A range bound movement was witnessed as key benchmark indices languished in red afternoon trade. The barometer index, S&P BSE Sensex, was currently off 132.23 points or 0.46% at 28,367.31. The market breadth indicating the overall health of the market was quite weak with more than three losers for every gainer on BSE. A number of side counters dropped. The BSE Mid-Cap index was off 1.87% and the BSE Small-Cap index was off 2.43%. The decline in these two indices was much sharper than the Sensex's slide in percentage terms.
The market sentiment was hit adversely by stock market regulator Securities and Exchange Board of India (Sebi) imposing restrictions on issue of Offshore Derivative Instruments (ODIs) by foreign portfolio investors (FPIs). The conditions imposed on issue of ODIs will come into effect immediately, Sebi said in a circular issued yesterday, 24 November 2014. Existing ODI positions which are not in conformity with the latest conditions imposed on issue of ODIs, can be continued till the expiry of the ODI contract.
Shares of pharmaceutical companies declined. Telecom shares declined after the Telecom Regulatory Authority of India (Trai) in its response to the telecom department's request for clarification over pricing of various bands of spectrum said that auctions are not the only way to allot spectrum.
The government intends to get the Insurance Laws Amendment Bill that seeks to enhance FDI limit in capital starved insurance sector passed during the month-long winter session of parliament which began yesterday, 24 November 2014. The government is also likely to introduce the constitutional amendment bill for the goods & services tax in the winter session of parliament.
Earlier, key benchmark indices had extended losses in mid-morning trade.
In overseas markets, Asian stocks were mixed. In the US yesterday, 24 November 2014, the S&P 500 and Dow Jones Industrial Average, both, attained another record closing high, on hopes that China will take further accommodative monetary policy action if needed.
In the foreign exchange market, the rupee reversed initial losses against the dollar.
Brent crude oil futures edged lower as investors lowered their expectation of a significant output cut by producer group the Organization of the Petroleum Exporting Countries (OPEC) at a meeting this week.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from November 2014 series to December 2014 series. The November 2014 derivatives contracts expire on Thursday, 27 November 2014.
At 13:17 IST, the S&P BSE Sensex was down 132.23 points or 0.46% at 28,367.31. The index fell 188.22 points at the day's low of 28,311.32 in mid-morning trade, its lowest level since 21 November 2014. The index rose 41.68 points at the day's high of 28,541.22 in early trade.
The CNX Nifty was down 59.20 points or 0.69% at 8,470.95. The index hit a low of 8,455.70 in intraday trade, its lowest level since 21 November 2014. The index hit a high of 8,535.35 in intraday trade, a record high for the index.
The market breadth indicating the overall health of the market was quite weak with more than three losers for every gainer on BSE. 2,143 shares fell and 625 shares rose. A total of 92 shares were unchanged.
The BSE Mid-Cap index was off 190.80 points or 1.87% at 10,012.17. The BSE Small-Cap index was off 275.22 points or 2.43% at 11,043.61. The decline in these two indices was much sharper than the Sensex's slide in percentage terms.
Shares of pharmaceutical companies declined. Wockhardt (down 4.36%), Strides Arcolab (down 3.09%), Aurobindo Pharma (down 2.53%), GlaxoSmithKline Pharmaceuticals (down 2.34%), Lupin (down 2.03%), Dr Reddy's Laboratories (down 1.14%), Cipla (down 1.1%), Divi's Laboratories (down 0.53%), Ranbaxy Laboratories (down 0.52%), IPCA Laboratories (down 0.32%) and Cadila Healthcare (down 0.05%) edged lower. Glenmark Pharmaceuticals (up 0.78%) and Sun Pharmaceutical Industries edged higher.
Telecom shares declined after regulator Telecom Regulatory Authority of India (Trai) in its response to the telecom department's request for clarification over pricing of various bands of spectrum said that auctions are not the only way to allot spectrum. Reliance Communications (down 5.97%), MTNL (down 4.54%), Tata Teleservices (Maharashtra) (down 4.14%) and Idea Cellular (down 3.48%), edged lower.
One option could be to allot airwaves at a nominal price with tough rollout obligations, Trai suggested. Trai termed the telecom department's view of the sector 'myopic,' referring to the DoT's moves to sell a limited amount of 2G spectrum upfront in February and hold separate auctions for 3G later.
The regulator, meanwhile, stuck to its recommendations on the auction starting levels - Rs 3004 crore per unit of 900 MHz in 18 telecom circles and Rs 2138 crore per MHz across 20 circles for 1800 MHz airwaves - and strongly reiterated its proposal that the department hold a simultaneous multi-band auction of frequencies, citing the small amount of airwaves - that too from operators currently using them - which will drive up bidding levels and leave the industry bleeding. It once again called for exploring the extended GSM band to add to the pool of airwaves.
Bharti Airtel rose 1.19% after the company said it has entered into a definitive pact with American Tower Corporation for the sale of over 4,800 of Bharti Airtel's communications towers in Nigeria. The announcement was made after trading hours yesterday, 24 November 2014.
Kotak Mahindra Bank fell 2.37%. The bank announced during trading hours today, 25 November 2014, that it has received approval from Reserve Bank of India (RBI) to form a subsidiary to enter the general insurance business. The bank has already received an in-principle approval from Insurance Regulatory and Development Authority (IRDA) for incorporation of a general insurance company. Kotak will now be required to apply and complete the registration process with IRDA to act as a general insurance company.
Mahesh Balasubramanian has been named as Chief Executive Officer of the new venture. Balasubramanian is currently Executive Vice President and Co-Head, Branch Banking, Kotak Mahindra Bank. He was part of the integral team that helped grow the consumer bank and its branch network, Kotak Mahindra Bank said in a statement.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 407.42 crore yesterday, 24 November 2014, as per provisional data.
Meanwhile, stock market regulator Securities and Exchange Board of India (Sebi) has imposed restrictions on issue of Offshore Derivative Instruments (ODIs) by foreign portfolio investors (FPIs). In a circular issued yesterday, 24 November 2014, Sebi said that a foreign portfolio investor (FPI) shall issue ODIs only to those ODI subscribers who are resident of a country whose securities market regulator is a signatory to International Organization of Securities Commission's Multilateral Memorandum of Understanding or a signatory to bilateral Memorandum of Understanding with Sebi. If the ODI applicant is a bank, the central bank of the country must be a member of Bank for International Settlements. An FPI cannot issue ODIs if the applicant is not resident in a country identified in the public statement of Financial Action Task Force as a jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply or a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the Financial Action Task Force to address the deficiencies.
An FPI shall issue ODIs only to those subscribers which do not have opaque structures, Sebi said in a circular. Sebi also said that the investment restrictions which are applicable to FPIs will also apply to ODI subscribers.
Existing ODI positions which are not in conformity with these latest conditions imposed on issue of ODIs, can be continued till the expiry of the ODI contract. No additional issuances/renewal/rollover of such positions shall be permitted, Sebi said. The conditions imposed on issue of ODIs will come into effect immediately, Sebi said.
In the foreign exchange market, the rupee reversed initial losses against the dollar. The partially convertible rupee was hovering at 61.875, compared with its close of 61.945 during the previous trading session.
Brent crude oil futures edged lower as investors lowered their expectation of a significant output cut by producer group the Organization of the Petroleum Exporting Countries (OPEC) at a meeting this week. Brent crude for January settlement was off 17 cents at $79.51 a barrel. The contract had fallen 68 cents to finish at $79.68 a barrel during the previous trading session.
Oil ministers from the OPEC are scheduled to meet in Vienna on Thursday, 27 November 2014, to consider whether to adjust their output target of 30 million barrels per day (bpd) for early 2015. OPEC, which pumps about 40% of the world's crude, has maintained its official quota at 30 million barrels a day since January 2012.
The government will announce data on gross domestic product (GDP) for Q2 September 2014 at 17:30 IST on Friday, 28 November 2014. India's GDP grew 5.7% in Q1 June 2014 over the corresponding period of the previous year.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 2 December 2014. The central bank aims to limit consumer-price gains to 8% by January 2015 and 6% by January 2016. Over the longer term, the RBI aims to limit consumer-price gains to 4%, within a 2% band. The annual rate of inflation based on the combined consumer price index (CPI) for urban and rural India eased to 5.52% in October 2014 from 6.46% in September 2014, data released by the government on 12 November 2014 showed.
On the political front, voting began for the first of the five-phase assembly elections in Jammu and Kashmir and Jharkhand today, 25 November 2014. Assembly elections in Jammu & Kashmir and Jharkhand are being held in five phases between 25 November 2014 and 20 December 2014 and counting of votes will take place on 23 December 2014.
Asian stocks were mixed today, 25 November 2014. Key benchmark indices in Hong Kong, Indonesia and Taiwan were off 0.07% to 0.30%. Key benchmark indices in South Korea and Japan were up 0.08% to 0.29%. Singapore's Straits Times was flat.
In mainland China, the Shanghai Composite rose 1.37%. China's central bank reportedly cut the yield for a key short-term money rate today, 25 November 2014, for the fourth time this year, as regulators step up efforts to reduce funding pressure on Chinese companies. The reduction of the yield on the 14-day bond repurchase agreement (repo) to 3.4%, from 3.6%, follows a surprise cut to benchmark lending rates on Friday, 21 November 2014, to support the cooling economy, and follows similar moves in October and July as growth wobbled. The People's Bank of China cut one-year benchmark lending rates by 40 basis points to 5.6% late on Friday, and at the same time increased the maximum payable deposit rate to 3.3% from 3.2%.
In Japan, the minutes of the Bank of Japan's (BOJ) Oct. 31 monetary policy meeting released today, 25 November 2014, showed BOJ Governor Haruhiko Kuroda proposed the additional stimulus for the Japanese economy. In a speech, Kuroda today, 25 November 2014, stressed the bank's readiness to expand stimulus further to meet its price goal.
Trading in US index futures indicated that the Dow could see a flat opening today, 25 November 2014. The S&P 500 and Dow Jones Industrial Average, both, attained another record closing high yesterday, 24 November 2014, on hopes that China will take further accommodative monetary policy action if needed. Small-caps rallied and outperformed their large counterparts, in a sign that the current bull market has not run out of steam yet. Trading volumes were lower than usual, as the week is cut short by Thanksgiving holiday on Thursday, 27 November 2014. Trading on Friday, 28 November 2014, will be a half-day session.
In Europe, Germany's gross domestic product rose 0.1% in Q3 September 2014, the Federal Statistics Office said today, 25 November 2014, confirming initial estimate. The expansion marks a rebound from the prior three months, when GDP fell 0.1%
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