Key benchmark indices reversed initial gains on weak Asian stocks. The barometer index, the S&P BSE Sensex, was down 40.50 points or 0.19%, up about 20 points from the day's low and off close to 50 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
Asian Paints and UltraTech Cement dropped ahead of their Q3 results today, 20 January 2014. Wipro rose on good Q3 result. Index heavyweight Reliance Industries (RIL) fell as the company's net profit remained flat in Q3 December 2013 due to fall in gross refining margins (GRM). Mahindra & Mahindra (M&M) declined after the company said that as part of aligning its production with sales requirements, the company would be observing no production days at the company's automotive plants for 1 to 3 days during the remaining period of January 2014. 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.
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.
At 9:35 IST, the S&P BSE Sensex was down 40.50 points or 0.19% to 21,023.12. The index declined 62.49 points at the day's low of 21,001.13 in early trade. The index rose 29.38 points at the day's high of 21,093 in early trade.
The CNX Nifty was down 10 points or 0.16% to 6,251.65. The index hit a low of 6,243.35 in intraday trade. The index hit a high of 6,271.70 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 744 shares gained and 535 shares fell. A total of 82 shares were unchanged.
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Among the 30-share Sensex pack, 18 stocks fell and rest rose. AXIS Bank (down 1.4%), L&T (down 0.96%) and Sesa Sterlite (down 0.55%) edged lower from the Sensex pack.
Asian Paints fell 0.72% ahead of its Q3 results today, 20 January 2014.
UltraTech Cement declined 1.58% ahead of its Q3 results today, 20 January 2014.
Wipro rose 2% to Rs 563.50 on good Q3 result. Wipro after trading hours on Friday, 17 January 2014, said its consolidated net profit from continuing operations jumped 27% to Rs 2010 crore on 18% growth in revenue from continuing operations to Rs 11330 crore in Q3 December 2013 over Q3 December 2012. Excluding non-recurring expense, net profit from continuing operations jumped 28% to Rs 2030 crore in Q3 December 2013 over Q3 December 2012. The results are as per International Financial Reporting Standards (IFRS).
In dollar terms, IT services revenue were reported at $1.678.4 billion in Q3 December 2013, an increase of 2.9% over Q2 September 2013 and an increase of 6.4% over Q3 December 2012.
IT services revenues in rupee terms was at Rs 10330 crore in Q3 December 2013, an increase of 20% over Q3 December 2012.
IT services earnings before interest and tax (EBIT) was Rs 2380 crore in Q3 December 2013, an increase of 33% over Q3 December 2012.
Wipro expects revenues from IT services business to be in the range of $1.712 billion to $1.745 billion in Q4 March 2014 including the revenues from Opus CMC. The Opus CMC acquisition (announced in December 2013) was completed in January 2014, upon completion of customary closing conditions. Opus CMC's revenue for calendar year 2013, prior to the closing of the acquisition, was approximately $ 43 million, Wipro said.
Azim Premji, Chairman of Wipro, commenting on the results said: "As the global economy is progressing towards stability, we see optimism amongst clients, especially in the West. Corporations are leveraging technology to reduce operational costs and investing resources in differentiating themselves in the marketplace".
T K Kurien, Executive Director & Chief Executive Officer of Wipro, said: "Our focus on account management has yielded encouraging results. We continue to execute to our strategy for superior engagement with clients while investing in emerging technologies to drive towards a higher growth trajectory. During the quarter, our Global Infrastructure Services business grew strongly on revenues."
Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said: "Our strategy of 'standardization at the core' is yielding results. Our investments in automation and productivity tools have driven efficiencies and helped us expand margins of IT Services by 54 basis points to 23%."
Index heavyweight Reliance Industries (RIL) shed 0.63% after announcing almost flat profitability in its Q3 result. The company's net profit rose 0.2% to Rs 5511 crore on 10.5% growth in revenue to Rs 106383 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 17 January 2014.
RIL's profit before depreciation, interest and taxation (PBDIT) declined 1.8% to Rs 9927 crore in Q3 December 2013 over Q3 December 2012. RIL's non-operational income jumped 32.47% to Rs 2305 crore in Q3 December 2013 over Q3 December 2012.
RIL's gross refining margin (GRM) declined to $7.6/barrel in Q3 December 2013, from $7.7/barrel in Q2 September 2013 and $9.6/barrel in Q3 December 2012.
RIL said its refining business maintained stable earnings on Q-o-Q basis ni Q3 December 2013 despite lower volumes and decline in regional benchmark complex margins. RIL's margins were positively impacted by widening crude differentials, strength in middle-distillates and naphtha product cracks, which was offset by weak gasoline cracks
RIL said that the net addition to fixed assets for the nine month ended 31 December 2013 was Rs 27645 crore including exchange rate difference capitalization. Capital expenditure was principally on account of ongoing expansions projects in the petrochemicals and refining business at Jamnagar, Dahej, Silvassa and Hazira.
RIL said its retail unit Reliance Retail continued its growth momentum in Q3 December 2013 despite challenging macroeconomic environment. Reliance Retail's revenue jumped 38.32% to Rs 3927 crore in Q3 December 2013 over Q3 December 2012.
Commenting on the company's Q3 performance, Mukesh D. Ambani, CMD, RIL said: "Reliance's robust refining configuration enabled it to deliver stable refining profits in Q3 December 2013, against the backdrop of declining regional benchmark margins. Even as we invest to further strengthen our energy businesses, this quarter demonstrates the outstanding quality of our refining and petrochemical business resources and their ability to deliver creditable performance in a period marked by cyclicality and uncertainties. We are happy to announce the commissioning of our new polyester facility in Silvassa, the first amongst a series of projects that underpin RIL's industry-leading competitive position. Our retail business continues on its rapid growth trajectory with 38% revenue growth during the quarter".
RIL's outstanding debt as on 31 December 2013 was Rs 81330 crore compared to Rs 72427 crore as on 31 March 2013. RIL had cash and cash equivalents of Rs 88705 crore as on 31 December 2013. These were in bank deposits, mutual funds, CDs and Government securities/bonds. RIL is debt free on a net basis as at 31 December 2013.
The Ministry of Petroleum and Natural Gas notified the Domestic Natural Gas Pricing Guidelines, 2014 for all domestically produced gas, including conventional, shale, coal bed methane (CBM). These guidelines will be applicable from 1 April 2014.
Mahindra & Mahindra (M&M) declined 0.33% after the company on Saturday, 18 January 2014, said that the company, as part of aligning its production with sales requirements, would be observing no production days at the company's automotive plants for 1 to 3 days during the remaining period of January 2014. Mahindra Vehicle Manufacturers, a wholly owned subsidiary would also be observing no production days at the plant at Chakan for up to 3 days during the remaining period of January 2014, M&M said.
M&M said that the management does not envisage any adverse impact on availability of vehicles in the market due to adequacy of vehicle stocks to serve the market requirements.
Bank of Baroda declined 1.57% as the stock turned ex-dividend today, 20 January 2014, for interim dividend of Rs 11 per share for the year ending 31 March 2014.
Union Bank of India shed 1.84% as the stock turned ex-dividend today, 20 January 2014, for the interim dividend of Rs 2.70 per share for the year ending 31 March 2014.
Aurobindo Pharma rose 3.26% 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.
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 0.39% to 0.72%. Key benchmark indices in Indonesia, South Korea and Taiwan rose 0.22% to 0.42%.
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 will remain closed today, 20 January 2014, for the Martin Luther King Jr. Holiday.
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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