Key benchmark indices edged higher as exit polls on Wednesday, 4 December 2013, predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and New Delhi. But, the key benchmark indices gave away a portion of the initial strong gains. The barometer index, the S&P BSE Sensex, fell below the psychological 21,000 mark, having alternately moved above and below that level in intraday trade. The Sensex was provisionally up 240.08 points or 1.16%, off close to 215 points from the day's high and up close to 20 points from the day's low. The market breadth, indicating the overall health of the market, was positive. In the foreign exchange market, the rupee strengthened past 62 against the dollar.
Indian stocks snapped two-day losing streak today, 5 December 2013.
Index heavyweight and cigarette maker ITC edged lower. Another index heavyweight Reliance Industries (RIL) edged higher. Bank shares were in demand after a foreign brokerage upgraded target prices of select bank shares. Capital goods stocks also gained.
The market surged in early trade after exit polls on Wednesday, 4 December 2013, predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and New Delhi. The Sensex hit 4-1/2-week above the psychological 21,000 mark. The 50-unit CNX Nifty hit its highest level in more than four weeks. The market trimmed initial gains in morning trade. Firmness continued on the bourses in mid-morning trade. The Sensex pared gains and hit fresh intraday low in early afternoon trade. The Sensex fell below the psychological 21,000 mark in afternoon trade.
Indian stocks edged higher today, 5 December 2013, after exit polls on Wednesday, 4 December 2013, predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and New Delhi. The state elections are considered a barometer for the national elections that are scheduled to be held before the end of May 2014. BJP's prime ministerial candidate for general elections in 2014 -- Narendra Modi -- is considered a pro-business leader.
The Bharatiya Janata Party (BJP) has emerged as the biggest winner in four key state elections, exit polls forecast on Wednesday, 4 December 2013, a possible blow to the ruling Congress ahead of a general election due next year. Assembly elections in Delhi, Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram were held over the past few weeks. The elections were marked by record high turnout in most states. Despite the gains predicted for the BJP it was unable to win a majority of seats in the capital Delhi, two polls showed. One poll suggested the race was close in Chhattisgarh. While the exact results varied from exit poll to exit poll, the general trend was clear: The ruling Congress party recorded embarrassing declines in support in Delhi as well as the western state of Rajasthan. Meanwhile voters in Madhya Pradesh and Chhattisgarh voted basically on the same lines they voted five years ago, backing the main opposition party, the BJP.
Counting of votes for assembly elections in Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan takes place on Sunday, 8 December 2013. Counting of votes for assembly elections in Mizoram takes place on 9 December 2013. The results are being closely watched by markets as a potential indicator of the mood of voters in the world's biggest democracy before the 2014 general election.
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As per provisional figures, the S&P BSE Sensex was up 240.08 points or 1.16% to 20,948.79. The index jumped 456.89 points at the day's high of 21,165.60 in early trade, its highest level since 3 November 2013. The index rose 220.49 points at the day's low of 20,929.20 in mid-afternoon trade.
The CNX Nifty was up 76.45 points or 1.24% to 6,237.40, as per provisional figures. The index hit a high of 6,300.55 in intraday trade, its highest level since 5 November 2013. The index hit a low of 6,232 in intraday trade.
The total turnover on BSE amounted to Rs 2079 crore, higher than Rs 1973.77 crore on Wednesday, 4 December 2013.
The market breadth, indicating the overall health of the market, once again turned positive from negative in late trade. On BSE, 1,268 shares gained and 1,248 shares fell. A total of 167 shares were unchanged. Earlier, the breadth had turned negative from positive in mid-afternoon trade.
From 30-share Sensex pack, 19 stocks rose and rest fell. Maruti Suzuki India (up 3.52%), Coal India (up 2.65%), and Tata Steel (up 1.76%) edged higher from the Sensex pack.
Index heavyweight and cigarette maker ITC shed 1.1% at Rs 309.80. The scrip hit high of Rs 318.05 and low of Rs 307.80.
Another index heavyweight Reliance Industries (RIL) gained 1.37%. RIL is currently producing about 10 million standard cubic metres per day (mscmd) of gas from the Krishna-Godavari basin's D6 block, off India's east coast, B. Ganguly, chief operating officer of its exploration and production business, told reporters. The current output is sharply lower from the 60 mscmd production at the end of 2010, and RIL and partner BP (BP.L) have cited geological complexities for the fall in output. The falling output has prompted the government to disallow proportionate cost recovery to RIL, leading to arbitration proceedings over the issue. The finance ministry has also asked for gas prices for RIL to be capped because it's gas production from the block is far below its supply commitment.
Bank shares were in demand after a foreign brokerage upgraded target prices of select bank shares. Kotak Mahindra Bank (up 1.67%), ICICI Bank (up 6.74%), Yes Bank (up 6.04%), HDFC Bank (up 4.45%), Union Bank of India (up 3.85%), Bank of Baroda (up 3.48%), Canara Bank (up 5.6%), IndusInd Bank (up 3.33%), Bank of India (up 2.05%), Punjab National Bank (up 1.9%), State Bank of India (up 1.59%), and Federal Bank (up 0.64%), edged higher.
The brokerage increased Bank of Baroda's target price to Rs 775 from Rs 645 and for Kotak Mahindra Bank, the target was raised to Rs 790 from Rs 762. SBI's target price was increased to Rs 2,200 from Rs 1,933. ICICI Bank's target price was raised to Rs 1,290 from Rs 1,250.
AXIS Bank rose 4.23% to Rs 1240. In its clarification to a news report that the private sector bank has initiated discussions for selling its network of credit and debit card swipe machines business, AXIS Bank today, 5 December 2013, said that the bank evaluates opportunities for various strategic initiatives on an ongoing basis. As and when any of these discussions fructify, the bank will make suitable announcements to the stock exchanges, it said. The news report said that three global payment processing giants, Global Payments, WorldPay and Total System Services (TSYS), are bidding for AXIS Bank's network of more than two lakh credit and debit card swipe machines business valued at Rs 1200 crore.
Capital goods stocks also gained. ABB (up 4.42%), Bhel (up 3.93%), Punj Lloyd (up 2.89%) and L&T (up 4.43%) gained.
Shares of state-run Power Grid Corporation (PGCIL) rose 0.16% to Rs 95.70. The company's follow-on public offer (FPO) was subscribed 2.53 times by 15:00 IST on the last day of the bidding for the FPO by institutional investors today, 5 December 2013. The FPO received bids for 199.39 crore shares till 15:00 IST today, 5 December 2013, compared with 78.70 crore shares on offer, as per NSE data.
The FPO closes tomorrow, 6 December 2013, for retail investors and employees of the company. The price band for the FPO has been set at Rs 85 to Rs 90 per share. A discount of Rs 4.50 per share on the final issue price discovered through the book-building route will be available to retail investors and eligible employees of the company.
PGCIL is issuing a total of 78.70 crore shares through the FPO, which includes 60.18 crore fresh equity shares 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 will come down to 57.89% from the present level of 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 Sep 30, 2013.
Shares of realty major Unitech edged higher in choppy trade after the company issued a clarification with regard to news reports that the company defaulted on the payment of interest on a Rs 200-crore loan it had taken from the Life Insurance Corporation (LIC). The stock rose 1.6% at Rs 15.90. The scrip hit high of Rs 16.40 and low of Rs 15.50. Unitech during trading hours today, 5 December 2013, said that due to its confidentiality agreement with the lender, the company cannot comment on the specifics of the media reports. However, the company's financial results for the relevant quarter will reflect no pendency with the said lender, Unitech said. The realty major also said it does not have any exposure to LIC Housing Finance. Shares of Unitech had tumbled 9.53% to settle at Rs 15.65 on Wednesday, 4 December 2013, on reports that the company defaulted on interest payment to LIC.
Global credit rating agency Moody's Investors Service has said that its outlook for Indian non-financial corporates is negative, reflecting macroeconomic challenges over the next 12 months. Moody's also expects heightened expectation of a scale back of quantitative easing by the Federal Reserve in 2014 to keep the rupee volatile, making the operating environment more challenging for importers and exporters. Moody's conclusions were contained in a just-released report titled, "2014 Outlook -- India Non-Financial Corporates, Weak Economy, Political Uncertainty and Quantitative-Easing Scale Back Are Biggest Risks".
Companies will also face higher borrowing costs and tight funding conditions with monetary policy likely to remain tight, the report says. Moody's could move to a stable outlook if its GDP growth expectations exceed 6%, the rupee stabilizes -- such that one-year volatility falls below 5% -- and a development and reform-focused government is formed with a strong majority after general elections in 2014.
In the foreign exchange market, the rupee edged higher against the dollar after exit polls on Wednesday, 4 December 2013, predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and New Delhi. The state elections are considered a barometer for the national elections that are scheduled to be held before the end of May 2014. BJP's prime ministerial candidate for general elections in 2014 -- Narendra Modi -- is considered a pro-business leader. The partially convertible rupee was currently hovering at 61.725, compared with its close of 62.05/06 on Wednesday, 4 December 2013.
On macro front, 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.
Global credit rating agency Moody's Investors Service has said in an update on the Indian economy that the outcome of the next general election could impact growth depending on the impact on policies and sentiments. Simultaneously, the agency which expects the Indian economy to pose a slow recovery only in the second half of 2014, has also reiterated the stable outlook for India's rating. "Moody's expects a slow economic recovery in the second half of 2014, if global growth increases while domestic inflation and interest rates decline", the agency said. Moody's added that India's investment climate and competitiveness indicators are weaker than those of similarly rated countries. "Although there have been policy efforts to induce investment in the last year, their impact may not be evident in the near term," it said.
Moody's said that downward pressure on the rating could develop if the medium-term growth and fiscal outlook weaken further; or if there is a decline in the foreign exchange reserves or the asset quality of state-owned banks or if high inflation persists, damaging the fiscal, growth and balance of payments outlook. The agency sounded a note of caution on the country's fiscal deficit saying that a low base limits the revenue-collection capacity of the government.
European stocks reversed intraday losses on Thursday, 5 December 2013, before interest-rate decisions from the European Central Bank and the Bank of England. Key benchmark indices in France, Germany and UK rose 0.11% to 0.17%.
The European Central Bank (ECB) holds its monthly monetary policy meeting today, 5 December 2013. The ECB unexpectedly cut the benchmark interest rate by a quarter-percentage point last month to a record-low 0.25% after inflation slowed in October to the least in four years.
UK's central bank -- Bank of England -- is expected to keep its key policy rate steady at 0.5% after a monetary policy review today, 5 December 2013.
Asian stocks declined on Thursday, 5 December 2013, as better-than-expected US jobs data fueled concern that the Federal Reserve will reduce its monthly bond purchases sooner than forecast. Key benchmark indices in Indonesia, Hong Kong, Japan, South Korea, Singapore, China and Taiwan shed 0.07% to 1.50%. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
Japanese Prime Minister Shinzo Abe's cabinet approved a $182 billion economic package on Thursday to pull the economy out of deflation, but doubts remain about the economic impact. The package has a headline value of 18.6 trillion yen, which is an exaggerated figure as the bulk of the package includes loans from government-backed lenders and spending by local governments that was already scheduled. The core of the package is 5.5 trillion yen in spending measures Abe ordered in October to bolster the economy ahead of a national sales-tax hike in April, and the government does not have to sell new debt to fund this spending. The measures approved on Thursday will add 1 percentage point to gross domestic product and create around 250,000 jobs, according to the Cabinet Office. The steps approved on Thursday include measures to boost competitiveness; assist women, youth and the elderly; accelerate reconstruction from the March 2011 earthquake and tsunami; and build infrastructure for the 2020 Tokyo Olympics.
Trading in US index futures indicated a flat opening of US stocks on Thursday, 5 December 2013. US stocks fell a fourth day on Wednesday, the longest slump in 10 weeks for the Standard & Poor's 500 Index, as investors weighed economic data for clues on the timing of Federal Reserve stimulus cuts amid optimism over a budget deal.
Data showed companies boosted payrolls in November by the most in a year. US companies added 215,000 jobs in November, topping estimates, a private survey showed yesterday. A separate report indicated service industries in the US expanded at a slower pace than forecast in November, showing uneven progress in the biggest part of the economy. Purchases of new US homes surged in October by the most in three decades, signaling buyers are starting to take higher mortgage rates in stride.
Investors are keeping a close watch on economic data in the United States as the Federal Reserve monitors the pace of recovery to gauge when it will begin to reduce monetary stimulus for the US economy, which has been aimed at encouraging growth. The US government will release the influential US non-farm payrolls data for November 2013 tomorrow, 6 December 2013. The Fed has said improvement in the labor market is a key factor in its policy assessment.
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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