A fall in global crude oil prices to four-year low provided fresh trigger for gains for Indian stocks. Intraday volatility was high as traders rolled over positions in the futures & options (F&O) segment from November 2014 series to December 2014 series. The November 2014 derivatives contracts expired today, 27 November 2014. The barometer index, the S&P BSE Sensex, was provisionally up 101.37 points or 0.36% at 28,487.56. The market breadth indicating the overall health of the market was positive.
Bank stocks rose after the Reserve Bank of India said commercial banks can extend loans to individuals against special long-term bonds issued by them for financing infrastructure projects and affordable housing.
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, Canada's Fairfax Financial Holdings and Fairfax India Holdings Corporation yesterday, 26 November 2014, announced that Fairfax India has filed a preliminary prospectus with the securities regulatory authorities of all provinces and territories in Canada in respect of its initial public of subordinate voting shares. Fairfax India is an investment holding company whose investment objective is to achieve long-term capital appreciation, while preserving capital, by investing in public and private equity securities and debt instruments in India and Indian businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, India.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 181.46 crore yesterday, 26 November 2014, as per provisional data.
Key benchmark indices witnessed high intraday volatility since afternoon trade after moving in a narrow range earlier during the day. After a strong intraday rebound in mid-afternoon trade, the key benchmark indices once again slipped into the red later. Key indices once again staged a strong rebound in late trade.
In the foreign exchange market, the rupee edged lower against the dollar in volatile trade.
Brent crude oil futures hit four-year low amid speculation that OPEC will refrain from cutting output when ministers meet in Vienna today, 27 November 2014.
In overseas markets, European stocks rose after the latest data showed that Germany's unemployment rate dropped to a record low in November. Asian stocks were mixed. In the US yesterday, 26 November 2014, the S&P 500 and Dow Jones Industrial Average, both, attained record closing high after registering small gains as telecoms and technology shares rose.
As per provisional figures, the S&P BSE Sensex was up 101.37 points or 0.36% at 28,487.56. The index jumped 110.32 points at the day's high of 28,496.51 in late trade, its highest level since 25 November 2014. The index fell 78.61 points at the day's low of 28,307.58 in mid-afternoon trade.
The CNX Nifty was up 18.45 points or 0.22% at 8,494.20, as per provisional figures. The index hit a high of 8,506.75 in intraday trade, its highest level since 25 November 2014. The index hit a low of 8,456.35 in intraday trade.
The market breadth indicating the overall health of the market was positive. On BSE, 1,573 shares gained and 1,344 shares fell. A total of 138 shares were unchanged.
The BSE Mid-Cap index was up 48.90 points or 0.48% at 10,168.85. The BSE Small-Cap index was up 59.15 points or 0.53% at 11,239.39. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 3336 crore, higher than Rs 2973.91 crore on Wednesday, 26 November 2014.
Essar Oil declined 2.88%. The company said during market hours that as advised by market regulator Securities & Exchange Board of India (Sebi)., the matter regarding company's delisting of shares has been put on hold till further directions in this regard are received. The company had approached the stock exchanges for in-principle approval for delisting of its equity shares.
Bank stocks rose after the Reserve Bank of India said commercial banks can extend loans to individuals against special long-term bonds issued by them for financing infrastructure projects and affordable housing. Among private sector banks, ICICI Bank (up 1.02%), IndusInd Bank (up 0.5%), Yes Bank (up 1.35%), Federal Bank (up 3.31%), and Kotak Mahindra Bank (up 0.05%) gained. Axis Bank (down 0.54%) and HDFC Bank (down 0.44%) declined.
Among PSU bank stocks, Canara Bank (up 0.09%), Union Bank of India (up 0.39%), Bank of India (up 0.09%), Punjab National Bank (up 3.26%), Syndicate Bank (up 0.99%), Indian Overseas Bank (up 1%), Andhra Bank (up 3%), Oriental Bank of Commerce (up 3.79%), and Indian Bank (up 0.25%), gained. State Bank of India (SBI) (down 0.16%) and Dena Bank (down 0.93%) declined
The Reserve Bank of India today, 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.
Meanwhile, Finance Minister Arun Jaitley has raised the target for opening of accounts under Pradhan Mantri Jan Dhan Yojana (PMJDY) from 7.5 crore to 10 crore by 26 January, 2015. A total of 7.64 crore bank accounts have been already opened under PMJDY till 18 November, 2014, out of which Public Sector Banks (PSBs) have opened 6.15 crore accounts, Regional Rural Banks (RRBs) have opened 1.28 crore accounts and private sector banks have opened 0.2 crore accounts. Jaitley has called for more active participation by the private sector banks under PMJDY.
Out of 7.64 core accounts opened till 18 November 2014 under PMJDY, 5.74 crore accounts opened are zero balance accounts. Jaitley asked the bankers that efforts be made to raise the deposit level in the zero balance accounts through financial literacy program, the finance ministry said in a statement today, 27 November 2014.
Cipla rose 1.27%. Medicines for Malaria Venture (MMV) has signed collaboration agreements with two Indian pharmaceutical companies, Cipla and Strides Arcolab for the development of rectal artesunate for pre-referral treatment of children with severe malaria. The collaborations, established under the MMV-led "Improving Severe Malaria Outcomes" project funded by UNITAID, aim to develop a rectal artesunate product for submission to WHO prequalification. Cipla and Strides will each develop a product building on the clinical studies led by TDR, the Special Programme for Research and Training in Tropical Diseases led by the World Health Organization. The goal is to achieve WHO-prequalification of a rectal artesunate product by 2016, Cipla and MMV said in a joint statement.
Shares of Strides Arcolab jumped 6.99%.
In the foreign exchange market, the rupee edged lower against the dollar in volatile trade. The partially convertible rupee was hovering at 61.8625, compared with its close of 61.855 during the previous trading session.
Brent crude oil futures hit four-year low amid speculation that OPEC will refrain from cutting output when ministers meet in Vienna today, 27 November 2014. Brent for January settlement was off $1.54 a barrel at $76.21 a barrel. The contract hit a 50-month low of $75.48 in intraday trade. Brent for January settlement had fallen 58 cents a barrel to finish at $77.75 a barrel during the previous trading session.
Oil ministers from the OPEC are scheduled to meet in Vienna today, 27 November 2014, to consider whether to adjust their output target of 30 million barrels per day (bpd) for early 2015. OPEC, which pumps about 40% of the world's crude, has maintained its official quota at 30 million barrels a day since January 2012. Saudi Arabia's Oil Minister Ali al-Naimi said yesterday, 26 November 2014, that he expects the oil market to stabilize itself eventually, hinting he wouldn't push for a cut in OPEC's production targets.
Meanwhile, Xia Baolong, Chairman of the Standing Committee of Zhejiang Provincial People's Congress, People's Republic of China told India's Finance Minister Arun Jaitley in a meeting yesterday, 26 November 2014, that agreements (MOUs) estimated at $2.5 billion were concluded between Chinese and Indian companies during the visit of Chinese business delegation to India, the Finance Ministry said today, 27 November 2014. Jaitley reiterated Indian government's vision and commitment for working towards expanding and deepening engagements and relations between India and China based on mutual complementarities and common interests.
Meanwhile, Canada's Fairfax Financial Holdings (Fairfax Financial) and Fairfax India Holdings Corporation (Fairfax India) yesterday, 26 November 2014, announced that Fairfax India has filed a preliminary prospectus with the securities regulatory authorities of all provinces and territories in Canada in respect of its initial public of subordinate voting shares. Fairfax India is an investment holding company whose investment objective is to achieve long-term capital appreciation, while preserving capital, by investing in public and private equity securities and debt instruments in India and Indian businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, India. Generally, Indian Investments will be made with a view to acquiring control or significant influence positions, Fairfax Financial Holdings said in a statement. Fairfax Financial has taken the initiative to create Fairfax India, according to the statement.
In addition to the public offering of subordinate voting shares, and as a condition to the closing of the offering, Fairfax India will issue to Fairfax Financial, either directly or to one or more of Fairfax Financial's subsidiaries, 30 million multiple voting shares of the company, on a private placement basis, for an aggregate purchase price of $300 million. Further, cornerstone investors have committed to subscribe for, on a private placement basis, approximately $200 million of subordinate voting shares. "We are excited to launch, for the first time in our nearly 30-year history, a new company sponsored and promoted by Fairfax Financial - a company focused purely on the potential of India and Indian businesses," said Prem Watsa, Chairman of Fairfax Financial and Fairfax India. "We believe India will be transformed by the business-friendly government of Prime Minister Narendra Modi - and Fairfax India, with our resources and expertise in India developed over the last 15 years, will be well positioned to make excellent significant long-term investments in businesses with experienced and ethical management teams," Watsa said. Watsa, who hails from Hyderabad, founded Fairfax in 1985.
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 government will announce data on gross domestic product (GDP) for Q2 September 2014 at 17:30 IST tomorrow, 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.
European stocks rose today, 27 November 2014, after the latest data showed that Germany's unemployment rate dropped to a record low in November. Germany's DAX was up 0.62%. In UK, the FTSE 100 was up 0.11%. France's CAC 40 index wasn't trading due to a technical problem.
The latest data showed number of people out of work in Germany fell a seasonally adjusted 14,000 in November. The unemployment rate dropped to a record low of 6.6%, matching the revised number for the previous month.
Italian manufacturing business confidence rose in November, for the second month in a row, boosted by better order expectations from manufacturers of consumer and industrial goods, national statistics institute Istat said today, 27 November 2014. Confidence among Italy's manufacturers rose to 96.3 in November--its highest level since July--from 96.1 in October, according to Istat's monthly survey. Last month's figure was revised slightly higher from an initial estimate of 96.
At a conference in London, ECB Vice President Vitor Constancio said yesterday, 26 November 2014, that the central bank is ready to buy sovereign bonds in early 2015.
Asian stocks were mixed today, 27 November 2014. Key benchmark indices in South Korea, Indonesia and Taiwan were up 0.06% to 0.47%. Key benchmark indices in Singapore, Hong Kong and Japan were off 0.26% to 0.78%.
In mainland China, the Shanghai Composite index jumped 1%. China's central bank refrained from selling repurchase agreements for the first time since July, loosening monetary policy further as a report showed industrial companies' profits fell by the most in two years. The People's Bank of China didn't conduct any open-market operations in today's auction window, after cutting interest rates last week for the first time since 2012. It last suspended sales of repos, which drain funds from the banking system, in the week of July 21 as initial public offerings boosted cash demand.
Industrial profits in China fell the most in two years, underscoring the need for looser monetary conditions as the world's second-largest economy slows. Total profits of China's industrial enterprises fell 2.1% from a year earlier in October, the National Bureau of Statistics said today, 27 November 2014, in Beijing. That compares with September's 0.4% increase and is the biggest drop since August 2012, based on previously reported data.
In the US, the S&P 500 and Dow Jones Industrial Average ended slightly higher yesterday, 26 November 2014, scoring their 47th and 30th record closes this year, respectively. Trading on Wall Street was thin with many participants taking off early for the Thanksgiving holiday. Market reaction to mostly disappointing economic reports was muted, as much of the data were shrugged off as volatile and in some cases backward looking.
Durable goods orders, a measure of business spending plans, fell for a second straight month in October, consumer spending rose less than market expectations in October and new home sales also unexpectedly fell in October. A separate report from the Labor Department showed initial claims for state unemployment benefits rose above the 300,000 threshold last week for the first time since early September.
The US stock market is closed today, 27 November 2014, for Thanksgiving Day holiday. The market will reopen tomorrow, 28 November 2014, for a shortened session ending at 1 p.m.
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