After reports filtered in that an adviser to the European Court of Justice has opined that the European Central Bank can buy large quantities of eurozone government debt to stabilize the currency area's economy, key equity benchmark indices in India staged a strong intraday rebound in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was currently off 45.70 points or 0.17% at 27,380.03. The market breadth indicating the overall health of the market was negative. US index futures trimmed losses. Weakness continued in European stocks on global growth worries.
Bajaj Finance jumped on strong Q3 results. Realty stocks dropped.
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 dropped on global growth worries 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 on global risk off sentiment.
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.
At 14:17 IST, the S&P BSE Sensex was down 45.70 points or 0.17% at 27,380.03. 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 3.90 points or 0.05% at 8,295.50. 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 BSE Mid-Cap index was down 5.72 points or 0.05% at 10,487.05. The decline in the index was lower than the Sensex's decline in percentage terms. The BSE Small-Cap index was down 34.05 points or 0.3% at 11,217.46. 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, 1,531 shares declined and 1,174 shares rose. A total of 117 shares were unchanged.
Bajaj Finance jumped 6.63% on strong Q3 results. The company's net profit rose 33.08% to Rs 258.38 crore in 37.34% rise in total income to Rs 1485.39 crore in Q3 December 2014 over Q3 December 2013. The result hit the market during trading hours today, 14 January 2015.
Realty stocks dropped. D B Realty (down 0.01%), Unitech (down 3.11%), Housing Development & Infrastructure (HDIL) (down 1.79%), Godrej Properties (down 0.04%), Anant Raj (down 1.52%), Parsvnath Developers (down 3.54%), Oberoi Realty (down 0.34%) and Prestige Estates (down 0.16%), edged lower. DLF rose 0.19%.
In the foreign exchange market, the rupee edged lower against the dollar in volatile trade on global risk off sentiment. The partially convertible rupee was hovering at 62.16, 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 92 cents at $45.67 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 97 cents at $46.85 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 1.4% to 1.78%.
The European Court of Justice Advocate General Pedro Cruz Villalon today, 14 January 2015, said that European Central Bank's OMT (Outright Monetary Transactions) bond buying is legal under the EU treaty as long as it meets certain conditions, media reports said. 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.
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 73 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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