A bout of volatility was witnessed in mid-afternoon trade as key benchmark indices trimmed gains after hitting fresh intraday high. The Sensex, and the 50-unit CNX Nifty, both trimmed gains after hitting one-week high. The benchmark indices retained positive terrain tracking gains in global stocks. The barometer index, the S&P BSE Sensex, was currently up 284.51 points or 1.05% at 27,411.08. The market breadth indicating the overall health of the market was positive. The BSE Small-Cap index was up 1.09%, outperforming the Sensex. Global crude oil prices tumbled yesterday, 18 December 2014. Fall in crude oil prices augur well for India as the country imports 80% of its oil requirement. Bank stocks gained.
Meanwhile, the fate of several crucial bills hangs in a limbo due to several disruptions by the Opposition over the alleged forced conversion row in the Rajya Sabha. With just three days left for the winter session of Parliament to end, the chance of the passage of the key reform bills in Parliament looks bleak.
Meanwhile, a mid-term economic review tabled by the finance ministry in parliament today, 19 December 2014, reportedly states that there is need for stalled projects to be cleared more expeditiously and that pick-up in economy in October-March is critical to prevent fiscal slippage. According to the mid-term review, adhering to FY 2015 fiscal deficit target of 4.1% is a major challenge. The government is committed to meeting FY 2015 fiscal deficit target despite difficult odds, the mid-term review says.
Meanwhile, according to a study published today, 19 December 2014, US-based consulting firm IHS, India is set to emerge as the third largest spender worldwide by 2020.
Foreign portfolio investors sold shares worth a net Rs 874.89 crore yesterday, 18 December 2014, as per provisional data.
In the foreign exchange market, the rupee edged higher against the dollar on global risk on sentiment.
Global crude oil prices slumped yesterday, 18 December 2014. 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.
In overseas markets, European and Asian stocks edged higher as investor confidence continued to be bolstered by expectations the US central bank is in no rush to raise interest rates in the world's biggest economy. US stocks surged yesterday, 18 December 2014, a day after Federal Reserve Chairwoman Janet Yellen assured the markets after the conclusion of Fed's two-day monetary policy review that the US central bank would be patient about lifting interest rate in the world's biggest economy.
In Russia, Russian President Vladimir Putin said during his annual public news conference yesterday, 18 December 2014, that the ruble will stabilize amid current economic headwinds. Putin also stressed that external conditions referring to sanctions imposed by the West were pushing Russia into reforms that would make the economy more efficient.
Brent crude futures rebounded from the lowest closing price since May 2009 after Saudi Arabia's oil minister said he's optimistic about global demand in the future.
At 14:16 IST, the S&P BSE Sensex was up 284.51 points or 1.05% at 27,411.08. The index jumped 370.55 points at the day's high of 27,497.12 in mid-afternoon trade, its highest level since 12 December 2014. The index gained 165.57 points at the day's low of 27,292.14 in early trade.
The CNX Nifty was up 79 points or 0.97% at 8,238.30. The index hit a high of 8,263.45 in intraday trade, its highest level since 12 December 2014. The index hit a low of 8,208.60 in intraday trade.
The BSE Mid-Cap index was up 82.27points or 0.83% at 10,046.94, underperforming the Sensex. The BSE Small-Cap index was up 118.44 points or 1.09% at 10,979.20, outperforming the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,614 shares rose and 1,119 shares fell. A total of 123 shares were unchanged.
Bank stocks gained. IndusInd Bank (up 0.58%), Federal Bank (up 2.68%), and Axis Bank (up 1.14%), gained.
ICICI Bank rose 2.62%. The bank's advance tax reportedly rose 20% to Rs 1200 crore in Q3 December 2014 over Q3 December 2013.
HDFC Bank rose 0.61%. The bank's advance tax reportedly rose 11% to Rs 735 crore in Q3 December 2014 over Q3 December 2013.
Kotak Mahindra Bank fell 0.58%. The bank's advance tax reportedly rose 37% to Rs 260 crore in Q3 December 2014 over Q3 December 2013.
Yes Bank gained 1.84%. The bank's advance tax reportedly rose 20% to Rs 300 crore in Q3 December 2014 over Q3 December 2013.
Among PSU bank stocks, Canara Bank (up 0.16%), Union Bank of India (up 0.76%), Punjab National Bank (up 0.82%) Syndicate Bank (up 1.06%), Indian Overseas Bank (up 0.53%), Oriental Bank of Commerce (up 0.17%), Dena Bank (up 1.13%), and Indian Bank (up 0.03%), gained.
State Bank of India (SBI) gained 0.49%. The bank's advance tax reportedly rose 26% to Rs 1425 crore in Q3 December 2014 over Q3 December 2013.
Bank of India rose 0.34%. The bank's advance tax reportedly rose 75% to Rs 350 crore in Q3 December 2014 over Q3 December 2013.
Bank of Baroda gained 0.19%. The bank's advance tax reportedly remained unchanged at Rs 575 crore in Q3 December 2014 over Q3 December 2013.
In the foreign exchange market, the rupee edged higher against the dollar on global risk on sentiment. The partially convertible rupee was hovering at 63.085, compared with its close of 63.115 during the previous trading session.
Brent crude futures rebounded from the lowest closing price since May 2009 after as Saudi Arabia's oil minister said he's optimistic about global demand in the future. Brent for February settlement was up 13 cents at $59.40 a barrel. The contract had fallen $1.91 a barrel or 1.01% to settle at $59.27 a barrel during the previous session, the lowest closing level since May 2009.
Closer home, India's economy is expected to grow at around 5.5% in the fiscal year ending 31 March 2015 (FY 2015), the finance ministry has reportedly said in a mid-term economic review tabled in parliament today, 19 December 2014. Emphasising that there is need for stalled projects to be cleared more expeditiously, the review says that pick-up in economy in October-March is critical to prevent fiscal slippage. Adhering to the fiscal year ending March 2015 (FY 2015) fiscal deficit target of 4.1% is a major challenge. The government is committed to meeting FY 2015 fiscal aim, despite difficult odds, the review said.
Pegging average CPI inflation at around 5.8% for January-March quarter in 2016, the review said that the momentum of headline inflation is showing a staggering decline. Inflation fall is not just due to base effect. Government role in inflation check is somewhat under-recognised, the review said. Modest rise in crop MSP will moderate inflationary pressures, it added. According to the review, current Reserve Bank of India (RBI) policy appears to be historically tight. The government assumes that interest rates will be held unchanged until March quarter.
Meanwhile, the fate of several crucial bills hangs in a limbo due to several disruptions by the Opposition over the alleged forced conversion row in the Rajya Sabha. The government had planned to get key bills like Insurance Bill and the Coal Mines (Special Provisions) Bill, 2014 in parliament during the current winter session which ends on 23 December 2014. The Lok Sabha last week passed the Coal Mines (Special Provisions) Bill, 2014. 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.
The Indian government had planned to get the Insurance Laws (Amendment) Bill, 2008 passed in both the Houses of Parliament in this week. The Union Cabinet, last week, approved the official amendments to the Insurance Laws (Amendment) Bill, 2008. 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.
With just three days left for the winter session of Parliament to end, the chance of the passage of the reform bills in Parliament looks bleak.
The Union Cabinet recently approved a constitutional amendment bill to provide the legal framework for rolling out a nationwide goods and services tax (GST). The constitutional amendment Bill provides the legal framework for rolling out the levy, giving states power to tax both goods and services. As of now only the central government can impose service tax. The amendment Bill will also create a GST council, a body that will have representatives of the states and the Centre that will take decisions on the tax after it is rolled out.
The government's intension is to implement a nationwide GST from 1 April 2016. GST is a major indirect tax reform. GST will subsume central indirect taxes such as excise duty and service tax at the central level and value added tax at the state level besides other local levies such as octroi and entry tax.
European stocks rose today, 19 December 2014. Key indices in France, Germany and UK rose 0.57% to 0.94%.
Germany's producer prices surprised on the upside in November as energy prices remained unchanged from October, data from the Federal Statistics Office showed today. Producer prices in Europe's largest economy were stable on the month in November and fell 0.9% on the year, Destatis said.
Japanese stocks led Asian markets higher today, 19 December 2014, after US stocks boasted its biggest two-day advance since late 2011 yesterday, 18 December 2014, amid relief the Federal Reserve was in no rush to start hiking interest rates. Key indices in China, South Korea, Indonesia, Singapore, Japan, Hong Kong, and Taiwan were up 0.77% to 2.39%.
The Bank of Japan maintained unprecedented stimulus today, 19 December 2014, as Governor Haruhiko Kuroda's bid to stoke inflation faces increasing challenges from the tumble in oil price. The central bank will boost the monetary base at an annual pace of 80 trillion yen ($672 billion), it said in a statement.
China raised its estimate of its 2013 economic output by 3.4% based on its latest survey of the economy, the National Bureau of Statistics said on Friday. The statistics bureau said China's gross domestic product in 2013 was 58.80 trillion yuan ($9.46 trillion). It also said the revision "basically" wouldn't affect GDP growth for 2014, though it would change the total size of the economy for this year.
Trading in US index futures indicated that the Dow could gain 62 points at the opening bell today, 19 December 2014. US stocks rallied yesterday, 18 December 2014, to its best two-day gains in three years. The rally was kicked off Wednesday, 17 December 2014, after Federal Reserve Chairwoman Janet Yellen assured the markets that the central bank would be patient about lifting interest rate.
In economic news, a weekly jobless claims report came in stronger than expected, confirming the Fed's view that the economy is strengthening. Claims fell by 6,000 to 289,000, a low level typically associated with strong hiring.
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