Key benchmark indices could fall today, 19 February 2015. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could fall 4.50 points at the opening bell.
UltraTech Cement will be in focus after the company won the Bicharpur coal block in Madhya Pradesh for Rs 3,003 per tonne, according to the results of e-Auction for Schedule II coal mines announced by the Ministry of Coal yesterday, 19 February 2015. The coal ministry has started auctioning coal blocks after the Supreme Court in September last year cancelled the allocation of more than 200 coal mines allotted between 1993 and 2010 after ruling that they were arbitrary and illegal.
Sugar stocks will be in focus. The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi, yesterday, 19 February 2015, approved the continuation of the incentive scheme for marketing and promotion services of raw sugar production during current sugar season 2014-15 (October-September) for a quantity of 14 lakh MT. As the quantity is fixed, settlement of claims will be prioritized on the basis of the date of export/deemed export as certified by concerned Customs and Excise authorities, a government statement said. The CCEA further approved fixed uniform rate of Rs 4,000 per MT for 2014-15 sugar season. Other conditions will remain the same, as were last year except that in case of mills having alcohol production capacities, the incentive would be available if they offer to supply ethanol to OMCs under the EBP upto 25% of their annual production level of alcohol. This will help sugar mills to clear the cane price dues of the farmers, the statement said.
Crompton Greaves (CG) said after market hours yesterday, 19 February 2015 that the Board of Directors of the company at its meeting held on 19 February 2015, reconsidered and approved the contours of the proposed demerger and decided to implement a 100% demerger of the consumer products business, such that the shareholding pattern of the resulting consumer company shall mirror the shareholding pattern of CG. The company said that board evaluated the salient aspects of the proposed demerger of the consumer products business of the company based on comments received from the Securities & Exchange Board of India, the stock exchanges and investors' feedback. A scheme of arrangement incorporating the above principles will soon be considered by the company's board, CG said.
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.
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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.
A strong rebound during the latter part of the trading session took key benchmark into the green from red in what a choppy trading session on Thursday, 19 February 2015. The S&P BSE Sensex rose 142.01 points or 0.48% to settle at 29,462.27, its highest closing level since 29 January 2015.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 1542.70 crore on Thursday, 19 February 2015, as per provisional data. Domestic institutional investors (DIIs) sold shares worth a net Rs 195.74 crore on Thursday, 19 February 2015, as per provisional data released by the stock exchanges.
In Asia, Japan's Nikkei 225 was up 0.32%, moving firmly into level not seen since mid 2000. Most other Asian markets were closed for a holiday. Indonesia's Jakarta Composite was up 0.50% Chinese markets are closed for Lunar New Year holiday.
US stocks ended Thursday's thinly-traded session mostly lower, as investors grappled with a drop in oil prices and a continued impasse between Greece and its creditors over loans. Meanwhile, mixed economic reports stoked uncertainty about the Federal Reserve's timetable for hiking rates.
Economic data in the US on Thursday was mixed. Weekly jobless claims report was better than expected. Meanwhile, leading US economic indicators edged up in January but the index pointed to some moderation in growth. Philadelphia Fed index disappointed, pointing the economy might have hit a soft patch.
In Europe, the impasse between Greece and is creditors continued, after Germany rejected Greece's request for a six-month loan extension agreement. The full Eurogroup of eurozone finance ministers is scheduled to meet again today, 20 February 2015. Greece has been making a distinction between a loan agreement and its bailout program, which is scheduled to end later this month.
Brent for April settlement lost 32 cents or 0.53% to settle at $60.21 a barrel during the previous trading session on Thursday, 19 February 2015.
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