Market snaps four-day gains

Key benchmark indices edged lower in choppy trade as weakness in European stocks and lower US index futures which indicated a decline for US stocks at the opening bell later in the global day hit sentiment on the domestic bourses adversely. The barometer index, the S&P BSE Sensex, lost 109.80 points or 0.43%, off 261.98 points from the day's high and up 108.24 points from the day's low. The BSE Mid-Cap index shed more than 1%. The market breadth indicating the overall health of the market turned positive from negative in late trade.

Indian stocks snapped four-day winning streak today, 11 June 2014. The Sensex had risen 777.86 points or 3.13% in four trading days to settle at a record closing high of 25,583.69 on Tuesday, 10 June 2014, from recent low of 24,805.83 on 4 June 2014. The Sensex has risen 1,256.55 points or 5.18% in this month so far (till 11 June 2014). The Sensex has gained 4,303.21 points or 20.32% in calendar year 2014 so far (till 11 June 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 8,025.18 points or 45.99%.

Coming back to today's trade, metal and mining stocks declined. Realty stocks tumbled. Auto stocks edged lower. But, shares of two wheeler makers gained. State Bank of India (SBI) edged higher in volatile trade and shares of its associates surged on reports that SBI is planning to merge its three listed and two unlisted associate banks with itself. Shares of power generation firms dropped. IT stocks extended their recent gains, with Tech Mahindra hitting 52-week high. Shares of public sector oil marketing companies (PSU OMCs) edged lower as crude oil prices rose.

Key benchmark indices edged higher in morning trade. A sudden slide was witnessed after the barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit record high in mid-morning trade. Key benchmark indices slipped into the red in early afternoon trade. Volatility ruled the roost in afternoon trade as fresh selling derailed an intraday recovery on the bourses triggered data showing that India's merchandise exports jumped 12.4% in May 2014. Volatility continued as key benchmark indices weakened once again after trimming losses in late trade.

The S&P BSE Sensex lost 109.80 points or 0.43% to settle at 25,473.89, its lowest closing level since 6 June 2014. The index fell 218.04 points at the day's low of 25,365.65 in mid-afternoon trade. The index jumped 152.18 points at the day's high of 25,735.87 in mid-morning trade, a lifetime high for the index.

The CNX Nifty shed 29.55 points or 0.39% to settle at 7,626.85, its lowest closing level since 6 June 2014. The index hit a low of 7,589.05 in intraday trade. The index hit a high of 7,700.05 in intraday trade, a lifetime high for the index.

The BSE Mid-Cap index lost 92.96 points or 1.01% to settle at 9,118.89. The BSE Small-Cap index shed 67.41 points or 0.67% to settle at 9,950.03. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 4704 crore, higher than Rs 4696.17 crore on Tuesday, 10 June 2014.

The market breadth indicating the overall health of the market turned positive from negative in late trade. On BSE, 1,647 shares rose and 1,487 shares fell. A total of 70 shares were unchanged. Earlier, the market breadth had turned negative from positive in mid-afternoon trade.

The S&P BSE Auto index (down 0.45%), the S&P BSE FMCG index (down 1.11%), the S&P BSE Capital Goods index (down 1.18%), the S&P BSE Oil & Gas index (down 1.84%), the S&P BSE Power index (down 2.75%), the S&P BSE Metal index (down 2.82%), the S&P BSE Consumer Durables index (down 2.99%) and the S&P BSE Realty index (down 4.21%) underperformed the Sensex.

The S&P BSE IT index (up 2.23%), the S&P BSE Teck index (up 1.25%), the S&P BSE Healthcare index (up 0.66%), the S&P BSE Bankex (up 0.06%) outperformed the Sensex.

Index heavyweight and cigarette major ITC fell 1.16% to Rs 333.45. The stock hit high of Rs 339.80 and low of Rs 331.05.

Hindustan Unilever shed 2.47% to Rs 623 as the stock turned ex-dividend today, 11 June 2014, for final dividend of Rs 7.50 per share for the year ended 31 March 2014 (FY 2014).

Reliance Industries lost 1.78% to Rs 1,097.90. The stock hit high of Rs 1,119 and low of Rs 1,093.25.

Shares of public sector oil marketing companies (PSU OMCs) edged lower as crude oil prices rose. HPCL (down 1.15% at Rs 425.40), Indian Oil Corporation (down 1.98% at Rs 352) and BPCL (down 1.67% to Rs 603.95) edged lower. Increase in crude prices could raise under-recovery of PSU OMCs on domestic sale of diesel, LPG and kerosene at government controlled prices. The government has already freed petrol pricing.

Brent oil futures for July settlement were trading 43 cents higher at $109.95 a barrel on the London-based ICE Futures Europe exchange today, 11 June 2014.

Shares of power generation firms dropped. NTPC (down 3.64% to Rs 157.50), Tata Power Company (down 5.51% to Rs 106.30), GVK Power & Infrastructure (down 4.9% to Rs 18.45), Adani Power (down 2.92% to Rs 61.55), CESC (down 2.22% to Rs 608.25), JSW Energy (down 4.25% to Rs 77.65), Reliance Infrastructure (down 4.11% to Rs 776.50), and Reliance Power (down 3.05% to Rs 106.50) declined.

L&T shed 1.31% to Rs 1,714. Shares of L&T Finance Holdings dropped 5.8% to Rs 77.20. Bids were received for a total of 8.79 crore shares at an indicative price of Rs 75.35 per share for the Offer for Sale (OFS) of L&T Finance Holdings shares till 15:30 IST, as per data from the stock exchanges. L&T, the promoter of L&T Finance Holdings, had put on block 1.65 crore shares of L&T Finance Holdings, constituting 0.96% of the equity share capital of L&T Finance Holdings, through Offer for Sale (OFS) via the stock exchanges mechanism today, 11 June 2014. L&T had said it may sell additional 1.1 crore shares of L&T Finance Holdings via the OFS. The OFS began at 9:15 IST and ended at 15:30 IST today, 11 June 2014. The floor price for the OFS was set at Rs 74 per share, a discount of 9.7% to Tuesday's closing price of the stock on BSE at Rs 81.95.

UltraTech Cement declined 1.06% to Rs 2,762. Jaiprakash Associates dropped 5.95% to Rs 83. With respect to news article titled UltraTech Cement to buy Jaiprakash Associates' Rewa cement plants, UltraTech Cement after market on Tuesday, 10 June 2014, said that the company does not comment on market speculation. Media reports said that UltraTech Cement is in talks to buy cement assets from Jaiprakash Associates, including Jaiprakash's Rewa cement-making complex in central India. UltraTech last year agreed to buy a Jaiprakash cement unit based in Gujarat.

ACC fell 1.86%. ACC after market hours informed that the Board of Directors of the Company at its meeting held today, 11 June 2014, has appointed Mr. Harish Badami as Chief Executive Officer & Managing Director (Designate) from 1 August 2014 and as Chief Executive Officer & Managing Director (CEO & MD) with effect from 13 August 2014 for a period of 5 years to succeed Mr. Kuldip Kaura, CEO & MD whose term of office was extended until 31 December 2014.

Mr. Kuldip Kaura, will demit office as CEO & MD of the Company with effect from 13 August 2014 and Mr. Badami will assume responsibility as CEO & MD of the Company. Mr. Kaura will continue to be associated with the company in the capacity of Advisor to the Board, ACC said.

India's largest commercial bank by branch network State Bank of India (SBI) rose 0.8% to Rs 2,686.10. The stock hit high of Rs 2,731.05 and low of Rs 2,662.25. With regard to a news report regarding merger of associate banks of SBI with the parent bank, SBI today, 11 June 2014, clarified that no such proposal has been formally taken up for approval. While SBI has always had plans to consider merger of the associate banks eventually, a position which has been stated by the bank from time to time since long, the matter had not been under active consideration for quite some time, SBI said. Going forward, SBI may examine the merger options afresh, when considered appropriate, but preparation of a possible roadmap would take a few months, SBI said.

Shares of three listed associate banks of SBI rallied. State Bank of Mysore advanced 10.85% to Rs 598.05 after hitting 52-week high of Rs 647.40 in intraday trade.

State Bank of Travancore surged 8.33% to Rs 652.85 after hitting 52-week high of Rs 662.90 in intraday trade.

State Bank of Bikaner and Jaipur jumped 4.54% to Rs 597.40 after hitting 52-week high of Rs 660 in intraday trade.

All these three banks in their own clarification issued separately said today, 11 June 2014, no negotiations are taking place for merger with parent SBI at the moment.

As at 31 March 2014, SBI owned 75.07% stake in State Bank of Bikaner and Jaipur, 78.91% in State Bank of Travancore and 90% in State Bank of Mysore. State Bank of Hyderabad and State Bank of Patiala are the other two unlisted associates of the SBI.

Shares of Kotak Mahindra Bank edged higher after a foreign brokerage upgraded the stock to buy from hold and increased the price target to Rs 1,080 from earlier Rs 770, after raising the bank's earnings estimates for the year ending 31 March 2015 (FY 2014) and for the year ending 31 March 2016 (FY 2016). The stock rose 2.65% at Rs 921.10. High operating leverage in banking, broking and other businesses of the bank is driving strong earnings for the bank, the brokerage has reportedly said in a note.

Auto stocks edged lower. Tata Motors (down 1.69% to Rs 444.65), Maruti Suzuki India (down 1.44% to Rs 2,430.30), Mahindra & Mahindra (M&M) (down 0.25% to Rs 1,227) and Ashok Leyland (down 3.73% to Rs 32.30) edged lower.

Shares of two wheeler makers gained. TVS Motor Company (up 1.61% to Rs 132.50), Bajaj Auto (up 1.17% to Rs 2,176), Hero MotoCorp (up 1.79% to Rs 2,710.20) edged higher.

JMT Auto rose by maximum permissible level of 5% to Rs 405.80 after the company's board at its meeting held on Tuesday, 10 June 2014, approved the issue of bonus shares in the ratio of 5:2 i.e., five bonus shares for every two shares held. The announcement was made after market hours on Tuesday, 10 June 2014.

Metal and mining stocks declined. Hindustan Zinc (down 3.45% to Rs 170.50), NMDC (down 4.06% to Rs 182.15), Hindalco Industries (down 4.48% to Rs 162.10), Sesa Sterlite (down 3.09% to Rs 291.20), Steel Authority of India (Sail) (down 4.36% to Rs 103.10), Jindal Steel & Power (down 3.45% to Rs 325), Tata Steel (down 2.24% to Rs 546.30), National Aluminium Company (down 0.71% to Rs 55.60), and Hindustan Copper (down 2.7% to Rs 117), edged lower.

JSW Steel dropped 1.94% to Rs 1,283.35. The company clarified during market hours with respect to the news articles in the media titled "JSW Steel to buy Welspun Maxsteel for Rs 1100 crore", that the company doesn't offer any comments on market rumours and speculation. However, as a long term strategy, the company will like to expand both organically by means of brownfield and greenfield expansions and inorganically by acquiring some existing assets. In that perspective, the company keeps scanning suitable opportunities, which have a strategic fit, JSW Steel said.

IT stocks extended their recent gains. Infosys (up 3.19% to Rs 3,165), Wipro (up 0.28% to Rs 526.25), TCS (up 2.08% to Rs 2,202) and HCL Technologies (up 0.69% to Rs 1,403) gained.

Tech Mahindra rose 0.53% to Rs 2,016 after hitting 52-week high of Rs 2,047.90 in intraday trade. Tech Mahindra and HPS, today, 11 June 2014, announced that they have entered into a global services alliance agreement. HPS is a market leading provider of mission-critical solutions to the cards and payments industry.

HPS' flagship PowerCARD payments technology will now be available to Tech Mahindra's customers worldwide. The alliance will enable Tech Mahindra's financial institutions and payment processing customers of all sizes to improve their cards and payment businesses by replacing legacy hardware and software with a single, flexible and cost processing effective platform.

Reliance Communications (RCom) dropped 4.66% to Rs 147.15. The company today, 11 June 2014, announced the launch of its next generation 3G services in 5 more telecom circles -- Karnataka, Andhra Pradesh, Tamil Nadu, Kerala and UP-East telecom circles thereby expanding its 3G footprint to 18 circles across the country.

Idea Cellular fell 1.76% to Rs 142.70. The company before market hours today, 11 June 2014, said that that pursuant to the resolution passed by the Board of Directors of the company at a meeting held on 1 August 2013, the Securities Allotment Committee of the board, at its meeting held on Tuesday, 10 June 2014, inter alia, has approved making of issuance of upto 5.18 crore equity shares for cash at a price of Rs 144.68 per equity share aggregating to about Rs 750 crore on a preferential basis to Axiata Investments 2 (India) (a wholly owned subsidiary of Axiata Group Berhad, Malaysia), subject to necessary approvals.

Cadila Healthcare rose 1.18%. Cadila Healthcare during market hours today, 11 June 2014, announced the finalization of previously announced agreement with Warner Chilcott Company LLC, a subsidiary of Actavis plc to settle all outstanding patent litigation related to Asacol HD delayed-release tablets. The terms of agreement are unchanged from those disclosed by the companies in December 2013.

Realty stocks reversed intraday gains. Housing Development & Infrastructure (HDIL) (down 8.43% to Rs 100.45), DLF (down 5.28% to Rs 220.85), and Anant Raj (down 1.61% to Rs 79.50) declined. Sobha Developers rose 0.89% to Rs 530.

Unitech dropped 7.11% to Rs 33.95. The stock hit high of Rs 37.90 and low of Rs 33.25. With reference to an announcement made by Unitech Corporate Parks PLC to sell its entire interest in the portfolio of 6 IT SEZ/Parks in India, Unitech announced during market hours today, 11 June 2014, that the interest of two of the affiliates of Unitech in 4 of these 6 IT SEZ/Parks stands transferred to an independent third party. These 4 SEZs are the most mature in terms of their development status, Unitech said. As part of this transaction, certain affiliates of Unitech will continue to manage and develop these assets to ensure that there is no impact on tenants and other stakeholders, Unitech said.

Aksh Optifibre rose by maximum permissible level of 5% to Rs 24.45 after the company said that its wholly owned subsidiary has commissioned a manufacturing unit in Jebel Ali Free Zone (JAFZA), Dubai, with installed capacity of 4 lakh km of Fibre Reinforced Plastic (FRP) Rods.

Gulshan Polyols surged 11.28% to Rs 187.50 after the company said it has successfully commissioned ITC's cigarette paper making plant. The announcement was made after market hours on Tuesday, 10 June 2014. Gulshan Polyols (GPL) said that in competition with various MNC vendors, ITC had awarded GPL to set up an onsite PCC (percipated calcium carbonate) plant for ITC's specialty paper division at Tribeni, West Bengal. This is the third onsite PCC plant set up by the company in India for supply of specialty PCC suitable for paper industry, GPL said in a statement.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 59.28, compared with its close of 59.29/30 on Tuesday, 10 June 2014.

India's merchandise exports jumped 12.4% to $28 billion in May 2014 over May 2013, data released by the government today, 11 June 2014, showed. Imports declined 11.41% to $39.23 billion in May 2014 over May 2013. Oil imports rose 2.5% at $14.46 billion in May 2014 over May 2013. Non-oil imports dropped 17.9% at $24.77 billion in May 2014 over May 2013.

The trade deficit declined to $11.23 billion in May 2014, from $19.37 billion in May 2013. Trade deficit for the first two months of this financial year declined to $21.32 billion, from $37.04 billion during the corresponding period in the previous year.

Industrial production is expected to register a growth of 1.7% in April 2014, as per the median estimates of a poll of economists carried out by Capital Market. The government is due to release industrial production data for April 2014 after trading hours tomorrow, 12 June 2014. Industrial production shrank for a second straight month in March 2014. Industrial production declined 0.5% in March 2014, compared with a contraction of 1.8% in February 2014.

The rate of inflation based on the combined consumer price index (CPI) for rural and urban India is seen easing at 8.4% in May 2014, from 8.59% in April 2014, as per the median estimates of a poll of economists carried out by Capital Market. The government is due to release CPI inflation for May 2014 after trading hours tomorrow, 12 June 2014. CPI inflation accelerated to 8.59% (provisional) in April 2014, from 8.31% (final) in March 2014. Core CPI which excludes food and energy prices eased to 7.8% in April 2014, from 7.81% in March 2014.

Finance Minister Arun Jaitley said on Tuesday, 10 June 2014, that the growth of the country has been below 5% in the recent years. He said that economic growth cannot be compromised at any cost. The Finance Minister said that the government is committed to bring the economy back on the track. He said that priority of the government would be to restore the economic growth, curb inflation, follow the path of fiscal consolidation and to create an environment for higher employability. The Finance Minister was making the opening remarks during his Pre-Budget consultation with economists.

Major suggestions from economists included doing away with retrospective tax amendments, removal of all kind of cess and surcharges and instead increase rate of tax if so required, removal of dividend distribution tax and introduction of inheritance tax above certain threshold limit as in case of many other capitalist countries.

The next major trigger for the market is the Union Budget for 2014-15. Jaitley is expected to table Union Budget for 2014-15 in Lok Sabha by mid-July 2014. An interim budget was presented by P. Chidambaram in February this year. Essentially, in the nature of a vote on account, the interim budget was intended to get Parliament approval for expenditure to be incurred during the first few months of fiscal year 2014-15 due to Lok Sabha elections.

European stocks fell from multiyear highs on Wednesday, 11 June 2014, after the World Bank cut its global growth forecast for 2014. Key benchmark indices in UK, Germany and France fell by 0.52% to 0.88%.

UK unemployment fell to the lowest level in more than five years as the strengthening economic recovery boosted payrolls by a record. The jobless rate dropped to 6.6% in the three months through April from 6.8% in the first quarter, the Office for National Statistics said in London today. While employment rose 345,000, the biggest increase since records began in 1971, the data also showed wage growth slowed.

Asian stocks edged higher in choppy trade on Wednesday, 11 June 2014. Key benchmark indices in China, Indonesia, Japan, Taiwan, and South Korea were up 0.08% to 0.52%. Key benchmark indices in Singapore and Hong Kong were off 0.25% each.

China will quicken interest rate liberalisation and preparations for setting up a deposit insurance system in 2014, the central bank said on Wednesday. The People's Bank of China (PBOC) reiterated elements from its 2013 annual report stating it would keep its monetary stance prudent, while still making pre-emptive moves to fine-tune policy.

Trading in US index futures indicated that the Dow could fall 58 points at the opening bell on Wednesday, 11 June 2014. Most US stocks managed small gains on Tuesday, with the Dow Jones Industrial Average closing at an all-time high.

Data showed US wholesale inventories increased 1.1% in April, more than the estimates. A separate report showed job openings rose to 4.5 million in April from 4.17 million in March.

The World Bank cut its global growth forecast amid weaker outlooks for the US, Russia and China, while calling on emerging markets to strengthen their economies before the Federal Reserve raises interest rates. The Washington-based lender predicts the world economy will expand 2.8% this year, compared with a January projection of 3.2%. The US forecast was reduced to 2.1% from 2.8% while outlooks for Brazil, Russia, India and China were also lowered. The 2015 estimate for world economic growth was unchanged at 3.4%.

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