Key benchmark indices surged as world stocks rose after Federal Reserve Chairman Ben S. Bernanke on Wednesday, 10 July 2013, said that a highly accommodative monetary policy is needed for the US economy for the foreseeable future. The barometer index, the BSE Sensex, settled at its highest level in almost six weeks. The CNX Nifty settled at over 5-week high. The Sensex jumped 381.94 points or 1.98%, off 47.45 points from the day's high and up 207.60 points from the day's low. The market breadth, indicating the overall health of the market, was positive. Except BSE Consumer Durables index, all the other sectoral indices on BSE were in the green.
The Sensex has risen 280.25 points or 1.44% so far in July 2013 (till 11 July 2013). The Sensex has gained 249.35 points or 1.28% in calendar 2013 so far (till 11 July 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 767.56 points or 3.75%. From a 52-week low of 16,598.48 on 26 July 2012, the Sensex has surged 3,077.58 points or 18.54%.
Coming back to today's trade, index heavyweights ITC and Reliance Industries gained. Mining and metal stocks rose after global commodity prices rallied overnight. Bank stocks rose across the board. Capital goods stocks also edged higher. IT major Infosys rose ahead of its Q1 June 2013 results tomorrow, 12 July 2013. Auto stocks were mixed. From pharma pack, Dr Reddy's Laboratories, Sun Pharmaceutical Industries and Lupin hit record highs.
Bernanke said a speech on Wednesday, 10 July 2013, that "highly accommodative" monetary policy will be needed for the "foreseeable future." Meanwhile, minutes of the Fed's June meeting showed that while "several members judged that a reduction in asset purchases would likely soon be warranted," many want to see further improvement in the labor market before reducing the central bank's $85 billion-a-month quantitative easing program.
The signal that the Fed will likely maintain an accommodative policy stance sent world stocks surging as Fed's bond-buying program and quantitative easing by other central banks worldwide has flooded global markets with liquidity and helped support an array of assets, including equities in recent years. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth. At a press conference following the June 18-19 meeting, Bernanke said the central bank could start reducing its $85 billion in monthly bond purchases later this year if the economy continues to improve in line with its forecasts.
The S&P BSE Sensex jumped 381.94 points or 1.98% to settle at 19,676.06, its highest closing level since 31 May 2013. The index jumped 429.39 points at the day's high of 19,723.51 in afternoon trade. The index gained 174.34 points at the day's low of 19,468.46 in opening trade.
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The CNX Nifty was up 118.40 points or 2.04% to 5,935.10, its highest closing level since 3 June 2013. The index hit a high of 5,948.85 in intraday trade. The index hit a low of 5,887.95 in intraday trade.
The total turnover on BSE amounted to Rs 1426 crore, lower than Rs 1619.83 crore on Wednesday, 10 July 2013.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,365 shares rose and 966 shares fell. A total of 148 shares were unchanged.
The BSE Mid-Cap index rose 0.67% and the BSE Small-Cap index gained 0.66%. Both these indices underperformed the Sensex.
Twelve of 13 sectoral indices on BSE edged higher. The BSE Metal index (up 3%), BSE Bankex (up 2.48%) and BSE Realty index (up 2.44%) outperformed the Sensex.
The BSE Capital Goods index (up 1.84%), BSE Oil & Gas index (up 1.8%) BSE PSU index (up 1.77%), BSE Teck index (up 1.52%), BSE Power index (up 1.51%), BSE FMCG index (up 1.44%) BSE IT index (up 1.43%), BSE Healthcare index (up 0.7%), BSE Auto index (up 0.55%) and BSE Consumer Durables index (down 0.64%) underperformed the Sensex.
From the 30-share Sensex pack, 26 stocks rose and only four of them fell.
Index heavyweight and cigarette maker ITC rose 2.36%
Reliance Industries (RIL) rose 1.89%. As per recent reports, the finance ministry has told oil ministry that RIL must deliver outstanding gas at old rate of $4.2 per million metric British thermal units (mmBtu). The Cabinet Committee on Economic Affairs (CCEA) had on 27 June 2013 approved new gas pricing formula from 1 April 2014. The price of gas as per the formula is likely to be about $8.4 mmBtu as opposed to $4.2 mmBtu currently.
IT stocks rose on renewed buying. HCL Technologies (up 0.1%), and TCS (up 2.9%), edged higher. But, Wipro fell 0.52%, with the stock reversing intraday gain.
IT major Infosys rose 1.38% ahead of its Q1 June 2013 results tomorrow, 12 July 2013. The company's Q1 results will reflect the impact of salary hike, rupee depreciation and cross-currency movements. Investors will closely watch the management commentary on demand environment. At the time of announcement of Q4 March 2013 results in April this year, Infosys had forecast 6% to 10% growth in revenue in both rupee terms and dollar terms for the year ending 31 March 2014 (FY 2014). Infosys has suspended the practice of giving EPS guidance or outlook on margins citing uncertainty in various factors.
Auto stocks were mixed. Mahindra & Mahindra (M&M) gained 0.52% after the company said that a scheduled production cut this month is unlikely to have an adverse impact on availability of vehicles in the market due to adequate inventory. M&M has announced that it would be observing 'No Production Days' at its automotive plants for a period ranging from 1 to 8 days during the remaining period of July 2013 with a view to align production with sales requirements. M&M also said that its wholly owned subsidiary viz. Mahindra Vehicle Manufacturers would also be observing 'No Production Days' for about 8 days during the remaining period of July 2013 at its plant situated at Chakan in Maharashtra.
Shares of car major Maruti Suzuki India fell 2.65% to Rs 1503.30. The company on 8 July 2013 said its production fell 25.36% to 61,668 vehicles in June 2013 over June 2012. Earlier, the company had reported 12.6% fall in total sales to 84,455 units in June 2013 over June 2012. The company's domestic sales fell 7.8% to 77,002 units in June 2013 over June 2012. Exports declined 43% to 7,453 units in June 2013 over June 2012. The company announced the monthly sales data on 1 July 2013.
Tata Motors shed 0.25%.
Two wheeler stocks gained. Bajaj Auto rose 0.94%. Hero MotoCorp gained 3.41%.
Capital goods stocks edged higher. L&T rose 2.65% to Rs 967.80. The stock turned ex-bonus today, 11 July 2013, for 1:2 bonus issue.
Among other capital goods stocks, ABB (up 1.35%), Bhel (up 0.95%), Crompton Greaves (up 2.35%), Siemens (up 1.63%) edged higher.
Thermax dropped 0.83% as the stock turned ex-dividend today, 11 July 2013, for dividend of Rs 7 per share for the year ended 31 March 2013 (FY 2013).
Bank stocks rose across the board. ICICI Bank (up 1.9%), HDFC Bank (up 2.57%) and Axis Bank (up 2.25%), edged higher.
Karur Vysya Bank shed 2.8% as the stock turned ex-dividend today, 11 July 2013, for dividend of Rs 14 per share for the year ended 31 March 2013 (FY 2013).
IndusInd Bank rose 3.29% on strong Q1 results. The bank's net profit rose 41.72% to Rs 334.84 crore on 22.14% rise in total income to Rs 2382.81 crore in Q1 June 2013 over Q1 June 2012. The bank announced Q1 results during market hours on Wednesday, 10 July 2013.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank gained by 1.27% to 2.7%.
Andhra Bank declined 4.42% as the stock turned ex-dividend today, 11 July 2013, for dividend of Rs 5 per share for the year ended 31 March 2013 (FY 2013).
HDFC edged higher after two block deals were executed in the counter on BSE. The stock was up 2.84% at Rs 852.85. A block deal of 1 lakh shares was executed at Rs 844.15 at 9:30 IST. Another block deal of 1.01 lakh shares was struck at Rs 848 at 11:05 IST.
Mining and metal stocks rose after global commodity prices rallied overnight. Sail (up 0.84%), Sesa Goa (up 5.89%), JSW Steel (up 1.38%), Jindal Steel & Power (up 1.51%), Hindustan Zinc (up 1.92%), Hindalco Industries (up 4.48%), Sterlite Industries (up 5.14%) and Sesa Goa (up 5.93%), edged higher.
Tata Steel rose 1.74%. Tata Steel said on Wednesday, 10 July 2013, its hot metal production rose 20% to 2.22 million tonnes in first quarter ended June 2013-14 (Q1 FY 2014) over Q1 FY 2013. The crude steel production rose 22% to 2.46 million tonnes in Q1 FY 2014 over Q1 FY 2013. Saleable Steel production was higher by 23% to 2.14 million tonnes in Q1 FY 2014 over Q1 FY 2013 and sales increased by 26% to 2.01 million tonnes in Q1 FY 2014 over Q1 FY 2013.
Bharti Airtel gained 3.62%. Bharti Airtel said during market hours today, 11 July 2013, that it is shocked and disappointed to receive a demand notice of Rs 650 crore from the Department of Telecommunications (DoT) pertaining to the service of Subscriber Local Dialing (SLD) to its subscribers between 2002 and 2005. Bharti Airtel believes that the demand for penalty of Rs 650 crore is devoid of any merit and has no justification both on facts and in law. Bharti Airtel had in 2002 launched the SLD service and had fully satisfied the sector regulator on this service and its various aspects. The regulator had found this service to be customer friendly and in compliance of the licence conditions. The total revenue this SLD service generated for Bharti Airtel was a few lacs of rupees, a fact which is fully known to the DoT. Yet strangely, without as much as giving us a proper hearing, the DoT has after 8 years has issued a demand notice of Rs 650 crore in complete disregard of the natural process of justice.
The company said it is disappointed that the DoT which has the bounden duty to act rationally, has thought it fit to issue such a baseless penalty order, leaving the company with no choice, but to litigate. The company wishes the DoT was mindful of the damage such meritless demands have on investor sentiment and the frustration such actions cause to the companies engaged in vital infrastructure. The company has urged the DoT to set out a cogent policy on imposition of penalties so that the telecom companies can operate in a rational and transparent environment.
Reliance Communications (RCom) rose 0.96% after the company today, 11 July 2013, announced that it has completed securitisation of proceeds under the Rs 1200 crore ($ 200 million) intercity Fibre Agreement signed with Reliance Jio Infocomm, a telecom unit of Reliance Industries, in April 2013. The proceeds from securitisation have been utilised to repay high cost rupee debt, resulting in significant interest cost savings for RCom. The securitisation has been completed with Indian and foreign banks. Deliveries of inter city fibre links to Reliance Jio have already commenced, RCom said. The total deliveries of 1.2 lakh kms inter city fibre under the agreement are expected to be completed within the current financial year.
Sun Pharmaceutical Industries rose 1.38% at Rs 1,095.90. The stock struck a record high of Rs 1,108 in intraday today, 11 July 2013.
Dr Reddy's Lab rose 1.45% to Rs 2,291.80. The stock struck a record high of Rs 2,301 in intraday today, 11 July 2013.
Lupin gained 0.94% at Rs 866.05. The stock hit a record high of Rs 875.05 in intraday today, 11 July 2013.
Biocon fell 1.08% as the stock turned ex-dividend today, 11 July 2013, for total dividend of Rs 7.50 per share for the year ended 31 March 2013 (FY 2013).
State Trading Corporation of India (STC) declined 5.08%. The Cabinet Committee on Economic Affairs has approved the disinvestment of 1.02% stake of State Trading Corporation (STC) to make the company compliant with the public shareholding norms under the Securities Contract (Regulation) Rules (SCRR). Under these rules every listed public sector company has to maintain a public shareholding of atleast 10% of the total paid up equity capital. The Government of India (GoI) currently owns 91.02% stake in STC.
MOIL surged 4.85% after the company said it has been granted prospecting license over an area of 597.44 hectares in the Nagpur and Bhandara districts by the Maharashtra state government. MOIL said that the total area of 597.44 hectares comprises of 11 blocks located adjacent to the existing leasehold area of MOIL in Nagpur and Bhandara districts of Maharashtra. MOIL is getting this new area for the first time since its inception in 1962. The necessary grant orders have been received by the company recently according to which, 6 blocks are located in Ramtek, Saoner and Mouda Tahsils of Nagpur district and 5 blocks are located in Tumsar Tahsil of Bhandara district. Presently, the company's existing leasehold area in Maharashtra is spread over an area of 696 hectares and with the addition of the new allotment the total area shall be 1,293 hectares reflecting an increase of 86%. The total leasehold area of MOIL shall thus increase from 1798.92 hectares to 2395.92 hectares reflecting an increase of 33.18%. This is indeed a huge increase in the area held by MOIL and this will go a long way in augmenting the production of manganese ore in the country in the coming years which in turn will help to meet the demand of steel industry to a great extent, MOIL said.
With grant of prospecting licence (PL) over the new area of 597.44 hectares, some of the areas will be utilised for expansion of the existing mines and there is a possibility of opening up of at least 4 new mines. Anticipating the grant of PL, the company has earmarked a sum of Rs 250 crore for conducting geophysical studies, exploratory drilling, etc, MOIL said. After completion of preliminary studies, the company shall convert these leases to mining leases so as to start the mining operations in the coming years. However, there will be a number of statutory clearances such as environment, forest, etc., before the new mines could be started, MOIL said in a statement. The company anticipates completing all the formalities expeditiously with the active support of the relevant government agencies.
Engineers India fell 1.15%. The company said today, 11 July 2013, that the Ministry of Petroleum & Natural Gas has granted its approval to the offer involving disinvestment of 10% or 3.36 crore shares of paid-up equity share capital of the company out of its holding in the company by way of an offer for sale in the proposed offer of the company.
UltraTech Cement rose 1.48% after the company said after market hours on Wednesday, 10 July 2013, it has commissioned its clinkerisation plant of 3.3 million tonnes a year (mtpa) at Malkhed in Karnataka.
Zee Entertainment Enterprises fell 1.63% as the stock turned ex-dividend today, 11 July 2013, for dividend of Rs 2 per share for the year ended 31 March 2013 (FY 2013).
Realty stocks gained. Indiabulls Real Estate (up 12.17%), HDIL (up 2.84%), Unitech (up 3.01%) and Omaxe (up 1.73%), edged higher.
DLF rose 2.73%. The company on 6 July 2013 said it has completed the Rs 325.38-crore deal to sell 150 megawatts (MW) wind turbine project in Gujarat to Bharat Light and Power. The transaction is in line with the DLF's objective of divesting its non core assets, the company said in a statement.
Mangalore Chemicals & Fertilizers was locked at an upper circuit limit of 10% at Rs 67.85 after Zuari Fertilisers and Chemicals bought 3.5% stake in the company through a bulk deal on Wednesday, 10 July 2013, on NSE. Zuari Fertilisers and Chemicals bought 41.42 lakh shares, or 3.5% stake, in Mangalore Chemicals & Fertilizers (MCFL) at Rs 61.01 through a bulk deal on Wednesday, 10 July 2013, on NSE.
Earlier on 2 April 2013, Zuari Fertilisers and Chemicals had acquired 1.15 crore shares, 9.73% stake in MCFL. After two bulk deals, Zuari Fertilisers now holds 1.56 crore shares, or 13.22% stake in MCFL.
The move by Zuari Fertilisers to hike stake in MCFL comes a week after Deepak Fertilisers & Petrochemicals Corporation (DFPCL) acquired 2.89 crore shares, or 24.46% stake, in MCFL on 3 July 2013.
DFPCL acquired a 24.46% stake in MCFL for Rs 179 crore, becoming MCFL's largest shareholder. DFPCL, through its wholly-owned subsidiary SCM Soilfert, acquired shares in MCFL at an average price of Rs 61.75 per share through multiple block deals executed on the BSE on 3 July 2013.
After buying stake, DFPCL announced that given its considerable strengths in the fertiliser business, the investment is very strategic and a good fit with the company's business. DFPCL said it looks forward to working closely with MCFL to enhance long-term value for the shareholders of both companies.
As on 31 March 2013, Vijay Mallya's UB Group held 22% in MCFL.
European stocks mirrored gains in Asian market after US Federal Reserve Chairman Ben S. Bernanke said on Wednesday, 10 July 2013, that the world's biggest economy will continue to need stimulus. Key benchmark indices in UK, France and Germany were up by 0.61% to 1.08%.
Asian stocks rose on Thursday, 11 July 2013, after Bernanke's comment. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan rose by 0.39 % to 3.23%.
The Bank of Japan (BOJ) refrained from adding to unprecedented monetary stimulus and raised its assessment of the economy, referring to a recovery for the first time since before a record 2011 earthquake. Governor Haruhiko Kuroda's board stuck with an April pledge to expand the monetary base by 60 to 70 trillion yen ($709 billion) per year, a statement released in Tokyo today showed. The bank maintained its April forecast that prices, excluding the effect of a planned sales tax increase, will rise 1.9% in the year starting April 2015. It trimmed some other forecasts for inflation and economic growth. The BOJ now sees inflation of 0.6% in the current fiscal year and 1.3% in the following 12 months. The central bank is chasing a target of 2 percent inflation, focusing on a gauge that excludes fresh food.
South Korea's central bank on Thursday left its policy interest rate unchanged at 2.5% amid low inflation, uncertainty over the Federal Reserve's bond purchases and China's economic slowdown.
Trading in US index futures indicated that the Dow could surge 125 points at the opening bell on Thursday, 11 July 2013. US stocks ended little changed on Wednesday as investors analyzed minutes from the Fed's last meeting for signs on when the central bank might slow the pace of stimulus efforts.
Meanwhile, Brazil's central bank late Wednesday, 10 July 2013, raised the country's benchmark interest rate to 8.5% from 8%, marking the third consecutive rate increase of a half-percentage point each.
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