Comments from Finance Minister P. Chidambaram and Reserve Bank of India Governor D. Subbarao on Thursday, 22 August 2013, in separate news conferences that India doesn't plan to introduce capital controls helped soothe investors' nerves as equities rose for the second day in a row and as the battered rupee also recovered. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit one-week high. The Sensex jumped 206.50 points or 1.13%, up close to 305 points from the day's high and off about 30 points from the day's low. The market breadth, indicating the overall health of the market, was positive. Except BSE Realty index, all the other sectoral indices on BSE were in the green.
From a recent low of 17,905.91 on 21 August 2013, the Sensex has gained 613.53 points or 3.42% in two trading sessions. The Sensex has fallen 826.26 points or 4.27% in this month so far (till 23 August 2013). The Sensex has declined 907.27 points or 4.67% in calendar 2013 so far (till 23 August 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 1,924.18 points or 9.4%. From a 52-week low of 17,250.80 on 5 September 2012, the Sensex has surged 1,268.64 points or 7.35%.
Coming back to today's trade, index heavyweight and cigarette major ITC edged higher in choppy trade. Capital goods pivotals rose on bargain hunting after recent losses. Most bank stocks gained. Reliance Infrastructure (RInfra) gained after the Maharashtra Electricity Regulatory Commission (MERC) allowed the company to recover past arrears over next 6 years and to recover revised cross subsidy surcharge. Among IT stocks, Tech Mahindra hit 52-week high.
The S&P BSE Sensex surged 206.50 points or 1.13% to 18,519.44, its highest closing level since 16 August 2013. The index jumped 233.66 points at the day's high of 18,546.60 in late trade. The index fell 102.19 points at the day's low of 18,210.75 in morning trade.
The CNX Nifty jumped 63.30 points or 1.17% to 5,471.75, its highest closing level since 16 August 2013. The index hit a high of 5,478.80 and a low of 5,377.80 in intraday trade.
The BSE Mid-Cap index rose 0.91% and the BSE Small-Cap index gained 0.74%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 1953 crore, lower than Rs 2323.03 crore on Thursday, 22 August 2013.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,336 shares rose and 981 shares fell. A total of 151 shares were unchanged.
Among the 30-share Sensex pack, 22 stocks rose and rest of them fell. Jindal Steel & Power (up 3.43%), ONGC (up 2.88%) and Tata Power Company (up 4%), edged higher.
Index heavyweight and cigarette major ITC rose 0.91% to Rs 308.55. The stock hit high of Rs 309.80 and low of Rs 301.15 in intraday trade.
Capital goods pivotals rose on bargain hunting after recent losses. L&T rose 1.49% to Rs 736.20. The stock had hit 52-week low of Rs 698.60 in intraday trade on Thursday, 22 August 2013. The company announced during market hours on Thursday, 22 August 2013, that its construction division has won new orders valued at Rs 1504 crore across various business segments in August 2013.
Shares of power equipment major Bharat Heavy Electricals (Bhel) jumped 8.1%.
Most bank stocks gained. HDFC Bank rose 2.74%. Axis Bank gained 0.96%.
But, State Bank of India fell 0.77%.
The Reserve Bank of India (RBI) on 20 August 2013, said it would repurchase government bonds to increase the availability of cash in the banking system, a step that appears to be a partial reversal of the slew of measures it took since mid-July to tighten liquidity. The RBI said it would buy back Rs 8000-crore of government bonds on Friday, 23 August 2013. Further repurchase will depend on evolving market conditions, it said. It is important to ensure that the liquidity tightening doesn't harden long-term bond yields and impact the flow of credit to productive sectors of the economy, the central bank said, referring to its buyback plan.
The RBI on 20 August 2013 also relaxed some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices. They now don't have to record their current marked-to-market losses immediately as the RBI has allowed them to spread the losses equally over the remaining period of this fiscal year.
Private sector banking giant ICICI Bank gained 2.14%. The bank after market hours on Thursday, 22 August 2013, said it has increased base rate by 0.25% to 10% per annum with effect from 23 August 2013. With effect from 1 July 2010, interest rates on new loans and advances, including consumer loans, are determined with reference to base rate. ICICI Bank has also announced an increase of 0.25% in its benchmark prime-lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from 23 August 2013. These benchmark rates are used for determining interest rates on loans and advances sanctioned upto 30 June 2010. The fixed rate customers will not be impacted by the above revision and their contracted rates will remain unchanged, ICICI Bank said.
Reliance Infrastructure (RInfra) rose 3.75% after the Maharashtra Electricity Regulatory Commission (MERC) allowed the company to recover past arrears over next 6 years and to recover revised cross subsidy surcharge. The company said during market hours today, 23 August 2013, that as per the MERC order dated 22 August 2013, RInfra has been allowed to recover past arrears, along with 14.5% per annum carrying cost, at Rs 925 crore per year, aggregating Rs 5550 crore over the next 6 years.
The MERC has also allowed RInfra to recover revised cross subsidy surcharge (CSS) of Rs 819 crore for the financial year 2013-14, Rs 896 crore for FY 2014-15 and Rs 590 crore for FY 2015-16. According to the MERC order, revised tariff, the arrears recovery and revised CSS will become effective from 1 September 2013. RInfra's tariffs are most competitive across all major categories, and this will ensure major inflow of high end consumers back to RInfra, the company said in a statement. RInfra's tariffs are expected to reduce by 12% and 11% in the next two financial years, benefitting its valued customers significantly, mainly owing to efficient and low power procurement cost by RInfra, the company said.
IT stocks edged higher on recent steep slide of the rupee against the dollar. Wipro (up 0.79%), TCS (up 2.74%) and HCL Technologies (up 4.85%), edged higher. Infosys shed 0.82%. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Tech Mahindra jumped 7.39% to Rs 1,366.90 after hitting a 52-week high of Rs 1,374.90 in intraday trade today, 23 August 2013.
Zensar Technologies rose 0.58%, with the stock extending Thursday's gains triggered by the company's announcement that it has signed significant large multiyear contracts in the United States. The company during trading hours on Thursday, 22 August 2013, also said that it has a robust pipeline of over 250 million dollars of new business and it expects all its business lines to do well during the current financial year.
Reliance Industries (RIL) rose 1.64% after the company and British Petroleum announced a new gas condensate discovery off the east coast of India in the Cauvery basin. The discovery, in the deepwater block CY-DWN-2001/2 (CYD5), is situated 62 kilometers from the coast in the Cauvery Basin and is the second gas discovery in the block. RIL is the operator with 70% equity and BP has a 30% share.
Preliminary evaluation of well data and fluid samples indicated presence of gas condensate in the reservoir interval with a gross column of 143 meters. The well reached its total depth in early August and RIL, as operator, has conducted drill stem test (DST) to evaluate the potential of the discovery. The well which had the initial reservoir pressure of 8000 psi flowed gas at the rate of 35.2 million standard cubic feet per day with condensate at the rate of 413 barrels per day through 52/64" choke during DST. Well flow rates during such tests are limited by the rig and well test equipment configuration, RIL and BP said in a joint statement. The Government of India (GoI) and Directorate General of Hydrocarbons have been notified of the discovery, named D-56.
Bharti Airtel declined 1.55% on reports the company is in advanced discussions to sell off its Sri Lankan operations to Abu Dhabi's Etisalat.
Realty major DLF lost 4.73%, with the stock extending Thursday's fall.
Auto stocks gained. Mahindra & Mahindra (M&M) rose 2.41%. The company on 14 August 2013 said it plans to invest Rs 200 crore to strengthen its current product line-up of trucks and buses. The company plans to invest Rs 300 crore to explore new product lines in the LCV, ICV and MCV range, it said.
Tata Motors gained 2.85%. The company's global wholesale vehicle sales fell 14% to 87,566 vehicles in July 2013 over July 2012. Global sales of passenger cars fell 13% to 46,684 vehicles in July 2013 over July 2012. Sales of its Jaguar Land Rover brand rose 30.61% to 35,162 units. Sales of its Jaguar cars rose 76.53% to 7,174 vehicles and Land Rover sales were higher by 22.45% at 27,988 vehicles during the month. The company announced the global vehicle sales figures on 14 August 2013.
Maruti Suzuki India rose 0.46%. The company announced on 21 August 2013 announced the launch of the stylish, aggressive, sporty Stingray car model. With this the company has expanded its portfolio and enriched to meet inspirations of young India, Maruti said on Wednesday, 21 August 2013. Stingray, which is powered by a 998 cc petrol engine, is available in three variants, with price ranging between Rs 4,09,999 to Rs 4,66,999 ex showroom Delhi.
Shares of two wheeler makers were mixed. Bajaj Auto rose 0.1%. Hero MotoCorp shed 0.08%.
Housing Development Finance (HDFC) rose 0.18%. As per reports the dedicated housing finance firm has increased its retail prime lending rate by 0.25% with effect from Friday, 23 August 2013.
Lupin rose 1.9%. The company said at the fag end of the trading session that its US subsidiary, Lupin Pharmaceuticals, Inc. (LPI) has received final approval for its Rifampin Capsules USP, 150 mg and 300 mg strengths from the United States Food and Drugs Administration (USFDA). Lupin's Rifampin Capsules USP, 150 mg and 300 mg are the AB rated generic equivalent of Sanofi Aventis' Rifadin Capsules 150 mg and 300 mg strengths. Rifadin Capsules had annual US sales of approximately $18.5 million as IMS MAT March 2013 data.
Rifampin Capsules is indicated for the treatment of all forms of Tuberculosis. The drug is also indicated for the treatment of asymptomatic carriers of Neisseria meningitidis to eliminate meningococci from the nasopharynx.
Dr Reddy's Laboratories rose 0.34%. The company announced after market hours on Thursday, 22 August 2013, that it has launched Divalproex Sodium Extended - Release Tablets, USP (250 mg and 500 mg), a therapeutic equivalent generic version of Depakote ER (divalproex sodium) Tablet, Extended Release in the US market on 19 August 2013. Dr. Reddy's ANDA for Divalproex Sodium Extended- Release Tablets, USP was approved by the United States Food & Drug Administration (USFDA). The Depakote ER brand and generic had combined US sales of approximately $194 million for the twelve months ended 30 June 2013 according to IMS Health data.
Diamond Power Infrastructure rose by maximum permissible 20% upper limit at Rs 46.80 on BSE after the company fixed 27 August 2013 as the record date for 1:3 bonus issue.
Bajaj Corp rose 5.15%, with the stock extending Thursday's 3.2% gains triggered by the company's announcement that its board of directors has accorded its approval for acquisition of the "NOMARKS" anti marks skin care brand from Ozone Ayurvedics. The transaction envisages transfer of NOMARKS brand related business (inclusive of trademarks, patents, goodwill and existing contracts) of Ozone Ayurvedics.
Seamec rose 4.59% to Rs 43.30 after the company said it has entered into a contract for the charter hire of Vessel "ALLIANCE" with Sea Horse General Contracting Establishment, UAE, Dubai for working in Offshore Egyptian Mediterranean waters. This vessel is under bareboat charter with Seamec. The tenure of the contract would be around 120 days with option for extension. The contract is likely to commence around end August 2013, Seamec said. The total contract value for the firm period would be around $7.3 million approximately, Seamec said.
Airline stocks galloped. Jet Airways (India) surged 6.84% to Rs 317.25 on bargain hunting after the stock tumbled 11.73% in the preceding five trading sessions to Rs 296.95 on 22 August 2013, from a recent high of Rs 336.40 on 14 August 2013. Jet Airways after market hours today, 23 August 2013, said JetPrivilege has inked a partnership with Mobile Store, India's first national chain of telecom retail outlets, as well as the country's largest mobile retailer offering new opportunities for its members to earn JPMiles. JetPrivilege is Jet Airways' frequent flyer programme for its customers.
SpiceJet (up 4.33%) and Kingfisher Airlines (up 0.28%), gained.
In the foreign currency market, the rupee staged a stround rebound after Finance Minister P. Chidambaram and Reserve Bank of India Governor D. Subbarao on Thursday, 22 August 2013, said in separate news conferences that India doesn't plan to introduce capital controls. The partially convertible rupee was hovering at 63.30, sharply higher than its close of 64.55/56 on Thursday, 22 August 2013.
Chidambaram said the restrictions imposed by the Reserve Bank of India recently on money that Indian individuals and companies can send overseas would be revisited once the currency market stabilizes. In separate news conferences in New Delhi, both Chidambaram and Subbarao attributed the rupee's recent sharp decline to global trends.
Chidambaram said that revival and encouragement of growth will continue to be the focus of the government. Chidambaram said that stronger growth will, in course of time, alleviate many of the challenges that India faces today. He said that there is no cause for the panic that seems to have gripped the currency markets and that is feeding into other markets.
Chidambaram believes that the rupee is undervalued and has overshot what is generally believed to be a reasonable and appropriate level. Capital inflows will, in due course, correct the position. India's debt indicators are within prudent limits. India does not have excessive public debt (Central and State Governments taken together). The overall public debt to GDP ratio has declined from 73.2% in 2006-07 to 66% in 2012-13. The economy's external debt is only 21.2% of GDP. India's reserves are $277 billion.
India's inflation could accelerate in the current fiscal year due to the rupee's sharp depreciation, the Reserve Bank of India (RBI) said in a report on Thursday. The pass-through of the depreciation of the rupee exchange rate by about 11% in the four months of 2013-14 is incomplete and will put upward pressure as it continues to feed through to domestic prices, the RBI said in its annual report for 2012-13. Risks on the inflation front are still significant, the RBI said. The rupee's weakness could also increase subsidy payouts for fuel and fertiliser in 2013/14, the central bank said. However, the report said normal monsoon rains in India have taken a major risk off the horizon" but said a close vigil was necessary after food prices showed an upsurge during April to July. If high food inflation persists into the second half of 2013-14, the risks of generalised inflation could become large, it said. India's current account gap, which widened to a record high of 4.8% of GDP in the fiscal year to March 2013, is likely to ease in the current fiscal year but may continue to be much above the sustainable level, the report said. Global risks coupled with domestic structural impediments have dampened prospects of a recovery in 2013-14, and posed immediate challenges for compressing the current account deficit, it said. The central bank's report added that utmost attention is needed to contain risks to financial stability arising from deteriorating asset quality of banks.
Most European stocks rose on Friday, 23 August 2013, after the latest data showed Germany's economy expanded by 0.7% in the second quarter, confirming official estimates released last week. Key benchmark indices in UK and Germany were up by 0.01% to 0.23%. France's CAC 40 fell 0.4%.
Germany's economy sharply rebounded in the second quarter from a weak start to the year, gaining steam from a pickup in investment and robust consumption, official data showed Friday. Gross domestic product swelled 0.7%, corresponding to an annualized rate of 2.9%, the national statistics office said. The figures confirm official estimates issued last week. That makes Germany the fastest growing of the world's largest industrialized economies in the second quarter.
UK economic growth accelerated more than initially estimated in the second quarter, helped by construction and manufacturing and a boost from trade. Gross domestic product increased 0.7% from the first quarter, when it rose 0.3%, the Office for National Statistics said in London today.
Data on euro zone consumer confidence for August 2013 is due for release today, 23 August 2013.
Most Asian stocks fell on Friday, 23 August 2013. Key benchmark indices in Singapore, Hong Kong, China and Indonesia fell by 0.02% to 0.47%. Key benchmark indices in Japan, Taiwan and South Korea were up by 0.75% to 2.21%.
Trading in US index futures indicated that the Dow could fall 19 points at the opening bell on Friday, 23 August 2013. US stocks edged higher on Thursday after a monthly average of jobless claims fell to a more than five-year low in the US, and as manufacturing Purchasing Managers' Index readings from China and Germany indicated expansion.
Investors are keeping a close watch on the Federal Reserve's three-day annual monetary conference in Jackson Hole, Wyo which begins today, 23 August 2013, on whether Fed officials give any indication of the timing of the potential tapering of the Fed's bond purchases. Fed Chairman Ben Bernanke is not attending this year's Fed's annual monetary conference. The Fed currently buys $85 billion worth of securities a month to help support the US economy, but it has signaled its intent to soon slow the pace of those purchases as the economy recovery gains pace.
Bernanke's term expires in January, and US President Barack Obama is considering candidates to succeed him, including Fed Vice Chairman Janet Yellen and former Treasury Secretary Lawrence Summers.
Brazil's central bank will begin a $60 billion currency-intervention program on Friday, 23 August 2013, aimed at supporting the real, which recently fell to its lowest level against the dollar since December 2008. Under the program, announced on Thursday, 22 August 2013, the central bank will offer $3 billion on the spot market and in currency swaps each week until the end of 2013, according to media reports.
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