After extending losses in morning trade, key benchmark indices staged a recovery in mid-morning trade. The 50-unit CNX Nifty regained the psychological 8,000 mark after falling below that mark in morning trade. The market breadth indicating the overall health of the market was quite weak, with more than three losers for every gainer on BSE. The barometer index, the S&P BSE Sensex, was currently off 121.49 points or 0.45% at 26,659.95. The BSE Mid-Cap index was off 1.1%. The BSE Small-Cap index was off 1.98%. The fall in both these indices was higher than the Sensex's decline in percentage terms.
Russia's woes had been roiling global markets. Russia's currency ruble fell 5.4% against the dollar yesterday, 16 December 2014, after the country's central bank unexpectedly hiked interest rates to 17% from 10.5% late on Monday, 15 December 2014, in a bid to stem the ruble's decline. Even as Russia's main stock market index MICEX bounced back after steep intraday slide yesterday, 16 December 2014, the dollar-denominated equivalent of the benchmark measure viz. the RTS Index plunged.
Shares of public sector oil marketing companies fell as weakness in rupee against the dollar offset the benefit of falling global crude oil prices.
Earlier, the Sensex and the Nifty had, both, hit their lowest level in more than eight weeks in morning trade.
Foreign portfolio investors sold shares worth a net Rs 1247.24 crore yesterday, 16 December 2014, as per provisional data.
Asian stocks were mixed. US stocks edged lower amid high intraday volatility yesterday, 16 December 2014, as investors wrestled with volatility in oil and growing turmoil in Russia, exemplified by a sharp decline of the ruble.
In the foreign exchange market, the rupee edged lower against the dollar.
Brent crude dropped below $60 a barrel, hovering near its lowest in five years as a supply glut dragged down prices.
At 11:19 IST, the S&P BSE Sensex was down 121.49 points or 0.45% at 26,659.95. The index slumped 312.02 points at the day's low of 26,469.42 in morning trade, its lowest level since 21 October 2014. The index rose 52.99 points at the day's high of 26,834.43 in early trade.
The CNX Nifty was down 42.55 points or 0.53% at 8,025.05. The index hit a low of 7,961.35 in intraday trade, its lowest level since 21 October 2014. The index hit a high of 8,080.65 in intraday trade.
The BSE Mid-Cap index was off 107.28 points or 1.1% at 9,657.41. The BSE Small-Cap index was off 210.04 points or 1.98% at 10,418.58. The fall in both these indices was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was quite weak, with more than three losers for every gainer on BSE. On BSE, 1,782 shares fell and 554 shares rose. A total of 65 shares were unchanged
Shares of public sector oil marketing companies fell as weakness in rupee against the dollar offset the benefit of falling global crude oil prices. Indian Oil Corporation (down 1.96%) and HPCL (down 1.63%) edged lower. A weak rupee raises the cost of imports. PSU OMCs incur under-recoveries on domestic sale of LPG and kerosene at government controlled prices. The government has already freed pricing of petrol and diesel.
BPCL dropped 1.63%. The company today, 17 December 2014, announced gas discovery in a block in the Cauvery Basin. BPCL during market hours today, 17 December 2014, that Bharat PetroResources (BRPL), a wholly owned subsidiary of BPCL, advises that ONGC, the operator of an on land block in the Cauvery Basin, has announced that it has successfully completed a production test in well MD 5 in the block to evaluate the potential of the unconventional basement reservoir. This gas discovery is envisaged to enhance the commercial viability of this block, BPCL said. ONGC is the operator of the block with 60% interest with BRPL holding the remaining 40% stake.
PSU OMCs early this week cut petrol and diesel prices due to falling global oil prices. Indian Oil Corporation (IOCL) on 15 December 2014, announced reduction in retail selling price of petrol by Rs 2 per litre at Delhi (including state levies) with corresponding decrease in other states and decrease retail selling price of diesel (retail) by Rs 2 per litre at Delhi (including state levies) with corresponding decrease in other states.
Hindalco Industries rose 0.69% to Rs 145.60. The stock was volatile. The stock hit high of Rs 146.10 and low of Rs 138.80 so far during the day. The stock had dropped 5.67% yesterday, 16 December 2014. With respect to news titled "Special Court rejects closure & orders CBI to further investigate the coal scam involving Hindalco," Hindalco Industries clarified during trading hours yesterday, 16 December 2014, that the Central Bureau of Investitaion (CBI) as per the direction of the Supreme Court is investigating coal allocations made to various companies including Hindalco. CBI is directly reporting to the Special Court. While the CBI has given its closure report, the court has asked for further investigation on few specific aspects, Hindalco said. As the matter is between the CBI and the court, and also subjudice, it is inappropriate for the company to comment, Hindalco said.
The CBI will reportedly record former Prime Minister Manmohan Singh's statement as a prosecution witness in case involving allocation of a coal block to Hindalco, following a directive from a trial court that refused to accept the agency's closure report. A special CBI trial court directed the agency to record the statement of Singh, who held additional charge as coal minister in 2005, and others over the allotment of two coal blocks in Odisha to Aditya Birla Group company Hindalco.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 63.61, compared with its close of 63.54 during the previous trading session.
Brent crude dropped below $60 a barrel, hovering near its lowest in five years as a supply glut dragged down prices. Brent for February settlement was off 64 cents a barrel at $59.37 a barrel. The contract had lost $1.2 a barrel to settle at $60.01 a barrel during the previous session.
Meanwhile, investors are closely monitoring if the government's key legislative reform bills are passed during the ongoing winter session of the parliament. The government may table the constitutional amendment bill to facilitate the levy of goods & services tax (GST) during the ongoing winter session of the parliament. The constitutional amendment Bill will provide the legal framework for rolling out the levy, giving states power to tax both goods and services. As of now only the central government can impose service tax. The amendment Bill will also create a GST council, a body that will have representatives of the states and the Centre that will take decisions on the tax after it is rolled out.
The government's intension is to implement a nationwide GST from 1 April 2016. GST is a major indirect tax reform. GST will subsume central indirect taxes such as excise duty and service tax at the central level and value added tax at the state level besides other local levies such as octroi and entry tax.
Meanwhile, the Indian government intends to get the Insurance Laws (Amendment) Bill, 2008 passed in both the Houses of Parliament in this week. The Union Cabinet, last week, approved the official amendments to the Insurance Laws (Amendment) Bill, 2008. The Parliamentary Select Committee in its report tabled in Rajya Sabha on 10 December 2014 agreed a composite cap of 49% on foreign investment in the insurance sector, which includes all types of foreign investment as opposed to the 26% foreign direct investment (FDI) allowed at present. Finance Minister Arun Jaitley had said in his maiden budget speech in July that the composite cap in the insurance sector should be increased to 49% from the current level of 26%, with full Indian management and control.
It also remains to be seen if the government will be to find support for the Coal Mines (Special Provisions) Bill, 2014 in the Rajya Sabha where it's in a minority. The Lok Sabha last week passed the Coal Mines (Special Provisions) Bill, 2014. The bill allows the government to enforce rules and guidelines for auction/allocation of 204 coal blocks cancelled by the Supreme Court in September this year.
Asian stocks were mixed today, 17 December 2014. Key indices in Indonesia, South Korea, China and Japan were up 0.05% to 0.55%. Key indices in Hong Kong, Singapore and Taiwan were off 0.22% to 1.11%.
The Asian Development Bank (ADB) slightly trimmed its growth forecast for developing Asia for this year and next, but said sliding prices for oil should help economies in the region push through with growth reforms. In its update to the 2014 outlook, ADB today, 17 December 2014, said that developing Asia was now expected to grow 6.1% this year, a tad below its 6.2% forecast in September. Growth in 2015 was seen at 6.2%, lower than 6.4% estimated previously.
Japan's exports rose less than forecast in November, underlining challenges to Prime Minister Shinzo Abe's efforts to steer the economy out of recession. Overseas shipments rose 4.9% from a year earlier, the finance ministry said.
Trading in US index futures indicated that the Dow could gain 43 points at the opening bell today, 17 December 2014. US stocks ended a seesaw session with broad declines on Tuesday, 16 December 2014, after spending much of the day swinging alongside crude-oil prices.
In economic data, the residential real estate recovery in the US is plodding, with the industry taking a step back in November for the first time in three months. Housing starts declined 1.6% the first drop since August, to a 1.03 million annualized rate from a revised 1.05 million pace in October that was stronger than previously estimated, figures from the Commerce Department showed.
A two-day meeting of Federal Open Market Committee (FOMC) to discuss monetary policy review concludes today, 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. It remains to be seen whether Federal Reserve officials would signal a rate hike by dropping their assurance that rates will stay low for a considerable time.
Meanwhile, US President Barack Obama on Tuesday, 16 December 2014, signed a $1.1 trillion spending bill passed by Congress last week that lifted the threat of a government shutdown. The legislation funds most government agencies through September 2015.
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