Key benchmark indices surged 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 barometer index, the, S&P BSE Sensex, reclaimed the psychological 21,000 mark. The Sensex and the 50-unit CNX Nifty, both, settled at their highest level in nearly two weeks. The Sensex garnered 375.72 points or 1.81%, up about 284 points from the day's low and off about 35 points from the day's high. Equities also got a boost from the latest data showing an unexpected contraction in industrial production in November 2013 as the weak data strengthened expectations that the central bank will hold off from raising interest rates at its next meeting later this month.
The Sensex has risen 420.84 points or 2.03% in two trading sessions from a recent low of 20,713.37 on 9 January 2014. The Sensex has lost 36.47 points or 0.17% in this month so far (till 13 January 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,685.50 points or 21.12%. From a record high of 21,483.74 hit on 9 December 2013, the Sensex is off 349.53 points or 1.63%.
Coming back to today's trade, Infosys extended Friday's post-result gains and hit record high. Many other IT stocks extended Friday's gains triggered by Infosys raising revenue growth guidance for FY 2014. TCS and HCL Technologies hit their record high. Wipro and Tech Mahindra scaled 52-week high. Bank stocks rose as the latest data showing an unexpected contraction in industrial production in November 2013 strengthened expectations that the central bank will hold off from raising interest rates at its next meeting later this month. Lead acid batteries maker Exide Industries slumped after announcing poor Q3 December 2013 results.
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. The Sensex extended gains and hit fresh intraday high in late trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 94 crore from the secondary equity markets on Friday, 10 January 2014, as per data from Securities & Exchange Board of India.
The S&P BSE Sensex garnered 375.72 points or 1.81% to settle at 21,134.21, its highest closing level since 1 January 2014. The index jumped 410.59 points at the day's high of 21,169.08 in late trade. The index rose 92.05 points at the day's low of 20,850.54 in opening trade.
The CNX Nifty garnered 101.30 points or 1.64% to settle at 6,272.75, its highest closing level since 1 January 2014. The index hit a high of 6,288.20 in intraday trade. The index hit a low of 6,189.55 in intraday trade.
The S&P BSE Mid-Cap index rose 0.15% and the S&P BSE Small-Cap index rose 0.37%. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,397 shares fell and 1,333 shares gained. A total of 146 shares were unchanged.
The total turnover on BSE amounted to Rs 2087 crore, lower than Rs 2386.51 crore on Friday, 10 January 2014.
The S&P BSE IT index (up 2.92%), the S&P BSE Teck index (up 2.4%), the S&P BSE Oil & Gas index (up 2.24%) and the S&P BSE Bankex index (up 2.04%), outperformed the Sensex.
The S&P BSE Metal index (up 0.05%), the S&P BSE Power index (up 0.13%), the S&P BSE Consumer durables index (up 0.14%), the S&P BSE FMCG index (up 0.21%), the S&P BSE Realty index (up 0.68%), the S&P BSE Auto index (up 0.68%) and the S&P BSE Capital Goods index (up 1.55%), underperformed the Sensex. The S&P BSE Healthcare index declined 0.68%, underperforming the Sensex.
Shares of companies engaged in production of natural gas edged higher after the government on Friday, 10 January 2014, issued the notification regarding Domestic Natural Gas Pricing Guidelines, 2014. Oil India (up 3.59%), ONGC (up 2.94%) and Reliance Industries (up 2.58%), gained. The new gas pricing norms will be applicable to all natural gas produced domestically, irrespective of the source, whether conventional, shale, CBM etc. These guidelines will be applicable from 1 April 2014. The new gas pricing norms shall be applicable to all consuming sectors uniformly, the Ministry of Petroleum & Natural Gas said in a statement on Friday, 10 January 2014. These guidelines shall also be applicable for natural gas produced by ONGC/Oil India from their nominated fields, it said.
First, the netback price of all Indian imports at the wellhead of the exporting countries will be estimated. Since there may be several sources of gas imports, the weighted average of such netback of import prices at the wellheads would represent the average global price for Indian LNG imports, the oil ministry said explaining the methodology of gas price calculation. Secondly, the weighted average of prices prevailing at trading points of transactions - i.e., the hubs or balancing points of the major global markets will be estimated. For this, (a) the hub price (at the Henry Hub) in the US (for North America), (b) the price at the National Balancing Point of the UK (for Europe), and (c) the netback wellhead price at the sources of supply for Japan will be taken as the average price for producers at their supply points across continents. Finally, the simple average of the prices arrived at through the aforementioned two methods will be determined as the price for domestically produced natural gas in India.
Domestic gas prices shall be notified in advance on a quarterly basis using the data for four quarters, with a lag of one quarter, the oil ministry said. In respect of D1 and D3 gas discoveries of Block KG-DWN-98/3, these guidelines shall be applicable subject to submission of bank guarantees in the manner to be notified separately, it said.
The extant gas pricing policy under NELP was earlier approved by the Government for five years commencing from April 2009 and is due for revision with effect from April 2014. The Government had constituted a Committee headed by Dr C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister in May 2012, to look into "the Production Sharing Contract (PSC) mechanism in petroleum industry". The Terms of Reference (TOR) of the Committee included, among others, formulating a structure and elements of the guidelines for determining the basis or formula for the price of domestically produced gas, and for monitoring actual price fixation. The Committee submitted its report in December 2012. Based on Committee Report, Government of India (GOI) approved the Natural Gas Pricing Guidelines in its meeting held on 27 June 2013.
In pursuance of the earlier decision, GOI on 19 December 2013 approved applicability of the Guidelines for D1 and D3 gas discoveries of the NELP Block KG-DWN-98/3, subject to submission of bank guarantees that will be notified separately, the Ministry of Petroleum & Natural Gas said in a statement.
Meanwhile, the Ministry of Petroleum and Natural Gas on Sunday, 12 January 2014, showcased 46 onshore and offshore hydrocarbon exploration blocks which have so far been finalized for auction in the Tenth round of the New Exploration Licensing Policy (NELP-X). Chairing the session to announce these blocks at the oil and gas industry event Petrotech 2014 at Greater Noida, Petroleum Minister Dr Verappa Moily said that more blocks will be identified and added to the Notice Inviting Offer (NIO). He said that the tender documents will be announced later while the prospective investors could take advantage of the advance information about these blocks.
Dr Moily invited various investors to take advantage of the vast investment opportunities in the Indian oil and gas sector. These are the blocks which have received all statutory clearances. Under NELP, 360 exploration blocks have been offered so far and 254 blocks have been awarded. Presently, 148 blocks are active and 106 have been relinquished.
Reliance Power (RPower) rose 1.2%. The company announced during market hours that Boiler Light Up has been achieved for its third 660 megawatts (MW) unit at the 3,960 MW Sasan Ultra Mega Power Plant. This is a critical milestone of the boiler commissioning activities for the unit, RPower said. The first 660 MW unit of the Sasan UMPP had been commissioned in March 2013 while the second unit was synchronized to the grid in December 2013, reached full load and is operational.
As announced earlier, coal production has already commenced from the 20 million tonnes per annum capacity Moher and Moher-Amlohri coal mines, RPower said. The Sasan Ultra Mega Power Project is the world's largest integrated power plant and coal mining project, RPower said.
Shares of pharmaceutical major Ranbaxy Laboratories edged lower 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 fell 5.42% to Rs 438.35. The scrip was volatile. The stock hit high of Rs 466 and low of Rs 420. 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.
Among other pharmaceutical stocks, Aurobindo Pharma (down 2.32%), Lupin (down 1.7%), Wockhardt (down 1.45%), Sun Pharmaceutical Industries (down 1.19%), Cadila Healthcare (down 0.95%), Glenmark Pharmaceuticals (down 0.77%), Strides Arcolab (down 0.5%) and Dr. Reddy's Laboratories (down 0.02%), edged lower.
Bank stocks rose as the latest data showing an unexpected contraction in industrial production in November 2013 strengthened expectations that the central bank will hold off from raising interest rates at its next meeting later this month.
Kotak Mahindra Bank (up 3.19%), ICICI Bank (up 3.09%), AXIS Bank (up 1.62%) and HDFC Bank (up 1.60%), gained.
State Bank of India rose 2.06%.
Indian Bank gained 1.35%. The bank said after market hours on Friday, 10 January 2014, that the board of directors of the bank at its meeting held on 10 January 2014, has approved the conversion of 4 crore Perpetual Non-Cumulative Preference Shares (PNCPS) of Rs 100 each aggregating to Rs 400 crore, held by Government of India, into such number of equity shares in favour of Government of India pursuant to compliance with Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and subject to approval of shareholders and other regulatory/statutory authorities. The board has fixed Extra-ordinary General Meeting of the shareholders of the bank on 10 February 2014 at IMAGE Auditorium, MRC Nagar, Raja Annamalaipuram, Chennai for this purpose.
The board has also declared an interim dividend of Rs 3 (30%) per share for the year ending 31 March 2014, subject to bank obtaining notification from Government of India exempting the bank from the provisions of Sub-section (1) of Section 15 of the Banking Regulations Act, 1949. The record date to ascertain the shareholders eligible to receive the interim dividend is fixed as 21 January 2014 and the date of payment of interim dividend will be 25 January 2014.
IndusInd Bank rose 1.91%. The bank's net profit jumped 29.79% to Rs 346.90 crore on 21.67% increase in total income to Rs 2623.76 crore in Q3 December 2013 over Q3 December 2012. The private sector bank announced the Q3 results on Friday, 10 January 2014.
IndusInd Bank's loan growth stood 24% year-on-year in Q3 December 2013. As per the bank's growth roadmap for 2014-2016 under the title 'Planning Cycle - 3' unveiled at the beginning of the current financial year, IndusInd Bank is targeting annual loan growth at 25-30% during FY 2014 to FY 2016. The bank plans to double branch network to 1,000 branches in next three years.
Oriental Bank of Commerce rose 0.30%. The bank said on Saturday, 11 January 2014, that the board of directors of the bank at its meeting held on 11 January 2014, has declared interim dividend of Rs 4 per share for the year ending 31 March 2014, subject to approval of Government of India in respect of Section 15(1) of the Banking Regulation Act, 1949. The bank has fixed 22 January 2014 as the record date for the purpose of payment of interim dividend. The dividend payment date has been fixed as 30 January 2014.
Punjab & Sind Bank fell 0.57%. The bank said after market hours on Friday, 10 January 2014, that a meeting of the board of directors of the bank will be held on 16 January 2014, inter alia, to consider and declare interim dividend.
Allahabad Bank fell 0.21%. The bank said on Saturday, 11 January 2014, that the board of directors of the bank at its meeting held on 11 January 2014, has approved and declared an interim dividend of 25% on paid up equity capital of the bank of the face value of Rs 10 each i.e. Rs. 2.50 per equity share. The dividend payment date for the aforesaid interim dividend will be 30 January 2014. The payment of aforesaid interim dividend will be subject to the necessary permission/approval from the Government of India and/or Reserve Bank of India and other Statutory/Regulatory Authorities, if any. The bank has fixed 22 January 2014 as the record date for the purpose of payment of interim dividend.
Dena Bank shed 1.38%. The bank said before market hours that the board of directors of the bank at its meeting held on 11 January 2014 have declared an interim dividend of 11% or Rs 1.10 per share for the year ending 31 March 2014.
IDBI Bank ended flat at Rs 64.10. 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 0.77%. 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.
Canara Bank fell 0.28%. The bank said after market hours on Friday, 10 January 2014, that a meeting of the board of directors of the bank will be held on 20 January 2014, to consider declaration of Interim dividend on the paid-up capital of the bank for the year ending 31 March 2014.
Bharti Airtel rose 0.2% to Rs 331.25. The company announced after market hours that its subsidiary, Bharti Airtel International (Netherlands) BV, has approached investors for the re-opening of euro 750 million, 4% Senior Notes due 10 December 2018.
Lead acid batteries maker Exide Industries slumped after announcing poor Q3 December 2013 results. The stock lost 6.4% to Rs 104.85. The stock hit 52-week low of Rs 104.55 in intraday trade. Exide Industries' net profit fell 25.52% to Rs 77.52 crore on 11.28% decline in total income to Rs 1308.85 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours today, 13 January 2014.
Commenting on the performance, Exide Industries' Managing Director & CEO Mr P K Kataky said that continued sluggish demand had its impact on the performance of the company. In the replacement market, the demand for heavy duty and light duty commercial vehicles including passenger cars used for commercial application (taxi) remained subdued. Automobile OEMs had a degrowth. In industrial batteries, the demand for infrastructure, motive power, telecom and inverter batteries continued to be sluggish, Mr Kataky said. He said that the company's cost control and technological upgradation initiatives are progressing well and this will enable the company to succeed in its marketing efforts in a high competitive market in the future.
Infosys rose 3.29% to Rs 3,665.70, with the stock extending Friday's gains triggered by the company raising its revenue growth guidance for the year ending 31 March 2014. The stock hit a record high of Rs 3,674.40 in intraday trade. At the time of announcement of Q3 December 2013 earnings, Infosys before trading hours on Friday, 10 January 2014, raised its revenue growth guidance in both rupee and dollar terms for the year ending 31 March 2014. The company expects consolidated revenue in rupee terms to grow 24.4% to 24.9% for the year ending 31 March 2014 (FY 2014). This guidance is based on rupee dollar conversion rate of 61.81 for the rest of the financial year. The company expects consolidated revenue in dollar terms to grow 11.5% to 12% in FY 2014.
Infosys' consolidated net profit jumped 19.4% to Rs 2875 crore on 0.5% increase in revenue to Rs 13026 crore in Q3 December 2013 over Q2 September 2013. The results are as per International Financial Reporting Standards (IFRS). Operating profit rose 14% to Rs 3620 crore in Q3 December 2013 over Q2 September 2013 on back of expansion in operating profit margin (OPM) by a sharp 330 basis points QoQ at 27.8% in Q3 December 2013. The OPM expanded by 170 basis points QoQ, excluding one-off visa cost of Rs 219 crore in Q2 September 2013.
Many other IT stocks extended Friday's gains triggered by Infosys raising revenue growth guidance for FY 2014.
TCS rose 3.88% to Rs 2,370.30 after hitting a record high of Rs 2,382.25 in intraday trade.
HCL Technologies gained 3.51% to Rs 1,344.80, which was also a record high of the stock.
Tech Mahindra advanced 0.20% to Rs 1,885.45 after hitting a 52-week high of Rs 1,905.95 in intraday trade.
Wipro rose 1.24% at Rs 561.45. The stock hit 52-week high of Rs 567.45 in intraday trade.
Apollo Tyres rose 4.6% to Rs 117 after hitting record high of Rs 117.70 in intraday trade.
Nitin Spinners rose 1.61% after the company said it has achieved financial closure for term loan of Rs 200 crore from banks for expansion project of spinning and knitting facilities at a project cost of Rs 286 crore. The announcement was made during trading hours today, 13 January 2014. Nitin Spinners said that the expansion project of spinning and knitting facilities at project cost of Rs 286 crore is being financed through term loan of Rs 200 crore and internal accruals of Rs 86 crore. The company has achieved financial closure for term loan of Rs 200 crore from banks.
Nitin Spinners said that the term loans are eligible for Interest Subsidy under Technology Upgradation Fund Scheme (TUFS) of Central Government and Interest Subsidy & other incentives under Customized Package for Textile Sector of Government of Rajasthan. The orders for main Plant & Machinery have been placed and building construction work is going on as per schedule, it said. After implementation of the expansion project the existing production capacity of the company shall increase nearly by 75%, Nitin Spinners said in a statement.
Ranbaxy Laboratories clocked a highest turnover of Rs 92.83 crore on BSE. Infosys (Rs 73.49 crore), Financial Technologies (India) (Rs 55.75 crore), MCX (Rs 53.58 crore) and Tata Motors (Rs 48.68 crore), were the other turnover toppers on BSE in that order.
Empower India reported highest volumes of 1.69 crore shares on BSE. Unitech (60.17 lakh shares), Shalimar Productions (55.53 lakh shares), Cals Refineries (33.02 lakh shares) and SpiceJet (29.78 lakh shares), were the other volume toppers on BSE in that order.
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 61.53, 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 8.7107%, 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. The Reserve Bank of India kept its main lending rate viz. the repo rate unchanged after its last policy review in December and had said at that time that it expected inflation to ease in the following months.
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 0.01% to 0.18%.
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 3.19%. Key benchmark indices in China and Singapore were off 0.19% to 0.27%. Markets in Japan were closed for a holiday.
Trading in US index futures indicated that the Dow could drop 22 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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