Key benchmark gave away initial strong gains after data released by the government today, 16 September 2013, showed that inflation based on wholesale price index (WPI) accelerated in August 2013, firming expectations that the central bank may again hold off cutting interest rates at its monetary policy review on Friday, 20 September 2013. The barometer index, the S&P BSE Sensex, closed a tad higher. The 50-unit CNX Nifty edged lower to hit over one-week low. Stock prices were volatile. The market breadth, indicating the overall health of the market, was negative. The Sensex advanced 9.71 points or 0.05%, off about 345 points from the day's high and up close to 145 points from the day's low.
The Sensex has gained 1,122.75 points or 6.02% in September 2013 so far (till 16 September 2013). The Sensex has risen 315.76 points or 1.62% in calendar 2013 so far (till 16 September 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 701.15 points or 3.42%.
Coming back to today's trade, shares of pharma major Ranbaxy Laboratories tumbled a staggering over 30% in a single trading session after the US Food and Drug Administration issued an import alert against company's Mohali plant. Shares of most private banks rose. IT stocks declined as the rupee surged against the dollar. Index heavyweight and cigarette maker ITC gained. Another index heavyweight Reliance Industries (RIL) declined. Shares of two out of three PSU OMCs rose after raising petrol price.
In the foreign exchange market, the rupee surged against the dollar. The partially convertible rupee was hovering at 62.81, stronger than its close of 63.49/50 on Friday, 13 September 2013.
The S&P BSE Sensex advanced 9.71 points or 0.05% to settle at 19,742.47, its highest closing level since 12 September 2013. The index surged 353.67 points at the day's high of 20,086.43 in early trade, its highest level since 25 July 2013. The index fell 136.61 points at the day's low of 19,596.15 in afternoon trade, its lowest level since 10 September 2013.
The CNX Nifty shed 10.05 points or 0.17% to 5,840.55, its lowest closing level since 6 September 2013. The index hit a low of 5,798.15 in intraday trade. The index hit a high of 5,957.25 in intraday trade, its highest level since 25 July 2013.
The BSE Mid-Cap index fell 0.54% and the BSE Small-Cap index declined 0.58%. Both these indices underperformed the Sensex.
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The total turnover on BSE amounted to Rs 1980 crore, higher than Rs 1856.21 crore on Friday, 13 September 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,243 shares fell and 1,118 shares rose. A total of 123 shares were unchanged.
From the 30-share Sensex pack, 18 stocks declined and rest of them rose.
Capital goods pivotals dropped. Bhel tumbled 5.16%. The stock was the biggest loser from the Sensex pack.
L&T declined 0.61%. The company said during market hours today, 16 September 2013, that its construction division has won new orders worth Rs 1793 crore across various business segments in July, August and September 2013.
Index heavyweight and cigarette maker ITC gained 0.89%.
Shares of most private banks rose. ICICI Bank (up 3.08%), Yes Bank (up 3.86%), Federal Bank (up 0.12%), and Axis Bank (up 2.41%), gained.
HDFC Bank rose 2.13%. The bank on Saturday, 14 September 2013, said that it has completed the acquisition of additional 42.75 lakh equity shares of its subsidiary HDFC Securities (HSL) from an existing shareholder. With this acquisition the total shareholding of HDFC Bank in HSL has increased from 62.06% to 89.88% of the paid-up capital of HSL.
State Bank of India fell 0.9%.
IT stocks declined as the rupee surged against the dollar. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports. Wipro (down 1.26%), TCS (down 2.57%), and Infosys (down 1.23%), dropped.
HCL Infosystems jumped 9.37% to Rs 28 and HCL Technologies lost 5.04% to Rs 993 on reports that HCL Infosystems is working towards the goal of merging its system integration and services business with HCL Technologies. However, HCL Infosystems clarified during trading hours today, 16 September 2013, that no such merger matter is currently under consideration of the company's board. HCL Technologies is a software firm. A bulk of HCL Infosystems' revenues comes from selling computing hardware to government and by acting as a national distributor for mobile phones, computers, laptops and printers.
HCL Technologies after trading hours clarified that no proposal to merge HCL Infosystems or its systems integration and services business with HCL Technologies is under consideration by the company's board. Both these entities have been teaming on specific opportunities in India. In these cases, they have been cross selling each other's services over the last 2 years. HCL Technologies said that the company derived about 5% of its revenue from India during FY 2013. It is expected that the revenue from India during FY 2014 would remain at similar level, the company said. The arrangement with HCL Infosystems did not have any impact on the margins in the past and it is not expected to have any impact on the margins going forward, HCL Technologies said.
Index heavyweight Reliance Industries (RIL) declined 1.74%.
Most two-wheeler stocks rose on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. The festive season starts with the Durga Puja in October. The festival is followed by Dussehra and Diwali. Hero MotoCorp (up 2.73%) and TVS Motor Company (up 5.3%), gained. Bajaj Auto declined 0.34%.
Meanwhile, PSU OMCs hiked petrol prices by Rs 1.63 a litre with effect from Saturday, 14 September 2013.
Mahindra & Mahindra (M&M) rose for the second straight day on expectations of increase in tractor sales due to good rains this year. The stock was up 0.83%.
Among other auto stocks, Tata Motors declined 0.72%. Maruti Suzuki India rose 2.94%.
Realty shares declined. HDIL (down 4.01%), Unitech (down 3.87%), D B Realty (down 4.06%), and DLF (down 1.98%), edged lower.
Pharma major Lupin dropped 2.67%. The company announced after market hours that it has received final approval for its Zolpidem Tartrate Extended?release tablets USP, 6.25 mg and 12.5 mg from the United States Food and Drugs Administration (FDA) to market a generic version of Sanofi Aventis, U.S, LLC's (Sanofi) Ambien CR Extended? release tablets, 6.25 mg and 12.5 mg. Lupin's wholly owned US subsidiary Lupin Pharmaceuticals Inc. (LPI) shall commence marketing the product shortly, the company said. Lupin's Zolpidem CR tablets 6.25 mg & 12.5 mg is the AB rated generic equivalent of Sanofi's Ambien CR Extended? release tablets, 6.25 mg and 12.5 mg and is indicated for the treatment of insomnia characterized by difficulties with sleep onset and/or sleep maintenance. Sanofi's Ambien CR Extended ?release tablets had annual US sales of approximately $366 million (IMS MAT Mar 2013).
Pharma major Ranbaxy Laboratories tumbled 30.27% to Rs 318.85 after the US Food and Drug Administration issued an import alert against company's Mohali plant. The FDA issued the alert on Friday, 13 September 2013. Ranbaxy Laboratories' plant in Mohali manufactures oral solids for export to the US, the European Union and other geographies. In May 2013, Ranbaxy Laboratories agreed to pay $500 million penalty to the US government to settle criminal and civil charges related to drug safety.
Ranbaxy during trading hours today, 16 September 2013, said that the company has so far not received any communication from the USFDA against company's Mohali plant. The company is seeking information from the USFDA in this regard, it added.
Cipla shed 2.3% to Rs 430.45. The stock reversed direction after hitting record high of Rs 450 in intraday trade today, 16 September 2013.
Sun Pharmaceutical Industries declined 0.19% to Rs 562.45. The stock reversed direction after hitting record high of Rs 583 in intraday trade today, 16 September 2013. The company said on Saturday, 14 September 2013, that the US FDA has granted its subsidiary final approval for its Abbreviated New Drug Applications (ANDA) for generic version of Prevacid, Lansoprazole Delayed-Release Capsules USP, 15 mg and 30 mg. Lansoprazole Delayed-Release Capsules USP, 15 mg and 30 mg are therapeutic equivalents of Takeda's Prevacid Delayed-Released Capsules. These Capsules have annual sales of approximately $430 million in the US. Lansoprazole Delayed-Release Capsules USP are indicated for short-term treatment (for 4 weeks) for healing and symptom relief of active duodenal ulcer.
Strides Arcolab fell 3.45% to Rs 869.10 after the company said that the sterile manufacturing facility 2 (SFF) at Bangalore of Agila Specialties, a wholly-owned subsidiary of the company, has received a warning letter from the United States Food and Drug Administration (US FDA).
The US FDA inspected SFF in the month of June 2013 and the inspection resulted in issuance of Form FDA 483 with observations. The company responded to the 483 observations by implementing corrective actions. Strides Arcolab said that the company is committed to work collaboratively and expeditiously with the USFDA to resolve concerns cited in the warning letter in the shortest possible time.
Further, the oncology facility at Bangalore of Agila Specialties was also inspected recently by the USFDA and this facility has cleared the inspection with "Zero 483 status", Strides Arcolab said.
Strides Arcolab said that the company has 8 US FDA approved sterile manufacturing facilities.
Cadila Healthcare rose 0.83% after the company said during market hours that it launched a diabetes drug in India. Cadila Healthcare said that three months after announcing its breakthrough in research, the Zydus Group has launched Lipaglyn, a novel drug targeted at bridging an unmet healthcare need for treating Diabetic Dyslipidemia and Hypertriglyceridemia in Type II diabetes, not controlled by statins alone. Lipaglyn will be available across India and can be prescribed by cardiologists, diabetologists and general physicians. The therapy is priced at Rs 25.90 per tablet.
Speaking on the occasion, Pankaj R. Patel, chairman and managing director, Cadila Healthcare said: "It's a great milestone for Indian pharmaceutical research today as Lipaglyn completes its journey from the lab to the market. Lipaglyn has opened up a new path in the care and management of diabetes and its complications and I believe this is just the beginning of India's contribution to the world of pharma research."
Sesa Goa dropped 3.62%. Tata Steel declined 2.16%.
Shares of public sector oil marketing companies (PSU OMCs) rose after raising petrol prices. HPCL (up 4.44%), and BPCL (up 3.87%), edged higher. Indian Oil Corporation fell 0.52%. Petrol prices were hiked by Rs 1.63 a litre with effect from Saturday, 14 September 2013, the seventh increase since June 2013, on rising oil rates and falling rupee. The increase excludes local sales tax or VAT.
PSU OMCs suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
Power Grid Corporation of India (PGCIL) rose 2.81%. The company after market hours on Friday, 13 September 2013, said that the Ministry of Power vide an order dated 13 September 2013 conveyed that it has sought the approval of Cabinet Committee on Economic Affairs (CCEA) for the follow on public offer (FPO) of PGCIL of 78.70 crore equity shares of Rs 10 each consisting 17% of existing paid up capital as per Sebi guidelines, which comprises of fresh issue of 60.18 crore equity shares (13% of existing paid up capital) and disinvestment of 18.51 crore equity shares (4% of existing paid up capital) by the Government of India (GoI).
The Ministry of Power also conveyed that PGCIL may proceed further with regard to appointment of Merchant Bankers and other key intermediaries involved in a public issue.
As on 30 June 2013, the GoI held 69.42% stake in PGCIL.
Godrej Industries fell 2.44% to Rs 283.90. A block deal of 17.07 lakh shares was executed on the counter on BSE at Rs 294 at 13:05 IST.
Steel Strips Wheels declined 1.31%. The company said it has bagged an export order for tractor segment from Ring Tech Company (RTCL), a subsidiary of Nippon Steel & Sumitomo Metal. The company made the announcement during trading hours today, 16 September 2013. The order size was disclosed.
RTCL has a technical tie up with SSWL for developing state of the art technology in steel wheel manufacturing. Nippon Steel & Sumitomo Metal holds a strategic stake in SSWL and that will substantially improve the scope of potential business being developed with RTCL, SSWL said in a statement.
SSWL is developing various products in different segments with RTCL. This marks the beginning of yet another export business and will add a lot of value with ramp up, the company said.
Man Industries (India) rose 0.94% the company announced the demerger of its real estate and infrastructure business which is conducted through Man Infraprojects. Shareholders of Man Industries will be entitled to one fully paid-up equity share of Rs 5 each of Man Infraprojects for each share held in Man Industries (India). Man Infraprojects will be listed separately on the bourses in due course.
Commenting on the development, Mr. R. C. Mansukhani, Chairman, Man Industries (India) said, "The family settlement entered into with Mr. J C Mansukhani has put an end to the dispute and misunderstandings."
Man Industries (India) said that it is confident that the demerger will enhance value of its shareholders, and provide fresh momentum for growth in both the business verticals. The proposed demerger will allow the Group to improve performance significantly by capitalizing the opportunities, the company said in a statement.
ARSS Infrastructure Projects was locked at 20% upper circuit at Rs 25.05 on BSE after the company said it has received a new work order of World Bank Projects in Odisha for Rs 147.53 crore.
McNally Bharat Engineering Company rose 6.5% after the company said its wholly owned subsidiary viz. MBE Coal & Mineral Technology has received an order worth Rs 51.75 crore for works relating to Coal Washery & Crashing Plant. In addition, MBE Coal & Minerals Technologies GMBH, a 100% subsidiary of MBE Mineral Technologies Pte, Singapore, a wholly owned subsidiary of McNally Bharat Engineering Company, is also participating in a part of this order for which the value of the order is Rs 6.35 crore.
On the macro front, the annual rate of inflation, based on the monthly wholesale price index (WPI), accelerated to 6.1% in August 2013 from 5.79% in July 2013, firming expectations that the central bank may again hold off cutting interest rates at its monetary policy review on Friday, 20 September 2013. A surge in primary food articles inflation to 18.2% in August 2013 from 11.9% in July 2013 mainly contributed to increase in inflation in August 2013. Core inflation or non-food manufacturing inflation eased to 1.97% in August 2013 from 2.33% in July 2013, the latest data showed. Meanwhile, the government revised the rate of WPI inflation for June 2013 to 5.16%, from 4.86% reported earlier.
Build up inflation rate in the financial year so far was 3.91% compared to a build up rate of 4.35% in the corresponding period of the previous year. The government announced the WPI data during trading hours today, 16 September 2013.
WPI inflation had eased to the Reserve Bank of India's comfort zone of 5% in April and May. But inflation rebounded following a rise in food prices due to crop damage after heavy rainfall this year, and increases in prices of fuel to compensate for higher import costs due to a sharp fall in the rupee.
At its upcoming mid-quarter monetary policy review on Friday, 20 September 2013, the Reserve Bank of India will have to decide whether to give in to industry demands and lower interest rates in order to boost slowing economic growth, or leave interest rates unchanged for the third straight policy review as it guards against risks of a fresh rise in inflationary pressures.
The Securities and Exchange Board of India (Sebi) said on Friday, 13 September 2013, that FIIs/QFIs shall hereafter be permitted to invest in government debt without purchasing debt limits till the overall investment reaches 90%. Once this 90% limit is reached, auction mechanism shall be initiated for allocation of the remaining limits, as currently in place for FII investments in corporate debt. Presently FIIs/QFIs have to purchase the debt limits through the auction mechanism.
In a major development on political front, Gujarat chief minister Narendra Modi was crowned as the candidate for prime minister's post by India's main opposition -- Bharatiya Janata Party (BJP) -- late on Friday, 13 September 2013. BJP said that Modi's pro-business stance can revive India's stumbling economy. Parliamentary polls are due by next May. "At this time, when corruption and rising prices have become a big problem for the country, I hope the people will support our call for development and good governance," Mr. Modi said at a news conference in New Delhi on Friday, 13 September 2013.
European stocks edged higher on Monday, 16 September 2013, after former Treasury Secretary Lawrence Summers dropped out of the running for the top Federal Reserve job. Key benchmark indices in UK, France and Germany were up 0.8% to 1.2%.
Asian stocks rose on Monday, 16 September 2013, after Lawrence Summers withdrew from consideration to be the next Federal Reserve chairman, paving the way for Janet Yellen, who some investors say may favor a slower reduction in US stimulus. Key benchmark indices in Taiwan, Hong Kong, Singapore, South Korea and Indonesia rose 0.96% to 3.35%. China's Shanghai Composite fell 0.22% in choppy trade. Japanese stock markets were closed for a holiday.
Trading in US index futures indicated that the Dow could jump 167 points at the opening bell on Monday, 16 September 2013. US stocks on Friday scored modest gains despite a mediocre retail sales report and a disappointing read on consumer sentiment. US retail sales, a closely watched benchmark of economic health, rose just 0.2% in August. The consumer sentiment reading in September issued by Thomson Reuters and the University of Michigan was 76.8, down from the 82.1 reading in August.
Summers withdrew his nomination to lead the Fed, before a two-day policy meeting starting tomorrow, 17 September 2013. Summers, 58, was one of three names that US President Barack Obama had mentioned as possible replacements for Bernanke, whose term as Fed chairman ends on 31 January 2014. Janet Yellen, 67, the current Fed vice chairman, was also on Obama's candidate list along with Donald Kohn, 70, a former Fed vice chairman, the president said earlier. The exit of Summers, who faced wide opposition in the Fed race, could clear the path for Yellen. Yellen is seen as one who would favor a slower pace of tapering on Fed bond purchases.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this week, considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC holds a two-day policy meeting on Tuesday 17 September and Wednesday 18 September 2013 to decide on interest rates in the United States. The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.
The US and Russia announced a deal on Saturday, 14 September 2013, for Syria to destroy its chemical-weapons stockpile by the middle of 2014. The agreement halted preparation for a possible US attack on Syrian government targets in retaliation for the apparent use of chemical agents on civilians last month.
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