A bout of volatility was witnessed as key benchmark indices regained strength after trimming initial gains and hitting fresh intraday low in morning trade. The barometer index, the S&P BSE Sensex, was up 65.56 points or 0.27%, up close to 60 points from the day's low and off about 25 points from the day's high. The market breadth, indicating the overall health of the market, was strong. Firmness in Asian stocks boosted market sentiment.
Capital goods stocks gained. L&T extended Monday's sharp gains triggered by strong Q4 result.
The market edged higher in early trade. The Sensex and the 50-unit CNX Nifty, both, hit their highest level in over one-week. It regained strength after trimming initial gains and hitting fresh intraday low in morning trade.
The market sentiment was also boosted by data showing that foreign funds were net buyers of Indian stocks on Monday, 2 June 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 234.49 crore on Monday, 2 June 2014, as per provisional data from the stock exchanges.
At 10:20 IST, the S&P BSE Sensex was up 65.56 points or 0.27% to 24,750.41. The index rose 87.38 points at the day's high of 24,781.39 in early trade, its highest level since 26 May 2014. The index gained 7.21 points at the day's low of 24,692.06 in morning trade.
The CNX Nifty was up 15.15 points or 0.21% to 7,377.65. The index hit a high of 7,390.90 in intraday trade, its highest level since 26 May 2014. The index hit a low of 7,362.25 in intraday trade.
The BSE Mid-Cap index was up 55.93 points or 0.65% to 8,706.45. The BSE Small-Cap index was up 65.72 points or 0.71% to 9,262.64. Both these indices outperformed the Sensex.
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The market breadth, indicating the overall health of the market, was strong. On BSE, 1,224 shares rose and 623 shares fell. A total of 75 shares were unchanged.
Tata Steel (up 2.82%), Coal India (up 2.61%) and NTPC (up 2.26%) edged higher from the Sensex pack.
Capital goods stocks gained. ABB (India) (up 0.43%), Bharat Heavy Electricals (Bhel) (up 0.14%), Crompton Greaves (up 2.18%), Siemens (up 0.6%) and Thermax (up 0.21%) gained.
L&T rose 1.25% to Rs 1,666, with the stock extending Monday's sharp gains triggered by strong Q4 result. The stock hit record high of Rs 1,673.95 in intraday trade. The scrip hit low of Rs 1,650.30 so far during the day. 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.
International revenue rose 22% to Rs 9129 crore in FY 2014 over FY 2013. It constituted 16% of the total revenue in FY 2014.
The company successfully secured fresh orders worth Rs 94108 crore in FY 2014, registering a significant growth 15% YoY, on a large base despite a sluggish economic environment during 2013-14. The international order inflow during the year at Rs 30752 crore grew more than 3 times on a YoY basis, constituting 33% of the total order inflow. Major orders during the year were procured by the infrastructure segment, L&T said in a statement.
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.
Ipca Laboratories rose 1.86% after the company inked an agreement with US-based Oncobiologics Inc to develop and manufacture biosimilar monoclonal antibody products. The announcement was made after trading hours on Monday, 2 June 2014.
Ipca Laboratories (Ipca Labs) and Oncobiologics, Inc., USA (Oncobiologics) announced the creation of a two-part alliance for the development, manufacture and commercialization of biosimilar monoclonal antibody products. The financial terms of the agreement between the two companies were not disclosed. Under the first part of the agreement, Ipca will in-license and commercialize biosimilar products for India and other associated markets. These products will be developed by Oncobiologics to USFDA and EU regulatory standards for global commercialization. Initial manufacturing will occur in the US by Oncobiologics and later by Ipca in India. The biologics covered by the agreement are among the most popular therapies in the world for immunology and oncology disease indications, Ipca said in statement. The partnership is planning to launch the first product in 2017, the Indian pharmaceutical company said.
Under the second part of the agreement, Oncobiologics will replicate its biologics R&D and manufacturing facility in India to create a world-class capability for Ipca for further biosimilar commercialization. The Mumbai R&D facility will be designed for development and commercialization of complex monoclonal antibodies. The manufacturing facility will be located in Vadodara and will utilize the latest single-use manufacturing platform, Ipca said. The R&D facility will be operational from 2015 and the manufacturing facility will be operational by 2016.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 59.13, compared with its close of 59.1525/1625 on Monday, 2 June 2014.
On macro front, the Reserve Bank of India (RBI) is widely expected to keep its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review today, 3 June 2014, as the central bank waits for further proof that inflation is under control. While high inflation rates have come down in recent months, the central bank is waiting to see if they will flare up again. The RBI has said it wants the consumer price index inflation rate to cool to 8% by January and further to 6% a year after that. The central bank will want to see if the crucial monsoon rains this year will exacerbate or ease food price inflation. The RBI left the repo rate unchanged at 8% after a monetary policy review on 1 April 2014 as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.
The Eight Core Industries, having a combined weight of 37.90 % in the Index of Industrial Production (IIP), recorded a 4.2 % increase in output during April 2014. Coal production increased 3.3 %, while the electricity generation increased 11.2% in April 2014 over April 2013. The production of fertilizer increased 11.1%, while that of steel and cement also galloped 3.1% and 6.7% in April 2014. However, the output of crude Oil declined 0.1 %, while that of the natural gas and petroleum refinery also dipped 7.7% and 2.2% in April 2014.
Markit Economics will unveil the result of a monthly survey on the performance of India's services sector for May 2014 tomorrow, 4 June 2014.
Rural Development Minister Gopinath Munde died on Tuesday after a head-on road collision in New Delhi. Munde, appointed just over a week ago to Prime Minister Narendra Modi's new government, suffered serious injuries while driving to the airport and died in hospital. Munde, 64, died in hospital from cardiac arrest.
Finance minister Arun Jaitley is expected to table Union Budget for 2014-15 in Lok Sabha by 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.
The First Meeting of the Special Investigating Team (SIT) was held on Monday under the Chairmanship of Mr. Justice M.B. Shah, former Judge of the Supreme Court. During the meeting, detailed modalities of proceeding further with the Supreme Court mandate were discussed and the roadmap decided. SIT was recently constituted to implement the decision of the Supreme Court on large amounts of money stashed abroad by evading taxes or generated through unlawful activities. The next meeting of the SIT will be convened shortly to take stock of the follow-up of the decisions taken in the First Meeting of SIT on Monday.
Asian stocks rose on Tuesday as concern eased about a slowdown in China, the world's second-largest economy. Key benchmark indices in Indonesia, South Korea, Japan, Hong Kong and China were up 0.23% to 0.86%. Key benchmark indices in Taiwan and Singapore fell 0.04% to 0.15%.
A Chinese manufacturing gauge rose to a four-month high, signaling that the economy is stabilizing even as job cuts and weakness in the property market underscore pressure on the government to do more to support growth. A Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics was at 49.4 in May, up from 48.1 in April.
The data came two days after a government gauge signaled the fastest growth in five months. Levels below 50 still signal contraction in the sector. China's official Purchasing Managers' Index rose to 50.8 in May, the highest level since December, a June 1 report showed.
China's non-manufacturing purchasing managers' index rose to 55.5 in May from a previously reported 54.8 in April, according data released by the Beijing-based National Bureau of Statistics and the China Federation of Logistics and Purchasing.
Trading in US index futures indicated that the Dow could fall 8 points at the opening bell on Tuesday, 3 June 2014. The Dow Jones Industrial Aerage and the S&P 500 index finished at record highs again on Monday after a closely watched read on US manufacturing was revised to show more strength than initially indicated in May.
Manufacturing expanded in May at the fastest pace this year as American assembly-line workers responded to increased orders by cranking up production. The Institute for Supply Management's factory index rose to 55.4 from the prior month's 54.9. Readings above 50 indicate expansion. The release of the data, watched closely by financial markets as a gauge of the economy's strength, was anything but smooth. Twice the Tempe, Arizona-based group had to amend its figures due to calculation errors.
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.
There are expectations that the European Central Bank (ECB) will announce new stimulus measures when the Governing Council of the ECB holds a monthly meeting on euro area interest rates on Thursday, 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 on Thursday, 5 June 2014.
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