Weakness in European stocks and fall in US equity index futures which indicated a weak opening of US stocks later in the global day weighed on Indian bourses on the last trading session of the week. Key equity benchmark indices extended losses in late trade, with the barometer index, the S&P BSE Sensex, hitting its lowest level in more than 6 weeks. The 50-unit CNX Nifty hit 6-week low. A number of side counters fell. The market breadth indicating the overall health of the market was weak with more than two losers for every gainer on BSE. The Sensex was provisionally off 247.38 points or 0.9% to 27,354.63. The BSE Mid-Cap index was off 1.28%. The BSE Small-Cap index was off 1.5%. The fall in both these indices was higher than the Sensex's decline in percentage terms.
European stocks fell and trading in US equity index futures pointed to a weak opening of US stocks later in the global day as global crude oil prices fell further after the International Energy Agency cut its 2015 global oil-demand view.
Shares of oil exploration and production (E&P) companies edged lower on decline in global crude oil prices. Metal shares declined after the latest data showed factory production in China slowed in November 2014.
Meanwhile, media reports today, 12 December 2014, suggested that the Centre and the state governments have made a significant headway on the goods & services tax (GST). Meanwhile, the latest data showed that the government's total indirect tax collections jumped 19.4% to Rs 44060 crore in November 2014 over November 2013.
The Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said today, 12 December 2014, that the central bank will start talks with the government for an appropriate timeline to ensure that the economy is within a medium term inflation target of 2% to 6%.
Foreign portfolio investors sold shares worth a net Rs 808.27 crore yesterday, 11 December 2014, as per provisional data.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade.
Brent crude futures hit 5-1/2-year low after the International Energy Agency cut its 2015 global oil-demand view. 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.
As per provisional closing, the S&P BSE Sensex was down 247.38 points or 0.9% to 27,354.63. The index lost 281.96 points at the day's low of 27,320.05 in late trade, its lowest level since 30 October 2014. The index rose 90.31 points at the day's high of 27,692.32 in morning trade.
The CNX Nifty was down 68.80 points or 0.83% at 8,224.10, as per provisional closing. The index hit a low of 8,216.30 in intraday trade, its lowest level since 31 October 2014. The index hit a high of 8,321.90 in intraday trade.
The BSE Mid-Cap index was off 131.10 points or 1.28% at 10,108.60. The BSE Small-Cap index was off 168.05 points or 1.5% at 11,068.48. The fall in both these indices was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was weak with more than two losers for every gainer on BSE. 1,984 shares declined and 929 shares gained. A total of 103 shares were unchanged.
The total turnover on BSE amounted to Rs 2961 crore, lower than turnover of Rs 3307.19 crore during previous trading session.
Metal shares declined after the latest data showed factory production in China slowed in November 2014. China is the world's largest consumer of copper, steel, and aluminium. Sesa Sterlite (down 3.27%), Tata Steel (down 4.43%), Hindalco Industries (down 0.9%), Hindustan Zinc (down 1.34%), JSW Steel (down 0.1%), and Jindal Steel & Power (down 1.74%), and Steel Authority of India (down 0.5%) edged lower. NMDC (up 1.02%) edged higher.
Shares of oil exploration and production companies edged lower as global crude oil prices continue to decline. Cairn India (down 3.75%), Oil India (down 3.27%), ONGC (down 3.12%), and Reliance Industries (down 2.42%) edged lower. Lower crude oil prices will result in lower realizations from crude sales for oil producers.
Tata Power Company fell 0.18% at Rs 84.60. The stock hit a high of Rs 86.15 and a low of Rs 83.75. The company after market hours yesterday, 11 December 2014, said it has signed a memorandum of understanding (MoU) with Russian Direct Investment Fund (RDIF) to develop investment opportunities in the energy sector. The agreement was signed during the state visit of Russian President Vladimir Putin to India. RDIF and Tata Power will cooperate on identifying and targeting investment opportunities in the energy sector across Russia in order to develop mutually beneficial transactions.
Essar Oil fell 3.23% at Rs 106.50. The stock hit a high of Rs 116 and a low of Rs 106. Essar Oil and Russia's Rosneft yesterday, 11 December 2014, signed key terms of oil and oil products supplies to Essar refineries in India from Rosneft. Supplies may begin in 2015, the two companies said in a joint statement. This agreement grants Rosneft a secure market outlet of oil and oil products, while Essar gains a reliable and stable partner as a supplier of oil and oil products to its refining facilities, the two companies said in a joint statement.
Havells India fell 6.33% at Rs 264.10. The stock hit a high of Rs 283.90 and a low of Rs 262.10. The company during market hours today, 12 December 2014, in clarification with regard to news item titled "Havells fall 7% as Earning Estimate is cut in Analyst Meet" said that no event has occurred or any 'analyst meet' organized/conducted by the company requiring any disclosure/intimation to the stock exchange under clause 36 of the Listing Agreement. The company, from time to time, keeps attending such investors' meets as are organized by recognized market intermediaries wherein discussions about the macro-environment of the economy are made in general and the ground situation assessed, Havells India said. Any discussion or information about the company is in line with publicly available material, it added. The subject news article is investors' perception and the company has not given out any formal guidance, Havells India said.
The Havells India stock has tumbled after news reports recently said that the company's management has 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. The stock had tumbled 9.22% in a single trading session yesterday, 11 December 2014, to settle at Rs 281.95.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade. The partially convertible rupee was hovering at 62.3175, compared with its close of 62.345 during the previous trading session.
Brent crude futures hit 5-1/2-year low after the International Energy Agency (IEA) cut its 2015 global oil-demand view. Brent for January settlement was off 74 cents a barrel at $62.94 a barrel. The contract had lost 56 cents a barrel to settle at $63.68 during the previous trading session, its lowest closing level since 16 July 2009.
The IEA today, 12 December 2014, cut its 2015 global oil-demand view by 230,000 barrels a day.
Reserve Bank of India (RBI) Governor Raghuram Rajan today, 12 December 2014, reportedly said that the central bank will start talks with the government for an appropriate timeline to ensure that the economy is within a medium term inflation target of 2% to 6%. Rajan said in a lecture at an industry event that a glide path towards lowering inflation to those levels worked best for India by ensuring moderate economic growth, according to reports. The RBI governor also proposed a debate on whether India needed more institutions to ensure deficits stay within control and the quality of budgets is high, noting other countries had independent bodies that provided opinions on fiscal budgets.
Rajan cautioned against using an undervalued exchange rate to boost exports. He recommended the implementation of a goods and services tax and repeated that the main role of the central bank is to keep inflation low and stable.
The Prime Minister's office (PMO) yesterday, 11 December 2014, said that conscious of India's ambitious economic growth strategy, which would require a significant enhancement of power generating capacity, India and Russia have decided to fast-track the implementation of agreed cooperation projects between the two countries for nuclear power plants. India and Russia will strive to complete the construction and commissioning of not less than 12 units in the next two decades in accordance with the Agreement of 2008, the PMO said. Separately, a joint statement issued yesterday, 11 December 2014, during Russian President Vladimir Putin's visit to India stated that India and Russia will study the possibilities of building a hydrocarbon pipeline system, connecting the Russian Federation with India. At their bilateral meeting, Putin and India's Prime Minister Narendra Modi agreed to step up efforts for enhancing bilateral trade in the coming years and set a target of bilateral trade turnover of goods and services at $30 billion by the year 2025. It is expected that the level of mutual investments by then will be over $15 billion each way, according to the joint statement issued after bilateral meeting between the two leaders.
Meanwhile, media reports today, 12 December 2014, suggested that the Centre and state governments have made a significant headway on the goods & services tax (GST). State and central finance ministers and officials will meet again in a week's time to try and clinch a deal, according to reports. The government is likely to introduce the constitutional amendment bill for GST during the ongoing winter session of parliament. 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.
Prime Minister Narendra Modi yesterday, 11 December 2014, said his focus was to build "Team India" through a partnership with all state Chief Ministers, and by encouraging and facilitating states to take initiatives for economic growth. Modi made this comments while interacting with a group of 16 eminent economists from the United States. Stating that a person who is unhealthy cannot derive benefit from exercise, the Prime Minister said that the first six months of his government were focused on making India healthy once again. The "exercise" would begin now, he added. The Prime Minister said there would be a youth-centric focus to all policies of his government, as 65% of India's population is below the age of 35. Therefore, skill development and job creation would continue to be accorded the topmost priority, Modi said. The Prime Minister stressed on the need to inject technology into government processes and decision making, saying this would provide the best possible solution to the problem of corruption. He said the government's focus on infrastructure and "Digital India" would boost employment opportunities even in the rural areas. The Prime Minister said the success of the Pradhan Mantri Jan Dhan Yojana would not only bring economic benefits, but had also boosted the confidence within government, as a key objective of the scheme of opening bank accounts for the poor has been achieved.
Meanwhile, the Indian government intends to get the Insurance Laws Amendment Bill that seeks to enhance foreign investment limit in the capital starved insurance sector passed during the ongoing winter session of parliament. The Union Cabinet recently approved the official amendments to the Insurance Laws (Amendment) Bill, 2008 and introduction in the Rajya Sabha when the bill is taken up for consideration and passing. 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 will include 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.
Meanwhile, the government's total indirect tax collections jumped 19.4% to Rs 44060 crore in November 2014 over November 2013, according to provisional figures released by the finance ministry yesterday, 11 December 2014. Total indirect tax collections rose 7.1% to Rs 328662 crore during the period April-November 2014 over the corresponding previous year period. This amount to an achievement of 52.7% of the target fixed at Rs 623244 crore in the Union Budget 2014-15 for the current fiscal year.
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 today, 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 today, 12 December 2014. Industrial production growth improved to 2.5% in September 2014, from 0.5% in August 2014.
European stocks edged lower today, 12 December 2014, as global crude oil prices fell further after the International Energy Agency cut its 2015 global oil-demand view. Key indices in Germany, UK and France were off 1.18% to 1.33%.
European lenders yesterday, 11 December 2014, took up fewer than estimated loans offered by the European Central bank, adding pressure for more stimulus.
Germany's wholesale price index fell unexpectedly last month, official data showed today, 12 December 2014. In a report, Destatis said that Germany's wholesale price index fell to minus 0.7% in November, from minus 0.6% in the preceding month.
Asian stocks edged higher today, 12 December 2014, after US data on retail sales and unemployment claims boosted optimism in the world's largest economy. Key indices in China, Hong Kong, Singapore, Indonesia, South Korea, and Taiwan were up 0.16% to 0.47%. In Hong Kong, the Hang Seng index was off 0.35%.
A slate of Chinese economic data for November released today, 12 December 2014, painted a mixed picture of the state of the world's second biggest economy, with better-than-expected retail sales and weaker-than-expected industrial output. Industrial production rose 7.2% on year in November, below October's 7.7 % rise. Meanwhile, retail sales rose 11.7% on year, up from October's 11.5% rise. Fixed-asset investment for this year through November was up 15.8%, in line with expectations. This metric is tracked as an indicator of construction activity in China and reported on a year-to-date basis. Meanwhile, property sales by square meter for the same 11-month period fell 8.2%, extending a down-trend that has persisted since then end of 2013.
In Japan, the Nikkei 225 Average was up 0.66%. Polls show Japan's Prime Minister Shinzo Abe is heading for a landslide victory in the election Dec. 14.
Trading in US index futures indicated that the Dow could fall 105 points at the opening bell today, 12 December 2014. US stocks advanced yesterday, 11 December 2014, cutting weekly losses, but euphoria over increased retail sales in October faded as oil fell to another five-year low. US retail sales rose 0.7% in November, the fastest growth in eight months, supported by autos, clothing and purchases at other kinds of stores, as holiday shopping got under way, according to government data released yesterday, 11 December 2014. The number of people who applied for US unemployment benefits inched down by 3,000 to 294,000 in the week that ended Dec. 6, hitting the lowest level in three weeks, as employers continued to lay off very few workers, according to another government data released yesterday, 11 December 2014. The prices paid for imported goods fell 1.5% in November, the largest drop since June 2012, dragged down by fuel, the US Labor Department reported yesterday, 11 December 2014.
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. It remains to be seen whether Federal Reserve officials would signal a rate hike by dropping their assurance that rates will stay low for a considerable time.
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