Key benchmark indices trimmed intraday gains in early afternoon trade. The barometer index, the S&P BSE Sensex, was up 69.12 points or 0.33%, off close to 75 points from the day's high and up about 130 points from the day's low. The market breadth, indicating the overall health of the market, was positive. The market sentiment was boosted by Reserve Bank of India's announcement on Friday, 17 January 2014, that it will conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 10000 crore on Wednesday, 22 January 2014, in a bid to ease the strain on liquidity in the banking system.
Investors also cheered Bharatiya Janata Party's (BJP's) prime ministerial candidate Narendra Modi's economic vision for India in his speech on Sunday, 19 January 2014, wherein he said that if the BJP comes to power after Lok Sabha elections, his emphasis will be on urbanisation, infrastructure and inflation control and said his wish list also includes setting up 100 new smart cities and introduction of bullet trains to all four corners of the country.
Capital goods stocks edged higher. Pharma stocks rose, with Dr Reddy's Laboratories hitting record high. Aurobindo Pharma rose after the company announced the signing of a binding offer to acquire commercial operations in seven Western European countries from Actavis plc. Biocon rose after the company said it will start selling a breast cancer drug developed jointly with US-based Mylan in the country from next month. Reliance MediaWorks jumped after the company after market hours on Friday, 17 January 2014, said that its board of directors would meet on Monday, 20 January 2014, inter alia, to consider delisting of equity shares of the company from the stock exchanges.
The market reversed initial gains on weak Asian stocks. The Sensex hit one-week low. The 50-unit CNX Nifty hit its lowest level in almost a week. Key benchmark indices regained positive terrain and hit fresh intraday high in morning trade. The Sensex trimmed gains after hitting fresh intraday high in mid-morning trade. The Sensex further trimmed intraday gains in early afternoon trade.
At 12:20 IST, the S&P BSE Sensex was up 69.12 points or 0.33% to 21,132.74. The index jumped 145.95 points at the day's high of 21,209.57 in mid-morning trade. The index declined 62.49 points at the day's low of 21,001.13 in early trade, its lowest level since 13 January 2014.
The CNX Nifty was up 24.20 points or 0.39% to 6,285.85. The index hit a high of 6,304.95 in intraday trade. The index hit a low of 6,243.35 in intraday trade, its lowest level since 14 January 2014.
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The market breadth, indicating the overall health of the market, was positive. On BSE, 1,224 shares gained and 1,046 shares fell. A total of 144 shares were unchanged.
Among the 30-share Sensex pack, 17 stocks rose and rest fell. Wipro (up 3.88%), TCS (up 3.12%) and M&M (up 1.48%) edged higher from the Sensex pack.
Pharma stocks gained. Cipla (up 0.34%), Lupin (up 0.49%), Ranbaxy Laboratories (up 0.39%) edged higher. Sun Pharmaceutical Industries declined 0.36%.
Dr Reddy's Laboratories rose 0.4% to Rs 2.666.50 after hitting record high of Rs 2,680 in intraday trade.
Aurobindo Pharma jumped 6.59% after the company on Saturday, 18 January 2014 announced the signing of a binding offer to acquire commercial operations in seven Western European countries from Actavis plc. Closing of the transaction is conditional on certain antitrust approvals and completion of employee consultation processes, Aurobindo Pharma said in a statement.
Aurobindo said it expects to acquire personnel, commercial infrastructure, products, marketing authorizations and dossier license rights in seven European countries. Actavis and Aurobindo will be entering into a long term commercial and supply arrangement in order to support the ongoing growth plans of these businesses. The acquisition expands Aurobindo's front-end operations into five segments (generics, prescription products, over-the-counter products, hospital products and generics tenders) with approximately 1,200 products and an additional pipeline of over 200 products, Aurobindo Pharma said in a statement.
Aurobindo Pharma said that the Management estimates the net sales for the acquired businesses would be around euro 320 million in 2013 with a growth rate of over 10% year-on-year. Although these businesses are currently loss-making, Aurobindo said it expects them to return to profitability in combination with its vertically integrated platform and existing commercial infrastructure. The acquisition will make Aurobindo one of the leading Indian pharmaceutical companies in Europe, it added. Since 2006 Aurobindo has been steadily expanding its European footprint through an increasing presence in UK, Spain and Germany. The acquisition will enable Aurobindo to achieve critical mass in Western Europe with a top 10 position in several key markets, Aurobindo Pharma said in a statement.
Commenting on the transaction, Mr V Muralidharan, SVP of European Operations for Aurobindo said, "The acquisition of these European businesses is a value enhancing and forward-looking initiative for Aurobindo. We have been clear about our intention to focus on growth initiatives in Europe and international markets, which together are expected to be key drivers for future growth. This transaction will complement our strategy of pursuing organic growth along with value-creating acquisitions within our served markets and adding complimentary growth platforms to provide scale and revenue diversity".
Mr Arvind Vasudeva, CEO of Aurobindo's Formulations Business further stated that, "We have carefully reviewed the Actavis European operations and concluded that with our cost competitiveness and group structure, we could significantly capitalize Actavis's strong market position in these Western European countries and improve profitability, thereby accelerating our strategy of becoming a significant Gx player in Europe. Aurobindo takes a disciplined approach to acquisition with clearly defined strategic and financial criteria and is committed to maintaining a prudential capital and debt structure. We are also excited to welcome the new employees in seven countries to our growing global team and anticipate a seamless integration into Aurobindo. Actavis will continue to support the businesses as a supplier and licence provider. Aurobindo looks forward to the opportunities this transaction provides for us to work even more closely with Actavis, who are one of our existing strategic partners".
Mr Sigurdur Oli Olafsson, President of Actavis Pharma, said, "We believe that the value created by the commercial operations in these seven markets will be better maximized by Aurobindo, which will gain scale, additional products and enhanced competitive market share position as a result of this transaction. This transaction will permit Actavis to focus management time and resources to support accelerated investment in driving faster growth of other markets, including Central and Eastern Europe and Southeast Asia".
Actavis plc is a global, integrated specialty pharmaceutical company focused on developing, manufacturing and distributing generic, brand and biosimilar products. Actavis has global headquarters in Dublin, Ireland and US administrative headquarters in Parsippany, New Jersey, USA.
Biocon rose 3.35% after the company said it will start selling a breast cancer drug developed jointly with US-based Mylan in the country from next month. The announcement was made on Saturday, 18 January 2014.
Biocon introduced 'CANMAb' (150 milligram (mg)/ 440 mg), a biosimilar trastuzumab for the treatment of HER2-positive metastatic breast cancer in India. CANMAb, developed jointly by Biocon and Mylan under a global partnership, is the world's first biosimilar version of Herceptin and is being introduced for the benefit of patients in India, Biocon said in a statement.
CANMAb is being manufactured at Biocon's biologics facility in Bangalore and will be available to patients around the first week of February 2014. CANMAb will be available at about 25% discount to the current list price of the reference product in India, which is already significantly lower than its price in developed markets. In addition, CANMAb's 150 milligram (mg) formulation, priced at Rs 19,500 per vial, will allow extra savings to patients as they can buy smaller quantities as per their requirement, the company added.
The global sales for Herceptin stood at $6.4 billion in 2012, while in India it recorded sales of $21 million.
Kiran Mazumdar-Shaw, Chairperson and Managing Director, Biocon, said, "Biocon intends to make a significant difference in the treatment paradigm for HER2-positive breast cancer in India by enhancing access to more affordable treatment with CANMAb (biosimilar trastuzumab), which offers the same level of safety and efficacy as the reference product. The launch of CANMAb in India is an important milestone for our biosimilars program and demonstrates our ability to deliver on our promise of affordable innovation with a high quality, world-class product."
Capital goods stocks edged higher. Bhel (up 0.93%), BEML (up 1.47%), L&T (up 0.29%) and Crompton Greaves (up 0.44%) rose.
Reliance Communications rose 3.27% after the company after trading hours on Friday, 17 January 2014, said Reliance Globalcom has appointed William (Bill) Barney as CEO of its three offshore businesses, comprising FLAG, Yipes and Vanco. Barney's appointment is effective immediately, and he will operate out of Hong Kong and Mumbai.
Barney has worked more than 15 years in Asia. He has worked as CEO of Pacnet for about 10 years. During his tenure at Pacnet, Barney led the company's successful acquisition of regional internet service provider Pacific Internet, which operationally merged with Asia Netcom and re-launched as Pacnet in January 2008.
Prior to Pacnet, Barney served as Asia Pacific President and CEO for MCI Worldcom (Verizon).
"We are delighted to have Bill join us to lead Reliance Globalcom into an accelerated phase of growth and development, leading to enhanced unlocking of value for the benefit of all our stakeholders. Bill's track record and ability in reshaping the technology business will be a true asset to Reliance Globalcom," said Anil Ambani, Chairman, Reliance Communications.
Punit Garg will continue to lead the enterprise business of Reliance Communications in India, the company said in a statement.
Reliance MediaWorks jumped 13.9% ahead of the company's board meeting today, 20 January 2014, to consider delisting of equity shares of the company. Reliance MediaWorks after market hours on Friday, 17 January 2014, said that its board of directors would meet on Monday, 20 January 2014, inter alia, to consider delisting of equity shares of the company from the stock exchanges. Promoters owned 73.3% stake in Reliance MediaWorks (as per the shareholding pattern as on 30 September 2013).
PTC India rose 3.91% after net profit jumped 314.9% to Rs 90.78 crore on 47.5% growth in total income to Rs 2771.05 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 17 January 2014.
In the foreign exchange market, the rupee edged lower against the dollar on global dollar strength. The partially convertible rupee was hovering at 61.63, lower than its close of 61.54/55 on Friday, 17 January 2013. The US dollar edged higher after a string of mostly upbeat data convinced markets the Federal Reserve will continue its gradual withdrawal of monetary stimulus for the US economy.
Bond prices rose after the Reserve Bank of India on Friday, 17 January 2014, said it has decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 10000 crore on Wednesday, 22 January 2014, in a bid to ease the strain on liquidity in the banking system. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.5649%, lower than its close of 8.6269% on Friday, 17 January 2014. Bond yield and bond prices are inversely related.
The Reserve Bank of India said on Friday, 17 January 2014, that the liquidity conditions are undergoing some stress in the recent period, primarily on account of the build-up of cash balances of the Government of India. In order to address the temporary liquidity deficit situation, the Reserve Bank of India has been infusing additional liquidity through 7/14/28 days term repo auctions in addition to the existing overnight repo under liquidity adjustment facility and standing liquidity facilities. The current assessment suggests that the strain on market liquidity is likely to remain enduring in view of the fiscal targets set for the year as well as projections for aggregate credit growth, warranting the need to provide liquidity of a more permanent nature. Accordingly, the Reserve Bank has decided to conduct Open Market Operations by purchasing the following government securities for an aggregate amount of Rs 10000 crore on Wednesday, 22 January 2014, through multi-security auction using the multiple price method.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
Bharatiya Janata Party's (BJP's) prime ministerial candidate Narendra Modi on Sunday, 19 January 2014, came out with his vision for a new India ahead of the 2014 Lok Sabha elections, pledging to project the country as a brand worldwide if a BJP government was voted to power. The key elements of the Bharatiya Janata Party prime ministerial candidate's programme are urbanisation, infrastructure, education and healthcare, apart from cracking down on scourges such as inflation and black money. Modi said he wanted to reach out to every level of society to ensure that the benefits of economic change didn't just go to the advantaged. His wish list includes Indian Institutes of Technology, Indian Institutes of Management and All India Institutes of Medical Science in every state, 100 new smart cities and bullet trains to all four corners of the country. He said inflation - one of BJP's main election planks besides corruption and "mis-governance" by the UPA government - was the country's biggest predicament and said steps needed to be taken to contain it. The answer lay in farm data that was much more current than it is now and a fund that could be used to protect the vulnerable. Modi also floated the idea of a price stabilisation fund to ensure that nobody went hungry.
He spoke of the need to focus on Brand India, referring to five Ts in this connection-tradition, talent, tourism, technology and trade. He also pledged a mix of social welfare schemes that would bring India on a par with developed economies, urging people to vote for him.
Other priorities in Modi's programme include development of infrastructure such as roads, ports and airports, reviving power plants that are shut, creating jobs, skill development, setting up agro infrastructure gas grids, deploying optical fibre networks, pushing the river interlinking project and establishing special courts to punish black marketing. In the 75-minute speech, Modi said the country has to treat urbanisation as an "opportunity", not as a "challenge", something India hasn't done. A BJP government under him will build 100 new cities to be developed as smart cities, twin cities and satellite cities, he said. "If the railways is modernised, we can give impetus to progress. By the time the country celebrates the diamond jubilee of independence (2022), we should have bullet trains going in four directions. The world will start seeing us with a new vision," he said.
Modi also touched on senior BJP leader LK Advani's pet theme of getting black money stashed overseas back to the country, saying that a task force will be set up to ensure that this is achieved. Modi also spoke of the need to uphold what he regarded as India's traditions, likening it to a rainbow with seven shades family values, agriculture and rural India, empowerment of women, environment, youth, democracy and knowledge.
Asian stocks edged lower on Monday, 20 January 2014, after China's economic growth slowed in the fourth quarter as gains in factory output and investment spending eased. Key benchmark indices in China, Japan, Singapore and Hong Kong were off 0.54% to 0.84%. Key benchmark indices in Indonesia, South Korea and Taiwan rose 0.24% to 0.48%.
China's economy expanded 7.7% in the fourth quarter from a year earlier, the National Bureau of Statistics said today. That compares 7.8% growth in the previous three months. Industrial production rose 9.7% in December from a year earlier, data showed, down from a 10% gain in November. Retail sales last month rose 13.6% from a year earlier, slowing from 13.7% in November. Fixed-asset investment in China excluding rural households increased 19.6% in the January-to-December period from a year earlier, when it expanded 20.6%.
The US stock market remains closed today, 20 January 2014, for a holiday commemorating civil rights leader Martin Luther King Jr.
US stocks settled mostly lower on Friday as disappointing results from Intel Corp. and General Electric Co. weighed on sentiment.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
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