Comments from Finance Minister P. Chidambaram and Reserve Bank of India Governor D. Subbarao on Thursday, 22 August 2013, in separate news conferences that India doesn't plan to introduce capital controls helped soothe investors' nerves as equities rose for the second day in a row and as the battered rupee also recovered. The S&P BSE Sensex was provisionally up 204.96 points or 1.12%, up close to 305 points from the day's high and off about 30 points from the day's low. The market breadth, indicating the overall health of the market, was positive. Except BSE Realty index, all the other sectoral indices on BSE were in the green.
Index heavyweight and cigarette major ITC edged higher in choppy trade. Capital goods pivotals rose on bargain hunting after recent losses. Most bank stocks gained. Reliance Infrastructure (RInfra) gained after the Maharashtra Electricity Regulatory Commission (MERC) allowed the company to recover past arrears over next 6 years and to recover revised cross subsidy surcharge. Among IT stocks, Tech Mahindra hit 52-week high.
A bout of volatility was witnessed as key benchmark indices slipped into the red after a higher opening triggered by firm Asian stocks. High volatility was witnessed as key benchmark indices regained positive terrain in morning trade. Intraday volatility continued as the Sensex cut entire intraday gains after hitting fresh intraday high in mid-morning trade. Key benchmark indices were a tad higher in early afternoon trade. Key benchmark indices extended gains to strike fresh intraday high in afternoon trade. A bout of volatility was witnessed as key benchmark indices pared gains after hitting fresh intraday high in mid-afternoon trade. The market regained strength in late trade.
As per provisional figures, the S&P BSE Sensex was up 204.96 points or 1.12% to 18,517.90. The index jumped 233.66 points at the day's high of 18,546.60 in late trade, its highest level since 21 August 2013. The index fell 102.19 points at the day's low of 18,210.75 in morning trade.
The CNX Nifty was up 60.25 points or 1.11% to 5,468.70, as per provisional figures. The index hit a high of 5,478.80 in intraday trade, its highest level since 21 August 2013. The index hit a low of 5,377.80 in intraday trade.
The total turnover on BSE amounted to Rs 1953 crore, lower than Rs 2323.03 crore on Thursday, 22 August 2013.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,346 shares rose and 972 shares fell. A total of 150 shares were unchanged.
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Among the 30-share Sensex pack, 22 stocks rose and rest of them fell. Jindal Steel & Power (up 3.43%), ONGC (up 2.88%) and Tata Power Company (up 4%), edged higher.
Lupin rose 1.9%. The company said at the fag end of the trading session that its US subsidiary, Lupin Pharmaceuticals, Inc. (LPI) has received final approval for its Rifampin Capsules USP, 150 mg and 300 mg strengths from the United States Food and Drugs Administration (USFDA). Lupin's Rifampin Capsules USP, 150 mg and 300 mg are the AB rated generic equivalent of Sanofi Aventis' Rifadin Capsules 150 mg and 300 mg strengths. Rifadin Capsules had annual US sales of approximately $18.5 million as IMS MAT March 2013 data.
Rifampin Capsules is indicated for the treatment of all forms of Tuberculosis. The drug is also indicated for the treatment of asymptomatic carriers of Neisseria meningitidis to eliminate meningococci from the nasopharynx.
Index heavyweight and cigarette major ITC rose 0.91% to Rs 308.55. The stock hit high of Rs 309.80 and low of Rs 301.15 in intraday trade.
Capital goods pivotals rose on bargain hunting after recent losses. L&T rose 1.49% to Rs 736.20. The stock had hit 52-week low of Rs 698.60 in intraday trade on Thursday, 22 August 2013. The company announced during market hours on Thursday, 22 August 2013, that its construction division has won new orders valued at Rs 1504 crore across various business segments in August 2013.
Shares of power equipment major Bharat Heavy Electricals (Bhel) jumped 8.01%.
Most bank stocks gained. HDFC Bank rose 2.74%. Axis Bank gained 0.96%.
But, State Bank of India fell 0.77%.
The Reserve Bank of India (RBI) on 20 August 2013, said it would repurchase government bonds to increase the availability of cash in the banking system, a step that appears to be a partial reversal of the slew of measures it took since mid-July to tighten liquidity. The RBI said it would buy back Rs 8000-crore of government bonds on Friday, 23 August 2013. Further repurchase will depend on evolving market conditions, it said. It is important to ensure that the liquidity tightening doesn't harden long-term bond yields and impact the flow of credit to productive sectors of the economy, the central bank said, referring to its buyback plan.
The RBI on 20 August 2013 also relaxed some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices. They now don't have to record their current marked-to-market losses immediately as the RBI has allowed them to spread the losses equally over the remaining period of this fiscal year.
Private sector banking giant ICICI Bank gained 2.14%. The bank after market hours on Thursday, 22 August 2013, said it has increased base rate by 0.25% to 10% per annum with effect from 23 August 2013. With effect from 1 July 2010, interest rates on new loans and advances, including consumer loans, are determined with reference to base rate. ICICI Bank has also announced an increase of 0.25% in its benchmark prime-lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from 23 August 2013. These benchmark rates are used for determining interest rates on loans and advances sanctioned upto 30 June 2010. The fixed rate customers will not be impacted by the above revision and their contracted rates will remain unchanged, ICICI Bank said.
Reliance Infrastructure (RInfra) rose 3.75% after the Maharashtra Electricity Regulatory Commission (MERC) allowed the company to recover past arrears over next 6 years and to recover revised cross subsidy surcharge. The company said during market hours today, 23 August 2013, that as per the MERC order dated 22 August 2013, RInfra has been allowed to recover past arrears, along with 14.5% per annum carrying cost, at Rs 925 crore per year, aggregating Rs 5550 crore over the next 6 years.
The MERC has also allowed RInfra to recover revised cross subsidy surcharge (CSS) of Rs 819 crore for the financial year 2013-14, Rs 896 crore for FY 2014-15 and Rs 590 crore for FY 2015-16. According to the MERC order, revised tariff, the arrears recovery and revised CSS will become effective from 1 September 2013. RInfra's tariffs are most competitive across all major categories, and this will ensure major inflow of high end consumers back to RInfra, the company said in a statement. RInfra's tariffs are expected to reduce by 12% and 11% in the next two financial years, benefitting its valued customers significantly, mainly owing to efficient and low power procurement cost by RInfra, the company said.
Tech Mahindra jumped 7.39% to Rs 1,366.90 after hitting a 52-week high of Rs 1,374.90 in intraday trade today, 23 August 2013.
Seamec rose 4.59% to Rs 43.30 after the company said it has entered into a contract for the charter hire of Vessel "ALLIANCE" with Sea Horse General Contracting Establishment, UAE, Dubai for working in Offshore Egyptian Mediterranean waters. This vessel is under bareboat charter with Seamec. The tenure of the contract would be around 120 days with option for extension. The contract is likely to commence around end August 2013, Seamec said. The total contract value for the firm period would be around $7.3 million approximately, Seamec said.
In the foreign currency market, the battered rupee recovered after Finance Minister P. Chidambaram and Reserve Bank of India Governor D. Subbarao on Thursday, 22 August 2013, said in separate news conferences that India doesn't plan to introduce capital controls. The partially convertible rupee was hovering at 64.13, higher than its close of 64.55/56 on Thursday, 22 August 2013.
Chidambaram said the restrictions imposed by the Reserve Bank of India recently on money that Indian individuals and companies can send overseas would be revisited once the currency market stabilizes. In separate news conferences in New Delhi, both Chidambaram and Subbarao attributed the rupee's recent sharp decline to global trends.
Chidambaram said that revival and encouragement of growth will continue to be the focus of the government. Chidambaram said that stronger growth will, in course of time, alleviate many of the challenges that India faces today. He said that there is no cause for the panic that seems to have gripped the currency markets and that is feeding into other markets.
Chidambaram believes that the rupee is undervalued and has overshot what is generally believed to be a reasonable and appropriate level. Capital inflows will, in due course, correct the position. India's debt indicators are within prudent limits. India does not have excessive public debt (Central and State Governments taken together). The overall public debt to GDP ratio has declined from 73.2% in 2006-07 to 66% in 2012-13. The economy's external debt is only 21.2% of GDP. India's reserves are $277 billion.
India's inflation could accelerate in the current fiscal year due to the rupee's sharp depreciation, the Reserve Bank of India (RBI) said in a report on Thursday. The pass-through of the depreciation of the rupee exchange rate by about 11% in the four months of 2013-14 is incomplete and will put upward pressure as it continues to feed through to domestic prices, the RBI said in its annual report for 2012-13. Risks on the inflation front are still significant, the RBI said. The rupee's weakness could also increase subsidy payouts for fuel and fertiliser in 2013/14, the central bank said. However, the report said normal monsoon rains in India have taken a major risk off the horizon" but said a close vigil was necessary after food prices showed an upsurge during April to July. If high food inflation persists into the second half of 2013-14, the risks of generalised inflation could become large, it said. India's current account gap, which widened to a record high of 4.8% of GDP in the fiscal year to March 2013, is likely to ease in the current fiscal year but may continue to be much above the sustainable level, the report said. Global risks coupled with domestic structural impediments have dampened prospects of a recovery in 2013-14, and posed immediate challenges for compressing the current account deficit, it said. The central bank's report added that utmost attention is needed to contain risks to financial stability arising from deteriorating asset quality of banks.
Most European stocks rose on Friday, 23 August 2013, after the latest data showed Germany's economy expanded by 0.7% in the second quarter, confirming official estimates released last week. Key benchmark indices in UK and Germany were up by 0.04% to 0.21%. France's CAC 40 fell 0.38%.
Germany's economy sharply rebounded in the second quarter from a weak start to the year, gaining steam from a pickup in investment and robust consumption, official data showed Friday. Gross domestic product swelled 0.7%, corresponding to an annualized rate of 2.9%, the national statistics office said. The figures confirm official estimates issued last week. That makes Germany the fastest growing of the world's largest industrialized economies in the second quarter.
UK economic growth accelerated more than initially estimated in the second quarter, helped by construction and manufacturing and a boost from trade. Gross domestic product increased 0.7% from the first quarter, when it rose 0.3%, the Office for National Statistics said in London today.
Data on euro zone consumer confidence for August 2013 is due for release today, 23 August 2013.
Most Asian stocks fell on Friday, 23 August 2013. Key benchmark indices in Singapore, Hong Kong, China and Indonesia fell by 0.02% to 0.47%. Key benchmark indices in Japan, Taiwan and South Korea were up by 0.75% to 2.21%.
Trading in US index futures indicated that the Dow could fall 17 points at the opening bell on Friday, 23 August 2013. US stocks edged higher on Thursday after a monthly average of jobless claims fell to a more than five-year low in the US, and as manufacturing Purchasing Managers' Index readings from China and Germany indicated expansion.
Investors are keeping a close watch on the Federal Reserve's three-day annual monetary conference in Jackson Hole, Wyo which begins today, 23 August 2013, on whether Fed officials give any indication of the timing of the potential tapering of the Fed's bond purchases. Fed Chairman Ben Bernanke is not attending this year's Fed's annual monetary conference. The Fed currently buys $85 billion worth of securities a month to help support the US economy, but it has signaled its intent to soon slow the pace of those purchases as the economy recovery gains pace.
Bernanke's term expires in January, and US President Barack Obama is considering candidates to succeed him, including Fed Vice Chairman Janet Yellen and former Treasury Secretary Lawrence Summers.
Brazil's central bank will begin a $60 billion currency-intervention program on Friday, 23 August 2013, aimed at supporting the real, which recently fell to its lowest level against the dollar since December 2008. Under the program, announced on Thursday, 22 August 2013, the central bank will offer $3 billion on the spot market and in currency swaps each week until the end of 2013, according to media reports.
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