Key benchmark indices regained strength in early afternoon trade. The barometer index, the S&P BSE Sensex, was currently up 306.42 points or 1.13% at 27,432.99. The market breadth indicating the overall health of the market was strong. The BSE Small-Cap index was up 1.32%, outperforming the Sensex. Firmness in global stocks boosted sentiment. 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.
Capital goods stocks gained. Crompton Greaves rose after the Reserve Bank of India advised that Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) can now invest up to 100% of the paid up capital of the company under the Portfolio Investment Scheme (PIS). Punj Lloyd surged after the company received FIPB approval for manufacturing equipment and associated assemblies for the defence sector. Tyre stocks rose across the board.
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.
Earlier, the Sensex, and the 50-unit CNX Nifty, had, both hit one-week high in morning trade, tracking gains in world stocks.
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, 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 as Saudi Arabia's oil minister said he's optimistic about global demand in the future.
At 12:17 IST, the S&P BSE Sensex was up 306.42 points or 1.13% at 27,432.99. The index jumped 366.50 points at the day's high of 27,493.07 in morning 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 88.25 points or 1.08% at 8,247.55. The index hit a high of 8,258.75 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 106.44 points or 1.07% at 10,071.11, underperforming the Sensex. The BSE Small-Cap index was up 142.96 points or 1.32% at 11,003.72, outperforming the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,525 shares rose and 926 shares fell. A total of 88 shares were unchanged.
Adani Enterprises gained 1.37%. With respect to news titled "Adani, POSCO tie up to Build Terminal in Aus" Adani Enterprises clarified during market hours today, 19 December 2014, that the said news item is pertaining to a company which is neither a direct or indirect subsidiary of the company.
Capital goods stocks gained. Bharat Heavy Electricals (Bhel) (up 2.06%), Thermax (up 0.56%), Havells India (up 0.47%), ABB (India) (up 0.31%), L&T (up 2.04%), and Siemens (up 1.19%) gained.
Crompton Greaves rose 1.99% after the Reserve Bank of India advised yesterday, 18 December 2014, that Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) can now invest up to 100% of the paid up capital of Crompton Greaves under the Portfolio Investment Scheme (PIS). The Reserve Bank has stated that the company has passed resolutions at its Board of Directors' level and a special resolution by the shareholders, agreeing for enhancing the limit for the purchase of its equity shares and convertible debentures by FIIs/RFPIs. The purchases could be made through primary market and stock exchanges.
Punj Lloyd surged 9.59% after the company said that Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance, Government of India vide its Letter dated 15 December 2014 have approved the proposal of the company for manufacturing of equipment systems and associated assemblies for the defence sector. As per clause 4 of the above letter, foreign equity participation in the company including FDI & Investment by FII/FPI/FVCI/QFl/NRI through portfolio investment have been capped at 32.99% of the paid-up equity capital of the company, Punj Lloyd said.
Tyre stocks rose across the board. Apollo Tyres (up 3.92%), JK Tyre & Industries (up 11.64%), MRF (up 1.98%) Goodyear India (up 3.08%), and CEAT (up 2.57%) gained.
In the foreign exchange market, the rupee edged higher against the dollar on global risk on sentiment. The partially convertible rupee was hovering at 63.06, 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 40 cents at $59.67 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 said in a mid-term economic review tabled in parliament today, 19 December 2014.
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.
Meanwhile, 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.
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 0.72% 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 67 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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