Key benchmark indices surged in early trade as a weaker-than-estimated US jobs report eased concern that the Federal Reserve may accelerate the pace of stimulus cuts. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets in recent years. The barometer index, the S&P BSE Sensex, moved past the psychological 21,000 mark. The Sensex was up 244.44 points or 1.18%, off close to 25 points from the day's high and up about 150 points from the day's low. The market breadth, indicating the overall health of the market, was strong. In the foreign exchange market, the rupee edged higher against the dollar.
Shares of companies engaged in production of natural gas edged higher after the government on Friday, 10 January 2014, issued the notification regarding Domestic Natural Gas Pricing Guidelines, 2014.
Foreign institutional investors (FIIs) bought shares worth a net Rs 68.16 crore on Friday, 10 January 2014, as per provisional data from the stock exchanges.
At 9:34 IST, the S&P BSE Sensex was up 244.44 points or 1.18% to 21,002.93. The index jumped 268.76 points at the day's high of 21,027.25 in early trade. The index rose 92.05 points at the day's low of 20,850.54 in opening trade.
The CNX Nifty was up 66.25 points or 1.07% to 6,237.70. The index hit a high of 6,244.65 in intraday trade. The index hit a low of 6,189.55 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,032 shares gained and 386 shares fell. A total of 76 shares were unchanged.
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Among the 30-share Sensex pack, 29 stocks rose and only one declined. Infosys (up 2.57%), Tata Motors (up 1.67%) and TCS (up 1.5%) edged higher from the Sensex pack.
Shares of companies engaged in production of natural gas edged higher after the government on Friday, 10 January 2014, issued the notification regarding Domestic Natural Gas Pricing Guidelines, 2014. Reliance Industries (up 2.11%), ONGC (up 2.22%) and Oil India (up 1.46%) gained. The new gas pricing norms will be applicable to all natural gas produced domestically, irrespective of the source, whether conventional, shale, CBM etc. These guidelines will be applicable from 1 April 2014. The new gas pricing norms shall be applicable to all consuming sectors uniformly, the Ministry of Petroleum & Natural Gas said in a statement on Friday, 10 January 2014. These guidelines shall also be applicable for natural gas produced by ONGC/Oil India from their nominated fields, it said.
First, the netback price of all Indian imports at the wellhead of the exporting countries will be estimated. Since there may be several sources of gas imports, the weighted average of such netback of import prices at the wellheads would represent the average global price for Indian LNG imports, the oil ministry said explaining the methodology of gas price calculation. Secondly, the weighted average of prices prevailing at trading points of transactions - i.e., the hubs or balancing points of the major global markets will be estimated. For this, (a) the hub price (at the Henry Hub) in the US (for North America), (b) the price at the National Balancing Point of the UK (for Europe), and (c) the netback wellhead price at the sources of supply for Japan will be taken as the average price for producers at their supply points across continents. Finally, the simple average of the prices arrived at through the aforementioned two methods will be determined as the price for domestically produced natural gas in India.
Domestic gas prices shall be notified in advance on a quarterly basis using the data for four quarters, with a lag of one quarter, the oil ministry said. In respect of D1 and D3 gas discoveries of Block KG-DWN-98/3, these guidelines shall be applicable subject to submission of bank guarantees in the manner to be notified separately, it said.
The extant gas pricing policy under NELP was earlier approved by the Government for five years commencing from April 2009 and is due for revision with effect from April 2014. The Government had constituted a Committee headed by Dr C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister in May 2012, to look into "the Production Sharing Contract (PSC) mechanism in petroleum industry". The Terms of Reference (TOR) of the Committee included, among others, formulating a structure and elements of the guidelines for determining the basis or formula for the price of domestically produced gas, and for monitoring actual price fixation. The Committee submitted its report in December 2012. Based on Committee Report, Government of India (GOI) approved the Natural Gas Pricing Guidelines in its meeting held on 27 June 2013.
In pursuance of the earlier decision, GOI on 19 December 2013 approved applicability of the Guidelines for D1 and D3 gas discoveries of the NELP Block KG-DWN-98/3, subject to submission of bank guarantees that will be notified separately, the Ministry of Petroleum & Natural Gas said in a statement.
Meanwhile, the Ministry of Petroleum and Natural Gas on Sunday, 12 January 2014, showcased 46 onshore and offshore hydrocarbon exploration blocks which have so far been finalized for auction in the Tenth round of the New Exploration Licensing Policy (NELP-X). Chairing the session to announce these blocks at the oil and gas industry event Petrotech 2014 at Greater Noida, Petroleum Minister Dr Verappa Moily said that more blocks will be identified and added to the Notice Inviting Offer (NIO). He said that the tender documents will be announced later while the prospective investors could take advantage of the advance information about these blocks.
Dr Moily invited various investors to take advantage of the vast investment opportunities in the Indian oil and gas sector. These are the blocks which have received all statutory clearances. Under NELP, 360 exploration blocks have been offered so far and 254 blocks have been awarded. Presently, 148 blocks are active and 106 have been relinquished.
Indian Bank gained 0.74%. The bank said after market hours on Friday, 10 January 2014, that the board of directors of the bank at its meeting held on 10 January 2014, has approved the conversion of 4 crore Perpetual Non-Cumulative Preference Shares (PNCPS) of Rs 100 each aggregating to Rs 400 crore, held by Government of India, into such number of equity shares in favour of Government of India pursuant to compliance with Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and subject to approval of shareholders and other regulatory/statutory authorities. The board has fixed Extra-ordinary General Meeting of the shareholders of the bank on 10 February 2014 at IMAGE Auditorium, MRC Nagar, Raja Annamalaipuram, Chennai for this purpose.
The board has also declared an interim dividend of Rs 3 (30%) per share for the year ending 31 March 2014, subject to bank obtaining notification from Government of India exempting the bank from the provisions of Sub-section (1) of Section 15 of the Banking Regulations Act, 1949. The record date to ascertain the shareholders eligible to receive the interim dividend is fixed as 21 January 2014 and the date of payment of interim dividend will be 25 January 2014.
Canara Bank rose 0.97%. The bank said after market hours on Friday, 10 January 2014, that a meeting of the board of directors of the bank will be held on 20 January 2014, to consider declaration of Interim dividend on the paid-up capital of the bank for the year ending 31 March 2014.
Oriental Bank of Commerce rose 1.51%. The bank said on Saturday, 11 January 2014, that the board of directors of the bank at its meeting held on 11 January 2014, has declared interim dividend of Rs 4 per share for the year ending 31 March 2014, subject to approval of Government of India in respect of Section 15(1) of the Banking Regulation Act, 1949. The bank has fixed 22 January 2014 as the record date for the purpose of payment of interim dividend. The dividend payment date has been fixed as 30 January 2014.
Punjab & Sind Bank was flat. The bank said after market hours on Friday, 10 January 2014, that a meeting of the board of directors of the bank will be held on 16 January 2014, inter alia, to consider and declare interim dividend.
Allahabad Bank gained 1%. The bank said on Saturday, 11 January 2014, that the board of directors of the bank at its meeting held on 11 January 2014, has approved and declared an interim dividend of 25% on paid up equity capital of the bank of the face value of Rs 10 each i.e. Rs. 2.50 per equity share. The dividend payment date for the aforesaid interim dividend will be 30 January 2014. The payment of aforesaid interim dividend will be subject to the necessary permission/approval from the Government of India and/or Reserve Bank of India and other Statutory/Regulatory Authorities, if any. The bank has fixed 22 January 2014 as the record date for the purpose of payment of interim dividend.
Dena Bank rose 0.65%. The bank said before market hours that the board of directors of the bank at its meeting held on 11 January 2014 have declared an interim dividend of 11% or Rs 1.10 per share for the year ending 31 March 2014.
In the foreign exchange market, the rupee edged higher against the dollar as a weaker-than-estimated US jobs report eased concern that the Federal Reserve may accelerate the pace of stimulus cuts. The partially convertible rupee was hovering at 61.58, compared with its close of 61.89/90 on Friday, 10 January 2014.
On macro front, India's Index of industrial production (IIP) declined 2.1% in November 2013, recording decline for second consecutive month after 1.6% dip in October 2013. The sharp decline in the output of manufacturing sector by 3.5% mainly led to decline in IIP in November 2013. Meanwhile, the marginal 1% growth in mining sector output and healthy 6.3% growth in the electricity generation restricted further dip in industrial production during November 2013. The government unveiled industrial production data for November 2013 after market hours on Friday, 10 January 2014.
Inflation based on the combined consumer price index (CPI) of urban and rural India is projected to ease at 10.1% in December 2013, from a record high of 11.24% in November 2013, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil CPI data for December 2013 after trading hours today, 13 January 2014.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Asian stock were mixed on Monday, 13 January 2014, after data released by the US government on Friday, 10 January 2014, showed that US payrolls increased in December 2013 at the slowest pace since January 2011. Key benchmark indices in Indonesia, South Korea and Taiwan were up 0.48% to 2.26%. Key benchmark indices in China, Singapore and Hong Kong were off 0.06% to 0.17%. Markets in Japan were closed for a holiday.
US stocks ended mostly higher on Friday, 10 January 2014, as a weaker-than-estimated jobs report eased concern that the Federal Reserve may accelerate the pace of stimulus cuts. A government report showed that US employment rose at the slowest pace in three years in December. The 74,000 gain in payrolls was the weakest since January 2011, Labor Department figures showed in Washington. The coldest December in four years probably contributed to a slump in hiring at construction and recreation companies, while industries such as health care and accounting also cut staff.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
Another cut to bond purchases by the US central bank appears in the offing this month despite data on Friday, 10 January 2014, that showed US jobs growth slowed sharply in December 2013, two top Federal Reserve officials said on Friday, 10 January 2014. "I would be disinclined to react to one month's number," St. Louis Fed President James Bullard told reporters after speaking at an Indiana bankers event. "For now we're on a program where we're likely to continue to taper (asset purchases) at subsequent meetings," Bullard said. He said he was more focused on the drop in unemployment than on the paltry 74,000 jobs that were created, a number he expects to be revised higher.
Asked whether the Fed might be forced to lower that 6.5% unemployment rate threshold, given the sharp drop in joblessness, Bullard said it was unlikely in part because such a move could compromise the credibility of the policy promise. However the big "wildcard" for Fed policy this year remains persistently low inflation, Bullard said. "For now we're on a program where we're likely to continue to taper at subsequent meetings ... But it is data dependent. If inflation stepped lower in a clear way then I think that would give me some pause" in continuing the cuts, he said.
Jeffrey Lacker, the hawkish head of the Richmond Fed, said it would take a "couple of quarters" of bad news to change the US economy's improving trend. "It takes a lot more than one labor market report to be convincing that the trend has shifted and in my experience one employment report rarely has an effect by itself on monetary policy," said Lacker, who has been an opponent of bond buying from its start. "I would expect a similar reduction in pace to be discussed at the upcoming meeting," Lacker told reporters after a speech to a business group in Raleigh.
The Fed targets 2% inflation. Lacker said he was confident inflation would move back toward that goal in the next year or two but added: "This is not a certainty, however, and I believe the FOMC will want to watch this closely," referring to the policy-setting Federal Open Market Committee.
Neither Bullard nor Lacker have votes on policy this year under the Fed's rotating system.
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