Key benchmark indices edged lower as world stocks fell after Federal Reserve Bank of Atlanta President Dennis Lockhart on Monday, 13 January 2014, said that the US economy is on solid footing and he would support continued cuts to stimulus. 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, lost 101.33 points or 0.48%, off close to 122 points from the day's high and up about 24 points from the day's low. The market breadth, indicating the overall health of the market, was negative.
Indian stocks snapped two-day winning streak today, 14 January 2014. The Sensex had jumped 420.84 points or 2.03% in two trading sessions to settle at 21,134.21 on Monday, 13 January 2014, from a recent low of 20,713.37 on 9 January 2014. The Sensex has lost 137.80 points or 0.65% in this month so far (till 14 January 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,584.17 points or 20.54%. From a record high of 21,483.74 hit on 9 December 2013, the Sensex is off 450.86 points or 2.10%.
Coming back to today's trade, metal shares witnessed selling pressure. Realty stocks also edged lower. Infosys edged higher in choppy trade and hit a record high. Tech Mahindra scaled a 52-week high. Tata Motors dropped after the company on Monday, 13 January 2014, announced the launch of the new Nano Twist, a new addition to the Nano range.
A bout of volatility was witnessed as key benchmark indices alternately swung between positive and negative zone in early trade. Volatility continued as key benchmark indices trimmed losses after hitting fresh intraday low in morning trade. The Sensex extended losses and hit fresh intraday low in mid-morning trade. The Sensex languished in the negative terrain in early afternoon trade. Key benchmark extended losses and hit fresh intraday low in mid-afternoon trade.
The S&P BSE Sensex shed 101.33 points or 0.48% to settle at 21,032.88, its lowest closing level since 10 January 2014. The index fell 125.16 points at the day's low of 21,009.05 in late trade. The index rose 20.55 points at the day's high of 21,154.76 in morning trade.
The CNX Nifty lost 30.90 points or 0.49% to 6,241.85, its lowest closing level since 10 January 2014. The index hit a low of 6,234.15 in intraday trade. The index hit a high of 6,280.35 in intraday trade.
The S&P BSE Mid-Cap index fell 0.32% and the S&P BSE Small-Cap index fell 0.20%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,485 shares dropped and 1,211 shares rose. A total of 129 shares were unchanged.
The total turnover on BSE amounted to Rs 1680 crore, lower than Rs 2098.60 crore on Monday, 13 January 2014.
The S&P BSE Healthcare index (up 0.66%), the S&P BSE Oil & Gas index (up 0.08%), the S&P BSE Power index (down 0.3%) and the S&P BSE FMCG index (down 0.46%), outperformed the Sensex.
The S&P BSE Metal index (down 1.41%), the S&P BSE Realty index (down 1.4%), the S&P BSE IT index (down 0.67%), the S&P BSE Bankex index (down 0.66%), the S&P BSE Capital Goods index (down 0.63%), the S&P BSE Teck index (down 0.63%) and the S&P BSE Consumer Durables index (down 0.52%), underperformed the Sensex.
Among the 30-share Sensex pack, 22 stocks fell and rest of them rose.
Bharti Airtel declined 0.77% to Rs 328.70. The company announced during market hours that its wholly-owned subsidiary Bharti Airtel International (Netherlands) B.V. (Bharti) in a follow on Tap has priced euro 250 million 4% Guaranteed Senior Notes due 2018. The Notes will be fully and unconditionally guaranteed by Bharti Airtel.
The notes attracted huge investor interest with an order-book aggregating circa euro 600 million from high quality investor accounts. The success of tap on the existing bond emphasizes the continuing and strong belief of the investor community in Bharti's credit, Bharti Airtel said in a statement. Bharti had earlier in December 2013 raised euro 750 million in an inaugural benchmark euro issuance.
The notes have been priced at 275 basis points over the curve adjusted 5-year EUR Mid Swap with a fixed coupon of 4% per annum. Bharti will fully apply the net proceeds to refinance its existing debt.
Mr. Harjeet Kohli, Group Treasurer of Bharti, said: "We are delighted with the response in the Euro debt markets for Bharti Airtel. Across tenors and markets, Airtel now has USD 1.5 billion in the USD bond markets and Euro 1 billion in the Euro bond markets. These issuances have much diversified our sources of funding, currencies and investor base. The pricing and appetite represent the strong demand for a robust and internationally diversified Investment Grade credit like Bharti Airtel".
Some pharma stocks bucked weak market. Cipla (up 2.09%) and Lupin (up 1.54%), gained. Sun Pharmaceutical Industries rose 0.19% to Rs 603.60.
Dr Reddy's Laboratories advanced 1.21% to close at a a record high of Rs 2,660.
Shares of pharmaceutical major Ranbaxy Laboratories extended Monday's losses triggered by the company's announcement that the US Food and Drug Administration found possible violations at the generic-drug maker's active pharmaceuticals ingredient (API) plant at Toansa, Punjab, India. The stock fell 1.95% to Rs 429.80. The stock had fallen 5.42% on Monday, 13 January 2014, 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. An FDA Form 483 is issued when an investigator observes conditions that might constitute a violation of the FDA's rules or standards.
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.
Infosys rose 0.63% to Rs 3,688.85, with the stock extending recent gains triggered by the company raising its revenue growth guidance for the year ending 31 March 2014. The scrip was volatile. The stock hit a record high of Rs 3,697.30 in intraday trade. The stock hit low of 3,636 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.
Tech Mahindra advanced 0.42% to Rs 1893.45 after hitting a 52-week high of Rs 1,906 in intraday trade.
Many other IT stocks dropped on profit taking.
CMC plunged 10.34% to Rs 1,540.40 after the company reported 4.79% rise in consolidated net profit to Rs 70.54 crore on 0.03% increase in net sales to Rs 560.93 crore in Q3 December 2013 over Q2 September 2013. Net profit rose 15.5% to Rs 70.54 crore on 13.9% growth in net sales to Rs 560.93 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Monday, 13 January 2014.
Commenting on the results, CMC CEO and MD R Ramanan said: "The revenue growth in this quarter has been in line with our expectation, considering that traditionally Q3 is not a growth quarter in the international markets. The company continues to find good traction across geographies and added 14 clients during the quarter. The company continues to focus on people excellence and was assessed at PCMM level 5 by SEI during the quarter".
CMC is a pioneer information technology solutions provider in India and is a subsidiary of Tata Consultancy Services (TCS).
TCS dropped 1.78% to Rs 2,328.15, with the stock reversing direction after hitting a record high of Rs 2,384.20 in intraday trade. The company unveils Q3 results on Thursday, 16 January 2014.
HCL Technologies dropped 1.65% to Rs 1,322.55. The stock had hit a record high of Rs 1,352 in intraday trade on Monday, 13 January 2014.
Wipro fell 1.56% to Rs 552.70. The stock had hit 52-week high of Rs 567.45 in intraday trade on Monday, 13 January 2014.
Tata Steel declined 2.91% to Rs 374.90. Tata Steel said during market hours on Monday, 13 January 2014, that it registered 1.6% rise in hot metal production to 2.31 million tonnes in Q3 December 2013 over Q2 December 2012. Crude Steel production rose 3.7% to 2.16 million tonnes in Q3 December 2013 over Q2 December 2012. Saleable Steel production was higher by 3.9% to 2.15 million tonnes in Q3 December 2013 over Q2 December 2012. Steel sales rose 9.4% to 2.06 million tonnes in Q3 December 2013 over Q2 December 2012. Flat Product saleable steel production was best ever in Q3 December 2013 at 1.48 million tonnes (previous best was 1.46 million tonnes in Q4 March 2013), Tata Steel said.
Among other metal shares, Jindal Steel & Power (down 2.46%), NMDC (down 1.84%), Sesa Sterlite (down 1.79%), Sail (down 1.34%), JSW Steel (down 0.96%), Hindalco Industries (down 0.41%) and Bhushan Steel (down 0.24%), edged lower.
Realty stocks also edged lower. Prestige Estates (down 2.79%), DLF (down 2.33%), Anant Raj Industries (down 2.32%), Unitech (down 2.19%), Phoenix Mills (down 1.51%), D B Realty (down 1.41%), Parsvnath Developers (down 1.19%), Peninsula Land (down 0.69%), HDIL (down 0.5%) and Sobha Developers (down 0.28%), edged lower.
Reliance Industries rose 0.24% to Rs 881.10, with the stock extending Monday's gains. Oil India dropped 0.3%. The government last week issued the notification regarding Domestic Natural Gas Pricing Guidelines, 2014. 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 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 on 10 January 2014.
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.
ONGC lost 0.7% to Rs 290.10. ONGC and Kuwait Petroleum Corp (KPC) today, 14 January 2014, signed an initial agreement for broad co-operation that could see KPC pick up stakes in the ONGC Mangalore Petrochemicals (OMPL) and ONGC Petro-Additions (OPAL) projects. "We are seeking strategic partnership in the two companies. Twenty-six percent stake is being offered in (each of) the two projects," ONGC Chairman Sudhir Vasudeva said on the sidelines of the Petrotech 2014 industry conference. KPC chief executive Nizar al-Adsani said the agreement was the first of many steps to come and his company was looking at several opportunities in India and outside.
ONGC is developing the OMPL petrochemicals complex in south India, in which its subsidiary Mangalore Refinery and Petrochemicals will also hold a small stake. The company is developing the OPAL petrochemicals project, in a joint venture with GAIL (India) and Gujarat State Petroleum Corp (GSPC), at Dahej in western India, as part of its efforts to diversify beyond oil exploration and production.
Tata Motors dropped after the company on Monday, 13 January 2014, announced the launch of the new Nano Twist, a new addition to the Nano range. The stock lost 1.13% to Rs 371.80. The new Nano Twist, will now allow hassle-free and relaxed driving in city traffic with the new first-in-class Electric Power Assisted Steering (EPAS) system, designed for easy manoeuvring in tight driving and parking situations, the company said in a statement. A new signature Damson Purple colour, with chrome accents, new sporty interiors with new fabrics and stunning in-car features, make the Nano Twist an exciting car to drive, it said. The new Nano Twist will be available in the XT version, which replaces the previous top of the line LX version of the Nano range. All XT versions come with Beige interior with the exception of Dazzle Blue, which comes with sporty black interiors. The new Nano Twist XT is priced at Rs 2.36 lakh, ex-showroom Delhi. The Nano Twist will be available across all Tata Motors Authorized Dealerships, in a phased manner, Tata Motors said.
Tyres shares rose. CEAT (up 2.61%), JK Tyre & Industries (up 1.78%) and MRF (up 0.8%), edged higher.
Apollo Tyres was up 0.17% at Rs 117.20. The stock hit record high of Rs 118.70 in intraday trade.
Rubber futures in Tokyo bounced back from a five-month low. The contract for delivery in June 2014 on the Tokyo Commodity Exchange was up 1.82% at 257.40 yen a kilogram. The contract recovered after plunging almost 4% to 246.4 yen a kilogram in intraday trade, the lowest level since 8 August 2013.
Rubber is a key raw material in tyre manufacturing.
Jay Bharat Maruti rose 4.45% to Rs 55.10 after net profit surged 63.7% to Rs 7.58 crore on 0.5% growth in net sales to Rs 286.66 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Monday, 13 January 2014.
Gujarat Apollo Industries rose 2.28% after the company said its board of directors will meet on 18 January 2014, to consider a proposal of buyback of equity shares of the company. The announcement was made after market hours on Monday, 13 January 2014.
Gati surged 4.49%, after a fund run by an independent investor hiked its stake in the firm on Monday, 13 January 2014. Investments Derive bought 4.68 lakh shares or 0.54% stake in Gati at Rs 61.22 per share in a bulk deal on the NSE on Monday, 13 January 2014.
Lead acid batteries maker Exide Industries extended Monday's losses triggered by the company's poor Q3 December 2013 results. The stock lost 0.76%. The stock had slumped 6.2% on Monday. 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 on Monday, 13 January 2014.
Shares of organised retailers declined on reports that the Aam Aadmi Party-headed Delhi government has written to the department of industrial policy and promotion (DIPP) seeking to withdraw its permission to allow FDI in multi-brand retail in the state. The decision of the Aam Aadmi Party government may make foreign retailers more wary of entering the Indian market. It also throws the FDI policy in retail into more political uncertainty ahead of general elections expected in April-May. Trent (down 3.1%), Shoppers Stop (down 1.98%) and Future Retail (down 1.79%), edged lower.
The central government approved a policy in September 2012 allowing 51% FDI in multi-brand retail, but left it to the discretion of individual state governments whether or not to allow supermarkets partially owned by foreign retailers. Delhi, Maharashtra, Jammu and Kashmir, Haryana, Rajasthan, Uttarakhand, Andhra Pradesh and Assam have in the past agreed to support the entry of foreign supermarket chains such as Wal-Mart Stores Inc. of the US and Tesco Plc of the UK. The previous Delhi government under Sheila Dikshit of the Congress, which was defeated in the 4 December Delhi assembly elections, supported FDI in multi-brand retail.
MCX clocked a highest turnover of Rs 42.01 crore on BSE. Financial Technologies (India) (Rs 39.48 crore), Axis Bank (Rs 37.29 crore), State Bank of India (Rs 28.06 crore) and Ranbaxy Laboratories (Rs 26.36 crore), were the other turnover toppers on BSE in that order.
Southern Ispat & Energy reported highest volumes of 74.66 lakh shares on BSE. Unitech (47.31 lakh shares), HCL Infosystems (44.04 lakh shares), IFCI (35.7 lakh shares) and First Financial Services (24.41 lakh shares), were the other volume toppers on BSE in that order.
The Reserve Bank of India (RBI) said on Monday, 13 January 2014, it had eased rules for hedging foreign exchange exposures, allowing greater flexibility for cancelling and rebooking forward contracts. The RBI is now allowing domestically-held forward contracts for all current as well as capital account transactions with a residual maturity of one year or less to be freely cancelled and taken out again, called rebooking. Before the changes domestic exporters could cancel and rebook up to 50% of the contracts booked in a financial year for hedging their contracted export exposures. Importers were allowed to cancel and rebook up to 25% of contracts booked in a financial year. These limits have been dropped. Foreign investors will be allowed to rebook 10% of the value of cancelled contracts, up from nothing previously.
On macro front, the rate of inflation based on the combined consumer price index (CPI) of urban and rural India slowed to 9.87% in December 2013, from 11.16% in November 2013, data released by the government after trading hours on Monday, 13 January 2014, showed. The moderation was largely driven by a fall in vegetable prices, which cooled nearly 19% from November on improved supplies. That helped slow down annual food inflation to 12.16% last month from 14.72% in November.
The core CPI inflation excluding the volatile food and fuel prices, edged up to 8.05% in December 2013, from 7.97% in November 2013.
Inflation based on the wholesale price index (WPI) is seen easing up a bit at 7.1% in December 2013, from 7.52% in November 2013, as per the median estimate of a poll of economists carried out by Capital Market. WPI had accelerated to 7.52% in November 2013, from 7% in October 2013. The government will unveil WPI data for December 2013 at 12 noon tomorrow, 15 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 said at that time that it expected inflation to ease in the following months.
European stocks edged lower on Tuesday, 14 January 2014, tracking weak Asian stocks and sharp overnight losses in US stocks. Key benchmark indices in France, Germany and UK were off 0.21% to 0.59%.
Asian stocks fell on Tuesday, 14 January 2014, after Federal Reserve Bank of Atlanta President Dennis Lockhart on Monday, 13 January 2014, said that the US economy is on solid footing and he would support continued cuts to stimulus. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets in recent years. Key benchmark indices in Hong Kong, Japan, Singapore, South Korea and Taiwan were down 0.15% to 3.08%. China's Shanghai Composite rose 0.86%.
Japan's current-account deficit widened to a record in November 2013 at 592.8 billion yen ($5.75 billion) before seasonal adjustment, data showed today, 14 January 2014.
Trading in US index futures indicated that the Dow could advance 10 points at the opening bell on Tuesday, 14 January 2014. US stocks sold off sharply Monday, resulting in the worst losses for benchmark indexes in several months, on concerns about the weak December jobs report and comments from a Federal Reserve official about a further reduction in stimulus. In a speech to the Rotary Club of America, Federal Reserve Bank of Atlanta President Dennis Lockhart said he supports "similar tapering steps" as the one taken to reduce bond-market purchases by $10 billion by the Federal Reserve last month, so long as the economy grows at the 2.5% to 3% clip he's forecasting this year. He pointed out that the labor market is not as healthy as a 6.7% unemployment rate suggests. He said continued disinflation could pose risks to economic performance. Lockhart doesn't vote on policy in 2014.
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.
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