A bout of volatility was witnessed as key benchmark indices languished in red in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was currently off 52.84 points or 0.2% at 26,934.62. The market breadth indicating the overall health of the market was negative. Global crude oil prices hit 5-1/2-year low amid continuing concerns about a global supply glut. Investors fear that the rout in global crude oil prices signals a weak global economy. Asian and European stocks were in green.
Foreign portfolio investors sold shares worth a net Rs 1570.76 crore yesterday, 6 January 2015, as per provisional data.
Telecom stocks were mostly higher. Cement stocks edged lower. Shares of paint makers advanced on decline in crude oil prices. Coal India edged lower in volatile trade after the company said due to strike by workers, the coal production and despatch were partially affected yesterday, 6 January 2015.
Meanwhile, Finance Minister Arun Jaitley yesterday, 6 January 2015, said that ease of doing business is high priority for the government.
Global crude oil prices hit 5-1/2-year low amid continuing concerns about a global supply glut. Deregulation of diesel price announced by the Indian government in October 2014 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.
Earlier, the Sensex and the 50-unit CNX Nifty had, both, hit 3-week low in early afternoon trade. The Sensex failed to hold the psychological 27,000 level. Earlier, the barometer index had regained the psychological 27,000 level amid initial volatility.
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In overseas markets, Asian and European stocks edged higher. The US stock market endured another day of selling yesterday, 6 January 2015, due to slumping oil prices.
In the foreign exchange market, the rupee edged higher against the dollar.
Brent crude futures hit 5-1/2-year low amid continuing concerns about a global supply glut.
At 14:15 IST, the S&P BSE Sensex was down 52.84 points or 0.2% at 26,934.62. The index dropped 211.34 points at the day's low of 26,776.12 in early afternoon trade, its lowest level since 17 December 2014. The index rose 64.14 points at the day's high of 27,051.60 in mid-morning trade.
The CNX Nifty was down 6.50 points or 0.08% at 8,120.85. The index hit a low of 8,065.45 in intraday trade, its lowest level since 17 December 2014. The index hit a high of 8,151.20 in intraday trade.
The BSE Mid-Cap index was off 12.01 points or 0.12% at 10,223.73. The BSE Small-Cap index was off 11.07 points or 0.1% at 10,975.15. The decline in both the indices was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was negative. On BSE, 1,483 shares declined and 1,209 shares advanced. A total of 109 shares were unchanged.
Telecom stocks were mostly higher. Tata Teleservices (Maharashtra) (up 1.15%), Mahanagar Telephone Nigam (up 0.93%), Bharti Airtel (up 0.69%) and Idea Cellular (up 0.33%) edged higher. Reliance Communications (down 0.5%) edged lower.
The Union Cabinet early this week approved the proposal of the Department of Telecom (DoT) to proceed with auction in 800, 900 & 1800 MHz bands. The Reserve price approved is Rs 3646 crore pan-India per MHZ in 800 MHz, Rs 3980 crore for 900 MHz band pan India excluding Delhi, Mumbai, Kolkatta, and J&K, and Rs 2191 crore pan India (excluding Maharashtra and West Bengal) in 1800 MHz band. The quantum of spectrum to be put to auction is 103.75 MHz in 800 MHz band in all service areas, 177.8 MHz in 17 LSAs in 900 MHz band and 99.2 MHz in 15 LSAs in 1800 MHz band. Thus a total of 380.75 MHz in 800,900 & 1800 MHz is being put to auction. Payment terms, eligibility criteria and auction objectives shall be as in the previous auction of February 2014, a government statement said on 5 January 2015.
The Union Cabinet also decided that intent to put 2100 MHz to simultaneous auction may be announced along with auction of other bands. Details of this will be announced later on.
Cement stocks edged lower. Jaiprakash Associates (down 2.3%), ACC (down 1.52%), Shree Cement (down 0.92%), Ambuja Cements (down 0.52%) and UltraTech Cement (down 0.1%) edged lower.
Shares of Grasim Industries were up 1.11% at Rs 3,418. Grasim Industries has exposure to cement industry through its subsidiary UltraTech Cement.
Shares of paint makers advanced on decline in crude oil prices. Asian Paints (up 2.37%), Berger Paints India (up 1.43%), Shalimar Paints (up 0.83%) Akzo Nobel India (up 0.42%), and Kansai Nerolac Paints (up 0.32%) 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.
Coal India edged lower in volatile trade after the company said due to strike by workers, the coal production and despatch were partially affected yesterday, 6 January 2015. The stock was off 0.53% at Rs 376.80. The stock hit a high of Rs 384.20 and a low of Rs 372.20 so far during the day. The company during market hours today, 7 January 2015, said that four central trade unions of the company observed strike yesterday, 6 January 2015, in Coal lndia and its subsidiaries companies. Due to strike the production and despatch were partially affected.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 63.3750, compared with its close of 63.58 during the previous trading session.
Brent crude futures hit 5-1/2-year low amid continuing concerns about a global supply glut. Brent for February settlement was off 97 cents at $50.13 a barrel. The contract had lost $2.01 a barrel or 3.78% to settle at $51.10 a barrel during the previous trading session, its lowest settlement since April 2009.
Finance Minister Arun Jaitley yesterday, 6 January 2015, said that ease of doing business is high priority for the government. The Finance Minister made these comments during the Pre Budget Consultative Meeting with the representatives of Trade and Industry. Jaitley said that implementation of nationwide goods and services tax (GST) is expected to improve the tax administration regime and would help in bringing more transparency in the system and ensure smooth flow of goods. It will also help in better implementation and collection of taxes, he said. The Finance Minister said that reforms measures undertaken by the government in coal sector, insurance and amendments in Land Acquisition Act etc will make a major difference in improving the Indian economy's performance.
European shares edged higher today, 7 January 2015. Key indices in Germany, UK, and France were up 0.52% to 0.74%.
The latest data showed that German retail sales in November rose by 1% in calendar- and inflation-adjusted terms compared with October, while in annual terms they fell by 0.8%.
Meanwhile, uncertainties over the status of Greece including its possible exit from the eurozone are likely to persist until the early election in the country later this month. Greece is set to hold snap elections on 25 January 2015 after it failed to elect a new president in a third round of voting late last year. A radical left opposition party is leading in opinion polls ahead of the vote on promises to raise wages, increase government jobs and persuade the euro area to write off some Greek debt.
Asian equity markets edged higher today, 7 January 2015. Key indices in China, Taiwan, Singapore, South Korea, Japan, Hong Kong and Indonesia were up 0.07% to 0.69%.
Trading in US index futures indicated that the Dow could gain 48 points at the opening bell today, 7 January 2015. The US stock market endured another day of selling yesterday, 6 January 2015, due to slumping oil prices. Investors appear to discount positive effect of lower oil prices on broader economy and continue to view the slide in crude as a symptom of slower global growth, which will threaten improving US economy. The US services sector expanded in December at its slowest rate since February as growth in new business and employment declined, an industry report showed yesterday, 6 January 2015.
The Fed will release minutes of the Federal Open Market Committee (FOMC) meeting held on 16 and 17 December 2014 later in the global day today, 7 January 2015. The Fed minutes may shed light on policy makers' views on the appropriate timing of the first interest-rate increase since 2006 and the conditions that would prompt them to tighten policy. At the two-day meeting in December, the FOMC had said it would be patient on the timing of an increase, replacing an earlier pledge to keep borrowing costs low for a "considerable time".
The US Labor Department reports monthly payroll data for December 2014 on Friday, 9 January 2015.
Meanwhile, Vietnam devalued its currency by weakening dong's reference rate for the second time since June, according to a statement on the central bank's website posted late yesterday, 6 January 2015. The currency is allowed to trade as much as 1 percent either side of the rate, which was reduced by 1 percent to 21,458 dong per dollar, effective today, 7 January 2015.
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