The government's announcement of gas and energy sector reforms sent key benchmark indices surging, with the barometer index BSE Sensex regaining the psychological 19,000 level. The Sensex settled at 2-1/2- week high. The 50-unit CNX Nifty settled at 1-1/2-week high. The Sensex jumped 519.86 points or 2.75%, off 37.13 points from the day's high and up 302.63 points from the day's low. The market breadth, indicating the overall health of the market, was strong.
The Sensex lost 364.49 points or 1.84% in June 2013. The Sensex has fallen 30.90 points or 0.16% in calendar 2013 so far (till 28 June 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 1,047.81 points or 5.13%. From a 52-week low of 16,598.48 on 26 July 2012, the Sensex has surged 2,797.33 points or 16.85%.
Coming back to today's trade, metal stocks edged higher on renewed buying. Coal India jumped after the government on Thursday, 27 June 2013, approved setting up of a coal regulator in a bid to further liberalize the energy sector and revitalize economic growth. ONGC and Reliance Industries (RIL) edged higher after the government's decision to revise gas pricing to the one based on global trade transactions of gas. PSU OMCs rose.
Bank stocks gained. IT stocks reversed intraday fall in volatile trade. Capital goods shares gained on renewed buying. Shares of non-banking finance companies (NBFC) were in demand as a number of companies announced their plans to apply for a banking license. Shares of diamond jewellery maker Gitanjali Gems was locked at 10% lower circuit.
Power generation and fertiliser stocks gained after the Finance Minister P Chidambaram on Friday said that the government would consider helping the power and fertiliser industries to cope with the doubling of domestic gas prices from 1 April 2014. Power finance stocks also gained.
The Cabinet Committee on Economic Affairs (CCEA) on Thursday, 27 June 2013, approved a hefty increase in gas prices by clearing a proposal for fixation of price of domestic natural gas according to the recommendations of the committee constituted under the Chairmanship of Dr. C. Rangarajan on Production Sharing Contract (PSC) mechanism in the petroleum industry. In another decision, the government on Thursday approved setting up of a coal regulator in a bid to further liberalize the energy sector and revitalize economic growth.
The S&P BSE Sensex surged 519.86 points or 2.75% to 19,395.81, its highest closing level since 10 June 2013. The index jumped 556.99 points at the day's high of 19,432.94 in late trade, its highest level since 10 June 2013. The index gained 217.23 points at the day's low of 19,093.18 in opening trade.
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The CNX Nifty jumped 159.85 points or 2.81% to 5,842.20, its highest closing level since 17 June 2013. The index hit a high of 5,852.95 in intraday trade, its highest level since 18 June 2013. The index hit a low of 5,749.50 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,566 shares gained and 880 shares fell. A total of 130 shares were unchanged.
The BSE Mid-Cap index rose 2.26% and the BSE Small-Cap index gained 1.37%. Both these indices underperformed the Sensex.
The BSE Metal index (up 4.7%), BSE Power index (up 4.15%), BSE Capital Goods index (up 4.03%), BSE PSU index (up 3.52%), BSE Oil & Gas index (up 3.37%), BSE Bankex (up 3.18%), BSE Auto index (up 3.11%) BSE Realty index (up 3.04%), outperformed the Sensex.
The BSE Consumer Durables index (up 0.18%), BSE FMCG index (up 0.37%), BSE IT index (up 0.75%), BSE Teck index (up 1.18%) and BSE Healthcare index (up 2.29%) underperformed the Sensex.
The total turnover on BSE amounted to Rs 1985.62 crore, higher than Rs 1647.01 crore on Thursday, 27 June 2013.
Hindustan Unilever was the lone loser from the 30-share Sensex pack. The stock fell 0.59% to Rs 585.55. Anglo-Dutch consumer goods major Unilever's open offer to raise its stake in Indian unit, which opened on 21 June 2013, closes on 4 July 2013. Unilever will buyback shares from minority shareholders at Rs 600 per share to hike its stake in Hindustan Unilever from 52.48% to up to 75%.
Index heavyweight and cigarette major ITC rose 0.2% to Rs 323.50.
GlaxoSmithkline Consumer Healthcare galloped 10.15% to Rs 5,230.
Metal stocks edged higher on renewed buying. Jindal Steel & Power (up 7.25%), Sterlite Industries (India) (up 6.18%), JSW Steel (up 1.69%), Sail (up 4.63%), National Aluminium Company (up 1.4%), Hindustan Zinc (up 6.08%), Tata Steel (up 3.71%) and Hindalco Industries (up 3.18%) edged higher.
Coal India jumped 5.26% to Rs 302.05 after the government on Thursday, 27 June 2013, approved setting up of a coal regulator in a bid to further liberalize the energy sector and revitalize economic growth. The coal ministry today, 28 June 2013, said that the Union Cabinet has approved the proposal for setting up of an independent regulatory authority for the coal sector and also approved the introduction of the Coal Regulatory Authority Bill, 2013 in Parliament. The coal ministry said that the setting up of an independent regulatory body for the coal sector shall help in the regulation and conservation of coal resources and will benefit all stakeholders; that is coal companies, coal consuming industries such as power, steel, cement and coal bearing states and people, directly or indirectly associated with the coal industry.
The Union Cabinet also approved that pending enactment of the legislation, the regulator will be set up through an executive order. The coal regulatory authority will specify methods of testing for declaration of grades or quality of coal, monitor and enforce closure of mines, specify principles and methodologies for price determination of raw coal and washed coal and any other by-produce generated during the process of coal washing, adjudicate upon disputes between parties and discharge other functions as the Central Government may entrust to it.
ONGC and Reliance Industries (RIL) edged higher after the government's decision to revise gas pricing to the one based on global trade transactions of gas.
ONGC was up 2.81% to Rs 329.55 on high volume of 20.79 lakh shares. The stock surged as much as 10.12% to strike an intraday high of Rs 353 in early trade.
Reliance Industries (RIL) was up 3.32% to Rs 858. The stock gained as much as 5.12% at an intraday high of Rs 873.
Oil India fell 0.52% to Rs 570. The stock reversed direction after surging as much as 9.08% to high of Rs 625 at the onset of the trading session.
The government on Thursday, 27 June 2013, agreed to double natural gas prices to industrial and retail consumers to help fund investment in exploration and reverse declining domestic gas output. The price of gas could go up to $8.4 per million metric British thermal units (mmBtu), effective 1 April next year, from current $4.2 mmBtu.
The oil ministry today, 28 June 2013, said that that the Cabinet Committee on Economic Affairs (CCEA) has approved fixation of price of domestic natural gas according to the recommendations of the committee constituted under the Chairmanship of Dr. C. Rangarajan on Production Sharing Contract (PSC) mechanism in the petroleum industry. The approved recommendations known as the Natural Gas Pricing Guidelines, 2013 will remain valid for five years. On the one hand these guidelines will help incentivize investment in the Indian upstream sector, so that production reaches optimum levels and all exploitable reserves are put to production expeditiously. At the same time these guidelines will ensure that producers do not cartelize because of the huge unmet demand. This will protect consumer interests, the oil ministry said in a statement.
The approved policy derives from global trade transactions of gas, the competitive price of gas at the global level by combining two methods. First, the netback price of Indian LNG term imports (excluding spot imports) at the wellhead of the exporting countries will be estimated. Such a netback weighted average price will be interpreted as the arm's length competitive price applicable for India. The second method of searching for a competitive price for India will be to take the weighted average of pricing prevailing at trading points of transactions. For this, the hub price at the Henry Hub in the US (for North America), the price at the National Balancing Point of the UK (for Europe) and the netback price at the sources of supply for Japan will be taken. Finally, the simple average of the prices arrived at through the aforementioned two methods will be taken. Such an overall average of global prices, derived on the basis of netback and hub/balancing point principles, will be taken as the economically appropriate estimate of the arm's length competitive prices applicable for India, the oil ministry said.
These guidelines will be applicable from 1 April 2014 to all domestically produced gas. However, the guidelines will not be applicable in respect of gas for which prices have been fixed contractually for a certain period of time, till the end of such period. These guidelines will also not be applicable where the contract provides a specific formula.
The present gas pricing policy under the New Exploration Licensing Policy (NELP) had been approved by the Government for five years beginning April 2009. This pricing policy will be due for revision with effect from April 2014.
PSU OMCs gained. HPCL (up 3.76%), BPCL (up 5.28%) and Indian Oil Corporation (up 4.79%) gained.
Auto stocks were mostly higher. Bajaj Auto gained 4.94%. The company on 25 June 2013, said workmen at its Chakan plant in Pune have stopped coming to work. Bajaj Auto said the workers had earlier given a notice for a stoppage of work at the plant from the morning shift of 28 June 2013. The reason for the strike was that management had refused to concede their demand that all the workmen working in Bajaj Auto should each be given an option to subscribe to 500 equity shares of the company at a discounted price of Re 1 per share, Bajaj Auto added. The workmen have, however, stopped coming to the Chakan plant from 25 June 2013, itself, without assigning any reason for this stoppage, the company said in a filing.
Hero MotoCorp rose 1.05%.
Maruti Suzuki India rose 0.97%. M&M advanced 3.61%. Tata Motors gained 3.97%.
Bank stocks were in demand. SBI (up 2.18%), ICICI Bank (up 3.24%) and HDFC Bank (up 2.82%), edged higher.
Yes Bank rose 3.85%. The Cabinet Committee on Economic Affairs has approved the proposal of Yes Bank to increase foreign equity participation upto 60% through a qualified Institutional Placement (QIP) of its equity shares to eligible non-residents and/or issue of Global Depository Receipts (GDRs) to eligible non-resident investors, as recommended by the Foreign Investment Promotion Board (FIPB). The approval would result in foreign investment amounting to Rs 2650 crore approximately being received in the country, the finance ministry said in a statement.
Shares of non-banking finance companies (NBFC) were in demand as a number of companies announced their plans to apply for a banking license.
Edelweiss Financial Services (up 0.17%), IFCI (up 17.79%), India Infoline (up 4.2%), Bajaj Finance (up 1.51%), Reliance Capital (up 4.32%), IDFC (up 1.78%) edged higher.
Videocon Industries shed 2.14%. The company after market hours today, 28 June 2013, said that the company's board of directors has accorded approval to the proposal of the group for filing an application with Reserve Bank of India (RBI) for opening a bank.
Applicants seeking licenses to set up banks are required to submit their applications to the RBI by 1 July 2013.
Entities in the private and public sector and NBFCs will be eligible to set up a bank through a wholly-owned Non-Operative Financial Holding Company (NOFHC). However, they need to have sound credentials, integrity and financials with a successful track record of 10 years.
Power generation and fertiliser stocks gained after the Finance Minister P Chidambaram on Friday said that the government would consider helping the power and fertiliser industries to cope with the doubling of domestic gas prices from 1 April 2014. The power and fertiliser ministries have raised the issue. The government can look at fixing the input costs for these sectors, he said. The issues will be addressed in course of time, Chidambaram said.
Tata Power Company (up 5.9%), Reliance Infrastructure (up 7.02%), CESC (up 2.58%), Reliance Power (up 5.81%) and Adani Power (up 3.12%) edged higher from the power generation pack.
NTPC rose 2.53% to Rs 144 after a block deal of 10 lakh shares was executed on BSE at Rs 142 per share at 11:13 IST. The block deal constitutes 0.01% of NTPC's equity.
Meanwhile, NTPC said that it has tied up a fixed interest rate term loan facility for euro 95 million on 27 June 2013 with KfW, the German government developmental financial institution to part finance the capital expenditure on renovation and retrofitting of Electro Static Precipitators at its various stations. The loan is to be repaid in 16 equal semi annual installments after moratorium of 4 years. NTPC is one of the few companies around the world considered as sovereign by the German government for lending on a standalone basis without sovereign guarantee.
Further, a loan agreement of Rs 2000 crore was signed with Bank of India on 28 June 2013 to finance capital expenditure of generation projects and coal mining activities, NTPC said. The loan facility has a door-to-door maturity of 15 years including a drawdown period of 5 years.
Power Grid Corporation of India surged 4.23%.
Among power finance stocks, REC (up 4.13%) and Power Finance Corporation (up 4.03%) gained.
Among fertiliser shares, Rashtriya Chemicals and Fertilizers (up 6.24%), Chambal Fertilisers & Chemicals (up 8.2%), GSFC (up 1.5%), Deepak Fertilisers & Petrochemicals Corporation (up 0.7%) and Coromandel International (up 9.41%) gained.
National Fertilizers (NFL) gained 1.77%. The Cabinet Committee on Economic Affairs (CCEA) today approved the disinvestment of 7.64% paid up equity capital of the NFL that is approximately 3.74 crore shares. The disinvestment will be out of Government of India's (GOI's) shareholding of 97.64%, as per the Securities and Exchanges Board of India (Sebi) rules and regulations in order to make the NFL compliant to public share holding requirements.
Market regulator Securities & Exchange Board of India (Sebi) has mandated minimum public shareholding of 10% for state-run firms by 8 August 2013.
Capital goods shares gained on renewed buying. ABB (up 5.47%), Bhel (up 7.24%), BEML (up 3.07%), Bharat Electronics (up 1.71%), L&T (up 4.04%), Siemens (up 7.52%) gained.
Crompton Greaves jumped 8.73%. The company said its board of directors at its meeting held today, 28 June 2013, approved buy-back of equity shares from the open market through the stock exchanges, at a price not exceeding Rs 125 per share. The company has set aside Rs 265.70 crore for share buyback, being 10% of the total paid-up equity capital plus free reserves as per the audited balance sheet of the company for the year ended 31 March 2012 (FY 2012).
Hindustan Construction Company rose 3.1% after the company after trading hours on Thursday, 27 June 2013, said it has approved preferential allotment of 3.92 crore convertible warrants to two promoter companies viz. Hincon Holdings and Hincon Finance at a price of Rs 16.32 per warrant (including a premium of Rs 15.32) aggregating Rs 64 crore.
IT stocks reversed intraday fall in volatile trade. Tata Consultancy Services (TCS) (up 2.16%), Infosys (up 0.66%) and Wipro (up 0.59%) gained.
Meanwhile, the US Senate approved plan to rewrite its immigration laws. The plan, aimed at overhauling US immigration laws, includes proposals such as limiting the number of foreign workers in the US and raising visa fees significantly. Indian IT companies get more than half of their revenue from the US and the bill could impact these companies' cost structures.
MMTC hit maximum permissible 5% lower circuit at Rs 102.85, also its 52-week low, with the stock extending recent steep slide triggered by government concluding the divestment of 9.33% stake in the firm at a huge discount to the stock's ruling market price. On 13 June 2013, the Government of India (GoI) sold 9.33% stake in MMTC via Offer for Sale (OFS) through stock exchanges mechanism at an indicative price of Rs 60.86 per share, at a discount of 71.21% to the closing price of the stock of Rs 211.45 on 12 June 2013.
The divestment was done to make the company compliant to the public shareholding requirements under the Securities Contract Regulations (Rules) (SCRR). Sebi has mandated minimum public shareholding of 10% for state-run firms by 8 August 2013. Post stake sale, the GoI holds 90% stake in MMTC.
Sun Pharmaceutical Industries jumped 3.74% to Rs 1,009.95, with the stock extending Thursday's 3.5% rally.
Cipla rose 0.84% after the company said today, 28 June 2013 that the company received approval from the takeover regulation panel of South Africa on 27 June 2013 regarding the proposed acquisition of 100% of issued shares of Medpro by the company and that all conditions precedent to the scheme have now been fulfilled or waived and accordingly on 27 June 2013 scheme has become unconditional.
Ranbaxy Laboratories fell 2.24%.
Piramal Enterprises spurted 10.81% to Rs 564.45.
Shasun Pharmaceuticals jumped 14.45%. The company during market hours today, 28 June 2013, said an amicable settlement has been reached with the workers at the company's Pondicherry facility. The strike has been called off and operations resumed from yesterday night.
Shares of diamond jewellery maker Gitanjali Gems was locked at 10% lower circuit at Rs 236.50, also its 52-week low. The stock has witnessed a steep slide this week.
European stock markets declined on Friday, 28 June 2013, ahead of US sentiment data and ahead of speeches by some Federal Reserve officials later in the global day. Key benchmark indices in Germany, UK and France were down 0.12% to 0.55%.
German retail sales were better than expected in May, as consumers returned to the shops after being kept away for months by the cold and rainy weather, data from the Federal Statistics Office showed on Friday. Retail sales in May increased 0.8% from April, following three consecutive months of declines, beating economists' forecasts of a 0.3% drop in sales. The data are inflation-adjusted and also consider calendar effects.
Asian stocks edged higher on Friday, 28 June 2013, tracking an overnight rise in global equities on easing fears of an early end to US monetary stimulus. Key benchmark indices in China, Hong Kong, Indonesia, Taiwan, Singapore and South Korea were up 1.04% to 2.26%.
In Japan, the Nikkei 225 index jumped 3.51% as a weakened yen combined with upbeat industrial-production data to lift sentiment.
Japan's industrial production showed a surprise jump in May, while retail sales for the same month also gained, though the largest retailers saw a decline. Industrial output rose 2% during the last month, the Ministry of Economy, Trade and Industry said Friday, accelerating from a 0.9% gain in April.
Trading in US index futures indicated that the Dow could gain 24 points at the opening bell on Friday, 28 June 2013. US stocks surged for a third session on Thursday on upbeat economic data and reiterations from Federal Reserve officials that monetary policy depends on the economic outlook. In a speech on Thursday, Federal Reserve Bank of New York President William Dudley played down the possibility that rate hikes are in the cards anytime soon. Atlanta Fed President Dennis Lockhart said that the markets had mistaken Bernanke's framework for tapering central-bank asset purchases, and reiterated the Fed's approach would be flexible, and based on economic conditions. On Wednesday, Fed Bank of Richmond President Jeffrey Lacker said he believes the economic recovery will remain lackluster for a few more years.
The US Department of Labor reported the number of Americans filing for state unemployment benefits fell by 9,000 to 346,000 last week. The National Association of Realtors reported that pending home sales jumped to a six-year high in May.
Federal Reserve Chairman Ben Bernanke on 19 June 2013 said that the central bank may taper the pace of its bond purchases, currently set at $85 billion a month, as early as this year if the economy continues to improve in line with its forecasts.
Data on Wednesday had gross domestic product expanding at a less-than-estimated 1.8% annualized pace in the first quarter, bolstering the view that the Fed would continue the rate of its quantitative easing until late this year or early in 2014.
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