Key benchmark indices edged lower in early trade tracking weakness in Asian markets and weak closing of US markets on Friday, 30 January 2015. The barometer index, the S&P BSE Sensex was off 83.20 points or 0.29% at 29,099.75. The market breadth indicating the overall health of the market was strong.
India's fiscal deficit reached 100.2% of Budget Estimate (BE) in nine months ended December 2014 to Rs 5.32 lakh crore, highlighting tight financial position of the central government. It was 95% of BE in corresponding period last year.
Coal India edged lower. Grasim Industries declined after muted growth in Q3 net profit. Tech Mahindra advanced after strong Q3 earnings.
Asian equity markets were lower today, 2 February 2015 as data showing China's manufacturing sector remaining in a poor state dampened investors' spirit.
Meanwhile, Foreign portfolio investors sold shares worth a net Rs 771.55 crore on Friday, 30 January 2015, as per provisional data.
At 9:20 IST, the S&P BSE Sensex was down 83.20 points or 0.29% at 29,099.75. The index fell 124.85 points at the day's low of 29,058.10 in early trade. The index fell 24.38 points at the day's high of 29,158.57 in early trade.
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The CNX Nifty was down 18.05 points or 0.2% at 8,790.85. The index hit a high of 8,808.10 in intraday trade. The index hit a low of 8,777.25 in intraday trade.
The BSE Mid-Cap index was down 5.12 points or 0.05% at 10,733.47. The decline in the index was lower than the Sensex's decline in percentage terms. The BSE Small-Cap index was up 35.26 points or 0.31% at 11,364.52, outperforming the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 763 shares gained and 461 shares fell. A total of 39 shares were unchanged.
Coal India fell 2.29% at Rs 352.60. The government successfully completed divestment of 10% stake in the state-run coal major through the stock exchanges mechanism on Friday, 30 January 2015. As against the total offer size of 63.16 crore shares of Coal India, total bids received were for a quantity of 67.5 crore shares across all categories. The oversubscription to the total quantity was around 5%. The CIL disinvestment has attracted the largest ever participation by foreign institutional investors in a Government Offer for Sale (OFS), according to a statement issued by the finance ministry after trading hours on Friday, 30 January 2015. With this divestment, the Government of India's (GoI) stake in CIL would come down to 79.65%, from 89.65%. The GoI has raised Rs 22557.63 crore from the CIL disinvestment.
Grasim Industries fell 1.88% at Rs 3,809. The company's consolidated net profit rose 0.6% to Rs 334 crore on 13% growth in net revenue to Rs 8036 crore in Q3 December 2014 over Q3 December 2013. The result was announced on Saturday, 31 January 2015.
Grasim Industries' profit before interest, depreciation, and taxation (PBIDT) rose 10% to Rs 1260 crore in Q3 December 2014 over Q3 December 2013.
Grasim Industries said that the implementation of growth plans has led to a significant capacity increase in both the VSF and cement businesses. At the Greenfield VSF project at Vilayat, 99K TPA capacity has been commissioned during the year, Grasim Industries said. With acquisition of Jaypee cement units in Gujarat, the cement capacity increased by 4.8 million tonnes per annum (MTPA), it said. Cement grinding capacity of 1.4 MTPA went on-stream in Karnataka, Grasim added. 182,500 TPA caustic soda plant and 51,500 TPA epoxy plant commissioned last year are also being ramped up. Consequently, company's financial performance has been encouraging, Grasim Industries said in a statement.
Grasim Industries said that it has maintained its profit after tax (PAT) in Q3 December 2014 even after providing for additional interest and depreciation cost on the acquired cement units. The company is on track to ramp up the operations and achieve targeted efficiencies at these units as anticipated, to deliver planned profitability, Grasim Industries said in a statement.
Grasim Industries' subsidiary UltraTech Cement has entered into a definitive agreement to acquire 2 units of Jaiprakash Associates in Satna cluster having a capacity of 4.9 MTPA with 180 megawatts (MW) power plants. This will propel the cement business capacity in India from about 60 MTPA to about 65 MTPA. On completion of brownfield expansion under implementation, the domestic capacity will increase to about 71 MTPA in 2016, Grasim Industries said. The units proposed to be acquired have surplus clinker capacity to augment cement capacity by a further 1.8 to 2.5 MTPA with investments in grinding units, Grasim Industries said in a statement.
In exchange of the above business, UltraTech shall issue non-convertible debentures worth Rs 4538 crore and non-convertible preference shares worth Rs 10 lakh and shall take over Rs 626.50 crore of debt and negative working capital of Rs 160.50 crore, Grasim Industries said in a statement.
Grasim Industries said that the transaction is subject to the approval of shareholders and creditors, sanction to the scheme of arrangement by the High Courts, approval of the Competition Commission of India and other statutory approvals.
With regard to the future business outlook Grasim Industries said that the VSF sector will continue to face head winds for some more time due to the over capacity and sharp reduction in price of cotton and polyester. The slowdown in new capacity additions in China should lead to an improvement in industry utilization which augurs well for the company, Grasim said. The focus on cost optimisation will continue relentlessly, it added. The new plant at Vilayat with higher share of speciality product should help in facing the challenge, Grasim Industries said in a statement.
In cement, demand growth in the long term is likely to be over 8%, Grasim said. The key drivers will be revival of infrastructure projects supplemented by regulatory reforms and improvement in housing demand with the interest rate cut, Grasim added. The company with its existing and proposed capacity is well placed to benefit from the accelerated growth in the sector, Grasim Industries said in a statement.
With additional capacity coming on stream in both the businesses, the company will further consolidate its leadership position, Grasim said. The company is well-poised to benefit from the expected upturn in the economy, it added.
Tech Mahindra rose 3.7% at Rs 2,984.90. On a consolidated basis, Tech Mahindra's net profit rose 11.9% to Rs 805 crore on 4.8% increase in revenue to Rs 5752 crore in Q3 December 2014 over Q2 September 2014. Tech Mahindra said that net profit includes special adjustment of Rs 28.50 crore of half year ended 30 September 2014 profits of Mahindra Engineering Services (MESL) in Q3 December 2014 numbers. The Q3 result was announced after market hours on Friday, 30 January 2015.
Tech Mahindra's operating profit (earnings before interest, taxation, depreciation and amortization) {EBITDA} rose 5.7% to Rs 1160 crore in Q3 December 2014 over Q2 September 2014.
Tech Mahindra's board of directors at its meeting held today, 30 January 2015, has considered and approved for issue of one bonus equity share for every one equity share and also approved 2-for-1 stock split.
"Our continued focus on operational excellence is yielding tangible results for our stakeholders." said Vineet Nayyar, Executive Vice Chairman, Tech Mahindra.
India's fiscal deficit reached 100.2% of Budget Estimate (BE) in nine months ended December 2014 to Rs 5.32 lakh crore, highlighting tight financial position of the central government. It was 95% of BE in corresponding period last year. The rise in fiscal deficit was mainly due to subdued revenue collection. The net tax revenue collection in April-December was Rs 5.46 lakh crore 55.8% of BE, lower from 58.6% during the same period last year.
Total receipts during the nine months of FY15 was Rs 7.04 lakh crore, a 55.7% of the target, lower than 57.7% collected in corresponding period 2013-14.
Plan expenditure of the government during the period was Rs 3.53 lakh crore, 61.3% of BE and non-Plan expenditure was Rs 8.84 lakh crore or 72.4% of BE.
The government is committed to contain fiscal deficit at its targeted 4.1% of the total GDP by the end of 31 March 2015. The fall in global oil prices has helped the government curb oil subsidy to oil marketing companies. Also, the 10% stake-sale in Coal India has already netted the government Rs 22,600 crore. Moreover, the government has approved base price of Rs 3705 crore per megahertz for 3G spectrum which will fetch it Rs 17,500 crore. This combined with the proceeds from 2G spectrum sale, the government aims to net over Rs 1 lakh crore.
Meanwhile, data released by the Ministry of Statistics & Programme Implementation after trading hours on Friday, 30 January 2015, showed that the Indian economy witnessed a strong recovery in the fiscal year ended 31 March 2014 (FY 2014). Based on a new series of national accounts with revision in base year from 2004-05 to 2011-12, India's gross domestic product (GDP) expanded 6.9% in FY 2014 compared with 5.1% expansion in FY 2013. Based on the previous data, the GDP grew 4.7% in FY 2014, from 4.5% expansion in FY 2013. Changes in the base year are made every five years. The dramatic revision could shake up the way the current trajectory of India's economy is perceived both at home and abroad. It also remains to be seen if the revised data will influence the Reserve Bank of India's (RBI) future monetary policy decisions. The RBI surprised financial markets by announcing a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled monetary policy review on 15 January 2015, citing easing of inflationary pressures in the economy. The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India rose to 5% in December 2014 from 4.4% in November 2014. Over the long term, the RBI aims to restrict consumer price inflation to 4%, within a two-per-cent band. The sixth bi-monthly monetary review from the RBI is scheduled tomorrow, 3 February 2015.
Asian equity markets were lower today, 2 February 2015 as data showing China's manufacturing sector remaining in a poor state dampened investors' spirit. Key indices in China, Hong Kong, Japan, South Korea, and Indonesia were off 0.05% to 1.3%. Key indices in Taiwan and Singapore were up 0.11% to 0.52%.
The HSBC China Manufacturing Purchasing Managers' Index, a gauge of nationwide manufacturing activity, inched up to a final reading of 49.7 in January from 49.6 in December, HSBC Holdings PLC said today, 2 February 2015. A reading below 50 indicates a contraction in manufacturing activity from the previous month, whereas a reading above indicates an expansion.
US stocks declined on Friday, 30 January 2015 with benchmarks down for a second month, after data showed US economic growth slowed sharply in the fourth quarter and Russia's central bank unexpectedly cut is benchmark interest rate. US economic growth slowed sharply in the fourth quarter as weak business spending and a wider trade deficit offset the fastest pace of consumer spending since 2006. Gross domestic product expanded at a 2.6% annual pace after the third quarter's spectacular 5% rate, the Commerce Department said in its first GDP snapshot on Friday, 30 January 2015.
Meanwhile, Russia's central bank has surprised financial markets and sent the rouble tumbling by cutting its key interest rate to soften the blows from falling oil prices and western sanctions. The main interest rate was cut to 15% from 17%, just weeks after the central bank had raised the interest rate in the hope of preventing the rouble's collapse.
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