Key benchmark indices traded off the day's high in afternoon trade. The barometer index, the S&P BSE Sensex, was currently below the psychological 21,000 mark, having alternately moved above and below that level since early afternoon trade. The Sensex was up 280.69 points or 1.36%, off close to 176 points from the day's high and up close to 10 points from the day's low. The market breadth, indicating the overall health of the market, was positive. Indian stocks edged higher today, 5 December 2013, after exit polls on Wednesday, 4 December 2013, predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and New Delhi. In the foreign exchange market, the rupee strengthened past 62 against the dollar.
Bank shares were in demand after a foreign brokerage upgraded target prices of select bank shares. Jubilant Life Sciences tumbled after the firm said that one of its manufacturing facilities, Jubilant HollisterStier, LLC in the United States has been issued a warning letter by US Food and Drug Administration.
The market surged in early trade after exit polls on Wednesday, 4 December 2013, predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and New Delhi. The Sensex hit 4-1/2-week above the psychological 21,000 mark. The 50-unit CNX Nifty hit its highest level in more than four weeks. The market trimmed initial gains in morning trade. Firmness continued on the bourses in mid-morning trade. The Sensex pared gains and hit fresh intraday low in early afternoon trade. The Sensex fell below the psychological 21,000 mark in afternoon trade.
Indian stocks surged today, 5 December 2013, after exit polls on Wednesday, 4 December 2013, predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and New Delhi. The state elections are considered a barometer for the national elections that are scheduled to be held before the end of May 2014. BJP's prime ministerial candidate for general elections in 2014 -- Narendra Modi -- is considered a pro-business leader.
The Bharatiya Janata Party (BJP) has emerged as the biggest winner in four key state elections, exit polls forecast on Wednesday, 4 December 2013, a possible blow to the ruling Congress ahead of a general election due next year. Assembly elections in Delhi, Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram were held over the past few weeks. The elections were marked by record high turnout in most states. Despite the gains predicted for the BJP it was unable to win a majority of seats in the capital Delhi, two polls showed. One poll suggested the race was close in Chhattisgarh. While the exact results varied from exit poll to exit poll, the general trend was clear: The ruling Congress party recorded embarrassing declines in support in Delhi as well as the western state of Rajasthan. Meanwhile voters in Madhya Pradesh and Chhattisgarh voted basically on the same lines they voted five years ago, backing the main opposition party, the BJP.
Counting of votes for assembly elections in Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan takes place on Sunday, 8 December 2013. Counting of votes for assembly elections in Mizoram takes place on 9 December 2013. The results are being closely watched by markets as a potential indicator of the mood of voters in the world's biggest democracy before the 2014 general election.
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At 13:15 IST, the S&P BSE Sensex was up 280.69 points or 1.36% to 20,989.40. The index jumped 456.89 points at the day's high of 21,165.60 in early trade, its highest level since 3 November 2013. The index rose 270.97 points at the day's low of 20,979.68 in afternoon trade.
The CNX Nifty was up 88.60 points or 1.44% to 6,249.55. The index hit a high of 6,300.55 in intraday trade, its highest level since 5 November 2013. The index hit a low of 6,247.10 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,233 shares rose and 1,061 shares dropped. A total of 163 shares were unchanged.
From 30-share Sensex pack, 23 stocks rose and rest fell. Larsen & Toubro (up 4.08%), Bhel (up 3.84%), Coal India (up 3.11%), Maruti Suzuki India (up 2.71%), Tata Power (up 2.44%), HDFC (up 2.05%), Jindal Steel & Power (up 1.94%), Reliance Industries (up 1.67%), Hindalco Industries (up 1.66%) and Hero MotoCorp (up 1.43%), edged higher from the Sensex pack.
Sun Pharmaceutical Industries (down 1.57%), Dr. Reddy's Laboratories (down 1.44%), ITC (down 0.59%), Wipro (down 0.53%), NTPC (down 0.38%), Infosys (down 0.24%) and Cipla (down 0.05%), edged lower from the Sensex pack.
Bank shares were in demand after a foreign brokerage upgraded target prices of select bank shares. ICICI Bank (up 6.39%), Yes Bank (up 5.13%), HDFC Bank (up 4.10%), Axis Bank (up 3.88%), Union Bank of India (up 3.68%), Bank of Baroda (up 3.59%), Canara Bank (up 3.50%), IDBI Bank (up 3.29%), IndusInd Bank (up 2.91%), Bank of India (up 2.69%), Punjab National Bank (up 2.53%), State Bank of India (up 2.15%), Kotak Mahindra Bank (up 1.87%) and Federal Bank (up 1.80%), edged higher.
The brokerage increased Bank of Baroda's target price to Rs 775 from Rs 645 and for Kotak Mahindra Bank, the target was raised to Rs 790 from Rs 762. SBI's target price was increased to Rs 2,200 from Rs 1,933. ICICI Bank's target price was raised to Rs 1,290 from Rs 1,250.
Jubilant Life Sciences tumbled 9.96% after the firm said that one of its manufacturing facilities, Jubilant HollisterStier, LLC in the United States has been issued a warning letter by US Food and Drug Administration. The announcement was made during trading hours today, 5 December 2013.
Jubilant Life Sciences (JLL) said that as required by the United States Food and Drug Administration (USFDA), JHS-Spokane will respond to the warning letter from USFDA on or before 12 December 2013. The response will identify corrective actions already been completed as well as some pending corrective actions to ensure on-going cGMP compliance, the company said in a statement.
JLL said that USFDA specified in the warning letter that until all corrections have been completed and that they have confirmed correction of the violations and firm compliance to cGMPs, USFDA may withhold approval of new applications or supplements listing JHS-Spokane as the drug product manufacturer.
JLL said it expects that the on-going manufacturing, distribution and sale of products from this facility will not be impacted as the warning letter will affect new approvals only. JHS-Spokane is committed to implementing the necessary corrective actions required to address the FDA concerns, and will work closely with the USFDA to bring resolution to this matter, the company said.
During first half of FY 2014, the contract manufacturing operations at JHS-Spokane contributed 7% to consolidated sales and 4% to consolidated EBITDA of JLL, the company said in a statement.
ICRA rose 0.62% to Rs 1,530. ICRA Management Consulting Services (IMaCS) and Cambridge Systematics, Inc. have signed a Memorandum of Understanding (MoU) to collaborate in providing consulting services to the transportation sector in India, across Asia, and in Africa. IMaCS and Cambridge Systematics will offer a broad mix of consulting services to public and private sector clients in the transportation sector. The announcement was made during trading hours.
Cambridge Systematics, founded in 1972, is a global transportation consulting and technology solutions provider headquartered in the United States. IMaCS, a wholly-owned subsidiary of ICRA, is a policy and strategy consulting firm headquartered in India with an operating footprint across 45 countries, principally across Asia, Africa and Europe. IMaCS has expertise in financial services, transportation, energy, urban and social infrastructure and manufacturing sector.
Strides Arcolab tumbled 12.42% after the company said it has completed sale of its Agila Specialties Division to Mylan Inc. for a total consideration of up to $1.75 billion. Strides Arcolab said that since the initial announcement of transaction pertaining to the sale of its Agila Specialties Division, the company's board of directors approved final transaction terms to include a hold back of $250 million contingent upon satisfaction of certain regulatory conditions. Consequent to the warning letter received by the company for one of its units in Bangalore, Strides has agreed to a hold back of $250 million, which will be contingent upon satisfaction of certain regulatory conditions related to the injectable facilities in India. The company expects those contingent conditions will be satisfied sometime in 2014.
Since the initial announcement of this transaction, Strides now expects an additional expenditure of $150 million. This includes cost towards acquisition of additional assets from its erstwhile partners and an estimated remediation cost related to its regulatory commitments post the warning letter.
Strides Arcolab also said that a meeting of the Board of Directors of the company will be held on 10 December 2013 to consider declaration of special dividend.
Global credit rating agency Moody's Investors Service has said that its outlook for Indian non-financial corporates is negative, reflecting macroeconomic challenges over the next 12 months. Moody's also expects heightened expectation of a scale back of quantitative easing by the Federal Reserve in 2014 to keep the rupee volatile, making the operating environment more challenging for importers and exporters. Moody's conclusions were contained in a just-released report titled, "2014 Outlook -- India Non-Financial Corporates, Weak Economy, Political Uncertainty and Quantitative-Easing Scale Back Are Biggest Risks".
Companies will also face higher borrowing costs and tight funding conditions with monetary policy likely to remain tight, the report says. Moody's could move to a stable outlook if its GDP growth expectations exceed 6%, the rupee stabilizes -- such that one-year volatility falls below 5% -- and a development and reform-focused government is formed with a strong majority after general elections in 2014.
In the foreign exchange market, the rupee edged higher against the dollar after exit polls on Wednesday, 4 December 2013, predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and New Delhi. The state elections are considered a barometer for the national elections that are scheduled to be held before the end of May 2014. BJP's prime ministerial candidate for general elections in 2014 -- Narendra Modi -- is considered a pro-business leader. The partially convertible rupee was currently hovering at 61.5975, compared with its close of 62.05/06 on Wednesday, 4 December 2013.
Government bond prices rose tracking gains in rupee against the dollar. The yield on 10-year benchmark federal paper, 7.16% GS 2023, was hovering at 9.0575%, lower than its close of 9.0897% on Wednesday, 4 December 2013. Bond yield and bond prices are inversely related.
On macro front, the Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled 28 January 2014.
Global credit rating agency Moody's Investors Service has said in an update on the Indian economy that the outcome of the next general election could impact growth depending on the impact on policies and sentiments. Simultaneously, the agency which expects the Indian economy to pose a slow recovery only in the second half of 2014, has also reiterated the stable outlook for India's rating. "Moody's expects a slow economic recovery in the second half of 2014, if global growth increases while domestic inflation and interest rates decline", the agency said. Moody's added that India's investment climate and competitiveness indicators are weaker than those of similarly rated countries. "Although there have been policy efforts to induce investment in the last year, their impact may not be evident in the near term," it said.
Moody's said that downward pressure on the rating could develop if the medium-term growth and fiscal outlook weaken further; or if there is a decline in the foreign exchange reserves or the asset quality of state-owned banks or if high inflation persists, damaging the fiscal, growth and balance of payments outlook. The agency sounded a note of caution on the country's fiscal deficit saying that a low base limits the revenue-collection capacity of the government.
Asian stocks declined on Thursday, 5 December 2013, as strong US economic data overnight triggered speculation that the Federal Reserve will bring forward cuts to monetary stimulus for the US economy. Key benchmark indices in Indonesia, Hong Kong, Japan, South Korea, Singapore, China and Taiwan shed 0.1% to 1.50%. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
Trading in US index futures indicated that the Dow could slide 9 points at the opening bell on Thursday, 5 December 2013. US stocks fell a fourth day on Wednesday, the longest slump in 10 weeks for the Standard & Poor's 500 Index, as investors weighed economic data for clues on the timing of Federal Reserve stimulus cuts amid optimism over a budget deal.
Data showed companies boosted payrolls in November by the most in a year. US companies added 215,000 jobs in November, topping estimates, a private survey showed yesterday. A separate report indicated service industries in the US expanded at a slower pace than forecast in November, showing uneven progress in the biggest part of the economy. Purchases of new US homes surged in October by the most in three decades, signaling buyers are starting to take higher mortgage rates in stride.
Investors are keeping a close watch on economic data in the United States as the Federal Reserve monitors the pace of recovery to gauge when it will begin to reduce monetary stimulus for the US economy, which has been aimed at encouraging growth. The US government will release the influential US non-farm payrolls data for November 2013 tomorrow, 6 December 2013. The Fed has said improvement in the labor market is a key factor in its policy assessment.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
In Europe, the European Central Bank (ECB) holds its monthly monetary policy meeting today, 5 December 2013. The ECB unexpectedly cut the benchmark interest rate by a quarter-percentage point last month to a record-low 0.25% after inflation slowed in October to the least in four years.
UK's central bank -- Bank of England -- is also expected to keep its key policy rate steady at 0.5% after a monetary policy review today, 5 December 2013.
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