Key benchmark indices edged higher in choppy trading session on the back of small gains in European stocks and further fall in crude oil prices. However, the gains for the key indices were small. The barometer index, the S&P BSE Sensex, was provisionally up 34.47 points or 0.13% at 26,348.76. Some progress was made on proposed goods and services tax (GST) after the empowered committee of state finance ministers on Wednesday, 20 August 2014, reportedly decided the common threshold for levy of GST. The market breadth indicating the overall health of the market was positive. Metal and mining stocks declined as the Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi, yesterday, 20 August 2014, approved the revision of rates of royalty and dead rent of all major minerals. PSU OMCs surged as crude oil prices fell.
Key indices had regained positive zone in afternoon trade after reversing intraday gains. Earlier, key indices had surged in mid-morning trade after a bout of initial volatility.
In overseas markets, European stocks edged higher after initial volatility as investors largely ignored a mixed bag of purchasing managers indexes from the region. Asian stocks dropped after a preliminary survey showed that manufacturing activity in China weakened in August to a three-month low.
As per provisional figures, the S&P BSE Sensex was up 34.47 points or 0.13% at 26,348.76. The index jumped 150.51 points at the day's high of 26,464.80 in mid-morning trade. The index fell 51.77 points at the day's low of 26,262.52 in afternoon trade, its lowest level since 18 August 2014.
The CNX Nifty was up 15.05 points or 0.19% to 7,890.35, as per provisional figures. The index hit a high of 7,919.65 in intraday trade. The index hit a low of 7,855.95 in intraday trade, its lowest level since 18 August 2014.
The total turnover on BSE amounted to Rs 3273 crore, higher than Rs 3125.21 crore on Wednesday, 20 August 2014.
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The market breadth indicating the overall health of the market was positive. On BSE, 1,678 shares gained and 1,336 shares fell. A total of 102 shares were unchanged.
The BSE Mid-Cap index was up 41.65 points or 0.45% at 9,317.99. The BSE Small-Cap index was up 29.70 points or 0.29% at 10,293.21. Both these indices outperformed the Sensex.
PSU OMCs surged as crude oil prices fell. HPCL (up 4.68%), BPCL (up 2.76%) and Indian Oil Corporation (IOC) (up 3.97%) gained. Lower crude oil prices will decrease under recoveries of PSU OMCs on domestic sale of diesel, LPG and kerosene at government controlled prices. The government has adopted the policy of gradually increasing diesel prices to eliminate under recovery and deregulate the diesel prices. The government has already freed pricing of petrol.
The under-recovery on High Speed Diesel (HSD) applicable for second fortnight of August 2014, effective from 16 August 2014, will go up to Rs 1.78 per litre. This was Rs 1.33 per litre during first fortnight of August 2014. In the case of PDS Kerosene and Domestic LPG, the under-recoveries for the second fortnight of August 2014 will be Rs 32.98 per litre (Rs 32.98 per litre in first fortnight) and Rs 447.87 per cylinder (Rs 447.87 per cylinder in first fortnight) respectively. Effective from 16 August 2014, PSU OMCs are incurring combined daily under-recovery of about Rs 230 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. This is higher than Rs 226 crore daily under-recoveries during first fortnight of August. The under-recoveries for the financial year 2014-15 are projected to be Rs 91665 crore while the figure was Rs 1.39 lakh crore in 2013-14.
Metal and mining stocks declined as the Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi, yesterday, 20 August 2014, approved the revision of rates of royalty and dead rent of all major minerals. Bhushan Steel (down 5%), Steel Authority of India (down 3.17%), Tata Steel (down 1.85%), JSW Steel (down 1.64%), Sesa Sterlite (down 1.83%), Hindalco Industries (down 1.473%), Jindal Steel & Power (down 1.05%), Hindustan Zinc (down 1.47%), and NMDC (down 1.05%) edged lower. With this decision, the royalty to mineral rich states would increase by 41% from Rs 9406 crore (2011-12) to Rs 13274 crore (estimated), a government statement said.
In the foreign exchange market, the rupee edged lower against the dollar after Federal Reserve minutes indicated that policy makers talked at their last meeting about a sooner-than-anticipated hike to US interest rates. The partially convertible rupee was hovering at 60.73, compared with its close of 60.62 on Wednesday, 20 August 2014.
The empowered committee of state finance ministers on Wednesday, 20 August 2014, reportedly decided that the common threshold for levy of goods and services tax (GST) would be kept at Rs 10 lakh in general category states and Rs 5 lakh in special category states. This means GST will be levied on all retailers and service providers with a turnover of more than Rs 10 lakh in general category states and Rs 5 lakh in special category states. The decision removes a key stumbling block in the finalisation of the GST structure and is expected to speed up the talks on implementation of the tax reform. However, significant differences still persist between the Centre and the states regarding GST, reports suggest. GST, a major indirect tax reform, will replace service tax, excise, state value-added tax and a number of other local levies.
Meanwhile, India's macroeconomic worries have eased on falling crude oil prices. India imports about 80% of its crude oil requirement. Brent dropped to below $102 a barrel as China's manufacturing growth slowed this month and as the US pledged to continue operations to stop Islamic radicals in Iraq. The October Brent crude contract was down 94 cents at $101.34 a barrel. The contract had gained 72 cents a barrel to settle at $102.28 a barrel yesterday, 20 August 2014. Brent had hit 14-month low of $101.07 a barrel early this week.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 251.36 crore on Wednesday, 20 August 2014, as per provisional data from the stock exchanges.
The Union Cabinet on Wednesday, 20 August 2014, at a meeting chaired by the Prime Minister, Narendra Modi gave its approval for Digital India - a programme to transform India into digital empowered society and knowledge economy. The programme will be implemented in phases from the current year till 2018. The Digital India is transformational in nature and would ensure that Government services are available to citizens electronically. It would also bring in public accountability through mandated delivery of government's services electronically, a Unique ID and e-Pramaan based on authentic and standard based interoperable and integrated government applications and data basis, a government statement said.
European stocks today, 21 August 2014, reversed their initial losses as investors largely ignored a mixed bag of purchasing managers indexes from the region. Key benchmark indices in UK, France and Germany were up 0.28% to 0.49%.
Retail sales in the UK rose less than expected in July, dampening optimism over the country's economic outlook, official data showed on Thursday. The UK Office for National Statistics said retail sales increased by a seasonally adjusted 0.1% last month.
The Markit flash euro zone composite output index gave back the ground it made in July, posting 52.8 in August, compared with a final reading of 53.8 in July. The headline index has now remained above the neutral 50 mark for 14 successive months. Output increased in both the manufacturing and service sectors, with service providers again reporting the sharper rate of expansion. However, rates of growth eased in both sectors. The extent of the slowing was much sharper in manufacturing, taking its rate of expansion to the weakest in the current 14 month sequence of production growth.
German services and manufacturing activity slowed in August. The preliminary reading of a Purchasing Managers Index for the two industries fell to 54.9 in August from 55.7 in July, London-based Markit Economics said. A reading above 50 indicates expansion.
French manufacturing activity contracted for a fourth month in August, signaling that the euro area's second-largest economy is unlikely to return to growth after stagnating in the first half. A Purchasing Managers Index for the manufacturing industry fell to 46.5 in August from 47.8 in July, London-based Markit Economics said today, 21 August 2014. That's the lowest level in more than a year. A composite gauge of both manufacturing and services activity rose to 50 in August, the mark that divides expansion from contraction, from 49.4 in July.
Asian shares fell today, 21 August 2014, as a disappointing survey on Chinese manufacturing stoked concerns about the regional giant. Key benchmark indices in Taiwan, Hong Kong, Indonesia, China, and South Korea were off 0.37% to 1.38%. Key benchmark indices in Japan and Singapore were up 0.01% to 0.85%.
The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index (PMI) fell to 50.3 in August from July's 18-month high of 51.7, missing forecasts.
Trading in US index futures indicated that the Dow could gain 30 points at the opening bell on Thursday, 21 August 2014. Most US stocks closed higher on Wednesday, 20 August 2014, shaking off a dip that came after Federal Reserve minutes indicated that policy makers talked at their last meeting about a sooner-than-anticipated hike to interest rates.
The minutes from the two-day meeting of the Federal Open Market Committee in late July showed that Fed officials came closer to an agreement on how to exit from the most aggressive stimulus. At that meeting, the Fed trimmed its monthly bond-buying program by an additional $10 billion. The minutes showed that some participants were increasingly uncomfortable with the committee's forward guidance on keeping its benchmark rate low for a "considerable time,". Many participants said they might have to raise borrowing costs sooner than they had anticipated. The US central bank has kept its benchmark rate at almost zero since December 2008.
Federal Reserve Chairwoman Janet Yellen will give a speech tomorrow, 22 August 2014, at the annual Fed summit in Jackson Hole, Wyo. Fed Chair Janet Yellen is reportedly expected to acknowledge during the conference that while economic data has generally been supportive, she remains concerned about slack in the labor market.
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