Indian stocks slumped as Thursday's Union Budget 2014-15 lacked major policy reforms and roadmap for reduction of subsidies. The barometer index, the S&P BSE Sensex, and 50-unit CNX Nifty, both, hit over five-week closing low. The Sensex shed 348.40 points or 1.37%, off close to 525 points from the day's high and up about 45 points from the day's low. The Sensex closed above the psychological 25,000 mark after falling below that mark for a brief period. There was a sharper decline in small-cap and mid-cap indices. The BSE Mid-Cap index fell almost 3%. The BSE Small-Cap index was off over 3%. The market breadth indicating the overall health of the market was weak, with more than three losers for every gainer on BSE.
Capital goods stocks tumbled. Banking, metal and realty stocks also declined. Index heavyweight Reliance Industries (RIL) dropped. Pharma stocks gained on defensive buying. IT major Infosys rose in volatile trade after the company retained its revenue guidance for the year ending 31 March 2015 at the time of announcing Q1 June 2014 results. PSU OMCs dropped.
The S&P BSE Sensex shed 348.40 points or 1.37% to settle at 25,024.35, its lowest closing level since 5 June 2014. The index slumped 394.42 points at the day's low of 24.978.33 in late trade. The index jumped 175.58 points at the day's high of 25,548.33 in morning trade.
The CNX Nifty lost 108.15 points or 1.43% to settle at 7,459.60, its lowest closing level since 4 June 2014. The index hit a low of 7,447.20 and a high of 7,625.85 in intraday trade.
The total turnover on BSE amounted to Rs 3749 crore, lower than Rs 5134.93 crore on Thursday, 10 July 2014.
The market breadth indicating the overall health of the market was weak, with more than three losers for every gainer on BSE. On BSE, 2,217 shares fell and 710 shares rose. A total of 79 shares were unchanged.
The BSE Mid-Cap index shed 256.94 points or 2.81% at 8,875.24. The BSE Small-Cap index lost 331.86 points or 3.31% at 9,688.11. Both these indices underperformed the Sensex.
Among the 30 Sensex shares, 19 declined and the remaining shares rose.
Metal and mining stocks dropped. Sesa Sterlite (down 0.12%), JSW Steel (down 5.33%), Hindalco Industries (down 5.59%), Hindustan Zinc (down 5.3%), Bhushan Steel (down 0.9%), Tata Steel (down 4.01%), Steel Authority of India (Sail) (down 6.06%), NMDC (down 7.26%) and Hindustan Copper (down 6.41%) declined.
The finance minister in the Union Budget 2014-15, presented on Thursday, 10 July 2014, made revision of royalty on minerals to ensure greater revenue for State Governments. He increased basic customs duty on imported flat-rolled stainless steel products from 5% to 7.5%. He also increased custom duty in metallurgical coal from nil to 2.5%
National Aluminum Company (Nalco) dropped 8.48%. The finance minister increased export duty on bauxite from 10% earlier to 20%.
Jindal Steel & Power shed 7.08% to Rs 280.05. The stock turned ex-dividend today, 11 July 2014, for dividend of Rs 1.50 per share for the year ending March 2014.
Shares of firms operating in the power sector tumbled on profit booking. JSW Energy (down 8%), Reliance Infrastructure (down 5.94%), Suzlon Energy (down 4.85%), Power Grid Corporation of India (down 3.84%), Reliance Power (down 4.94%), Adani Power (down 5.13%), Tata Power Company (down 3.6%), NHPC (down 5.02%), Torrent Power (down 4.74%), and NTPC (down 1.03%) edged lower.
The S&P BSE Power index rose 1.12% to 2,231.05 on Thursday, 10 July 2014, after the Finance Minister Arun Jaitley in Union Budget 2014-15 announced a ten-year tax holiday to the power sector undertakings, which begin generation, distribution and transmission of power by 31 March 2017.
Jaitley proposed Rs 200 crore for power reforms. Further, the Finance Minister has proposed to allocate an initial sum of Rs 100 crore for preparatory work for a new scheme "Ultra-Modern Super Critical Coal Based Thermal Power Technology" to promote cleaner and more efficient thermal power.
Jaitley also announced comprehensive measures for enhancing domestic coal production with a stringent mechanism for quality control and environmental protection. Measures will be initiated to provide adequate quantity of coal to power plants which are already commissioned or would be commissioned by March 2015 to unlock dead investments.
To further improve rural life, the government will launch the Deen Dayal Upadhyay Gram Jyoti Yojana to augment power supply at a cost of Rs 500 crore.
To promote wind energy, Jaitley proposed to reduce the basic customs duty from 10% to 5% on forged steel rings used in the manufacture of bearings of wind operated electricity generators. Also, he proposed to exempt the SAD of 4% on parts and raw materials required for the manufacture of wind operated generators. Further, he proposed to prescribe a concessional basic customs duty of 5% on machinery and equipment required for setting up of compressed biogas plants (Bio-CNG).
Realty stocks edged lower after Thursday's sharp gains triggered by favourable announcements in Union Budget 2014-15. Housing Development & Infrastructure (HDIL) (down 4.83%), Sobha Developers (down 0.83%), DLF (down 5.99%), Unitech (down 10.68%) and D B Realty (down 4.9%) declined.
Finance Minster Arun Jaitley on Thursday said that the government will provide tax incentives for Real Estate Investment Trusts. The government hiked the deduction limit on interest on housing loan in respect of self occupied house property from Rs 1.5 lakh to Rs 2 lakh in Union Budget 2014-15.
Jaitley proposed setting up a Mission on Low Cost Affordable Housing to be anchored in the National Housing Bank. A sum of Rs 4000 crore has been earmarked for National Housing Bank with a view to increase the flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.
Jaitley said that the Rural Housing Scheme has benefited a large percentage of rural population who have availed credit through Rural Housing Fund (RHF). In the light of the above, enhanced allocations to the tune of Rs 8000 crore has been made for National Housing Bank (NHB) for the year 2014-15 to expand and support Rural Housing in the country.
To encourage development of Smart Cities, requirement of the built up area and capital conditions for foreign direct investment (FDI) is being reduced from 50,000 square metres to 20,000 square metres and from $10 million to $5 million respectively with a three year post completion lock in. To further encourage this, projects which commit at least 30% of the total project cost for low cost affordable housing will be exempted from minimum built up area and capitalization requirements, with the condition of three year lock-in.
Pharma stocks gained on defensive buying. Aurobindo Pharma (up 3.9%), Cipla (up 0.17%), Dr Reddy's Laboratories (up 2%), Lupin (up 1.24%), Ranbaxy Laboratories (up 2.29%) and Sun Pharmaceutical Industries (up 2.28%) rose
Tata Motors fell 1.62% to Rs 445.50. The stock hit high of Rs 461.30 and low of Rs 444. The company's British luxury car unit Jaguar Land Rover (JLR) reported strong sales in June. JLR sales rose 17% to 39,594 vehicles in June 2014 over June 2013. Sales rose 14% to 240,372 vehicles during the period January-June 2014 over the corresponding period last year. The company said sales for the six months ended June 2014 were its strongest ever half year sales performance.
PSU OMCs dropped. BPCL (down 3.67%), HPCL (down 5.06%) and Indian Oil Corporation (IOCL) (down 2.44%) declined. The finance minister proposed in Union Budget 2014-15, to overhaul the subsidy regime, including food and petroleum subsidies, and make it more targeted while providing full protection to the marginalized, poor and SC/STs. The subsidy on petroleum products has been reduced to Rs 85480 crore in 2014-15, from revised estimate of Rs 63426.95 crore for 2013-14. The government has adopted the policy of gradually increasing the diesel prices to eliminate under recovery and deregulate the diesel prices. It is expected that the gap between administered price and market price of diesel would be eliminated by early FY 2014-15, the Finance Ministry said in its fiscal policy strategy statement.
Index heavyweight Reliance Industries (RIL) dropped 3.23% to Rs 966. The stock hit high of Rs 1,001.45 and low of Rs 963.85.
Capital goods stocks tumbled. Bharat Heavy Electricals (Bhel) (down 9.52%), ABB (India) (down 2.79%), Crompton Greaves (down 9.76%), and Siemens (down 3.33%), declined.
L&T shed 5.01% to Rs 1,572.35. The finance minister said that in Union Budget 2014-15, the government will provide Rs 37880 crore for road construction by National Highways Authority of India. A total of 8,500 KMs of roads will be added in this financial year. The Budget has provided Rs 14389 crore for rural road development projects in 2014-15 under the Pradhan Mantri Gram Sadak Yojana.
Bank stocks edged lower for the second day in a row. Among PSU banks, Union Bank of India (down 6.39%), State Bank of India (SBI) (down 4.96%), Punjab National Bank (down 4.01%), Bank of Baroda (down 5.17%) and Bank of India (down 6.5%), edged lower.
Expressing concerns over the rising non performing assets (NPA) of Public Sector Banks (PSBs) the finance minister in Union Budget 2014-15, announced setting-up of six new Debt Recovery Tribunals at Chandigarh, Bangaluru, Ernakulum, Dehradun, Silliguri and Hyderabad.
He also said that there is a requirement to infuse Rs 2.4 lakh crore as equity by 2018 in the public sector banks. To meet this huge capital requirement, additional resources have to be raised. By selling the shares through retail, the citizens will get direct shareholdings in these banks even as the government will continue to have majority shareholding. Jaitley said that government will also examine the proposal to give autonomy to the banks while making them accountable.
Among private sector banks, IndusInd Bank (down 0.18%), ICICI Bank (down 2.53%), Axis Bank (down 2.35%) and HDFC Bank (down 1.52%), edged lower..
The finance minister said that banks will be permitted to raise long term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and Priority Sector Lending. On the assets side, banks will be encouraged to extend long term loans to infrastructure sector with flexible structuring to absorb potential adverse contingencies, sometimes known as the 5/25 structure.
The finance minister said that after making suitable changes to current framework, a structure will be put in place for continuous authorization of universal banks in the private sector in the current financial year. He said RBI will create a framework for licensing small banks and other differentiated banks. Jaitley said differentiated banks serving niche interests, local area banks and payment banks etc. are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant workforce among others.
Kotak Mahindra Bank fell 0.97% to Rs 856.75. The stock hit high of Rs 882.50 and low of Rs 847.15. The Reserve Bank of India has on Thursday, 10 July 2014, notified that shares of the bank can now be purchased through primary market and stock exchanges by Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) as the restrictions placed on the purchase of shares of the bank have been withdrawn with immediate effect after the share holdings by FIIs/RFPIs under Portfolio Investment Scheme in Kotak Mahindra Bank have gone below the prescribed threshold limit stipulated under the extant FDI Policy.
IT major Infosys gained 1% to Rs 3,325.40 after announcing its Q1 result. The stock was volatile. The stock hit high of Rs 3,429.35 and low of Rs 3,305. The company's consolidated net profit as per International Financial Reporting Standards (IFRS) fell 3.5% to Rs 2886 crore on 0.8% decline in revenue to Rs 12770 crore in Q1 June 2014 over Q4 March 2014. The result was announced before market hours today, 11 July 2014. Infosys said it added 61 clients during the quarter.
Infosys expects its consolidated revenue to grow 7%-9% in dollar terms in the year ending 31 March 2015 (FY 2015). The guidance is unchanged compared to the one the company had given at the time of announcement of Q4 March 2014 results in April this year. The guidance in rupee terms has also been kept unchanged from that given in April as the company has assumed rupee dollar conversion rate of 60 which is exactly the same conversion rate given in April guidance. The company expects its revenue to grow 5.6%-7.6% in rupee terms in FY 2015.
Shares of other IT companies rose as Infosys retained revenue guidance for the full year at the time of announcing Q1 June 2014 results. HCL Technologies (up 1.96%), TCS (up 2.13%), Tech Mahindra (up 1.46%) and Wipro (up 1.42%) gained.
Diamond jewellery makers declined after the finance minister in Union Budget 2014-15 increased customs duty from NIL to 2.5% on half?cut or broken diamonds and on cut & polished diamonds and colored gemstones from 2% to 2.5%. Classic Diamonds (India) (down 4.57%), Gitanjali Gems (down 5.23%), Rajesh Exports (down 4.24%) and Winsome Diamonds & Jewellery (down 3.48%) declined.
Footwear stocks were mostly lower after Finance Minister proposed to cut excise duty to 6% from 12% on footwear. Liberty Shoes (down 4.62%) and. Bata India (down 2.03%) declined. Relaxo Footwear rose 0.2%.
Finance Minister proposed to cut excise duty to 6% from 12% on footwear of retail price exceeding Rs 500 per pair but not exceeding Rs 1,000 per pair. Footwear of retail price upto Rs 500 per pair will continue to remain exempted.
A bout of initial volatility was witnessed as key benchmark indices regained positive terrain after slipping into the red for a brief period after opening higher. Volatility continued as key benchmark indices once again regained positive terrain after slipping into the negative terrain from positive terrain in morning trade. Volatility continued as key benchmark indices slipped into the red and hit fresh intraday low in mid-morning trade. Key benchmark indices extended losses and hit fresh intraday low in early afternoon trade. Selling intensified in afternoon trade as key benchmark indices extended losses to hit fresh intraday low. Key benchmark indices further extended losses and hit fresh intraday low. Indian stocks extended losses in late trade. The Sensex and 50-unit CNX Nifty, both, hit 2-1/2-week low.
Indian stocks fell for the fourth day in a row today, 11 July 2014. On Thursday, worries about the fragility of Europe's banking system weighed on Indian stocks which registered small losses after witnessing high intraday volatility after the presentation of the Union Budget 2014-15. The Sensex has fallen 1,075.73 points or 4.12% in four trading sessions from a record closing high of 26,100.08 on 7 July 2014. The Sensex has fallen 389.43 points or 1.53% in this month so far (till 11 July 2014). The Sensex has gained 3,853.67 points or 18.2% in calendar year 2014 so far (till 11 July 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 7,575.64 points or 43.41%. From a record high of 26,190.44 on 8 July 2014, the Sensex has fallen 1,166.09 points or 4.45%.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 60.055, compared with its close of 60.19/20 on Thursday, 10 July 2014.
Finance Minster Arun Jaitley made a number of announcements in Union Budget 2014-15 on Thursday, 10 July 2014, such as a proposal to increase in the ceiling on foreign direct investment in defence manufacturing, proposal to increase the ceiling on foreign investment in insurance, measures to boost long term financing for infrastructure by banks and provided clarity on taxation with respect to foreign portfolio investors. But, market expectations that the Finance Minster would scrap the law on retrospective taxation were not met. Government spending on plan expenditure was substantially increased to support growth.
Industrial output is seen rising 3.8% in May 2014, higher than 3.4% growth in April, as per the median estimates of a poll of economists carried out by Capital Market. The government will unveil industrial production data for May 2014 today, 11 July 2014.
European stocks edged higher on Friday, 11 July 2014, rebounding from concern the region's so-called peripheral countries are slipping back into trouble. Key benchmark indices in UK, France and Germany were up by 0.11% to 0.57%.
European stocks had dropped on Thursday, 10 July 2014, after Portugal's Espirito Santo International missed a payment on some short-term debt. Trading in shares of Banco Espirito Santo SA (BES) and Espirito Santo Financial Group SA was halted on Thursday and remained suspended today. BES today disclosed it has an exposure of 1.18 billion euros ($1.6 billion) to the Espirito Santo conglomerate through loans and securities. BES also said that its capital buffer is 2.1 billion euros above the minimum regulatory level for European banks.
Asian stocks edged lower in choppy trade on Friday, 11 July 2014, amid concern that Europe's debt problems haven't been resolved. Key benchmark indices in Hong Kong, Taiwan, Indonesia, South Korea and Japan fell 0.02% to 1.28%. Key benchmark indices in China and Singapore were up 0.42% to 0.74%.
Trading in US index futures indicated that the Dow could gain 30 points at the opening bell on Friday, 11 July 2014. US stocks fell on Thursday, 10 July 2014, on concerns that trouble at a European bank might spread.
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