Key benchmark indices eked out small gains as index heavyweight and cigarette major ITC extended intraday gains in late trade and as another index heavyweight Infosys rose. The market was range bound as investors refrained from building large positions ahead of the outcome of the two-day meeting of the Federal Open Market Committee which begins today, 17 September 2013, and also ahead of the mid-quarter monetary policy review by the Reserve Bank of India (RBI) later this week. The barometer index, the S&P BSE Sensex, settled at its highest level in almost a week. The Sensex rose 61.56 points or 0.31%, off 15.07 points from the day's high and up 168.59 points from the day's low. The market breadth, indicating the overall health of the market, was negative.
The Sensex has gained 1,184.31 points or 6.36% in September 2013 so far (till 17 September 2013). The Sensex has risen 377.32 points or 1.94% in calendar 2013 so far (till 17 September 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 639.59 points or 3.13%.
Coming back to today's trade, IT stocks gained on weak rupee. Wipro jumped ahead of its entry in the 50-unit CNX Nifty next week. Some metal and mining stocks rose. Dr Reddy's Laboratories rose after the company said it will launch Azacitidine for injection 100 mg/vial, a bioequivalent generic version of VIDAZA (azacitidine for injection), in the United States in the near future. Index heavyweight and cigarette maker ITC edged higher after its hospitality arm ITC Hotels on Monday, 16 September 2013, said it has tied up with RP Group Hotels & Resorts to manage 5 hotels in India and Dubai, under ITC Hotels' 5-star 'WelcomHotel' brand and the group's mid-market to upscale 'Fortune' brand.
Shares of gold financing firms declined after the Reserve Bank of India (RBI) tightened rules for finance companies which lend against gold. Auto stocks rose on renewed buying. 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. Mahindra & Mahindra (M&M) rose for the third straight day on expectations of increase in tractor sales due to good rains this year. Capital goods pivotals saw mixed trend. Realty shares fell for the second day in a row.
In the foreign exchange market, the rupee dropped against the dollar in choppy trade. The partially convertible rupee was hovering at 63.37, weaker than its close of 62.83/84 on Monday, 16 September 2013. The rupee hit a low of 63.6450 early in the session.
The domestic currency has declined against the dollar this year due to fears that India will struggle to fund its current account gap if the US starts to wind down its easy-money policies that have fueled global liquidity in recent years. The rupee has, however, made a strong rebound after hitting record low of 68.85 in intraday deals on 28 August 2013. The recovery in the rupee materialized after new Reserve Bank of India Governor Raghuram Rajan on 4 September 2013 announced plans to bolster the financial industry and stabilize the rupee.
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Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
The S&P BSE Sensex rose 61.56 points or 0.31% to settle at 19,804.03, its highest closing level since 11 September 2013. The index rose 76.63 points at the day's high of 19,819.10 in late trade. The index declined 107.03 points at the day's low of 19,635.44 in morning trade.
The CNX Nifty was up 9.65 points or 0.17% to 5,850.20, its highest closing level since 13 September 2013. The index hit a high of 5,857.80 in intraday trade. The index hit a low of 5,804.90 in intraday trade.
The total turnover on BSE amounted to Rs 1446 crore, lower than Rs 1990.61 crore on Monday, 16 September 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,238 shares fell and 1,118 shares rose. A total of 129 shares were unchanged.
The BSE Mid-Cap index fell 0.41%. The BSE Small-Cap index shed 0.08%. Both these indices underperformed the Sensex.
The BSE IT index (up 2.15%), BSE Teck index (up 1.7%), BSE Metal index (up 0.84%), BSE Auto index (up 0.73%), BSE FMCG index (up 0.68%) outperformed the Sensex.
The BSE HealthCare index (down 0.29%), BSE Oil & Gas index (down 0.51%), BSE PSU index (down 0.64%), BSE Capital Goods (down 0.66%), BSE Consumer Durables index (down 0.75%), BSE Bankex (down 0.8%), BSE Power index (down 0.83%) and BSE Realty index (down 0.87%) underperformed the Sensex.
Among the 30-share Sensex pack, 16 stocks declined and rest of them rose.
Index heavyweight and cigarette maker ITC rose 1.34%. ITC Hotels on Monday, 16 September 2013, said it has tied up with RP Group Hotels & Resorts to manage 5 hotels in India and Dubai, under ITC Hotels' 5-star 'WelcomHotel' brand and the group's mid-market to upscale 'Fortune' brand. The tie-up has been firmed up through a Memorandum of Understanding between ITC Hotels and RP Groups Hotels & Resorts. While the two WelcomHotels are already under a management contract and will be flagged off immediately, the three Fortune hotels are a part of the signed MOU and will be launched subsequently, ITC Hotels said in a statement. As part of its expansion drive, ITC Hotels proposes to add several managed hotels to its brand portfolio, it said. On the anvil are an ITC super-premium luxury hotel in Mahabalipuram, a WelcomHotel in Jodhpur, Patna and Chandigarh and more than 30 hotels under the Fortune brand.
Reliance Industries fell 0.56% to Rs 856.80
ONGC fell 2.41%. The stock turned ex-dividend today, 17 September 2013, for final dividend of 50 paise per share for the year ended 31 March 2013.
Pharma stocks were mostly higher. Cipla rose 0.71%.
Dr Reddy's Laboratories rose 3.69% after the company announced during market hours today, 17 September 2013, that Azacitidine for injection 100 mg/vial, a bioequivalent generic version of VIDAZA (azacitidine for injection), is approved by the USFDA on 16 September 2013. The launch of product in the US market is planned in the near term, the company said. The VIDAZA brand had US sales of approximately $378.5 million for the twelve months ended July 2013, according to IMS Health data.
Ranbaxy Laboratories gained 3.1% to Rs 328.75. The company said during market hours today, 17 September 2013, that during late hours on Monday, 16 September 2013, the company received communication from the US Food and Drug Administration (USFDA) that the regulator had imposed an import alert on the company's Mohali facility. The USFDA also advised that the Mohali facility will be subject to certain terms of the Consent Decree signed in January 2012. Ranbaxy said it will review the details and will continue to fully cooperate with the USFDA and take all necessary steps to resolve the concerns at the earliest.
The USFDA had conducted inspections at Ranbaxy's Mohali facility in 2012, resulting in certain observations. The company believes that it has made further improvements at its Mohali facility since the last inspection in 2012, and remains committed to adressing all concerns of the USFDA. Ranbaxy is hopeful of an early resolution these concerns, the company said in a statement.
Ranbaxy remains fully committed to upholding the highest standards that patients, prescribers, regulators and all other stakeholders expect from the company. Ranbaxy stays firmly committed to its philosophy of 'Quality and Patients First,' it said in a statement.
Shares of Ranbaxy had tumbled 30.27% in a single trading session to settle at Rs 318.85 on Monday, 16 September 2013, after the USFDA issued an import alert against company's Mohali plant.
Pharma major Lupin rose 0.31% after the company announced after market hours on Monday, 16 September 2013 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).
Sun Pharmaceutical Industries (down 3.8%) and Wockhardt (down 10%) declined.
Fresenius Kabi Oncology surged 4.49% to Rs 133.95 after the company's promoter announced delisting offer to the public shareholders of the company. The announcement was made after market hours on Monday, 16 September 2013. Fresenius Kabi Oncology said that its promoter, Fresenius Kabi (Singapore), has made a public announcement to the public shareholders of the company in respect of the proposed acquisition and consequent delisting of the fully paid-up equity shares of the company from the BSE and the NSE.
Fresenius Kabi (Singapore) is seeking to acquire up to 3 crore shares of the company, representing 19% of the total share capital, from the public shareholders. The floor price of the reverse book-building process is fixed at Rs 116.10 per share.
Fresenius Kabi (Singapore) will announce the discovered price and its decision to accept or reject the discovered price by 28 October 2013.
Fresenius Kabi (Singapore) had announced delisting plan in April 2013. The foreign promoter had then expressed its intention to pay an indicative price of up to Rs 130 per share to acquire the shares offered to it in the delisting offer. As on 30 June 2013, Fresenius Kabi (Singapore) held 81% stake in the company.
Some metal and mining stocks rose. Jindal Steel & Power (2.23%), Hindalco Industries (up 0.84%), JSW Steel (up 1.09%), Sail (up 1.96% and Sesa Goa (up 1.64%), gained.
Auto stocks rose on renewed buying. Mahindra & Mahindra (M&M) rose for the third straight day on expectations of increase in tractor sales due to good rains this year. The stock was up 0.81%.
Among other auto stocks, Tata Motors gained 1.22%. Maruti Suzuki India rose 1.22%.
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. Bajaj Auto rose 1.08%. TVS Motor Company gained 0.74%. Hero MotoCorp fell 1.26%.
IT stocks rose on weak rupee. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. TCS (up 2.27%), and Infosys (up 1.03%), gained.
Wipro jumped 5.41% to Rs 475.35, with the stock surging ahead of its entry in the 50-unit CNX Nifty next week. Wipro becomes a part of the Nifty with effect from 27 September 2013. The IT major replaces Reliance Infrastructure in Nifty.
HCL Technologies rose 4.13%. HCL Infosystems declined 2.33%. HCL Technologies and HCL Infosystems on Monday, 16 September 2013, clarified that no proposal to merge HCL Infosystems or its systems integration and services business with HCL Technologies is under consideration. The two companies issued the clarification after media reports suggested that HCL Infosystems is working towards the goal of merging its system integration and services business with HCL Technologies. HCL Tech and HCL Infosystems have been teaming on specific opportunities in India and for this purpose the two companies have been cross selling each other's services over the last 2 years, HCL Tech said after trading hours on Monday, 16 September 2013. HCL Tech 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. HCL Technologies is a software firm.
HCL Infosystems also said that HCL Infosystems and HCL Technologies have been collaborating together under teaming agreements to address business opportunities in India. These agreements are on arms length basis in the best interest of HCL and its customers and not margin dilutive to HCL Infosystems, the company said.
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.
Zensar Technologies gained 3.86% after the company after market hours on Monday, 16 September 2013, announced a unique initiative to encourage product start-ups in India and to help take their products global. These start-ups are in the new age technology area of SMAC (Social, Mobility, Analytics and Cloud).
Dr. Ganesh Natarajan, Vice Chairman and CEO, Zensar Technologies said: "This initiative is a reiteration of our commitment to building an ecosystem for technology innovation, by helping program manage and showcase quality assured solutions from India's best start-ups."
Mr. Kumar Gaurav, Head of Consulting & SMAC Portfolio, Zensar Technologies said: "With the emergence of new technologies across the areas of Cloud, Social Media, Mobile and Analytics, organizations today are looking at integrating applications across the enterprise seamlessly, with the ability to dashboard and allow for easy anywhere-anytime accessibility. The move from systems of record to systems of engagement is now imminent. The customer is the centre of focus across the enterprise, constantly driving demand for intelligence, insights, ideas and collaboration across organizational boundaries. Digital Transformation will also focus around experience creation through a combination of efforts across customer intimacy, product innovation, organizational agility and intelligence driven processes."
Mr. Kumar added, "This initiative of partnering with SMAC product companies is in sync with our strategy of delivering integrated and innovative SMAC solutions to our clients. We are delighted to be a part of this initiative and look forward to partner with these final few SMAC product start-up companies and take their offerings across globally to our clients."
Mindtree rose 1.69% after the company after market hours on Monday, 16 September 2013, announced a partnership with SAP America to enable customers execute their Cloud strategies on SAP's cloud applications like SuccessFactors and mobile platforms.
Arun Rangaraju, Head, Package Solutions, Mindtree said: "Customers success spells success for us. They want more and more options in how they take advantage of cloud and mobility platforms to address their IT needs. Our partnership with SAP reinforces our commitment to deliver innovative solutions to our customers. This ties back to our mission to engineer meaningful technology solutions to help businesses and societies.
Redington (India) rose 1.77% to Rs 57.45 after the company said it has tied up with 3M India (3M) as a national distributor for distribution of 3M Cogent Biometric & Security systems products. This partnership with 3M will enable the company to enhance its product portfolios and would provide access to the attractive opportunity in the biometric & security systems segment though a strong and established MNC brand, Redington (India) said.
3M Corporation is a $25.3 billion diversified technology driven company known for its innovation across the world with leading positions in a broad range of important markets. 3M markets approximately 50,000 products worldwide in about 200 countries and owns more than 45 technology platforms. The 3M technology solutions expertise has been tried and tested for performance, safety, value & productivity in markets that include construction, transportation, hospitals, general industry, aerospace, railways, highways, defense, security, mining, health, oil & gas, telecom, marine and homes in India and across the globe.
Accelya Kale Solutions lost 7.68% after the stock turned ex-dividend today, 17 September 2013, for final dividend of Rs 40 per share for the year ended 31 March 2013.
Capital goods pivotals saw mixed trend. L&T shed 0.8%. Bhel rose 1.4%.
GMR Infrastructure rose 2.27% after the company said GMR Highways has signed a definitive agreement with India Infrastructure Fund (IIF) to divest 74% stake in GMR Ulundurpet Expressways (GUEL). The transaction is subject to closing conditions customary to such transactions, the company said. IIF emerged as successful bidder in buying majority stake in GUEL, which attracted strong interest from several major investors from India and abroad. This is a second major divestment in GMR's roads portfolio in less than 6 months, GMR Infrastructure said.
GUEL operates the highway stretch of about 73 km, from Tindivanam to Ulundurpet on National Highway 45 in the state of Tamil Nadu. The project commenced commercial operations in July 2009. GMR Group will receive a consideration of about Rs 222 crore for the sale of 74% equity stake.
Commenting on the development, Mr. Madhu Terdal, Group CFO of GMR Group said: "This transaction signifies GMR Group's ability to successfully implement its "Asset-Light-Asset-Right" strategy under challenging market conditions. We at GMR Group, continue to focus on creating liquidity and reducing our leveraged position, as part of the strategy of churning of assets. Divestment of this asset will also reduce the debt as on 31 August 2013, by about Rs 459 crore on a fully consolidated basis, in addition to infusing equity funds of Rs 222 crore. The GMR Group will continue to focus in adopting this approach in other businesses as well. This partnership will also strengthen the relationship with IDFC.
Mr. M. K. Sinha, Managing Partner and CEO of IDFC Alternatives said: "This investment is our first major acquisition and a step in the direction of implementing our road sector strategy of acquiring control of operational projects with proven traffic history. Given the uncertainty and delays in implementing under construction projects, we will continue our focus on acquisition of operating road assets. This investment also reinforces our desire to stick to partners with whom IDFC has proven and long standing relationships like the GMR Group and we look forward to continue working with GMR in building and operating quality infrastructure assets in India".
Realty shares fell for the second day in a row. HDIL (down 2.74%), Unitech (down 2.01%), Indiabulls Real Estate (down 1.2%), Sobha Developers (down 2.64%) edged lower. DLF rose 0.16%.
IL&FS Transportation Networks fell 2.58% on equity dilution concerns after the company said its board of directors has approved a proposal to raise upto Rs 550 crore from rights issue of equity shares. The terms and conditions of the rights issue, including the rights entitlement ratio, the issue price, issue size, record date, timing of the issue and other matters shall be decided in consultation with the lead managers to the rights issue, the company said.
Bank pivotals were mostly lower. ICICI Bank (down 0.6%), State Bank of India (down 0.89%) declined. HDFC Bank rose 0.22%.
Private sector bank Yes Bank rose 2.98% after the bank today, 17 September 2013, said it has successfully closed equivalent to $255 million by way of dual currency, multi-tenor syndicated loan facility which will be utilized for general corporate purposes and trade finance. The facility has a maturity of 1 and 2 years with majority commitments coming in the 2 year tenure bucket. The loan has been widely distributed with commitments from 11 banks representing 8 countries across US, Europe, Middle East and Australia, Yes Bank said.
On the successful completion of the transaction, Mr. Rana Kapoor, Managing Director and CEO, Yes Bank said: "This significant commitment from global banks reinforces our unique financial and business model, and further reposes faith and trust in the Yes Bank management team, despite the challenging global and Indian micro environment".
The recent RBI guidelines on offering swap facility to banks for the foreign currency borrowings at 100 basis points below the market rate will further make the landed rupee cost of these funds extremely competitive vis-vis rupee funds of equivalent maturity, Yes Bank said.
Shares of gold financing firms declined after the Reserve Bank of India (RBI) tightened rules for finance companies which lend against gold. Muthoot Finance shed 8.81% and Manappuram Finance dropped 4.92%. Magma Fincorp dropped 3%. The RBI on Monday, 16 September 2013, said lenders need to value the pledged gold at the average closing price of 22-carat gold for the preceding 30 days as quoted by the Bombay Bullion Association to arrive at the loan-to-value ratio. The ratio would remain at 60% for loans against jewellery. Currently, there is no standard method for arriving at the value of gold accepted as collateral and valuation is arbitrary and opaque, the central bank said in a notification issued late on Monday.
The central bank also streamlined the process by which lenders auction gold when a borrower defaults, saying lenders need to declare a reserve price for the pledged ornaments. Lenders would also need RBI approval to open branches exceeding 1,000. No new ones would be allowed without adequate storage facility for gold. Unbridled growth may not be in the overall interests of the concerned NBFC or the sector and there is a need for consolidation of the existing network, the central bank said.
Shares of Motilal Oswal Financial Services dropped 0.68% to Rs 73 after the company said it has an exposure of Rs 253.92 crore on the beleaguered National Spot Exchange (NSEL). The company said that the Motilal Oswal group had consolidated networth of Rs 1236.70 crore as on 30 June 2013, with no borrowings on its balance sheet.
Reliance Broadcast Network hit upper circuit of 5% at Rs 47.55 on BSE after the company said its board will consider delisting proposal on 18 September 2013. The company made the announcement after market hours on Monday, 16 September 2013.
PI Industries rose 1.3%, with the stock extending Monday's gains triggered by the company's announcement that the ceiling on investment in the company's shares by foreign institutional investors (FIIs) has been raised to 40% of the company's equity from 24% earlier.
Man Industries (India) rose 2.44% to Rs 71.30. Two block deals were executed on the counter on BSE today, 17 September 2013. One block deal of 2.5 lakh shares was executed at Rs 74 at 9:44 IST and another block deal of 2.5 lakh shares was struck at Rs 73.90 also at 9:44 IST. The company announced on Sunday, 15 September 2013, 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.
Man Industries (India) said that it is confident that the demerger will enhance value for 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.
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.
European stock markets pulled back from multi-year highs on Tuesday, 17 September 2013, ahead of the US Federal Reserve kicking of its two-day policy meeting, at which the central bank could decide to scale back its stimulus program. Key benchmark indices in UK, France and Germany were down by 0.21% to 0.36%.
UK inflation slowed in August as transport costs and prices for new autumn clothing ranges rose less than a year earlier. Consumer prices increased 2.7% from a year earlier, the least in three months, compared with 2.8% in July, the Office for National Statistics said in London.
German investor confidence rose to the highest level in more than three years, signaling optimism that Europe's largest economy will continue to grow amid a global recovery. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 49.6 in September from 42 in August. That's the highest level since April 2010.
Asian stocks fell on Tuesday, 17 September 2013, as the Federal Reserve begins a two-day policy meeting at which it is forecast to reduce the pace of its US bond buying. Key benchmark indices in China, Japan, Taiwan, Hong Kong, Indonesia and South Korea fell by 0.07% to 2.05%. Singapore's Straits Times rose 0.05%.
Trading in US index futures indicated a flat opening of US stocks on Tuesday, 17 September 2013. Most US stocks rose on Monday, 16 September 2013, after former US Treasury secretary Larry Summers removed himself from consideration to run the Federal Reserve. Summers was seen as relatively hawkish.
Investors across the globe are eyeing the two-day policy meeting of the Federal Open Market Committee (FOMC), considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC's two-day policy meeting on interest rates in the United States begins today, 17 September 2013. 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. Investors are also eyeing Fed's forward guidance on policy.
UN chemical investigators on Monday confirmed the use of sarin nerve agent in an August 21 poison gas attack outside the Syrian capital in a long-awaited report that the United States, Britain and France said proved government forces were responsible. Syria and Russia have blamed the August 21 attack on the rebels. The rebels, the United States and other Western powers blame forces loyal to Assad for the Ghouta attack. The UN confirmation of sarin gas use on August 21 comes as France, Britain and the United States agreed in Paris to seek a strong and robust UN resolution that sets binding deadlines on removal of chemical weapons. Those talks followed a weekend deal on Syria's chemical weapons reached by the United States and Russia that could avert US military action.
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