Weakness in global stocks weighed on sentiment as key equity benchmark indices in India tumbled in mid-morning trade, extending initial losses. November trade data showing weakness on India's external front also hit sentiment on the domestic bourses adversely. The barometer index, the S&P BSE Sensex, fell below the psychological 27,000 mark. The Sensex hit 7-week low. The 50-unit CNX Nifty hit its lowest level in more than 6-1/2 weeks. The Sensex was currently off 407.28 points or 1.49% at 26,912.28.
The market breadth indicating the overall health of the market was quite weak, with more than five losers for every gainer on BSE. The BSE Mid-Cap index was off 2.3%.The BSE Small-Cap index was off 2.87%. The fall in both these indices was higher than the Sensex's decline in percentage terms.
IT stocks gained on weak rupee. Metal and mining stocks dropped after weak China manufacturing data.
Due to sharp jump in gold imports, India's trade deficit rose sharply to $16.86 billion in November 2014 from $9.57 billion in November 2013, data released by the Ministry of Commerce & Industry after trading hours yesterday, 15 December 2014, showed.
Foreign portfolio investors sold shares worth a net Rs 455.72 crore yesterday, 15 December 2014, as per provisional data.
In overseas markets, Asian stocks edged lower as oil's slump and weaker-than-estimated Chinese manufacturing stoked concern that the global economy may falter. US stocks fell yesterday, 15 December 2014, amid a continuing slump in oil prices and ahead of a closely watched Federal Reserve meeting. Investors fret that the sharp slide in global crude oil prices since June could be signaling that the global economy is slowing more quickly than data currently suggest.
In the foreign exchange market, the rupee weakened past the 63 mark against the dollar as India's trade deficit rose sharply last month due to a sharp surge in gold imports.
Brent crude futures hovered near 5-1/2 year low as Chinese factory activity slowed and concerns rose over the health of emerging market economies and their currencies.
At 11:20 IST, the S&P BSE Sensex was down 407.28 points or 1.49% at 26,912.28. The index lost 431.92 points at the day's low of 26,887.64 in mid-morning trade, its lowest level since 28 October 2014. The index fell 120.19 points at the day's high of 27,199.37 in early trade.
The CNX Nifty was down 116.40 points or 1.42% at 8,103.20. The index hit a low of 8,093.90 in intraday trade, its lowest level since 30 October 2014. The index hit a high of 8,189.35 in intraday trade.
The BSE Mid-Cap index was off 231.67 points or 2.3% at 9,830.91. The BSE Small-Cap index was off 315.19 points or 2.87% at 10,682.72. The fall in both these indices was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was quite weak, with more than five losers for every gainer on BSE. On BSE, 1,942 shares fell and 377 shares rose. A total of 67 shares were unchanged
IT stocks gained on weak rupee. TCS (up 1.66%), Infosys (up 0.61%), Tech Mahindra (up 2.61%), HCL Technologies (up 3.34%) and Wipro (up 0.41%) gained. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Positive economic data in US also supported IT stocks. US is the biggest outsourcing market for the Indian IT firms.
Metal and mining stocks dropped after weak China manufacturing data. China is the world's largest consumer of steel, copper and aluminum. JSW Steel (down 1.99%), Bhushan Steel (down 1.87%), Hindustan Copper (down 3.02%), Sesa Sterlite (down 3.83%), Hindalco Industries (down 6.06%), Hindustan Zinc (down 1.46%), Jindal Steel & Power (down 1.63%), Tata Steel (down 2.48%), Steel Authority of India (Sail) (down 1.47%), and National Aluminum Company (down 1.66%) declined.
NMDC declined 2.04%. The company's advance tax payment reportedly fell 11% to Rs 800 crore in Q3 December 2014 over Q3 December 2013.
Coal India lost 0.83%. With respect to news titled "Coal India to set up South Africa Unit for acquiring Coal Assets", Coal India (CIL) clarified that the company's board of directors at its meeting held on 12 August 2011 approved to start dialogue with Government of Limpopo to undertake initiatives. A Memorandum of Understanding (MOU) was signed amongst CIL, Trade and Investment of Limpopo (TIL) and Corridor Mining Resources (CMR) of the provincial Govt. of Limpopo in South Africa in September 2011. No agreement or any contract has been signed by the parties so far, CIL said. As a follow up action, a Memorandum of Agreement (MoA) is to be signed between CIL and the state owned agencies of the provincial Govt. Limpopo, CIL said. The company said it had engaged a consultant for assisting CIL for registration of a wholly owned subsidiary of CIL in South Africa in February 2013. The draft Memorandum of Incorporation prepared by the consultant is under consideration of competent authority, CIL said.
Meanwhile, the government has already finalised selling its 10% stake in Coal India during the current fiscal year.
In the foreign exchange market, the rupee weakened past the 63 mark against the dollar as India's trade deficit rose sharply last month due to a sharp surge in gold imports. The partially convertible rupee was hovering at 63.535, compared with its close of 62.945 during the previous trading session.
Brent crude futures hovered near 5-1/2 year low as Chinese factory activity slowed and concerns rose over the health of emerging market economies and their currencies. Brent for January settlement, which expires today, 16 December 2014, was off 36 cents at $60.70 a barrel. The contract had lost 79 cents settle at $61.06 a barrel during the previous trading session. Brent for February settlement was off 38 cents at $60.83 a barrel.
India's merchandise exports rose 7.27% to $25.96 billion in November 2014 over November 2013, data released by the Ministry of Commerce & Industry after trading hours yesterday, 15 December 2014, showed. Imports jumped 26.79% at $42.82 billion in November 2014 over November 2013. Oil imports dropped 9.7% at $11.72 billion in November 2014 over November 2013. Non-oil imports jumped 49.6% at $31.10 billion in November 2014 over November 2013. The trade deficit rose sharply to $16.86 billion in November 2014, from $9.57 billion in November 2013.
Finance Minister Arun Jaitley yesterday, 15 December 2014, said that various welfare programmes of the government for vulnerable sections of the society are essential and working well. In this regard he mentioned about food security and education for all programmes among others. The Finance Minister made those comments while speaking to the students of Stanford University, USA when they called on him in his office yesterday, 15 December 2014.
Meanwhile, investors are closely monitoring if the government's key legislative reform bills are passed during the ongoing winter session of the parliament. The government may table the constitutional amendment bill to facilitate the levy of goods & services tax (GST) during the ongoing winter session of the parliament. The constitutional amendment Bill will provide 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.
Meanwhile, the Indian government intends 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.
It also remains to be seen if the government will be to find support for the Coal Mines (Special Provisions) Bill, 2014 in the Rajya Sabha where it's in a minority. 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.
Asian stocks edged lower today, 16 December 2014, as oil's slump and weaker-than-estimated Chinese manufacturing stoked concern that the global economy may falter. Key indices in Hong Kong, Singapore, Indonesia, South Korea, Taiwan, and Japan were off 0.11% to 1.77%. China's Shanghai Composite rose 0.52%.
China's flash manufacturing purchasing managers' index from HSBC Holdings Plc and Markit Economics fell to 49.5 for December, from 50 last month. It's the first time since May that the gauge has slipped below 50, the threshold between expansion and contraction.
Indonesia's Finance Minister Bambang Brodjonegoro will reportedly meet Bank Indonesia and financial regulator Otoritas Jasa Keuangan today, 16 December 2014, to discuss a policy response to the weakening currency.
Meanwhile, heavily armed Australian police reportedly stormed a Sydney cafe early on Tuesday morning and freed hostages being held there at gunpoint, in a dramatic end to a 16-hour siege in which two captives and the attacker were killed.
Trading in US index futures indicated that the Dow could gain 46 points at the opening bell today, 16 December 2014. US stocks fell Monday, 15 December 2014, amid a continuing slump in oil prices and ahead of a closely watched Federal Reserve meeting.
Among economic data, US manufacturing output recorded its largest increase in nine months in November as production expanded across the board, pointing to underlying strength in the economy. Factory production rose 1.1% after advancing 0.4% in October, the Federal Reserve said on Monday.
A two-day meeting of Federal Open Market Committee (FOMC) to discuss monetary policy review begins today, 16 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. It remains to be seen whether Federal Reserve officials would signal a rate hike by dropping their assurance that rates will stay low for a considerable time.
Meanwhile in Russia, the nation's central bank unexpectedly raised its benchmark interest rate to 17% from 10.5% yesterday, 15 December 2014, its biggest step yet to shore up the ruble and defuse the currency crisis threatening the country's stricken economy.
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