Key benchmark indices today, 13 May 2014, extended their recent strong gains after exit polls on Monday, 12 May 2014, signaled that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) would win a majority in the Lok Sabha elections which concluded on Monday, 12 May 2014. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit record high, with market sentiment boosted by data showing that foreign funds made substantial purchases of Indian stocks on Monday, 12 May 2014. Gains in Asian and European stocks also underpinned sentiment on domestic bourses. The Sensex was provisionally up 338.90 points or 1.44%, off close to 180 points from the day's high and up about 160 points from the day's low. The market breadth, indicating the overall health of the market was positive. The BSE Small-Cap index gained more than 1.5%. The BSE Mid-Cap rose almost 1.5%.
GAIL (India) and Reliance Infrastructure hit 52-week high. Realty stocks edged higher. Bank of Baroda gained after good Q4 results. Dr. Reddy's Laboratories dropped after weak Q4 results. Bharat Heavy Electricals (Bhel) surged on reports that the Cabinet is likely to ratify today, 13 May 2014, the decision to sell 4.66% stake in the company through a block deal. Construction stocks rallied.
Various exit polls on Monday, 12 May 2014, predicated that the NDA will be able to form the next government at the Centre by winning 272 or more seats or will bag just few seats lower than the majority 272 seats needed to form the next government in a house of 543. The exit polls were out on Monday evening after the 9th and the final phase of Lok Sabha elections got over at 18:00 IST on that day. If exit polls prove correct, NDA's prime ministerial candidate Narendra Modi will become India's next Prime Minister. 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 ends on 1 June and the new House has to be constituted by 31 May.
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. While campaigning for the Lok Sabha elections, Modi has pledged to reinvigorate the country's manufacturing sector, create more jobs and overhaul the country's inadequate infrastructure. Investors are hoping that the BJP-led government will be better at getting things done and more business-friendly than the current Congress-party-led coalition government.
Various post-poll surveys on Monday predicted an easy win for NDA with CNN-IBN forecasting about 280 seats, Headlines Today 272 seats, India TV 289 seats, ABP 281 and News 24 predicting up to 340 seats for NDA in a house of 543. The predictions of an NDA victory are primarily based on survey results showing BJP and its allies doing exceedingly well in Uttar Pradesh, Bihar and Maharashtra, which account for 168 seats and also in BJP's strongholds of Gujarat, Madhya Pradesh, Rajasthan and Chhattisgarh. Only Times NOW gave NDA cause for worry by not predicting a simple majority. It gave BJP and its allies 249-265 seats, still putting NDA in a comfortable zone, requiring just 20 or so seats from post-poll allies.
Investors are hoping that when the results of the Lok Sabha elections are out on Friday, 16 May 2014, a stable government which will complete its full term of five years in office comes to power. 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.
The BJP in its Lok Sabha polls manifesto has promised more business-friendly policies if the party comes to power after elections. The BJP has said that measures for the revival of the economy are its priority if the party comes to power after elections. India's GDP growth has slowed to a decade low of below 5%. The GDP grew 4.7% in Q3 December 2013.
Indian stocks gained for the fourth day in a row today, 13 May 2014.
The market surged amid initial volatility after exit polls on Monday, 12 May 2014, signaled that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) would win a majority in the Lok Sabha elections which concluded on Monday, 12 May 2014. Firmness continued on the bourses in morning trade. Key benchmark indices extended gains and hit fresh intraday high in early afternoon trade. The Sensex hit record high above 24,000 level. A bout of volatility was witnessed as the key benchmark indices trimmed intraday gains in afternoon trade. Firmness continued on the bourses in mid-afternoon trade.
The market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Monday, 12 May 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 1217.95 crore on Monday, 12 May 2014, as per provisional data from the stock exchanges.
As per provisional figures, the S&P BSE Sensex was up 338.90 points or 1.44% at 23,889.90. The index jumped 517.94 points at the day's high of 24,068.94 in early afternoon trade, a lifetime high for the index. The index rose 178.25 points at the day's low of 23,729.25 in early trade.
The CNX Nifty was up 95.45 points or 1.36% at 7,109.70, as per provisional figures. The index hit a high of 7,172.35 in intraday trade, a lifetime high for the index. The index hit a low of 7,067.15 in intraday trade.
The BSE Mid-Cap index was up 108.89 points or 1.44% at 7,618.62. The BSE Small-Cap index was up 130.63 points or 1.71% at 7,762.92. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 4588 crore, higher than Rs 3592.61 crore on Monday, 12 May 2014.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,620 shares gained and 1,271 shares fell. A total of 147 shares were unchanged.
Among the 30-share Sensex pack, 23 stocks gained and rest of them fell. Hero MotoCorp (up 5.88%), ONGC (up 3.66%) and Tata Power Company (up 3.43%) edged higher from the Sensex pack.
Bharti Airtel gained 1.34%. The company today, 13 May 2014, said that its wholly-owned subsidiary -- Bharti Airtel International (Netherlands) B.V. -- has successfully priced a dual currency issuance of Guaranteed Senior Notes comprising of $1 billion 5.35% Notes due 2024 and Euro 750 million 3.375% Notes due 2021. The notes carry an investment grade rating from Moody's, Standard & Poor and Fitch.
The notes will be fully and unconditionally guaranteed by Bharti Airtel. Bharti will apply the net proceeds of the issue to refinance its existing debt. This refinancing exercise has significantly lengthened the average maturity profile of Bharti's debt, the company said. With this, the company has fully refinanced the original $9 billion acquisition facility and also taken care of all near term maturities, the company said. The success of the dual tranche euro and US dollar bond offerings demonstrate the demand for quality investment grade Indian paper like that of Bharti Airtel, the company said. The notes received considerable investor interest, witnessing a strong demand across high quality institutional investors, banks and insurance companies, Bharti Airtel said.
Bharat Heavy Electricals (Bhel) surged 10.58% to Rs 219.45 on reports that the Cabinet is likely to ratify today, 13 May 2014, the decision to sell 4.66% stake in the company through a block deal. The stock hit 52-week high of Rs 229.85 in intraday trade.
The Finance Ministry in March 2014 had sold 4.66% stake in Bhel to Life Insurance Corporation (LIC) for about Rs 1889 crore. LIC purchased 11.41 crore shares in Bhel at a price of Rs 165.55 per share through a block deal on the BSE.
Following the block deal, the government stake in Bhel came down to 63.06%, from 67.72%.
The Empowered Group of Ministers, headed by Finance Minister P Chidambaram, had in February 2014 decided on the timing and mode of disinvestment in Bhel. However, the CCEA approval was pending for the stake sale.
In August 2011, the Cabinet had cleared the sale of 5% stake in Bhel through a follow-on public offer (FPO). However, market conditions led to a delay in the issue and the company in April 2012 withdrew the draft prospectus filed with market regulator Sebi.
GAIL (India) rose 2.92% to Rs 394.25 after hitting 52-week high of Rs 405.30 in intraday trade.
Reliance Infrastructure rose 5.36% to Rs 587.10 after hitting 52-week high of Rs 596 in intraday trade.
Realty stocks edged higher. Housing Development and Infrastructure (up 0.01%), D B Realty (up 1.75%), DLF (up 4.07%), Sobha Developers (up 1.65%) and Unitech (up 0.29%) gained.
Punjab National Bank dropped 4.62% on dismal Q4 results. The stock was volatile. The stock hit 52-week high of Rs 877.60 in intraday trade. The stock hit low of 793.80 in intraday trade. The bank's net profit fell 28.69% to Rs 806.35 crore on 8.18% rise in total income to Rs 12498.23 crore in Q4 March 2014 over Q4 March 2013. The result was announced during market hours.
PNB's net profit declined 29.59% to Rs 3342.57 crore on 3.66% growth in total income to Rs 47799.96 crore in the year ended 31 March 2014 over the year ended 31 March 2013.
PNB's ratio of net non-performing assets (NPAs) to net advances rose to 2.85% as of 31 March 2014, from 2.8% as on 31 December 2013 and 2.35% as on 31 March 2013.
The bank's ratio of gross NPAs to gross advances rose to 5.25% as on 31 March 2014, compared with 4.96% as on 31 December 2013 and 4.27% as on 31 March 2013.
The bank's provisions and contingencies surged 44.73% to Rs 2138.69 crore in Q4 March 2014 over Q4 March 2013. The provision coverage ratio as on 31 March 2014 was 59.07%.
The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 11.52% as on 31 March 2014, compared with 11.02% as on 31 December 2013.
Bank of Baroda rose 4.6% to Rs 878 on good Q4 results. The stock 52-week high of Rs 913 in intraday trade. The bank's net profit rose 12.48% to Rs 1157.27 crore on 13.17% rise in total income to Rs 11614.85 crore in Q4 March 2014 over Q4 March 2013. The result was announced during market hours.
Bank of Baroda's (BoB) net profit rose 1.35% to Rs 4541.08 crore on 11.78% increase in total income to Rs 43402.45 crore in the year ended March 2014 over the year ended March 2013.
BoB's ratio of net non-performing assets (NPAs) to net advances stood at 1.52% as on 31 March 2014, compared with 1.88% as on 31 December 2013 and 1.28% as on 31 March 2013.
The bank's ratio of gross NPAs to gross advances stood at 2.94% as on 31 March 2014, compared with 3.32% as on 31 December 2013 and 2.40% as on 31 March 2013.
Provisions and contingencies fell 27.86% to Rs 1153.15 crore in Q4 March 2014 over Q4 March 2013. The provisioning coverage ratio as on 31 March 2014 stood at 65.45%.
The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 12.28% as on 31 March 2014, compared with 12.01% as on 31 December 2013.
Dr. Reddy's Laboratories dropped 4.2% on weak Q4 results. The company's net profit fell 16% to Rs 481.60 crore on 4% increase in revenue to Rs 3480.90 crore in Q4 March 2014 over Q4 March 2013. The company announced results during market hours. The fall in net profit was partly due to base effect. The company had received one-time settlement income of Rs 120 crore from Nordian Inc (formerly MDS Inc) in Q4 March 2013.
The company also said during market hours that board of directors of the company has decided to have separate roles of the Chairman of the company and Managing Director and CEO. The company has appointed Satish Reddy as Chairman of the Board. He previously held the position of Vice-Chairman, Managing Director and COO. GV Prasad will continue as the CEO. He has also been appointed as the Co-Chairman and Managing Director.
The company also announced that Abhijit Mukherjee, President, Global Generics, has been appointed as Chief Operating Officer (COO). He will be responsible for both the global generics and pharmaceutical services and activate ingredients (PSAI) businesses.
Construction stocks surged. Jaiprakash Associates (up 7.83%), Hindustan Construction Company (up 16.31%), NCC (up 17.29%), IVRCL (up 14.16%), Unity Infraprojects, Gammon India (up 7.66%), and IRB Infrastructure & Developers (up 3.84%) rose.
Engineering and construction major L&T advanced 1.94% to Rs 1,414 after hitting a 52-week high of Rs 1,440.05 in intraday trade. The company today, 13 May 2014, said that its construction division has won new orders worth Rs 1137 crore across various business segments in April and May 2014.
In the foreign exchange market, the rupee edged higher against the dollar as equities rose after exit polls on Monday, 12 May 2014, signaled victory for the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) in the Lok Sabha elections which concluded on Monday, 12 May 2014. The partially convertible rupee was hovering at 59.825, compared with its close of 60.05/06 on Monday, 12 May 2014.
On the macro front, inflation based on the combined consumer price index (CPI) for urban and rural India accelerated to 8.59% (provisional) in April 2014, from 8.31% (final) in March 2014, data released by the government after trading hours on Monday, 12 May 2014, showed. Core CPI which excludes food and energy prices eased to 7.8% in April 2014, from 7.81% in March 2014.
Another data released by the government after trading hours on Monday, 12 May 2014, showed that industrial production shrank for a second straight month in March 2014. Industrial production declined 0.5% in March 2014, compared with a contraction of 1.8% in February 2014. Mining production declined 0.4% and manufacturing sector registered a contraction of 1.2% in March 2014. Electricity generation rose 5.4% in March 2014. As per use-based classification, production of basic goods rose 4% and that of intermediate goods rose 0.6%. Production of capital goods registered a contraction of 12.5%. The consumer goods sector registered a contraction in production of 0.9% in March 2014. Within the consumer goods sector, production of consumer non-durables registered a growth of 7.2% whereas production of consumer durables registered a contraction of 11.8% in March 2014.
For the year ended 31 March 2014 (FY 2014), the industrial production registered a contraction of 0.1%. The fall in February's output was revised to 1.8% from 1.9% reported earlier.
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.
European stocks nudged higher on Tuesday, 13 May 2014, as quarterly earnings from ThyssenKrupp AG to Airbus Group NV (AIR) exceeded analysts' estimates. Key benchmark indices in UK, Germany and France were up 0.01% to 0.54%.
German investor confidence fell for a fifth month in May in a sign of growing concern that threats from low inflation to a strong euro may undermine the recovery. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 33.1 from 43.2 in April. The gauge has dropped every month since reaching a seven-year high of 62 in December.
Asian stocks rose on Tuesday, 13 May 2014, as investors weighed earnings and after US stocks climbed to record high overnight. Key benchmark indices in Indonesia, South Korea, Hong Kong, Taiwan, and Japan were up 0.11% to 1.95%. Markets in Malaysia, Singapore, Thailand and Bangladesh were closed for a holiday.
Stocks fell in mainland China after the latest data showed growth in industrial output, fixed-asset investment and retail sales all unexpectedly slowed last month. The Shanghai Composite was off 0.1%.
China's factory production expanded 8.7% last month, the National Bureau of Statistics said today, 13 May 2014. Retail sales rose 11.9% percent in April. Fixed-asset investment for the first four months of this calendar year climbed 17.3%, the latest data showed.
Trading in US index futures indicated that the Dow could advance 26 points at the opening bell on Tuesday, 13 May 2014. The US stock market ended Monday with best gains in nearly a month that sent both the S&P 500 and the Dow Jones Industrial Average to record levels. Broad-based gains on the S&P 500 were led by technology and industrial sector stocks, while deal news in the food industry boosted investor sentiment.
The economic calendar was light on news Monday. The US government recorded a budget surplus of $107 billion in April, the Treasury Department reported Monday, a smaller windfall than in the same month last year. The April surplus contributes to a steady decline in the deficit for fiscal 2014. Shrinking US deficit could help keep interest rates low.
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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