Firmness continued on the bourses in morning trade. The barometer index, the S&P BSE Sensex, was up 327.75 points or 1.43%, up about 315 points from the day's low and off close to 90 points from the day's high. The market breadth, indicating the overall health of the market, was strong. Indian stocks surged today, 12 May 2014, on speculation the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at the centre and that Narendra Modi will become the next Prime Minister of India after the final phase of Lok Sabha elections which conclude today, 12 May 2014. There is speculation that exit-poll results may show a victory by the NDA in Lok Sabha elections. Exit poll results can be telecast after 18:30 IST today, 12 May 2014, according to the Election Commission. The counting of votes will take place on Friday, 16 May 2014, and the results are expected on the same day. The term of the current Lok Sabha expires on 1 June and the new House has to be constituted by 31 May. The market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Friday, 9 May 2014. Gains in Asian stocks also aided the rally on the domestic bourses.
Modi, the prime ministerial candidate from the NDA, is perceived as being more business-friendly and decisive by the business community. As chief minister for the fast-growing state of Gujarat, Modi has built a reputation for getting things done.
Index heavyweight Reliance Industries (RIL) jumped after the company, BP and Niko Resources said in a joint statement issued on Saturday, 10 May 2014, that they have issued a Notice of Arbitration on Friday, 9 May 2014, to the Government of India seeking the implementation of the "Domestic Natural Gas Pricing Guideline 2014" notified on 10 January 2014. Bank stocks gained across the board on renewed buying with HDFC Bank, IndusInd Bank, Kotak Mahindra Bank and Axis Bank hitting record high. ICICI Bank and Bank of Baroda hit 52-week high.
The market surged in early trade amid speculation exit-poll results may show a victory by the NDA in Lok Sabha elections. The Sensex and the 50-unit CNX Nifty, both, scaled record high. Firmness continued on the bourses in morning trade.
The market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Friday, 9 May 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 1268.78 crore on Friday, 9 May 2014, as per provisional data from the stock exchanges.
At 10:20 IST, the S&P BSE Sensex was up 327.75 points or 1.43% to 23,321.98. The index jumped 416.13 points at the day's high of 23,410.36 in early trade, a lifetime high for the index. The index rose 14.42 points at the day's low of 23,008.65 in early trade.
The CNX Nifty was up 89.65 points or 1.31% to 6,948.45. The index hit a high of 6,975.70 in intraday trade, a lifetime high for the index. The index hit a low of 6,862.90 in intraday trade.
The BSE Mid-Cap index was up 60.76 points or 0.81% at 7,516.85. The BSE Small-Cap index was up 49.48 points or 0.65% at 7,643.16. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,238 shares gained and 803 shares fell. A total of 101 shares were unchanged.
Among the 30-share Sensex pack, 25 stocks gained and rest of them fell. Bharat Heavy Electricals (Bhel) (up 2.83%), GAIL (India) (up 3.51%) and ONGC (up 2.65%) edged higher from the Sensex pack.
Bank stocks gained across the board on renewed buying. Among private sector banks, Yes Bank (up 2.81%), and Federal Bank (up 0.89%) gained.
HDFC Bank rose 1.8% to Rs 770.80 after hitting a record high of Rs 779.95 in intraday trade.
Kotak Mahindra Bank rose 0.02% to Rs 852 after hitting a record high of Rs 864.65 in intraday trade.
Axis Bank rose 2.48% to Rs 1,672 after hitting a record high of Rs 1,691 in intraday trade.
IndusInd Bank rose 2.8% to Rs 528.05 after hitting a record high of Rs 535.40 in intraday trade.
ICICI Bank rose 1.17% to Rs 1,390.90 after hitting 52-week high of Rs 1,413.85 in intraday trade.
Among PSU bank stocks, State Bank of India (SBI) (up 2.69%), Canara Bank (up 1.92%), Union Bank of India (up 1.69%), Bank of India (up 1.22%), and Punjab National Bank (up 1.63%) gained.
Bank of Baroda rose 1.28% to Rs 840.55 after hitting 52-week high of Rs 849 in intraday trade.
Index heavyweight Reliance Industries (RIL) was up 4.02% at Rs 1,037.40. The stock hit a 52-week high of Rs 1.048 in intraday trade. The stock hit a low of Rs 995 so far during the day. RIL, BP and Niko Resources said in a joint statement issued on Saturday, 10 May 2014, that they have issued a Notice of Arbitration on Friday, 9 May 2014, to the Government of India seeking the implementation of the "Domestic Natural Gas Pricing Guideline 2014" notified on 10 January 2014. The continuing delay on part of the Government of India in notifying gas price in accordance with the approved formula for the gas to be sold has left the parties with no other option but to pursue this course of action, the three companies said.
Without this clarity, the parties are unable to sanction planned investments of close to $4 billion this year, they said. In addition, this will also delay the ability of the parties to appraise and develop other significant discoveries made last year, the joint statament said. Overall, the parties were planning to invest $ 8-10 billion in the next few years to significantly increase production from the KGD6 block, they said. This domestic production is essential for meeting India's energy needs and will also help conserve foreign exchange which is required for imports of natural gas into India at the present time. All of this requires clarity on pricing, the joint statement said. The three parties shall endeavour to work with the government to achieve a prompt and efficient resolution of this dispute, they said.
Torrent Pharmaceuticals jumped 4.76% after consolidated net profit surged 120% to Rs 244 crore on 41% growth in revenue to Rs 1225 crore in Q4 March 2014 over Q4 March 2013. The Q4 result was announced after market hours on Friday, 9 May 2014.
Torrent Pharmaceuticals' EBITDA (earnings before interest, taxation, depreciation, and amortization) surged 59% to Rs 350 crore in Q4 March 2014 over Q4 March 2013.
The company's consolidated net profit surged 53% to Rs 664 crore on 30% growth in revenue to Rs 4184 crore in the year ended 31 March 2014 (FY 2014) over the year ended 31 March 2013 (FY 2013). EBITDA surged 37% to Rs 952 crore in FY 2014 over FY 2013.
Torrent Pharmaceuticals said that Shri Sudhir Mehta, Chairman of Torrent Pharmaceuticals, expressed his desire to relinquish his position as Chairman of the Board of Directors and the company from the conclusion of the forthcoming Annual General Meeting of the company scheduled on 30 July 2014. The board reluctantly acceded to his desire and has also requested him to accept the position of Chairman Emeritus and continue to benefit the company with his considerable wisdom and counsel on key business and strategic matters, Torrent Pharmaceuticals said.
The board thereafter also recommended appointment of Shri Samir Mehta, who is currently the Executive Vice Chairman of the company as Chairman of Torrent Pharmaceuticals from the conclusion of the forthcoming Annual General Meeting of the company scheduled on 30 July 2014. This appointment is subject to the approval of the shareholders in the said meeting.
Torrent Pharmaceuticals' board of directors at its meeting held on Friday, 9 May 2014, inter alia, has recommended a final dividend of Rs 5 per equity share for FY 2014.
In the foreign exchange market, the rupee edged higher against the dollar as equities rose amid speculation exit-poll results may show a victory by the NDA in Lok Sabha elections. The partially convertible rupee was hovering at 59.68, compared with its close of 60.02/03 on Friday, 9 May 2014.
India's merchandise exports rose 5.26% to $25.63 billion in April 2014 over April 2013, data released by the government after trading hours on Friday, 9 May 2014, showed. Imports dropped 15% at $35.72 billion in April 2014 over April 2013. Oil imports declined 0.6% at $12.98 billion in April 2014 over April 2013. Non-oil imports dropped 21.5% at $22.74 billion in April 2014 over April 2013. The trade deficit for April 2014 was estimated at $10.09 billion, which was sharply lower than the trade deficit of $17.67 billion during April 2013.
Industrial production is seen remaining in contraction mode in March 2014. Industrial production is expected to shrink 1.4% in March 2014, as per the median estimate of a poll of economists carried out by Capital Market. Industrial production declined 1.9% in February 2014. The government unveils data on industrial production for March 2014 after trading hours today, 12 May 2014.
The rate of inflation based on the combined consumer price index (CPI) for urban India and rural India is seen accelerating to 8.6% in April 2014, from 8.3% in March 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government unveils CPI data for April 2014 after trading hours today, 12 May 2014.
The rate of inflation based on the wholesale price index is expected to remain at 5.7% in April 2014, at the same level it was in March 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil data on inflation based on the wholesale price index (WPI) for April 2014 at about 12:00 noon on Thursday, 15 May 2014.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.
A major near term trigger for the stock market is the outcome of the ongoing Lok Sabha elections. The 36 days long voting process which began on 7 April 2014 conclude with the final phase of voting today, 12 May 2014. Results of exit polls predicting the outcome of the election will likely start coming in from today evening. The counting of votes will take place on 16 May 2014 and the results are expected on the same day. The term of the current Lok Sabha expires on 1 June and the new House has to be constituted by 31 May.
Investors are hoping that a stable government which will complete its full term of five years in office comes to power after the elections. A party or a pre-poll alliance will need 272 MPs to form government at the Centre, which is a simple majority in 543-member Lok Sabha. Investors are expecting measures for revival of the economy, business-friendly policies and good governance from the new government that comes to power after the elections. Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis.
There are expectations that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at the centre with support from some regional parties after Lok Sabha elections which conclude next week. Various opinion polls have forecast that the NDA with Narendra Modi as its prime ministerial candidate is leading the race to Parliament. Most opinion polls have forecast that the NDA will be unable to form the government on its own and that it will have to rely on support from smaller regional parties to form the government. For the first time in mid-April, an opinion poll for a television news channel showed the NDA winning a narrow majority of 275 seats.
Asian stocks rose on Monday, 12 May 2014, after Chinese President Xi Jinping said the nation needs to adapt to a new normal in the pace of economic growth. Key benchmark indices in Indonesia, South Korea, Hong Kong, China and Indonesia were up 0.34% to 1.9%. Key benchmark indices in Taiwan, Singapore and Japan were off 0.12% to 0.66%.
China's growth fundamentals haven't changed and the country is still in a significant period of strategic opportunity, Xi reportedly said. At the same time, the government must prevent risks and take timely countermeasures to reduce potential negative effects, he said.
Japan's current-account surplus narrowed more than forecast in March as a surge in imports before last month's sales-tax increase trimmed gains from overseas investments. The excess of 116.4 billion yen ($1.14 billion) reported today by the Ministry of Finance in Tokyo. A 782.9 billion yen deficit on a seasonally adjusted basis was the largest in comparable data back to at least 1996.
Trading in US index futures indicated that the Dow could advance 27 points at the opening bell on Monday, 12 May 2014. US stocks rose with the Dow Jones Industrial Average ending at a record high on Friday, boosted by IBM, while a rebound in high-growth momentum names helped the broader market.
Dennis Lockhart, president of the Atlanta Fed, said he expects the central bank will use a reverse-repurchase program when it eventually begins to tighten monetary policy. Lockhart, who doesn't vote on policy this year, told reporters on Sunday, 11 May 2014, after a speech in Dubai that reverse repos may play a role in influencing short-term rates.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 17-18 June 2014. The Fed on 30 April 2014 said after a monetary policy review that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends. The FOMC also reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve.
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