After a sharp rally at the onset of the trading session triggered by overnight steep slide in global crude oil prices, key equity benchmark indices remained firm in morning trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit record high. The Sensex was currently up 309.56 points or 1.09% at 28,748.47. The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser on BSE. The BSE Mid-Cap index was up 1.11%, outperforming the Sensex.
Shares of public sector oil marketing companies surged as global crude oil prices tumbled yesterday, 27 November 2014, after OPEC decided to keep the cartel's production levels unchanged at a meeting in Vienna yesterday, 27 November 2014. Shares of state run upstream oil and gas companies rose on hopes of lower subsidy burden as crude oil prices declined. Cairn India fell as lower crude oil prices will result in lower realizations from crude sales for oil exploration firms such as Cairn India.
Brent crude traded near a four-year low after OPEC decided to keep the cartel's production levels unchanged at a meeting in Vienna yesterday, 27 November 2014. Indian government's decision last month to decontrol diesel prices 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. 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 Reserve Bank of India (RBI) yesterday, 27 November 2014, set Rs 100 crore as minimum paid-up equity capital requirement for setting up payments banks and small finance banks.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 389.73 crore yesterday, 27 November 2014, as per provisional data.
In overseas markets, Japanese stocks led gains in Asian stocks after the latest data showed Japan's October retail sales rose 1.4% on year and industrial production beat forecasts with a month-on-month increase of 0.2%.
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In the foreign exchange market, the rupee edged lower against the dollar.
At 10:17 IST, the S&P BSE Sensex was up 309.56 points or 1.09% at 28,748.47. The index jumped 327.08 points at the day's high of 28,765.99 in morning trade, a record high for the index. The index rose 45.08 points at the day's low of 28,483.99 in early trade.
The CNX Nifty was up 91.90 points or 1.08% at 8,586.80. The index hit a high of 8,593.45 in intraday trade, a record high for the index. The index hit a low of 8,516.25 in intraday trade.
The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser on BSE. 1,445 shares gained and 557 shares fell. A total of 61 shares were unchanged.
The BSE Mid-Cap index was up 113.40 points or 1.11% at 10,285.32, outperforming the Sensex. The BSE Small-Cap index was up 106.69 points or 0.95% at 11,348.34, underperforming the Sensex.
Shares of public sector oil marketing companies surged as global crude oil prices tumbled yesterday, 27 November 2014. HPCL (up 7.13%), BPCL (up 5.1%) and Indian Oil Corporation (up .4.18%) edged higher. Lower crude oil prices could reduce under-recoveries of PSU OMCs 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 state run upstream oil and gas companies rose on hopes of lower subsidy burden as crude oil prices declined. Oil India gained 0.16%. GAIL (India) gained 0.8%.
State run upstream oil and gas companies share a part of the under recoveries of state-run oil marketing companies (PSU OMCs) on sale of petroleum products by allowing discount in the prices of crude oil, PSD kerosene, and domestic LPG based on the rates of discount communicated by the Ministry of Petroleum and Natural Gas and the Petroleum Planning and Analysis Cell.
ONGC rose 1.39%. The government has decided to sell a 5% stake in ONGC.
Cairn India fell 1.79% as lower crude oil prices will result in lower realizations from crude sales for oil exploration firms such as Cairn India.
IL&FS Engineering and Construction Company rose 1.03% ahead of its board meeting today, 28 November 2014, to consider additional fund raising options for the company.
Just Dial rose 2.81% after the Reserve Bank of India yesterday, 27 November 2014, notified that foreign portfolio investors (FIIs)/registered foreign portfolio investors (RFPIs) can invest upto 75% in the company's equity capital, from 49% earlier. Just Dial has already passed resolutions at its board of directors' level and a special resolution by the shareholders agreeing for enhancing the limit for the purchase of its equity shares and convertible debentures by FIIs, the RBI said. Total holding of FIIs in Just Dial stood at 26.64% as on 30 September 2014.
The National Stock Exchange (NSE) yesterday, 27 November 2014, announced that the exchange has decided to provide a flat concession of 40% in the transaction charges on the incremental billable volume (i.e. the Premium value) above Rs 750 crore in a month for a period of 2 months from 1 December 2014 to 31 January 2015 on a pilot basis on NSE's equity options segment. In order to improve the liquidity in the equity options segment and to align with the feedback received from the market, an exercise to review the transaction charges in the equity options segment was carried out by the exchange, NSE said in a circular.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.8975, compared with its close of 61.875 during the previous trading session.
Brent crude traded near a four-year low after OPEC decided to keep the cartel's production levels unchanged at a meeting in Vienna yesterday, 27 November 2014. Brent for January settlement was currently unchanged at $72.58 a barrel. The contract dropped $5.17 a barrel to settle at $72.58 yesterday, 27 November 2014, the lowest close since August 2010.
The Organization of Petroleum Exporting Countries (OPEC) will maintain its collective output target at 30 million barrels a day, Saudi Arabia's Oil Minister Ali Al-Naimi said after the group met in Vienna yesterday, 27 November 2014. The 12-member group, which pumps 40% of the world's oil, will convene again on 5 June 2015 in the Austrian capital.
The Reserve Bank of India (RBI) yesterday, 27 November 2014, set Rs 100 crore as minimum paid-up equity capital requirement for setting up payments banks and small finance banks. Those eligible for setting up a payments bank include existing non-bank pre-paid payment instrument (PPI) issuers and other entities such as individuals/professionals, non-banking finance companies (NBFCs), corporate Business Correspondents (BCs), mobile telephone companies, super-market chains, companies and real sector cooperatives that are owned and controlled by residents. Public sector entities can also apply to set up payments banks, the RBI said while issuing guidelines on payments banks. A promoter/promoter group can have a joint venture with an existing scheduled commercial bank to set up a payments bank. A scheduled commercial bank can take equity stake in a payments bank only to the extent permitted under Section 19 (2) of the Banking Regulation Act, 1949. Promoter/promoter groups should be 'fit and proper' with a sound track record of professional experience or running their businesses for at least a period of five years in order to be eligible to promote payments banks, according to the RBI guidelines on payments banks.
A payment bank can accept demand deposits. However, it will initially be restricted to holding a maximum balance of Rs 1 lakh per individual customer as demand deposits. A payments bank can issue ATM/debit cards, but cannot issue credit cards. A payments bank will provide payments and remittance services through various channels. A payments bank can act as BC of another bank, subject to the Reserve Bank guidelines on BCs. The payments bank cannot undertake lending activities. Apart from amounts maintained as Cash Reserve Ratio (CRR) with the Reserve Bank of India on its outside demand and time liabilities, a payments bank will be required to invest minimum 75% of its "demand deposit balances" in Statutory Liquidity Ratio (SLR) eligible government securities/treasury bills with maturity up to one year and hold maximum 25% in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.
The payments bank should have a leverage ratio of not less than 3%, i.e., its outside liabilities should not exceed 33.33 times its net worth (paid-up capital and reserves). The promoter's minimum initial contribution to the paid-up equity capital of a payments bank shall at least be 40% for the first five years from the commencement of its business, the RBI said. The operations of a payments bank should be fully networked and technology driven from the beginning, conforming to generally accepted standards and norms, the RBI said.
Those eligible for setting up a small finance bank include resident individuals/professionals with 10 years of experience in banking and finance and companies and societies owned and controlled by residents. Existing NBFCs, Micro Finance Institutions (MFIs) and Local Area Banks (LABs) that are owned and controlled by residents can also opt for conversion into small finance banks. Promoter/promoter groups should be 'fit and proper' with a sound track record of professional experience or of running their businesses for at least a period of five years in order to be eligible to promote small finance banks, according to RBI's guidelines on small finance banks.
The small finance bank shall primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities, the RBI said. There will not be any restriction in the area of operations of small finance banks, the central bank said. If the small finance bank aspires to transit into a universal bank, such transition will not be automatic, but would be subject to fulfilling minimum paid-up capital/net worth requirement as applicable to universal banks, its satisfactory track record of performance as a small finance bank and the outcome of the RBI's due diligence exercise. The promoter's minimum initial contribution to the paid-up equity capital of a small finance bank shall at least be 40% and gradually brought down to 26% within 12 years from the date of commencement of business of the bank, the RBI said.
The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). No forbearance would be provided for complying with the statutory provisions, the RBI said. A small finance bank will be required to extend 75% of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the RBI. At least 50% of the loan portfolio a small finance bank should constitute loans and advances of upto Rs 25 lakh.
The government will announce data on gross domestic product (GDP) for Q2 September 2014 at 17:30 IST today, 28 November 2014. India's GDP grew 5.7% in Q1 June 2014 over the corresponding period of the previous year.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 2 December 2014. The central bank 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 annual rate of inflation based on the combined consumer price index (CPI) for urban and rural India eased to 5.52% in October 2014 from 6.46% in September 2014, data released by the government on 12 November 2014 showed.
Japanese stocks led gains in Asian stocks today, 28 November 2014, after the latest data showed Japan's October retail sales rose 1.4% on year and industrial production beat forecasts with a month-on-month increase of 0.2%. Key benchmark indices in China, Taiwan, Singapore, and Japan were up 0.17% to 1.07%. Key benchmark indices in South Korea, Indonesia and Hong Kong were off 0.11% to 0.39%.
Japan's annual core consumer inflation slowed for a third straight month in October due to falling oil prices, highlighting the economic gloom facing Premier Shinzo Abe as he campaigns for a new mandate to implement his stalled recovery plan. Factory output unexpectedly rose in October, suggesting companies have reduced inventories of unsold goods built up after April's sales tax hike triggered a recession.
Trading in US index futures indicated that the Dow could gain 17 points at the opening bell today, 28 November 2014. The US market was closed yesterday, 27 November 2014, for Thanksgiving Day holiday.
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