Weakness in European stocks and tension at the Indo-Pak border hit investor sentiment as key equity benchmark indices in India slumped on the first trading session of the week. Benchmark indices extended losses in late trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest closing level in nearly eight weeks. The Sensex dropped 296.02 points or 1.11% to settle at 26,271.97. The market breadth indicating the overall health of the market was weak.
Metal and mining stocks edged lower on concerns over growth in China. Most pharma stocks declined. Bank stocks declined. Most auto stocks declined. Capital goods and IT stocks also declined.
Meanwhile, after overnight firing along the Line of Control, fresh ceasefire violation by Pakistani troops has been reported today afternoon in Poonch sector of Jammu region. Home Minister Rajnath Singh reported said today, 7 October 2014, that India has told Pakistan to stop ceasefire violation or else India will give a befitting reply. The Ministry of Home Affairs has reportedly asked the Border Security Force (BSF) to seek a flag meeting with Pakistan over continuous ceasefire violations along the Line of Control. Five civilians were killed and 34 others were injured in firing by Pakistani troops on Monday in Jammu's Arnia sector, as per reports.
In overseas markets, European stocks dropped as a report showed German industrial production contracted the most in more than five years. Asian stocks ended mixed. US stocks edged lower in volatile trade yesterday, 6 October 2014, as investors resorted to profit taking after last week's rally.
Earlier, key indices had lost ground after initial volatility.
In the foreign exchange market, the rupee edged higher against the dollar amid optimism the falling oil price will help narrow the nation's trade deficit.
Brent crude oil prices edged lower after disappointing German output reinforced concern that global oil demand will falter.
The S&P BSE Sensex dropped 296.02 points or 1.11% to settle at 26,271.97, its lowest closing level since 14 August 2014. The index lost 317.75 points at the day's low of 26,250.24 in late trade. The index rose 2.39 points at the day's high of 26,570.38 in early trade.
The CNX Nifty declined 93.15 points or 1.17% to settle at 7,852.40, its lowest closing level since 14 August 2014. The index hit a low of 7,842.70 and a high of 7,943.05 in intraday trade.
The market breadth indicating the overall health of the market was weak. On BSE, 1,767 shares declined and 1,111 shares gained. A total of 113 shares were unchanged.
The BSE Mid-Cap index fell 86.01 points or 0.9% to settle at 9,425.39. The BSE Small-Cap index declined 83.86 points or 0.79% to settle at 10,557.96. Both these indices outperformed the Sensex.
The S&P BSE Consumer Durables index (down 1.72%), the S&P BSE Healthcare index (down 1.85%), the S&P BSE Capital Goods index (down 1.78%), the S&P BSE Metal index (down 2.65%), and the S&P BSE Realty index (down 1.27%), underperformed the Sensex.
The S&P BSE Oil & Gas index (down 0.69%), the S&P BSE FMCG index (down 0.49%), the S&P BSE Auto index (down 0.83%), the S&P BSE Teck index (down 0.66%), the S&P BSE IT index (down 0.81%), the S&P BSE Bankex (down 0.87%), and the S&P BSE Power index (down 0.03%) outperformed the Sensex.
Most pharma stocks declined. Dr Reddy's Laboratories (down 3.18%), Sun Pharmaceutical Industries (down 2.74%) and Wockhardt (down 1.9%) declined. Glenmark Pharmaceuticals rose 2.25%.
Aurobindo Pharma gained 3.06% to Rs 995.20 after scaling a record high of Rs 1,000.80 in intraday trade.
Cadila Healthcare rose 2.32% to Rs 1,338.50 after scaling a record high of Rs 1,373.20 in intraday trade.
Cipla dropped 3.67%. Cipla said on Saturday, 4 October 2014, that the company has signed a definitive agreement with its existing Iranian distributor for setting up a manufacturing facility in Iran. The total contribution from the company over the next 3 years will include machinery, equipment, technical know-how and is expected to be approximately Rs 225 crore for a 75% stake. The proposed investment is subject to completion of certain conditions precedent and applicable regulatory approvals.
Lupin slipped 1.53%. Lupin after market hours on Wednesday, 1 October 2014, said that the closing conditions for acquisition of 100% equity stake in Laboratorios Grin, S.A. DE C.V., Mexico (Lab Grin) were completed on 30 September 2014. As a result Lab Grin has become a wholly-owned subsidiary of Lupin with effect from 30 September 2014.
Ranbaxy Laboratories (Ranbaxy) fell 2.87%. Ranbaxy after market hours on Wednesday, 1 October 2014, said that its wholly owned subsidiary Ranbaxy Laboratories Inc. (RLI) has launched ABSORICA (isotretinoin) 25 mg and 35 mg capsules into the US healthcare market. ABSORICA has become the most prescribed branded oral isotretinoin in the US, as per a recent independent survey conducted with dermatologists, Ranbaxy said. The product is licensed by Ranbaxy from Cipher Pharmaceuticals, Inc. It is indicated for the treatment of severe recalcitrant nodular acne in patients 12 years of age and older, Ranbaxy said.
Cairn India dropped 4.09% as crude oil prices edged lower. Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms like Cairn India.
Bank stocks declined. Among private banks, Axis Bank (down 1.71%), IndusInd Bank (down 0.3%), Federal Bank (down 1.56%), HDFC Bank (down 0.67%) Yes Bank (down 1.12%) and Kotak Mahindra Bank (down 0.43%), edged lower. ICICI Bank rose 0.12%.
Among public sector banks, State Bank of India (SBI) (down 2.2%), Syndicate Bank (down 1.61%), Andhra Bank (down 1.7%), Bank of India (down 2.28%), Bank of Baroda (down 3.58%), Dena Bank (down 1.2%), Canara Bank (down 1.3%), Union Bank of India (down 0.55%) and Punjab National Bank (down 0.7%), edged lower.
Financial Services Secretary G.S. Sandhu was quoted by the media as saying on 30 September 2014 that state-run banks will very soon start raising funds from markets as part of government's efforts to infuse capital into banks to meet the Basel III norms.
Most auto stocks declined. Bajaj Auto (down 0.38%) and Hero MotoCorp (down 2.33%) declined.
Maruti Suzuki India shed 1.02%. Maruti Suzuki India on Monday, 6 October 2014, announced the global launch of its mid-size premium sedan Ciaz. Ciaz's petrol variants are priced from Rs 6.99 lakhs to Rs 9.34 lakhs while diesel variants are priced from Rs 8.04 lakhs to Rs 9.80 lakhs, ex-showroom Delhi.
Mahindra & Mahindra (M&M) dropped 2.26%. M&M today, 7 October 2014, said that Mahindra Two Wheelers (MTWL), an unlisted subsidiary of the company has made a binding offer to acquire a 51% stake in Peugeot Motocycles (PMTC), part of PSA Group based in France. PMTC (a.k.a. Peugeot Scooters), a key player in urban mobility in Europe for 116 years, is the oldest motorized two-wheeler manufacturer in the world. The transaction between MTWL and PSA, subject to Works Council consultation, as part of the employee dialogue process and anti-trust law, would involve infusion of Euro 15 million into PMTC to finance projects implemented through the strategic partnership, and further sale of shares by PSA which would allow MTWL to take a 51% stake in PMTC, M&M said.
Tata Motors rose 0.43%. Tata Motors after market hours on Wednesday, 1 October 2014, said that its total sales (including exports) of Tata commercial and passenger vehicles declined 8% to 46,118 units in September 2014 over September 2013. Domestic sales of Tata commercial and passenger vehicles declined 11% to 40,874 units in September 2014 over September 2013. Exports rose 18% to 5,244 units in September 2014 over September 2013.
Ashok Leyland rose 1.43% to Rs 42.60 after scaling a record high of Rs 44 in intraday trade. The company's total sales surged 27% to 9,193 units in September 2014 over September 2013. The sales numbers were announced on Saturday, 4 October 2014.
TVS Motor Company fell 2.01%. The company's total sales rose 27% to 2.50 lakh units in September 2014 over September 2013. The sales numbers were announced after market hours on Wednesday, 1 October 2014.
Capital goods stocks declined. ABB India (down 2.85%), BEML (down 5.17%), Crompton Greaves (down 2.87%), and Thermax (down 4.2%) declined.
L&T shed 2.14% to Rs 1,414.65. The stock was volatile. The stock hit high of Rs 1,458.75 and low of Rs 1,405.45. L&T during market hours said that the Transportation Infrastructure Business of its construction division has won an EPC order worth Rs 1630 crore from the Uttar Pradesh Expressways Industrial Development Authority. The greenfield order is for the construction of six-lane access controlled expressway from Unnao district (village Neval) to Lucknow. The project is scheduled to be completed within 36 months, L&T said.
Bharat Heavy Electricals (Bhel) declined 0.93%. Bhel has bagged a contract worth Rs 359 crore from NMDC for setting up a Plant Power Distribution Package on turnkey basis. The contract pertains to NMDC's three million tonnes per annum integrated steel plant at Nagarnar in Chattisgarh. The order win was announced on Thursday, 2 October 2014.
Siemens slipped 1.27%. Siemens before market hours today, 7 October 2014, said that Siemens Rail Automation has become a wholly owned subsidiary of the company with effect from 1 October 2014. On 30 January 2014, the Board of Directors of Siemens had approved the acquisition of 100% equity shares of Siemens Rail Automation from Siemens International Holding BV, Netherlands (99.99%) and Siemens AG (0.01%) for Rs 55 crore.
IT stocks declined. HCL Technologies (down 0.49%) and TCS (down 1.53%) dropped.
Tech Mahindra dropped 0.42%. Tech Mahindra on Monday, 6 October 2014 announced that it has successfully launched and operationalized "The HUB for Airbus Group". The HUB is a long term transition from current execution models to a platform based approach in Product Development and Engineering services. The HUB will deliver multi-domain services and solutions, ranging from product development to after-market services to the Airbus Group.
Infosys shed 0.44%. Infosys said on Monday, 6 October 2014, that the company's former employee, Jack Palmer's current complaint in the United States District Court in New Jersey is a repetition of issues that were tried and dismissed by a federal court in 2012. Palmer resigned in November 2013 and released the company from the charges he has alleged in the complaint. The company said it believes current complaint is without any legal merit and will vigorously defend this complaint. The company expects the issue to be resolved at the earliest.
Wipro rose 0.37%.
Metal and mining stocks edged lower on concerns over growth in China. China is the world's largest consumer of steel, copper and aluminum.
Sesa Sterlite (down 4.12%), JSW Steel (down 2.2%), Tata Steel (down 1.59%), Hindustan Copper (down 1.14%), Hindustan Zinc (down 2.29%), National Aluminium Company (down 4.14%), Jindal Steel & Power (down 4.88%) and Hindalco Industries (down 4.61%) edged lower. Steel Authority of India (Sail) gained 1.71%.
NMDC fell 5.03%. NMDC during trading hours today, 7 October 2014, said its total iron ore production rose 12.28% to 14.44 million tonnes for six months from April-September 2014 from 12.86 million tonnes during six months from April-September 2013. Sales rose 15.18% to 15.85 million tonnes for six months from April-September 2014 from 12.86 million tonnes during six months from April-September 2013. The announcement was made during market hours today, 7 October 2014.
Meanwhile, NMDC kept price of iron ore unchanged for October 2014. NMDC said it has rolled over the September 2014 price of lump ore (Rs 4600 per tonne) and fines (Rs 3160 per tonne) to the month of October 2014.
GAIL (India) rose 1.12%. Shipping of Corporation India (SCI) jumped 5.47%. With reference to the news item appearing in the leading newspaper titled "Shipping Corp, GAIL may buy LNG import carriers for $3 bn", GAIL (India) after trading hours today, 7 October 2014, said that the news items on the issue of tie-up between GAIL and SCI for buying of LNG carriers has no basis and GAIL is not contemplating buying any LNG ship either on its own or through SCI. GAIL (India) further said that the company has signed two long terms Free on Board (FOB) contracts to source 5.8 MTPA of LNG from USA, which require GAIL to arrange LNG ships for transportation of such LNG from 2017 onwards for a period of 20 years. In order to transport 5.8 MTPA, GAIL would require about 9 LNG ships and on 1 August 2014, GAIL floated a tender for charter hiring of new built LNG ships on International Competitive Bidding basis. The due date for bid submission is 30 October 2014. As GAIL is also exploring the possibility of swapping as well as marketing part of the LNG in international markets, the exact number of ships would be decided at the time of award, GAIL said. As per Industry practice, each of the LNG ships will be registered as a Special Purpose Vehicle (SPV) for ownership and management of such LNG ship. The tender conditions provide that both GAIL and SCI will have the option to take equity ownership in each SPV to the extent of upto 10% and 26% respectively. GAIL shall exercise such option in due course upon evaluating all pros and cons. GAIL clarified that the ships will remain under long term charter with the company irrespective of GAIL's equity participation in the SPVs. After the charter hire period, the SPVs will be free to deploy the ships elsewhere
In its own clarification on the news, SCI during market hours clarified that SCI and GAIL (India) had on 7 June 2013 signed a Memorandum of Understanding (MOU) to cooperate for transportation of LNG sourced by GAIL from USA. It is expected that about 9 to 11 LNG tankers would be required for this purpose, SCI said. The company further added that it has the option to exercise step in rights to participate in the shipping venture with up to 26% share.
Tyre makers gained as natural rubber prices in the local market were trading near their lowest levels in five years. JK Tyre & Industries (up 4.4%), Goodyear India (up 0.08%), MRF (up 0.84%) and CEAT (up 1.13%) gained.
Decline in rubber prices could boost profit margin of tyre firms. Rubber is a key raw material in tyre manufacturing. A strong rupee also helped further lower the cost of imports of tyre makers as they source natural rubber from both home and abroad.
Apollo Tyres surged 5.86%. The Reserve Bank of India (RBI) on 1 October 2014, notified that Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs), through primary market and stock exchanges, can now purchase up to 45% of the paid up capital of Apollo Tyres under the Portfolio Investment Scheme (PIS). Apollo Tyres has passed resolutions at the board of directors' level and a special resolution by the shareholders, agreeing for enhancing the limit from 40% to 45% for the purchase of its equity shares and convertible debentures by FIIs/RFPIs, RBI said.
The Sensex declined for second day in a row today, 7 October 2014, as trading resumed after a slew of holidays. From a recent high of 26,630.51 on 30 September 2014, the Sensex has declined 358.54 points or 1.34% in two trading sessions. The Sensex has gained 5,101.29 points or 24.09% in calendar year 2014 so far (till 7 October 2014). From a record high of 27,354.99 on 8 September 2014, the Sensex has declined 1,083.02 points or 3.95%. From a 52-week low of 19,264.72 on 1 October 2013, the Sensex has risen 7,007.25 points or 36.37%.
In the foreign exchange market, the rupee edged higher against the dollar amid optimism the falling oil price will help narrow the nation's trade deficit. The partially convertible rupee was hovering at 61.4675, compared with its close of 61.61 during the previous trading session on Wednesday, 1 October 2014. The foreign exchange market was closed from Thursday, 2 October 2014, to Monday, 6 October 2014 for local holidays.
Brent crude oil prices edged lower after disappointing German output reinforced concern that global oil demand will falter. Brent for November settlement was off 52 cent at $92.27 a barrel. The contract had risen 48 cents to settle at $92.79 a barrel yesterday, 6 October 2014.
Lower crude oil prices will help India in containing its fiscal deficit, current account deficit and fuel price inflation. India imports 80% of its crude oil requirement.
There was a moderate improvement in India's service sector activity during September, as per a latest survey. The headline seasonally adjusted HSBC India Services Business edged up to 51.6 in September from 50.6 in August. A figure above 50 indicates expansion while one below points to a contraction.
The Indian economy is set to grow by 6.4% in fiscal year (FY) 2015/16 after 5.6% growth in FY2014/15, a World Bank report said. India is benefiting from a "Modi dividend", the report said, with economic activity buoyed by expectations from the newly elected government of Prime Minister Narendra Modi. Over the next year or so economic growth should be supported by the recovering US economy that would provide a market for Indian merchandise and service exports, the report said. Private investment is expected to pick up thanks to the government's business orientation, and declining oil prices should boost private sector competitiveness, the report said. But economic reforms will be needed for India to achieve its full long-term growth potential, the report argued.
Meanwhile, indicating a sharp improvement for the second consecutive quarter, the CII Business Confidence Index (CII-BCI) for July-September quarter shot up to 57.4, up from 53.7 in April-June quarter and 49.9 in January-March quarter this year. During the same quarter last fiscal, the index had touched the all-time low value of 45.7. The number 50 is the dividing line on the index between positive and weak business confidence. The result of the 88th Business Outlook Survey based on responses from over 150 industry members was declared on Monday, 6 October 2014.
Cumulative rainfall during this year's monsoon from 1 June 2014 up to 30 September 2014 was 12% below the Long Period Average (LPA), India Meteorological Department said on 1 October 2014. India's farming sector accounts for around 14% of the economy, but two-thirds of the nation's 1.2 billion people depend on farming for a livelihood and more than half of its arable land needs the summer rains.
European stocks declined today, 7 October 2014, as a report showed German industrial production contracted the most in more than five years. Key benchmark indices in France, Germany and UK were off 0.64% to 1.07%.
The latest data showed that industrial output in Germany declined sharply in August, marking the second consecutive day of rough economic numbers for Europe's largest economy. In adjusted terms, factory output was down 4% in August. Meanwhile, July's figure was downwardly revised to growth of 1.6% from the 1.9% gain originally reported.
Meanwhile, a senior British banker has pleaded guilty to manipulating the Libor interest-rate benchmark, marking the first UK person to admit to rigging the lending rate, according to media reports on Tuesday. The court didn't allow publication of the identity of the banker, but said on Oct. 3 he admitted to charges of conspiracy to defraud filed by the UK's Serious Fraud Office in its two-year investigation into alleged Libor rigging. Two men in the US have already pleaded guilty to the offence.
Asian stocks ended mixed today, 7 October 2014. Key benchmark indices in Hong Kong, Indonesia and South Korea rose 0.23% to 0.92%. Key benchmark indices in Japan, Taiwan and Singapore shed 0.28% to 0.67%. China's Shanghai Composite was closed for holiday.
The Bank of Japan today, 7 October 2014, kept its policy unchanged as widely expected, adding no new easing. In his remarks to the parliament, the central bank's governor, Haruhiko Kuroda voiced approval of the yen's relatively weak level and said Japan remained on track to reach its goal of sustained 2% consumer inflation.
Trading in US index futures indicated that the Dow could fall 64 points at the opening bell today, 7 October 2014. US stocks edged lower in volatile trade on yesterday, 6 October 2014, as investors resorted to profit taking after last week's rally.
The US Federal Reserve will tomorrow, 8 October 2014, release the minutes of its Sept. 16-17 meeting at which it had decided to cut its monthly bond purchases to $15 billion. Policy makers next begin their two-day meeting on 28 October 2014.
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