Volatility ruled the roost in afternoon trade as the key benchmark indices once again strengthened after trimming intraday gains in early afternoon trade following reports that the monsoon session of Parliament came to an end today, 13 August 2015 without any major bill being passed. The barometer index, the S&P BSE Sensex was currently up up 117.90 points or 0.43% at 27,630.16. The market breadth indicating the overall health of the market turned negative from positive in afternoon trade.
Banks stocks were in demand on renewed buying. Telecom stocks were mixed after the Union Cabinet yesterday, 12 August 2015, gave its approval to the guidelines on spectrum sharing, arising from the recommendations of the Telecom Regulatory Authority of India.
As per reports, the 23-day monsoon session of Parliament came to an end today, 13 August 2015 after both the Houses - Lok Sabha and Rajya Sabha were adjourned sine dine without any major bill, including the Goods and Services Tax Bill being passed. The session which began on 21 July 2015 was a complete washout due to protests by the opposition, chiefly the Congress, demanding the resignations of External Affairs Minister Sushma Swaraj and Rajasthan CM Vasundhara Raje in the Lalit Modi controversy and Madhya Pradesh CM Shivraj Singh Chouhan in the Vyapam scam.
The proposed GST bill is the biggest tax overhaul since independence from Britain in 1947. It will subsume myriads of federal and state tax levies, replacing a chaotic structure that inflates costs. The delay in passing the law will make it difficult for Prime Minister Narendra Modi to meet a self-imposed deadline of next April for its launch.
The macro economic data announced after market hours yesterday, 12 August 2015, showing industrial production registered year-on-year growth of 3.8% in June 2015 and inflation based on the consumer price index (CPI) eased sharply last month to 3.78% from 5.4% in June 2015, have raised hopes that the Reserve Bank of India (RBI) may cut rates to strengthen economic growth. Firmness in Asian stocks also supported gains on the domestic bourses.
In overseas markets, European equities opened higher as investors keep an eye on developments in China on the yuan and the progress being made on Greece's third bailout program. Asian stocks edged higher taking heart from a late recovery of US stocks overnight and from efforts by China's central bank to slow the sharp descent of the yuan. US stocks rebounded after a late recovery yesterday, 12 August 2015 after a early slide triggered by China weakening its currency again, spooking investors worried about a slowdown in the world's second-largest economy and its effects on global growth.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 1,855.02 crore yesterday, 12 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1223.80 crore yesterday, 12 August 2015, as per provisional data.
At 13:25 IST, the S&P BSE Sensex was up 117.90 points or 0.43% at 27,630.16. The index gained 278.84 points at the day's high of 27,791.10 in early trade. The index rose 23.71 points at the day's low of 27,535.97 in afternoon trade.
The CNX Nifty was up 34.65 points or 0.41% at 8,384.10. The index hit a high of 8,429.50 in intraday trade. The index hit a low of 8,339.75 in intraday trade.
The market breadth indicating the overall health of the market turned negative from positive in afternoon trade. On BSE, 1,423 shares declined and 1,210 shares rose. A total of 104 shares were unchanged.
The BSE Mid-Cap index was up 62.05 points or 0.55% at 11,278.39, outperforming the Sensex. The BSE Small-Cap index was up 9.55 points or 0.08% at 11,674.28, underperforming the Sensex.
Banks stocks were in demand on renewed buying. Among private bank stocks, HDFC Bank (up 0.66%), Kotak Mahindra Bank (up 0.62%), ICICI Bank (up 0.69%), Axis Bank (up 1.59%), IndusInd Bank (up 1.52%) gained. Yes Bank shed 0.12%.
Among PSU bank stocks, Punjab National Bank (up 0.43%), Bank of Baroda (up 1.25%), Canara Bank (up 0.19%), IDBI Bank (up 1.61%), Bank of India (up 0.95%) and Union Bank of India (up 1.55%) gained.
Shares of State Bank of India (SBI) rose 1.64%. With respect to news appearing on 1 August 2015 titled "Hong Kong fines SBI branch $1 mn for law lapses," SBI after market hours yesterday, 12 August 2015 clarified that the bank did not intimate of the regulatory action by Hong Kong Monetary Authority on its Hong Kong Branch, as the event would not have any material impact on SBI's present or future operation or its profitability or financials.
The regulatory action by the Hong Kong Monetary Authority (HKMA) is not considered to be material as the quantum of monetary penalty at HKD 7,500,000/- ( approximately Rs 6.17 crore) is very small considering the size of balance sheet and profits, SBI said. Further, HKMA have very clearly stated in order, hosted on their website, that there was nothing involving any actual money laundering transactions or breaches of sanctions by our Hong Kong operations. The control gaps related to the past and have since been remediated with appropriate enhancements in policies and procedures, the bank said.
Telecom stocks were mixed after the Union Cabinet yesterday, 12 August 2015, gave its approval to the guidelines on spectrum sharing, arising from the recommendations of the Telecom Regulatory Authority of India.
Idea Cellular (down 0.22%), Reliance Communications (down 4.8%) and Mahanagar Telephone Nigam (down 3.22%) edged lower. Tata Teleservices (Maharashtra) advanced 2.75%.
Bharti Airtel rose 1.92%. Shares of Bharti Airtel turned ex-dividend today, 13 August 2015 for final dividend of Rs 2.22 per share for the year ended 31 March 2015.
As per the spectrum sharing guidelines, spectrum sharing would be allowed only for the access service providers in the first instance in a Licensed Service Area (LSA), where both the licensees are having spectrum in the same band. Leasing of spectrum will not be permitted. For the purpose of charging Spectrum Usage Charges (SUC), licensees shall be considered as sharing their entire spectrum holding in the particular band in the entire LSA. All access spectrum including traded spectrum will be sharable provided that both licensees are having spectrum in the same band. The right to share spectrum shall be subject to fulfilment of relevant license conditions and any other conditions that may be specified by the licensor/Government from time to time. A licensee shall not be eligible to share its spectrum, if it has been established that it is in breach of terms and conditions of the licence, and the licensor has ordered for revocation/termination of its licence.
Guided by the principle of ease of doing business, the Cabinet also decided that both licensees sharing the spectrum shall jointly give a prior intimation for sharing the right to use the spectrum at least 45 days before the proposed effective date of the sharing. Both the licensees shall also give an undertaking that they are in compliance with all terms and conditions of the guidelines for spectrum sharing and licence conditions, and will agree that in the event it is established at any stage in the future, that either of the licensee was not in conformance with the terms and conditions of the guidelines for spectrum sharing or/and of the licence, at the time of giving intimation for sharing of right to use the spectrum, the Government will have the right to take appropriate action which among other things may include annulment of sharing arrangement. A processing fee, of Rs 50,000 which could be modified from time to time, shall be payable individually by each licensee for each service area at the time of intimation.
Among macro economic data, industrial production registered year-on-year growth of 3.8% in June 2015, according to the data released by the Ministry of Statistics & Programme Implementation after trading hours yesterday, 12 August 2015. The cumulative growth in industrial production for the period April-June 2015 over the corresponding period of the previous year stands at 3.2%. The IIP growth for May 2015 was scaled down to 2.5% in the first revision compared with 2.7% reported provisionally. Meanwhile, the growth in March 2015 that was scaled up at first revision to 2.5% from 2.1% reported provisionally, has been retained nearly unchanged at 2.5% in final revision.
An improvement in the pace of growth of industrial production was driven entirely by more than doubling of growth in the output of manufacturing sector to 4.6% in June 2015 from 2% in May 2015. On the other hand, the mining sector output declined 0.3% after four months of consistent growth. The electricity generation growth eased to 1.3% in June 2015 from 6% in May 2015.
As per the use-based classification, the basic goods output increased 5.1% in June 2015 over a year ago. However, the output of capital goods declined 3.6%, while the intermediate goods output growth slowed down to 0.8%.The output of consumer goods increased at 32-month high pace of 6.6% in June 2015. Within consumer goods, the production of consumer durables zoomed 16%, while that of consumer non-durables also improved 1.3% in June 2015.
Due to a large base effect, inflation based on the consumer price index (CPI) eased sharply last month. CPI inflation eased to 3.78% in July 2015 from 5.4% in June 2015, according to the data released by the Ministry of Statistics & Programme Implementation after trading hours yesterday, 12 August 2015. Consumer Food Price Index (CFPI) eased to 2.15% in July 2015 from 5.48% in June 2015, the latest data showed.
The government will release data on inflation based on the wholesale price index (WPI) for July 2015 at around 12:00 noon tomorrow, 14 August 2015. The WPI inflation continued to be in negative zone for the eighth straight month in June 2015. The WPI inflation stood at negative 2.4% in June 2015, unchanged from the level in May 2015.
Meanwhile, investors continue to watch the progress of the monsoon rains which will have a bearing on food prices and rural income. India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 12 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 9% below the Long Period Average (LPA) until 12 August 2015. Region wise, the rainfall was 20% below the LPA in South Peninsula, 12% below the LPA in East & Northeast India, 8% below the LPA in Central India and 2% above the LPA in Northwest India until 12 August 2015.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
European equities opened higher today, 13 August 2015 as investors keep an eye on developments in China on the yuan and the progress being made on Greece's third bailout program. Key benchmark indices in UK, France and Germany were up 0.89% to 1.84%.
Investors are monitoring developments on Greece's third bailout, which now needs to be agreed by euro zone governments. As per reports, there are signs of trouble brewing in Germany over the bailout. Germany's Finance Ministry yesterday, 12 August 2015 reportedly criticized a draft agreement between Greece and lenders as having "no full clarity on the direction of policies.
Asian stocks edged higher today, 13 August 2015 taking heart from a late recovery of US stocks overnight and from efforts by China's central bank to slow the sharp descent of the yuan. Key indices in China, Hong Kong, South Korea, Indonesia, Taiwan, Japan and Singapore were up 0.34% to 2.32%.
China's central bank said today, 13 August 2015, that there is no basis for further depreciation in the yuan currency given strong economic fundamentals, in a bid to reassure jittery global financial markets after it devalued the currency earlier in the week. The People's Bank of China (PBOC) said that the country's strong economic environment, sustained trade surplus, sound fiscal position and deep foreign exchange reserves provide "strong support" to the exchange rate. China's yuan fell recent days after the PBOC shocked markets by pushing its official guidance rate down 2% on Tuesday, 11 August 2015 the sharpest adjustment in the history of China's foreign exchange market.
Japanese data released today, 13 August 2015, showed Japan's core machinery orders fell a greater-than-expected 7.9% in June, down for the first time in four months.
US stocks settled higher after a late recovery yesterday, 12 August 2015 from a early slide triggered by China weakening its currency again, spooking investors about a slowdown in the world's second-largest economy and its effects on global growth.
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