Index heavyweights power rally in benchmark indices

Index heavyweights led rally in key benchmark indices on the first trading session of the week after India and the US on Sunday, 25 January 2015, reached an understanding on resolving the logjam in implementing the historic 2006 India-US nuclear deal and decided to take defence cooperation to a new level after bilateral meeting between Indian Prime Minister Narendra Modi and US President Barack Obama. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit record high. The Sensex was provisionally up 273.46 points or 0.93% at 29,552.30. The market breadth indicating the overall health of the market was negative.

Key indices logged gains for the 8th trading sessions in a row.

Index heavyweights ITC, L&T, HDFC, ICICI Bank and HDFC Bank edged higher. But, Infosys which is also an index heavyweight, dropped. Maruti Suzuki India scaled record high after reporting good Q3 result. Max India scaled record high after the company's board approved a corporate restructuring plan to vertically split the company through a demerger into three separate listed companies. Sugar shares gained on renewed buying.

Foreign portfolio investors (FPIs) bought shares worth a net Rs 2019.98 crore during the previous trading session on Friday, 23 January 2015, as per provisional data. The stock market was closed yesterday, 26 January 2015, for Republic Day holiday.

In the foreign exchange market, the rupee edged lower against the dollar.

Brent crude oil futures edged lower amid a global supply glut.

In overseas markets, European stocks edged lower as Siemens AG led industrial companies lower after the Europe's largest engineering company reported a decline in first-quarter profit. Asian stocks edged higher amid optimism the actions of Greece's new government won't force the nation to leave the euro currency bloc. US stocks eked out small gains yesterday, 26 January 2016, as investors mostly shrugged off the Greek election results which brought the leftist Syriza party to power.

Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month January 2015 series to February 2015 series. The near month January 2015 derivatives contract expire on Thursday, 29 January 2015.

As per provisional closing, the S&P BSE Sensex was up 273.46 points or 0.93% at 29,552.30. The index jumped 339.75 points at the day's high of 29,618.59 in late trade, a lifetime high for the index. The index rose 7.25 points at the day's low of 29,286.09 in early afternoon trade.

The CNX Nifty was up 74.90 points or 0.85% at 8,910.50. The index hit a high of 8,925.05 in intraday trade, a lifetime high for the index. The index hit a low of 8,825.45 in intraday trade.

The BSE Mid-Cap index was up 84.80 points or 0.79% at 10,780.47. The BSE Small-Cap index was up 58.39 points or 0.51% at 11,424.48. Both these indices underperformed the Sensex.

The market breadth indicating the overall health of the market was negative. On BSE, 1,519 shares fell and 1,406 shares rose. A total of 117 shares were unchanged.

The total turnover on BSE amounted to Rs 3875 crore, lower than turnover of Rs 4032.25 crore during the previous trading session on Friday, 23 January 2015.

Index heavyweight and cigarette major ITC advanced 3.01% to Rs 359.75. The stock hit high of Rs 360.45 and low of Rs 350.

Maruti Suzuki India rose 2.2% to Rs 3,688. The stock was volatile. The stock hit record high of Rs 3,704 in intraday trade. The stock hit an intraday low of Rs 3,587.05. Maruti Suzuki India's net profit rose 17.76% to Rs 802.16 crore n 15.38% rise in total income to Rs 12704.72 crore in Q3 December 2014 over Q3 December 2013. The company announced Q3 results during market hours today, 27 January 2015.

Maruti Suzuki India said that higher volumes, material cost reduction initiatives and favourable foreign exchange contributed to bottom line growth in Q3 December 2014.

Engineering and construction major L&T gained 1.99% to Rs 1,740. The stock hit high of Rs 1,749.50 and low of Rs 1,718.

IT major Infosys dropped 3.53% to Rs 2,136. The stock hit a high of Rs 2,216 and a low of Rs 2,131.

Index heavyweight ICICI Bank was up 3.66%.

Another index heavyweight HDFC Bank was up 2.39%.

Housing finance major HDFC advanced 1.56% to Rs 1,310.60.

Max India jumped 9.55% to Rs 497.95 after scaling a record high of Rs 505 in intraday trade. Max India during market hours today, 27 January 2015, said its board approved a corporate restructuring plan to vertically split the company through a demerger into three separated listed companies, to give investors specific and undiluted access to its diverse lines of businesses, provide sharper focus to each underlying business and unlock shareholder value. The board also approved divestment of the clinical research business.

Upon completion of the demerger, the existing company, Max India, is proposed to be renamed Max Financial Services (MFS) and will focus solely on the group's flagship life insurance activity, through its 72.1% shareholding in Max Life. Upon completion of the demerger, it is proposed to name the second vertical Max India, which will continue to manage investments in the high potential health and allied businesses comprising Max Healthcare, Max Bupa, Antara Senior Living and supported by a corporate management services team. The corporate management services team will manage a shared services centre, which will provide functional support to all 3 verticals.

The third vertical will house the investment activity in the group's manufacturing subsidiary, Max Speciality Films which is an innovation leader in the speciality packaging films business and will be named Max Ventures and Industries (MVIL).

Once the demerger scheme becomes effective after due regulatory approvals, Max India's shareholders will retain one equity share of Rs 2 each in MFSL and will additionally get one equity share of Max India for each equity share of Rs 2 each held in MFSL, and one equity share of MVIL for every 5 equity shares held in MFSL.

Max India has also initiated action for the divestment of its entire 100% stake in the clinical research business. Max Neeman entities in India and United States are proposed to be divested to a Canadian Contract Research Organisation (CRO), JSS Medical Research Inc., for a consideration of $1.5 million, subject to successful completion of due diligence and signing of definitive agreements, expected by mid-February 2015.

Max India has cash reserves of Rs 605 crore as at 31 December 2014. It is proposed to split the cash reserves as on the appointed date of 1 April 2015 between the 3 listed companies such that MFSL will hold Rs 150 crore, MVIL will hold Rs 10 crore and balance likely to be over Rs 400 crore will be held by the newly formed Max India.

Sugar shares gained on renewed buying. Bajaj Hindusthan (up 9.33%), Dhampur Sugar Mills (up 4.18%), Sakthi Sugars (up 4.62%), Balrampur Chini Mills (up 6.98%), Triveni Engineering & Industries (up 3.11%), Shree Renuka Sugars (up 8.6%), Simbhaoli Sugar Mills (up 7.03%), Dwarikesh Sugar Industries (up 3.59%) gained.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.465, compared with its close of 61.44 during the previous trading session on Friday, 23 January 2015. The foreign exchange market was closed yesterday, 26 January 2015, for Republic Day holiday.

Brent crude oil futures edged lower amid a global supply glut. Brent for March settlement was off 26 cents at $47.90 a barrel. The contract had fallen 63 cents or 1.29% to settle at $48.16 a barrel during the previous trading session.

Prime Minister Narendra Modi yesterday, 26 January 2015, said big projects involving large investment would be monitored by the Prime Minister's Office. He was speaking at the interactive India US CEO Forum, in the presence of US President Barack Obama, and top business leaders from both countries. He mentioned the importance of investment in the infrastructure sector, especially in the Railways.

India and the US on Sunday, 25 January 2015, reached an understanding on resolving the logjam in implementing the historic 2006 India-US nuclear deal and decided to take defence cooperation to a new level after bilateral meeting between Indian Prime Minister Narendra Modi and US President Barack Obama. The two countries resolved key hurdles pertaining to the liability of suppliers of nuclear reactors in the event of an accident and the tracking of fuel supplied by the US. Both countries also agreed on a Working Group to explore aircraft carrier technology besides designing and development of jet engine technology, according to media reports.

In a media statement issued during a joint press interaction with Obama, Modi on Sunday, 25 January 2015, said that the Indo-US civil nuclear agreement was the centrepiece of a transformed relationship between India and the United States, which demonstrated new trust. "I am pleased that six years after we signed our bilateral agreement, we are moving towards commercial cooperation, consistent with our law, our international legal obligations, and technical and commercial viability. President Obama has also assured me of strong US efforts in support of India's full membership of the four international export control regimes at the earliest", Modi said. Separately, a joint statement issued by India and the US stated that Modi and Obama welcomed the understandings reached on the issues of civil nuclear liability and administrative arrangements for civil nuclear cooperation, and looked forward to US-built nuclear reactors contributing to India's energy security at the earliest.

Obama today, 27 January 2015, concludes his 3-day visit to India.

Meanwhile, the Reserve Bank of India (RBI) on Friday, 23 January 2015, relaxed rules for companies and banks to restructure and reschedule existing overseas borrowings by permitting an increase in the total cost of external commercial borrowing (ECB). The RBI has also allowed changes in the drawdown and repayment schedules of ECB. However, the easing of rules will not be applicable for foreign currency convertible bonds, the RBI said.

European stocks edged lower today, 27 January 2015, as Siemens AG led industrial companies lower after the Europe's largest engineering company reported a decline in first-quarter profit. Key benchmark indices in UK, France and Germany were off 0.23% to 0.52%.

In Greece, the leftist Syriza party which ran on an antiausterity platform, won elections held in the country on Sunday, 25 January 2015. Syriza and its outspoken leader, Alexis Tsipras, who had campaigned against the austerity measures imposed on Greece by its international creditors, formed a coalition government yesterday, 26 January 2015, with a right-wing fringe party, Independent Greeks.

Asian stocks edged higher today, 27 January 2015, amid optimism the actions of Greece's new government won't force the nation to leave the euro currency bloc. Key benchmark indices in Taiwan, Singapore, Japan, Indonesia and South Korea rose 0.33% to 1.72%. Key benchmark indices in China and Hong Kong fell 0.41% to 0.89%.

China reported a service trade deficit of $23.5 billion in December, compared with a deficit of $20.8 billion in November, official data showed today, 27 December 2015. For 2014, the country's service trade deficit stood at $198.0 billion, as per the State Administration of Foreign Exchange. China's service trade deficit was $118.4 billion in 2013.

Trading in US index futures indicated that the Dow could fall 52 points at opening bell today, 27 January 2015. US stocks ended higher yesterday, 26 January 2015, as investors brushed off fears that a leftist victory in Greece would bring fresh crisis to the Eurozone and energy stocks advanced.

A two-day meeting of the Federal Open Market Committee (FOMC) begins today, 27 January 2015. In its last meet in December 2014, FOMC had based on its assessment, judged that it can be patient in beginning to normalize the stance of monetary policy.

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