The movement for key benchmark indices remained range bound in early afternoon trade. A divergent trend continued between the two key indices. While the barometer index, the S&P BSE Sensex, was a tad lower, the 50-unit CNX Nifty retained positive zone. The Sensex was currently off 18.24 points or 0.07% at 27,567.03. The market breadth indicating the overall health of the market was positive. Global crude oil prices slumped. India stands to benefit from a rout in global crude oil prices given that the nation meets 80% of its crude oil requirements from imports.
Macroeconomic data released after trading hours yesterday, 12 January 2015, showed a lower-than-expected acceleration in inflation based on the consumer price indices last month. Finance Minister Arun Jaitely yesterday, 12 January 2015, said that the government has taken major steps to improve the investment climate in the last several months and will continue to do so.
FMCG shares extended gains registered during the previous trading session. Hindalco Industries rose after US based aluminum major Alcoa Inc reported better-than-expected Q4 earnings yesterday, 12 January 2015. Shares of paint makers were in demand as global crude oil prices slumped.
Earlier, the Sensex had hit one-week high and Nifty had hit its highest level in more than a week in early trade.
In overseas markets, Asian stocks were mixed. US stocks edged lower for the second day in a row yesterday, 12 January 2015, as a renewed assault on oil prices eroded investor confidence ahead of the start of fourth-quarter earnings season.
Meanwhile, foreign portfolio investors bought shares worth a net Rs 244.95 crore yesterday, 12 January 2015, as per provisional data.
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In the foreign exchange market, the rupee edged higher against the dollar.
Global crude oil prices extended losses after steep slide yesterday, 12 January 2015, amid speculation that US crude stockpiles will increase, exacerbating a global supply glut that's driven prices to the lowest in more than 5-1/2 years. 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 12:18 IST, the S&P BSE Sensex was down 18.24 points or 0.07% at 27,567.03. The index declined 55.67 points at the day's low of 27,529.60 in mid-morning trade. The index rose 84.92 points at the day's high of 27,670.19 in early trade, its highest level since 6 January 2015.
The CNX Nifty was up 18.10 points or 0.22% at 8,341.10. The index hit a high of 8,356.30 in intraday trade, its highest level since 5 January 2015. The index hit a low of 8,321.85 in intraday trade.
The BSE Mid-Cap index was up 53.23 points or 0.51% at 10,539.41. The BSE Small-Cap index was up 52.62 points or 0.47% at 11,344.12. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,428 shares advanced and 1,059 shares declined. A total of 114 shares were unchanged.
FMCG shares extended gains registered during the previous trading session. Godrej Consumer Products (up 2.33%), Dabur India (up 1.68%), Nestle India (up 2.88%), Britannia Industries (up 0.64%), Marico (up 3.77%) and Colgate-Palmolive (India) (up 0.67%) edged higher.
Hindustan Unilever (HUL) fell 1.15% at Rs 886.30 on profit booking. The stock reversed gains after hitting record high of Rs 908.30 in intraday trade.
Hindalco Industries rose 1.26% after US based aluminum major Alcoa Inc reported better-than-expected Q4 earnings yesterday, 12 January 2015. Lightweight metals leader Alcoa reported net income of $159 million, or $0.11 per share in Q4 December 2014, compared with a net loss of $2.3 billion or $2.19 per share in Q4 December 2013. Revenue rose 14% to $6.4 billion in Q4 December 2014 over Q4 December 2013. Higher sales in Alcoa's value-add businesses, favorable metal prices and energy sales drove the company's year-over-year revenue increase.
Hindalco Industries' US subsidiary Novelis Inc., the world's largest producer of rolled aluminium products, competes with Alcoa in the North American markets.
Shares of paint makers were in demand as global crude oil prices slumped. Berger Paints India (up 1.88%), Shalimar Paints (up 2.97%), and Akzo Nobel India (up 0.83%) edged higher. Falling crude oil prices augur well for paints makers. Titanium dioxide is a key raw material for paint companies and is derived from crude oil.
Asian Paints gained 4.01%. The company after market hours yesterday, 12 January 2015, in a clarification with regard to news item titled Asian Paints in talks for Rs 2500-crore project in South, said the company has been exploring the possibility of setting up an additional paint manufacturing plant and that the management has been talks with some of the southern states of the country since the last four to five years. It usually takes three to four years for the company for setting up a greenfield plant including acquisition of land, obtaining all necessary environmental and other clearances and approvals, Asian Paints said. The final capacity of the proposed paint plant will be dependent on the location and area of the land allotted to the company, it added. The cost of setting up a manufacturing plant of a capacity in the range of 4 lakh KL to 6 lakh KL, subject to various factors would be approximately Rs 2000 crore to Rs 2500 crore, Asian Paints said. Since the company has not been allotted the required land and pending other approvals, as may be required for setting up the said manufacturing facility, the company has not made any announcements in this regard, Asian Paints said. As soon as the required land is allotted to the company and necesssary approvals for setting up of the paint plant are granted by the concerned state government, the company will promptly make appropriate disclosures including the location and the details of the investment, it added.
As regards the company's greenfield venture in Indonesia is concerned, the company vide its letters dated 22 August 2014 and 1 October 2014 had made announcements that the company had made an application for investment approval for setting up a greenfield paint manufacturing facility in Indonesia. The Badan Koordinasi Penanaman Modal (BKPM), the investment coordinating Board of Republic of Indonesia had approved the investment application and issued a principal license for setting up manufacturing facility. The company had further informed that the further steps to be taken for setting up the greenfield operations in Indonesia will be subject to necessary regulatory and other approvals, Asian Paints said.
Regarding the company's proposed acquisition of 51% stake in Kadisco Paint and Adhesive Industry Share Company, Ethiopia, (Kadisco), the company had made announcement dated 22 October 2014 wherein the company had stated that, Berger International, Singapore (indirect subsidiary of the company) had signed the share purchase agreement and other definitive agreements and documents to acquire 51% stake in Kadisco. The company had further stated that the acquisition would be subject to regulatory approvals, Asian Paints said.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.095, compared with its close of 62.165 during the previous trading session.
Brent crude oil futuers extended losses after steep slide yesterday, 12 January 2015, amid speculation that US crude stockpiles will increase, exacerbating a global supply glut that's driven prices to the lowest in more than 5-1/2 years. Brent for February settlement was off 94 cents at $46.49 a barrel. The contract had lost $2.68 a barrel or 5.4% to $47.43 a barrel during the previous trading session, its lowest finish since March 2009. Brent for March settlement was off 93 cemts a barrel at $47.57 a barrel.
On macro front, India's Index of industrial production (IIP) increased at five-months high pace of 3.8% in November 2014, recovering from the sharpest pace of decline in three-years at 4.2% recorded in October 2014. The manufacturing sector's output growth rebounded to 3.8% in November 2014, snapping the largest decline in the last five-and-a-half years at 7.4% recorded in October 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 IIP and CPI data was announced after market hours yesterday, 12 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 government will release data on WPI for December 2014 at 12 noon tomorrow, 14 January 2015.
Finance Minister Arun Jaitely yesterday, 12 January 2015, said that the government has taken major steps to improve the investment climate in the last several months and will continue to do so. Speaking at the Seminar Invest in India Summit 2015 - Financing for Future Growth, held on the sidelines of Vibrant Gujarat, in Gandhinagar, Jaitely said that in the near future, the nationwide goods and services (GST) tax could become a reality and further improve the investment climate.
On the political front, the Election Commission (EC) yesterday, 12 January 2015, announced that the assembly election will be held in Delhi on 7 February 2015 and counting of votes will take place on 10 February 2015. With the declaration of the poll schedule, the Model Code of Conduct will come into force with immediate effect, the EC said. The last government in Delhi was headed by the Aam Aadmi Party (AAP) but Chief Minister Arvind Kejriwal resigned 49 days after assuming office.
Asian stocks were mixed today, 13 January 2015. Key benchmark indices in China, Hong Kong, Indonesia and Taiwan were up by 0.18% to 0.62%. Key benchmark indices in Japan, Singapore and South Korea were off 0.13% to 0.76%.
China's exports climbed more than estimated last month as stronger demand from abroad helps bolster growth. Overseas shipments rose 9.7% in December from a year earlier. Imports fell 2.4%, leaving a trade surplus of $49.61 billion, the customs administration said in Beijing.
Trading in US index futures indicated that the Dow could gain 35 points at the opening bell today, 13 January 2015. US stocks ended lower yesterday, 12 January 2015, led by another sharp decline in energy shares as oil prices tumbled and concern grew ahead of corporate earnings season.
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.
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