The rally gathered steam as key benchmark indices extended gains in afternoon trade. The barometer index, the S&P BSE Sensex, retained the psychological 29,000 mark. The Sensex had moved past the psychological 29,000 mark in early afternoon trade. The Economic Survey 2014-15 tabled in Parliament by Finance Minister Arun Jaitley today, 27 February 2015, stated that the government remains committed to fiscal consolidation and that the deficit target of 4.1% as envisaged in the Budget 2014-15 will be met. The Sensex was currently up 360.03 points or 1.25% at 29,106.68. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index was up 1.41%, outperforming the Sensex. The BSE Small-Cap index was up 1.19%.
Shares of companies operating in the capital goods sector rose across the board. Shares of power generation companies were also in demand.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 2312.15 crore yesterday, 26 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 340.79 crore yesterday, 26 February 2015, as per provisional data.
In the foreign exchange market, the rupee edged lower against the dollar.
Brent crude oil futures edged higher as supply outages in the North Sea and renewed fears of gas supply disruption in Europe supported prices.
In overseas markets, Asian stocks were mixed. In the US yesterday, 26 February 2015, small-cap companies outperformed large as downbeat economic reports and selling pressure from the energy sector weighed on the benchmark S&P 500 index.
At 13:17 IST, the S&P BSE Sensex was up 360.03 points or 1.25% at 29,106.68. The index jumped 363.11 points at the day's high of 29,109.76 in afternoon trade, its highest level since 25 February 2015. The index rose 90.41 points at the day's low of 28,837.06 in mid-morning trade.
The CNX Nifty was up 115.90 points or 1.33% at 8,799.75. The index hit a high of 8,805.60 in intraday trade, its highest level since 25 February 2015. The index hit a low of 8,717.45 in intraday trade.
The market breadth indicating the overall health of the market was strong. On BSE, 1,691 shares gained and 964 shares fell. A total of 110 shares were unchanged.
The BSE Mid-Cap index was up 150.09 points or 1.41% at 10,766.37, outperforming the Sensex. The BSE Small-Cap index was up 133.22 points or 1.19% at 11,296.98, underperforming the Sensex.
Shares of companies operating in the capital goods sector rose across the board. Suzlon Energy (up 5.63%), Bharat Electronics (up 4.13%), Punj Lloyd (up 3.20%), Jindal Saw (up 2.78%), Pipavav Defence and Offshore Engineering Company (up 2.54%), Crompton Greaves (up 2.46%), ALSTOM India (up 2.41%), Praj Industries (up 1.68%), Bharat Heavy Electricals (Bhel) (up 1.59%), BEML (up 1.51%), Lakshmi Machine Works (up 1.42%), Siemens (up 1.40%), ABB (up 1.39%), Havells India (up 1.38%), AIA Engineering (up 1.09%), Alstom T&D India (up 0.30%), SKF India (up 0.13%) and Thermax (up 0.10%), edged higher.
Engineering & construction major L&T gained 4.12%. Tata Power Company gained 4.35%. Tata Power Company announced after market hours yesterday, 26 February 2015, that its Strategic Engineering Division (Tata Power SED), in a consortium with L&T, is one of the two down-selected Development Agencies for Ministry of Defence's prestigious "MAKE" Program "Battlefield Management System (BMS)". Tata Power SED is the lead of the consortium.
BMS is a Network Centric Program being indigenously developed for the Indian Army under the MAKE category of Defence Procurement Procedure. It is the second such Program that Tata Power SED and L&T are collaborating for. In next 5-7 years, when BMS will be deployed by the Army, it will cover more than 70% of soldiers while digitizing the Tactical Battlefield and creating a secure IoT (Internet of Things) for the Army.
The down-selection of Tata Power SED - L&T consortium enables it to participate in the Prototype Development Phase of this MAKE Program followed by a Production Order, which will be decided by the MoD after successful completion of the Prototype. Tata Power SED is one of the few private companies with a track record of over four decades in Defence R&D and Production. Project BMS is of special importance as it gives an opportunity to serve a very large section of the Indian Army.
Shares of power generation companies were in demand. GMR Infrastructure (up 5.83%), Jaiprakash Power Ventures (up 4.33%), Tata Power (up 4.23%), Adani Power (up 3.28%), JSW Energy (up 3.01%), Reliance Infrastructure (up 2.75%), CESC (up 2.67%), Reliance Power (up 1.84%), Torrent Power (up 1.48%) and NHPC (up 0.48%), edged higher.
NTPC rose 1.93%. NTPC announced after market hours yesterday, 26 February 2015, that the Unit-III of 500 megawatt (MW) of Vallur Thermal Power Project of NTPC Tamil Nadu Energy Co. (NTECL), a joint venture of the company, and TANGEDCO, is declared on commercial operation from the midnight of 26 February 2015. With this the total commercial capacity of Vallur Thermal Power Project has become 1,500 MW and that of NTPC Group- 43,143 MW.
Aditya Birla Nuvo fell 0.59%. The company announced during trading hours that its Ammonia/Urea Plant at Jagdishpur (U.P.) has been shut down from 27 February 2015. The shutdown of the plant is necessitated due to policy of the Government of India for production beyond 100% quantity as permissible under the pricing mechanism during the financial year 2014-15. The company will carry out various maintenance jobs during the shutdown period. The plant will remain under shut down till 1st week of April 2015, the company added.
TVS Motor Company rose 2.85% to Rs 278.20. The company announced during trading hours that it has signed a MOU (Memorandum Of Understanding) with Kangra Central Co-operative Bank for retail finance of two wheelers in Himachal Pradesh. Through this tie-up, customers will benefit from highly competitive rates of interest and easy access to high quality, world-class products. Kangra Central Co-operative Bank is one of the leading banks of Himachal Pradesh with around 200 branches.
Persistent Systems rose 0.61%. The company during trading hours said that it has fixed 11 March 2015 as Record Date for the purpose of ascertaining the entitlement of the shareholders for the issue of bonus shares in the ratio of one equity share for every one equity share held.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.845, compared with its close of 61.76 during the previous trading session.
Brent crude oil futures edged higher as supply outages in the North Sea and renewed fears of gas supply disruption in Europe supported prices. Brent for April settlement was up $1.32 a barrel at $61.37 a barrel. The contract had declined $1.58 a barrel or 2.56% to settle at $60.05 a barrel during the previous trading session.
The Economic Survey 2014-15 tabled in Parliament by Finance Minister Arun Jaitley today, 27 February 2015, stated that the government remains committed to fiscal consolidation and that the deficit target of 4.1% as envisaged in the Budget 2014-15 will be met. According to the survey, India needs to create additional fiscal space in order to ensure macro stability and to create buffers for future economic downturns. As per a medium-term fiscal strategy, there is a need to reduce fiscal deficit over the medium term to the established target of 3% of GDP. There is a need to ensure that the government's borrowing over the cycle is only for capital formation.
With regard to government expenditure, the Survey advocates a shift away from public consumption by reducing subsidies, towards investment. The Survey, however, states that eliminating or phasing down subsidies is neither feasible nor desirable.
The Economic Survey 2014-15 has acknowledged that the Food Subsidy Bill has increased substantially in the past few years putting a severe strain on the public exchequer. Rationalization of subsidies and better targeting of beneficiaries would release resources for public investment in agriculture.
The Economic Survey taking into consideration the change of base year by the Central Statistics Office of the National Accounts series from 2004-05 to 2011-12, states that GDP growth at market prices for 2015-16 is expected to be 8.1% to 8.5%. The growth rate in GDP at constant (2011-12) market prices in 2012-13 was 5.1%, which increased to 6.9% in 2013-14 and it is expected to further increase to 7.4% in 2014-15 (according to advanced estimates). As the new government is to present its first full year budget, the Economic Survey states that it appears that India has reached a sweet spot and that there is a scope for Big Bang reforms now.
On investments, the Survey has significantly commented that while private investment must remain the primary engine of long-run growth, the public investment, especially in the railways, will have to play an important role at least in the interim, to revive growth and to deepen physical connectivity. The Economic Survey has expressed a serious concern that several projects have been stalled and such a tendency is increased over the past years. In the same breadth, the Survey notes that such stalling of projects seems to have plateaued. It suggested revitalizing public private partnership model of investment.
To improve the investment climate and reduce the backlog of stalled projects, the Survey advocates revival of public investment in short term, to act as an engine of growth in infrastructure sector. It argues that public investment cannot be a substitute for private investment; but is required as a complement and to crowd it in. The Survey highlights the need for reorientation and restructuring of the public private partnership (PPP) model. Creative solutions need to be devised to strengthen institutions relating to bankruptcy, says the Survey. The total stock of stalled projects currently stands at Rs 8.8 lakh crore or 7% of GDP.
Meanwhile, the stock exchanges have decided to keep the stock market open on tomorrow, 28 February 2015, just like any other normal trading session when the Finance Minister Arun Jaitley presents the first full-fledged Budget of the Narendra Modi government. Trading will start at 9:15 IST and conclude at 15:30 IST. Jaitley will begin his speech at 11:00 IST in Lok Sabha tomorrow, 28 February 2015 as he tables the Union Budget 2015-16 in the parliament.
Analysts will scrutinize measures in the Budget for financing infrastructure projects as well as the government's own capital expenditure on infrastructure for the year ahead. This is the first full fledged Budget of the Narendra Modi government and analysts will look for a roadmap for economic growth for the next few years.
Changes in rates of dividend distribution tax, capital gains tax on sale of shares, Securities Transaction Tax (STT) and Minimum Alternate Tax (MAT), if any, will be closely watched. The dividend distribution tax is currently at 15%. The minimum alternate tax is currently at 18.5% of book profits. Short term capital gains tax on sale of shares is currently at 15% while there is zero long capital gains tax on sale of shares held for a period of more than one year.
Analysts are awaiting further progress on the Goods and Services Tax (GST) during the ongoing Budget session of Parliament after the Constitution Amendment Bill for the introduction of GST was tabled in the Lok Sabha during the winter session of parliament. 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.
Asian stocks were mixed today, 27 February 2015. Key benchmark indices in South Korea and Singapore were off 0.12% to 0.37%. Key benchmark indices in Japan, Indonesia and China were up 0.06% to 0.36%. Hong Kong's Hang Seng was flat. Markets in Taiwan are closed today, 27 February 2015 in observance of Peace Memorial Day.
Japanese industrial production rose 4% in January 2015 -the second straight on-month increase, following the 0.8% increase in December 2014, data showed today, 27 February 2015.
Trading in US index futures indicated that the Dow could fall 20 points at the opening bell today, 27 February 2015. US stocks ended mixed yesterday, 26 February 2015 in another lackluster performance, amid uncertainty about the near-term outlook for the markets.
Investors are now waiting on revised fourth quarter US gross domestic product data due later today, 27 February 2015 for another health check of the world's largest economy.
In economic news, the consumer-price index fell 0.7% in January 2015 from December 2014, the Labor Department said yesterday, 26 February 2015. Prices slipped 0.1% from a year earlier, marking the first year-over-year decline since October 2009. Another data showed that weekly jobless claims rose to 313,000 last week, above the 283,000 in the previous week. Durable goods orders figures for January increased 2.8%, after a 3.4% decline in the prior month.
In Europe, German lawmakers reportedly signaled that they will approve an extension of Greece's bailout with an overwhelming majority in parliament today, 27 February 2015 although many will do so reluctantly amid fears Athens will not deliver on its reform promises. Eurozone finance ministers on Tuesday, 24 February 2015, backed new reforms proposed by Greece in exchange for a four-month financial lifeline that will keep the country afloat and in the single currency for the time being. Several parliaments, including Germany's, must now approve the extension before the current bailout expires tomorrow, 28 February 2015.
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