A bout of initial volatility was witnessed as key benchmark indices alternately swung between positive and negative zone. The barometer index, the S&P BSE Sensex, regained the psychological 21,000 mark, after falling below that level in initial trade. The Sensex was down 7.68 points or 0.04%, up about 35 points from the day's low and off close to 40 points from the day's high. The market breadth, indicating the overall health of the market, was strong.
Shares of realty major DLF dropped after weak Q2 result. Shares of state-run oil refining-cum-marking firms (PSU OMCs) rose while state-run upstream oil firms fell after an Expert Group set up by the government to advice it on pricing methodology for diesel, domestic LPG and PDS kerosene under the chairmanship of Dr. Kirit S. Parikh on Wednesday, 30 October 2013, suggested that the best course of action is to free the market from all price controls on diesel, domestic LPG and PDS kerosene at the earliest.
The market may remain volatile today, 31 October 2013, as traders roll over positions in the futures & options (F&O) segment from the near month October 2013 series to November 2013 series. The near month October 2013 derivatives contract expire today, 31 October 2013.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1016.77 crore on Wednesday, 30 October 2013, as per provisional data from the stock exchanges.
At 9:30 IST, the S&P BSE Sensex was down 7.68 points or 0.04% to 21,026.19. The index fell 41.99 points at the day's low of 20,991.98 in early trade. The index rose 32.44 points at the day's high of 21,066.41 in early trade.
The CNX Nifty was down 12.40 points or 0.2% to 6,239.30. The index hit a low of 6,235.90 in intraday trade. The index hit a high of 6,255.20 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 714 shares rose and 375 shares fell. A total of 53 shares were unchanged.
Among the 30-share Sensex pack, 17 stocks rose and rest of them fell.
Sesa Sterlite rose 1.24% ahead of its Q2 results today, 31 October 2013.
Bank of Baroda shed 0.39% ahead of its Q2 results today, 31 October 2013.
IDFC declined 0.19% ahead of its Q2 results today, 31 October 2013.
Dr Reddy's Laboratories shed 0.22% ahead of its Q2 results today, 31 October 2013.
State Bank of India declined 0.26%. The bank said after market hours on Wednesday, 30 October 2013, that the Central Board of the bank at its Meeting held on 30 October 2013 has approved, subject to the approvals from Reserve Bank of India (RBI) and Government of India (GoI) under section 5(2) of the State Bank of India Act, the infusion of capital funds to the tune of Rs 2000 crore in State Bank of India by way of preferential allotment of equity shares in favour of the Government of India.
DLF dropped 1.88% on weak Q2 result. The company's consolidated net profit declined 28.05% to Rs 100 crore on 3% growth in revenue to Rs 2225 crore in Q2 September 2013 over Q2 September 2012. The Q2 result was announced after market hours on Wednesday, 30 October 2013.
DLF's consolidated EBITDA (earnings before interest, taxation, depreciation and amortization) almost remained flat at Rs 863 crore in Q2 September 2013 as against Rs 864 crore in Q2 September 2012.
DLF's consolidated net profit declined 45% to Rs 100 crore on 9% fall in revenue to Rs 2225 crore in Q2 September 2013 over Q1 June 2013. EBITDA declined 18% to Rs 863 crore in Q2 September 2013 over Q1 June 2013.
DLF said it has witnessed an enthusiastic response to its luxury development-Camellias in DLF 5, Gurgaon. In Q2 September 2013, the company sold approximately 0.09 million square feet (msf) of the project at an average realization of Rs 28,055 per sq. ft.
DLF has appointed the construction major L&T as the general contractor to build the luxury residential development - The Crest and Leighton Welspun, an Australian construction major as the general contractor to build luxury residential development - The Camellias. The execution of both the projects Crest and Camellias has commenced, DLF said.
With regard to the divestment of the non-core assets, DLF said it has closed the divestiture of the Wind business and Star Alubuild to Lixil. The company has also signed a share purchase agreement with Dewan Housing Finance for sale of shareholding in DLF Pramerica Life Insurance, which is currently awaiting regulatory approvals. Given the pipeline of divestitures, the company remains committed to reduce its net debt to Rs 17500 crore by end of FY 2014, DLF said.
DLF said it expects a slow absorption of product in the market amid current economic and high interest rate environment. Despite these adverse conditions, the company has managed to more than double it sales bookings in first half of FY 2014 compared to corresponding period of last year, DLF said. The company said it remains hopeful in achieving its sales booking target for the year. On the leasing front, the company has achieved leasing of 1 msf in first half of FY 2014 compared to 1.14 msf for the entire FY 2013.
Infosys declined 0.06%. The company after trading hours on Wednesday, 30 October 2013, said that the company has completed a civil settlement that concludes the investigation by the US Attorney's Office for the Eastern District of Texas and resolves all issues with the US Department of State, Immigrations and Customs Enforcement and the US Department of Homeland Security relating to I-9 paperwork errors and visa matters that were the subject of the investigation. There were no criminal charges or court rulings against the company, Infosys said. Furthermore, there are no limitations on the company's eligibility for federal contracts or access to US visa programs as a result of the settlement, Infosys said.
In the settlement, Infosys has agreed to pay $34 million to resolve all allegations, for which the company had already taken a reserve of $35 million which included attorney's fees. The settlement is focused on historical I-9 paperwork errors from 2010-2011 that Infosys began correcting before the investigation began. There is no evidence that the I-9 paperwork violations allowed any Infosys employee to work beyond their visa authorization. As reflected in the settlement, Infosys denies and disputes any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse, the software major said in a statement. The company's use of B-1 visas was for legitimate business purposes and not in any way intended to circumvent the requirements of the H-1B program, Infosys said. Only 0.02% of the days that Infosys employees worked on US projects in 2012 were performed by B-1 visa holders.
In the settlement agreement, the US Government acknowledged that Infosys demonstrates a commitment to compliance with the immigration laws through its current visa and I-9 practices. This settlement removes the uncertainty of prolonged litigation and allows the management to continue to focus on delivering measurable results for the company's clients, Infosys said.
Shares of state-run oil refining-cum-marking firms (PSU OMCs) rose while state-run upstream oil firms fell after an Expert Group set up by the government to advice it on pricing methodology for diesel, domestic LPG and PDS kerosene under the chairmanship of Dr. Kirit S. Parikh on Wednesday, 30 October 2013, suggested that the best course of action is to free the market from all price controls on diesel, domestic LPG and PDS kerosene at the earliest.
Among PSU OMCs, BPCL (up 0.75%) and Indian Oil Corporation (up 1.07%), gained. But, HPCL fell 0.35%.
Among state-run upstream oil firms, ONGC (down 0.38%), GAIL (India) (down 0.46%) and Oil India (down 0.51%), declined.
In view of the significant gap between the present administered prices and the international prices, the committee has spelt out the arrangements that may prevail in the interim till the best course of action is implemented. The Expert Group was of the opinion that since the government has already decided to eventually free diesel price, there is no need to tinker with the existing pricing formula, which, even if modified, will not solve the problem of mounting under-recoveries incurred on sales of controlled products, mainly due to high international crude prices and depreciation of Indian rupee.
The committee was of the opinion that the government should take steps to pass on the impact of rise in price of diesel to consumers and move rapidly towards making the price of diesel market determined. The committee has recommended that diesel price be raised by Rs 5 per litre with immediate effect and the balance under-recovery should be made up through a subsidy of Rs 6 per litre to PSU OMCs. The subsidy on diesel should be capped at Rs 6 per litre. This would imply freeing of price of diesel beyond this cap. Any rise in the gap between domestic and international prices beyond Rs 6/litre should be made up by corresponding increase in the price of diesel in the domestic market by the OMCs. If the gap falls below Rs 6/litre, either the prices should be reduced or the subsidy to be provided should be reduced. The second option is recommended by the Expert Group as that would lead to decline in subsidy over time. In the future, oil companies should be permitted to revise the prices above the subsidy cap (in line with the changes in the international prices and other costs elements) on their own. The committee was of the opinion that the fixed subsidy of Rs 6/litre be reduced gradually and finally removed through regular monthly downward revisions in the cap on subsidy and corresponding increase in the price of diesel over the next one year.
As regards, PDS kerosene, the committee has suggested market determined pricing of kerosene and that the benefit of the subsidy to the deserving consumers i.e. BPL families, be given through direct cash transfer mechanism. For this purpose, the DBTK scheme for Direct Transfer of Subsidy to BPL families throughout the country should be fast-tracked and completed within the next two years. Till this is implemented, the price of PDS Kerosene should be increased by Rs 4/litre immediately and thereafter the price of PDS Kerosene be revised from time to time at least in line with growth in the per capita agriculture GDP. Allocation of PDS Kerosene should be reduced with spread of rural electrification and increased use of LPG and PNG for cooking. Since Kerosene is neither exported nor imported and also since there is no custom duty on PDS Kerosene, it's pricing may continue to be based on IPP.
As regards domestic LPG, the committee was of the opinion that the limit for subsidized cylinders be reduced from the present 9 to 6 cylinders per annum to each household and the DBTL scheme be restricted to identified families based on an exclusion criteria. The DBTL scheme should be implemented throughout the country for Direct Transfer of Subsidy to identified families within next one year. The committee has recommended increase in price of subsidized domestic LPG by Rs 250/cylinder immediately and that the balance subsidy be phased out over the next 2 years through gradual price increase. As the country continues to be heavily dependent on imports of LPG, the methodology of fixing refinery gate price of Domestic LPG should continue on IPP basis.
The committee has suggested subsidy sharing burden by ONGC and Oil India based on based on three levels of previous crude oil prices viz. crude price below $80 a barrel, crude price at between $80 to $120 a barrel and crude price above $120 a barrel from the financial year financial year 2014-15 onwards. Keeping in view the current high level of under-recoveries, the contribution from ONGC and Oil India during the financial year 2013-14 may be retained at the existing level of $56/barrel of crude oil produced. As regards GAIL (India), with the reduction in availability of APM gas, the committee has recommended that GAIL's contribution should not exceed the gross profit made on sale of LPG (after allowing a reasonable profit amount to be retained by GAIL).
Power Grid Corporation of India fell 0.7%. The company after market hours on Wednesday, 30 October 2013, said that the board of directors of the company at its meeting held on 30 October 2013 has approved four projects entailing a total investment of Rs 2820.04 crore.
In the foreign exchange market, the rupee edged lower against the dollar, hurt by broad gains in the dollar. The partially convertible rupee was hovering at 61.335, compared with its close of 61.235/245 on Wednesday, 30 October 2013. The dollar rose against a basket of six major currencies after the Federal Reserve fueled bets it may start paring stimulus sooner than previously forecast.
Asian stocks fell on Thursday, 31 October 2013, after the Federal Reserve fueled bets it may start paring stimulus sooner than previously forecast. Key benchmark indices in China, Japan, Hong Kong, Indonesia, Singapore, and South Korea shed 0.14% to 1.24%. Taiwan's Taiwan Weighted rose 0.01%.
US stocks fell on Wednesday, 30 October 2013, as investors assessed a Federal Reserve statement that largely matched forecasts, but also had some Fed watchers saying a policy change could come sooner than expected.
The Federal Reserve decided to press on with $85 billion in monthly bond purchases, saying it needs to see more evidence that the economy will continue to improve. "The recovery in the housing sector slowed somewhat in recent months," the Federal Open Market Committee (FDTR) said Wednesday at the end of a two-day meeting in Washington. "Fiscal policy is restraining economic growth. Taking into account the extent of federal fiscal retrenchment over the past year, the committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy," the committee said. The Fed repeated that it will "await more evidence that progress will be sustained before adjusting the pace of its purchases." The Fed's purchases will remain divided between $40 billion a month of mortgage bonds and $45 billion in Treasury securities.
US private-sector employers hired the fewest workers in six months in October while tepid domestic demand kept inflation benign last month, suggesting the economy was still in need of stimulus from the Federal Reserve. Employers in the private sector added 130,000 new jobs to their payrolls this month, the ADP National Employment Report showed on Wednesday. That was the lowest reading since April.
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