Indian stocks dropped on first trading day of the week amid concerns strong US job growth may prompt the US Federal Reserve to speed up interest rate hikes in the world's biggest economy. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit 2-1/2 week closing low. The market breadth indicating the overall health of the market was weak. The Sensex lost 338.70 points or 1.19% to settle at 28,119.40. With a 1.22% decline, the fall in the BSE Mid-Cap index was higher than the Sensex's slide in percentage terms.
Shares of power generation companies declined. Index heavyweight and cigarette major ITC extended its recent gains triggered by reports the government may put on hold its plan to ban sales of single cigarettes. Infosys declined after company's founders sold a total 3.26 crore shares of the company in bulk deals on NSE. Thermax advanced after securing a repeat order. Auto stocks declined.
Bank stocks dropped. Bank of Baroda reversed direction after scaling a record high. Metal and mining stocks edged lower after disappointing China trade data for November. Steel Authority of India edged lower amid volatility as offer for sale (OFS) for government's 5% stake-sale in the company was successfully concluded during the previous trading session on Friday, 5 December 2014. Cement stocks were mixed.
Indian stocks dropped today, 8 December 2014, amid concerns strong US job growth may prompt the US Federal Reserve to speed up interest rate hikes in the world's biggest economy. There is a concern that the tighter monetary policy in the US may slow foreign portfolio flows into the country. Higher interest rates will boost returns on US debt and bank deposits, drawing money back from riskier markets.
After seeing a range bound movement in negative zone earlier during the day, a sudden slide took key benchmark indices further lower in early afternoon trade. The benchmark indices further extended losses in late trade.
In overseas markets, European stocks edged lower after Ewald Nowotny, member of the European Central Bank's Governing Council, expressed concerns about the health of the region's economy. Asian stocks fell after disappointing Chinese and Japanese economic data. In the US, the S&P 500 and Dow Jones Industrial Average, both, closed at record levels on Friday, 5 December 2014, after a surprisingly strong job report for November 2014.
In the foreign exchange market, the rupee edged lower against the dollar on a broad strength in dollar triggered by a surprisingly strong US job report for November 2014.
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Brent crude slumped to a five-year low amid speculation that US oil producers will fight OPEC for market share. 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. 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 S&P BSE Sensex lost 338.70 points or 1.19% to settle at 28,119.40, its lowest closing level since 20 November 2014. The index lost 360.98 points at the day's low of 28,097.12 in late trade. The index gained 36.75 points at the day's high of 28,494.85 in early trade.
The CNX Nifty lost 100.05 points or 1.17% to settle at 8,438.25, its lowest closing level since 20 November 2014. The index hit a low of 8,432.25 in intraday trade. The index hit a high of 8,546.35 in intraday trade.
The BSE Mid-Cap index fell 128.45 points or 1.22% to settle at 10,369.84. The fall in the index was higher than Sensex's decline in percentage terms. The BSE Small-Cap index fell 100.06 points or 0.87% to settle at 11,374.63. The fall in the index was lower than Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was weak. On BSE, 1,797 shares declined and 1,151 shares gained. A total of 115 shares were unchanged.
The total turnover on BSE amounted to Rs 3150 crore, lower than Rs 3623.11 crore during previous trading session on Friday, 5 December 2014.
Among sectoral indices on BSE, the BSE Bankex index (down 1.23%), the BSE Metal index (down 1.31%), the BSE Power index (down 1.34%), the S&P BSE Auto index (down 1.36%), the BSE Consumer Durables index (down 1.41%), the BSE Capital Goods index (down 1.72%), the BSE Realty index (down 1.8%), the BSE Teck index (down 2.58%) and the BSE IT index (down 3.18%) underperformed the Sensex.
The BSE FMCG index (up 0.78%), the BSE Healthcare index (down 0.35%), the BSE Oil & Gas index (down 0.82%) outperformed the Sensex.
Index heavyweight and cigarette major ITC rose 1.47% to Rs 397.20 after scaling a record high of Rs 399.50 in intraday trade. The stock extended recent gains triggered by media reports that the government may put on hold its plan to ban sales of single cigarettes. It may be recalled that the health ministry had last month accepted a panel's proposal to ban loose cigarettes to deter smoking.
ONGC rose 0.59%. With respect to media reports titled ONGC to start KG-D5 block production by mid 2018, ONGC after market hours today, 8 December 2014, said that the company has initiated the process of developments of fields in the KG D5 block. The estimated reserves of Northern Discovery Area (NDA) of the block are 121 MMT of Oil in Place and 78 BCM of initial gas in place and that of Southern Discovery Area of the block are 80.8 BCM of initial gas in place, ONGC said. Considering the vast area for development, it is planned to develop the block in clusters, ONGC said.
Bank stocks dropped. Among PSU bank stocks, Andhra Bank (down 1.13%), Canara Bank (down 1.25%), Union Bank of India (down 0.29%), Bank of India (down 2.61%), Punjab National Bank (down 1.04%) declined.
State Bank of India (SBI) slipped 1.32% to Rs 313.45. The stock hit high of Rs 319.85 and low of Rs 312.80. The bank after market hours on Friday, 5 December 2014, said it has decided to issue bond under reverse enquiry up to $300 million for 3 year/5 year/10 year at T+140 bps, T+160 bps, T+185 bps respectively, through issuance of senior unsecured fixed rate notes. According, the bank has finalized the pricing of $100 million 10 year senior unsecured fixed rate note at a fixed pricing of T+175 with a fixed yield of 4.045. The bonds will carry an interest rate of 3.95% per annum that will be paid semi-annually.
Bank of Baroda fell 2.14% to Rs 1,081.35. The stock reversed direction after scaling a record high of Rs 1,125.60 in intraday trade.
Central Bank of India lost 0.93% at Rs 80.10. The state-run bank before market hours today, 8 December 2014, said that the Capital Raising Committee of the board of directors of the bank considered and approved raising of additional equity capital by issuance and allotment of upto 8.28 crore shares of the face value of Rs 10 each at the issue price of Rs 75.55 per share to Life Insurance Corporation of India (LIC of India) on preferential basis.
Among private sector banks, IndusInd Bank (down 1.07%), HDFC Bank (down 1.81%), Kotak Mahindra Bank (down 0.11%), Axis Bank (down 0.3%) and Yes Bank (down 1.99%) declined. ING Vysya Bank rose 0.33%.
ICICI Bank fell 1.08% to Rs 355.55. The stock hit a high of Rs 362.75 and a low of Rs 353.35. The bank after market hours on Friday, 5 December 2014, said that the board of directors of the bank has approved a proposal for the sale of ICICI Bank's shareholding in ICICI Bank Eurasia Limited Liability Company (IBEL), a non-material wholly-owned banking subsidiary in Russia, to Sovcombank, an unrelated third party Russian bank. At 30 September 2014, IBEL had total assets of RUB 4.5 billion and paid-up equity capital of RUB 1.6 billion. IBEL's profit after tax in the six months ended 30 September 2014 was RUB 28 million. IBEL accounted for less than 0.1% of ICICI Bank's consolidated total assets at that date and consolidated profit after tax for the period.
Bajaj Finserv jumped 6.71% to Rs 1,356.15 after scaling a record high of Rs 1,395.15 in intraday trade.
Auto stocks declined. Tata Motors (down 1.84%), Mahindra & Mahindra (M&M) (down 2.67%), Eicher Motors (down 1.6%), Ashok Leyland (down 3.84%), Bajaj Auto (down 0.56%), Hero MotoCorp (down 0.8%) and TVS Motor Company (down 3.66%) declined.
Maruti Suzuki India fell 1.02% to Rs 3,371. The stock reversed direction after scaling a record high of Rs 3,434 in intraday trade.
IT stocks edged lower. Oracle Financial Services Software (down 3.14%), MindTree (down 1.92%), TCS (down 2.44%), HCL Technologies (down 1.89%), MphasiS (down 1.18%), Wipro (down 1.37%) and Tech Mahindra (down 0.1%) declined.
Infosys lost 4.79% at Rs 1,970.50. The company's founders N R Narayana Murthy, Nandan Nilekani, K Dinesh and S D Shibulal, along with their families sold a total 3.26 crore shares of the company in bulk deals on NSE today, 8 December 2014, at Rs 1,988 per share.
Metal and mining stocks edged lower after disappointing China trade data for November. China is the world's largest consumer of steel, copper and aluminum. Sesa Sterlite (down 3.97%), Hindalco Industries (down 3.52%), NMDC (down 0.04%), Hindustan Copper (down 2.82%), National Aluminium Company (down 0.35%), Tata Steel (down 2.14%), JSW Steel (down 3.06%) Jindal Steel & Power (down 3.2%) and Hindustan Zinc (down 1.03%) declined.
Steel Authority of India (Sail) fell 0.72% at Rs 82.20. The stock hit a high of Rs 82.95 and a low of Rs 82. The finance ministry after trading hours on Friday, 5 December 2014, said that the offer for sale (OFS) for divestment of 5% of Government of India equity in Sail was successfully concluded on that day. The issue was oversubscribed more than two times. In addition, retail investors were given 10% allocation and this category was also hugely oversubscribed more than 2.5 times, a record for any retail participation in any OFS, the finance ministry said. The divestment of 5% stake in Sail will fetch about Rs 1715 crore for the government. With this divestment, the Government of India's stake in Sail would come down to 75% and the company has become compliant to the public shareholding norms of 25% for listed companies, the finance ministry said in a statement.
The government plans to introduce the Coal Mines (Special Provisions) Bill, 2014 to replace the Coal Mines (Special Provisions) Ordinance, 2014 in Lok Sabha this week. The Ordinance was promulgated for auction of coal mines that were cancelled by the Supreme Court. It may be recalled that the Supreme Court had in September cancelled allocation of 204 coal blocks, including 42 operational mines and another 32 ready-to-start blocks.
Meanwhile, Mines & Steel Minister Narendra Singh Tomar on Friday, 5 December 2014, said that the objective of proposed MMDR Amendment Bill, 2014 is to kick-start the mining sector by removing the bottlenecks that are preventing mining industry from becoming a growth-multiplier in the country. The government is working towards bringing in transparency in the systems, ensuring fair share of value for the government and creating an investor-friendly environment in the mining industry, Tomar said. Tomar stated that the auction route suggested in the proposed bill has been included after active discussions and inputs from the state governments. The government's intention is to bring the bill in the ongoing session of parliament, Tomar said after the conclusion of several rounds of discussion on the bill with representatives of miners, end-user industries and other associated organizations.
Cement shares were mixed. Ambuja Cements (down 2.6%), ACC (down 1.62%) declined. UltraTech Cement rose 0.3%.
Shree Cement advanced 0.91% to Rs 9,274.55 after scaling a record high of Rs 9,479.85 in intraday trade.
Grasim Industries lost 1.85% to Rs 3,418.45. Grasim has exposure to the cement sector through its subsidiary UltraTech Cement.
Shares of power generation companies dropped. Torrent Power (down 2.63%), Reliance Power (down 1.28%), NTPC (down 0.67%), NHPC (down 2%), Reliance Infrastructure (down 2.89%), GVK Power & Infrastructure (down 1.93%), and JSW Energy (down 1.09%) edged lower. Shares of Tata Power Company were up 0.11%.
Bharat Heavy Electricals (Bhel) fell 1.56% at Rs 267.70. The stock hit a high of Rs 275.30 and a low of Rs 262.05. The company during market hours today, 8 December 2014, said it has achieved one more landmark in the African region by constructing and successfully commissioning a hydro power project in Rwanda on turnkey basis. Significantly, the order for setting up the 28 megawatts (MW) Nyaborongo Hydro Electric Project (2x14 MW), was the first order received by Bhel from this East-African country, the company said.
Thermax rose 0.62% at Rs 1,070.80. The company after market hours on Friday, 5 December 2014, said it has won a repeat order from a leading African industrial major. The new order worth Rs 351 crore is also for supplying a captive power project for one of the conglomerate's cement plants. The back-to-back repeat order further strengthens Thermax's credentials to provide lump sum turnkey solutions for African customers, the company said in a statement.
Indian Oil Corporation (IOC) shed 0.3%. The company after market hours on Friday, 5 December 2014, in a clarification with regard to news item titled "IOC scouts for partners in $ 1bn Guj plant after BP exit" said that IOC was exploring the possibilities of setting up of acetic acid plant in Gujarat for which purpose, an MoU was entered into with British Petroleum. IOC said that it was only a non-binding MoU to evaluate the feasibility of the project. However, BP did not feel it feasible to proceed for the project. IOC is exploring to tie-up with alternate technology providers, the company said. Based on the technical information of such licences, techno-economic feasibility for setting up of acetic acid project based on petcoke gasification will be re-assessed, IOC said. Further progress towards the project will be undertaken subject to establishment of viability including support from the state government, it added.
Ranbaxy Laboratories rose 0.71%. The company during market hours today, 8 December 2014, said that on 5 December 2014, a jury sitting in the United States District Court for the District of Massachusetts issued a verdict in the esomeprazole antitrust litigation in favor of the defendants AstraZeneca and Ranbaxy. This multidistrict litigation was commenced in 2012. As pertains to Ranbaxy, the lawsuits alleged that Ranbaxy's April 2008 patent settlement agreement with Astrazeneca concerning esomeprazole magnesium violated US antitrust laws, Ranbaxy said. The company is pleased with this verdict, and is committed to serving patients, prescribed and the US heatlhcare system, Ranbaxy Laboratories said in a statement.
Aurobindo Pharma rose 3.77% at Rs 1,166. The company after trading hours on Friday, 5 December 2014, announced the completion of acquisition of assets of nutritional supplement maker, Natrol Inc. and other affiliate entities (Natrol) through its wholly owned subsidiary Aurobindo Pharma USA Inc. (APUSA). APUSA emerged as the highest and best bidder to acquire assets of Natrol under the auction process by the United States Bankruptcy Court for the District of Delaware was previously announced on 12 November 2014. APUSA expects its profitability to improve by combining the strength of both enterprises in creating a fully integrated nutraceuticals platform in the USA and other international markets.
Reliance Communications (RCom) fell 3.41%. With respect to media reports titled Rcom signs deal with Ericsson, Reliance Communications after market hours today, 8 December 2014, said that as a routine ongoing business, the company has realigned some of its outsourced activities between existing vendors and signed managed service contract with Ericsson on a pan-India basis.
SpiceJet tumbled 4.7% at Rs 15.20. The company during market hours today, 8 December 2014, in a clarification with regard to news item titled "SpiceJet dives over 12% as AAI puts it on cash-and-carry", said that the company is not under a "Cash-and-Carry" payment mode with Airport Authority of India (AAI) as wrongly reported in certain sections of the media.
The Sensex fell for the second day in a row today, 8 December 2014. The Sensex lost 443.42 points or 1.55% in two trading days from recent high of 28,562.82 on 4 December 2014. The Sensex has declined 574.59 points or 2% in this month so far (till 8 December 2014). The Sensex has gained 6,948.72 points or 32.82% in calendar year 2014 so far (till 8 December 2014). From a record high of 28,822.37 struck on 28 November 2014, the Sensex has fallen 702.97 points or 2.43%. From a 52-week low of 19,963.12 on 4 February 2014, the Sensex has risen 8,156.28 points or 40.85%.
In the foreign exchange market, the rupee edged lower against the dollar on a broad strength in dollar triggered by a surprisingly strong US job report for November 2014. The partially convertible rupee was hovering at 61.875, compared with its close of 61.795 during the previous trading session on Friday, 5 December 2014.
Brent crude slumped to a five-year low amid speculation that US oil producers will fight OPEC for market share. Brent for January settlement was off $1.45 a barrel at $67.62 a barrel. The contract had lost 57 cents a barrel to settle at $69.07 during the previous trading session on Friday, 5 December 2014, the lowest closing level since October 2009.
Prime Minister Narendra Modi yesterday, 7 December 2014, said it is impossible for the nation to develop unless states develop. In his opening remarks at the consultation meeting with Chief Ministers of state governments on replacing the Planning Commission, Modi said that state governments should have a key role in the new body to replace the Planning Commission. He also said there should be an effective mechanism to address inter-state disputes. The Prime Minister also recalled his own speech on Independence Day, and said that the Planning Commission should be replaced by an organization which can think creatively, strengthen the federal structure, and energize states.
The government plans to introduce the Coal Mines (Special Provisions) Bill, 2014 to replace the Coal Mines (Special Provisions) Ordinance, 2014 in Lok Sabha this week. The government intends to get the Insurance Laws Amendment Bill that seeks to enhance FDI limit in capital starved insurance sector passed during the ongoing winter session of parliament. The government is also likely to introduce the constitutional amendment bill for the goods & services tax in the winter session of parliament. The government also plans to bring the MMDR Amendment Bill, 2014 during the the ongoing session of parliament.
The government will unveil industrial production data for October 2014 on Friday, 12 December 2014. Industrial production growth improved to 2.5% in September 2014, from a revised 0.5% growth in August 2014.
The government will release annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India for November 2014 on Friday, 12 December 2014. CPI for urban and rural India eased to 5.52% in October 2014, from 6.46% in September 2014.
The government will release the inflation data based on wholesale price index (WPI) for November 2014 on 15 December 2014. WPI eased to 1.77% in October from 2.38% in September 2014.
On the domestic political front, a regional party in Tamil Nadu MDMK today, 8 December 2014, reportedly passed a resolution at a meeting of the district secretaries to quit the BJP led NDA alliance. MDMK said that the BJP has been acting against Tamils. The MDMK also said that the Modi government has not helped in solving the fishermen issue.
Meanwhile, Russian President Vladimir Putin arrives on a two-day visit to India on Wednesday, 10 December 2014, for the 15th Annual India-Russia Summit. India's Ministry of External Affairs on Friday, 5 December 2014, said that the Summit will have a strong focus on redefining the economic partnership between the two countries. Several documents are under preparation for signing at the Summit, in the fields of defence, nuclear energy, customs, banking and energy, the Ministry of External Affairs said. Russia is a significant partner for India in strategic sectors like defence, nuclear security and science, including space. Russia is also India's primary defence partner and will remain so for decades, the Ministry of External Affairs said.
While bilateral economic, commercial and investment ties between India and Russia have been growing, they are way below potential, the Ministry of External Affairs said. India is keenly interested in participating in more hydrocarbon projects in Russia, the Ministry of External Affairs said. India has said clearly that it cannot be party to any sanctions against Russia, the Ministry of External Affairs said in a statement.
European stocks edged lower after Ewald Nowotny, member of the European Central Bank's Governing Council, expressed concerns about the health of the region's economy. Key indices in Germany, France, and UK were off 0.29% to 0.63%.
Nowotny reportedly said today, 8 December 2014, that eurozone inflation could fall even further in the first quarter of 2015, which would take the currency union dangerously close to deflation. Nowotny also said he sees the eurozone as the weak spot in the world economy and that it is worth discussing government-bond purchases, according to the reports.
The latest data showed German industrial production rose for a second month in October, in a sign that a slow recovery in Europe's largest economy is continuing. Production, adjusted for seasonal swings, gained 0.2% from September, when it climbed a revised 1.1%, the Economy Ministry in Berlin said today, 8 December 2014. Output advanced 0.8% from a year earlier.
The French economy is expected to slow down in the fourth quarter as business sentiment remains weak, according to a survey by the Bank of France released today, 8 December 2014. Growth in the eurozone's second-largest economy is expected to slow to 0.1% in the fourth quarter from the third quarter, the central bank said in its monthly survey. The French economy expanded 0.3% in the third quarter after a slight contraction in the second quarter and a stagnation in the first quarter. The survey by the Bank of France showed business leaders still lack the confidence that could spur a recovery.
Meanwhile, economic growth is set to slow in the eurozone, according to leading indicators released today, 8 December 2014 by the Organization for Economic Cooperation and Development (OECD), placing the currency area at risk of a slide back into contraction. The Paris-based research body said its gauges of future economic activity--which is based on information available for October--also pointed to slowdowns in the U.K. and Russia, while suggesting growth in most of the world's other large economies will remain at current rates over coming months.
Asian stocks edged lower today, 8 December 2014, after disappointing economic data from Japan and China. Key benchmark indices in Taiwan, Singapore, South Korea, and Indonesia were off 0.21% to 0.85%. Key indices in Japan, China and Hong Kong were up 0.08% to 2.81%.
In Japan, the latest data showed that the economy contracted an annualized 1.9% in the July to September period from the previous quarter, weaker than the 1.6% drop reported in preliminary data.
In China, the latest trade data painted a gloomy picture for the world's second-largest economy with both exports and imports slowing sharply in November. Exports rose just 4.7% in November, compared to October's 11.6% rise. Imports sank 6.7% in November against a 4.6% rise in October. There was one bright spot in November's trade data, however. Weak imports and the slight rise in exports left a record trade surplus of $54.47 billion in November, compared with a surplus of $45.4 billion in October.
Trading in US index futures indicated that the Dow could fall 56 points at the opening bell today, 8 December 2014. US stocks rose on Friday, 5 December 2014, lifting the Dow and S&P 500 to record high as investors embraced a stronger-than-forecast November payrolls report as backing the view the economy can handle rate hikes by the Federal Reserve in 2015. The Labor Department reported on Friday, 5 December 2014 that employers added 321,000 jobs in November, a much stronger number than economists had predicted and the tenth consecutive month of net job gains above 200,000.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 16-17 December 2014. The policy meeting will be keenly watched for any hints on the timing of interest rate increases in the world's biggest economy.
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