Market pares gains

After holding firm in morning trade, key benchmark indices trimmed gains in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently up 99.45 points or 0.34% at 29,194.38. The market breadth indicating the overall health of the market was positive.

Shares of public sector banks were mixed. Shares of private sector banks were mostly lower. HDFC Bank rose after good Q3 results. Reliance Communications (RCom) rose after strong Q3 results. Metal shares were in demand. Hindalco Industries and Sunflag Iron & Steel rose on reports of winning coal mines with aggressive bids. FMCG shares edged higher.

Earlier, the Sensex and the 50-unit CNX Nifty had, both, hit their highest levels in almost 2-1/2 weeks in early trade.

Foreign portfolio investors bought shares worth a net Rs 390.26 crore during the previous trading session on Friday, 13 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 95.82 crore on Friday, 13 February 2015, as per provisional data.

In the foreign exchange market, the rupee edged higher against the dollar.

Brent crude oil futures edged lower after a rally during the previous trading session on Friday, 13 February 2015. Global crude oil prices have bounced back over the past few days after a steep slide in prices over the past few months. The recent rebound in global crude oil prices will raise concerns pertaining to India's fiscal deficit, current account deficit and fuel price inflation. However, gains in rupee against the dollar will mitigate the negative impact of higher crude oil price. Gains in local currency will reduce the cost of imports. India imports about 80% of its crude oil requirements.

In overseas markets, Asian stocks edged higher today, 16 February 2015, after Japan emerged from recession last quarter and as investors looked ahead to a meeting between Greece and its main European creditors. US stocks posted small gains during the previous trading session on Friday, 13 February 2015.

India's financial markets are closed tomorrow, 17 February 2015, on account of Mahashivratri.

At 11:20 IST, the S&P BSE Sensex was up 99.45 points or 0.34% at 29,194.38. The index jumped 230.42 points at the day's high of 29,325.35 in early trade, its highest level since 30 January 2015. The index rose 61.11 points at the day's low of 29,156.04 in early trade.

The CNX Nifty was up 34.20 points or 0.39% at 8,839.70. The index hit a high of 8,870.10 in intraday trade, its highest level since 30 January 2015. The index hit a low of 8,824.70 in intraday trade.

The BSE Mid-Cap index was up 23.90 points or 0.22% at 10,764.85. The BSE Small-Cap index was up 29.88 points or 0.27% at 11,269.16. Both these indices underperformed the Sensex.

The market breadth indicating the overall health of the market was positive. On BSE, 1,256 shares advanced and 1,141 shares declined. A total of 92 shares were unchanged.

FMCG shares edged higher. Hindustan Unilever was up 2.81%.

Among other FMCG shares, Bata India (up 1.97%), Nestle India (up 1.77%), Colgate-Palmolive (India) (up 1.35%), Bajaj Corp (up 0.66%), Procter & Gamble Hygiene & Health Care (up 0.59%), Britannia Industries (up 0.58%), GlaxoSmithKline Consumer Healthcare (up 0.58%), Jyothy Laboratories (up 0.54%), Godrej Consumer Products (up 0.46%) and Marico (up 0.18%), edged higher. Tata Global Beverages (down 0.57%) and Dabur India (down 0.61%), edged lower.

Metal shares were in demand. Hindustan Zinc (up 2.7%), Sesa Sterlite (up 1.6%), Bhushan Steel (up 1.35%), Tata Steel (up 1.25%), Steel Authority of India (up 1%), Hindustan Copper (up 0.86%), NMDC (up 0.77%) and JSW Steel (up 0.63%), edged higher. Jindal Steel & Power was off 0.03%.

Hindalco Industries was up 2.51%. According to media reports, Hindalco Industries beat six companies including Monnet Ispat & Energy, Rungta Mines, UltraTech Cement and the prior allottee Usha Martin to bag the Kathautia mine in Jharkhand by offering Rs 2,860 per tonne of coal. The mine has good quality coal reserves of around 26 million tonnes, reports added.

Integrated telecommunications service provider, Reliance Communications (RCom) rose 3.12% to Rs 74.30. The stock hit a high of Rs 74.85 and a low of Rs 73.50 in intraday trade. RCom's consolidated net profit rose 31% to Rs 201 crore on 1.2% growth in revenue to Rs 5469 crore in Q3 December 2014 over Q2 September 2014. The Q3 result was announced after market hours on Friday, 13 February 2015.

RCom's consolidated EBITDA (earnings before interest, taxation, depreciation, and amortization) rose 1.3% to Rs 1851 crore in Q3 December 2014 over Q2 September 2014. EBITDA margin of 33.8% maintained at the same level as Q2 September 2014, the company said in a statement. Revenue from India operations rose 2.5% to Rs 4799 crore in Q3 December 2014 over Q2 September 2014. Revenue from global operations rose 23% to Rs 1236 crore in Q3 December 2014 over Q2 September 2014.

Public sector banks were mixed. Bank of Maharashtra (up 2.09%), State Bank of India (up 1.07%), Indian Bank (up 1.05%), IDBI Bank (up 0.82%), Dena Bank (up 0.63%), Punjab National Bank (up 0.54%), United Bank of India (up 0.39%) and Allahabad Bank (up 0.13%), edged higher. Central Bank of India (down 0.05%), Corporation Bank (down 0.23%), Bank of Baroda (down 0.25%), Andhra Bank (down 0.45%), Union Bank of India (down 0.58%), Canara Bank (down 0.59%), UCO Bank (down 0.63%), Vijaya Bank (down 0.7%), Syndicate Bank (down 0.85%) and Bank of India (down 1.23%), edged lower.

Private sector banks were mostly lower. Federal Bank (down 0.68%), Yes Bank (down 0.68%), Axis Bank (down 0.5%), ICICI Bank (down 0.19%), ING Vysya Bank (down 0.09%) and Kotak Mahindra Bank (down 0.02%), edged lower. City Union Bank was up 0.58%.

The Ministry of Law & Justice yesterday, 15 February 2015, said more than 56,000 cases were settled involving more than Rs 265 crore on 14 February 2015 through National Lok Adalat for bank recovery. Cheque bounce cases, particularly under Section 138 Negotiable Instruments Act were addressed in all courts at all levels from the Taluk Courts to the Districts Courts, High Courts in all states (excluding Assam & Uttar Pradesh) and the Supreme Court of India, the Ministry of Law & Justice said. Banks and financial institutions and others who participated were able to arrive at final settlements of more than Rs 265 crore. Judges, lawyers and various authorities including banks and financial institutions extended their full cooperation, the Ministry of Law & Justice said.

HDFC Bank rose 1.21% to Rs 1,078.80. The stock hit a high of Rs 1,083.75 and a low of Rs 1,073.35 so far during the day. HDFC Bank's net profit rose 20.2% to Rs 2794.50 crore on 21.4% growth in net revenue (net interest income plus other income) to Rs 8234.80 crore in Q3 December 2014 over Q3 December 2013. The Q3 result was announced on Saturday, 14 February 2015.

HDFC Bank's net interest income rose 23% to Rs 5699.90 crore in Q3 December 2014 over Q3 December 2013. Net interest margin (NIM) improved to 4.4% in Q3 December 2014, from 4.2% in Q3 December 2013. The bank's other income (non-interest revenue) rose 18% to Rs 2534.90 crore in Q3 December 2014 over Q3 December 2013.

Provisions and contingencies rose 44.13% to Rs 560.40 crore in Q3 December 2014 over Q3 December 2013.

HDFC Bank's current account and savings account (CASA) mix was 40.9% as on 31 December 2014.

The bank's total Capital Adequacy Ratio (CAR) as per Basel III guidelines as at 31 December 2014 stood at 15.7% as against a regulatory requirement of 9%. Of this, Tier-I CAR was 11.97%.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 62.18, compared with its close of 62.20 during the previous trading session on Friday, 13 February 2015.

Brent crude oil futures edged lower. Brent for April settlement was off 10 cents at $61.42 a barrel. The contract had risen $2.24 a barrel to settle at $61.52 a barrel during the previous trading session on Friday, 13 February 2015.

Exports during January, 2015 were valued at $23883.60 million (Rs 148617.82 crore) which was 11.19% lower in dollar terms (10.97% lower in rupee terms) than the level of $26891.58 million (Rs 166932.15 crore) during January 2014. Imports during January 2015 were valued at $32205.63 million (Rs 200402.44 crore) which was 11.39% lower in dollar terms and 11.18% lower in rupee terms over the level of imports valued at $36346.32 million (Rs 225623.44 crore) in January 2014. The trade deficit for April-January 2014-15 was estimated at $118373.95 million which was higher than the deficit of $116532.22 million during April-January 2013-14. The government announced the trade data for January 2015 after trading hours on Friday, 13 February 2015.

The rate of inflation based on the wholesale price index (WPI) is seen accelerating to 0.4% in January 2015 from 0.1% in December 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil WPI data for January 2015 at 12.10 noon today, 16 February 2015.

The next major event for the financial markets is Union Budget for 2015-16. Finance Minister Arun Jaitley will present Union Budget 2015-16 in Parliament on 28 February 2015. Analysts will scrutinize measures in the Budget for financing infrastructure projects as well as the government's own capital expenditure on infrastructure for the year ahead. This is the first full fledged Budget of the Narendra Modi government and analysts will look for a roadmap for economic growth for the next few years.

Changes in rates of dividend distribution tax, capital gains tax on sale of shares, Securities Transaction Tax (STT) and Minimum Alternate Tax (MAT), if any, will be closely watched. The dividend distribution tax is currently at 15%. The minimum alternate tax is currently at 18.5% of book profits. Short term capital gains tax on sale of shares is currently at 15% while there is zero long capital gains tax on sale of shares held for a period of more than one year.

The upcoming Budget session of the parliament assumes utmost importance as the government intends to replace the ordinances it had promulgated after the conclusion of the winter session of the parliament with Bills and get them cleared by both Houses of Parliament during the budget session. The Narendra Modi government promulgated a slew of ordinances after the last session of Parliament. Some of the key ordinances include raising the FDI in the insurance sector from 26% to 49%, e-auctioning of coal mines and amendment to the Land Acquisition Act.

The government has already started auctioning coal blocks for captive mining. The Coal Mines (Special Provisions) Bill that was moved to replace an ordinance issued earlier was passed by the Lok Sabha in the winter session but it could not be taken up in the Rajya Sabha. The government promulgated the Coal Mines (Special Provisions) Ordinance, 2014, in October to facilitate coal block auctions after the Supreme Court cancelled 204 coal blocks in September.

Through another ordinance, the government has raised the ceiling on foreign investment in the insurance sector to 49% from 26%. The government was unable to get the Insurance Laws (Amendment) Bill, 2008, passed in parliament during the winter session.

Amendments to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 were brought in via an ordinance after the winter session of the parliament.

Analysts are also awaiting further progress on the Goods and Services Tax (GST) in the Budget session after the Constitution Amendment Bill for the introduction of GST was tabled in the Lok Sabha during the winter session of parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.

Asian markets were mostly higher today, 16 February 2015, after Japan emerged from recession last quarter and as investors looked ahead to a meeting between Greece and its main European creditors. Key benchmark indices in China, Hong Kong, Japan and South Korea were up by 0.03% to 0.35%. Indonesia and Singapore were off 0.29% to 0.38%.

Japan's Nikkei 225 were up at 0.42% after managing to touch eight-year high. Japan managed to pull out of recession in the last quarter of last year. The first read of Japan's gross domestic product for the October-December period indicated growth at a 2.2% annualized rate, or 0.6% on a quarterly basis. Likewise, the deflator for the quarter rose to 2.3% compared to 2.0% in July-September.

Data showed China's foreign direct investment surged in January. China attracted $13.92 billion of foreign direct investment in January, up 29.4% from a year earlier, the Ministry of Commerce said today. The figure was above December's $13.32 billion, which was 10.3% higher than a year earlier. Chinese investments overseas reached $10.17 billion in the first month of the year, up 40.6% from a year ago, according to the ministry. It didn't say whether this included financial investments, which are normally calculated separately.

US markets are shut today, 16 February 2015, for the Presidents' Day holiday. US stocks rose on Friday, 13 February 2015, boosted by a positive lead from European markets, including upbeat eurozone GDP data and optimistic signs regarding Greek debt negotiations. The Dow Jones Industrial Averages closed above 18,000 points for the first time in 2015 and the S&P 500 reported a new all-time closing high.

However, the buying interest was partly offset by the release of a report from the University of Michigan showing a sharp pullback in US consumer sentiment in the month of February. The University of Michigan said its preliminary consumer sentiment index for February tumbled to 93.6 from the final January reading of 98.1.

In Europe, Greece and its international creditors held talks on Friday, 13 February 2015, on reforms needed to keep the country financed. The talks are said to increase the possibility of reaching an interim compromise deal at another euro-zone finance ministers meeting today, 16 February 2015.

The talks between eurozone finance ministers and Greece are key, because they are the last moment for the new Greek government to ask for a technical extension of the current bailout program, which expires on 28 February 2015.

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