Key benchmark indices surged as European stocks and US index futures rose ahead of the outcome of the two-day meeting of the Federal Open Market Committee which concludes today, 18 September 2013. The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Tuesday, 17 September 2013. The barometer the S&P BSE Sensex and the 50-unit CNX Nifty, both, settled at one-week high. The Sensex jumped 158.13 points or 0.8%, up 186.87 points from the day's low and off 51.17 points from the day's high. The market breadth, indicating the overall health of the market turned positive from negative in late trade.
The Sensex gained for the third straight day today, 18 September 2013. The Sensex has risen 229.40 points or 1.16% in three trading days from a recent low of 19732.76 on 13 September 2013. The Sensex has gained 1,342.44 points or 7.21% in September 2013 so far (till 18 September 2013). The Sensex has risen 535.45 points or 2.76% in calendar 2013 so far (till 18 September 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 481.46 points or 2.36%.
Coming back to today's trade, bank stocks edged higher. Shares of power generation and distribution heavyweights rose. Pharma stocks gained for the second straight day. Index heavyweights Reliance Industries (RIL) and ITC, both, moved higher. Capital goods pivotals saw mixed trend. Shares of gold financing firms extended Tuesday's fall triggered by the Reserve Bank of India announcing tightening of rules for finance companies which lend against gold.
The market edged higher amid initial volatility. Key benchmark indices pared initial gains and swung alternately between gains and losses near the flat line in morning trade. The market hovered in green in early afternoon trade. The market was range bound in afternoon trade. The Sensex retained positive zone in mid-afternoon trade. The market surged in late trade, with the Sensex reclaiming the psychological 20,000 mark.
The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Tuesday, 17 September 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 347.70 crore from the secondary equity markets on Tuesday, 17 September 2013, as per data from the Securities & Exchange Board of India (Sebi).
The S&P BSE Sensex jumped 158.13 points or 0.8% to settle at 19,962.16, its highest closing level since 11 September 2013. The index surged 209.30 points at the day's high of 20,013.33 in late trade. The index fell 28.74 points at the day's low of 19,775.29 in morning trade.
The CNX Nifty was up 49.25 points or 0.84% to 5,899.45, its highest closing level since 11 September 2013. The index hit a high of 5,916.90 in intraday trade. The index hit a low of 5,840.20 in intraday trade.
The total turnover on BSE amounted to Rs 1459 crore, higher than Rs 1452.79 crore on Tuesday, 17 September 2013.
The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,221 shares rose and 1,112 shares fell. A total of 170 shares were unchanged.
The BSE Mid-Cap index rose 0.45% and the BSE Small-Cap index rose 0.08%. Both these indices underperformed the Sensex.
The BSE Realty index (up 2.03%), BSE Bankex (up 1.56%), BSE FMCG index (up 1.37%), BSE Oil & Gas index (up 0.87%), BSE HealthCare index (up 0.81%), outperformed the Sensex.
The BSE PSU index (up 0.78%), BSE Capital Goods (up 0.52%), BSE Power index (up 0.5%), BSE Consumer Durables index (up 0.44%), BSE Teck index (up 0.23%), BSE IT index (up 0.15%), BSE Metal index (up 0.01%) and BSE Auto index (up 0.01%) underperformed the Sensex.
Among the 30-share Sensex pack, 23 stocks rose and rest of them fell.
Index heavyweight and cigarette major ITC rose 1.79% to Rs 344.80. The stock hit a high of Rs 345 and low of Rs 339.30. ITC's hospitality unit ITC Hotels on Monday, 16 September 2013, said it has tied up with RP Group Hotels & Resorts to manage 5 hotels in India and Dubai, under ITC Hotels' 5-star 'WelcomHotel' brand and the group's mid-market to upscale 'Fortune' brand. The tie-up has been firmed up through a Memorandum of Understanding between ITC Hotels and RP Groups Hotels & Resorts. While the two WelcomHotels are already under a management contract and will be flagged off immediately, the three Fortune hotels are a part of the signed MOU and will be launched subsequently, ITC Hotels said in a statement.
As part of its expansion drive, ITC Hotels proposes to add several managed hotels to its brand portfolio, it said. On the anvil are an ITC super-premium luxury hotel in Mahabalipuram, a WelcomHotel in Jodhpur, Patna and Chandigarh and more than 30 hotels under the Fortune brand.
Index heavyweight Reliance Industries (RIL) rose 1.55% to Rs 871.40. The stock hit a high of Rs 873.30 and low of Rs 857.
HPCL rose 1.38% to Rs 198. A block deal of 5.4 lakh shares was executed in the counter on BSE at Rs 197.25 at 13:32 IST.
Pharma stocks gained for the second straight day. Cipla rose 0.98%.
Dr Reddy's Laboratories rose 2.64%, with the stock extending Tuesday's gain triggered by the company getting USFDA nod for Azacitidine for injection 100 mg/vial, a bioequivalent generic version of VIDAZA (azacitidine for injection). The launch of product in the US market is planned in the near term, the company said during trading hours on Tuesday, 17 September 2013. The VIDAZA brand had US sales of approximately $378.5 million for the twelve months ended July 2013, according to IMS Health data.
Ranbaxy Laboratories gained 0.91% to Rs 333, with the stock gaining for the second day in a row. The company said during market hours on Tuesday, 17 September 2013, that during late hours on Monday, 16 September 2013, the company received communication from the US Food and Drug Administration (USFDA) that the regulator had imposed an import alert on the company's Mohali facility. The USFDA also advised that the Mohali facility will be subject to certain terms of the Consent Decree signed in January 2012. Ranbaxy said it will review the details and will continue to fully cooperate with the USFDA and take all necessary steps to resolve the concerns at the earliest.
The USFDA had conducted inspections at Ranbaxy's Mohali facility in 2012, resulting in certain observations. The company believes that it has made further improvements at its Mohali facility since the last inspection in 2012, and remains committed to adressing all concerns of the USFDA. Ranbaxy is hopeful of an early resolution these concerns, the company said in a statement.
Ranbaxy remains fully committed to upholding the highest standards that patients, prescribers, regulators and all other stakeholders expect from the company. Ranbaxy stays firmly committed to its philosophy of 'Quality and Patients First,' it said in a statement.
Shares of Ranbaxy had tumbled 30.27% in a single trading session to settle at Rs 318.85 on Monday, 16 September 2013, after the USFDA issued an import alert against company's Mohali plant.
Strides Arcolab jumped 3.54% to Rs 877 after the company said it has received USFDA approval for Beltapharm's facility at Milan in Italy. This state-of-the-art, EU and TGA (Australia) approved facility manufactures liquids, semi-solids, ointments and creams, Strides Arcolab said. The company said it is expecting its first approval of a niche semisolid product by Q1 2014.
Strides is developing a portfolio of liquids and semi-solids products for the US and EU markets and it currently has over 12 products at various stages of development/approvals. Strides already sells semi-solids in the UK market.
Sun Pharmaceutical Industries gained 1.46%.
But, Lupin fell 0.61%. The company on Monday 16 September 2013 it has received final approval for its Zolpidem Tartrate Extended release tablets USP, 6.25 mg and 12.5 mg from the United States Food and Drugs Administration (FDA) to market a generic version of Sanofi Aventis, U.S, LLC's (Sanofi) Ambien CR Extended release tablets, 6.25 mg and 12.5 mg. Lupin's wholly owned US subsidiary Lupin Pharmaceuticals Inc. (LPI) shall commence marketing the product shortly, the company said. Lupin's Zolpidem CR tablets 6.25 mg & 12.5 mg is the AB rated generic equivalent of Sanofi's Ambien CR Extended? release tablets, 6.25 mg and 12.5 mg and is indicated for the treatment of insomnia characterized by difficulties with sleep onset and/or sleep maintenance. Sanofi's Ambien CR Extended release tablets had annual US sales of approximately $366 million (IMS MAT Mar 2013).
IT stocks were mixed. TCS rose 0.18%.
Wipro rose 0.98%, with the stock extending Tuesday's 5.41% surge. Wipro becomes a part of the 50-unit CNX Nifty with effect from 27 September 2013. The IT major replaces Reliance Infrastructure in Nifty.
Infosys declined 0.19%. The company during market hours today, 18 September 2013, announced the launch of Finacle 11E, an advanced universal banking solution that simplifies banking transformation.
HCL Technologies fell 0.5%. HCL Infosystems rose 0.37%. HCL Technologies and HCL Infosystems on Monday, 16 September 2013, clarified that no proposal to merge HCL Infosystems or its systems integration and services business with HCL Technologies is under consideration. The two companies issued the clarification after media reports suggested that HCL Infosystems is working towards the goal of merging its system integration and services business with HCL Technologies. HCL Tech and HCL Infosystems have been teaming on specific opportunities in India and for this purpose the two companies have been cross selling each other's services over the last 2 years, HCL Tech said after trading hours on Monday, 16 September 2013. HCL Tech said that the company derived about 5% of its revenue from India during FY 2013. It is expected that the revenue from India during FY 2014 would remain at similar level, the company said. The arrangement with HCL Infosystems did not have any impact on the margins in the past and it is not expected to have any impact on the margins going forward, HCL Technologies said. HCL Technologies is a software firm.
HCL Infosystems also said that HCL Infosystems and HCL Technologies have been collaborating together under teaming agreements to address business opportunities in India. These agreements are on arms length basis in the best interest of HCL and its customers and not margin dilutive to HCL Infosystems, the company said.
A bulk of HCL Infosystems' revenues comes from selling computing hardware to government and by acting as a national distributor for mobile phones, computers, laptops and printers.
Mindtree rose 5.4% to Rs 1,140 after hitting record high of Rs 1,152.90 in intraday trade. The company on Monday, 16 September 2013, announced a partnership with SAP America to enable customers execute their Cloud strategies on SAP's cloud applications like SuccessFactors and mobile platforms.
Shares of power generation and distribution heavyweights rose. NTPC gained 3.67%. Tata Power Company rose 3.57%.
Capital goods pivotals saw mixed trend. L&T rose 2.68%.
Bhel dropped 4.43%. The stock was the biggest loser from the Sensex pack.
GMR Infrastructure rose 2.18%, with the stock extending Tuesday's gain. The company said during market hours on Tuesday, 17 September 2013, that GMR Highways has signed a definitive agreement with India Infrastructure Fund (IIF) to divest 74% stake in GMR Ulundurpet Expressways (GUEL). The transaction is subject to closing conditions customary to such transactions, the company said. IIF emerged as successful bidder in buying majority stake in GUEL, which attracted strong interest from several major investors from India and abroad. This is a second major divestment in GMR's roads portfolio in less than 6 months, GMR Infrastructure said.
GUEL operates the highway stretch of about 73 km, from Tindivanam to Ulundurpet on National Highway 45 in the state of Tamil Nadu. The project commenced commercial operations in July 2009. GMR Group will receive a consideration of about Rs 222 crore for the sale of 74% equity stake.
Suzlon Energy rose 1.56% after the company said its UK-based subsidiary, REpower UK, signed four new turbine contracts in the UK. The company made the announcement before trading hours today, 18 September 2013.
Suzlon Energy said that REpower UK will be supplying turbines for new wind farms at Clashindarroch in Aberdeenshire, Scotland; Eye Airfield in Suffolk in the South East of Engliand; Hampole in Yorkshire and finally Westnewton located in Cumbria. Financial details were not disclosed.
Bank stocks gained. Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank gained 2.27% to 3.32%.
Among private sector banks, ICICI Bank (up 1.11%), HDFC Bank (up 1.74%), and Axis Bank (up 2.72%), gained.
Private sector bank Yes Bank rose 4.94%, with the stock extending Tuesday's gain. The bank on Tuesday, 17 September 2013, said it has successfully closed equivalent to $255 million by way of dual currency, multi-tenor syndicated loan facility which will be utilized for general corporate purposes and trade finance. The facility has a maturity of 1 and 2 years with majority commitments coming in the 2 year tenure bucket. The loan has been widely distributed with commitments from 11 banks representing 8 countries across US, Europe, Middle East and Australia, Yes Bank said.
The recent RBI guidelines on offering swap facility to banks for the foreign currency borrowings at 100 basis points below the market rate will further make the landed rupee cost of these funds extremely competitive vis-vis rupee funds of equivalent maturity, Yes Bank said.
Shares of gold financing firms extended Tuesday's fall triggered by the Reserve Bank of India announcing tightening of rules for finance companies which lend against gold. Muthoot Finance (down 6.85%) and Manappuram Finance (down 4.84%) edged lower.
Muthoot Finance had lost 8.28% to Rs 103.60 on Tuesday, 17 September 2013. Manappuram Finance had declined 4.62% to Rs 15.50 on Tuesday, 17 September 2013.
The Reserve Bank of India (RBI) has tightened rules for finance companies which lend against gold. The RBI on Monday, 16 September 2013, said lenders need to value the pledged gold at the average closing price of 22-carat gold for the preceding 30 days as quoted by the Bombay Bullion Association to arrive at the loan-to-value ratio. The ratio would remain at 60% for loans against jewellery. Currently, there is no standard method for arriving at the value of gold accepted as collateral and valuation is arbitrary and opaque, the central bank said in a notification issued late on Monday, 16 September 2013.
The central bank also streamlined the process by which lenders auction gold when a borrower defaults, saying lenders need to declare a reserve price for the pledged ornaments. Lenders would also need RBI approval to open branches exceeding 1,000. No new ones would be allowed without adequate storage facility for gold. Unbridled growth may not be in the overall interests of the concerned NBFC or the sector and there is a need for consolidation of the existing network, the central bank said.
Shares of gold jewellery retailers and manufacturers rose after the government raised import duty on gold jewelry to 15% from 10%. Titan Industries (up 0.5%), P C Jeweller (up 3.8%), Tribhovandas Bhimji Zaveri (up 2.31%) and Shree Ganesh Jewellery House (up 0.77%) edged higher.
The government said on Tuesday that to protect the interests of small artisans, the customs duty on articles of jewellery and of goldsmiths' or silversmiths' wares and parts thereof is being increased from 10% to 15%. A notification notifying the revised rates of customs duty on articles of jewellery and of goldsmiths' or silversmiths' wares and parts thereof has been issued on Tuesday. As part of measures to contain the current account deficit, the customs duty on gold has been revised upwards periodically in the past two years. The government said jewellery making is a labour intensive industry. Millions of artisans are dependent on this sector for their livelihood. In the absence of any duty differential between articles of jewellery and primary metal, which was 8% in the case of gold jewellery and 4% in the case of silver jewellery in January 2012, there is an apprehension that Indian jewellery makers would not be able to compete with cheaper imports, particularly when majority of the imported jewellery is machine-made as compared to handmade jewellery in India.
SKS Microfinance surged 7.07% after the company after market hours on Tuesday, 17 September 2013, said that a leading rating agency has assigned 'A' rating for its long-term and 'A1' rating for its short-term bank facilities for an aggregate sum of Rs 2000 crore. According to the rating agency, instruments with 'A' rating are considered to have adequate degree of safety regarding timely servicing of financial obligations and carry low credit risk. Instruments with 'A1' rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk, SKS said.
Mr. S. Dilli Raj, Chief Financial Officer, SKS Microfinance said: "The ratings would help to reduce the risk weights assigned to banks' exposure on SKS Microfinance from the present 100% to 50% in the case of long-term facilities and 30% for short-term facilities. The ratings are likely to enhance credit availability and reduce the cost of borrowing as they will free up capital allocation for banks in the case of SKS Microfinance's borrowings. We are unable to quantify the gains at this juncture, but expect the impact will be positive."
SKS Microfinance's borrowings as of 31 August 2013 stood at Rs 1675 crore.
SKS Microfinance said that the ratings are significant in view of the fact that the company has sustained and completed its turnaround in Q1 June 2013 with three consecutive quarters of profit. During the Andhra Pradesh situation, the company had repaid Rs 5800 crore to the banking system without any rescheduling or deferral or haircut. As of 30 June 2013, the company had a capital adequacy ratio of 30% and cash and bank balance of Rs 310 crore. Collection efficiency of the non-Andhra Pradesh portfolio is at 99.8% in Q1, SKS said.
IDFC rose 2.7% after its unit IDFC Alternatives on Tuesday, 17 September 2013, said it has received commitments for $644 million from investors for an India-focused infrastructure fund. IDFC's contribution to the fund, India Infrastructure Fund II, is $64 million. The balance is from investors in North America, Europe and the UK. IDFC Alternatives manages about $2.8 billion of assets. It invests mainly across three asset classes -- infrastructure, private equity and real estate.
Realty stocks edged higher on bargain hunting after recent losses. HDIL (up 2.44%), Indiabulls Real Estate (up 1.91%), Oberoi Realty (up 2.19%), D B Realty (up 0.98%) and DLF (up 4.97%), gained. Unitech was unchanged at Rs 17.10.
Sobha Developers rose 2.19% after credit rating company, ICRA, upgraded the long-term rating of the company from ICRA BBB+ to ICRA A-. Sobha Developers made the announcement during trading hours today, 18 September 2013. Sobha Developers said that ICRA upgraded the long-term rating of the company's fund-based working capital limits of Rs 365 crore, term loans of Rs 648 crore and non fund-based working capital limits of Rs 125 crore to 'ICRA A- (Stable)' from 'ICRA BBB+ (Positive)'.
Reliance Broadcast Network hit upper circuit of 5% at Rs 49.90, with the stock surging for the second day in a row. The stock has surged during the last two trading session after the company after market hours on Monday, 16 September 2013, said its board will consider delisting proposal on 18 September 2013.
Gujarat State Fertilizers & Chemicals rose 4.11% to Rs 51.95. A block deal of 12.11 lakh shares executed in the counter at Rs 52.05 per share on BSE at 14:07 IST.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 63.325, a tad than its close of 63.37/38 on Tuesday, 17 September 2013.
The Reserve Bank of India (RBI) cracked down on offshore foreign exchange trading by Indians through online trading websites, asking banks to report any such remittances to the regulator. In a circular issued late on Tuesday, the Reserve Bank of India (RBI) asked banks to advise customers not to undertake forex trading on foreign websites that offer currency contracts by accepting margins through credit card and online money transfer mechanisms. The RBI also asked banks to close the credit card or online bank account of a customer that is found to be in violation of the rule.
Foreign direct investment inflows into India rose an annual 12.9% to $1.66 billion in July 2013, the government said in statement released late on Tuesday, the highest monthly inflow for three months.
At its upcoming mid-quarter monetary policy review on Friday, 20 September 2013, the Reserve Bank of India will have to decide whether to give in to industry demands and lower interest rates in order to boost slowing economic growth, or leave interest rates unchanged for the third straight policy review as it guards against risks of a fresh rise in inflationary pressures. The RBI will release Mid-Quarter Review of Monetary Policy 2013-14 at 11:00 IST on Friday, 20 September 2013. This will be followed by Governor Raghuram Rajan addressing the media in the afternoon on that day.
European stock markets edged higher on Wednesday, 18 September 2013, as investors awaited the latest policy decision from the US Federal Reserve, expected to announce the beginning of tapering of its asset purchases. Key benchmark indices in UK, France and Germany were up 0.19% to 0.5%.
The Bank of England's Monetary Policy Committee earlier in September voted unanimously to keep both interest rates and the asset-purchase program unchanged, according to minutes of the meeting published Wednesday. The interest rate was kept at a record low 0.5%, while the quantitative-easing program stayed at 375 billion pounds ($596.48 billion).
Asian stocks were mixed on Wednesday, 18 September 2013, before the Federal Reserve decides later today whether to slow its $85 billion of monthly asset purchases. Key benchmark indices in China, Japan and Singapore rose by 0.29% to 1.35%. Key benchmark indices in Hong Kong, Taiwan and Indonesia shed by 0.27% to 1.2%. South Korean stock market was closed for a holiday.
Trading in US index futures indicated that the Dow could gain 17 points at the opening bell on Wednesday, 18 September 2013. US stocks rose slightly on Tuesday on expectations the Federal Reserve will make a modest cut in its stimulative bond buying and keep interest rates extraordinarily low. A report in the US on Tuesday showed the cost of living rose less than forecast in August, with the consumer-price index increasing 0.1%, the least in three months.
Investors across the globe are eyeing the two-day policy meeting of the Federal Open Market Committee (FOMC), considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC's two-day policy meeting on interest rates in the United States ends today, 18 September 2013. The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.
Investors are also eyeing Fed's forward guidance on policy. The Fed is due to offer its rate expectations for 2016, and it has previously said it wanted to see the US unemployment fall to 6.5% from its current 7.3% before it raises the benchmark fed funds rate target from its present 0-to-0.25% range.
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