Key benchmark indices trimmed intraday gains in early afternoon trade. The barometer index, the S&P BSE Sensex, was up 79.02 points or 0.37%, off close to 50 points from the day's high and up about 80 points from the day's low. The market breadth, indicating the overall health of the market, was strong. The market sentiment was boosted by data showing that foreign funds remained buyers of Indian stocks on Friday, 20 December 2013. Gains in Asian stocks also boosted sentiment on the domestic bourses.
Bank stocks rose across the board. Pharma stocks rose on renewed buying. Infosys extended intraday losses after the company announced the changes to the board of directors of the company.
Shares of a number of small-cap and mid-cap companies rose for the second day in a row, boosted by stock market regulator Securities and Exchange Board of India's (Sebi) announcement on 19 December 2013 that it has decided to rationalize the rules on trading of thinly-traded stocks. BSE Small-Cap and Mid-Cap indices were up more than 1% each, with both these indices outperforming the Sensex.
Asian stocks edged higher on Monday, 23 December 2013, after data showed faster-than-estimated economic growth in the US and after the International Monetary Fund said it's raising its outlook for the world's largest economy.
The market edged higher in early trade on firm Asian stocks. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their highest level in almost two weeks. A bout of volatility was witnessed as key benchmark indices recovered from lower level after trimming initial gains in morning trade. The Sensex hovered in positive terrain in mid-morning trade. The Sensex trimmed gains in early afternoon trade.
The market sentiment was boosted by data showing that foreign funds remained buyers of Indian stocks on Friday, 20 December 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 990.19 crore on Friday, 20 December 2013, as per provisional data from the stock exchanges. FIIs bought shares worth a net Rs 2244.20 crore from the secondary equity markets on Thursday, 19 December 2013, as per data from Securities & Exchange Board of India. Continuation of FII buying after the US Federal Reserve's decision on 18 December 2013 to gradually reduce monetary stimulus for the US economy, has helped the market shrug off fears of slowdown in foreign inflows. Market men are worried that the reduced availability of cash in the global financial system could temper the flow of foreign money into India, which has been one of the biggest beneficiaries of foreign capital. Foreign institutional investors (FIIs) have purchased shares worth a net Rs 110792.50 crore in 2013 so far (till 19 December 2013). FIIs had bought shares worth a net Rs 128359.80 crore in calendar 2012.
The market may remain volatile this week, which is a truncated trading week, as traders roll over positions in the futures & options (F&O) segment from the near month December 2013 series to January 2014 series. The near month December 2013 derivatives contract expire on Thursday, 26 December 2013. The stock market remains closed on Wednesday, 25 December 2013, on account of Christmas.
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At 12:20 IST, the S&P BSE Sensex was up 79.02 points or 0.37% to 21,158.74. The index jumped 128.17 points at the day's high of 21,207.89 in early trade, its highest level since 11 December 2013. The index rose 0.82 points at the day's low of 21,080.54 in opening trade.
The CNX Nifty was up 27.40 points or 0.44% to 6,301.65. The index hit a high of 6,310.35 in intraday trade, its highest level since 11 December 2013. The index hit a low of 6,266.95 in intraday trade.
The S&P BSE Mid-Cap index was up 80.67 points or 1.24% at 6,583.16. The BSE Small-Cap index was up 64.38 points or 1.02% at 6,356.34. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,426 shares gained and 769 shares fell. A total of 132 shares were unchanged.
Among the 30-share Sensex pack, 22 stocks gained and rest of them declined. Bhel (up 2.81%), Hindalco Industries (up 3.11%) and Hero MotoCorp (up 1.35%) edged higher from the Sensex pack.
Pharma stocks rose on renewed buying. Cipla (up 0.52%), Dr Reddy's Laboratories (up 1%), Ranbaxy Laboratories (up 0.76%) and Sun Pharmaceutical Industries (up 0.64%) gained.
Bank stocks rose across the board. ICICI Bank gained 1.31%. ICICI Bank on Saturday, 21 December 2013, said it has cut its home loan rates for new customers by 15 basis points or 0.15 percentage points, as a part of a special scheme. It will be valid till 31 January 2014. Under the scheme, the bank will offer home loans up to Rs. 75 lakh at an interest rate of 10.25%, while loans above Rs. 75 lakh will be charged 10.50%. The move came shortly after State Bank of India and Housing Development Finance Corporation (HDFC) reducing home loan rates on 19 December 2013.
HDFC Bank gained 0.8%. The bank on 18 December 2013 said that it has filed an application with the Foreign Investment Promotion Board (FIPB) seeking approval for increasing foreign shareholding limit in the bank in accordance with the now prevailing guidelines as the total foreign shareholding in the bank (FII and FDI) has crossed 49%.
The Reserve Bank of India had recently notified that the foreign shareholding through Foreign Institutional Investors (FIIs)/Non Resident Indians (NRI)/Persons of Indian Origin (PIO)/Foreign Direct Investment (FDI)/ADRs/GDRs in HDFC Bank has crossed the overall limit of 49% of its paid-up capital and that no further purchases of shares of HDFC Bank would be allowed through stock exchanges in India on behalf of FII/NRI/PIO/FDI/ADRs/GDRs.
Total foreign shareholding in the bank as on 13 December 2013 was 52.18% of its paid-up capital. This includes investments through the FDI route in ADRs/GDRs of 17.01% which were raised in accordance with the then applicable guidelines, and other foreign holdings made under the FII route of 35.17%. Necessary approval from the shareholders is in place for FII investments up to 49%, HDFC Bank said in a statement.
AXIS Bank gained 1.96%. AXIS Bank replaced Jindal Steel & Power as a constituent of the S&P BSE Sensex with effect from today, 23 December 2013.
State Bank of India (SBI) rose 0.87%. A day after RBI governor Raghuram Rajan decided to hold rates, SBI on 19 December 2013 slashed home loan rates by up to 35 basis points for new borrowers and has unveiled a further discount of 5 basis points for women customers. Loans of up to Rs 75 lakh would be available to fresh borrowers at 10.15% against the existing rate of 10.50%. For women borrowers, the rate of interest after an additional concession of 0.05% would be 10.10% for home loans of up to Rs 75 lakh. With regard to loans of above Rs 75 lakh, the new rate would be 10.30%. For women borrowers it is 10.25%.
Among other PSU bank stocks, Canara Bank (up 4.55%), Union Bank of India (up 4.22%), Bank of India (up 2.92%), Bank of Baroda (up 1.79%) and Punjab National Bank (up 3.07%) gained.
The Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review on 18 December 2013, contrary to market expectations of a 25 basis point increase. The central bank said its decision to keep the repo rate unchanged was a close call. The RBI warned that if the expected softening of food inflation does not materialise and translate into a significant reduction in headline inflation in the next round of data releases, or if inflation excluding food and fuel does not fall, the central bank will act, including on off-policy dates if warranted, so that inflation expectations stabilise and an environment conducive to sustainable growth takes hold. The Reserve Bank of India's policy action on those dates will be appropriately calibrated, the central bank said.
The Reserve Bank of India last week released on its website a Discussion Paper on 'Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders: Framework for Revitalising Distressed Assets in the Economy'. The Discussion Paper outlines a corrective action plan that will incentivize early identification of problem cases, timely restructuring of accounts which are considered to be viable, and taking prompt steps by banks for recovery or sale of unviable accounts.
With the slowdown of the Indian economy, a number of companies/projects are under stress. As a result, the Indian banking system has seen increase in NPAs and restructured accounts during the recent years. Not only do financially distressed assets produce less than economically possible, they also deteriorate quickly in value, the central bank said in a statement. Therefore, there is a need to ensure that the banking system recognises financial distress early, takes prompt steps to resolve it, and ensures fair recovery for lenders and investors, the RBI said. 'Improving the system's ability to deal with corporate distress and financial institution distress by strengthening real and financial restructuring as well as debt recovery' has been indicated by the Governor, RBI as one of the five pillars on which Reserve Bank of India's developmental measures will be built for improving the financial system over the next few quarters. This Discussion Paper is a step in that direction, the RBI said.
Yes Bank rose 2.39%. The bank announced during market hours that it has raised $150 million from International Finance Corporation (IFC), Washington, a member of the World Bank Group, for tenor of up to 7 years. The loan will be used by the bank to scale up its small and medium enterprise loan portfolio, Yes Bank said.
The financing package to Yes Bank includes $45 million provided through IFC's new co-lending program in addition to IFC's own account loan of $60 million, both for a period of 7 years; and another $ 45 million syndicated loan provided by Intesa Sanpaolo, Bank Muscat, Doha Bank & AKA Frankfurt for a tenor of 2 years. Yes Bank has swapped this loan with RBI through the concessional swap window offered to banks, Yes Bank said.
HDFC dropped 0.27%. The housing finance major on 19 December 2013 announced a cut of up to 50 basis points in home loan rates in its "special winter bonanza". The new rates for HDFC's home loans up to Rs 75 lakh will be 10.25 per cent per annum. "This is a limited period offer and is valid for all new applications submitted before 31 January 2014 and first disbursement taken by 28 February 2014," HDFC said in a statement.
Infosys dropped 2.03%, with the stock extending intraday losses after the company announced after market hours on Friday, 20 December 2013, changes to the board of directors of the company. Mr. V. Balakrishnan has conveyed his intention to resign as a member of the board and from the services of the company. The resignation is effective 31 December 2013.
Mr. N. R. Narayana Murthy, Executive Chairman said, "Bala has been an early adopter and a keen anchor-builder of Infosys. It is difficult to imagine Infosys without Bala's passion, commitment, and intellect. The Board and every Infoscion thank Bala for his wonderful contribution and wish him great success in his future endeavors."
Mr. S. D. Shibulal, Chief Executive Officer and Managing Director said, "Bala during his two decades of association with Infosys, has played a pivotal role in building the finance function and has been a key driver behind all of our achievements in areas of investor relations and corporate governance. Over the last few years, he has also provided leadership to BPO, Finacle, India Business Unit, Global Immigration and most recently, to Lodestone. I would like to wish him the very best in all his future endeavors."
Balakrishnan said, "I have enjoyed every moment of my stint at Infosys and it was a great learning experience. While my heart will always be with Infosys my mind wants to do something beyond Infosys. I thank all my colleagues who supported and encouraged me during my career at Infosys. I wish Infosys all the very best in its future endeavors."
Infosys also said that the Nominations and Governance Committee of the company has recommended the induction of Mr. U. B. Pravin Rao as a Whole-time Director of the company. Mr. Pravin Rao is currently a Member of the Executive Council, Senior Vice President and Global Head-Retail, Consumer Packaged Goods, Logistics and Life Sciences. Mr. Rao also serves as a Member of the Board of Infosys Lodestone. Mr. Rao is also the Director of the Infosys Leadership Institute (ILI). Mr. Rao holds a degree in electrical engineering from Bangalore University, India.
Welcoming Mr. Pravin Rao, Mr. N. R. Narayana Murthy, Executive Chairman said, "I am very happy that Pravin will be joining the Board. I have worked with Pravin closely and have benefited immensely from his wisdom. My congratulations to him."
The Nominations and Governance Committee of the company has also recommended the induction of Ms. Kiran Mazumdar-Shaw as an Independent Member of the Board. Ms. Kiran Mazumdar-Shaw is the Chairman & Managing Director of Biocon, a biotechnology company based in Bangalore, India. Welcoming Ms. Shaw, Mr. N. R. Narayana Murthy, Executive Chairman said, "Kiran is a well-recognized and respected corporate leader. She will bring immense value to the board. I am honored to welcome her to our Board."
IL&FS Engineering and Construction Company rose 2.92% after the firm said it has received a letter of award for a joint venture contract worth Rs 144.65 crore. The announcement was made at the fag end of trading hours on Friday, 20 December 2013. The stock had risen 1.24% to settle at Rs 32.65 on Friday, 20 December 2013.
IL&FS Engineering and Construction Company at the fag end of trading hours on Friday, 20 December 2013 said that the company in joint venture (JV) with GPT Infraprojects has received a Letter of Award (LoA) from Dedicated Freight Corridor Corporation of India (DFCCIL) for the work of design and construction of rail flyover near Ganjkhwaja in Uttar Pradesh and formation in embankments/cuttings including blanketing, bridges (major, minor & RUBs), supply and spreading of ballast and other related infrastructural works for double track electrified railway line in different stretches between Dehri-on-Sone & Mughalsarai section of Eastern Dedicated Freight Corridor in Bihar and Uttar Pradesh on Design Build Lump Sum basis.
The total value of this project is Rs 144.65 crore, which is to be completed in 30 months, the statement said.
Sebi after trading on Thursday, 19 December 2013, said it has rationalized the periodic call auction mechanism by modifying how it classifies illiquid stocks. A stock would now be classified as illiquid if its average daily turnover is less than Rs 2 lakh in the previous two quarters and if it is classified as illiquid at all the exchanges where it is traded. Earlier, a stock was classified to be illiquid if its average daily trading volume in a quarter was less than 10,000, the average daily number of trades was less than 50 in a quarter and if it was classified as illiquid by all the exchanges where it traded.
Henceforth, call auctions will not apply to shares where a company is profitable in at least two of the past three years and not more than 20% of promoters' shareholding is pledged in the latest quarter and the book value is three times or more than the face value. The new rules also exclude companies with a market capitalisation of at least Rs 10 crore or which have paid a dividend in at least two of the past three years.
From now, stock exchanges will determine the number of call auction sessions for illiquid stocks. Exchanges will, however, have at least two sessions in a trading day, with one uniform closing session across the exchanges. So far, periodic call auction sessions of one hour each were conducted throughout trading hours, with the first session starting at 9:30 IST.
In foreign exchange market, rupee strengthened past 62 against the dollar. The partially convertible rupee was hovering at 61.995 compared to its close of 62.04/05 on Friday, 20 December 2013. The rupee rose on global risk on sentiment.
Asian stocks edged higher on Monday, 23 December 2013, after data showed faster-than-estimated economic growth in the US and after the International Monetary Fund said it's raising its outlook for the world's largest economy. Key benchmark indices in China, Hong Kong, Taiwan, Singapore and South Korea rose 0.11% to 0.68%. In Indonesia, Jakarta Composite was off 0.85%. Japanese markets were shut today for a holiday.
Trading in US index futures indicated that the Dow could advance 39 points at the opening bell on Monday, 23 December 2013. US stocks rallied Friday, lifting the Dow Jones Industrial Average and the S&P 500 to record levels, after a government report showed the economy grew at its fastest pace in two years last quarter.
The rate of US growth in the third quarter was faster than previously estimated as consumers stepped up spending on services such as health care and companies invested more in software. Gross domestic product climbed at a 4.1% annualized rate, the strongest since the final three months of 2011 and up from a previous estimate of 3.6%, Commerce Department figures showed on Friday, 20 December 2013.
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