Key benchmark indices dropped amid intraday volatility on first trading session of the week on concerns about global liquidity. The S&P BSE Sensex was down 171.05 points or 0.88%, off 97.92 points from the day's high and up 138.85 points from the day's low. The market breadth, indicating the overall health of the market, was negative.
Indian stocks snapped two day winning streak today, 8 July 2013, as weakness in Indian rupee against the dollar hit investor sentiment. The Sensex had risen 318.06 points or 1.66% in two trading sessions to 19,495.82 on 5 July 2013 from a recent low of 19,177.76 on 3 July 2013. The Sensex has fallen 71.04 points or 0.37% so far in July 2013 (till 8 July 2013). The Sensex has declined 101.94 points or 0.52% in calendar 2013 so far (till 8 July 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 1,118.85 points or 5.47%. From a 52-week low of 16,598.48 on 26 July 2012, the Sensex has surged 2,726.29 points or 16.42%.
Coming back to today's trade, FMCG stocks rose after the latest data showed a further pick-up in sowing of kharif crops. Some PSU stocks surged. Bharti Airtel reversed intraday gains after a Zambia Information and Communications Technology Authority spokeswoman reportedly said Zambia has begun criminal proceedings against all the three mobile phone operators in the country including Bharti Airtel alleging poor quality mobile phone services. In metal stocks, Tata Steel hit 52-week low.
Auto stocks edged lower. UB group shares rose after Diageo last week said it has raised stake in liquor major United Spirits. PSU OMCs declined while Cairn India rose as US crude oil futures hit a 14-month high. Reliance Communications (RCom) surged after the company's board approved a proposal for demerger of the real estate assets held by RCom into a separate company to unlock substantial value for the company's shareholders. Realty stocks declined. Capital goods stocks also edged lower. IT stocks rose as rupee hit record low against the dollar.
The market edged lower in early trade as Asian stocks fell after stronger than expected US job data fuelled expectations the US Federal Reserve will slow the pace of monetary stimulus later this year. Weakness continued in morning trade. The Sensex continued to hover in negative terrain in mid-morning trade. The market trimmed intraday losses in early afternoon trade. Key benchmark indices pared intraday losses in afternoon trade after European market opened higher. The market once again weakened in mid-afternoon trade.
Weakness in Indian rupee against the dollar kept investor sentiment edgy. The rupee hit record low against the dollar mirroring losses in most emerging market currencies after strong US employment data raised fears that the US Federal Reserve would roll back its monetary stimulus. The rupee was trading at 60.80 versus dollar, compared with Friday's close of 60.225/235. The rupee hit a record low below 61 against the dollar in intraday deals.
Indian government bonds came under selling pressure on fears that foreign investors would continue to pull out of Indian debt to chase higher bond yields in the US. The yield on the most traded 8.2% GS 2025 was at 7.7191%, higher that its close at 7.6731% on Friday, 5 July 2013. Bond prices and yields move in opposite directions. The Fixed Income Money Market and Derivatives Association of India, which along with the RBI oversees bond markets, said on its website that it had removed price filters on bonds for Monday's session.
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The S&P BSE Sensex was down 171.05 points or 0.88% to 19,324.77, its lowest closing level since 3 July 2013. The index declined 309.90 points at the day's low of 19,185.92 in early trade, its lowest level since 3 July 2013. The index fell 73.13 points at the day's high of 19,422.69 in early trade.
The CNX Nifty was down 56.35 points or 0.96% to 5,811.55, its lowest closing level since 3 July 2013. The index hit a low of 5,775.55 in intraday trade, its lowest level since 3 July 2013. The index hit a high of 5,833.85 in intraday trade.
The total turnover on BSE amounted to Rs 1549 crore, lower than Rs 1626.52 crore on Friday, 5 July 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,237 shares fell and 1,030 shares rose. A total of 106 shares were unchanged.
The BSE Mid-Cap index fell 0.06% and the BSE Small-Cap index declined 0.38%. Both these indices underperformed the Sensex.
The BSE FMCG index (up 0.72%), BSE Capital Goods index (up 0.13%), BSE Teck index (up 0.43%), BSE Power index (down 0.38%), BSE IT index (up 0.32%),BSE Consumer Durables index (down 0.03%), BSE Healthcare index (down 0.05%), outperformed the Sensex.
The BSE Bankex (down 1.06%), BSE Metal index (down 1.37%), BSE Auto index (down 1.51%), BSE Realty index (down 1.79%), BSE PSU index (down 1.9%), BSE Oil & Gas index (down 1.94%) underperformed the Sensex.
From the 30-share Sensex pack, 21 stocks fell and rest of them rose.
Auto stocks edged lower. Mahindra & Mahindra (M&M) shed 2.55%. The company on Thursday, 4 July 2013, said it has allotted 5,000, 9.55% senior unsecured redeemable non-convertible debentures of the face value of Rs 10 lakh each for cash at par aggregating Rs 500 crore to Yes Bank.
Tata Motors lost 2.57% on reports that the production line at Jaguar Land Rover (JLR) facilities in the UK may get impacted after delivery workers from DHL voted for a strike demanding a large pay rise and similar terms and conditions on par with the JLR staff. The staff of logistics giant DHL, which has about 1,800 workers at JLR's three main factories -- 1,000 between Castle Bromwich and Solihull in the Midlands and 800 at Halewood, Merseyside, perform a key role in managing warehouse operations and bringing parts to production lines. Reports suggested that production could stop soon without parts reaching the production line. Any shutdown could potentially dent JLR's position as the biggest exporter of manufactured goods in the UK, reports added.
Maruti Suzuki India fell 0.35% to Rs 1,549.05 after company reported a fall in production in June 2013. The stock came off low of Rs 1,531.25. The company said during market hours today, 8 July 2013, that production fell 25.36% to 61,668 units in June 2013 over June 2012. Earlier, the company had reported 12.6% fall in total sales to 84,455 units in June 2013 over June 2012. The company's domestic sales fell 7.8% to 77,002 units in June 2013 over June 2012. Exports declined 43% to 7,453 units in June 2013 over June 2012. The company announced the monthly sales data on 1 July 2013.
Ashok Leyland rose 0.54% after the company after market hours on Friday, 5 July 2013, said it has secured an order from the Institute of Road Transport (IRT), Tamil Nadu for the supply of 2,610 buses. IRT is a nodal organization that procures buses for all transport corporations in Tamil Nadu.
FMCG stocks rose after the latest data showed a further pick-up in sowing of kharif crops. Hindustan Unilever (up 0.16%), Marico (up1 19%), Dabur India (up 0.7%), Tata Global Beverages (up 1.83%), and Colgate Palmolive India (up 1.88%), gained. FMCG companies derive substantial revenue from rural sales.
The Centre on Friday, 5 July 2013, said that as per reports received from state governments, the total sown area in the country stands at 401.69 lakh hectare (lh) as on 5 July 2013, compared with 215.07 lh at this time last year.
The India Meteorological Department said on Friday, 5 July 2013, that the cumulative seasonal rainfall for the country as a whole from 1-30 June 2013 has been 32% above the Long period average (LPA) with excess/normal rainfall activity over 92% area of the country. For the country as a whole, cumulative rainfall during this year's monsoon has so far upto 3 July been 27% above the LPA. The cumulative seasonal rainfall activity continued to be excess over all the four homogeneous regions except east & northeast India, where it was 37% below LPA.
Index heavyweight and Cigarette market ITC rose 1.29%, with the stock extending intraday gains.
Reliance Industries (RIL) fell 1.5%. The government on Thursday, 27 June 2013, agreed to double natural gas prices to industrial and retail consumers to help fund investment in exploration and reverse declining domestic gas output. The price of gas could go up to $8.4 per million metric British thermal units (mmBtu), effective 1 April next year, from current $4.2 mmBtu.
Metal stocks declined. Jindal Steel & Power (down 1.09%), JSW Steel (down 1.91%), Sail (down 0.21%), Hindustan Zinc (down 0.83%) and Sterlite Industries (India) (down 1.43%), edged lower. Hindalco Industries rose 1.05%
Tata Steel declined 1.59% to Rs 260.60. The stock hit 52-week low of Rs 258.25 in intraday trade today, 8 July 2013.
Hindustan Copper rose 4.62% to Rs 69. The government on 3 July 2013, sold 4.01% stake sale in the state-run firm via offer for sale through stock exchange mechanism. As against a total number of 3.71 crore shares on offer, bids for a total number of 4.38 crore shares were received above the floor price of Rs 70. The issue was subscribed 1.18 times. The approximate gross receipts for the government from the state-sale would be Rs 260 crore. Post divestment of 4.01% stake, the public shareholding in Hindustan Copper stands at 10%, adhering to the Sebi's mandate of minimum public shareholding for state-run firms.
MMTC was locked at 5% lower circuit at Rs 83.90, also its 52-week low, with the stock extending recent steep slide triggered by government concluding the divestment of 9.33% stake in the firm at a huge discount to the stock's ruling market price. On 13 June 2013, the Government of India (GoI) sold 9.33% stake in MMTC via Offer for Sale (OFS) through stock exchanges mechanism at an indicative price of Rs 60.86 per share, at a discount of 71.21% to the closing price of the stock of Rs 211.45 on 12 June 2013.
PSU OMCs declined as US crude oil futures hit a 14-month high a barrel on Monday, after posting their biggest weekly gain in a year last week, as better-than-expected US jobs data fueled hopes for increased economic activity. Indian Oil Corporation (down 3.44%), BPCL (down 5.86%) and HPCL (down 3.95%), edged lower.
US crude oil futures for August delivery were down 31 cents at $102.91 a barrel in electronic trading today, 8 July 2013. Unrest in Egypt left traders watching for any news of supply disruptions out of the Middle East. Egypt's new leaders late on Saturday, 6 July 2013, said they hadn't named opposition figure Mohamed ElBaradei as Egypt's interim prime minister, underscoring political instability in the country. Egypt controls the key Suez Canal and an adjacent pipeline which is used to transport a significant amount of the region's oil trade. ElBaradei is a leader of secular groups that opposed Mohammed Morsi, who was ousted last week as Egypt's president in the wake of massive protests. Clashes between Morsi supporters and critics have left more than 30 people dead, according to various reports.
Higher crude oil price will increase under-recovery of PSU OMCs on domestic sales of diesel, LPG and kerosene at government controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
Cairn India rose 1.63%. Higher crude oil prices will result in higher realizations from crude sales for oil exploration firms like Cairn India.
Some PSU stocks surged. State Trading Corporation of India (up 15.75%), Dredging Corporation of India (up 5.8%), Hindustan Copper (up 3.94%), and HMT (up 3.94%), surged.
Bank stocks also edged lower. HDFC Bank (down 0.94%), Kotak Mahindra Bank (down 1.11%), and ICICI Bank (down 2.05%) declined.
Among PSU bank stocks, State Bank of India (down 0.67%), Canara Bank (down 1.78%), Union Bank of India (down 0.75%), Bank of Baroda (down 0.36%) and Punjab National Bank (down 0.6%) declined.
IDBI Bank fell 1.05%. The bank after market hours on Friday, 5 July 2013 said that the Government of India (GoI), Ministry of Finance, Department of Financial Services has, vide their letter dated 5 July 2013, appointed M. S. Raghavan as Chairman & Managing Director of IDBI Bank from 5 July 2013, for a period upto 30 June 2015, i.e., the date of his attaining the age of superannuation or until further orders, whichever is earlier.
The Reserve Bank of India (RBI) on 2 July 2013, issued draft guidelines that would require banks to make higher provisions and increase risk weights on exposure to companies that have unhedged foreign-currency exposure. Starting 1 October 2013, banks will have to monitor unhedged foreign currency exposure of borrowers at monthly intervals.
The draft guidelines advised banks to ensure that their policies and procedures for management of credit risk factor their exposure to currency-induced credit risks and are calibrated towards borrowers whose capacity to repay is sensitive to changes in the exchange rate and other market variables.
IT stocks rose as rupee hit record low against the dollar. Infosys (up 0.99%), Wipro (up 1.65%) and HCL Technologies (up 3.23%) edged higher. TCS shed 1.4%. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Bharti Airtel fell 0.83% to Rs 293.10, with the stock reversing intraday gains after a Zambia Information and Communications Technology Authority spokeswoman reportedly said Zambia has begun criminal proceedings against all the three mobile phone operators in the country including Bharti Airtel alleging poor quality mobile phone services.
Shares of Bharti Airtel had risen as much as 4.14% at the day's high of Rs 307.80, in intraday trade after the company announced during market hours today, 8 July 2013, that it has retired equivalent debt from the proceeds of Rs 6796 crore of the preferential allotment in June 2013 of 5% equity shares in Bharti Airtel at Rs 340 per share to Qatar Foundation Endowment. Bharti Airtel said that this significant debt reduction will result in an improvement in the capital structure and balance sheet leverage for the company. In June 2013, Bharti had issued 19.98 crore new equity shares, representing 5% equity stake in the company, to Qatar Foundation Endowment for a total consideration of Rs 6796 crore.
Reliance Communications (RCom) jumped 7.19% to Rs 145.35. The company said on Sunday, 7 July 2013, that its board of directors has in-principle decided on a demerger of the real estate held by RCom into a separate unit to be called Reliance Properties, to unlock substantial value for the benefit of its shareholders. The stock hit 52-week high of Rs 149.55 in intraday trade today, 8 July 2013. The proposed separation of real estate into a separate unit is part of RCom's strategic plan to divest non-core assets, and focus on its core wireless and enterprise business. Reliance Properties will be a separate listed company. All shareholders of RCom will receive fully tradeable pro-rata shareholding in Reliance Properties, free of cost, based on their existing shareholding in RCom.
The preliminary and indicative monetisable value of RCom's real estate on development is estimated by independent valuers at over Rs 12000 crore ($2 billion), which is equal to Rs 60 ($1) per RCom share.
Reliance Properties will work with leading global partners to develop the real estate, and unlock this value for the benefit of its shareholders. The properties proposed to be developed by Reliance Properties include prime land at Dhirubhai Ambani Knowledge City, Navi Mumbai measuring nearly 135 acres, with saleable area of over 15 million square feet and prime property near Connaught Place, New Delhi measuring nearly 4 acres.
The board has constituted a committee to consider the matter in detail, and prepare the necessary Demerger Scheme, etc. in consultation with legal and other advisors. The demerger will be subject to approvals from shareholders, lenders, Courts, etc.
Capital goods stocks edged lower. L&T (down 0.21%), ABB (down 1.31%), Siemens (down 1.58%) declined. Bhel gained 2.86%.
Havells India galloped 5.04% to Rs 748.80 after a foreign brokerage initiated coverage on the stock with an 'overweight' rating, citing the company's leading dealer franchise, strong brand, and diversified product line-up. The broker set a price target of Rs 878 on the Havells India stock and added that it deserves to trade at a premium to its historical valuations given consistently high domestic earnings and return ratios.
Realty stocks declined. Indiabulls Real Estate (down 2.4%), HDIL (down 3.75%), Unitech (down 2.63%) and Sobha Developers (down 2.87%), edged lower.
DLF shed 1.46%. The company on Saturday, 6 July 2013, said it has completed the Rs 325.38-crore deal to sell 150 megawatts (MW) wind turbine project in Gujarat to Bharat Light and Power. The transaction is in line with the DLF's objective of divesting its non core assets, the company said in a statement.
UB group shares rose after Diageo last week said it has raised stake in liquor major United Spirits. United Spirits (USL) rose 0.93% to Rs 2,555.20. The stock had struck a record high of Rs 2,625.95 in intraday trade on Friday, 5 July 2013. Kingfisher Airlines was locked at 10% upper circuit filter after hitting maximum permissible upper limit of 10% on Friday. United Breweries (Holdings) was locked at 10% upper limit after hitting maximum permissible upper limit of 10% on Friday. United Breweries fell 2.14%.
USL on Thursday, 4 July 2013, said that Diageo has completed the acquisition of a 14.98% stake in USL at Rs 1,440 per share. The shares were bought from United Breweries (Holdings) and other UB group companies. Following the acquisition, Diageo holds 25.02% stake in USL. Diageo and the UB Group are now co-promoters of USL. In a statement, Diageo said that its 25.02% shareholding in USL, together with the voting and other governance arrangements agreed with the UB group, including Dr. Vijay Mallya's continued role as Chairman of USL, will give Diageo control and enable Diageo to fully reflect the results of USL in its consolidated accounts, which it expects to do from 1 January 2014. Prior to this, Diageo will equity account its shareholding in USL, Diageo said.
On 27 May 2013, Diageo subscribed for a preferential allotment of new shares in USL amounting to 10% of the post-issue enlarged share capital. Separately, Diageo acquired 58,668 additional USL shares via a mandatory open offer to the shareholders of USL.
Neyveli Lignite Corporation shed 1.2%. The market regulator Securities & Exchange Board of India approved Tamil Nadu state government to buy 5% stake in the company. In a statement issued on Sunday, 7 July 2013, the finance ministry said the department of disinvestment has requested the Tamil Nadu state government to nominate senior official for further discussions with Securities & Exchange Board of India (Sebi) with regard to its proposal to sell the proposed 5% stake of the central government in Neyveli Lignite Corporation (NLC) to the state undertakings of Tamil Nadu. The ministry said that Sebi is of the view that the proposal could get covered within the guidelines on institutional placement programme (IPP).
The ministry said that in the offer document for IPP, the seller can propose the criteria on the basis of which allocation could be made. This can be used to give preference to any set of qualified institutional buyers including stage undertakings of Tamil Nadu.
The central government has decided to sell 5% stake in NLC. The Government of India (GoI) holds 93.56% stake in NLC (as per the shareholding pattern as on 31 March 2013). The stake sale will also help the company to meet the minimum public holding norm.
Sebi has set a deadline of August 2013 for all listed central public sector units to have a minimum 10% public shareholding.
Last month, Tamil Nadu chief minister J Jayalalithaa had written to Prime Minister Dr. Manmohan Singh expressing interest to buy 5% in the company. Employee unions of the Tamil-Nadu headquartered firm are protesting against the stake sale and workers went on an indefinite strike since 3 July 2013.
Meanwhile, the union ministry of coal has allocated two coal blocks to NLC for implementing its power projects at Sirkali in Tamil Nadu and Neyveli Uttar Pradesh Power in Uttar Pradesh.
Fresenius Kabi Oncology lost 0.28% after the company said it has received a warning letter from the United States Food and Drug Administration (USFDA), inter-alia, asking for certain information and implementation of more corrective and preventive measures so as to avoid recurrence of deviations in respect of the company's API plant located at Nadia district in West Bengal. Earlier, on 26 February 2013, Fresenius Kabi said that the USFDA as part of its routine inspection made certain observations relating to GMP non-conformities in respect of manufacturing, documentation practices and product testing at the company's API plant at Nadia subsequent to which the company at that time has voluntarily put the production at the plant on hold.
Century Textiles & Industries lost 2.46% as the stock turned ex-dividend today, 8 July 2013, for dividend of Rs 5.50 per share for the year ended 31 March 2013.
Gillette India rose 0.79%. The market regulator Securities and Exchange Board of India (Sebi) on Friday, 5 July 2013, barred promoters of Gillette India from dealing in capital markets and directed a freeze on their voting rights and corporate benefits such as dividend, rights, bonus shares and split for non-compliance with public shareholding norms before the deadline that expired 3 June 2013. All private listed firms are required to have a minimum public shareholding of 25%. Sebi's interim order follows a ruling by the Securities Appellate Tribunal, or SAT, upholding the market regulator's earlier decision on Gillette with regard to non-compliance with public holding norms.
Gitanjali Gems was locked at 5% lower circuit at Rs 174, also its 52-week low, after credit rating agency CARE on Friday, 5 July 2013, revised the ratings assigned to the bank facilities/instruments of Gitanjali Gems (GGL) and its subsidiaries/step-down subsidiaries and placed them on credit watch. The revision in the ratings takes into account stressed liquidity position of GGL as evidenced by full utilisation of the existing working capital limits which along with the recent RBI guidelines on gold import for domestic purpose would further put pressure on its liquidity position, CARE said. CARE further added that it has also taken into account the significant erosion in share price and market capitalisation of the company in the last two weeks of June 2013 which in CARE's opinion would have weakening effect on GGL's financial flexibility and liquidity. The rating has been placed on credit watch due to lack of adequate information in-order to take a final view, the rating agency added.
Prime Minister Dr. Manmohan Singh will meet the captains of Indian industry on 29 July 2013 to review steps to revive the economy, a statement from the prime minister's office (PMO) said. The discussion will cover measures to correct the Current Account Deficit, measures to revive industrial growth, depreciation of the rupee and its impact on trade and industry, skill development and ways of accelerating it and development of the Delhi-Mumbai Industrial Corridor (DMIC), the Chennai-Bangalore Industrial Corridor (CBIC), and the Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC).
European markets edged higher on Monday, 8 July 2013, as investors waited for Alcoa Inc. to kick off the US earnings season later in the global day. Key benchmark indices in UK, France and Germany were up 0.33% to 2.26%.
Asian stocks dropped on Monday, 8 July 2013, after a better-than-forecast monthly US jobs report fueled speculation that the Federal Reserve may begin reducing stimulus this year. Key benchmark indices in China, Hong Kong, Indonesia, Singapore, Japan, South Korea and Taiwan shed by 0.45% to 3.68%.
Chinese stocks were also hit by concerns that Beijing won't ease policies despite slowing growth. In a statement issued on Friday, 5 July 2013, elaborating on its pursuit of economic restructuring and reforms, the State Council -- China's cabinet -- indicated it would strengthen supervision of wealth-management products and emphasized financial-market stability, but it also hinted it would loosen controls on banks' interest rates only gradually. The State Council also suggested tighter controls over credit to industries with excess production capacity.
Trading in US index futures indicated that the Dow could gain 70 points at opening bell on Monday, 8 July 2013. US stocks surged on Friday, 5 July 2013, after government data showed the nation added more jobs than forecast last month. The non-farm payrolls increased by 195,000 in June and the unemployment rate held steady at 7.6% as more people entered the workforce. Job growth in previous months also was revised higher.
Federal Reserve Chairman Ben Bernanke on 19 June 2013 said that the central bank may taper the pace of its bond purchases, currently set at $85 billion a month, as early as this year if the economy continues to improve in line with its forecasts.
The minutes of Federal Open Market Committee's (FOMC) policy meeting held on 19 June 2013, will be released on Wednesday, 10 July 2013. The minutes may provide more insight into the Fed's outlook on monetary stimulus. Bernanke is also due to deliver a speech on that day.
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