Key benchmark indices extended initial gains and hit fresh intraday high in morning trade 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. The barometer index, the S&P BSE Sensex, hit 1-1/2-week high above the psychological 21,000 mark. The 50-unit CNX Nifty also hit 1-1/2-week high. The Sensex was up 280.67 points or 1.35%, off close to 30 points from the day's high and up about 190 points from the day's low. The market breadth, indicating the overall health of the market, was strong.
Tata Motors edged higher after the company's British luxury car unit Jaguar Land Rover (JLR) on Saturday, 11 January 2014, said sales jumped 19% to a record 425,006 units in calendar year 2013 over calendar year 2012. 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. Tech Mahindra scaled 52-week high.
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 barometer index, the S&P BSE 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.
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 10:20 IST, the S&P BSE Sensex was up 280.67 points or 1.35% to 21,039.16. 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 78.85 points or 1.28% to 6,250.30. 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 strong. On BSE, 1,325 shares gained and 622 shares fell. A total of 127 shares were unchanged.
Among the 30-share Sensex pack, 27 stocks rose and only three declined. ONGC (up 2.92%), ICICI Bank (up 2.62%) and Reliance Industries (up 2.43%) edged higher from the Sensex pack.
Infosys gained 2.82% to Rs 3655.05, 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 3,660 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 1.87% to Rs 2,324.45 after hitting a record high of Rs 2,330 in intraday trade.
HCL Technologies gained 2.21% to Rs 1,328 after hitting a record high of Rs 1,330 in intraday trade.
Tech Mahindra advanced 1.13% to Rs 1,903 after hitting a 52-week high of Rs 1,905.95 in intraday trade.
Wipro was up 0.7% at Rs 558.65. The stock hit 52-week high of Rs 567.45 in intraday trade.
Tata Motors edged higher after the company's British luxury car unit Jaguar Land Rover (JLR) on Saturday, 11 January 2014, said sales jumped 19% to a record 425,006 units in calendar year 2013 over calendar year 2012. The stock was up 2.53%. JRL said growth in sales in 2013 was on the back of strong growth in all major regions.
Jaguar recorded a 42% increase in sales to 76,668 vehicles in 2013 -- its strongest full year sales performance since 2005 with new records set in 17 markets including, Brazil, India, Russia and China. Land Rover set a new full year sales record, retailing 348,338 vehicles in 2013, up 15% on the prior year following record sales of the Range Rover and Range Rover Evoque, and an incredible performance from Range Rover Sport which was close to equaling its prior record set in 2007, despite the all-new model having only been on sale for part of the year.
JLR on Sunday, 12 January 2014, said it plans to significantly increase its investment in new technology, plants and models to more than GBP3.5 billion ($5.7 billion) a year next fiscal year. The UK premium car maker said it wants to capitalize on strong recent sales growth at its expanded Land Rover brand and invest more in Jaguar, its premium sedan and sports car brand. Andy Goss, director in charge of global sales, said investment would jump to GBP3.5 billion to GBP3.75 billion in the fiscal year that begins April from GBP2.75 billion this year. "This (investment) is what we are generating each year. We are preparing very heavily for the future," Mr. Goss said at a press briefing.
He said the company is investing GBP500 million to build a new engine plant in UK that would spawn new four-cylinder gasoline as well as diesel engines. The first engine would go into the new Jaguar sports car that would be introduced in 2015. The company aims to increase its global dealer network to 3,100 in fiscal year 2016-2017 from 2,519 currently, he said. In the US, Jaguar is stepping up in its marketing effort with a new television advertising campaign which will include the brand's first spots at this year's Super Bowl, the American football game that is the country's top sporting event.
Jubilant FoodWorks lost 0.67%, with the stock extending Friday's slide triggered by the index provider MSCI excluding the stock from its small cap indices. Shares of Jubilant FoodWorks will be excluded from the MSCI global small cap indices effective on Tuesday, 14 January 2014, MSCI said in a statement late on 9 January 2014.
The Reserve Bank of India (RBI) notified last week that the aggregate net purchases of equity shares in Jubilant FoodWorks by foreign institutional investors (FIIs) in primary/secondary markets under portfolio investment scheme (PIS) have reached the trigger limit. Hence, further purchases of equity shares of this company would be allowed only after obtaining prior approval of the RBI, the central bank said in a statement.
Currently, FIIs are allowed to invest upto 49% of the paid-up capital of Jubilant FoodWorks under the PIS. As at 30 September 2013, FIIs held 45.35% stake in Jubilant FoodWorks.
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 61.5750, compared with its close of 61.89/90 on Friday, 10 January 2014.
On macro front, India's 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 0.47% to 2.47%. Key benchmark indices in China, Singapore and Hong Kong were off 0.06% to 0.13%. Markets in Japan were closed for a holiday.
Trading in US index futures indicated that the Dow could fall 34 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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