Key benchmark indices slipped in negative zone after a firm start on selling pressure in index pivotals. Global cues were mixed. Volatility was high ever since opening bell. The BSE 30-share Sensex was down 69.48 points or 0.46%, off 220.79 points from the day's low but up 23.29 points from the day's low. The market breadth turned negative after a positive start
Foreign trade data for May 2009 to be unveiled by the government and ABN Amro's purchasing manager's index (PMI) due today, 1 July 2009 will influence trade during the day.
In a move which may boost sentiment, the Indian government on Tuesday, 30 June 2009 eased overseas borrowing rules for firms to speed up work at infrastructure projects as the cash strapped government tries to boost a slowing economy.
Successful fund raising by corporates through qualified institutional placement (QIP) early this week helping them finance expansion and reduce debt, also boosted the sentiment. While infrastructure firm GMR withdrew its QIP on Tuesday, 30 June 2009, realty firm Housing Development & Infrastructure (HDIL) has reportedly raised $350.30 million by QIP issue on the same day.
Institutional investors also bought $150 million of shares from sugar maker Bajaj Hindusthan this week, as well as $110 million from realty firm Sobha Developers and $100 million from construction firm Hindustan Construction Company.
A number of firms have announced plans to raise funds through shares sales to institutional investors, taking advantage of a solid surge in share prices in the past three months. Brokers expect companies to raise over $10 billion in the current financial year by way of share placements and initial public offers. On the flip side, the large equity sales may keep a lid on share prices in the secondary market
Growth in the index of six core infrastructure industries slipped to a three-month low of 2.8% in May 2009 on account of a dip in crude oil and refinery production as well as less power generation by hydel plants, Ministry of Commerce and Industry data showed on Tuesday, 30 June 2009. The core sector performance in May 2009 was lower than that of April 2009, when it expanded by 5%, as well as the increase of 3.1% a year ago. The core sector has 27% weight in Index of Industrial Production (IIP).
The near-term major trigger for the market is the Union Budget 2009-10 on 6 July 2009. The Annual economic survey is scheduled to be presented on 2 July 2009 followed by the Rail Budget on 3 July 2009.
The corporate sector is expecting a removal of the fringe benefit tax (FBT) in the budget. Under the current dispensation, an employer has to pay FBT at 30% on the fringe benefit, the taxable value of which is determined in accordance with a formula. FBT is a tax levied on perquisites-or fringe benefits -provided by an employer to his employees.
Meanwhile, domestic brokerages and fund houses want the government to remove securities transaction tax (STT) on trading in securities in the Budget. The Securities & Exchange Board of India (Sebi) members have already forwarded the demand of premier stock exchanges, BSE and NSE, to Finance Minister Pranab Mukherjee for scrapping STT in the Budget.
STT, which was introduced in the Union Budget 2004-05 by the then Finance Minister P Chidambaram, taxes every purchase and sale of securities entered into in a recognised stock exchange in India in securities like shares, debentures, bonds, and units of mutual funds. Equity investors pay an STT of 0.125% for every transaction in cash for the delivery of shares.
Meanwhile, before the budget, investors will also be keenly watching the outcome of the Employees' Provident Fund Organisation (EPFO's) apex advisory body meet on 4 July 2009. The Central Board of Trustees (CBT) will take a view on the Finance Ministry's proposal to invest 15% of its corpus in equity. The EPFO has a corpus of about Rs 1,82,000 crore and the permission to invest 15% funds in equity could have positive implications for the capital market. A proposal to park funds in the stock market was earlier rejected by the EPFO's Finance and Investment Committee (FIC) at its meeting on 26 March 2009.
Analysts expects that the government will provide a thrust to the infrastructure sector and push economic reforms to boost growth. Finance Minister Pranab Mukherjee would present the budget on 6 July 2009. The Railway Budget will be presented on 3 July 2009 and the Economic Survey would be presented on 2 July 2009.
A comfortable victory last month for the Congress-led United Progressive Alliance (UPA) government in elections for the 15th Lok Sabha has raised hopes for economic reforms. Reforms virtually came to a halt in the past five years of the Congress-led alliance government at the centre, when the Communists provided support to the government from outside for a large part of the five-year term. Left parties are opposed to economic reforms.
Investor expectations from the new government are high. Investors expect financial sector reforms such as increase in the cap on foreign direct investment in insurance sector to 49%, from 26% at present.
Asian markets were trading mixed today, 1 July 2009. Key benchmark indices in South Korea, China and Taiwan were up by between 1.13% and 2.30%. However, key indices in Hong Kong and Singapore fell 0.81% and 0.09% respectively
China's manufacturing growth accelerated in June 2009, adding to a picture of an improving economy as the effects of stimulus spending and new bank lending fueled activity. Brokerage CLSA's PMI rose to 51.8 in June 2009 from 51.2 in May 2009, the highest level since July 2008. The CLSA figures suggest China's manufacturing sector has expanded for three straight months.
A reading above 50 in either index indicates conditions are in an expansionary mode, while anything below 50 signals contraction.
Trading in the US index futures indicated the Dow could rise 16 points at the opening bell today, 1 July 2009.
US markets declined on Tuesday, 30 June 2009, after consumer confidence unexpectedly slid and delinquencies on the least-risky mortgages more than doubled. The Dow Jones industrial average slipped 82.38 points, or 0.97%, to 8,447, the S&P 500 fell 7.91 points, or 0.85%, to 919.32, and the Nasdaq Composite index declined 9.02 points, or 0.49%, to 1,835.04.
The June 2009 US job data would be closely watched. The data will be unveiled on Thursday, 2 July 2009 instead of the usual Friday, 3 July 2009 as the US markets will be closed on Friday, 3 July 2009, for independence day holiday. The Job data could have a huge impact on US and global stock markets as positive data would confirm an improvement in the US economy. US non-farm payrolls are forecast to lose 355,000 jobs in June 2009 versus May's 2009 slide of 345,000. The US unemployment rate is projected to jump to 9.6% in June 2009 from 9.4% in May 2009.
At 11:25 IST, the BSE 30-share Sensex was down 69.48 points or 0.46% to 14,427.63. The Sensex opened 12.59 points higher at 14,506.43. At the day's high of 14,648.42, the Sensex rose 154.58 points in midmorning trade. The Sensex lost 89.50 points at the day's high low of 14,404.34 in midmorning trade
The S&P CNX Nifty was down 23.65 points or 0.55% to 4,267.45
The BSE clocked a turnover of Rs 1734 crore at 11:25 IST as compared with Rs 684 crore by 10:25 IST
The market breadth, indicating the overall health of the market, turned negative after a positive start. On BSE, 1116 shares declined as compared with 895 that advanced. 68 shares remained unchanged.
Among the 30-member Sensex pack, 18 slipped while the rest gained
India's largest commercial vehicle maker by sales Tata Motors gained 1.32% to Rs 295, reversing two-day slide of over 15% triggered by weak financial performance, The company reported a net loss of Rs 2505.25 crore in the year ended March 2009 as compared with net profit of Rs 2167.70 crore in the year ended March 2008. The results were announced after market hours on 26 June 2009. It was the top gainer from the Sensex pack.
India's top small car maker by sales Maruti Suzuki India rose 1.36% to Rs 1080 after total vehicle sales rose 22.63% to Rs 75,109 units in June 2009 over June 2008. Maruti's domestic sales rose 9.5% to Rs 61,773 units, while exports soared 175.8% to Rs 13,336 units in June 2009 over June 2008. The company said the export volume in June 2009 is the highest ever monthly figure in its history. The announcement came during market hours today, 1 July 2009.
TVS Motor Company rose 0.26% after its sales increased 6% at 115,488 units in June 2009 over June 2008.
India's largest engineering and construction company by revenue Larsen & Toubro rose 0.20% after the company bagged two orders aggregating Rs 651 crore in the hydrocarbon sector. One of the two orders valued at Rs 440 crore is for construction work for a green field refinery project at Bhatinda being set up by HPCL-Mittal Energy. Another order valued at Rs 211 crore is from Engineers India for the supply and construction of a reactor and regenerator systems.
FCCG companies gained after they said sales and consumption have not declined due to the delay in the onset of monsoons. AC Nielsen data showing the FMCG industry grew at 16% in May 2009 also aided gains.
Hindustan Unilever (up 1.25%), ITC (up 0.29%), Nestle India (up 1.01%), Marico (up 2.18%), Colgate Palmolive India (up 2.99%), and Bata India (up 2.76%), gained.
Fortunes of fast-moving consumer goods (FMCG) firms are closely linked to the monsoon as they derive majority of sales from rural markets.
India's largest private sector aluminium maker by sales Hindalco tumbled 4.11% to Rs 82.90, extending yesterday's 1.59% fall, after consolidated net profit declined 77.88% to Rs 485 crore in year ended March 2009 over year ended March 2008. Net sales rose 9.35% to Rs 65625 crore in year ended March 2009 over year ended March 2008. The results were announced during market hours on Tuesday, 30 June 2009. It was the top loser from the Sensex pack
Meanwhile, the company's board of directors in its meet held on 30 June 2009 approved raising funds upto $500 million by selling shares to institutional investors.
Cement shares slipped on recent reports prices are likely to soften by Rs 3-5 per 50 kilogram bag this month due to the twin effect of excess supply and lower demand. ACC (down 2.85%), Ambuja Cement (down 0.39%), India Cements (down 1.11%), UltraTech Cement (down 0.72%), slipped. However, Grasim rose 0.28%
Post this price cut, retail cement prices will come down to Rs 255 in Mumbai, Gujarat, South India and to around Rs 245 in the northern and eastern markets. Grasim, ACC and Ambuja Cement are expected to announce price cut today, 1 July 2009, reports added.
India's largest private sector firm by market capitalisation Reliance Industries (RIL) slipped 0.61% to Rs 2011.60 on reports the government is contemplating penal action against RIL for committing 28 million standard cubic meters of gas per day (mmscmd) from its KG basin block to Reliance Natural Resources (RNRL) at a price of $2.34 per million British thermal units (mmBtu) as part of the Ambani family settlement without the permission of the government.
India's biggest bank in terms of branch network State Bank of India (SBI) slipped 0.17%. The bank on Tuesday, 30 June 2009 introduced a new home loan scheme under which it offer loans up to Rs30 lakh at fixed rates of 8% for the first year and 9% for the next two years. The bank's earlier offer of home loans at a fixed rate of 8% for the first year ended on Tuesday, 30 June 2009. Under the new scheme, customers will have two options in the fourth year: a floating rate at 2% below State Bank Advance Rate (SBAR), which is currently at 11.75%, or a fixed rate of 1% below SBAR with a five year re-set. A re-set means new rates will come into effect at the end of the specified period.
GMR Infrastructure lost 2.68% after it was on Tuesday, 30 June 2009 forced to abandon its attempt to raise $500 million in off-market share sales to institutional investors after they showed little interest in the offering.
Back home, as per the provisional figures on the NSE, foreign institutional investors (FIIs) bought shares worth Rs 107.88 crore on Tuesday, 30 June 2009 while domestic institutional investors purchased shares worth Rs 197.98 crore.
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