Power generation shares nudge higher

Key benchmark indices edged lower in choppy trade after Prime Minister's Economic Advisory Council (PMEAC) sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate of 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. The market sentiment was also hit by stronger-than-expected US jobless-claims data released on Thursday, 12 September 2013, which triggered speculation that the Federal Reserve would begin trimming its monetary stimulus at next week's meeting. The BSE Sensex lost 49.12 points or 0.25%, off 166.61 points from the day's high and up 57.08 points from the day's low. The market breadth, indicating the overall health of the market, was positive.

Index heavyweight and cigarette major ITC edged lower in choppy trade. Other FMCG stocks also declined. IT stocks declined on recent strong rebound of the rupee against the dollar. 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.

State-run bank stocks were in demand. Pharma stocks rose for the second straight day. Auto stocks edged higher on fresh buying. Metal stocks also gained. Power generation stocks rose on recent reports that the power ministry has made a proposal to mix imported and locally produced natural gas and supply it to electricity producers at a subsidized price. Realty stocks extended recent gains.

Capital goods stocks edged higher on renewed buying. Sugar stocks gained after the Minister for Consumer Affairs, Food and Public Distribution K.V. Thomas on Thursday, 12 September 2013, said that the Ministry of Food in principle does not have any objection to permit further export of sugar as it will help faster clearance of cane price arrears and help the country to earn some precious foreign exchange.

In the foreign exchange market, the rupee rose against the dollar in choppy trade. The partially convertible rupee was hovering at 63.40, stronger than its close of 63.50/51 on Thursday, 12 September 2013.

The S&P BSE Sensex shed 49.12 points or 0.25% to 19,732.76, its lowest closing level since 6 September 2013. The index gained 117.49 points at the day's high of 19,899.37 in morning trade. The index fell 106.20 points at the day's low of 19,675.68 in mid-morning trade.

The CNX Nifty lost 0.10 points to 5,850.60, its lowest closing level since 6 September 2013. The index hit a high of 5,884.30 in intraday trade. The index hit a low of 5,822.90 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,355 shares gained and 1,036 shares fell. A total of 165 shares were unchanged.

The BSE Mid-Cap rose 0.57% and the BSE Small-Cap index rose 0.6%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 1839 crore, lower than Rs 2817.90 crore on Thursday, 12 September 2013.

Among the 30-share Sensex pack, 17 stocks gained and rest of them declined.

Index heavyweight and cigarette major ITC lost 1.67% to Rs 330.40. The stock was volatile. The scrip hit high of Rs 338.90 and low of Rs 329.80.

Other FMCG stocks also declined. Britannia Industries (down 0.3%), Colgate-Palmolive (India) (down 0.64%), Dabur India (down 0.18%), Godrej Consumer Products (down 2.13%), Hindustan Unilever (down 0.85%) and Marico (down 1.8%) edged lower.

State-run bank stocks were in demand. SBI (up 0.05%), Punjab National Bank (up 4.02%), Canara Bank (up 0.73%), Bank of India (up 2.63%) Oriental Bank of Commerce (up 6.13%), and Bank of Baroda (up 2%) gained.

IT stocks declined on recent strong rebound of the rupee against the dollar. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Wipro lost 3.81%.

TCS shed 0.36%. The company on Tuesday, 10 September 2013, said it has bagged a five-year multi-million euros deal from Scandinavian Airlines (SAS) to help transform and optimise SAS' IT processes, applications and infrastructure. TCS will implement its proprietary cloud-based solutions to simplify and standardize the SAS IT landscape. The initiative is a part of the SAS "4 Excellence Next Generation" strategy, aimed at improving the competitiveness of the SAS Group. Through this partnership, SAS will also tap into TCS' Aviation and Digital Innovation Labs to develop solutions addressing the needs of the new digital consumer.

Infosys lost 1.2%. Infosys BPO during market hours on Thursday, 12 September 2013, announced that it has been selected by AkzoNobel, a leading global paint and coatings company and a major producer of specialty chemicals, to transform its finance and accounting (F&A) processes to deliver higher operational efficiencies and performance. Infosys BPO will play a key role in accelerating AkzoNobel's finance transformation program and streamline accompanying operations for AkzoNobel's decorative business in over 30 countries across Europe, the Middle East and Africa.

HCL Technologies declined 2.74%. The company said during market hours today, 13 September 2013, that SPIELO International UK (SPIELO), a subsidiary of GTECH S.p.A., has contracted with the company to provide technical operations services that have been previously provided in house. Under the terms of the agreement, SPIELO affiliate Boss Media AB expects to transfer to HCL the employment of approximately 160 technical operations service employees currently based in Vaxjo, Sweden. The agreement is subject to certain closing conditions.

Under a multi-year services agreement, HCL will provide software services relating to, among other matters, Boss Media's existing systems. All services provided by HCL under this agreement will be subject to oversight, direction and management of SPIELO.

HCL will also provide coding and technical services subject to SPIELO's strict Quality Assurance standards. SPIELO will continue to own all current and future Intellectual Property, customer contracts and agreements, and will continue to be fully responsible for providing its customers with product specifications, design, deliveries, and ongoing service.

Negotiations with trade union representatives have been initiated, with the goal of transferring the affected employees to HCL by 1 November 2013. The closing of the agreement is expected following the completion of the employee transfer.

Tech Mahindra dropped 1.53%. The company during market hours on Thursday, 12 September 2013, said it has been chosen as a strategic partner for application maintenance and development by Volvo Car Corporation. This partnership will provide Volvo Car Corporation with a service to maintain and develop a wide range of applications across the business and to develop and implement new applications as part of its drive to increase efficiency and reduce costs, Tech Mahindra said in a statement.

Auto stocks edged higher on renewed buying. Mahindra & Mahindra (M&M) edged higher on expectations of increase in tractor sales due to good rains this year. The stock rose 2.24%. The company on Tuesday, 10 September 2013, said that it has crossed yet another milestone with over 4 lakh sales of its special utility vehicle (SUV), Scorpio.

Tata Motors rose 0.06% to Rs 333.05. The stock had hit a record high of Rs 352 in intraday trade on 10 September 2013. The company's unit Jaguar Land Rover (JLR) on 10 September 2013 reported 28% rise in sales to 27,852 vehicles in August 2013 over August 2012.

Maruti Suzuki India rose 0.24%.

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. Hero MotoCorp (up 1.5%), Bajaj Auto (up 1.35%) and TVS Motor Company (up 5.4%) gained.

Power generation stocks rose on recent reports that the power ministry has made a proposal to mix imported and locally produced natural gas and supply it to electricity producers at a subsidized price, a plan that could help boost power production but hurt the government's already-weak finances. Reliance Power (up 2.06%), Reliance Infrastructure (up 3.46%), CESC (up 0.06%), Adani Power (up 3.29%), Tata Power Company (up 1.76%) gained.

NHPC galloped 6.50% after a media report suggested that the company will buyback its shares worth Rs 1600 crore from the open market. According to the report, NHPC will buyback its shares worth Rs 1600 crore from the market and the Power Ministry will soon float a Cabinet note for the same. Report suggested that the Government had earlier planned to disinvest 11.36% stake in NHPC through offer for sale (OFS) route in the domestic market. But due to choppy market conditions, the Government changed the plan to buyback of shares.

NTPC rose 1.26%. The company before trading hours today, 13 September 2013, said it has entered into a commercial interest reference rate based fixed interest rate facility for euro 52 million with KfW, the German government developmental financial institution on 12 September 2013. The facility has a door to door maturity of 15 years and shall be utilized to part finance the capital expenditure on Mouda Stage-II Project, NTPC said.

Rural Electrification Corporation (REC) rose 3.81% after the company on Thursday, 12 September 2013, said it has decided the early closure of Tranche I of the tax free bonds issue on 16 September 2013. The announcement was made after market hours on Thursday, 12 September 2013.

REC said that the Bond Committee of the company at its meeting held on Thursday, 12 September 2013, has passed a resolution approving the issue and closure of Tranche-I secured redeemable non convertible bonds for an amount of Rs 1000 crore with an option to retain oversubscription upto Rs 2500 crore aggregating upto Rs 3500 crore on Monday, 16 September 2013.

REC proposes to raise upto Rs 5000 crore by way of issuance of bonds in one or more tranches in fiscal 2014.

Pharma stocks rose for the second straight day. Cipla (up 0.69%), Dr Reddy's Laboratories (up 0.29%), Ranbaxy Laboratories (up 0.39%), and Sun Pharmaceutical Industries (up 1.28%), gained.

Divi's Laboratories rose 1.01% on reports the company's shares will be included in the FTSE Asian Health Care Index starting 23 September 2013. According to reports, FTSE assigned 30% investment weightage to Divis Laboratories shares on the Asian Health Care Index. Index changes will be applied after the close of Friday, 20 September 2013 and will be effective on Monday, 23 September 2013.

An inclusion in global benchmark indices such as FTSE prompts buying from passive trackers of the FTSE indices.

Most metal stocks gained. JSW Steel rose 1.32% after the company unveiled production data for August 2013. JSW Steel's crude steel production fell 2% to 9.85 lakh tonnes in August 2013 over August 2012. Production of flat rolled products rose 12% to 8.24 lakh tonnes in August 2013 over August 2012. Production of long rolled products declined 13% to 1.28 lakh tonnes in August 2013 over August 2012. The figures are after giving effect to the merger of JSW ISPAT Steel with the company.

JSW Steel said it took shutdown of one of its Corex furnaces for relining and capacity enhancement and the same is expected to recommence production during September 2013. The capacity utilization at Vijayanagar works remains at around 80% due to iron ore shortage caused by inordinate delays in opening Category A and B mines even after the Supreme Court order in April 2013 to resume mining operations, JSW Steel said.

Jindal Steel & Power gained 0.98%. The stock turned ex-dividend today, 13 September 2013, for dividend of Rs 1.60 per share for the financial year ended 31 March 2013.

Hindustan Copper shed 0.23%. The stock turned ex-dividend today, 13 September 2013, for dividend of Rs 1 per share for the financial year ended 31 March 2013.

Among other metal and mining stocks, NMDC (up 0.73%), National Aluminium Company (up 1.06%) and Hindalco Industries (up 0.85%), gained. Sesa Goa fell 0.05%. Tata Steel fell 1.77%.

Capital goods stocks edged higher on renewed buying. ABB (up 1.75%), Bhel (up 5.97%), Bharat Electronics (up 0.61%), Crompton Greaves (up 3.01%), L&T (up 2.62%), Siemens (up 1.18%) and Thermax (up 4.12%) gained.

Simplex Infrastructures was locked at 10% upper circuit at Rs 71.80 after the company said that its promoters acquired in aggregate 3.61 lakh equity shares or 0.73% stake of the company between 2 September and 12 September 2013. The announcement was made during trading hours today, 13 September 2013.

Jyoti Structures surged 12.83%. The company during market hours today, 13 September 2013, said that affiliates of Aion Capital Partners have invested $23 million in Jyoti International Inc, a wholly-owned subsidiary of the company incorporated under the laws of Delaware, USA.

Realty stocks extended recent gains. DLF (up 5.26%), Indiabulls Real Estate (up 1.91%), HDIL (up 1.76%), Unitech (up 1.97%), and Parsvnath Developers (up 1.4%) gained.

Adani Ports and Special Economic Zone surged 5.93% after the company said its Mundra port handled a record 151,229 metric tonnes of steam coal in 24 hours from MV Cape Fushen, Large Cape Vessel, carrying steam coal of Indonesian Steam Coal of Adani Power (APL), thus setting a new national record in coal cargo handling in the country.

Sugar stocks gained after the Minister for Consumer Affairs, Food and Public Distribution K.V. Thomas on Thursday, 12 September 2013, said that the Ministry of Food in principle does not have any objection to permit further export of sugar as it will help faster clearance of cane price arrears and help the country to earn some precious foreign exchange.

Bajaj Hindusthan (up 0.48%), Dhampur Sugar Mills (up 3.88%), Balrampur Chini Mills (up 2.22%) and Shree Renuka Sugars (up 5.17%) gained.

Thomas said that government policies, including, the ones relating to sugar exports, are aimed at balancing the interest of consumers, farmers and the industry. Thomas assured that while reviewing sugar export policy, his ministry will be fair to all stakeholders.

Prime Minister's Economic Advisory Council (PMEAC) today, 13 September 2013, sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate of 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. The full impact of various measures taken over the last six months will be reflected later in this year, PMEAC said. Depreciation of the rupee may put some upward pressure on inflation, it said. On balance, WPI inflation by end March 2014 will be around 5.5% as against the average of 7.4% in 2012-13 and 5.7% at end March 2013.

Controlling current account deficit (CAD) remains main concern at present, the council said. Current account deficit is projected at $70 billion (3.8% of GDP) in 2013-14 against an estimated $88.2 billion (4.8% of GDP) in 2012-13, it said. The CAD may go even below $70 billion in 2013-14 if the recent trends in exports and imports are maintained through the year, the PMEAC said.

For India, the short-term problem is of financing the large CAD. The medium term objective should be to compress CAD to 2.5% of GDP and ensure price stability, the council said. Containing fiscal deficit within the budgeted estimate could be a challenge, it said adding discretionary expenditure budgeted may need to be compressed, and subsidies restructured.

Industrial production rose 2.6% in July 2013 as against a contraction of 1.8% in June 2013, data released by the government after trading hours on Thursday, 12 September 2013, showed. The manufacturing sector registered a growth of 3% and electricity generation rose 5.2%. Mining sector output registered a contraction of 2.3%. As per use-based classification, production of basic goods rose 1.7% in July 2013. Capital goods production jumped 15.6% and production of intermediate goods rose 2.4%. Production of consumer goods declined 0.9%. Within the consumer goods sector, production of consumer non-durables rose 6.8% whereas production of consumer durables witnessed a contraction of 9.3%

Industrial production for June 2013 was revised upwards to de-growth of 1.8% from de-growth of 2.2% reported earlier. Industrial production growth for April 2013 was revised downward to 1.5% from 1.9% reported earlier. On cumulative basis, industrial production registered a contraction of 0.2% for the period April-July 2013 over the corresponding period of the previous year.

The rate of inflation based on the consumer price index decelerated in August 2013, data released by the government after trading hours on Thursday, 12 September 2013, showed. The rate of inflation based on the combined consumer price index (CPI) for urban and rural India decelerated to 9.52% in August 2013 from 9.64% in July 2013. Inflation for the category 'food and beverages' stood at 11.06% in August 2013, the data showed.

The Reserve Bank of India on Thursday, 12 September 2013, announced the details of its committee constituted to examine the current monetary policy framework and recommend ways to revise and strengthen it to make it more transparent and predictable. RBI Governor Raghuram Rajan, who took over on Sept. 4, had announced the committee would be headed by Deputy Governor Urjit Patel. The panel will review the objectives, structure, operating framework and instruments of monetary policy, particularly the multiple indicator approach and the liquidity management framework, the RBI said. It will also identify regulatory, fiscal and other impediments to monetary policy transmission, and recommend measures to improve transmission. The committee is expected to submit its report within three months, the RBI said.

European stocks dropped on Friday, 13 September 2013, as investors were hesitant of making any major moves ahead of US data out later in the day which could weaken or strengthen the case for the Federal Reserve to start scaling back its asset purchases. Key benchmark indices in France, Germany and UK were down by 0.18% to 0.3%.

Asian shares were mostly lower on Friday, 13 September 2013, as investors fretted stronger-than-expected US jobless-claims data on Thursday has increased the odds the Federal Reserve would begin trimming its monetary stimulus at next week's meeting. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, South Korea fell by 0.02% to 0.86%. Key benchmark indices in Indonesia and Japan rose by 0.12% to 0.43%.

Trading in US index futures indicated a flat opening of US stocks on Friday, 13 September 2013. US stocks declined on Thursday, 12 September 2013, with the S&P 500 snapping its seven-session winning streak, as investors worried about developments related to Syria and Federal Reserve policy moves.

Among US data out later on Friday are retail sales for August and consumer sentiment for September.

First-time claims for unemployment benefits declined by 31,000 to 292,000 in the week ending Sept. 7, but processing glitches involving two states clouded the reading, the US Labor Department reported on Thursday, 12 September 2013.

The US and Russia began talks on Thursday on Moscow's plan for Syria to surrender its chemical weapons as Damascus formally applied to join a global poison gas ban, but US Secretary of State John Kerry held fast to the position that the US may still use military force if diplomacy fails. Separately, Syria's President Bashar al-Assad reportedly said that the US needs to give up "its policy of threats" and stop shipping arms to Syrian rebels before his government surrenders its chemical weapons.

Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled next week, considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC holds a two-day policy meeting on Tuesday 17 September and Wednesday 18 September 2013 to decide on interest rates in the United States. 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.

US President Barack Obama reportedly plans to name former US Treasury Secretary Lawrence Summers as the next chairman of the US Federal Reserve Board of Governors. An announcement is expected as early as late next week, following the conclusion of the Fed's policy meeting on Wednesday, 18 September 2013, a Japanese newspaper report said. Treasury Undersecretary Lael Brainard, who served as an economic adviser under the Clinton administration, will likely be named the central bank's vice chairman, the report said. Summers would succeed Fed Chairman Ben Bernanke, whose term expires in January 2014. Summers and current Fed Vice Chairman Janet Yellen had been considered the front-runners to become the Fed's next chief.

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