Mirroring gains in global stocks, key equity benchmark indices edged higher on the last trading session of the week. But, the benchmark indices trimmed intraday gains during the last 30 minutes of the trading session. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, attained their highest closing level in more than a week. The Sensex rose 245.27 points or 0.9% to settle at 27,371.84. The market breadth indicating the overall health of the market was positive. Global crude oil prices tumbled yesterday, 18 December 2014. Fall in crude oil prices augur well for India as the country imports 80% of its oil requirement.
IT stocks gained after US based global management consulting, technology services and outsourcing company Accenture yesterday, 18 December 2014, raised its outlook for net revenue growth for the year ending 31 August 2015 (FY 2015) after reporting strong Q1 results. Most private bank stocks rose. PSU Bank stocks reversed intraday gains. Shares of steel and metal companies extended yesterday's gains. Some capital goods stocks gained. Crompton Greaves rose after the Reserve Bank of India advised that Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) can now invest up to 100% of the paid up capital of the company under the Portfolio Investment Scheme (PIS). Punj Lloyd surged after the company received FIPB approval for manufacturing equipment and associated assemblies for the defence sector.
Meanwhile, the fate of several crucial bills hangs in a limbo due to several disruptions by the Opposition over the alleged forced conversion row in the Rajya Sabha. With just three days left for the winter session of Parliament to end, the chance of the passage of the key reform bills in Parliament looks bleak.
Meanwhile, a mid-term economic review tabled by the finance ministry in parliament today, 19 December 2014, stated that the backlog of stalled projects needs to be cleared more expeditiously, a process that has already begun. There are stalled projects to the tune of Rs 18 lakh crore (about 13% of GDP) of which an estimated 60% are in infrastructure, according to the mid-term review. The finance ministry also said that adhering to the fiscal deficit target of 4.1% of GDP in 2014-15 is a major challenge. The report stated that the government is committed to meeting the fiscal targets for 2014-15, despite the difficult odds engendered by a combination of factors. A pick-up in economic activity in the second half of the year is critical to prevent a slippage and to meet the overall fiscal deficit target during 2014-15.
Meanwhile, according to a study published today, 19 December 2014, US-based consulting firm IHS, India is set to emerge as the third largest spender worldwide by 2020.
Foreign portfolio investors sold shares worth a net Rs 874.89 crore yesterday, 18 December 2014, as per provisional data.
In the foreign exchange market, the rupee edged lower against the dollar in choppy trade.
Global crude oil prices slumped yesterday, 18 December 2014. 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.
In overseas markets, European and Asian stocks edged higher as investor confidence continued to be bolstered by expectations the US central bank is in no rush to raise interest rates in the world's biggest economy. US stocks surged yesterday, 18 December 2014, a day after Federal Reserve Chairwoman Janet Yellen assured the markets after the conclusion of Fed's two-day monetary policy review that the US central bank would be patient about lifting interest rate in the world's biggest economy.
In Russia, Russian President Vladimir Putin said during his annual public news conference yesterday, 18 December 2014, that the ruble will stabilize amid current economic headwinds. Putin also stressed that external conditions referring to sanctions imposed by the West were pushing Russia into reforms that would make the economy more efficient.
Brent crude futures recovered after a steep slide during the previous trading session.
The S&P BSE Sensex rose 245.27 points or 0.9% to settle at 27,371.84, its highest closing level since 11 December 2014. The index jumped 370.55 points at the day's high of 27,497.12 in mid-afternoon trade. The index gained 165.57 points at the day's low of 27,292.14 in early trade.
The CNX Nifty gained 65.90 points or 0.81% to settle at 8,225.20, its highest closing level since 11 December 2014. The index hit a high of 8,263.45 in intraday trade. The index hit a low of 8,208.60 in intraday trade.
The BSE Mid-Cap index rose 35.74 points or 0.36% to settle at 10,000.41. The BSE Small-Cap index gained 61.45 points or 0.57% to settle at 10,922.21. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 3553 crore, higher than Rs 3015.21 crore yesterday, 18 December 2014.
The market breadth indicating the overall health of the market was positive. On BSE, 1,480 shares rose and 1,402 shares fell. A total of 111 shares were unchanged.
IT stocks gained after US based global management consulting, technology services and outsourcing company Accenture yesterday, 18 December 2014, raised its outlook for net revenue growth for the year ending 31 August 2015 (FY 2015) after reporting strong Q1 results. Strong economic data in US also supported IT stocks. US is the biggest outsourcing market for the Indian IT firms. Infosys (up 1.39%), HCL Technologies (up 2.46%) and Wipro (up 2.25%) gained.
Accenture has raised its outlook for net revenue growth for FY 2015 in local currency to be in the range of 5% to 8% percent, compared with 4% to 7% forecast previously. But, the company cuts its diluted earnings per share (EPS) forecast for FY 2015 as the positive impact of its increased revenue outlook was more than offset by the negative impact of the company's revised foreign-exchange assumption. Accenture now expects diluted earnings per share (EPS) to be in the range of $4.66 to $4.80 for FY 2014, compared with the company's previously guided range of $4.74 to $4.88. Accenture said its new bookings for the first quarter ended 30 November 2014 were $7.7 billion and reflect a negative 3% foreign-currency impact compared with new bookings in the first quarter last year.
TCS rose 2.31%. The company's advance tax reportedly rose 8% to Rs 1415 crore in Q3 December 2014 over Q3 December 2013.
Tech Mahindra rose 1.34%. The company's advance tax reportedly rose 12% to Rs 190 crore in Q3 December 2014 over Q3 December 2013.
UltraTech Cement rose 1.98%. Grasim Industries gained 1.35%. Grasim has exposure to the cement sector through its subsidiary UltraTech Cement. Jaiprakash Associates slumped 4.62% to Rs 23.75. The stock reversed gains after hitting intraday high of Rs 25.65.
With respect to media report titled "Ultratech cement in talks to buy JP Associates Cement plants", UltraTech Cement clarified during market hours today, 19 December 2014, that the company in its course of business evaluates various proposals on a regular basis. No proposal has reached the stage which would merit intimation to exchanges under the listing agreement. The company will inform of any decision that may have a bearing on the performance/operations of the company, it added.
Indian Oil Corporation (IOCL) gained 1.51%. With respect to news article titled "IOC to add 15 mmtpa capacity", IOCL clarified during trading hours today, 19 December 2014, that the 15 million metric tonne per annum (MMTPA) Grass Root Refinery Project at Paradip is nearing completion and the commissioning of the project is likely to begin on stage-wise basis from March to September 2015.
Most private bank stocks rose. Federal Bank (up 2.57%), and Axis Bank (up 0.52%) gained.
ICICI Bank rose 2.95%. The bank's advance tax reportedly rose 20% to Rs 1200 crore in Q3 December 2014 over Q3 December 2013.
HDFC Bank rose 0.72%. The bank's advance tax reportedly rose 11% to Rs 735 crore in Q3 December 2014 over Q3 December 2013.
Yes Bank gained 0.87%. The bank's advance tax reportedly rose 20% to Rs 300 crore in Q3 December 2014 over Q3 December 2013.
Kotak Mahindra Bank fell 1.35%. The bank's advance tax reportedly rose 37% to Rs 260 crore in Q3 December 2014 over Q3 December 2013.
IndusInd Bank declined 0.48%.
PSU Bank stocks reversed intraday gains. Canara Bank (down 1.58%), Union Bank of India (down 0.7%), Punjab National Bank (down 0.75%) Syndicate Bank (down 0.53%), Indian Overseas Bank (down 0.35%), Oriental Bank of Commerce (down 1.61%) and Dena Bank (down 1.13%), declined.
State Bank of India (SBI) fell 0.74% to Rs 304.25, with the stock reversing gains after hitting intraday high of Rs 312. The bank's advance tax reportedly rose 26% to Rs 1425 crore in Q3 December 2014 over Q3 December 2013.
Bank of India declined 1.48% to Rs 287.15, with the stock reversing gains after hitting intraday high of Rs 296.55. The bank's advance tax reportedly rose 75% to Rs 350 crore in Q3 December 2014 over Q3 December 2013.
Bank of Baroda dropped 1.35% to Rs 1,041.75, with the stock reversing gains after hitting intraday high of Rs 1,071. The bank's advance tax reportedly remained unchanged at Rs 575 crore in Q3 December 2014 over Q3 December 2013.
Mahindra & Mahindra (M&M) was up 0.67%. With reference to news captioned "Mahindra Partners in Talk to Buy Online Co BabyOye", M&M clarified during trading hours today, 19 December 2014, that this matter pertains to an unlisted subsidiary of M&M and not to the company. As such, the company will not comment on this news item, M&M said.
Metal shares were in demand. JSW Steel (up 1.65%), Sesa Sterlite (up 2.21%), Hindalco Industries (up 2.64%), Bhushan Steel (up 1.35%), Tata Steel (up 0.83%), Steel Authority of India (up 3.47%), NMDC (up 0.79%), National Aluminum Company (up 2.53%) and Hindustan Zinc (up 0.55%), edged higher. However, Jindal Steel & Power was off 1.23%.
According to an approach paper on proposed e-auction of coal mines released by the Ministry of Coal recently, a floor price of Rs 150 per tonne has been fixed for auction of coal blocks to unregulated sectors such as steel, sponge iron, cement and captive power. For the unregulated sectors, a regular bidding process will be adopted where the highest bidder will be declared the successful bidder. The approach paper put up on the coal ministry website has sought feedback from stakeholders.
NTPC was up 1.73%. NTPC after trading hours yesterday, 18 December 2014, announced that a meeting of the board of directors of the company will be held on 23 December 2014, inter alia, to consider a proposal for issuing bonus debentures to the shareholders of the company. NTPC said it is keen to reward its shareholders for their continued support as the company has entered its 40th year of operations. These bonus debentures may be issued through a scheme of arrangement under Section 391-394 of Companies Act, 1956, subject to approval of the board of directors of the company and receipt of requisite approvals under applicable laws, NTPC said.
Some capital goods stocks gained. Bharat Heavy Electricals (Bhel) (up 0.6%), and L&T (up 1.78%) gained.
Crompton Greaves rose 1.06% after the Reserve Bank of India advised yesterday, 18 December 2014, that Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) can now invest up to 100% of the paid up capital of Crompton Greaves under the Portfolio Investment Scheme (PIS). The Reserve Bank has stated that the company has passed resolutions at its Board of Directors' level and a special resolution by the shareholders, agreeing for enhancing the limit for the purchase of its equity shares and convertible debentures by FIIs/RFPIs. The purchases could be made through primary market and stock exchanges.
Punj Lloyd surged 7.05% after the company said that Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance, Government of India vide its Letter dated 15 December 2014 has approved the proposal of the company for manufacturing of equipment systems and associated assemblies for the defence sector. As per clause 4 of the above letter, foreign equity participation in the company including FDI & Investment by FII/FPI/FVCI/QFl/NRI through portfolio investment have been capped at 32.99% of the paid-up equity capital of the company, Punj Lloyd said.
Key indices gained for the second day in a row today, 19 December 2014. From the recent low of 26,710.13 on 17 December 2014, the Sensex has risen 661.71 points or 2.47% in two trading sessions. The Sensex has declined 1,322.15 points or 4.6% in this month so far (till 19 December 2014). The Sensex has gained 6,201.16 points or 29.29% in calendar year 2014 so far (till 19 December 2014). From a record high of 28,822.37 struck on 28 November 2014, the Sensex has fallen 1,450.53 points or 5.03%. From a 52-week low of 19,963.12 on 4 February 2014, the Sensex has risen 7,408.72 points or 37.11%.
In the foreign exchange market, the rupee edged lower against the dollar in choppy trade. The partially convertible rupee was hovering at 63.275, compared with its close of 63.115 during the previous trading session.
Brent crude futures recovered after a steep slide during the previous trading session. Brent for February settlement was up 61 cents at $59.88 a barrel. The contract had fallen $1.91 a barrel or 1.01% to settle at $59.27 a barrel during the previous session, the lowest closing level since May 2009.
Closer home, a mid-term economic review tabled by the finance ministry in parliament today, 19 December 2014, stated that the backlog of stalled projects needs to be cleared more expeditiously, a process that has already begun. There are stalled projects to the tune of Rs 18 lakh crore (about 13% of GDP) of which an estimated 60% are in infrastructure, according to the mid-term review. The finance ministry also said that adhering to the fiscal deficit target of 4.1% of GDP in 2014-15 is a major challenge. The report stated that the government is committed to meeting the fiscal targets for 2014-15, despite the difficult odds engendered by a combination of factors. A pick-up in economic activity in the second half of the year is critical to prevent a slippage and to meet the overall fiscal deficit target during 2014-15.
According to the fiscal challenges pointed out by the mid-term view, the tax base was weaker than expected, thanks to unanticipated moderation in inflation. The revenue projections were over-optimistic. The budget was unduly burdened by a legacy of carried-over expenditures. Moreover, the deficit target of 4.1% of GDP for 2014-15 represented strongly pro-cyclical fiscal policy-consolidation when growth was below potential.
The year could end with GDP growth around 5.5%. The economy registered a growth of 5.5% in the first half (H1) of the current financial year. According to the finance ministry, India faces challenges that are mostly domestic. Private investment has not yet picked up, and is being held back by the legacy of distressed corporate balance sheets. More than one-third firms have an interest coverage ratio of less than one (borrowing is used to cover interest payments). Over-indebtedness in the corporate sector with median debt-equity ratios at 70% is among the highest in the world. The ripples from the corporate sector have extended to the banking sector where restructured assets are estimated at about 11-12 percent of total assets. Displaying risk aversion, the banking sector is increasingly unable and unwilling to lend to the real sector.
For the year as a whole, the CAD will remain close to 2% of GDP with higher gold imports-consequent upon the liberalization in November-offset by falling oil prices, which is yet to be reflected in the data and which could reduce the CAD by 1.5% on an annual basis. CAD for April-September 2014 stood at 1.9% of GDP.
The finance ministry is of the view that falling inflation fall is not just due to base effect. The government's contribution to inflation control has been important if somewhat under-recognized. By releasing stocks at a time that food availability seemed worrisome, and crucially by reining in the increase in MSPs, government actions, along with declining world prices have moderated the inflationary impulses stemming from agriculture. According to the finance ministry, the current Reserve Bank of India (RBI) policy appears to be historically tight.
Meanwhile, Finance minister Arun Jaitley introduced constitutional amendment bill for Goods & Services tax (GST) in Lok Sabha today, 19 December 2014. The Union Cabinet recently approved a constitutional amendment bill to provide the legal framework for rolling out a nationwide goods and services tax (GST). 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 fate of several crucial bills hangs in a limbo due to several disruptions by the Opposition over the alleged forced conversion row in the Rajya Sabha. The government had planned to get key bills like Insurance Bill and the Coal Mines (Special Provisions) Bill, 2014 in parliament during the current winter session which ends on 23 December 2014. 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.
The Indian government had planned 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.
With just three days left for the winter session of Parliament to end, the chance of the passage of the reform bills in Parliament looks bleak.
European stocks rose today, 19 December 2014, spurred by the US Federal Reserve's pledge to adopt a patient approach when raising interest rates in 2015. Key indices in Germany and UK rose 0.09% to 0.47%. France's CAC 40 fell 0.01%.
Germany's producer prices surprised on the upside in November as energy prices remained unchanged from October, data from the Federal Statistics Office showed today. Producer prices in Europe's largest economy were stable on the month in November and fell 0.9% on the year, Destatis said.
The eurozone's current account surplus narrowed in October from an upwardly revised surplus in September, as the surplus on both goods and services shrank, data from the European Central Bank showed today, 19 December 2014. The current account balance, a broad measure of an economy's international financial position, showed a surplus of 20.5 billion euros ($25.24 billion) in October, down from Euro 32.0 billion in September, the ECB said.
French business confidence in manufacturing was stable in December, French statistics agency Insee said today, 19 December 2014. The confidence reading in December was 99, unchanged from November, Insee said. Business leaders said their foreign order books were stronger while their outlook for production stagnated.
Japanese stocks led Asian markets higher today, 19 December 2014, after US stocks boasted its biggest two-day advance since late 2011 yesterday, 18 December 2014, amid relief the Federal Reserve was in no rush to start hiking interest rates. Key indices in China, South Korea, Indonesia, Singapore, Japan, Hong Kong, and Taiwan were up 0.61% to 2.39%.
The Bank of Japan maintained unprecedented stimulus today, 19 December 2014, as Governor Haruhiko Kuroda's bid to stoke inflation faces increasing challenges from the tumble in oil price. The central bank will boost the monetary base at an annual pace of 80 trillion yen ($672 billion), it said in a statement.
China raised its estimate of its 2013 economic output by 3.4% based on its latest survey of the economy, the National Bureau of Statistics said on Friday. The statistics bureau said China's gross domestic product in 2013 was 58.80 trillion yuan ($9.46 trillion). It also said the revision "basically" wouldn't affect GDP growth for 2014, though it would change the total size of the economy for this year.
Trading in US index futures indicated that the Dow could gain 70 points at the opening bell today, 19 December 2014. US stocks rallied yesterday, 18 December 2014, to its best two-day gains in three years. The rally was kicked off Wednesday, 17 December 2014, after Federal Reserve Chairwoman Janet Yellen assured the markets that the central bank would be patient about lifting interest rate.
In economic news, a weekly jobless claims report came in stronger than expected, confirming the Fed's view that the economy is strengthening. Claims fell by 6,000 to 289,000, a low level typically associated with strong hiring.
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