As a steep slide in global crude oil prices stoked fears about deflation and as the prospect of Greece dropping the euro weighed on global equity markets, key equity benchmark indices in India registered heavy losses. Key indices extended losses in late trade, with the barometer index, the S&P BSE Sensex, falling below the psychological 27,000 level. Frontline stocks witnessed steep losses. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than 2-1/2-weeks. The market breadth indicating the overall health of the market was quite weak, with more than three losers for every gainer on BSE. The Sensex was provisionally off 875.32 points or 3.14% to 26,967. The BSE Mid-Cap and BSE Small-Cap indices were off 2.95% each. A number of side counters slumped, with quite a few stocks registering losses ranging from 5% to 20% on BSE.
Shares of oil exploration and production firms declined after a steep decline in global crude oil prices. Hindustan Unilever advanced on reports that a foreign investment bank has upgraded the stock to buy from hold and also raised its target price for the stock. Bank of Baroda edged lower.
Meanwhile, growth at India's service sector activity moderated last month, according to a survey from HSBC Holdings Plc and Markit Economics released today, 6 January 2015.
Global crude oil prices tumbled to 5-1/2-year low. Deregulation of diesel price announced by the Indian government in October 2014 and a sharp decline in global crude oil prices over the past few months will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. The steep slide 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. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
Foreign portfolio investors bought shares worth a net Rs 472 crore yesterday, 5 January 2015, as per provisional data.
In overseas markets, energy stocks led losses in European stocks as crude oil prices continued to drop after a steep selloff overnight. Asian stocks tumbled after overnight sharp slide in US stocks triggered by another plunge in oil prices and concerns about the political situation in Greece. US stocks were clobbered yesterday, 5 January 2015, in an indiscriminate sell-off triggered by a renewed plunge in crude oil prices and surging dollar, which left the Dow Jones Industrial Average and the S&P 500 with their worst losses since October.
In the foreign exchange market, the rupee edged lower against the dollar as Indian stocks witnessed a carnage.
Brent crude futures continued to drop after a steep selloff overnight.
As per provisional closing, the S&P BSE Sensex was down 875.32 points or 3.14% to 26,967. The index tumbled 905.26 points at the day's low of 26,937.06 in late trade, its lowest level since 18 December 2014. The index declined 143.39 points at the day's high of 27,698.93 in early trade.
The CNX Nifty was down 251.05 points or 3% at 8,127.35, as per provisional closing. The index hit a low of 8,111.35 in intraday trade, its lowest level since 18 December 2014. The index hit a high of 8,327.85 in intraday trade.
The BSE Mid-Cap index was off 311.43 points or 2.95% at 10,235.74. The BSE Small-Cap index was off 333.99 points or 2.95% at 10,986.22. The decline in both these indices was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was quite weak, with more than three losers for every gainer on BSE. 2,247 shares declined and 646 shares rose. A total of 62 shares were unchanged.
The total turnover on BSE amounted to Rs 3127 crore, higher than Rs 2729.17 crore on yesterday, 5 January 2015.
Telecom stocks edged lower. Bharti Airtel (down 0.76%), Tata Teleservices (Maharashtra) (down 6.35%), Mahanagar Telephone Nigam (down 1.83%) and Idea Cellular (down 2.02%), and Reliance Communications (down 2.69%) edged lower. The Union Cabinet yesterday, 5 January 2015, approved the proposal of the Department of Telecom (DoT) to proceed with auction in 800, 900 & 1800 MHz bands. The Reserve price approved is Rs 3646 crore pan-India per MHZ in 800 MHz, Rs 3980 crore for 900 MHz band pan India excluding Delhi, Mumbai, Kolkatta, and J&K, and Rs 2191 crore pan India (excluding Maharashtra and West Bengal) in 1800 MHz band. The quantum of spectrum to be put to auction is 103.75 MHz in 800 MHz band in all service areas, 177.8 MHz in 17 LSAs in 900 MHz band and 99.2 MHz in 15 LSAs in 1800 MHz band. Thus a total of 380.75 MHz in 800,900 & 1800 MHz is being put to auction. Payment terms, eligibility criteria and auction objectives shall be as in the previous auction of Februay 2014, a government statement said.
The Union Cabinet also decided that intent to put 2100 MHz to simultaneous auction may be announced along with auction of other bands. Details of this will be announced later on.
Shares of oil exploration and production (E&P) firms declined after a steep decline in global crude oil prices. ONGC (down 6.06%), Cairn India (down 3.53%), Oil India (down 4.6%) and Reliance Industries (down 5.03%) edged lower. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms.
Tata Motors fell 4.6% at Rs 500. Jaguar Land Rover (JLR) yesterday, 5 January 2015, said its US sales rose 2% to 7,437 units in December 2014 over December 2013. US sales of the Jaguar brand rose 9% to 1,683 units in December 2014 over December 2013. US sales of the Land Rover brand declined 0.17% to 5,754 units in December 2014 over December 2013. JLR's US sales rose 0.41% to 67,238 units in calendar year 2014 over the calendar year 2013. The Land Rover brand established an all-time annual high for US sales of 51,465 units in calendar year 2014.
Bank of Baroda fell 3.61% at Rs 1,055.95. The state-run bank during market hours today, 6 January 2015, said it has decided to raise funds by way of private placement of BASEL III compliant AT-1 Bonds of Rs 1000 crore for augmenting Tier-1 capital of the bank.
Hindustan Unilever (HUL) rose 1.35% at Rs 771 on reports that a foreign investment bank has upgraded the stock to buy from hold and also raised its target price for the stock.
In the foreign exchange market, the rupee edged lower against the dollar as Indian stocks witnessed a carnage. The partially convertible rupee was hovering at 63.56, compared with its close of 63.42 during the previous trading session.
Brent crude futures continued to drop after a steep selloff overnight. Brent for February settlement was off $1.85 a barrel at $51.26 a barrel. The contract had lost $3.31 a barrel or 5.9% to settle at $53.11 a barrel yesterday, 5 January 2015, its lowest settlement since 1 May 2009, amid speculation rising global output will exacerbate oil supply glut.
Growth at India's service sector activity moderated last month, according to a survey from HSBC Holdings Plc and Markit Economics released today, 6 January 2015. The seasonally adjusted HSBC India Services PMI Business Activity Index declined to 51.1 in December 2014, from 52.6 in November 2014. Both activity and new orders in India's services sector expanded in December at lower rates compared with November. Except the financial intermediation sub-sector, all other sectors saw an expansion in order books in December 2014. Pranjul Bhandari, Chief India Economist at HSBC said that growth in the financial intermediation sector is key for funding a meaningful pick-up in economic growth. As per the survey, business expectations grew quickly at service providers in December 2014, led by the hotels and restaurants sub-sector. Inflationary pressures from both input and output prices remained modest.
Meanwhile, the Union Cabinet yesterday, 5 January 2015, approved the proposal of the Department of Telecom to proceed with auction in 800, 900 & 1800 MHz bands in February 2015. A government statement said that the estimated revenues from the auction is Rs 64840 crore of which Rs 16000 crore is expected to be realized in the current financial year.
The Prime Minister's Office (PMO) after trading hours yesterday, 5 January 2015, said that Prime Minister Narendra Modi has appointed economist Arvind Panagariya as Vice Chairman of NITI Aayog (National Institution for Transforming India). Economist Bibek Debroy and former secretary of defence research and development V.K. Saraswat have been appointed as two full-time members of NITI Aayog. The government had last week announced the setting up of NITI Aayog as replacement for the Planning Commission.
Energy stocks led losses in European stocks today, 6 January 2015, as crude oil prices continued to drop after a steep selloff overnight. Key indices in Germany, UK and France were off 0.07% to 0.97%.
The euro zone economy ended 2014 with its worst quarter for over a year as further price cutting failed to significantly drive up business activity, adding pressure on the European Central Bank (ECB) to act. Markit's final December Composite Purchasing Managers' Index (PMI), based on surveys of thousands of companies across the region and seen as a good indicator of growth, missed an earlier flash reading of 51.7, coming in at 51.4.
In Greece, uncertainties over the status of Greece including a possible exit from the eurozone are likely to persist until the early election in the country later this month. Greece is set to hold snap elections on 25 January 2015 after it failed to elect a new president in a third round of voting late last year. A radical left opposition party is leading in opinion polls ahead of the vote on promises to raise wages, increase government jobs and persuade the euro area to write off some Greek debt.
French consumer confidence in December jumped to its highest level since June 2012, latest data showed. Consumer confidence index edged up to 90 in December, from 88 in November.
Asian markets were sharply lower today, 6 January 2015, after stocks on Wall Street declined overnight following the relentless fall in oil prices. Key indices in Japan, Hong Kong, Singapore, Taiwan, Singapore, South Korea and Indonesia were off 0.98% to 3.02%. China's Shanghai Composite index rose 0.07%.
The HSBC China services purchasing managers index rose to 53.4 in December from 53 in November, HSBC Holdings PLC said today, 6 January 2015, pointing to economic resilience outside the nation's factory sector. A reading above 50 indicates month-over-month expansion while a level below that points to contraction.
The HSBC Hong Kong Purchasing Managers Index rose to the expansion mode of 50.3 in December, the first time in five months, signaling a slight improvement in the city's operating conditions. HSBC today, 6 January 2015, said that December's manufacturing PMI rose from 48.8 in November, helped by the increase of new business and output, despite the continued fall of new orders from China. A reading below 50 indicates a contraction in manufacturing, while a reading above that indicates an expansion. December's reading is the first month the PMI is above 50 since July, when it was 50.4.
Trading in US index futures indicated that the Dow could fall 14 points at the opening bell today, 6 January 2015. US stocks fell sharply yesterday, 5 January 2015, with the S&P 500 extending losses into a fourth session, as energy companies took it on the chin as the price of oil fell to its lowest since April 2009.
The Fed will release minutes of the Federal Open Market Committee (FOMC) meeting held on 16 and 17 December 2014 tomorrow, 7 January 2015. The Fed minutes may shed light on policy makers' views on the appropriate timing of the first interest-rate increase since 2006 and the conditions that would prompt them to tighten policy. At the two-day meeting in December, the FOMC had said it would be patient on the timing of an increase, replacing an earlier pledge to keep borrowing costs low for a "considerable time".
The US Labor Department reports monthly payroll data for December 2014 on Friday, 9 January 2015.
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