Key benchmark indices trimmed intraday gains in early afternoon trade. The barometer index, the S&P BSE Sensex, was up 39.52 points or 0.18%, off close to 95 points from the day's high and up about 5 points from the day's low. The market breadth, indicating the overall health of the market, was strong. The BSE Mid-Cap and BSE Small-Cap indices were up more than 1% each.
Metal and mining stocks edged higher. Hindalco Industries rose after Alcoa, the largest US aluminium producer on Tuesday, 8 April 2014, reported first quarter earnings that topped analyst forecasts. JSW Steel gained after the company said it has completed the acquisition of 26% equity stake in Vallabh Tinplate (VTPL) on 7 April 2014. Tata Steel gained after the company said that Steel & Tube Holdings of New Zealand has agreed to acquire Tata Steel International (Australasia) (TSIAL) on 14 April 2014 for a cash consideration of NZ$ 27.5 million.
Sun Pharmaceutical Industries extended Monday's gains and Ranbaxy Laboratories recovered from Monday's slide. Shares of other pharma stocks rose on hopes of further consolidation in the sector after Sun Pharma on 6 April 2014 announced the acquisition of Ranbaxy.
The market edged higher in early trade on firm Asian stocks. Key benchmark indices extended initial gains and hit fresh intraday high in morning trade. The Sensex trimmed gains in mid-morning trade. The Sensex further pared gains in early afternoon trade.
Foreign Institutional Investors (FIIs) bought shares worth a net Rs 703.71 crore on Monday, 7 April 2014, as per provisional data from the stock exchanges. The stock markets was closed on Tuesday, 8 April 2014, on account of Ram Navami.
At 12:20 IST, the S&P BSE Sensex was up 39.52 points or 0.18% to 22,382.97. The index jumped 135.62 points at the day's high of 22,479.07 in morning trade. The index rose 36.50 points at the day's low of 22,379.95 in early afternoon trade.
The CNX Nifty was up 16.25 points or 0.24% to 6,711.30. The index hit a high of 6,733.60 in intraday trade, its highest level since 4 April 2014. The index hit a low of 6,705.10 in intraday trade.
The BSE Mid-Cap index was up 74.46 points or 1.04% at 7,239.82. The BSE Small-Cap index was up 90 points or 1.24% at 7,371.07. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,512 shares rose and 830 shares fell. A total of 100 shares were unchanged.
State Bank of India (SBI) (up 1.47%), Tata Motors (up 2.91%) and GAIL (India) (up 1.34%) edged higher from the Sensex pack.
Pharma stocks rose. Sun Pharmaceutical Industries rose 6.41%, with the stock extending Monday's gains. Ranbaxy Laboratories gained 3.17%. The two companies in a joint statement issued on Sunday, 6 April 2014, announced that they have entered into definitive agreements pursuant to which Sun Pharma will acquire 100% of Ranbaxy in an all-stock transaction. As per the share swap ratio, Ranbaxy shareholders will receive 8 shares of Sun Pharma for every 10 equity shares of Ranbaxy. This exchange ratio represents an implied value of Rs 457 for each Ranbaxy share, a premium of 18% to Ranbaxy's 30-day volume-weighted average share price and a premium of 24.3% to Ranbaxy's 60-day volume-weighted average share price, in each case, as of the close of business on 4 April 2014.
The combination of Sun Pharma and Ranbaxy creates the fifth-largest specialty generics company in the world and the largest pharmaceutical company in India. The combined entity will have operations in 65 countries, 47 manufacturing facilities across 5 continents, and a significant platform of specialty and generic products marketed globally, including 629 ANDAs. On a pro forma basis, the combined entity's revenues are estimated at $4.2 billion with EBITDA of $1.2 billion for the twelve month period ended December 31, 2013. The transaction value implies a revenue multiple of 2.2 based on 12 months ended 31 December 2013.
Shares of other pharma stocks rose on hopes of further consolidation in the sector after Sun Pharma announced the acquisition of Ranbaxy. Cipla (up 0.84%), Dr. Reddy's Laboratories (up 0.98%), Lupin (up 1.73%), Aurobindo Pharma (up 2.04%), Wockhardt (up 0.72%), GlaxoSmithKline Pharmaceuticals (up 0.51%), Divi's Laboratories (up 0.34%), and Strides Arcolab (up 1.93%) edged higher.
Metal and mining stocks edged higher. Sesa Sterlite (up 1.08%), Hindustan Zinc (up 1.86%), Bhushan Steel (up 0.71%), Steel Authority of India (Sail) (up 2.96%), National Aluminum Company (up 2.3%), NMDC (up 2.65%) and Hindustan Copper (up 1.46%) gained.
Hindalco Industries rose after Alcoa, the largest US aluminium producer on Tuesday, 8 April 2014, reported first quarter earnings that topped analyst forecasts. The stock was up 3.9% to Rs 142.75. The scrip hit 52-week high of Rs 143.75 in intraday trade.
Alcoa's profit, excluding restructuring costs and other one-time items, was 9 cents a share in Q1 March 2014, it said in a statement on Tuesday, 8 April 2014. Earnings from Alcoa's rolled-products unit, which supplies carmakers, surpassed its January forecast. In contrast, the smelting division posted an after-tax loss of $15 million. Overall, Alcoa had a net loss of 16 cents a share compared with a net income of 13 cents a year earlier.
Alcoa maintained its forecast for worldwide aluminum demand to grow 7% this year. It boosted its projection for aerospace growth to as much as 9%, citing demand for large commercial aircraft and regional jets.
Tata Steel gained 2.03% after the company said that Steel & Tube Holdings of New Zealand has agreed to acquire Tata Steel International (Australasia) (TSIAL) on 14 April 2014 for a cash consideration of NZ$ 27.5 million. TSIAL, based in New Zealand, is a distribution business supplying stainless steel, engineering steels and composite floor decks to the New Zealand and Pacific Island markets. The company made the announcement on Tuesday, 8 April 2014.
JSW Steel gained 0.26%. JSW Steel on Tuesday, 8 April 2014, said it has completed the acquisition of 26% equity stake in Vallabh Tinplate (VTPL) on 7 April 2014. On 21 February 2014, JSW Steel had announced that the company, subject to customary closing conditions and third party consents, intends to acquire 26% equity stake in VTPL immediately and increase it to 50% in due course.
Reliance Power (RPower) gained 2.32%. The company today, 9 April 2014, announced that Boiler Light up has been achieved for its fourth 660 megawatts (MW) unit of the 3,960 MW Sasan Ultra Mega Power Plant (UMPP). This is a critical milestone of the boiler commissioning activities for the unit. The balance two units of 3,960 MW Sasan UMPP are in advanced stages of construction, RPower said.
The Sasan UMPP is the largest integrated power plant and coal mining project in the world. Coal production has already commenced from the 20 million tonnes Moher and Moher-Amlohri coal mines associated with the power project.
Havells India rose 1.8% after the company said that CARE has assigned a credit rating of CARE AA+ to the Fixed Deposit programme of the company. The announcement was made on Tuesday, 8 April 2014.
In the foreign exchange market, the rupee edged higher against the dollar, tracking gains in most other Asian units versus the greenback. The partially convertible rupee was hovering at 60.09, compared with its close of 60.11/12 on Monday, 7 April 2014. India's financial markets were closed on Tuesday, 8 April 2014, on account of Ram Navami.
The Securities and Exchange Board of India (Sebi) on Monday, 7 April 2014, partially reversed curbs on dollar-rupee forward contracts that were imposed last year after the rupee hit record low against the dollar. Sebi had doubled the margin requirement on the domestic dollar-rupee forward trades last year in a bid to arrest the steep decline of the rupee. The stock market regulator on Monday, 7 April 2014, asked stock exchanges and clearing corporations to restore the initial margins and extreme loss margin for dollar-rupee trades to pre 8 July 2013 levels from 15 April 2014.
The Reserve Bank of India (RBI) on Monday, 7 April 2014, said that with a view to further liberalising the existing facilities the RBI has decided to allow all resident individuals, firms and companies, who have actual or anticipated foreign exchange exposures to book foreign exchange forward contracts up to $250,000 on the basis of a simple declaration without any requirement of further documentation, the RBI said in a circular issued to Authorised Dealer Category-I (AD Category-I) banks. This is higher than the existing limit of $100,000. The existing facilities in terms of this circular for Small and Medium Enterprises (SMEs) having direct and/or indirect exposures to foreign exchange risk permitting them to book/cancel/roll over forward contracts without production of underlying documents to manage their exposures effectively subject to conditions specified therein shall remain unchanged, the RBI said.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.
The next major trigger for the stock market is Q4 March 2014 and year ended 31 March 2014 (FY 2014) corporate earnings. Investors and analysts will closely watch the management commentary that would accompany the results to see if there is any revision in their future earnings forecast of the company for the year ending 31 March 2015 (FY 2015) and/or for the year ending 31 March 2016 (FY 2016). Indian companies will start reporting their Q4 and full year results from mid-April 2014. The result season will conclude in end-May 2014.
A major near term trigger for the stock market is the outcome of the upcoming Lok Sabha elections. The 36 days long voting process began on 7 April 2014 and will conclude on 12 May 2014. The results will be declared on 16 May 2014 after which India will get a new government. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31.
Polling began for the lone parliamentary seat in Nagaland in the second phase of Lok Sabha elections today, 9 April 2014. The poll will decide the fate of Chief Minister Neiphiu Rio, who is the candidate from his Naga Peoples Front party.
Asian stocks outside Japan rose on Wednesday, 9 April 2014, as consumer companies advanced. Key benchmark indices in Hong Kong, Singapore, China, Taiwan and South Korea were up 0.18% to 0.8%. Japanese equities fell after the yen rose against the dollar. The Nikkei 225 Average lost 2.1%.
The Bank of Japan (BOJ) refrained from adding to unprecedented monetary stimulus after a monetary policy review on Tuesday, 8 April 2014, as Governor Haruhiko Kuroda said the blow to the economy from last week's sales-tax increase will fade during the summer. The central bank will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen ($682 billion) per year, it said in a statement in Tokyo. At a press briefing, Kuroda said the BOJ would always adjust policy without hesitation as needed, including easing or tightening. The economy has continued to recover moderately, "albeit with some fluctuations due to the consumption tax hike," the BOJ said in its statement. Kuroda said he will adjust record easing that the BOJ began in April last year should prospects for achieving the price target be jeopardized.
Indonesia's central bank kept its key interest rate unchanged after a monetary policy review on Tuesday, 8 April 2014, extending a pause in monetary tightening as inflation slowed. Bank Indonesia Governor Agus Martowardojo and his board maintained the reference rate at 7.5%, the central bank said in Jakarta. It also kept the deposit facility rate unchanged at 5.75%.
Trading in US index futures indicated that the Dow could advance 5 points at the opening bell on Wednesday, 9 April 2014. US stocks snapped three-day losing streak on Tuesday, 8 April 2014, on bargain-hunting as investors picked up stocks that had fallen the most in the slump over the previous three days.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
In Europe, a monthly meeting of the Monetary Policy Committee of the Bank of England's (BoE) for monetary policy review is scheduled tomorrow, 10 April 2014.
Stronger US growth this year and next will help the world economy withstand weaker recoveries in emerging markets including Brazil and Russia, the International Monetary Fund (IMF) said in a report yesterday, 8 April 2014. The IMF predicted global growth of 3.6% this year, compared with a January estimate of 3.7%. Next year, the expansion will accelerate to 3.9%, unchanged from the prior forecast. Developing Asian economies are forecast to grow 6.7% this year, the IMF said.
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