Key benchmark indices trimmed gains after hitting fresh intraday high in mid-morning trade. The barometer index, the S&P BSE Sensex, was up 100.53 points or 0.48%, up about 160 points from the day's low and off close to 45 points from the day's high. The market breadth, indicating the overall health of the market, was positive. The market sentiment was boosted by Reserve Bank of India's announcement on Friday, 17 January 2014, that it will conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 10000 crore on Wednesday, 22 January 2014, in a bid to ease the strain on liquidity in the banking system.
Investors also cheered Bharatiya Janata Party's (BJP's) prime ministerial candidate Narendra Modi's economic vision for India in his speech on Sunday, 19 January 2014, wherein he said that if the BJP comes to power after Lok Sabha elections, the party's emphasis will be on urbanisation, infrastructure and inflation control and said his wish list includes setting up 100 new smart cities and introduction of bullet trains to all four corners of the country.
Wipro extended initial gains and hit 52-week high on good Q3 result. HCL Technologies scaled record high. Infosys extended recent gains triggered by the company raising its revenue growth guidance for the year ending 31 March 2014. Mahindra & Mahindra reversed initial losses triggered by the company's announced production cut this month. Bajaj Auto extended recent gains triggered by the two-wheeler major reporting record net profit in Q3 December 2013.
The market reversed initial gains on weak Asian stocks. The Sensex hit one-week low. The 50-unit CNX Nifty hit its lowest level in almost a week. Key benchmark indices regained positive terrain and hit fresh intraday high in morning trade. The Sensex trimmed gains after hitting fresh intraday high in mid-morning trade.
At 11:20 IST, the S&P BSE Sensex was up 100.53 points or 0.48% to 21,162.42. The index jumped 145.95 points at the day's high of 21,209.57 in mid-morning trade. The index declined 62.49 points at the day's low of 21,001.13 in early trade, its lowest level since 13 January 2014.
The CNX Nifty was up 32.65 points or 0.52% to 6,294.30. The index hit a high of 6,304.95 in intraday trade. The index hit a low of 6,243.35 in intraday trade, its lowest level since 14 January 2014.
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The market breadth, indicating the overall health of the market, was positive. On BSE, 1,221 shares gained and 856 shares fell. A total of 130 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks rose and rest fell. ITC (up 1.49%), Hindalco Industries (up 0.99%) and NTPC (up 0.84%) edged higher from the Sensex pack.
Auto stocks gained. Maruti Suzuki India (up 0.61%), Tata Motors (up 1.08%), Ashok Leyland (up 0.3%), Hero MotoCorp (up 0.86%) and TVS Motor Company (up 1.91%) gained.
Mahindra & Mahindra (M&M) reversed initial losses triggered by the company's announced production cut this month. The stock was up 1.06%. The company on Saturday, 18 January 2014, said that the company, as part of aligning its production with sales requirements, would be observing no production days at the company's automotive plants for 1 to 3 days during the remaining period of January 2014. Mahindra Vehicle Manufacturers, a wholly owned subsidiary would also be observing no production days at the plant at Chakan for up to 3 days during the remaining period of January 2014, M&M said.
M&M said that the management does not envisage any adverse impact on availability of vehicles in the market due to adequacy of vehicle stocks to serve the market requirements.
M&M is planning to invest 1 trillion won in its South Korean unit, South Korean President Park Geun Hye said in India on Saturday, 18 January 2014.
Bajaj Auto rose 0.62%, with the stock extending recent gains triggered by the two-wheeler major reporting record net profit in Q3 December 2013. The company's net profit rose 10.48% to a record 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 on Thursday, 16 January 2014.
Bajaj Auto said that the quarter witnessed a marked increase in input costs of steel, aluminium and other imported components.
Wipro rose 4.43% to Rs 576.95, with the stock extending initial gains triggered by good Q3 result. The stock hit 52-week high of Rs 577.75 in intraday trade. Wipro after trading hours on Friday, 17 January 2014, said its consolidated net profit from continuing operations jumped 27% to Rs 2010 crore on 18% growth in revenue from continuing operations to Rs 11330 crore in Q3 December 2013 over Q3 December 2012. Excluding non-recurring expense, net profit from continuing operations jumped 28% to Rs 2030 crore in Q3 December 2013 over Q3 December 2012. The results are as per International Financial Reporting Standards (IFRS).
In dollar terms, IT services revenue were reported at $1.678.4 billion in Q3 December 2013, an increase of 2.9% over Q2 September 2013 and an increase of 6.4% over Q3 December 2012.
IT services revenues in rupee terms was at Rs 10330 crore in Q3 December 2013, an increase of 20% over Q3 December 2012.
IT services earnings before interest and tax (EBIT) was Rs 2380 crore in Q3 December 2013, an increase of 33% over Q3 December 2012.
Wipro expects revenues from IT services business to be in the range of $1.712 billion to $1.745 billion in Q4 March 2014 including the revenues from Opus CMC. The Opus CMC acquisition (announced in December 2013) was completed in January 2014, upon completion of customary closing conditions. Opus CMC's revenue for calendar year 2013, prior to the closing of the acquisition, was approximately $ 43 million, Wipro said.
Azim Premji, Chairman of Wipro, commenting on the results said: "As the global economy is progressing towards stability, we see optimism amongst clients, especially in the West. Corporations are leveraging technology to reduce operational costs and investing resources in differentiating themselves in the marketplace".
T K Kurien, Executive Director & Chief Executive Officer of Wipro, said: "Our focus on account management has yielded encouraging results. We continue to execute to our strategy for superior engagement with clients while investing in emerging technologies to drive towards a higher growth trajectory. During the quarter, our Global Infrastructure Services business grew strongly on revenues."
Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said: "Our strategy of 'standardization at the core' is yielding results. Our investments in automation and productivity tools have driven efficiencies and helped us expand margins of IT Services by 54 basis points to 23%."
TCS rose 1.98%. The company's consolidated net profit rose 15.1% to Rs 5333 crore on 1.5% increase in revenue to Rs 21294 crore in Q3 December 2013 over Q2 September 2013. Operating profit grew 0.5% to Rs 6337 crore in Q3 December 2013 over Q2 September 2013. Operating margin was reported at 29.8% in Q3 December 2013. TCS announced the third quarter results after trading hours on Thursday, 16 January 2014.
TCS said growth in Q3 December 2013 was driven by industries like Life Science & Healthcare, Manufacturing, Media, Travel & Hospitality and Telecom. The company's broad based presence across markets and services helped overcome seasonal weakness in some markets. Europe led growth, driven by the continuous investments being made in that market, while North America and UK also grew during the quarter, TCS said in a statement. Among growth markets, Latin America, APAC and MEA registered strong growth. India business suffered from volatility and declined sequentially, TCS said. Among service lines, Business Process Services, Enterprise Solutions, Global Consulting were the leaders.
HCL Technologies rose 2.03% to Rs 1409.25. The stock hit record high of Rs 1,413.10 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). The company announced Q3 results on Thursday, 16 January 2014.
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.
Tech Mahindra gained 1.98%.
Infosys rose 0.16% to Rs 3734, with the stock extending recent gains triggered by the company raising its revenue growth guidance for the year ending 31 March 2014. At the time of announcement of Q3 December 2013 earnings, Infosys, on 10 January 2014, raised its revenue growth guidance in both rupee and dollar terms for the year ending 31 March 2014. The company expects consolidated revenue in rupee terms to grow 24.4% to 24.9% for the year ending 31 March 2014 (FY 2014). This guidance is based on rupee dollar conversion rate of 61.81 for the rest of the financial year. The company expects consolidated revenue in dollar terms to grow 11.5% to 12% in FY 2014.
In the foreign exchange market, the rupee edged lower against the dollar on global dollar strength. The partially convertible rupee was hovering at 61.605, lower than its close of 61.54/55 on Friday, 17 January 2013. The US dollar edged higher after a string of mostly upbeat data convinced markets the Federal Reserve will continue its gradual withdrawal of monetary stimulus for the US economy.
Bond prices rose after the Reserve Bank of India on Friday, 17 January 2014, said it has decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 10000 crore on Wednesday, 22 January 2014, in a bid to ease the strain on liquidity in the banking system. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.5649%, lower than its close of 8.6269% on Friday, 17 January 2014. Bond yield and bond prices are inversely related.
The Reserve Bank of India said on Friday, 17 January 2014, that the liquidity conditions are undergoing some stress in the recent period, primarily on account of the build-up of cash balances of the Government of India. In order to address the temporary liquidity deficit situation, the Reserve Bank of India has been infusing additional liquidity through 7/14/28 days term repo auctions in addition to the existing overnight repo under liquidity adjustment facility and standing liquidity facilities. The current assessment suggests that the strain on market liquidity is likely to remain enduring in view of the fiscal targets set for the year as well as projections for aggregate credit growth, warranting the need to provide liquidity of a more permanent nature. Accordingly, the Reserve Bank has decided to conduct Open Market Operations by purchasing the following government securities for an aggregate amount of Rs 10000 crore on Wednesday, 22 January 2014, through multi-security auction using the multiple price method.
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.
Bharatiya Janata Party's (BJP's) prime ministerial candidate Narendra Modi on Sunday, 19 January 2014, came out with his vision for a new India ahead of the 2014 Lok Sabha elections, pledging to project the country as a brand worldwide if a BJP government was voted to power. The key elements of the Bharatiya Janata Party prime ministerial candidate's programme are urbanisation, infrastructure, education and healthcare, apart from cracking down on scourges such as inflation and black money. Modi said he wanted to reach out to every level of society to ensure that the benefits of economic change didn't just go to the advantaged. His wish list includes Indian Institutes of Technology, Indian Institutes of Management and All India Institutes of Medical Science in every state, 100 new smart cities and bullet trains to all four corners of the country. He said inflation - one of BJP's main election planks besides corruption and "mis-governance" by the UPA government - was the country's biggest predicament and said steps needed to be taken to contain it. The answer lay in farm data that was much more current than it is now and a fund that could be used to protect the vulnerable. Modi also floated the idea of a price stabilisation fund to ensure that nobody went hungry.
He spoke of the need to focus on Brand India, referring to five Ts in this connection-tradition, talent, tourism, technology and trade. He also pledged a mix of social welfare schemes that would bring India on a par with developed economies, urging people to vote for him.
Other priorities in Modi's programme include development of infrastructure such as roads, ports and airports, reviving power plants that are shut, creating jobs, skill development, setting up agro infrastructure gas grids, deploying optical fibre networks, pushing the river interlinking project and establishing special courts to punish black marketing. In the 75-minute speech, Modi said the country has to treat urbanisation as an "opportunity", not as a "challenge", something India hasn't done. A BJP government under him will build 100 new cities to be developed as smart cities, twin cities and satellite cities, he said. "If the railways is modernised, we can give impetus to progress. By the time the country celebrates the diamond jubilee of independence (2022), we should have bullet trains going in four directions. The world will start seeing us with a new vision," he said.
Modi also touched on senior BJP leader LK Advani's pet theme of getting black money stashed overseas back to the country, saying that a task force will be set up to ensure that this is achieved. Modi also spoke of the need to uphold what he regarded as India's traditions, likening it to a rainbow with seven shades family values, agriculture and rural India, empowerment of women, environment, youth, democracy and knowledge.
Asian stocks edged lower on Monday, 20 January 2014, after China's economic growth slowed in the fourth quarter as gains in factory output and investment spending eased. Key benchmark indices in China, Japan, Singapore and Hong Kong were off 0.44% to 1.04%. Key benchmark indices in Indonesia, South Korea and Taiwan rose 0.24% to 0.46%.
China's economy expanded 7.7% in the fourth quarter from a year earlier, the National Bureau of Statistics said today. That compares 7.8% growth in the previous three months. Industrial production rose 9.7% in December from a year earlier, data showed, down from a 10% gain in November. Retail sales last month rose 13.6% from a year earlier, slowing from 13.7% in November. Fixed-asset investment in China excluding rural households increased 19.6% in the January-to-December period from a year earlier, when it expanded 20.6%.
The US stock market remains closed today, 20 January 2014, for the Martin Luther King Jr. Holiday.
US stocks settled mostly lower on Friday as disappointing results from Intel Corp. and General Electric Co. weighed on sentiment.
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.
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