Intraday volatility continued as the barometer index, the S&P BSE Sensex, regained positive zone after slipping into the red in morning trade. The 50-unit CNX Nifty hovered in negative zone. The Sensex was up 1.82 points or 0.01%, off close to 130 points from the day's high and up about 25 points from the day's low. The market breadth, indicating the overall health of the market, was weak.
Shares of Financial Technologies witnessed a further steep slide after Thursday's carnage in stock triggered by the National Spot Exchange's decision to suspend trading of all contracts, other than e-Series contracts, till further notice. Shares of Multi Commodity Exchange of India (MCX) also tumbled for the second day in a row today, 2 August 2013, with the stock locked at 20% lower circuit.
Reliance Communications dropped on weak Q1 results. Shares of organised retailers rose after the Union Cabinet on Thursday, 1 August 2013, approved relaxation of rules for foreign direct investment (FDI) in multibrand retail trade. Pharma major Ranbaxy Laboratories reversed direction after hitting a 52-week low. IT major TCS hit record high.
A bout of initial volatility was witnessed as key benchmark indices trimmed gains after a firm start triggered by the government's decision on Thursday, 1 August 2013, to relax foreign direct investment (FDI) rules in a number of sectors. Intraday volatility continued as the barometer index, the S&P BSE Sensex, regained positive zone after slipping into the red in morning trade.
At 10:20 IST, the S&P BSE Sensex was up 1.82 points or 0.01% to 19,319.01. The index jumped 134.51 points at the day's high of 19,451.70 in early trade. The index fell 21.09 points at the day's low of 19,296.10 in morning trade.
The CNX Nifty was down 10.90 points or 0.19% to 5,716.95. The index hit a low of 5,714.75 in intraday trade. The index hit a high of 5,761.85 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 942 shares fell and 571 shares rose. A total of 95 shares were unchanged.
Among the 30-share Sensex pack, 15 stocks fell and rest of them rose. Jindal Steel & Power (down 7.24%), Coal India (down 2.85%) and Hindalco Industries (down 2.52%), edged lower.
IT major TCS rose 1.19% to Rs 1836.75 after hitting a record high of Rs 1839 in intraday trade today, 2 August 2013.
Pharma major Ranbaxy Laboratories rose 0.8% to Rs 265.05, with the stock reversing direction after hitting a 52-week low of Rs 253.95 in intraday trade today, 2 August 2013.
Shares of organised retailers rose after the Union Cabinet on Thursday, 1 August 2013, approved relaxation of rules for foreign direct investment (FDI) in multibrand retail trade. Trent (up 1.42%) and Future Retail (up 7.12%), gained. Shoppers Stop fell 0.51%.
The Union Cabinet on Thursday, 1 August 2013, approved the proposal for amendment in the existing FDI policy in Multi-Brand Retail Trading (MBRT). At least 50% of total FDI brought in the first tranche of $100 million, shall be invested in 'backend infrastructure' within three years, where 'back-end infrastructure' will include capital expenditure on all activities, excluding that on front-end units. For instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure. Subsequent investment in the back-end infrastructure would be made by the MBRT retailer as needed, depending upon his business requirements.
The government also said at least 30% of the value of procurement of manufactured/processed products purchased shall be sourced from Indian micro, small and medium industries which have a total investment in plant & machinery not exceeding $2 million. This valuation refers to the value at the time of installation, without providing for depreciation. The 'small industry' status would be reckoned only at the time of first engagement with the retailer and such industry shall continue to qualify as a 'small industry' for this purpose even if it outgrows the said investment of $ 2 million, during the course of its relationship with the said retailer. Sourcing from agricultural co-operatives and farmers cooperatives would also be considered in this category. The procurement requirement would have to be met, in the first instance, as an average of five years' total value of the manufactured/ processed products purchased, beginning 1st April of the year during which the first tranche of FDI is received. Thereafter, it would have to be met on an annual basis.
It added retail sales outlets may be set up only in cities with a population of more than 10 lakh as per the 2011 Census or any other cities as per the decision of the respective State Governments, and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities; retail locations will be restricted to conforming areas as per the Master/Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking.
The amendment in the extant FDI policy relating to Multi-Brand Retail Trading in respect of 'small industry' will bring in a balance between the business exigencies of the MBRT entity and intent of the policy which is to extend the benefits of the FDI policy in multi-brand retail trading to a larger constituency of small industries. The amendment in the provision regarding 'back-end infrastructure' will give more clarity to the policy. The amendment to the provision regarding location of retail outlets will bring in parity in the policy as it is proposed to extend such dispensation to all States.
Reliance Communications (RCom) dropped 3.2% to Rs 127.20 on weak Q1 results. The company's consolidated net profit declined 33.33% to Rs 108 crore on 1.74% growth in total income to Rs 5412 crore in Q1 June 2013 over Q1 June 2012. The result hit the market after trading hours on Thursday, 1 August 2013.
RCom said that its operating income rose 3.6% to Rs 5315 crore in Q1 June 2013 over Q4 March 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 2% on comparable basis at Rs 1701 crore in Q1 June 2013 over Q4 March 2013. The company said its EBITDA margin at 31.4% in Q1 June 2013 was amongst the highest in the industry, with strong contribution from both Wireless and GEBU businesses. The company said revenue per minute (RPM) rose 4% to 45.7 paisa in Q1 June 2013 over Q4 March 2013. The company said the increase in RPM was led by tariff hikes and strong focus on paid and profitable minutes.
RCom said that the company remains free cash flow (FCF) positive and this shall continue in succeeding years.
Shares of Financial Technologies witnessed a further steep slide after Thursday's carnage in stock triggered by the National Spot Exchange's decision to suspend trading of all contracts, other than e-Series contracts, till further notice. The stock was off 20.18% at Rs 153.05 after slumping a staggering 64.59% in a single trading session on Thursday, 1 August 2013. Financial Technologies is one of the two promoters of the National Spot Exchange.
In a clarification to the stock exchanges, Mr. Jignesh Shah, Chairman & Managing Director of Financial Technologies (India) (FTIL) during trading hours on Thursday, 1 August 2013, said that this action of NSEL does not entail any financial liability on FTIL and that the business of FTIL is as usual.
Shares of Multi Commodity Exchange of India (MCX), a commodity futures exchange promoted by Financial Technologies, were locked at 20% lower circuit at Rs 409.65 after falling by the maximum permissible level of 20% on Thursday, 1 August 2013. MCX during trading hours on Thursday, 1 August 2013, said that there will not be any impact of NSEL's circular on the operations and financials of MCX.
The government on Thursday approved liberalisation of FDI norms in a dozen sectors, including 100 per cent in telecom and higher caps in insurance and defence sectors, to boost the sagging economy. In the contentious insurance sector, it was decided to raise the sectoral FDI cap from 26 per cent to 49 per cent under automatic route under which companies investing do not require prior government approval. A bill to raise FDI cap in the sector is pending in the Rajya Sabha. It was also decided to allow 49 per cent FDI in single brand retail under the automatic route and beyond, through the Foreign Investment Promotion Board (FIPB) route. In case of PSU oil refineries, commodity bourses, power exchanges, stock exchanges and clearing corporations, FDI would be allowed up to 49 per cent under automatic route as against the current routing of the investment through FIPB. In basic and cellular services, FDI was raised to 100 per cent from the current 74 per cent. Of this, up to 49 per cent would be allowed under automatic route and the remaining through FIPB approval. A similar dispensation would be allowed for asset reconstruction companies and tea plantations. FDI of up to 100 per cent was allowed in courier services under automatic route. Earlier, similar amount of investment was allowed through FIPB route. In credit information firms, 74 per cent FDI under automatic route has been allowed. While the FDI cap in defence sector remained unchanged at 26 per cent, it was decided that higher limits of foreign investments in 'state-of-the-art' technology manufacturing would be considered by the Cabinet Committee on Security.
Asian stocks rose on Friday, 2 August 2013, as global manufacturing reports beat forecasts and central banks in Europe vowed to maintain stimulus. Key benchmark indices in Hong Kong, China, Indonesia, Japan, Singapore, Taiwan and South Korea rose by 0.08% to 1.76%.
China's non-manufacturing purchasing managers' index is scheduled to be released tomorrow, 3 August 2013 after the manufacturing gauge unexpectedly strengthened in July, data yesterday showed.
Indonesia's economy grew less than 6% last quarter, adding to risks for the Southeast Asian nation as investments ease, inflation accelerates and the currency slumps. Gross domestic product increased 5.81% in the three months ended June 30 from a year earlier, the Central Bureau of Statistics said in Jakarta today.
Trading in US index futures indicated that the Dow could gain 15 points at the opening bell on Friday, 2 August 2013. US stocks kicked off the month by rallying Thursday, 1 August 2013, to all-time highs in the wake of upbeat economic signals from around the globe. Factory output from the US to China and Europe expanded in July, reports on Thursday showed, while American jobless claims fell to a five-year low. The Institute for Supply Management's US factory index increased to 55.4 in July 2013, the strongest since June 2011, from 50.9 in June 2013. Readings above 50 indicate expansion.
The influential US non-farm payroll data for July 2013 is due later in the global day today, 2 August 2013. The job data is a key piece of data which the Federal Reserve monitors to decide on when to slow the flow of monetary stimulus to the US economy. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.
The European Central Bank on Thursday kept its key financing rate at a record low, and ECB President Mario Draghi said interest rates would remain at or below present levels for an extended period of time. The Bank of England also on Thursday also left its benchmark interest rate and bond-buying program unchanged.
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