Key benchmark indices were off the day's high in mid-morning trade. The barometer index, the S&P BSE Sensex, was up 47.97 points or 0.22%, off close to 40 points from the day's high and up close to 70 points from the day's low. The market breadth, indicating the overall health of the market, was strong. Firmness in Asian stocks supported domestic bourses.
IT stocks rose on renewed buying. Auto stocks rose for the second day in a row. Shares of Apollo Tyres surged after US based tyre maker Cooper Tire & Rubber Company on Monday, 30 December 2013, announced that it has terminated the merger agreement with Apollo Tyres.
A bout of volatility was witnessed as key benchmark indices trimmed gains after a firm start. Volatility continued as key benchmark indices regained positive terrain soon after reversing initial gains in morning trade. The Sensex trimmed gains in mid-morning trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 116.06 crore on Monday, 30 December 2013, as per provisional data from the stock exchanges.
At 11:25 IST, the S&P BSE Sensex was up 47.97 points or 0.22% to 21,190.30. The index rose 87.87 points at the day's high of 21,230.88 in early trade. The index fell 20.33 points at the day's low of 21,122.68 in morning trade.
The CNX Nifty was up 16 points or 0.25% to 6,307.10. The index hit a high of 6,317.30 in intraday trade. The index hit a low of 6,287.30 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,243 shares gained and 784 shares fell. A total of 140 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks gained and rest of them declined. Tata Power Company (up 2.98%), Reliance Industries (up 1.03%) and Cipla (up 0.76%) edged higher from the Sensex pack.
IT stocks rose on renewed buying. Tech Mahindra rose 0.04% to Rs 1,847.20. The stock had hit 52-week high of Rs 1,875 in intraday trade on Monday, 30 December 2013.
Wipro was flat at Rs 552. The stock had hit 52-week high of Rs 558 in intraday trade on Friday, 27 December 2013.
Infosys rose 0.01% to Rs 3,502. The stock had hit record high of Rs 3,575 in intraday trade on Monday, 30 December 2013.
TCS gained 0.66%.
HCL Technologies rose 0.41% to Rs 1,253.15. The stock had hit record high of Rs 1,269 in intraday trade on Monday, 30 December 2013. The company on Friday, 27 December 2013, announced that Vineet Nayar, Director of the company since 2008, has decided to retire from the board in order to devote more time to his Foundation. HCL Technologies also announced on Friday, 27 December 2013, the appointment of Vineet Nayar as a Senior Advisor to HCL Technologies and HCL Corporation.
As a Senior Advisor, Vineet will advise HCL Corporation on key strategic issues and also work with the board of HCL Technologies on initiatives such as driving a high performance culture amongst senior managers and new strategies for growth.
Most auto stocks rose. Tata Motors (up 0.87%), Ashok Leyland (up 0.58%) and Maruti Suzuki India (up 0.28%) gained. M&M declined 0.15%, with the stock falling for the second day in a row.
Shares of two-wheeler majors -- Bajaj Auto and Hero MotoCorp--edged higher. Bajaj Auto rose 0.76%. Hero MotoCorp gained 0.69%.
TVS Motor Company fell 0.82% on profit booking. The stock had surged 14.84% on Monday, 30 December 2013.
Shares of Apollo Tyres rose 6.42% to Rs 107.80 after US based tyre maker Cooper Tire & Rubber Company on Monday, 30 December 2013, announced that it has terminated the merger agreement with Apollo Tyres. The stock witnessed high intraday volatility. The stock hit record high of Rs 113 at the onset of the trading session. The stock hit low of Rs 102.55 so far during the day. High volumes accomanied the rally in the stock. On BSE, so far 36.33 lakh shares changed hands in the counter, compared with average daily volume of 10.54 lakh shares during the past one quarter.
Cooper Chairman, Chief Executive Officer and President, Roy Armes, said: "It is time to move our business forward. While the strategic rationale for a business combination with Apollo is compelling, it is clear that the merger agreement both companies signed on June 12 will not be consummated by Apollo and we have been notified that financing for the transaction is no longer available. The right thing for Cooper now is to focus on continuing to build our business. Our business model is strong, and despite the challenges this year, we are coming off record operating profit through the first half of the year and expect to continue to be profitable for the second half, ending the year with a strong balance sheet. We look forward to continuing to execute on our strategy in 2014, and we have a very strong base from which to do this-brands that are respected for quality, a loyal customer base, a flexible global network of manufacturing facilities, a skilled workforce, and top technical capabilities".
"While Cooper believes Apollo has breached the merger agreement, and we will continue to pursue the legal steps necessary to protect the interests of our company and our stockholders, our focus will be squarely on our business and moving it forward," Armes said.
"Addressing the situation at Cooper Chengshan Tire (CCT) in Rongcheng, China is our top priority in the near term. The issues at CCT were driven by the merger agreement, and with the agreement now terminated, Cooper is working independently to restore normal operations at CCT, including obtaining the information needed for Cooper to resume regular financial reporting as soon as possible. Once the situation at CCT is resolved and regular financial reporting has resumed, Cooper will be in a position to address additional options for the deployment of capital targeted at returning value for our stockholders," he added.
Apollo Tyres on Monday, 30 December 2013, issued a press statement in response to Cooper Tire & Rubber Company's decision to terminate merger agreement with Apollo Tyres. The company said that the management is disappointed as Cooper has prematurely attempted to terminate the merger agreement. While Cooper's lack of control over its largest Chinese subsidiary -- Cooper Chengshan Tire Company -- and its inability to meet its legal and contractual financial reporting obligations has considerably complicated the situation, Apollo has made exhaustive efforts to find a sensible way forward over the past several months, Apollo Tyres said. However, Cooper has been unwilling to work constructively to complete a transaction that would have created value for both the companies and their shareholders, Apollo Tyres said. Cooper's actions leave Apollo no choice but to pursue legal remedies for Cooper's detrimental conduct, Apollo Tyres said.
"Importantly, Apollo has many other compelling growth opportunities around the world that we are continuing to pursue. Our business is performing well, as evidenced by the strong top line and bottom line results we reported last quarter and we remain focused on executing our standalone strategic plan to maximum value for Apollo's shareholders. We are confident that Apollo is well positioned for continued success", Apollo Tyres said.
Jain Irrigation Systems rose 3.03% after the company said it bagged one of the country's largest irrigation projects worth Rs 385.70 crore in Karnataka. The announcement was made after trading hours on Monday, 30 December 2013.
The project mooted by Krishna Bhagya Jal Nigam (KBJNL), a division of Water Resources Department of Karnataka, intends to irrigate 30,381 acres owned by over 7,000 farmers in 35 villages. KBJNL selected Jain Irrigation Systems through national competitive bidding process.
The project involves survey, planning, design, supply and execution of distribution system using HDPE / PVC piping network. Besides, it involves formation of Water Users Co-operative Societies in convenient blocks, installation of on-farm fully automated Micro Irrigation System on the field and two year's maintenance after commissioning. The company will also train farmers on proper use of micro irrigation system and capacity building of farmers, Jain Irrigation Systems said in a statement.
Successful commissioning of this project will assume the status of being the largest Micro Irrigation project in the world for improving water use efficiency in canal command areas through conduit distribution and use of Micro Irrigation Systems, Jain Irrigation said.
Commenting on the development, Jain Irrigation Joint Managing Director Atul Jain said: "We are excited to receive such large order for uniquely designed project, which will usher in significant benefits to all stakeholders considering backdrop of dwindling water supply in our country in inverse proportion to more demand for agriculture produce."
In the foreign exchange market, the rupee edged higher against the dollar after the Foreign Investment Promotion Board (FIPB) on Monday, 30 December 2013, cleared Vodafone and Tesco's investment proposals, worth around $1.7 billion in total. The partially convertible rupee was hovering at 61.89, compared with its close of 61.91/92 on Monday, 30 December 2013.
Prime Minister Dr. Manmohan Singh will hold a press conference on 3 January 2014. The press conference is likely to set the tone for the Congress party's election agenda in 2014, according to reports. Dr. Singh is likely to officially opt himself out of the prime minister's race after the 2014 elections, reports suggest.
The Confederation of Indian Industry (CII) on Monday, 30 December 2013, said that the CII Business Confidence Index (CII-BCI) rose sharply to 54.9% in Q3 December 2013, from 45.7% in Q2 September 2013. The pick-up in BCI for the current quarter comes as a major relief for the economy which has been braving the onslaught of the slowdown for the last several quarters and awaiting the return of growth, the CII said in a statement. The survey also strikes a note of caution as the downside risks to growth have still not abated and supply side bottlenecks continue to pose a problem, CII said. "With some positive signals emanating from the global economy, which finds a resonance in our improved export performance and is causing our current account deficit to decline, we believe that the slowdown in the domestic economy may have bottomed out in the second quarter and the trend could reverse henceforth", observed Mr. Chandrajit Banerjee, Director General, Confederation of Indian Industry.
The 85th Business Outlook Survey is based on the responses from over 174 industry members. Majority of the respondents (63%) belong to large-scale firms, while 12% are from medium-scale firms and 25% were from small-scale. Further, 65% of the respondents were from manufacturing sector while 35% were from services.
The survey reveals that 58% of the respondents expect an increase in their sales in the third quarter of 2013-14, much higher than 45% who witnessed the same during the previous quarter. As regards the input cost in the current quarter, majority of the respondents also expect it to increase. The silver lining, however, is that the percentage of respondents who expect expenses on raw materials, electricity, and wages and salaries to increase has declined significantly from the last quarter, CII said.
Against the backdrop of an expected improvement in sales growth and moderation in inputs cost, majority of the respondents (43%) expect an increase in their pre-tax profit margin in the third quarter, much higher than 31% in the previous quarter.
Another positive signal emerging from the survey is that an improvement in capacity utilization is expected in the current quarter, CII said. As compared to 56% respondents experiencing less than 75% capacity utilization in the second quarter, only 45% respondents expect capacity utilization to fall below 75% in the third quarter, CII said. Underlining the need for continuing policy intervention to step up investment, 53% of firms did not expect their capacity to expand in the current quarter.
What is also encouraging is to note that the export prospects look positive in the current quarter whereas imports are seen to be restrained, CII said. 53% of firms expected their exports to increase in the current quarter, up from 49% in the previous quarter. Similarly, 56% of the respondents didn't expect their imports to increase during the current quarter.
In the 85th Business Outlook Survey, domestic economic/political instability, slackening consumer demand, high level of corruption, persistent high inflation and risk from exchange rate volatility emerged as the top five current concerns in order of severity to most firms, CII said.
The next major trigger for the market is Q3 December 2013 corporate earnings. The Q3 earnings season will begin around mid-January 2014 and continue till mid-February 2014. Investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year and/or the next year.
Asian stocks edged higher on the last trading session of the year on Tuesday, 31 December 2013, as energy shares advanced. Key benchmark indices in China, Hong Kong, and Singapore were up 0.26% to 0.7%. Taiwan's Taiwan Weighted fell 0.29%. Stock markets in Japan, South Korea, Indonesia, Thailand, the Philippines and Vietnam were closed for holidays.
China is scheduled to post its manufacturing purchasing managers' index for December 2013 tomorrow, 1 January 2014.
Trading in US index futures indicated that the Dow could gain 5 points at the opening bell on Tuesday, 31 December 2013. US stocks finished little changed on Monday, 30 December 2013, although the Dow Jones Industrial Average managed to eke out its 51st record close of 2013 in the next-to-last trading session of the year, while shares of Twitter extended a decline. The National Association of Realtors said its index of pending home sales rose 0.2% in November to 101.7, slightly above a 10-month low of 101.5 in October, but down from 103.3 in November 2012. The data had little impact on stocks.
The US stock market is closed tomorrow, 1 January 2014, for New Year's Day holiday.
The US Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world's largest economy. The US central bank is poised to continue winding down its stimulus measures gradually over the next year.
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