Key benchmark indices edged lower on the last trading session of the week as the market sentiment was hit adversely by Reserve Bank of India (RBI) governor Raghuram Rajan's comments on Thursday, 23 January 2014, that inflation is a destructive disease which is forcing the central bank to keep interest rates high. Weakness in Asian and European stocks and overnight losses for US stocks also hit sentiment on the domestic bourses adversely. The market breadth, indicating the overall health of the market, was weak. All the thirteen sectoral indices on BSE dropped. The barometer index, the S&P BSE Sensex, was provisionally down 232.29 points or 1.09%, off close to 190 points from the day's high and up about 15 points from the day's low. The BSE Small-Cap and Mid-Cap indices were off more than 1.5% each.
Indian stocks snapped a four-day winning streak today, 24 January 2014.
Interest rate sensitive banking and realty stocks dropped after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high.
A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak start triggered by weak Asian stocks. The Sensex languished in negative zone in morning trade. The Sensex extended losses and hit fresh intraday low in mid-morning trade. Volatility continued as key benchmark indices weakened once again after trimming intraday losses in early afternoon trade. Weakness persisted on the bourses in afternoon trade. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming intraday losses in mid-afternoon trade. The Sensex extended losses and hit fresh intraday low in late trade.
As per provisional figures, the S&P BSE Sensex was down 232.29 points or 1.09% to 21,141.37. The index dropped 249.67 points at the day's low of 21,123.99 in late trade, its lowest level since 20 January 2014. The index declined 40 points at the day's high of 21,333.66 in early trade.
The CNX Nifty was down 77 points or 1.21% to 6,268.85, as per provisional figures. The index hit a low of 6,263.90 in intraday trade, its lowest level since 20 January 2014. The index hit a high of 6,331.45 in intraday trade.
The BSE Mid-Cap index was off 1.7%. The BSE Small-Cap index was off 1.81%. Both these indices underperformed the Sensex.
Info Edge (India) (down 9.6%), Just Dial (down 6%), Biocon (down 5.73%), Oriental Bank of Commerce (down 5.7%), Oberoi Realty (down 5.45%), P I Industries (down 5.31%), Multi Commodity Exchange of India (MCX) (down 5.24%), Kirloskar Oil Engines (down 5.13%) and PC Jeweller (down 5.09%) topped losers from the BSE Mid-Cap index.
Luminaire Technologies (down 10.16%), Midland Polymers (down 9.96%), Indian Metals & Ferro Alloys (down 8.36%), Tribhovandas Bhimji Zaveri (down 7.38%), Aptech (down 7.37%), SKS Microfinance (down 6.78%), Bhansali Engineering (down 6.65%), S R K Industries (down 6.5%) and Shrenuj & Company (down 6.28%) topped losers from the BSE Small-Cap index.
The total turnover on BSE amounted to Rs 2668 crore, higher than Rs 1876.47 crore on Thursday, 23 January 2014.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,750 shares fell and 895 shares rose. A total of 152 shares were unchanged.
Among the 30-share Sensex pack, 27 stocks fell and only 3 of them gained. Bhel (down 3.39%), Tata Motors (down 3.26%) and Tata Steel (down 3.26%) edged lower from the Sensex pack.
Realty stocks declined after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high. Purchases of both residential and commercial property are largely driven by finance. DLF (down 3.87%), HDIL (down 4.57%), Sobha Developers (down 0.12%) and Unitech (down 1.83%) declined.
Bank stocks dropped across the board after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high. ICICI Bank (down 1.96%), AXIS Bank (down 0.77%), HDFC Bank (down 0.8%) declined.
Among PSU bank stocks, State Bank of India, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank shed 2.12% to 5.44%.
Canara Bank dropped 6.67% as the stock turned ex-dividend today, 24 January 2014, for the interim dividend of Rs 6.50 per share for the year ending 31 March 2014.
Cairn India fell 0.08% on weak Q3 result. The company after market hours on Thursday, 23 January 2014, reported 14% fall in consolidated profit after tax (PAT) to Rs 2884 crore on 17% growth in revenue to Rs 5000 crore in Q3 December 2013 over Q3 December 2012. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 10% to Rs 3555 crore in Q3 December 2013 over Q3 December 2012. EBITDA margin fell to 71.1% in Q3 December 2013, from 75.8% in Q3 December 2012.
PAT declined 15% to Rs 2884 crore on 8% growth in revenue to Rs 5000 crore in Q3 December 2013 over Q2 September 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) fell 2% to Rs 3555 crore in Q3 December 2013 over Q3 December 2012. EBITDA margin fell to 71.1% in Q3 December 2013, from 77.8% in Q2 September 2013.
Cairn India said that the 8% growth in revenue on sequential basis in Q3 December 2013 was driven by increased volumes. The company said EBITDA fell 2% on sequential basis in Q3 December 2013 as the contribution from higher revenues was primarily offset by increased exploration costs and one time charge on account of adoption of fair value methodology of stock option valuation. The company said that the 15% decline in PAT on sequential basis in Q3 December 2013 was primarily due to a foreign exchange loss on the dollar deposits with the strengthening of the rupee against the dollar.
With regard to future business outlook, Cairn India said that the production remains on track to meet the fiscal year exit guidance of over 225,000 boepd from all producing assets, supported by continued infill drilling. Cairn India said it targets to commence implementation of Polymer Flood EOR programme by Q4 FY 2015 for enhancing ultimate recovery from the Mangala field. The company further said that it is actively working on plans to extend the EOR programme to other fields in future. The company said it remains focussed on developing and enhancing production from the already discovered and new fields through the use of advanced technology in the low permeability reservoirs.
Cairn India said it remains on track to drill out 50% of gross risked prospective resources in Rajasthan by fiscal year end including 2 high impact wells expecting to test deeper gas plays. Successful exploration outcomes in the southern part of the basin indicate potential for gas, Cairn India said.
Mr. Elango P, Whole time Director, Cairn India said: "Cairn remains committed to discover new resources and deliver accelerated value from its assets. Our focus on execution is yielding results. Production rose by over 5% compared with the previous quarter and we remain on track to meet the full year exit guidance of over 225,000 boepd. With strategic focus on increasing ultimate recovery from operating fields, we have commenced execution of Polymer Flood Enhanced Oil Recovery project at Mangala, making us one of the front runners in technology adoption. The renewed exploration and appraisal programme during 2013 resulted in 3 discoveries in Rajasthan and declaration of commerciality of Nagayalanka discovery in KG-Onshore block. Our strategy of active exploration across the portfolio opens up potential for resource accretion in the near term. We are keen on evaluating the blocks in NELP-X announced by MoPNG recently, to build on our exploration led growth in India".
Bharat Electronics declined 1.98% after net profit fell 2.96% to Rs 191.74 crore on 18.29% decline in total income to Rs 1303.11 crore in Q3 December 2013 over Q3 December 2012. The company announced the results during trading hours today, 24 January 2014.
Novartis India dropped 4.06% after net profit fell 47.5% to Rs 15.23 crore on 4.3% fall in net sales to Rs 218.54 crore in Q3 December 2013 over Q3 December 2012. The company announced results after market hours on Thursday, 23 January 2014. Novartis India said that reduction in the selling prices of some key products arising out of the notification of the new Drug Price Control Order continued to have a significant adverse impact on the revenue and operating profits of the company. Depreciation of the rupee further impacted profits, the company said in a statement.
Novartis India's total income from operations fell 3.92% to Rs 224.64 crore in Q3 December 2013 over Q3 December 2012.
The company's pharmaceuticals business recorded 11.69% decline in total income from operations to Rs 142.90 crore in Q3 December 2013 over Q3 December 2012.
The generics business recorded 1.91% rise in total income from operations of Rs 16 crore in Q3 December 2013 over Q3 December 2012.
The animal health business registered 17.08% rise in total income from operations of Rs 28.10 crore in Q3 December 2013 over Q3 December 2012.
OTC business recorded 16.72% rise in total income from operations of Rs 37.70 crore in Q3 December 2013 over Q3 December 2012.
Vakrangee rose 0.54% after the company said that the Reserve Bank of India has granted the company the final authorization of the White Label ATM license today, 24 January 2014. The announcement was made during trading hours today, 24 January 2014.
Under the White Label ATM (WLA) license, Vakrangee is entitled to set up and run minimum 15,000 ATMs across the country in next three years. WLA's are those which are not run by the banks but by a non- banking entity in its own brand name (like Vakrangee ATM) after passing through all the stringent qualification and due-diligence process undertaken by the Reserve Bank of India (RBI). These ATMs shall have all the functionalities like that of a bank -run ATMs, Vakrangee said.
Vakrangee said that the WLA business is a perfect strategic fit for the company's current business of rural bank branch management wherein Brick and Mortar bank branches (As Common BC) being set up and run by Vakrangee for the PSU banks with real time banking transactions happening at these out-sourced PSU bank branches by seamless integration with the core banking solution (CBS) of respective PSU Banks.
In the foreign exchange market, the rupee edged lower against the dollar on global risk off sentiment. The partially convertible rupee was hovering at 62.37, compared with its close of 61.9275/9375 on Thursday, 23 January 2014.
Bond prices dropped after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high, according to reports. "Industrialists complain about high interest rates but we don't have a choice but to keep interest at a high rate because inflation is high at 8%", Rajan said. The strong warning against inflation comes ahead of the central bank's policy review early next week. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.7376%, higher than its close of 8.6653% on Thursday, 23 January 2014. Bond yield and bond prices move in opposite direction.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI 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 in choppy trade on Friday, 24 January 2014. Key benchmark indices in France, Germany and UK were off 0.34% to 0.53%.
Fitch Ratings today affirmed Germany's credit rating at AAA with a stable outlook, citing a decline in the debt level of Europe's biggest economy. Germany continues to have the components of a declining public debt path, Fitch said in a statement. The economy is growing, the budget position is relatively favorable and nominal interest rates are low. Standard & Poor's on Jan. 10 affirmed Germany's AAA credit grade and the stable outlook for the rating. Germany had the outlook for its Aaa rating lowered to negative by Moody's Investors Service in July 2012.
Asian stocks edged lower on Friday, 24 January 2014, amid concern earnings growth will miss estimates on signs of weakness in China's economy. Key benchmark indices in South Korea, Singapore, Indonesia, and Hong Kong were down 0.36% to 1.31%. Taiwan's Taiwan Weighted rose 0.04% in choppy trade.
Japanese stocks slumped after the yen strengthened against the dollar yesterday by the most since Sept. 18. The Nikkei 225 average lost 1.94%.
China's Shanghai Composite rose 0.6%. A preliminary reading of HSBC's January China manufacturing Purchase Manufacturing Index fell to 49.6, below the 50 boundary between expansion and contraction, and down from 50.5 in the final result for December. It was the first contraction for the sector in six months, according to the HSBC data which was released on Thursday, 23 January 2014.
China's central bank on 21 January 2014 announced that it is injecting more liquidity into the system ahead of the Lunar New Year holiday.
Funds investing in emerging markets had outflows of $2.4 billion in the week ended 22 January 2014, according to a report by Citigroup Inc., citing data from EPFR Global.
Trading in US index futures indicated that the Dow could drop 59 points at the opening bell on Friday, 24 January 2014. US stocks closed sharply lower on Thursday as weak economic data from China prompted investors to sell resource stocks and emerging-markets assets and seek safety in bonds, gold, and high-dividend paying sectors.
Among economic data, an early gauge of US manufacturing dipped in January from the prior month, but some of the slowdown was due to cold weather, Markit reported Thursday. The US flash purchasing managers index slipped to 53.7 in January, down from December's level of 55, which was an 11-month high. This is the slowest improvement in conditions since October. US initial jobless claims rose slightly to 326,000 last week. The leading economic index rose 0.1% in December, marking its sixth gain in a row, the nonprofit Conference Board said Thursday. In the housing sector, sales of existing homes rose 1% in December to a 4.98 million annual rate, while the median sale price climbed 9.9% to $198,000.
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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