A bout of volatility was witnessed as key benchmark indices regained strength after trimming strong intraday gains in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was currently above the psychological 27,000 mark, having alternately moved above and below that mark earlier during the trading session trading session. Earlier, a firm opening had taken the Sensex above that psychological level. The market breadth indicating the overall health of the market was quite strong, with more than three gainers for every loser on BSE. A number of side counters witnessed decent to strong gains. The Sensex was currently up 372.21 points or 1.39% at 27,082.34. The BSE Mid-Cap index was up 2.62%. The BSE Small-Cap index was up 3.08%. Both these indices outperformed the Sensex.
Stocks rose across the globe after the US Federal Reserve pledged patience on interest-rate increases after the conclusion of its two-day monetary policy meeting yesterday, 17 December 2014. A longer timeline for rate increases in the United States implies that equities will continue to be more appealing to investors, including those in riskier emerging markets, compared with the low returns on US bonds. Closer home, India's Union Cabinet yesterday, 17 December 2014, reportedly approved a constitutional amendment bill to provide the legal framework for rolling out a nationwide goods and services tax (GST).
Auto stocks gained on renewed buying. Shares of power generation and power distribution companies rose after the government said it has decided to set up of Power System Operation Corporation (POSOCO) as an independent government company for reforms in power sector.
In the foreign exchange market, the rupee edged higher against the dollar after the US Federal Reserve pledged patience on interest-rate increases after the conclusion of its two-day monetary policy meeting yesterday, 17 December 2014.
Brent crude futures extended gains registered during the previous trading session.
Foreign portfolio investors sold shares worth a net Rs 1636.36 crore yesterday, 17 December 2014, as per provisional data.
In overseas markets, Asian and European stocks surged after a Federal Reserve pledge to be patient on interest-rate increases sent US stocks surging yesterday, 17 December 2014.
At 14:16 IST, the S&P BSE Sensex was up 372.21 points or 1.39% at 27,082.34. The index jumped 411.76 points at the day's high of 27,121.89 in mid-afternoon trade, its highest level since 16 December 2014. The index gained 190.44 points at the day's low of 26,900.57 in mid-morning trade.
The CNX Nifty was up 115.60 points or 1.44% at 8,145.40. The index hit a high of 8,154.45 in intraday trade, its highest level since 16 December 2014. The index hit a low of 8,084.90 in intraday trade.
The BSE Mid-Cap index was up 254.25 points or 2.62% at 9,960.70. The BSE Small-Cap index was up 324.41 points or 3.08% at 10,840.53. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was quite strong, with more than three gainers for every loser on BSE. 2,004 shares rose and 650 shares fell. A total of 95 shares were unchanged.
Shares of power generation and power distribution companies rose after the government said it has decided to set up of Power System Operation Corporation (POSOCO) as an independent government company for reforms in power sector. JSW Energy (up 3.52%), Torrent Power (up 9.07%), GVK Power & Infrastructure (up 5.29%), NHPC (up 3.01%), Tata Power Company (up 3.75%), NTPC (up 3.05%), Adani Power (up 3.12%), Power Grid Corporation of India (up 0.69%), Reliance Infrastructure (up 4.92%) and Reliance Power (up 3.59%) gained.
It has been decided to establish POSOCO as a wholly-owned Government of India company under the Ministry of Power thereby giving a big thrust to bringing in further reforms in the power sector at the Central level, the Ministry of Power said in a statement. POSOCO operates the National Load Despatch Centre (NLDC) and Regional Load Despatch Centres (RLDCs) which are also responsible for operating the vibrant electricity market working in the country, the Ministry of Power said. POSOCO is also designated as the nodal agency for major reforms in the power sector such as the Renewable Energy Certificate (REC) Mechanism, transmission pricing, short term open access in transmission, Deviation Settlement Mechanism, Power System Development Fund (PSDF), etc.
The strengthening of the institutional mechanism of System Operation would help bring in innovation in the power sector as the RLDCs/NLDC operated by POSOCO by achieving economy and efficiency in the power system operation and facilitating implementation of various Government of India policies for power sector as well as provide feedback to the policymakers, regulators and planners, Ministry of Power said.
Auto stocks gained. Tata Motors (up 2.14%), Eicher Motors (up 2.34%), Hero MotoCorp (up 0.26%), Ashok Leyland (up 6.75%), Bajaj Auto (up 1.79%) and TVS Motor Company (up 5.23%) gained.
Maruti Suzuki India gained 3.12%. With respect to news article titled "Maruti, Hyundai to hike prices in Jan", Maruti Suzuki India clarified during market hours today, 18 December 2014, that the company is contemplating increase in prices of its products owing to various reasons including increase in cost of inputs. After taking into consideration various factors, the prices of the company's products are increased/decreased from time to time in the ordinary course of business. However, as evident from the media report, the company has not taken a final decision in this direction, Maruti said.
As the modifications in prices takes place in the ordinary course of business, hence, in the best interest of the investors in general, the company does not specifically report such information to the exchanges, Maruti said.
In the foreign exchange market, the rupee edged higher against the dollar after the US Federal Reserve pledged patience on interest-rate increases after the conclusion of its two-day monetary policy meeting yesterday, 17 December 2014. The partially convertible rupee was hovering at 63.23, compared with its close of 63.62 during the previous trading session.
Brent crude futures extended gains registered during the previous trading session. Brent for February settlement was up 20 cents at $61.38 a barrel. The contract had risen $1.17 a barrel or 2% to settle at $61.18 a barrel during the previous session.
Closer home, the Union Cabinet yesterday, 17 December 2014, reportedly approved a constitutional amendment bill to provide the legal framework for rolling out a nationwide goods and services tax (GST). The constitutional amendment Bill provides the legal framework for rolling out the levy, giving states power to tax both goods and services. As of now only the central government can impose service tax. The amendment Bill will also create a GST council, a body that will have representatives of the states and the Centre that will take decisions on the tax after it is rolled out. The Bill is likely to be introduced in parliament during the ongoing winter session.
The government's intension is to implement a nationwide GST from 1 April 2016. 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.
Investors are closely monitoring if the Indian government's key legislative reform bills are passed during the ongoing winter session of the parliament. The Indian government intends to get the Insurance Laws (Amendment) Bill, 2008 passed in both the Houses of Parliament in this week. The Union Cabinet, last week, approved the official amendments to the Insurance Laws (Amendment) Bill, 2008. The Parliamentary Select Committee in its report tabled in Rajya Sabha on 10 December 2014 agreed a composite cap of 49% on foreign investment in the insurance sector, which includes all types of foreign investment as opposed to the 26% foreign direct investment (FDI) allowed at present. Finance Minister Arun Jaitley had said in his maiden budget speech in July that the composite cap in the insurance sector should be increased to 49% from the current level of 26%, with full Indian management and control.
It also remains to be seen if the government will be to find support for the Coal Mines (Special Provisions) Bill, 2014 in the Rajya Sabha where it's in a minority. The Lok Sabha last week passed the Coal Mines (Special Provisions) Bill, 2014. The bill allows the government to enforce rules and guidelines for auction/allocation of 204 coal blocks cancelled by the Supreme Court in September this year.
European stocks jumped today, 18 December 2014, on confidence over global growth after a Federal Reserve pledge to be patient on interest-rate increases. Key indices in France, Germany and UK rose 1.03% to 1.52%.
In Greece, Prime Minister Antonis Samaras failed to get enough support for his nominee in a parliamentary vote for a new head of state. If Samaras also fails to get enough support for his candidate in the second and third round of votes, snap elections will take place in early 2015
Asian stocks surged today, 18 December 2014, rebounding from an almost nine-month low, after a Federal Reserve pledge to be patient on interest-rate increases sent US equities up the most since 2013 yesterday, 17 December 2014. Key indices in Indonesia, Singapore, Japan, Hong Kong, and Taiwan were up 0.57% to 2.32%. Key indices in China and South Korea were down 0.11% to 0.14%.
Trading in US index futures indicated that the Dow could gain 73 points at the opening bell today, 18 December 2014. US stocks surged the most since 2013 yesterday, 17 December 2014, with the Standard & Poor's 500 Index erasing about half of its December drop, after the Federal Reserve pledged patience on its first interest-rate increase since 2006.
The Federal Reserve after two-day policy meet yesterday, 17 December 2014, said it will be patient when it comes to the timing of rate increases, replacing a pledge in its statement to keep borrowing costs near zero for a considerable time, and raising its assessment of the job market.
Federal Reserve Chair Janet Yellen restored clarity to the central bank's monetary policy plans, saying it was on course to raise interest rates, though not right away. Yellen also laid out the economic parameters that would need to be met for liftoff to begin later in the year and said that rates probably would be raised gradually thereafter. They may not return to more normal levels until 2017, she added.
Among economic data in the US, the US consumer-price index dropped 0.3% in November from the previous month, the most since December 2008, after being little changed the prior month, a Labor Department report showed yesterday, 17 December 2014.
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