GAIL (India) extends Monday's gains

Key benchmark indices slipped in negative zone from positive zone in mid-morning trade. The barometer index, the S&P BSE Sensex, was down 6.47 points or 0.03%, off 67.78 points from the day's high and up 44.78 points from the day's low. The market breadth indicating the overall health of the market was strong. The BSE Small-Cap index was up almost 1%.

NTPC slipped in volatile trade. Shares of state-run gas transmission and distribution company GAIL (India) extended Monday's rally triggered by buzz that a foreign brokerage has raised the price target on the stock. PSU OMCs extended Monday's gains as the under-recovery on diesel declined for the fortnight commencing 16 June 2014. Jaypee Infratech recovered on bargain hunting after recent steep slide. Shares of ALSTOM India hit 52-week high. Dishman Pharmaceuticals and Chemicals also hit 52-week high.

At 11:18 IST, the S&P BSE Sensex was down 6.47 points or 0.03% to 25,184.01. The index gained 61.31 points at the day's high of 25,251.79 in morning trade. The index fell 51.25 points at the day's low of 25,139.23 in early trade.

The CNX Nifty was down 3 points or 0.04% to 7,530.55. The index hit a high of 7,553.50 in intraday trade, its highest level since 13 June 2014. The index hit a low of 7,516.25 in intraday trade.

The market breadth indicating the overall health of the market was strong. On BSE, 1,528 shares gained and 990 shares fell. A total of 115 shares were unchanged.

The BSE Mid-Cap index was up 43.96 points or 0.49% at 9,010.84. The BSE Small-Cap index was up 89.94 points or 0.93% at 9,794.33. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 1266 crore by 11:15 IST, compared with Rs 791 crore by 10:15 IST.

Among the 30-share Sensex pack, 16 stocks gained and rest of them declined.

HDFC (down 1.79%), Tata Steel (down 1.6%) and Mahindra & Mahindra (down 1.39%) edged lower from the Sensex pack.

NTPC shed 0.85% to Rs 151.55 in volatile trade. The stock hit high of Rs 153.90 and low of Rs 151 so far during the day.

Shares of state-run gas transmission and distribution company GAIL (India) gained 1.36% to Rs 439.15. The stock extended Monday's 3.95% rally triggered by buzz that a foreign brokerage has raised the price target on the stock to Rs 525 from Rs 450 earlier. The brokerage remains optimistic about the performance of the company's key business segments barring the petrochemicals business, as per reports. According to the brokerage house, with the new reform-oriented government at the helm, the macro outlook is fast improving. GAIL's gas transmission volumes should start to improve, and trading earnings can rebound after the weak Q4 March 2014. The brokerage did not factor any tariff increase by the company, and highlighted that a 15% tariff increase can boost GAIL's target price by a further 10%.

PSU OMCs extended Monday's gains as the under-recovery on diesel declined for the fortnight commencing 16 June 2014. Indian Oil Corporation (IOCL) rose 1.49% to Rs 340.95. HPCL advanced 0.96% to Rs 409.70. BPCL gained 0.41% to Rs 592.70.

The oil ministry on Monday, 16 June 2014, said that the under-recovery on diesel applicable for second fortnight of June 2014, effective from, 16 June 2014, has declined to Rs 1.62 per litre, from Rs 2.80 per litre during first fortnight of June 2014. In the case of PDS kerosene and domestic LPG, the under-recoveries for the second fortnight of June 2014 continue to be Rs 32.87 per litre and Rs 432.71 per cylinder respectively, as in the first fortnight of June.

PSU OMCs are now incurring combined daily under-recovery of about Rs 249 crore on the sale of diesel, PDS kerosene and domestic LPG. This is lower than daily under-recovery of Rs 262 crore during the first fortnight of June 2014. The under-recoveries for the financial year 2014-15 are projected to be Rs 91665 crore while the figure was Rs 139869 crore in 2013-14.

Prime Minister Narendra Modi on 14 June 2014 said that repairing the economy would require unpleasant decisions and tough actions. His comments have triggered speculation that the government may raise fuel prices and/or announce diesel price deregulation to reduce the government's fuel subsidy burden.

Jaypee Infratech jumped 10.6% to Rs 32.35, with the stock recovering on bargain hunting after recent steep slide. Shares of Jaypee Infratech had dropped 21.68% in five trading sessions to settle at Rs 29.25 on Monday, 16 June 2014, from a recent high of Rs 37.35 on 9 June 2014.

ALSTOM India gained 3.29% to Rs 518 after hitting a 52-week high of Rs 528.20 in intraday trade.

Dishman Pharmaceuticals and Chemicals advanced 2.58% to Rs 123.40 after hitting a 52-week high of Rs 128.80 in intraday trade.

Arvind Remedies rose 1.36%. Arvind Remedies has inked a pact with Punjab-based Adesh University to make formulation products targeting certain diseases such as type 2 diabetes, coronary heart disease and depression, based on Adesh University's patents. These drugs will be manufactured in the form of tablets and will be launched in the domestic market by 2017 followed by the global market, the company said. Arvind Remedies made the announcement after market hours on Monday, 16 June 2014.

A bout of volatility was witnessed in early trade as the key benchmark indices turned negative after reversing initial decline. Key benchmark indices moved into positive zone in morning trade. Key benchmark indices slipped in negative zone from positive zone in mid-morning trade.

In the foreign exchange market, the rupee edged lower against the dollar on caution ahead of the outcome of this week's meeting of the Federal Open Market Committee on US monetary policy. The partially convertible rupee was hovering at 60.3250, compared with its close of 60.155/60.165 on Monday, 16 June 2014.

Commenting on the wholesale price index (WPI) data on Monday, 16 June 2014, which showed that WPI inflation jumped to five-month high in May 2014, Finance Minister Arun Jaitley was quoted by the media as saying that the rising inflation was due to the hoarding of food stocks. He said that the Centre is committed to ease supply side bottlenecks and has also asked states to take firm measures against hoarders to check speculation. The Finance Minister reportedly said that the government is committed to take measures which will positively impact the GDP and result in higher growth than expected. The Finance Minister said inflation which is moving upward now would eventually come down.

The annual rate of inflation based on the monthly wholesale price index (WPI) accelerated to 6.01% for the month of May 2014, from 5.2% in April 2014, data released by the government on Monday, 16 June 2014, showed.

Meanwhile, crude oil prices eased after recent gains triggered by unrest in Iraq. Brent crude oil futures for August delivery were down 34 cents at $112.60 a barrel. The contract had risen 48 cents to settle at $112.94 a barrel on Monday, 16 June 2014, after touching an intraday high of $113.28 a barrel.

The recent increase in crude oil price and fall in rupee against the dollar have stoked concerns of fuel price inflation and increase in India's current account deficit and fiscal deficit. India imports majority of its crude oil requirements.

Asian stocks fell on Tuesday, 17 June 2014, as the double-whammy of a deepening conflict in Iraq and a gas dispute between Ukraine and Russia sapped investors' appetite for risk. Key benchmark indices in Hong Kong, China, Singapore and Indonesia were off 0.08% to 0.92%. Key benchmark indices in Japan, South Korea and Taiwan were up 0.27% to 0.47%.

China attracted $8.6 billion of foreign direct investment in May, down 6.7% from a year earlier, the Ministry of Commerce said in a statement Tuesday. The figure was down from April's $8.7 billion, which was 3.4% higher from a year earlier. FDI in the January-May period rose 2.8% on year to $48.91 billion.

Japan's government late Monday, 16 June 2014, released a draft of Prime Minister Shinzo Abe's long-awaited growth strategy. This included already-flagged policies such as a plan to cut the corporate tax rate and other steps like a promise to ease regulation in agriculture and allow more foreign workers to be employed in the housekeeping and nursing sectors.

Trading in US index futures indicated that the Dow could rise 19 points at the opening bell on Tuesday, 17 June 2014. US stocks rose on Monday, 16 June 2014, as corporate deals and growth in American manufacturing overshadowed escalating tension in Iraq.

Fresh data from the factory sector showed that manufacturing remained a bright spot in the US economy at the end of the second quarter. Manufacturing activity in the New York region held steady in June after hitting an almost four-year high in May, the Federal Reserve Bank of New York said Monday.

Another data showed that industrial production in the US climbed in May. Output at factories, mines and utilities rose 0.6% after a revised 0.3% drop in April, a report from the Federal Reserve showed.

Home builders' confidence rose in June to the highest level in five months, but respondents were still a bit pessimistic, according to the National Association of Home Builders/Wells Fargo housing-market index released Monday.

A two-day meeting of the Federal Open Market Committee on US monetary policy begins today, 17 June 2014. The FOMC after a monetary policy review on 30 April 2014 reduced its monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve. The Fed also said at that time that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends.

The International Monetary Fund (IMF) cut its growth forecast for the US economy this year and said the Fed may have scope to keep interest rates at zero for longer than investors expect. The institution now sees the world's largest economy growing 2% in 2014, down from an April estimate of 2.8%. The IMF left a 2015 prediction unchanged at 3%, and said it doesn't expect the US to see full employment until the end of 2017, amid low inflation.

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