Key benchmark indices edged higher on the first trading session of the week after the Finance Minister P Chidambaram said that the fiscal deficit will be contained at 4.6% of GDP for the year ending 31 March 2014 (2013-14) and will be pruned further to 4.1% of GDP in 2014-15 and that the current account deficit (CAD) will be contained at $45 billion in 2013-14. The barometer index, the S&P BSE Sensex, settled at over two week high. The Sensex garnered 97.24 points or 0.48%, up 125.11 points from the day's low and off 28.37 points from the day's high. The market breadth, indicating the overall health of the market was negative.
Indian stocks edged higher for second day in a row today, 17 February 2014. The Sensex has risen 270.71 points or 1.34% in two sessions from a recent low of 20,193.35 on Thursday, 13 February 2014. The Sensex has lost 49.79 points or 0.24% in this month so far (till 17 February 2014). The Sensex has declined 706.62 points or 3.33% so far in Calendar 2014 (till 17 February 2014). From a record high of 21,483.74 on 9 December 2013, the Sensex has declined 1,019.68 points or 4.74%. From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,015.35 points or 17.28%.
Coming back to today's trade, auto stocks gained in volatile trade after the finance minister announced reduction in excise duty on cars, commercial vehicles, sports utility vehicles (SUVs), motorcycles and scooters. Most PSU bank stocks declined after the Finance Minister said at the time of presentation of Interim Budget for 2014-15 that the government has set aside Rs 11200 crore for capital infusion in public sector banks.
Finance Minister P Chidambaram said fiscal deficit will be contained at 4.6% of GDP for the year ending 31 March 2014 (2013-14), smaller than the 4.8% originally forecast toward the start of the financial year. The Finance Minister said that current account deficit (CAD) will be contained at $45 billion in 2013-14. He said that the government and the RBI have acted in tandem to curtail inflation. Food inflation is still the main worry, although it has declined sharply from a high of 13.6% to 6.2%, Chidambaram said.
India's merchandise exports are projected to expand 6.3% to $326 billion in 2013-14. However, imports are down, and this does not augur well for either manufacturing or domestic trade, the Finance Minister said. "Our aim must be robust growth in both exports and imports, with trade in balance over a period of time", the Finance Minister said.
The deceleration in investment in manufacturing is particularly worrying, the Finance Minister said. Consequently, there is no uptick yet in manufacturing, he said.
GDP growth in third and fourth quarters of 2013-14 will be at least 5.2%, the Finance Minister said. Chidambaram said that $15 billion will be added to foreign exchange reserves by the end of the fiscal year. Declining fiscal deficit, moderation of CAD, stable exchange rate and increase in project implementation is a result of hard work, he said.
Chidambaram expressed confidence that the economy is more stable today than what it was two years ago. At a time when it appeared that a number of projects would fail because of the logjam, the government took the bold step to set up the Cabinet Committee on Investment and the Project Monitoring Group, he said. Thanks to the swift decisions taken by them, by the end of January 2014, the way was cleared for completing 296 projects with an estimated project cost of Rs 660000 crore, the Finance Minister said.
The government will allocate Rs 2.24 lakh crore to defence sector in 2014-15, an increase of 10% over the Budget Estimate for 2013-14. The government will provide capital infusion of Rs 11200 crore in state-run banks in 2014-15. Total spending on food, fertiliser and fuel subsidies will be at Rs 2.46 lakh crore in 2014-15. This is higher than the revised estimate of Rs 2.45 lakh crore in 2013-14.
Chidambaram said that in keeping with the conventions, he does not propose to make any announcements regarding changes to the tax laws in the interim budget. The finance minister cut excise duty on cars, sports utility vehicles (SUVs), commercial vehicles and two wheelers for the period up to 30 June 2014 so as to give relief to the automobile industry. The Finance Minister also announced reduction in excise duty from 12% to 10% on all goods falling under chapter 84 and chapter 85 of the Schedule to the Central Excise Tariff Act for the period up to 30 June 2014 with an intention to stimulate growth in the capital goods and consumer non-durables sectors.
The changes in indirect taxes don't need Parliament sanction and can be made through government orders.
The government has envisaged number of steps to deepen the Indian Financial markets, Chidambaram said.
The estimate of plan expenditure is Rs 5.55 lakh crore for 2014-15. Non-plan expenditure is estimated at Rs 12.07 lakh crore. Revenue for the next fiscal year is projected at Rs 11.29 lakh crore, higher than Rs 10.29 lakh crore this year. Fiscal deficit for 2014-15 is expected at 4.1% of GDP.
The objective of a Vote-on-Account is to get Parliament's nod for expenditure to be incurred in the months prior to elections.
The next full-fledged budget will be presented by the new government which comes to power after the Lok Sabha polls in April-May 2014.
The S&P BSE Sensex garnered 97.24 points or 0.48% to settle at 20,464.06, its highest closing level since 31 January 2014. The index jumped 125.61 points at the day's high of 20,492.43 in late trade. The index fell 27.87 points at the day's low of 20,338.95 in mid-morning trade.
The CNX Nifty garnered 24.95 points or 0.41% to settle at 6,073.30, its highest closing level since 12 February 2014. The index hit a high of 6,080.65 in intraday trade. The index hit a low of 6,038.30 in intraday trade.
The BSE Mid-Cap index lost 11.21 points or 0.18% at 6,300.67. The BSE Small-Cap index rose 0.91 points or 0.01% at 6,280.60. Both these indices underperformed the Sensex.
The S&P BSE Bankex (up 1.21%), the S&P BSE Power index (up 0.96%), the S&P BSE Auto index (up 0.76%) and the S&P BSE Healthcare index (up 0.67%) outperformed the Sensex.
The S&P BSE IT index (up 0.17%), the S&P BSE Capital Goods index (up 0.11%), the S&P BSE Teck index (up 0.01%), the S&P BSE FMCG index (down 0.11%), the BSE PSU index (down 0.34%), the S&P BSE Oil & Gas index (down 0.49%), the S&P BSE Metal index (down 0.71%), the S&P BSE Consumer Durables index (down 0.73%) and the S&P BSE Realty index (down 0.82%) underperformed the Sensex.
The total turnover on BSE amounted to Rs 1515 crore, lower than Rs 1732.10 crore on Friday, 14 February 2014.
The market breadth, indicating the overall health of the market was negative. On BSE, 1,394 shares dropped and 1,217 shares rose. A total of 154 shares were unchanged.
Index heavyweight and cigarette major ITC rose 0.13% to Rs 320.20. The stock hit a high of Rs 322 and low of Rs 317.80.
Index heavyweight Reliance Industries (RIL) declined 1.1%.
Auto stocks gained in volatile trade after the finance minister announced reduction in excise duty on cars, commercial vehicles, sports utility vehicles (SUVs), motorcycles and scooters for the period up to 30 June 2014. M&M (up 3.7%), Maruti Suzuki India (up 1.74%), Bajaj Auto (up 0.43%), Hero MotoCorp (up 2.34%) and TVS Motor Company (up 3.31%) gained. Ashok Leyland (down 1.6%) declined.
The Finance Minster announced cut in excise duty on small cars, two-wheelers and commercial vehicles to 8% from 12%. The excise duty on SUVs has been reduced to 24% from 30%. The excise duty on large and mid-segment cars has been reduced to 24/20% from 27/24%.
Tata Motors shed 0.37% after the company announced group global wholesales in January 2014. The company announced after market hours on Friday, 14 February 2014, that its global wholesales in January 2014, including Jaguar Land Rover stood at 80,163 units. Global wholesales of all Tata Motors' commercial vehicles and Tata Daewoo range -- were 30,121 units. Global wholesales of all passenger vehicles in January 2014 were 50,042 units. Global wholesales of Tata Motors' passenger vehicles in January 2014 were 11,411 units.
Global wholesales for Jaguar Land Rover for the month were 38,631vehicles. Jaguar wholesales for the month were 6,711 vehicles, while Land Rover wholesales for the month were 31,920 vehicles.
Private sector bank stocks gained. AXIS Bank (up 1.17%), HDFC Bank (up 1.75%) and ICICI Bank (up 2.43%) gained.
PSU bank stocks declined after the Finance Minister said that the government has set aside Rs 11200 crore for capital infusion in public sector banks.
Bank of Baroda (down 0.76%) and Bank of India (down 0.46%) dropped.
Union Bank of India rose 0.34%
Punjab National Bank fell 0.76%. The bank said on Saturday, 15 February 2014 that after regulatory approvals, the bank has decided to sell its entire stake in India Factoring & Financial Solutions (IFFSL) to parent promoter Fll (FIM Bank Malta). The transaction shall be completed during the current quarter ending 31 March 2014.
The Finance Minister has extended interest subvention scheme on farm loans for one more year. There is a subvention of 2% and an incentive of 3% for prompt payment, thus reducing the effective rate of interest on farm loans to 4%. So far, Rs 23924 crore has been released under the scheme, the Finance Minister said.
Chidambaram said that banks are set to exceed the target of Rs 7 lakh crore of agricultural credit in 2013-14. The Finance Minister has set a target of agricultural credit of Rs 8 lakh crore for 2014-15.
The Finance Minister has announced a moratorium period for all education loans taken up to 31 March 2009 and which are outstanding on 31 December 2013. The government will take over the liability for outstanding interest as on 31 December 2013, but the borrower would have to pay interest for the period after 1 January 2014. Nearly 9 lakh student borrowers will benefit to the tune of approximately Rs 2600 crore, the Finance Minister said. Chidambaram said that a sum of Rs 2600 crore will be provided in the current financial year itself and this amount will be transferred to state-run Canara Bank. The Finance Minister said that the central scheme for interest subsidy was introduced in 2009-10 in respect of education loans disbursed after 1 April 2009. However, students who had borrowed before 31 March 2009 struggled to pay interest during the period of study and they deserved some relief, he said. Chidambaram said that ten years ago, only a few thousand students -- mostly the well-connected -- got education loans. At the end of December 2013, public sector banks had 25,70,254 student loan accounts and the amount outstanding was Rs 57700 crore.
State Bank of India rose 0.12%. The bank said on Saturday, 15 February 2014, that it has revised downwards the interest rates on bulk term deposits for Rs 1 crore and above effective from 18 February 2014. It has also decided to revise the interest rates on retail term deposits for below Rs 1 crore effective from 18 February 2014.
Tata Power Company gained 4.81%. Reliance Infrastructure rose 0.03%. Forty-nine days after Arvind Kejriwal took charge of a minority government in Delhi, Kejriwal resigned Friday following a tumultuous day in the assembly where the Congress and BJP legislators defeated the AAP's attempts to introduce the Jan Lokpal bill aimed to curb corruption in high places. AAP government had initiated actions against power distribution companies in Delhi for charging high power rates on consumers.
Bharti Airtel shed 0.13%. Reportedly the company will acquire Loop Mobile in a Rs 700-crore deal that may be announced this week. The deal will be on a slump sale basis, the report said and Bharti will get Loop's 3 million subscribers, about 400 telecom towers and optic fibre and electronic equipment on which Loop's network currently runs. The deal will make Bharti the largest telecoms operator in the Mumbai circle with about 7 million subscribers, ahead of rival Vodafone's Indian unit, report added.
Capital goods stocks were mostly higher after the Finance Minister said that with a view to stimulate growth in the capital goods and consumer non-durables, the excise duty will be cut to 10% from 12% on all goods falling under chapter 84 and chapter 85 of the Schedule to the Central Excise Tariff Act for the period up to 30 June 2014. Siemens (up 0.4%), Thermax (up 3.83%), ABB (up 2.69%), L&T (up 0.71%) gained.
Bharat Heavy Electricals (Bhel) (down 0.81%), Crompton Greaves (down 2.99%) declined.
Gayatri Projects tumbled 10.34% after net profit fell 89.41% to Rs 1.62 crore on 11.43% decline in total income from operations to Rs 421.60 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 14 February 2014.
HCL Technologies rose 0.71% to Rs 1,508 after hitting record high of Rs 1,520.60 in intraday trade.
Tech Mahindra fell 0.52%. The company announced during market hours global strategic business partnership with Acidaes Solutions, the owners of CRMnext Solution, which will primarily focus on the global banking and financial services sector. The partnership aims to develop and deliver scalable enterprise CRM solutions in the banking and financial services space. This space is expected to grow exponentially by 2015, Tech Mahindra said. This partnership will empower Tech Mahindra and CRMnext to be at the forefront of the customer experience revolution. Tech Mahindra and CRMnext will jointly develop strategies and solutions orm CRM implementations, in the BFSI space.
Mastek rose 0.69% after a foreign fund bought 0.5% stake in the company on Friday, 14 February 2014. Merrill Lynch Capital Markets Espana bought 1.24 lakh shares of Mastek at Rs 197.79 per share in a bulk deal on BSE on Friday, 14 February 2014.
Financial Technologies (India) (FTIL) jumped 4.98% to Rs 295.95 after net profit rose 27.61% to Rs 34.48 crore on 10.98% decline in net sales to Rs 79.97 crore in Q3 December 2013 over Q2 September 2013. The result was announced after market hours on Friday, 14 February 2014.
Steel Authority of India (Sail) lost 1.87%. The company's net profit rose 9.97% to Rs 532.60 crore on 7.14% increase in total income to Rs 11667.52 crore in Q3 December 2013 over Q3 December 2012. The result was announced after market hours on Friday, 14 February 2014.
Sail said that the board of directors of the company at its meeting held on 14 February 2014, inter alia, has approved interim dividend of Rs 2.02 per equity share for the year ending 31 March 2014.
NMDC declined 4.92% as the stock turned ex-dividend today, 17 February 2014 for the second interim dividend of Rs 5.50 per share for the year ending 31 March 2014.
MMTC fell 2.42% after the company reported net loss of Rs 8.71 crore in Q3 December 2013 as against net profit of Rs 28.84 crore in Q3 December 2012. The result was announced after trading hours on Friday, 14 February 2014.
DLF fell 1% after announcing weak Q3 results. The company's consolidated net profit fell 48.98% to Rs 145.29 crore on 13% increase in revenue to Rs 2590.20 crore in Q3 December 2013 over Q3 December 2012. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 7% to Rs 1144 crore in Q3 December 2013 over Q3 December 2012. The company announced the result after market hours on Friday, 14 February 2014.
DLF said that normalised sales, EBITDA and normalised PAT, after excluding the impact of divestment transactions were at Rs 2290 crore, Rs 844 crore and Rs 125 crore respectively in Q3 December 2013.
DLF said that the company has met the goals of non-core divestments with the successful consummation of divestiture transactions such as Aman Resorts, Pramerica Insurance JV and final settlement with DDA on the Dwarka land piece. With this the company is poised to meet its guidance of reducing the net debt to Rs 17500-18000 crore by end of FY 2014. As on date, the net debt stands at about Rs 17400 crore. DLF said that the company is comfortable with its current net debt levels and expects these to continue at similar levels till the economic cycle improves. However, the quality of debt shall continue to improve as annuity incomes continue to grow, DLF said in a statement. Currently almost 70% of the net debt is backed by annuity flows, DFL said.
During the last two quarters, the economic environment in the country has further worsened leading to slowdown in demand in all sectors including real estate. The company expects slow growth and high interest rate environment to continue atleast for the next two quarters i.e. till middle of FY 2015. In spite of these economic conditions, the company will continue to invest capex in creating high quality annuity yielding assets and invest in the upgradation of land through requisite approvals, consolidation and investment in infrastructure, DLF said. The company will continue to focus on growth through aggressive construction of projects, hence creating high value, high quality real estate products ready to be unlocked as and when the economic cycle turns positive, DLF said.
Shares of public sector oil marketing companies (PSU OMCs) rose in volatile trade. HPCL (up 0.55%), BPCL (up 0.35%) gained. Indian Oil Corporation was unchanged at Rs 240.30.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas has reviewed international prices of crude oil and petroleum products during the first fortnight of February 2014. Accordingly, the under-recovery on High Speed Diesel (HSD) applicable for the second fortnight of February 2014, effective from 16 February 2014, rose to Rs 8.31 per litre. This was Rs 7.39 per litre during first fortnight of February 2014. PSU OMCs are currently incurring combined daily under-recovery of about Rs 456 crore on the sale of Diesel, PDS Kerosene and Domestic LPG at government controlled prices. This is higher than Rs 446 crore daily under-recoveries for the first fortnight of February 2014.
PSU OMCs reported a total of Rs 100632 crore as under-recoveries during first nine months of 2013-14 (April-December 2013) on Diesel, PDS Kerosene, Domestic LPG.
In the interim budget announced today, 17 February 2014, Finance Minister P. Chidambaram provided Rs 65000 crore for fuel subsidy for 2014-15. The government, this year, absorbed the rollover of Rs 45000 crore from the fourth quarter of 2012-13 and it will rollover only Rs 35000 crore from the fourth quarter of this year into the next year, Chidambaram said in the budget speech today, 17 February 2014.
Stocks whose fortunes are linked to orders from the defence sector were mixed after the Finance Minister said that the allocation for defence sector has been enhanced by 10% from the estimated Rs 203672 crore in 2013-14 to Rs 224000 crore in 2014-15. BEML rose 0.82%. Bharat Electronics fell 1.77%.
Most pharma stocks gained. Cipla (up 0.51%), Dr Reddy's Laboratories (up 2.45%) and Lupin (up 1.59%) gained. Ranbaxy Laboratories (down 0.37%) and Sun Pharmaceutical Industries (down 0.45%) declined.
Jet Airways rose 3.38% on reports Etihad may be forced to make an open offer to retail shareholders as market regulator has served notice to the Abu Dhabi-based airline. According to reports, Sebi has served a notice on Etihad Airways for alleged violation of the takeover code regulations while acquiring 24% stake in Jet Airways.
ABG Shipyard lost 5.03% after the company reported a net loss of Rs 156.08 crore in Q3 December 2013 as against net profit of Rs 18.62 crore in Q3 December 2012. The Q3 result was announced after market hours on Friday, 14 February 2014. ABG Shipyard's net sales declined 39.2% to Rs 284.55 crore in Q3 December 2013 over Q3 December 2012.
Punj Lloyd lost 4.34% after the company reported consolidated net loss of Rs 139.48 crore in Q3 December 2013 as against net profit of Rs 8.77 crore in Q3 December 2012. The Q3 result was announced after market hours on Friday, 14 February 2014.
Punj Lloyd's consolidated net sales declined 2.3% to Rs 2710.76 crore in Q3 December 2013 over Q3 December 2012. EBITDA (earnings before interest, taxation, depreciation and amortization) declined 45.57% to Rs 160 crore in Q3 December 2013 over Q3 December 2012.
Commenting on the company's financial performance, Atul Punj, Chairman, Punj Lloyd Group said, "While the environment continues to be challenging, initiatives and developments at Punj Lloyd make us cautious but optimistic about the future. With Director and Group CEO, J P Chalasani at the helm, Group operations will strengthen with a focus on project earnings. We will continue to pursue new markets with special focus on MRT and railways. Encouragingly, our project in Libya has recommenced and we have begun to receive some payments. Additionally, we have taken several steps towards making Punj Lloyd a more lean, efficient and responsive organization. I am confident of the macro environment gradually improving and as it does. I am equally confident that Punj Lloyd under the able stewardship of Mr Chalasani and a highly capable management team, is well positioned to leverage the opportunities that unfold. The Group's order backlog stands at Rs 18852 crore. The order backlog is the value of unexpected orders on 31 December 2013 plus new orders received after that date".
IFCI rose 2.87%. Finance Minister P. Chidambaram in the interim budget for 2014-15 presented today, 17 February 2014, announced that in order to promote entrepreneurship among the scheduled castes and to provide concessional finance to them, IFCI will set up a Venture Capital Fund for Scheduled Castes. The finance ministry proposes to provide an initial capital of Rs 200 crore, which can be supplemented every year, Chidambaram said.
Mahanagar Telephone Nigam rose 3.91% after the company reported a net profit of Rs 428.03 crore in Q3 December 2013 as against net loss of Rs 1182.18 crore in Q3 December 2012. Mahanagar Telephone Nigam (MTNL)'s net sales rose 1.7% to Rs 847.20 crore in Q3 December 2013 over Q3 December 2012.
Allcargo Logistics surged 4.91% after consolidated net profit jumped 58.03% to Rs 57.02 crore on 55.9% growth in total income from operations to Rs 1516.41 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 14 February 2014.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade. The partially convertible rupee was hovering at 61.85, compared with its close of 61.925/935 on Friday, 14 February 2014.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Sighting elevated consumer price inflation, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
European stocks edged higher on Monday, 17 February 2014. Key benchmark indices in Germany and UK rose 0.09% to 1%. France's CAC 40 fell 0.06%.
Asian stocks edged higher on Monday, 17 February 2014, after China's new credit increased to a record in January, boosting optimism the world's second-largest economy can maintain its growth momentum. Key benchmark indices in China, Hong Kong, South Korea, Indonesia, Taiwan, Japan and Singapore rose by 0.07% to 1.07%.
Japan's economy grew less than forecast in the fourth quarter, according to a report today, underscoring risks to the recovery as a sales-tax increase looms in April. Gross domestic product expanded an annualized 1% from the previous quarter, the Cabinet Office said in Tokyo.
US stocks edged higher on Friday, 14 February 2014, as investors shrugged off a report showing poor industrial output last month as mainly weather-related. The US stock market is closed today, 17 February 2014, for a holiday.
US industrial output unexpectedly fell 0.3% in January but the Federal Reserve said that was partly due to the severe weather that curtailed production in some regions.
Federal Reserve Chairwoman Janet Yellen said last week that US growth has strengthened and that only a "notable change in the outlook" for the economy would prompt policy makers to slow the pace of cuts to the monthly bond-buying program.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market.
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