After a rangebound movement in early afternoon trade, key benchmark indices trimmed intraday gains in afternoon trade. The barometer index, the S&P BSE Sensex, was currently up 166.98 points or 0.58% at 29,171.64. The market breadth indicating the overall health of the market was positive.
Index heavyweights HDFC and Infosys edged higher. Cement stocks edged higher amid expectations that the government will rationalize excise duty structure for the cement sector when the Finance Minister Arun Jaitley presents Union Budget 2015-16 in parliament on Saturday, 28 February 2015. Auto shares were in demand.
Meanwhile, the finance ministry yesterday, 24 February 2015, said that the central government has accepted the recommendation of the 14th Finance Commission (FFC) to keep the States' share of Union Tax proceeds (net) at 42%. The Rajya Sabha yesterday, 24 February 2015, passed the Public Premises (Eviction of Unauthorised Occupants) Amendment Bill, 2014 that seeks to empower Delhi Metro Rail Corporation, other Metros, Public Transport Companies, Companies of Delhi Government, New Delhi Municipal Council and successors to Major Port Trusts to get their properties and premises evicted of unauthorized companies in a speedy manner.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 697.28 crore yesterday, 24 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 146.98 crore yesterday, 24 February 2015, as per provisional data.
The market may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month February 2015 series to March 2015 series. The near month February 2015 derivatives contracts expire tomorrow, 26 February 2015.
In the foreign exchange market, the rupee edged higher against the dollar after Federal Reserve Chair Janet Yellen signaled an increase in US interest rates isn't imminent, supporting demand for emerging-market assets.
Brent crude oil futures edged higher, helped by better than expected Chinese factory activity data, the Federal Reserve's flexible stance on US interest rates and the eurozone's approval of reforms proposed by Greece.
In overseas markets, Asian stocks were mixed. US stocks edged higher yesterday, 24 February 2015, with the S&P 500 and Dow industrials closing at records, as the market read Federal Reserve Chairwoman Janet Yellen's testimony before Congress as a reassurance that a rate hike might not occur until the second half of the year.
At 13:16 IST, the S&P BSE Sensex was up 166.98 points or 0.58% at 29,171.64. The index jumped 265.17 points at the day's high of 29,269.83 in early trade, its highest level since 23 February 2015. The index rose 110.66 points at the day's low of 29,115.32 in opening trade.
The CNX Nifty was up 49.85 points or 0.57% at 8,811.95. The index hit a high of 8,840.65 in intraday trade, its highest level since 23 February 2015. The index hit a low of 8,798 in intraday trade.
The market breadth indicating the overall health of the market was positive. On BSE, 1,352 shares gained and 1,302 shares fell. A total of 106 shares were unchanged.
The BSE Mid-Cap index was up 15.59 points or 0.15% at 10,740.29. The BSE Small-Cap index was up 28.30 points or 0.25% at 11,328.41. Both these indices underperformed the Sensex.
IT major and index heavyweight Infosys advanced 2.1% to Rs 2,326. The stock hit high of Rs 2,332 and low of Rs 2,278.35 so far during the day.
Housing finance major and index heavyweight HDFC rose 2.73% to Rs 1,345. The stock hit high of Rs 1,348 and low of Rs 1,310 so far during the day.
Cement stocks edged higher amid expectations that the government will rationalize excise duty structure for the cement sector when the Finance Minister Arun Jaitley presents Union Budget 2015-16 in parliament on Saturday, 28 February 2015. Birla Corporation (up 3.32%), Dalmia Cement (Bharat) (up 2.12%), Ambuja Cements (up 1.69%), HeidelbergCement India (up 1.66%), UltraTech Cement (up 1.56%), ACC (up 1.04%), JK Lakshmi Cement (up 0.94%), Saurastra Cement (up 0.50%), edged higher. Kakatiya Cement (down 0.55%), Shree Cement (down 0.73%), J K Cement (down 0.74%), India Cements (down 1%), The Ramco Cement (down 1.02%), Mangalam Cement (down 1.28%) and Prism Cement (down 1.3%), edged lower.
Grasim Industries was up 0.57%. Grasim holds majority stake in UltraTech Cement.
Cement is as much an essential item required for construction activities as steel but both products are treated differently when it comes to the taxation. Cement, a high volume low-value product, is highly taxed, even more than the luxury items at 60% of ex-factory price in India. Moreover, the present excise duty structure on cement is complicated with a combination of ad valorem duty and specific duty. At present, excise duty is levied on cement at the rate of 12% + Rs 120 per metric tonne. At present, most of the varieties of cement are subjected to excise duty on the basis of the maximum retail price (MRP) printed on the bags.
Most auto shares edged higher. Escorts (up 1.88%), Mahindra & Mahindra (up 1.88%), Tata Motors (up 1.42%), Ashok Leyland (up 1.05%), TVS Motor Company (up 0.96%) and Maruti Suzuki (India) (up 0.18%), edged higher. Eicher Motors (down 0.31%), Bajaj Auto (down 0.33%) and Hero MotoCorp (down 0.65%), edged lower.
In the foreign exchange market, the rupee edged higher against the dollar after Federal Reserve Chair Janet Yellen signaled an increase in US interest rates isn't imminent, supporting demand for emerging-market assets. The partially convertible rupee was hovering at 62.04, compared with its close of 62.20 during the previous trading session.
Brent crude oil futures edged higher, helped by better than expected Chinese factory activity data, the Federal Reserve's flexible stance on US interest rates and the eurozone's approval of reforms proposed by Greece. Brent for April settlement was up 3 cents at $58.69 a barrel. The contract had declined 24 cents or 0.4% to settle at $58.66 a barrel during the previous trading session.
Global credit rating agency Moody's Investors Service reportedly said today, 25 February 2015, that its assessment of India's credit ratings will be determined mainly by the extent of India's fiscal reforms, not recent revisions to its economic growth data. The upward revisions of India's GDP growth based on methodological and base year updates highlight the strength of the economy, but do not impact Moody's overall assessment of the sovereign's credit profile, the agency said. Rather, fiscal and structural reform policies will determine the extent to which accelerating growth will buttress the sovereign credit profile, Moody's said, according to reports. The rating agency said that rising private external debt levels and banking sector challenges will continue to pose sovereign credit risks. Moody's rates India at "Baa3", the lowest investment grade rating, with a "stable" outlook.
The Rajya Sabha yesterday, 24 February 2015, passed the Public Premises (Eviction of Unauthorised Occupants) Amendment Bill, 2014 that seeks to empower Delhi Metro Rail Corporation, other Metros, Public Transport Companies, Companies of Delhi Government, New Delhi Municipal Council and successors to Major Port Trusts to get their properties and premises evicted of unauthorized companies in a speedy manner. This Amendment Bill was already approved by the Lok Sabha during the monsoon session of Parliament. Piloting the Bill, Minister of Urban Development M.Venkaiah Naidu said that Recommendations of the Parliamentary Standing Committee on Urban Development and suggestions of the Supreme Court have been incorporated in the Amendment Bill to enable quick execution of infrastructure projects, according to a statement issued by Ministry of Urban Development yesterday, 24 February 2015.
Meanwhile, the finance ministry yesterday, 24 February 2015, said that the central government has accepted the recommendation of the 14th Finance Commission (FFC) to keep the States' share of Union Tax proceeds (net) at 42%. FFC has recommended by majority decision that the States' share in the net proceeds of the Union tax revenues be 42%. The recommendation of tax devolution at 42% is a huge jump from the 32% recommended by the 13th Finance Commission. The transfers to the States will see a quantum jump, the finance ministry said. This is the largest ever change in the percentage of devolution. The government tabled the 14th Finance Commission (FFC) Report in parliament yesterday, 24 February 2015. Article 280 of the Constitution of India requires the Constitution of a Finance Commission every five years, or earlier. For the period from 1 April 2015 to 31 March 2020, the 14th Finance Commission (FFC) was constituted by the orders of President on 2 January 2013 and submitted its report on 15 December 2014.
The consequence of this much greater devolution to the States is that the fiscal space for the Centre will reduce in the same proportion, the finance ministry said. The finance ministry also said that the central government has accepted the recommendations of the 14th Finance Commission with regard to grants to local bodies. FFC has recommended that out a total grant of Rs 2.87 lakh crore for five year period from 1 April 2015 to 31 March 2020. Of this, the grant recommended to Panchayatas is Rs 2 lakh crore and that to municipalities is Rs 87143.80 crore.
Meanwhile, the stock exchanges have decided to keep the stock market open on Saturday, 28 February 2015, just like any other normal trading session when the Finance Minister Arun Jaitley presents the first full-fledged Budget of the Narendra Modi government. Trading will start at 9:15 IST and conclude at 15:30 IST. Jaitley will begin his speech at 11:00 IST in Lok Sabha on 28 February 2015 as he tables the Union Budget 2015-16 in the parliament.
The Railway Budget 2015-16 will be tabled in the parliament by Railway minister Suresh Prabhu tomorrow, 26 February 2015. The speech of the Railway minister tomorrow, 26 February 2015, is being closely watched for clues on the tone and thrust of the Union Budget on Saturday, 28 February 2015. The Economic Survey will be tabled in parliament on Friday, 27 February 2015.
The next major event for the financial markets is Union Budget for 2015-16. Finance Minister Arun Jaitley will present Union Budget 2015-16 in Parliament on Saturday, 28 February 2015. Analysts will scrutinize measures in the Budget for financing infrastructure projects as well as the government's own capital expenditure on infrastructure for the year ahead. This is the first full fledged Budget of the Narendra Modi government and analysts will look for a roadmap for economic growth for the next few years.
Changes in rates of dividend distribution tax, capital gains tax on sale of shares, Securities Transaction Tax (STT) and Minimum Alternate Tax (MAT), if any, will be closely watched. The dividend distribution tax is currently at 15%. The minimum alternate tax is currently at 18.5% of book profits. Short term capital gains tax on sale of shares is currently at 15% while there is zero long capital gains tax on sale of shares held for a period of more than one year.
Analysts are awaiting further progress on the Goods and Services Tax (GST) during the ongoing Budget session of Parliament after the Constitution Amendment Bill for the introduction of GST was tabled in the Lok Sabha during the winter session of parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.
Asian stocks were mixed today, 25 February 2015. Key benchmark indices in Singapore, Taiwan, Indonesia and South Korea were up 0.23% to 0.73%. Key benchmark indices in China, Hong Kong and Japan were off 0.09% to 0.56%.
The preliminary HSBC China Manufacturing Purchasing Managers' Index, a gauge of nationwide manufacturing activity, rose to 50.1 in February compared with a final reading of 49.7 in January, HSBC Holdings PLC said today, 25 February 2015. A reading below 50 indicates a contraction in manufacturing activity from the previous month, whereas a reading above indicates expansion. HSBC will release its final PMI data on Monday, 2 March 2015.
Trading in US index futures indicated that the Dow may open 8 points lower at opening bell today, 25 February 2015. US stocks moved higher yesterday, 24 February 2015 with the S&P 500 and Dow industrials closing at records, as the market read Federal Reserve Chairwoman Janet Yellen's testimony before Congress as a reassurance that a rate hike might not occur until the second half of the year.
Federal Reserve Chairwoman Janet Yellen yesterday, 24 February 2015 took another step closer to the first rate hike since 2006. In testimony to the Senate, Yellen signaled to financial markets the Fed would soon drop the word patient from its forward guidance. She softened the blow with several dovish comments that suggest no hurry about actually moving. Yellen signaled the outlook of inflation will be the deciding factor of when the Fed will hike rates for the first time since 2006.
In Europe, Eurozone finance ministers yesterday, 24 February 2015, backed new reforms proposed by Greece in exchange for a four-month financial lifeline that will keep the country afloat and in the single currency for the time being. Several parliaments, including Germany's, must now approve the extension before the current bailout expires on Saturday, 28 February 2015.
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