A bout of volatility was witnessed as key benchmark indices pared gains in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently below the psychological 27,000 mark, having alternately moved above and below that mark so far during the trading session. Earlier, a firm opening had taken the Sensex above that psychological level. The market breadth indicating the overall health of the market was quite strong, with more than four gainers for every loser on BSE. A number of side counters witnessed decent to strong gains. The Sensex was currently up 195.62 points or 0.73% at 26,905.75. The BSE Mid-Cap index was up 1.86%. The BSE Small-Cap index was up 2.25%. Both these indices outperformed the Sensex.
World stocks rose after the US Federal Reserve pledged patience on interest-rate increases after the conclusion of its two-day monetary policy meeting yesterday, 17 December 2014. Closer home, India's Union Cabinet yesterday, 17 December 2014, reportedly approved a constitutional amendment bill to provide the legal framework for rolling out a nationwide goods and services tax (GST).
Capital goods stocks edged higher on renewed buying. L&T gained after the company after trading hours yesterday, 17 December 2014, said that Canada Pension Plan Investment Board (CPPIB), through a subsidiary, has made an initial investment of Rs 1000 crore in L&T's subsidiary L&T Infrastructure Development Projects (L&T IDPL). Logistics providers surged after the cabinet cleared GST amendment bill yesterday, 17 December 2014.
In the foreign exchange market, the rupee edged higher against the dollar after the US Federal Reserve pledged patience on interest-rate increases after the conclusion of its two-day monetary policy meeting yesterday, 17 December 2014.
Brent crude futures extended gains registered during the previous trading session.
Foreign portfolio investors sold shares worth a net Rs 1636.36 crore yesterday, 17 December 2014, as per provisional data.
In overseas markets, Asian stocks surged after a Federal Reserve pledge to be patient on interest-rate increases sent US stocks surging yesterday, 17 December 2014.
At 11:17 IST, the S&P BSE Sensex was up 195.62 points or 0.73% at 26,905.75. The index jumped 395.67 points at the day's high of 27,105.80 in early trade, its highest level since 16 December 2014. The index gained 190.44 points at the day's low of 26,900.57 in mid-morning trade.
The CNX Nifty was up 55.65 points or 0.69% at 8,085.45. The index hit a high of 8,151.50 in intraday trade, its highest level since 16 December 2014. The index hit a low of 8,085.45 in intraday trade.
The BSE Mid-Cap index was up 180.54 points or 1.86% at 9,886.99. The BSE Small-Cap index was up 236.39 points or 2.25% at 10,752.51. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was quite strong, with more than four gainers for every loser on BSE. 1,778 shares rose and 442 shares fell. A total of 73 shares were unchanged
Capital goods stocks edged higher on renewed buying. ABB India (up 1.84%), Bharat Heavy Electricals (Bhel) (up 4.28%), Punj Lloyd (up 3.04%), Thermax (up 0.64%), BEML (up 4.24%), Crompton Greaves (up 3.81%), and Siemens (up 3.24%) gained.
L&T gained after the company after trading hours yesterday, 17 December 2014, said that Canada Pension Plan Investment Board (CPPIB), through a subsidiary, has made an initial investment of Rs 1000 crore in L&T's subsidiary L&T Infrastructure Development Projects (L&T IDPL). The stock was up 1.53%. L&T said that a second tranche of Rs 1000 crore, or such higher amount as may be agreed between L&T IDPL and CPPIB's subsidiary, will be invested in L&T IDPL after twelve months from the date of the initial investment, subject to regulatory approvals. This is the first direct private investment by a Canadian pension fund into an Indian infrastructure development company, L&T said.
L&T IDPL undertakes infrastructure developments projects in India under the public-private-partnership model.
Coal India dropped 0.41%. Employee unions at state-run miners Coal India and Singareni Collieries Co. have reportedly called a five day strike next month to protest the government's plan to end its monopoly in mining and selling of coal.
Meanwhile, the government has already finalised selling a 10% stake in Coal India during the current fiscal year.
Logistics providers surged after the cabinet cleared GST amendment bill yesterday, 17 December 2014. Snowman Logistics (up 6.73%), Gati (up 6.61%) and Blue Dart Express (up 2.7%) gained. A lower tax rate and fast movement of goods and inventories after implementation of GST bill will help logistics providers.
In the foreign exchange market, the rupee edged higher against the dollar after the US Federal Reserve pledged patience on interest-rate increases after the conclusion of its two-day monetary policy meeting yesterday, 17 December 2014. The partially convertible rupee was hovering at 63.345, compared with its close of 63.62 during the previous trading session.
Brent crude futures extended gains registered during the previous trading session as weeks of nearly non-stop selling abruptly halted. Brent for February settlement was up 8 cents at $61.26 a barrel. The contract had risen $1.17 a barrel or 2% to settle at $61.18 a barrel during the previous session.
Closer home, the Union Cabinet yesterday, 17 December 2014, reportedly 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 Bill is likely to be introduced in parliament during the ongoing winter session.
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.
Investors are closely monitoring if the Indian government's key legislative reform bills are passed during the ongoing winter session of the parliament. The Indian government intends 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.
It also remains to be seen if the government will be to find support for the Coal Mines (Special Provisions) Bill, 2014 in the Rajya Sabha where it's in a minority. 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.
Asian stocks surged today, 18 December 2014, rebounding from an almost nine-month low, after a Federal Reserve pledge to be patient on interest-rate increases sent US equities up the most since 2013 yesterday, 17 December 2014. Key indices in China, Indonesia, Singapore, Japan, Hong Kong, and Taiwan were up 0.27% to 2.3%. South Korea's Kospi fell 0.59%.
Trading in US index futures indicated that the Dow could fall 21 points at the opening bell today, 18 December 2014. US stocks surged the most since 2013 yesterday, 17 December 2014, with the Standard & Poor's 500 Index erasing about half of its December drop, after the Federal Reserve pledged patience on its first interest-rate increase since 2006.
The Federal Reserve after two-day policy meet yesterday, 17 December 2014, said it will be patient when it comes to the timing of rate increases, replacing a pledge in its statement to keep borrowing costs near zero for a considerable time, and raising its assessment of the job market.
Federal Reserve Chair Janet Yellen restored clarity to the central bank's monetary policy plans, saying it was on course to raise interest rates, though not right away. Yellen also laid out the economic parameters that would need to be met for liftoff to begin later in the year and said that rates probably would be raised gradually thereafter. They may not return to more normal levels until 2017, she added.
Among economic data in the US, the US consumer-price index dropped 0.3% in November from the previous month, the most since December 2008, after being little changed the prior month, a Labor Department report showed yesterday, 17 December 2014.
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