Key benchmark indices edged higher in choppy trade as Asian and European stocks rose after International Monetary Fund raised its global growth forecast. The S&P BSE Sensex hit its highest level in nearly a week. The 50-unit CNX Nifty hit its highest level in almost three weeks. The Sensex was provisionally up 69.02 points or 0.32%, off close to 55 points from the day's high and up about 150 points from the day's low. The market breadth, indicating the overall health of the market, was positive.
Indian stocks gained for the third day in a row today, 22 January 2014.
Metal and mining stocks edged higher for the second day in a row after China's central bank on Tuesday, 21 January 2014, said it provided emergency funding support for commercial banks as they gear up to meet demands for cash ahead of the Lunar New Year. Pharma stocks edged higher. HDFC eked out small gains after reporting a decent growth in bottom line in Q3 December 2013.
The Sensex edged lower amid initial volatility after a Reserve Bank of India panel recommended that the central bank should start using a consumer-price inflation target to determine monetary policy. High volatility was witnessed as key benchmark indices alternately swung between gains and losses in morning trade. Key benchmark indices moved into positive zone from negative zone in mid-morning trade as Asian stocks rose. Key benchmark indices gave away a lion's portion of intraday gains in early afternoon trade. Key benchmark indices extended intraday gains in afternoon trade. The Sensex pared gains in mid-afternoon trade. A bout was witnessed in late trade as key benchmark indices pared gains soon after extending intraday gains.
As per provisional figures, the S&P BSE Sensex was up 69.02 points or 0.32% to 21,320.14. The index jumped 126.79 points at the day's high of 21,377.91 in late trade, its highest level since 16 January 2014. The index dropped 82.69 points at the day's low of 21,168.43 in early trade, its lowest level since 20 January 2014.
The CNX Nifty was up 19.80 points or 0.31% to 6,333.60, as per provisional figures. The index hit a high of 6,349.95 in intraday trade, its highest level since 2 January 2014. The index hit a low of 6,287.45 in intraday trade, its lowest level since 20 January 2014.
The total turnover on BSE amounted to Rs 1887 crore, lower than Rs 1888.43 crore on Tuesday, 21 January 2014.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,405 shares gained and 1,273 shares fell. A total of 157 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks rose and rest fell. Bharti Airtel (up 1.56%), NTPC (up 1.3%) and M&M (up 1.12%) edged higher from the Sensex pack.
Metal and mining stocks edged higher for the second day in a row after China's central bank on Tuesday, 21 January 2014, said it provided emergency funding support for commercial banks as they gear up to meet demands for cash ahead of the Lunar New Year. China is the world's largest consumer of copper and aluminum. Hindustan Copper (up 0.67%), Hindalco Industries (up 2.13%), Tata Steel (up 2.32%), Steel Authority of India (up 1.16%) National Aluminum Company (up 1.37%), NMDC (up 0.35%) and JSW Steel (up 0.63%) gained. Jindal Steel & Power fell 0.04%.
Hindustan Zinc rose 0.15%, with the stock extending Tuesday's gains. Trade minister Anand Sharma on Monday, 20 January 2014, said that Union Cabinet has approved divestment of government's residual stake in Hindustan Zinc. He said the method and timing of the stake sale would be decided later. The government sold its control in Hindustan Zinc to India-born billionaire Anil Agarwal's Vedanta Resources PLC almost a decade ago. The government now still has a 29.54% stake in Hindustan Zinc. Vedanta holds 64.92% stake in Hindustan Zinc through its Indian arm Sesa Sterlite -- erstwhile Sterlite Industries. Vedanta has been seeking a larger control of the company to fast-track decision-making.
Sesa Sterlite rose 0.84%, with the stock extending Tuesday's gains.
Dabur India fell 4.06% after Q3 result. The company reported a 15.04% growth in consolidated net profit to Rs 242.88 crore on 16.8% growth in net sales to Rs 1904.30 crore in Q3 December 2013 over Q3 December 2012. The company announced the result during trading hours today, 22 January 2014.
Dabur India reported a 14.5% growth in earnings before interest, taxation, depreciation and amortization (EBITDA) to Rs 331.50 crore in Q3 December 2013 over Q3 December 2012. EBITDA margin declined to 17.4% in Q3 December 2013, from 17.7% in Q3 December 2012.
The strong sales was due to strong volume-driven growth across its key categories of Health Supplements, Air Care, Hair Care, Oral Care, Skin Care and Foods. The company delivered another robust operating performance during Q3 December 2013 despite a challenging business environment where macro-economic headwinds dampened consumer confidence and moderated consumption spending, the company said in a statement.
Commenting on the company's Q3 performance, Dabur India's Chief Executive Officer Mr. Sunil Duggal said: "We have delivered another quarter of strong volume-led growth. Dabur has been reporting strong and consistent performance despite intensifying competitive pressures and the challenging market environment being witnessed for some quarters now. Our focus on brand-building and market expansion programs coupled with a greater degree of innovation has helped Dabur sustain strong growth in the core categories, which have been significantly ahead of the market. Going forward, our focus will be on pursuing an aggressive and profitable growth strategy".
The health supplements business for Dabur was a key driver of growth during the quarter, reporting a strong 19.5% surge. The air freshener business for Dabur, under the brand Odonil, continued to surge ahead with an over 27% growth during the quarter. Dabur's Foods business also reported a robust near 18% growth. The shampoo business for Dabur ended the third quarter of 2013-14 fiscal with a strong 24.7% growth. The toothpaste business grew by over 14% while the skin care category reported an over 13% growth during the quarter. The quarter saw Dabur introduce a host of new products and variants, including the new Fem Fairness Naturals facial bleach range and Vatika Hibiscus hair care range.
Dabur's international business ended the quarter with a 26% growth, led by strong performance in GCC, Egypt and Nigeria. "The GCC business reported a 21% growth, while sales in Egypt and Nigeria both grew by 16%. Going forward, we will continue to pursue an aggressive growth strategy," Dabur India Group Director Mr. P D Narang said.
HDFC rose 0.44% on good Q3 result. The lender's net profit rose 12.06% to Rs 1277.71 crore on 14.87% increase in total income to Rs 6030.93 crore in Q3 December 2013 over Q3 December 2012. The company announced the result during trading hours today, 22 January 2014. As on 31 December 2013, HDFC's loan book stood at Rs 192266 crore, compared with Rs 160941 crore in the corresponding period of the previous year. This is after considering the loans sold during the preceding 12 months amounting to Rs 3263 crore.
On a consolidated basis, HDFC's net profit rose 13.42% to Rs 1934.85 crore on 13.30% increase in total income to Rs 10052.98 crore in Q3 December 2013 over Q3 December 2012.
Pharma stocks edged higher. Cipla (up 1.38%), Dr Reddy's Laboratories (up 1.17%), Lupin (up 2.21%), Ranbaxy Laboratories (up 0.59%) and Sun Pharmaceutical Industries (up 2.94%) gained.
Suven Life Sciences jumped 5.31% after the company said its facility in Pashamylaram near Hyderabad received approval from the US Food and Drug Administration. The company made the announcement during trading hours today, 22 January 2014. Suven Life Sciences said it underwent US Food and Drug Administration (USFDA) renewal inspection at its facility in Pashamylaram near Hyderabad for the manufacture and supply of active pharmaceutical ingredients (bulk drugs), intermediates and formulations under cGMP.
Based on the inspection and the review thereafter, USFDA has classified the Pashamylaram facility as acceptable for manufacture and supply of active pharmaceutical ingredients, intermediates and formulations, the company said in a statement.
So far, Suven Life Sciences has filed 29 Drug Master Files (DMFs) and 1 Abbreviated New Drug Application (ANDA) from this facility, which is FDA compliant under current good manufacturing practices (cGMP) and continued after renewal inspection.
Torrent Pharmaceuticals jumped 6.67% after consolidated net profit rose 41.1% to Rs 158 crore on 28.9% increase in net sales to Rs 990 crore in Q3 December 2013 over Q3 December 2012. The company announced the results after trading hours on Tuesday, 21 January 2014.
Torrent Pharmaceuticals said its domestic formulation business revenues grew 15% to Rs 297 crore in Q3 December 2013 over Q3 December 2012. As per AIOCD, Torrent grew at 12% during the quarter compared to covered market growth of 5% and Indian Pharmaceutical growth of 5%.
International revenues grew by 41% to 637 crore in Q3 December 2013 over Q3 December 2012. In the international operations, US business reported growth of 61%, Europe (incl.Heumann) 59%, Brazil growth 26% and Rest of the World, including Russia, CIS, Mexico & Canada 9%.
In Q3 December 2013, the company acquired Indian branded formulations business of Elder for a consideration of Rs 2004 crore. The transaction is subject to conditions precedent including shareholder approval and applicable regulatory approvals and is expected to close in the first half of 2014, Torrent Pharmaceuticals said in a statement.
Mahindra & Mahindra Financial Services lost 5.26% after consolidated net profit fell 15.65% to Rs 182.36 crore on 28.36% growth in total income to Rs 1363.20 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced during trading hours today, 22 January 2014.
Bond prices dropped after a Reserve Bank of India panel recommended that the central bank should start using a consumer-price inflation target to determine monetary policy. The panel's recommendations if accepted by the central bank may result in increase in interest rates to achieve the panel's 4% consumer-price inflation target by 2016. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6267%, higher than its close of 8.5531% on Tuesday, 21 January 2014. Bond yield and bond prices move in opposite direction.
A Reserve Bank of India panel has recommended that the central bank should start using a consumer-price inflation target to determine monetary policy. The panelset up soon after former International Monetary Fund chief economist Raghuram Rajan took over as RBI governor last yearwas created to come up with ways to make the country's monetary policy more transparent and predictable. In a 130-page report released on Tuesday, 21 January 2014, the panel recommended using a well-defined range of consumer-price index inflation to set monetary policy. The report suggested a CPI inflation rate target within two percentage points above or below 4%. The RBI panel said the central bank should move to lower India's consumer inflation, which has been close to 10% in recent months, to 8% within the next 12 months and to 6% in 24 months, before adopting the target. "This transition path should be clearly communicated to the public," the report said.
If accepted, the report's recommendation would bring India in line with global norms by placing less emphasis on wholesale price inflation, which India has used until now as its main indicator of price movements. The wholesale price inflation measure, which excludes the massive service sector, has typically been much lower than consumer prices. The consumer price index is currently hovering near 10%, compared with about 6% for wholesale prices.
Historically, the Indian central bank has followed a multifocus approach to monetary policy, setting interest rates based on how it sees inflation, growth and currency stability. It usually didn't have an official inflation target, which often left markets surprised by its moves.
The panel also suggested monetary policy be decided by a committee headed by the governor with final decisions through a vote of the committee members, as is the practice in some developed countries like the UK. Right now in India monetary policy decisions are made by the RBI governor alone, though he gets input from an advisory committee.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
European stocks edged higher on Wednesday, 22 January 2014, as minutes released by the Bank of England showed policy makers see no need to raise interest rates soon even as unemployment falls faster than anticipated. Key benchmark indices in France and UK were up 0.05% to 0.11%. Germany's DAX fell 0.07%.
Bank of England policy makers see no need to raise interest rates soon even as they forecast that unemployment will fall to a key level far sooner than they previously anticipated. The Monetary Policy Committee "saw no immediate need to raise bank rate even if the 7% unemployment threshold were to be reached in the near future," it said in the minutes of its Jan. 8-9 meeting, published today, 22 January 2014. It said cost pressures remain subdued and headwinds to growth would persist for some time. Central bank officials at that meeting had left the country's benchmark interest rate at a record low of 0.5% and kept its asset-purchase target at 375 billion pounds ($618 billion).
UK unemployment, as measured by International Labour Organization methods, declined to 7.1% in the three months through November from 7.4% in the quarter through October, the Office for National Statistics said in London today, 22 January 2014.
Asian stocks edged higher on Wednesday, 22 January 2014, after the Bank of Japan pledged to maintain economic stimulus and the International Monetary Fund raised its global growth forecast. Key benchmark indices in Japan, South Korea, Indonesia, China, Taiwan and Hong Kong were up 0.16% to 2.16%. Singapore's Straits Times was flat.
The Bank of Japan (BOJ) today, 22 January 2014, pledged to maintain economic stimulus after a two-day monetary policy review. The BOJ said it will keep plans to increase the monetary base annually by 60 trillion to 70 trillion yen and maintained its inflation target for 2015.
The Thai government declared a state of emergency in its capital in response to antigovernment protests that have paralyzed the city and stirred up increasingly violent attacks. Over the past week, unknown assailants have launched attacks on the protesters, killing one and injuring dozens. The unrest is also dragging on the economy, with Japanese auto companies, some of Thailand's most important investors, raising a red flag that future investment could be affected.
Trading in US index futures indicated that the Dow could drop 22 points at the opening bell on Wednesday, 22 January 2014. US stocks closed mostly higher on Tuesday, 21 January 2014, though disappointing earnings results from Verizon Communications Inc and the Travelers Cos. Inc. weighed on the Dow. The S&P 500's cyclical sectors energy and natural resources were among the biggest gainers after the People's Bank of China on Tuesday, 21 January 2014, said it provided emergency funding support for commercial banks as they gear up to meet demands for cash ahead of the Lunar New Year.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
The International Monetary Fund raised its forecast for global growth this year as expansions in the US and UK accelerate, and urged advanced economies to maintain monetary accommodation to strengthen the recovery. The global economy will grow 3.7% this year, compared with an October estimate of 3.6%, the IMF said in revisions to its World Economic Outlook released in Washington.
US gross domestic product will expand 2.8%, compared with 2.6%; Japan will gain 1.7% versus 1.2%; and the UK will increase 2.4% from 1.9%, the report showed. "In advanced economies, output gaps generally remain large and, given the risks, the monetary policy stance should stay accommodative while fiscal consolidation continues," the Washington-based organization said in the report. "In many emerging market and developing economies, stronger external demand from advanced economies will lift growth, although domestic weaknesses remain a concern." Central banks in the US, Japan and the euro area face inflation levels under their targets while trying to accelerate growth with policies including benchmark interest rates near zero and bond-buying programs. While it raised the outlook for advanced nations, the IMF said "downside risks remain," including financial-market volatility in emerging markets.
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