Weakness continued on the bourses in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently off 253.47 points or 0.91% at 27,577.63. Weakness in global stocks weighed on sentiment. The market breadth indicating the overall health of the market was weak.
Telecom stocks declined. IT stocks were mixed. Shares of oil producers edged lower as global crude oil prices fell sharply yesterday, 10 December 2014.
Foreign portfolio investors bought shares worth a net Rs 5.39 crore yesterday, 10 December 2014, as per provisional data.
Earlier, the Sensex and the 50-unit CNX Nifty had, both, hit their lowest level in almost 6 weeks in early trade on weak cues from global markets.
In overseas markets, Asian stocks edged lower after Wall Street finished sharply lower overnight on the back of further oil price declines, while a worse-than-expected machinery orders report from Japan accelerated the market's slide. US stocks suffered their worst declines in about two months yesterday, 10 December 2014, as a renewed slump in oil prices slammed energy companies while investors fretted that a stunning drop in oil prices signals a more worrisome global-economic slowdown.
In the foreign exchange market, the rupee edged lower against the dollar on global risk-off sentiment.
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Brent crude futures slumped yesterday, 10 December 2014, on data showing a surprise increase in weekly US oil inventory. 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.
At 11:28 IST, the S&P BSE Sensex was off 253.47 points or 0.91% at 27,577.63. The index lost 272.53 points at the day's low of 27,558.57 in morning trade, its lowest level since 31 October 2014. The index lost 34.76 points at the day's high of 27,796.34 in opening trade.
The CNX Nifty was off 72.25 points or 0.86% at 8,283.40. The index hit a low of 8,276.15 in intraday trade, its lowest level since 31 October 2014. The index hit a high of 8,348.30 in intraday trade.
The BSE Mid-Cap index was down 69.84 points or 0.68% at 10,231.51. The BSE Small-Cap index was down 80.47 points or 0.71% at 11,232.07. The decline in both these indices was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was weak. On BSE, 1,469 shares declined and 834 shares gained. A total of 81 shares were unchanged.
Telecom stocks declined. Reliance Communications (down 2.41%), Tata Teleservices (Maharashtra) (down 1.6%), Mahanagar Telephone Nigam (down 1.24%), and Bharti Airtel (down 0.68%) edged lower. Idea Cellular (up 0.42%) edged higher.
IT stocks were mixed. HCL Technologies (down 1.6%), Oracle Financial Services Software (down 0.81%), MindTree (down 0.54%), and MphasiS (down 0.29%) edged lower. Tech Mahindra (up 1.19%), TCS (up 0.1%), and Wipro (up 0.07%) edged higher.
Infosys fell 1.75% at Rs 1,929.30. The stock hit a high of Rs 1,960 and hit a low of Rs 1,921.75. The Union Cabinet yesterday, 10 December 2014, gave its approval for extension of the contract for the Central Processing Centre (CPC) Project of the Income Tax Department at Bengaluru awarded to Infosys by two years upto 30 September 2017. This would be after the end of the existing contract period on 30 September 2015 and for revision of the CPC project cost to Rs 1078.59 crore.
Kotak Mahindra Bank rose 0.23% at Rs 1,238.65. ING Vysya Bank lost 0.64% at Rs 848. According to reports, Kotak Mahindra Bank's acquisiton of ING Vysya Bank faces headwinds as some employees of ING Vysya Bank are threatening to go on a strike if their demands for job and wage guarantees aren't met. C.H. Venkatachalam, general secretary of the All India Bank Employees Union was quoted as saying that Kotak Mahindra needs to guarantee the jobs and wages of all ING Vysya employees. According to reports, employees of ING Vysya will strike for one day in January in protest against the deal with Kotak Mahindra. Mumbai-based spokesman of Kotak Mahindra Bank Rohit Rao was quoted as saying that Kotak Mahindra Bank will respect and honor all employee-related contractual commitments of ING Vysya Bank as agreed upon in the merger deal, which will be binding on all parties after approval by the RBI and other regulators.
Havells India tumbled 7.1% at Rs 288.55. According to reports, the company's management at an analyst meet held yesterday, 10 December 2014, cut the company's standalone revenue forecast to 12-14% from earlier 17-20% for the year ending 31 March 2015, citing weak domestic demand.
Shares of oil producers edged lower as crude oil prices fell sharply yesterday, 10 December 2014. Cairn India (down 2.41%), Oil India (down 1.21%), and ONGC (down 1.51%) declined. Lower crude oil prices will result in lower realizations from crude sales for oil producers.
GAIL (India) also declined as crude oil prices fell sharply yesterday, 10 December 2014. The stock was off 2.36% at Rs 444.40. Fall in crude oil lowers the realizations from GAIL (India)'s petrochemicals and LPG businesses which in turn impacts company's margins.
In the foreign exchange market, the rupee edged lower against the dollar on global risk-off sentimeent. The partially convertible rupee was hovering at 62.195, compared with its close of 62.02 during the previous trading session.
Brent crude recovered after yesterday's steep slide as OPEC reduced its estimate for 2015 demand, Kuwait offered new discounts to Asian customers and the Saudi oil minister questioned the need for an output cut. Brent for January settlement was up 40 cents a barrel at $64.64 a barrel. The contract had lost $2.60 a barrel to settle at $64.24 during the previous trading session.
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 is also likely to introduce the constitutional amendment bill for the goods & services tax during the ongoing winter session of parliament. The government also plans to bring the MMDR Amendment Bill, 2014 during the ongoing session of parliament.
The government also intends to get the Insurance Laws Amendment Bill that seeks to enhance foreign investment limit in capital starved insurance sector passed during the ongoing winter session of parliament.
Minister of State for Finance, Jayant Sinha yesterday, 10 December 2014, said India needs to develop alternative model of economic growth based on mix of policies including market driven entrepreneurship innovations, scope for larger private investment and free market economy in democratic polity among others. He was delivering the Inaugural Address after inaugurating the two day Delhi Economic Conclave 2014. The theme of the two day Conclave is Structural Reforms and Growth in India. Stressing on the non-inflationary, inclusive and sustainable growth, Sinha said that structural reforms shall keep taking place at gradual intervals as being done by the present government so that as overall net result, these gradual reforms lead to transformation of India into an economy with a sustainable growth of 7-8% and inflation in the range of 4-6%. Delivering the Key Note Address on this occasion, Tharman Shanmugaratnam, Deputy Prime Minister and Finance Minister, Singapore said that India does not have time on its side and will have to race against competitive countries, intelligent machines among others. He said that India has very highly talented people including scientists, IT experts, academicians, entrepreneurs, but there is a gap at the middle and lower level in comparison with other competitive countries like China.
Piyush Goyal, Minister of State (IC), Power, Coal and NRE, said that there is need for change of mind set of policy makers, policy implementers, stakeholders including private entrepreneurs among others to achieve the goal of high and sustainable growth. He said that the present government is focusing on bringing transparency and honesty in allocation of natural resources including coal blocks, iron ore and other minerals as well in time to come. Goyal specifically mentioned about e-auction of coal blocks which will bring more transparency, competitiveness and efficiency in the system.
The Ministry of Consumer Affairs, Food & Public Distribution yesterday, 10 December 2014, said that the Centre has asked state government to expedite implementation of National Food Security Act. They have been urged to complete all the preparatory work by March next year so that the Act can be roll-out all over the country in April 2015, the Ministry of Consumer Affairs, Food & Public Distribution said in a statement. Addressing the Conference of State Food Secretaries, Minister of Consumer Affairs, Food & Public Distribution Ram Vilas Paswan said that the time-limit of one year provided in the National Food Security Act for identification of eligible households had to be extended twice as several state governments were unable to do so in the prescribed time limit.
On the domestic macro front, inflation is seen easing further in November 2014 and growth in industrial production is seen improving a bit in October 2014. The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India is seen easing further to 4.4% in November 2014, from 5.52% in October 2014, as per the median estimate of a poll of economist carried out by Capital Market. The government will release the data on CPI inflation for November 2014 after trading hours tomorrow, 12 December 2014.
The annual rate of inflation based on the wholesale price index (WPI) is seen easing further to 1.2% in November 2014, from 1.77% in October 2014, as per the median estimate of a poll of economist carried out by Capital Market. The government will release the inflation data based on wholesale price index (WPI) for November 2014 at 12.15 noon on 15 December 2014.
Growth in industrial production is seen inching up to 2.7% in October 2014, from 2.5% in September 2014, as per the median estimate of a poll of economist carried out by Capital Market. The government will unveil industrial production data for October 2014 after trading hours tomorrow, 12 December 2014. Industrial production growth improved to 2.5% in September 2014, from 0.5% in August 2014.
Asian bourses were lower today, 11 December 2014, after Wall Street finished sharply lower overnight on the back of further oil price declines, while a worse-than-expected machinery orders report from Japan accelerated the market's slide. Key indices in China, Hong Kong, Japan, Singapore, Indonesia, Taiwan, and South Korea were off 0.2% to 1.06%.
Japan's core machinery orders, a leading indicator of capital spending, snapped a four-month rising streak in October, data released yesterday, 10 December 2014 showed. Core machinery orders fell 6.4% on month, On year-on-year, machinery orders fell 4.9% in October.
Trading in US index futures indicated that the Dow could gain 27 points at the opening bell today, 11 December 2014. US stocks closed sharply lower yesterday, 10 December 2014, furthering the week's losses, as the price of crude fell to a new five-year low and the Organization of Petroleum Exporting Countries cut its demand outlook for next year.
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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