Key benchmark indices slumped after minutes from the Federal Reserve's last meeting signaled US stimulus may be reduced in coming months. 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. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest level in more than a week. The Nifty settled at a tad below the psychological 6,000 mark, having swung alternately above and below that mark in late trade. The Sensex tanked 406.08 points or 1.97%, up close to 40 points from the day's low and off about 350 points from the day's high. The market breadth, indicating the overall health of the market, was weak. In the foreign exchange market, the rupee edged lower against the dollar due to broad dollar gains after minutes from the US Federal Reserve's October policy meeting showed the US central bank considering an imminent slowing of its bond-buying program.
Indian stocks fell for the second day in a row today, 21 November 2013. From a recent high of 20,890.82 on 19 November 2013, the Sensex has lost 661.77 points or 3.16% in two trading sessions. The index has fallen 935.47 points or 4.41% in November so far (till 21 November 2013). The Sensex has garnered 802.34 points or 4.13% in calendar 2013 so far (till 21 November 2013). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 2,780.34 points or 15.93%. From a record high of 21,321.53 on 3 November 2013, the Sensex has fallen 1,092.48 points or 5.12%.
Coming back to today's trade, index heavyweight and cigarette major ITC edged lower in choppy trade. IT major and index heavyweight Infosys trimmed intraday losses in late trade. Index heavyweight Reliance Industries (RIL) extended intraday losses in late trade. Future Retail slumped after the National Stock Exchange after trading hours on Wednesday, 20 November 2013, said it would exclude the company from its derivatives segment. Kirloskar Oil Engines jumped after four block deals were executed on the scrip on BSE.
The S&P BSE Sensex lost 406.08 points or 1.97% to settle at 20,229.05, its lowest closing level since 13 November 2013. The index lost 445.90 points at the day's low of 20,189.23 in mid-afternoon trade. The index fell 55.87 points at the day's high of 20,579.26 in opening trade.
The CNX Nifty shed 123.85 points or 2.02% to 5,999.05, its lowest closing level since 13 November 2013. The index hit a low of 5,985.40 and a high of 6,097.35 in intraday trade.
The BSE Mid-Cap index fell 1.18%. The BSE Small-Cap index declined 0.91%. Both the indices outperformed the Sensex.
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The BSE Bankex (down 2.49%), BSE Capital Goods index (down 2.37%), BSE Realty index (down 2.29%), BSE Power index (down 2.06%), and BSE PSU index (down 2%) underperformed the Sensex.
The BSE Auto index (down 0.96%), BSE HealthCare index (down 1.27%), BSE Consumer Durables index (down 1.38%), BSE IT index (down 1.59%), BSE Teck index (down 1.66%), BSE Oil & Gas index (down 1.7%), BSE Metal index (up 1.79%), and BSE FMCG index (down 1.87%), outperformed the Sensex.
The total turnover on BSE amounted to Rs 1803 crore, lower than Rs 2137 crore on Wednesday, 20 November 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,552 shares declined and 922 shares gained. A total of 137 shares were unchanged.
Index heavyweight and cigarette major ITC fell 2.29% to Rs 313.60. The stock hit high of Rs 320.25 and low of Rs 311.10.
Index heavyweight Reliance Industries (RIL) lost 1.86% to Rs 847.45, with the stock extending fall in late trade. The stock hit high of Rs 861 and low of Rs 845.25.
Bank pivotals declined. HDFC Bank fell 1.65%.
ICICI Bank fell 1.8%. ICICI Bank early this week said that the bank acting through its Dubai branch, priced an issuance of 5.5 year fixed rate notes of an aggregate principal amount of $750 million. The notes were sold under the Rule 144A/Reg S format. The notes carry a coupon of 4.8% and were offered at an issue price of 99.609.
State Bank of India slipped 1.7%
Capital goods pivotals dropped. Bhel (down 2.59%) and L&T (down 2.83%) declined.
Pharmaceutical stocks dropped. Cipla fell 1.41%. The company during market hours said that Meditab Holdings (MHL), a wholly owned step down subsidiary of the company, has acquired an additional 14.5% stake in Quality Chemical Industries (QCIL), Uganda for a consideration of $15 million. MHL was earlier holding 36.55% stake in QCIL. Consequent to the acquisition of aforesaid additional stake, MHL now holds 51.05% stake in QCIL. QCIL's principal activity is manufacturing and selling of pharmaceutical drugs with emphasis on anti-retroviral (ARV's) and anti-malarial drugs. QCIL has a WHO approved manufacturing facility in Uganda.
Ranbaxy Laboratories (Ranbaxy) dropped 1.82%.
Wyeth rose 2.65%, with the stock extending Wednesday's 20% rally. Shares of Pfizer rose 1.13%. Wyeth and Pfizer before market hours on Wednesday, 20 November 2013, said that the board of directors of the two companies will meet on Saturday, 23 November 2013 to consider merger proposal. While, globally Pfizer and Wyeth are single entities, they operate as separate entities in India.
Many other pharma shares declined. Dr Reddy's Laboratories (down 0.78%), Sun Pharmaceutical Industries (down 2.63%), Lupin (down 1.46%), and Glenmark Pharmaceuticals (down 1.08%) declined.
Sterling Biotech was locked at 20% upper circuit at Rs 8.89 on BSE after the company said that at the meeting of the holders of the existing bonds held on Wednesday, 20 November 2013, the bond holders have passed and approved, amongst others, the extraordinary resolution to approve exchange and substitution of the existing bonds with and for the Zero Coupon Convertible Bonds due 2018 and the terms and conditions thereof. The bond holders have also agreed and approved that the conversion price of the Bonds due 2018 shall be Rs 60 per share, subject to Reserve Bank of India, Foreign Investment Promotion Board and such other regulatory approvals, if any, as may be required. The bond holders have also approved and agreed to suspend all litigations in India and UK till January 2014 and they had also agreed to withdraw the litigations in India and UK on completion of the exchange and substitution of the existing bonds with and for the Zero Coupon Convertible Bonds due 2018, Sterling Biotech said after trading hours on Wednesday, 20 November 2013.
Auto stocks dropped across the board. Tata Motors fell 0.83%. Tata Motors' British luxury car unit Jaguar Land Rover (JLR) on Wednesday, 20 November 2013, said it will enhance its research and product development on future vehicle infotainment technologies through a new collaboration with Intel and the opening of a new Technology R&D centre in Portland, Oregon. JLR's new research facility on the West Coast will help lead the development of future vehicle infotainment systems and will be responsible for collaborative work with a number of technology partners, JLR said in a statement. The location of the centre has been chosen for its proximity to the technology industry hubs in Silicon Valley and Seattle, where JLR has been developing collaborative partnerships with the world's leading IT businesses and creative and technical talent.
JLR and Intel have already begun work on multiple levels across engineering, research and marketing as JLR progresses its ambitions to deliver the best in-car infotainment experience, JLR said. The close proximity of JLR's new research facility to Intel Labs is enabling a collaborative relationship on research projects, JLR said. Multiple programs are underway to explore and develop next-generation digital vehicle prototypes with in-vehicle cockpit experiences that connect car, device and cloud. The insights gained from the research programs along with alignment on engineering efforts will speed development on new innovative in-vehicle experiences, JLR said.
Dr Wolfgang Ziebart, Jaguar Land Rover Engineering Director, said: "Our aim is to innovate and develop the ultimate user experience for our customers and by taking a collaborative approach with both technology start-ups and large organisations such as Intel, we will push the boundaries of future infotainment technology. Working with Intel will help both partners define and develop platforms and systems appropriate for premium global brands like Jaguar and Land Rover. This will ultimately develop unique and innovative technologies that will continue to drive the appeal of our products. Our research and the partnerships we are developing in the US will help us ensure our new products remain innovative and globally competitive."
Elliot Garbus, vice president and general manager, Automotive Solutions Division, Intel Corporation, said: "Consumers expect their in-vehicle experiences to be an integrated part of their digitally connected lifestyle; this requires enhanced levels of connectivity and intelligence in the car. As part of our work with Jaguar Land Rover, we are exploring innovative ways to inform, entertain and assist drivers and passengers in a safe way; speeding development of unique experiences from the car to the cloud. Our goal is to accelerate opportunities for new types of in-vehicle services and applications in the Internet of Things."
Maruti Suzuki India declined 0.19%. M&M dropped 0.88%. Ashok Leyland fell 1.6%.
Shares of two-wheeler makers declined. Hero MotoCorp (down 0.98%) and Bajaj Auto (down 2.04%), fell.
IT stocks edged lower. TCS (down 1.69%), HCL Technologies (down 2.12%), and Wipro (down 0.99%), declined.
IT major and index heavyweight Infosys lost 1.28% to Rs 3,359. The stock hit high of Rs 3,402 and low of Rs 3,316.05. The stock had hit a 52-week high of Rs 3,447.90 in intraday trade on 19 November 2013.
Zensar Technologies declined 0.57%. Zensar Technologies today, 21 November 2013, announced an end-to-end suite of multivendor support service (MVS) offerings, which will help enterprise customers accelerate how they monitor, identify and remedy issues in server, storage and networking environments.
Commenting on the development, Vivek Gupta, Chief Executive, Zensar Global IM Services said, "Zensar has expanded its suite of multivendor support services beyond hardware break-fix to include infrastructure monitoring as well as the migration of IT infrastructure to hybrid cloud. Today Zensar is able to provide MVS services with a global SLA and single point of contact across our client's entire infrastructure stack".
Metal shares edged lower as a preliminary gauge showed that China's manufacturing activity decelerated this month. China is the world's largest consumer of copper and aluminum. JSW Steel (down 1.04%), Jindal Steel & Power (down 2.54%), Hindalco Industries (down 1.28%), Sesa Sterlite (down 3.91%) and Tata Steel (down 0.62%) declined.
Jet Airways (India) fell in choppy trade after Wednesday's small gain triggered by the company's board approving issue and allotment of shares on preferential basis to Abu Dhabi based Etihad Airways, thereby giving Etihad 24% equity in the Indian private carrier. The stock declined 0.11%. Jet Airways (India)'s board of directors at its meeting held on Wednesday, 20 November 2013, approved the issue and allotment of 2.72 crore shares at Rs 754.7361607 per share to Abu Dhabi based Etihad Airways on a preferential basis in terms of the investment agreement entered between Etihad and the company on 24 April 2013 and amendments thereto and pursuant to the approval of the shareholders on 24 May 2013 by way of special resolution. The announcement was made during trading hours on Wednesday, 20 November 2013. Jet Airways will mop up Rs 2057.66 crore from the preferential allotment of shares to Etihad. Etihad will hold 24% of the post issue paid up share capital of the company, Jet Airways (India) said.
Jet Airways (India) also said that at a board meeting held on Wednesday, 20 November 2013, Mr. James Hogan and Mr. James Rigney, both nominees of Etihad Airways PJSC, have been appointed as additional directors on the board of the Jet Airways (India).
Jet Airways Chairman Mr. Naresh Goyal said that together with Etihad Airways, Jet Airways would enhance connectivity for tourists, business travellers, Indian families and the wider travelling public. Mr. James Hogan, President and Chief Executive Officer, Etihad Airways said that through their association, Etihad Airways and Jet Airways will, both, be strengthened, as will the economies of India and the UAE. Mr. Goyal and Mr. Hogan confirmed that the collaboration between the airlines would commence immediately with a view to delivering network and service benefits to customers as soon as possible.
Meanwhile, Jet Airways (India) after market hours on Wednesday, 20 November 2013 said that the board of directors of the company has approved the sale of the Jet Privilege Frequent Flyer Programme business of the company to its subsidiary, Jet Privilege as a going concern on a slump sale basis. The company and Etihad Airways PJSC have also agreed to make equity investment in Jet Privilege following which Jet Privilege will become 50.1% owned by Etihad Airways PJSC (with Jet Airways holding approximately 49.9%). The consummation of the transaction is subject to the approval of the Competition Commission of India and will only be effected after receipt of such approval, Jet Airways said.
Realty shares declined. DLF (down 3.23%), HDIL (down 3.82%), Unitech (down 1.16%), and D B Realty (down 2.54%) declined.
Bombay Dyeing & Manufacturing Company rose 0.5% after the company announced that the Bombay High Court on Wednesday, 20 November, 2013, passed an order upholding the petition filed by the company permitting it to handover 66,651 square meter (sq. m) land to MCGM and MHADA at a single location in its Spring Mills plot now known as Island City Centre at Wadala. As a part of its development plans, the company was required to handover 52,331.55 sq. m at Wadala and 12,823.39 at Lower Parel to the two agencies. It had prayed, in a petition that it be allowed to submit the land at one location in Wadala instead of separately at its mill lands in Lower Parel and Wadala under the Integrated Development Scheme for Textile Mills as provided under Section 58 of DCR.
Commenting on the decision, a company spokesperson stated, "We welcome the decision by the Honourable court. I am pleased that we can now move forward with our development plans by handing over the requisite land to MHADA and MCGM. This paves the way for planned world class developments for the city of Mumbai and our customers."
Bombay Realty, a division of Bombay Dyeing is working on an Integrated Development Scheme at Wadala. It has already delivered Springs, a luxury 40 storey residential tower and is currently developing two more world-class premium residential towers at Wadala site called Island City Centre. The Lower Parel situated Bombay Dyeing Mill land is also to be commercially developed, the company said in a statement.
SKS Microfinance rose 1.49% after the company announced that the Reserve Bank of India (RBI) has classified the company as non-banking financial company-micro finance institution (NBFC-MFI) (non-deposit taking) from its existing status of non-banking financial company (non-deposit taking) systematically important (NBFC-ND-SI), effective from 18 November 2013. The announcement was made after market hours on Wednesday, 20 November 2013.
Future Retail extended initial losses after the National Stock Exchange after trading hours on Wednesday, 20 November 2013, said it would exclude the company from its derivatives segment. The stock lost 7.56%. In a circular, the National Stock Exchange (NSE) said trading in futures and options (F&O) contracts of Future Retail would not be available with effect from 31 January 2014. NSE added that the existing unexpired contracts of expiry months November 2013, December 2013 and January 2014 would continue to be available for trading till their respective expiry and new strikes would also be introduced in the existing contract months.
Kirloskar Oil Engines jumped 11.08% to Rs 164.45 on high volume of 28.84 lakh shares. A block deal of 6.40 lakh shares was hit on the counter at Rs 163.50 per share at 12:37 IST on BSE today, 21 November 2013. Second block deal of 9.60 lakh shares was executed at Rs 163.50 per share at 12:37 IST on BSE today, 21 November 2013. Third block deal of 3.20 lakh shares was executed at Rs 161.85 per share at 12:38 IST on BSE today, 21 November 2013. Fourth block deal of 8.50 lakh shares was executed at Rs 163.50 per share at 15:00 IST on BSE today, 21 November 2013.
In the foreign exchange market, the rupee edged lower against the dollar due to broad dollar gains after minutes from the US Federal Reserve's October policy meeting showed the US central bank considering an imminent slowing of its bond-buying program. The partially convertible rupee was hovering at 62.93, compared with its close of 62.57/58 on Wednesday, 20 November 2013.
India will close the special concessional swap rate offered to lenders raising funds abroad on 30 November 2013, according to the text of the speech Finance Minister P. Chidambaram gave in Singapore today, 21 November 2013. The window for the foreign currency non-resident (bank), or FCNR (B), is due to close on 30 November 2013, although some banks have pushed for an extension. "Two months ago, the Reserve Bank opened a special window to attract more funds into FCNR (B), and I am happy to report that, as I speak to you today, the scheme, which will close on November 30, 2013, has received $16 billion," Chidambaram said according to a copy of his speech, released in New Delhi by the finance ministry.
Indian government bond prices dropped after minutes from the US Federal Reserve's October policy meeting showed the US central bank considering an imminent slowing of its bond-buying program. The yield on most traded federal paper, 8.28% GS 2027, was hovering at 9.0681%, higher than its close of 9.0262% on Wednesday, 20 November 2013. The yield on 10-year benchmark federal paper, 7.16% GS 2023, was hovering at 9.0773%, higher than its close of 9.0355% on Wednesday, 20 November 2013. Bond yield and bond prices are inversely related.
The annual headline inflation is expected to moderate to near 5% as there was reasonable price stability in some major commodities, the finance minister said on Thursday, 21 November 2013. P. Chidambaram made the comment in a lecture at the National University of Singapore. Government data on 14 November 2013 showed that the headline inflation had accelerated to an eight-month high of 7% in October, mainly driven by higher fuel and manufactured goods prices. Chidambaram also said the fiscal deficit target of 4.8% of gross domestic product in 2013/14 would not be breached under any circumstances.
Fitch Ratings said in a report published on Wednesday, 20 November 2013, that the spillover effects of a weaker rupee have not significantly hurt India's creditworthiness, and hence would not trigger any rating action as this point. India's ratings already incorporate both the sovereign's vulnerabilities and tolerance for volatility in global financial market conditions, Fitch said.
The rating agency said that India's economy has not lost much momentum, with both agriculture and exports remaining resilient and providing a cushion. Fitch therefore expects the economy to recover with real GDP forecast to rise 4.8% in FY 2014 (financial year ending March 2014) and 5.8% in FY 2015, compared with a 5% rise in FY 2013. The modest economic recovery, however, will continue to undermine India's banking sector, which is facing a combination of weakening asset quality, eroding profit and declining capital. Nonetheless, these factors are likely to have only a moderate effect on the banking sector's ability to supply credit to the economy. Inflation has risen only moderately, despite higher import prices stemming from the weaker rupee. The Reserve Bank of India (RBI) has also signalled that it has started to place a greater focus on capping CPI. The current account deficit is narrowing, following measures to curb gold imports, a weaker exchange rate, and softer domestic demand. Fitch forecasts the current account deficit to decline to 3.1% of GDP in FY 2014 (versus 4.8% in FY 2013). This fall, however, will not be enough to shield India from further pressures related to the eventual start of Fed tapering.
India's budget remains under pressure as the central government's (CG) fiscal deficit in the first six months of FY 2014 stood at 76% of the full-year target, Fitch said. The authorities have indicated that they are still committed to lowering the fiscal deficit to 4.8% of GDP (versus 4.9% in FY 2013). To achieve this, the CG is likely to clamp down heavily on expenditures in 2H FY 2014.
Fitch rates India at "BBB-minus", the lowest investment grade rating. It revised its outlook for the country to "stable" from "negative" in June.
European stocks dropped on Thursday, 21 November 2013, after minutes from the US Federal Reserve's latest meeting showed the central bank could start to taper its asset purchases at one of the next meetings. Data from China showing slower growth in the manufacturing sector also hampered the investing mood. Key benchmark indices in Germany and France were off 0.29% to 0.44%. UK's FTSE 100 rose 0.09%.
An index based on a survey of purchasing managers in the euro-area manufacturing industry rose to 51.5 from 51.3 in October, London-based Markit Economics said today.
German private-sector activity grew in November at its fastest rate in almost a year. Data provider Markit said Thursday a preliminary reading of its composite Purchasing Managers' Index for Germany rose to 54.3 in November from 53.2 in October, putting it further above the 50 threshold that denotes month-to-month growth. The expansion was fastest in the services sector, the index for which climbed to 54.5, while the index for manufacturing--the heart of Germany's export-driven economy--edged up to 52.5, its strongest reading in over two years. New orders taken by businesses across the economy also rose at the fastest rate in over two years.
France's economy worsened in November, a survey suggested Thursday, as activity in the private sector ended a brief period of growth to fall at the fastest rate in five months. Data provider Markit said a preliminary reading of its composite Purchasing Managers' Index for France fell to 48.5 in November, underneath the 50 threshold that denotes month-to-month growth. The index in September and October had shown gradually rising activity among manufacturers and service providers, with readings of 50.5 in both months. Incoming business fell, as did employment and firms' confidence about future activity levels. Activity fell across both the manufacturing and services industries.
Asian stocks fell on Thursday, 21 November 2013, after minutes from the Federal Reserve's last meeting signaled US stimulus may be reduced in coming months and as a preliminary gauge showed that China's manufacturing activity decelerated this month. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, Indonesia and South Korea fell by 0.04% to 1.28%. Japan's Nikkei 225 index rose 1.92%.
China manufacturing activity growth slipped to a two-month low as export orders swung to a decline, according to preliminary results from HSBC's monthly gauge of the sector, released Thursday. The "flash" version of the HSBC/Markit China manufacturing Purchasing Managers' Index eased to 50.4, compared to last month's 50.9 reading.
China may not be able to end its reliance on investment and exports for growth over the next three to five years despite plans for economic restructuring, an adviser to the central bank said on Thursday, 21 November 2013. Speaking at a financial seminar, Song Guoqing said that China's high savings rate is hindering the government's efforts to boost domestic consumption and reduce the role of exports and investment in driving growth. China's high savings rate is partly due to an aging population combined with a lack of a reliable social safety net, he noted.
The Bank of Japan kept its policy rates and asset-purchasing program unchanged Thursday, as widely expected. The decision, which came just three weeks after the central bank's previous policy statement, was unanimous. It also made no changes to its assessment of the economy, which it said "has been recovering moderately" as "exports have generally been picking up." It also cited gains for businesses' fixed investment and corporate profits.
Trading in US index futures indicated that the Dow could advance 37 points at the opening bell on Thursday, 21 November 2013. US stocks fell on Wednesday, 20 November 2013, after the minutes of the Federal Reserve's October meeting minutes signaled the central bank is on track to slow down its $85 billion a month bond bond-buying program that has boosted the equity market. Central bank policy makers "generally expected that the data would prove consistent with the committee's outlook for ongoing improvement in labor-market conditions and would thus warrant trimming the pace of purchases in coming months," according to minutes of the Federal Open Market Committee's Oct. 29-30 meeting.
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