Key benchmark indices dropped on the first trading day of the week amid immense intraday volatility. A slide in crude oil prices from near 9-month high aided intraday recovery on the domestic bourses in late trade. The barometer index, the S&P BSE Sensex, regained the psychological 25,000 level after alternately moving above and below that mark during the trading session. With modest losses for the day, the Sensex and the 50-unit CNX Nifty, both, settled at their lowest level in 2-1/2 weeks. The government after trading hours on Friday, 20 June 2014, announced 6.5% hike in railway freight rate and 14.2% increase in railway passenger fare to boost revenue of the railways to meet its annual expenditure. Increase in railway freight rate and firm global oil prices have stoked inflation worries. The Sensex shed 74.19 points or 0.3%, up 152.66 points from the day's low and off 166.18 points from the day's high. The market breadth indicating the overall health of the market turned positive from negative in late trade.
Coming back to today's trade, index heavyweight and cigarette maker ITC slumped on reports that Union health minister Harsh Vardhan has urged Finance Minister Arun Jaitley to raise tax on cigarettes in the upcoming final Union Budget for 2014-15 to deter people from smoking. Shares of power generation firms were mixed after the government raised freight rates on Friday, 20 June 2014. Tyre stocks rallied, with CEAT hitting record high. Hero MotoCorp rose on bargain hunting after recent slide.
IT stocks edged lower. Sugar stocks were in demand after media reports suggested that in a move to bail out the ailing sugar industry, Food Minister Ram Vilas Paswan has agreed to raise import duty from 15% to 40%. Shares of Essar Group companies jumped after the board of directors of Essar Oil on Sunday, 22 June 2014, gave its nod to promoters' proposal to delist the company from Indian bourses. Kotak Mahindra Bank fell after its exclusion from MSCI index. Metal and mining stocks gained after a preliminary survey showed that manufacturing activity in China's factory sector expanded in June for the first time in six months. Shares of companies whose fortunes are linked to orders from Indian Railways rose after the government revised higher passenger fare and freight rates on Friday, 20 June 2014.
The S&P BSE Sensex shed 74.19 points or 0.3% to settle at 25,031.32, its lowest closing level since 5 June 2014. The index lost 226.85 points at the day's low of 24,878.66 in late trade. The index jumped 91.99 points at the day's high of 25,197.50 in early trade.
The CNX Nifty lost 18.10 points or 0.24% to settle at 7,493.35, its lowest closing level since 5 June 2014. The index hit a low of 7,441.60 in intraday trade. The index hit a high of 7,534.80 in intraday trade.
The total turnover on BSE amounted to Rs 3006 crore, lower than Rs 3056.97 crore on Friday, 20 June 2014.
The market breadth indicating the overall health of the market turned positive from negative in late trade. On BSE, 1,562 shares rose and 1,387 shares fell. A total of 124 shares were unchanged. Earlier, the breadth had turned negative from positive in afternoon trade.
The BSE Mid-Cap index advanced 56.11 points or 0.63% to settle at 9,018.07. The BSE Small-Cap index advanced 55.13 points or 0.56% to settle at 9,816.35. Both these indices outperformed the Sensex.
The S&P BSE Oil & Gas index (up 1.43%), the S&P BSE Metal index (up 1.13%), the S&P BSE Auto index (up 0.73%), the S&P BSE Capital Goods index (up 0.55%), the S&P BSE Healthcare index (up 0.48%), the S&P BSE Bankex (up 0.44%), the S&P BSE Realty index (up 0.42%) and the S&P BSE Power index (up 0.17%) outperformed the Sensex.
The S&P BSE Consumer Durables index (down 0.9%), the S&P BSE Teck index (down 1.12%), the S&P BSE IT index (down 1.56%) and the S&P BSE FMCG index (down 4.06%) underperformed the Sensex.
Index heavyweight and cigarette maker ITC dropped on reports that Union health minister Harsh Vardhan has urged Finance Minister Arun Jaitley to raise tax on cigarettes in the upcoming final Union Budget for 2014-15 to deter people from smoking. The stock was off 5.92% at Rs 316. The stock hit high of Rs 335 and low of Rs 312.40. In a letter to the Finance Minister, Vardhan has sought an increase in tax on cigarettes of all lengths by Rs 2 to Rs 3.5 per stick, as per reports.
Shares of state-run oil marketing companies (PSU OMCs) rose as increase in railway passenger fare and freight rates raised expectations that the government may take pro-reform measures such as deregulation of diesel prices. Among PSU OMCs, Indian Oil Corporation (up 1.6% at Rs 327.90), HPCL (up 1.1% at Rs 391.15) and BPCL (up 0.42% at Rs 556.30) edged higher.
Oil India gained 3.07% to Rs 585.
ONGC surged 4.63% to Rs 437.05. ONGC announced after market hours on Friday, 20 June 2014, that its wholly-owned subsidiary, ONGC Videsh, entered into a Memorandum of Understanding (MOU) with Turkish Petroleum Corporation (TPAO) on the sidelines of World Petroleum Congress (WPC) 2014 at Moscow. The MOU paves the way for joint cooperation between two National Oil Companies in the hydrocarbon sector. The MOU envisages two companies working together for E&P activities in Turkey, joint participation in bidding for opportunities including exploration bid rounds in third countries and pursuit of hydrocarbon area related research and development activities.
ONGC Videsh and TPAO are consortium partners in the Azeri-Chirag-Guneshli (ACG) project in Azerbaijan and Baku-Tbilisi-Ceyhan (RTC) pipeline from Azerbaijan to Turkey via Georgia.
Hero MotoCorp rose 2.2% to Rs 2,575.50, with the stock recovering on bargain hunting after recent slide. Shares of Hero MotoCorp had declined 3.47% in four trading sessions to settle at Rs 2,520 on Friday, 20 June 2014, from a recent high of Rs 2,610.75 on 16 June 2014.
Bharti Airtel gained 0.61% after the company announced the signing the definitive agreement with Loop Mobile (India). In February this year, Bharti Airtel and Loop Mobile announced a strategic agreement for combining their operations in Mumbai (India) service area. Bharti Airtel, however, did not disclose how much it was paying for acquiring the assets of Loop Mobile (erstwhile BPL Mobile), which currently only operates in Mumbai, with 3 million subscribers.
L&T gained 0.31% after the company said during market hours that it has entered into a definitive investment agreement with a wholly owned subsidiary of Canada Pension Plan Investment Board (CPPIB) viz. CPP Investment Board Singaporean Holdings 1 (CPPIBSH) for an initial investment tranche of Rs 1000 crore to be invested by CPPIBSH into the company's subsidiary L&T Infrastructure Development Projects (L&T IDPL).
This will be followed by a second tranche of Rs 1000 crore, or such higher amount as may be agreed between the company and CPPIBSH, after twelve months from the date of initial investment subject to any required regulatory approval at such time. CPPIBSH will invest in preference shares of L&T IDPL, compulsorily convertible into equity shares by 2018 at a valuation to be determined as per a mutually agreed process. Post conversion, CPPIBSH will hold a minority stake in the equity capital of L&T IDPL.
L&T said that this would be the first direct private investment by a Canadian pension fund into an Indian infrastructure development company.
Metal and mining stocks gained after a preliminary survey showed that manufacturing activity in China's factory sector expanded in June for the first time in six months. China is the World's largest consumer of copper and aluminum. Jindal Steel & Power (up 2.99%), Hindustan Copper (up 1.95%), JSW Steel (up 1.86%), Sesa Sterlite (up 1.47%), Tata Steel (up 1.45%), Hindalco Industries (up 1.25%), Hindustan Zinc (up 1.07%), NMDC (up 0.35%) gained. National Aluminum Company (down 1.88%) and Steel Authority of India (Sail) (down 0.85%) declined.
Cement stocks largely shrugged off the government's announcement of about 6.5% increase in freight rates. Ambuja Cements (up 2.71%) and ACC (up 2.26%) edged higher. Shree Cement (down 0.28%), UltraTech Cement (down 0.25%) declined.
Higher freight rates will increase operating cost of the cement companies. Cement industry transports nearly 40% of its cement production by rail.
Coal India rose 0.06% to Rs 386.70. The stock was volatile. The stock hit high of Rs 390.50 and low of Rs 383.80. Coal India transports coal mainly by rail.
Shares of companies whose fortunes are linked to orders from Indian Railways rose after the government revised higher passenger fare and freight rates on Friday, 20 June 2014. Simplex Casting (up 4.92%), Texmaco Infrastructure & Holdings (up 3.12%), BEML (up 2.9%), Kalindee Rail Nirman (Engineers) (up 2.72%), Bharat Heavy Electricals (up 2.7%), Transformers & Rectifiers (India) (up 2.62%), Titagarh Wagons (up 2.42%), Container Corporation of India (up 1.47%) edged higher.
Shares of power generation firms were mixed after the government raised freight rates on Friday, 20 June 2014. The cost of transport of coal will rise after a freight rate hike. Coal is a primary raw material used in thermal power generation process. Reliance Power (down 0.73% to Rs 102.05), JSW Energy (down 1.63% to Rs 72.25) and Reliance Infrastructure (down 3.12% to Rs 705.30) declined. NTPC (up 0.73% to Rs 152.80), Tata Power Company (up 0.39% to Rs 101.75) and Adani Power (up 0.34% to Rs 58.95), gained.
IT stocks edged lower. HCL Technologies (down 1.71%), Wipro (down 1.27%), TCS (down 0.59%) and Tech Mahindra (down 0.5%) declined.
Infosys lost 2.58%. The company said during market hours that FONDEP, one of Morocco's leading microfinance institutions, has chosen Infosys Finacle for its strategic core banking transformation program. The Finacle solution will help FONDEP adapt to changing customer needs by enabling them to offer relevant products to their customer base, Infosys said in a statement today, 23 June 2014.
Private sector lender Kotak Mahindra Bank lost 3.53% after the MSCI said it will delete the stock from its Global Standard Index with effect from 8 July 2014. Media reports suggested that MSCI may have deleted Kotak Mahindra Bank stock from its index after the bank's foreign shareholding reached trigger limit of 37%.
Adani Ports and Special Economic Zone rose 2.05%. Adani Ports and Special Economic Zone after market hours said that further to the share purchase agreement dated 16 May 2014 executed by Adani Ports and Special Economic Zone with L&T Infrastructure Development Projects and Tata Steel, Adani Ports and Special Economic Zone has completed the acquisition of 100% stake in the Dhamra Port Company from L&T Infrastructure Development Projects and Tata Steel.
Sugar stocks were in demand after media reports suggested that in a move to bail out the ailing sugar industry, Food Minister Ram Vilas Paswan has agreed to raise import duty from 15% to 40%.
Shree Renuka Sugars (up 10.32%), Bajaj Hindusthan (up 9.87%), Balrampur Chini Mills (up 6.66%), Dhampur Sugar Mills (up 7.97%), EID Parry (India) (up 4.78%), Triveni Engineering & Industries (up 9.91%), Simbhaoli Sugars (up 4.96%), Dwarikesh Sugar (up 4.92%), Sakthi Sugars (up 4.85%) edged higher.
While taking the decision at a second high-level meeting on Monday, 23 June 2014, the food minister also extended sugar export incentives till September 2014. In addition, ethanol blending with petrol too has been raised to 10% from 5%, according to reports.
Paswan has reportedly said that these latest measures for the revival of sugar industry are subject to the condition that sugar mills clear dues owed to farmers on sugarcane purchases estimated at Rs 11000 crore.
Shares of Essar Group companies jumped after the board of directors of Essar Oil on Sunday, 22 June 2014, gave its nod to promoters' proposal to delist the company from Indian bourses. Essar Oil (up 5%), Essar Ports (up 4.31%) and Essar Shipping (up 3.71%) edged higher.
Essar Energy Holdings (EEHL) -- the promoter of Essar Oil -- said the delisting proposal of Essar Oil would be in furtherance of the business strategy of Essar Energy Plc, of taking the entire hydrocarbon/energy business group of Essar Energy Plc private, following the delisting of the shares of Essar Energy Plc from the London Stock Exchange on 10 June 2014. EEHL believes that Essar Oil requires substantial investment to develop and grow its businesses, especially the refining and marketing business. Full ownership of Essar Oil will provide EEHL with increased operational/financial flexibility to support the company's businesses and strategic needs.
Sundram Fasteners rose 2.62% after the company said its wholly owned subsidiary has acquired 24.53% of equity capital of TVS Infotech (an existing associate company) consequent to the allotment of rights shares to Sundaram Fasteners Investment. With this acquisition, Sundaram Fasteners Investment has 62.27% equity stake in TVS Infotech. TVS Infotech has thus become a subsidiary of Sundaram Fasteners Investment and consequently a step-down subsidiary of Sundram Fasteners with effect from 18 June 2014.
TVS Infotech holds 100% equity stake in TVS Infotech Inc., Michigan, USA. As a result of the above mentioned acquisitions, TVS Infotech Inc., Michigan, USA has also become a subsidiary of Sundram Fasteners Investments and consequently a step-down subsidiary of Sundram Fasteners with effect from 18 June 2014, Sundram Fasteners said.
Indiabulls Housing Finance rose 1.4% after the company said that the rating committee of ICRA has upgraded the long term rating to the non-convertible debentures programme of the company. With this IBHFL enjoys a AA+ from three rating agencies and joins a group of select few HFCs and NBFCs to be rated AA+ by ICRA.
Gammon Infrastructure Projects hit an upper circuit limit of 5% at Rs 14.23 after the company said its board has approved a qualified institutional placement issue of equity shares or equity linked instrument to raise upto Rs 500 crore. The company made the announcement after market hours on Friday, 20 June 2014.
Tyre stocks rallied. Apollo Tyres (up 2.97% to Rs 197.80), JK Tyre & Industries (up 4.6% to Rs 311.85), and MRF (up 1.76% to Rs 23,600) gained.
CEAT surged 12.59% to Rs 658.95 after hitting record high of Rs 677 in intraday trade.
Praj Industries jumped on reports that the government has decided to raise the level of mandatory blending of ethanol in petrol to 10% from 5%, as a part of measures for the revival of the sugar industry. The stock was up 5.82% at Rs 71.80. Praj Industries undertakes implementation of projects for installing plants based on a variety of sugar based feed stocks for 1st generation ethanol production. Ethanol is produced by the fermentation of molasses. Molasses is a by-product of the refining of sugarcane into sugar.
Deepak Nitrite rose 3.31% to Rs 99.80 after the company said that its board of directors at a meeting held today, 23 June 2014, approved the sale of parcel of land admeasuring 12,141 sq. mt at Sinhagad Road, Pune, Maharashtra. The announcement was made during mrket hours today, 23 June 2014. The proposal to sell the said land is with a view to monetize the value of its unutilized assets and improve shareholders value by freeing up capital to facilitate growth, Deepak Nitrite said. The company will continue to make additional disclosures as and when definitive material events in this process takes place, Deepak Nitrite added.
Divi's Laboratories gained 1.56% after the company said after market hours on Friday, 20 June 2014, that it has had a successful inspection by the USFDA from 16th to 20th June, 2014, without any observations, for its unit near Hyderabad during this month. The purpose of this inspection was for general cGMP (Current Good Manufacturing Practices) for the facility.
AstraZeneca Pharma India rose 1.47% after the company said its shareholders approved a proposal to delist the company from the bourses. The announcement was made after market hours on Friday, 20 June 2014. In March this year, AstraZeneca Pharma India's board had approved the proposal from AstraZeneca Pharmaceuticals AB, Sweden (AZP AB), the promoter of the company, to delist the equity shares of the company from Indian stock exchanges (BSE, NSE and Bangalore Stock Exchange). AZP AB holds 75% in the Indian unit (as per shareholding pattern as on 31 March 2014).
Indian stocks witnessed high intraday volatility today, 23 June 2014. The market edged higher amid initial volatility as the government's announcement after trading hours on Friday, 20 June 2014, to raise passenger fare and railway freight fuelled expectations that the Centre has started taking tough decisions which are required to bring the economy back on growth path. But, the initial gains proved short lived as firm global crude oil prices and hike in railway freight rates stoked inflation worries. The Sensex and the 50 Nifty, both, hit their lowest level in 2-1/2 weeks in morning trade. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming losses after hitting fresh intraday low in mid-morning trade as firm global crude oil prices and hike in railway freight rates stoked inflation worries. The Sensex regained the psychological 25,000 level after falling below that mark in intraday trade. Key benchmark indices weakened once again after trimming intraday losses in early afternoon trade. Key benchmark indices extended losses and hit fresh intraday low in afternoon trade after European market opened lower. The Sensex fell below the psychological 25,000 mark. Key benchmark indices trimmed losses in mid-afternoon trade. A choppy trading session was witnessed in late trade as key benchmark indices trimmed losses soon after extending intraday decline. The Sensex regained 25,000 level.
Today's decline marked fourth straight day of losses for Indian stocks. The Sensex has declined 489.87 points or 1.91% in four trading days from recent high of 25,521.19 on 17 June 2014. The Sensex has risen 813.98 points or 3.36% in June so far (till 23 June 2014). The Sensex has gained 3,860.64 points or 18.23% in calendar year 2014 so far (till 23 June 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 7,582.61 points or 43.45%. From a record high of 25,725.12 hit on 11 June 2014, the Sensex is off 693.80 points or 2.69%.
Indian stocks may continue to remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month June 2014 series to July 2014 series. The near-month June 2014 F&O contract expire on Thursday, 26 June 2014.
The government on Friday, 20 June 2014, raised passenger fare and freight rates. A flat 10% increase in passenger fare was announced for all classes. In addition, there will be an increase of 4.2% in fares on account of FAC (Fuel Adjustment Component) which is due from April 2014. The overall increase in passenger fare is 14.2%.
There has been a flat 5% increase in freight rates. In addition there will be an increase of 1.4% in fares on account of FAC (Fuel Adjustment Component) which is due from April 2014. The overall increase in freight rates will be about 6.5% for major commodities. The revised passenger fare and freight rates and freight structure rationalization will come into effect from 25 June 2014.
Oil prices reversed intraday gains. Brent oil futures for August delivery were off 3 cents at $114.78 a barrel. The contract had risen as much as 85 cents to a near 9-month high of $115.66 a barrel earlier during the day.
The recent spike in crude oil has sparked worries about India's macroeconomic situation as India imports majority of its crude oil requirements. Increase in crude oil prices has raised concerns of increase in India's current account deficit and fiscal deficit. Firm global crude oil prices and the latest hike in railway freight rate have also stoked inflation worries.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 60.205, compared with its close of 60.185/195 on Friday, 20 June 2014.
European markets edged lower on Monday, 23 June 2014, after data showed Euro-area manufacturing and services activity weakened in June. Key benchmark indices in UK, France and Germany were off 0.28% to 0.34%.
Euro-area manufacturing and services activity weakened in June amid a further slowdown in France's economy, underscoring the fragility of the recovery in the 18-nation region. A Purchasing Managers Index for both industries slipped to 52.8 in June from 53.5, Markit Economics said today. That's the 12th month the gauge has exceeded 50, the mark that signals expansion.
Most Asian stocks edged lower in choppy trade on Monday, 23 June 2014. Key benchmark indices in Indonesia, China, Singapore, Hong Kong and Taiwan were down by 0.04% to 1.68%. Key benchmark indices in Japan and South Korea were up by 0.13% and 0.35%.
Activity in China's factory sector expanded in June for the first time in six months as new orders surged, a preliminary HSBC survey showed on Monday, offering new signs the economy is stabilising thanks to Beijing's measures to shore up growth. The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index rose to 50.8 in June from May's final reading of 49.4. It was the first time since December that the PMI was in growth territory, and the highest reading since November, when it was also 50.8.
Trading in US index futures indicated that the Dow could fall 6 points at the opening bell on Monday, 23 June 2014. The Dow Jones Industrial Average and the S&P 500 index closed at record highs on Friday, helped by the prospect of the Federal Reserve keeping interest rates low for a long period of time.
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