A bout of volatility was witnessed as key benchmark indices reversed intraday gains in morning trade. Losses for the benchmark indices were small. The barometer index, the S&P BSE Sensex, was currently off 24.45 points or 0.09% at 27,401.28. The market breadth indicating the overall health of the market was positive. Asian stocks dropped as a sharp slide in copper prices in global markets sparked concerns about global economy. Trading in US index futures indicated opening losses for US stocks later in the global day today, 14 January 2015.
Cement shares edged higher after the Ministry of Mines after trading hours yesterday, 13 January 2015, said that the government has promulgated the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015 on 12 January 2015. Metal and mining stocks declined as metal prices fell in global markets.
Foreign portfolio investors bought shares worth a net Rs 235.09 crore yesterday, 13 January 2015, as per provisional data.
Meanwhile, Finance Minister Arun Jaitley yesterday, 13 January 2015, said that the government is committed to fiscal discipline and with sharp decline in international oil prices and due to focused attention from the government, the Current Account Deficit (CAD) is also within the comfort level.
In overseas markets, Asian stocks fell as a sharp slide in copper prices in global markets sparked concerns about global economy. US stocks registered small losses yesterday, 13 January 2015, in what was a highly volatile trading session.
In the foreign exchange market, the rupee edged higher against the dollar.
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Global crude prices extended losses from the lowest close in more than five and half years as the United Arab Emirates and Kuwait predicted a global supply glut will persist to at least the second half of 2015. 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.
At 10:18 IST, the S&P BSE Sensex was down 24.45 points or 0.09% at 27,401.28. The index rose 87.07 points at the day's high of 27,512.80 in early trade. The index declined 74.46 points at the day's low of 27,351.27 in early trade.
The CNX Nifty was down 5.20 points or 0.06% at 8,294.20. The index hit a high of 8,326.45 in intraday trade. The index hit a low of 8,283.25 in intraday trade.
The BSE Mid-Cap index was up 41.64 points or 0.4% at 10,534.41. The BSE Small-Cap index was up 42.97 points or 0.38% at 11,294.48. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,208 shares advanced and 859 shares declined. A total of 92 shares were unchanged.
Cement shares edged higher after the Ministry of Mines after trading hours yesterday, 13 January 2015, said that the government has promulgated the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015 on 12 January 2015. UltraTech Cement (up 2.57%), ACC (up 1.43%), and Ambuja Cements (up 0.72%), edged higher. Shree Cement declined 0.14%.
Grasim Industries rose 1.15%. Grasim Industries has exposure to cement industry through its subsidiary UltraTech Cement.
The Ministry of Mines after trading hours yesterday, 13 January 2015, said that the government has promulgated the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015 on 12 January 2015. The ordinance amends certain provisions of the MMDR Act, 1957. The Ministry of Mines said that the promulgation of the ordinance became necessary to address the emergent problems in the mining industry. Essentially, through the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015, the government intends to remove discretion in grant of mineral concessions. Henceforth, all mineral concessions would be through auctions, thereby bringing in greater transparency and removing of discretion. Unlike in the 1957 Act, there would be no renewal of any mining concession. The tenure of the mineral concession has been increased from the existing 30 years to 50 years. Thereafter, the mining lease would be put up for auction (and not for renewal as in the earlier system).
The Ministry of Mines said that Sub-Section 5 and 6 of Section 8(a) of the ordinance provides that the mining leases would be deemed to be extended from the date of their last renewal to 31 March 2030 in the case of captive miners and till 31 March, 2020 for the merchant miners or till the completion of the renewal already granted, if any, whichever is later. Thus, no mining lease holder is likely to be put into any disadvantaged condition. It is expected that this would immediately permit such closed mines to start their operations, the Ministry of Mines said in a statement.
The ordinance proposes to setup a National Mineral Exploration Trust created out of contribution from the mining lease holders. This would allow the government to have a dedicated fund for undertaking exploration. In addition, the transferability provision (in respect of mining leases to be granted through auction) would permit flow of greater investment to the sector and increasing the efficiency in mining.
In respect of ten minerals in Part C of First Schedule like iron ore, manganese, bauxite, copper, gold, etc., the requirement that a state government should obtain the prior approval of the central government before grant of mineral concession has been done away with. Similarly, approval of mining plan by the government would no longer be mandatory as a provision has been added under 5(2) (b) permitting the state governments to devise a system for filing of a mining plan obviating need for approval by the central government.
Metal and mining stocks declined as metal prices fell in global markets. Hindalco Industries (down 2.87%), JSW Steel (down 0.74%), Bhushan Steel (down 0.4%), Sesa Sterlite (down 3.15%), Hindustan Zinc (down 1.82%), Tata Steel (down 2.02%), Steel Authority of India (Sail) (down 0.38%), National Aluminum Company (down 0.31%) and NMDC (down 0.41%) declined. Jindal Steel & Power rose 0.2%.
Copper prices plunged to pace a broad selloff in the metals prices in global markets today, 14 January 2015. By midday in East Asia, high-grade copper for March delivery had dropped 16 cents, or 5.9%, to $2.49 a pound, hitting levels not seen since mid-2009 though off its lows of the day. Weakness in copper is often seen as an omen for the global economy because the metal is used in a wide array of construction and manufacturing activities.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.09, compared with its close of 62.15 during the previous trading session.
Brent crude oil futures extended losses from the lowest close in more than five and half years as the United Arab Emirates and Kuwait predicted a global supply glut will persist to at least the second half of 2015. Brent for February settlement was off 37 cents at $46.22 a barrel. The contract had lost 84 cents or 1.77% to settle at $46.59 a barrel during the previous trading session. Brent for March settlement was off 71 cents at $47.39 a barrel.
On macro front, the government will release data on inflation based on the wholesale price index (WPI) for December 2014 at 12 noon today, 14 January 2015. The rate of inflation based on the wholesale price index (WPI) is projected at 0.5% for December 2014, as per the median estimate of a poll of economist carried out by Capital Market. WPI inflation stood at zero in November 2014.
The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India rose to 5% in December 2014 from nine-year low of 4.4% in November 2014, while snapping consistent decline for last four sequential months. An increase in inflation food items contributed entirely to the inflation rise in November 2014. The December CPI data was announced early this week.
Asian stocks edged lower today, 14 January 2015, as commodity prices slumped. Key benchmark indices in Indonesia, Singapore, Taiwan, Japan, and South Korea were off 0.1% to 1.33%. Key benchmark indices in China and Hong Kong were up by 0.23% to 0.37%.
Trading in US index futures indicated that the Dow could fall 56 points at the opening bell today, 14 January 2015. US stocks registered small losses yesterday, 13 January 2015, in what was a highly volatile trading session. Earlier, US stocks had surged in early trade underpinned by better-than-expected earnings from the industrial bellwether Alcoa and hopes that European Central Bank (ECB) is close to providing quantitative easing.
Meanwhile in Europe, 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. The Greek leftist opposition party Syriza leads opinion polls ahead of national elections on 25 January 2015. Syriza has demanded debt relief from the eurozone and promised to roll back the austerity and reform measures that the country has undertaken in exchange for the international bailout that the government negotiated in 2012.
The World Bank yesterday, 13 January 2015, lowered its global growth forecast for 2015 and next year due to disappointing economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices. The global development lender predicted the global economy would grow 3% this year, below a forecast of 3.4% made in June, according to its twice-yearly Global Economic Prospects report. World GDP growth will reach 3.3% in 2016, as opposed to a June forecast of 3.5%, before dipping to 3.2% in 2017, it said.
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