Indian stocks staged a strong intraday rebound and closed with mild losses as investors assessed the impact on monetary stimulus for the US economy as US lawmakers wrangled over the debt limit and as a partial US government shutdown entered a seventh day. The US Federal Reserve's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The barometer index, the S&P BSE Sensex, lost 20.85 points or 0.1%, up close to 250 points from the day's low and off close to 25 points from the day's high. The market breadth, indicating the overall health of the market was positive.
The Sensex snapped a three-day winning streak today, 7 October 2013. The Sensex had garnered 536.18 points or 2.76% in three trading sessions to settle at 19,915.95 on Friday, 4 October 2013, from a recent low of 19,379.77 on 30 September 2013. The Sensex has gained 515.33 points or 2.65% in first four trading sessions of October 2013 so far (till 7 October 2013). The Sensex has gained 468.39 points or 2.41% in calendar 2013 so far (till 7 October 2013). From a 52-week high of 20,739.69 on 19 September 2013, the Sensex has declined 844.59 points or 4.07%. From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 2,446.39 points or 14.02%.
Coming back to today's trade, Coal India dropped on reports that the government will offload its 5% stake in the company by way of follow-on public offer (FPO) in December. Bank pivotals declined. Private sector bank Axis Bank fell after two bulk deals. IT stocks gained as the rupee dropped against the dollar, with TCS and HCL Technologies hitting record high and Tech Mahindra striking 52-week high.
In the foreign exchange market, the rupee dropped against the dollar. The partially convertible rupee was hovering at 61.90, weaker than its close of 61.43/44 on Friday, 4 October 2013. The Reserve Bank of India (RBI) will look at easing restrictions on the forex futures market once the rupee stabilises, Deputy Governor H.R. Khan said on Monday, 7 October 2013. The RBI is also in talks with stock market regulator Securities and Exchange Board of India (Sebi) on making the dollar-rupee over-the-counter and futures market trades on a delivery basis, Khan said on the sidelines of an event. The central bank will look at the "whole gamut of futures market" once stability improves in the forex market, Khan added.
The S&P BSE Sensex was down 20.85 points or 0.1% to 19,895.10, its lowest closing level since 1 October 2013. The index lost 268.07 points at the day's low of 19,647.88 in mid-morning trade. The index rose 5.43 points at the day's high of 19,921.38 in late trade.
The CNX Nifty was down 1.15 points or 0.02% to 5,906.15, its lowest closing level since 1 October 2013. The index hit a low of 5,825.85 and a high of 5,912 in intraday trade.
The BSE Mid-Cap index rose 0.45% and the BSE Small-Cap index gained 0.47%. Both these indices outperformed the Sensex.
The BSE IT index (up 1.21%), BSE Metal index (up 0.91%), BSE Teck index (up 0.89%), BSE HealthCare index (up 0.87%), BSE Power index (up 0.45%), and BSE FMCG index (unchanged), outperformed the Sensex.
The BSE Bankex (down 1.16%), BSE PSU index (down 0.41%) BSE Capital Goods index (down 0.39%), BSE Realty index (down 0.32%), BSE Consumer Durables index (down 0.29%), BSE Oil & Gas index (down 0.27%), and BSE Auto index (down 0.19%), underperformed the Sensex.
The total turnover on BSE amounted to Rs 1850 crore, lower than Rs 1872.73 crore on Friday, 4 October 2013.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,280 shares gained and 1,089 shares declined. A total of 153 shares were unchanged.
Among the 30-share Sensex pack, 17 stocks gained and rest of them declined.
Index heavyweight and cigarette major ITC fell marginally by 0.03% to Rs 340. The stock hit high of Rs 341.95 and low of Rs 332.20.
Reliance Industries fell 1.1% to Rs 844. The stock hit high of Rs 852.50 and low of Rs 836.65.
IT stocks gained as the rupee dropped against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Infosys rose 0.81%. Infosys announces its Q2 results on Friday, 11 October 2013.
Wipro shed 0.19%. The company last week announced the changes in the top deck of the organisation. The company announced the appointment of Senior Vice President Shaji Farooq as the global head of its Banking, Finance Services and Insurance (BFSI) strategic business unit. Shaji, who is currently leading the company's Advanced Technologies Service Line and Go-To-Market transformation initiatives, will take over from Senior Vice President Soumitro Ghosh, who will now head Wipro Infotech, the India and Middle East business.
TCS surged 3.01% to Rs 2,094, also its record high.
HCL Technologies gained 1.95% to Rs 1,117. The stock hit record high of Rs 1,129 in intraday trade.
Tech Mahindra advanced 3.63% to Rs 1,449. The stock hit 52-week high of Rs 1,449.90 in intraday trade.
Bank stocks edged lower in choppy trade. Among private bank stocks, HDFC Bank (down 1.01%), Kotak Mahindra Bank (down 1.24%), and ICICI Bank (down 1.5%) declined.
Axis Bank lost 2.19% to Rs 1,070. A bulk deal of 9.75 lakh shares was executed in the counter at Rs 1,051.60 per share in early trade. Another bulk deal of 4.19 lakh shares was executed in the counter at Rs 1,050.05 per share in early trade.
State Bank of India declined 1.19%.
The Reserve Bank of India (RBI) governor, Raghuram Rajan, on Friday, 4 October 2013, said that the government is in talks with the bank to decide the contours of a package for retail investors for the festive season, which would be announced soon. Rajan was speaking in Raipur after the RBI's board meeting. Indian banks will offer cheaper loans to stimulate demand for two-wheelers and other consumer durables as Finance Minister P. Chidambaram tries to pull the economy out of the worst slowdown in a decade ahead of national elections due by next May.
Coal India lost 3.19% to Rs 300.10 on reports that the company's 5% follow-on public offer (FPO) is likely to hit the market by the second week of December. The government, which currently holds a 90% stake in Coal India, intends to sell more than 31.5 crore shares through an offer for sale or OFS through the stock exchanges. Shares will be allotted to Coal India employees at a 5% discount to the lowest cut-off price. A maximum of 10% of the offer will be kept for employees, reports said.
L&T fell 1.47%. The company said during market hours that it has secured two engineering, procurement and construction (EPC) projects aggregating about Rs 1100 crore in the hydrocarbon segment in UAE and Qatar. These orders reinforce L&T's strategic objective of enhancing its global footprints, and reflect its capability to execute hydrocarbon projects in competitive international environment, L&T said in a statement.
Steel shares shrugged off hike in freight rate by the Railways. Tata Steel (up 4.13%), Jindal Steel & Power (up 1.59%), and Sail (up 2.09%), gained.
The Railways has announced an increase in freight rates by 1.7% on all commodities effective from the midnight of 9 October 2013. Railway is the preferred mode of transport for bulk commodities. The revision came in the form of fuel adjustment component (FAC) which was announced in the Railway Budget 2013-14 to adjust the fluctuating prices of fuel.
JSW Steel rose 1.72%. JSW Steel on Saturday, 5 October 2013, said it has executed a business transfer agreement with Heidelberg Cement India for acquisition of its cement grinding facility at Raigad, Maharashtra, as a going concern on slump sale basis.
Heidelberg Cement India fell 1.26%.
Among other metal stocks, Sesa Sterlite rose 0.59%.
Hindalco Industries gained 3.22%
Tata Motors fell 0.51% in choppy trade. Jaguar Land Rover (JLR) UK announced on 4 October 2013 record sales in September with retail figures rising 13% year-to-date over the same period last year. Land Rover had its best ever September month of sales, registering an 11% rise in sales to 10,769 vehicles. The bookends of the brand drove the impressive figures with a record September for the Land Rover Defender, with its sales rising 30% compared to the same period last year and continued strong sales of Land Rover's flagship vehicle -- the all new Range Rover, with its sales rising 24% compared to the same period last year.
Jeremy Hicks, Jaguar Land Rover UK Managing Director, said: "The September sales figures tangibly demonstrate that both Jaguar and Land Rover continue to focus on relevant and highly-desirable product line-ups. With the recent introduction of the all-new Range Rover Sport and F-TYPE coupled with the continued success of our well established models, we have seen more new customers than ever purchasing Jaguar Land Rover award-winning products. Indeed, our new 2014 model year offerings across both brands will be hitting showrooms shortly and will see us build on the successes of the 2013 range."
Reliance Infrastructure (RInfra) rose 0.53% to Rs 394.90, with the stock reversing intraday losses. The scrip came off the day's low of Rs 382.60. The company during market hours today, 7 October 2013, announced that Reliance Cement will commission its first 5 million tonnes per annum (MTPA) cement project in Madhya Pradesh this month i.e. in October 2013. The company has implemented the project within a record time of just 22 months, more than 5 months ahead of the targeted schedule.
The project has been implemented at a capital outlay of about Rs 3000 crore, setting a new benchmark in terms of capex efficiency, nearly 25% lower than comparable recent transaction values.
Mr. Anil D. Ambani, Chairman, Reliance Infrastructure, said: "We are delighted to add the cement business to our portfolio of high growth infrastructure businesses, serving the long term needs of our country. Reliance Cement will add the manufacturing mix to our existing range of annuity infrastructure businesses across power, roads and metro rail systems."
Reliance Infrastructure (RInfra) said that all processes for manufacturing, sales and distribution, customer service and administration have been designed to be fully automated for ensuring high product and service quality.
The project is conceptualized with waste heat recovery system right from the beginning, generating over 10 megawatts (MW) of power from the heat that would otherwise be lost as waste. Further, the cement plant is designed and built at par with the international standards to be one of the most energy efficient plants in the country, and with the highest environmental standards.
Reliance Cement has already been launched in the Maharashtra market last year, with supplies from the company's Butibori plant having capacity of about 0.5 million MTPA, and has already established itself as a favored brand in a short period of time, RInfra said in a statement. The company now plans to expand its presence in the central, eastern and northern markets of India from the new manufacturing unit in Madhya Pradesh.
Earlier during the day, RInfra announced that a meeting of the board of directors of the company will be held on Wednesday, 9 October 2013, to consider raising long term resources through borrowings in the domestic/international market for the purpose of refinancing of rupee debt, capital expenditure etc. RInfra also announced that Brickwork Ratings India has assigned AA rating for the proposed Non-convertible Debenture issue of Rs 300 crore of the company. Meanwhile, CRISIL has revised credit rating on the company's long term debts to A+.
Realty stocks fell on profit booking after recent gains. DLF (down 0.97%), D B Realty (down 3.32%), HDIL (down 1.76%), and Unitech (down 1.51%) declined.
Bombay Dyeing & Manufacturing Company surged 12.46% to Rs 60. The stock was volatile. The scrip jumped as much as 14.64% at the day's high of Rs 62.50. The stock rose 6.57% at the day's low of Rs 57.10. The stock rallied on volume of 19.64 lakh shares, higher than an average volume of 1.24 lakh shares in the past one quarter.
The stock jumped after a media report said that three global private equity firms are in talks to jointly acquire up to 24% stake in Bombay Dyeing & Manufacturing Company. Bombay Dyeing & Manufacturing Company during market hours today, 7 October 2013, in clarification to media report said that it has no comments to offer on the newspaper report which is totally baseless, speculative and unsubstantiated.
Tyre shares gained across the board. CEAT (up 5.08%), JK Tyre & Industries (up 1.99%) and MRF (up 3.09%) edged higher.
Apollo Tyres rose 4.96% on growing uncertainty about the company's $2.5 billion deal to buy US-based Cooper Tire & Rubber Company. Cooper Tire & Rubber Company (Cooper) on Friday, 4 October 2013, said that it filed a complaint in a US court asking that subsidiaries of Apollo Tyres be required to expeditiously close the pending merger between the two tyre companies in accordance with the terms of the definitive merger agreement.
Apollo said in a statement late on Sunday that it may have to bear "significant and unanticipated costs" that were "well beyond" those it was obligated to bear under the initial merger agreement. Those costs are related to labour issues both in the United States and in China, where workers at Cooper's joint venture have been on strike for three months in opposition to the deal. "Cooper has acknowledged to Apollo that some price reduction is warranted. The issue now is by how much," Apollo said in a statement late on Sunday. Cooper disputed that. "Cooper has not agreed that a reduction in share price is warranted," it said in a statement.
On 30 September 2013, Cooper's stockholders voted to approve its pending merger with a wholly-owned subsidiary of Apollo Tyres. When finalised, the pending merger will result in a strategic business combination that creates the seventh-largest tire company in the world.
Cooper and Apollo announced the proposed merger on 12 June 2013 following unanimous approval by the boards of directors of both companies.
Most cement stocks declined after the Railways announced an increase in freight rates by 1.7%. ACC (down 0.81%) and UltraTech Cement (down 0.14%), fell. Ambuja Cement rose 1.5%.
Grasim Industries fell 1.02%. The company said during market hours today, 7 October 2013, that due to unexpected floods at Vilayat in Gujarat in the last week of September, 2013, the work at the company's greenfield viscose staple fibre project has been hampered, thereby affecting the project commissioning schedule. Grasim also said that the operations of its chemical plant in the areas have been suspended due to floods affecting the plant/power supply. This, however, is not likely to have any significant impact on the company's profitability, considering the present contribution of this plant to overall profitability, Grasim said.
At its board meeting on Saturday, 5 October 2013, market regulator Securities & Exchange Board of India (Sebi) approved the draft Sebi (Foreign Portfolio Investors) Regulations, 2013. The Sebi (Foreign Portfolio Investors) Regulations, 2013 have been framed keeping in view the provisions of Sebi (Foreign Institutional Investors) Regulations, 1995, qualified foreign investors (QFIs) framework and the recommendations of the "Committee on Rationalization of Investment Routes and Monitoring of Foreign Portfolio Investments".
Sebi said that existing FIIs, sub accounts and qualified foreign investors (QFIs) shall be merged into a new investor class termed as Foreign Portfolio Investors (FPIs). Sebi approved designated depository participants (DDPs) shall register FPIs on behalf of Sebi subject to compliance with KYC requirements. The Sebi board also took note of the fact that instructions regarding risk-based KYC for FPIs have already been issued by Sebi on 12 September 2013.
Sebi said that FPIs shall be required to seek registration in any one of the categories viz. Category I Foreign Portfolio Investor -- which shall include Government and Government related foreign investors etc; Category II Foreign Portfolio Investor -0 which shall include appropriately regulated broad based funds, appropriately regulated entities, broad based funds whose investment manager is appropriately regulated, university funds, university related endowments, pension funds etc; and Category III Foreign Portfolio Investor -- which shall include all others not eligible under Category I and II foreign portfolio investors.
Sebi said that all existing FIIs and sub accounts may continue to buy, sell or otherwise deal in securities under the FPI regime. Further, all existing Qualified Foreign Investors (QFIs) may continue to buy, sell or otherwise deal in securities till the period of one year from the date of notification of this regulation. In the meantime, they may obtain FPI registration through DDPs. The registration granted to FPIs by the DDPs on behalf of Sebi shall be permanent unless suspended or cancelled by Sebi. FPIs shall be allowed to invest in all those securities, wherein Foreign Institutional Investors (FIIs) are allowed to invest.
The market regulator said Category I and Category II FPIs shall be allowed to issue, or otherwise deal in offshore derivative instruments (ODIs), directly or indirectly. However, the FPI needs to be satisfied that such ODIs are issued only to persons who are regulated by an appropriate foreign regulatory authority after ensuring compliance with know your client norms.
The CII ASCON survey for July-September 2013 quarter indicates a scenario of subdued growth with green shoots of recovery continuing to be elusive in the near future. The Survey reveals that the number of sectors reporting negative growth in July-September 2013 quarter of the current year has increased significantly over the corresponding period of last year. This is despite the fact that the government has introduced various economic reform measures to seize the declining growth. "This continuous deterioration in the economy since the last fiscal is reflective of downbeat sentiment within industry. With economic slowdown showing no signs of bottoming out in the near future, industry is cautious in moving ahead. This calls for a concerted effort from policy makers to stay the course on reforms. No doubt, the government has reiterated its support to industry in form of steps taken to accelerate rupee valuation, increase exports, rev up foreign investment, etc. However, the focus has to be on clearing projects and ensuring that once cleared the investments do take place." said Mr Chandrajit Banerjee, Director General, CII.
The sluggish performance of both producer as well as consumer goods indicate subdued demand conditions in the economy which going forward does not sound optimistic for revival of growth in the coming quarters as well. The Survey respondents have raised concerns over the deteriorating macroeconomic conditions owing to multiple factors, both domestic and global. On the external front, global economic uncertainties, depreciation value of rupee, rising oil prices has contributed to the weak economic environment. These concerns have further contributed to the weakening of domestic economy leading to lowering investments, decline in exports, soaring inflation, stalled investments, and subdued consumption, among others. Respondents have stressed on the need for reviving the investments in the economy to boost demand.
RBI governor Raghuram Rajan on Friday, 4 October 2013, said that there is no reason to dispute the government's estimate of 5-5.5 percent economic growth for the current fiscal year. A pick-up in exports and strong agriculture growth would help the government meet its growth estimate, said Rajan while speaking at Raipur after the Reserve Bank of India's board meeting. He also said the RBI had so far received $5.6 billion through the two swap windows the bank announced last month to attract foreign flows.
On the political front, the Election Commission on Friday, 4 October 2013, announced the schedule for assembly elections in five states. While Chhattisgarh will have a two-phase polling on 11 November and 19 November 2013, the remaining states will have a single-phase poll. Delhi and Mizoram will go to polls on 4 December 2013, Madhya Pradesh on 25 November 2013 and Rajasthan on 1 December 2013. Counting of all assembly elections in all five states will be held on 8 December 2013.
European stocks dropped on Monday, 7 October 2013, as US House Speaker John Boehner ruled out raising the US government's debt limit without setting preconditions. Key benchmark indices in France, Germany and UK were off 0.86% to 1.12%.
Asian markets edged lower on Monday, 7 October 2013, as lawmakers in Washington remain deadlocked over extending the nation's debt limit to avoid default. Key benchmark indices in Singapore, Taiwan, Hong Kong, Indonesia, Japan and South Korea fell by 0.05% to 1.22%. Mainland Chinese markets, which have been closed since Oct. 1 for the National Day holidays, resume trading tomorrow, 8 October 2013.
Trading in US index futures indicated that the Dow could fall 131 points at the opening bell on Monday, 7 October 2013. Republican House Speaker John Boehner vowed on Sunday not to raise the US debt ceiling without a "serious conversation" about what is driving the debt, while Democrats said it was irresponsible and reckless to raise the possibility of a US default. Republicans and Democrats also traded blame for a shutdown that has brought much of the government to a standstill for nearly a week. Republicans are seeking concessions in exchange for raising the nation's $16.7 trillion debt limit. If the borrowing cap is not increased, the United States could go into default.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. The lack of data may make it harder for the Federal Reserve to assess the economy's strength as policy makers mull the timing of reductions in bond buying. Government data from payrolls to retail sales will be delayed as long as the shutdown continues. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.
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