An extremely range bound movement was witnessed for key benchmark indices in afternoon trade. The benchmark indices retained strong intraday gains, tracking gains in global stocks. The barometer index, the S&P BSE Sensex, was currently up 332.80 points or 1.23% at 27,459.37. The market breadth indicating the overall health of the market was strong. The BSE Small-Cap index was up 1.33%, outperforming the Sensex. Global crude oil prices tumbled yesterday, 18 December 2014. Fall in crude oil prices augur well for India as the country imports 80% of its oil requirement.
Shares of steel, metal and power generation companies extended yesterday's gains. NTPC edged higher after the company after trading hours yesterday, 18 December 2014, said that a meeting of the board of directors of the company will be held on 23 December 2014, inter alia, to consider a proposal for issuing bonus debentures to the shareholders of the company.
Meanwhile, the fate of several crucial bills hangs in a limbo due to several disruptions by the Opposition over the alleged forced conversion row in the Rajya Sabha. With just three days left for the winter session of Parliament to end, the chance of the passage of the key reform bills in Parliament looks bleak.
Meanwhile, a mid-term economic review tabled by the finance ministry in parliament today, 19 December 2014, reportedly states that there is need for stalled projects to be cleared more expeditiously and that pick-up in economy in October-March is critical to prevent fiscal slippage. According to the mid-term review, adhering to FY 2015 fiscal deficit target of 4.1% is a major challenge. The government is committed to meeting FY 2015 fiscal deficit target despite difficult odds, the mid-term review says.
Meanwhile, according to a study published today, 19 December 2014, US-based consulting firm IHS, India is set to emerge as the third largest spender worldwide by 2020.
Earlier, the Sensex, and the 50-unit CNX Nifty, had, both hit one-week high in morning trade, tracking gains in world stocks.
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Foreign portfolio investors sold shares worth a net Rs 874.89 crore yesterday, 18 December 2014, as per provisional data.
In the foreign exchange market, the rupee edged higher against the dollar on global risk on sentiment.
Global crude oil prices slumped yesterday, 18 December 2014. 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.
In overseas markets, Asian stocks edged higher as investor confidence continued to be bolstered by expectations the US central bank is in no rush to raise interest rates in the world's biggest economy. US stocks surged yesterday, 18 December 2014, a day after Federal Reserve Chairwoman Janet Yellen assured the markets after the conclusion of Fed's two-day monetary policy review that the US central bank would be patient about lifting interest rate in the world's biggest economy.
In Russia, Russian President Vladimir Putin said during his annual public news conference yesterday, 18 December 2014, that the ruble will stabilize amid current economic headwinds. Putin also stressed that external conditions referring to sanctions imposed by the West were pushing Russia into reforms that would make the economy more efficient.
Brent crude futures rebounded from the lowest closing price since May 2009 after as Saudi Arabia's oil minister said he's optimistic about global demand in the future.
At 13:15 IST, the S&P BSE Sensex was up 332.80 points or 1.23% at 27,459.37. The index jumped 366.50 points at the day's high of 27,493.07 in morning trade, its highest level since 12 December 2014. The index gained 165.57 points at the day's low of 27,292.14 in early trade.
The CNX Nifty was up 92.50 points or 1.13% at 8,251.80. The index hit a high of 8,258.75 in intraday trade, its highest level since 12 December 2014. The index hit a low of 8,208.60 in intraday trade.
The BSE Mid-Cap index was up 114.80 points or 1.15% at 10,079.47, underperforming the Sensex. The BSE Small-Cap index was up 144.04 points or 1.33% at 11,004.80, outperforming the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,621 shares rose and 979 shares fell. A total of 103 shares were unchanged.
Mahindra & Mahindra (M&M) was up 1.16%. With reference to news captioned "Mahindra Partners in Talk to Buy Online Co BabyOye", M&M clarified during trading hours today, 19 December 2014, that this matter pertains to an unlisted subsidiary of M&M and not to the company. As such, the company will not comment on this news item, M&M said.
Metal shares were in demand. JSW Steel (up 2.72%), Sesa Sterlite (up 2.33%), Hindalco Industries (up 2.21%), Bhushan Steel (up 1.85%), Tata Steel (up 1.78%), Steel Authority of India (up 1.20%), NMDC (up 1.07%) and Hindustan Zinc (up 0.09%), edged higher. However, Jindal Steel & Power was off 0.32%.
According to an approach paper on proposed e-auction of coal mines released by the Ministry of Coal recently, a floor price of Rs 150 per tonne has been fixed for auction of coal blocks to unregulated sectors such as steel, sponge iron, cement and captive power. For the unregulated sectors, a regular bidding process will be adopted where the highest bidder will be declared the successful bidder. The approach paper put up on the coal ministry website has sought feedback from stakeholders.
Shares of power generation companies edged higher. JSW Energy (up 7.73%), Tata Power (up 1.78%), Adani Power (up 1.44%), Jaiprakash Power Ventures (up 1.08%), NHPC (up 0.80%) and CESC (up 0.46%), edged higher. However, Torrent Power (down 3.39%), Reliance Power (down 0.65%) and Reliance Infrastructure (down 0.25%), edged lower.
According to an approach paper on proposed e-auction of coal mines released by the Ministry of Coal recently, auction of coal mines for the power sector, a regulated sector, will be through reverse bidding. A ceiling price will be fixed for each coal mine based on the prevailing Coal India notified price, where the bidder quoting the lowest below this ceiling will be successful. This methodology is expected to keep electricity tariffs in check by preventing irrational bidding. The approach paper put up on the coal ministry website has sought feedback from stakeholders.
On 25 August, the Supreme Court ruled that allocation of all coal mines between 1993 and 2010 were illegal. In September, the apex court cancelled allocation of 204 coal blocks.
Meanwhile, the Ministry of Power yesterday, 18 December 2014, announced the setting up of Power System Operation Corporation (POSOCO) as an independent government company for reforms in the power sector.
NTPC was up 2.41%. NTPC after trading hours yesterday, 18 December 2014, announced that a meeting of the board of directors of the company will be held on 23 December 2014, inter alia, to consider a proposal for issuing bonus debentures to the shareholders of the company. NTPC said it is keen to reward its shareholders for their continued support as the company has entered its 40th year of operations. These bonus debentures may be issued through a scheme of arrangement under Section 391-394 of Companies Act, 1956, subject to approval of the board of directors of the company and receipt of requisite approvals under applicable laws, NTPC said.
In the foreign exchange market, the rupee edged higher against the dollar on global risk on sentiment. The partially convertible rupee was hovering at 63.035, compared with its close of 63.115 during the previous trading session.
Brent crude futures rebounded from the lowest closing price since May 2009 after as Saudi Arabia's oil minister said he's optimistic about global demand in the future. Brent for February settlement was up 13 cents at $59.40 a barrel. The contract had fallen $1.91 a barrel or 1.01% to settle at $59.27 a barrel during the previous session, the lowest closing level since May 2009.
Closer home, India's economy is expected to grow at around 5.5% in the fiscal year ending 31 March 2015 (FY 2015), the finance ministry has reportedly said in a mid-term economic review tabled in parliament today, 19 December 2014. Emphasising that there is need for stalled projects to be cleared more expeditiously, the review says that pick-up in economy in October-March is critical to prevent fiscal slippage. Adhering to the fiscal year ending March 2015 (FY 2015) fiscal deficit target of 4.1% is a major challenge. The government is committed to meeting FY 2015 fiscal aim, despite difficult odds, the review said.
Pegging average CPI inflation at around 5.8% for January-March quarter in 2016, the review said that the momentum of headline inflation is showing a staggering decline. Inflation fall is not just due to base effect. Government role in inflation check is somewhat under-recognised, the review said. Modest rise in crop MSP will moderate inflationary pressures, it added. According to the review, current Reserve Bank of India (RBI) policy appears to be historically tight. The government assumes that interest rates will be held unchanged until March quarter.
Meanwhile, the fate of several crucial bills hangs in a limbo due to several disruptions by the Opposition over the alleged forced conversion row in the Rajya Sabha. The government had planned to get key bills like Insurance Bill and the Coal Mines (Special Provisions) Bill, 2014 in parliament during the current winter session which ends on 23 December 2014. 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.
The Indian government had planned 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.
With just three days left for the winter session of Parliament to end, the chance of the passage of the reform bills in Parliament looks bleak.
The Union Cabinet recently approved a constitutional amendment bill to provide the legal framework for rolling out a nationwide goods and services tax (GST). The constitutional amendment Bill provides 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.
Japanese stocks led Asian markets higher today, 19 December 2014, after US stocks boasted its biggest two-day advance since late 2011 yesterday, 18 December 2014, amid relief the Federal Reserve was in no rush to start hiking interest rates. Key indices in China, South Korea, Indonesia, Singapore, Japan, Hong Kong, and Taiwan were up 0.81% to 2.39%.
The Bank of Japan maintained unprecedented stimulus today, 19 December 2014, as Governor Haruhiko Kuroda's bid to stoke inflation faces increasing challenges from the tumble in oil price. The central bank will boost the monetary base at an annual pace of 80 trillion yen ($672 billion), it said in a statement.
China raised its estimate of its 2013 economic output by 3.4% based on its latest survey of the economy, the National Bureau of Statistics said on Friday. The statistics bureau said China's gross domestic product in 2013 was 58.80 trillion yuan ($9.46 trillion). It also said the revision "basically" wouldn't affect GDP growth for 2014, though it would change the total size of the economy for this year.
Trading in US index futures indicated that the Dow could gain 90 points at the opening bell today, 19 December 2014. US stocks rallied yesterday, 18 December 2014, to its best two-day gains in three years. The rally was kicked off Wednesday, 17 December 2014, after Federal Reserve Chairwoman Janet Yellen assured the markets that the central bank would be patient about lifting interest rate.
In economic news, a weekly jobless claims report came in stronger than expected, confirming the Fed's view that the economy is strengthening. Claims fell by 6,000 to 289,000, a low level typically associated with strong hiring.
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