After posting strong gains in prior two trading days, key benchmark indices dropped today, 12 May 2015, as caution prevailed ahead of release of macro-economic data. European stocks declined and trading in US index futures indicated a weak opening of US stocks later in the global day weighed by concerns over Greece's future in the euro zone. The barometer index, the S&P BSE Sensex settled below the psychological 27,000 mark after closing above that level on 8 May 2015. The Sensex and the 50-unuit CNX Nifty, both, closed with losses of more than 2% each. The Sensex slumped 629.82 points or 2.29% to settle at 26,877.48. The market breadth indicating the overall health of the market was weak with almost three losers for ever gainer. The BSE Mid-Cap index and the BSE Small-Cap index were off 1.72% each. The fall in both these indices was lower than the Sensex's decline in percentage terms.
Index heavyweight Reliance Industries (RIL) declined. Index heavyweight and housing finance major HDFC also fell. Metal and mining stocks dropped. Dr Reddy's Laboratories gained after declaring good Q4 March 2015 result. Banks stocks dropped ahead of the release of data on inflation based on the consumer price index (CPI) for April 2015 by the government today, 12 May 2015.
Meanwhile, a closely watched forecast by Japan today, 12 May 2015, reportedly confirmed El Nino's return this year. A strong El Nino will roil economies that are heavily dependent on agriculture, particularly India which is already reeling from bad weather.
On the macro front, the government will after market hours today, 12 May 2015 unveil the inflation data based on the consumer price index (CPI) for April 2015 and Index of Industrial Production (IIP) data for March 2015.
Foreign portfolio investors bought shares worth a net Rs 379.66 crore from secondary equity market yesterday, 11 May 2015, as per data from Central Depository Services (India). Domestic institutional investors (DIIs) bought shares worth a net Rs 328.57 crore yesterday, 11 May 2015, as per provisional data.
In the foreign exchange market, the rupee dropped past 64 against the dollar as the dollar firmed up overseas.
Brent crude oil futures advanced after previous trading session's decline.
In the overseas markets, European stocks dropped today, 12 May 2015 as concerns over Greece's future in the euro zone weighed heavily. Asian stocks were trading mixed today, 12 May 2015. US stocks ended yesterday's thinly traded session slightly lower, giving back some of the gains from Friday's post-jobs rally.
The S&P BSE Sensex slumped 629.82 points or 2.29% to settle at 26,877.48, its lowest closing level since 7 May 2015. The index lost 669.91 points at the day's low of 26,837.39 in late trade. The index fell 4.39 points at the day's high of 27,502.91 in opening trade.
The CNX Nifty tumbled 198.30 points or 2.38% to settle at 8,126.95, its lowest closing level since 7 May 2015. The index hit a low of 8,115.30 and a high of 8,326.65 in intraday trade.
The BSE Mid-Cap index declined 179.88 points or 1.72% to settle at 10,274.08. The BSE Small-Cap index dropped 188.92 points or 1.72% to settle at 10,778.70. The fall in both these indices was lower than the Sensex's decline in percentage terms.
Among sectoral indices on BSE, the S&P BSE Bankex index (down 3.09%), BSE Capital Goods index (down 3.1%), BSE Metal index (down 2.97%), BSE Oil & Gas index (down 2.56%), BSE Power index (down 3.12%) and BSE Realty index (down 3.3%) underperformed the Sensex. The S&P BSE FMCG index (down 1.16%), BSE Healthcare index (down 0.7%), BSE IT index (down 1.78%), BSE Auto index (down 1.83%), BSE Consumer Durables index (down 1.5%) and BSE Teck index (down 1.85%) outperformed the Sensex.
The market breadth indicating the overall health of the market was weak with almost three losers for ever gainer on BSE. On BSE, 1,962 shares declined and 746 shares rose. A total of 95 shares were unchanged.
The total turnover on BSE amounted to Rs 3131 crore, higher than turnover of Rs 2718.72 crore registered during the previous trading session.
Index heavyweight Reliance Industries (RIL) lost 2.89% to Rs 869.85. The stock hit high of Rs 895 and low of Rs 865.25.
Index heavyweight and housing finance major HDFC lost 2.76% to Rs 1,189.10. The stock hit high of Rs 1,220 and low of Rs 1,185.85.
Metal and mining stocks dropped. Vedanta (down 5.16%), JSW Steel (down 2.82%), Tata Steel (down 6.28%), Steel Authority of India (Sail) (down 2.9%), Hindustan Copper (down 2.42%), Jindal Steel & Power (down 4.17%) and Hindalco Industries (down 3.27%) edged lower.
NMDC fell 1.02%. NMDC said after market hours yesterday, 11 May 2015, that it has signed three memorandum of understanding (MoUs) in the presence of Prime Minister of India Narendra Modi; Chief Minister of Chhattisgarh Dr. Raman Singh; Minister of Steel & Mines Narendra Singh Tomar and other dignitaries at Dantewada, Chhattisgarh on 9 May 2015. Narendra Kothari, CMD has signed MoUs on behalf of NMDC. MOUs were for setting up Ultra Mega Steel Plant in Bastar Region (Ministry of steel, Government of Chhattisgarh, SAIL and NMDC): development of railway line from Jagdalpur to Rowghat (Government of Chhattisgarh, SAIL, NMDC and IRCON) and slurry Pipeline & Pellet Plant (Government of Chhattisgarh and NMDC).
Hindustan Zinc fell 3.79%. The stock turned ex-dividend today, 12 May 2015, for final dividend of Rs 2.50 per share for the year ended 31 March 2015 (FY 2015).
Dr Reddy's Laboratories gained 3.31% after consolidated net profit rose 7.73% to Rs 518.84 crore on 10.83% growth in total income to Rs 3882.97 crore in Q4 March 2015 over Q4 March 2014. The Q4 result was announced during market hours today, 12 May 2015.
Dr Reddy's Laboratories' Co-Chairman and CEO, GV Prasad said that the company is pleased with the progress on its financial and non-financial parameters, which it delivered despite currency volatility in some of its emerging market geographies.
Dr Reddy's Laboratories' board of directors recommended a final dividend of Rs 20 per share for the year ended 31 March 2015 (FY 2015).
Power generation stocks edged lower. Reliance Infrastructure (down 2.54%), Tata Power Company (down 3.64%), CESC (down 2.46%), NTPC (down 1.97%), Reliance Power (down 3.31%), NHPC (down 1.56%), JSW Energy (down 6.39%), Adani Power (down 6.91%), and Torrent Power (down 0.2%) edged lower.
Telecom stocks declined. Bharti Airtel (down 1.21%), Idea Cellular (down 2.19%), MTNL (down 4.56%), Tata Teleservices (Maharashtra) (down 2.76%) and Reliance Communications (down 5.48%) declined.
Banks stocks dropped ahead of the release of data on inflation based on the consumer price index (CPI) for April 2015 by the government today, 12 May 2015.
Among private bank stocks, HDFC Bank (down 1.92%), IndusInd Bank (down 2.42%), Kotak Mahindra Bank (down 1.5%), Axis Bank (down 3.34%), Yes Bank (down 2.6%), and ICICI Bank (down 4.59%) declined.
Among PSU bank stocks, State Bank of India (SBI) (down 3.13%), Punjab National Bank (down 3.83%), Bank of Baroda (down 6.63%), Canara Bank (down 3.7%), and Bank of India (down 4.07%) dropped.
The Reserve Bank of India (RBI) in a notification yesterday, 11 May 2015, advised all public sector banks (PSBs) and some private sector and foreign banks to appoint an internal ombudsman. The internal ombudsman would be designated Chief Customer Service Officer (CCSO), RBI said. The CCSO should not have worked in the bank in which he/she is appointed as CCSO. The Reserve Bank has taken this initiative to further boost the quality of customer service and to ensure that there is undivided attention to resolution of customer complaints in banks. While all PSBs will have to appoint a CCSO, the private sector and foreign banks which have been asked to appoint the CCSO (Internal Ombudsman) are ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Standard Chartered Bank, Citi Bank N.A. and HSBC, RBI said. These banks have been selected on the basis of their asset size, business mix, etc, RBI said. The bank's internal ombudsman will be a forum available to bank customers for grievance redressal before they can even approach the Banking Ombudsman, RBI said. The Reserve Bank will shortly issue detailed operational guidelines to the banks.
Union Bank of India advanced as the bank's ratio of net non-performing assets to net advances declined to 2.71% as on 31 March 2015 compared with 2.95% as on 31 December 2014. The stock was up 2.35% at Rs 143.55. The result was announced during market hours today, 12 May 2015.
Union Bank of India's ratio of net non-performing assets (NPAs) to net advances stood at 2.71% as on 31 March 2015 compared with 2.95% as on 31 December 2014 and 2.33% as on 31 March 2014. The ratio of gross NPAs to gross advances stood at 4.96% as on 31 March 2015 as against 5.08% as on 31 December 2014 and 4.08% as on 31 March 2014.
Union Bank of India's net profit fell 23.34% to Rs 443.77 crore on 11.11% growth in total income to Rs 9383.71 crore in Q4 March 2015 over Q4 March 2014.
The bank's provisions and contingencies rose 9.71% to Rs 1009.94 crore in Q4 March 2015 over Q4 March 2014. Provision coverage ratio as on 31 March 2015 stood at 59.23%.
Union Bank of India's Capital Adequacy Ratio (CAR) as per Basel III stood at 10.22% as on 31 March 2015 as against 10.3% as on 31 December 2014 and 10.8% as on 31 March 2014.
Key indices snapped two-day winning streak today, 12 May 2015. From a recent low of 26,599.11 on 7 May 2015, the Sensex had gained 908.19 points or 3.41% in two sessions to settle at 27,507.30 on 11 May 2015. The Sensex has fallen 133.83 points or 0.49% in this month so far (till 12 May 2015). The Sensex has dropped 621.94 points or 2.26% in this calendar year so far (till 12 May 2015). From a 52-week low of 22,317.18 on 9 May 2014, the Sensex has risen 4,560.30 points or 20.43%. The Sensex is off 3,147.26 points or 10.48% from a record high of 30,024.74 hit on 4 March 2015.
In the foreign exchange market, the rupee edged lower past 64 against the dollar as the American currency firmed up overseas. Besides, increased demand for the dollar from importers and weak domestic equity market also weighed on the rupee. The partially convertible rupee was hovering at 64.18, compared with closing of 63.8550 during the previous trading session.
Brent crude oil futures advanced after previous trading session's decline. Brent for June settlement was up $1.43 a barrel at $66.34 a barrel. The contract had fallen 48 cents or 0.73% to settle at $64.91 a barrel during the previous trading session. The recent rebound in global crude oil prices will raise concerns pertaining to India's fiscal deficit, current account deficit and fuel price inflation. A weak rupee will increase cost of crude oil imports. India imports about 80% of its crude oil requirements.
A closely watched forecast by Japan today, 12 May 2015, reportedly confirmed El Nino's return this year. A strong El Nino will roil economies that are heavily dependent on agriculture, particularly India which is already reeling from bad weather. It would also unhinge supply chains of commodities such as rice, corn and palm oil. In fact, the heat is already up in some places in the Asia Pacific. The El Nino, or a warming of sea-surface temperatures in the Pacific, can lead to scorching weather across Asia and east Africa but heavy rains and floods in South America. In 2009, the El Nino brought the worst drought in four decades to India. It razed wheat fields in Australia and damaged crops across Asia.
On the macro front, the government will after market hours today, 12 May 2015 unveil data on inflation based on the consumer price index (CPI) for April 2015. The all-India general CPI inflation slowed down to three months low of to 5.2% in March 2015 from 5.4% in February 2015. The government will also today, 12 May 2015 unveil the Index of Industrial Production (IIP) data for March 2015. IIP increased 5% in February 2015 compared with the revised growth of 2.8% in January 2015.
Finance Minister Arun Jaitley, while responding to the discussions on the Finance Bill in Rajya Sabha on 7 May 2015, had announced the constitution of a Committee headed by Justice A.P. Shah to look into, inter alia, the issue of Minimum Alternate Tax (MAT) on FIIs.
In the light of the Finance Minister's announcement, officers dealing with International Taxes have been advised that no coercive action be taken for recovery of demand already raised by invoking provisions of MAT in the case of foreign companies particularly FIIs. Issue of fresh notices for reopening of cases as also completion of assessment should also be put on hold unless the case is getting barred by limitation, the Ministry of Finance said yesterday, 11 May 2015.
Meanwhile, proceedings in parliament are being keenly watched. As per reports, sloganeering and protests reverberated parliament today, 12 May 2015 as the opposition continued its agitation demanding resignation of union minister Nitin Gadkari while the government kept trying to push key bills through. The government had yesterday, 11 May 2015 reportedly appeared to have blinked in its ongoing stand-off with the Congress in Parliament. Reports indicated that the government is likely to refer the Land Acquisition Bill, which was introduced in Lok Sabha yesterday, 11 May 2015 to a joint committee of both Lok Sabha and Rajya Sabha. The GST Bill, passed by the Lok Sabha last week, will be reportedly sent to a select committee of the Rajya Sabha. The 30-member joint committee could have 19 members from the Lok Sabha and 11 from the Rajya Sabha. The Select Committee will only have members from the upper house. Both these panels are expected to submit their reports in the next session, reports indicated. Besides the Land Acquisition Bill and the GST Bill, a united Opposition had last week forced the government to refer another Bill related to regulating the real estate sector to a Select Committee of the Rajya Sabha. The only hope for the three Bills will now be in the monsoon session of Parliament in July 2015 as the budget session ends tomorrow, 13 May 2015.
The amended Land Acquisition Bill seeks to scrap the consent clause for acquiring land for five sectors industrial corridors, public private partnership projects, rural infrastructure, affordable housing and defence. The bill also exempts projects in these five areas from social impact assessments and allows the purchase of irrigated multi-cropped land and other types of agricultural land.
The Lok Sabha on 6 May 2015, passed the Constitution Amendment Bill in respect of goods and services tax (GST). A constitutional amendment bill needs to be approved by a two-thirds majority in both houses of Parliament and ratified by half the state legislative assemblies before coming into effect. While the Bharatiya Janata Party-led National Democratic Alliance found it easy to pass the GST bill in the Lok Sabha where it is in a majority, the real test will come in the Rajya Sabha where the ruling alliance is in a minority, with 62 members in a 245-member house.
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.
In overseas markets, European stocks edged lower today, 12 May 2015 as concerns over Greece's future in the euro zone weighed heavily. Key indices in France, Germany and UK shed by 1.75% to 2.12%.
The Bank of England (BOE) yesterday, 11 May 2015 kept interest rates unchanged, after delaying the announcement from last Thursday's meeting because of the general election, in which the incumbent Conservative Party gained enough votes to take a majority in parliament. The BOE held its benchmark interest rate at a record low of 0.5%, where it has stayed since March 2009. It also kept the size of its bond purchases under the quantitative easing program at 375 billion pound ($578 billion).
Meanwhile, in a closely-watched Eurogroup meeting yesterday, 11 May 2015 euro zone finance ministers welcomed progress in negotiations between Greece and its creditors but said more work is needed for a cash-for-reform deal. Greece's finance minister reportedly said that his country's financial situation is "terribly urgent" and the crisis could come to a head in a couple of weeks. Yanis Varoufakis gave the warning after eurozone finance ministers met in Brussels to discuss the final euro 7.2 billion tranche of Greece's euro 240 billion EU/IMF bailout. Earlier, Greece began the transfer of euro 750 million in debt interest to the International Monetary Fund, a day ahead of a payment deadline.
Asian stocks were trading mixed today, 12 May 2015. Key benchmark indices in Japan, Taiwan, China and Indonesia rose by 0.02% to 1.56%. Key benchmark indices in Singapore, Hong Kong and South Korea fell by 0.03% to 1.12%.
Trading in US index futures indicated that the Dow could slide 133 points at the opening bell today, 12 May 2015. US stocks ended yesterday's thinly traded session slightly lower, giving back some of the gains from Friday's post-jobs rally.
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