Key benchmark indices edged higher in what was a roller-coaster trading session today, 11 March 2016. The barometer index, the S&P BSE Sensex, rose 94.65 points or 0.38% to settle at 24,717.99. The Nifty rose 24.05 points or 0.32% to settle at 7,510.20. Strong gains in European market boosted sentiment in the second half of the trading session. Gains were also triggered by the government announcing a series of reforms yesterday, 10 March 2016.
Reforms took a front seat yesterday, 10 March 2016, with the government unshackling the oil & gas sector with a new exploration regime that allows a higher price of gas for new deep-sea fields. Besides, a Real Estate Bill to protect interests of buyers and bring more transparency to the sector was passed in the Rajya Sabha.
In overseas stock markets, European stocks edged higher as sentiment improved after European Central Bank (ECB) announced stimulus yesterday, 10 March 2016. Asian stocks edged higher, reversing initial decline as investors digested fresh easing from ECB. US stocks closed slightly lower yesterday, 10 March 2016, under pressure from low oil prices and concerns about the effectiveness of monetary policy following the announcements from ECB.
The ECB delivered a surprise package of measures to kick start Europe's economy by cutting its main interest rates and expanding its massive bond-buying program. The ECB cut the bank's key lending rate to zero from 0.05% and cut its bank deposit rate, from minus 0.3% to minus 0.4%. It also announced it would expand the size of its monthly bond purchases to 80 billion euros from its current level of 60 billion euros beginning in April 2016 and expand the scope of those purchases to include investment-grade, euro-denominated, nonbank corporate bonds.
Closer home, the Sensex rose 94.65 points or 0.38% to settle at 24,717.99, its highest closing level since 9 March 2016. The index rose 194.46 points or 0.78% at the day's high of 24,817.80 in mid-morning trade. The barometer index fell 71.08 points or 0.28% at the day's low of 24,552.26 in early afternoon trade.
The Nifty 50 index rose 24.05 points or 0.32% to settle at 7,510.20, its highest closing level since 9 March 2016. The index rose 57.80 points or 0.77% at the day's high of 7,543.95 in morning trade. The index fell 25.55 points or 0.34% at the day's low of 7,460.60 in early afternoon trade.
The BSE Mid-Cap index rose 0.08%. The BSE Small-Cap index fell 0.16%. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was negative. On BSE, 1,464 shares declined and 1,100 shares rose. A total of 161 shares were unchanged.
Among sectoral indices on BSE, the S&P BSE Metal index (down 0.69%), the S&P BSE Utilities index (down 0.55%), the S&P BSE Power index (down 0.46%), the S&P BSE Realty index (down 0.3%), the S&P BSE Telecom index (down 0.22%), the S&P BSE Bankex (down 0.18%), the S&P BSE Basic Materials index (down 0.16%), the S&P BSE Consumer Durables index (down 0.08%), the S&P BSE Finance index (down 0.04%), the S&P BSE IT index (down 0.02%), the S&P BSE Teck index (up 0.03%), the S&P BSE Consumer Discretionary Goods & Services index (up 0.18%), the S&P BSE Capital Goods index (up 0.25%) and the S&P BSE Energy index (up 0.27%), underperformed the Sensex. The S&P BSE Industrials index (up 0.39%), the S&P BSE Auto index (up 0.42%), the S&P BSE Oil & Gas index (up 0.50%), the S&P BSE Healthcare index (up 0.53%) and the S&P BSE FMCG index (up 1.24%), outperformed the Sensex.
Index heavyweight Reliance Industries (RIL) rose 0.36% to Rs 1,015.65. The stock hit a high of Rs 1,029.50 and a low of Rs 1,011.30 in intraday trade.
Index heavyweight and cigarette major ITC rose 1.60% to Rs 321.10. The stock hit a high of Rs 322 and a low of Rs 315.10 in intraday trade.
Index heavyweight and IT major Infosys fell 0.30% to Rs 1,142.50. The stock hit a high of Rs 1,156.10 and a low of Rs 1,139 in intraday trade.
Index heavyweight and housing finance major HDFC rose 0.53% to Rs 1,158.75. The stock hit a high of Rs 1,166.95 and a low of Rs 1,147 in intraday trade.
Bank shares were mixed. Among state-run banks, Corporation Bank (down 2.73%), Indian Bank (down 2.33%), Andhra Bank (down 1.6%), Punjab and Sind Bank (down 1.46%), IDBI Bank (down 1.44%), Bank of Maharashtra (down 1.37%), Central Bank of India (down 1.33%), United Bank of India (down 1.26%), Allahabad Bank (down 1.17%), Dena Bank (down 0.7%), Vijaya Bank (down 0.63%), Bank of India (down 0.32%) and State Bank of India (down 0.17%), edged lower. Union Bank of India (up 0.04%), Punjab National Bank (up 0.18%), Syndicate Bank (up 0.33%), Bank of Baroda (up 1%) and Canara Bank (up 1.39%), edged higher.
Among private sector banks, Kotak Mahindra Bank (down 1.79%), City Union Bank (down 0.87%), ICICI Bank (down 0.77%), Federal Bank (down 0.2%) and Axis Bank (down 0.17%), edged lower. IndusInd Bank (up 0.03%), HDFC Bank (up 0.76%) and Yes Bank (up 0.90%), edged higher.
Metal shares edged lower. Hindustan Copper (down 1.33%), Vedanta (down 0.96%), National Aluminium Company (down 0.77%), Tata Steel (down 0.57%), Bhushan Steel (down 0.55%), NMDC (down 0.27%), Hindalco Industries (down 0.24%), Steel Authority of India (down 0.23%) and JSW Steel (down 0.06%), edged lower. Hindustan Zinc was up 0.89%.
Shares of Jindal Steel & Power (JSPL) fell 4.56% to Rs 62.80. In the backdrop of various media reports about the company's weak financials, JSPL in a press release issued after market hours yesterday, 10 March 2016, said that the company's investment in enhancing steel capacities in Angul and power capacity in Jindal Power (JPL) Tamnar have been completed/commissioned and are in stable level of operation. With these additional capacities and better outlook for steel demand/fair sales price realisation and better outlook for power demand/realization, JSPL said it will be in a better position to generate higher cash flows as compared to last four quarters. The company's efforts in bringing cash through divestment of assets and strategic collaborations through joint ventures (JVs) will add to its cash flows, and also result in reduction in bank borrowings, JSPL said. The company added that it has an excellent track record of meeting all its financial commitments and recent reduction in credit rating, in its opinion, merely presents rating downgrade on technical grounds. JSPL said it had met all its financial commitments till November-December 2015. In discussion with banks, the company has launched 5/25 scheme, and also exploring various options with all lenders to reschedule payments considering likely short/medium term cashflow mis-matches, JSPL said. When these are completed, there will not be any overdue situation, the company added.
Considering better cash flow outlook from better demand/realization for steel/power, rescheduled financial commitments through 5/25 scheme and others and cash flow from disinvestments/JVs, JSPL will be in much stronger position to meet all its liabilities and emerge as financially strong and sustainable company in 2016-17, the company said in a statement.
Meanwhile, the High Grade Copper for May 2016 delivery was currently up 1.10% at $2.2445 per pound on the COMEX.
Realty stocks were mixed. Indiabulls Real Estate (down 0.38%), Oberoi Realty (down 0.45%), Sobha (down 0.88%), Godrej Properties (down 1.15%), Prestige Estates Projects (down 1.49%), Unitech (down 1.79%), Sunteck Realty (down 1.87%) and Housing Development and Infrastructure (HDIL) (down 2.18%), edged lower. D B Realty (up 2.58%), Peninsula Land (up 2.27%), Phoenix Mills (up 1.75%), Parsvnath Developers (up 1.52%), DLF (up 0.38%), Anant Raj (up 0.15%) and Mahindra Lifespace Developers (up 0.02%), edged higher.
A Bill seeking to regulate the real estate sector, bring in transparency and help protect consumer interests was passed by the Rajya Sabha yesterday, 10 March 2016. The Real Estate (Regulation & Development) Bill 2015 will pave the way for setting up a regulator to offer buyers protection from unscrupulous activities. The Bill recommended that 70% of the amount collected from home buyers will need to be deposited in an escrow account for use in the project. Further, the Bill defined carpet area as net usable area of an apartment which means now you will be charged only for your carpet area.
Shares of most oil and gas exploration companies rose. Oil India (up 0.45%), Reliance Industries (RIL) (up 0.36%) and Cairn India (up 4.58%) gained. ONGC fell 0.29%.
State-run GAIL (India) fell 0.45% at Rs 339.80.
Shares of most public sector oil marketing companies rose. BPCL (up 1.36%) and HPCL (up 0.96%), edged higher. Indian Oil Corporation (IOCL) fell 0.14% to Rs 385.50.
In a major policy drive to give a boost to petroleum and hydrocarbon sector, the Government has unveiled a series of initiatives yesterday, 10 March 2016. The Union Cabinet and the Cabinet Committee on Economic Affairs in its meeting yesterday, 10 March 2016 gave its approval for Hydrocarbon Exploration Licensing Policy, HELP, an innovative policy for future which provides for a uniform licensing system to cover all hydrocarbons such as oil, gas, coal bed methane etc. under a single licensing framework. There will be marketing and pricing freedom for new gas production from deepwater, ultra deepwater and high pressure-high temperature areas. Policy is also approved for grant of extension to the Production Sharing Contracts for small, medium sized and discovered fields. The government has also cancelled the Ratna offshore field award from Essar Oil and assigned it to the original licensee, ONGC. The government made the announcement after market hours yesterday, 10 March 2016.
The new policy regime marks a generational shift and modernization of the oil and gas exploration policy. It is expected to stimulate new exploration activity for oil, gas and other hydrocarbons and eventually reduce import dependence. It is also expected to create substantial new job opportunities in the petroleum sector. The introduction of the concept of revenue sharing is a major step in the direction of minimum government maximum governance, as it will not be necessary for the Government to verify the costs incurred by the contractor. Marketing and pricing freedom will further simplify the process. These will remove the discretion in the hands of the Government, reduce disputes, avoid opportunities for corruption, reduce administrative delays and thus stimulate growth.
The Sensex has risen 1,717.99 points or 7.47% in March 2016 so far (till 11 March 2016). The Sensex has fallen 1,396.55 points or 5.35% in calendar year 2016 so far (till 11 March 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the Sensex has risen 2,224.38 points or 9.89%. The Sensex is off 4,465.77 points or 15.30% from a record high of 30,024.74 hit on 4 March 2015.
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