After seeing high intraday volatility, key benchmark indices registered modest losses. A divergent trend was witnessed among various index constituents. The barometer index, the S&P BSE Sensex, was provisionally off 43.97 points or 0.16% at 27,381.76. The market breadth indicating the overall health of the market was negative. US index futures trimmed losses.
Metal and mining stocks tumbled as metal prices fell in global markets. Cement shares edged higher after the Ministry of Mines after trading hours yesterday, 13 January 2015, said that the government has promulgated the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015 on 12 January 2015. Yes Bank gained in volatile trade after reporting strong Q3 results.
The World Bank yesterday, 13 January 2015, lowered its global growth forecast for 2015 and next year due to disappointing economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices.
Foreign portfolio investors bought shares worth a net Rs 235.09 crore yesterday, 13 January 2015, as per provisional data.
Meanwhile, Finance Minister Arun Jaitley yesterday, 13 January 2015, said that the government is committed to fiscal discipline and with sharp decline in international oil prices and due to focused attention from the government, the Current Account Deficit (CAD) is also within the comfort level.
In overseas markets, European stocks fell in volatile trade after the World Bank cut its outlook for the world economy. Asian stocks fell as a sharp slide in copper prices in global markets sparked concerns about slowing global growth. US stocks registered small losses yesterday, 13 January 2015, in what was a highly volatile trading session.
In the foreign exchange market, the rupee edged lower against the dollar in volatile trade.
Global crude prices extended losses from the lowest closing level in more than five and half years on concerns about global growth and ahead of a weekly US inventory report expected to show even higher oil supplies in the US. 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. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
Key indices fell for the second day in a row today, 14 January 2015.
As per provisional figures, the S&P BSE Sensex was down 43.97 points or 0.16% at 27,381.76. The index declined 222.48 points at the day's low of 27,203.25 in early afternoon trade, its lowest level since 9 January 2015. The index rose 87.07 points at the day's high of 27,512.80 in early trade.
The CNX Nifty was down 21.85 points or 0.26% at 8,277.55, as per provisional figures. The index hit a low of 8,236.65 in intraday trade, its lowest level since 9 January 2015. The index hit a high of 8,326.45 in intraday trade.
The total turnover on BSE amounted to Rs 3192 crore, lower than Rs 3996.31 crore yesterday, 13 January 2015.
The BSE Mid-Cap index was down 20.86 points or 0.2% at 10,471.91. The decline in the index was lower than the Sensex's decline in percentage terms. The BSE Small-Cap index was down 50.43 points or 0.45% at 11,201.08. The decline in the index was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was negative. On BSE, 1,596 shares declined and 1,261 shares rose. A total of 123 shares were unchanged.
Yes Bank gained 0.38% to Rs 785 on strong Q3 results. The stock hit high of Rs 793.55 and low of Rs 776.75. Yes Bank's net profit rose 30% to Rs 540.29 crore on 20.89% rise in total income to Rs 3508.47 crore in Q3 December 2014 over Q3 December 2013. The result hit the market during trading hours today, 14 January 2015. Net interest income (NII) increased 36.6% to Rs 909 crore in Q3 December 2014 over Q3 December 2013, led by steady growth in advances, coupled with expansion in net interest margin (NIMs) to 3.2% in Q3 December 2014 from 2.9% in Q3 December 2013. Non-interest income increased 38.4% to Rs 536.8 crore in Q3 December 2014 over Q3 December 2013.
On absolute basis, gross non-performing assets (NPAs) edged up to Rs 278.70 crore as on 31 December 2014, from Rs 222.4 crore as on 30 September 2014 and Rs 195.80 crore as on 31 December 2013. The ratio of gross NPA to gross advances edged up to 0.42% as on 31 December 2014, from 0.36% as on 30 September 2014, and 0.39% as on 31 December 2013. The ratio of net NPAs to net advances edged up to 0.1% as on 31 December 2014, from 0.09% as on 30 September 2014, and 0.08% as on 31 December 2013.
The bank's specific loan loss provision coverage stood at 76.8% as on 31 December 2014. Total restructured advances (excluding NPAs) stood at Rs 170.70 crore as on 31 December 2014. This represents 0.26% of the gross advances against 0.21% as on 31 December 2013.
Current and Savings Account (CASA) deposits grew by 30.7% year on year (y-o-y) to Rs 18622.6 crore taking the CASA ratio to 22.6% as on 31 December 2014, up from 20.9% as on 31 December 2013. Continued investment in retail branches and retail sales force has resulted in achieving consistent CASA growth, Yes Bank said in a statement. Yes Bank's total advances grew by 32.4% to Rs 66606.9 crore as on 31 December 2014. The bank's CD ratio stood at 80.9% as on 31 December 2014. The cost effective longer tenor FCY borrowing resulted in lower deposit growth, Yes Bank said.
Metal and mining stocks tumbled as metal prices fell in global markets. Hindalco Industries (down 6.24%), JSW Steel (down 2.58%), Bhushan Steel (down 0.87%), Sesa Sterlite (down 8.29%), Hindustan Zinc (down 3.96%), Tata Steel (down 3.98%), Steel Authority of India (Sail) (down 1.22%), Jindal Steel & Power (down 1.54%), National Aluminum Company (down 2.56%) and NMDC (down 1.85%) declined.
Copper prices plunged to pace a broad selloff in the metals prices in global markets today, 14 January 2015. Weakness in copper is often seen as an omen for the global economy because the metal is used in a wide array of construction and manufacturing activities.
Meanwhile, the Ministry of Mines after trading hours yesterday, 13 January 2015, said that the government has promulgated the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015 on 12 January 2015. The ordinance amends certain provisions of the MMDR Act, 1957. The Ministry of Mines said that the promulgation of the ordinance became necessary to address the emergent problems in the mining industry. Essentially, through the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015, the government intends to remove discretion in grant of mineral concessions. Henceforth, all mineral concessions would be through auctions, thereby bringing in greater transparency and removing of discretion. Unlike in the 1957 Act, there would be no renewal of any mining concession. The tenure of the mineral concession has been increased from the existing 30 years to 50 years. Thereafter, the mining lease would be put up for auction (and not for renewal as in the earlier system).
The Ministry of Mines said that Sub-Section 5 and 6 of Section 8(a) of the ordinance provides that the mining leases would be deemed to be extended from the date of their last renewal to 31 March 2030 in the case of captive miners and till 31 March, 2020 for the merchant miners or till the completion of the renewal already granted, if any, whichever is later. Thus, no mining lease holder is likely to be put into any disadvantaged condition. It is expected that this would immediately permit such closed mines to start their operations, the Ministry of Mines said in a statement.
The ordinance proposes to setup a National Mineral Exploration Trust created out of contribution from the mining lease holders. This would allow the government to have a dedicated fund for undertaking exploration. In addition, the transferability provision (in respect of mining leases to be granted through auction) would permit flow of greater investment to the sector and increasing the efficiency in mining.
In respect of ten minerals in Part C of First Schedule like iron ore, manganese, bauxite, copper, gold, etc., the requirement that a state government should obtain the prior approval of the central government before grant of mineral concession has been done away with. Similarly, approval of mining plan by the government would no longer be mandatory as a provision has been added under 5(2) (b) permitting the state governments to devise a system for filing of a mining plan obviating need for approval by the central government.
Kajaria Ceramics rose 1.91% after net profit rose 55.19% to Rs 45.61 crore on 30.10% increase in total income to Rs 556.45 crore in Q3 December 2014 over Q3 December 2013.
In the foreign exchange market, the rupee edged lower against the dollar in volatile trade. The partially convertible rupee was hovering at 62.18, compared with its close of 62.15 during the previous trading session.
Brent crude oil futures extended losses from the lowest closing level in more than five and half years on concerns about global growth and ahead of a weekly US inventory report expected to show even higher oil supplies in the US. Brent for February settlement was off 46 cents at $46.13 a barrel. The contract had lost 84 cents or 1.77% to settle at $46.59 a barrel during the previous trading session. Brent for March settlement was off 23 cents at $47.63 a barrel.
On macro front, data released during trading hours today, 14 January 2015, showed that inflation based on the wholesale price index (WPI) stood at 0.11% in December 2014, as compared to zero in November 2014. Build up inflation rate in the financial year so was a negative 0.28%, compared to a build up rate of 5.58% in the corresponding period of the previous year. Meanwhile, WPI for October 2014 was revised downwards to 1.66%, from 1.77% reported earlier.
Meanwhile, Finance Minister Arun Jaitley yesterday, 13 January 2015, said that the government is committed to fiscal discipline and with sharp decline in international oil prices and due to focused attention from the government, the Current Account Deficit (CAD) is also within the comfort level. Jaitely made these comments during the Pre Budget Consultative Meeting with the economists. The Finance Minister said that the government has taken lot of initiatives in different sectors in the last 7-8 months with an objective to take the economy on a higher growth path. Jaitley said that the government is committed to regain the investors' confidence for investment in infrastructure and revival of manufacturing sector among others.
European stocks edged lower today, 14 January 2015, as commodity prices dropped amid concern over slowing global growth. Key benchmark indices in France, Germany and UK were off 0.47% to 1.37%.
An interim ruling today, 14 January 2015, from the the European Court of Justice signaled a green light for the European Central Bank's Outright Monetary Transactions (OMT) program, which is seen as opening the door further for quantative easing from the ECB. The European Court of Justice Advocate General Pedro Cruz Villalon said that European Central Bank's OMT bond buying is legal under the EU treaty as long as it meets certain conditions. One condition is that it refrains from direct involvement in aid, implying the ECB's buying of debt should be restricted to secondary markets. The opinion also said the ECB has broad discretion in implementing monetary policy and noted that OMT is necessary. While the ECJ itself has not yet given its decision, the court adviser's opinion is seen as a strong indication of how it will rule and as a green light for a program of quantitative easing from the ECB.
The ECB called the ruling an important milestone and said the program is ready and available. The OMT program was put in place in 2012 to help countries suffering from high borrowing costs, but has never actually been used. However, its sheer existence has been credited with easing tensions in the eurozone, and particularly in bringing down Spanish and Italian bond yields substantially.
Meanwhile, uncertainties over the status of Greece including its possible exit from the eurozone are likely to persist until the early election in the country later this month. Greece is set to hold snap elections on 25 January 2015 after it failed to elect a new president in a third round of voting late last year. The Greek leftist opposition party Syriza leads opinion polls ahead of national elections on 25 January 2015. Syriza has demanded debt relief from the eurozone and promised to roll back the austerity and reform measures that the country has undertaken in exchange for the international bailout that the government negotiated in 2012.
Asian stocks edged lower today, 14 January 2015, as commodity prices slumped. Key benchmark indices in China, Indonesia, Singapore, Taiwan, Japan, Hong Kong and South Korea were off 0.18% to 1.71%.
Trading in US index futures indicated that the Dow could fall 47 points at the opening bell today, 14 January 2015. US stocks registered small losses yesterday, 13 January 2015, in what was a highly volatile trading session. Earlier, US stocks had surged in early trade, underpinned by better-than-expected earnings from the industrial bellwether Alcoa and hopes that European Central Bank (ECB) is close to providing quantitative easing.
The World Bank yesterday, 13 January 2015, lowered its global growth forecast for 2015 and next year due to disappointing economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices. The global development lender predicted the global economy would grow 3% this year, below a forecast of 3.4% made in June, according to its twice-yearly Global Economic Prospects report. World GDP growth will reach 3.3% in 2016, as opposed to a June forecast of 3.5%, before dipping to 3.2% in 2017, it said.
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