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The Feds pledge for patience in raising rates infused markets with a new vigor on Thursday. Fed Chair Janet Yellen said the central bank is unlikely to increase rates for at least the next couple of meetings. The Dow Jones Industrial Average gained 421 points or 2.4%, to 17,778 today, while the S&P 500 rose 2.4% to 4748. Every stock in the Dow ended the day in green.
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market is gaining strength. Initial claims for the state unemployment benefits declined by 6,000 to a seasonally adjusted 289,000 for the week ended December 13, the Labor Department said, defying Wall Street's expectations for a rise to 295,000.
US markets have gained 4.5% in two days. S&P is up at least 2% on both days. The latter hasn?t happened since April 8, 2002. Sony shares were up 3.7% after deciding to pull the release of The Interview, previously set to debut on Christmas Day. On Wednesday, major theater chains including AMC Entertainment and Regal Entertainment dropped plans to show the movie after threats from Sony hackers.
Rite Aid climbed 11.9% as quarterly net income beat expectations and same-store sales in its third quarter spiked more than 5%. Dunkin' Brands tumbled more than 6% as the company issued weaker-than-expected 2015 guidance, while Kraft Foods surged 6.3% after announcing it had appointed its Chairman John Cahill as its new CEO.
Treasury bonds wrapped up their biggest two-day selloff in more than a year. The 10-year Treasury yield jumped to 2.204% from 2.146% late Wednesday, as demand for safe-haven government debt declined. Bond yields rise as their prices fall.
Indias Economy Mid-term review today: GDP estimate cut to 5.4-5.7%
Expectations on the street are that the review could see the range of GDP growth estimates being cut to 5.4-5.7% from 5.4-5.9%, because the farm output has been weaker than originally estimates.
On 10th December, Finance Minister Arun Jaitley sounded off a warning, saying fiscal deficit has reached unmanageable levels. This comes after 90 per cent of the fiscal deficit target of Rs 5.31 lakh crore was hit in the April-October period, meaning there's very little headroom for the government.
Whats also worrying the finance minister is that tax mobilisation may fall short of the full year's target of Rs 9.77 lakh crore, with only 38 per cent of the target being achieved in the April-October period.
In addition, the government has not made much headway when it comes to divestments either. So far, it has only raised Rs 1,700 crore by divesting a 5 per cent stake in Sail, a far cry from the FY15 target of Rs 58,425 crore.
The streets are also waiting to see what the review has to say about how the government plans to meet its stiff fiscal deficit target of 4.1 per cent of GDP by the end of the year.
Coal ministry released approach paper for e-auction
Coal ministry released the approach paper for coal auction and has charted out the eligibility criteria as well as the methodology and formula for the auction. It came out with draft rules for e-auction of 92 cancelled coal mines in the first phase, and this paves way for auction and allotment of 204 coal blocks that were cancelled by the Supreme Court in September. The Coal Ministry has sought comments from stakeholders by December 22.
The approach paper states there would be two methods of bidding for auction of coal blocks one is forward bidding for unregulated sectors such as steel, cement and captive power where Rs 150 will be the floor price for bidding. Two, reserve bidding for specified end use for power generation where Rs 100 per tonne will be the floor price. While the criteria for calculating the floor price for bidding would be based on state miner Coal India's (CIL) price of coal of the same grade, the auction would also have a ceiling price for power sector bidders to keep the lid on power tariffs.
PM Narendra Modi moves in to speed up $300 bn stuck projects
Prime Minister Narendra Modi has taken direct control of a project-monitoring body to fast-track investments worth almost $300 billion and revive manufacturing in the country.
By taking over the Project Monitoring Group (PMG), which was previously in the Cabinet Secretariat, Modi could help firms planning coal, power, steel and infrastructure projects cut through a maze of up to 180 clearances.
ONGC gets VAT relief of Rs 1000 crore from Gujarat HC
ONGC Ltd received a major relief from the Gujarat high court which exempted it from paying value added tax (VAT) of Rs 1,000 crore to the state government. ONGC supplies crude oil and petroleum products from its wells to Oil Marketing Companies (OMCs) such as Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum and others. The sales invoice are raised based on the international prices, however, it sells crude to the OMCs at subsidized rate fixed by the Union government.
Hence, ONGC paid VAT on the subsidized rate. The state government, however, demanded tax on invoice price and issued VAT recovery notice for over five years. ONGC approached the VAT Tribunal against the recovery notice of nearly Rs 1,000 crore. But the tribunal ruled in favour of the state government. Following this, ONGC approached the HC challenging the order of the VAT Tribunal. The state PSU had sought exemption from paying VAT on the subsidy amount. On Thursday, division bench accepted the demand of the ONGC. The court observed that the state government can recover VAT only on subsidized rates and not on the actual realization rates of petroleum products sold by ONGC.
Punj Lloyd Gets FIPB Nod to Manufacture Defence Gear
Punj Lloyd has received FIPB approval for manufacturing equipment and associated assemblies for the defence sector.
Foreign equity participation in the Company including FDI and Investment by any foriegn institutional investor through portfolio investment have been capped at 32.99 per cent of the paid-up equity capital of the company.
Indian Markets
Dow has surged more than 400 points. This will ensure that our markets open with on a positive note today. Markets have already gained 2.5% from the lows of 7961 it touched on Wednesday. Next week, most western foreign institutional investors will take a break from initiating fresh positions to celebrate Christmas. This means we can expect actions from the domestic investors to affect our markets disproportionately.
Domestic institutions are net buyers for the last few days and that suggest we are in for good time for the rest of the year. Derivative expiry will also govern the trade though it increasingly looks like a buoyant expiry week is ahead.
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market is gaining strength. Initial claims for the state unemployment benefits declined by 6,000 to a seasonally adjusted 289,000 for the week ended December 13, the Labor Department said, defying Wall Street's expectations for a rise to 295,000.
US markets have gained 4.5% in two days. S&P is up at least 2% on both days. The latter hasn?t happened since April 8, 2002. Sony shares were up 3.7% after deciding to pull the release of The Interview, previously set to debut on Christmas Day. On Wednesday, major theater chains including AMC Entertainment and Regal Entertainment dropped plans to show the movie after threats from Sony hackers.
Rite Aid climbed 11.9% as quarterly net income beat expectations and same-store sales in its third quarter spiked more than 5%. Dunkin' Brands tumbled more than 6% as the company issued weaker-than-expected 2015 guidance, while Kraft Foods surged 6.3% after announcing it had appointed its Chairman John Cahill as its new CEO.
Treasury bonds wrapped up their biggest two-day selloff in more than a year. The 10-year Treasury yield jumped to 2.204% from 2.146% late Wednesday, as demand for safe-haven government debt declined. Bond yields rise as their prices fall.
Indias Economy Mid-term review today: GDP estimate cut to 5.4-5.7%
Expectations on the street are that the review could see the range of GDP growth estimates being cut to 5.4-5.7% from 5.4-5.9%, because the farm output has been weaker than originally estimates.
On 10th December, Finance Minister Arun Jaitley sounded off a warning, saying fiscal deficit has reached unmanageable levels. This comes after 90 per cent of the fiscal deficit target of Rs 5.31 lakh crore was hit in the April-October period, meaning there's very little headroom for the government.
Whats also worrying the finance minister is that tax mobilisation may fall short of the full year's target of Rs 9.77 lakh crore, with only 38 per cent of the target being achieved in the April-October period.
In addition, the government has not made much headway when it comes to divestments either. So far, it has only raised Rs 1,700 crore by divesting a 5 per cent stake in Sail, a far cry from the FY15 target of Rs 58,425 crore.
The streets are also waiting to see what the review has to say about how the government plans to meet its stiff fiscal deficit target of 4.1 per cent of GDP by the end of the year.
Coal ministry released approach paper for e-auction
Coal ministry released the approach paper for coal auction and has charted out the eligibility criteria as well as the methodology and formula for the auction. It came out with draft rules for e-auction of 92 cancelled coal mines in the first phase, and this paves way for auction and allotment of 204 coal blocks that were cancelled by the Supreme Court in September. The Coal Ministry has sought comments from stakeholders by December 22.
The approach paper states there would be two methods of bidding for auction of coal blocks one is forward bidding for unregulated sectors such as steel, cement and captive power where Rs 150 will be the floor price for bidding. Two, reserve bidding for specified end use for power generation where Rs 100 per tonne will be the floor price. While the criteria for calculating the floor price for bidding would be based on state miner Coal India's (CIL) price of coal of the same grade, the auction would also have a ceiling price for power sector bidders to keep the lid on power tariffs.
PM Narendra Modi moves in to speed up $300 bn stuck projects
Prime Minister Narendra Modi has taken direct control of a project-monitoring body to fast-track investments worth almost $300 billion and revive manufacturing in the country.
By taking over the Project Monitoring Group (PMG), which was previously in the Cabinet Secretariat, Modi could help firms planning coal, power, steel and infrastructure projects cut through a maze of up to 180 clearances.
ONGC gets VAT relief of Rs 1000 crore from Gujarat HC
ONGC Ltd received a major relief from the Gujarat high court which exempted it from paying value added tax (VAT) of Rs 1,000 crore to the state government. ONGC supplies crude oil and petroleum products from its wells to Oil Marketing Companies (OMCs) such as Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum and others. The sales invoice are raised based on the international prices, however, it sells crude to the OMCs at subsidized rate fixed by the Union government.
Hence, ONGC paid VAT on the subsidized rate. The state government, however, demanded tax on invoice price and issued VAT recovery notice for over five years. ONGC approached the VAT Tribunal against the recovery notice of nearly Rs 1,000 crore. But the tribunal ruled in favour of the state government. Following this, ONGC approached the HC challenging the order of the VAT Tribunal. The state PSU had sought exemption from paying VAT on the subsidy amount. On Thursday, division bench accepted the demand of the ONGC. The court observed that the state government can recover VAT only on subsidized rates and not on the actual realization rates of petroleum products sold by ONGC.
Punj Lloyd Gets FIPB Nod to Manufacture Defence Gear
Punj Lloyd has received FIPB approval for manufacturing equipment and associated assemblies for the defence sector.
Foreign equity participation in the Company including FDI and Investment by any foriegn institutional investor through portfolio investment have been capped at 32.99 per cent of the paid-up equity capital of the company.
Indian Markets
Dow has surged more than 400 points. This will ensure that our markets open with on a positive note today. Markets have already gained 2.5% from the lows of 7961 it touched on Wednesday. Next week, most western foreign institutional investors will take a break from initiating fresh positions to celebrate Christmas. This means we can expect actions from the domestic investors to affect our markets disproportionately.
Domestic institutions are net buyers for the last few days and that suggest we are in for good time for the rest of the year. Derivative expiry will also govern the trade though it increasingly looks like a buoyant expiry week is ahead.
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