Trading for the week started on a weak note as key benchmark indices dropped after data showing a muted 0.5% growth in industrial production in July 2014 raised doubts about economic recovery. Key indices extended losses in late trade after remaining in red throughout the trading session. The barometer index, the S&P BSE Sensex, fell below the psychological 27,000 mark to settle at 2-1/2 week low. The 50-unit CNX Nifty settled at 2-week low. The market breadth indicating the overall health of the market was positive. The Sensex declined 244.48 points or 0.9% to settle at 26,816.56. The BSE Mid-Cap and Small-Cap indices were, both, in green. Metal and mining stocks declined as a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy. Among pharma pack, Cipla and Lupin scaled record high.
Most auto stocks declined. Shares of biscuits major Britannia Industries scaled record high. Tyre makers extended recent rally, with shares of MRF, Goodyear India and TVS Srichakra scaling record high. PSU bank stocks reversed initial losses after Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said today, 15 September 2014, that there was a need to change the management appointment process in public sector banks to make it more transparent and that the central bank is in talks with the government to improve governance in public sector banks. PSU OMCs edged higher ahead of a fortnightly revision in fuel prices. Yes Bank declined after the Reserve Bank of India (RBI) notified that foreign shareholding in the bank has reached the trigger limit and further purchases of equity shares of the bank would be allowed only after obtaining prior approval of RBI. Cement stocks dropped.
Key indices extended losses in late trade after remaining in red throughout the trading session after a lower opening triggered by data showing muted industrial production growth in July 2014 and weak Asian stocks.
In overseas markets, Asian and European stocks fell as a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy.
In the foreign exchange market, the rupee weakened past 61 against the dollar as key equity benchmark indices dropped.
Brent crude oil prices dropped amid concerns that new sanctions against Russia will weaken oil demand amid ample supplies and a strong dollar.
The S&P BSE Sensex declined 244.48 points or 0.9% to settle at 26,816.56, its lowest closing level since 28 August 2014. The index dropped 261.30 points at the day's low of 26,799.74 in late trade. The index fell 62.97 points at the day's high of 26,998.07 in opening trade.
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The CNX Nifty lost 63.50 points or 0.78% to settle 8,042, its lowest closing level since 1 September 2014. The index hit a low of 8,030 in intraday trade. The index hit a high of 8,077.30 in intraday trade.
The total turnover on BSE amounted to Rs 3446 crore, lower than Rs 3722.60 crore on Friday, 12 September 2014.
The market breadth indicating the overall health of the market was positive. On BSE, 1,757 shares rose and 1,301 shares fell. A total of 94 shares were unchanged.
The BSE Mid-Cap index rose 17.78 points or 0.18% to settle at 10,000.86. The BSE Small-Cap index gained 78.73 points or 0.71% to settle at 11,245.52. Both these indices outperformed the Sensex.
The S&P BSE IT index (down 0.96%), the S&P BSE Oil & Gas index (down 0.96%) and the S&P BSE Metal index (down 1.69%) underperformed the Sensex.
The S&P BSE Healthcare index (up 0.41%), the S&P BSE Realty index (up 0.18%), the S&P BSE Power index (down 0.07%), the S&P BSE Auto index (down 0.28%), the S&P BSE Bankex (down 0.53%), the S&P BSE Teck index (down 0.58%), the S&P BSE Consumer Durables index (down 0.73%), the S&P BSE FMCG index (down 0.76%) and the S&P BSE Capital Goods index (down 0.89%) outperformed the Sensex.
Cipla rose 2.55% to Rs 628.20 after hitting record high of Rs 634 in intraday trade. Cipla after market hours announced the signing of a non-exclusive licensing agreement with Gilead Sciences, Inc. for manufacturing and distribution of medicines for the treatment of hepatitis C. Under this licensing agreement, Cipla will be allowed to manufacture and market Sofosbuvir, Ledipasvir in 91 countries including its home markets India and South Africa under Cipla's own brand names. It also covers countries like Egypt which has a high incidence of Hepatitis C. The countries within the agreement account for more than 100 million people living with hepatitis C globally representing 54% of the total global infected population. As per the agreement, Cipla has the option of receiving a technology transfer of the manufacturing process from Gilead.
Lupin jumped 4.18% to Rs 1,416, with the stock extending Friday's gains. The stock hit a record high of Rs 1,422 in intraday trade. Lupin at fag end of trading session on Friday, 12 September 2014, announced that the company and Salix Pharmaceuticals, Inc. have entered into a definitive distribution agreement, under which Salix has granted Lupin the exclusive right to market, distribute and sell certain Salix products in Canada. Lupin will promote the Salix products through its own sales force in Canada, the company said. Under the agreement terms, Salix will receive an upfront payment and distribution fees, and is eligible for additional pre-commercial and sales milestone payments. Salix will supply the products to Lupin under separate supply agreements, the company said.
Sun Pharmaceuticals Industries declined 1.48%. In clarification to media reports that Sun Pharma plans to raise Rs 12000 crore through QIP, the company during market hours said that resolutions proposed for approval of the shareholders of the company at the ensuing 22nd Annual General Meeting to be held on 27 September 2014 regarding issue of securities upto Rs 12000 crore and for borrowings upto Rs 50000 crore are only enabling resolutions.
Ranbaxy Laboratories fell 1.92%. Pfizer Inc and Ranbaxy Laboratories reportedly on Friday, 12 September 2014, won dismissal of a US antitrust lawsuit accusing them of conspiring to delay sales of generic versions of the best-selling cholesterol drug Lipitor. US District Judge Peter Sheridan in Trenton, New Jersey, ruled that the plaintiffs, retailers and distribution companies that bought Lipitor directly from Pfizer, failed to plead their case with enough detail.
Wockhardt rose 1.23% ahead of the company's board meeting today, 15 September 2014, to consider amalgamation of two wholly-owned subsidiaries -- Wockhardt Biopharm and Vinton Healthcare -- with Wockhardt.
Fortis Healthcare surged 6.28% after the company sold its Singapore-based diagnostics business RadLink-Asia for Singapore dollar 137 million.
Larsen & Toubro (L&T) fell 1.19%. L&T after market hours said that its construction division has won new orders worth Rs 2050 crore across various business segments in August 2014 and September 2014.
PSU bank stocks reversed initial losses after Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said today, 15 September 2014, that there was a need to change the management appointment process in public sector banks to make it more transparent and that the central bank is in talks with the government to improve governance in public sector banks. Canara Bank (up 0.1%), Union Bank of India (up 2.84%), Bank of Baroda (up 0.83%), Punjab National Bank (up 1.33%) Syndicate Bank (up 2.39%), Andhra Bank (up 2.68%), Oriental Bank of Commerce (up 2.06%) gained.
But, State Bank of India (SBI) slipped 0.06%.
Rajan also reportedly said at a banking conference that problems that have emerged in recent bank scandals were due to outsourced project evaluation.
Among private bank stocks, IndusInd Bank (down 0.86%), Kotak Mahindra Bank (down 1.98%), Axis Bank (down 1.33%) and ICICI Bank (down 1.03%) declined. HDFC Bank rose 0.42%.
Yes Bank lost 5.11% after the Reserve Bank of India (RBI) notified that foreign shareholding in the bank has reached the trigger limit and further purchases of equity shares of the bank would be allowed only after obtaining prior approval of RBI.
IDFC dropped 1.34% to Rs 147.05 after the Capital Raising Committee of the board of directors of the company fixed the issue price of qualified institutions placement at a discount to the ruling price. The Committee approved the issuance of 7.30 crore equity shares at a price of Rs 137 per equity share (including a premium of Rs 127 per equity share), aggregating to Rs 1000.10 crore, to qualified institutional buyers.
GAIL (India) dropped 1.62%. The company said during market hours that in pursuance to the directives issued by the Ministry of Petroleum and Natural Gas, the company has informed industries in South Gujarat about the restriction in supply of natural gas to non-core sector in lieu of the supply of Administered Pricing Mechanism (APM) Gas to CGD sector for use of natural gas in domestic households (PNG) and transport sector (CNG) in the larger interest of the people with effect from 16 September 2014. Considering the requirement of gas to other industries, GAIL (India) has offered to supply equivalent amount of alternate gas so that the production of such industries do not suffer. Some of the affected parties have already availed GAIL (India)'s offer to utilize alternative gas in view of the reduced quantity of APM gas.
PSU OMCs edged lower ahead of a fortnightly revision in fuel prices. Indian Oil Corporation (IOCL) (down 0.74%) and BPCL (down 0.45%) declined. HPCL rose 1.39%.
According to reports, for the first time in seven years PSU OMCs may cut diesel prices after a fortnightly revision in fuel prices. A recent sharp decline in crude prices could trigger cut in diesel price.
Metal and mining stocks declined as a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy. China is the world's largest consumer of steel, copper and aluminum. Hindalco Industries (down 3.32%), Jindal Steel & Power (down 4.91%), Sesa Sterlite (down 1.55%), JSW Steel (down 1.24%), NMDC (down 1.13%), Bhushan Steel (down 5%), Tata Steel (down 2.14%), National Aluminum Company (down 0.31%) and Hindustan Copper (down 1.37%) declined. Hindustan Zinc (up 0.47%) and Steel Authority of India (Sail) (up 0.75%) gained.
Most auto stocks declined. Bajaj Auto (down 0.83%), TVS Motor Company (down 2.19%), Maruti Suzuki India (down 0.04%), and Mahindra & Mahindra (M&M) (down 1.36%) edged lower. Ashok Leyland (up 1.69%) and Hero MotoCorp (up 1.56%) gained.
Tata Motors was off 0.84%. With respect a news item captioned "Tata Motors to partner Microlise", Tata Motors today, 15 September 2014, clarified that the company has entered into a partnership with Microlise of UK for sourcing fleet telematics solutions. This is purely a sourcing partnership for offering value added services to Tata Motors' commercial vehicle customers which are yet to be launched. This partnership does not have any material impact on the company as it has no significant business or financial implications for the company, Tata Motors said.
IT stocks declined. Tata Consultancy Services (TCS) (down 1.57%), HCL Technologies (down 1.09%), Polaris Financial Technology (down 2.87%), MphasiS (down 1.8%) and Hexaware Technologies (down 0.67%) declined. Tech Mahindra rose 0.97%.
Wipro fell 1.35%. Wipro after market hours said that the company's joint-venture subsidiary, Wipro Arabia has today, 15 September 2014, entered into a strategic partnership with Saudi-based Saudi Electricity Company (SEC), the largest power utility company in the Middle East serving approximately 5 million customers in the Kingdom of Saudi Arabia (KSA). As part of this engagement, Wipro will implement and rollout the plant maintenance and project system functionality of the SAP ERP application for SEC's distribution business line across KSA.
Infosys rose 0.06% to Rs 3,674.50, also its intraday high. The stock was volatile. The stock hit an intraday low of Rs 3,630.
Oracle Financial Services Software rose 1.9% to Rs 4,010, with the stock extending Friday's gain triggered by the company's board declaring an interim dividend of Rs 485 per equity share. Based on the current market price, the stock offers a high dividend yield of 12.09%.
Britannia Industries gained 5.87% to Rs 1,467 after scaling a record high of Rs 1,474 in intraday trade.
Cement stocks dropped. ACC (down 1.82%), Ambuja Cements (down 1.96%), Shree Cement (down 1.07%) and UltraTech Cement (down 1.94%) declined.
Grasim Industries lost 1.09%. Grasim has exposure to the cement sector through its subsidiary UltraTech Cement.
Zee Entertainment Enterprises rose 0.79%. The company after market hours on Friday, 12 September 2014, said that at the hearing held on 12 September 2014, the Mumbai High Court has approved the scheme of arrangement between Diligent Media Corporation (DMCL) and the company and their respective shareholders and creditors, for demerger of Media Business Undertaking of DMCL vesting with the company with effect from 31 March 2014 (appointed date).
Shares of tyre makers extended recent rally. MRF rose 1.29% at Rs 31,539. The stock hit a record high of Rs 31,815 in intraday trade.
Goodyear India advanced 3.02% at Rs 692.95. The stock hit a record high of Rs 708.30 in intraday trade.
TVS Srichakra rose 0.99% at Rs 1,102. The stock hit a record high of Rs 1,142.90 in intraday trade.
JK Tyre & Industries (up 1.74%), CEAT (up 0.18%) and Apollo Tyres (up 1.11%) gained.
Domestic rubber prices have seen sharp fall recently. Decline in rubber prices could boost profit margin of tyre firms. Rubber is a key raw material in tyre manufacturing. Also recent steep decline in crude oil prices aided rally in tyre stocks. Nearly 30% of raw material for tyres is derived from crude products.
The Sensex has gained 178.45 points or 0.66% in this month so far (till 15 September 2014). The Sensex has gained 5,645.88 points or 26.66% in calendar year 2014 so far (till 15 September 2014). From a record high of 27,354.99 on 8 September 2014, the Sensex has declined 538.43 points or 1.96%. From a 52-week low of 19,264.72 on 1 October 2013, the Sensex has risen 7,551.84 points or 39.2%.
In the foreign exchange market, the rupee weakened past 61 against the dollar as key equity benchmark indices dropped. The partially convertible rupee was hovering at 61.09, compared with its close of 60.66 during the previous trading session.
The annual rate of inflation based on the monthly wholesale price index (WPI) decelerated to 3.74% in August 2014, from 5.19% in July 2014. The inflation reading in August 2014 was lowest since 1.79% posted in October 2009. The inflation eased for all three major product groups contributing to the overall decline in inflation. The data was released at noon today, 15 September 2014.
The deceleration in inflation based on the wholesale price index (WPI) was sharper than market expectations. The WPI data comes after another data released by the government after trading hours on Friday, 12 September 2014, showed that the annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 7.8% in August 2014, from 7.96% July 2014. The rate of inflation based on the combined consumer food price indices (CFPI) for urban and rural India accelerated to 9.42% in August 2014, from 9.36% in July 2014, the data showed. Core CPI inflation which excludes food and energy prices, eased to 6.9% in August 2014, from 7.4% in July 2014.
Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said at a banking conference today, 15 September 2014, that inflation was still high and there was no point in cutting interest rates to see inflation pick up again. The RBI wants to bring down interest rates when it is "feasible", Rajan said. His comments came before the release of WPI data.
The Reserve Bank of India (RBI) is targeting CPI inflation at 8% by January 2015 and 6% by January 2016.
Meanwhile, industrial production (IIP) growth moderated to 0.5% in July 2014, from a revised 3.9% growth recorded in June 2014, data released by the government after trading hours on Friday, 12 September 2014, showed. The moderation in the IIP growth in July was mainly contributed by 1% decline in the manufacturing sectors output. On the other hand, the mining sector output increased 2.1%, while the electricity generation posted double-digit growth for second straight month at 11.7%.
Today is the due date for the second installment of advance tax payment by corporates. The advance tax data could provide cues about Q2 September 2014 corporate earnings. Advance taxes are collected in four installments -- 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.
Brent crude oil futures edged lower amid concerns that new sanctions against Russia will weaken oil demand amid ample supplies and a strong dollar. Brent for October settlement was down 20 cents at $96.91 a barrel. The contract fell 97 cents to settle at $97.11 on Friday, 12 September 2014. The more active contract Brent for November settlement was down 18 cents at $97.78 a barrel.
On Friday, 12 September 2014, the United States reportedly imposed sanctions on Gazprom, Gazprom Neft, Lukoil, Surgutneftegas and Rosneft, banning Western firms from supporting their activities in exploration or production from deep water, Arctic offshore or shale projects following similar sanctions by the European Union (EU) earlier on that day. The new measures, designed to put further pressure on President Vladimir Putin over Russia's actions in Ukraine, are a major broadening of the previous sanctions, which only banned the export of high technology oil equipment into Russia.
Meanwhile, in its quarterly report released yesterday, 14 September 2014, the Bank for International Settlements (BIS) has reportedly warned that international borrowing and low volatility are increasing risk for emerging-market assets. International borrowing by companies in some emerging markets now matches the output of their economies, leaving bondholders more vulnerable to interest rate or currency shocks, the BIS has said, according to reports. The BIS, known as the central bankers' bank, hosts the Basel Committee on Banking Supervision which sets global capital standards.
European stocks retreated today, 15 September 2014, after Chinese factory and retail data added to evidence of a slowdown in the world's second-biggest economy. Key benchmark indices in UK and France were off 0.23% to 0.25%. Germany's DAX rose 0.1%.
Asian stocks fell today, 15 September 2014, after a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy. Key benchmark indices in Indonesia, South Korea, Taiwan, Singapore and Hong Kong were off 0.06% to 0.97%. China's Shanghai Composite was up 0.31%.
Factory production in China rose 6.9% in August from a year earlier, the statistics office reported on 13 September 2014, down from 9% in July. It was the slowest pace outside the Lunar New Year holiday period of January and February since December 2008. Growth in fixed-asset investment slowed to 16.5% in August, while retail sales expanded 11.9% in August, easing from 12.2% in July.
Trading in US index futures indicated that the Dow could fall 22 points at the opening bell on Monday, 15 September 2014. US stocks edged lower on Friday, 12 September 2014, as investors looked ahead to a Federal Reserve meeting due on 16-17 September 2014.
Investors will look to Federal Open Market Committee (FOMC) meeting for fresh guidance on US interest rates. A policy meeting of the Federal Open Market Committee (FOMC) will be held on 16 and 17 September 2014. At the end of a two-day meeting, the FOMC is widely expected to announce cut in Fed's monthly bond-buying program by another $10 billion to $15 billion, staying on track to end the program at its October meeting. The Fed is likely to raise short-term interest rates next year from their current near-zero levels, where they have been since December 2008.
The Fed will also announce US economic projections after the policy meet. Fed now releases economic projections four times a year (March, June, September, and December). Traditionally, the Fed forecasts covered GDP, the PCE price index, and the civilian unemployment rate. However, the forecast report additionally now includes forecasts for the appropriate timing of the next change in the fed funds rate and the expected fed funds rate at the end of the next two years. The policy meet will be followed by a press conference by Federal Reserve Chairwoman Janet Yellen on 17 September 2014.
The Federal Reserve after two-day policy meeting on 30 July 2014, said it would reduce its purchases of mortgage and Treasury bonds by $10 billion to $25 billion monthly from $35 billion earlier, as widely expected.
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