Key benchmark indices surged after the Reserve Bank of India (RBI)'s surprise decision to keep its main lending rate viz. the repo rate unchanged at 7.75% after mid-quarter monetary policy review today, 18 December 2013. It was widely expected that the central bank will raise repo rate by 25 basis points to rein in inflation after recent data showed that both consumer prices and wholesale prices accelerated last month. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their hit their highest level in almost a week. The market was volatile. The Sensex was provisionally up 271.45 points or 1.32%, off 33.98 points from the day's high and up 314.89 points from the day's low. The market breadth, indicating the overall health of the market, was strong.
Indian bourses snapped their six-day losing streak today, 18 December 2013.
Index heavyweight Reliance Industries (RIL) edged higher. Interest rate sensitive automobile, banking and realty stocks edged higher as the Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review contrary to market expectations of a 25 basis point increase. Among IT stocks, HCL Technologies hit record high.
Pharma stocks rose on renewed buying. Aurobindo Pharma hit record high. Biocon surged after the company said it has entered into a licensing & collaboration agreement with Quark Pharmaceuticals, Inc. for the development of a range of small interfering RNA based novel therapeutics.
The market was volatile. The Sensex, and the 50-unit CNX Nifty, both, hit their lowest level in more than 2-1/2 weeks after opening with a downward gap. A bout of volatility was witnessed in early trade as the key benchmark indices reversed initial losses. Key benchmark indices trimmed gains after hitting fresh intraday high in morning trade. Key benchmark indices surged and hit fresh intraday high after the Reserve Bank of India (RBI) surprised markets by keeping its main lending rate viz. the repo rate unchanged at 7.75% after mid-quarter monetary policy review. The RBI's decision hit the market at around 11:00 IST. Firmness continued on the bourses in afternoon trade. Key benchmark indices held firm in mid-afternoon trade as European stocks edged higher in early trade there.
The market sentiment was boosted by data showing that foreign funds remained buyers of Indian stocks on Tuesday, 17 December 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 249.93 crore on Tuesday, 17 December 2013, as per provisional data from the stock exchanges.
As per provisional closing, the S&P BSE Sensex was up 271.45 points or 1.32% to 20,883.59. The index jumped 305.43 points at the day's high of 20,917.57 in mid-morning trade, its highest level since 12 December 2013. The index fell 43.44 points at the day's low of 20,568.70 in opening trade, its lowest level since 29 December 2013.
The CNX Nifty was up 89.65 points or 1.46% to 6,228.70. The index hit a high of 6,236 in intraday trade, its highest level since 12 December 2013. The index hit a low of 6,129.95 in intraday trade, its lowest level since 29 December 2013.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,502 shares gained and 948 shares fell. A total of 175 shares were unchanged.
The total turnover on BSE amounted to Rs 2479 crore, higher than Rs 2292 crore on Tuesday, 17 December 2013.
Index heavyweight Reliance Industries (RIL) edged higher. The stock rose 2.35% t0 Rs 858.65. The stock hit high of Rs 861.85 and low of Rs 839. RIL's subsidiary Reliance Retail on Monday, 16 December 2013, that echoing consumer sentiments, Reliance Retail has decided to discontinue its non-vegetarian food offering, 'Delight', with immediate effect. Reliance Retail has decided to focus on vegetarian offerings only, within its retail portfolio.
Bank stocks edged higher as the Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review contrary to market expectations of a 25 basis point increase.
ICICI Bank rose 0.37% at Rs 1,102.35. The stock was volatile. The scrip hit high of Rs 1,134 and low of Rs 1,082.30.
HDFC Bank edged higher in volatile trade. The stock rose 1.46% to Rs 668.05. The scrip hit a high of Rs 680.75 and low of Rs 650. The stock had dropped 3.55% on Tuesday, 17 December 2013, after the Reserve Bank of India (RBI) announced a ban on further purchases of the bank's shares by foreign institutional investors (FIIs) after foreign share holding in the bank crossed the overall limit of 49% of the bank's paid-up capital.
State Bank of India rose 2.7% to Rs 1,765.30. The scrip hit high of Rs 1,779.30 and low of Rs 1,716.
Kotak Mahindra Bank (up 1.51%), Axis Bank (up 2.5%), Bank of India (up 5.47%), Punjab National Bank (up 5.03%), Bank of Baroda (up 0.18%), and Union Bank of India (up 5.13%) gained.
IndusInd Bank gained 4.33% to Rs 432.85 after two block deals were executed on the counter in early trade on BSE. The stock saw volume of 32.65 lakh shares so far during the day, higher than an average volume of 4.19 lakh shares in the past one quarter. A block deal of 18.25 lakh shares was executed on the counter at Rs 414.70 in opening trade on BSE today, 18 December 2013. A block deal of 11.50 lakh shares was executed on the counter at Rs 415.20 in opening trade on BSE today, 18 December 2013.
The Reserve Bank of India on Tuesday, 17 December 2013, released on its website a Discussion Paper on 'Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders: Framework for Revitalising Distressed Assets in the Economy'. The Discussion Paper outlines a corrective action plan that will incentivize early identification of problem cases, timely restructuring of accounts which are considered to be viable, and taking prompt steps by banks for recovery or sale of unviable accounts.
With the slowdown of the Indian economy, a number of companies/projects are under stress. As a result, the Indian banking system has seen increase in NPAs and restructured accounts during the recent years. Not only do financially distressed assets produce less than economically possible, they also deteriorate quickly in value, the central bank said in a statement. Therefore, there is a need to ensure that the banking system recognises financial distress early, takes prompt steps to resolve it, and ensures fair recovery for lenders and investors, the RBI said. 'Improving the system's ability to deal with corporate distress and financial institution distress by strengthening real and financial restructuring as well as debt recovery' has been indicated by the Governor, RBI as one of the five pillars on which Reserve Bank of India's developmental measures will be built for improving the financial system over the next few quarters. This Discussion Paper is a step in that direction, the RBI said.
Auto stocks rose as the Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review contrary to market expectations of a 25 basis point increase. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Maruti Suzuki India (up 2.12%), Mahindra & Mahindra (M&M) (up 1.72%) and Ashok Leyland (up 2.89%) gained.
Tata Motors rose 0.49%. Tata Motors' global wholesales fell 19.91% to 81,957 units in November 2013 over November 2012. Global wholesales for Jaguar Land Rover rose 15.31% to 39,956 vehicles in November 2013 over November 2012. Tata Motors announced the data on 13 December 2013.
Shares of two wheeler makers rose. Bajaj Auto (up 3.87%), Hero MotoCorp (up 3.2%) and TVS Motor Company (up 2.31%) rose.
Realty stocks edged higher as the Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review contrary to market expectations of a 25 basis point increase. Purchases of both residential and commercial property are largely driven by finance.
DLF (up 5.43%), HDIL (up 7.11%), Indiabulls Real Estate (up 5.21%), D B Realty (up 8.11%), Unitech (up 2.68%), Sobha Developers (up 0.52%) and Godrej Properties (up 0.83%) edged higher.
Pharma stocks rose on renewed buying. Cipla (up 1.43%), Dr Reddy's Laboratories (up 1.03%), Ranbaxy Laboratories (up 0.1%), Wockhardt (up 1.17%), and Sun Pharmaceutical Industries (up 0.88%) advanced.
Lupin rose 1.16%. The company today, 18 December 2013, announced that its US subsidiary -- Lupin Pharmaceuticals Inc. -- has launched its Abacavir Sulfate, Lamivudine, and Zidovudine Tablets, 300 mg (base)/150 mg/300 mg in the US after the US District Court for the District of Delaware ruled that the Lupin's generic version of Trizivir did not infringe on patents. Lupin had earlier received approval for the drug. Lupin's Abacavir Sulfate, Lamivudine Zidovudine 300mg (Base)/150mg/300mg Tablets are the AB-rated generic equivalent of ViiV Healthcare's (ViiV) Trizivir Tablets, 300 mg (base)/150 mg/300mg and are indicated in combination with other antiretrovirals or alone for the treatment of HIV-1 infection.
Lupin is the first applicant to file an ANDA for Trizivir Tablets and as such is entitled to 180 days of marketing exclusivity, the company said in a statement. Trizivir Tablets, 300 mg (base)/150 mg/300mg had annual US sales of approximately $111.6 million, as per IMS MAT September 2013 data.
Aurobindo Pharma rose 5.64% to Rs 374.80, after hitting a record high of Rs 389 in intraday trade. The stock extended recent gains triggered by the company receiving the final approval from USFDA to manufacture and market a generic medicine in the United States.
Aurobindo Pharma during trading hours on Friday, 13 December 2013 said it has received the final approval from the US Food & Drug Administration (USFDA) to manufacture and market Duloxetine Hydrochloride Delayed-Release Capsules 20mg (base), 30mg (base) and 60mg (base) which was earlier tentatively approved.
Duloxetine Hydrochloride Delayed-Release Capsules 20mg (base), 30mg (base) and 60mg (base) are the generic equivalent of Eli Lilly & Company's Cymbalta Delayed-Release Capsules 20mg (base), 30mg (base) and 60mg (base). Duloxetine Hydrochloride Delayed-Release Capsules are indicated for the treatment of for the treatment of major depressive disorder (MDD) and falls under the Neurological (CNS) therapeutic category. According to IMS data, the market size of the product is estimated to be $5.4 billion for the twelve months ended September 2013.
Aurobindo now has a total of 188 abbreviated new drug application (ANDA) approvals (163 final approvals including 7 from Aurolife Pharma LLC and 25 tentative approvals) from USFDA.
Biocon surged 11.86% after the company said it has entered into a licensing & collaboration agreement with Quark Pharmaceuticals, Inc. for the development of a range of small interfering RNA based novel therapeutics. The announcement was made during trading hours today, 18 December 2013.
The collaboration will enable Biocon to co-develop, manufacture & commercialize QPI-1007, a novel small interfering RNA (siRNA) drug candidate for ophthalmic conditions, for India and other key markets, Biocon and Quark Pharmaceuticals, Inc. (Quark) said in a combined statement.
Biocon will have access to Quark's innovative and proprietary siRNA technology platform that can be leveraged for the development of novel therapeutics for various unmet medical needs.
Commenting on the development, Ms Kiran Mazumdar Shaw, Chairperson & MD, Biocon said, "We are very excited to partner with Quark to develop novel and promising siRNA therapeutics. Quark is the world leader in this technology and our joint development efforts on QPI-1007, targeting ocular neuroprotection aims at providing relief to several patients suffering from serious ophthalmic conditions. This collaboration reinforces our commitment to develop and introduce innovative therapeutics to India to meet the unmet medical needs. We hope to use this technology for developing several other novel therapeutics".
Daniel Zurr, Ph.D., CEO, QuarkPharma said, "We are very pleased to collaborate with Biocon, a pioneer in biopharmaceuticals. It is the only Indian company to develop several difficult to make biologics and biosimilars and has provided affordable healthcare solutions for the patients in India and other markets. We believe siRNA is going to make a very important impact in the field of pharmaceuticals discovery and development. We are hopeful that this collaboration will position Biocon as the leading siRNA company in India and as an international player in this new drug category".
An expert team of scientists from Quark and Biocon will jointly work on the development of QPI-1007, and the additional novel pipeline, leveraging the siRNA innovative technology, the statement said.
HCL Technologies rose 2.26% to Rs 1,199.90, also its record high. The stock turned ex-dividend today, 18 December 2013, for final dividend of Rs 6 per share for the year ended 30 June 2013.
Bond prices surged as the Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review contrary to market expectations of a 25 basis point increase. The yield on 10-year federal paper 8.83% GS 2023 was hovering at 8.7916%, lower than its close of 8.9141% on Tuesday, 17 December 2013. Bond yield and bond prices are inversely related.
The Reserve Bank of India (RBI) said that today's policy decision was a close call. Even though the RBI maintains status quo today, it can help guide market expectations through a clearer description of its policy reaction function: if the expected softening of food inflation does not materialise and translate into a significant reduction in headline inflation in the next round of data releases, or if inflation excluding food and fuel does not fall, the Reserve Bank of India will act, including on off-policy dates if warranted, so that inflation expectations stabilise and an environment conducive to sustainable growth takes hold. The Reserve Bank's policy action on those dates will be appropriately calibrated, the central bank said in a statement.
The RBI said that current inflation is too high. However, given the wide bands of uncertainty surrounding the short term path of inflation from its high current levels, and given the weak state of the economy, the inadvisability of overly reactive policy action, as well as the long lags with which monetary policy works, there is merit in waiting for more data to reduce uncertainty, the RBI said. There are obvious risks to waiting for more data, including the possibility that tapering of quantitative easing by the US Federal Reserve may disrupt external markets and that the Reserve Bank of India may be perceived to be soft on inflation. The Reserve Bank of India will be vigilant, it said.
Recent readings suggest that headline inflation, both retail and wholesale, have increased, mainly on account of food prices. While consumer price index (CPI) and wholesale price index (WPI) inflation excluding food and fuel have been stable, despite a steady and necessary increase in administered prices towards market levels, the high level of CPI inflation excluding food and fuel leaves no room for complacency. There is, however, reason to wait before determining the course of monetary policy. There are indications that vegetable prices may be turning down sharply, although trading mark-ups could impede the full pass-through into retail inflation. In addition, the disinflationary impact of recent exchange rate stability should play out into prices. The RBI also said that the negative output gap, including the recent observed slowdown in services growth, as well as the lagged effects of effective monetary tightening since July, should help contain inflation.
Retail inflation measured by the consumer price index (CPI) has risen unrelentingly through the year so far, pushed up by the unseasonal upturn in vegetable prices, double-digit housing inflation and elevated levels of inflation in the non-food and non-fuel categories. While vegetable prices seem to be adjusting downwards sharply in certain areas, the feed-through to much-too-high headline CPI inflation remains to be seen, the RBI said. Wholesale inflation has also gone up sharply from Q2 onwards, with upside pressures evident across all constituent components, the RBI said.
High inflation at both wholesale and retail levels risks entrenching inflation expectations at unacceptably elevated levels, posing a threat to growth and financial stability, the RBI said. There are also signs of a resumption of high rural wage growth, suggesting second round effects that cannot be ignored. High and persistent inflation also increases the risks of exchange rate instability.
While volatility in financial markets has receded, it could pick up again following the inevitable taper of quantitative easing in the US, given the large dependence of EMEs on external financing, the RBI said. In India, the pick-up in real GDP growth in Q2 of 2013-14, albeit modest, was driven largely by robust growth of agricultural activity, supported by an improvement in net exports. However, the weakness in industrial activity persisting into Q3, still lacklustre lead indicators of services and subdued domestic consumption demand suggest continuing headwinds to growth. Tightening government spending in Q4 to meet budget projections will add to these headwinds. In this context, the revival of stalled investment, especially in the projects cleared by the Cabinet Committee on Investment, will be critical.
The RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL) after monetary policy review today, 18 December 2013. With the normalization of exceptional monetary measures, liquidity conditions have improved, as reflected in the steady decline in the access to the MSF. Capital inflows under the Reserve Bank's swap facilities for banking capital and non-resident deposits augmented domestic liquidity significantly from the end of November. Over the first two weeks of December, banks refrained from utilising the limits under the overnight LAF repo and export credit refinance, and, in fact, excess liquidity was parked with the Reserve Bank of India through reverse repo. Liquidity is being managed with a view to ensuring that there is adequate credit flow to the productive sectors of the economy, the RBI said.
The narrowing of the trade deficit since June through November, on positive export growth and contraction in both oil and non-oil imports, should bring the current account deficit (CAD) down to a more sustainable level for the year as a whole, the RBI said.
Robust inflows into the swap windows opened by the Reserve Bank during August-November have contributed significantly to rebuilding foreign exchange reserves thus covering possible external financing requirements and providing stability to the foreign exchange market. Looking ahead, these favourable developments should help to build resilience to external shocks, the RBI said.
European stocks edged higher on Wednesday, 18 December 2013, as investors waited for the Federal Reserve to decide whether to reduce its monthly asset purchases. Key benchmark indices in UK, Germany and France were up 0.37% to 0.69%.
Asian stocks edged higher on Wednesday, 18 December 2013, as investors await a Federal Reserve decision on its stimulus program. Key benchmark indices in Hong Kong, Japan, Indonesia and South Korea rose by 0.32% to 2.02%. Key benchmark indices in China, Taiwan and Singapore fell by 0.05% to 0.13%.
China attracted $8.5 billion in foreign direct investment in November--up 2.35% on year, the Ministry of Commerce said in a statement on Wednesday. The figure was more than October's $8.42 billion which was up 1.24% on year. FDI in the January-November period rose 5.48% on year to $105.5 billion. Non-financial overseas direct investment rose 28.3% on year in the January-November period to $80.2 billion.
Japanese exports rose 18.4% from a year earlier in November 2013, data today, 18 December 2013, showed. That marked the ninth consecutive month of increase, as manufacturers benefited from a weaker yen brought about by Prime Minister Shinzo Abe's pro-growth strategies. A recovery in exports is important for the country's economy ahead of a planned sales-tax increase in April.
The Bank of Japan (BoJ), which buys more than 7 trillion yen ($67.6 billion) of Japanese Government Bonds (JGBs) every month in its bid to stoke inflation, holds a two-day monetary policy meeting which begins tomorrow, 19 December 2013.
Trading in US index futures indicated that the Dow could advance 42 points at the opening bell on Wednesday, 18 December 2013. US stocks closed a volatile session lower on Tuesday, 17 December 2013, as markets digested a slew of economic data and focused on the Federal Reserve's upcoming decision on the fate of the stimulus program.
The Federal Open Market Committee's (FOMC) two-day policy meeting on interest rates in the United States concludes today, 18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
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