Amid weak cues from global markets, key equity benchmark indices in India languished in red in mid-morning trade. The market breadth indicating the overall health of the market turned negative from positive. The barometer index, the S&P BSE Sensex, was currently off 87.71 points or 0.31% at 28,031.69. Brent crude oil futures slumped to five-year low. Fall in crude oil prices augur well for India as the country imports 80% of its crude oil requirements.
Insurance stocks advanced after Finance Minister Arun Jaitley yesterday, 8 December 2014, said that he is hopeful that the insurance market expansion would take place once the Insurance Amendment Bill is passed by the parliament. Realty stocks edged higher. Cairn India dropped as global crude oil prices slumped to five-year low.
India's current account deficit (CAD) increased to $10.1 billion or 2.1% of GDP in Q2 September 2014, from $7.8 billion or 1.7% of GDP in Q1 June 2014 and from $5.2 billion or 1.2% of GDP in Q2 September 2013, data released by the Reserve Bank of India (RBI) after trading hours yesterday, 8 December 2014, showed.
Foreign portfolio investors bought shares worth a massive Rs 4984.60 crore yesterday, 8 December 2014, as per provisional data.
After swinging alternately between gains and losses in earlier during the day, key indices drifted lower in mid-morning trade, with the Sensex hitting its lowest level in almost three week and the 50-unit CNX Nifty hitting 2-1/2-week low.
In overseas markets, Asian stocks declined after US shares dropped overnight. US stocks edged lower yesterday, 8 December 2014, as a withering selloff among energy companies, which closely tracked oil's continued price slide, dragged down key benchmark indices.
In the foreign exchange market, the rupee edged lower against the dollar on broad strength for the dollar.
Brent crude oil futures slumped to five-year low on worries over a deepening supply glut. 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.
At 11:21 IST, the S&P BSE Sensex was down 87.71 points or 0.31% at 28,031.69. The index lost 94.19 points at the day's low of 28,025.21 in mid-morning trade, its lowest level since 20 November 2014. The index gained 38.13 points at the day's high of 28,157.53 in morning trade.
The 50-unit CNX Nifty was down 30.15 points or 0.36% at 8,408.10. The index hit a low of 8,405.55 in intraday trade, its lowest level since 21 November 2014. The index hit a high of 8,444.50 in intraday trade.
The BSE Mid-Cap index was up 2.15 points or 0.02% at 10,371.99. The BSE Small-Cap index was up 13.15 points or 0.12% at 11,387.78. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market turned negative from positive in mid-morning trade. On BSE, 1,209 shares declined and 1,174 shares gained. A total of 100 shares were unchanged.
Realty stocks advanced. Prestige Estates Proejects (up 1.26%), Oberoi Realty (up 0.9%), Sobha Developers (up 0.47%), Anant Raj (up 0.29%), and Unitech (up 0.28%) edged higher. Godrej Properties (down 0.17%) and D B Realty (down 0.52%) edged lower. Shares of Housing Development & Infrastructure were flat Rs 77.70.
DLF rose 0.66% at Rs 161.20. The company before market hours today, 9 December 2014, said that DLF Home Developers (a wholly subsidiary of the company) has just been made aware of the Order passed on 8 December 2014 by Single Bench of High Court regarding its "Riverside Project" at Chilavanoor, Vyttila, Cochin. This order comes as a result of a writ filed by a private individual in 2012 when company's applications for CRZ and MoEF clearance were under consideration by concerned authorities, (which approvals were subsequently granted in December 2013 by State Environment Impact Assessment Authority, a body constituted under the aegis of MoEF, Govt. of India), DLF said. The company awaits the full text of the order so as to get a detailed understanding of the matter after which it will take appropriate remedial measures in consultation with its legal counsel, DLF said.
DLF said that the company is a highly compliance oriented company which takes all necessary approvals to complete construction formalities. In case of Riverside project also, all required approvals like Building Permit, NOC from Pollution Control Board, Fire & Rescue Department, Naval Airport and also final orders of Environment cum CRZ clearance have been taken, DLF said. DLF said that according to a High Court order dated 19 August 2014, the High Court had clarified that the state government and Chief Secretary have no jurisdiction over approvals granted by SEIAA/MoEF, and any observations by the state government could be treated as for information purpose only. On the same day, another High Court order was passed by a two member bench dismissing a writ filed by another private individual seeking action against the company on basis of the state government/Chief Secretary's report, DLF said.
Coal India fell 0.47% at Rs 362.60. The stock hit a high of Rs 365 and a low of Rs 360.95 so far in the day.
Minister of state for Power, Coal & New and Renewable Energy (Independent Charge) Piyush Goyal said in a written reply to a question in the Rajya Sabha yesterday, 8 December 2014, that CIL has been impressed upon to enhance production of domestic coal in the country and power utilities have also been advised to enhance import of coal to meet the shortfall in domestic availability of coal. Goyal further stated that during April 2014 to October 2014, there has been a growth of 15.4% in coal-based generation over the corresponding period of last year. Coal supply from CIL sources to power utilities in the country has improved, Goyal said. With a view to monitor coal supplies to power utility sector, an Inter-Ministerial Sub-Group comprising representatives of Ministry of Power, Ministry of Coal and Ministry of Railways has been constituted. This Sub-Group takes various operational decisions for meeting any contingent situations relating to power sector including critical coal stock position, Goyal said.
In reply to another question on the exercise of coal rationalization, Goyal said in a written reply in the Rajya Sabha that the exercise of coal rationalisation is expected to optimize overall materialisation of coal at thermal power plants and one of the benefits will be increased power generation and reduction in power shortages in the country. KPMG has submitted a draft report on coal rationalisation to the government, Goyal said. However, figures of savings in transportation cost are dynamic and subject to acceptance and implementation of the proposal in part or totality by all the participating stakeholders, Goyal said.
Cairn India dropped as global crude oil prices slumped to five-year low. The stock was off 2.08% at Rs 252.40. The stock hit 52-week low of Rs 252.15 in intraday trade. Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms like Cairn India.
Shares of insurance companies rose after Finance Minister Arun Jaitley yesterday, 8 December 2014, said that he is hopeful that the insurance market expansion would take place once the Insurance Amendment Bill is passed by the parliament. Max India (up 2.84%), Reliance Capital (up 0.28%), Bajaj Finserv (up 0.03%), ICICI Bank (up 0.17%), and Aditya Birla Nuvo (up 0.38%) edged higher. State Bank of India (down 0.38%) and HDFC (down 0.18%) edged lower. The Insurance Amendment Bill seeks to raise foreign direct investment cap to 49% in the insurance sector from current 26%.
In the foreign exchange market, the rupee edged lower against the dollar on broad strength for the dollar. The partially convertible rupee was hovering at 61.87, compared with its close of 61.845 during the previous trading session.
Brent crude oil futures slumped to five-year low on worries over a deepening supply glut. Brent Brent for January settlement was off 69 cents a barrel at $65.50 a barrel. The contract had lost $2.88 a barrel to settle at $66.19 during the previous trading session, its lowest closing level since September 2009.
India's current account deficit (CAD) increased to $10.1 billion or 2.1% of GDP in Q2 September 2014, from $7.8 billion or 1.7% of GDP in Q1 June 2014 and from $5.2 billion or 1.2% of GDP in Q2 September 2013, data released by the Reserve Bank of India (RBI) yesterday, 8 December 2014 showed. The increase in CAD was primarily on account of higher trade deficit contributed by both a deceleration in export growth and increase in imports, the RBI said in a statment. In the financial account, net flows through foreign direct investment were stable in Q2 September 2014, the RBI said.
Lower trade deficit coupled with a marginal rise in net services receipts moderated the CAD to $17.9 billion in H1 of 2014-15 or 1.9% of GDP, from $26.9 billion in H1 of 2013-14 or 3.1% of GDP. With a relatively higher growth in merchandise exports and marginal rise in merchandise imports, India's trade deficit narrowed to $73.2 billion in H1 of 2014-15, from $83.8 billion in H1 of 2013-14.
The government plans to introduce the Coal Mines (Special Provisions) Bill, 2014 to replace the Coal Mines (Special Provisions) Ordinance, 2014 in Lok Sabha this week. The government is also likely to introduce the constitutional amendment bill for the goods & services tax during the onging winter session of parliament. The government also plans to bring the MMDR Amendment Bill, 2014 during the the ongoing session of parliament.
The government also intends to get the Insurance Laws Amendment Bill that seeks to enhance FDI limit in capital starved insurance sector passed during the ongoing winter session of parliament. Finance Minister Arun Jaitley yesterday, 8 December 2014, said that he is hopeful that the insurance market expansion would take place once the Insurance Amendment Bill is passed by the Parliament. The Finance Minister expressed his sense of satisfaction over the recommendations made by the Parliamentary Select Committee with regard to the Insurance Amendment Bill referred to it. Jaitley was speaking when Jerry Gimstone, Chairman, Standard Life, UK and Uday Kotak, Executive VC and MD, Kotak Mahindra Bank , both Co-Chair of India UK Financial Partnership called on the Finance Minister in his office yesterday, 8 December 2014.
The government will unveil industrial production data for October 2014 on Friday, 12 December 2014. Industrial production growth improved to 2.5% in September 2014, from a revised 0.5% growth in August 2014.
The government will release annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India for November 2014 on Friday, 12 December 2014. CPI for urban and rural India eased to 5.52% in October 2014, from 6.46% in September 2014.
The government will release the inflation data based on wholesale price index (WPI) for November 2014 on 15 December 2014. WPI eased to 1.77% in October from 2.38% in September 2014.
Asian stocks declined today, 9 December 2014, after US shares dropped overnight. Key indices in Japan, Hong Kong, Taiwan, South Korea, and Indonesia were off 0.17% to 1.13%. Key indices in China and Singapore were up 1.04% to 1.81%.
As China's top leadership convened today, 9 December 2014, for the annual Central Economic Work Conference in Beijing, state media reported the government might cut 2015's economic growth target to as low as 7%, down from the 2014 goal of about 7.5%. China's official growth target numbers usually aren't publically announced until the national legislature convenes in the spring.
Trading in US index futures indicated that the Dow could fall 38 points at the opening bell today, 9 December 2014. US stocks slid from records yesterday, 8 December 2014 amid continued selling of energy producers as crude oil sank to a five-year low.
Federal Reserve Bank of Atlanta President Dennis Lockhart said yesterday, 8 December 2014 that he's sticking with his long-held view that the US central bank should hold off on raising rates until the middle of next year or later. The momentum I perceive in the economy gives me confidence that the Federal Open Market Committee can consider beginning to normalize interest rates in 2015, Mr. Lockhart reportedly said.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 16-17 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.
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