Weakness continued on the bourses in mid-morning trade. The market breadth once again turned negative from positive in mid-morning trade. The barometer index, the S&P BSE Sensex, was down 167.76 points or 0.74%, off close to 275 points from the day's high and up close to 40 points from the day's low. The market sentiment was hit adversely after data released by the government after trading hours on Friday, 11 April 2014, showed that India's industrial production witnessed a surprise contraction in February 2014 as manufacturing activity shrunk. That data came after another data released during trading hours on Friday, 11 April 2014, showed that India's merchandise exports declined for the second month in a row in March 2014. Weakness in emerging-market stocks also weighed on sentiment on Indian bourses.
Auto stocks dropped ahead of data on inflation based on consumer price index (CPI) and whole sale price index (WPI), both, for the month of March 2014 today, 15 April 2014. Tata Motors declined its global wholesales declined in March. Cadila Healthcare rose after the company said that the company and Zydus Pharmaceuticals (USA), Inc. have entered into a settlement agreement with Depomed, Inc. to settle their ongoing patent infringement litigation related to Gralise (gabapentin) 300 mg and 600 mg tablets.
A bout of volatility was witnessed as key benchmark indices slipped into the red after opening higher. The Sensex languished in negative terrain in morning trade. Weakness continued on bourses in mid-morning trade.
The market sentiment was affected adversely by data showing that foreign funds turned net sellers of Indian stocks on Friday, 11 April 2014. Foreign Institutional Investors (FIIs) sold shares worth a net Rs 362.29 crore on Friday, 11 April 2014, as per provisional data from the stock exchanges. The stock market was closed on Monday, 14 April 2014, on account of Dr. Baba Saheb Ambedkar Jayanti.
Emerging-market shares dropped today, 15 April 2014, as the slowest Chinese money supply growth in almost 13 years tempered optimism from improving US economic data.
At 11:25 IST, the S&P BSE Sensex was down 167.76 points or 0.74% to 22,461.20. The index declined 209.45 points at the day's low of 22,419.51 in early trade, its lowest level since 9 April 2014. The index jumped 108.35 points at the day's high of 22,737.31 in early trade, its highest level since 10 April 2014.
The CNX Nifty was down 50.05 points or 0.74% to 6,726.25. The index hit a low of 6,711.75 in intraday trade, its lowest level since 9 April 2014. The index hit a high of 6,813.40 in intraday trade, its highest level since 10 April 2014.
The BSE Mid-Cap index was off 1.31 points or 0.02 at 7,337.15. The BSE Small-Cap index was up 7.11 points or 0.09% at 7,530.29. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market once again turned negative from positive in mid-morning trade. On BSE, 1,129 shares dropped and 1,113 shares rose. A total of 120 shares were unchanged. Earlier, the breadth had turned positive from negaive in morning trade.
Cadila Healthcare rose after the company said that the company and Zydus Pharmaceuticals (USA), Inc. have entered into a settlement agreement with Depomed, Inc. to settle their ongoing patent infringement litigation related to Gralise (gabapentin) 300 mg and 600 mg tablets. The stock was up 1.72%. The settlement with Depomed permits Cadila and Zydus to begin selling generic versions of Gralise on 1 January 2024, or earlier under certain circumstances. Other terms of the settlement were not disclosed.
The agreement is subject to review by the US Department of Justice and the Federal Trade Commission, and entry of an order dismissing the litigation by the US District Court for the District of New Jersey.
Auto stocks dropped ahead of data on inflation based on consumer price index (CPI) and whole sale price index (WPI), both, for the month of March 2014 today, 15 April 2014. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. Mahindra & Mahindra (M&M) (down 1.76%), Hero MotoCorp (down 1.54%), Maruti Suzuki India (down 0.7%), TVS Motor Company (down 1.41%), Ashok Leyland (down 0.41%) and Bajaj Auto (down 1.5%), declined.
Tata Motors declined 2.55%. Tata Motors Group's global wholesales including Jaguar Land Rover declined 17.89% to 95,668 units in March 2014 over March 2013. Global wholesales of Jaguar Land Rover rose 1.47% to 43,311 units in March 2014 over March 2013.
Tata Group's global wholesales including Jaguar Land Rover declined 15.59% to 10.09 lakh units in the year ended 31 March 2014 (FY 2014) over the year ended 31 March 2013 (FY 2013). Global wholesales of Jaguar Land Rover rose 15.53% to 4.29 lakh units in FY 2014 over FY 2013.
Infosys gained 1.55% to Rs 3,286 after the company before trading hours today, 15 April 2014, said its consolidated net profit rose 4.1% to Rs 2992 crore on 1.2% decline in revenue to Rs 12875 crore in Q4 March 2014 over Q3 December 2013. The stock was volatile. The stock hit high of Rs 3,371 and low of Rs 3,270.40 so far during the day. Infosys' non-operational income jumped 16.4% to Rs 851 crore in Q4 March 2014 over Q3 December 2013. The results are as per International Financial Reporting Standards.
Infosys has forecast revenue growth of 7% to 9% in dollar terms for the year ending 31 March 2015 (FY 2015). The company has forecast revenue growth of 5.6% to 7.6% in rupee terms for FY 2015. The guidance in rupee terms is based on rupee dollar conversion rate of 60.
Infosys had liquid assets including cash and cash equivalents, available-for-sale financial assets, certificates of deposits and government bonds at Rs 30251 crore as on 31 March 2014, higher than Rs 27440 crore as on 31 December 2013.
Infosys said that the company's current policy is to pay dividends up to 30% of post-tax profits. The board has decided to increase the dividend pay-out ratio to up to 40% of post-tax profits with effect from FY 2014. The board of directors recommended a final dividend of Rs 43 per share for FY 2014.
Infosys and its subsidiaries added 50 clients in Q4 March 2014 and 238 clients in FY 2014.
There was gross addition of 10,997 employees during the quarter and 39,985 during the year by Infosys and its subsidiaries.
Commenting on the company's financial performance, S. D. Shibulal, CEO and Managing Director, Infosys said: "I am pleased that we have been able to double our growth rate for the full year compared to last year, though performance in the last quarter of FY 2014 has been disappointing. We have guided for a revenue growth of 7%-9% next year and remain firmly focused on building the growth momentum by making all the necessary investments in our business".
Rajiv Bansal, Chief Financial Officer, Infosys said: "Our cash and cash equivalents crossed Rs 30000 crore during the quarter. We have increased the dividend payout ratio to up to 40% of post-tax profits effective FY 2014 to enhance returns for our shareholders".
In the foreign exchange market, the rupee edged lower against the dollar, tracking weakness in other Asian currencies against the dollar. The partially convertible rupee was hovering at 60.26, compared with its close of 60.175/185 on Friday, 11 April 2014. Indian financial markets were closed on Monday, 14 April 2014, on account of Dr. Baba Saheb Ambedkar Jayanti.
Indian government bond prices dropped on speculation a drop in yields last week deterred buyers waiting for data on inflation and an auction. The yield of 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 9.004%, higher than its close of 8.9406% on Friday, 11 April 2014. Bond yield and bond prices move in opposite direction. Indian financial markets were closed on Monday, 14 April 2014, on account of Dr. Baba Saheb Ambedkar Jayanti.
Global rating agency Standard & Poor's (S&P) said today, 15 April 2014, the direction and pace of policy reforms in India, more than which political party takes control after elections, will have a bearing on the sovereign rating. "An important factor is how fragmented the government will be. The more parties involved in the next coalition government, the more likely policies will be incoherent and less supportive of credit attributes," said Kim Eng Tan, sovereign credit analyst at S&P, in a statement. S&P has a BBB- rating on India with a negative outlook and has warned of the risks of a ratings downgrade in the absence of structural reforms, fiscal consolidation and if economic growth decelerates further.
India's index of industrial production (IIP) dipped 1.9% in February 2014, snapping 0.8% growth recorded in the previous month. IIP recorded decline for six out of 11 months in FY 2014 till February 2014. The sharp decline in the output of manufacturing sector at 3.7% in February 2014, mainly led to dip in IIP during February 2014. Meanwhile, the output of mining sector rose 1.4%, while the electricity generation surged 11.5% in February 2014. The data was announced after market hours on Friday, 11 April 2014.
The rate of inflation based on the wholesale price index (WPI) is seen edging up to 5.3% in March 2014, from 4.7% in February 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government is scheduled to announce WPI inflation data for March 2014 at 12 noon today, 15 April 2014.
The rate of inflation based on the consumer price index (CPI) is seen inching up to 8.2% in March 2014, from 8.1% in February 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government is scheduled to announce CPI inflation data for March 2014 at 17:00 IST today, 15 April 2014.
Global credit rating agency Fitch Ratings after trading hours on Friday, 11 April 2014, affirmed India's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BBB-'. The issue ratings on India's senior unsecured foreign and local currency bonds are also affirmed at 'BBB-', Fitch said. The outlooks on the Long-Term IDRs are stable, the rating agency said. The Country Ceiling is affirmed at 'BBB-' and the Short-Term Foreign Currency IDR at 'F3', it said.
India's sovereign ratings benefit from relatively high real GDP growth: the five-year average is 6.7%, compared with the median of 3.2% for peers in the 'BBB' rating category (sovereigns rated 'BBB-', 'BBB' and 'BBB+'). However, the Indian economy has lost much of its dynamism in recent years and the average is coming down, the rating agency said. Fitch forecasts real GDP growth to rise to 5.5% in the year ended 31 March 2015 (FY 2015) and 6% in the year ended 31 March 2016 (FY 2016), from 4.7% in the year ended on 31 March 2014 (FY 2014).
The course of the Indian economy is uncertain in light of the on-going parliamentary elections, with the results due to be announced on 16 May 2014, the rating agency said. Once the next coalition starts implementing its economic policies, it will become clearer whether the economy can return to a higher sustainable growth path or whether it remains stuck at current levels, it said. A policy push that includes structural and governance reforms, fiscal consolidation and efforts to rein in inflationary pressures would likely require a coherent coalition with a strong electoral mandate, the rating agency said.
Fiscal consolidation remains critical to the rating, as both the general government budget deficit of the Centre and the States combined (7.3% of GDP) and the gross general government debt (64.7%) are much higher than 'BBB' category medians (respectively -2.5% of GDP and 40% of GDP), Fitch said. The central government seems to have met its budget deficit target of 4.8% of GDP (including privatization receipts) for FY 2014, despite the looming elections. But this was only achieved through substantial one-off measures, such as special dividends by state companies, and deferral of bill payments and capital expenditure, which raise questions about the feasibility of a fiscal consolidation process over the long run, Fitch said. Credibility of the government's fiscal policy would be strengthened through the implementation of a clear strategy to reach the Fiscal Responsibility and Budget Management Act's consolidation path towards a general government deficit of 3% of GDP by FY 2017, Fitch said.
India's standards of governance and business environment are relatively weak and constrain its investment potential. Fitch expects a gradual pick-up in investment in its baseline scenario once the election uncertainty dissipates. The clearance of close to 300 investment projects by the Cabinet Committee on Investment should facilitate investment activity. However, some of these projects may no longer be viable or may still face difficulties at the state level, Fitch said. More structural measures could cause investment to take off decisively, as illustrated by India's low score for World Bank indicators related to the ease of doing business (28.3 percentile compared with 70.7 percentile for 'BBB' peers) and governance (48.3 percentile compared with 54.6).
India's inflation is high at a five-year average of 10.2% compared with the 'BBB' peer median of 4.2%. However, the Reserve Bank of India (RBI) seems more determined than in the past to bring down inflation, as evidenced by recent policy rate hikes. Clarity on potentially a new monetary policy framework would likely contribute to lower inflation expectations, subsequently feeding through to lower actual inflation levels. Nonetheless, some structural factors driving inflation, including inefficiencies in food distribution, are in the realm of the government rather than the RBI, Fitch said.
The rating agency said that India's external position continues to be strong, given the high level of foreign exchange reserves of $304 billion or 6.1 months of current account receipts cover (compared with the 'BBB' peer median of 4.8 months) and low net external debt of 4.4% of GDP (compared with a 9.2% 'BBB' peer median). This provides a thick cushion in case of renewed pressures on the rupee and other asset markets. The authorities reacted effectively to the market jitters in 2013 related to the expectations surrounding the US Federal Reserve tapering its stimulus, helping lower the current account deficit from 4.8% of GDP in FY 2013 to an expected 1.9% of GDP in FY 2014, Fitch said.
In a number of respects the Indian economy is less developed than investment grade peers, Fitch said. India's average per capita income remains low at $1,543 in 2013 compared with the 'BBB' range median of $10,778. The UN Human Development Index indicates relatively low basic human development.
The profitability and capital position of the banking sector will likely remain under pressure, especially for public sector banks, as asset quality continues to deteriorate in the context of a weak macro environment, Fitch said. Non-performing loans increased to 4.2% of total assets in September 2013. Nonetheless, Fitch does not view banks' balance sheets as a material risk to the public finances at this stage, the rating agency said.
Since the rating outlook is stable, Fitch does not currently anticipate developments with a high likelihood of leading to a rating change. However, future developments that could individually or collectively, result in negative rating action include deviation from the fiscal consolidation path in such a way that it results in continuation of large general government budget deficits, a prolonged period of disappointing real GDP growth, a loose macro policy setting that would cause inflationary pressures to persist and/or the current account to widen to such an extent that it would lead to external funding stress, greater-than-expected deterioration in the banking sector's asset quality that would prompt large-scale financial support from the sovereign, Fitch said.
Future developments that could individually or collectively result in positive rating action include sustained fiscal consolidation or fiscal reforms which lead to a sharp decline in the ratio of gross general government debt to GDP, new reform momentum with the implementation of far-reaching reforms that raise the potential growth rate, establishing a credible low inflation environment, Fitch 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.
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 1 June and the new House has to be constituted by 31 May.
Asian stocks edged higher on Tuesday, 15 April 2014, after the largest jump in US retail sales since 2012 added to optimism that the recovery in the world's biggest economy is intact. Key benchmark indices in Japan, Singapore, Indonesia, and Taiwan were up 0.14% to 0.93%. Key benchmark indices in South Korea, Hong Kong and China were off 0.29% to 1.28%.
China's broadest measure of credit fell 19% from a year earlier in March and money supply grew at the slowest pace since 2001, data from the People's Bank of China showed today, 15 April 2014. Aggregate financing was 2.07 trillion yuan ($333 billion) from 2.55 trillion yuan a year earlier. New yuan loans were 1.05 trillion yuan. M2, China's broadest measure of money supply, rose 12.1% in March from a year earlier.
Trading in US index futures indicated that the Dow could drop 2 points at the opening bell on Tuesday, 15 April 2014. US stocks edged higher in choppy trade on Monday, 14 April 2014, weathering a selloff at the start of the final hour, after data showed retail sales increased the most since 2012 and as Citigroup Inc. earnings unexpectedly rose.
American retailers warmed up in March as the winter chill faded -- and it wasn't just car dealers who benefited. Sales jumped a greater-than-forecast 1.1%, the biggest gain since September 2012, following a 0.7% advance in February that was more than twice as large as previously reported, Commerce Department figures showed.
The US government's deficit will fall to $492 billion this year, according to the Congressional Budget Office, a steeper drop than originally predicted from $680 billion in fiscal year 2013. The 2014 deficit will be 2.8% of the economy, according to CBO, almost 32% below fiscal year 2013, when it was 4.1%. The deficit will shrink again in fiscal 2015 to $469 billion, before rising to about $1 trillion in fiscal years 2022 to 2024, CBO said.
Federal Reserve Chair Janet Yellen will speak today, 15 April 2014, as manufacturing and inflation reports are released after better-than-estimated retail sales and Citigroup Inc. earnings buoyed US stocks on Monday, 14 April 2014.
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 decided after the conclusion of a monetary policy review to trim its monthly bond purchases by $10 billion to $55 billion.
US and European lawmakers are looking at how to punish Russia for its support of separatists in Ukraine. Amid the growing tensions, European officials agreed to add new names to a list of people facing sanctions following Russian President Vladimir Putin's annexation of Crimea. US President Barack Obama warned Putin of further consequences for supporting the separatists.
Powered by Capital Market - Live News
