Key benchmark indices spurted in early trade to hit record high as sharp fall in crude oil prices boosted sentiment. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit record high. The Sensex was currently up 304.67 points or 1.07% at 28,743.58. The market breadth indicating the overall health of the market was strong. Banking and auto stocks led gains on the bourses.
Global crude oil prices tumbled yesterday, 27 November 2014. Crude oil sank to a four-year low, heading for the biggest weekly tumble since 2011, after the Organization of Petroleum Exporting Countries (OPEC) refrained from reducing output. The OPEC kept its production ceiling steady at yesterday's meeting in Vienna, resisting calls from Venezuela to cut output. Brent for January settlement dropped $5.17 a barrel to $72.58 a barrel yesterday, 27 November 2014, the lowest close since August 2010.
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.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 389.73 crore yesterday, 27 November 2014, as per provisional data.
In overseas markets, most Asian stocks rose.
At 9:25 IST, the S&P BSE Sensex was up 304.67 points or 1.07% at 28,743.58. The index jumped 326.61 points at the day's high of 28,765.52, in early 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 87.40 points or 1.03% at 8,581.60. The index hit a high of 8,591.40 in intraday trade, a record high for the index. The index hit a low of 8,516.25 in intraday trade.
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The market breadth indicating the overall health of the market was strong. On BSE, 1,126 shares gained and 278 shares fell. A total of 34 shares were unchanged.
The BSE Mid-Cap index was up 84.66 points or 0.83% at 10,256.58. The BSE Small-Cap index was up 80.74 points or 0.72% at 11,322.39. Both these indcies underperformed the Sensex.
Dr Reddys Laboratories (DRL) gained 0.61%. With respect to the media report titled, "Srikakulam plant gets Form 483 for lapses: DRL.", DRL after trading hours on Thursday, 27 November 2014, clarified that it had received some inspectional observations from the US Food and Drug Administration (USFDA) after their visit to the active pharmaceutical ingredient (API) manufacturing facility of the company in Srikakulam district of Andhra Pradesh. DRL said that the company is committed to respond to the agency within stipulated timelines with remedial plans and start implementing the necessary measures immediately. At this stage, it has no implication on any activity at the plant, DRL said. Hence, these are not expected to be material to the company's operations or consolidated results, DRL said.
L&T rose 0.78%. With respect to the disclosure made on November 24, 2014 to the exchange titled "L&T Technology Services closes acquisition of Dell's Engineering Services Business.", the company clarified that L&T Technologies Services intends to acquire Dell's Engineering Services business located at US and India, subject to regulatory approvals. The acquisition price is $12.5 million, subject to customary net asset adjustments at the time of closing. There are no further disclosures, the company added.
Ashok Leyland gained 0.97%. The company issued a clarification with respect to the disclosure made on 24 November 2014 to the Exchange titled "M/s. Hinduja Tech Limited - HTL (formerly Defiance Technologies Limited) a Wholly Owned Unlisted Subsidiary (WOS -100%) of Ashok Leyland Limited (AL), has now become a Subsidiary Company. To unlock value, HTL has roped in a strategic investor to subscribe to the equity share capital of the Company. Consequent to the allotment of equity shares to the strategic investor, the holding of AL now stands at 68%."
Ashok Leyland clarified that the error in the percentage of holding [post dilution of equity in Hinduja Technologies Limited (HTL)] as 62%, instead of 68% was purely a typographical error and not otherwise. Hence, the company had filed the revised disclosure on time well before the market opened for the next day (25 November 2014).
Regarding non-disclosure of details about consideration received, the company stated that it has not received any consideration. The equity stake of Ashok Leyland has been brought down from 100% to 62%, consequent to allotment of further shares (preferential issue) in Hinduja Tech. The proceeds of the fresh issue were received by HTL (which is an unlisted subsidiary of AL), the company added.
Meanwhile, 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.
Most Asian stocks rose today, 28 November 2014. Key benchmark indices in China, Taiwan, Singapore, and Japan were up 0.24% to 0.92%. Key benchmark indices in South Korea, Indonesia and Hong Kong were down 0.18% to 0.29%.
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.
The US stock market remained closed yesterday, 27 November 2014, for Thanksgiving Day holiday. The market will reopen today, 28 November 2014, for a shortened session ending at 1 p.m.
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