A bout of volatility was witnessed as key benchmark indices recovered from lower level after trimming intraday gains in afternoon trade. The market breadth indicating the overall health of the market was negative. The barometer index, the S&P BSE Sensex, was currently up 93.19 points or 0.32% at 29,188.12. On the macro front, the latest data showed that the annual rate of inflation based on monthly wholesale price index was in negative zone in January 2015.
Shares of oil exploration firms rose after crude oil prices surged on Friday, 13 February 2015. HPCL fell as the company continued to report losses in Q3. Infosys edged lower after the company announced the acquisition of automation technology provider, Panaya, Inc., in cash, for an enterprise value of $200 million.
Earlier, the Sensex and the 50-unit CNX Nifty had, both, hit their highest levels in almost 2-1/2 weeks in early trade.
Foreign portfolio investors bought shares worth a net Rs 390.26 crore during the previous trading session on Friday, 13 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 95.82 crore on Friday, 13 February 2015, as per provisional data.
In the foreign exchange market, the rupee edged lower against the dollar.
Brent crude oil futures edged lower after a rally during the previous trading session on Friday, 13 February 2015. Global crude oil prices have bounced back over the past few days after a steep slide in prices over the past few months. The recent rebound in global crude oil prices will raise concerns pertaining to India's fiscal deficit, current account deficit and fuel price inflation. India imports about 80% of its crude oil requirements.
In overseas markets, Asian stocks edged higher today, 16 February 2015, helped by Wall Street's gains during the previous trading session on Friday, 13 February 2015. US stocks posted small gains during the previous trading session on Friday, 13 February 2015.
India's financial markets are closed tomorrow, 17 February 2015, on account of Mahashivratri.
At 13:20 IST, the S&P BSE Sensex was up 93.19 points or 0.32% at 29,188.12. The index jumped 230.42 points at the day's high of 29,325.35 in early trade, its highest level since 30 January 2015. The index rose 52.46 points at the day's low of 29,147.39 in afternoon trade.
The CNX Nifty was up 22.10 points or 0.25% at 8,827.60. The index hit a high of 8,870.10 in intraday trade, its highest level since 30 January 2015. The index hit a low of 8,815.25 in intraday trade.
The BSE Mid-Cap index was up 22.47 points or 0.21% at 10,763.42. The BSE Small-Cap index was up 16.26 points or 0.14% at 11,255.54. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was negative. On BSE, 1,412 shares declined and 1,250 shares advanced. A total of 109 shares were unchanged.
IT stocks edged higher on renewed buying. Tech Mahindra (up 1.13%), TCS (up 1.42%), HCL Technologies (up 0.1%) and Wipro (up 0.61%) gained.
Infosys was off 1.01% to Rs 2,273. The stock hit a high of Rs 2,305.85 and a low of Rs 2,271.35 in intraday trade. The company announced during market hours that it has signed a definitive agreement to fully acquire Panaya, Inc., a leading provider of automation technology for large scale enterprise software management, in cash, for an enterprise value of $200 million. The transaction is expected to close before 31 March 2015, subject to customary closing conditions.
Infosys said that this acquisition reflects the company's execution of its Renew and New strategy to enhance the competitiveness and productivity of current service lines by leveraging automation, innovation and artificial intelligence. Panaya's CloudQuality suite uniquely positions Infosys to bring automation to several of its service lines via an agile SaaS model, and helps mitigate risk, reduce costs and shorten time to market for clients.
Shares of oil exploration firms rose after gains in crude oil prices on Friday, 13 February 2015. Cairn India (up 0.37%) and Oil India (up 0.27%) gained. Higher crude oil prices would result in higher realizations from crude sales for oil exploration firms. Reliance Industries (RIL) fell 0.46%.
ONGC rose 0.25% to Rs 340.75. The stock hit high of Rs 344.90 and low of Rs 337.60 in intraday trade. The company's net profit fell 49.88% to Rs 3571.20 crore on 13.66% decline in total income to Rs 20302.02 crore in Q3 December 2014 over Q3 December 2013. The result was announced on Saturday, 14 February 2015. The impact on ONGC's gross revenue due to subsidy burden declined 31.28% to Rs 9458 crore in Q3 December 2014 over Q3 December 2013. The impact on profit after tax (PAT) declined 29.58% to Rs 5386 crore in Q3 December 2014 over Q3 December 2013.
HPCL fell 2.09% after the company reported net loss of Rs 325.38 crore in Q3 December 2014 as against net loss of Rs 1733.91 crore in Q3 December 2013. The Q3 result was announced after market hours on Friday, 13 February 2015. HPCL's net sales declined 7.82% to Rs 51045.24 crore in Q3 December 2014 over Q3 December 2013.
HPCL's average gross refining margins during the nine months ended December 2014, were $1.04 a barrel as against $2.94 per barrel during the corresponding period of the previous year. Subsidy on PDS Kerosene and Domestic Subsidized LPG amounting to Rs 559.54 crore has been accounted during the nine months ended December 2014. (April-December 2013: Rs 465.43 crore). During the nine months ended December 2014, discount from upstream oil companies viz. ONGC and GAIL (India) amounting to Rs 9807.02 crore in respect of crude oil, PDS kerosene & domestic LPG purchased from them has been accounted. (April - December 2013: Rs 11099.66 crore).
Meanwhile, petrol price was hiked by Rs 0.82 a litre and diesel by Rs 0.61 a litre in Delhi with corresponding increase in other states effective from midnight of Sunday, 15 February 2015. This is the first increase since August 2014 and follows firming of oil prices in the international market. PSU OMCs review fuel prices during the middle of the month and on the last day of the month based on the average imported oil price in the preceding fortnight. The government has already freed pricing of petrol and diesel.
Union Bank of India dropped 0.74%. The bank said during market hours that it intends to raise capital funds through issuance of additional Tier 1 bonds. In this regard, CARE Ratings has assigned "CARE AA (Double A)" rating to the bank's proposed Basel III Compliant Tier 1 perpetual bonds of Rs 2000 crore.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 62.215, compared with its close of 62.20 during the previous trading session on Friday, 13 February 2015.
Brent crude oil futures edged lower. Brent for April settlement was off 8 cents at $61.44 a barrel. The contract had risen $2.24 a barrel to settle at $61.52 a barrel during the previous trading session on Friday, 13 February 2015.
On the macro front, the latest data showed that the annual rate of inflation based on monthly wholesale price index (WPI) was in negative zone January 2015. The annual rate of inflation based on monthly wholesale price index (WPI) stood at negative 0.39% in January 2015, compared with a reading of 0.11% for December 2014. Build up inflation rate in the financial year so far was negative 1.11%, compared to a build up rate of 5.23% in the corresponding period of the previous year. Meanwhile, annual rate of inflation based on WPI was revised downward to negative 0.17% for November 2014, from a figure of zero reported earlier.
Exports during January, 2015 were valued at $23883.60 million (Rs 148617.82 crore) which was 11.19% lower in dollar terms (10.97% lower in rupee terms) than the level of $26891.58 million (Rs 166932.15 crore) during January 2014. Imports during January 2015 were valued at $32205.63 million (Rs 200402.44 crore) which was 11.39% lower in dollar terms and 11.18% lower in rupee terms over the level of imports valued at $36346.32 million (Rs 225623.44 crore) in January 2014. The trade deficit for April-January 2014-15 was estimated at $118373.95 million which was higher than the deficit of $116532.22 million during April-January 2013-14. The government announced the trade data for January 2015 after trading hours on Friday, 13 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 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.
The upcoming Budget session of the parliament assumes utmost importance as the government intends to replace the ordinances it had promulgated after the conclusion of the winter session of the parliament with Bills and get them cleared by both Houses of Parliament during the budget session. The Narendra Modi government promulgated a slew of ordinances after the last session of Parliament. Some of the key ordinances include raising the FDI in the insurance sector from 26% to 49%, e-auctioning of coal mines and amendment to the Land Acquisition Act.
The government has already started auctioning coal blocks for captive mining. The Coal Mines (Special Provisions) Bill that was moved to replace an ordinance issued earlier was passed by the Lok Sabha in the winter session but it could not be taken up in the Rajya Sabha. The government promulgated the Coal Mines (Special Provisions) Ordinance, 2014, in October to facilitate coal block auctions after the Supreme Court cancelled 204 coal blocks in September.
Through another ordinance, the government has raised the ceiling on foreign investment in the insurance sector to 49% from 26%. The government was unable to get the Insurance Laws (Amendment) Bill, 2008, passed in parliament during the winter session.
Amendments to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 were brought in via an ordinance after the winter session of the parliament.
Analysts are also awaiting further progress on the Goods and Services Tax (GST) in the Budget session 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 markets were mostly higher today, 16 February 2015, after Japan emerged from recession last quarter and as investors looked ahead to a meeting between Greece and its main European creditors. Key benchmark indices in China, Hong Kong, Japan and South Korea were up by 0.04% to 0.58%. Key indices in Indonesia and Singapore were off 0.11% to 0.59%.
Japan's Nikkei 225 was at 0.51% after managing to touch eight-year high. Japan's economy pulled out of a recession in the final months of 2014, yet the weaker than expected pickup is likely to raise concerns about Prime Minister Shinzo Abe's efforts to get the nation out of a long slump with his stimulus policy known as Abenomics. Gross domestic product increased at an annualized pace of 2.2% in the three months through December, government data showed today, 16 February 2015.
In China, the latest data showed that China's foreign direct investment surged in January. China attracted $13.92 billion of foreign direct investment in January, up 29.4% from a year earlier, the Ministry of Commerce said today. The figure was above December's $13.32 billion, which was 10.3% higher than a year earlier. Chinese investments overseas reached $10.17 billion in the first month of the year, up 40.6% from a year ago, according to the ministry.
US markets are shut today, 16 February 2015, for the Presidents' Day holiday. US stocks rose on Friday, 13 February 2015, boosted by a positive lead from European markets, including upbeat eurozone GDP data and optimistic signs regarding Greek debt negotiations. The Dow Jones Industrial Averages closed above 18,000 points for the first time in 2015 and the S&P 500 reported a new all-time closing high.
However, the buying interest was partly offset by the release of a report from the University of Michigan showing a sharp pullback in US consumer sentiment in the month of February. The University of Michigan said its preliminary consumer sentiment index for February tumbled to 93.6 from the final January reading of 98.1.
In Europe, a meeting of eurozone finance ministers is scheduled in Brussels, Belgium today, 16 February 2015, to discuss Greece's debt situation. Greece is scrambling to reach a deal with creditors before it runs out of cash. Greece's current bailout plan expires on 28 February 2015.
Meanwhile, the conflict in eastern Ukraine subsided after a cease-fire came into effect yesterday, 15 February 2015, although fighting continued between Ukrainian forces and Russia-backed militants around a key railway hub.
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