Key benchmark indices edged lower in choppy trading session as weakness in European and Asian stocks weighed on sentiment adversely. The barometer index, the S&P BSE Sensex, was down 52.76 points or 0.21%, off about 120 points from the day's high and up close to 30 points from the day's low. The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser on BSE. The BSE Mid-Cap and the BSE Small-Cap indices were up almost 2% each.
Indian stocks snapped two-day winning streak today, 4 June 2014. From a recent low of 24,217.34 on 30 May 2014, the Sensex had gained 641.25 points or 2.64% in two trading sessions to settle at 24,858.59 on 3 June 2014. The Sensex has gained 588.49 points or 2.43% in first three trading sessions of June so far. The Sensex has gained 3,635.15 points or 17.17% in calendar year 2014 so far (till 4 June 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 7,357.12 points or 42.16%. From a record intraday high of 25,375.63 on 16 May 2014, the Sensex has fallen 569.80 points or 2.24%.
Coming back to today's trade, shares of firms involved in life insurance business rose on renewed buying following recent media reports the finance ministry could recommend an increase in the limit on foreign direct investment in insurance sector. Hero MotoCorp extended recent gains triggered by the company's strong sales in May.
A bout of volatility was witnessed in initial trade as key benchmark indices regained positive terrain after slipping into the red after opening higher. The Sensex and the 50-unit CNX Nifty, both, hit their highest level in more than a week. Key benchmark indices languished in negative terrain in morning trade. The Sensex extended losses and hit fresh intraday low in mid-morning trade. It trimmed intraday losses in early afternoon trade. Key benchmark indices were almost flat in afternoon trade. It slipped into the red once again after regaining positive terrain in mid-afternoon trade. It weakened in late trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 575.09 crore on Tuesday, 3 June 2014, as per provisional data from the stock exchanges.
The S&P BSE Sensex was down 52.76 points or 0.21% to 24,805.83, its lowest closing level since 2 June 2014. The index fell 84.66 points at the day's low of 24,773.93 in late trade. The index rose 67.31 points at the day's high of 24,925.90 in early trade, its highest level since 26 May 2014.
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The CNX Nifty was down 13.60 points or 0.18% to 7,402.25, its lowest closing level since 2 June 2014. The index hit a low of 7,391.35 in intraday trade. The index hit a high of 7,433.30 in intraday trade, its highest level since 26 May 2014.
The BSE Mid-Cap index was up 160.88 points or 1.85% to 8,865.94. The BSE Small-Cap index was up 182.84 points or 1.96% to 9,488.71. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 4450 crore, higher than Rs 4084.34 crore on Tuesday, 3 June 2014.
The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser on BSE. On BSE, 2,127 shares rose and 921 shares fell. A total of 100 shares were unchanged.
Among the 30 Sensex shares, 15 rose and the remaining shares fell.
IDBI Bank (up 15.71%), Mahindra Holidays & Resorts (up 10.91%), Suzlon Energy (up 9.65%), Edelweiss Financial Services (up 9.78%) and Indiabulls Real Estate (up 9.14%) were the biggest gainers from the BSE Mid-Cap index.
Maksans Pharma (up 20%), Nahar Spinning Mills (up 19.97%), Ingersoll Rand (India) (up 13.84%), Welspun Corp (up 13.82%) and Trident (up 13.55%) were the biggest gainers from the BSE Small-Cap index.
Telecom stocks dropped. Bharti Airtel (down 1.59%), Idea Cellular (down 2.9%) and Reliance Communications (down 0.45%) declined.
Coal India declined 0.74%. Coal India said during market hours that the Board of Directors of the company in its meeting held on 29 May 2014 has approved to amend the "Object Clause" of Memorandum of Association (MoA) of the company for setting up of surface coal gasification project at Talcher. Since the main object clause of MoA of CIL does not contain the provision of manufacturing of urea-ammonium nitrate, fertilisers and associated products, it was decided to amend the MoA.
As decided in the cabinet committee on economic affairs (CCEA) meeting on 4 August 2011, Coal India has signed MoA on 5 September 2013 to form two separate joint venture companies for setting up a new surface coal gasification based urea plant and ammonium nitrate chemicals complex at the site of Talcher unit of FCIL. As per the regulation, amendment has to be passed by the shareholders of the company.
Metal shares extended recent rise triggered by strong Chinese data. China is the world's largest consumer of copper and aluminum. Hindustan Copper (up 1.25%), National Aluminium Company (up 5.44%), Hindalco Industries (up 3.48%), Jindal Steel & Power (up 1.97%), Bhushan Steel (up 1.99%) and NMDC (up 5.45%), edged higher. JSW Steel fell 0.21%. Hindustan Zinc was flat.
Sesa Sterlite shed 0.89% to Rs 295.25, with the stock reversing direction after hitting 52-week high of Rs 300 in intraday trade.
Shares of Tata Steel and Steel Authority of India extended recent gains triggered by reports the two steel makers have restarted most of their iron ore mines in Odisha state after getting new permits from the Odisha state government. Steel Authority of India (Sail) was up 4.86%.
Tata Steel gained 2.06% to Rs 536.60 after hitting 52-week high of Rs 543.30 in intraday trade.
A total of eight mines in Odisha, which have an annual combined capacity of 20 million metric tons and received new mining leases, have resumed ore extraction, according to reports. These include four mines of Tata Steel, three of Steel Authority and one belonging to Orissa Mining Corp.
The Supreme Court on 16 May 2014 ordered suspension of mining at 26 quarries in Odisha, pending renewal of extraction leases from the state government. The court gave six months to the state to dispose all applications for renewing permits and asked it to first process the applications for mines owned by steel makers.
IT stocks declined. HCL Technologies (down 2.84%), Infosys (down 0.72%), TCS (down 1.92%), Tech Mahindra (down 1.02%) and Wipro (down 0.54%) declined.
Index heavyweight and cigarette maker ITC fell 0.75% to Rs 330.95. The stock hit high of Rs 334 and low of Rs 328.90.
Capital goods stocks gained. Bharat Heavy Electricals (Bhel) (up 0.23%), Crompton Greaves (up 7.28%), and Punj Lloyd (up 1.97%) gained.
L&T rose 1.18% to Rs 1673, with the stock extending recent gains triggered by strong Q4 result. The stock hit record high of Rs 1,677.30 in intraday trade. The company's net profit surged 69% to Rs 2723.48 crore on 11% growth in gross revenue to Rs 20229 crore in Q4 March 2014 over Q4 March 2013. The strong growth in bottom-line can be explained by strong operating performance and higher extraordinary income. The result was announced after market hours on Friday, 30 May 2014.
Consequent to completion of demerger of hydro carbon business to wholly owned subsidiary effective from 1 April 2013 in pursuant to approval of said demerger scheme by Bombay High Court vide its order dated 20 December 2013, the numbers of corresponding previous quarter/nine month and FY 2013 figures were restated and the growth figures are in comparison to restated P&L figures.
The growth in L&T's top line during Q4 March 2014 was due to progress in various jobs under execution. The international revenue rose 25% to Rs 2966 crore in Q4 March 2014 over Q4 March 2013. International revenue constituted 15% of total revenue in Q4 March 2014.
L&T's order intake during the quarter was steady at Rs 26737 crore. International order inflow during the quarter at Rs 11389 crore constituted 43% of the total order inflow for the quarter.
The order book at Rs 162952 crore as at 31 March 2014, grew 13% on YoY basis. International order book constituted 21% of the total order book, L&T said in a statement.
With regard to future business outlook, L&T said it has weathered the challenging times of the past few years due to its inherent capabilities and strong balance sheet. Being well positioned to tap the emerging opportunities in its core businesses, the company looks forward to a period of renewed investment momentum and sustainable growth. Given its large order book, the company is optimistic to maintain its growth momentum in the medium term, as domestic and global economic environment improves, L&T said in a statement.
Siemens dropped 1.02%. The company said during market hours that Siemens AG, Germany has entered into an agreement with Mitsubishi-Hitachi Metals Machinery, Inc., and Mitsubishi Heavy Industries for setting up a joint venture to operate in the business of metallurgical industry as a complete provider of plant, products and services for the iron, steel and aluminium industry.
Pursuant to this, the Board of Directors at its meeting held on 3 June 2014, has agreed in principle to transfer the Metals Technologies business of the company to a designated entity subject to such terms and conditions as may be decided later on.
Index heavyweight Reliance Industries (RIL) fell 1.54% after the company after trading hours on Tuesday, 3 June 2014, announced that a minor fire broke out on Tuesday morning in the finishing line of poly butadiene rubber plant in Vadodara. The fire was expeditiously brought under control by the fire fighters at the plant, RIL said. The cause of fire is being investigated, RIL said. An alternate finishing line is taken into production and hence there will be no adverse impact on production, RIL said. All other units are functioning normally, RIL said.
Separately, RIL said after market hours on Tuesday, 3 June 2014 said that Reliance Jio Infocomm (RJIL), a wholly owned subsidiary of RIL has signed a telecom tower sharing agreement with Ascend Telecom Infrastructure. Under the agreement, RJIL will utilise the pan-India tower infrastructure of Ascend to launch its 4G services, ensuring a faster and more efficient rollout to its customers. Ascend is one of the leading innovators in the wireless infrastructure space, and has a portfolio of more than 4,500 towers across India.
The company has successfully deployed innovative and efficient solutions which reduce providers' operating costs and carbon footprints. It is at the forefront of leveraging technology to manage infrastructure efficiently. Ascend is backed by New Silk Route Growth Capital, IL&FS and the TVS Group.
Sanjay Mashruwala, Managing Director, Reliance Jio said, "Our partnership with Ascend Telecom is a continuation of our efforts to forge strategic partnership with key tower infrastructure companies with a view to build a formidable nationwide network. Ultimately it's our network coverage footprint that will give our customers the geographical freedom they need to avail our high speed services."
"Our 12 years' experience in the market, coupled with strong relationships with mobile network operators and equipment suppliers, allows us to bring improvements right across the value chain. We are excited about the opportunity to partner with RJIL for the launch of their 4G services," said Sushi! Kumar Chaturvedi, Director & CEO, Ascend Telecom Infrastructure Pvt. Ltd. "Our network of more than 4,500 towers across the country will make higher quality, higher speed coverage available to RJIL's mobile subscribers. Our focus on innovation has been recognized by the industry. At the same time, this agreement will benefit the environment by avoiding the impact of building new towers that duplicate existing infrastructure," added Mr. Chaturvedi.
IDFC rose 3.89% after the lender said during market hours that the Board of Directors of the company at its meeting held on 3 June 2014, has among other things gave in principle approval for the proposed domestic fund raising (follow-on public offer/ preferential offer), to bring down the foreign shareholding in IDFC below 50% after the Board discussed and approved, among other items relating to the banking business consequent upon receipt of the In-Principle approval for the Banking License from Reserve Bank of India on 9 April 2014,:
Shares of firms involved in life insurance business rose on renewed buying following recent media reports the finance ministry could recommend an increase in the limit on foreign direct investment in insurance sector. Max India Bajaj Finserv (up 4.57%), Reliance Capital (up 5.08%), Religare Enterprises (up 2.58%), Aditya Birla Nuvo (up 1.4%), Exide Industries (up 3.47%), State Bank of India (up 1.54%), and ICICI Bank (up 0.86%) gained. HDFC fell 1.19%. All these firms have their presence in the life insurance sector either directly or through joint venture with foreign companies.
As per recent media reports, the finance ministry could recommend an increase in the limit on foreign direct investment (FDI) in insurance sector to 49% from 26%. The finance ministry is likely to propose capping of voting rights for foreign investors so as to ensure that the control of the critical sector involving lifetime's savings of a large number of people does not pass into foreign hands, reports suggest. The government will also discuss the feasibility of allowing 49% foreign investment in the sector with FDI retained at 26% and rest through foreign institutional investors (FII), reports suggest.
Car major Maruti Suzuki India gained 1.3% after the company after trading hours on Tuesday, 3 June 2014, said its total production jumped 20.11% to 1.21 lakh units in May 2014 over May 2013. The company's total sales rose 19.2% to 1 lakh units in May 2014 over May 2013. Domestic sales rose 16.4% to 90,560 units in May 2014 over May 2013. Exports jumped 51.2% to 10,365 units in May 2014 over May 2013. The sales figures were announced on Monday, 2 June 2014.
Hero MotoCorp rose 3.35%, with the stock extending recent gains triggered by the company's strong sales in May. Continuing its growth trajectory, Hero MotoCorp (HMCL), reported all-time high despatch sales for a non-festive month. Riding on robust volumes driven by new launches, Hero MotoCorp sold 6.02 lakh units of two-wheelers in May 2014 -- its highest-ever despatch sales for any non-festival period. The previous highest was in the preceding month, i.e., April 2014 when the company sold 5.71 lakh units-thus highlighting HMCL's sustained volume growth since the beginning of FY 2015.
The sales registered in May 2014 represents a growth of eight per cent over the corresponding month in the previous year, when the company had sold 5.57 lakh units. The company announced sales figures on 1 June 2014.
In May 2014, HMCL crossed the landmark six lakh sales figure for the second time, thus representing second-highest monthly sales ever. The all-time high monthly sales of the company was recorded in the festival month of October last year when it sold 6.25 lakh units of two-wheelers.
Fertiliser stocks rallied on reports that fertiliser ministry has prepared a roadmap for rationalisation of subsidy for the sector. National Fertilizer (up 10%), GNFC (up 7.06%), GSFC (up 5.06%), Tata Chemicals (up 3.06%) and Chambal Fertiliser & Chemicals (up 6.02%) gained.
The market buzz was also that the government will soon clear its 2013/14 outstanding subsidy payments for the fertilizer sector, estimated at more than Rs 35000 crore.
Shares of Rashtriya Chemicals and Fertilizers (RCF) were up 6.38%. With reference to the news item appearing in the media dated 4 June 2014 titled "the company is in advanced talks to acquire a gas plant in Middle East", Rashtriya Chemicals and Fertilizers today, 4 June 2014, said that there is no plan by the company to acquire any gas plant in Middle East or any other place. RCF further said that the company is looking at possibilities of joint ventures abroad for making fertilisers with cheaper gas available. The talks are at very preliminary stage and no concrete understanding has been reached, RCF said.
Realty stocks were in demand. D B Realty (up 2.49%), Sobha Developers (up 1.41%), Housing Development and Infrastructure (HDIL) (up 0.87%), and Unitech (up 0.67%), edged higher. But, DLF fell 0.23%.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 59.345, compared with its close of 59.385/395 on Tuesday, 3 June 2014.
Markit Economics said today, 4 June 2014, its seasonally adjusted HSBC India Composite Output index edged up to 50.7 in May from 49.5 in April to 50.7 in May, indicating growth of India's private sector output for the first time in three months. The rate of expansion was, however, slight overall and well below the series average. Higher output was noted at manufacturing and services companies.
The headline HSBC Services Business Activity Index posted 50.2 in May, rising from April's reading of 48.5 and pointing to the first expansion of output in 11 months. That said, the latest increase in activity was only marginal and weak in the context of historical data. Divergent trends were seen at the sub-sector level, with only Post & Telecommunication and Renting & Business Activities registering higher output, Markit Economics said.
Supporting the rise in services activity was a rebound in new orders. The rate of expansion in incoming new work was, however, slight overall. Survey participants commented on a general improvement in client demand, but there were reports that growth was hampered by the elections. Order book volumes placed with manufacturers also rose, leading to higher new business across the private sector as a whole.
Indian service providers were optimistic in May that activity would increase over the next 12 months. Marketing campaigns, the end of the elections and the launch of new services are expected to promote new business growth, and therefore output. Nevertheless, the degree of positive sentiment was unchanged since April.
Input costs faced by service providers in India continued to rise in May. Anecdotal evidence suggested that higher raw material and fuel bills had been the main drivers of increasing input prices. Nonetheless, the rate of cost inflation eased to the weakest since July 2013. Purchase prices at manufacturers rose at the slowest pace in one year. Subsequently, cost inflation across the private sector as a whole dropped to a one-year low.
Prices charged by services companies increased for a forty-third consecutive month in May, with panellists citing the pass-through of higher input costs. However, as with the trend for input prices, the rate of charge inflation moderated to the slowest since last July. Average tariffs set by private sector companies rose at the weakest pace in eight months.
May data indicated that staffing levels in the Indian private sector were broadly unchanged. Workforce numbers increased at manufacturing firms, but stagnated in the service economy.
Work-in-hand at service providers rose for the third month running in May, amid evidence of cashflow difficulties. Furthermore, the rate of accumulation was solid and the joint-strongest in the history of the survey. Backlogs of work across the private sector increased at the sharpest pace since December 2012.
Commenting on the India Services PMI survey, Frederic Neumann, Co-Head of Asian Economic Research at HSBC said: At last, a gradual improvement in services activity, with the index creeping above the 50 level after nearly a year. Fortunately, this momentum will be further supported by the strong election results. However, the RBI is likely to retain its hawkish stance given the increased risks attached to inflation".
The Reserve Bank of India kept its main lending rate viz. the repo rate unchanged at 8% and also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL) after a monetary policy review on Tuesday, 3 June 2014. The central bank announced reduction in the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points to 22.5% of their NDTL from 23% with effect from the fortnight beginning 14 June 2014.
Reacting to the RBI's latest monetary policy announcement, Finance Minister Arun Jaitley on Tuesday, 3 June 2014, said the RBI has chosen to maintain a balance between growth and inflation while keeping the policy rates unchanged. The RBI has allowed banks to lend more to the private sector since they will be required to subscribe less to government securities than earlier, he said. The RBI has followed a caliberated approach aimed in the direction of balancing between growth and inflation, Jaitley said. The Finance Minister said that it is a priority for the government to maintain a balance between growth and inflation. The government is also concerned with restarting the investment cycle and moving towards higher growth and employment generation. "We would like to address the problem of inflation through supply side measures particularly in relation to food inflation", Jaitley said. Fiscal consolidation is a priority for the government, he said.
Jaitley is expected to table Union Budget for 2014-15 in Lok Sabha by mid-July 2014. An interim budget was presented by P. Chidambaram in February this year. Essentially, in the nature of a vote on account, the interim budget was intended to get Parliament approval for expenditure to be incurred during the first few months of fiscal year 2014-15 due to Lok Sabha elections.
European stocks edged lower on Wednesday as traders remained cautious before the European Central Bank's (ECB) policy announcement later this week. Key benchmark indices in France, Germany and UK shed 0.3% to 0.57%.
Euro-area services output expanded at the strongest pace in almost three years, helping create jobs in a region suffering from low inflation, anemic growth and unemployment close to a record high. A Purchasing Managers' Index rose to 53.2 last month from 53.1, London-based Markit Economics said today. That's less than the May 22 preliminary reading of 53.5. The index has held above the 50 mark, which separates growth from contraction, for 10 months. A measure of manufacturing and services activity declined to 53.5 from 54 in April.
UK services grew faster than economists forecast in May and confidence about the outlook prompted companies to boost hiring. Markit Economics said the economy continued to boom last month as its Purchasing Managers' Index for the services industry came in at 58.6. That's above the 50 level that divides expansion from contraction and compares with a reading of 58.7 in April.
Euro-area economic growth slowed to start the year, keeping pressure on the European Central Bank to act as soon as tomorrow to spur the fragile recovery and spark prices. Gross domestic product in the 18-nation currency bloc increased 0.2% in the first quarter, down from a revised 0.3% gain in the previous three months, the European Union's statistics office in Luxembourg said today. The first-quarter reading confirmed Eurostat's initial estimate.
There are expectations that ECB will announce new stimulus measures when the Governing Council of the ECB holds a monthly meeting on euro area interest rates tomorrow, 5 June 2014.
Bank of England's Monetary Policy Committee will probably keep its benchmark interest rate at a record-low 0.5% and leave its bond-purchase program unchanged at a monthly meeting on interest rates in UK tomorrow, 5 June 2014.
Asian stocks fell on Wednesday, 4 June 2014, as investors await a report on US jobs and a decision from the European Central Bank on monetary policy. Key benchmark indices in Indonesia, Singapore, Taiwan, Hong Kong, and China were down 0.04% to 0.66%. Japan's Nikkei Average rose 0.22%.
Australia's economy grew at the fastest pace in two years as surging exports and home building showed record-low borrowing costs are sustaining a 22-year expansion even as mining investment slows. First-quarter gross domestic product advanced 1.1% from the previous three months, government data today showed.
Trading in US index futures indicated that the Dow could fall 21 points at the opening bell on Wednesday, 4 June 2014. US stocks edged lower on Tuesday, following all-time highs for benchmark indexes on Monday, as investors awaited a European Central Bank decision on stimulus measures and a report on American employment in May.
A Commerce Department report showed US factory orders climbed 0.7% in April.
The influential US nonfarm payroll data for May 2014 is due for release on Friday, 6 June 2014.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 17-18 June 2014. The Fed on 30 April 2014 said after a monetary policy review that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends. The FOMC also reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve.
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