Key benchmark indices eked out small gains after witnessing high volatility during the second half of the trading session. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty trimmed gains soon after both these indices hit their highest level in more than a week in afternoon trade. Equities trimmed gains as data showing slowdown in India's exports in December 2013 offset positive sentiment generated from IT major Infosys raising its revenue guidance for the year ending 31 March 2014 at the time of announcement of its Q3 December 2013 results before trading hours. The market breadth, indicating the overall health of the market, was negative. The barometer index, the S&P BSE Sensex, was provisionally up 37.58 points or 0.18%, off 220.28 points from the day's high and up 125.78 points from the day's low.
Index heavyweight and cigarette major ITC edged higher. Reliance Industries (RIL) trimmed gain in late trade. Infosys gained in volatile trade after the company raised its revenue growth guidance in both rupee and dollar terms for the year ending 31 March 2014 (FY 2014) at the time of announcement of its Q3 December 2013 results before trading hours today, 10 January 2014. Many other IT stocks rose as Infosys raised revenue growth guidance for FY 2014. TCS and HCL Technologies scaled record high and Tech Mahindra hit 52-week high. Banking pivotals declined in volatile trade. IndusInd Bank dropped as the bank's gross non-performing assets rose in Q3 December 2013.
Volatility struck bourses in early trade as key benchmark indices reversed initial gains. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than thee weeks. Key benchmark regained positive zone later. Key benchmark indices extended gains and hit fresh intraday high in mid-morning trade. Firmness continued on the bourses in early afternoon trade. Volatility ruled the roost as the key benchmark indices trimmed gains soon after extending intraday gains in mid-afternoon trade. The Sensex, and the 50-unit CNX Nifty, both, trimmed gains after both these indices hit their highest level in more than a week. Key benchmark indices further trimmed gains in late trade.
As per provisional closing, the S&P BSE Sensex was up 37.58 points or 0.18% to 20,750.95. The index jumped 257.86 points at the day's high of 20,971.23 in afternoon trade, its highest level since 2 January 2014. The index fell 88.20 points at the day's low of 20,625.17 in early trade, its lowest level since 18 December 2013.
The CNX Nifty was up 4.75 points or 0.08% to 6,173.10. The index hit a high of 6,239.10 in intraday trade, its highest level since 2 January 2014. The index hit a low of 6,139.60 in intraday trade, its lowest level since 18 December 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,505 shares dropped and 1,034 shares rose. A total of 142 shares were unchanged.
The total turnover on BSE amounted to Rs 2375 crore, higher than Rs 2181 crore on Thursday, 9 January 2014.
Among the 30-share Sensex pack, 19 stocks declined and rest of them gained. Mahindra & Mahindra (down 2.52%), Coal India (down 2.43%) and Sesa Sterlite (down 2.02%) declined.
Index heavyweight and cigarette major ITC advanced 2.08% to Rs 322. The stock hit a high of Rs 324.45 and low of Rs 314.10.
Reliance Industries (RIL) rose 0.52% to Rs 855, with the stock trimming gains in late trade. The stock hit a high of Rs 874.70 and low of Rs 848.45. RIL, which operates the Krishna-Godavari basin's D6 block off the east coast, has reportedly started producing gas from the MA-8 well from 1 January 2014. The well has potential to produce 1 million to 2 million standard cubic metres per day (mscmd) of gas from the well.
Infosys gained 2.75% to Rs 3,546. The stock hit a high of Rs 3,575.20 and low of Rs 3,449. Infosys' consolidated net profit jumped 19.4% to Rs 2875 crore on 0.5% increase in revenues to Rs 13026 crore in Q3 December 2013 over Q2 September 2013. The results are as per International Financial Reporting Standards (IFRS). The strong sequential growth in the company's bottom line was due to base effect - Infosys' bottom line in Q2 September 2013 was hit adversely due to a provision of Rs 219 crore during that quarter for one-off visa costs. A sharp surge in non-operating income also aided the growth in bottom line. Non-operating income jumped 43.3% to Rs 731 crore in Q3 December 2013 over Q2 September 2013.
Infosys has 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 fiscal 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 and its subsidiaries added 54 clients during Q3 December 2013. The company and its subsidiaries reported a gross addition of 6,682 employees for the quarter.
"The year ahead looks exciting for the IT services industry. We believe the global economic environment has improved and our clients are gaining confidence to invest in their strategic initiatives. We continue to differentiate ourselves to seize growth opportunities. The recent changes in organizational structure will enable us to strengthen client relationships and increase market share," said S. D. Shibulal, CEO and Managing Director, Infosys.
"During the quarter, we saw early but promising results of our initiatives to increase efficiency in our operations. We continue to remain focused on making investments necessary to secure and grow our future," said Rajiv Bansal, Chief Financial Officer, Infosys.
Many other IT stocks rose as Infosys raised revenue growth guidance for FY 2014.
TCS rose 2.07% to Rs 2,290 after hitting a record high of Rs 2,307 in intraday trade.
HCL Technologies gained 1.03% to Rs 1,298.30 after hitting a record high of Rs 1,318.90 in intraday trade.
Tech Mahindra advanced 2.89% to Rs 1,880 after hitting a 52-week high of Rs 1,890 in intraday trade.
Wipro (up 2.1%), Polaris Financial Technology (up 3.73%), Hexaware Technologies (up 0.9%), Oracle Financial Services Software (up 0.35%) edged higher.
Mastek lost 9.13% to Rs 183.15. Shares of Mastek had rallied 28.45% in five trading sessions to settle at Rs 201.55 on Thursday, 9 January 2014, from a recent low of Rs 156.90 on 2 January 2014. The recent rally in the stock was triggered by the announcement of share buyback proposal.
Mastek after market hours on Wednesday, 8 January 2014, said its board approved buyback of maximum of 32 lakh equity shares and minimum of 9.50 lakh equity shares from the open market at a price not exceeding Rs 250 per equity share for an aggregate amount not exceeding Rs 54.50 crore. The buyback offer size represents 14.92% of the aggregate of the company's paid up equity capital and free reserves as on 31 March 2013, the company said.
Banking pivotals declined in volatile trade. State Bank of India fell 2.16% to Rs 1,603.70. The stock hit a high of Rs 1,656.65 and low of Rs 1,600.
AXIS Bank declined 1.52% to Rs 1,166.90. The stock hit a high of Rs 1,196.95 and low of Rs 1,160.10.
ICICI Bank lost 2.04% to Rs 1,030. The stock hit a high of Rs 1,055 and low of Rs 1,015.
HDFC Bank shed 0.29% to Rs 661.15. The stock hit a high of Rs 674.85 and low of Rs 656.80.
IndusInd Bank lost 3.43%. The private sector bank during market hours said its net profit jumped 29.79% to Rs 346.90 crore on 21.67% increase in total income to Rs 2623.76 crore in Q3 December 2013 over Q3 December 2012.
IndusInd Bank's gross non-performing assets edged up to Rs 625.84 crore as on 31 December 2013, from Rs 546.39 crore as on 30 September 2013 and Rs 421.62 crore as on 31 December 2012. The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 1.18% as on 31 December 2013, higher than 1.11% as on 30 September 2013 and 0.99% as on 31 December 2012.
IndusInd Bank's ratio of net non-performing assets to net advances stood at 0.31% as on 31 December 2013, higher than 0.22% as on 30 September 2013 and 0.3% as on 31 December 2012.
Provisions and contingencies rose 60.34% to Rs 126.16 crore in Q3 December 2013 over Q3 December 2012. On sequential basis, provisions and contingencies rose 41.97% in Q3 December 2013.
In terms of RBI circular dated 23 August 2013 on 'Investment portfolio of banks - Classification, Valuation and Provisioning', IndusInd has opted to amortise the depreciation on the Available For Sale (AFS) and Held For Trading (HFT) portfolios on each of the valuation dates in equal installments during current financial year. Accordingly, out of the total depreciation of Rs 93.64 crore as on 31 December 2013, the bank has recognized Rs 37.14 crore as deprecation in the profit and loss account for Q3 December 2013 and Rs 53.51 as deprecation in the profit and loss account for the nine months period April-December 2013, IndusInd Bank said. In accordance with its accounting policy consistently adopted which is more conservative compared with RBI guidelines, the bank continues to ignore appreciation on its AFS and HFT portfolio. The gross appreciation in the AFS and HFT portfolio amounted to Rs 36.16 crore as on 31 December 2013.
In line with the policy approved by the board of directors, the bank had created a floating provision for advances amounting to Rs 50 crores during the quarter ended June 30, 2013. This provision has been made without reference to any specific NPA and is in excess of the minimum requirements prescribed by RBI under Income Recognition and Asset Classification (IRAC) norms. This floating provision has been considered while computing the position of net NPAs, IndusInd Bank said.
Container Corporation of India fell 0.77%. Container Corporation of India during market hours said that board of directors may also consider declaration of interim dividend, if any, to the shareholders along with Q3 December 2013 results on 31 January 2014.
In the foreign exchange market, the rupee edged higher against the dollar tracking broad losses in the dollar versus other major currencies. The partially convertible rupee was hovering at 61.915, compared with its close of 62.07/08 on Thursday, 9 January 2014.
A $50 billion swap line between Indian and Japan is effective from Friday, 10 January 2014, the Reserve Bank of India said. The agreement, which will be valid till 3 December 2015, aims at addressing any short-term liquidity difficulties. The swap line was initially at $15 billion and following the exchange rate crisis last summer both the countries entered into a pact to expand the line.
On the macro front, trade deficit widened in December 2013 on slowing export growth, data released by government today, 10 January 2014, showed. The trade deficit stood at $10.14 billion in December 2013, compared with $9.22 billion in November 2013. Merchandise exports rose 3.49% year-on-year to $26.35 billion, slowing down from a 5.86% pace in November. Imports fell 15.25% year-on-year to $36.49 billion as gold and silver imports dropped.
Industrial production is seen registering a muted growth of 0.9% in November 2013, as per the median estimate of a poll of economists carried out by Capital Market. Industrial production had declined 1.8% in October 2013, against 2% growth in September 2013. The decline in the output of manufacturing sector at 2% and mining sector at 3.5% mainly led to decline in industrial production in October 2013. The government will unveil industrial production data for November 2013 after trading hours today, 10 January 2014.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
European stock markets edged higher on Friday, 10 January 2014, as investors awaited data that may show American jobs made the biggest annual gain since 2005. Key benchmark indices in UK, France and Germany were up by 0.44% to 0.72%.
French industrial production rose in November as energy production increased, the national statistics agency Insee said Friday. Industrial production in the euro zone's second-largest economy rose 1.3% in November from the previous month, according to Insee. Insee also revised the industrial production figure for October, saying it fell 0.5%, rather than the previously reported 0.3% decline.
The European Central Bank on Thursday, 9 January 2014, kept its main interest rate unchanged at 0.25% after a monetary policy review.
The Bank of England on Thursday, 9 January 2014, left the size of its bond-buying program unchanged and held its key lending rate at a record low of 0.5%, where it has stood since March 2009. The central bank's Monetary Policy Committee left its asset purchases, the centerpiece of its quantitative-easing strategy, at 375 billion pounds ($617 billion). The minutes from the January meeting will be published on 22 January 2014.
Asian stocks rose on Friday, 10 January 2014, as data showed China's trade surplus narrowed and investors awaited a report on US payrolls. Key benchmark indices in Indonesia, Japan, Hong Kong, and Taiwan rose 0.17% to 1.28%. Key benchmark indices in China, Singapore and South Korea fell 0.05% to 0.71%.
China's exports rose 4.3% in December from a year earlier, according to reported data, after surging 12.7% in November. Imports were 8.3% higher than the year-ago month, accelerating from 5.3% growth in November. The resulting trade surplus was $25.6 billion, narrowing from the previous month's $33.8 billion.
Trading in US index futures indicated that the Dow could advance 37 points at the opening bell on Friday, 10 January 2014. The S&P 500 index eked out a marginal gain on Thursday, 9 January 2014, while the Dow Jones Industrial Average and the Nasdaq Composite index dropped, weighed down by losses for Verizon Communications Inc. and AT&T Inc.
The number of Americans who applied to receive unemployment benefits in the first week of the new year fell to the lowest level since the end of November. In the week ended Jan. 4, initial jobless claims fell by 15,000 to a seasonally adjusted 330,000, the US Department of Labor said Thursday.
The US government will unveil the influential non-farm payroll report for December 2013 today, 10 January 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. The US central bank is poised to continue winding down its stimulus measures gradually this year.
Janet Yellen, incoming Federal Reserve chairwoman, said in an interview with Time magazine on Thursday, 9 January 2014, that the US economy would see stronger growth this year.
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