Key benchmark indices extended gains and hit fresh intraday high in mid-morning trade. The barometer index the S&P BSE Sensex, was currently trading below 27,000 level, having alternately moved above and below that mark in intraday trade so far. The Sensex and the 50-unit CNX Nifty were, both, currently trading with gains of more than 1% each. The broad market showed strength. There were more than three gainers against every loser on BSE. The Sensex was currently up 399.81 points or 1.5% at 26,998.92. The BSE Mid-Cap index was up 1.65%. The BSE Small-Cap index was up 1.76%. Both these indices outperformed the Sensex.
The market sentiment was boosted by the government yesterday, 7 May 2015, announcing the setting up a committee to suggest ways to resolve the minimum alternative tax (MAT) dispute with foreign investors as well as some other tax issues. Firmness in Asian stocks, decline in crude oil prices and rupee's recovery against the dollar after a recent steep slide also helped boost sentiment on the domestic bourses.
Hero MotoCorp (HMCL) declined after reporting weak Q4 results. Tata Motors rose after the company after trading hours yesterday, 7 May 2015, announced that its rights issue was oversubscribed 1.21 times. FMCG stocks gained on renewed buying. FMCG major Hindustan Unilever gained ahead of its Q4 March 2015 earnings today, 8 May 2015.
In overseas markets, Asian stocks edged higher on signs global bond markets are stabilising after a big selloff. US stocks rose yesterday, 7 May 2015, a day after they fell in the wake of the Federal Reserve chief's warning over high equity valuations.
Foreign portfolio investors sold shares worth a net Rs 1360.69 crore yesterday, 7 May 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1158.02 crore yesterday, 7 May 2015, as per provisional data released by the stock exchanges.
At 11:27 IST, the S&P BSE Sensex was up 399.81 points or 1.5% at 26,998.92. The index surged 412.97 points at the day's high of 27,012.08 in mid-morning trade, its highest level since 6 May 2015. The index rose 215.27 points at the day's low of 26,814.38 in early trade.
The Nifty was up 117.35 points or 1.46% at 8,174.65. The index hit a high of 8,178.25 in intraday trade, its highest level since 6 May 2015. The index hit a low of 8,123.45 in intraday trade.
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The BSE Mid-Cap index was up 166.34 points or 1.65% at 10,231.90. The BSE Small-Cap index was up 187.48 points or 1.76% at 10,838.87. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was quite strong, with more than three gainers against every loser on BSE. 1,675 shares rose and 515 shares fell. A total of 76 shares were unchanged.
Auto stocks gained. Mahindra & Mahindra (M&M) (up 2.81%), Ashok Leyland (up 3.44%), Maruti Suzuki India (up 1.85%), Eicher Motors (up 2.42%), Bajaj Auto (up 2.76%) and TVS Motor Company (up 4.56%) gained.
Tata Motors rose after the company after trading hours yesterday, 7 May 2015, announced that its rights issue was oversubscribed 1.21 times. The stock rose 4.06%. Tata Motors collected an amount of Rs 9040.56 crore on applications. The rights issue of ordinary shares was oversubscribed by 1.17 times with an amount of Rs 7956.73 crore collected on applications and the rights issue of 'A' Ordinary Shares was oversubscribed by 1.51 times with an amount of Rs 1083.83 crore collected on applications, Tata Motors said. The company had aimed raising upto Rs 7500 crore from rights issue which closed on 2 May 2015.
The proceeds from the rights issue are intended to be used for funding expenditure towards plant and machinery, research and product development, repayment in full or in part of certain long-term and short term borrowings, and general corporate purposes.
Hero MotoCorp (HMCL) declined after reporting weak Q4 results. The stock fell 3.06% to Rs 2,282. The stock hit high of Rs 2,312 and low of Rs 2,256 so far during the day. The company's net profit after exceptional item fell 14.05% to Rs 476.53 crore on 4.31% growth in total turnover (net sales & other operating income) to Rs 6793.87 crore in Q4 March 2015 over Q4 March 2014. The result was announced after market hours yesterday, 7 May 2015.
There was an impairment cost of Rs 155.04 crore ($25 million) in Q4 March 2015 pertaining to equity investment in Erik Buell Racing, Inc., a Delaware Corporation (EBR) through HMCL NA Inc, subsidiary of HMCL. EBR has filed an Assignment for Benefit of Creditors under Chapter 128 of the Wisconsin Statutes, which is similar to the federal bankruptcy law of the United States of America.
Pawan Munjal, Vice Chairman, Chief Executive Officer & Managing Director of HMCL said that the auto industry has remained sluggish due to the slowing rural economy on account of poor crop realization and moderating wages in the rural markets. Going forward, the company remains cautiously optimistic in its near to medium term outlook, Munjal said. An overall improvement in the economy and positive market sentiments are required for the industry to get back to the trend of healthy double digit growth, he added. HMCL will continue to focus on its strengths and keep providing the best of products to its customers in India and across the globe, Munjal said.
FMCG stocks gained. Tata Global Beverages (up 1.89%), Nestle India (up 0.59%), Britannia Industries (up 0.95%), Jyothy Laboratories (up 1.51%), Procter & Gamble Hygiene and Health Care (up 2.26%), Dabur India (up 1.17%), Colgate Palmolive India (up 1.27%), GlaxoSmithkline Consumer Healthcare (up 0.18%), Godrej Consumer Products (up 3.01%), and Bajaj Corp (up 4.26%) gained. Marico declined 0.76%.
FMCG major Hindustan Unilever gained 1.77% ahead of its Q4 March 2015 earnings today, 8 May 2015.
Brent crude oil futures extended previous session's sharp decline. Brent for June settlement was down 19 cents at $65.35 a barrel. The contract had fallen $2.23 a barrel, or 3.29% to settle at $65.54 a barrel during the previous trading session.
The decline in global crude oil prices and deregulation of diesel price announced by the Indian government in October 2014 will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. The 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.
Meanwhile, Finance Minister Arun Jaitley yesterday, 7 May 2015, announced the setting of a committee to suggest ways to resolve the minimum alternative tax (MAT) dispute with foreign investors as well as some other tax issues. While replying to the debate on Finance Bill 2015 in the Rajya Sabha, Jaitley announced the setting up of a committee to be headed by Law Commission chairman A.P. Shah for resolving the MAT issue. While reiterating the government's earlier position that it would wait for a final word on the matter from the Supreme Court, Jaitley said the government would consider the recommendation of the committee and take an appropriate decision as soon as possible. The committee is requested to give its recommendations on the specific issue of MAT on foreign portfolio investors (FPIs) expeditiously, Jaitley said. The Rajya Sabha subsequently passed the Finance Bill.
Jaitley assured that on taxation, the government was committed to certainty and to providing an enabling environment to both domestic and foreign investors while avoiding any retrospective levies. The finance minister said he had provided relief from MAT to FPIs with prospective effect, starting this financial year. He added that in view of a ruling given by the Authority of Advance Rulings in 2012, it was not possible to provide any retrospective exemption.
Jaitley had, last week, moved amendments to exempt foreign investors' capital gains from the sale of securities, interest income, royalty and fees for technical services from MAT, in cases where the tax rate was less than 18.5%, a move which is expected to benefit private equity, venture capital investors and debt funds. In his budget speech on 28 February 2015, he had exempted capital gains accruing to FPIs from levy of MAT. But these provisions would only be applicable from 1 April, leaving past transactions open to litigation.
So far, most of the tax demand directing payment of MAT by FPIs has been only for the financial year ending 31 March 2012. But Indian law allows taxes to be recovered on income earned up to seven years earlier, so FPIs are concerned that they could face additional tax bills.
Meanwhile, the government yesterday, 7 May 2015, announced extension of Budget session of Lok Sabha by three more days till 13 May 2015. The government is particularly keen to introduce the land acquisition bill in the Lok Sabha, according to reports. The amended Land Acquisition Bill seeks to scrap the consent clause for acquiring land for five sectors industrial corridors, public private partnership projects, rural infrastructure, affordable housing and defence. The bill also exempts projects in these five areas from social impact assessments and allows the purchase of irrigated multi-cropped land and other types of agricultural land.
Meanwhile, it remains to be seen if the government is able to get the Constitution Amendment Bill in respect of goods and services tax (GST) passed in the Rajya Sabha. While the Bharatiya Janata Party-led National Democratic Alliance found it easy to pass the GST bill in the Lok Sabha where it is in a majority, the real test will come in the Rajya Sabha where the ruling alliance is in a minority, with 62 members in a 245-member house. The bill is expected to be introduced in the Rajya Sabha next week.
Being a constitutional amendment bill, the GST bill needs to be approved by a two-thirds majority in both houses of Parliament and ratified by half the state legislative assemblies before coming into effect. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.
In overseas markets, Asian stocks edged higher today, 8 May 2015, on signs global bond markets are stabilising after a big selloff. Key indices in China, Hong Kong, Singapore, Taiwan, Indonesia, and Japan rose by 0.02% to 0.92%. South Korea's Kospi fell 0.12%.
China's exports unexpectedly fell 6.4% in April from a year earlier, while imports tumbled by a deeper-than-forecast 16.2%, fueling expectations that Beijing will quickly roll out more stimulus to avert a sharper economic slowdown. That left the country with a trade surplus of $34.13 billion for the month, the General Administration of Customs said today, 8 May 2015.
US stocks rose yesterday, 7 May 2015, a day after they fell in the wake of the Federal Reserve chief's warning over high equity valuations. Economic news yesterday, 7 May 2015 showed jobless claims rose by 3,000 to 265,000 in the week ended May 2, the Labor Department said.
The US government will unveil US nonfarm payrolls data for April 2015 today, 8 May 2015. The payroll data may give clues to the likely timing of an anticipated rate increase by the US Federal Reserve.
In Europe, Greece defied its international creditors yesterday, 7 May 2015, refusing to cut pensions or reverse re-hiring some public employees to meet their demands, dimming prospects of progress next week towards securing financial aid.
In UK, exit polls for Parliamentary elections held yesterday, 7 May 2015, gave the Conservatives 316 of 650 seats in the lower house of parliament, still short of a majority but far better than expected.
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