Investors cheered overnight steep slide in global crude oil prices, sending key equity benchmark indices to record high. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit record high on intraday basis as well as on closing basis. However, the benchmark indices trimmed gains during the latter part of the trading session after a sharp surge earlier during the trading session. The Sensex jumped 255.08 points or 0.9% to settle at 28,693.99. The market breadth indicating the overall health of the market turned negative from positive in late trade.
Foreign portfolio investors (FIIs) bought shares worth a net Rs 567.82 crore from the secondary equity markets yesterday, 27 November 2014, as per data from the National Securities Depository (NSDL).
Bank stocks surged on optimism falling oil prices will slow inflation and create room for the Reserve Bank of India (RBI) to cut interest rates. Coal India edged higher in volatile trade after the company said its board of directors has approved setting up a coal-based super-critical thermal power plant in Odisha at a total capital investment of Rs 11363.18 crore. Capital goods stocks edged higher on renewed buying. Shares of paint makers were in demand as crude oil prices fell.
Auto stocks edged higher on hopes PSU OMCs may cut petrol and diesel prices after the latest slump in crude oil prices. Airline stocks jumped after global crude oil prices tumbled yesterday, 27 November 2014. Shares of public sector oil marketing companies surged as global crude oil prices tumbled yesterday, 27 November 2014, after OPEC decided to keep the cartel's production levels unchanged at a meeting in Vienna yesterday, 27 November 2014. Cairn India fell as lower crude oil prices will result in lower realizations from crude sales for oil exploration firms such as Cairn India.
Indian government's decision last month to decontrol diesel prices 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.
Meanwhile, the Reserve Bank of India (RBI) yesterday, 27 November 2014, set Rs 100 crore as minimum paid-up equity capital requirement for setting up payments banks and small finance banks.
In overseas markets, European stocks edged lower as falling oil prices dragged energy stocks lower. Stocks in Japan and mainland China led gains in Asian markets.
In the foreign exchange market, the rupee weakened past 62 against the dollar on month-end dollar demand from importers.
The S&P BSE Sensex gained 255.08 points or 0.9% to settle at 28,693.99, a record closing high for the index. The index jumped 383.46 points at the day's high of 28,822.37 in early afternoon trade, a lifetime high for the index. The index rose 45.08 points at the day's low of 28,483.99 in early trade.
The CNX Nifty rose 94.05 points or 1.11% to settle at 8,588.25, a record closing high for the index. The index hit a high of 8,617 in intraday trade, a lifetime high for the index. The index hit a low of 8,516.25 in intraday trade.
The total turnover on BSE amounted to Rs 3815 crore, higher than Rs 3351.02 crore on Thursday, 17 November 2014.
The market breadth indicating the overall health of the market turned negative from positive in late trade. On BSE, 1,518 shares fell and 1,509 shares fell. A total of 94 shares were unchanged.
The BSE Mid-Cap index rose 98.69 points or 0.97% to settle at 10,270.61, outperforming the Sensex. The BSE Small-Cap index gained 29.14 points or 0.26% to settle at 11,270.79, underperforming the Sensex.
Bank stocks surged on optimism falling oil prices will slow inflation and create room for the Reserve Bank of India (RBI) to cut interest rates. Among private sector banks, IndusInd Bank (up 3.97%), Yes Bank (up 2.6%), Kotak Mahindra Bank (up 4.12%), ING Vysya Bank (up 3.63%), Axis Bank (up 3.3%), ICICI Bank (up 1.87%), City Union Bank (up 2.92%), Federal Bank (up 2.98%) and HDFC Bank (up 0.95%) edged higher.
Among public sector banks, Syndicate Bank (up 6.27%), Punjab National Bank (up 8.13%), Canara Bank (up 7.97%), UCO Bank (up 6.43%), Bank of India (up 5.31%), Allahabad Bank (up 5.13%), Union Bank of India (up 5.04%), Oriental Bank of Commerce (up 7.07%), State Bank of India (up 5.38%), Andhra Bank (up 4.55%), Indian Bank (up 4.17%), and Dena Bank (up 2.65%) edged higher.
Minister of State for Finance Jayant Sinha reportedly said in a written statement in parliament today, 28 November 2014, that the government is considering a plan to reduce stakes in state-run banks to 52% that could enable it to raise about Rs 89120 crore. He said the stake sale will enable the government to scale back its budgetary support for the banks.
A Supreme Court order scrapping most coal extraction permits given to companies would have a likely impact of Rs 96484 crore on state-run lenders, Sinha reportedly said in a written reply in parliament today, 28 November 2014. The government had deduced the impact of the cancellation of the coal block allotments on banks due to likely stoppage of power production, Sinha said.
The Reserve Bank of India yesterday, 27 November 2014, said commercial banks can extend loans to individuals against special long-term bonds issued by them for financing infrastructure projects and affordable housing. This will provide liquidity to retail investors in such bonds, the RBI said in a notification. The RBI said that a bank should lay down a policy in this regard prescribing suitable margins, purpose of the loan and other safeguards. Further, such loans should be subject to a prescribed ceiling per borrower and tenure of loan should be within the maturity period of the bonds, the RBI said. The RBI however barred banks from providing loans against long-term infrastructure bonds issued by other banks. It may be recalled that the RBI had in July this year allowed banks to raise funds by selling special long-term bonds that are exempt from reserve requirements. The funds raised are also exempt from priority-sector norms, making the sale of these bonds attractive for banks that finance infrastructure projects.
Bank of Baroda jumped 7.52%. The bank said during market hours today, 28 November 2014, that it has decided to defer issue of private placement of bonds. Bank of Baroda had on 26 November 2014 announced that it was planning private placement of AT-1 Bonds (Basel III Compliant- Tier I) of Rs 1000 crore with a green shoe option of additional Rs 500 crores to augment Tier I capital of the bank.
Shares of index heavyweight Reliance Industries rose 0.19% to Rs 989 on buzz that a government panel recommended to the oil ministry it should allow RIL to recover cost of discoveries to the tune of $160.8 million for digging three wells in the KG basin gas reserve off the Andhra coast. The stock hit high of Rs 1,016.20 and low of Rs 983.55. The panel urged the government resolve disputes related to estimating gas reserves in the wells with the explorer and added that the oil ministry should act on raising the output in the KG D6 block, as per reports.
Capital goods stocks edged higher. ABB (up 2.03%), Alstom India (up 1.07%), Bharat Heavy Electricals (Bhel) (up 0.07%), BEML (up 1.31%), and Siemens (up 0.43%) gained.
L&T rose 1.28%. With respect to the disclosure made on 24 November 2014 to the exchange titled "L&T Technology Services closes acquisition of Dell's Engineering Services Business.", the company clarified that L&T Technologies Services intends to acquire Dell's Engineering Services business located at US and India, subject to regulatory approvals. The acquisition price is $12.5 million, subject to customary net asset adjustments at the time of closing. There are no further disclosures, the company added.
Coal India edged higher in volatile trade after the company said its board of directors has approved setting up a coal-based super-critical thermal power plant in Odisha at a total capital investment of Rs 11363.18 crore. The stock was up 1.59% at Rs 354.75. The scrip hit high of Rs 357.85 and low of Rs 347. The power plant is being set up by Mahanadi Basin Power (MBPL) a wholly owned subsidiary of Mahanadi Coalfields, which is a wholly owned subsidiary of Coal India. The announcement was made during trading hours today, 28 November 2014.
The government has already approved divestment of 10% stake in Coal India.
Realty stocks edged higher on optimism falling oil prices will slow inflation and create room for the Reserve Bank of India (RBI) to cut interest rates. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance. Sobha (up 4.18%), D B Realty (up 0.23%), Unitech (up 0.52%), DLF (up 0.81%), Housing Development & Infrastructure (HDIL) (up 3.92%), Godrej Properties (up 0.32%), Phoenix Mills (up 0.29%), Parsvnath Developers (up 2.16%), Oberoi Realty (up 1.4%) and Prestige Estates (up 2.45%), edged higher.
Auto stocks edged higher on hopes PSU OMCs may cut petrol and diesel prices after the latest slump in crude oil prices. Tata Motors (up 2.78%), Maruti Suzuki India (up 2.25%), Hero MotoCorp (up 1.18%), Escorts (up 0.36%), Eicher Motors (up 1.04%), and Mahindra & Mahindra (up 2.53%) edged higher. Bajaj Auto fell 0.35%. TVS Motor Company declined 1.14%.
PSU OMCs review fuel prices during the middle of the month and on the last day of the month based on the average imported oil price in the preceding fortnight.
Meanwhile, as per recent media reports the government may extend excise duty concessions on automobiles beyond 31 December 2014 as the industry continues to struggle with sluggish demand due to high interest rates. In February this year, the Congress led UPA government in its interim budget had reduced excise duty on automobiles for a limited period until 30 June 2014. Later, the new BJP government which came to power in May this year extended the concessional excise duty on automobiles until 31 December 2014. The excise duty on small cars, scooters, motorcycles and commercial vehicles was cut to 8% from 12%. The same for SUVs (sports utility vehicles) was slashed to 24% from 30%, while on large cars it was reduced to 24% from 27% and mid-sized cars to 20% from 24%.
Shares of public sector oil marketing companies surged as global crude oil prices tumbled yesterday, 27 November 2014. HPCL (up 8.93%), BPCL (up 3.58%) and Indian Oil Corporation (up 4.42%) edged higher. Lower crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. 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. The government has already freed pricing of petrol and diesel.
Cairn India fell 4.35% as lower crude oil prices will result in lower realizations from crude sales for oil exploration firms such as Cairn India.
Airline stocks jumped after global crude oil prices tumbled yesterday, 27 November 2014. Jet Airways (India) (up 20%) and SpiceJet (up 15.36%) surged. Aviation turbine fuel (ATF) or jet fuel price is linked to international crude oil prices. Jet fuel constitutes about 40% of airlines' operating cost. PSU OMCs review jet fuel prices during the middle of the month and on the last day of the month based on the average imported oil price in the preceding fortnight.
Shares of paint makers were in demand as crude oil prices fell. Shalimar Paints (up 6.33%), Berger Paints (up 3.65%), Akzo Nobel India (up 5.24%) and Kansai Nerolac Paints (up 1.11%), edged higher.
Falling crude oil prices augur well for paints makers. Titanium dioxide is a key raw material for paint companies and is derived from crude oil.
Sector bellwether Asian Paints jumped 5.28% to Rs 743.70. The stock hit a record high of Rs 748.25 in intraday trade.
Indian stocks gained for the third day in a row today, 28 November 2014. The Sensex has risen 355.94 points or 1.25% in three trading sessions from a recent low of 28,338.05 on 25 November 2014. The Sensex has risen 828.16 points or 2.97% in this month so far (till 28 November 2014). The Sensex has gained 7,523.31 points or 35.53% in calendar year 2014 so far (till 28 November 2014). From a 52-week low of 19,963.12 on 4 February 2014, the Sensex has risen 8,730.87 points or 43.73%.
Meanwhile, the National Stock Exchange (NSE) yesterday, 27 November 2014, announced that the exchange has decided to provide a flat concession of 40% in the transaction charges on the incremental billable volume (i.e. the Premium value) above Rs 750 crore in a month for a period of 2 months from 1 December 2014 to 31 January 2015 on a pilot basis on NSE's equity options segment. In order to improve the liquidity in the equity options segment and to align with the feedback received from the market, an exercise to review the transaction charges in the equity options segment was carried out by the exchange, NSE said in a circular.
In the foreign exchange market, the rupee weakened past 62 against the dollar on month-end dollar demand from importers. The partially convertible rupee was hovering at 62.0325, compared with its close of 61.875 during the previous trading session.
Brent crude futures edged higher in volatile trade. Brent for January settlement was up 2 cents at $72.60 a barrel. The contract dropped $5.17 a barrel to settle at $72.58 yesterday, 27 November 2014, the lowest close since August 2010, after OPEC decided to keep the cartel's production levels unchanged at a meeting in Vienna.
The Organization of Petroleum Exporting Countries (OPEC) will maintain its collective output target at 30 million barrels a day, Saudi Arabia's Oil Minister Ali Al-Naimi said after the group met in Vienna yesterday, 27 November 2014. The 12-member group, which pumps 40% of the world's oil, will convene again on 5 June 2015 in the Austrian capital.
The Indian government intends to get the Insurance Laws Amendment Bill that seeks to enhance FDI limit in capital starved insurance sector passed during the winter session of parliament which began on 24 November 2014. The government is also likely to introduce the constitutional amendment bill for the goods & services tax in the winter session of parliament.
The Reserve Bank of India (RBI) yesterday, 27 November 2014, set Rs 100 crore as minimum paid-up equity capital requirement for setting up payments banks and small finance banks. Those eligible for setting up a payments bank include existing non-bank pre-paid payment instrument (PPI) issuers and other entities such as individuals/professionals, non-banking finance companies (NBFCs), corporate Business Correspondents (BCs), mobile telephone companies, super-market chains, companies and real sector cooperatives that are owned and controlled by residents. Public sector entities can also apply to set up payments banks, the RBI said while issuing guidelines on payments banks. A promoter/promoter group can have a joint venture with an existing scheduled commercial bank to set up a payments bank. A scheduled commercial bank can take equity stake in a payments bank only to the extent permitted under Section 19 (2) of the Banking Regulation Act, 1949. Promoter/promoter groups should be 'fit and proper' with a sound track record of professional experience or running their businesses for at least a period of five years in order to be eligible to promote payments banks, according to the RBI guidelines on payments banks.
A payment bank can accept demand deposits. However, it will initially be restricted to holding a maximum balance of Rs 1 lakh per individual customer as demand deposits. A payments bank can issue ATM/debit cards, but cannot issue credit cards. A payments bank will provide payments and remittance services through various channels. A payments bank can act as BC of another bank, subject to the Reserve Bank guidelines on BCs. The payments bank cannot undertake lending activities. Apart from amounts maintained as Cash Reserve Ratio (CRR) with the Reserve Bank of India on its outside demand and time liabilities, a payments bank will be required to invest minimum 75% of its "demand deposit balances" in Statutory Liquidity Ratio (SLR) eligible government securities/treasury bills with maturity up to one year and hold maximum 25% in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.
The payments bank should have a leverage ratio of not less than 3%, i.e., its outside liabilities should not exceed 33.33 times its net worth (paid-up capital and reserves). The promoter's minimum initial contribution to the paid-up equity capital of a payments bank shall at least be 40% for the first five years from the commencement of its business, the RBI said. The operations of a payments bank should be fully networked and technology driven from the beginning, conforming to generally accepted standards and norms, the RBI said.
Those eligible for setting up a small finance bank include resident individuals/professionals with 10 years of experience in banking and finance and companies and societies owned and controlled by residents. Existing NBFCs, Micro Finance Institutions (MFIs) and Local Area Banks (LABs) that are owned and controlled by residents can also opt for conversion into small finance banks. Promoter/promoter groups should be 'fit and proper' with a sound track record of professional experience or of running their businesses for at least a period of five years in order to be eligible to promote small finance banks, according to RBI's guidelines on small finance banks.
The small finance bank shall primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities, the RBI said. There will not be any restriction in the area of operations of small finance banks, the central bank said. If the small finance bank aspires to transit into a universal bank, such transition will not be automatic, but would be subject to fulfilling minimum paid-up capital/net worth requirement as applicable to universal banks, its satisfactory track record of performance as a small finance bank and the outcome of the RBI's due diligence exercise. The promoter's minimum initial contribution to the paid-up equity capital of a small finance bank shall at least be 40% and gradually brought down to 26% within 12 years from the date of commencement of business of the bank, the RBI said.
The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). No forbearance would be provided for complying with the statutory provisions, the RBI said. A small finance bank will be required to extend 75% of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the RBI. At least 50% of the loan portfolio a small finance bank should constitute loans and advances of upto Rs 25 lakh.
The government's fiscal deficit during April-October 2014 was 89.6% of the full-year target, compared with 84.4% during the comparable period in the previous fiscal year, according to reports.
The government will announce data on gross domestic product (GDP) for Q2 September 2014 at 17:30 IST today, 28 November 2014. India's GDP grew 5.7% in Q1 June 2014 over the corresponding period of the previous year.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 2 December 2014. The central bank aims to limit consumer-price gains to 8% by January 2015 and 6% by January 2016. Over the longer term, the RBI aims to limit consumer-price gains to 4%, within a 2% band. The annual rate of inflation based on the combined consumer price index (CPI) for urban and rural India eased to 5.52% in October 2014 from 6.46% in September 2014, data released by the government on 12 November 2014 showed.
Meanwhile, leaders of the South Asian Association for Regional Cooperation (SAARC) issued a statement after the end of a two-day summit in Nepal yesterday, 27 November 2014, that the Heads of State or Government of SAARC expressed their strong determination to deepen regional integration for peace, stability and prosperity in South Asia by intensifying cooperation, inter alia, in trade, investment, finance, energy, security, infrastructure, connectivity and culture; and implementing projects, programmes and activities in a prioritized, result-oriented and time-bound manner. The SAARC leaders renewed their commitment to achieve South Asian Economic Union (SAEU) in a phased and planned manner through a Free Trade Area, a Customs Union, a Common Market, and a Common Economic and Monetary Union. The leaders welcomed the signing of the SAARC Framework Agreement for Energy Cooperation (Electricity).
European stocks edged lower today, 28 November 2014, as falling oil prices dragged energy stocks lower. Key benchmark indices in France, Germany and UK were off 0.51% to 0.81%.
Italy's unemployment rate unexpectedly rose above 13% in October, setting a new record as businesses refrain from hiring amid the country's longest recession since World War II. The unemployment rate rose to 13.2% from a revised 12.9% the previous month, the Rome-based national statistics office Istat said in a preliminary report today.
Euro-area inflation slowed in November to match a five-year low, prodding the European Central Bank toward expanding its unprecedented stimulus program. Consumer prices rose 0.3% from a year earlier, the European Union's statistics office in Luxembourg said today.
UK consumer confidence was unchanged this month as Britons' willingness to make big purchases offset a deterioration in their outlook for the economy. A sentiment index by GfK NOP held at minus 2, GfK said in a statement today. A measure of shoppers' assessment of the climate for making major purchases rose 5 points to zero, while gauges of their economic and personal finance outlook both declined. The economic index is now at its weakest since 2013.
German retail sales rose in October at their fastest monthly pace in more than three years, supporting views that consumption could remain a key pillar of German economic growth in the fourth quarter. Retail sales in October rose 1.9% in calendar- and inflation-adjusted terms compared with September, the Federal Statistics Office said today, 28 November 2014. It was the highest figure since June 2011, when it was 2.6%.
In France, consumer spending--by far the largest component of the economy--dropped 0.9% in October from September, the sharpest month-on-month decline since June 2013, statistics agency Insee said.
Stocks in Japan and mainland China led gains in Asian markets today, 28 November 2014. Key benchmark indices in Indonesia, Taiwan and Singapore were up 0.09% to 0.29%. Key benchmark indices in South Korea and Hong Kong were off 0.07% each.
In Japan, the Nikkei 225 Average jumped 1.23% after the latest data showed Japan's October retail sales rose 1.4% on year and industrial production beat forecasts with a month-on-month increase of 0.2%. However, the inflation rate slowed to its lowest level in a year.
In mainland China, the Shanghai Composite index jumped 1.99% on optimism a slide in oil prices will reduce costs for transport companies and the central bank may continue to loosen monetary policy.
Trading in US index futures indicated that the Dow could fall 48 points at the opening bell today, 28 November 2014. The US market was closed yesterday, 27 November 2014, for Thanksgiving Day holiday.
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