Key benchmark indices edged lower in what was a choppy trading session after the new government led by Prime Minister Narendra Modi took charge at the Centre. The barometer index, the S&P BSE Sensex, shed 167.37 points or 0.68%, off 60.43 points from the day's high and up 127.18 points from the day's low. The market breadth indicating the overall health of the market was negative.
The Sensex snapped three-day winning streak today, 27 May 2014. The Sensex had gained 418.86 points or 1.72% in three trading days to settle at 24,716.88 on Monday, 26 May 2014, from recent low of 24,298.02 on 21 May 2014. The Sensex has risen 2,131.71 points or 9.5% in this month so far (till 27 May 2014). The Sensex has gained 3,378.83 points or 15.96% in calendar year 2014 so far (till 27 May 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 7,100.80 points or 40.69%. From a record high of 25,375.63 on 16 May 2014, the Sensex has fallen 826.12 points or 3.25%.
Coming back to today's trade, index heavyweight Reliance Industries slipped in volatile trade. Private bank stocks were mixed. PSU bank stocks dropped. Most sugar stocks declined on sluggish demand from bulk consumers ahead of the monsoon season. Auto stocks declined. GAIL (India) dropped as its Q4 results fell short of market expectations.
The Sensex slipped into the red after opening higher. Key benchmark indices extended initial losses and hit fresh intraday low in morning trade. A bout of volatility was witnessed as key benchmark indices trimmed intraday losses in mid-morning trade. Weakness continued on the bourses in early afternoon trade. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming intraday losses in afternoon trade. Volatility continued as key benchmark indices weakened once again after trimming intraday losses in mid-afternoon trade. The Sensex languished in negative terrain in late trade.
The market may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month May 2014 series to June 2014 series. The near month May 2014 derivatives contract expire on Thursday, 29 May 2014.
The S&P BSE Sensex shed 167.37 points or 0.68% to settle at 24,549.51, its lowest closing level since 22 May 2014. The index declined 294.55 points at the day's low of 24,422.33 in mid-morning trade. The index rose 60.43 points at the day's high of 24,777.31 in early trade.
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The CNX Nifty lost 41.05 points or 0.56% to settle at 7,318, its lowest closing level since 22 May 2014. The index hit a low of 7,274.75 in intraday trade. The index hit a high of 7,372.95 in intraday trade.
The BSE Mid-Cap index lost 55.86 points or 0.66% to settle at 8,429.20. The BSE Small-Cap index shed 40 points or 0.45% to settle at 8,883.65. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 4,136 crore, lower than Rs 6,121.45 crore on Monday, 26 May 2014.
The market breadth indicating the overall health of the market was negative. On BSE, 1,660 shares fell and 1,292 shares rose. A total of 103 shares were unchanged.
The S&P BSE Realty index (down 0.9%), the S&P BSE Auto index (down 1.31%), the S&P BSE Oil & Gas index (down 1.92%) and the S&P BSE Power index (down 2.14%) underperformed the Sensex.
The S&P BSE IT index (up 0.29%), the S&P BSE Healthcare index (up 0.25%), the S&P BSE Teck index (up 0.21%), the S&P BSE Metal index (up 0.04%), the S&P BSE Capital Goods index (down 0.07%), the S&P BSE FMCG index (down 0.09%), the S&P BSE Bankex (down 0.61%) and the S&P BSE Consumer Durables index (down 0.62%) outperformed the Sensex.
Among the 30-share Sensex pack, 20 stocks fell and rest of them rose.
Index heavyweight Reliance Industries fell 1.36% to Rs 1,086. The stock hit high of Rs 1,106 and low of Rs 1,076.05.
GAIL (India) dropped 7.34% to Rs 379.95 as its Q4 results fell short of market expectations. The stock had hit a 52-week high of Rs 439 on Monday, 26 May 2014. The company's net profit rose 57.24% to Rs 972.03 crore on 17.56% rise in total income to Rs 14977.89 crore in Q4 March 2014 over Q4 March 2013. The result was announced after market hours on Monday, 26 May 2014.
Net profit rose 8.78% to Rs 4375.27 crore on 20.94% rise in net sales to Rs 57245.10 crore in the year ended March 2014 over the year ended March 2013.
In terms of the decision of the Government of India to share the under recoveries on LPG, the company has provided provisional discount of Rs 500 crore in Q4 March 2014 (Q4 March 2013: Rs 587.18 crore) and Rs 1900 crore in the year ended March 2014 (previous year: Rs 2687.18 crore), GAIL said in a statement.
Sun Pharmaceutical Industries rose 0.11%. Ranbaxy Laboratories fell 0.34%. In response to the news articles which appeared on 25 May 2014 regarding Andhra Pradesh High Court vacating the stay on the Sun Pharma Ranbaxy merger, Sun Pharmaceutical Industries after market hours today, 27 May 2014, said that there was no material impact of the earlier court order on the process of completion of merger of Ranbaxy Laboratories with the company and therefore the vacation of the said order will also not have any material impact on the process of completion of merger of Ranbaxy Laboratories with Sun Pharma.
Metal and mining stocks declined. Sesa Sterlite (down 1.49%), JSW Steel (down 1.39%), Steel Authority of India (Sail) (down 1.53%), NMDC (down 1.16%), National Aluminum Company (down 2.35%) and Hindustan Copper (down 1.11%) declined. Tata Steel (up 2.01%) and Hindustan Zinc (up 1.06%) rose.
Jindal Steel & Power jumped 5.76% to Rs 314.85. The stock hit a 52-week high of Rs 319.70 in intraday today.
Hindalco Industries rose 0.99% to Rs 148.60, with the stock reversing recent fall on bargain hunting. Shares of Hindalco Industries had declined 7.8% in three trading days to Rs 147.15 on 26 May 2014 from a recent high of Rs 159.60 on 21 May 2014.
Auto stocks declined. Tata Motors (down 1.42%), Mahindra & Mahindra (M&M) (down 2.87%) and Ashok Leyland (down 0.31%) declined.
Maruti Suzuki India dropped 1.64%. The company on Monday, 26 May 2014, announced the launch of Celerio Green, the CNG powered Celerio car model with the acclaimed iGPI technology starting at Rs 4.68 lakh (Ex-showroom Delhi). The Celerio Green has only manual transmission option.
Shares of two-wheeler makers edged higher. TVS Motor Company (up 4.59%), Hero MotoCorp (up 0.49%) and Bajaj Auto (up 0.9%) gained.
Motherson Sumi Systems rose 3.95% after the company signed an agreement to acquire the wiring harness business of Stoneridge Inc. The announcement was made during market hours today, 27 May 2014
Motherson Sumi Systems (MSSL) signed an agreement to acquire the wiring harness business of Stoneridge Inc. through asset purchase at transaction value of $65.7 million (debt free and cash free). This acquisition is expected to close in the third quarter of 2014, subject to customary closing conditions. The acquired business has a turnover of about $300 million. The transaction includes six manufacturing facilities located in Portland, Indiana; Chihuahua, Mexico; Saltillo Mexico; and Monclova, Mexico; as well as an engineering and administrative center located in Warren, Ohio. This is by far the largest acquisition for the core business of wiring harnesses, MSSL said in a press release.
MSSL said that the acquired business has a history of 48 years of wiring harness manufacturing and is a well-established name in the markets it serves. It supplies principally to the commercial vehicles, agricultural equipment, material handling equipment and off-highway vehicle segments.
This acquisition further strengthens MSSL presence in North America where it has in recent past, established wiring harness operations, MSSL said.
Bharat Forge rose 5.54% after net profit jumped 137.57% to Rs 118.98 crore on 38.53% growth in total income to Rs 963.12 crore in Q4 March 2014 over Q4 March 2013. The result was announced during market hours today, 27 May 2014. On a consolidated basis, Bharat Forge's net profit surged 101.36% to Rs 498.53 crore on 29.59% growth in total income to Rs 6841.02 crore in the year ended 31 March 2014 (FY 2014) over the year ended 31 March 2013 (FY 2013).
Capital goods stocks declined. ABB (India) (down 3.48%), Bharat Heavy Electricals (Bhel) (down 5.55%), BEML (down 5.68%), Crompton Greaves (down 5.16%), Punj Lloyd (down 2.32%), and Thermax (down 0.42%) dropped. Siemens rose 0.29%.
Engineering and construction major L&T rose 1.36% to Rs 1,565.15. The stock was volatile. The stock hit high of Rs 1,576 and low Rs 1,522.80. L&T during trading hours today, 27 May 2014, said that its subsidiary L&T Special Steels and Heavy Forgings (LTSSHF) has entered into a five-year technology transfer agreement with The Japan Steel Works (JSW) which covers transfer of critical technology for steel melting and heavy forgings made from ingots weighing 200 MT, for hydrocarbon, thermal power, steel and cement sectors.
Shares of private sector banks were mixed. Axis Bank (down 1.27%) and ICICI Bank (down 0.38%) declined. But, HDFC Bank rose 0.88%.
Kotak Mahindra Bank gained 0.37% to Rs 866.65. The stock was volatile. The stock hit high of Rs 873.95 and low of Rs 850.60. Kotak Mahindra Bank before market hours today, 27 May 2014, said that the bank has received a communication from the Reserve Bank of India (RBI) to bring down promoter shareholding to 40% by 30 September 2014 and 30% by 31 December 2016. The current promoter shareholding is 43.58%.
PSU bank stocks declined. State Bank of India (SBI) (down 2.71%), Canara Bank (down 5%), Bank of India (down 4.09%) and Bank of Baroda (down 2.89%) declined. Union Bank of India rose 1.01%.
Shares of non-banking financial companies (NBFCs) declined after the Reserve Bank of India tightened merger and acquisition rules for NBFCs. IFCI (down 6.99%), LIC Housing Finance (down 3.42%), Reliance Capital (down 3.27%), IDFC (down 2.82%), Bajaj Finance (down 2.34%) and L&T Finance Holdings (down 1.57%) declined.
The Reserve Bank of India (RBI) has on Monday issued directions to all the NBFCs both deposit accepting and non-deposit accepting, stating that prior approval of the Reserve Bank of India is required in case of any takeover/acquisition of shares of an NBFC; or merger/amalgamation of an NBFC with another entity; or any merger/amalgamation of an entity with an NBFC, that would give the acquirer/ another entity control of the NBFC, or would result in acquisition/transfer of shareholding in excess of 10% of the paid up capital of the NBFC. The said requirement is applicable to all NBFCs, irrespective of it being a deposit taking or a non-deposit taking NBFC, the RBI said. Prior written approval of the Reserve Bank of India would also be required before approaching the Court or Tribunal under Section 391-394 of the Companies Act, 1956 or Section 230-233 of Companies Act, 2013 seeking order for mergers or amalgamations with other companies or NBFCs.
IT stocks were mostly higher. Wipro (up 0.5%) and Infosys (up 1.36%). HCL Technologies fell 0.73%.
TCS lost 1.1% to Rs 2,130 in volatile trade. The stock hit high of Rs 2,183.70 and low of Rs 2,116.05.
Tech Mahindra rose 2.51%. Tech Mahindra today, 27 May 2014, announced that Premium Credit, the No.1 Insurance Premium Finance Company in the UK and Ireland, has selected Tech Mahindra to deliver front and back office application services. The announcement was made after market hours today, 27 May 2014.
Tech Mahindra will provide operational support and maintenance services, as well as development and implementation. Tech Mahindra said that the company was selected because of its domain expertise in the insurance and financial services, and a strong local footprint.
Sonata Software gained by maximum permissible level of 20% at Rs 53.90 after consolidated net profit rose 9% to Rs 23.57 crore on 12% decline in revenues to Rs 340.71 crore in Q4 March 2014 over Q3 December 2013. The result was announced after market hours on Monday, 26 May 2014. Sonata Software's earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7% to Rs 35.02 crore in Q4 March 2014 over Q3 December 2013.
Realty stocks extended Monday's sharp losses. Sobha Developers (down 1.99%), Unitech (down 7.46%) and Housing Development & Infrastructure (down 1.08%) declined.
DLF rose 0.2% to Rs 204.75. The stock was volatile. The stock hit high of Rs 207.15 and low of Rs 195.15. The company on 23 May 2014 announced that DLF Emporio, a subsidiary of DLF, has successfully placed India's first Commercial Mortgage Backed Security (CMBS) issuance of Rs 525 crore, with a coupon rate of 10.90% per annum (p.a.) and legal maturity of 7.5 years. DLF Emporio owns and operates approximately 3 lakh square feet (sq. ft) of a Luxury Mall in New Delhi, India. The CMBS issue is rated CRISIL AA (SO). This is a landmark issuance, being the first of its kind in the country at a competitive pricing. This shall pave way for more such issuances in future, DLF said in a statement.
Power Finance Corporation fell 4.93% to Rs 292.85 on profit booking after the company declared its Q4 March 2014 results during trading hours today, 27 May 2014. Shares of Power Finance Corporation (PFS) surged 68.47% in the preceding 18 trading sessions to Rs 308.05 on Monday, 26 May 2014, from Rs 182.85 on 29 April 2014.
PFC's net profit rose 9.06% to Rs 1411.41 crore on 20.68% increase in total income to Rs 5636.09 crore in Q4 March 2014 over Q4 March 2013.
The company's net profit rose 22.58% to Rs 5417.75 crore on 24.69% increase in total income to Rs 21537.46 crore in the year ended March 2014 over the year ended March 2013.
On a consolidated basis, PFC's net profit rose 23.08% to Rs 5461.84 crore on 24.90% increase in total income to Rs 21629.22 crore in the year ended March 2014 over the year ended March 2013.
Container Corporation of India fell 1.71%. The company during market hours today, 27 May 2014, said net profit rose 8.94% to Rs 246.03 crore on 6.79% rise in total income to Rs 1411.25 crore in Q4 March 2014 over Q4 March 2013.
Aurobindo Pharma rose 4.62% to Rs 642.25. The stock hit a record high of Rs 643.40 in intraday today. The company will announce Q4 results on 30 May 2014.
Most sugar stocks declined on sluggish demand from bulk consumers ahead of the monsoon season. Bajaj Hindusthan (down 4.07%) and Balrampur Chini Mills (down 4.3%) declined. Shree Renuka Sugars rose 0.41%. Demand for sugar from bulk consumers like cold drink and ice-cream makers usually softens during the monsoon season.
TV18 Broadcast rose 4.88% after consolidated net profit jumped 107.51% to Rs 35.90 crore on 16.50% increase in total income to Rs 572.25 crore in Q4 March 2014 over Q4 March 2013. The result was announced during trading hours today, 27 May 2014. TV18 Broadcast reported a net profit of Rs 103.63 crore in the year ended March 2014 compared with net loss of Rs 25.44 crore in the year ended March 2013. Total income rose 14.78% to Rs 2000.54 crore in the year ended March 2014 over the year ended March 2013.
On the macro front, India's current account deficit (CAD) narrowed sharply to $1.2 billion (0.2% of GDP) in Q4 March 2014, from $18.1 billion (3.6% of GDP) in Q4 March 2013, which was also lower than $4.2 billion (0.9% of GDP) in Q3 December 2013. The lower CAD was primarily on account of a decline in the trade deficit as decline in imports was sharper than that in exports.
On a BoP basis, merchandise exports declined by 1.3% to $ 83.7 billion in Q4 March 2014 as against an increase of 5.9% in Q4 March 2013.
Reserve Bank of India Governor Raghuram Rajan today, 27 May 2014, said that fighting inflation would continue to be a top priority, although the central bank will also aim to strike a balance between promoting economic growth and containing inflation. Rajan was speaking to reporters after meeting new Finance Minister Arun Jaitley in the capital. "It's absolutely a task that the government and the RBI are engaged with," Rajan said when asked if curbing inflation was going to be one of the biggest tasks for the government and the RBI. But Rajan also added: "RBI has always maintained the balance between growth and inflation."
After taking charge of the Finance Ministry, Jaitley said at a news conference today, 27 May 2014, that a balancing act will have to be done to restore growth while curbing inflation and taking steps toward fiscal consolidation. "I think political change itself sends strong signals to the global community as also to domestic investors. Over the next few months by expediting decision making processes, I'm sure we'll be able to build on that," Jaitley said.
After taking charge as the Law Minister, Ravi Shankar Prasad today, 27 May 2014, said that new government's goal is to remove uncertainty and provide investors a stable fiscal and legal policy.
Narendra Modi was sworn in India's 15th Prime Minister on Monday, 26 May 2014. The Union Council of Ministers includes Rajnath Singh as Home Minister and Sushma Swaraj as Minister for External Affairs. Arun Jaitley was allocated Finance Ministry, corporate affairs and will also have additional charge of Defence. Nitin Gadkari will be a minister of road transport, highways and shipping. Ravi Shankar Prasad will take charge of Communications and Information Technology, Law and Justice Ministry. Venkaiah Naidu takes charge as minister of Urban Development, Housing and Urban Poverty Alleviation and Parliamentary Affairs. Shri D.V. Sadananda Gowda was allotted Ministry of railways. Uma Bharati was allotted Water Resources, River Development and Ganga Rejuvenation Ministry, Ashok Gajapathi Raju Pusapati was allotted Civil Aviation Ministry, Ananthkumar was allotted Chemicals and Fertilizers. Gopinath Munde was allotted Rural Development, Panchayati Raj and Drinking Water and Sanitation Ministry. Ramvilas Paswan was allotted Consumer Affairs, Food and Public Distribution Ministry. Kalraj Mishra was allotted Micro, Small and Medium Enterprises. Maneka Gandhi was allotted Women and Child Development Ministry. Anant Geete was allotted Heavy Industries and Public Enterprises Ministry. Harsimrat Kaur Badal was allotted Food Processing Industries Ministry. Dharmendra Pradhan has got Petroleum and Natural Gas ministry with independent charge.
Investors are expecting measures from the new government to revive the Indian economy. India's GDP growth slowed sharply at 4.7% in Q3 December 2013. Investors expect the new government to accelerate policy reforms and overhaul the country's poor infrastructure.
Modi is favored by business leaders because of his record in Gujarat, which he's led since 2001. With Modi at the helm of affairs, Gujarat's economy expanded by 10.1% a year, on average and adjusting for inflation, from 2001 and 2012, compared with 7.7% growth a year for India's economy as a whole.
Modi has pledged to fight inflation by cracking down on food hoarders, creating a national agriculture market and improving rural infrastructure.
The first budget of the new government is expected 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 Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. 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.
European stocks edged higher on Tuesday, 27 May 2014before reports on US durable goods and consumer confidence later in the global day today. Key benchmark indices in UK, France and Germany were up 0.06% to 0.48%.
French consumer confidence stagnated at a historically low level in May, a survey from statistics agency INSEE showed on Tuesday. The monthly survey recorded consumer confidence of 85 in May, unchanged from 85 in April. That reading is well below the long-term average of 100.
Asian stocks edged lower in choppy trade on Tuesday, 27 May 2014. Key benchmark indices in China, Singapore, Hong Kong and South Korea were off 0.08% to 0.63%. Key benchmark indices in and Taiwan and Japan were up 0.21% to 0.23%.
Trading in US index futures indicated that the Dow could gain 71 points at the opening bell on Tuesday, 27 May 2014. US stock market was closed on Monday, 26 May 2014, on account of Memorial Day.
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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