Key benchmark indices edged higher in choppy session after global credit rating agency Standard & Poor's (S&P) revised upwards its outlook on India's sovereign credit rating to stable from negative. The market breadth indicating the overall health of the market turned positive from negative in late trade. The barometer index, the S&P BSE Sensex, rose 157.96 points or 0.6% to settle at 26,626.32. A recovery in European stocks also boosted sentiment. Bank stocks reversed intraday losses. Metal stocks rose. Most pharma stocks gained on weak rupee. PSU OMCs reversed intraday losses. Capital goods stocks and realty stocks gained.
Volatility was the order of the day as key indices alternately swung between positive and negative zone in intraday trade. When the news of the S&P upgrade hit the market in mid-afternoon trade, the Sensex was languishing in red. It reversed those losses soon after the news.
In overseas markets, European stocks reversed intraday losses as investors awaited data on US gross domestic product to gauge the outlook for interest rates in the world's largest economy. Asian stocks dropped after steep losses for US stocks overnight. US stocks fell sharply yesterday, 25 September 2014, on a report that Russian lawmakers are drafting legislation that would allow the government to seize foreign assets in response to sanctions by US and the European Union imposed on account of Russia's aggression in Ukraine.
In the foreign exchange market, the rupee edged higher against the dollar after global credit rating agency Standard & Poor's (S&P) revised upwards its outlook on India's sovereign credit rating to stable from negative.
Brent crude oil prices edged higher in choppy trade as hefty supplies capped price gains and outweighed concerns that rising tensions in the Middle East could disrupt supply.
S&P said that the stable outlook for the next 24 months reflects the rating agency's view that the new government has both the willingness and capacity to implement reforms necessary to restore some of India's lost growth potential, consolidate its fiscal accounts and permit the Reserve Bank of India to carry out effective monetary policy. The government's actions will likely add momentum to the incipient cyclical upswing evident in the economy, S&P said. The rating agency said it expects improved fiscal performance in the medium term primarily from revenue-side improvements brought about by the planned introduction of a national goods and services tax (GST) and administrative efforts to expand the tax base. "We project net general government debt to decline to below 60% of GDP by the year ending March 2018, and with it, general government interest rate expense to just under 20% of revenues", S&P said. India's external position is a key credit strength, S&P said.
The rating agency said it may raise India's rating if the economy reverts to a real per capita GDP trend growth of 5.5% per year and fiscal, external, or inflation metrics improve. S&P also simultaneously warned that it may lower the rating if the government's structural reform agenda stalls.
The S&P BSE Sensex rose 157.96 points or 0.6% to settle at 26,626.32, its highest closing level since 24 September 2014. The index jumped 252.67 points at the day's high of 26,721.03 in late trade. The index lost 247.87 points at the day's low of 26,220.49 in afternoon trade, its lowest level since 18 August 2014.
The CNX Nifty gained 57 points or 0.72% to settle at 7,968.85, its highest closing level since 24 September 2014. The index hit a high of 7,993.30 in intraday trade. The index hit a low of 7,841.80 in intraday trade, its lowest level since 18 August 2014.
The total turnover on BSE amounted to Rs 4428 crore, higher than Rs 3624.11 crore on Thursday, 25 September 2014.
The market breadth indicating the overall health of the market turned positive from negative in late trade. On BSE, 1,552 shares rose and 1,405 shares fell. A total of 86 shares were unchanged. Earlier, the breadth had turned negative from positive in mid-morning trade.
The BSE Mid-Cap index rose 70.68 points or 0.76% to settle at 9,421.40. The BSE Small-Cap index gained 66.20 points or 0.63% to settle at 10,510.99. Both these indices underperformed the Sensex.
Index heavyweight Reliance Industries (RIL) rose 0.45%. The company said before market hours that Reliance Jio Infocomm (RJIL), a subsidiary of RIL has signed a $750 million loan backed by Korea Exim Bank on 24 September 2014. The loan is guaranteed by RIL and will be primarily used to finance goods and services procured from Samsung Electronics for the infrastructure rollout of RJIL.
This is the first loan between Reliance group and Korea Exim Bank and has a door to door tenor of 12 years including a 2 year availability period and repayable over 10 years thereafter. This deal is notably Korea Exim Bank's largest telecom infrastructure financing till date. It is also Korea Exim Bank's largest deal in India. Korea Exim Bank is funding $ 440 million of the above loan as a direct funding and the balance $ 310 million is being funded under the K-Exim covered guarantee by eleven of Reliance's relationship banks.
GMR Infrastructure gained 3.49%. The company said after market hours that in the backdrop of the Supreme Court's order on the cancellation of 214 Coal blocks, a coal mine block known as "Rampia" in the state of Odisha also stands cancelled, where GMR Group is one among the 6 shareholders. This mine was allotted to GMR Energy, and intended to feed coal towards 550 megawatts (MW) of power generation at GMR Kamalanga Energy (GKEL). However, the mine could not be developed on account of variety of reasons beyond the control of the developers.
The management of GMR Group clarified that GMR Group has not made any significant investment and no borrowing was made for the development of Rampia Coal Block. Considering the PPA obligations with Haryana / Bihar / Odisha States Discoms, a presidential directive was given to Coal India via Ministry of Coal to provide coal linkage up to September 2019 and to this effect an FSA has been signed with the subsidiaries of Coal India and Coal supplies are being received. In addition to this arrangement, GKEL also has a firm linkage of coal supplies for 500MW, assuring fuel linkage to Kamalanga thermal power plant to its full capacity. In light of the above the current SC order will not have any negative impact on GMR Kamalanga Energy / GMR Group.
Capital goods stocks gained. Siemens (up 3.8%), Crompton Greaves (up 0.98%), Bharat Heavy Electricals (up 0.96%) and ABB (India) (up 0.94%) gained.
L&T gained 1.88% L&T Infotech, a wholly owned subsidiary of L&T announced during market hours a partnership with Solix Technologies, a leading provider of enterprise data management (EDM) solutions, to offer customers a comprehensive information lifecycle (ILM) solution to manage both structured and unstructured data.
PSU OMCs reversed intraday losses. BPCL (up 3.13%), HPCL (up 3.14%), Indian Oil Corporation (up 2.05%) gained.
The government reportedly plans a big cut in diesel prices while state oil firms are preparing to slash petrol rates ahead of elections scheduled in Maharashtra and Haryana scheduled next month. Diesel prices may fall about Rs 2 per litre when PSU OMCs review fuel prices next week, according to reports. It will be the first rate cut for diesel since January 2009. PSU OMCs review fuel prices on 1st and 16th of every month based on the average imported oil price in the previous fortnight. PSU OMCs have over recovery of 35 paise per litre on sale of diesel for the current fortnight, as per data released by the Petroleum Planning & Analysis Cell on 16 September 2014. PSU OMCs are currently incurring daily under-recovery of Rs 190 crore on the sale of Diesel, PDS Kerosene and Domestic LPG.
PSU OMCs suffer under-recoveries on domestic sale of LPG and kerosene at government controlled prices.
Most pharma stocks gained on weak rupee. Aurobindo Pharma (up 1.52%), Lupin (up 1.1%), Strides Arcolab (up 1.14%), and Wockhardt (up 2.4%) gained. Dr Reddy's Laboratories fell 2.61%. Weakness in rupee could boost sales of pharma companies in rupee terms as pharma firms derive substantial revenue from exports.
Sun Pharmaceutical Industries (Sun Pharma) jumped 4.3%.
A foreign brokerage reportedly said that Sun Pharma has received a Form 483 from the US Food and Drug Administration (FDA) on a Gujarat facility. FDA's Form 483 is a letter that notifies company of objectionable conditions. The brokerage noted that the letter given to Sun Pharma contained "no data integrity issues" and said chances of an import alert are "low", as per reports.
Ranbaxy Laboratories surged 5.12%.
In April 2014, Sun Pharmaceutical Industries acquired Ranbaxy Laboratories in a $4 billion landmark transaction.
Cipla rose 0.52% to Rs 611.50. The stock hit high of Rs 616.90 and low of Rs 588.15 in intraday trade. The Medicines Patent Pool (MPP) announced six new sub-licences with Aurobindo, Cipla, Desano, Emcure, Hetero Labs and Laurus Labs to allow generic manufacture of TAF for 112 developing countries. MPP's announcement comes one day after Gilead released positive results on two of its TAF Phase III studies, suggesting that the medicine has the potential to play a large role in the international community's efforts to scale-up HIV treatment, the statement from MPP and Cipla said after trading hours yesterday, 25 September 2014.
IT stocks were mixed. Tech Mahindra (down 1.32%), TCS (down 0.91%) and Infosys (down 0.34%) declined. HCL Technologies (up 0.15%) and Wipro (up 0.49%) gained.
Realty stocks edged higher. DLF (up 4.06%), Housing Development & Infrastructure (HDIL) (up 0.49%), D B Realty (up 1.87%), Anant Raj (up 3.56%) and Unitech (up 5.43%) gained.
Metal stocks rose on renewed buying. Sesa Sterlite (up 0.49%), JSW Steel (up 3.33%), NMDC (up 4.71%), Hindustan Zinc (up 2.03%), Bhushan Steel (up 5%), Tata Steel (up 3.25%), Steel Authority of India (Sail) (up 6.15%), National Aluminum Company (up 1.75%) and Hindustan Copper (up 0.82%) gained.
Jindal Steel & Power (JSPL) jumped 5.02%. The company after trading hours on Thursday, 25 September 2014, said that the management is in the process of evaluating the impact of the Supreme Court's decision. The stock had been hit adversely in prior two sessions by the Supreme Court's decision on Wednesday, 24 September 2014, to cancel most coal blocks allocated since 1993 as the company has operating coal blocks which stand cancelled.
Hindalco Industries jumped 5.65% after the company after market hours on Thursday, 25 September 2014, issued a clarification with regard to the Supreme Court cancelling coal block allocations that the only incremental impact because of the cancelation of coal blocks would be on the cost of production at Hirakud smelter starting April 2015, which is not expected to be significant. The company said that at a suggested levy of Rs 295 per tonne on coal, the total one time impact on the company would be around Rs 500 crore. In any case, the company was not expecting the captive coal immediately and it has plans to operate on purchased coal.
Bank stocks reversed intraday losses. Union Bank of India (up 5.82%), Bank of India (up 2.54%), Bank of Baroda (up 1.71%), Syndicate Bank (up 6.33%), Dena Bank (up 3.15%), Indian Bank (up 1.13%), Canara Bank (up 2.54%), Indian Overseas Bank (up 5.71%), Andhra Bank (up 7.08%), Punjab National Bank (up 4.15%) and Oriental Bank of Commerce (up 4.25%) gained.
Among private sector banks, ICICI Bank (up 0.96%), IndusInd Bank (up 2.34%), Yes Bank (up 4.92%), Federal Bank (up 2.37%), and Axis Bank (up 2.95%), gained. Kotak Mahindra Bank dropped 0.45%.
HDFC Bank rose 2.05% on reports that the Foreign Investment Promotion Board (FIPB) will decide on 1 October 2014 a fresh proposal seeking enhancement of foreign investment limit in the bank. On December last year the Reserve Bank of India (RBI) had stopped further foreign purchase of HDFC Bank's shares, saying overall foreign shareholding limit of 49% had been reached.
Bank stocks had tumbled recently amid concerns of bad loans due to their exposure to coal mines after the Supreme Court's decision on Wednesday, 24 September 2014, cancelling most coal block allocations since 1993.
The Supreme Court in its verdict Wednesday, 24 September 2014, cancelled the allocation of 214 out of 218 coal blocks it had already declared illegal due to irregularities in the allocation of the blocks. Of these, licenses for 172 coal blocks which weren't in production stand canceled immediately, while licenses for 42 blocks which were producing coal or were close to starting production would stand canceled after six months, the court said. The six months' time has been allowed to ensure coal supplies don't get affected until the government comes out with a fresh policy for auctioning the canceled coal blocks. Coal India will take over operations of the cancelled coal blocks until they are re-auctioned.
The court also slapped a penalty of Rs 295 per tonne on operating coal blocks for coal already extracted from the blocks.
State Bank of India (SBI) rose 2.71% to Rs 2,442.90. The stock hit high of Rs 2,455.20 and low of Rs 2,348 in intraday trade. Arundhati Bhattacharya, Chairman of the bank was quoted by the media as saying that she does not believe that the entire exposure to companies that will be impacted by the recent Supreme Court judgement quashing 214 coal blocks will be written off. The bank reportedly has more than Rs 4000 crore exposure to companies that will be impacted by the recent Supreme Court judgement quashing 214 coal blocks. On upcoming Reserve Bank policy on 30 September 2014, she is expecting a status quo, with maybe some tweaking on the CRR side, report said.
The Sensex snapped three-day losing streak straight day today, 26 September 2014. From recent high of 27,206.74 on 22 September 2014, the Sensex had lost 738.38 points or 2.71% to settle at 26,468.36 on 25 September 2014, in three trading sessions. The Sensex has lost 11.79 points or 0.04% in this month so far (till 26 September 2014). The Sensex has gained 5,455.64 points or 25.76% in calendar year 2014 so far (till 26 September 2014). From a record high of 27,354.99 on 8 September 2014, the Sensex has declined 728.67 points or 2.66%. From a 52-week low of 19,264.72 on 1 October 2013, the Sensex has risen 7,361.60 points or 38.21%.
In the foreign exchange market, the rupee edged higher against the dollar after global credit rating agency Standard & Poor's (S&P) revised upwards its outlook on India's sovereign credit rating to stable from negative. The partially convertible rupee was hovering at 61.165, compared with its close of 61.34 during the previous trading session.
Brent crude oil prices edged higher in choppy trade as hefty supplies capped price gains and outweighed concerns that rising tensions in the Middle East could disrupt supply. Brent for November settlement was up 7 cents at $97.07 a barrel. The contract had risen 5 cents a barrel or 0.05% to settle at $97 a barrel yesterday, 25 September 2014.
Prime Minister Narendra Modi will reach the United States today, 26 September 2014, for a five-day official visit. The Indian Prime Minister will meet US President Barack Obama at the White House on 29-30 September 2014. The two leaders will discuss a range of issues of mutual interest in order to expand and deepen the US-India strategic partnership. They will discuss ways to accelerate economic growth, bolster security cooperation, and collaborate in activities that bring long-term benefits to both countries and the world.
The Reserve Bank of India (RBI) undertakes fourth bi-monthly monetary policy review on 30 September 2014. The central bank's policy stance after the review could provide cues on the direction of interest rates in the coming months. The central bank is targeting consumer price inflation at 8% by end January 2015 and 6% by end January 2016.
European stocks reversed intraday losses today, 26 September 2014, as investors awaited data on US gross domestic product to gauge the outlook for interest rates in the world's largest economy. Key indices in France, Germany and UK were up 0.05% to 0.72%.
A sentiment survey released today, 26 September 2014, showed that German consumer confidence is expected to deteriorate for a second consecutive month in October. The monthly survey of GfK market research group showed consumer confidence falling to 8.3 points for October from an unrevised 8.6 points in September. Nonetheless, confidence remains "at a good level," GfK said. Germany is Europe's biggest economy.
French consumer confidence remained stable as expected in September, survey data from the statistical office Insee showed today, 26 September 2014. The consumer confidence remained at 86 for the third consecutive month in September.
Asian stocks dropped today, 26 September 2014, after steep losses for US stocks overnight. Key benchmark indices in Indonesia, Japan, South Korea, Hong Kong, and Taiwan were off 0.12% to 1.32%. Key benchmark indices in China and Singapore rose 0.04% to 0.11%.
Japan's annual core consumer inflation eased in August, in another sign that the Bank of Japan could be forced into additional easing steps to meet its 2% price goal sometime next fiscal year.
Trading in US index futures indicated that Dow could gain 27 points at the opening bell today, 26 September 2014. US stocks fell sharply on Thursday, 25 September 2014, on a report that Russian lawmakers are drafting legislation that would allow the government to seize foreign assets in response to sanctions by US and the European Union imposed on account of Russia's aggression in Ukraine.
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