A sudden reversal of trend was witnessed as key benchmark indices slipped into the red from green in mid-morning trade. The market breadth indicating the overall health of the market turned negative from positive. The barometer index, the S&P BSE Sensex, was currently down 97.50 points or 0.33% at 29,222.76. The BSE Small-Cap and Mid-Cap indices, both, slipped into the red from green. Crude oil prices extended losses registered during the previous trading session. Bank stocks witnessed selling pressure.
Foreign portfolio investors bought shares worth a net Rs 2187.96 crore yesterday, 18 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 327.87 crore yesterday, 18 February 2015, as per provisional data.
Earlier, the Sensex and the CNX Nifty, both, hit their highest levels in almost three weeks in early trade.
Brent crude oil futures edged lower on reports that crude inventories jumped in the United States last week. Lower 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. Lower 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. On 15 February 2015, Indian Oil Corporation announced increase in petrol price by 82 paise per litre in Delhi (including state levies) and diesel price by 61 paise per litre.
In overseas markets, Japanese stocks edged higher, helped by gains in financial and shipping companies, and as Sony Corp jumped on a well-received business plan. US stocks ended marginally lower yesterday, 18 February 2015, as investors wrestled with interpreting minutes from the Federal Reserve's latest policy meeting.
At 11:30 IST, the S&P BSE Sensex was off 97.50 points or 0.33% at 29,222.76. The index fell 155.14 points at the day's low of 29,165.12 in the mid-morning trade. The index jumped 149.60 points at the day's high of 29,469.86 in early trade, its highest level since 30 January 2015.
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The CNX Nifty was down 42 points or 0.47% at 8,827.10. The index hit a low of 8,809.60 in intraday trade. The index hit a high of 8,902.90 in intraday trade, its highest level since 30 January 2015.
The BSE Mid-Cap index was off 37.41 points or 0.35% at 10,791. The decline in the index was higher than the Sensex's decline in percentage terms.
The BSE Small-Cap index was off 23.83 points or 0.21% at 11,340.09. The decline in the index was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market turned negative from positive in mid-morning trade. On BSE, 1,403 shares declined and 1,022 shares advanced. A total of 90 shares were unchanged.
Hero MotoCorp fell 0.09% to Rs 2660.95. The stock hit a high of Rs 2701.85 and a low of Rs 2651.10 so far in intraday trade. Shares of MotoCorp had lost 5.09% to settle at Rs 2,663.45 yesterday, 18 February 2015. The promoter group Hero Group announced market hours yesterday, 18 February 2015, that in a major initiative towards diversification into fast growth areas, the BML Munjal-led Hero Group has sold 70 lakh shares in its flagship firm Hero MotoCorp. Following the sale, Hero Group still holds a significant stake of over 36% in the company. The group will use the sale proceeds to fund new growth avenues available through the government's 'Make in India' initiative, the Hero Group said in press release.
The Hero Group further said that it remains strongly committed to its core two-wheeler business, where it sees enormous potential, both in India and overseas. The Hero Group said that Hero MotoCorp has successfully consolidated its market leadership in the highly-competitive domestic market in India, even as it expands its global footprint across Asia, Africa and Central and South America. Hero MotoCorp said it sold a record 6.64 million two-wheelers in the calendar year 2014, including over 2 lakh unit sales in its global market.
Bank stocks witnessed selling pressure. Among private sector banks, ICICI Bank (down 2.13%), Axis Bank (down 1.72%), Kotak Mahindra Bank (down 1.31%), Yes Bank (down 1.28%), IndusInd Bank (down 1.22%), HDFC Bank (down 0.5%), ING Vysya Bank (down 0.21%) and City Union Bank (down 0.05%), edged lower. Federal Bank was up 0.84%.
Among public sector banks, Bank of Baroda (down 3%), Allahabad Bank (down 2.93%), Indian Bank (down 2.76%), Union Bank of India (down 2.55%), United Bank of India (down 2.35%), Syndicate Bank (down 2.22%), UCO Bank (down 2.13%), Punjab National Bank (down 2.02%), Canara Bank (down 1.91%), Bank of India (down 1.88%), State Bank of India (down 1.54%), Andhra Bank (down 1.44%), Central Bank of India (down 1.28%), Vijaya Bank (down 1.01%), Punjab and Sind Bank (down 1%), IDBI Bank (down 0.93%), Corporation Bank (down 0.79%), Bank of Maharashtra (down 0.74%) and Dena Bank (down 0.72%), edged lower.
In a clarification issued with respect to the norms on gold imports in India, the Reserve Bank of India (RBI) yesterday, 18 February 2015, said that nominated banks are permitted to import gold on consignment basis and that banks are free to grant gold metal loans. All sale of gold domestically will, however, be against upfront payments, the RBI said.
While the import of gold coins and medallions will no longer be prohibited, pending further review, the restrictions on banks in selling gold coins and medallions are not being removed, the RBI said. The RBI also clarified that Star and Premier Trading Houses (STH/PTH) can import gold on DP basis as per entitlement without any end use restrictions.
Brent crude oil futures edged lower on reports that crude inventories jumped in the United States last week. Brent for April settlement was off 95 cents at $59.58 a barrel. The contract had lost $2 a barrel or 3.19% to settle at $60.53 a barrel during the previous trading session.
The next major event for the financial markets is Union Budget for 2015-16. Finance Minister Arun Jaitley will present Union Budget 2015-16 in Parliament on 28 February 2015. Analysts will scrutinize measures in the Budget for financing infrastructure projects as well as the government's own capital expenditure on infrastructure for the year ahead. This is the first full fledged Budget of the Narendra Modi government and analysts will look for a roadmap for economic growth for the next few years.
Changes in rates of dividend distribution tax, capital gains tax on sale of shares, Securities Transaction Tax (STT) and Minimum Alternate Tax (MAT), if any, will be closely watched. The dividend distribution tax is currently at 15%. The minimum alternate tax is currently at 18.5% of book profits. Short term capital gains tax on sale of shares is currently at 15% while there is zero long capital gains tax on sale of shares held for a period of more than one year.
The upcoming Budget session of the parliament assumes utmost importance as the government intends to replace the ordinances it had promulgated after the conclusion of the winter session of the parliament with Bills and get them cleared by both Houses of Parliament during the budget session. The Narendra Modi government promulgated a slew of ordinances after the last session of Parliament. Some of the key ordinances include raising the FDI in the insurance sector from 26% to 49%, e-auctioning of coal mines and amendment to the Land Acquisition Act.
The government has already started auctioning coal blocks for captive mining. The Coal Mines (Special Provisions) Bill that was moved to replace an ordinance issued earlier was passed by the Lok Sabha in the winter session but it could not be taken up in the Rajya Sabha. The government promulgated the Coal Mines (Special Provisions) Ordinance, 2014, in October to facilitate coal block auctions after the Supreme Court cancelled 204 coal blocks in September.
Through another ordinance, the government has raised the ceiling on foreign investment in the insurance sector to 49% from 26%. The government was unable to get the Insurance Laws (Amendment) Bill, 2008, passed in parliament during the winter session.
Amendments to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 were brought in via an ordinance after the winter session of the parliament.
Analysts are also awaiting further progress on the Goods and Services Tax (GST) in the Budget session after the Constitution Amendment Bill for the introduction of GST was tabled in the Lok Sabha during the winter session of parliament. 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, Japanese stocks edged higher, helped by gains in financial and shipping companies, and as Sony Corp jumped on a well-received business plan. The Nikkei 225 average was up 0.46%. Most other Asian markets were closed for a holiday. Chinese markets are closed for Lunar New Year holiday.
Trading in US index futures indicated that the Dow could fall 14 points at the opening bell today, 19 February 2015. US market ended slightly lower yesterday, 18 February 2015, after a drop in energy shares but declines were limited by minutes from the latest Federal Reserve meeting, which showed policymakers were concerned that a premature rise in interest rates could hurt US economic growth and the recovery in the labour market.
In Europe, Greek officials are reportedly planning to submit a proposal to eurozone finance ministers for breaking the impasse in debt negotiations between the new government in Athens and Greece's European creditors. Athens tomorrow, 20 February 2015, will propose an extension of several months to the current bailout program, a government spokesman, Gavriil Sakellaridis, was quoted by media as saying yesterday, 18 February 2015. Media reports indicated that Greece would seek a four-month extension of the current program, under which the country has received 240 billion euros, or $272 billion, in exchange for pursuing various economic overhauls.
Greece is scrambling to reach a deal with creditors before it runs out of cash. Greece's current bailout plan expires on 28 February 2015.
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