A broad based decline was witnessed as Indian stocks fell amid weakness in Asian and European markets. The barometer index, the S&P BSE Sensex, fell below the psychological 28,000 mark. The Sensex hit 4-1/2-week low and the 50-unit CNX Nifty hit its lowest level in almost four weeks. The market breadth indicating the overall health of the market was weak, with more than two losers for every gainer on BSE. The Sensex was provisionally off 315.59 points or 1.12% at 27,803.81. The BSE Mid-Cap index was off 1.57%. The BSE Small-Cap index was off 1.59%. The decline in both these indices was higher than the Sensex's decline in percentage terms.
Bank stocks declined. Shares of power generation and distribution firms edged lower. GAIL (India) declined in volatile trade. Coal India dropped in volatile trade.
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) after trading hours yesterday, 8 December 2014, showed.
After swinging alternately between gains and losses in earlier during the day, key indices drifted lower in mid-morning trade, with the Sensex hitting its lowest level in almost three week and the 50-unit CNX Nifty hitting 2-1/2-week low. Key benchmark indices extended losses later, with the Sensex falling below the psychological 28,000 level.
In overseas markets, European stocks edged lower after the latest data showed Germany's exports declined at the start of the fourth quarter in adjusted terms. Chinese stocks led decline in Asian markets after China's securities clearing house yesterday, 8 December 2014, tightened the use of corporate bonds as collateral for short-term financing. 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 as Indian stocks dropped.
Brent crude oil futures slumped to five-year low yesterday, 8 December 2014, 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.
As per provisional data, the S&P BSE Sensex was down 315.59 points or 1.12% to 27,803.81. The index lost 355.58 points at the day's low of 27,763.82 in late trade, its lowest level since 7 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 97.55 points or 1.16% at 8,340.70, as per provisional closing. The index hit a low of 8,330.50 in intraday trade, its lowest level since 13 November 2014. The index hit a high of 8,444.50 in intraday trade.
The BSE Mid-Cap index was off 163.31 points or 1.57% at 10,206.53. The BSE Small-Cap index was off 180.51 points or 1.59% at 11,194.12. The decline 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 weak, with more than two losers for every gainer on BSE. 2,039 shares declined and 903 shares gained. A total of 96 shares were unchanged.
The total turnover on BSE amounted to Rs 3024 crore, lower than Rs 3165.91 crore during previous trading session.
GAIL (India) fell 0.94% at Rs 462.25. The stock hit a high of Rs 470.80 and a low of Rs 459.55. The company during market hours today, 9 December 2014, said that the Uttar Pradesh state government has agreed to constitute a high power committee to provide single window clearance for the pipeline construction activities for the company's Jagdishpur-Haldia natural gas pipeline project in Uttar Pradesh. The committee will help in securing various statutory clearances like forest, environments, PWD, irrigation, industries etc and also give administrative support for the pipeline construction activities, GAIL (India) said in a statement.
GAIL's 2,050 KM Jagdishpur-Haldia natural gas pipeline will serve as the 'Energy Highway' to carry the efficient and environment-friendly fuel to Uttar Pradesh, Bihar, Jharkhand and West Bengal, GAIL (India) said.
Siemens fell 2.98% at Rs 888.10. The stock hit a high of Rs 927.70 and a low of Rs 884.80. The company during market hours today, 9 December 2014, said that the company will be supplying power transmission technology to Power Grid Kala Amb Transmission, a wholly-owned subsidiary of Power Grid Corporation of India (PGCIL). The equipment to be supplied is for the upcoming 400/220 kV GIS substation at Kala Amb in Himachal Pradesh and is the first GIS substation with FSC awarded in India under the build, own, operate and maintain (BOOM) segment, Siemens said in a statement.
DLF fell 0.69% at Rs 159.05. The stock hit a high of Rs 162.40 and a low of Rs 157.25. The company before market hours today, 9 December 2014, said that DLF Home Developers (a wholly subsidiary of the company) has just been made aware of the Order passed on 8 December 2014 by Single Bench of High Court regarding its "Riverside Project" at Chilavanoor, Vyttila, Cochin. This order comes as a result of a writ filed by a private individual in 2012 when company's applications for CRZ and MoEF clearance were under consideration by concerned authorities, (which approvals were subsequently granted in December 2013 by State Environment Impact Assessment Authority, a body constituted under the aegis of MoEF, Govt. of India), DLF said. The company awaits the full text of the order so as to get a detailed understanding of the matter after which it will take appropriate remedial measures in consultation with its legal counsel, DLF said.
DLF said that the company is a highly compliance oriented company which takes all necessary approvals to complete construction formalities. In case of Riverside project also, all required approvals like Building Permit, NOC from Pollution Control Board, Fire & Rescue Department, Naval Airport and also final orders of Environment cum CRZ clearance have been taken, DLF said. DLF said that according to a High Court order dated 19 August 2014, the High Court had clarified that the state government and Chief Secretary have no jurisdiction over approvals granted by SEIAA/MoEF, and any observations by the state government could be treated as for information purpose only. On the same day, another High Court order was passed by a two member bench dismissing a writ filed by another private individual seeking action against the company on basis of the state government/Chief Secretary's report, DLF said.
Sun Pharmaceutical Industries rose 1.05% at Rs 837.50. 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.
HCL Technologies lost 0.04% at Rs 1,561.60. The stock hit a high of Rs 1,575.65 and a low of Rs 1,548.45. The company during market hours today, 9 December 2014, said that the company has signed an agreement with Washington Gas, which distributes natural gas to about 1.1 million residential, commercial and industrial customers in the District of Columbia, Maryland and Virginia. HCL Technologies has been engaged to perform an application modernization for Washington Gas' legacy mainframe customer care and billing software, leveraging HCL's customer engagement expertise, the company said in a statement.
ONGC fell 4.25% at Rs 352.50. The stock hit a high of Rs 367.90 and a low of Rs 351. ONGC after market hours yesterday, 8 December 2014, in a clarification with regard to news item ONGC to start KG-D5 block production by mid 2018, said that the company has initiated the process of developments of fields in the KG D5 block. The estimated reserves of Northern Discovery Area (NDA) of the block are 121 MMT of Oil in Place and 78 BCM of initial gas in place and that of Southern Discovery Area of the block are 80.8 BCM of initial gas in place, ONGC said. Considering the vast area for development, it is planned to develop the block in clusters, ONGC said.
Cairn India dropped 1.11% at Rs 254.90 as global crude oil prices slumped to five-year low yesterday, 8 December 2014. The stock hit 52-week low of Rs 252.15 in intraday trade. Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms like Cairn India.
In the foreign exchange market, the rupee edged lower against the dollar as Indian stocks dropped. The partially convertible rupee was hovering at 61.8925, compared with its close of 61.845 during the previous trading session.
Brent crude oil futures rebounded after closing at the lowest price in more than five years amid competition between OPEC's largest members, Iraq and Saudi Arabia. Brent for January settlement was up 8 cents a barrel at $66.27 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 statement. 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 ongoing winter session of parliament. The government also plans to bring the MMDR Amendment Bill, 2014 during 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.
European shares edged lower today, 9 December 2014, after the latest data showed Germany's exports declined at the start of the fourth quarter in adjusted terms. Key indices in UK, Germany, and France were off 0.89% to 1.16%.
Germany's exports declined at the start of the fourth quarter in adjusted terms. In seasonally-adjusted terms, exports decreased by 0.5% on the month in October. Imports, however, decreased at a sharper pace, falling by 3.1%.
In UK, industrial production unexpectedly shrank in October, with the headline number slipping 0.1% month-on-month, according to data released by the Office for National Statistics today, 9 December 2014.
Chinese stocks led decline in Asian markets today, 9 December 2014, after China's securities clearing house yesterday, 8 December 2014, tightened the use of corporate bonds as collateral for short-term financing. Key indices in Japan, Taiwan, South Korea and Indonesia were off 0.4% to 0.68%. In Singapore, the Straits Time index was up 0.36%. In China, the Shanghai Composite index dropped 5.31%. In Hong Kong, the Hang Seng index fell 2.34%.
China's securities clearing house yesterday, 8 December 2014, said lower-rated bonds can no longer be used as collateral for some short-term loans. The nation's clearing agency for exchanges has stopped accepting new applications for repurchase agreements that involve bonds rated below AAA or sold by issuers graded lower than AA. The rule is an attempt to rein in risky debt issuances from struggling companies and local governments, according to reports.
Meanwhile, Chinese state media reports today, 9 December 2014, said that the government might cut 2015's economic growth target to as low as 7%, down from the 2014 goal of about 7.5%. China's top leadership convened today, 9 December 2014, for the annual Central Economic Work Conference in Beijing. China's official growth target numbers usually aren't publically announced until the national legislature convenes in the spring.
Trading in US index futures indicated that the Dow could fall 58 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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