Shares of oil exploration and production companies led decline as key benchmark indices edged lower in choppy trade. After staging a strong intraday recovery in mid-afternoon trade, the benchmark indices weakened once again during the last one hour of the trading session. The barometer index, the S&P BSE Sensex, was provisionally off 236.84 points or 0.85% to 27,594.26. The market breadth indicating the overall health of the market was weak.
Shares of oil exploration and production companies declined after overnight sharp decline in global crude oil prices. Sugar stocks advanced after the Cabinet Committee on Economic Affairs approved a mechanism for procurement of ethanol by PSU OMCs to carry out the ethanol blended petrol program. PSU bank stocks were mixed after the Union Cabinet yesterday, 10 December 2014, gave its approval for allowing PSU banks to raise capital to meet their additional capital requirements under BASEL-III by diluting government holding upto 52% in a phased manner. Insurance stocks declined.
Foreign portfolio investors bought shares worth a net Rs 5.39 crore yesterday, 10 December 2014, as per provisional data.
Earlier, the Sensex and the 50-unit CNX Nifty had, both, hit their lowest level in almost 6 weeks in early trade on weak cues from global markets.
Meanwhile, Sergey Aksyonov, the leader of Crimea, the former Ukrainian territory annexed by Russia, arrived for unofficial talks in New Delhi today, 11 December 2014, according to reports. The informal meeting may prove an irritant for India before US President Barack Obama's visit to India in January 2015.
Russian President Vladimir Putin arrived in New Delhi yesterday, 10 December 2014, for annual summit talks with India's Prime Minister Narendra Modi.
In overseas markets, European stocks edged lower in choppy trade before the European Central Bank reveals take-up of its lending auction, which could provide cues on the central bank's policy decisions. Asian stocks edged lower after Wall Street finished sharply lower overnight on the back of further oil price declines, while a worse-than-expected machinery orders report from Japan accelerated the market's slide. US stocks suffered their worst declines in about two months yesterday, 10 December 2014, as a renewed slump in oil prices slammed energy companies while investors fretted that a stunning drop in oil prices signals a more worrisome global-economic slowdown.
In the foreign exchange market, the rupee edged lower against the dollar as Indian stocks fell.
Brent crude futures slumped yesterday, 10 December 2014, after OPEC cut the forecast for how much crude it will need to provide in 2015 to the lowest level in 12 years. 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.
As per provisional closing, the S&P BSE Sensex was off 236.84 points or 0.85% to 27,594.26. The index lost 291.63 points at the day's low of 27,539.47 in early afternoon trade, its lowest level since 31 October 2014. The index lost 34.76 points at the day's high of 27,796.34 in opening trade.
The CNX Nifty was off 62.75 points or 0.75% at 8,292.90, as per provisional closing. The index hit a low of 8,272.40 in intraday trade, its lowest level since 31 October 2014. The index hit a high of 8,348.30 in intraday trade.
The BSE Mid-Cap index was off 61.55 points or 0.6% at 10,239.70. The BSE Small-Cap index was off 76.01 points or 0.67% at 11,236.53. The fall in both these indices was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was weak. On BSE, 1,750 shares declined and 1,131 shares gained. A total of 104 shares were unchanged.
The total turnover on BSE amounted to Rs 3291 crore, higher than turnover of Rs 3040.59 crore during previous trading session.
Shares of oil exploration and production companies declined after overnight sharp decline in global crude oil prices. Reliance Industries (down 2.9%), Cairn India (down 2.26%), Oil India (down 0.97%), and ONGC (down 3.55%) edged lower. Lower crude oil prices will result in lower realizations from crude sales for oil producers.
Sugar stocks advanced after the Cabinet Committee on Economic Affairs (CCEA) approved a mechanism for procurement of ethanol by PSU OMCs to carry out the ethanol blended petrol program. Balrampur Chini Mills (up 3.75%), Shree Renuka Sugars (up 3.56%), Sakthi Sugars (up 6.67%), Rana Sugars (up 2.01%), Simbhaoli Sugars (up 11.66%), Triveni Engineering & Industries (up 3.27%), Bajaj Hindusthan (up 3.81%), Dhampur Sugar Mills (up 3.4%), and Dwarikesh Sugar Industries (up 1.82%) edged higher.
The Cabinet Committee on Economic Affairs (CCEA) yesterday, 10 December 2014, approved a mechanism for procurement of ethanol by public sector oil marketing companies (PSU OMCs) to carry out the ethanol blended petrol (EBP) program. The CCEA approved replacing the current procedure on ethanol and decided that the delivered price of ethanol may be fixed in the range of Rs 48.50 per litre to Rs 49.50 per litre, depending upon the distance of sugar mill from the depot/installation of the PSU OMCs. These rates proposed would be delivered price at depot location and inclusive of all central and state taxes, transportation costs, etc which would be borne by the ethanol suppliers. PSU OMCs will incorporate "Supply or Pay" clause duly backed up with bank guarantee in their supply agreement with ethanol suppliers. PSU OMCs will sign MOU with the state governments for a comprehensive system for uninterrupted inter-depot transfer of ethanol within a State. This may include annual excise permits to PSU OMCs for movement of ethanol and other relevant measures, a government statement said.
In order to give fillip to the EBP program, the government decided in November 2012 that 5% ethanol blending with petrol should be implemented across the country. However, PSU OMCs are yet achieve this across the country due to supply and pricing issues, according to reports.
PSU bank stocks were mixed. Oriental Bank of Commerce (down 2.2%), Indian Overseas Bank (down 0.64%), Andhra Bank (down 0.28%), Syndicate Bank (down 1.2%), Union Bank of India (down 1.32%), Allahabad Bank (down 1.33%), State Bank of India (down 0.52%), IDBI Bank (down 0.77%), UCO Bank (down 1.56%), Punjab National Bank (down 0.77%), Vijaya Bank (down 1.21%) edged lower. Bank of India (up 0.26%), Bank of Baroda (up 0.45%) and Corporation Bank (up 0.2%) edged higher.
The Union Cabinet yesterday, 10 December 2014, gave its approval for allowing Public Sector Banks (PSBs) to raise capital to meet their additional capital requirements under BASEL-III by diluting government holding upto 52% in a phased manner. The quantum of capital support needed by PSBs is huge, which cannot be funded by budgetary support alone, a government statement said. If the PSBs are permitted to bring down Government of India (GOI) holding to 52% in a phased manner, they can raise upto Rs 1.60 lakh crore from the market. GOI budgetary support needed for 2015-19 would be Rs 78895 crore only, which will maintain GOI holding at 52%, the government said. The GOI is likely to receive an amount of Rs 34500 crore from PSBs as dividend and hence the net outgo will only be Rs 44395 crore, the government said.
While permitting banks to raise capital from the market, the banks would be advised to preserve the GOI holding at minimum 52% and increase the public shareholding in a phased manner through the issue of shares largely to retail investors that is to common citizens of this country, a government statement said.
Meanwhile, the Union Cabinet yesterday, 10 December 2014, also gave its approval for continuing interest subvention to Public Sector Banks (PSBs), Private Sector Banks, Regional Rural Banks (RRBs), Cooperatives Banks and National Bank for Agriculture and Rural Development (NABARD) to enable them to provide short-term crop loans up to Rs 3 lakh to farmers at 7% per annum during the year 2014-15. The Union Cabinet also decided to allow the release of Rs 18583 crore as interest subvention for 2014-15 of which Rs 4399 crore subvention to NABARD for refinance to Cooperatives Banks and RRBs and Rs 14184 crore to Public Sector Banks, Private Sector Banks, RRBs and Cooperative Banks for subvention on their own funds.
IndusInd Bank fell 0.5% at Rs 778.50. The bank during market hours today, 11 December 2014, said it has inaugurated two new branches in Mohali and Zirakpur area of Punjab. With the inauguration of new branches, IndusInd Bank now has 35 branches in Punjab and in Chandigarh the bank has 6 branches. The bank plans to further strengthen its presence and customer reach in Punjab with more branches in the coming quarters, IndusInd Bank said.
Insurance stocks edged lower. Reliance Capital (down 2.4%), Max India (down 2.52%), ICICI Bank (down 1.38%), State Bank of India (down 0.6%), Exide Industries (down 1.92%), Aditya Birla Nuvo (down 2.36%), Religare Enterprises (down 0.6%), Bajaja Finserv (down 0.95%) and HDFC (down 0.75%) edged lower. The Union Cabinet yesterday, 10 December 2014, 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 bill is aimed at removing archaic and redundant provisions in the relevant legislations and to enable the insurance sector to work for the betterment of the insured with greater efficacy, a government statement said.
Bharti Infratel surged 4.4% at Rs 345. The stock hit a record high of Rs 371.75 in intraday trade. According to reports, Bharti Infratel will gain from mega-spectrum auction as it will accelerate data-network rollouts by telecom operators. Current 2,100 mhz band is less efficient for 3G services and this may lead to operators increasing their presence via Bharti Infratel's towers, reports added.
Tech Mahindra rose 1.35% at Rs 2,605. The company during market hours today, 11 December 2014, announced the inauguration of the new IT block in Bhubaneswar, adding to the existing block that houses 500 associates. The total capacity of the Bhubaneswar facility with the addition of new building will be 1,111 seats, Tech Mahindra said.
Havells India tumbled 8.81% at Rs 283.25. According to reports, the company's management at an analyst meet held yesterday, 10 December 2014, 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.
Jindal Steel & Power (JSPL) fell 3.66% at Rs 143.40. The company after market hours yesterday, 10 December 2014, said it has commissioned the Billet Caster plant as part of the 6 MTPA integrated steel project at Angul, Odisha.
In the foreign exchange market, the rupee edged lower against the dollar as Indian stocks fell. The partially convertible rupee was hovering at 62.32, compared with its close of 62.02 during the previous trading session.
Brent crude futures edged higher after a steep slide during the preceding trading session. Brent for January settlement was up 51 cents a barrel at $64.75 a barrel. The contract lost $2.60 a barrel to settle at $64.24 a barrel during the previous trading session after OPEC cut the forecast for how much crude it will need to provide in 2015 to the lowest level in 12 years.
The Indian government plans to introduce the Coal Mines (Special Provisions) Bill, 2014 to replace the Coal Mines (Special Provisions) Ordinance, 2014 in Lok Sabha this week. The government is also likely to introduce the constitutional amendment bill for the goods & services tax during the ongoing winter session of parliament. The government also plans to bring the MMDR Amendment Bill, 2014 during the ongoing winter session of parliament.
The government also intends to get the Insurance Laws Amendment Bill that seeks to enhance foreign investment limit in capital starved insurance sector passed during the ongoing winter session of parliament.
Minister of State for Finance, Jayant Sinha yesterday, 10 December 2014, said India needs to develop alternative model of economic growth based on mix of policies including market driven entrepreneurship innovations, scope for larger private investment and free market economy in democratic polity among others. He was delivering the Inaugural Address after inaugurating the two day Delhi Economic Conclave 2014. The theme of the two day Conclave is Structural Reforms and Growth in India. Stressing on the non-inflationary, inclusive and sustainable growth, Sinha said that structural reforms shall keep taking place at gradual intervals as being done by the present government so that as overall net result, these gradual reforms lead to transformation of India into an economy with a sustainable growth of 7-8% and inflation in the range of 4-6%. Delivering the Key Note Address on this occasion, Tharman Shanmugaratnam, Deputy Prime Minister and Finance Minister, Singapore said that India does not have time on its side and will have to race against competitive countries, intelligent machines among others. He said that India has very highly talented people including scientists, IT experts, academicians, entrepreneurs, but there is a gap at the middle and lower level in comparison with other competitive countries like China.
Piyush Goyal, Minister of State (IC), Power, Coal and NRE, said that there is need for change of mind set of policy makers, policy implementers, stakeholders including private entrepreneurs among others to achieve the goal of high and sustainable growth. He said that the present government is focusing on bringing transparency and honesty in allocation of natural resources including coal blocks, iron ore and other minerals as well in time to come. Goyal specifically mentioned about e-auction of coal blocks which will bring more transparency, competitiveness and efficiency in the system.
The Ministry of Consumer Affairs, Food & Public Distribution yesterday, 10 December 2014, said that the Centre has asked state government to expedite implementation of National Food Security Act. They have been urged to complete all the preparatory work by March next year so that the Act can be roll-out all over the country in April 2015, the Ministry of Consumer Affairs, Food & Public Distribution said in a statement. Addressing the Conference of State Food Secretaries, Minister of Consumer Affairs, Food & Public Distribution Ram Vilas Paswan said that the time-limit of one year provided in the National Food Security Act for identification of eligible households had to be extended twice as several state governments were unable to do so in the prescribed time limit.
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 tomorrow, 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 tomorrow, 12 December 2014. Industrial production growth improved to 2.5% in September 2014, from 0.5% in August 2014.
European stocks edged lower in choppy trade today, 11 December 2014, trade before the European Central Bank reveals take-up of its lending auction, which could provide cues on the central bank's policy decisions. Key indices in UK, and France were off 0.04% to 0.21%. In Germany, the DAX index was up 0.33%.
The European Central Bank (ECB) today, 11 December 2014, issues a second round of long-term loans to the region's banks, with investors weighing the take-up for cues on the central bank's policy decisions.
Meanwhile, in Germany, the latest data showed that consumer price inflation in the Europe's biggest economy remained unchanged last month. In a report, Federal Statistical Office Germany said that German CPI remained unchanged at a seasonally adjusted 0% in November, from 0% in October.
Asian bourses were lower today, 11 December 2014, after Wall Street finished sharply lower overnight on the back of further oil price declines, while a worse-than-expected machinery orders report from Japan accelerated the market's slide. Key indices in China, Hong Kong, Japan, Singapore, Indonesia, Taiwan, and South Korea were off 0.21% to 1.49%.
Japan's core machinery orders, a leading indicator of capital spending, snapped a four-month rising streak in October, data released yesterday, 10 December 2014 showed. Core machinery orders fell 6.4% on month, On year-on-year, machinery orders fell 4.9% in October.
Trading in US index futures indicated that the Dow could gain 51 points at the opening bell today, 11 December 2014. US stocks closed sharply lower yesterday, 10 December 2014, furthering the week's losses, as the price of crude fell to a new five-year low and the Organization of Petroleum Exporting Countries cut its demand outlook for next year.
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.
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