Key benchmark indices edged lower as hawkish comments on inflation from Reserve Bank of India (RBI) Governor Raghuram Rajan triggered speculation that the central bank will raise its main lending rate viz. the repo rate at a monetary policy review next week. The latest data which showed slowdown in India's merchandise exports also weighed on sentiment. Investor sentiment was also hit adversely after global rating agency Standard & Poor's said India's ratings may be pressured if the next general elections due by May end with a hung parliament or with a government unable to push through reforms. Nevertheless, the market trimmed losses after hitting fresh intraday low in late trade. Volatility was high. The barometer index, the S&P BSE Sensex, shed 83.85 points or 0.39%, up 101.96 points from the day's low and off 44.53 points from the day's high. The market breadth, indicating the overall health of the market, was negative. Except BSE FMCG index, all the other sectoral indices on BSE were in the red.
Indian stocks fell for the second day in a row today, 11 December 2013. The Sensex has lost 155.01 points or 0.73% in two trading sessions from a recent high of 21,326.42 on 9 December 2013. The Sensex has gained 379.48 points, or 1.83% in this month so far (till 11 December 2013). The Sensex has garnered 1,744.70 points or 8.98% in calendar 2013 so far (till 11 December 2013). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,722.70 points or 21.34%. The Sensex had hit a record high of 21,483.74 on Monday, 9 December 2013.
Coming back to today's trade, index heavyweight and cigarette maker ITC rose. Most metal stocks edged lower on profit booking after recent gains. Oil & Natural Gas Corporation (ONGC) extended Tuesday's losses triggered by company's announcement that the Gujarat High Court has ruled late last month that the royalty on crude oil is to be paid on pre-discount price. Capital goods pivotals declined for the second day in a row. Among IT stocks, HCL Technologies scaled record high. Tyre stocks gained across the board on renewed buying. Shares of private sector banks edged higher in volatile trade.
The market edged lower in early trade on weak Asian stocks. A bout of volatility was witnessed as key benchmark indices trimmed losses after hitting fresh intraday low in morning trade. Weakness continued on the bourses in mid-morning trade. Key benchmark indices extended losses and hit fresh intraday low in early afternoon trade after Reserve Bank of India (RBI) Governor Raghuram Rajan said that the central bank's focus remains on controlling inflation. Key benchmark indices trimmed losses after hitting fresh intraday low in early afternoon trade. High volatility was witnessed as key benchmark indices trimmed losses after hitting fresh intraday low in afternoon trade. Immense volatility was witnessed in late trade as key benchmark indices trimmed losses after hitting fresh intraday low in late trade.
The S&P BSE Sensex lost 83.85 points or 0.39% to settle at 21,171.41, its lowest closing level since 6 December 2013. The index fell 185.81 points at the day's low of 21,069.45 in late trade. The index declined 39.32 points at the day's high of 21,215.94 in late trade.
The CNX Nifty lost 24.95 points or 0.39% to settle at 6,307.90, its lowest closing level since 6 December 2013. The index hit a low of 6,280.25 in intraday trade. The index hit a high of 6,326.60 in intraday trade.
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The total turnover on BSE amounted to Rs 1739 crore, lower than Rs 2186.07 crore on Tuesday, 10 December 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,356 shares fell and 1,134 shares rose. A total of 165 shares were unchanged.
The BSE Mid-Cap fell 0.1%, outperforming the Sensex. The BSE Small-Cap index rose 0.08%, outperforming the Sensex.
The S&P BSE FMCG index (up 0.56%), the S&P BSE Power index (down 0.24%), the S&P BSE Healthcare index (down 0.26%), the S&P BSE IT index (down 0.27%) and the S&P BSE Bankex (down 0.38%) outperformed the BSE Sensex.
The S&P BSE Teck index (down 0.41%), the S&P BSE Realty index (down 0.54%), the S&P BSE Consumer Durables index (down 0.55%), the S&P BSE Metal index (down 0.63%), the S&P BSE Oil & Gas index (down 0.86%), the S&P BSE PSU index (down 0.86%), the S&P BSE Auto index (down 1.05%) and the S&P BSE Capital Goods index (down 1.39%) underperformed the BSE Sensex.
From the 30-share Sensex pack, 17 stocks fell and rest rose.
Index heavyweight and cigarette maker ITC rose 1.18% to Rs 321.50. The stock hit high of Rs 321.70 and low of Rs 317.55.
Index heavyweight Reliance Industries (RIL) fell 0.17% at Rs 882.05. The scrip hit high of Rs 883.65 and low of Rs 872.20. Bharti Airtel fell 1.89%. Shares of Bharti Airtel's telecom tower infrastructure subsidiary -- Bharti Infratel -- rose 3.79%. Reliance Jio Infocomm, a subsidiary of Reliance Industries and Bharti Airtel on Tuesday, 10 December 2013, announced a comprehensive telecom infrastructure sharing arrangement under which they will share infrastructure created by both parties. This will include optic fibre network - inter and intra city, submarine cable networks, towers and internet broadband services and other such opportunities identified in the future, Reliance Jio Infocomm and Bharti Airtel said in a joint statement issued after trading hours on Tuesday, 10 December 2013.
The cooperation is aimed at avoiding duplication of infrastructure, wherever possible, and to preserve capital and the environment, the two companies said. This will also provide redundancy in order to ensure seamless services to customers of the respective parties, they said. The arrangement could, in future, be extended to roaming on 2G, 3G and 4G, and any other mutually benefiting areas relating to telecommunication, including but not limited to jointly laying optic fibre or other forms of infrastructure services. The pricing would be at 'arm's length', based on the prevailing market rates. As part of this arrangement, Bharti and Reliance Jio have already announced an agreement under which Bharti has provided capacity on its i2i submarine cable to Reliance Jio.
Oil & Natural Gas Corporation (ONGC) dropped 2%, with the stock extending Tuesday's losses. ONGC on Tuesday said the Gujarat High Court vide its order dated 30 November 2013 has decided that royalty on crude oil is to be paid on pre-discount price. The court has directed ONGC to make payment towards shortfall royalty for the period from April 2008 till this date, within a period of two months. ONGC said that the company is in the process of filing an appeal in the Supreme Court of India against the order of the Gujarat High Court and making the Union Government as party. The company's management has already directed Corporate Legal to engage best possible advocate for the case, ONGC said.
Meanwhile, it has been conveyed to the Ministry of Petroleum and Natural Gas from CMD, ONGC to Secretary, Petroleum and Natural Gas that in case the decision goes against the company and if ONGC is directed to deposit the royalty on pre-discount price, ONGC should be compensated by the Government of India for the differential royalty. ONGC said that it will not be in a position of bearing such a huge burden, particularly when it is of recurring nature.
Giving a background about the issue, ONGC said that the company started making payment of royalty on crude oil from 1 April 2008 at post discount price to state governments in India, in line with royalty payment to the Central Government and taking into account the provisions of Oilfields (Regulation and Development) Act, 1948 (ORDA). ONGC further said that the company paid excess royalty to the tune of Rs 3419 crore to the Gujarat state government for the period 2003-04 to 2007-08.
ONGC said that the latest ruling of the Gujarat High Court to direct ONGC to pay royalty on onshore crude production at the pre-discount price instead of the post-discount price works out to about Rs 10000 crore for the period April 2008 to September 2013 in respect of crude oil production in Gujarat alone and hence will have significant adverse impact on ONGC's financials. Further, the payment of royalty on pre-discount price is of recurring nature. Similar implications would also arise in other states like Assam, Andhra Pradesh and Tamil Nadu, where ONGC is producing crude from onshore fields.
ONGC also said that in a separate but related issue, ONGC has been asked to pay VAT on pre-discount price from 2004-05 onwards by Gujarat VAT Tribunal, against which ONGC is in the process of filing appeal in Gujarat High Court. Assam VAT authorities have also raised demand for payment of VAT on pre-discount price, which is also being addressed by ONGC, the company said in a statement.
In a separate announcement, ONGC on Tuesday, 10 December 2013, said that a memorandum of understanding (MOU) was signed between the Co-ordinating Ministry for Strategic Sectors (MICSE) of the Republic of Ecuador and ONGC Videsh on 9 December 2013 in New Delhi. ONGC Videsh has been evaluating E&P opportunities in Ecuador for last one year. Latin America is a focus area of ONGC Videsh. The MOU provides that MICSE would make available to ONGC Videsh information regarding oil and gas projects in Ecuador, which ONGC Videsh would evaluate to identify the project/projects of its interests and could propose participation in such project/projects through specific definitive agreements.
ONGC Videsh is a wholly-owned subsidiary of ONGC.
Coal India edged higher in choppy trade, with the scrip shrugging off Competition Commission of India's order slapping a penalty of Rs 1773.05 crore on the state-run coal miner. The stock rose 1.56% at Rs 289.90, also its intraday high. Earlier, the stock had lost as much as 3.68% at an intraday low of Rs 274.95 at the onset of the trading session. The Competition Commission of India has imposed the fine saying Coal India abused its dominant position and imposed unfair conditions in fuel supply agreements with customers.
Coal India after market hours said that Competition Commission of India (CCI) vide its order dated 9 December 2013 has pronounced an order against Coal India and its subsidiaries viz. Mahanadi Coalfields, Western Coalfields and South Eastern Coalfields. Coal India said that the company is seized of the matter and that the company will initiate appropriate legal action after the receipt of the copy of the order by post.
Power Grid Corporation of India (PGCIL) shed 0.81% at Rs 97.50. The company has priced its recently concluded follow-on public offer (FPO) at Rs 90 per share, the top end of the Rs 85-90 per share price band. A discount of Rs 4.50 per share has been allowed to retail investors and eligible employees on the issue price, PGCIL said on Tuesday, 10 December 2013. The FPO which was completed last week had received strong response from investors. The FPO was subscribed 6.74 times. The portion reserved for institutional investors i.e. Qualified Institutional Buyers (QIBs) was subscribed 9.09 times. Category wise subscription data showed that foreign institutional investors (FIIs) put in bids for a total of 186.93 crore shares, compared with 39.20 crore shares reserved for the QIB category as a whole.
The portion reserved for retail individual investors was subscribed 2.17 times. The portion reserved for non-institutional investors was subscribed 9.7 times.
The PGCIL FPO was a combination of fresh issue of 60.18 crore shares by the company and disinvestment by the Government of India (GoI) of 18.51 crore equity shares held by the President of India, acting through the Ministry of Power. After the successful divestment, GoI's holding in PGCIL has dropped to 57.89% from earlier 69.42%.
PGCIL, a navaratna public sector undertaking under the ministry of power, is the country's central transmission utility (CTU). The company owns and operates more than 90% of India's inter-state and interregional electric power transmission systems (ISTS). As principal electric power-transmission company of the country, it owns and operates 102109 circuit kilometers of electrical transmission lines and 172 electrical substations with a total transformation capacity of 172378 MVA as end of 30 September 2013
GVK Power & Infrastructure lost 4.07% on profit booking. The stock had surged 9.65% on Tuesday after the company said that it has relieved the Australian Federal Government's approval for its Abbot Point Port Capital Dredging programme. The announcement was made during trading hours on Tuesday, 10 December 2013.
Bharat Electronics rose 0.09%. The company during market hours said that the Negotiating Trade Unions of the company's constituent units along with the corporate office have served notices on management to go on one day token strike by all the non-executive employees on or after 11 December 2013. The matter of dispute is that the Unions are demanding early settlement of Plant Performance Incentive (PPI)/upward revision of PPI amount from the financial year 2012-13 onwards, the company said.
Private sector bank stocks reversed intraday fall in volatile trade. AXIS Bank (up 1.34%), ICICI Bank (up 0.79%), HDFC Bank (up 0.66%), Yes Bank (up 1.24%), Federal Bank (up 1%) gained.
Among PSU bank stocks, Canara Bank (down 1.68%), Union Bank of India (down 0.67%), Bank of India (down 1.41%), and Punjab National Bank (down 1.16%) dropped.
State Bank of India (SBI) dropped 2.29%. The state-run bank early this week said that the Government of India (GoI) has accorded its approval to the bank to raise Rs 9576 crore of equity during the current financial from the market by way of Qualified Institutions Placement (QIP) as per law with the condition that the Gol holding shall not come down below 58%. The GoI has also accorded its approval to SBI to increase its "Issued Capital" by Rs 11576 crore in accordance with Section 5(2) of SBI Act, 1955, subject to requisite approvals.
Oriental Bank of Commerce fell 3.07% to Rs 217.75 on profit booking after the stock jumped 18.02% in the preceding four trading sessions to Rs 224.65 on 10 December 2013, from a recent low of Rs 190.35 on 4 December 2013.
Auto stocks were mixed. Tata Motors dropped 3.12%.
M&M fell 0.18%. Maruti Suzuki India rose 0.09%
Shares of two wheeler makers also were mixed. Bajaj Auto rose 0.14%.
Hero MotoCorp dropped 1.46%. The company said during market hours that it has subscribed on 9 December 2013, to a total of 17.49 lakh equity shares of face value Rs 10 of HMC MM Auto at par, constituting around 60% shareholding in the joint venture (JV) company. HMC MM Auto has been incorporated as a joint venture between Hero MotoCorp and Magneti Marelli S.p.A. The purpose of this joint venture is to, amongst others, sell, distribute and market complete two wheeler fuel injection systems or components parts thereof, Hero MotoCorp said.
SKF India rose 1.37% after a mutual fund bought 0.97% stake in the company on Tuesday, 10 December 2013. HDFC Equity Fund bought 5.10 lakh shares or 0.97% stake at Rs 664 per share in SKF India through a bulk deal on NSE on Tuesday, 10 December 2013.
Tyre stocks gained across the board on renewed buying. Apollo Tyres (up 2.15%), CEAT (up 2.03%), Goodyear India (up 0.07%), JK Tyre & Industries (up 0.61%), MRF (up 3.14%) and TVS Srichakra (up 0.44%) gained.
Most metal stocks edged lower on profit booking after recent gains. Sail (down 2.26%), JSW Steel (down 0.81%), Tata Steel (down 0.8%), Hindalco Industries (down 1.52%), Hindustan Zinc (down 1.86%), Hindustan Copper (down 0.64%) and National Aluminum Company (down 0.65%), declined. Sesa Sterlite rose 0.13%, with the stock reversing intraday losses.
Capital goods pivotals declined for the second day in a row. Shares of state-run power equipment major Bharat Heavy Electricals shed 1.9%.
Shares of engineering and construction major L&T lost 1.48%. The company on Tuesday, 10 December 2013, said its subsidiary -- L&T Shipbuilding -- has bagged orders valued at $154 million for six specialized commercial vessels in Q3 December 2013 so far.
Suzlon Energy jumped 6.46% after the company said its wholly-owned subsidiary, REpower Systems SE, won orders to deliver 103 wind turbines in Germany. The announcement was made during trading hours today, 11 December 2013. Financial details of the deal were not disclosed.
HCL Technologies rose 1.84% to Rs 1,175.80 after hitting record high of Rs 1,180 in intraday trade.
GlaxoSmithKline Pharmaceuticals lost 1.2% to Rs 2,460. The company today, 11 December 2013, said that the trade has resumed the purchase of the company's products across the country since last week of November 2013.
United Breweries rose 1.93% to Rs 791.25 after Dutch beer maker Heineken International BV, on Tuesday, 10 December 2013, hiked its stake in United Breweries for an estimated Rs 275 crore. According to the information available with the bourses, Heineken International BV acquired a total of 35.58 lakh shares, amounting to 1.35% stake, of United Breweries through open market. The shares were purchased, from Citicorp Finance (India) on an average price of Rs 772.90, valuing the transaction at Rs 275 crore.
Realty stocks edged lower. DLF (down 1.62%), Omaxe (down 0.28%), Godrej Properties (down 1.5%), D B Realty (down 1.26%), and Unitech (down 1.27%) declined.
Shakti Pumps (India) advanced 2.6% after the company's board of directors approved issue of 15 lakh warrants to promoter and promoter group on a preferential basis. The announcement was made during market hours today, 11 December 2013.
In the foreign exchange market, the rupee edged lower against the dollar on speculation a US budget agreement will boost prospects of tapering the Federal Reserve's stimulus program. The partially convertible rupee was hovering at 61.245, compared with its close of 61.04/05 on Tuesday, 10 December 2013.
India's trade deficit declined sharply to $9.219 billion in November 2013, from $17.203 billion in November 2012, data released by the government today, 11 December 2013, showed. Merchandise exports rose 5.86% year-on-year (YoY) at $24.613 billion in November 2013. Imports declined 16.37% YoY at $33.833 billion in November 2013. Oil imports declined 1.1% to $12.964 billion. Non-oil imports dropped 23.69% at $20.868 billion.
November's 5.86% growth in merchandise exports was lower than 13.5% growth in October.
The government will unveil industrial production data for October 2013 after trading hours tomorrow, 12 December 2013. Industrial output is estimated to fall 1.5% in October 2013, as per the median estimate of a poll of economists carried out by Capital Market. Industrial production rose 2% in September 2013, showing increase in growth from 0.4% growth recorded in August 2013.
Data on inflation based on the general consumer price index (CPI) for November 2013 will also be unveiled after trading hours tomorrow, 12 December 2013. CPI (combined) for November 2013 is estimated at 10% in November 2013, as per the median estimate of a poll of economists carried out by Capital Market. The CPI inflation (combined) for October 2013 stood at 10.09% (y-o-y), higher than 9.84% (y-o-y) seen in September 2013.
The government will unveil data on inflation based on the wholesale price index (WPI) for November 2013 on 16 December 2013. WPI is seen easing a bit at 6.9% in November 2013, from 7% in October 2013, as per the median estimate of a poll of economists carried out by Capital Market.
The Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled 28 January 2014.
The focus of the Reserve Bank of India remains on inflation, Governor Raghuram Rajan said on Wednesday, 11 December 2013, adding growth seems to be stabilising, although it is too early to call a bottom. Rajan added the rupee had stabilised "somewhat", but said there is no room for complacency. He also called on the government to continue its efforts to contain the fiscal deficit and said raising subsidised diesel prices to market levels would help. "Our effort is firmly on controlling inflation," Rajan said during a speech to the Delhi Economic Conclave organised by India's Finance Ministry. "Growth is stabilising though it is too early to say it has bottomed at this point," he also said.
Rajan also reiterated the central bank would continue to focus on developing markets, adding the RBI is also keen to strengthen debt markets and introduce more products. Rajan also said the RBI would introduce measures to improve liquidity and depth in government bonds, known widely in India as G-secs. "We will roll out more measures to improve liquidity and depth of G-sec market," he said.
Rajan also said that the Reserve Bank of India will announce next weeks steps to recognise and resolve financial stresses, including making it more expensive for so-called wilful defaulters to borrow funds. The RBI defines a wilful defaulter as a borrower who is able but unwilling to pay, or one that has diverted loan proceeds for uses other than their initially stated intention. Wilful defaulters can also refer to borrowers that overstate profits in order to obtain a loan. "For wilful defaulters, or the category that we call un-cooperative defaulters, future borrowing will become more expensive," Rajan said.
Global rating agency Standard & Poor's (S&P) today, 11 December 2013, said that India's sovereign rating may come under pressure if general elections due by May next year end up with a hung parliament or with a government unable to push through reforms. S&P has a "negative" outlook on India's sovereign ratings, meaning any downgrade from its current "BBB-minus" would place the country's debt in so-called "junk."
Finance Minister P. Chidambaram today, 11 December 2013, said that the government will not compromise on fiscal prudence and will contain its fiscal deficit and narrow it to 3% of gross domestic product by the fiscal year ending in March 2017. The comments come a day after Fitch Ratings had warned the setback for the Congress party in recent state elections could imperil the fiscal deficit target by tempting the government to have less restraint on spending. The fiscal deficit target for the current fiscal year ending in March 2014 is set at 4.8% of GDP and Chidambaram has repeatedly pledged the country would meet the target. "There will be no compromise on the decision to walk on the path of fiscal prudence and contain the fiscal deficit step by step, year by year, until we the reach the goal of 3% of GDP in 2016/17," Chidambaram said. The finance minister also highlighted the government would do all it can to moderate inflation, given the RBI only has monetary policy as a "blunt tool" to contain rising food prices.
The Asian Development Bank (ADB) on Wednesday kept its growth forecast for India at 4.7% for this year, and sees the country growing at 5.7% in 2014. The Manila-based bank slightly raised its forecast for China this year and the next, aided by the impact of government reforms and better prospects for key trading partners. The bank lifted its 2013 forecast for China to 7.7%, from 7.6% in October. It now sees 2014 growth at 7.5% rather than 7.4%. However, the ADB lowered estimates for Southeast Asia this year and in 2014, in the wake of a strong typhoon in the Philippines and political uncertainties in Thailand. The bank kept its growth forecast for developing Asia at 6% this year and 6.2% next year.
On the domestic political front, the Congress party has decided to suspend from the party the six rebel Seemandhra MPs who moved a no-confidence motion against the UPA government. The party is hoping that the motion will fizzle out if action is taken against the rebel MPs. The government has also ruled out the possibility of early polls if the no-confidence motion gets the support of 50 MPs to be admitted. Six party MPs from Seemandhra region of Andhra Pradesh had pushed a no-confidence motion in Parliament on Tuesday, 10 December 2013, which is backed by the TDP and YSR Congress. However, it was not taken up in Parliament on Tuesday due to the uproar over the issue. In the no-confidence motion, they have mentioned that the UPA government has lost the faith of Seemandhra MPs. The MPs behind the move are L Rajagopal, SPY Reddy, Sabbam Hari, R Sambasivarao, Harshakumar and V Arunkumar.
Earlier, Union Tourism Minister Chiranjeevi had sent his resignation letter to Congress President Sonia Gandhi. The Centre had cleared the Telangana Bill last week. It will be sent to the Andhra Pradesh Assembly seeking its views. The views of the state assembly are not binding on the Centre. It can go ahead with the formation irrespective of what Andhra Pradesh Assembly says.
The Biju Janata Dal (BJD) and Shiv Sena amongst other parties had already said that they will support the motion while Trinamool Congress had said that the government had already lost confidence of the people and there is no need now of any such notice. On the other hand BJP is playing a waiting game and hasn't cleared its stand on the issue. The motion needs the support of 50 MPs to be admitted.
European stocks edged higher on Wednesday, 11 December 2013, as investors weighed the outlook for US monetary stimulus after US lawmakers agreed on a budget deal. Key benchmark indices in Germany, France and UK were up 0.1% to 0.61%.
Asian stocks edged lower on Wednesday, 11 December 2013, on speculation a US budget agreement will boost prospects of tapering the Federal Reserve's stimulus program. Key benchmark indices in Taiwan, South Korea, Indoensia, Singapore, China, Japan and Hong Kong were off 0.11% to 1.71%. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
Trading in US index futures indicated that the Dow could fall 10 points at the opening bell on Wednesday, 11 December 2013. US stocks fell on Tuesday as investors weighed federal budget negotiations and better-than-estimated economic data to gauge the timing of any Federal Reserve stimulus cuts. The US budget deal, worked out between chief negotiators Senator Patty Murray and Representative Paul Ryan, would set spending at about $1.01 trillion in 2014, higher than the $967 billion required in a 2011 budget accord. The deal needs to pass both chambers of Congress. A partial shutdown in October lasted for 16 days because lawmakers couldn't agree on how to fund the government.
Meanwhile, the latest data showed job openings in the US climbed to a five-year high in October, indicating employers were confident about demand even as Washington's budget impasse shuttered parts of the federal government. Another report showed wholesale trade sales and inventories increased more than economists forecast.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
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