Key benchmark indices edged lower in choppy trade on concern foreign capital inflow will slow after the US Federal Reserve further reduced monetary stimulus for the US economy and signaled US interest rates will be raised. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets over the past few years. Foreign institutional investors (FIIs) have bought Indian stocks worth Rs 9845.20 crore ($1.616 billion) and Indian bonds worth Rs 38245 crore ($6.2099 billion) in this calendar year so far (till 18 March 2014). The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, settled at two-week low. The Sensex shed 92.77 points or 0.42%, off 113.16 points from the day's high and up 35.43 points from the day's low. The market breadth, indicating the overall health of the market was negative.
Indian stocks snapped three-day winning streak today, 20 March 2014. The Sensex had risen 58.25 points or 0.26% in three trading days to settle at 21,832.86 on Wednesday, 19 March 2014, from its recent low of 21,774.61 on 13 March 2014. The Sensex has risen 619.97 points or 2.93% in this month so far (till 20 March 2014). The Sensex has risen 569.41 points or 2.69% so far in calendar 2014 (till 20 March 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 4,291.38 points or 24.59%. From a record high of 22,040.72 on Tuesday, 18 March 2014, the Sensex has lost 300.63 points or 1.36%.
Coming back to today's trade, index heavyweight and cigarette maker ITC edged lower in choppy trade. Capital goods stocks declined. Realty stocks also declined. Shares of car major Maruti Suzuki India edged lower in choppy trade after Japanese carmaker Nissan Motors on Wednesday, 19 March 2014, launched its low-cost Datsun brand in India by rolling out its GO hatchback at an aggressive price to revive its fortunes after a tough year. Metal stocks dropped as concern deepened that the Chinese economy is slowing.
The market edged lower in early trade on weak Asian stocks. The Sensex extended initial losses and hit fresh intraday low in morning trade. The Sensex trimmed intraday losses in mid-morning trade. A bout of volatility was witnessed as the Sensex once again slipped into the red after briefly moving into positive zone from negative zone in early afternoon trade. Key benchmark indices languished in negative zone in mid-afternoon trade. The Sensex trimmed losses after hitting fresh intraday low in late trade.
The S&P BSE Sensex lost 92.77 points or 0.42% to settle at 21,740.09, its lowest closing level since 6 March 2014. The index declined 128.20 points at the day's low of 21,704.66 in late trade. The index rose 20.39 points at the day's high of 21,853.25 in early afternoon trade.
The CNX Nifty was down 40.95 points or 0.63% to settle at 6,483.10, its lowest closing level since 6 March 2014. The index hit a low of 6,473.25 in intraday trade. The index hit a high of 6,523.65 in intraday trade.
The BSE Mid-Cap index lost 24.28 points or 0.36% to settle at 6,715.30. The BSE Small-Cap index rose 4.32 points or 0.06% to settle at 6,726.67. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 2368 crore, lower than Rs 2578.92 crore on Wednesday, 19 March 2014.
The market breadth, indicating the overall health of the market was negative. On BSE, 1,534 shares fell and 1,269 shares rose. A total of 137 shares were unchanged.
The S&P BSE IT index (up 1.69%), the S&P BSE Teck index (up 1.23%), the S&P BSE Healthcare index (up 0.17%), the S&P BSE Consumer Durables index (down 0.1%), the S&P BSE FMCG index (down 0.16%) and the S&P BSE Oil & Gas index (down 0.21%) outperformed the Sensex.
The S&P BSE Auto index (down 1.04%), the S&P BSE Metal index (down 1.2%), the S&P BSE Bankex (down 1.36%), the S&P BSE Power index (down 1.62%), the S&P BSE Capital Goods index (down 1.94%) and the S&P BSE Realty index (down 2.23%) underperformed the Sensex.
Index heavyweight and cigarette maker ITC lost 0.76% to Rs 356.80. The stock hit high of Rs 358.50 and low of Rs 352.55.
Index largest FMCG company by sales Hindustan Unilever gained 2.13% at Rs 573.50. The stock hit high of Rs 574.25 and low of Rs 561.90.
Marico rose 0.22%. The company has scheduled a meeting of the Board of Directors of the company on 25 March 2014, to consider declaration of one time Silver Jubilee Third interim dividend for the year ending 31 March 2014. Marico has fixed 31 March 2014 as the record date for the purpose of payment of third interim dividend. In the event of dividend being declared by the Board of Directors the payment date for the third interim dividend shall be 22 April 2014, Marico said.
Index heavyweight Reliance Industries rose 0.43% to Rs 906. The stock hit high of Rs 906.70 and low of Rs 898.
Shares of state-run oil marketing companies (PSU OMCs) fell on a media report that PSU OMCs may have to absorb a higher share of under recoveries this fiscal year. BPCL (down 4.07%), HPCL (down 2.07%) and Indian Oil Corporation (IOC) (down 2.72%), edged lower.
Shares of state-run upstream companies were mixed. ONGC rose 0.86%. Oil India fell 1.45%.
PSU OMCs suffer under-recovery on domestic sales of diesel, kerosene and LPG at government controlled prices. The government compensates PSU OMCs for their under-recoveries through oil bonds. The rest of the cost-price gap is borne by three state-run oil and gas firms -- GAIL (India), ONGC and Oil India.
Metal stocks dropped as concern deepened that the Chinese economy is slowing. China is the world's largest consumer of copper and aluminum. Sesa Sterlite (down 1.73%), Hindustan Zinc (down 0.08%), Jindal Steel & Power (down 1.97%), Hindalco Industries (down 0.54%), Hindustan Copper (down 1.54%), JSW Steel (down 2.47%) and Tata Steel (down 1.57%), dropped. NMDC (up 0.34%), Steel Authority of India (SAIL) (up 0.27%) and National Aluminum Company (up 0.72%) edged higher.
Mukand rose by maximum permissible level of 20% at Rs 24.95 after promoters hiked their stake in the company through rights issue. The announcement was made during market hours today, 20 March 2014.
Mukand said that the company's promoters have hiked their stake in the company to 73.36% on 15 March 2014 from 54.33% as at 31 December 2013 through rights issue.
Following the rights issue, foreign institutional investors (FIIs) holding in the company declined to 0.64% on 15 March 2014 from 1.24% as at 31 December 2013. Domestic institutional investors (DIIs) stake declined to 5.19% from 10.06% and public stake declined to 26.64% from 45.67%. Non institutional investors stake fell to 20.81% from 34.37% while ownership of corporate bodies fell to 7.26% from 12.09%.
It may be recalled that Mukand had announced 1:1 rights issue at Rs 21 per share on 30 January 2014.
Auto stocks declined. Tata Motors (down 1.31%), Mahindra & Mahindra M&M) (down 0.42%) edged lower. Ashok Leyland rose 0.28%.
Shares of car major Maruti Suzuki India edged lower in choppy trade after Japanese carmaker Nissan Motors on Wednesday, 19 March 2014, launched its low-cost Datsun brand in India by rolling out its GO hatchback at an aggressive price to revive its fortunes after a tough year. Priced aggressively at Rs 3.12 lakh onwards, the GO will challenge Maruti Alto and Hyundai Eon at the entry level segment with a bigger 1,200-cc engine, more cabin space and superior mileage. The stock lost 0.37% to Rs 1,863.60. The stock hit high of Rs 1,875 and low of Rs 1,847.95.
Shares of most two wheeler makers declined. Hero MotoCorp (down 0.39%) and Bajaj Auto (down 1.51%) declined.
TVS Motor Company jumped 6.07% to Rs 95.25 after scaling a record high of Rs 96.25 in intraday trade.
IT stocks rose as rupee edged lower against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. Improving economic outlook of US after the Federal Reserve continued tapering bond purchases and hinted at rising interest rates by next year also aided gains in IT stocks. US is the biggest outsourcing market for the Indian IT firms.
Infosys (up 1.02%), Wipro (up 1.01%) and HCL Technologies (up 0.46%), edged higher.
TCS surged 3.28%. The company after market hours on Wednesday, 19 March 2014, announced the go-live of a new maintenance, repair and overhaul (MRO) application programme with PT Garuda Indonesia (Persero) Tbk. (Garuda Indonesia Airlines), Indonesia's national airline, via its aircraft maintenance subsidiary GMF Aeroasia.
Judi Rifajantoro, EVP Strategy, Business Development and Risk Management, Garuda Indonesia said, Garuda went through a rigorous MRO vendor selection process, and we chose TCS' SWIFT MRO solution based on Garuda's futuristic roadmap, ease of enterprise integration, lower TCO and proven track record. The first phase of Garuda's MRO transformation is now complete and in production, and phase two is coming soon, further helping the airline deliver exemplary aircraft maintenance services in line with our strong growth and development of a global leading airline brand."
Garuda Indonesia, the national airline of Indonesia connects more than 64 destinations, which include 40 domestic and 20 international destinations worldwide.
Tech Mahindra rose 2.56% after the company announced the inauguration of its 3rd near shore delivery center in Dusseldorf, Germany. The Dusseldorf 50-seat center is an important milestone in Tech Mahindra's increasing network of delivery centers in Europe, the company said in a statement. This will bring the company closer to its key customers in the Nordrhein-Westfalen (NRW) region, it said. The company aims to ramp-up its presence in the region significantly within the next few months, Tech Mahindra said. Tech Mahindra derives 31% of its revenue from European markets.
Polaris Financial Technology jumped 8.64% to Rs 199.20 after hitting a 52-week high of Rs 207.20 in intraday trade, with the stock extending recent rally triggered by the company announcing the demerger of its products business into a separately listed company.
After demerger, the product company will be known as Intellect Design Arena (Intellect) and comprise of four distinct businesses: global universal banking; risk and treasury management; global transaction banking and insurance, the company said in a statement.
Polaris Financial Technology said it will continue to run the services business with a strong vertical and solution focus. As consideration for the demerger (technically called a vertical split), every shareholder of Polaris Financial Technology, will receive one share of Intellect.
The product business is significantly different from the services stream, in terms of investments into product development, talent and sales & distribution. Given this, the Polaris board, taking into consideration the recommendations made by the Special Committee comprising of independent directors of the Board as well as the Audit Committee, has decided to offer a special option to the shareholders of Intellect to exchange the shares (should they wish to) allotted pursuant to the demerger against fully secured non-convertible debentures (NCD). These NCDs shall have a face value of Rs 42, with a coupon of 7.75% per annum, redeemable at par after 90 days.
Persistent Systems rose 3.04% after the company said it has set up Accelerite to take a portfolio of products and related solutions to market. The company made the announcement after market hours on Wednesday, 19 March 2014.
Persistent Systems announced the creation of Accelerite to take a portfolio of products and related solutions to market. Accelerfte will be a business unit of Persistent Systems, headquartered in Silicon Valley and led by Nara Rajagopalan.
The formation of Accelerite will bring product-centric alignment to business models, strategies, sales, and operations. Persistent Systems will continue to focus on product development and technology services where it is a well-respected market leader, the company said in a statement.
"The business model for products is distinctly different from services. Over the last few years, we invested in building a portfolio of products and IP focused on SMAC technologies," said Dr. Anand Deshpande, Chairman, Managing Director and CEO of Persistent Systems. "The creation of Accelerite brings the organizational alignment to achieve global leadership for these products."
Bank stocks dropped. Among private sector banks, ICICI Bank (down 0.75%), HDFC Bank (down 0.92%), Yes Bank (down 1%), Kotak Mahindra Bank (down 1.93%), AXIS Bank (down 2.03%) and Federal Bank (down 2.38%), declined.
Among PSU bank stocks, Punjab National Bank (down 2.58%), State Bank of India (SBI) (down 1.58%), Union Bank of India (down 2.95%), Canara Bank (down 2.62%), Bank of India (down 3.52%) and Bank of Baroda (down 2.64%) declined.
Canara Bank declined 2.62%. The state-run bank after market hours said that as per the powers delegated by the board of the bank, the Bond Committee has decided to raise additional capital of Rs 1000 crore through issue of BASEL-III complaint Tier-II Bonds (Series-II). The bank has received reaffirmation of rating "AAA/Stable" (pronounced 'CRISIL Triple A rating with Stable Outlook') from CRISIL and confirmation of rating '[ICRA] AAA (hyb)' (Pronounced ICRA Triple A Hybrid with Stable Outlook) from ICRA for the proposed issue of the bonds, Canara Bank said.
Capital goods stocks declined. L&T (down 2.22%), Bharat Heavy Electricals (Bhel) (down 2.37%), ABB India (down 1.14%), BEML (down 0.8%), Bharat Electronics (down 0.23%), Crompton Greaves (down 2.84%) and Thermax (down 2.44%) declined.
Cummins India fell 3.85% to Rs 560, with the stock declining on profit booking. Shares of Cummins India had gained 13.03% in four trading days to Rs 582.45 on 19 March 2014 from a recent low of Rs 515.30 on 12 March 2014.
Dr. Reddy's Laboratories (DRL) fell 0.97%. In response to media reports titled "Lawsuit filed against DRL in US", Dr. Reddy's Laboratories said that the company is one of a number of companies that have filed applications with the USFDA requesting permission to sell generic versions of Cephalon's Treanda (Bendamustine HCI) Injection for treatment of leukemia. The company's ANDA includes paragraph IV certifications reflecting the fact that it seeks approval to market the products prior to expiration of certain patents owned by Cephalon. On 20 December 2013, Cephalon filed suit in the US District Court for the District of Delaware, alleging that the company's actions infringe its patents. This is in the ordinary course of business of the pharmaceutical industry, DRL said.
Realty stocks dropped. DLF (down 3.82%), Housing Development Infrastructure (down 3.63%), Sobha Developers (down 1.27%) and Unitech (down 4.45%) declined.
Bombay Rayon Fashions fell 1.79% after the company said it has declared a lock-out at its mill division located at Dodaballapur in Bangalore. The company made the announcement after market hours on Wednesday, 19 March 2014.
SKS Microfinance rose 2.02% after the company said that it has completed the tenth securitization transaction during the current financial year of Rs 26.73 crore. The announcement was made after trading hours on Wednesday, 19 March 2014.
With this, the total sum of securitizations completed for the fiscal year ending March 2014 (FY 2014) (year-to-date) is Rs 1377.94 crore, SKS Microfinance said in a statement. The company said that the entire pool qualifies for priority sector treatment as per RBI's priority sector lending guidelines. The pool is rated A1+ (SO) by a leading rating agency signifying a very strong degree of safety regarding timely payment of financial obligations'. Such instruments carry the lowest credit risk, the company said.
Excel Crop Care jumped 8.21% to Rs 537 after 3.63% equity changed hands in three bulk deals on BSE today, 20 March 2014. First bulk deal of 1.50 lakh shares was executed on the Excel Crop Care counter at Rs 525 per share at 13:36 IST on BSE today, 20 March 2014. Second bulk deal of 1.50 lakh shares was executed on the counter at Rs 530 per share at 13:39 IST on BSE today, 20 March 2014. Third bulk deal of 1 lakh shares was executed on the counter at Rs 530 per share at 13:44 IST on BSE today, 20 March 2014.
In the foreign exchange market, the rupee edged lower against the dollar after the US Federal Reserve on Wednesday, 19 March 2014, announced a further reduction of monetary stimulus for the US economy and signaled US interest rates will be raised, potentially damping fund flows into emerging markets. The partially convertible rupee was hovering at 61.345, compared with its close of 60.95/96 on Wednesday, 19 March 2014.
Indian government bond prices dropped, tracking surge in yields on US Treasury notes on Wednesday, 19 March 2014, after the US Federal Reserve signaled it may raise US interest rates from the middle of next year. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.8188%, higher than its close of 8.7772% on Wednesday, 19 March 2014. Bond yield and bond prices move in opposite direction.
The Reserve Bank of India will announce the First Bi-monthly Monetary Policy Statement, 2014-15 on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
The next major trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will be take place on 16 May 2014. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31. Along with the Lok Sabha election, Andhra Pradesh (AP), including the regions comprising Telangana, Odisha and Sikkim will go to polls to elect new assemblies. AP, Odisha and Sikkim assemblies come to end on June 2, June 7 and May 7 respectively.
European stocks dropped on Thursday, 20 March 2014, after US Federal Reserve Chair Janet Yellen signaled benchmark interest rates could rise about six months after the central bank ends bond purchases. Key benchmark indices in France, Germany and UK shed 0.94% to 1.19%.
Asian stocks fell on Thursday, 20 March 2014, after the Federal Reserve signaled it may raise US interest rates from the middle of next year and as concern deepened that the Chinese economy is slowing. Key benchmark indices in China, Hong Kong, Taiwan, Singapore, South Korea, Indonesia and Japan were off 0.76% to 2.54%.
China will keep economic growth at a reasonable rate while keeping inflation stable, Premier Li Keqiang reportedly said on Wednesday. Li also told a regular meeting of the State Council, or the cabinet, that China will continue to push forward reforms.
New Zealand's annual economic growth exceeded 3% for a second straight quarter, buoyed by dairy exports, adding to signs of increasing inflation pressure that may require higher borrowing costs. Gross domestic product increased 3.1% in the fourth quarter from a year earlier, Statistics New Zealand said in Wellington today. That's slower than the revised 3.3% pace in the third quarter. GDP rose 0.9% from the third quarter.
Trading in US index futures indicated that the Dow could drop 36 points at the opening bell on Thursday, 20 March 2014. US stocks dropped on Wednesday, 19 March 2014, as the Federal Reserve's latest policy statement raised jitters about the prospect of interest rates rising sooner than anticipated.
The Federal Reserve announced a further reduction in its bond-buying program by $10 billion to $55 billion after the conclusion of a monetary policy review on Wednesday, 19 March 2014. The purchases will finish by year-end with a borrowing-cost increase to follow in "around six months," Chair Janet Yellen indicated on Wednesday, 19 March 2014. The Federal Open Market Committee said on Wednesday, 19 March 2014, it will no longer link borrowing costs to a specific unemployment rate, and will consider a broad range of indicators on the labor market, inflation and financial markets instead. Separately, the Fed released forecasts showing more officials predicting the benchmark rate, now close to zero, will rise at least to 1% at the end of 2015 and 2.25% by the end of the following year, higher than previously forecast.
The US and Europe are moving to increase sanctions on Russia after Russian President Vladimir Putin signed an accord setting in motion Crimea's accession to Russian territory. With visa bans and asset freezes on Russian officials failing to sway Putin, European Union leaders meet today, 20 March 2014, to consider their next move. Ukraine on Wednesday, 19 March 2014, ordered the removal of its military from the majority Russian-speaking Crimea and said it will strengthen its deployments on the country's border with Russia.
Russian Finance Minister Anton Siluanov today, 20 March 2014, said that Russia isn't planning to cut budget spending in the next three years as it will replace expensive borrowing with extra revenue from exports. Russia is expected to receive more for its exports thanks to the weaker ruble, which boosts incomes of commodity exporters and thus props up tax revenue. However the recent ruble weakening, which accelerated after the West threatened to impose sanctions against Moscow due to its ambitious plan to annex Crimea, also has a negative impact on the economy. Mr. Siluanov said the weaker ruble is set to push consumer prices higher, but inflation is likely to stabilize in the second half of 2014. If inflation slows, the central bank may lower interest rates, Mr. Siluanov said. He said 2014 inflation is now seen at between 5% and 6%, which is above the central bank's full-year target of 5%.
To support flagging economic growth, the government is mulling ways to boost industrial output. Mr. Siluanov said Russia may create a special fund to support producers, which will be funded by state-run bank VEB.
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