Strong market breadth

Key benchmark indices retained positive terrain in morning trade. The barometer index, the S&P BSE Sensex, was up 63.93 points or 0.29%, up close to 30 points from the day's low and off about 25 points from the day's high. The market breadth, indicating the overall health of the market was strong. Gains in Asian stocks and overnight rally in US stocks underpinned sentiment on the domestic bourses.

Auto stocks edged higher. Piramal Enterprises rose after the company announced that it has agreed to acquire an effective 20% equity stake in Shriram Capital.

The market edged higher in early trade on firm Asian stocks. Key benchmark indices retained positive terrain in morning trade

 

Foreign institutional investors (FIIs) sold shares worth a net Rs 44.69 crore on Wednesday, 16 April 2014, as per provisional data from the stock exchanges.

The stock market remains closed tomorrow, 18 April 2014, on account of Good Friday.

At 10:20 IST, the S&P BSE Sensex was up 63.93 points or 0.29% to 22,341.16. The index gained 87.67 points at the day's high of 22,364.90 in early trade. The index rose 34.96 points at the day's low of 22,312.19 in early trade.

The CNX Nifty was up 18.10 points or 0.27% to 6,693.40. The index hit a high of 6,701.80 in intraday trade. The index hit a low of 6,684.40 in intraday trade.

The BSE Mid-Cap index was up 52.45 points or 0.73% at 7,285.21. The BSE Small-Cap index was up 71.67 points or 0.97% at 7,489.89. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market was strong. On BSE, 1,147 shares gained and 540 shares fell. A total of 88 shares were unchanged.

Wipro (up 2.14%), Infosys (up 1.12%) and Hindalco Industries (up 1.11%) edged higher from the Sensex pack.

Auto stocks edged higher. Tata Motors (up 1.9%), Maruti Suzuki India (up 0.52%), Mahindra & Mahindra (M&M) (up 0.83%) and Ashok Leyland (up 1.95%) gained.

Shares of two wheeler makers also gained. TVS Motor Company (up 2.54%), Hero MotoCorp (up 0.56%) and Bajaj Auto (up 0.47%) gained.

Piramal Enterprises rose 1.37% after the company today, 17 April 2014, said it has agreed to acquire an effective 20% equity stake in Shriram Capital, a financial services company, for an aggregate consideration of Rs 2014 crore.

Shriram Capital (SCL) is the overarching holding company for the financial services and insurance entities of the Shriram Group, created with the primary objective of optimizing the synergies across the group's entities. Shriram Capital's operating entities, have an overall customer base in excess of 9 million, more than 53,000 employees across 2,600 offices, net profit of Rs 800 crore with Assets Under Management (AUM) in excess of Rs 78000 crore.

Piramal had invested Rs 1636 crore in May last year to acquire 9.9% equity in Shriram Transport Finance Company, one of the listed NBFCs forming part of the Shriram Group.

Commenting on the investment, Mr. Ajay Piramal, Chairman of Piramal Enterprises, said: "This investment builds our presence in financial services sector and we see long term shareholder value creation from our partnership with Shriram Capital. The company is well known for its culture and values, which resonates well with Piramal Group's philosophy".

Commenting on the partnership, Mr. R. Thyagarajan, Founder of Shriram Group, said: "Shriram Group has pioneered providing financial services to the under-served section of the economy. Our success over the last four decades has been possible only through strategic partnerships. Piramals' entry into Shriram Capital is a significant milestone for the financial services businesses to take a quantum leap in the group's contribution to the community at large".

Earlier, Piramal in May last year invested Rs 1636 crore to acquire about 10% stake Shriram Transport Finance Company.

MindTree rose 3.36% after consolidated net profit rose 11% to Rs 98.20 crore on 4.2% growth in revenue to Rs 823.70 crore in Q4 March 2014 over Q3 December 2013. The result was announced after market hours on Wednesday, 16 April 2014.

In dollar terms, MindTree's consolidated net profit rose 11.7% to $15.9 million on 4.4% growth in revenue to $132.8 million in Q4 March 2014 over Q3 December 2013.

MindTree's consolidated net profit surged 32.9% to Rs 450.80 crore on 28.4% growth in revenue to Rs 3031.60 crore in the year ended 31 March 2014 (FY 2014) over the year ended 31 March 2013 (FY 2013).

In dollar terms, MindTree's consolidated net profit rose 19.3% to $74.6 million on 15.1% growth in revenue to $501.50 million in FY 2014 over FY 2013.

Commenting on the company's financial performance, Krishnakumar Natarajan, CEO & MD, MindTree said, "FY14 has been a momentous year for Mindtree. We crossed half a billion dollars in revenues, $100 million in operating profits and Rs 100 of EPS. As we celebrated this success, I would like to thank all our clients, partners, investors and Mindtree Minds for their immense faith and contribution. We have progressed well in our journey to increase our strategic relevance to our clients. We will continue to aspire to deliver superior financial performance, innovation, industry leadership in our chosen verticals, social responsibility and corporate governance."

MindTree has 207 active clients as of 31 March 2014. The company added 397 employees in Q4 March 2014 on a gross basis.

In order to commemorate the occasion of the company's completion of fifteen years and crossing revenues of $500 million, the board of directors has recommended for the issue of bonus shares to the shareholders of the company in the ratio of 1:1 (i.e. one bonus equity share of Rs 10 each, for every one fully paid up equity share of Rs 10 each, held and on stock options of the company under various plans) by increasing the existing issued, subscribed and paid-up share capital of the company subject to the approval of the shareholders.

MindTree's board recommended interim dividend Rs 5 per share for Q4 March 2014. Further, the board has recommended a final dividend of Rs 5 per share for FY 2014 and a special dividend of Rs 5 per share for completion of 15 years in business. If the proposed 1:1 bonus share issue is approved by shareholders prior to the date of the AGM, the final & special dividend amounts would be accordingly reduced to 25% (Rs 2.5 per share), Mindtree said in a statement.

In the foreign exchange market, the rupee edged higher against the dollar sparked by dollar selling after US Federal Reserve Chairwoman Janet Yellen's dovish comments on Wednesday, 16 April 2014. The partially convertible rupee was hovering at 60.35, compared with its close of 60.37/38 on Wednesday, 16 April 2014.

The United States on Wednesday, 16 April 2014, urged the Indian government that emerges from ongoing elections to follow economic policies that encourage investment, saying Washington would like to see bilateral trade grow to $500 billion a year. Nisha Biswal, US assistant secretary of state for South and Central Asia, said future economic growth in South Asia hinged on India as the region's growth engine. However, Biswal said that while Indian leaders had targeted $1 trillion in infrastructure investment over five years to close gaps preventing growth in manufacturing, policies still inhibited foreign investment. She said India ranked a poor 134 out of 189 countries as a place to invest and start a business.

Biswal said India had the potential to exceed all expectations economically, but needed to adopt investment and tax policies designed to lure, not deter, capital flows and a system of timely regulatory approvals and contract enforcement. It also needed to protect intellectual property rights, she said. "The more integrated India is into global markets and into the economic architecture of Asia, the more India's economy will grow and benefit the entire global economic system," she said. Biswal said the United States wanted to see bilateral trade grow to $500 billion a year. It is about $100 billion currently.

Biswal also said an improved climate between India and Pakistan could "pay enormous economic dividends."

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. Voting in Maharashtra in the crucial fifth phase of the Lok Sabha elections takes place today, 17 April 2014. Nineteen seats are going for elections in this phase. Voting has also begun in Madhya Pradesh with 142 candidates in the fray in 10 Lok Sabha constituencies. 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 Thursday, 17 April 2014, after US industrial production increased more than forecast in March and Federal Reserve Chair Janet Yellen said the central bank remains committed to supporting the economic recovery. Key benchmark indices in China, Indonesia, Hong Kong and Taiwan were up 0.01% to 0.3%. Key benchmark indices in South Korea, Japan, and Singapore were off 0.03% to 0.25%.

China's Premier Li Keqiang said China isn't considering strong stimulus, and reiterated that economic growth a bit higher or lower than 7.5% is a reasonable range, according to a statement posted on the central government's website. The government said it will lower reserve ratios at some rural lenders.

Trading in US index futures indicated that the Dow could drop 36 points at the opening bell on Thursday, 17 April 2014. US stocks rose to their highest level in a week on Wednesday, 16 April 2014, encouraged by a crop of corporate earnings and reassuring US and Chinese economic data.

The US economy continued to expand in most regions as businesses benefited from a rebound from harsh winter weather earlier in the year. Eight of 12 Fed districts characterized growth as modest or moderate, the Fed said in its Beige Book business survey, based on reports gathered before April 7. Industrial production rose more than forecast in March after a February gain that was twice as big as previously estimated. A Commerce Department report showed the pace of US home construction rebounded less than forecast in March.

In her first major speech on her policy framework as Fed chair, Janet Yellen said US central bankers must be mindful of how short the Fed is of its goals of full employment and price stability. The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained, Yellen said to the Economic Club of New York.

The gap, in both cases, is large, with a jobless rate of 6.7% more than a percentage point higher than the top end of the Federal Open Market Committee's estimate of full employment. Inflation, by the Fed's preferred measure, is more than a percentage point below its 2% goal. It will take more than two years for the economy to close in on the Fed's goals, she said, adding that the Fed's forecasts in the past were disrupted by negative surprises, not positive ones.

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.

Meanwhile, Ukraine accused Russia of fueling terrorism in its eastern regions as a move against separatists in the town of Kramatorsk stalled on the eve of an international conference aimed at defusing the crisis. Ukrainian government troops attempted to press on with an anti-separatist offensive that freed an airfield near Kramatorsk. Authorities sent armored vehicles into the Donetsk region town, only to have some of them seized by pro-Russian activists who also disarmed a number of soldiers. NATO is strengthening its military footprint along its eastern border immediately in response to Russia's aggression in Ukraine, the alliance's chief said on Wednesday.

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