Gains in European stocks triggered upmove for key equity benchmark indices in India in what was a choppy trading session. Banking, FMCG and IT stocks led the upmove. European stocks rose on reports that a bond-buying scheme by the European Central Bank is taking firmer shape. The 50-unit CNX Nifty hit one-week high. The barometer index, the S&P BSE Sensex, hit its highest level in almost a week. The Sensex was provisionally up 134.89 points or 0.49% at 27,593.27. The market breadth indicating the overall health of the market was positive.
Meanwhile, Prime Minister Narendra Modi yesterday, 11 January 2015, said that the government is committed to create a policy environment that is predictable, transparent and fair.
FMCG stocks edged higher, with Hindustan Unilever (HUL) hitting record high. Index heavyweight and cigarette maker ITC edged higher. Capital goods stocks also gained.
In overseas markets, European stocks edged higher on reports that a bond-buying scheme by the European Central Bank is taking firmer shape. Asian stocks edged lower as a decline in wage growth in the US last month stoked worries about global deflationary pressures. US stocks fell on Friday, 9 January 2015, after December's US payroll report revealed a drop in wages.
In the foreign exchange market, the rupee edged higher against the dollar as a drop in US wages last month spurred speculation the US Federal Reserve will delay an increase in interest rates.
Brent crude oil futures extended losses from the lowest level in more than 5-1/2 years after a prominent investment bank reportedly cut its oil-price projections for this year and the next. 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.
Foreign portfolio investors sold shares worth a net Rs 297.99 crore during the previous trading session on Friday, 9 January 2015, as per provisional data.
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Meanwhile, as per media reports, the government's revenue department is pushing the Income Tax department to include portfolio investors (FPIs) under the Minimum Alternate Tax (MAT) on their gains from stock market transactions. The Income Tax department reportedly issued show-cause notices to more than 35 foreign portfolio investors (FPIs) last month on why the concerned FPI isn't liable to pay MAT.
As per provisional figures, the S&P BSE Sensex was up 134.89 points or 0.49% at 27,593.27. The index jumped 162.28 points at the day's high of 27,620.66 in late trade, its highest level since 6 January 2015. The index declined 134.64 points at the day's low of 27,323.74 in afternoon trade.
The CNX Nifty was up 38.50 points or 0.46% at 8,323, as per provisional figures. The index hit a high of 8,332.60 in intraday trade, its highest level since 5 January 2015. The index hit a low of 8,245.60 in intraday trade.
The BSE Mid-Cap index was up 60.17 points or 0.58% at 10,486.18. The BSE Small-Cap index was up 93.16 points or 0.83% at 11,291.50. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,644 shares advanced and 1,259 shares declined. A total of 121 shares were unchanged.
The total turnover on BSE amounted to Rs 2999 crore, lower than Rs 3287.18 crore on Friday, 9 January 2015.
FMCG stocks gained. Colgate Palmolive (India) (up 0.26%), Dabur India (up 2.5%), Godrej Consumer Products (up 3.34%), Nestle India (up 1.26%), and Tata Global Beverages (up 0.97%) gained.
Hindustan Unilever (HUL) gained 3.98% to Rs 897.90, after hitting record high of Rs 899.65 in intraday trade.
Index heavyweight and cigarette maker ITC rose 0.24% to Rs 357.55. The stock hit high of Rs 361.50 and low of Rs 356.25.
Capital goods stocks edged higher. Alstom India (up 5.27 %), Bharat Heavy Electricals (Bhel) (up 1.53%), L&T (up 2.31%), Punj Lloyd (up 2.06%), Thermax (up 0.57%) and Siemens (up 1.53%) gained.
In the foreign exchange market, the rupee edged higher against the dollar as a drop in US wages last month spurred speculation the US Federal Reserve will delay an increase in interest rates. The partially convertible rupee was hovering at 62.21, compared with its close of 62.32 during the previous trading session.
Brent crude oil futures extended losses from the lowest level in more than 5-1/2 years after a prominent investment bank reportedly cut its oil-price projections for this year and the next. Brent for February settlement was off $1.26 a barrel to $48.85 a barrel. The contract had lost 85 cents to settle at $50.11 a barrel during the previous trading session on Friday, 9 January 2015, the lowest closing since April 2009. Brent for March settlement was off $1.43 a barrel at $49.87 a barrel.
On the macro front, data to be released today, 12 January 2015, is expected to show industrial production growth remaining muted in November 2014 and consumer price inflation accelerating in December 2014. Industrial production is seen rising 1.6% in November 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil industrial production data for November 2014 after trading hours today, 12 January 2015. Industrial production had witnessed a surprise contraction of 4.2% in October 2014.
The rate of inflation based on the consumer price index (CPI) is seen accelerating to 5.4% in December 2014 from 4.4% in November 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will release the data on CPI inflation for December 2014 after trading hours today, 12 January 2015.
The Reserve Bank of India (RBI) aims to limit consumer-price gains to 8% by January 2015 and 6% by January 2016. Over the longer term, the RBI aims to limit consumer-price gains to 4%, within a 2% band.
The rate of inflation based 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 government will release data on WPI for December 2014 at 12 noon on Wednesday, 14 January 2015.
Dr Raghuram Rajan, Governor, Reserve Bank of India (RBI) and Dr Mario Draghi, President of the European Central Bank (ECB) today, 12 January 2015, signed a Memorandum of Understanding (MoU) on cooperation in the field of central banking. The MoU provides a framework for regular exchange of information, policy dialogue and technical cooperation between the two institutions. Technical cooperation may take the form of joint seminars and workshops in areas of mutual interest in the field of central banking.
Prime Minister Narendra Modi yesterday, 11 January 2015, said that the government is committed to create a policy environment that is predictable, transparent and fair. Speaking at Vibrant Gujarat summit at Gandhinagar in Gujarat, Modi said that the government is putting all efforts to ensure faster and yet inclusive growth. Modi said that HSBC's latest report has identified India as the world's largest growing exporter, which is set to move from being the fourteenth to the fifth largest exporter in the world by 2030. Modi has that the government has taken far reaching decisions to ensure supply of key natural resources. He further said that the government has also amended legal provisions to facilitate availability of land. This has been done to enable development in remote areas while ensuring better returns to the farming community. Modi said that the government has put focus on building infrastructure through public and private investments. With regard to the manufacturing sector, Modi said that the government's focus is on promoting labour intensive manufacturing.
European stocks edged higher today, 12 January 2015, on reports that a bond-buying scheme by the European Central Bank (ECB) is taking firmer shape. Key indices in France, Germany and UK were up 0.3% to 1.04%.
The ECB is reportedly planning a quantitative easing program that could be based on contributions made by central banks into the ECB. Germany pays 17.9% of the total contributions while Cyprus pays the least, at 0.15% of the total contributions to the ECB, according to reports. Nothing has been finalized yet, reports said.
The French economy grew only slightly in the final quarter of 2014, a business confidence survey by the Bank of France showed today, 12 January 2015. French gross domestic product expanded 0.1% in the fourth quarter from the third, the central bank said.
Meanwhile, 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.
Asian stocks edged lower today, 12 January 2015, amid concern Europe's stimulus plans may not solve the euro region's economic woes and after an unexpected drop in American wages clouded the outlook for US interest rates. Key indices in South Korea, Indonesia, Singapore, China and Taiwan were off 0.19% to 1.71%. Key indices in Hong Kong and Singapore were up 0.19% to 0.45%. Japanese stock market remained close for a holiday.
Trading in US index futures indicated that the Dow could gain 65 points at the opening bell today, 12 January 2015. US stocks fell on Friday, 9 January 2015, following a two-day rally as December's jobs report gave a mixed view of the economy, with financial shares leading the way lower.
US job growth increased briskly in December, but wages posted their biggest decline in at least eight years in a sign the tightening labor market has yet to give much of a boost to workers. Nonfarm payrolls increased by 252,000 last month after an upwardly revised jump of 353,000 in November, the Labor Department said. The jobless rate fell 0.2 percentage point to a 6-1/2-year low of 5.6%, but that was mainly because people left the labor force.
The drop in labor participation and a surprise five-cent, or 0.2 percent, decrease in average hourly earnings, which nearly erased November's gains, took some shine off the otherwise upbeat report.
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