Firmness continued on the bourses in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was up 303.70 points or 1.46%, up about 215 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.
Dr Reddy's Laboratories reversed direction after hitting record high. Shares of pharmaceutical major Ranbaxy Laboratories tumbled after the company said it has received the form 483 with certain observations as a result of the recent US FDA inspection at its active pharmaceuticals ingredient (API) plant at Toansa, Punjab, India. The market breadth, indicating the overall health of the market, was negative.
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. Key benchmark indices regained strength after trimming intraday gains early afternoon trade. The Sensex hovered near intraday high in mid-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 14:20 IST, the S&P BSE Sensex was up 303.70 points or 1.46% to 21,062.19. 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 74.20 points or 1.2% to 6,245.65. 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 negative. On BSE, 1,372 shares fell and 1,238 shares gained. A total of 152 shares were unchanged.
Infosys (up 3.33%), TCS (up 3.25%) and ONGC (up 2.52%) edged higher from the Sensex pack.
Some pharma stocks declined. Lupin (down 2.73%) and Sun Pharmaceutical Industries (down 1.4%) declined.
Dr Reddy's Laboratories fell 0.32% to Rs 2,617.10. The stock reversed direction after hitting record high of Rs 2,630.60 in intraday trade.
Shares of pharmaceutical major Ranbaxy Laboratories tumbled after the company said it has received the form 483 with certain observations as a result of the recent US FDA inspection at its active pharmaceuticals ingredient (API) plant at Toansa, Punjab, India. The stock was off 7.91%. Ranbaxy said that the company is assessing the US FDA observations, and will respond to the US FDA in accordance with the agency's procedure to resolve the concerns at the earliest. Ranbaxy said it continues to improve its systems and processes, and remains fully committed to upholding the highest standards that patients, prescribers, regulators and all other stakeholders expect from the company. The company added that it stays firmly committed to its philosophy of quality and patients first.
The Toansa factory is the fourth Ranbaxy plant to receive negative observations from the US drug regulator; its plants in Paonta Sahib in Himchal Pradesh, Dewas in Madhya Pradesh and Mohali in Punjab had come under the FDA scanner earlier. Imports from the three plants have been stopped by the US regulator.
Cipla rose 0.14%.
IDBI Bank dropped 0.7%. The bank said during market hours that the board of directors of the bank at its meeting held today, 13 January 2014, have declared interim dividend of Rs 0.725 per equity share for the year ending 31 March 2014. The board of directors have fixed 24 January 2014 as the record date for the purpose of ascertaining eligibility of shareholders for payment of interim dividend on equity shares. Further, the board has also fixed 27 January 2014 as the date for despatch of interim dividend warrants and 31 January 2014 as the date of payment of interim dividend.
Vijaya Bank declined 0.13%. The bank said during market hours that a meeting of the board of directors of the bank will be held on 17 January 2014, to consider, declaration of interim dividend on the equity share capital of the bank for the year ending 31 March 2014.
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 61.535, compared with its close of 61.89/90 on Friday, 10 January 2014. Gains in equities also aided rupee's gains.
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 8.713%, 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.
Bank stocks led European markets higher on Monday, 13 January 2014, after global regulators diluted a debt-limit plan for banks. Key benchmark indices in France, Germany and UK were up 0.06% to 0.13%.
Global regulators diluted a planned debt limit for banks amid warnings that the measure would penalize low-risk financial activities and curtail lending. The measure, known as a leverage ratio, was adjusted after thoroughly analyzing bank data, the Basel Committee said following a meeting of regulators in Basel, Switzerland, yesterday, 12 January 2014.
In Portugal, Secretary of State for Treasury Isabel Castelo Branco said she "estimates" it will be possible for the country to sell bonds through auctions before its bailout program ends in the middle of May.
Asian stocks edged higher on Monday, 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. Key benchmark indices in Indonesia, Hong Kong, South Korea and Taiwan were up 0.19% to 3.11%. Key benchmark indices in China and Singapore were off 0.19% to 0.32%. Markets in Japan were closed for a holiday.
Trading in US index futures indicated that the Dow could drop 39 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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