Key benchmark indices held firm in mid-morning trade after a monthly survey showed that India's manufacturing sector ended 2013 on an encouraging footing as operating conditions improved for the second successive month in December 2013, as both output and new orders increased. The barometer index, the S&P BSE Sensex, was up 151.05 points or 0.71%, up about 150 points from the day's low and off close to 40 points from the day's high. The market breadth, indicating the overall health of the market, was strong. All the thirteen sectoral indices on BSE were in the green.
Capital goods stocks edged higher. Auto stocks were also mostly higher.
The market edged higher in early trade as the rupee edged higher against the dollar. The Sensex extended initial gains and hit fresh intraday high in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit their highest level in more than three weeks. Firmness continued on the bourses in mid-morning trade after the result of a survey showed that India's manufacturing sector ended 2013 on an encouraging footing as operating conditions improved for the second successive month in December 2013, as both output and new orders increased.
At 11:20 IST, the S&P BSE Sensex was up 151.05 points or 0.71% to 21,291.53. The index jumped 190.84 points at the day's high of 21,331.32 in morning trade, its highest level since 9 December 2013. The index rose 0.10 points at the day's low 21,140.58 in early trade.
The CNX Nifty was up 43.85 points or 0.7% to 6,345.50. The index hit a high of 6,358.30 in intraday trade, its highest level since 10 December 2013. The index hit a low of 6,300.65 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,400 shares gained and 653 shares fell. A total of 143 shares were unchanged.
Among the 30-share Sensex pack, 26 stocks gained and four declined. AXIS Bank (up 1.91%), Sun Pharmaceutical Industries (up 1.74%) and HDFC (up 1.63%) gained.
Auto stocks were mostly higher. Mahindra & Mahindra (M&M) rose 0.68%, with the stock gaining for the second day in a row. M&M during market hours on Wednesday, 1 January 2014, said that its total tractor sales rose 15% to 17,037 units in December 2013 over December 2012. Tractor sales in the domestic market rose 19% to 16,257 units in December 2013 over December 2012. Exports fell 26% at 780 units in December 2013 over December 2012.
M&M during market hours on Wednesday, 1 January 2014, also said that its total auto sales declined 13% to 39,611 units in December 2013 over December 2012.
Maruti Suzuki India rose 0.94%. The company said during market hours on Wednesday, 1 January 2014, that its total sales fell 4.4% to 90,924 units in December 2013 over December 2012. Domestic sales rose 5.5% to 86,613 units in December 2013 over December 2012. Exports fell 67% to 4,311 units in December 2013 over December 2012.
Shares of buses makers were mixed after the Ministry of Urban Development on Wednesday, 1 January 2014, said it has sanctioned buses to a total of 13 cities/cluster of cities after the Central Sanctioning & Monitoring Committee Meeting held on 31 December 2013. Tata Motors fell 0.04%. Ashok Leyland rose 3.49%.
The State Govt. has to procure these buses as per the urban bus specifications-II which has been prepared by the Ministry of Urban Development recently, the ministry said in a statement. The first instalment of Government of India share will be released to the State after submission of information/documents within three months as per the conditions given in bus funding guidelines, it said.
The objective behind sanctioning of these buses is to improve the city transport system, to give Metro experience to public in these modern ITS enabled buses and to attract the public to use Public Transport, the urban transport ministry said. The JNNURM buses will change the face of the Urban Transport of these 13 cities and will help in the overall growth of the State/UT, it said.
These cities have also been sanctioned projects relating to ancillary infrastructure viz. Depot, Workshops, ITS etc. for Urban Transport. In addition, ancillary infrastructure project for Bathinda has also been approved. The total estimated project cost for these 13 cities/cluster of cities is about Rs 464 crore.
Shares of two-wheeler makers gained. Bajaj Auto (up 0.28%), Hero MotoCorp (up 0.42%) and TVS Motor Company (up 6.26%) gained.
Capital goods stocks edged higher. ABB (up 1.42%), Bhel (up 0.66%), L&T (up 0.5%), Crompton Greaves (up 0.31%) and Punj Lloyd (up 1.56%) gained.
Sandur Manganese & Iron Ores fell 3.99% after the company said it suspended its mining operations after mining leases expired on 31 December 2013. The company made the announcement before trading hours today, 2 January 2014. Sandur Manganese & Iron Ores said its mining leases, which were effective for a period of 20 years starting from 1 January 1994, expired on 31 December 2013. The company said that it had applied for its renewal more than 12 months prior to its expiry.
However, the Forest Department has directed suspension of the company's mining operations with effect from 1 January 2014. Accordingly, the company has suspended all activities in its mines and efforts are being made to obtain orders for resumption of operations, the company said.
Pratibha Industries surged 12.18% after the company said it bagged new order aggregating to Rs 589.69 crore. The company made the announcement during trading hours today, 2 January 2014.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 61.835, compared with its close of 61.90/91 on Wednesday, 1 January 2014.
Bond prices edged higher. The yield 10-year federal paper, 8.83% GS 2023, was hovering at 8.8061%, lower than its close of 8.8445% on Wednesday, 1 January 2014. Bond yield and bond prices are inversely related.
The Indian manufacturing sector ended 2013 on an encouraging footing, according to a monthly survey from Markit Economics. Operating conditions improved for the second successive month in December, as both output and new orders increased. Consequently, firms raised their workforce numbers further in the latest month.
Down slightly from 51.3 in November to 50.7 in December, the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) signalled a second consecutive monthly improvement in business conditions. Although weaker than its long-run trend, the PMI average for the final quarter of the year at 50.5 was greater than that seen for Q3 at 49.4. Manufacturing production rose for the second month running, but at only a marginal rate. Supporting the latest increase in total output was a further gain in incoming new business. Sector data indicated that the overall expansion in production volumes was largely centred on the consumer goods sub-sector, Markit Economics said.
New orders placed at Indian manufacturers rose in December, albeit marginally. Panelists linked higher levels of new work to improved domestic and overseas demand. However, the latest increase was mainly focused in the consumer goods category. Export order growth was registered for the third consecutive month. Although quickening since November, the overall rate of expansion was modest and below the series average.
Indian manufacturing employment rose in December, stretching the current period of job creation to three months. However, the rate of growth was only marginal. All three broad areas of the goods-producing sector registered higher staffing levels.
Price indicators moved lower in December. Average purchasing costs increased at the slowest pace for four months, but the overall rate of inflation remained robust. Most of the increase was attributed by surveyed companies to higher prices paid for raw materials such as metals, chemicals and textiles. Output prices rose for the seventh month in a row, although competition between manufacturers meant that the rate of increase was historically muted.
December data pointed to a further, albeit fractional, rise in purchasing activity. Consumer goods was the only sub-category of the manufacturing economy to post higher input buying. The overall increase in quantity of purchases was insufficient to prevent a drop in holdings of raw materials. Pre-production inventories fell for the first time since September, but the rate of contraction was moderate. Conversely, stocks of finished goods rose in December. The overall increase was, however, unchanged from the fractional rate seen in November. Backlogs of work rose again during the latest survey period, with the rate of accumulation climbing to a six-month high. Anecdotal evidence highlighted raw material shortages at vendors and power cuts, Markit Economics said.
Commenting on the India Manufacturing PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "Manufacturing activity decelerated slightly in December as a slowdown in domestic order flows led to slower output growth. By sector, however, the consumer goods segment held up. Despite the deceleration in order flows, backlogs of work picked up due to raw material shortages and power outages. Inflation gauges were broadly steady, although they declined marginally. Today's numbers show that growth remains moderate and struggles to take off due to lingering structural constraints. Even so, inflation pressures remain firm and are proving sticky. RBI may yet again have to flex its muscles and tighten monetary policy to bring down the elevated level of inflation".
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.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Asian stocks edged lower on Thursday, 2 January 2014, after gauges of manufacturing in China declined. Key benchmark indices in China, Hong Kong, Taiwan and South Korea were off 0.06% to 1.94%. Key benchmark indices in Singapore and Indonesia were up 0.21% to 0.96%. Japanese stock markets were closed for holiday.
China's manufacturing purchasing managers' index came in at 51 for December, the National Bureau of Statistics and the nation's logistics federation said yesterday, 1 January 2014. A separate manufacturing PMI report from HSBC Holdings Plc and Markit Economics today showed the gauge coming in at 50.5, from 50.8 in November.
Singapore's economy contracted more than expected in the fourth quarter as manufacturing activity weakened, data showed on Thursday, casting some doubt on market expectations for a slight pick-up in growth over 2014. According to advance estimates from Singapore's Ministry of Trade and Industry, GDP contracted an annualised and seasonally adjusted 2.7% in the final quarter of 2013 from the July-September period. That reversed a 2.2% expansion in the third quarter.
The US stock market was closed on Wednesday, 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.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014.
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