Key benchmark indices languished in negative zone afternoon trade after Australia's Bureau of Meteorology that the chances of an El Nino weather pattern occurring this year have increased. The barometer index, the S&P BSE Sensex, was down 40.19 points or 0.18%, off close to 35 points from the day's high and up about 100 points from the day's low. The market breadth, indicating the overall health of the market, was negative.
Metal and mining stocks edged higher. Realty stocks also gained. ONGC and Reliance Industries (RIL) dropped in volatile trade after the Election Commission on Monday, 24 March 2014, halted a proposed hike in natural gas prices which was to take effect from 1 April 2014.
Volatility ruled the roost in early trade as the key benchmark indices cut initial losses triggered by mostly lower Asian stocks. The Sensex regained the psychological 22,000 level after falling below that level in early trade. The 50-unit CNX Nifty reversed initial losses and matched its record high hit in intraday trade on Monday, 24 March 2014. Key benchmark indices languished in negative zone early afternoon trade. Key indices weakened once again after erasing almost the entire intraday losses in afternoon trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1465.62 crore on Monday, 24 March 2014, as per provisional data from the stock exchanges.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near-month March 2014 series to April 2014 series. The near-month March 2014 F&O contracts expire on Thursday, 27 March 2014.
At 13:20 IST, the S&P BSE Sensex was down 40.19 points or 0.18% to 22,015.29. The index lost 138.61 points at the day's low of 21,916.87 in early trade. The index fell 2.18 points at the day's high of 22,053.30 in early afternoon trade.
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The CNX Nifty was down 5.55 points or 0.08% at 6,577.95. The index hit a low of 6,544.85 in intraday trade. The index hit a high of 6,591.50 in intraday trade, matching its record high hit in intraday trade on Monday, 24 March 2014.
The BSE Mid-Cap index was up 21.94 points or 0.32% at 6,822.86. The BSE Small-Cap index was up 9.77 points or 0.14% at 6,851.68. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,582 shares declined and 1,071 shares gained. A total of 151 shares were unchanged.
Wipro (down 0.87%), Mahindra & Mahindra (M&M) (down 0.69%) and Bharti Airtel (down 0.78%) edged lower from the Sensex pack.
ONGC and Reliance Industries (RIL) dropped in volatile trade after the Election Commission on Monday, 24 March 2014, halted a proposed hike in natural gas prices which was to take effect from 1 April 2014. The Congress party-led government's plan for increasing the price of natural gas to around $8 per million metric British Thermal unit from $4.20 was controversial and set to take effect days before the start of voting in national elections. Delhi's former chief minister, Arvind Kejriwal, criticized the move recently and cited the case as an example of federal policy makers going out of their way to help powerful energy company Reliance Industries (RIL). RIL operates India's Krishna Godavri D 6 field, which has been the country's richest gas discovery in recent years.
The government had sought the election regulator's approval to go ahead with the new policy. The polls agency has the power to stay any move in the run-up to elections that could influence the outcome of the vote.
The Bharatiya Janata Party (BJP) said the party will review the new gas pricing formula if elected to power after general elections. "If we are voted into power we would have to look at all the facts, all the realities on the ground, while keeping the interest of stakeholders in mind - in particular consumers. If this means going for a review we will review the pricing formula," Narendra Taneja, National Convener, Energy Cell, for the Bharatiya Janata Party (BJP) said in an interview to a news agency.
Reliance Industries (RIL) was off 2.9% at Rs 878.35. The stock hit high of Rs 882.95 and low of Rs 872.60 so far during the day.
Reliance Industries (RIL) after market hours on Monday, 24 March 2014, said that a number of misconceptions have been floating around the issue of gas price hike. One such misconception is that the government will increase fertilizer prices immediately, with the increase in gas price. It is alleged that this shall lead to increase in prices of all food grains produced by the farmers. RIL said that close to 40% of gas consumed in the country is imported in the form of LNG. The current price of LNG imported in the country is around $18 per MMBTU. Even at domestic gas price of $8 per MMBTU, imported LNG will be costlier by at least $10 per MMBTU. The moot point is why those who are raising the issue about higher domestic gas price are quiet about increased profits that international gas companies will be making by supplying gas to India at much higher prices, RIL said. "Are these vested interests aligned with those of the international gas companies?," RIL questioned.
RIL said that fertilizer prices are set by the government and not on the basis of cost of fertilizer production. About 75% of domestic gas is being produced by public sector companies. As per media reports, ONGC alone will benefit to the tune of Rs 16000 crore following the price hike, RIL said. The government's income will also increase due to higher royalty and taxes, RIL said. The increased income to the government will be much higher than additional subsidy that it will have to shell out for the fertilizer sector. Thus, the government will have no reason to pass on increased gas price to farmers, RIL said.
With regard to the power sector, RIL said that gas produced by the company is not being used presently by any power producer in the country. In any case, only 5% of power produced in India is produced from gas and the remaining 95% is produced by coal, hydel and nuclear power plants. Thus, this propaganda that gas price hike will increase power tariffs dramatically is misplaced, RIL said. Therefore, the issue about power and fertilizer rates going up due to increase in gas prices is only a political stunt devoid of facts, RIL said.
ONGC was off 2.51% at Rs 313.35. The stock hit high of Rs 317.45 and low of Rs 306.60 so far during the day.
ONGC's board of directors on Monday, 24 March 2014, approved a second interim dividend of Rs 4.25 per equity share for the year ending 31 March 2014.
ONGC on Monday, 24 March 2014, also said that the company will take up additional Development of its Vasai East Field in Arabian Sea at a total estimated capital cost of Rs 2476.82 crore. The project, scheduled to be completed by December 2018, will result in incremental oil production of 1.83 Million Metric Tonnes (MMT) and incremental gas production of 1.971 Billion Cubic Metres (BCM) by 2030. This project will improve the recovery factor of Vasai East field with infill wells towards north and south side of the field with two well platforms VSEB and VSEC and utilizing existing surface facilities at process platform of BPA and BCPA-2 with minor modifications.
The oil and gas fields of ONGC on Arabian Sea are over 40 years vintage. ONGC, now recognized as one of the best brownfield managers in the Exploration and Production world, has increased its recovery factor to over 40 per cent by aggressive redevelopment efforts since 2001, the company said in a statement.
Further, the company's board also took note of the notification of one discovery at its well NW-B173A-8 in South and East Bassein PML of Western Offshore basin as a new prospect. The discovery will add to the reserves and production potential of the field B-173A. With this, total new discoveries of ONGC during the year 2013-14 add to fourteen, ONGC said in a statement.
Power Grid Corporation of India rose 1.55%. The company said during market hours that the company pursuant to its selection as the successful bidder under Tariff based competitive bidding, has acquired Unchahar Transmission (UNCHAHAR TL) -- the Special Purpose Vehicle to establish the transmission system for ATS of Unchahar TPS -- on build, own operate and maintain (BOOM) basis on 24 March 2014 from REC Transmission Projects Company (the Bid Process Coordinator) and a wholly owned subsidiary of Rural Electrification Corporation.
Shares of Rural Electrification Corporation gained 2.97%.
Metal and mining stocks edged higher. Hindustan Zinc (up 0.01%), Jindal Steel & Power (up 1.15%), Steel Authority of India (SAIL) (up 1.78%), NMDC (up 0.52%), Hindalco Industries (up 0.21%), Hindustan Copper (up 0.3%), JSW Steel (up 0.79%) and Tata Steel (up 1.64%), gained. Sesa Sterlite (down 0.67%), National Aluminum Company (down 0.28%), Bhushan Steel (down 0.28%) declined.
Gujarat NRE Coke jumped 6.94% after the company said it has received the formal approval for the restructuring of the debts, from the Empowered Group of Corporate Debt Restructuring Cell. The announcement was made during trading hours today, 25 March 2014.
As per CDR package, the debt would be restructured for 10 year door-to-door, with two year moratorium and ballooning repayment. The package involves funding of interest for two years. It includes an additional need based working capital aggregating Rs 370 crore. The CDR package also envisages a fresh term loan of Rs 50 crore for completing the waste heat recovery based (WHRB) power plants at Dharwad, Karnataka.
Speaking on the development, Mr Arun Kumar Jagatramka, CMD, Gujarat NRE Coke said, "The approval of the CDR package establishes the fundamental viability of our business. The package would certainly help us in realigning our debts and help revive the company. I am confident that with the continued support of our lenders, customers, vendors and all stakeholders of the company, we would be very soon be able to achieve stability and produce tangible results which would meet the expectations of all our stakeholders".
Rrealty stocks edged higher. DLF (up 0.55%), Housing Development Infrastructure (HDIL) (up 1.73%) and Sobha Developers (up 1.55%) gained. Unitech fell 0.93%.
In the foreign exchange market, the rupee edged higher against the dollar after the provisional data released by the stock exchanges after trading hours on Monday, 24 March 2014, showed that foreign institutional investors (FIIs) made substantial purchases of Indian stocks on that day. The partially convertible rupee was hovering at 60.47, compared with its close of 60.77/78 on Monday, 24 March 2014.
The Reserve Bank of India will announce the First Bi-monthly Monetary Policy Statement, 2014-15 on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
The chances of an El Nino weather pattern occurring this year have increased, according to Australia's Bureau of Meteorology. Climate models show that the tropical Pacific Ocean is likely to warm in coming months, with most models predicting sea surface temperatures reaching El Nino thresholds during the southern hemisphere winter, the bureau said today, 25 March 2014. El Nino is the warming of the Pacific Ocean that causes a shift of moist winds away from their typical patterns. It generally results in less rain for India's June-to-September monsoon season.
The next major trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will be take place on 16 May 2014. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31. Along with the Lok Sabha election, Andhra Pradesh (AP), including the regions comprising Telangana, Odisha and Sikkim will go to polls to elect new assemblies. AP, Odisha and Sikkim assemblies come to end on June 2, June 7 and May 7 respectively.
Asian stocks edged lower on Tuesday, 25 March 2014, as data on Monday, 24 March 2014, showed a slowdown in US manufacturing and as investors weighed the prospect of a recession in Russia. Key benchmark indices in Hong Kong, Singapore, Indonesia, Japan, and South Korea were off 0.22% to 0.37%. China's Shanghai Composite rose 0.05%. In Taiwan, the Taiwan Weighted rose 0.98%.
China's manufacturing industry weakened a fifth straight month in March 2014, a preliminary China Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics showed yesterday, 24 March 2014.
Trading in US index futures indicated that the Dow could advance 8 points at the opening bell on Tuesday, 25 March 2014. US stocks bounced off session lows but still finished Monday lower as sell-off in biotechnology companies weighed on indexes on a day light on economic news.
The sole economic report Monday was Markit's preliminary or flash PMI index, which tallied 55.5 in March, just slightly below February's nearly four-year high. Any number over 50 signals growth. Most manufacturers said they were churning out plenty of goods and demand remained strong. They also continued to add workers in anticipation of stronger growth in the broader US economy in the months ahead, Markit said.
San Francisco Federal Reserve President John Williams in an interview with Washington Post said there was no suggestion from the Federal Reserve last week that the central bank will pull the trigger to hike interest rates sooner than previously believed. "Market perceptions are what they are. But I really don't see anything of what we said as suggesting that we're going to tighten monetary policy sooner rather than previously," Williams said.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
The world's top industrial powers threatened further sanctions to deter Russian President Vladimir Putin from taking over other parts of Ukraine and suspended Russia from participating in the Group of Eight. The leaders of the G-7 industrialized nations on Monday, 24 March 2014, said they will not participate in the scheduled G-8 summit in Sochi due to Russia's "illegal attempt to annex Crimea." In a statement, the leaders warned that any escalation of the crisis would result in "coordinated sectoral sanctions" that will hurt the Russian economy. The G-7 urged the International Monetary Fund and the Ukrainian government to rapidly reach a deal on conditions for an aid package, which will unlock other international assistance. "We remain united in our commitment to provide strong financial banking to Ukraine," the statement said. The energy ministers of the seven nations will meet to discuss ways to strengthen "collective energy security," the statement said.
Standard & Poor's on Monday, 24 March 2014 cut the credit rating on Brazil's long term bonds to one notch above junk, citing deteriorating government accounts and rising debt, the latest rebuke for a once-highflying economy now struggling to hold on to the investor enthusiasm it inspired just a few years ago. The ratings agency cut Brazil's sovereign credit rating to triple-B-minus from triple-B, also citing weak economic growth, and said its outlook for Brazil was stable. The downgrade marks a turnaround from 2008, when Brazil's bonds were awarded investment grade status amid the global financial crisis.
Brazil has suffered from slow growth that averaged about 2% in recent years. "The downgrade reflects the combination of fiscal slippage, the prospect that fiscal execution will remain weak amid subdued growth in the coming years, a constrained ability to adjust policy ahead of the October presidential elections, and some weakening in Brazil's external accounts," S&P said. The agency said that fiscal credibility had been "systematically weakened" following cuts in the government's main budget target, and that loans by state-run banks had "undermined policy credibility and transparency."
The Brazilian finance ministry rejected S&P's arguments and said the downgrade contradicted Brazil's solid economic fundamentals and healthy standing compared with other major economies. "The Brazilian economy has low external vulnerability because it holds the fifth largest volume of international reserves among G20 nations," it said in a statement.
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