A bout of volatility was witnessed as key benchmark indices trimmed losses after hitting fresh intraday low in mid-afternoon trade. The barometer index, the S&P BSE Sensex, regained the psychological 21,000 mark, having alternately moved above and below that level since early afternoon trade. The Sensex was down 159.42 points or 0.75%, up about 25 points from the day's low and off close to 90 points from the day's high. The market breadth, indicating the overall health of the market, was negative. Weakness in Asian and European stocks hit sentiment on the domestic bourses adversely. In the foreign exchange market, the rupee edged lower against the dollar on speculation a US budget agreement will boost prospects for the Federal Reserve to start tapering its monetary stimulus for the US economy.
Oil & Natural Gas Corporation (ONGC) dropped for the third day in a row. Auto stocks extended intraday losses. Tata Motors dropped on reports that its British luxury car unit Jaguar Land Rover's (JLR) has increased its investment guidance for the year ending 31 March 2015 (FY 2015).
The market edged lower in early trade on weak Asian stocks. Key benchmark indices extended initial losses and hit fresh intraday low in morning trade. The Sensex, and the 50- unit CNX Nifty, both, hit their lowest level in almost a week. The Sensex hovered in negative terrain in mid-morning trade. Key benchmark indices extended intraday losses and hit fresh intraday low in early afternoon trade. Weakness continued on the bourses in afternoon trade.The Sensex trimmed losses after hitting fresh intraday low in mid-afternoon trade.
Asian and European stocks dropped on Thursday, 12 December 2013, on heightened expectations the US Federal Reserve may act sooner than later to unwind its stimulus after a provisional budget deal in Washington eased some of the fiscal drag on the US economy. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
At 14:20 IST, the S&P BSE Sensex was down 159.42 points or 0.75% to 21,011.99. The index fell 184.78 points at the day's low of 20,986.63 in mid-afternoon trade, its lowest level since 6 December 2013. The index declined 67.61 points at the day's high of 21,103.80 in early trade.
The CNX Nifty was down 46.65 points or 0.74% to 6,261.25. The index hit a low of 6,253.65 in intraday trade, its lowest level since 6 December 2013. The index hit a high of 6,286.85 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,347 shares fell and 1,024 shares rose. A total of 144 shares were unchanged.
From the 30-share Sensex pack, 24 stocks fell and rest rose. ICICI Bank (down 1.7%), Coal India (down 1.63%) and Dr Reddy's Laboratories (down 1.25%) declined.
Oil & Natural Gas Corporation (ONGC) dropped 2%, with the stock falling for the third day in a row. ONGC early this week said the Gujarat High Court vide its order dated 30 November 2013 has decided that royalty on crude oil is to be paid on pre-discount price. The court has directed ONGC to make payment towards shortfall royalty for the period from April 2008 till this date, within a period of two months. ONGC said that the company is in the process of filing an appeal in the Supreme Court of India against the order of the Gujarat High Court and making the Union Government as party. The company's management has already directed Corporate Legal to engage best possible advocate for the case, ONGC said.
Meanwhile, it has been conveyed to the Ministry of Petroleum and Natural Gas from CMD, ONGC to Secretary, Petroleum and Natural Gas that in case the decision goes against the company and if ONGC is directed to deposit the royalty on pre-discount price, ONGC should be compensated by the Government of India for the differential royalty. ONGC said that it will not be in a position of bearing such a huge burden, particularly when it is of recurring nature.
Giving a background about the issue, ONGC said that the company started making payment of royalty on crude oil from 1 April 2008 at post discount price to state governments in India, in line with royalty payment to the Central Government and taking into account the provisions of Oilfields (Regulation and Development) Act, 1948 (ORDA). ONGC further said that the company paid excess royalty to the tune of Rs 3419 crore to the Gujarat state government for the period 2003-04 to 2007-08.
ONGC said that the latest ruling of the Gujarat High Court to direct ONGC to pay royalty on onshore crude production at the pre-discount price instead of the post-discount price works out to about Rs 10000 crore for the period April 2008 to September 2013 in respect of crude oil production in Gujarat alone and hence will have significant adverse impact on ONGC's financials. Further, the payment of royalty on pre-discount price is of recurring nature. Similar implications would also arise in other states like Assam, Andhra Pradesh and Tamil Nadu, where ONGC is producing crude from onshore fields.
ONGC also said that in a separate but related issue, ONGC has been asked to pay VAT on pre-discount price from 2004-05 onwards by Gujarat VAT Tribunal, against which ONGC is in the process of filing appeal in Gujarat High Court. Assam VAT authorities have also raised demand for payment of VAT on pre-discount price, which is also being addressed by ONGC, the company said in a statement.
In a separate announcement, ONGC on 10 December 2013 said that a memorandum of understanding (MOU) was signed between the Co-ordinating Ministry for Strategic Sectors (MICSE) of the Republic of Ecuador and ONGC Videsh on 9 December 2013 in New Delhi. ONGC Videsh has been evaluating E&P opportunities in Ecuador for last one year. Latin America is a focus area of ONGC Videsh. The MOU provides that MICSE would make available to ONGC Videsh information regarding oil and gas projects in Ecuador, which ONGC Videsh would evaluate to identify the project/projects of its interests and could propose participation in such project/projects through specific definitive agreements.
ONGC Videsh is a wholly-owned subsidiary of ONGC.
Auto stocks extended intraday losses. M&M fell 0.69%. Maruti Suzuki India dropped 1.5%
Tata Motors dropped on reports that its British luxury car unit Jaguar Land Rover's (JLR) has increased its investment guidance for the year ending 31 March 2015 (FY 2015). The stock was off 4.12%. JLR has reportedly indicated investment of 3.5 to 3.7 billion pounds (in R&D and capital expenditure) for FY 2015, which an increase of 27-35% over the company's guidance of investment of 2.7 billion pounds for the current financial year. The increased capital investment would be towards development of new products in new and existing segments and investment in new powertrains and technologies to meet customer and regulatory requirements.
JLR on Wednesday, 11 December 2013, said its retail sales jumped 25% to 37,403 units in November 2013 over November 2012. Retail sales of the Jaguar brand jumped 55% to 6,244 units in November 2013 over November 2012. Retail sales of the Land Rover brand rose 20% to 31,159 units in November 2013 over November 2012. JLR announced the retail sales data on Wednesday, 11 December 2013.
Commenting on the November performance Andy Goss, JLR Group Sales Operations Director said: "November has been another solid month in what has so far, been a great year for Jaguar Land Rover. Our continued sales success is a testament to our sustained investment in new and exciting products which are driving growth internationally and attracting new customers to our brands".
Shares of two wheeler makers also declined. Bajaj Auto (down 1.11%) and Hero MotoCorp (down 1.01%) declined.
The Securities and Exchange Board of India (SEBI) unveiled new proposals on Wednesday, 11 December 2013, broadening the scope of who can be held liable for insider trading violations, as it steps up its fight against securities fraud. India's financial market regulator plans to include company employees, directors and their immediate relatives and other stakeholders such as founders, handling market sensitive information under its purview. Under current rules only senior executives are liable for trading violations.
Officials with access to sensitive information will also be required to submit planned trades in company shares ahead of time to resolve any potential conflict of interest. The new proposals also mandate that every listed company and market intermediary formulate a code of conduct to regulate, monitor and report trading in securities by its employees or connected persons. Trades by stakeholders, employees, directors and their immediate relatives would need to be disclosed internally to the company.
In the foreign exchange market, the rupee edged lower against the dollar on speculation a US budget agreement will boost prospects for the Federal Reserve to start tapering its monetary stimulus for the US economy. The partially convertible rupee was hovering at 61.56, compared with its close of 61.245/255 on Wednesday, 11 December 2013.
Bond prices rose in choppy trade after the Reserve Bank of India (RBI) on Wednesday, 11 December 2013, said it has decided to provide additional liquidity of Rs 10000 crore through the 14-day term repo scheduled to be conducted on Friday, 13 December 2013. Accordingly, the notified amount for the 14-day term repo auction to be conducted on that day will be adjusted upwards by Rs 10000 crore, the RBI said in a statement. The yield on the new 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.821%, lower than its close of 8.8265% on Wednesday, 11 December 2013. Bond yield and bond prices are inversely related.
The RBI said it has announced this additional liquidity support for the banking sector so as to ensure that adequate liquidity is available to support the flow of credit to the productive sectors of the economy. The RBI said that the liquidity conditions are expected to tighten in the immediate future on account of advance tax payments commencing from mid-December 2013.
The government will unveil industrial production data for October 2013 after trading hours today, 12 December 2013. Industrial output is estimated to fall 1.5% in October 2013, as per the median estimate of a poll of economists carried out by Capital Market. Industrial production rose 2% in September 2013, showing increase in growth from 0.4% growth recorded in August 2013.
Data on inflation based on the general consumer price index (CPI) for November 2013 will also be unveiled after trading hours today, 12 December 2013. CPI (combined) for November 2013 is estimated at 10%, as per the median estimate of a poll of economists carried out by Capital Market. The CPI inflation (combined) for October 2013 stood at 10.09% (y-o-y), higher than 9.84% (y-o-y) seen in September 2013.
The government will unveil data on inflation based on the wholesale price index (WPI) for November 2013 on 16 December 2013. WPI is seen easing a bit at 6.9% in November 2013, from 7% in October 2013, as per the median estimate of a poll of economists carried out by Capital Market.
The Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled 28 January 2014.
President Pranab Mukherjee has given the Andhra Pradesh Assembly six weeks to decide on Telangana. The President had on Wednesday sent the Telangana Bill to the Andhra Pradesh Assembly for consideration. Earlier, Pranab Mukherjee held consultations with legal experts on various provisions of the draft Telangana Bill proposing splitting of Andhra Pradesh.
European stocks edged lower on Thursday, 12 December 2013, as investors awaited US retail-sales and jobless-claims data to gauge whether the Federal Reserve will decide next week to reduce monthly bond purchases. Key benchmark indices in France, Germany and UK were off 0.26% to 0.52%.
Asian shares dropped on Thursday, 12 December 2013, on heightened expectations the Federal Reserve may act sooner than later to unwind its stimulus after a provisional budget deal in Washington eased some of the fiscal drag on the US economy. Key benchmark indices in China, Taiwan, South Korea, Indonesia, Singapore, Japan and Hong Kong were off 0.06% to 1.12%.
South Korea's central bank on Thursday kept its benchmark interest rate steady at 2.5%, standing pat for a seventh straight month amid a tentative economic recovery. The last rate move was a surprise quarter-percentage-point rate cut in May. At that time, the government also introduced a $16 billion extra budget, seeking to revive the economy that grew just 2% in 2012, the slowest in three years.
Chinese policy makers are meeting this week to set economic growth targets for 2014. China's central economic work conference, which is expected to end today or tomorrow, will set the tone for macroeconomic policy and decide major targets for 2014.
Trading in US index futures indicated that the Dow could advance 11 points at the opening bell on Thursday, 12 December 2013. US stocks posted their biggest drop in a month on Wednesday as traders locked in recent gains after Congress announced the provisional budget deal. The bipartisan budget agreement reached late on Tuesday, though modest in spending cuts, would end three years of political squabbling in Washington that climaxed in October with a two-week partial government shutdown. The US House of Representatives could vote on the deal tomorrow, 13 December 2013.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
Powered by Capital Market - Live News
