Gains in world stocks, global crude oil prices and the Russian ruble aided rally on the domestic bourses as the barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit 1-1/2-week high. A lion's portion of the gains materialized during the second half of the trading session after benchmark indices moved in a narrow range in positive zone earlier during the day. The market breadth indicating the overall health of the market was positive. The Sensex was provisionally up 339.93 points or 1.24% to 27,711.77.
The government on Friday, 19 December 2014, introduced the Constitution Amendment Bill on Goods and Services Tax (GST) in Lok Sabha. Meanwhile, Parliamentary Affairs Minister Venkaiah Naidu was quoted as saying that that the Cabinet Committee on Parliamentary Affairs (CCPA) will reportedly meet tomorrow, 23 December 2014, to take a decision on whether to extend the duration of winter session of the parliament which concludes tomorrow, 23 December 2014.
Meanwhile on the political front, exit polls released after the conclusion of five-phased polling in assembly elections in Jharkhand on Saturday, 20 December 2014, predicted the formation of a BJP government in Jharkhand. In Jammu and Kashmir, exit polls have predicted a hung assembly with People's Democratic Party (PDP) likely to emerge as the single largest party.
Housing Development Finance Corporation (HDFC) rose after announcing the sale of a small stake in its insurance unit HDFC Standard Life Insurance Company to the Azim Premji Trust. Shares of power generation companies rose. GMR Infrastructure gained after the company said that its joint venture GMR-Megawide Cebu Airport Corporation (GMCAC) has achieved financial closure for its Mactan Cebu international airport project located in Cebu, Philippines.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 668.85 crore during the previous trading session on Friday, 19 December 2014, as per provisional data.
In overseas markets, a jump in energy companies pushed European stocks higher as global crude oil prices extended strong gains registered during the previous trading session on Friday, 19 December 2014. Asian stocks edged higher, taking their cues from greater stability in crude oil prices and the Russian ruble, along with the Federal Reserve's indication it will take a slow approach to raising interest rates. The ruble had tumbled about 40% against the dollar in the past six months amid concern a drop in oil would hurt the biggest energy exporter at the same time as it contends with US and European sanctions.
In the foreign exchange market, the rupee edged higher against the dollar on global risk on sentiment.
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Brent crude oil futures extended strong gains registered during the previous trading session on Friday, 19 December 2014.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from December 2014 series to January 2015 series. The near month December 2014 derivatives contracts expire on Wednesday, 24 December 20014. The stock market remains closed on Thursday, 25 December 2014, on account of Christmas.
As per provisional closing, the S&P BSE Sensex was up 339.93 points or 1.24% to 27,711.77. The index jumped 353.43 points at the day's high of 27,725.27 in late trade, its highest level since 11 December 2014. The index gained 10.48 points at the day's low of 27,382.32 in early afternoon trade.
The CNX Nifty was up 98.80 points or 1.20% at 8,324, as per provisional closing. The index hit a high of 8,330.95 in intraday trade, its highest level since 11 December 2014. The index hit a low of 8,228.20 in intraday trade.
The BSE Mid-Cap index was up 91.75 points or 0.92% at 10,092.16. The BSE Small-Cap index was up 38.03 points or 0.35% at 10,960.24. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,550 shares rose and 1,346 shares fell. A total of 125 shares were unchanged.
The total turnover on BSE amounted to Rs 2467 crore, lower than turnover of Rs 3692.57 crore during the previous trading session on Friday, 19 December 2014.
Housing Development Finance Corporation (HDFC) rose 2.74%. The company announced during trading hours today, 22 December 2014, that it has agreed to sell up to 1.89 crore equity shares representing a 0.95% stake of HDFC Standard Life Insurance Company (HDFC Life) to the Azim Premji Trust at Rs 105 per share. The shares to be sold as above represent 0.95% of the total issued and paid-up equity capital of HDFC Life. HDFC has already concluded the sale of the first tranche of 1.19 crore shares. The balance shares would be sold subsequently. After the entire sale of 1.89 crore equity shares is completed, HDFC would hold 71.42% of the total issued and paid-up equity capital of HDFC Life, HDFC said.
DLF rose 1.29%. With respect to news titled "DLF Looks to monetize Rs. 3000 cr office space", DLF clarified during trading hours today, 22 December 2014, that no such event or negotiations as published in the article has taken place, and there is no event, information or development in the knowledge of the company, which requires disclosure under Clause 36 of Listing Agreement. The company issued the clarification after media reports suggested that DLF has explored options to monetize some commercial assets worth about $500 million or Rs 3000 crore, with a clutch of global investors to allay concerns about the company's fund-raising flexibility in the face of a regulator ban. DLF said that the company, during its normal course of business, keeps exploring various opportunities to enhance shareholder value, which includes mergers and acquisitions (M&A), divestment of assets and fund raising opportunities.
In October, stock market regulator Securities & Exchange Board of India (Sebi) banned DLF and its top directors from accessing the capital markets for three years, as the regulator claims that the company curbed information during its public float seven years ago, among other issues. DLF is contesting the ban order with the Securities Appellate Tribunal, the hearing for which is underway.
Shares of power generation companies rose. Reliance Infrastructure (up 2.49%), Jaiprakash Power Ventures (up 1.45%), NHPC (up 1.06%), Adani Power (up 0.95%), CESC (up 0.93%) and Reliance Power (up 0.73%) edged higher.
According to an approach paper on proposed e-auction of coal mines released by the Ministry of Coal recently, auction of coal mines for the power sector, a regulated sector, will be through reverse bidding. A ceiling price will be fixed for each coal mine based on the prevailing Coal India notified price, where the bidder quoting the lowest below this ceiling will be successful. This methodology is expected to keep electricity tariffs in check by preventing irrational bidding. The approach paper put up on the coal ministry website has sought feedback from stakeholders.
On 25 August, the Supreme Court ruled that allocation of all coal mines between 1993 and 2010 were illegal. In September, the apex court cancelled allocation of 204 coal blocks.
NTPC was up 2.51%. A meeting of the board of directors of NTPC is scheduled tomorrow, 23 December 2014, to consider a proposal for issuing bonus debentures to the shareholders of the company. NTPC on 18 December 2014 said that it is keen to reward its shareholders for their continued support as the company has entered its 40th year of operations.
Tata Power was up 1.2%. Tata Power Company announced before trading hours today, 22 December 2014, that that a technical snag developed in Unit No.7 at its Trombay Thermal Power Generating Station. The gas turbine generator rotor of the Combined Cycle Gas based unit developed an inter-turn short and ground. However, there is no associated damage to any other equipment, Tata Power said. The exact extent of the fault/repair and schedule required would be known once the rotor end rings are dismantled and fault/damage is closely examined, Tata Power said.
GMR Infrastructure gained after the company said that its joint venture GMR-Megawide Cebu Airport Corporation (GMCAC) has achieved financial closure for its Mactan Cebu international airport project located in Cebu, Philippines. The stock was up 0.59%. GMR said financing will fund 70% of its total project cost of Php 33 billion (about $750 million). The loan is being financed by a consortium of six banks. Total equity contribution of GMR to GMCAC will be approximately $90 million, out of which GMR has already invested $48 million and it does not envisage any further investment in the near future.
GMCAC shall be responsible for construction, development, renovation, expansion and operation of the Mactan Cebu International Airport for a period of 25 years as provided in the concession agreement. GMR Infrastructure holds 40% stake and Megawide Construction Corporation holds 60% stake in GMR-Megawide Cebu Airport Corporation.
In the foreign exchange market, the rupee edged higher against the dollar on global risk on sentiment. The partially convertible rupee was hovering at 63.25, compared with its close of 63.30 during the previous trading session.
Brent crude oil futures extended strong gains registered during the previous trading session on Friday, 19 December 2014. Brent for February settlement was up 86 cents at $62.24 a barrel. The contract had risen $2.11 a barrel or 3.6% to settle at $61.38 a barrel during the previous session on Friday, 19 December 2014.
Meanwhile, Parliamentary Affairs Minister Venkaiah Naidu was quoted as saying that that the Cabinet Committee on Parliamentary Affairs (CCPA) will reportedly meet tomorrow, 23 December 2014, to take a decision on whether to extend the duration of winter session of the parliament. The winter session of Parliament ends tomorrow, 23 December 2014, and an impasse in Rajya Sabha over conversion issue has made the government unable to push through important economic reforms.
Finance Minister Arun Jaitley on Saturday, 20 December 2014, said that the government will not countenance attempts to delay or obstruct reforms of the nature of opening the insurance sector to foreign direct investment (FDI) even as political obstructionists are out to ensure that the issue does not come to the debating table of Parliament. Addressing captains of trade and industry while inaugurating FICCI's 87th Annual General Meeting in New Delhi, Jaitley said that overseas investors have waited and watched for over a decade and are confounded by the fact that a country committed to reform has not been able to reform the insurance sector. "That is the challenge," he said and questioned, "Can we allow this to continue?".
Consideration and passing of the Insurance Laws (Amendment) Bill, pending since 2008 in the Rajya Sabha has been held up on account of the prevailing stalemate in the Rajya Sabha. It may be recalled that the Parliamentary Select Committee in its report tabled in Rajya Sabha on 10 December 2014 agreed a composite cap of 49% on foreign investment in the insurance sector, which includes all types of foreign investment as opposed to the 26% foreign direct investment (FDI) allowed at present. Finance Minister Arun Jaitley had said in his maiden budget speech in July that the composite cap in the insurance sector should be increased to 49% from the current level of 26%, with full Indian management and control.
The Coal Mines (Special Provisions) Bill, 2014 has been passed in the Lok Sabha, but the Bill is yet to be passed by the Rajya Sabha where the government is in minority. The bill allows the government to enforce rules and guidelines for auction/allocation of 204 coal blocks cancelled by the Supreme Court in September this year. According to media reports, the government is looking at taking the ordinance route for the Coal Bill.
The government on Friday, 19 December 2014, introduced the Constitution Amendment Bill on Goods and Services Tax (GST) in Lok Sabha. GST will simplify and harmonise the indirect tax regime in the country. GST will broaden the tax base, and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one state to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders. It is thus, expected that introduction of GST will foster a common and seamless Indian market and contribute significantly to the growth of the economy, the finance ministry said in a statement. 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.
All goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST. Petroleum and petroleum products have also been constitutionally brought under GST. However, it has also been provided that petroleum and petroleum products will not be subject to the levy of GST till notified at a future date on the recommendation of the GST Council. The present taxes levied by the States and the Centre on petroleum and petroleum products, i.e., Sales Tax/VAT, CST and Excise duty only, will continue to be levied in the interim period.
Both Centre and States will simultaneously levy GST across the value chain. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States. GST is a destination-based tax. All SGST on the final product will ordinarily accrue to the consuming State. GST rates will be uniform across the country. However, to give some fiscal autonomy to the States and Centre, there will a provision of a narrow tax band over and above the floor rates of CGST and SGST.
There will be a non-vatable additional tax of not more than 1% on supply of goods in the course of inter-State trade or commerce. This tax will be for a period not exceeding 2 years, or further such period as recommended by the GST Council. This additional tax on supply of goods shall be assigned to the States from where such supplies originate, the finance ministry said.
A new Article 279A is proposed for the creation of a GST Council which will be a joint forum of the Centre and the States. This Council would function under the Chairmanship of the Union Finance Minister and will have Ministers in charge of Finance/Taxation or Minister nominated by each of the States & UTs with Legislatures, as members. The Council will make recommendations to the Union and the States on important issues like tax rates, exemptions, threshold limits, dispute resolution modalities etc.
The Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years. A provision in this regard has been made in the Amendment Bill. The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year.
On the political front, exit polls on Saturday, 20 December 2014, predicted a near complete victory for Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) and its alliance in Jharkhand and a hung Assembly with upper hand for the PDP in Jammu and Kashmir. Soon after polling concluded for the fifth and final phase with record turnouts, most private news channels published varied exit polls for both states that revealed a broad pattern of results that could be expected on Tuesday, 23 December 2014, the counting day.
A jump in energy companies pushed European stocks higher today, 22 December 2014, as global crude oil prices extended strong gains registered during the previous trading session on Friday, 19 December 2014. Key benchmark indices in UK, France and Germany were up by 0.71% to 1.08%.
In Greece, Prime Minister Antonis Samaras reached out to lawmakers, offering a set of compromises to resolve an impasse over the selection of Greece's future head of state and to avoid snap elections early next year. Speaking in an unscheduled televised address yesterday, 21 December 2014, the Greek premier called for consensus over the government's presidential candidate. In return, he offered to hold general elections by the end of 2015 - before the term of the current government expires - but only after Greece concluded negotiations with its international creditors and passed political and constitutional reforms.
Samaras also offered to reshuffle his cabinet to include ministers who would be appointed by other political parties, a move aimed at winning over undecided lawmakers from smaller parties in parliament.
Asian markets were trading higher today, 22 December 2014, tracking gains in the US market last week. Key benchmark indices in China, Japan, Hong Kong and Singapore were up by 0.08% to 1.26%. Indonesia's Jakarta Composite fell 0.37%.
South Korea's Seoul Composite was up 0.68%. South Korea's government trimmed its growth forecast for next year but said domestic demand--long a weak spot for the country--would contribute more to economic activity. The 2015 gross domestic product growth forecast was lowered to 3.8% from a July projection of 4.0%, the Ministry of Strategy and Finance said Monday in its biannual economic outlook. The estimate for GDP growth this year was also revised down, to 3.4% from 3.7%. The economy grew 3% in 2013.
Taiwan's Taiwan Weighted index was up 1.06%. Taiwan's unemployment rate inched down last month due to a decrease in job seekers. The rate was 3.89% in November from 3.95% in October, the Directorate-General of Budget, Accounting and Statistics said. On a seasonally-adjusted basis, the rate was 3.87%, unchanged from October's 3.87%, it said.
Trading in US index futures indicated that the Dow could gain 54 points at the opening bell today, 22 December 2014. On Friday, 19 December 2014, US stocks ended higher and the S&P 500 came within a few points of its closing record high. The S&P 500 index had climbed over the previous two sessions, spurred by the US Federal Reserve's commitment to take a "patient" approach toward raising interest rates, while signaling it was on track to boost rates in 2015. That provided clarity and relief to investors over the policy outlook.
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