Trading for the week began on positive note as a drop in US wages last month spurred speculation the US Federal Reserve will delay an increase in interest rates. 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. The latest gains for Indian stocks materialized as Brent crude oil futures extended losses from 5-1/2-year low. India stands to benefit from a rout in global crude oil prices given that the nation meets 80% of its crude oil requirements from imports. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, attained one-week closing high.
The Sensex advanced 126.89 points or 0.46% to settle at 27,585.27. Banking, FMCG and IT stocks led the upmove. The market breadth indicating the overall health of the market was positive. Gains in European stocks also aided the upmove on the domestic bourses. European stocks rose on reports that a bond-buying scheme by the European Central Bank is taking firmer shape.
Meanwhile, Prime Minister Narendra Modi yesterday, 11 January 2015, said that the government is committed to create a policy environment that is predictable, transparent and fair.
Adani Enterprises rose after the company said it has signed a Memorandum of Understanding with SunEdison Inc., to establish a joint venture to build the largest, vertically integrated solar photovoltaic manufacturing facility in India with an investment of around $4 billion. Max India advanced after the company said that its board of directors has delegated authority to its Investment & Finance Committee, to examine options for corporate restructuring of the company.
In overseas markets, European stocks edged higher on reports that a bond-buying scheme by the European Central Bank is taking firmer shape. Asian stocks edged lower as a decline in wage growth in the US last month stoked worries about global deflationary pressures. US stocks fell on Friday, 9 January 2015, after December's US payroll report revealed a drop in wages.
In the foreign exchange market, the rupee edged higher against the dollar as a drop in US wages last month spurred speculation the US Federal Reserve will delay an increase in interest rates.
Brent crude oil futures extended losses from the lowest level in more than 5-1/2 years after a prominent investment bank reportedly cut its oil-price projections for this year and the next. 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.
Meanwhile, as per media reports, the government's revenue department is pushing the Income Tax department to include portfolio investors (FPIs) under the Minimum Alternate Tax (MAT) on their gains from stock market transactions. The Income Tax department reportedly issued show-cause notices to more than 35 foreign portfolio investors (FPIs) last month on why the concerned FPI isn't liable to pay MAT.
The S&P BSE Sensex advanced 126.89 points or 0.46% to settle at 27,585.27, its highest closing level since 5 January 2015. The index jumped 162.28 points at the day's high of 27,620.66 in late trade. The index declined 134.64 points at the day's low of 27,323.74 in afternoon trade.
The CNX Nifty rose 38.50 points or 0.46% to settle at 8,323, its highest closing level since 5 January 2015. The index hit a high of 8,332.60 in intraday trade, its highest level since 5 January 2015. The index hit a low of 8,245.60 in intraday trade.
The BSE Mid-Cap index advanced 60.17 points or 0.58% to settle at 10,486.18. The BSE Small-Cap index rose 93.16 points or 0.83% to settle at 11,291.50. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,651 shares advanced and 1,253 shares declined. A total of 120 shares were unchanged.
The total turnover on BSE amounted to Rs 2999 crore, lower than Rs 3287.18 crore during the previus trading session on Friday, 9 January 2015.
Among sectoral indices on BSE, the S&P BSE Bankex index (up 0.9%), BSE Consumer Durables index (up 0.49%), BSE Capital Goods index (up 1.55%), BSE FMCG index (up 1.42%), BSE IT index (up 1.32%), BSE Power index (up 0.51%) and BSE Teck index (up 0.91%) outperformed the Sensex. The BSE Auto index (up 0.06%), BSE Healthcare index (up 0.32%), BSE Metal index (down 1.68%), BSE Oil & Gas index (down 1.19%), and BSE Realty index (down 0.03%) underperformed the Sensex.
Bank stocks edged higher. Among PSU banks, Corporation Bank (up 4.06%), IDBI Bank (up 3.52%), UCO Bank (up 2.98%), Syndicate Bank (up 2.9%), Allahabad Bank (up 2.69%), Union Bank of India (up 2.41%), Oriental Bank of Commerce (up 2.35%), Andhra Bank (up 2.28%), Bank of Baroda (up 1.94%), Bank of India (up 1.72%), Central Bank of India (up 1.49%), Punjab National Bank (up 1.26%), State Bank of India (up 1.24%), Indian Overseas Bank (up 1.17%), Dena Bank (up 1.08%), and Canara Bank (up 0.87%) edged higher.
Reserve Bank of India (RBI) Deputy Governor R Gandhi reportedly said on Saturday, 10 January 2015 that dilution of government holding in PSBs may not be sufficient for meeting Basel III capital adequacy norms. Mr. Gandhi was quoted as saying that the PSBs would have to chart out a clear capital raising plan over the next five years.
Among private sector banks, IndusInd Bank (up 4%), Yes Bank (up 1.73%), ICICI Bank (up 1.27%), Axis Bank (up 1.24%), and Kotak Mahindra Bank (up 0.88%) edged higher.
HDFC Bank fell 0.68% at Rs 968.10. The stock hit a high of Rs 974.30 and a low of Rs 964.10. The finance ministry on Friday, 9 January 2015, said that a proposal related to foreign investment in HDFC Bank has been recommended for consideration of the Cabinet Committee on Economic Affairs (CCEA). HDFC Bank has sought approval from the government for issue of equity shares of the bank aggregating to an amount of Rs 10000 crore to NRIs/FIIs/FPIs subject to the aggregate foreign shareholding not exceeding 74% of the post issue paid up capital. Currently, there is a ban on purchases of shares of HDFC Bank by foreigners. The Reserve Bank of India (RBI) had 16 Dec 2013 notified that foreign share holding through foreign institutional investors (FIIs)/Non Resident Indian (NRI)/Persons of Indian Origin (PIO)/foreign direct investment (FDI)/ADR/Global Depository Receipt (GDR) in HDFC Bank had crossed the overall limit of 49% of the bank's paid-up capital. Therefore, no further purchases of share of HDFC Bank would be allowed through stock exchanges in India on behalf of FII/NRI/PIO/FDI/ADR/GDRs, the RBI had said.
ONGC declined 0.9% at Rs 347.90. The stock hit a high of Rs 353.90 and a low of Rs 344.50. With reference to the news captioned "ONGC at a loss, US firm walks out of Russian project", ONGC said during market hours that ONGC Videsh, a wholly owned subsidiary of ONGC has refuted the statement "ONGC Videsh at a loss" and denied the same. ONGC said that Imperial Energy is having reserves in tight sand formations. To improve production, Imperial Energy engaged Liberty Resources in September 2013 for technology consultation to exploit the oil reserves of tight sands in one field and also Bazhenov shale oil. The expert team of Liberty Resources worked along with Imperial team and carried out detailed evaluation studies and firmed up drilling of 4 pilot wells; 2 each for tight sand and Bazhenov shale. At present, Liberty Resources continues to support on the development of tight sand, ONGC said. However, Liberty Resources has expressed its inability to support for Bazhenov shale activities due to US sanction. ONGC Videsh has continued with the pilot project of Bazhenov shale with its in-house expertise.
Production enhancement initiatives are ongoing routine activities in E&P companies, ONGC said.
Indian Oil Corporation (IOCL) fell 0.63% at Rs 339.50. The stock hit a high of Rs 343.05 and a low of Rs 338.30. With respect to news article titled "IOC to form JV for Rs 5150-crore LNG terminal project in TN within a month", the company clarified during market hours today, 12 January 2015, that the board of IOCL at its meeting held in October 2014 had accorded approval for setting up a 5 million tonne LNG project at Ennore through a joint venture company. The cost of the project is estimated at Rs 5150 crore. The project would be implemented through a joint venture company and not directly by IOCL. As per the equity participation in the JV company, IOCL will hold 45%, TIDCO, a Tamil Nadu State Govt Enterprise hold 5% and balance 50% will be held by financial institutions.
The JV will be initially incorporated with a Seed Capital of Rs 1 lakh by the JV partners out of which IOCL's investment would only be Rs 45000 at present. As the project activities progress, the strategic joint venture partners would be identified and inducted as equity partners. The project related activities are yet to commence.
Coal India dropped 4.54% at Rs 358.70 on report the government is planning to sell a 10% stake in the state-run coal miner. Last week, finance minister Arun Jaitley had reportedly said that the last quarter of the current fiscal year ending 31 March 2015 (FY 2015) will see a big disinvestment push. The government has already finalised selling its 10% stake in Coal India during the current fiscal year.
According to the media report, the Coal India stock sale plan had been held up because of lack of policy clarity on mine auctions, following the cancellation of blocks by the Supreme Court in September, and opposition by unions. Both issues policy clarity on mine auctions and opposition by unions have been resolved: the first through an ordinance and the second through negotiations. A five-day strike called by 5.5 lakh Coal India workers last week was called off in two days after Coal, Power and Renewable Energy Minister Piyush Goyal met unions to explain the government's position and addressed their concerns, report added.
Adani Enterprises rose 1.86% at Rs 515.50. The company during market hours today, 12 January 2015, said it has signed a memorandum of understanding (MoU) with Australian energy major Woodside Energy for cooperation for exploring business opportunities across a broad spectrum in the oil and gas sector in India, as part of the Vibrant Gujarat initiative. The two companies will jointly explore opportunities in sourcing of liquefied natural gas (LNG), supply and purchase arrangements for India, LNG marketing, investment in upstream activities such as Oil & Gas Exploration, Production & Liquefaction plants, knowledge sharing, training, joint technology studies, technology workshops and connecting local R&D institutions and universities with each other, Adani Enterprises said in a statement.
Separately, Adani Enterprises during market hours today, 12 January 2015, said it has signed an MoU with SunEdison Inc., a leading solar technology manufacturer and provider of solar energy services, to establish a joint venture (JV) to build the largest, vertically integrated solar photovoltaic manufacturing facility in India with an investment of around $4 billion. The facility will create enough solar panels to fuel substantial solar growth in India, furthering India's goals for clean, renewable energy independence, Adani Enterprises said in a statement. Max India rose 1.2% at Rs 396.20. The company during market hours today, 12 January 2015 said that its baord of directors delegated authority to its Investment & Finance Committee, to examine options for corporate restructuring of the company.
United Spirits (USL) rose 6.63% at Rs 3,050.45 after minority shareholders of the company approved a proposal to make and sell brands owned by its parent Diageo Plc. The announcement was made after market hours on Friday, 9 January 2015. USL said it has received approval from minority shareholders for exclusive licence and distribution agreements with its parent Diageo, a proposal that had been defeated in a previous vote in November 2014. USL said last month that the agreement will help generate roughly Rs 700 crore in estimated sales in the first full year. The company also said it would share marketing and advertising expenses with Diageo's India unit, based on net sales. Diageo's India unit is expected to shut down following the closure of the deal.
IT stocks advanced. Tech Mahindra (up 2.78%), MindTree (up 2.05%), HCL Technologies (up 1.94%), CMC (up 0.63%), and Wipro (up 0.51%) edged higher. TCS (down 0.01%), Oracle Financial Services Software (down 0.72%), and MphasiS (down 1.38%) edged lower.
Infosys gained 1.98% at Rs 2,114.75. Infosys US based subsidiary Infosys Public Services during market hours today, 12 January 2015, said that the company has successfully implemented a premium billing and payments solution for L.A. Care Health Plan, the largest publicly operated health plan in the US serving more than 1.6 million members.
Shares of Infosys had jumped 5.02% during the previous trading session on Friday, 9 January 2015, after the company reported stronger-than-expected Q3 December 2014 results. Infosys' consolidated net profit as per International Financial Reporting Standards (IFRS) rose 5% to Rs 3250 crore on 3.4% increase in revenue to Rs 13796 crore in Q3 December 2014 over Q2 September 2014.
At the time of announcement of the third quarter results, Infosys said on that day that the company has maintained its guidance of 7%-9% growth in revenue in dollar terms for the year ending March 2015 (FY 2015) based on exchange rates as on 30 September 2014.
FMCG shares advanced. Emami (up 4.65%), Godrej Consumer Products (up 3.28%), Dabur India (up 2.2%), Nestle India (up 0.64%), and Colgate-Palmolive (India) (up 0.34%) edged higher. Marico (down 0.97%) and Britannia Industries (down 0.72%) edged lower.
Hindustan Unilever (HUL) gained 3.84% at Rs 896.65, after hitting record high of Rs 899.65 in intraday trade.
Bharat Forge rose 7.68% to Rs 1000.80 after a foreign brokerage reportedly initiated its coverage on the stock with a 'buy' rating. The brokerage cited robust growth outlook, strong franchise and diversified business mix as key reasons for the stock's upgrade, according to reports.
Key indices advanced for a third straight trading session today, 12 January 2015. The Sensex has risen 676.45 points or 2.51% in three trading sessions from a recent low of 26,908.82 on 7 January 2015. The Sensex has gained 85.85 points or 0.31% in this month so far (till 12 January 2015). From a record high of 28,822.37 struck on 28 November 2014, the Sensex has fallen 1,237.10 points or 4.29%. From a 52-week low of 19,963.12 on 4 February 2014, the Sensex has risen 7,622.15 points or 38.18%.
In the foreign exchange market, the rupee edged higher against the dollar as a drop in US wages last month spurred speculation the US Federal Reserve will delay an increase in interest rates. The partially convertible rupee was hovering at 62.2425, compared with its close of 62.32 during the previous trading session.
Brent crude oil futures extended losses from the lowest level in more than 5-1/2 years after a prominent investment bank reportedly cut its oil-price projections for this year and the next. Brent for February settlement was off $1.36 a barrel to $48.75 a barrel. The contract had lost 85 cents to settle at $50.11 a barrel during the previous trading session on Friday, 9 January 2015, the lowest closing since April 2009. Brent for March settlement was off $1.41 a barrel at $49.89 a barrel.
On the macro front, data to be released today, 12 January 2015, is expected to show industrial production growth remaining muted in November 2014 and consumer price inflation accelerating in December 2014. Industrial production is seen rising 1.6% in November 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil industrial production data for November 2014 after trading hours today, 12 January 2015. Industrial production had witnessed a surprise contraction of 4.2% in October 2014.
The rate of inflation based on the consumer price index (CPI) is seen accelerating to 5.4% in December 2014 from 4.4% in November 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will release the data on CPI inflation for December 2014 after trading hours today, 12 January 2015.
The Reserve Bank of India (RBI) 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 rate of inflation based the wholesale price index (WPI) is projected at 0.5% for December 2014, as per the median estimate of a poll of economist carried out by Capital Market. WPI inflation stood at zero in November 2014. The government will release data on WPI for December 2014 at 12 noon on Wednesday, 14 January 2015.
Meanwhile, the Reserve Bank of India (RBI) today, 12 January 2015, that Governor Dr. Raghuram Rajan and European Central Bank (ECB) President Dr. Mario Draghi today, 12 January 2015, signed a Memorandum of Understanding (MoU) on cooperation in the field of central banking. The MoU provides a framework for regular exchange of information, policy dialogue and technical cooperation between the two institutions. Technical cooperation may take the form of joint seminars and workshops in areas of mutual interest in the field of central banking, the RBI said.
Prime Minister Narendra Modi yesterday, 11 January 2015, said that the government is committed to create a policy environment that is predictable, transparent and fair. Speaking at Vibrant Gujarat summit at Gandhinagar in Gujarat, Modi said that the government is putting all efforts to ensure faster and yet inclusive growth. Modi said that HSBC's latest report has identified India as the world's largest growing exporter, which is set to move from being the fourteenth to the fifth largest exporter in the world by 2030. Modi has that the government has taken far reaching decisions to ensure supply of key natural resources. He further said that the government has also amended legal provisions to facilitate availability of land. This has been done to enable development in remote areas while ensuring better returns to the farming community. Modi said that the government has put focus on building infrastructure through public and private investments. With regard to the manufacturing sector, Modi said that the government's focus is on promoting labour intensive manufacturing.
European stocks edged higher today, 12 January 2015, on reports that a bond-buying scheme by the European Central Bank (ECB) is taking firmer shape. Key indices in France, Germany and UK were up 0.4% to 1.47%.
The ECB is reportedly planning a quantitative easing program that could be based on contributions made by central banks into the ECB. Germany pays 17.9% of the total contributions while Cyprus pays the least, at 0.15% of the total contributions to the ECB, according to reports. Nothing has been finalized yet, reports said.
The French economy grew only slightly in the final quarter of 2014, a business confidence survey by the Bank of France showed today, 12 January 2015. French gross domestic product expanded 0.1% in the fourth quarter from the third, the central bank said.
Meanwhile, uncertainties over the status of Greece including its 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. The Greek leftist opposition party Syriza leads opinion polls ahead of national elections on 25 January 2015. Syriza has demanded debt relief from the eurozone and promised to roll back the austerity and reform measures that the country has undertaken in exchange for the international bailout that the government negotiated in 2012.
Asian stocks edged lower today, 12 January 2015, amid concern Europe's stimulus plans may not solve the euro region's economic woes and after an unexpected drop in American wages clouded the outlook for US interest rates. Key indices in South Korea, Indonesia, Singapore, China and Taiwan were off 0.19% to 1.65%. Key indices in Hong Kong and Singapore were up 0.21% to 0.45%. Japanese stock market remained close for a holiday.
Trading in US index futures indicated that the Dow could gain 102 points at the opening bell today, 12 January 2015. US stocks fell on Friday, 9 January 2015, following a two-day rally as December's jobs report gave a mixed view of the economy, with financial shares leading the way lower.
US job growth increased briskly in December, but wages posted their biggest decline in at least eight years in a sign the tightening labor market has yet to give much of a boost to workers. Nonfarm payrolls increased by 252,000 last month after an upwardly revised jump of 353,000 in November, the Labor Department said. The jobless rate fell 0.2 percentage point to a 6-1/2-year low of 5.6%, but that was mainly because people left the labor force.
The drop in labor participation and a surprise five-cent, or 0.2 percent, decrease in average hourly earnings, which nearly erased November's gains, took some shine off the otherwise upbeat report.
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