Intraday recovery that was witnessed earlier during the day gathered steam in early afternoon trade. Banking and IT stocks lead recovery in key benchmark indices. The barometer index, the S&P BSE Sensex, was currently off 13.55 points or 0.05% at 26,767.89. The market breadth indicating the overall health of the market was weak, with more than two losers for every gainer on BSE. As per market buzz, state-run Life Insurance Corporation of India (LIC) has started buying shares after a recent steep slide in stock prices. LIC is known to support domestic share markets at times of hefty falls.
Foreign portfolio investors sold shares worth a net Rs 1247.24 crore yesterday, 16 December 2014, as per provisional data.
Russia's woes had been roiling global markets. Russia's currency ruble fell 5.4% against the dollar yesterday, 16 December 2014, after the country's central bank unexpectedly hiked interest rates to 17% from 10.5% late on Monday, 15 December 2014, in a bid to stem the ruble's decline. Even as Russia's main stock market index MICEX bounced back after steep intraday slide yesterday, 16 December 2014, the dollar-denominated equivalent of the benchmark measure viz. the RTS Index plunged.
Auto stocks declined. Mahindra & Mahindra (M&M) declined after the company announced that as part of its efforts to align its production with sales requirements, the company may observe on a need basis, 1 to 7 days in a month as 'No Production Days' at some of its automotive and/or tractor plants and/or Chakan plant of its wholly owned subsidiary Mahindra Vehicle Manufacturers during the period upto March 2015.
Earlier, key indices had staged a strong rebound after extending initial losses in morning trade. The 50-unit CNX Nifty regained the psychological 8,000 mark after falling below that level in morning trade.
In overseas markets, Asian stocks were mixed. US stocks edged lower amid high intraday volatility yesterday, 16 December 2014, as investors wrestled with volatility in oil and growing turmoil in Russia, exemplified by a sharp decline of the ruble.
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In the foreign exchange market, the rupee edged lower against the dollar in choppy trade.
Brent crude dropped below $60 a barrel, hovering near its lowest in five years as a supply glut dragged down prices.
At 12:19 IST, the S&P BSE Sensex was down 13.55 points or 0.05% at 26,767.89. The index slumped 312.02 points at the day's low of 26,469.42 in morning trade, its lowest level since 21 October 2014. The index rose 52.99 points at the day's high of 26,834.43 in early trade.
The CNX Nifty was down 4.20 points or 0.05% at 8,063.40. The index hit a low of 7,961.35 in intraday trade, its lowest level since 21 October 2014. The index hit a high of 8,080.65 in intraday trade.
The BSE Mid-Cap index was off 36.73 points or 0.38% at 9,493.30. The BSE Small-Cap index was off 105.58 points or 0.99% at 10,523.04. The fall in both these indices was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was weak, with more than two losers for every gainer on BSE. On BSE, 1,685 shares fell and 730 shares rose. A total of 73 shares were unchanged
Auto stocks declined. Tata Motors (down 1.26%), Maruti Suzuki India (down 1.19%), Eicher Motors (down 0.41%), Hero MotoCorp (down 1.71%), Bajaj Auto (down 0.93%) and TVS Motor Company (down 4.76%) declined. Ashok Leyland rose 0.87%.
Mahindra & Mahindra (M&M) declined 0.86% after the company announced after market hours on Tuesday, 16 December 2014, that the company, as part of its efforts to align its production with sales requirements, may observe on a need basis, 1 to 7 days in a month as 'No Production Days' at some of its automotive and/or tractor plants and/or Chakan plant of its wholly owned subsidiary Mahindra Vehicle Manufacturers during the period upto March 2015. The management does not envisage any adverse impact on the availability of products in the market due to adequacy of stocks to serve the market requirements, M&M said.
JSW Steel dropped 1.17%. The company said during market hours today, 17 December 2014, that the company remains committed to its proposed 10 million tonnes per annum (MTPA) green field steel plant in West Bengal. The company said it will continue to work with the state government of West Bengal to find alternatives to establish raw material linkages so as to take up implementation of steel project in due course. Earlier, ban/restrictions on iron ore mining in the country followed by cancellation of coal blocks including coal mines earmarked for the project, brought severe uncertainty to the linkages of critical inputs for steel making, JSW Steel said.
In the foreign exchange market, the rupee edged lower against the dollar in choppy trade. The partially convertible rupee was hovering at 63.60, compared with its close of 63.54 during the previous trading session.
Brent crude dropped below $60 a barrel, hovering near its lowest in five years as a supply glut dragged down prices. Brent for February settlement was off 62 cents a barrel at $59.39 a barrel. The contract had lost $1.2 a barrel to settle at $60.01 a barrel during the previous session.
Meanwhile, investors are closely monitoring if the government's key legislative reform bills are passed during the ongoing winter session of the parliament. The government may table the constitutional amendment bill to facilitate the levy of goods & services tax (GST) during the ongoing winter session of the parliament. The constitutional amendment Bill will provide the legal framework for rolling out the levy, giving states power to tax both goods and services. As of now only the central government can impose service tax. The amendment Bill will also create a GST council, a body that will have representatives of the states and the Centre that will take decisions on the tax after it is rolled out.
The government's intension is to implement a nationwide GST from 1 April 2016. GST is a major indirect tax reform. GST will subsume central indirect taxes such as excise duty and service tax at the central level and value added tax at the state level besides other local levies such as octroi and entry tax.
Meanwhile, the Indian government intends to get the Insurance Laws (Amendment) Bill, 2008 passed in both the Houses of Parliament in this week. The Union Cabinet, last week, approved the official amendments to the Insurance Laws (Amendment) Bill, 2008. The Parliamentary Select Committee in its report tabled in Rajya Sabha on 10 December 2014 agreed a composite cap of 49% on foreign investment in the insurance sector, which includes all types of foreign investment as opposed to the 26% foreign direct investment (FDI) allowed at present. Finance Minister Arun Jaitley had said in his maiden budget speech in July that the composite cap in the insurance sector should be increased to 49% from the current level of 26%, with full Indian management and control.
It also remains to be seen if the government will be to find support for the Coal Mines (Special Provisions) Bill, 2014 in the Rajya Sabha where it's in a minority. The Lok Sabha last week passed the Coal Mines (Special Provisions) Bill, 2014. The bill allows the government to enforce rules and guidelines for auction/allocation of 204 coal blocks cancelled by the Supreme Court in September this year.
Asian stocks were mixed today, 17 December 2014. Key indices in Hong Kong, South Korea, Singapore and Taiwan were off 0.07% to 1.37%. Key indices in China, Indonesia and Japan were up 0.18% to 1.31%.
The Asian Development Bank (ADB) slightly trimmed its growth forecast for developing Asia for this year and next, but said sliding prices for oil should help economies in the region push through with growth reforms. In its update to the 2014 outlook, ADB today, 17 December 2014, said that developing Asia was now expected to grow 6.1% this year, a tad below its 6.2% forecast in September. Growth in 2015 was seen at 6.2%, lower than 6.4% estimated previously.
Japan's exports rose less than forecast in November, underlining challenges to Prime Minister Shinzo Abe's efforts to steer the economy out of recession. Overseas shipments rose 4.9% from a year earlier, the finance ministry said.
Trading in US index futures indicated that the Dow could gain 48 points at the opening bell today, 17 December 2014. US stocks ended a seesaw session with broad declines on Tuesday, 16 December 2014, after spending much of the day swinging alongside crude-oil prices.
In economic data, the residential real estate recovery in the US is plodding, with the industry taking a step back in November for the first time in three months. Housing starts declined 1.6% the first drop since August, to a 1.03 million annualized rate from a revised 1.05 million pace in October that was stronger than previously estimated, figures from the Commerce Department showed.
A two-day meeting of Federal Open Market Committee (FOMC) to discuss monetary policy review concludes today, 17 December 2014. The policy meeting will be keenly watched for any hints on the timing of interest rate increases in the world's biggest economy. It remains to be seen whether Federal Reserve officials would signal a rate hike by dropping their assurance that rates will stay low for a considerable time.
Meanwhile, US President Barack Obama on Tuesday, 16 December 2014, signed a $1.1 trillion spending bill passed by Congress last week that lifted the threat of a government shutdown. The legislation funds most government agencies through September 2015.
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