High volatility was witnessed as key benchmark cut almost entire intraday gains after a sudden surge in early afternoon trade after global credit rating agency Standard and Poor's (S&P) today, 7 November 2013, warned that it may lower India's rating to speculative grade from investment grade next year if the government that takes office after the general election fails to provide a credible plan to reverse the country's low economic growth. The barometer index, the S&P BSE Sensex, fell below the psychological 21,000 mark, after regaining that level in early afternoon trade. The Sensex was up 9.30 points or 0.04%, off close to 250 points from the day's high and up about 35 points from the day's low. The market breadth, indicating the overall health of the market, turned negative from positive in mid-afternoon trade.
Most pharma stocks edged higher. Index heavyweight Reliance Industries (RIL) declined in choppy trade. Most bank pivotals edged lower in choppy trade. Triveni Turbine tumbled on weak Q2 result.
A bout of initial volatility was witnessed as key benchmark alternately swung between positive and negative terrain. Volatility continued in morning trade. Key benchmark indices moved in a narrow range in mid-morning trade. A sudden surge took the key benchmark indices to fresh intraday high in early afternoon trade. The Sensex regained the psychological 21,000 mark. Key benchmark indices pared gains in afternoon trade. High volatility was witnessed as key benchmark cut almost entire intraday gains in mid-afternoon trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 271.70 crore on Wednesday, 6 November 2013, as per provisional data from the stock exchanges.
Global credit rating agency Standard and Poor's (S&P) today, 7 November 2013, affirmed its 'BBB-/A-3' sovereign credit rating on India while retaining negative rating outlook on Asia's third-largest economy. S&P said in its statement that India's institutional strengths and high international reserves supported its investment-grade rating on India. However, the agency noted a marked slowdown in India's real growth, which complicates the government's debt dynamics and ability to implement reforms. S&P added that the outlook remained negative, indicating that it may lower the rating to speculative grade next year if the government that takes office after the general election does not appear capable of reversing India's low economic growth. Alternatively, the credit ratings agency said it may revise India's outlook back to "stable" should a new government have an agenda to restore growth, improve the country's finances, or allow the implementation of an effective monetary policy. S&P added it will conduct its next review on India's ratings after the elections, which are due by May 2014, unless the country's fiscal or external standing deteriorates.
At 14:20 IST, the S&P BSE Sensex was up 9.30 points or 0.04% to 20,904.24. The index jumped 247.91 points at the day's high of 21,142.85 in early afternoon trade, its highest level since 5 November 2013. The index fell 28.06 points at the day's low of 20,866.88 in early trade.
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The CNX Nifty was down 1.15 points or 0.02% to 6,214. The index hit a high of 6,288.95 in intraday trade, its highest level since 5 November 2013. The index hit a low of 6,207.35 in intraday trade, its lowest level since 29 October 2013.
The market breadth, indicating the overall health of the market, turned negative from positive in mid-afternoon trade. On BSE, 1,262 shares fell and 1,109 shares rose. A total of 148 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks rose and rest of them fell.
Most bank pivotals edged lower. ICICI Bank declined 1.53% to Rs 1063.50. The stock hit high of Rs 1091.70 and low of Rs 1058.55 so far during the day.
HDFC Bank rose 0.26% to Rs 669.80. The stock hit high of Rs 677.10 and low of Rs 661.55 so far during the day
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank shed 0.08% to 4.95%.
Most pharma stocks edged higher. Cipla (up 0.19%), Dr Reddy's Laboratories (up 0.09%), Lupin (up 0.7%), and Sun Pharmaceutical Industries (up 0.62%), gained. But, Ranbaxy Laboratories fell 0.92%.
Wockhardt surged 8.41% after the UK health regulator allowed its Kadaiya, Nani Daman facility to manufacture and supply most of the products approved to be produced at the unit. The announcement was made after market hours on Wednesday, 6 November 2013.
Wockhardt said that UK's Medicine and Healthcare Products Regulatory Agency (UKMHRA) has allowed the company to manufacture and supply most of the products manufactured at the company's facility at Kadaiya in Nani Daman and assessed to be critical to public health. As a result the net impact on the annualised consolidated revenue is expected to be less than 1 million pounds, out of the total annual consolidated revenue of approximately 18 million pounds from the said facility, Wockhardt added.
Last month, UKMHRA had imposed restrictions on import of medicines made at Wockhardt's Kadaiya unit for violation of norms.
Index heavyweight Reliance Industries (RIL) fell 0.47% to Rs 894.30. The stock hit high of Rs 904.95 and low of Rs 894 so far during the day.
Triveni Turbine tumbled 6.84% on weak Q2 result. The company's net profit fell 45.55% to Rs 15.30 crore on 31.6% decline in net sales to Rs 122.90 crore in Q2 September 2013 over Q2 September 2012. The Q2 result was announced after market hours on Wednesday, 6 November 2013.
Triveni Turbine's EBITDA (earnings before interest, taxation, depreciation and amortization) declined 42.95% to Rs 25.90 crore in Q2 September 2013 over Q2 September 2012. EBITDA margin declined to 21.1% from 25.3% a year ago.
Commenting on the company's Q2 performance, Mr. Dhruv M. Sawhney, CMD, Triveni Turbine said, "The performance of the business for the quarter and half year under review has been lower than our expectations. The macroeconomic factors - economic slowdown, currency depreciation, lower credit etc., both domestically and in the addressable markets globally, impacted both the order booking and revenue. The enquiry book for both domestic and overseas market remain strong, but the challenge being faced is the delay in order finalisation as well as delay in taking deliveries, which are primarily from the customer end. The company continued its focus on export markets and during the last six months, established customer contacts in over 15 new countries and is expecting generation of enquiries/orders from these markets as well in the coming quarters. The aftermarket business is going as per our estimates and we believe we will be able to achieve a year on year growth in that segment during the year. We believe, in the second half of the current financial year, on account of improvement in credit off-take especially from the industrial segments which we cater to, the order booking should improve in both domestic & exports which should help in building a healthy order book for FY 2015. However, on account of slow down in the order intake and delay in despatches in the first half of the current financial year, we believe the year end results would not be as per our earlier estimates, and is expected to register a decline. Even though this will also have an impact on the overall profitability due to under-absorption of fixed overheads, the contribution margins remain healthy in line with previous years. However, we believe this to be in the short term and once the order booking picks up, we expect the business to be back on the growth path with similar profitability as was shown in the previous years".
Mr. Sawhney added, "GE Triveni, the joint venture with GE, has secured two orders in the current half year and is expected to have break-through in the international market. Having successfully commissioned its first turbine and having four turbines in the pipeline for execution, we believe that GETL is well positioned to get more orders - both from domestic and international markets".
In the foreign exchange market, the rupee edged lower against the dollar in choppy trade after global credit rating agency Standard and Poor's (S&P) warned that it may lower India's rating to speculative grade from investment grade next year if the government that takes office after the general election does not appear capable of reversing India's low economic growth. The partially convertible rupee was hovering at 62.55, compared with its close of 62.39/40 on Wednesday, 6 November 2013. The rupee had declined sharply on Wednesday.
Most European stocks edged lower on Thursday, 7 November 2013, as investors awaited the European Central Bank's interest rate decision. Key benchmark indices in France and UK shed 0.14% to 0.27%. Germany's DAX rose 0.07%.
The European Central Bank (ECB) holds a monetary policy meeting today, 7 November 2013. The ECB is seen retaining its key policy rate at a record-low 0.5%. The Bank of England is expected to keep monetary policy unchanged after a monetary policy review today, 7 November 2013.
Asian stocks fell on Thursday, 7 November 2013, before US economic reports and the European Central Bank's policy meeting. Key benchmark indices in Singapore, China, Japan, Hong Kong and South Korea shed 0.19% to 0.76%. Key benchmark indices in Taiwan and Indonesia and rose 0.02% to 0.85%.
China's leaders will meet in Beijing on November 9-12 to map out economic policies as the country heads for its slowest annual growth in more than two decades.
Trading in US index futures indicated that the Dow could fall 6 points at the opening bell on Thursday, 7 November 2013. Most US stocks rose on Wednesday, 6 November 2013, with the Dow Jones Industrial Average notching another record close, as investors bought into optimism that the Federal Reserve would continue its stimulus longer than thought, ahead of economic reports this week on the economy and the labor market.
Data on US GDP growth for Q3 September 2013 is due for release today, 7 November 2013. The GDP grew 2.5% in Q2 June 2013.
The US government will tomorrow, 8 November 2013, release nonfarm payrolls figures for October 2013. The job data is a key economic indicator that has been watched closely in recent months to see whether the US Federal Reserve will roll back its bond-buying program.
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