Key indices register small losses

After moving in a relatively narrow range during the trading session, key benchmark registered small losses. The barometer index, the S&P BSE Sensex, was provisionally off 7.83 points or 0.03% at 27,342.85. The market breadth indicating the overall health of the market was negative. The rupee witnessed a sharp slide against the dollar. Foreign portfolio investors sold shares worth a net Rs 864.96 crore during the previous trading session on Friday, 12 December 2014, as per provisional data.

IT stocks declined after IT major TCS after trading hours on Friday, 12 December 2014, said that the company's revenue from retail, manufacturing and hi-tech may be impacted adversely by holidays in Q3 December 2014. Most capital goods stocks declined.

Earlier, the Sensex and the 50-unit CNX Nifty, had, both bounced back after hitting hit 6-1/2-week low at the onset of the trading session.

On the macro front, the latest data showed that the rate of inflation based on the wholesale price index (WPI) stood at zero in November 2014, compared with WPI of 1.77% in October 2014. The data comes close on the heels of another data showing a further easing of consumer price inflation last month. Meanwhile, industrial production declined 4.2% in October 2014, compared with 2.8% (revised) increase in September 2014, due to a 2.5% decline in the manufacturing sector. Data on both industrial production and consumer price inflation was released after trading hours on Friday, 12 December 2014.

Meanwhile, Finance Minister Arun Jaitley will reportedly hold discussions with state finance ministers for two days starting today, 15 December 2014, in a determined bid to seal a deal on goods & services tax (GST).

In overseas markets, energy shares led recovery in European shares from initial slide as global crude oil prices rose. Asian stocks edged lower after a sharp setback for US stocks on Friday, 12 December 2014. US stocks tumbled on Friday, 12 December 2014, as the sustained drop in oil prices revived growth concerns.

In the foreign exchange market, the rupee edged lower against the dollar on year-end dollar demand from importers.

Brent crude futures bounced back after hitting 5-1/2-year low of $60.28 earlier in the session, as traders began pricing in expectations of improving manufacturing data to be published later this week.

As per provisional figures, the S&P BSE Sensex was down 7.83 points or 0.03% at 27,342.85. The index rose 41.50 points at the day's high of 27,392.18 in mid-afternoon trade. The index lost 245.64 points at the day's low of 27,105.04 in early trade, its lowest level since 30 October 2014.

The CNX Nifty was down 4.50 points or 0.05% at 8,219.60, as per provisional figures. The index hit a high of 8,242.40 in intraday trade. The index hit a low of 8,152.50 in intraday trade, its lowest level since 30 October 2014.

The BSE Mid-Cap index was off 46.02 points or 0.46% at 10,062.58. The BSE Small-Cap index was off 70.57 points or 0.64% at 10,997.91. The fall in these two indices was higher than the Sensex's decline in percentage terms.

The total turnover on BSE amounted to Rs 2907 crore, lower than Rs 2976.43 crore on Friday, 12 December 2014.

The market breadth indicating the overall health of the market was negative. On BSE, 1,721 shares fell and 1,177 shares rose. A total of 112 shares were unchanged.

Most capital goods stocks declined. ABB (India) (down 3.39%), Alstom India (down 2.1%), BEML (down 2.93%), Crompton Greaves (down 1.04%), L&T (down 0.59%) and Punj Lloyd (down 0.69%) declined.

Siemens declined 1.06% to Rs 876.10. The stock was volatile. The stock hit high of Rs 896.60 and low of Rs 870.40. The company after trading hours on Friday, 12 December 2014, said it recently won an order worth approximately Rs 317 crore from Bihar Grid Company (BGCL), a joint venture between Bihar State Power Holding Company and Power Grid Corporation of India. This is the company's first GIS substation order from BGCL and also marks the establishment of the first 220 kV GIS in the state of Bihar, Siemens said.

Lupin shed 0.55%. With respect to recent news item captioned "Scouting for Acquisitions in India: Lupin", Lupin clarified during market hours today, 15 December 2014, that in its day-to-day operations, the company actively explores opportunities for organic and inorganic growth including acquisitions. The company shall promptly inform the exchanges once any such proposal is duly approved by the board, Lupin said.

TCS dropped 3.53%. TCS in its business update for Q3 December 2014 issued after trading hours on Friday, 12 December 2014, said that currency fluctuations will have a marginal positive impact on the company's earnings before interest and tax (EBIT) in Q3 December 2014. The target EBIT margin band for Q3 December 2014 remains unchanged, TCS said. There will be adverse currency impact of 20 basis points (bps) on constant currency revenue in rupee terms in Q3 December 2014. There will be adverse currency impact of 220 bps on constant currency revenue in dollar terms in Q3 December 2014. TCS said that revenue in Q3 December 2014 is expected to be in-line with the seasonal trends. Retail, manufacturing and Hi-Tech verticals are likely to see impact of holidays and furloughs. The BFSI vertical continues to be impacted by weakness in insurance and products. Telecom and smaller verticals are expected to grow better than the company average. Demand environment in North America is on expected lines, adjusted for seasonal weakness. TCS expects business in Europe to grow better than average while the business in UK remains weak due to seasonality and impact of insurance. TCS said that the strength in the IT infrastructure services vertical continues.

Among other IT stocks, HCL Technologies (down 1.33%), Infosys (down 0.74%), Tech Mahindra (down 3.75%) and Wipro (down 0.16%) declined.

In the foreign exchange market, the rupee edged lower against the dollar on year-end dollar demand from importers. The partially convertible rupee was hovering at 62.92, compared with its close of 62.29 during the previous trading session.

Brent crude futures bounced back after hitting 5-1/2-year low of $60.28 earlier in the session, as traders began pricing in expectations of improving manufacturing data to be published later this week. Brent for January settlement was up $1 a barrel at $62.85 a barrel. The contract had lost $1.83 a barrel or 2.9% to settle at $61.85 during the previous trading session on Friday, 12 December 2014, the lowest closing level since July 2009. Brent for February settlement was up 97 cents a barrel to 63.13 a barrel.

On the macro front, the latest data showed that the rate of inflation based on the wholesale price index (WPI) stood at zero in November 2014, compared with WPI of 1.77% in October 2014. Build up inflation rate in the financial year so far was 0.67%, compared to a build up rate of 6.70% in the corresponding period of the previous year. The government announced the WPI inflation data during trading hours today, 15 December 2014.

The data comes close on the heels of another data showing a further easing of consumer price inflation last month. The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 4.4% in November 2014 from 5.5% in October 2014, driven by a sharp decline in inflation for food articles. The corresponding provisional inflation rates for rural area were 4.1% and urban area also 4.7% as against 5.5% and 5.6% for October 2014.

Index of industrial production (IIP) declined, at a sharpest pace in three-years, contracting 4.2% in October 2014 compared with 2.8% (revised) increase in September 2014. The manufacturing sector's output dipped to 2.5% in October 2014, recording largest decline in last five-and-half years. The decline in the industrial production was entirely contributed by the manufacturing sector. Lesser number of working days in October 2014 mainly led to sharp decline in manufacturing sectors output.

Meanwhile, Finance Minister Arun Jaitley will reportedly hold discussions with state finance ministers for two days starting today, 15 December 2014, in a determined bid to seal a deal on goods & services tax (GST). The fiscal room created by the crash in crude oil prices has given Jaitley space to walk the extra mile in his bid to assure the state governments that they will not lose any revenue once the single levy is imposed, according to reports. The finance ministry will make a big saving in fuel subsidies after a crash in global crude oil prices over the past few months. These savings could be used to compensate states once the tax is rolled out, according to reports.

The government's intension is to implement a nationwide GST from 1 April 2016. GST is a major indirect tax reform. GST will subsume central indirect taxes such as excise duty and service tax at the central level and value added tax at the state level besides other local levies such as octroi and entry tax.

Meanwhile, the Indian government intends to get the Insurance Laws (Amendment) Bill, 2008 passed in both the Houses of Parliament in this week. The Union Cabinet, last week, approved the official amendments to the Insurance Laws (Amendment) Bill, 2008. The Parliamentary Select Committee in its report tabled in Rajya Sabha on 10 December 2014 agreed a composite cap of 49% on foreign investment in the insurance sector, which includes all types of foreign investment as opposed to the 26% foreign direct investment (FDI) allowed at present. Finance Minister Arun Jaitley had said in his maiden budget speech in July that the composite cap in the insurance sector should be increased to 49% from the current level of 26%, with full Indian management and control.

The Lok Sabha on Friday, 12 December 2014, passed the Coal Mines (Special Provisions) Bill, 2014. The bill allows the government to enforce rules and guidelines for auction/allocation of 204 coal blocks cancelled by the Supreme Court in September this year. The challenge for the government now will be to find support for the bill in the Rajya Sabha where it's in a minority.

Energy shares led recovery in European stocks from initial slide today, 15 December 2014, as global crude oil prices rose. Key indices in France, Germany and UK were up 0.71% to 0.85%.

European Central Bank (ECB) Governing Council member Ewald Nowotny today, 15 December 2014, reportedly said the risk of a collapse in the eurozone has been removed and that the ECB's efforts can only work if policy measures on the fiscal side are implemented.

Asian stocks edged lower today, 15 December 2014, after a sharp setback for US stocks on Friday, 12 December 2014. US stocks tumbled on Friday, 12 December 2014, as the sustained drop in oil prices revived growth concerns. Key indices in Hong Kong, Singapore, Indonesia, South Korea, Hong Kong and Taiwan were off 0.07% to 1.57%. China's Shanghai Composite index rose 0.52%.

China's GDP growth could decelerate to 7.1% next year on slowing property investment, according to a latest research report from China's central bank.

In Japan, Prime Minister Shinzo Abe's coalition cruised to a big election win on Sunday, 14 December 2014, ensuring he will stick to reflationary economic policies and a muscular security stance, but record low turnout pointed to broad dissatisfaction with his performance.

Confidence of Japan's large manufacturers declined in the fourth quarter as a recession offset a boost from a weaker yen, underlining the economic challenges facing Prime Minister Shinzo Abe after his election win. The Tankan's big manufacturer index slipped to 12 in December from 13 in September Bank of Japan today, 15 December 2014.

Meanwhile, five hostages reportedly rescued themselves from the Lindt Chocolate Cafin Martin Place in Sydney where a man is holding people at gunpoint. Authorities sealed off surrounding streets, evacuated people from buildings, and suspended several rail routes into and out of the city after the incident began around 9:45 a.m. in the heart of the business district in Sydney.

Trading in US index futures indicated that the Dow could gain 118 points at the opening bell today, 15 December 2014. US stocks sank on Friday, 12 December 2014, as oil prices continued to slide. The US Senate on Saturday, 12 December 2014, passed a $1.1 trillion spending bill that lifts the threat of a government shutdown as Congress attempts to wrap up a two-year legislative session marked by bitter partisanship and few major accomplishments. The Senate's 56-40 vote sends the measure to President Barack Obama, who is expected to sign it into law before federal spending authority expires at midnight.

A two-day meeting of Federal Open Market Committee (FOMC) to discuss monetary policy review starts tomorrow, 16 December 2014. The policy meeting will be keenly watched for any hints on the timing of interest rate increases in the world's biggest economy. It remains to be seen whether Federal Reserve officials would signal a rate hike by dropping their assurance that rates will stay low for a considerable time.

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