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Thursday, January 31, 2013
Markets trade flat ahead of Jan F&O expiry
Sell-off in auto, technology, CG, metal, banking and HC led the markets lower. Volatility is high as investors are cautious ahead of January derivatives contract expiry Global News: Asia stock markets are trading mostly lower on Thursday (January 31, 2013), with Japanese, Hong Kong and Australian markets backing away from multiyear highs, as investors parsed earnings reports and global economic data. Coming to individual stocks, Suzlon Energy is trading with gains after Suzlon Group wins 350 MW Canada Order: largest REpower contract to date. BSE 30-Sensex stocks: Gainers - ONGC up by 0.90%, BHEL up by 0.76% and Bajaj Auto 0.73%. Losers - Tata Motors fell by 1.07%, RIL fell by 1% and Wipro fell by 0.96%. At 9.55 am, the Sensex was trading at 19963, 43 points lower and the Nifty was trading at 6047, down by 8 points.
Bullions glitter
Weak US GDP data and weak dollar boost prices Bullion metal prices ended substantially higher on Wednesday, 30 January 2013. Prices rose for second straight day following weaker than expected fourth quarter GDP data at US and a weak dollar. A friendly Federal Open Market Committee meeting statement on Wednesday afternoon also pushed prices higher. Heavy short covering and bargain hunting were featured in gold and silver. Gold for February delivery ended higher by $19.1 or 1.2%, to settle at $1,679.9 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. The most-active April gold contract added $18.90, or 1.1%, to settle at $1,681.60 an ounce. March silver closed higher by 99 cents, or 3.2%, at $32.18 an ounce on Wednesday. The dollar index, which weighs the strength of the dollar against a basket of six other currencies fell by 0.2% on Wednesday. The big news of the day for the precious metals was a surprisingly weak U.S. economic report. Fourth-quarter U.S. GDP contracted by 0.1% on an annual basis. It is the first U.S. GDP decline in over three years. The market place was expecting the figure to be up 1.0%. The gold and silver markets popped higher immediately following the GDP report, on ideas the weak data will prompt the Federal Reserve to adhere to is very easy money policies presently in place. Then on Wednesday afternoon the two-day FOMC meeting ended with its official policy statement indicating still-tepid U.S. economic growth that suggests the central bank will keep its monetary policy very easy, including continuing to purchase government bonds. Most traders expected the Fed to keep U.S. monetary policy unchanged. However, traders also were watching for any nuances that were included in the Fed statement, which could provide early clues on when the Fed will stop its asset purchases. Overnight, it was reported Euro zone consumer sentiment continues to creep higher, according to the latest figures released from the European Commission Wednesday. The Euro currency continues to rally and hit a fresh 13-month high against the U.S. dollar on Wednesday, amid better investor sentiment toward the European Union and its handling of its sovereign debt crisis. Traders and investors are for the U.S. employment report is out Friday morning. At the MCX, gold prices for April delivery closed higher by Rs 91 (0.3%) at Rs 30,862 per ten grams. Prices rose to a high of Rs 30,927 per 10 grams and fell to a low of Rs 30,621 per 10 grams during the day's trading. At the MCX, silver prices for March delivery closed higher by Rs 1155 (2%) at Rs 59,061/Kg. Prices opened at Rs 58,030/kg and rose to a high of Rs 59,139/Kg during the day's trading.
Sensex falls below 20,000
Key benchmark indices edged lower amid initial volatility amid weakness in Asian stocks. The barometer index, BSE Sensex, fell below the psychological 20,000 mark in opening trade. The Sensex was down 24.96 points or 0.12%, off 28.79 points from the day's high and up 14.27 points from the day's low. Index heavyweight and cigarette maker ITC edged higher in early trade.Another index heavyweight Reliance Industries (RIL) edged lower. The market breadth, indicating the overall health of the market, was positive. Oil India fell after the company after trading hours on Wednesday, 30 January 2013, said that Government of India will sell 6.01 crore shares constituting 10% of the total paid up capital of the company via Offer for Sale (OFS) through the stock exchanges mechanism on Friday, 1 February 2013. Lupin and Grasim Industries rose ahead of Q3 results today, 31 January 2013. ICICI Bank and Punjab National Bank declined ahead of Q3 results. Siemens rose ahead of its Q1 December 2012 results today, 31 January 2013. The market may remain volatile today, 31 January 2013, as traders roll over positions in the futures & options (F&O) segment from the near month January 2013 series to February 2013 series. The January 2013 F&O contracts expire today, 31 January 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 906.36 crore on Wednesday, 30 January 2013, as per provisional data from the stock exchanges. Asian stocks declined on Thursday, 31 January 2013, after the US Federal Reserve said after the conclusion of a two-day meeting on US interest rates on Wednesday, 30 January 2013, that that US economic activity has paused in recent months after data on Wednesday, 30 January 2013, showed a surprise economic contraction in US economy in Q4 December 2012. At 09:28 IST, the BSE Sensex was down 24.96 points or 0.12% to 19,980.04. The index rose 3.83 points at the day's high of 20,008.83 in early trade. The index fell 39.23 points at the day's low of 19,965.77 in opening trade. The S&P CNX Nifty was down 5.60 points or 0.09% to 6,050.15. The index hit a high of 6,057.70 in intraday trade. The index hit a low of 6,044.60 in intraday trade. The market breadth, indicating the overall health of the market, was positive. On BSE, 835 shares rose and 641 shares fell. A total of 79 shares were unchanged. The total turnover on the BSE amounted to Rs 187 crore by 09:30 IST. Among the 30-share Sensex pack, 19 stocks fell while the rest of them rose. Index heavyweight Reliance Industries (RIL) fell 0.51% to Rs 894.25. The stock had hit 52-week high of Rs 954.80 in intraday trade on 21 January 2013. RIL early this week said it has raised $800 million via perpetual bonds carrying interest rate of 5.875%. The company said it will use the proceeds to fund its ongoing capital expenditure in the infrastructure sector. The transaction was about 4 times over-subscribed with an order book of close to $3 billion from high quality investor accounts, RIL said. The transaction witnessed participation from more than 160 accounts from Asia, Europe and the United States, RIL said. Index heavyweight and cigarette maker ITC rose 0.33% to Rs 304.60. The stock hit record high of Rs 307 on Wednesday, 30 January 2013. ITC on 18 January 2013 said its net profit rose 20.62% to Rs 2051.85 crore on 22.41% growth in total income to Rs 8041.90 crore in Q3 December 2012 over Q3 December 2011. The Ministry of Health and Family Welfare in October 2012 notified new pictorial health warnings to be depicted on tobacco product packs which will come into effect from 1 April 2013. The Ministry of Health and Family Welfare said in a statement on 22 October 2012 that three sets of warnings each have been notified for smoking as well as smokeless forms of tobacco product packages. The well-designed health warnings and messages are part of a range of measures to communicate health risks due to tobacco use. Pictorial health warnings communicate health risks in a visible way, provoke a greater emotional response and increase the motivation of tobacco users to quit and to decrease their tobacco consumption, the ministry's statement said. Graphic warning labels have a greater impact than text-only labels and can be recognized by low-literacy audiences and children, the statement added. State Bank of India (SBI) rose 0.19%. SBI after trading hours on Wednesday, 30 January 2013, said that the bank has reduced the base rate by 5 basis points (bps) to 9.7% per annum (p.a.) from 9.75% per annum effective from 4 February 2013. The bank has also reduced the Benchmark Prime Lending Rate by 5 bps to 14.45% p.a. from 14.5% p.a. effective from 4 February 2013. Oil India fell 2.21%. The company after trading hours on Wednesday, 30 January 2013, said that Government of India will sell 6.01 crore shares constituting 10% of the total paid up capital of the company via Offer for Sale (OFS) through the stock exchanges mechanism on Friday, 1 February 2013. The OFS will start at 9:15 IST and end at 15:30 IST on Friday, 1 February 2013. The floor price for the OFS will be disclosed after market hours on Thursday, 31 January 2013. Shares of Oil India dropped 2.3% to settle at Rs 527.15 on BSE on Wednesday, 30 January 2013, ahead of the announcement. GoI currently holds 78.43% stake in Oil India. The GoI's stake would come down to 68.43% after the stake sale. The Cabinet Committee on Investment on Wednesday, 30 January 2013, directed the Ministry of Defence and Ministry of Petroleum and Natural Gas to resolve differences between them within one month relating to the exploration and production activities in 39 NELP oil and gas blocks. Colgate-Palmolive (India) shed 1.19%. Colgate-Palmolive (India) after trading hours on Wednesday, 30 January 2013, said its net profit declined 3.91% to Rs 111.05 crore on 14% growth in net sales to Rs 762.70 crore in Q3 December 2012 over Q3 December 2011. Colgate-Palmolive (India) said that the company achieved volume growth of 9% during the nine-month period April-December 2012 over the same period last year. The toothpaste volume market share has increased to 54.2% during April-December 2012 from 52.4% during April-December 2011. Toothpaste registered a strong volume growth of 10% through the company's flagship brands Colgate Dental Cream, Colgate Active Salt, Colgate Total, and Colgate Max Fresh, Colgate-Palmolive (India) said. With focused efforts and new launches during the year, the toothbrush volume market share increased by 370 basis points to 39.5% during April-December 2012 from 35.8% during April-December 2011. In the mouthwash category, the company registered a volume market share of 26.7% during April-December 2012. Despite significant inflationary pressures, the company has maintained its gross margin through prudent price increases and cost management efforts, Colgate-Palmolive (India) said. These continuing efforts and focused programs to enhance efficiencies and to reduce costs continue to yield strong, positive results that enabled the company to maintain margin and fund investments in strengthening brand equity and business, Colgate-Palmolive (India) said. Aditya Birla Nuvo rose 0.06%. Aditya Birla Nuvo after trading hours on Wednesday, 30 January 2013, said that the board directors of the company has taken a decision to go for brownfield expansion of the company's urea capacity by 3,850 TPD at existing fertilizer complex at Jagdishpur in Uttar Pradesh at a capital expenditure of around Rs 4000 crore. Power Finance Corporation (PFC) gained 2.47%. PFC after market hours on Wednesday, 30 January 2013, reported 1% growth in net profit to Rs 1117 crore on 36% growth in total income to Rs 4466 crore in Q3 December 2012 over Q3 December 2011. Profit before tax and before extra-ordinary items such as translation/actual exchange gain/loss, prior period adjustments and restructuring/prepayment premium etc. jumped 48% to Rs 1557 crore in Q3 December 2012 over Q3 December 2011. PFC's net interest income jumped 53% to Rs 1677 crore in Q3 December 2012 over Q3 December 2011. Interest spread increased by 93 basis points (bps) to 3.08 in Q3 December 2012 from 2.15% in Q3 December 2011. Sanctions, excluding R-APDRP jumped 45% to 18144 crore in Q3 December 2012 over Q3 December 2011. Disbursements, excluding R-APDRP rose 28% to 12621 crore in Q3 December 2012 over Q3 December 2011. Gross NPA edged up to 0.92% as on 31 December 2012 from 0.54% as on 31 December 2011. Net NPA edged up to 0.82% as on 31 December 2012 from 0.48% as on 31 December 2011. The board of directors of the company at its meeting on 30 January 2013 declared and approved the payment of interim dividend at the rate of Rs 6 per share for the year ending 31 March 2013. ICICI Bank (down 0.43%), and Punjab National Bank (down 0.19%) declined ahead of their Q3 results today, 31 January 2013. Lupin (up 0.72%) and Grasim Industries (up 0.6%) rose ahead of their Q3 results today, 31 January 2013. Siemens rose 0.09% ahead of its Q1 December 2012 results today, 31 January 2013. Union Bank of India rose 0.37%. Union Bank of India after trading hours on Wednesday, 30 January 2013, said its board of directors has approved raising of equity capital up to Rs 1000 crore on preferential/QIP/rights basis towards capital infusion in addition to Rs 1500 crore already approved at a board meeting held on 27 December 2012 The focus on the stock market is currently on Q3 December 2012 results. Investors and analysts will closely watch the management commentary that would accompany the result which could cause revision in their future earnings forecast of the company for the current year and or next year. IDFC, Bharat Heavy Electricals and Bharti Airtel announce Q3 results tomorrow, 1 February 2013. Bank of Baroda unveils Q3 results on 4 February 2013. Cipla unveils Q3 results on 6 February 2013. ACC and Ambuja Cement announce Q4 December 2012 results on 7 February 2013. Mahindra & Mahindra, Sun Pharmaceuticals Industries and Hindalco Industries unveil Q3 results on 8 February 2013. ONGC and Tata Power Company unveil Q3 results on 11 February 2013. Coal India and BPCL unveil Q3 results on 13 February 2013. Tata Motors and Dr. Reddy's Laboratories unveil Q3 results on 14 February 2013. Ranbaxy Laboratories unveils Q4 December 2012 results on 26 February 2013. Markit Economics will unveil HSBC India Manufacturing PMI, which gauges the business activity of India's factories, for January 2013 tomorrow, 1 February 2013. The HSBC manufacturing Purchasing Managers' Index (PMI), which gauges the business activity of India's factories but not its utilities, rose to six-month high of 54.7 in December 2012 from 53.7 in November 2012. Markit Economics will unveil HSBC India Services PMI for December 2012 on 5 February 2013. The HSBC services Purchasing Managers' Index, based on a survey of around 400 companies, rose to 55.6 in December 2012 from November's 52.1. Services make up nearly 60% of India's economic output. The Reserve Bank of India (RBI) on Tuesday, 29 January 2013, announced a 25 basis points reduction in its key policy rate viz. the repo rate to 7.75% from 8% after a monetary policy review. The central bank also announced a reduction of 25 basis points in the cash reserve ratio (CRR) to 4% from 4.25% effective the fortnight beginning 9 February 2013. As a result of the reduction in the CRR, around Rs 18000 crore of primary liquidity will be injected into the banking system, RBI said. Keeping in view the expected moderation in non-food manufactured products inflation, domestic supply-demand balances and global trends in commodity prices, the baseline WPI inflation projection for March 2013 has been revised downwards from 7.5% set out in the SQR Second Quarter Review (SQR) of Monetary Policy in October 2012 to 6.8%, RBI said. The central bank has also lowered the baseline projection of GDP growth for 2012-13 to 5.5% from 5.8% given in the SQR. With headline inflation likely to have peaked and non-food manufactured products inflation declining steadily over the last few months, there is an increasing likelihood of inflation remaining range-bound around current levels going into 2013-14, the Reserve Bank of India (RBI) said. This provides space, albeit limited, for monetary policy to give greater emphasis to growth risks, the central bank said in its policy guidance. This policy guidance will, however, be conditioned by the evolving growth-inflation dynamic and the management of risks from twin deficits viz. the current account deficit and fiscal deficit, RBI said. The next mid-quarter review of Monetary Policy for 2012-13 will be announced on 19 March 2013. The central bank signaled that there is less room for aggressive policy rate cuts amid any negative surprise emanating from inflation and the twin deficits. Finance minister P. Chidambaram on 22 January 2013 said that the government is on pace to hit its $5 billion target for sales of stakes in state-owned companies before the fiscal year ends in March. The disinvestment will continue next year at the same pace or faster, he said. Mr. Chidambaram said that the government must act to close its gaping current account deficit, a legacy of huge import bills for oil and gold and one reason behind the rupee's poor performance over the past year. The finance minister said India's economy is on the right track and he dismissed any suggestion that the sovereign debt rating could be downgraded. Mr. Chidambaram said the government is committed to lowering the fiscal deficit by 0.6% a year for the next five years. The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The deficit target is 5.3% of gross domestic product for the current fiscal year through March, 4.8% in the next fiscal year, and 3% by the end of the year through March 2017. The government's move to raise diesel prices is positive, but it must keep up the momentum of economic reforms for there to be a material impact on its fiscal position, Moody's Investors Services said on 19 January 2013. The diesel price hike is another signal that the government is willing to take some long-delayed, politically difficult decisions, said Atsi Sheth, Moody's sovereign analyst for India. While the diesel price hike will have a fairly small impact on the actual budget deficit, the fiscal position would improve if fuel subsidies continue to be reduced over time, Ms. Sheth said. She also said Moody's maintains its sovereign rating at Baa3 for India, with a stable outlook. The Ministry of Finance on 14 January 2013 said that the government has decided to defer the implementation of the General Anti Avoidance Rules or GAAR by two years until 1 April 2016 and that it has accepted major recommendations of the Parthasarathi Shome Committee on GAAR with some modifications. The provisions of GAAR will apply to only those foreign institutional investors (FIIs) who seek to take advantage of the double taxation avoidance treaties India has with different countries. The rules won't apply to the non-resident individual investors who put money with the FIIs. Any investments made before 30 August 2010 won't be examined under GAAR. Finance Minister Mr. Chidambaram said that the GAAR provisions strike a balance between the government's need for revenue generation and investors' interests. Chidambaram early this month said attracting foreign funds to India has become an economic imperative. Commerce, Industry and Textiles Minister Mr. Anand Sharma on 9 January 2013 said that the Joint Working Group on Indo-Mauritius Double Taxation Avoidance Convention (DTAC), which is scheduled to meet in February 2013, would be able to take the deliberations forward. The government on 17 January 2013 allowed PSU OMCs to increase diesel prices by a small margin from time to time, a decision aimed at reducing the government's oil subsidy burden and fiscal deficit and improving the government's finances. Oil Minister Veerappa Moily said after a meeting of the Union Cabinet that there was an earlier proposal to deregulate diesel prices, and in pursuance of that, oil companies have been authorised to make price corrections from time to time. Finance Minister P. Chidambaram on 17 January 2013 said the government will factor in the reduction in subsidies and its impact on the deficit once the retailers say how much they intend to increase prices by. The government on 17 January 2013 also said it has increased the limit of subsidized cooking-gas cylinders to nine per year a family from six now. Mr. Moily said that the raising of the cap will cost the government about an additional Rs 10000 crore a year. Bahujan Samaj Party (BSP) chief Mayawati slammed the UPA government for its decision to deregulate diesel prices and said that it would affect prices and hit common man badly. She, however, ruled out the possibility of withdrawing BSP's support to the government, saying she did not want to destabilise it as the general election is not too far. BSP provides outside support to the Congress led UPA government which has already been reduced to a minority government after Trinamool Congress withdrew support to the government in September last year. Asian stocks declined on Thursday, 31 January 2013, after the US Federal Reserve said after the conclusion of a two-day meeting on US interest rates on Wednesday, 30 January 2013, that that US economic activity has paused in recent months after data on Wednesday, 30 January 2013, showed a surprise economic contraction in US economy in Q4 December 2012. Key benchmark indices in Indonesia, Taiwan, Japan, South Korea, Hong Kong and Singapore were down by 0.13% to 0.61%. China's Shanghai Composite rose 0.1%. US stocks dropped on Wednesday, 30 January 2013, retreating from five-year highs after the Federal Reserve said that economic activity paused in recent months, while fourth-quarter data showed a surprise economic contraction. The Federal Reserve on Wednesday maintained its aggressive bond-buying policy given the downside risks to the economic outlook. In a statement after a two-day meeting, the Fed said it would keep buying $85 billion a month in mortgage bonds and Treasurys. The Fed has kept its federal funds target for short-term rates unchanged at a record-low range of 0 to 0.25% for four years. The Commerce Department reported fourth-quarter gross domestic product dropped at a 0.1% annual rate, the worst performance since the second quarter of 2009, when the economy remained in recession. The influential US nonfarms payroll data for January 2013 is due for release tomorrow, 1 February 2013.
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