Firmness continued on the bourses in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently up 232.97 points or 0.84% at 27,878.50. The market breadth indicating the overall health of the market was strong.
Shares of most PSU OMCs rose after global crude oil prices declined yesterday, 19 May 2015. Shares of private sector banks edged higher. Shares of PSU banks were mixed. Most auto stocks edged higher after the Ministry of Road Transport & Highways yesterday, 19 May 2015, released the notification for mass emission standards for flex-fuel ethanol E85 and ED95 in vehicles.
The gains for key benchmark indices materialised as Brent crude oil prices dropped overnight. The decline in global crude oil prices augur well for India as the country imports about 80% of its crude oil requirements. Comments by Reserve Bank of India (RBI) Governor Raghuram Rajan that inflation has come down tremendously in India also aided the upmove on the domestic bourses.
Earlier, the Sensex and the 50-unit CNX Nifty both hit their highest levels in almost four weeks in morning trade as these two key benchmark indices extended initial gains.
Meanwhile, the finance ministry yesterday, 19 May 2015, reportedly issued draft guidelines on gold monetization scheme that will encourage Indians to vest the gold in their possession with banks and earn interest on it.
Foreign portfolio investors bought shares worth a net Rs 48.06 crore yesterday, 19 May 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 451.02 crore yesterday, 19 May 2015, as per provisional data released by the stock exchanges.
In the overseas markets, Asian indices were mixed. In US, stocks lost steam by the end of session and closed mostly lower yesterday, 19 May 2015, though Dow industrials eked out a small gain to finish at a fresh record.
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At 11:16 IST, the S&P BSE Sensex was up 232.97 points or 0.84% at 27,878.50. The index jumped 257.48 points at the day's high of 27,903.01 in morning trade, its highest level since 23 April 2015. The index gained 98.46 points at the day's low of 27,743.99 at the onset of trading session.
The Nifty was up 69.40 points or 0.83% at 8,435.05. The index hit a high of 8,440.35 in intraday trade, its highest level since 23 April 2015. The index hit a low of 8,391.45 in intraday trade.
The BSE Mid-Cap index was 50.02 points or 0.47% at 10,701.04. The BSE Small-Cap index was up 62.02 points or 0.55% at 11,249.75. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,356 shares rose and 831 shares fell. A total of 109 shares were unchanged.
Auto stocks edged higher after the Ministry of Road Transport & Highways yesterday, 19 May 2015, released the notification for mass emission standards for flex-fuel ethanol E85 and ED95 in vehicles. Mahindra & Mahindra (up 1.07%), Maruti Suzuki (India) (up 0.88%), Ashok Leyland (up 0.36%), Escorts (up 0.35%), Bajaj Auto (up 0.28%), Hero MotoCorp (up 0.25%) and Tata Motors (up 0.18%) edged higher. TVS Motor Company (down 0.07%) and Eicher Motors (down 0.78%), edged lower.
The Ministry of Road Transport & Highways said that the notification for mass emission standards for flex-fuel ethanol E85 and ED95 will enable vehicle manufacturers to manufacture vehicles running on bio-ethanol E85 and ED95. A bio-ethanol fuel bus is already under trial in Nagpur. The Ministry of Road Transport & Highways is amending the rules under CMVR, 1989 to facilitate the use of greener alternate fuels in vehicles. Alternative fuels are either produced in the country for e.g. Ethanol, Bio-CNG etc. or generated locally like solar photovoltaic and other sources of electric power which can be stored in electric batteries.
The Ministry of Road Transport & Highways has already notified draft rules for mass emission norms and testing standards of vehicles running on bio-CNG which are under finalisation. The standards of small series testing of vehicles running on electric power have already been notified by the ministry. All the above steps will enable use of alternative fuels in vehicles in India, the notification added, the Ministry of Road Transport & Highways said in a statement.
Shares of most PSU OMCs rose after crude oil prices declined yesterday, 19 May 2015. HPCL (up 1.52%) and BPCL (up 1.22%) edged higher. Indian Oil Corporation was down 0.01%. Lower crude oil prices will reduce underrecovery of PSU OMCs (public sector oil marketing companies) on domestic sale of LPG and kerosene at controlled prices. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. The government has already freed pricing of petrol and diesel.
Shares of PSU banks were mixed. Central Bank of India (up 1.52%), State Bank of India (up 0.97%), Vijaya Bank (up 0.65%), Andhra Bank (up 0.51%), Bank of Maharashtra (up 0.38%), Punjab and Sind Bank (up 0.32%), Punjab National Bank (up 0.20%) and United Bank of India (up 0.19%) edged higher. Union Bank of India (down 0.15%), Corporation Bank (down 0.17%), UCO Bank (down 0.17%), Canara Bank (down 0.21%), IDBI Bank (down 0.22%), Allahabad Bank (down 0.34%), Indian Bank (down 0.38%), Dena Bank (down 0.9%) and Bank of Baroda (down 0.96%) edged lower.
Syndicate Bank was up 1.69%. The board of Syndicate Bank at its meeting held yesterday, 19 May 2015, approved raising equity capital of Rs 2000 crore, including premium to be decided as per the guidelines by way of qualified institutional placement (domestic and foreign financial institutions)/rights issue /follow-on public/or any other mode approved by Reserve Bank of India/Government of India at an appropriate time. Syndicate Bank's board also approved raising Basel III complaint additional tier I bonds upto Rs 1800 crore and tier II bonds upto Rs 1750 crore, as per eligibility at an appropriate time. The announcement was made after market hours yesterday, 19 May 2015.
Shares of private sector banks edged higher. ICICI Bank (up 1.36%), HDFC Bank (up 1.19%), Federal Bank (up 1.12%), Kotak Mahindra Bank (up 0.89%), City Union Bank (up 0.76%), Yes Bank (up 0.45%) and Axis Bank (up 0.19%) edged higher.
Meanwhile, the finance ministry yesterday, 19 May 2015, reportedly issued draft guidelines on gold monetization scheme that will encourage Indians to vest the gold in their possession with banks and earn interest on it. Banks could treat gold deposits as part of their cash reserve ratio (CRR) or statutory liquidity ratio (SLR), the finance ministry said in its guidelines released to seek opinions about its gold monetisation scheme. The SLR is the minimum amount of bonds that banks must have, while the CRR is the share of deposits they have to compulsory keep with the central bank. Under the scheme, customers' will have to deposit gold for at least a year and banks may pay the interest after 30 or 60 days of the opening of the gold savings account, the proposal said. Both the interest and the principal payable to depositors are likely to be valued in gold and the gains will be tax-free.
The scheme will also allow jewellers to obtain loans in their metal account. It has been proposed to allow banks to lend the gold they collect under this scheme to jewellers. This will help meet some of the demand of the jewellery industry. This will also help reduce the reliance of jewellers on imports.
IndusInd Bank was up 0.88%. The bank announced during trading hours today, 20 May 2015, that Worldpay -- the global leader in payments -- has partnered with IndusInd Bank to offer domestic acquiring services in India. The association will assist both companies in processing customers' payments and marks the first step for Worldpay in entering the Indian market, IndusInd Bank said.
Tata Consultancy Services (TCS) rose 1.52%. The company announced during trading hours that its client -- Euroclear Finland -- the central securities depository (CSD) for the Finnish capital markets, has launched a new transaction processing platform known as 'Infinity'. Infinity is a multi-year program powered by TCS BaNCS for market infrastructure and is a key component of Euroclear Finland's outsourcing its securities settlement processing toTARGET2Securities (T25) as part of the European Central Bank's fourth migration wave in February 2017.
Infinity's processing capabilities for fixed-income was recently unveiled, following a 22 month implementation of this first phase, TCS said. The next phases will be rolled out in the course of 2016 and the processing environment will also feature a new central register as well as equity processing capabilities, TCS said.
Infinity is a multi-year program powered by TCS BaNCS for Market infrastructure, and is a key component of Euroclear Finland's outsourcing its securities settlement processing toTARGET2Securities (T25) as part of the European Central Bank's fourth migration wave in February 2017. Through Infinity, TCS BaNCS has provided Euroclear with a single, consolidated platform for depository, registry and corporate actions functions, thereby, enabling simplified business operations.
In the global commodities market, Brent crude oil prices dropped overnight. Brent for July settlement was up 63 cents at $64.65 a barrel. The contract had lost $2.25 a barrel or 3.39% to settle at $64.02 a barrel during the previous trading session. The decline in global crude oil prices and deregulation of diesel price announced by the Indian government in October 2014 will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. The slide in global crude oil prices will also help India in containing its current account deficit and fuel price inflation. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. India imports 80% of its crude oil requirement.
In the foreign exchange market the rupee edged lower against the dollar. The partially convertible rupee was currently hovering at 63.82, compared with its close of 63.68 during the previous trading session.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said in New York yesterday, 19 May 2015, that inflation has come down tremendously in India. Rajan also reportedly called the government's spending cuts significant. Rajan said that the depreciation of the rupee is due in part to the US dollar's strength and that the rupee has fallen less and in a less volatile fashion than other currencies. While the rupee has slid against the strengthening dollar, he said that it has actually strengthened against other currencies.
Meanwhile, the finance ministry yesterday, 19 May 2015, reportedly issued draft guidelines on gold monetization scheme that will encourage Indians to vest the gold in their possession with banks and earn interest on it. Banks could treat gold deposits as part of their cash reserve ratio (CRR) or statutory liquidity ratio (SLR), the finance ministry said in its guidelines released to seek opinions about its gold monetisation scheme. The SLR is the minimum amount of bonds that banks must have, while the CRR is the share of deposits they have to compulsory keep with the central bank. Under the scheme, customers' will have to deposit gold for at least a year and banks may pay the interest after 30 or 60 days of the opening of the gold savings account, the proposal said. Both the interest and the principal payable to depositors are likely to be valued in gold and the gains will be tax-free.
The minimum quantity of gold that a customer can bring is proposed to be set at 30 grams so that even small depositors are encouraged. The government has sought feedback on the scheme by 2 June 2015.
The scheme will also allow jewellers to obtain loans in their metal account. It has been proposed to allow banks to lend the gold they collect under this scheme to jewellers. This will help meet some of the demand of the jewellery industry. This will also help reduce the reliance of jewellers on imports.
In overseas markets, Asian indices were mixed today, 20 May 2015. Key benchmark indices in China, Indonesia, Japan and South Korea were up by 0.47% to 1.92%. Key benchmark indices in Taiwan, Singapore and Hong Kong were off 0.27% to 0.37%.
Data showed that Japan's economy grew at its fastest pace in a year during the first quarter. Japan's real gross domestic product grew 2.4% in annualized terms in the first three months of 2015, the government said today, much stronger than a revised 1.1% expansion in the previous quarter.
In US, stocks lost steam by the end of session and closed mostly lower yesterday, 19 May 2015, though Dow industrials eked out a small gain to finish at a fresh record. Falling oil prices weighed on energy stocks, with the sector selling off sharply. Meanwhile, investors digested a report showing a sharp increase in housing starts last month, pondering the effect it might have in determining the course of the Federal Reserve's interest rate policy.
Investors will get a closer look at the US Federal Reserve's thoughts about interest rates and economic data when the minutes of the Federal Open Market Committee meeting from its meeting held in late April 2015 are released in the global day today, 20 May 2015.
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