Key benchmark indices edged lower on the first trading session of the week and the month after the government revised downwards the GDP growth rate for the year ended 31 March 2013 (FY 2013) to 4.5% from 5% reported earlier. The market sentiment was affected adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 31 January 2014. The barometer index, S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest level in more than 10 weeks. The Nifty fell below the psychological 6,000 mark. The market breadth, indicating the overall health of the market, was negative. The Sensex was provisionally down 320.52 points or 1.56%, off about 285 points from the day's high. Except BSE Healthcare index all the other sectoral indices on BSE were in the red. Weakness in Asian and European stocks also dampened sentiment on the domestic bourses.
Metal stocks edged lower as China's Purchasing Managers' Index fell to a six-month low in January. Lupin rose after announcing strong Q3 results. Grasim Industries dropped after weak Q3 results.
The market edged lower in early trade on weak Asian stocks. A recovery from lower level after initial losses proved short lived as key benchmark indices weakened once again in morning trade. The Sensex languished in negative terrain in mid-morning trade. The Sensex extended losses and hit fresh intraday low in afternoon trade. A bout of volatility was witnessed as key benchmark indices hit fresh intraday low in mid-afternoon trade. The Sensex extended losses and hit fresh intraday low in late trade. The 50-unit CNX Nifty fell below the psychological 6,000 mark.
The market sentiment was affected adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 31 January 2014. Foreign institutional investors (FIIs) sold shares worth a net Rs 652.97 crore on Friday, 31 January 2014, as per provisional data from the stock exchanges.
Global investors pulled out $6.3 billion from emerging-market equities in the week through 29 January 2014, according to reports.
As per provisional figures, the S&P BSE Sensex was down 320.52 points or 1.56% to 20,193.33. The index lost 322.08 points at the day's low of 20,191.77 in late trade, its lowest level since 22 November 2013. The index declined 33.50 points at the day's high of 20,480.35 in early trade.
The CNX Nifty was down 93.15 points or 1.53% to 5,996.35, as per provisional figures. The index hit a low of 5,994.45 in intraday trade, its lowest level since 22 November 2013. The index hit a high of 6,074.85 in intraday trade.
The BSE Mid-Cap index lost 52.42 points or 0.83% at 6,255.63. The BSE Small-Cap index lost 36.40 points or 0.58% at 6,226.95. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 1629 crore, lower than Rs 2685.58 crore on Friday, 31 January 2014.
The market breadth, indicating the overall health of the market was negative. On BSE, 1,444 dropped and 1,068 shares rose. A total of 152 shares were unchanged.
Among the 30-share Sensex pack, 25 stocks declined and rest of them rose. Bajaj Auto (down 3.69%), Tata Motors (down 3.62%), Bhel (down 3.5%) and ONGC (down 3.05%), edged lower from the Sensex pack.
Lupin rose 4.85% on strong Q3 results. The company's consolidated net profit jumped 42% to Rs 476.10 crore on 20.8% growth in total income from operations (net) to Rs 3022 crore in Q3 December 2013 over Q3 December 2012. The result was announced during market hours.
Lupin's operating profit jumped 27.8% to Rs 773.30 crore in Q3 December 2013 over Q3 December 2012. Operating profit margin edged up to 25.9% in Q3 December 2013, from 24.5% in Q3 December 2012.
Operating working capital increased to Rs 2769.50 crore as on 31 December 2013, from Rs 2674.30 crore as on 30 September 2013. The working capital number of days stood at 94 days as on 31 December 2013, lower than 96 days as on 30 September 2013. The company incurred capital expenditure of Rs 104.10 crore in Q3 December 2013.
Lupin said that the company now is debt free at the net debt level.
Revenue expenditure on R&D for Q3 December 2013 stood at Rs 271 crore or 9.1% of net sales. In Q3 December 2012, revenue expenditure on R&D was Rs 238.20 crore or 9.7% of net sales.
Lupin filed 5 ANDAs and received 5 ANDA approvals in the quarter. Cumulative ANDA filings with the US FDA now stand at 186 with the company having received 96 approvals to date. The company received 5 approvals from European regulatory authorities in the quarter.
Commenting on the company's financial performance, Nilesh Gupta, Managing Director, Lupin, said: "We have had a robust quarter with record profits, driven in particular by strong business growth in the US. Other markets like India are getting back on track also. In addition, our consistent focus on ramping up operational efficiencies has led to higher margins and better profitability".
Lupin said that the board of directors of the company at its meeting held on 3 February 2014, inter alia, has declared an interim dividend of 150% i.e. Rs 3 per share absorbing a sum of Rs 134.50 crore for the year ending 31 March 2014. The company has fixed 14 February 2014 as the record date for the purpose of payment of interim dividend.
Separately, Lupin announced the acquisition of Nanomi B.V. in the Netherlands. With this acquisition, Lupin has made its foray into the technology intensive complex injectables space. Nanomi has patented technology platforms to develop complex injectable products. Nanomi has a rich talent pool of scientists who would be backed by Lupin's global R&D and manufacturing teams.
Commenting on the acquisition Ms. Vinita Gupta, Chief Executive Officer, Lupin said: "We are very pleased with the acquisition of Nanomi. With the use of Nanomi's proprietary technology platform, Lupin would be able to make significant in?roads into the niche area of complex injectables".
Metal stocks edged lower as China's Purchasing Managers' Index fell to a six-month low in January. China is the world's largest consumer of copper and aluminum. Sesa Sterlite (down 1.86%), Steel Authority of India (Sail) (down 3.67%), JSW Steel (down 7.43%), Hindustan Copper (down 1.62%), NMDC (down 2.83%), Bhushan Steel (down 1.33%), Hindustan Zinc (down 3.36%), National Aluminium Company (Nalco) (down 0.6%), Tata Steel (down 3.83%), and Hindalco Industries (down 5.86%) edged lower.
Jindal Steel & Power shed 3.16%. The company after trading hours on Friday, 31 January 2014, said that the company has utilized more than 50% of the amount earmarked for share buyback as specified in the resolution passed by the Board of Directors at its meeting held on 30 August 2013, i.e., the minimum buy-back size of Rs 500 crore. Accordingly, a meeting of the duly authorized sub-committee of directors of the company is being convened on Tuesday, 4 February 2014, in order to consider, inter alia, determining the closing date of the buy-back offer of the company's equity shares, being a date earlier than the last date for the completion of buy-back offer mentioned in the announcement, i.e. 15 March 2014, Jindal Steel & Power said.
United Spirits rose 2.73% to Rs 2542 after Relay B.V., an indirect wholly owned subsidiary of Diageo Plc, increased its stake in the company to 28.77% from 26.37%. On Friday, 31 January 2014, Relay B.V. bought 35 lakh shares of United Spirits (USL) at Rs 2,474.45 each on the BSE, whereas Oppenheimer Funds Inc sold 36.42 lakh USL shares at Rs 2,474.25 each via block deals.
Grasim Industries dropped 2.67% on weak Q3 results. The company's consolidated net profit fell 39.55% to Rs 331.93 crore on 3.86% rise in total income to Rs 7226.18 crore in Q3 December 2013 over Q3 December 2012. The result was announced on Saturday, 1 February 2014.
Grasim Industries said its performance was constrained due to subdued economic condition.
The company said that Viscose Staple Fibre (VSF) business has recorded volume growth, supported by increased capacity at Harihar. Production increased by 4% over the last year. Sales volume at 97,049 MT was up by 24%, led by better performance in both domestic and exports markets. The company was able to maintain the realizations, despite the sharp fall in the international prices, supported by the rupee depreciation. The input costs have gone up due to the increase in pulp prices coupled with rupee depreciation. The performance of the Pulp JVs was affected on account of planned maintenance shutdowns. The anti-dumping duty levied in China impacted realizations and the volumes of pulp sold in China, Grasim Industries said in a statement.
The firm said that the Epoxy project (51,500 tonnes per annum) at Vilayat was commissioned in December 2013. The VSF project (120,000 tonnes per annum) at Vilayat is expected to go on stream in a phased manner from quarter 4.
For its cement subsidiary, UltraTech Cement, the company said that the combined cement and clinker sales volume increased marginally at 10.76 million tons. The cement industry volumes remained flat due to the continued slow down in the Indian economy. Based on continuous cost optimization measures, the business has been able to contain the cost, the company said.
With the commissioning of the grinding unit (1.6 million tonnes per annum) at Jharsuguda, Odisha in October 2013, UltraTech's cement capacity stands augmented to 55.5 million tonnes per annum. On commissioning of all the projects currently under implementation and the acquisition of Gujarat cement unit of Jaypee Cement Corp., total cement capacity will increase to 70 million tonnes per annum.
The chemical business reported a growth of 14% in sales volumes. ECU realizations improved over quarter 2 but were flat on a year on year (YoY) basis. The operations at Vilayat (Gujarat), which were impacted by the floods, have resumed in December, 2013 and are being ramped up in a phased manner, the company added.
Grasim Industries in its outlook said that the current difficult market conditions have affected the performance of both the businesses. The performance of cement business should improve with the expected recovery post general elections in India and of VSF business based on global rebalancing of excess capacity. The commissioning of major projects by the company will help improve volume and profitability.
Ashok Leyland lost 3.04% after the company said its total sales declined 26% to 7,847 units in January 2014 over January 2013. The sales numbers were announced during trading hours today, 3 February 2014. Ashok Leyland's sales of medium & heavy commercial vehicles (M&HCV) declined 19% to 5,530 units in January 2014 over January 2013. Sales of light commercial vehicles (LCVs) dropped 37% to 2,317 units in January 2014 over January 2013.
Petron Engineering Construction jumped 8% after the firm said it has secured a contract worth Rs 99.76 crore from VISA Power, Kolkata, for execution of civil job at VISA Raigarh thermal power plant, Chhattisgarh. The new order was announced during trading hours today, 3 February 2014.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade. The partially convertible rupee was hovering at 62.675, compared with its close of 62.68/69 on Friday, 31 January 2014.
Indian manufacturers signalled a further improvement in operating conditions during January, according to a survey. The headline HSBC India Purchasing Managers' Index (PMI) posted a reading of 51.4 for January 2014, up from 50.7 for December 2013. The latest reading was the highest since March 2013, but pointed to a marginal pace of expansion that was well below the series average (55.1). January saw new orders expand at the quickest rate in ten months, with survey participants reporting stronger demand from both domestic and overseas clients.
Concurrently, new business from abroad grew at a solid pace that was the fastest since June last year. Subsequently, Indian manufacturers raised their production levels for the third successive month. The rate of output growth was solid and the strongest since February 2013.
Sector data indicated that consumer goods continued to outperform the remaining two monitored categories, while operating conditions deteriorated at capital goods producers. Growth rates for output and new orders in the consumer goods sub-category surpassed those seen at intermediate goods companies.
Employment rose for the fourth month running in January, with all three broad areas of the manufacturing economy posting job creation. Despite being slight, the overall rate of expansion was broadly in line with the long-run series average. Companies operating in the Indian manufacturing sector signalled pressure on operating capacity in January, as backlogs of work increased solidly. Moreover, the latest increase in unfinished work was the eighteenth in as many months. All three market groups posted higher work-in-hand, with the sharpest increase noted at consumer goods firms.
Meanwhile, supplier performance improved in the latest month for the first time since September 2013. Anecdotal evidence suggested that shorter delivery times reflected a greater availability of raw materials at vendors.
Amid reports of new business gains, purchasing activity in the Indian manufacturing economy rose at the start of 2014, although the pace of expansion was only slight and well below the series average. Growth of buying activity was largely centred on the consumer goods sub-sector. Pre-production stocks increased at consumer goods producers, but fell at both capital and intermediate goods firms. This resulted in an overall decline of stocks of purchases across the Indian manufacturing economy as a whole.
Average input costs rose in January, with manufacturers reporting higher prices for a range of raw materials, including metals, chemicals and energy. The rate of cost inflation remained robust. Consequently, companies raised their tariffs again. Although the strongest in three months, the latest rise in output charges was moderate and much weaker than seen for input costs.
Commenting on the India Manufacturing PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "Manufacturing activity moved into higher gear led my faster growth in new orders. However, inflation pressures also firmed, suggesting that the RBI has to keep up its inflation guards".
The First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, for the year 2012-13 released on Friday, 31 January 2014, showed India GDP revised down to 4.5% in 2012-13 from 5% earlier and as against a growth of 6.7% in the year 2011-12. The downward revision was mainly due to lower than provisionally estimated output in primary and secondary sectors. The data also showed lower-than-estimated growth numbers for exports, capital investment and consumption sectors, thereby pointing out to deeper underlying weaknesses.
The Eight Core Industries having a combined weight of 37.9% in the Index of Industrial Production (IIP) increased by 2.1% in December 2013 compared with a growth of 7.5% growth in December 2012 and 1.7% growth in November 2013, data released by the government after trading hours on Friday, 31 January 2014, showed.
The fiscal deficit reached Rs 5.16 lakh crore during April-December 2013, or 95.2% of the full-year target, compared with 78.8% a year earlier, data released by the government after trading hours on Friday, 31 January 2014, showed. Factory gate duties were down 6.9% at Rs 1.02 lakh crore during April-December from the year-earlier period, while customs tax receipts rose 4.3% to Rs 1.24 lakh crore -- much lower than the 13.6% annual growth target.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Sighting elevated consumer price inflation, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
European stocks edged lower on Monday, 3 February 2014, after Chinese data out over the weekend added to worries about slowing growth in the country. Key benchmark indices in UK, Germany and France were off 0.21% to 0.42%.
Asian stocks fell on Monday, 3 February 2014, after a slowdown in Chinese manufacturing growth added to concern the global economic recovery is faltering. Key benchmark indices in Indonesia, Japan, Singapore and South Korea shed by 0.74% to 1.98%.
China's markets remain closed until 7 February 2014 for the Lunar New Year holiday, while markets in Hong Kong and Taiwan markets are shut until 4 February 2014.
A Chinese manufacturing gauge fell to a six-month low in January as output and orders slowed, adding to signs that government efforts to rein in excessive credit will cool growth in the world's second-largest economy. The Purchasing Managers' Index was at 50.5 in January 2014, compared with December's 51 reading, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Feb. 1 in Beijing. The survey showed jobs and export orders shrinking, amplifying risks of a deeper slowdown as Communist Party leaders clamp down on the $6 trillion shadow-banking industry and interbank borrowing costs rise. A separate private manufacturing gauge released by HSBC Holdings Plc and Markit Economics on Jan. 30 pointed to the first contraction in six months.
Growth in China's services sector cooled in January to its slowest pace in at least a year, data showed on Monday, the latest sign that the Chinese economy lost momentum last month in the run-up to the Lunar New Year holiday. The official non-manufacturing Purchasing Managers' Index slipped to 53.4 from December's 54.6, the lowest reading in at least a year but still above the 50-point level that indicates growth.
South Korea's exports contracted 0.2% in January from a year before, according to government data released on Saturday, 1 February 2014.
Trading in US index futures indicated that the Dow could drop 19 points at the opening bell on Monday, 3 February 2014. US stocks fell sharply on Friday amid continued unease over emerging markets and a number of high-profile earnings disappointments.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market.
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