A bout of volatility was witnessed key benchmark indices alternately swung between positive and negative zone in morning trade. The barometer index, the S&P BSE Sensex, was currently off 16.21 points or 0.06% at 28,103.19. The market breadth indicating the overall health of the market was positive. Brent crude oil futures slumped to five-year low. Fall in crude oil prices augur well for India as the country imports 80% of its crude oil requirements.
Shares of PSU OMCs advanced as global crude oil prices slumped to five-year low. IT stocks advanced on weak rupee. Shares of Sun Pharmaceutical Industries and Ranbaxy Laboratories, both, advanced after Competition Commission of India approved Sun's acquisition of Ranbaxy.
India's current account deficit (CAD) increased to $10.1 billion or 2.1% of GDP in Q2 September 2014, from $7.8 billion or 1.7% of GDP in Q1 June 2014 and from $5.2 billion or 1.2% of GDP in Q2 September 2013, data released by the Reserve Bank of India (RBI) yesterday, 8 December 2014 showed.
Foreign portfolio investors bought shares worth a massive Rs 4984.60 crore yesterday, 8 December 2014, as per provisional data.
In overseas markets, Asian stocks declined after US shares dropped overnight. US stocks edged lower yesterday, 8 December 2014, as a withering selloff among energy companies, which closely tracked oil's continued price slide, dragged down key benchmark indices.
In the foreign exchange market, the rupee edged lower against the dollar on broad strength for the dollar.
Brent crude oil futures slumped to five-year low on worries over a deepening supply glut. 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 10:15 IST, the S&P BSE Sensex was down 16.21 points or 0.06% at 28,103.19. The index lost 62.53 points at the day's low of 28,056.87 in early trade, its lowest level since 21 November 2014. The index gained 38.13 points at the day's high of 28,157.53 in morning trade.
The 50-unit CNX Nifty was down 9.10 points or 0.11% at 8,429.15. The index hit a low of 8,418.45 in intraday trade, its lowest level since 21 November 2014. The index hit a high of 8,444.50 in intraday trade.
The BSE Mid-Cap index was up 27.46 points or 0.26% at 10,397.30. The BSE Small-Cap index was up 40.23 points or 0.35% at 11,414.86. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,120 shares gained and 777 shares fell. A total of 89 shares were unchanged.
IT stocks advanced on weak rupee. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. TCS (up 1.44%), Wipro (up 0.69%), HCL Technologies (up 0.35%) and MindTree (up 0.29%) edged higher.
Infosys rose 0.43% at Rs 1,977.05. The company's founders N R Narayana Murthy, Nandan Nilekani, K Dinesh and S D Shibulal, along with their families sold a total 3.26 crore shares of the company in bulk deals on NSE yesterday, 8 December 2014, at Rs 1,988 per share. The stock had lost 4.88% to settle at Rs 1,968.60 on BSE yesterday, 8 December 2014.
Tech Mahindra rose 0.68% at Rs 2,625. The company after market hours yesterday, 8 December 2014, said that the further to earlier announcement dated 31 October 2014 whereby the company had informed that High Court of Judicature at Bombay on 31 October 2014, approved the Scheme of Amalgamation and Arrangement of Mahindra Engineering Services (MESL) with Tech Mahindra and their respective shareholders and creditors which, inter alia, envisages amalgamation of MESL and transfer and vesting thereof into the company and other consequential matters, the company has now informed that the said scheme has become effective on 8 December 2014.
PSU OMCs advanced as global crude oil prices slumped to five-year low. BPCL (up 0.48%) and HPCL (up 2%) edged higher. Lower crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. 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. The government has already freed pricing of petrol and diesel.
Shares of Indian Oil Corporation (IOCL) were up 1.45% at Rs 349.05. Minister of State (Independent Charge) for Petroleum & Natural Gas Dharmendra Pradhan informed the Lok Sabha in a written reply yesterday, 8 December 2014, that IOCL has planned to set up Liquefied Natural Gas (LNG) import, storage and regasification terminal with a capacity of 5 MMTPA at Kamrajar Port (formerly Ennore Port) in Tamil Nadu. The terminal is planned to be commissioned by end of 2017-18. IOCL presently does not have any proposal to set up a gas pipeline from Paradip to Vishakhapatnam, Pradhan said.
Sun Pharmaceutical Industries rose 1.6% at Rs 842.05. Ranbaxy Laboratories rose 3.06% at Rs 644.30. The Ministry of Corporate Affairs after trading hours yesterday, 8 December 2014, announced that the Competition Commission of India (CCI) in its meeting held on 5 December 2014 approved the proposed merger between Sun Pharmaceutical Industries and Ranbaxy Laboratories, subject to the parties inter alia carrying out the divestiture of their products relating to seven relevant markets for formulations. The CCI also directed that the proposed merger shall not take effect before the parties have carried-out the divestiture of the products so specified as per the order of the CCI. Sun Pharma and Ranbaxy in a joint statement issued after trading hours yesterday, 8 December 2014, said that these products constitute less than 1% of the combined entity's revenue in India. The two companies said they are looking forward to progressing towards the completion of the transaction and will comply with the conditions laid down by the CCI within the specified time.
Dilip Shanghvi, Managing Director of Sun Pharma said, The order of the CCI approving the deal is an important milestone for the transaction. It revalidates our view that the Sun Pharma and Ranbaxy businesses complement each other with limited product overlap, and will offer a comprehensive product basket to enable future growth. We are pleased with the open and transparent manner in which the matter has progressed.
In the foreign exchange market, the rupee edged lower against the dollar on broad strength for the dollar. The partially convertible rupee was hovering at 61.88, compared with its close of 61.845 during the previous trading session.
Brent crude oil futures slumped to five-year low on worries over a deepening supply glut. Brent for January settlement was off 82 cents a barrel at $65.37 a barrel. The contract had lost $2.88 a barrel to settle at $66.19 during the previous trading session, its lowest closing level since September 2009.
India's current account deficit (CAD) increased to $10.1 billion or 2.1% of GDP in Q2 September 2014, from $7.8 billion or 1.7% of GDP in Q1 June 2014 and from $5.2 billion or 1.2% of GDP in Q2 September 2013, data released by the Reserve Bank of India (RBI) yesterday, 8 December 2014 showed. The increase in CAD was primarily on account of higher trade deficit contributed by both a deceleration in export growth and increase in imports, the RBI said in a statment. In the financial account, net flows through foreign direct investment were stable in Q2 September 2014, the RBI said.
Lower trade deficit coupled with a marginal rise in net services receipts moderated the CAD to $17.9 billion in H1 of 2014-15 or 1.9% of GDP, from $26.9 billion in H1 of 2013-14 or 3.1% of GDP. With a relatively higher growth in merchandise exports and marginal rise in merchandise imports, India's trade deficit narrowed to $73.2 billion in H1 of 2014-15, from $83.8 billion in H1 of 2013-14.
The government plans to introduce the Coal Mines (Special Provisions) Bill, 2014 to replace the Coal Mines (Special Provisions) Ordinance, 2014 in Lok Sabha this week. The government is also likely to introduce the constitutional amendment bill for the goods & services tax during the onging winter session of parliament. The government also plans to bring the MMDR Amendment Bill, 2014 during the the ongoing session of parliament.
The government also intends to get the Insurance Laws Amendment Bill that seeks to enhance FDI limit in capital starved insurance sector passed during the ongoing winter session of parliament. Finance Minister Arun Jaitley yesterday, 8 December 2014, said that he is hopeful that the insurance market expansion would take place once the Insurance Amendment Bill is passed by the Parliament. The Finance Minister expressed his sense of satisfaction over the recommendations made by the Parliamentary Select Committee with regard to the Insurance Amendment Bill referred to it. Jaitley was speaking when Jerry Gimstone, Chairman, Standard Life, UK and Uday Kotak, Executive VC and MD, Kotak Mahindra Bank , both Co-Chair of India UK Financial Partnership called on the Finance Minister in his office yesterday, 8 December 2014.
The government will unveil industrial production data for October 2014 on Friday, 12 December 2014. Industrial production growth improved to 2.5% in September 2014, from a revised 0.5% growth in August 2014.
The government will release annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India for November 2014 on Friday, 12 December 2014. CPI for urban and rural India eased to 5.52% in October 2014, from 6.46% in September 2014.
The government will release the inflation data based on wholesale price index (WPI) for November 2014 on 15 December 2014. WPI eased to 1.77% in October from 2.38% in September 2014.
Asian equity markets today, 9 December 2014, joined Wall Street's slump overnight after oil markets resumed their downward spiral. Key indices in Japan, Hong Kong, Taiwan, South Korea, and Indonesia were off 0.14% to 0.91%. Key indices in China and Singapore were up 0.9% to 1.24%.
Trading in US index futures indicated that the Dow could fall 45 points at the opening bell today, 9 December 2014. US stocks slid from records yesterday, 8 December 2014 amid continued selling of energy producers as crude oil sank to a five-year low.
Federal Reserve Bank of Atlanta President Dennis Lockhart said yesterday, 8 December 2014 that he's sticking with his long-held view that the US central bank should hold off on raising rates until the middle of next year or later. The momentum I perceive in the economy gives me confidence that the Federal Open Market Committee can consider beginning to normalize interest rates in 2015, Mr. Lockhart reportedly said.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 16-17 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.
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