A further slide in global crude oil prices and weakness in Asian stocks triggered by data showing a further slowdown in China's manufacturing sector sent key equity benchmark indices in India tumbling. November trade data showing weakness on India's external front also hit sentiment on the domestic bourses adversely as the barometer index, the S&P BSE Sensex, hit its lowest level in more than seven weeks and the 50-unit CNX Nifty hit its lowest level in nearly 7 weeks. The Sensex fell below the psychological 27,000 mark. The Sensex was provisionally off 496.02 points or 1.82% at 26823.54. Among side counters, quite a few stocks witnessed decent to steep losses.
The market breadth indicating the overall health of the market was quite weak, with more than four losers for every gainer on BSE. The BSE Mid-Cap index was off 2.96%. The BSE Small-Cap index was off 3.29%. The fall in both these indices was higher than the Sensex's decline in percentage terms.
Realty stocks slumped. Index heavyweight and cigarette maker ITC dropped. Metal and mining stocks dropped after weak China manufacturing data.
Global crude oil futures tumbled as market sentiment remained bearish and data showed a further slowdown in China's manufacturing sector. The slump in oil prices over the past three months is having a ripple effect across global financial markets and economies.
Earlier, the Sensex fell below the psychological 27,000 mark in mid-morning trade as weakness in global stocks hit sentiment on the domestic bourses.
Key indices fell for the fourth day in a row today, 16 December 2014.
Due to sharp jump in gold imports, India's trade deficit rose sharply to $16.86 billion in November 2014 from $9.57 billion in November 2013, data released by the Ministry of Commerce & Industry after trading hours yesterday, 15 December 2014, showed.
Foreign portfolio investors sold shares worth a net Rs 455.72 crore yesterday, 15 December 2014, as per provisional data.
In overseas markets, European stocks edged higher in choppy trade as the ZEW indicator for economic sentiment in Germany jumped to the highest level since May. Asian stocks edged lower as oil's slump and weaker-than-estimated Chinese manufacturing stoked concern that the global economy may falter. US stocks fell yesterday, 15 December 2014, amid a continuing slump in oil prices and ahead of a closely watched Federal Reserve meeting.
Brent crude futures hit 5-1/2-year low amid speculation that US oil producers may further increase output.
In the foreign exchange market, the rupee weakened past the 63 mark against the dollar as India's trade deficit rose sharply last month due to a sharp surge in gold imports.
Meanwhile, Taliban gunmen reportedly took hundreds of students hostage at a military-run school in the Pakistani city of Peshawar today, 16 December 2014, and at least 18 people were killed, including 16 pupils, according to reports.
As per provisional figures, the S&P BSE Sensex was down 496.02 points or 1.82% at 26823.54. The index plunged 583.33 points at the day's low of 26,736.23 in late trade, its lowest level since 27 October 2014. The index fell 120.19 points at the day's high of 27,199.37 in early trade.
The CNX Nifty was down 152 points or 1.85% at 8,067.60, as per provisional figures. The index hit a low of 8,052.60 in intraday trade, its lowest level since 29 October 2014. The index hit a high of 8,189.35 in intraday trade.
The BSE Mid-Cap index was off 297.95 points or 2.96% at 9,764.63. The BSE Small-Cap index was off 362.35 points or 3.29% at 10,635.56. The fall in both these indices was higher than the Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 3539 crore, higher than Rs 2924.08 crore on Monday, 15 December 2014.
The market breadth indicating the overall health of the market was quite weak, with more than four losers for every gainer on BSE. On BSE, 2,335 shares fell and 531 shares rose. A total of 88 shares were unchanged.
Realty stocks slumped. Sobha (down 1.69%), DLF (down 4.45%), D B Realty (down 4.38%), Unitech (down 10.75%), Housing Development & Infrastructure (HDIL) (down 7.05%), Godrej Properties (down 2.86%), Anant Raj (down 3.19%), Parsvnath Developers (down 5.56%), Oberoi Realty (down 5.21%) and Prestige Estates (down 0.71%), edged lower.
Metal and mining stocks dropped after weak China manufacturing data. China is the world's largest consumer of steel, copper and aluminum. JSW Steel (down 5.55%), Bhushan Steel (down 4.6%), Hindustan Copper (down 6.45%), Sesa Sterlite (down 7.41%), Hindalco Industries (down 5.48%), Hindustan Zinc (down 1.83%), Jindal Steel & Power (down 4.1%), Tata Steel (down 3.29%), Steel Authority of India (Sail) (down 0.51%), and National Aluminum Company (down 2.34%) declined.
NMDC declined 1.82%. The company's advance tax payment reportedly fell 11% to Rs 800 crore in Q3 December 2014 over Q3 December 2013.
Index heavyweight and cigarette maker ITC lost 3.14% to Rs 380.50. The stock hit high of Rs 390 and low of Rs 378.
Jaiprakash Associates tumbled 6.35%. The company clarified during market hours today, 16 December 2014, that keeping in view the provisions of the new Companies Act, it has stopped accepting fresh deposits from the public from 1 April 2014. The company has been honouring its obligations to repay the fixed deposits as and when they become due. Minor delays, if any, should not be construed otherwise by any of the investors, Jaiprakash Associates said. The company has maintained its creditworthiness with all its lenders and investors and is committed to do so in future as well, Jaiprakash Associates said.
Apollo Hospitals Enterprise declined 2.87%. With respect to news titled "Apollo Hospitals to invest Rs. 150 cr in K'taka by 2016", Apollo Hospitals Enterprise clarified during market hours today, 16 December 2014, that the sum of Rs 150 crore indicated in the news report would include the capital outlay involving in establishing the hospital apart from recurring capital expenditure in the existing facilities of the company established in Karnataka which is a part of the existing approved expansion plans of the company.
PMC Fincorp (down 19.05%), Jain Irrigation Systems (down 9.96%), Pipavav Defence and Offshore (down 9.08%) and BF Utilities (down 8.92%) were the top losers from the BSE Mid-Cap index.
SV Global Mill (down 16.09%), Elder Pharmaceuticals (down 14.04%), Hindustan Oil Exploration Company (down 11.91%), Shrenuj & Company (down 11.83%) were the top losers from the BSE Small-Cap index.
In the foreign exchange market, the rupee weakened past the 63 mark against the dollar as India's trade deficit rose sharply last month due to a sharp surge in gold imports. The partially convertible rupee was hovering at 63.535, compared with its close of 62.945 during the previous trading session.
Brent crude futures hit 5-1/2-year low amid speculation that US oil producers may further increase output. Brent for January settlement, which expires today, 16 December 2014, was off $1.75 a barrel at $59.31 a barrel. The contract had lost 79 cents settle at $61.06 a barrel during the previous trading session. Brent for February settlement was off $1.43 a barrel at $59.79 a barrel.
United Arab Emirates' oil minister Suhail Al Mazrouei said yesterday, 15 December 2015, that the Organization of the Petroleum Exporting Countries won't call for an emergency meeting of the oil cartel unless something drastic happens in the oil market. He said the cartel won't cut its production level for now as the move would only provide a temporary fix to the price drop. The refusal of OPEC and its core members to balance oil markets has caused much of the recent oil price slump, but the US shale revolution has also contributed to the global oil surplus.
India's merchandise exports rose 7.27% to $25.96 billion in November 2014 over November 2013, data released by the Ministry of Commerce & Industry after trading hours yesterday, 15 December 2014, showed. Imports jumped 26.79% at $42.82 billion in November 2014 over November 2013. Oil imports dropped 9.7% at $11.72 billion in November 2014 over November 2013. Non-oil imports jumped 49.6% at $31.10 billion in November 2014 over November 2013. The trade deficit rose sharply to $16.86 billion in November 2014, from $9.57 billion in November 2013.
Finance Minister Arun Jaitley yesterday, 15 December 2014, said that various welfare programmes of the government for vulnerable sections of the society are essential and working well. In this regard he mentioned about food security and education for all programmes among others. The Finance Minister made those comments while speaking to the students of Stanford University, USA when they called on him in his office yesterday, 15 December 2014.
Meanwhile, investors are closely monitoring if the government's key legislative reform bills are passed during the ongoing winter session of the parliament. The government may table the constitutional amendment bill to facilitate the levy of goods & services tax (GST) during the ongoing winter session of the parliament. The constitutional amendment Bill will provide 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.
Meanwhile, 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.
European stocks edged higher in choppy trade today, 16 December 2014, as the ZEW indicator for economic sentiment in Germany jumped to the highest level since May. Key indices in Germany, France and UK were up 0.27% to 0.77%.
Data released today, 16 December 2014, showed, Eurozone business activity grew at a slightly faster rate in December, but the pace of expansion was still one of the weakest seen over the past year. The Markit Eurozone PMI rose from November's 16-month low of 51.1 to 51.7 in December, signalling a modest upturn in the rate of growth. However, the reading was the second-lowest seen over the past year and failed to prevent the average reading for the fourth quarter from falling to the lowest since the third quarter of 2013.
The data showed a mixed batch of PMI data out of Germany, with multi-month lows for the services and composite PMIs, but the manufacturing PMI rose to 2-month high. France's manufacturing PMI fell to a four-month low.
Asian stocks edged lower today, 16 December 2014, as oil's slump and weaker-than-estimated Chinese manufacturing stoked concern that the global economy may falter. Key indices in Hong Kong, Singapore, Indonesia, South Korea, Taiwan, and Japan were off 0.39% to 2.4%. China's Shanghai Composite rose 2.31%.
China's flash manufacturing purchasing managers' index (PMI) from HSBC Holdings Plc and Markit Economics fell to 49.5 for December, from 50 last month. It's the first time since May that the gauge has slipped below 50, the threshold between expansion and contraction. The preliminary reading, which is usually issued about one week before the final PMI reading, was released more than two weeks before the final estimate for December due to the year-end holidays. The final reading is due on 2 January 2015.
Indonesia's Finance Minister Bambang Brodjonegoro will reportedly meet Bank Indonesia and financial regulator Otoritas Jasa Keuangan today, 16 December 2014, to discuss a policy response to the weakening currency.
Meanwhile, heavily armed Australian police reportedly stormed a Sydney cafe early on Tuesday morning and freed hostages being held there at gunpoint, in a dramatic end to a 16-hour siege in which two captives and the attacker were killed.
Trading in US index futures indicated that the Dow could gain 22 points at the opening bell today, 16 December 2014. US stocks fell Monday, 15 December 2014, amid a continuing slump in oil prices and ahead of a closely watched Federal Reserve meeting.
Among economic data, US manufacturing output recorded its largest increase in nine months in November as production expanded across the board, pointing to underlying strength in the economy. Factory production rose 1.1% after advancing 0.4% in October, the Federal Reserve said on Monday.
A two-day meeting of Federal Open Market Committee (FOMC) to discuss monetary policy review begins today, 16 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.
Meanwhile in Russia, the nation's central bank unexpectedly raised its benchmark interest rate to 17% from 10.5% yesterday, 15 December 2014, its biggest step yet to shore up the ruble and defuse the currency crisis threatening the country's stricken economy.
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