Comments by Central Board of Direct Taxes (CBDT) chairman Anita Kapur that the income tax department would not attempt any coercive recovery of the minimum alternate tax (MAT) demands placed on foreign institutional investors (FIIs) boosted sentiment on the domestic bourses with key benchmark indices registering decent gains. But, the benchmark indices trimmed gains in late trade soon after extending intraday gains as global crude oil prices rose. India imports about 80% of its crude oil requirements. The market breadth indicating the overall health of the market was strong. Key benchmark indices hovered in positive zone throughout the trading session today, 17 June 2015.
The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, attained one-week closing high. The Sensex garnered 146.15 points or 0.55% to settle at 26,832.66. The BSE Mid-Cap index rose 1.44%. The BSE Small-Cap index rose 1.33%. Both these indices outperformed the Sensex.
Index heavyweights L&T and Reliance Industries edged higher. Shares of steel companies rose after reports that the government has decided to increase import duty on steel products. Tata Steel surged on reports trade unions decided to suspend industrial action at the steelmaker's UK plants. Cement stocks gained. Power equipment major Bharat Heavy Electricals (Bhel) fell on huge volume after a large bulk deal was executed on the scrip on BSE. FMCG stocks gained after a good start for the monsoon season. Pharma stocks also edged higher.
Key benchmark indices edged higher for the fourth straight trading session today, 17 June 2015.
Central Board of Direct Taxes (CBDT) chairman Anita Kapur was quoted as saying at a press conference yesterday, 16 June 2015, that the income tax department would not attempt any coercive recovery of the minimum alternate tax (MAT) demands placed on foreign institutional investors (FIIs). The tax department had asked several FIIs to pay 18.5% MAT on their trading income in India, forcing some of them to take it to the court. Although the government says that the notices have been served in only 68 cases involving a total demand of just Rs 603 crore for the period prior to 1 April 2015, FIIs are worried that more such notices could be in the offing. In the Union Budget 2015-16, the government exempted FIIs' trading income from MAT with effect from 1 April 2015.
Last month, the government set up a committee to examine the matter relating to the levying of MAT on FIIs for the period prior to 1 April 2015. Earlier, the government had said that FIIs can avail of treaty benefits to ward off the tax demands.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 491.84 crore into the secondary equity market yesterday, 16 June 2015, as per data from National Securities Depository. Domestic institutional investors (DIIs) bought shares worth a net Rs 644.81 crore yesterday, 16 June 2015, as per provisional data released by the stock exchanges.
Meanwhile, the India Meteorological Department (IMD) said in its daily monsoon update issued yesterday, 16 June 2015, that the cumulative rainfall during this year's monsoon season was 13% above the Long Period Average (LPA) until 15 June 2015.
Meanwhile, a news agency quoted Arvind Virmani who is a member of the central bank's technical advisory panel as saying that the Reserve Bank of India (RBI) still has scope to cut interest rates by more than a percentage point given the slowdown in inflation
In overseas markets, European stocks edged lower in volatile trade, with investors nervously digesting the lack of progress in Greece's debt talk with lenders ahead of a closely watched Eurogroup meeting later in the week. Asian stocks edged higher after US stocks registered modest gains overnight. US stocks edged higher yesterday, 16 June 2015, as investors shrugged off worries about unsuccessful Greek debt talks and awaited the outcome of a two-day Federal Reserve policy meeting.
The S&P BSE Sensex rose 146.15 points or 0.55% to settle at 26,832.66, its highest closing level since 10 June 2015. The index jumped 296.97 points at the day's high of 26,983.48 in late trade. The index rose 42.38 points at the day's low of 26,728.89 in morning trade.
The Nifty rose 44.25 points or 0.55% to settle at 8,091.55, its highest closing level since 10 June 2015. The index hit a high of 8,136.85 in intraday trade. The index hit a low of 8,048.95 in intraday trade.
The BSE Mid-Cap index rose 146.83 points or 1.44% to settle at 10,344.51. The BSE Small-Cap index rose 141.65 points or 1.33% to settle at 10,796.55. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,715 shares rose and 938 shares fell. A total of 128 shares were unchanged.
The total turnover on BSE amounted to Rs 3104 crore, higher than turnover of Rs 2505.16 crore registered during the previous trading session.
Among sectoral indices on BSE, the S&P BSE Consumer Durables index (up 2.26%), the S&P BSE Healthcare index (up 1.62%), the S&P BSE FMCG index (up 1.46%), the S&P BSE Capital Goods index (up 1.11%), the S&P BSE Auto index (up 0.81%) and the S&P BSE Metal index (up 0.78%) outperformed the Sensex. The S&P BSE Power index (down 0.45%), the S&P BSE Bankex (down 0.15%), the S&P BSE IT index (up 0.08%), the S&P BSE Realty index (up 0.38%), the S&P BSE Teck index (up 0.42%) and the S&P BSE Oil & Gas index (up 0.46%) underperformed the Sensex.
Engineering and construction major L&T rose 1.6% to Rs 1,703.45. The stock hit high of Rs 1,717 and low of Rs 1,676.65.
Index heavyweight Reliance Industries (RIL) gained 2.95% to Rs 930.65. The stock hit high of Rs 940.40 and low of Rs 894.40.
FMCG stocks gained after a good start for the monsoon season. FMCG firms derive substantial revenue from rural India. Hindustan Unilever (HUL) (up 3.41%), Dabur India (up 2.9%), Colgate Palmolive India (up 1.27%), Godrej Consumer Products (up 0.35%), Tata Global Beverages (up 2.53%), Nestle India (up 1.85%), Marico (up 2.74%), Britannia Industries (up 5.91%), Procter & Gamble Hygiene and Health Care (up 0.4%) and Bajaj Corp (up 0.52%) gained. GlaxoSmithkline Consumer Healthcare (down 0.91%) and Jyothy Laboratories (down 0.81%) fell.
Pharma stocks edged higher. Cipla (up 4.03%), Lupin (up 2.19%), Wockhardt (up 1.93%), Dr Reddy's Laboratories (up 1.62%), Sun Pharmaceutical Industries (up 0.05%), Aurobindo Pharma (up 1.74%), Divi's Laboratories (up 1.51%), and Cadila Healthcare (up 1.83%) gained.
Glenmark Pharmaceuticals gained 4.76%. The company after market hours yesterday, 16 June 2015, announced that the Operations Committee of the board of directors of the company at its meeting held yesterday, 16 June 2015, allotted 17,803 shares of the face value of Re 1 each in the ratio of four shares of Re 1 each of Glenmark Pharmaceuticals for every five shares held of Glenmark Generics pursuant to Scheme of Amalgamation of Glenmark Generics with Glenmark Pharmaceuticals approved by High Court of Bombay.
Shares of steel companies rose after reports that the government has decided to increase import duty on steel products. JSW Steel (up 1.98%), Bhushan Steel (up 3.39%), Steel Authority of India (Sail) (up 1.5%), and Jindal Steel & Power (up 0.53%) gained. According to media reports, the government has raised import duty on long steel products to 7.5% from 5.5% and on flat steel products to 10% from 7.5%. Investors expect that higher import duty will restrict rising steel imports, which have put additional pressure on domestic steel companies.
Tata Steel edged higher on reports trade unions decided to suspend industrial action at the steelmaker's UK plants. The stock was up 2.9%. According to reports, trade unions representing workers of Tata Steel in the UK have decided to suspend its 22 June 2015 strike action after the steel major approached the Advisory, Conciliation and Arbitration Service (ACAS) to resolve the pension dispute in an independent manner. Tata Steel is keen to resolve dispute without industrial action, reports added.
ACAS provides collective conciliation services to help employers and employees' representatives (Trade Unions) to reach agreement on a range of issues affecting groups of employees. Reports added that the trade unions have agreed to suspend industrial action as they are confident that ACAS involvement will ensure fair negotiations. They are expecting a revised offer from Tata Steel.
Unions in UK recently notified plans to take industrial action in dispute over the Tata Steel UK's proposals to revise the British Steel Pensions Scheme's contribution and benefits framework.
National Aluminium Company (Nalco) rose 2.3% on reports a foreign brokerage has maintained outperform rating on the stock. The foreign brokerage reportedly said that alumina prices are at nine year high and capital expenditure on alumina refinery should aid return on capital employed for Nalco. The brokerage said that Nalco's valuations are attractive and its EBITDA (earnings before interest, taxation, depreciation and amortization) discount is attractive compared to its rival Hindalco Industries.
Capital goods stocks gained. ABB India (up 3.86%), BEML (up 1.09%), Bharat Electronics (up 1.64%), L&T (up 1.57%) and Thermax (up 2.17%) rose. Crompton Greaves (down 0.09%) and Siemens (down 0.02%) fell.
Power equipment major Bharat Heavy Electricals (Bhel) lost 2.03% to Rs 240.90. The stock hit high of Rs 246.90 and low of Rs 240.50. On BSE, 1.11 crore shares were traded in the counter as against average daily volume of 3.94 lakh shares in the past one quarter. A massive bulk deal of 84.45 lakh shares was executed on the scrip at Rs 243 per share at 10:30 IST on BSE today, 17 June 2015.
Bank stocks were mixed after the Basel Committee on Banking Supervision under the aegis of the Bank for International Settlements in its assessment reports rated the standards adopted by the Reserve Bank of India (RBI) with regard to risk-based capital requirements as compliant with the minimum Basel capital standards. Each of the 14 components of the Basel capital framework included in the assessment has been assessed as compliant, the RBI said in a press release issued yesterday, 16 June 2015. The Liquidity Coverage Ratio (LCR) requirements have been assessed as largely compliant with the minimum Basel liquidity standards.
Among public sector banks, Vijaya Bank (up 0.62%), Union Bank of India (up 0.13%), Corporation Bank (up 0.59%), State Bank of India (SBI) (up 0.35%) and Canara Bank (up 0.1%) edged higher. Punjab National Bank (down 0.26%), Bank of Baroda (down 1.27%) and Bank of India (down 0.09%) fell.
Among private sector banks, Axis Bank (down 0.62%), ICICI Bank (down 0.5%), IndusInd Bank (down 0.59%), HDFC Bank (down 0.76%) and Yes Bank (down 0.17%) declined. Federal Bank (up 4.15%) and Karnataka Bank (up 2.52%) rose.
Kotak Mahindra Bank rose 0.3%. The finance ministry today, 17 June 2015, announced that the government has deferred decision on a proposal of Kotak Mahindra Bank for increasing the aggregate foreign investment in Kotak Mahindra Bank to 55% pursuant to a merger of ING Vyasa Bank with Kotak Mahindra Bank.
Cement stocks edged higher on renewed buying. Shree Cement (up 4.17%), Ambuja Cements (up 1.96%) and UltraTech Cement (up 1.87%) edged higher.
Grasim Industries shed 0.51%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
ACC gained after the company announced resumption of limestone mining operations at Bargarh cement works. The stock rose 1.2%. On 10 October 2014, ACC had informed about the suspension of limestone mining operations at the company's Bargarh cement works. The impact of the closure was not material since cement grinding continued with transfer of clinker from sister works/purchase of clinker.
Realty stocks edged higher. DLF (up 0.46%), Housing Development and Infrastructure (up 0.62%), D B Realty (up 1.5%), Unitech (up 1.33%), Sobha (up 0.56%), Godrej Properties (up 0.12%), Oberoi Realty (up 1.29%) and Parsvnath Developers (up 0.72%) rose. Indiabulls Real Estate shed 0.35%.
The Union Cabinet today, 17 June 2015, gave its approval for the National Mission for Urban Housing. A central grant of Rs 1 lakh per house, on an average, will be available under the slum rehabilitation programme. A state government would have flexibility in deploying this slum rehabilitation grant to any slum rehabilitation project taken for development using land as a resource for providing houses to slum dwellers. The slum rehabilitation projects can be undertaken with participation of private developers using land as a resource.
Under the Credit Linked Interest Subsidy component, interest subsidy of 6.5% on housing loans availed upto a tenure of 15 years will be provided to EWS/LIG categories, wherein the subsidy pay-out on NPV basis would be about Rs 2.3 lakh per house for both the categories. Central assistance at the rate of Rs 1.5 lakh per house for EWS category will be provided under the Affordable Housing in Partnership and Beneficiary-led individual house construction or enhancement. State governments or their para statals like housing boards can take up project of affordable housing to avail the central government grant.
Key benchmark indices edged higher for the fourth straight trading session today, 17 June 2015. The Sensex has risen 461.69 points or 1.75% in the preceding four trading sessions from a recent low of 26,370.98 on 11 June 2015. The Sensex has lost 995.74 points or 3.57% in this month so far (till 17 June 2015). The Sensex has lost 666.73 points or 2.42% in this calendar year so far (till 17 June 2015). From a 52-week low of 24,878.66 on 23 June 2014, the Sensex has risen 1,954.02 points or 7.85%. The Sensex is off 3,192.03 points or 10.63% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, a news agency quoted Arvind Virmani who is a member of the central bank's technical advisory panel as saying that the Reserve Bank of India (RBI) still has scope to cut interest rates by more than a percentage point given the slowdown in inflation. The consumer-price inflation rate has declined by three percentage points over the last 12 to 18 months, raising real interest rates by 2 to 3%, Virmani said.
Meanwhile, in the global commodities market, Brent crude futures edged higher today, 17 June 2015. Brent for August settlement was up $1.56 a barrel at $65.26 a barrel. The contract had fallen 25 cents or 0.39% to settle at $63.70 a barrel during the previous trading session.
Increase in global crude oil prices has raised concerns about India's fiscal deficit, current account deficit and fuel price inflation. India imports about 80% of its crude oil requirements.
Meanwhile, the India Meteorological Department (IMD) said in its daily monsoon update issued yesterday, 16 June 2015, that the Southwest Monsoon was active over Gangetic West Bengal and Telangana during past 24 hours ending at 0830 hrs. Conditions are favourable for further advance of southwest monsoon into some more parts of Chhattisgarh, Odisha and West Bengal and remaining parts of Coastal Andhra Pradesh and Bay of Bengal during next 3 days, the IMD said.
For the country as a whole, the cumulative rainfall during this year's monsoon season was 13% above the Long Period Average (LPA) until 15 June 2015. Region wise, the southwest monsoon was 22% above the LPA in East & Northeast India, 18% above the LPA in Central India and 1% below the LPA in Northwest India until 15 June 2015. The rainfall was 100% of the Long Period Average in South Peninsula.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
In overseas markets, European stocks edged higher in volatile trade today, 17 June 2015, with investors nervously digesting the lack of progress in Greece's debt talk with lenders ahead of a closely watched Eurogroup meeting later in the week. Key benchmark indices in UK, France and Germany were off 0.12% to 0.57%.
Investors continue to watch developments in Greece. Greece Prime Minister Alexis Tsipras accused Greece's creditors yesterday, 16 June 2015, of trying to "humiliate" Greeks with more cuts as he defied a growing drumbeat of warnings that Europe was preparing for his country to leave the euro. The unrepentant address to lawmakers after the collapse of talks with European and International Monetary Fund (IMF) lenders at the weekend was the clearest sign yet that the leftist leader has no intention of making a last-minute U-turn and accepting austerity cuts needed to unlock frozen aid and avoid a debt default within two weeks.
Meanwhile, Austrian chancellor Werner Faymann is due to speak with Tsipras in Athens today, 17 June 2015, in an effort to break the deadlock, according to reports. Greece has a debt repayment of 1.6 billion euros ($1.8 billion) due at the end of this month to the International Monetary Fund after the European nation bundled all its four June repayments into one.
Meanwhile, a meeting of eurozone finance ministers is scheduled in Luxembourg tomorrow, 18 June 2015.
Greece's central bank warned today, 17 June 2015, that failure to clinch a deal with international creditors on its future funding needs could lead the country into an uncontrollable crisis, describing the issue as being of historical significance for the nation. In its annual monetary report, the Bank of Greece, the country's central bank, said that based on evidence so far, it seems that a compromise has been reached on the main conditions attached to the lending agreement and that little ground remains to be covered.
In UK, the minutes of Bank of England's (BOE) Monetary Policy Committee meeting which was held early this month showed that all nine panel members voted to keep the BOE's benchmark interest rate at 0.5% and voted unanimously to leave the size of the central bank's bond portfolio at 375 billion pounds ($585.44 billion).
Asian stocks edged higher today, 17 June 2015, after US stocks registered modest gains overnight. Key benchmark indices in China, Indonesia, South Korea, Hong Kong and Singapore were up 0.3% to 1.65%. Key benchmark indices in Taiwan and Japan were off 0.19% to 0.25%.
Japanese exports grew at the slowest pace in nine months in May as shipments to the US and China moderated, while export volumes for the month fell compared with a year earlier. Exports rose 2.4% from a year earlier to 5.741 trillion yen in May 2015, the finance ministry said today, 17 June 2015. The rate of expansion was the smallest since the start of a gentle uptrend in September, in a sign that a slowdown in the US and weakening growth in China may be beginning to hinder a Japanese economic recovery.
US stocks closed higher yesterday, 16 June 2015, as investors shrugged off worries about unsuccessful Greek debt talks and awaited the outcome of a two-day Federal Reserve policy meeting. In macroeconomic data in US, construction starts on new US homes fell 11.1% to an annual rate of 1.04 million in May, pulling back from a surge in April and missing expectations. But the annual pace of permits for new construction, a sign of future demand, rose 11.8% to 1.28 million in Ma, the fastest pace since August 2007.
A two-day meeting of the Federal Open Market Committee (FOMC) to review US monetary policy concludes today, 17 June 2015. The FOMC meeting is being keenly watched for further indication of the timing of an expected rate hike by the US central bank later this calendar year.
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