A bout of volatility was witnessed as key benchmark indices retained positive zone in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was up 31.99 points or 0.16%, up close to 165 points from the day's low and off about 25 points from the day's high. The market breadth, indicating the overall health of the market, was positive. The BSE Small-Cap index was up more than 1%. Gains in Asian and European stocks supported gains on the domestic bourses.
Shares of state-run power equipment major Bharat Heavy Electricals (Bhel) dropped in choppy trade after the company reported poor Q3 December 2013 results. Most metal stocks edged higher.
The market edged lower amid initial volatility after provisional data showed that foreign funds resorted to heavy selling of Indian stocks on Tuesday, 4 February 2014. The 50-unit CNX Nifty fell below the psychological 6,000 mark. The Sensex extended initial losses and hit fresh intraday low in morning trade. The Sensex languished in negative terrain in mid-morning trade after a survey showed that India's service sector activity remained weak in January 2014. Key benchmark indices recouped a lion's part of intraday losses in early afternoon trade. Key benchmark indices moved into positive zone from negative zone in afternoon trade. The 50-unit CNX Nifty regained the psychological 6,000 mark. Key benchmark indices retained positive zone in mid-afternoon trade.
Foreign institutional investors (FIIs) sold shares worth a net Rs 1234.02 crore on Tuesday, 4 February 2014, as per provisional data from the stock exchanges.
At 14:20 IST, the S&P BSE Sensex was up 31.99 points or 0.16% to 20,245.14. The index rose 56.07 points at the day's high of 20,268 in mid-afternoon trade, its highest level since 3 February 2014. The index dropped 135.83 points at the day's low of 20,076.10 in morning trade.
The CNX Nifty was up 13.60 points or 0.23% to 6,014.70. The index hit a high of 6,021.45 in intraday trade, its highest level since 3 February 2014. The index hit a low of 5,962.05 in intraday trade.
The BSE Small-Cap index was up 64.43 points or 1.03% at 6,307.31. The BSE Mid-Cap index was up 23.33 points or 0.4% at 6,307.31. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,373 shares rose and 1,040 shares fell. A total of 143 shares were unchanged.
Tata Motors (up 3.27%), GAIL (India) (up 2.86%), and Coal India (up 2.33%), edged higher from the Sensex pack.
Most metal stocks edged higher. Steel Authority of India (Sail) (up 2.82%), Hindustan Copper (up 0.5%), NMDC up 1.26%), Hindalco Industries (up 1.99%) and Tata Steel (up 3.31%) gained. Sesa Sterlite (down 0.7%), Hindustan Zinc (down 0.8%) JSW Steel (down 0.03%), and National Aluminum Company (down 0.3%) declined.
Jindal Steel and Power (JSPL) rose 0.8% to Rs 244.25. The company after market hours on Tuesday, 4 February 2014, said that as per Regulation 14(3) of the Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998, as amended (the "Buy-Back Regulations"), the company has utilized at-least 50% of the amount earmarked for buy-back as specified in the resolution passed by the board of directors at its meeting held on 30 August 2013, i.e., the minimum buy-back Size of Rs 500 crore. Accordingly, the duly authorized Sub-Committee of Directors of the company at its meeting held on Tuesday, 4 February 2014, unanimously approved that the buy-back offer of equity shares of the company be closed on 18 February 2014, being a date earlier than the last date for the completion of buy-back mentioned in the announcement, i.e. 15 March 2014. Subject to the maximum buy-back price of Rs 261 per share, the company will not place buy orders under the buy-back after 13 February 2014, JSPL said.
Shares of state-run power equipment major Bharat Heavy Electricals (Bhel) dropped in choppy trade after the company reported poor Q3 December 2013 results. The stock was off 1.8% at Rs 160.35. The scrip hit high of Rs 164.75 and low of Rs 158.55 so far during the day. The company's net profit fell 41.21% to Rs 694.81 crore on 15.41% fall in total income to Rs 8925.63 crore in Q3 December 2013 over Q3 December 2012. The result was announced during market hours.
Consequent to merger of Bharat Heavy Plates & Vessels (BHPV) with the company w.e.f. 30 August 2013, the financial results of HPVP unit (erstwhile BHPV) have been included in Q3 December 2013 results. In view of this, figures for Q3 December 2013 are not comparable with the figures in corresponding period of previous year.
Bhel said that it had an outstanding order book position of about Rs 100600 crore as on 31 December 2013.
The company's board declared an interim dividend of Rs 1.31 per share for the year ending 31 March 2014. The interim dividend shall be paid/dispatched on 20 February 2014.
SKS Microfinance rose 1.82% after the company issued a profit guidance of Rs 125 crore for FY 2015. The announcement was made before market hours today, 5 February 2014.
SKS Microfinance (SKS) on Tuesday, 4 February 2014 announced its plans to raise growth capital of up to Rs 400 crore in FY 2015 with a maximum dilution of 20% as it sets out to create SKS Microfinance 3.0 to tap into the opportunities presented by the transformation of Indian villages into signposts of future in view of rural buoyancy.
SKS said that SKS Microfinance 3.0 plans to address the growing demand among its customers for an entire range of products and services including insurance, mobile loans, loans for solar lights, etc. in addition to micro credit, which will remain the company's core business. Pre-Andhra Pradesh microfinance crisis, the non-Andhra Pradesh portfolio outstanding of the microfinance sector was Rs 28300 crore, which stood at Rs 18596 crore as of September 2013 with a huge gap of Rs 9704 crore, SKS said. The company plans to increase its non-Andhra Pradesh portfolio outstanding from Rs 2364 crore as of December 2013 to Rs 3800 crore - Rs 4000 crore by the end of FY 2015, SKS said in a statement.
SKS also issued a profit guidance of Rs 125 crore for FY 2015. The profit guidance comes close on the heels of its recent announcement that there could be a positive surprise in its guided net profit of Rs 55-Rs 60 crore for FY 2014. The proposed capital raise of up to Rs 400 crore will fund such growth opportunities besides reinforcing the capital position of SKS which had a net worth of Rs 432 crore and a capital adequacy of 28.1% (21.6% without taking RBI dispensation on provisioning for the Andhra Pradesh portfolio) as of 31 December 2013. The company's cash and bank balances stood at Rs 809 crore, SKS said in a statement.
SKS said it believes that initiatives like Cross Sale which has been in pilot phase for a couple of years, will create greater value for all its stakeholders as the company plans to creatively disturb the asset-revenue-earning mix. The non-MFI business will be just 10% of the company's assets, but it could contribute 15% of the revenue and 25% of the profit in the medium term, the company said in a statement.
SKS also decided to realign its top structure in order to optimally spend management bandwidth on its reinvention, which will equip it fully to meet its long-term goals. As part of its restructuring exercise, the company plans to move the two present C-Level officials into strategic, mentoring roles but with complete accountability for business targets and new initiatives. Mr. M.R. Rao will continue as MD and CEO of the company. Mr. S Dilli Raj, presently CFO of the company to be promoted as President of the company. The two officials will spearhead new initiatives like Cross Sale, capital raise, creation of subsidiaries and building partnerships, the company said. Policy advocacy will be another major focus area, it added.
Mr. M.R. Rao, MD and CEO, SKS Microfinance said, "SKS Microfinance 2.0 was the result of our painstaking focus on Customer Protection Practices including 3% cap on return on assets in the MFI business, revamping of Customer Grievance Redressal mechanism, appointment of Ombudsman and 100% reliance on Credit Bureaus in processing loan applications. SKS Microfinance 3.0 will create customer and stakeholder delight as it creates a win-win situation for all as our pilot projects in areas like Mobile Loans have established".
Mr. S. Dilli Raj, CFO, SKS Microfinance said, "Now that Transformation A (fixing the core) is behind us, it is time to focus on Transformation B, that is, creation of new engines of growth. Our strong rural distribution and deep connect with 3 million non-Andhra Pradesh members will be used for delivery of quality products and services. The new paradigm is world-class customer service at a competitive price, and, in this regard, signing right partnerships, sourcing growth capital at the right time and striving for organization agility are key drivers. These will be hallmarks of SKS Microfinance 3.0, and we are confident of fast-tracking this transformation".
In the foreign exchange market, the rupee edged higher against the dollar, tracking weakness in the dollar versus majors and other Asian currencies. The partially convertible rupee was hovering at 62.465, compared with its close of 62.525/535 on Tuesday, 4 February 2014.
Up from 48.1 in December to 49.6 in January, the seasonally adjusted HSBC India Composite Output Index indicated a seventh consecutive monthly drop in private sector activity. But, the rate of contraction was marginal and the weakest in that sequence, Markit Economics said. Whereas manufacturing production growth accelerated, output at services companies fell again.
The headline HSBC Services Business Activity Index increased from December's 46.7 to 48.3 in January, signalling a moderate rate of output contraction that was the weakest in the current seven-month sequence of decrease. Panellists cited tough economic conditions, political issues and lower new order levels as the main reasons behind the fall in output. Service providers reported falling new business received for the seventh month running in January, with respondents commenting on increased competition for new work, deteriorating confidence among clients and weaker underlying demand. Nonetheless, the rate of contraction was slight and the slowest in that sequence. Manufacturing new orders rose at the quickest pace since March 2013. Incoming new work across the Indian private sector as a whole fell, albeit fractionally.
Despite having lower new business, service providers hired additional workers in January. Where job creation was indicated, this was attributed to expectations of higher new orders in coming months. With manufacturing employment also growing, staffing levels across the private sector increased for the second successive month (although slightly). Service providers were optimistic in January that business activity would expand over the next year. Growth is expected to be supported by planned increases in marketing, forecasts of an overall improvement in the Indian economy and stronger demand. Moreover, the degree of positive sentiment was the highest in six months.
Meanwhile, input cost inflation in the Indian private sector economy hit a three-month high, while the rate of charge inflation was little-changed from that seen in December. Manufacturing firms recorded stronger increases in both input and output prices than their service sector counterparts. Outstanding business in the Indian service sector fell in January, while an accumulation was recorded at manufacturers. Across the private sector as a whole, backlogs were unchanged from the levels recorded one month previously.
Sector data highlighted Post & Telecommunication as the best performing services category. This was the only sector to record higher output and new business. Conversely, Financial Intermediation suffered the sharpest declines in both business activity and new orders among the remaining five monitored service sectors, Markit Economics said.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "Service sector activity remains weak and broad based, although Post & Telecommunication led the softening in January. Meanwhile inflation pressures firmed, with input prices rising at a faster pace. Despite the weak growth backdrop, the RBI has to stick to its hawkish bias to get inflation under control and through this eventually pave the way for a recovery in economic activity".
Finance Minister P Chidambaram will present the Vote-on-Account or interim budget on 17 February 2014. The objective of a Vote-on-Account is to get Parliament's nod for expenditure to be incurred in the months prior to elections. The next full-fledged budget will be presented by the new government which comes to power after the Lok Sabha polls in April-May 2014.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Sighting elevated consumer price inflation, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
European stocks edged higher on Wednesday, 5 February 2014, as banks and financial-services companies rallied and investors awaited a private U.S. jobs report. Key benchmark indices in UK and France were up 0.02% to 0.3%. Germany's DAX index was off 0.08%.
The European Central Bank (ECB) undertakes monthly montary policy review tomorrow, 6 February 2014, amid speculation the ECB will reinforce its commitment to lower rates. The ECB will probably hold the benchmark interest rate at a record-low 0.25% at its policy meeting tomorrow, 6 February 2014, as it faces slowing inflation. After the Jan. 9 policy meeting, ECB President Mario Draghi said the central bank "strongly emphasizes" that it will maintain accommodative measures for as long as necessary.
The Bank of England's (BoE) Monetary Policy Committee (MPC) undertakes monthly montary policy review tomorrow, 6 February 2014, with markets waiting to see if Governor Mark Carney will alter guidance on lifting its record-low interest rate. The MPC is widely expected to keep the BoE's main interest rate at a record-low level of 0.5%. It is widely predicted also to maintain quantitative easing at 375 billion ($613 billion, 454 billion euros), opting against following the US Federal Reserve in tapering stimulus.
Britain's 12-month inflation slowed to 2% in December, recent official data showed, touching the lowest level for more than four years. The BoE's main task is to use monetary policy as a tool to keep annual inflation close to a government-set target of 2%, to preserve the value of money.
Asian stocks edged higher on Wednesday, 5 February 2014, after US shares rebounded overnight and Japanese companies posted earnings that cheered investors. Key benchmark indices in Indonesia, Japan, Singapore and South Korea were up 0.08% to 1.23%. Key benchmark indices in Hong Kong and Taiwan were off 0.6% to 2.34%
Stock markets in mainland China remain closed until 7 February 2014 for the Lunar New Year holiday.
Trading in US index futures indicated that the Dow could advance 8 points at the opening bell on Wednesday, 5 February 2014. US stocks closed with modest gains on Tuesday, clawing back a fraction of their worst losses since June made a day earlier. Investors welcomed a smaller-than-expected drop in factory orders during December.
The next major event on the horizon is the labor report out of the US, with nonfarm payrolls due on Friday, 7 February 2014.
On Tuesday, 4 February 2014, two Federal Reserve district bank presidents signaled a decline in global stock markets probably won't deter the Fed from further trimming bond buying that has pushed up central bank assets to $4.1 trillion. "The hurdle ought to remain pretty high for pausing in tapering," Richmond Fed President Jeffrey Lacker said after a speech in Winchester, Virginia. The fall in equities hasn't affected the outlook for labor market conditions materially at this point, Lacker said. "We linked the asset purchase programs to significant improvement in the outlook for labor market conditions. That has definitely occurred, Lacker said. "The committee is always cognizant of global economic conditions and developments," Lacker said at Shenandoah University, adding that his colleagues have to make policy choices focused on Fed goals for the US economy. "We conduct policy to achieve price stability and maximum employment here in the United States," Lacker said.
Chicago Fed President Charles Evans said in Detroit that policy makers probably face a high hurdle to deviate from $10 billion cuts in monthly bond buying at each of their next several meetings. The Fed's reduction in bond buying has been expected for quite some time and shouldn't have been a big surprise to global financial markets, Evans said to reporters after a speech. "Each country has a set of issues they need to deal with," Evans said. "The moderate pace of tapering that we laid out in conjunction with our stronger forward guidance" on the path of the federal funds rate "provides an adequate amount of accommodation for the other foreign markets," Evans said.
Evans and Lacker don't vote on policy this year.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market.
Powered by Capital Market - Live News
