After extending gains in morning trade, key benchmark indices pared gains in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently trading below the psychological 28,000 level, having alternately moved above and below that psychological level so far during the day. Earlier, the Sensex had moved past the psychological mark earlier during the trading session. The Sensex was currently up 102.43 points or 0.37% at 27,990.33. The market breadth indicating the overall health of the market was strong. Global crude oil prices hit 5-1/2-year low. Fall in crude oil prices augur well for India as the country imports about 80% of its crude oil requirements.
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.
Shares of public sector banks were mixed. Pharma stocks advanced on media reports that the US Food and Drug Administration approved 41 first-of-a-kind drugs in 2014, including a record number of medicines for rare diseases, pushing the agency's annual tally of drug approvals to its highest level in 18 years. L&T rose after the company said its construction division secured orders worth Rs 4006 crore in December 2014.
Earlier, the 50-unit CNX Nifty hit 4-week high and the Sensex hit its highest level in almost four weeks in morning trade.
Foreign portfolio investors bought shares worth a net Rs 259.82 crore during the previous trading session on Friday, 2 January 2015, as per provisional data.
In overseas markets, Asian stocks edged lower amid concern Greece will exit the European currency union. Key equity benchmark indices in the US closed flat for the day on Friday, 2 January 2015, after giving back intraday gains following disappointing reports on US manufacturing and construction.
In the foreign exchange market, the rupee edged lower against the dollar on broad strength for the dollar.
Brent crude futures hit 5-1/2-year low as worries about a surplus of global supplies amid weak demand continued to drag on oil markets.
At 11:15 IST, the S&P BSE Sensex was up 102.43 points or 0.37% at 27,990.33. The index jumped 176.59 points at the day's high of 28,064.49 in morning trade, its highest level since 9 December 2014. The index rose 31.14 points at the day's low of 27,919.04 in early trade.
The CNX Nifty was up 25.85 points or 0.31% at 8,421.30. The index hit a high of 8,445.60 in intraday trade, its highest level since 8 December 2014. The index hit a low of 8,401.25 in intraday trade.
The BSE Mid-Cap index was up 77.68 points or 0.74% at 10,607.88. The BSE Small-Cap index was up 95.82 points or 0.85% at 11,403.97. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,601 shares gained and 867 shares fell. A total of 99 shares were unchanged.
Shares of public sector banks (PSBs) were mixed. Bank of Baroda (up 0.73%), Dena Bank (up 0.24%), Oriental Bank of Commerce (up 0.28%), Canara Bank (up 0.29%), Vijaya Bank (up 0.29%), Bank of Maharashtra (up 0.11%), Punjab National Bank (up 0.39%) and Allahabad Bank (up 0.04%) edged higher. Corporation Bank (down 0.18%), Central Bank of India (down 0.11%), Bank of India (down 0.23%), Syndicate Bank (down 0.19%), Punjab & Sind Bank (down 0.31%), IDBI Bank (down 0.33%), United Bank of India (down 0.89%), Union Bank of India (down 0.58%), State Bank of India (down 0.4%), UCO Bank (down 0.82%), Indian Overseas Bank (down 1.02%) and Andhra Bank (down 1.35%) edged lower.
PSBs have suggested the government to transfer government's stake in PSBs to a bank investment company. At the two day Retreat for Banks and Financial Institutions called Gyan Sangam held at National Institute of Banking Management (NIBM) in Pune, Maharashtra on Friday, 2 January 2015, and Saturday, 3 January 2015, PSBs also suggested that eventually the government should reduce its stake in PSBs to less than 51%.
On the second and last day of the summit on Saturday, 3 January 2015, Prime Minister Narendra Modi said banks would be run professionally, and there would be no interference. But accountability was essential. He said the government had no vested interest, and public sector banks can derive strength from this fact. The Prime Minister said that banks in India should actually compete for achieving maximum cashless transactions, as this would be the best solution to the problem of black money. Speaking at the summit, Finance Minister Arun Jaitley said that banks have a major role to play in the financing of infrastructure.
Jaitley said that the government is open to bold decisions for professionalization of the management and autonomy in decision making, rewarding merit, and relooking at the recruitment process at the top management level of PSBs. The government was ready to protect commercial decisions so as to avoid the delay in good decisions, Jaitley said.
Earlier, Chief Economic Advisor to the finance ministry Dr. Arvind Subramanian proposed that the PSBs should be differentiated into weak, good and strong categories and accordingly consolidation and restructuring measures could be applied to them. The current overhang of stressed assets should be resolved by distribution of the pain between promoters, creditors and tax payers, Dr. Subramanian said.
Reserve Bank of India Governor Dr. Raghuram Rajan stated that there is a need for internationalisation of the banking system in the current global environment. In the short term (up to 12 months), he said that there was need to clean up the NPAs and then restructure other stressed loans so as to put the economy back on the track.
Pharma stocks advanced on media reports that US Food and Drug Administration approved 41 first-of-a-kind drugs in 2014, including a record number of medicines for rare diseases, pushing the agency's annual tally of drug approvals to its highest level in 18 years.
Cadila Healthcare (up 4.93%), GlaxosmithKline Pharmaceuticals (up 0.8%), Divi's Laboratories (up 0.55%), Wockhardt (up 0.38%), Ipca Laboratories (up 0.25%), Torrent Pharmaceuticals (up 0.56%), Lupin (up 0.23%), Sun Pharmaceutical Industries (up 0.25%), Aurobindo Pharma (up 0.26%), and Cipla (up 0.21%) edged higher. Ranbaxy Laboratories (down 0.19%), Glenmark Pharmaceuticals (down 0.86%), and Dr Reddy's Laboratories (down 1.28%) edged lower.
Shares of Supreme Infrastructure India were up 1.3% at Rs 293. Shares of Piramal Enterprises were up 0.16% at Rs 838. With reference to the media reports that "Piramal enterprises have acquired 2 BOT Infra projects from the company worth Rs 700 Crs. Due diligence to be completed in March 2015. Kotak Bank & SBI will be the lead bankers to the deal ", Supreme Infrastructure India after trading hours on Friday, 2 January 2015, clarified that as on date the company has not sold its 2 BOT infra projects as reported in the media. Supreme Infrastructure India said that during the course of business, various parties approach the company for business purposes and may come out with various proposals. No such non-committal proposals are binding on the company, Supreme Infrastructure India said.
In its own clarification about the same media reports, Piramal Enterprises after market hours on Friday, 2 January 2015, said that the company from time to time explores various investment opportunities as part of its structured investment business, in the normal course of its business. This evaluation of opportunities includes various criteria, including technical financial, taxation, commercial, regulatory and legal. Once these criteria are met it is followed by internal approvals at various levels, post which, comes a comprehensive financial and legal diligence, Piramal Enterprises said. Projects that come out of this filtration process are then placed before the Board or its duly empowered Committee for approval. It is an established practice that only those proposals that are definitive and which are disc losable events, are disclosed to the stock exchanges, the company said. Any disclosure prior to this would only be speculative, it added. Piramal Enterprises further said that the investment opportunities forming part of the company's structured investment business, includes investments in infra projects such as the project referred to in the captioned news item. Since nothing is of definite nature and nothing has been approved by the Board/duly empowered Committee it is difficult for the company to comment on the same at this stage, Piramal Enterprises said.
L&T rose 1.83% at Rs 1,562.80 after the the company said its construction division secured orders worth Rs 4006 crore across various business segments in December 2014 in both the domestic and international markets. The announcement was made during trading hours today, 5 January 2015. Commenting on the latest orders won by the company, S N Subrahmanyan, Member of the Board and Senior Executive Vice President (Infrastructure & Construction), L&T said that these orders reveal the increased activity at ground level in the infrastructure space which augurs well for the Indian economy and, more particularly, for EPC players like L&T.
Coal India fell 0.29% at Rs 380.55. The stock hit a high of Rs 382.40 and a low of Rs 378.05. According to reports, the government is likely to allow private firms to build and operate critical railway lines connecting Coal India mines to power, steel and cement projects. The proposal, agreed 'in-principal' by the railway and coal ministries, will allow private companies to charge fee from the users of the rail links, similar to the toll charged by highway developers, reports suggested.
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 63.385, compared with its close of 63.29 during the previous trading session on Friday, 2 January 2015.
Brent crude futures hit 5-1/2-year low as worries about a surplus of global supplies amid weak demand continued to drag on oil markets. Brent for February settlement was off 88 cents at $55.54 a barrel. The contract hit a low $55.36 a barrel in intraday trade, its lowest level since May 2009. The contract had declined 91 cents or 1.6% to settle at $56.42 a barrel during the previous trading session on Friday, 2 January 2015, its lowest settlement since 30 April 2009.
Asian stocks edged lower today, 5 January 2015, amid concern Greece will exit the European currency union. Key indices in Taiwan, Singapore, South Korea, and Indonesia were off 0.36% to 1%. Key indices in China, Japan and Hong Kong were up 0.18% to 2.88%.
In Japan, the final Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) came at 52 in December, slightly less than a preliminary reading of 52.1 and unchanged from the final reading in November.
Trading in US index futures indicated that the Dow could gain 9 points at the opening bell today, 5 January 2015. US stocks ended near unchanged on Friday, 2 January 2015, with the S&P 500 down for a third session, after economic reports showed manufacturing slowing but still in expansion mode at the end of 2014. Factory activity in the United States grew at the slowest pace in six months in December 2014, weakened by declines in orders and production. The Institute for Supply Management, a trade group of purchasing managers, said on Friday, 2 January 2015, that its manufacturing index fell to 55.5 in December from 58.7 in November, which was just below a three-year high reached in October.
Minneapolis Fed President Narayana Kocherlakota yesterday, 4 January 2015, said that the Federal Reserve should not be forced to adopt any set rules to determine how it makes monetary policy. Discretion is better than any rule, Kocherlakota said in discussing tying policy moves to data or other indicators. The Fed has information about inflation pressures that would be hard to boil down into a rule, Kocherlakota said during a talk at the American Economic Association meeting.
In Europe, Greece's political parties have embarked on a campaign for elections this month that may determine the fate of the country's membership in the euro currency area, with Der Spiegel magazine reporting German Chancellor Angela Merkel is ready to accept a Greek exit.
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