Key benchmark indices edged lower amid volatility in early trade as mostly lower Asian stocks weighed on sentiment adversely. The barometer index, the S&P BSE Sensex, was down 18.28 points or 0.1%, up about 45 points from the day's low and off close to 20 points from the day's high. Index heavyweight and cigarette maker ITC edged lower in early trade. Another index heavyweight Reliance Industries (RIL) edged higher. The market breadth was strong. Sugar stocks jumped after the government on Thursday partially decontrolled sugar sector by giving freedom to millers to sell in the open market and removed their obligation to supply the sweetener at subsidised rates to ration shops.
FMCG major, Hindustan Unilever gained after the company entered into a Share Purchase Agreement with the promoters of Aquagel Chemicals Private (ACPL) for acquisition of remaining 74% of the equity share capital of ACPL. DLF gained after the company's shareholders approved allotting equity shares through institutional placement program (IPP). Essar Oil (EOL) jumped after the company completed the process for exiting the Corporate Debt Restructuring (CDR) loan facility set up in December 2004 to help cover the construction of its Vadinar refinery in Gujarat.
The market sentiment was affected adversely by data showing that foreign funds remained net sellers of Indian stocks on Thursday, 4 April 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 326.21 crore on Thursday, 4 April 2013, as per provisional data from the stock exchanges.
At 9:30 IST, the S&P BSE Sensex was down 18.28 points or 0.1% to 18,491.42. The index fell 63.17 points at the day's low of 18,446.53 in early trade. The index rose 2.62 points at the day's high of 18,512.32 in early trade.
The CNX Nifty was down 9.50 points or 0.17% to 5,565.25. The index hit a low of 5,557.50 in intraday trade. The index hit a high of 5,577.30 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 674 shares rose and 337 shares fell. A total of 53 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks gained while rest of them fell.
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Index heavyweight Reliance Industries (RIL) gained 0.78% at Rs 772.70. Shares of Reliance Communications rose 1.44%. Reliance Jio Infocomm and Reliance Communications (RCom) on Tuesday, 2 April 2013, announced the signing of a definitive agreement for approximately Rs 1200 crore as one time indefeasible right to use (IRU) fees for sharing RCom's nationwide inter-city fiber optic network infrastructure. Reliance Jio Infocomm will utilize multiple fiber pairs across RCom's 1.2 lakh kilometres inter-city fiber optic network to provide a robust and future proof backbone for rolling out its state-of-the-art 4G services. As per the agreement, RCom will in turn have reciprocal access to optic fiber infrastructure to be built by Reliance Jio Infocomm in the future.
The agreement provides for joint working arrangements to be put in place immediately for upgradation of the optic fiber network, to ensure seamless delivery of next generation services.
Index heavyweight and cigarette major ITC declined 1.93% to Rs 294 on profit booking. The stock had hit a record high of Rs 310.75 on 4 February 2013. The government raised the excise duty on cigarettes by about 18% on all cigarettes except cigarettes of length not exceeding 65 mm in Union Budget 2013-14, which was unveiled on 28 February 2013.
FMCG major, Hindustan Unilever gained 0.61% after the company said before market hours today, 5 April 2013 that the company has entered into a Share Purchase Agreement with the promoters of Aquagel Chemicals Private (ACPL) for acquisition of 74% of the equity share capital of ACPL. The company was earlier holding an investment to the extent of 26% of the equity share capital of ACPL. Consequent to the acquisition of remaining 74% of the equity share capital, ACPL has become a wholly owned subsidiary of Hindustan Unilever with effect from 1 April 2013.
DLF gained 1.47% after the company announced after market hours on Thursday, 4 April 2013, that its shareholders have approved allotting equity shares through institutional placement program (IPP).
Separately, DLF announced before market hours today, 5 April 2013, that a definite agreement has been entered between the company's wholly-owned subsidiary DLF Home Developers (DHDL) and Tulip Renewable Powertech (Tulip). Accordingly, DHDL's Tamil Nadu wind mill undertaking of 34.5 megawatts (MW) capacity including related assets and liabilities (including current assets and liabilities) and relevant long term loans of the said undertaking, has been transferred by DHDL to Tulip as is where is basis by way of slump sale for lump sum consideration of Rs 188.70 crore.
DLF further added that a definitive agreement has been entered between company's wholly-owned subsidiary DLF Home Developers (DHDL) and Violet Green Power (Violet) for sale of DHDL's Rajasthan wind mill undertaking of 33 MW capacity as is where is basis by way of slump sale for lump sum consideration of Rs 52.2 crore. Subject to the fulfilment of the terms and conditions and requisite regulatory approvals by both the parties in accordance with the said agreement, related assets and liabilities (including current assets and liabilities) of the said undertaking along with relevant long term loans will be transferred to Violet. DLF said the transactions are in line with the DLF's objective of divesting its non core assets.
Sugar stocks jumped after the government on Thursday partially decontrolled sugar sector by giving freedom to millers to sell in the open market and removed their obligation to supply the sweetener at subsidised rates to ration shops. Triveni Engineering & Industries, Dwarikesh Sugar, Bajaj Hindusthan, Balrampur Chini Mills and Shree Renuka Sugars jumped by 7.4% to 10.14%.
The government has taken steps to remove curbs on domestic sugar supplies after months of debate as the world's second-biggest producer hopes to iron out sharp swings in output that have triggered volatility in global prices. India, the biggest sugar consumer, will no longer force mills to sell sugar to the government at a discount and will not limit the amount they can sell in the open market, Food Minister K.V. Thomas was quoted by media as saying on Thursday after the cabinet agreed the changes.
Essar Oil (EOL) jumped 4.96% after the company said after market hours on Thursday, 4 April 2013 that it has completed the process for exiting the Corporate Debt Restructuring (CDR) loan facility set up in December 2004 to help cover the construction of its Vadinar refinery in Gujarat. The CDR loan facility has been replaced with a new debt facility of about Rs 9100 crore on commercial terms from similar group of lenders.
Mr Lalit Gupta, Essar Oil Managing Director and Chief Executive Officer, said, "The CDR exit marks a significant step forward for Essar Oil. Complete stabilising of our expanded capacity pave the way for us to move forward positively to maximize value for all our stakeholders. Capacity expansion and high complexity has already improved our profitability."
Mr Suresh Jain, Chief Financial Officer, Essar Oil, said, "We are thankful to our lenders for their continued faith in us. The CDR exit will lead to greater operational and financial flexibility for the organization. We have begun the process of swapping our costly rupee debt with cheaper dollar loans that will lower our interest cost significantly, improve our cash flow, and strengthen the balance sheet."
In addition, as part of dollarization of its rupee term debt, EOL has refinanced Rs 2611 crore of rupee term loans into equivalent foreign currency debt of $481 million through ECBs / swaps. This will help in reduction of long-term interest cost. The company had received RBI approval of $2.27 billion to replace its high cost rupee debt with ECBs, and now with the CDR exit, the company will be able to refinance the remaining rupee loans to ECB.
Vadinar refinery, which commenced commercial production in May 2008 with a capacity of 10.5 million metric tonnes per year (220,000 barrels per day) and complexity of 6.1, now has a capacity of 20 mmtpa, or 405,000 bpd and complexity of 11.8. This makes the fully integrated refinery India's second largest single location refinery and amongst the most complex globally. With increased complexity, Essar Oil is able to take over 85% of ultra heavy and heavy crude in its crude diet and yet produce higher grade products like Euro IV and Euro V compliant gasoline and gasoil to cater to the domestic and international markets.
The Q4 March 2013 corporate earnings season will begin around mid-April 2013. Infosys announces Q4 results on 12 April 2013. IndusInd Bank announces Q2 results on 18 April 2013. Cairn India announces Q4 results on 22 April 2013. HDFC Bank announces Q4 results on 23 April 2013. Axis Bank will announce its Q4 March 2013 results on 24 April 2013. ICICI Bank announces Q4 results on 26 April 2013.
The Reserve Bank of India (RBI) will announce the Monetary Policy Statement 2013-14 on 3 May 2013. The RBI cut its key policy rate viz. the repo rate by 25 basis points to 7.5% after a mid-quarter monetary policy review on 19 March 2013. The key macroeconomic priorities are to raise the growth rate, restrain inflation pressures and mitigate the vulnerability of the external sector, RBI said at that time. Even as the policy stance emphasises addressing the growth risks, the headroom for further monetary easing remains quite limited, the RBI said. The RBI said it will continue to actively manage liquidity through various instruments, including open market operations (OMO), so as to ensure adequate flow of credit to productive sectors of the economy.
The upside on the bourses may be capped as reduction of promoter stake to meet the Securities & Exchange Board of India (Sebi) mandated minimum public shareholding of 25% for private companies and 10% for state-run firms will result in supply of equity in the market over the next few months. As per the Sebi mandated minimum public shareholding rule, private-sector companies must cut founders' stake to adhere to the rules by 30 June 2013, while the deadline for state-run firms is 31 August 2013. PSU divestment will also add to share sale glut in FY 2014. The government has set a target of Rs 40000 crore from divestment of government stake in state-run firms and Rs 14000 crore from divestment of stake in non-government companies for FY 2014.
The India Meteorological Department will issue its first forecast of 2013 southwest monsoon in this month.
The second half of the Budget session of the Parliament begins on 22 April 2013. The Budget Session of the Parliament ends on 10 May 2013. The government has lined up a number of key bills for consideration and passing during the Budget session of the parliament, which include The Forward Contracts (Regulation) Amendment Bill, 2010, The Pension Fund Regulator and Development Authority Bill, 2011, The Land Acquisition, Rehabilitation and Resettlement Bill, 2011, The National Food Security Bill, 2011 and The Insurance Laws (Amendment) Bill, 2008.
Assembly elections will be held in Karnataka on 5 May 2013 and the counting of votes and results of the election will be declared on 8 May 2013.
Most Asian stocks fell on Friday. Key benchmark indices in Hong Kong, Singapore and South Korea fell by 0.27% to 2.38%. Indonesia's Jakarta Composite rose 0.35%. Markets in China and Taiwan remain closed for a holiday.
Japan's Nikkei Average jumped 3.69%. The Bank of Japan yesterday boosted its stimulus program, saying it will double the monetary base within two years.
U.S. stocks rose on Thursday as cheer over Japan's monetary stimulus overcame resistance that came as U.S. jobless claims climbed to a four-month high. The Labor Department reported that those filing for state unemployment benefits rose by 28,000 to a seasonally adjusted 385,000, the highest number since November and more than expected. The data came ahead of Friday's monthly nonfarm-payrolls report and after data Wednesday showed the economy created just 158,000 private-sector jobs in March.
In Europe, European Central Bank (ECB) President Mario Draghi yesterday signaled the ECB will keep monetary policy loose for an extended period and that further easing is possible if economic conditions deteriorate. ECB has left its main interest rate unchanged at the historic low of 0.75%.
The Bank of England has decided not to restart its bond-buying programme this month amid mixed signals on the health of the fragile UK economy. In a widely expected move, the Monetary Policy Committee on Thursday kept the stock of asset purchases in its quantitative easing programme on hold at 375bn. It also kept the BoE interest rate at an all-time low of 0.5%.
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