Firmness continued on the bourses in early afternoon trade. The barometer index, the S&P BSE Sensex, was up 245.96 points or 1.8%, off close to 60 points from the day's high and up about 155 points from the day's low. Indian stocks surged today, 13 January 2014, as a weaker-than-estimated US jobs report eased concern that the US Federal Reserve may accelerate the pace of stimulus cuts. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets in recent years. India has been one of the biggest beneficiaries of foreign capital flows. The market breadth, indicating the overall health of the market, was positive.
Realty stocks were mostly lower. Shares of pharmaceutical major Ranbaxy Laboratories dropped on media reports that the US Food and Drug Administration (USFDA) has begun inspection of the company's active pharmaceutical ingredient or API manufacturing factory at Toansa in Punjab.
The Sensex surged in early trade as a weaker-than-estimated US jobs report eased concern that the US Federal Reserve may accelerate the pace of stimulus cuts. The Sensex moved past the psychological 21,000 mark. The Sensex extended initial gains and hit fresh intraday high in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit 1-1/2-week high. Firmness continued on the bourses in early afternoon trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 68.16 crore on Friday, 10 January 2014, as per provisional data from the stock exchanges.
At 12:20 IST, the S&P BSE Sensex was up 245.96 points or 1.8% to 21,004.45. The index jumped 307.59 points at the day's high of 21,066.08 in morning trade, its highest level since 2 January 2014. The index rose 92.05 points at the day's low of 20,850.54 in opening trade.
The CNX Nifty was up 61.55 points or 1% to 6,233. The index hit a high of 6,259 in intraday trade, its highest level since 2 January 2014. The index hit a low of 6,189.55 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,239 shares gained and 1,152 shares fell. A total of 149 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks rose and rest of them declined. Infosys (up 3.46%), TCS (up 2.76%) and ONGC (up 2.18%) edged higher from the Sensex pack.
Shares of pharmaceutical major Ranbaxy Laboratories dropped 7.48% on media reports that the US Food and Drug Administration (USFDA) has begun inspection of the company's active pharmaceutical ingredient or API manufacturing factory at Toansa in Punjab. The Toansa plant is crucial for the company as about 70% of APIs used in its formulations are said to be manufactured there. The USFDA inspection teams had in December 2012 written to the company identifying eight violations in the manufacturing practices at its main API (active pharmaceutical ingredient) unit at Toansa in Punjab, said media reports.
Tata Steel declined 0.08%. Tata Steel said during market hours that it registered 1.6% rise in hot metal production to 2.31 million tonnes in Q3 December 2013 over Q2 December 2012. Crude Steel production rose 3.7% to 2.16 million tonnes in Q3 December 2013 over Q2 December 2012. Saleable Steel production was higher by 3.9% to 2.15 million tonnes in Q3 December 2013 over Q2 December 2012. Steel sales rose 9.4% to 2.06 million tonnes in Q3 December 2013 over Q2 December 2012. Flat Product saleable steel production was best ever in Q3 December 2013 at 1.48 million tonnes (previous best was 1.46 million tonnes in Q4 March 2013), Tata Steel said.
Meanwhile, Tata Steel in its clarification with respect to a news item titled "Tata Steel bags French rail contract" said during market hours that the news report was based on a press release dated 8 January 2014 issued by Tata Steel Europe from United Kingdom and relates to an order placed on them for supply of rails to a French Rail Operator. The press release is mainly addressed to the related trade segment and represents a very small contract as compared to the annual sales turnover in terms of value or volume, Tata Steel said.
Tata Steel said on 8 January 2014 that it has won a two-year contract to supply more than 200,000 tonnes of track to French rail operator SNCF. The contract will see Tata Steel supply the majority of SNCF's rail requirements in lengths of up to 108 metres from its plant in Hayange, Northern France.
NMDC dropped 0.32%. The company said during market hours that prices of iron ore lumps were fixed at Rs 4500/WMT and that of iron ore fines at Rs 2810/WMT for January 2014. The said prices for January 2014 were unchanged from the level in December 2013, NMDC said.
NMDC also said that the company's total iron ore production rose 14.79% to 20.17 million tonnes in nine months ended 31 December 2013 over nine months ended 31 December 2012. Total iron ore dispatches rose 16.18% to 21.25 million tonnes in nine months ended 31 December 2013 over nine months ended 31 December 2012.
Realty stocks were mostly lower. HDIL (down 0.8%), Sobha Developers (down 0.1%) and Unitech (down 2.48%) declined. But, DLF rose 0.42%.
In the foreign exchange market, the rupee edged higher against the dollar as a weaker-than-estimated US jobs report eased concern that the Federal Reserve may accelerate the pace of stimulus cuts. The partially convertible rupee was hovering at 61.51, compared with its close of 61.89/90 on Friday, 10 January 2014.
Bond prices rose as industrial production data released after market hours on Friday, 10 January 2014, showed contraction in output for second straight month. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.7206%, lower than its close of 8.7581% on Friday, 10 January 2014. Bond yield and bond prices are inversely related. The weak industrial production data has raised the expectations of RBI continuing with status quo on policy rates at third quarter review of monetary policy due on 28 January 2014. The CPI inflation data for December 2013 to be released today, 13 January 2014, is also expected show easing from November 2013 level, supporting sentiments in the gilts market.
The index of industrial production (IIP) declined 2.1% in November 2013, recording decline for second consecutive month after 1.6% dip in October 2013. The sharp decline in the output of manufacturing sector by 3.5% mainly led to decline in IIP in November 2013. Meanwhile, the marginal 1% growth in mining sector output and healthy 6.3% growth in the electricity generation restricted further dip in industrial production during November 2013. The government unveiled industrial production data for November 2013 after market hours on Friday, 10 January 2014.
Inflation based on the combined consumer price index (CPI) of urban and rural India is projected to ease at 10.1% in December 2013, from a record high of 11.24% in November 2013, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil CPI data for December 2013 after trading hours today, 13 January 2014.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Asian stock were mixed on Monday, 13 January 2014, after data released by the US government on Friday, 10 January 2014, showed that US payrolls increased in December 2013 at the slowest pace since January 2011. Key benchmark indices in Indonesia, South Korea and Taiwan were up 0.43% to 2.51%. Key benchmark indices in China and Singapore were off 0.16% to 0.45%. Hong Kong's Hang Seng was flat. Markets in Japan were closed for a holiday.
Trading in US index futures indicated that the Dow could fall 36 points at the opening bell on Monday, 13 January 2014. US stocks ended mostly higher on Friday, 10 January 2014, as a weaker-than-estimated jobs report eased concern that the Federal Reserve may accelerate the pace of stimulus cuts. A government report showed that US employment rose at the slowest pace in three years in December. The 74,000 gain in payrolls was the weakest since January 2011, Labor Department figures showed in Washington. The coldest December in four years probably contributed to a slump in hiring at construction and recreation companies, while industries such as health care and accounting also cut staff.
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.
Another cut to bond purchases by the US central bank appears in the offing this month despite data on Friday, 10 January 2014, that showed US jobs growth slowed sharply in December 2013, two top Federal Reserve officials said on Friday, 10 January 2014. "I would be disinclined to react to one month's number," St. Louis Fed President James Bullard told reporters after speaking at an Indiana bankers event. "For now we're on a program where we're likely to continue to taper (asset purchases) at subsequent meetings," Bullard said. He said he was more focused on the drop in unemployment than on the paltry 74,000 jobs that were created, a number he expects to be revised higher.
Asked whether the Fed might be forced to lower that 6.5% unemployment rate threshold, given the sharp drop in joblessness, Bullard said it was unlikely in part because such a move could compromise the credibility of the policy promise. However the big "wildcard" for Fed policy this year remains persistently low inflation, Bullard said. "For now we're on a program where we're likely to continue to taper at subsequent meetings ... But it is data dependent. If inflation stepped lower in a clear way then I think that would give me some pause" in continuing the cuts, he said.
Jeffrey Lacker, the hawkish head of the Richmond Fed, said it would take a "couple of quarters" of bad news to change the US economy's improving trend. "It takes a lot more than one labor market report to be convincing that the trend has shifted and in my experience one employment report rarely has an effect by itself on monetary policy," said Lacker, who has been an opponent of bond buying from its start. "I would expect a similar reduction in pace to be discussed at the upcoming meeting," Lacker told reporters after a speech to a business group in Raleigh.
The Fed targets 2% inflation. Lacker said he was confident inflation would move back towards that goal in the next year or two but added: "This is not a certainty, however, and I believe the FOMC will want to watch this closely," referring to the policy-setting Federal Open Market Committee.
Neither Bullard nor Lacker have votes on policy this year under the Fed's rotating system.
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