Pharma stocks edge higher

Key benchmark indices alternately swung between positive and negative terrain around the flat line in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently almost unchanged for the day at 21,338.56, up about 70 points from the day's low and off close to 20 points from the day's high. The market breadth, indicating the overall health of the market, was positive.

Metal stocks edged lower after a private gauge of China's manufacturing in January unexpectedly contracted. Pharma stocks edged higher.

A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak start triggered by weak Asian stocks. Key benchmark indices swung alternately between positive and negative terrain near the flat line in mid-morning trade.

Foreign institutional investors (FIIs) bought shares worth a net Rs 279.45 crore on Wednesday, 22 January 2014, as per provisional data from the stock exchanges.

At 11:20 IST, the S&P BSE Sensex was almost unchanged for the day at 21,338.56. The index dropped 72.96 points at the day's low of 21,264.71 in early trade. The index rose 17.67 points at the day's high of 21,355.34 in morning trade.

The CNX Nifty was down 1.40 points or 0.02% to 6,337.55. The index hit a low of 6,316.40 in intraday trade. The index hit a high of 6,342.90 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,077 shares gained and 1,024 shares fell. A total of 131 shares were unchanged.

Among the 30-share Sensex pack, 15 stocks fell and rest rose. ONGC (down 1.47%), Wipro (down 1.48%) and M&M (down 2.2%) edged lower from the Sensex pack.

Metal stocks edged lower as a private gauge of China's manufacturing in January unexpectedly contracted. China is the world's largest consumer of copper and aluminum. Hindustan Copper (down 0.52%), Hindalco Industries (down 1%), Tata Steel (down 1.07%), Steel Authority of India (down 0.64%) National Aluminum Company (down 0.68%), Hindustan Zinc (down 0.81%), Sesa Sterlite (down 0.59%), Bhushan Steel (down 0.1%), JSW Steel (down 0.03%) and NMDC (down 1%) declined. But, Jindal Steel & Power rose 0.4%.

Pharma stocks edged higher. Cipla (up 0.38%), Dr Reddy's Laboratories (up 0.2%), Lupin (up 0.66%), Ranbaxy Laboratories (up 0.5%) and Sun Pharmaceutical Industries (up 1.99%) gained.

Raymond rose 3.33% after consolidated net profit surged 343% to Rs 57 crore on 15% rise in net sales to Rs 1207 crore in Q3 December 2013 over Q3 December 2012. The company announced results after market hours on Wednesday, 22 January 2014.

Raymond's consolidated earnings before interest taxes depreciation and amortization (EBITDA) rose 35% to Rs 164 crore in Q3 December 2013 over Q3 December 2012. EBITDA margins expanded by 202 basis points (bps) to 13.6% in Q3 December 2013 over Q3 December 2012.

Announcing the results, Gautam Hari Singhania, Chairman & Managing Director, Raymond said, "We have ended the third quarter on a positive note, despite subdued discretionary spend witnessed in the month of December 2013. Our focus on profitability through margin expansion across key business segments of the group has led to a strong bottom line growth in the current quarter as well as for the period till date. Going forward, while factors like inflation and interest rates will continue to play a role in the consumer discretionary space, we are confident that our long term sustainable initiatives in brands, retail, supply chain management and operational efficiency will enable Raymond to surge ahead."

Raymond's textile segment's consolidated sales for the quarter ended 31 December 2013 witnessed an increase of 8% at Rs 543 crore on the back of higher realization in domestic as well as in the export segment. EBITDA margins for the quarter improved by 234 bps to 21%.

The apparel segment's net sales stood at Rs 250 crore, an increase of 15% on year-on-year (Y-o-Y) basis. EBITDA margins doubled to 8%.

The retail stores count as at 31 December 2013 stood at 955 across all formats, including 41 stores in the Middle East and SAARC region covering over 1.8 million square feet of retail space. During the quarter ended 31 December 2013, like-to-like sales growth blended across all formats were flat. Secondary sales through the retail channel grew by 5% Y-o-Y.

The garmenting segment's net sales grew by 45% to Rs 104 crore during the quarter. EBITDA rose by 54% to Rs 15 crore.

The cotton shirting fabric business grew by 7% to Rs 86 crore during the quarter. However, EBITDA for the quarter was impacted due to higher input costs and lower exports.

The denim business witnessed 8% sales growth during the quarter and stood at Rs 235 crore backed by higher realisation in the domestic as well as in the export segments. EBITDA was impacted due to higher input cost.

Sales in the tools & hardware segment grew by 15% to Rs 110 crore led by both domestic as well as export markets. EBITDA grew by 90% to Rs 11 crore.

Sales in the auto component segment grew by 13% to Rs 56 crore led by both domestic as well as export markets. EBITDA improved by 65% to Rs 7 crore.

Sasken Communication Technologies slumped 12.47% after the stock turned ex-dividend today, 23 January 2014, for a special dividend of Rs 22.50 per share for the year ending March 2014.

In the foreign exchange market, the rupee edged lower against the dollar on global risk off sentiment. The partially convertible rupee was hovering at 61.97, compared with its close of 61.815/825 on Wednesday, 22 January 2014.

Bond prices dropped for the second day in a row after a committee set up by the Reserve Bank of India in its report submitted to the central bank early this week recommended that the central bank should start using a consumer-price inflation target to determine monetary policy. The panel's recommendations if accepted by the central bank may result in increase in interest rates to achieve the panel's 4% consumer-price inflation target by 2016. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6357%, higher than its close of 8.6085% on Wednesday, 22 January 2014. Bond yield and bond prices move in opposite direction.

The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.

Assuring global investors that India is prepared to face the impact of the US Fed tapering, finance minister P Chidambaram on Wednesday said the country is poised to clock 5% growth in 2013-14 and over 6% in 2014-15. Addressing a meeting of the World Economic Forum (WEF), Chidambaram said the Indian economy has "stabilised and it is poised to return to high-growth path and step by step we will go back to 8% growth rate".

On the impact of the calibrated tapering of bond purchases by the US central bank, Chidambaram said: "We were concerned in May. But now I think we have done a lot of preparatory work. There will be some consequences in developing and emerging economies but I think we are better prepared for the taper than when we were surprised in May".

Asian stocks declined on Thursday, 23 January 2014, after a private gauge of China's manufacturing in January unexpectedly contracted. Key benchmark indices in Japan, South Korea, Singapore, China, Taiwan and Hong Kong were down 0.25% to 1.4%. Indonesia's Jakarta Composite rose 0.15%.

A preliminary reading of HSBC's January China manufacturing Purchase Manufacturing Index fell to 49.6, below the 50 boundary between expansion and contraction, and down from 50.5 in the final result for December. It was the first contraction for the sector in six months, according to the HSBC data.

South Korea's economic growth slowed as expected in the final quarter of last year on weaker construction spending, despite robust exports that reaffirms a recovery in Asia's fourth-largest economy. Gross domestic product rose a seasonally adjusted 0.9% in the October-December period from the previous quarter, when the economy expanded 1.1%, the Bank of Korea said on Thursday, 23 January 2014.

Trading in US index futures indicated that the Dow could drop 71 points at the opening bell on Thursday, 23 January 2014. US stocks closed mostly higher on Wednesday after trading in a narrow range for the bulk of the session. Markets shrugged off largely disappointing earnings, but results from IBM weighed on the blue chips.

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.

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