital of a small finance bank shall at least be 40% and gradually brought down to 26% within 12 years from the date of commencement of business of the bank, the RBI said.
The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). No forbearance would be provided for complying with the statutory provisions, the RBI said. A small finance bank will be required to extend 75% of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the RBI. At least 50% of the loan portfolio a small finance bank should constitute loans and advances of upto Rs 25 lakh.
The government will announce data on gross domestic product (GDP) for Q2 September 2014 at 17:30 IST today, 28 November 2014. India's GDP grew 5.7% in Q1 June 2014 over the corresponding period of the previous year.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 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.
Japanese stocks led gains in Asian stocks today, 28 November 2014, after the latest data showed Japan's October retail sales rose 1.4% on year and industrial production beat forecasts with a month-on-month increase of 0.2%. Key benchmark indices in China, Taiwan, Singapore, and Japan were up 0.09% to 1.26%. Key benchmark indices in South Korea, Indonesia and Hong Kong were off 0.05% to 0.34%.
Japan's annual core consumer inflation slowed for a third straight month in October due to falling oil prices, highlighting the economic gloom facing Premier Shinzo Abe as he campaigns for a new mandate to implement his stalled recovery plan. Factory output unexpectedly rose in October, suggesting companies have reduced inventories of unsold goods built up after April's sales tax hike triggered a recession.
Trading in US index futures indicated that the Dow could gain 18 points at the opening bell today, 28 November 2014. The US market was closed yesterday, 27 November 2014, for Thanksgiving Day holiday.
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