Key benchmark indices once again slipped into the red in early afternoon trade after the Finance Ministry tabled its Economic Survey 2013-14 in parliament. The barometer index, the S&P BSE Sensex was down 60.10 points or 0.23%, off close to 160 points from the day's high and up about 150 points from the day's low. The market breadth indicating the overall health of the market was weak.
PSU OMCs edged higher as crude oil prices declined. Hindalco Industries rose after US based aluminum major Alcoa Inc reported better-than-expected Q2 June 2014 earnings on Tuesday, 8 July 2014.
The Economic Survey 2013-14 predicated a recovery in India's economic growth in 2014-15. It has forecast 5.4% to 5.9% growth in GDP in 2014-15, compared with 4.7% expansion in 2013-14. The survey also states that there are downside risks to the economy arising from a poor monsoon, the external environment and the poor investment climate. The survey recommends that the government needs to move towards a low and stable inflation regime through fiscal consolidation, establishing a monetary policy framework, and creating a competitive national market for food. The survey also discusses the need for revamping some of the social sector schemes such as MNREGA, NRHM, SSA, etc. The survey calls for putting public finances on the sustainable path through fiscal correction, a new Fiscal Responsibility and Budget Management (FRBM) Act with teeth, better accounting practices, greater transparency and improved budgetary management. It argues that improvements on both tax and expenditure are needed to obtain high quality fiscal adjustment. The survey recommends fiscal consolidation through higher tax-GDP ratio than merely reducing the expenditure to GDP ratio.
According to the survey, government expenditure reform should involve three elements: shifting subsidy programmes away from price subsidies to income support, a change in the focus of government spending towards provision of public goods, and a focus on outcomes through an improvement in systems of accountability. The survey calls for a tax regime that is simple, predictable and stable consisting of a single-rate goods and services tax (GST), fewer exemptions in direct taxes, and a transformation of tax administration.
At 12:20 IST, the S&P BSE Sensex was down 60.10 points or 0.23% to 25,522.01. The index jumped 101.86 points at the day's high of 25,683.97 in early trade. The index slumped 212.90 points at the day's low of 25,369.21 in morning trade, its lowest level since 30 June 2014.
The CNX Nifty was up 8.95 points or 0.12% to 7,632.15. The index hit a high of 7,650.10 in intraday trade. The index hit a low of 7,551.65 in intraday trade, its lowest level since 30 June 2014.
The market breadth indicating the overall health of the market was weak. On BSE, 1,513 shares declined and 899 shares rose. A total of 73 shares were unchanged.
The BSE Mid-Cap index was down 54.22 points or 0.59% at 9,155.99. The BSE Small-Cap index was down 122.69 points or 1.21% at 10,005.32. Both these indices underperformed the Sensex.
PSU OMCs edged higher as crude oil prices declined. BPCL (up 2.39% to Rs 582.95), HPCL (up 3.49% to Rs 400.30) and Indian Oil Corporation (IOCL) (up 2.75% to Rs 340) gained. Brent crude oil futures for August delivery was down 6 cents or 0.09% to $108.88 a barrel in electronic trading today, 9 July 2014. Brent crude oil futures for August delivery fell $1.30, or 1.2%, to settle at $108.94 a barrel on Tuesday, 8 July 2014.
Lower crude oil prices could decrease under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.
Some steel stocks edged higher. JSW Steel (up 0.96%) and Tata Steel (up 1.25%) gained.
Steel Authority of India (Sail) rose 1.24% to Rs 90.05, with the stock recovering on bargain hunting after recent slide. Shares of Steel Authority of India (SAIL) had declined 9.69% in four trading sessions to settle at Rs 88.95 on Tuesday, 8 July 2014, from a recent high of Rs 98.50 on 2 July 2014.
Hindalco Industries rose 3.49% to Rs 174.75 after US based aluminum major Alcoa Inc reported better-than-expected Q2 earnings. Alcoa on Tuesday, 8 July 2014, said its profits surged in the second quarter as the company's portfolio transformation continues accelerating. Excluding the impact of special items, net income was $216 million, or $0.18 per share in Q2 June 2014, more than double sequentially and nearly triple year-over-year.
Alcoa also increased its 2014 growth estimate for the North America commercial transportation market. Hindalco's unit Novelis Inc directly competes with Alcoa in the North American markets.
Claris Lifesciences gained 4.72% to Rs 170.90 after the company after market hours on Tuesday, 8 July 2014, said that the US Food and Drug Administration (USFDA) has found the company's finished dosage plant and the active pharmaceutical ingredient (API) plant as acceptable after an inspection.
A bout of volatility was witnessed as key benchmark indices regained positive terrain after slipping into the red for a brief period after opening higher. Volatility continued as key benchmark indices recouped almost entire intraday losses after a sudden slide in morning trade. The Sensex and the 50-unit CNX Nifty, both trimmed losses after hitting their lowest level in more than a week. Key benchmark indices moved in a narrow range ahead of the presentation of Economic Survey for 2013-14 which could set the tone for tomorrow's Union Budget 2014-15. Key benchmark indices once again slipped into the red in early afternoon trade after the Finance Ministry tabled its Economic Survey for 2013-14 in parliament.
Finance Minister Arun Jaitley will present the final Union Budget for 2014-15 in Lok Sabha at 11:00 IST tomorrow, 10 July 2014. There are expectations that the finance minster will announce measures in the Budget aimed at bolstering economic growth. Increase in outlay on infrastructure sector with focus on stricter and time-bound implementation of projects, initiatives towards investments in agriculture and irrigation aimed at easing supply bottlenecks for food-grains, fiscal prudence with roadmap to reduce the fiscal deficit, a roadmap for reducing the subsidy burden and timeline for implementation of the Goods and Services Tax are some of the expectations from the Budget.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 59.72, compared with its close of 59.78/79 on Tuesday, 8 July 2014.
Asian stocks edged lower on Wednesday, 9 July 2014, in a broad based decline in global equities triggered by concerns that equity valuations are too high. Key benchmark indices in China, South Korea, Taiwan, Hong Kong, Singapore and Japan were off 0.08% to 1.51%. Indonesia's Jakarta Composite rose 0.72%.
Consumer-price inflation in China slowed last month, data today showed, while factory gate prices fell at the lowest pace in more than two years. China's consumer price index rose 2.3% in June from a year earlier, after gaining 2.5% in May. The country's measure of producer prices, which hasn't shown a year-on-year increase since January 2012, fell 1.1%. It dropped 1.4% in May.
Trading in US index futures indicated a flat opening of US stocks on Wednesday, 9 July 2014. US stocks declined on Tuesday, 8 July 2014, in a broad selloff, dropping for a second straight session and driving the Dow Jones Industrial Average below 17,000 as investors turned cautious before the start of earnings season.
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