Key benchmark indices edged lower in choppy trade as European stocks declined. The barometer index, the S&P BSE Sensex, was provisionally down 45.28 points or 0.21%, off close to 135 points from the day's high and up about 45 points from the day's low. The market breadth, indicating the overall health of the market, was negative.
Telecom stocks tumbled as a surprise decision of Reliance Industries (RIL) to join the bidding for upcoming telecom spectrum auction slated for 3 February 2014 raised concerns of aggressive bidding in the auction which in turn could have an adverse impact on balance sheet of telecom firms. Bajaj Auto rose on good Q3 result. HCL Technologies rose and hit record high after the company reported good Q2 result before trading hours. L&T rose after the company said that it has recently secured new orders of Rs 1000 crore from the domestic market in its offshore and onshore hydrocarbon business segment. AXIS Bank dropped in choppy trade as the bank's bad loans rose in Q3 December 2013.
A bout of volatility was witnessed in early trade as key benchmark indices pared gains after a firm start triggered by higher Asian stocks. The Sensex hit its highest level in more than five weeks at the onset of the trading session. The 50-unit CNX Nifty hit 2-week high at the onset of the trading session. Key benchmark indices reversed initial gains and hit fresh intraday low in morning trade. Key benchmark indices trimmed losses after hitting fresh intraday low in mid-morning trade. The Sensex languished in negative zone in early afternoon trade. A bout of volatility was witnessed as key benchmark trimmed losses after hitting fresh intraday low in afternoon trade. Volatility continued in late trade.
As per provisional figures, the S&P BSE Sensex was down 45.28 points or 0.21% to 21,244.21. The index fell 89.84 points at the day's low of 21,199.65 in afternoon trade. The index rose 89.80 points at the day's high of 21,379.29 in early trade, its highest level since 9 December 2013.
The CNX Nifty was down 4.70 points or 0.07% to 6,316.20, as per provisional figures. The index hit a low of 6,299.85 in intraday trade. The index hit a high of 6,346.50 in intraday trade, its highest level since 2 January 2014.
The total turnover on BSE amounted to Rs 1991 crore, higher than Rs 1877.54 crore on Wednesday, 15 January 2014.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,512 shares dropped and 1,167 shares rose. A total of 166 shares were unchanged.
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Among the 30-share Sensex pack, 15 stocks rose and rest fell. Tata Motors (down 1.91%), Sun Pharmaceutical Industries (down 1.37%) and Cipla (down 1.39%), edged lower from the Sensex pack.
AXIS Bank dropped in choppy trade as the bank's bad loans rose in Q3 December 2013. The stock shed 0.28% at Rs 1,174.80. The scrip hit high of Rs 1,197.95 and low of Rs 1,168.15 in intraday trade. AXIS Bank's net profit rose 19.06% to Rs 1604.11 crore on 9.94% increase in total income to Rs 9433.55 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours today, 16 January 2014.
The bank's gross non-performing assets increased to Rs 3008.20 crore as on 31 December 2013, from Rs 2734.47 crore as on 30 September 2013 and Rs 2275.30 crore as on 31 December 2012. The ratio of net non-performing assets to net advances stood at 0.42% as on 31 December 2013, compared with 0.37% as on 30 September 2013 and 0.33% as on 31 December 2012. The ratio of gross non-performing assets (NPA) to gross advances stood at 1.25% as on 31 December 2013, compared with 1.19% as on 30 September 2013 and 1.10% as on 31 December 2012.
Provisions and contingencies fell 47.65% to Rs 202.49 crore in 31 December 2013 over Q3 December 2012. Provisions and contingencies declined 70.54% on sequential basis
The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 15.50% as on 31 December 2013, compared with 15.85% as on 30 September 2013.
The Reserve Bank of India on Wednesday, 15 January 2014, announced new rules for setting incremental provisioning and capital requirements for bank exposures to entities with unhedged foreign currency exposures. The provisioning rule requirements will be calculated as per the ratio of likely loss due to foreign exchange movement to a company's earnings before interest and depreciation (EBID), the RBI circular said on Wednesday, 15 January 2014. "These guidelines have been framed keeping in view the domestic borrowers' vulnerability to the foreign currency exposure," the central bank said. Banks have to monitor unhedged forex exposures on a monthly basis and calculate the incremental provisioning and capital needs at least once a quarter. However, during periods of high rupee volatility, it may be done at monthly intervals, the RBI said. The new rules take effect from 1 April 2014.
L&T rose after the company said that it has recently secured new orders of Rs 1000 crore from the domestic market in its offshore and onshore hydrocarbon business segment. The stock rose 0.12%.
Separately, L&T said in its clarification with respect to a news item captioned "L&T in talks with investors to sell stake in Tamil Nadu terminal, seeks Rs 2500 crore for its 97% stake", that the company has large portfolio of infrastructure assets. Strategic players/investors express interest in some of these assets from time to time, L&T said. The company evaluates these expressions of interest and if found value accretive, proceeds to the next stage. On this asset viz. Tamil Nadu terminal, such a stage has not been reached, L&T said in its clarification.
HCL Technologies jumped 4.31% to Rs 1,393 after the company reported good Q2 result before trading hours. The stock hit record high of Rs 1,398.30 in intraday trade. The company's consolidated net profit rose 5.7% to Rs 1496 crore on 2.8% increase in revenue to Rs 8184 crore in Q2 December 2013 over Q1 September 2013. The results are as per US Generally Accepted Accounting Principles (US GAAP).
Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 1.6% to Rs 2126 crore in Q2 December 2013 over Q1 September 2013. EBITDA margin declined to 26% in Q2 December 2013, from 26.3% in Q1 September 2013.
HCL Technologies' consolidated net profit as per US GAAP rose 7.1% to $241.6 million on 4% growth in revenue at $1.3213 billion in Q2 December 2013 over Q1 September 2013. EBITDA rose 2.8% to $343.3 million in Q2 December 2013 over Q1 September 2013. EBITDA margin edged lower to 26% in Q2 December 2013, from 26.3% in Q1 September 2013.
Commenting on the company's Q2 performance, Shiv Nadar, Chairman & Chief Strategy Officer, HCL Technologies said: "As a company HCL has always differentiated itself on two key pillars -- corporate excellence and governance, and trust through transparency and flexibility. Our sustained efforts in these areas continue to be recognized".
Anant Gupta, President & CEO, HCL Technologies said: "HCL continues its profitable growth trajectory with yet another stellar quarter of 4% QoQ revenues growth and 39.1% YoY net income growth. The company also crossed many milestones during the quarter, with our calendar year 2013 revenues crossing the $5 billion landmark. In addition Infrastructure Services, Europe geography and Manufacturing vertical each crossed $1.5 billion in revenues. This quarter we also made significant progress in the execution of our Digital System Integration Services strategy by signing new engagements and establishing dedicated Centers of Excellence to further strengthen our thought leadership and thrust on Gen 2 Outsourcing".
Anil Chanana, CFO, HCL Technologies said: "We continue to deliver superior performance. The operating efficiencies, the scale of business in our Run-the-Business offering and the optimization of G&A spend helped in pushing the net income margin to another high of 18.3% this quarter. The asset light model reflected by our Fixed asset turnover at 10x of revenues, and efficient working capital management, continued to keep the return on equity at a historic high of 35% and operating cash flows in excess of 100% of net income".
Telecom stocks tumbled as a surprise decision of Reliance Industries (RIL) to join the bidding for upcoming telecom spectrum auction slated for 3 February 2014 raised concerns of aggressive bidding in the auction which in turn could have an adverse impact on balance sheet of telecom firms. Idea Cellular, Bharti Airtel and Reliance Communications were off 4.22% to 7.7%.
RIL's entry could result in increase in competition in the telecom sector.
RIL will join Bharti Airtel, Idea Cellular as well as the local units of Vodafone Group PLC and Telenor ASA in bidding for bandwidth in the auction in February. The government aims to raise at least Rs 11000 crore through two sets of auctions, one for a national service and another for a portion of bandwidth in Delhi, Mumbai or Kolkata, collectively home to over 32 million Indians.
RIL will bid to operate both nationally and in the three cities. A successful bid would mark the company's re-entry into the phone business after spinning-off its cellphone unit Reliance Communications in 2005, to brother Anil Ambani, as part of the division of the business empire built by their late father, Dhirubhai Ambani.
The auctions are crucial for Bharti and Vodafone India, whose bandwidth usage rights are set to expire in Delhi, Mumbai and Kolkata. Reliance Communications also has permits up for renewal in some regions in November this year. The companies will have to bid successfully in the upcoming auction to continue operations. The rights to use bandwidth last for 20 years. Idea Cellular and the Indian unit of Telenor, are also bidding in the hopes of expanding their services.
The Department of Telecommunications, which will conduct the auctions, will scrutinize the bids and announce the final list of bidders on 20 January 2014.
Shares of index heavyweight Reliance Industries (RIL) rose 0.02% to Rs 885.60. The stock hit high of Rs 891.95 and low of Rs 882.
Bajaj Auto was up 0.66% to Rs 1,908 after net profit rose 10.48% to Rs 904.55 crore on 4.67% decline in total income to Rs 5353.08 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours today, 16 January 2014.
Exports rose 23.5% to Rs 2123 crore in Q3 December 2013 over Q3 December 2012.
Operating earnings before interest, taxation, depreciation and amortization (EBITDA) before mark-to-market gain/loss rose 0.64% to Rs 1092 crore in Q3 December 2013 over Q3 December 2012. Operating EBITDA margin before mark-to-market gain/loss, edged up to 21.1% in Q3 December 2013, from 19.8% in Q3 December 2012.
Total automobile sales fell 11.88% to 9.93 lakh units in Q3 December 2013 over Q3 December 2012. Bajaj Auto said that sales during festive period, though reasonable, were not robust. Subsequently, in November and December, industry sales continued to remain sluggish, Bajaj Auto said.
Bajaj Auto said that the quarter witnessed a marked increase in input costs of steel, aluminium and other imported components.
Cash and cash equivalents as on 31 December 2013 stood at Rs 6920 crore, higher than Rs 6516 crore as on 30 September 2013, Bajaj Auto said in a statement.
Bond prices rose for the second day in a row after data released by the government on Wednesday, 15 January 2014, showed inflation based on the wholesale price index (WPI) eased to a five-month low in December 2013, raising hopes that the central bank won't raise interest rates at its next monetary policy review later this month. Further, RBI has already announced to defer the bond auction scheduled for the current week supporting sentiments in the gilts market. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6116%, lower than its close of 8.64% on Wednesday, 15 January 2014. Bond yield and bond prices are inversely related.
An India downgrade is not on the cards, a foreign news agency reported, citing Moody's rating analyst Thomas Byrne. Moody's has an investment grade rating of Baa3 on India with a stable outlook.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
European stocks edged lower on Thursday, 16 January 2014, after rallying yesterday to a six-year high, as investors weighed corporate earnings and awaited data on American jobless claims. Key benchmark indices in France and Germany were off 0.07% to 0.2%. UK's FTSE 100 rose 0.02%.
Spain's borrowing costs reportedly dropped to an all-time low at an auction of three-year government bonds on Thursday, adding to signs that the euro zone's fourth-largest economy is recovering. The Spanish Treasury sold 2.66 billion euros ($3.62 billion) of a 2017 bond at an average yield of 1.595%. The Spanish government also sold 1.81 billion euros in 2026 bonds and 1.44 billion euros in 2028 bonds, for a total of 5.91 billion euros. The targeted range was 4.5 billion to 5.5 billion euros.
Asian stocks edged higher on Thursday, 16 January 2014, as better-than-projected bank earnings boosted investor confidence and drove US stock gauges to record highs on Wednesday, 15 January 2014. Key benchmark indices in China, Hong Kong, South Korea and Taiwan were up 0.02% to 0.37%. Key benchmark indices in Indonesia, Japan and Singapore fell 0.09% to 0.66%.
Foreign direct investment in China rose a modest 5.3% last year compared with 2012. China's Ministry of Commerce said on Thursday that China attracted a total of $117.6 billion in foreign direct investment in 2013, and that pointed to continued confidence among investors in the health of the world's second-largest economy, a ministry spokesman said Thursday. "We saw a stable development in foreign investment with positive growth starting from February last year," Shen Danyang told a news briefing. "I'm confident that actual foreign direct investment will see steady progress in 2014," he added.
Mr. Shen said China has been stepping up its outbound investment, and it could soon surpass incoming investment. Chinese companies made nonfinancial investments of $90.17 billion in overseas markets last year, up 16.8% from the previous year. In 2013, China's nonfinancial direct investment to Russia totaled $4.1 billion, five times the amount of 2012, and investment to the US more than doubled to $4.23 billion.
Mr. Shen also said that the outlook for China's trade faced "severe challenges" this year, though he gave no precise estimates. Mr. Shen cited a survey by the ministry saying that about 77% of companies surveyed said that external demand wasn't strong, while more than half pointed to concerns about rising costs and growing competition from other emerging markets. Exports were up 7.9% last year while imports rose 7.3%, giving the nation a trade surplus of $259.8 billion.
Trading in US index futures indicated that the Dow could drop 15 points at the opening bell on Thursday, 16 January 2014. The S&P 500 index closed at a record high Wednesday, narrowly beating its previous peak reached on December 31, as investors took upbeat manufacturing data, Bank of America Corp. earnings, and Apple Inc.'s China deal as signs economic growth was on solid ground.
The Federal Reserve said "moderate" growth across most of the US last month was buoyed by gains in holiday spending by consumers, an improving labor market and strength in manufacturing. "The economic outlook is positive in most districts, with some reports citing expectations of 'more of the same' and some expecting a pickup in growth," the Fed said yesterday in its Beige Book business survey, based on reports gathered on or before 6 January 2014.
The Federal Reserve Bank of New York said that its general business conditions index jumped to 12.51 in January from an upwardly revised 2.22 in December.
The US producer price index rose 0.4% in December, the biggest increase since June, recovering from a 0.1% decline in November and was 1.2% higher from a year earlier. Core PPI was up 0.3% in December and rose 1.4% on a year-over year basis, compared to expectations for a monthly increase of 0.1% and an annual gain of 1.3%.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
International Monetary Fund Managing Director Christine Lagarde said yesterday that momentum in the world economy in the second half of last year should continue in 2014. The Washington-based fund plans to raise its forecast for global growth when it releases a report later this month.
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