Volatility continued as key benchmark indices once again slipped into the red from green in mid-morning trade. The market breadth indicating the overall health of the market was negative. The barometer index, the S&P BSE Sensex, was currently trading below the psychological 29,000 mark, having alternately moved above and below that level in intraday trade so far. The Sensex had fallen below the psychological 29,000 mark after yesterday's slide. The Sensex was currently off 40.46 points or 0.14% at 28,934.65. The BSE Small-Cap and Mid-Cap indices were, both, in red.
PSU bank stocks led decline in bank stocks after the bank employees' unions and bank managements, under the aegis of the Indian Banks' Association (IBA), at a meeting held yesterday, 23 February 2015, agreed 15% wage hike as part of an industry-wide wage settlement. Metal and mining stocks declined.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 601.91 crore yesterday, 23 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 163.79 crore yesterday, 23 February 2015, as per provisional data.
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month February 2015 series to March 2015 series. The near month February 2015 derivatives contracts expire on Thursday, 26 February 2015.
In the foreign exchange market, the rupee edged higher against the dollar.
Brent crude oil futures edged lower in choppy trade.
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In overseas markets, Asian stocks edged higher before US Federal Reserve Chair Janet Yellen's semi-annual monetary policy testimony to the Congress later in the global day. Most US stocks edged lower in choppy trading session yesterday, 23 February 2015.
At 11:22 IST, the S&P BSE Sensex was down 40.46 points or 0.14% at 28,934.65. The index fell 57.48 points at the day's low of 28,917.63 in mid-morning trade. The index gained 79.71 points at the day's high of 29,054.82 in early trade.
The CNX Nifty was down 9.45 points or 0.11% at 8,745.50. The index hit a low of 8,736.90 in intraday trade. The index hit a high of 8,777.40 in intraday trade.
The market breadth indicating the overall health of the market was negative. On BSE, shares 1,414 declined and 983 shares gained. A total of 105 shares were unchanged.
The BSE Mid-Cap index was off 41.30 points or 0.38% at 10,704.12. The BSE Small-Cap index was off 79.47 points or 0.7% at 11,310.01. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 1360 crore by 11:25 IST compared to turnover of Rs 849 crore by 10:15 IST.
PSU bank stocks led decline in bank stocks after the bank employees' unions and bank managements, under the aegis of the Indian Banks' Association (IBA), at a meeting held yesterday, 23 February 2015, agreed 15% wage hike as part of an industry-wide wage settlement. Punjab National Bank (down 1.56%), Bank of Baroda (down 2.79%), Canara Bank (down 1.29%), Bank of India (down 1.41%) and Union Bank of India (down 1.46%) dropped.
The proposed hike in salaries will amount to a collective outgo of Rs 4725 crore per year for the 45 banks that are part of the 10th industry-wide bipartite five-year wage (2012-2017) settlement exercise. The revision in wages would be effective retrospectively from November 2012. Following the agreement, the employees' unions have called off the four-day strike, which was supposed to start tomorrow, 25 February 2015.
State Bank of India (SBI) declined 0.93%. The Ministry of Defence after trading hours yesterday, 23 February 2015, said a Memorandum of Understanding (MoU) was signed between the Indian Army and State Bank of India (SBI) on the Defence Salary Package. The basic features of the MoU include a number of free/concessional services like free drafts, free cheque books, free funds transfers to any bank in India through RTGS/NEFT, free ATM cards etc. The provision also includes the Nepal Express Remittance Scheme which enables instant fund transfers to Nepal for the benefit of the Nepali Domicile Gorkha Soldiers serving in the Indian Army. Additional improved features are linking of the Personal Accident Insurance (PAI) to the savings account instead of the debit card, enhancement of the PAI amounts, enhancement of the exemption percentage of margin money for house and car loans and waiving off of the processing charges on the loans. The revised MoU will benefit almost 19.5 lakh pensioners and 10 lakh serving personnel who hold Pay or Pension accounts with SBI and also provide them an opportunity to access modern banking facilities, the Ministry of Defence said in a statement.
Among private bank stocks, HDFC Bank (down 0.06%), IndusInd Bank (down 1.25%), Axis Bank (down 0.7%), Yes Bank (down 1.59%), and ICICI Bank (down 1.02%) declined.
Kotak Mahindra Bank rose 0.52%. ING Vysya Bank fell 0.32%. The Reserve Bank of India yesterday, 23 February 2015, notified that the foreign shareholding through Global Depository Receipts (GDRs)/American Depository Receipt (ADR)/ Foreign Direct Investment (FDI)/Non Resident Indian (NRI)/Persons of Indian Origin (PIO)/Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) in ING Vysya Bank has reached the trigger limit. Hence, further purchases of equity shares of this bank would be allowed only after obtaining prior approval of the Reserve Bank of India on behalf of FII/RFPI/NRI/PIOs and through FDI/ADR/GDRs under Schedule-I of FEMA.
Kotak Mahindra Bank and ING Vysya Bank have announced amalgamation of ING Vysya with Kotak in the ratio of 725 shares of Kotak for every 1,000 shares of ING Vysya Bank.
Metal and mining stocks declined. Sesa Sterlite (down 2.26%), NMDC (down 0.15%), Hindustan Copper (down 3.06%), Hindustan Zinc (down 0.17%), and Hindalco Industries (down 0.06%) edged lower. National Aluminium Company rose 0.21%.
Among steel stocks, Jindal Steel & Power (down 2.52%), Bhushan Steel (down 0.88%), JSW Steel (down 0.84%), Tata Steel (down 1.76%), Steel Authority of India (Sail) (down 2.04%) edged lower.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.2625, compared with its close of 62.3125 during the previous trading session.
Brent crude oil futures edged lower in choppy trade. Brent for April settlement was off 7 cents at $58.83 a barrel. The contract had dropped $1.32 a barrel to settle at $58.90 a barrel during the previous trading session.
Meanwhile, the stock exchanges have decided to keep the stock market open on Saturday, 28 February 2015, just like any other normal trading session when the Finance Minister Arun Jaitley presents the first full-fledged Budget of the Narendra Modi government. Trading will start at 9:15 IST and conclude at 15:30 IST. Jaitley will begin his speech at 11:00 IST in Lok Sabha on 28 February 2015 as he tables the Union Budget 2015-16 in the parliament.
The Railway Budget 2015-16 will be tabled in the parliament by rail minister Suresh Prabhu on Thursday, 26 February 2015. The Economic Survey will be tabled on Friday, 27 February 2015.
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 Saturday, 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 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.
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. Minister of Parliamentary Affairs Venkaiah Naidu on 22 February 2015 said that the government is willing to address concerns if any, on the Land Acquisition Ordinance. Several state governments cutting across party line have expressed difficulties in land acquisition for development projects under the Act of 2013 and sought modifications. Subsequently, the central government sought to facilitate land acquisition for notified purposes like infrastructure and affordable housing projects etc., in an easy manner without compromising on the remuneration to be paid to farmers and rehabilitation measures to be taken up for displaced persons, Naidu said. The government is ready to address apprehensions, if any in this regard, Naidu said.
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.
Asian stocks edged higher today, 24 February 2015 before the US Federal Reserve Chair Janet Yellen speaks to lawmakers. Key benchmark indices in Singapore, Taiwan, Japan, Indonesia and South Korea rose by 0.09% to 0.95%. In Hong Kong, the Hang Seng index fell by 0.55%. China's mainland markets remain closed today, 24 February 2015 for the Lunar New Year holiday.
Markit Economics will tomorrow, 25 February 2015, announce preliminary reading of China's HSBC PMI index for February 2015, indicating health of China's manufacturing activity for that month.
Trading in US index futures indicated that the Dow could rise 6 points at the opening bell today, 24 February 2015. US stocks ended mixed yesterday, 23 February 2015 as lower oil prices dragged down energy shares. In economic data, sales of previously owned US homes fell in January as a tight supply forced up prices, showing the residential real-estate market faces an uneven recovery. Purchases slowed 4.9% to a 4.82 million annualized rate, the least since April, according to figures from the National Association of Realtors yesterday, 23 February 2015.
Investors will receive further clues on the central bank's assessment of the economy and the timing of a rate increase when Federal Reserve Chair Janet Yellen gives two days of testimony to Congressional finance committees starting today, 24 February 2015.
Meanwhile, Greece yesterday, 23 February 2015, finalised measures which include plans to combat tax evasion and tackling fuel and tobacco smuggling in order to secure a bailout extension. Greece had previously delayed presenting the reforms by 24 hours. Euro zone finance ministers would today, 24 February 2015, discuss Greece's plans as scheduled earlier.
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