Volatility continued as key benchmark indices trimmed intraday gains in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently up 78.81 points or 0.27% at 28,883.91. The market breadth indicating the overall health of the market was positive. Asian stocks edged higher after a breakthrough in talks with Ukraine yesterday, 12 February 2015, and on a friendlier tone between negotiators in Europe over Greece's debt troubles. Brent crude oil futures extended previous session's rally.
Cipla gained after good Q3 results. Lupin edged higher after the Reserve Bank of India yesterday, 12 February 2015, raised the ceiling on investment in the company's shares by foreign institutional investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) under the portfolio investment scheme to 49% of the company's equity capital with effect from 12 February 2015, from earlier 33%.
Earlier, the Sensex and the 50-unit CNX Nifty had, both, hit their highest level in more than a week in morning trade.
The rate of inflation based on the consumer price index (CPI) accelerated to 5.11% in January 2015 from 4.28% in December 2014 after the statistics ministry revised the base year for the calculation of the index to 2012 from 2010. Meanwhile, growth in industrial production decelerated to 1.7% in December 2014 from 3.9% in November 2014. Both CPI and industrial production data was announced after market hours yesterday, 12 February 2015.
Prime Minister Narendra Modi yesterday, 12 February 2015, said that the government is committed to provide predictable and stable tax regime and policies. Finance Minister Arun Jaitley yesterday, 12 February 2015, said that the government is determined to pursue economic reforms despite a defeat for the Bharatiya Janata Party (BJP) in assembly election in Delhi early this week.
Foreign portfolio investors sold shares worth a net Rs 406.28 crore yesterday, 12 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 705.53 crore yesterday, 12 February 2015, as per provisional data.
In overseas markets, Asian stocks edged higher on news of a ceasefire accord in Ukraine, while Sweden's surprise move to cut its main rate into negative territory and hopes of a resolution between debt-strapped Greece and its creditors burnished risk appetite. US stocks climbed yesterday, 12 February 2015, with major benchmarks nearing record highs, buoyed by a truce deal in Ukraine and strong quarterly earnings reports.
In the foreign exchange market, the rupee edged higher against the dollar.
Brent crude oil futures edged higher as news of deeper industry spending cuts and a sinking US dollar revived buying. Global crude oil prices have witnessed high volatility recently after a steep slide in prices over the past few months. The recent rebound in global crude oil prices will raise concerns pertaining to India's fiscal deficit, current account deficit and fuel price inflation. However, gains in rupee against the dollar will mitigate the negative impact of higher crude oil price. Gains in local currency will reduce the cost of imports. India imports about 80% of its crude oil requirements.
At 11:17 IST, the S&P BSE Sensex was up 78.81 points or 0.27% at 28,883.91. The index jumped 149.93 points at the day's high of 28,955.03 in morning trade, its highest level since 5 February 2015. The index gained 30.60 points at the day's low of 28,835.70 in early trade.
The CNX Nifty was up 35.55 points or 0.41% at 8,747.10. The index hit a high of 8,766.80 in intraday trade, its highest level since 5 February 2015. The index hit a low of 8,729.65 in intraday trade.
The BSE Mid-Cap index was up 71.41 points or 0.67% at 10,733.52. The BSE Small-Cap index was up 76.90 points or 0.69% at 11,277.05. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,338 shares rose and 986 shares fell. A total of 91 shares were unchanged.
Cipla gained 1.77% to Rs 673.75 after good Q3 results. The stock hit high of Rs 701.60 and low of Rs 661 so far during the day. The company's consolidated net profit rose 15.3% to Rs 328 crore on 6.5% growth in income from operations to Rs 2765 crore in Q3 December 2014 over Q3 December 2013. The result was announced after market hours yesterday, 12 February 2015.
Cipla's EBITDA (earnings before interest, taxation, depreciation, and amortization) rose 18.5% to Rs 554 crore in Q3 December 2014 over Q3 December 2013. Domestic sales rose 14.2% to Rs 1199 crore in Q3 December 2014 over Q3 December 2013. The growth in domestic sales was largely on account of growth in respiratory, anti-infectives, cardiac and gastro intestinal therapies, Cipla said in a statement.
Exports of formulations declined 6.2% to Rs 1275 crore in Q3 December 2014 over Q3 December 2013. Exports of APIs fell 4.4% to Rs 151 crore in Q3 December 2014 over Q3 December 2013.
Meanwhile, Cipla said it has signed a definitive agreement to acquire 60% stake of Jay Precision Pharmaceuticals (Jay Precision), Mumbai, from the existing shareholders, for a cash consideration of Rs 96 crore. Jay Precision is an existing supplier of respiratory devices to the company and has a state of the art manufacturing facility at Vasai, Maharashtra. Considering company's leading position in inhalation therapy, this transaction is aimed at integrating the value chain and will serve as platform for development of next generation respiratory devices, Cipla said. Pharmaceutical undertaking of Jay Precision Products (India) was demerged into Jay Precision effective 1 January 2014. Turnover of Jay Precision for the year ended 31 March 2014 was Rs 30 crore. The transaction is expected to be completed by end of this financial year, subject to completion of certain conditions precedent, Cipla said.
In separate announcement, Cipla said before market hours that a binding term sheet has been entered into with the company's existing partner, Biopharm SPA, for establishing a joint venture (JV) company in Algeria. The JV company will manufacture and market respiratory products facilitating Cipla's front-end presence in Algeria. As per the term sheet, the company's wholly owned subsidiary, Cipla (EU) will hold a 40% stake in the JV company while the remainder will be held by a Biopharm-led Algerian consortium. The JV company is expected to make an investment of up to $15 million in the construction of a manufacturing facility. Cipla (EU)'s initial investment in cash in the JV company is expected to be $6 million.
Cipla also said during market hours that it has been awarded $188.95 million of Global Fund ARV Tender. Cipla has been selected as a 'Panel Supplier' for a Supplier Partnership Agreement. The contract is effective from 1 January 2015 and will run for a period of three years. The supplies will begin from Q4 March 2015. The anti-retrovirals drugs will be manufactured in Cipla's state-of-the-art manufacturing facilities in India, which has been approved by various international regulatory agencies.
Shares of other pharma stocks also gained after Cipla announced good Q3 results. Sun Pharmaceutical Industries (up 2.38%), Ranbaxy Laboratories (up 3.01%), Aurobindo Pharma (up 0.69%), Wockhardt (up 3.66%), Dr Reddy's Laboratories (up 0.59%), Strides Arcolab (up 0.87%), Shasun Pharmaceuticals (up 0.38%), Elder Pharmaceuticals (up 1.14%) and Divi's Laboratories (up 0.91%) gained.
Lupin rose 2.58% to Rs 1,669 after the Reserve Bank of India yesterday, 12 February 2015, raised the ceiling on investment in the company's shares by foreign institutional investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) under the portfolio investment scheme to 49% of the company's equity capital with effect from 12 February 2015, from earlier 33%. The stock hit record high of Rs 1,692.50 in intraday trade. Total FII holding in Lupin stood at 31.77% as on 31 December 2014.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.125, compared with its close of 62.305 during the previous trading session.
Brent crude oil futures edged higher as news of deeper industry spending cuts and a sinking US dollar revived buying. Brent for April settlement was up 57 cents at $59.85 a barrel. The contract had surged $3.36 a barrel to settle at $59.28 a barrel during the previous trading session.
On macro front, the rate of inflation based on the consumer price index (CPI) rose 5.11% in January 2015 compared with a 4.28% gain in December 2014. The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has revised the base year of the CPI from 2010 to 2012. Meanwhile, growth in industrial production decelerated to 1.7% in December 2014 from 3.9% in November 2014. Both CPI and industrial production data was announced after market hours yesterday, 12 February 2015.
The rate of inflation based on the wholesale price index (WPI) is seen accelerating to 0.4% in January 2015 from 0.1% in December 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil WPI data for January 2015 at 12.10 noon on 16 February 2015.
Prime Minister Narendra Modi yesterday, 12 February 2015, said that the government is committed to provide predictable and stable tax regime and policies. Modi made these comments during his meeting with Treasury Secretary of the United States Jacob Lew, accompanied by the Vice Chairman of the US Federal Reserve, Stanley Fischer. The two are visiting India for the India-US Economic and Financial Partnership dialogue which is co-chaired by the Finance Minister of India.
Finance Minister Arun Jaitley yesterday, 12 February 2015, said that the government is determined to pursue economic reforms despite a defeat for the Bharatiya Janata Party (BJP) in assembly election in Delhi early this week. Jaitley also reportedly said at a news conference after talks with his US counterpart, Treasury Secretary Jack Lew that India's economy is poised to take off at a much faster pace. The BJP was trounced in assembly election held in Delhi last week. The Aam Aadmi Party won 67 of 70 seats. The BJP won a mere 3 seats.
The next major event for the financial markets is Union Budget for 2015-16. Finance Minister Arun Jaitley will present Union Budget 2015-16 in Parliament on 28 February 2015. Analysts will scrutinize measures in the Budget for financing infrastructure projects as well as the government's own capital expenditure on infrastructure for the year ahead. This is the first full fledged Budget of the Narendra Modi government and analysts will look for a roadmap for economic growth for the next few years.
Changes in rates of dividend distribution tax, capital gains tax on sale of shares, Securities Transaction Tax (STT) and Minimum Alternate Tax (MAT), if any, will be closely watched. The dividend distribution tax is currently at 15%. The minimum alternate tax is currently at 18.5% of book profits. Short term capital gains tax on sale of shares is currently at 15% while there is zero long capital gains tax on sale of shares held for a period of more than one year.
The upcoming Budget session of the parliament assumes utmost importance as the government intends to replace the ordinances it had promulgated after the conclusion of the winter session of the parliament with Bills and get them cleared by both Houses of Parliament during the budget session. The Narendra Modi government promulgated a slew of ordinances after the last session of Parliament. Some of the key ordinances include raising the FDI in the insurance sector from 26% to 49%, e-auctioning of coal mines and amendment to the Land Acquisition Act.
Asian stocks edged higher today, 13 February 2015, on news of a ceasefire accord in Ukraine, while Sweden's surprise move to cut its main rate into negative territory and hopes of a resolution between debt-strapped Greece and its creditors burnished risk appetite. Key indices in China, Hong Kong, Singapore, Taiwan, Indonesia, and South Korea were up 0.14% to 1.83%. Japan's Nikkei Average fell 0.34%.
Trading in US index futures indicated that the Dow could gain 10 points at the opening bell today, 13 February 2015. US stocks climbed on Thursday, 12 February 2015, with major benchmarks nearing record highs, buoyed by a truce deal in Ukraine and strong quarterly earnings reports.
In economic news, jobless claims in the week ended Feb. 7 rose 25,000 to 304,000, the Labor Department said. Retail sales fell in January for the second month in a row, fueling worries that the drop in gasoline prices isn't translating into more consumer spending. Sales fell 0.8% last month to $439.77 billion, the Commerce Department said.
Meanwhile in Europe, a standoff between Greece and its European creditors on Greece's bailout program eased somewhat after Greece made an about-face yesterday, 12 February 2015, agreeing to talk to the "troika" of international lenders.
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