Tyre stocks on a roll

After surging to fresh record high in mid-morning trade, key benchmark indices trimmed gains in early afternoon trade. The barometer index, the S&P BSE Sensex, retained the psychological 28,000 level which it had regained in early trade. The Sensex was currently up 140.99 points or 0.51% at 28,051.05. The market breadth indicating the overall health of the market was positive.

Global crude oil prices edged lower. Fall in crude oil prices augur well for India as the country imports 80% of its oil requirement. Data after trading hours today, 12 November 2014, is likely to show consumer price inflation falling further in October 2014 and growth in industrial production remaining muted in September 2014. Asian stocks were in green.

Meanwhile, the empowered committee of state finance ministers on goods & services tax (GST) at its meeting held yesterday, 11 November 2014, reportedly agreed on the 'place of supply' rules that form the backbone of proposed GST. Foreign portfolio investors (FPIs) bought shares worth a net Rs 458.04 crore yesterday, 11 November 2014, as per provisional data.

Capital goods stocks edged higher. Tyre stocks advanced on renewed buying. L&T Finance Holdings extended yesterday's rally after the company's clarification with regard to media news of merger of ING Vysya Bank.

Earlier, the Sensex and the 50-unit CNX Nifty had, both, hit record high in mid-morning trade after extending initial gains.

In overseas markets, Asian stocks edged higher after Wall Street edged up to its fifth straight record close yesterday, 11 November 2014. US stocks eked out miniscule gains yesterday, 11 November 2014, with the Dow Jones Industrial Average and the S&P 500, both, attaining record closing high in light volume as consumer discretionary shares gained.

In the foreign exchange market, the rupee edged higher against the dollar as key equity benchmark indices in India hit record high.

Brent crude futures fell amid signs that OPEC members are reluctant to reduce supply even as prices slump.

At 12:16 IST, the S&P BSE Sensex was up 140.99 points or 0.51% at 28,051.05. The index jumped 216.42 points at the day's high of 28,126.48 in mid-morning trade, a lifetime high for the index. The index rose 48.58 points at the day's low of 27,958.64 in opening trade.

The CNX Nifty was up 31 points or 0.37% at 8,393.65. The index hit a high of 8,415.05 in intraday trade, a lifetime high for the index. The index hit a low of 8,377.95 in intraday trade.

The BSE Mid-Cap index was up 82.14 points or 0.81% at 10,167.79. The BSE Small-Cap index was up 57.68 points or 0.52% at 11,219.63. Both these indices outperformed the Sensex.

The market breadth indicating the overall health of the market was positive. On BSE, 1,508 shares gained and 1,133 shares fell. A total of 104 shares were unchanged.

Tyre stocks advanced on renewed buying. Natural rubber prices in the local market are reportedly hovering near five-year low. This will help boost profit margins for tyre makers. Natural rubber is the main raw material in the manufacture of tyres.

Shares of Apollo Tyres rose 3.46% at Rs 240.95. The stock hit a record high of Rs 242.30 in intraday trade.

Shares of CEAT spurted 7.36% at Rs 997.50. The stock hit a record high of Rs 1,009 in intraday trade.

Shares of MRF rose 1.43% at Rs 33,101.20. The stock hit a record high of Rs 33,378 in intraday trade.

Shares of JK Tyre & Industries spurted 4.09% at Rs 528. The stock hit a record high of Rs 538 in intraday trade.

Shares of Goodyear India advanced 1.27% at Rs 640.

Capital goods stocks edged higher. Alstom T&D India (up 3.06%), Siemens (up 2.42%), and Thermax (up 1.91%) gained. L&T (down 0.87%) and ABB (down 0.66%) declined.

Bharat Heavy Electricals (Bhel) rose 1.69% at Rs 249.20 after the company after market hours yesterday, 11 November 2014, said that the company has achieved yet another landmark in its After-Market-Service business by successfully renovating and modernizing (R&M) Unit-2 (110 megawatt) at Muzaftarpur Thermal Power Station (TPS) Plant of Kanti Bijlee Utpadan Nigam in Bihar.

L&T Finance Holdings (LTFH) surged 2.84% to Rs 74.15, with the stock extending yesterday's 3% rally. Shares of LTFH had jumped 3% to settle at Rs 72.10 yesterday, 11 November 2014, after the company during market hours yesterday, 11 November 2014 issued a clarification with regard to a news report published on 11 November 2014 that the company has approached the Reserve Bank of India for seeking prior approval to merge or acquire ING Vysya Bank. LTFH, as a policy, does not comment on speculative news appearing in the media, the company said. As a part of its normal course of business, the company keeps evaluating opportunities on both organic and inorganic basis. The investors/stock exchanges would be informed as and when definitive developments take place, LTFH said.

Shares of ING Vysya Bank were up 1.51% at Rs 718.25.

Hexaware Technologies shed 1.26% at Rs 211.95 as the stock turned ex-dividend today, 12 November 2014, for interim dividend of Rs 2.35 per share for the year ending 31 December 2014.

In the foreign exchange market, the rupee edged higher against the dollar as key equity benchmark indices in India hit record high. The partially convertible rupee was hovering at 61.475, compared with its closing of 61.555 during the previous trading session.

Brent crude futures fell amid signs that OPEC members are reluctant to reduce supply even as prices slump. Brent for December delivery was off 42 cents at $81.25 a barrel. The contract had fallen 67 cents a barrel to settle at $81.67 a barrel during the previous trading session on Tuesday, 11 November 2014, the lowest price since October 2010. Brent for January 2015 delivery was off 40 cents at $81.99 a barrel.

Indian government's decision last month to decontrol diesel prices and a sharp decline in global crude oil prices recently will help India in containing its fiscal deficit. The fall in global crude oil prices will also help India in containing its current account deficit and fuel price inflation. India imports 80% of its crude oil requirement. A slump in Brent crude since the end of June contributed to consumer-price index slowing to 6.46% in September 2014, the least since 2012.

Data after trading hours today, 12 November 2014, is likely to show consumer price inflation falling further in October 2014 and data later this week is likely to show wholesale price inflation falling further last month.

The rate of inflation based on the combined consumer price indices (CPI) for urban and rural India is seen easing further to 5.7% in October 2014, from 6.46% in September 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will release consumer price inflation data for October 2014 at 17:30 IST today, 12 November 2014.

The rate of inflation based on wholesale price index (WPI) is seen easing further to 2.1% in October 2014, from 2.38% in September 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil WPI inflation data for October 2014 at 12:00 noon on Friday, 14 November 2014.

Industrial production is seen rising a muted 0.4% in September 2014, matching the growth in August 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil industrial production data for September 2014 at 17:30 IST today, 12 November 2014.

Meanwhile, the empowered committee of state finance ministers on goods & services tax (GST) at its meeting held yesterday, 11 November 2014, reportedly agreed on the 'place of supply' rules that form the backbone of proposed GST. The place of supply rules decide where goods or services will be taxed, fixing a crucial element of the levy that has gained in importance because of the surge in ecommerce and electronic delivery of services. However, both the Centre and the states continue to differ on the threshold limit beyond which GST will be levied. As per reports, the states have stuck to their stand that the revenue threshold limit beyond which GST will be levied should be Rs 10 lakh for general category states and Rs 5 lakh for special category states and north-eastern states, despite the central government asking states to review its earlier decision on this limit and increase it upwards to Rs 25 lakh.

The government is reportedly proposing to introduce the GST Constitutional Amendment Bill and push for its passage in the winter session of Parliament. 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.

Asian stocks edged higher today, 12 November 2014, after Wall Street edged up to its fifth straight record close yesterday, 11 November 2014. Key indices in China, South Korea, Hong Kong, and Indonesia were up 0.2% to 0.59%. Key indices in Singapore and Taiwan were off 0.08% to 1.28%.

Japanese stocks rose for the second day in a row amid speculation the nation will delay raising its sales tax again. The Nikkei 225 Average was up 0.43%. Newspaper reports yesterday, 11 November 2014, suggested that Japan's Prime Minister Shinzo Abe is considering postponing a second increase in sales-tax next year and preparing to call snap elections next month. Abe told reporters yesterday, 11 November 2014, at the Asia-Pacific Economic Cooperation forum in Beijing that he hadn't made a decision on dissolving parliament.

Meanwhile, a trading program linking Hong Kong's stock market with Shanghai's will open on 17 November 2014.

Trading in US index futures indicated that the Dow could fall 27 points at the opening bell today 12 November 2014. US stocks eked out miniscule gains yesterday, 11 November 2014 with the Dow Jones Industrial Average and S&P 500 hitting record closing high in light volume as consumer discretionary shares gained. The National Federation of Independent Business said its small-business optimism index rose 0.8 point to 96.1 in October, a two-month high.

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