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Friday, August 30, 2013
Daily News Roundup - Aug 30 2013
Reliance Industries and its partners in the KG-D6 block — BP Plc and Niko Resources — have received Government approval to invest US$4bn in the R-Series gas-field in the block. (BL)
SREI Group is looking for acquisition opportunities in distressed power and road sectors. (BL)
The NSEL Investors Forum has urged the broking community to halt trading for one day on the Multi Commodity Exchange. (BL)
With the depreciation of the rupee and a rise in crude oil prices beginning to pinch them, airlines in India have begun raising fares. Jet Airways has started levying a surcharge of US$50 on the economy class fare on its Gulf flights. SpiceJet, is planning to increase the surcharge on its domestic flights. (BS)
SpiceJet is in talks with Airbus to acquire A320neo narrowbody aircraft. (BS)
ING Vysya Bank said it had increased interest rates on deposits by 25-50 basis points, effective August 28. (BS)
The commodity market regulator has now stumbled on information that a firm controlled by the group has been trading on FT-promoted MCX in violation of government guidelines. (ET)
Idea Cellular has applied for unified licences to provide voice and data services in seven circles and said it will comply with the telecom department’s guidelines on roaming agreements. (ET)
State Bank of India raised interest rates by up to 1.5% on bulk deposits of over Rs10mn. The interest rate for bulk deposits for tenors of 7 to 60 days will be 9%. (ET)
A 3-day block closure in Tata Motors’ Jamshedpur plant has begun. The closure, which will be observed from August 29 to 31, was aimed to prevent unnecessary build-up of inventory as well as at dealers’ end. (ET)
The REC is coming out with the tax-free bond issuance. Through this route, REC plans to raise Rs10bn, with an oversubscription option of Rs25bn. (BS)
A significant part of SAIL’s capacity expansion project, worth around Rs190bn, may miss the revised deadline of 2013-14. (BL)
Economy Snippets
The petroleum ministry has finalised a shale oil and gas exploration policy, which will be tabled before the Cabinet soon after the oil minister approves it. (ET)
The government is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports. (ET)
The Commerce Ministry has asked the Finance Ministry to include export credit in priority sector lending of all banks to boost overseas sales. (ET)
Credit ratings agency Moody’s has said the food security bill will weaken government finances and deteriorate country’s macroeconomic situation. (ET)
Nifty rolls smoothly...above 5400
The Indian equity market ended with strong gains on Thursday amid F&O expiry. Overnight gains in the US and the Asian markets propped up the benchmark indices to open with a positive gap. From there on the benchmark indices just continued rallying on account of short covering across the markets.
Sector-wise, major short covering was witnessed in the realty and infra stocks as the Congress was now eyeing for the contentious Land Acquisition, Rehabilitation and Resettlement Bill. Parliament is likely to take the Land Bill for discussion. The Land Acquisition Bill seeks to provide a fair compensation and rehabilitation to land owners in both rural and urban areas for land that is acquired for developmental projects.
Among the other major gainers were, oil and gas, metals, FMCG, capital goods and the auto stocks. Even the mid-cap and the small-cap stocks witnessed some buying momentum.
On the currency front, the slide in the rupee came to a halt after the RBI decided to open a foreign exchange swap window to meet the daily dollar requirements of the three public sector oil marketing companies which guzzle US$8-8.5bn every month, for the import of an average of 7.5 mn tonnes of crude oil.
The telecom sector also was in action on Thursday, commenting on the sector, Amar Ambani, Head of Research at IIFL, said, telecom operators posted robust rev/min improvement in Q1 FY14 and he expect companies to continue to benefit from sustained effort to reduce promotional/discounted minutes over past few quarters. Although uncertainty still persists around issues like one time spectrum charge, renewal fees etc, he believes current valuations factor in potential payouts from the same. We believe that worst may be over from stock perspective and recommend BUY on Idea and Bharti.
Finally, Sensex closed at 18401 up 404 points, while Nifty closed at 5,409 up 124 points over the previous close.
Sesa Goa, Hindalco, HDFC, Lupin, Kotak Bank, Bharti Airtel, Dr Reddy’s Labs, HCL Tech and NMDC were among the top gainers in the Nifty, while, PNB, Ultratech Cem, Coal India, Infy, SBI and Ranbaxy were among the top losers.
The advance-decline ratio favoured the bulls. On the BSE, 1274 stocks advanced against 990 declining stocks, while 138 remained unchanged.
The INDIA VIX was down 9% at 29.41. It hit a day’s high of 32.44 and low of 28.83.
Step back into safety
You will either step forward into growth or you will step back into safety." - Abraham Maslow
August is behind us and thank God it ended with a bang after whimpering around most days of the month. We are into the September series and ‘Septaper’ will be on every investor’s mind. The situation in Syria remains under watch by investors. Prime Minister David Cameron said that Britain would not participate militarily in any strike against Syria as the UK Parliament voted against the same.
We have the GDP numbers which will be announced after market hours today which will give some more reason perhaps for pessimism to rise even further given the prolonged slowdown.
The outlook is a flat start. The rupee which recovered smartly on Thursday will continue to keep investors on tenterhooks. Speculation on the GDP numbers could cause the indices to taper towards close. Global cues are nothing much to write about.
Around noon, the Prime Minister Manmohan Singh will make a statement in Parliament on the state of economy and touch on the rupee's sharp swing against the dollar.
Jindal Steel & Power will remain in focus as it will consider buyback of shares. Aanjaneya Lifecare will consider fund raising.
Reliance Industries and its partner BP Plc won approval to invest $3.18 bn in R-Series gas field in KG-D6 block, says media reports. Report said that RIL-BP plan to bring satellite fields in KG-D6 block to production.
Petroleum Minister M Veerappa Moily met Finance Minister P Chidambaram to discuss possible solutions including Rs 3-4 per litre hike in diesel prices and cut in duties.
Rural Electrification Corp is planning to raise Rs50bn through issue of taxfree bonds. The issue opens on August 30 and closes on September 23, says report.
In coal block scam, the apex court directed CBI to conclude the probe against all companies, which were allocated coal blocks, by December this year and ordered it to file the status report by October 22.
Verizon Communications Inc and Vodafone Group Plc restarted talks over possible buyout of the British firm's stake in their US wireless joint venture.
The Lok Sabha has debated and passed two land-mark laws; the food bill and an updated version of the 19th-century legislation governing land acquisition. The ‘Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation & Resettlement Bill, 2012’ seeks to give a fair deal to farmers losing their land, especially multi-crop land, to industrial needs. But industry complained the law would push cost and timeframe for setting up new enterprises.
The Dow added 0.11% while the Standard & Poor's 500 Index was marginally. The Nasdaq notched up 0.75%. Asian stocks are mixed. Japan's Nikkei is down half a percent while Hong Kong's Hang Seng index is marginally up. South Korea's Kospi index and China's Shanghai index have gained ~0.5%. Brent crude prices fell 1% to $113.97 a barrel.
In US, the nation's second-quarter gross domestic product grew at a 2.5% annualized pace, according to a revised estimate from the Bureau of Economic Analysis. Jobless claims fell last week to 331,000.
Indonesia's central bank on Thursday raised its benchmark interest rates by 50 basis points to 7%, a move intended to support the declining rupiah and reduce the country's CAD.
While, Brazil's central bank on Wednesday raised its key lending rate by a half percentage point, to curb worrisome inflation despite parallel concerns over the pace of economic growth. In a widely expected move, the central bank's monetary policy committee voted unanimously to raise the ‘Selic’ interest rate to 9% from the previous 8.5%, the fourth increase since April.
A radical but a seemingly effective idea to curb gold imports by RBI might see the light of day shortly. India is considering a plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.
Results watch: BRAND HOUSE,Color Chips, Dunlop India, EL Forge, Lee & Nee Soft, PREMIER ENER, S Kumar Nation, Shakti Press, UCIL Leasing.
Trends in FII flows: The FIIs were net sellers of Rs2.48bn in the cash segment on Thursday, while the domestic institutional investors (DIIs) were net sellers of Rs758mn, as per the provisional figures released by the NSE.
The foreign funds were net sellers of Rs11.99bn in the cash segment on Wednesday, according to the SEBI figures.
Corporate snippets
Reliance Industries and its partners in the KG-D6 block — BP Plc and Niko Resources — have received Government approval to invest US$4bn in the R-Series gas-field in the block. (BL)
SREI Group is looking for acquisition opportunities in distressed power and road sectors. (BL)
The NSEL Investors Forum has urged the broking community to halt trading for one day on the Multi Commodity Exchange. (BL)
With the depreciation of the rupee and a rise in crude oil prices beginning to pinch them, airlines in India have begun raising fares. Jet Airways has started levying a surcharge of US$50 on the economy class fare on its Gulf flights. SpiceJet, is planning to increase the surcharge on its domestic flights. (BS)
SpiceJet is in talks with Airbus to acquire A320neo narrow body aircraft. (BS)
ING Vysya Bank said it had increased interest rates on deposits by 25-50 basis points, effective August 28. (BS)
The commodity market regulator has now stumbled on information that a firm controlled by the group has been trading on FT-promoted MCX in violation of government guidelines. (ET)
Idea Cellular has applied for unified licences to provide voice and data services in seven circles and said it will comply with the telecom department’s guidelines on roaming agreements. (ET)
State Bank of India raised interest rates by up to 1.5% on bulk deposits of over Rs10mn. The interest rate for bulk deposits for tenors of 7 to 60 days will be 9%. (ET)
A 3-day block closure in Tata Motors’ Jamshedpur plant has begun. The closure, which will be observed from August 29 to 31, was aimed to prevent unnecessary build-up of inventory as well as at dealers’ end. (ET)
The REC is coming out with the tax-free bond issuance. Through this route, REC plans to raise Rs10bn, with an oversubscription option of Rs25bn. (BS)
A significant part of SAIL’s capacity expansion project, worth around Rs190bn, may miss the revised deadline of 2013-14. (BL)
Economic Snippets
The petroleum ministry has finalised a shale oil and gas exploration policy, which will be tabled before the Cabinet soon after the oil minister approves it. (ET)
The government is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports. (ET)
The Commerce Ministry has asked the Finance Ministry to include export credit in priority sector lending of all banks to boost overseas sales. (ET)
Credit ratings agency Moody’s has said the food security bill will weaken government finances and deteriorate country’s macroeconomic situation. (ET)
Global Data Watch: Private Sector Credit (MoM) (Jul) AUD, Private Sector Credit (YoY) (Jul) AUD, Construction Orders (YoY) (Jul) JPY, Housing Starts (YoY) (Jul) JPY, Retail Sales (MoM) (Jul) EUR, Retail Sales (YoY) (Jul) EUR, Nationwide Housing Prices s.a (MoM) (Aug) GBP, Nationwide Housing Prices n.s.a (YoY) (Aug) GBP, KOF Leading Indicator (Aug) CHF, Unemployment (Jul) EUR, Current Account Balance (Jul) EUR, Consumer Credit (Jul) GBP, M4 Money Supply (MoM) (Jul) GBP, M4 Money Supply (YoY) (Jul) GBP, Mortgage Approvals (Jul) GBP, Net Lending to Individuals (MoM) (Jul) GBP, Consumer Confidence (Aug) EUR, Business Climate (Aug) EUR, Economic Sentiment Indicator (Aug) EUR, Industrial Confidence (Aug) EUR, Services Sentiment (Aug) EUR, Consumer Price Index (YoY)Preliminar EUR, Unemployment Rate (Jul) EUR, Retail Sales (YoY) (Jun) EUR, Consumer Price Index (MoM) (Jul)Preliminar EUR, Consumer Price Index (EU Norm) (MoM) (Jul)Preliminar EUR, Consumer Price Index (EU Norm) (YoY) (Jul)Preliminar EUR, Consumer Price Index (YoY) (Jul)Preliminar EUR, Producer Price Index (MoM) (Jul) EUR, Producer Price Index (YoY) (Jul) EUR, Federal Fiscal Deficit, INR (Jul) INR, Gross Domestic Product Quarterly (YoY) (Q1) INR, Gross Domestic Product (MoM) (Jun) CAD, Gross Domestic Product Annualized (QoQ) (Q2) CAD, Personal Income (MoM) (Jul) USD, Core Personal Consumption Expenditure - Price Index (MoM) (Jul) USD, Core Personal Consumption Expenditure - Price Index (YoY) (Jul) USD, Personal Consumption Expenditures - Price Index (MoM) (Jul) USD, Personal Consumption Expenditures - Price Index (YoY) (Jul) USD, Personal Spending (Jul) USD, Chicago Purchasing Managers' Index (Aug) USD, Reuters/Michigan Consumer Sentiment Index (Aug) USD
Happy days are here again for MCX
Shares of Multi Commodity Exchange of India ( MCX) hit an upper circuit of 5% for the ninth consecutive trading session, at Rs355.20 on the Bombay Stock Exchange (BSE) with no sellers.
The counter has rallied nearly 50% from its record low of Rs238 registered on August 19 this year, after the company said it has no exposure to crisis-hit National Spot Exchange Limited ( NSEL), which had to settle dues worth Rs5,600 crore to investors.
MCX and NSEL are totally different entities with no financial commitments or exposure to each other whatsoever. The company is in full compliance with the directive of the Forward Markets Commission (FMC), the commodity markets regulator, on investments, loans and advances.
The company is a debt-free company and has a net worth of Rs1,214 crore in the quarter ended June 30.
At 3.15 pm, MCX was trading at Rs355.20, up by 5.00%, with a volume of 2210 shares trading on BSE.
Market may open flat to slightly higher
The market may open flat to slightly higher as most Asian stocks rose. Trading of CNX Nifty futures on the Singapore stock exchange indicates a flat opening on the domestic bourses today, 30 August 2013. On the macro front, the Central Statistics Office (CSO) will unveil data on gross domestic product (GDP) for Q1 June 2013 today, 30 August 2013. India's GDP grew a dismal 4.78% in Q4 March 2013. The GDP grew 5% in the year ended 31 March 2013, the weakest in a decade, as falling domestic and overseas demand, crumbling domestic infrastructure facilities, bureaucratic delays in approvals for industrial projects and high borrowing costs choked investments in the economy.
Infrastructure and realty stocks will be in focus as the path-breaking Land Acquisition Bill, which seeks to provide just and fair compensation to farmers while ensuring that no land can be acquired forcibly, was passed by the Lok Sabha with overwhelming majority on Thursday. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2012 stipulates mandatory consent of at least 70% for acquiring land for Public Private Partnership (PPP) projects and 80% for acquiring land for private companies. The bill, which will replace over a century-old law, proposes compensation that is up to four times the market value in rural areas and two times the market value in urban areas. The bill was passed with 216 votes in favour and 19 against.
State Bank of India (SBI) said after market hours on Thursday, 29 August 2013 that the interest rate for bulk deposits for the tenors 7 days to 60 days will be 9% per annum and for the tenor 61 days to less than one year will be 8.25% per annum with effect from 31 August 2013.
Sesa Goa said after market hours on Thursday, 29 August 2013 that the board of directors of the company at its meeting held on 29 August 2013 approved allotment of equity shares to the shareholders of Sterlite Industries (India) (Sterlite), The Madras Aluminium Company (MALCO) and Ekaterina (Ekaterina) pursuant to the Schemes of Amalgamation and Arrangement.
To the shareholders of Sterlite a total of 194.45 crore shares were issued, 3 Sesa Goa shares being issued for every 5 existing Sterlite shares. To the Shareholders of MALCO, 7.87 crore shares, 7 Sesa Goa shares being issued for every 10 existing MALCO shares. To the Shareholders of Ekaterina 7.23 crore shares, 1 Sesa Goa share being issued for every 25 existing Ekaterina shares.
Consequent to the aforesaid allotments, the paid up equity share capital of the company stands increased from Rs. 86.91 crore to Rs. 296.46 crore. Sesa Goa will apply to the Bombay Stock Exchange and the National Stock Exchange in India (together, the Indian Stock Exchanges) for listing approval for the new Sesa Goa shares and expects to receive the final listing approval within three to four business days. Thereafter, Sesa Goa will apply to the Indian Stock Exchanges for trading approval for the new Sesa Goa shares and expects to receive the trading approval within a further two to three business days. The new Sesa Goa shares are expected to begin trading on the Indian Stock Exchanges on the next business day in India after trading approval is received.
Hindalco Industries turns ex-dividend today, 30 August 2013, for dividend of Rs 1.40 per share for the year ended March 2013.
NHPC turns ex-dividend today, 30 August 2013, for a final dividend of Rs 0.60 per share for the year ended March 2013.
A recovery in the battered rupee, a slide in oil prices triggered by US President Barack Obama's comments on Wednesday, 28 August 2013, that he hasn't yet decided whether to launch an attack on Syria and weaker-than-expected report on US durable-goods orders which raised expectations that the Federal Reserve may delay plans to reduce its monetary stimulus to the US economy, aided a rally in Indian stocks on Thursday, 29 August 2013. The S&P BSE Sensex jumped 404.89 points or 2.25% to 18,401.04 on that day, its highest closing level since 26 August 2013.
Foreign institutional investors (FIIs) sold shares worth a net Rs 248.18 crore on Thursday, 29 August 2013, as per provisional data from the stock exchanges.
Most Asian stocks rose after the UK parliament voted against military strikes on Syria. Key benchmark indices in South Korea, Indonesia, Taiwan and China rose by 0.31% to 0.89%. Key benchmark indices in Singapore, Hong Kong, and Japan fell by 0.09% to 0.8%.
Japan's consumer prices increased at the fastest pace since 2008 in July, adding to signs that Prime Minister Shinzo Abe is making progress in pulling the economy out of 15 years of deflation. Consumer prices excluding fresh food climbed 0.7% from a year earlier, the statistics bureau said today in Tokyo.
US stocks rose as data showed the economy expanded at a faster pace in the second quarter and concerns over Syria eased. Gross domestic product rose at a 2.5% annualized rate, up from an initial estimate of 1.7%, Commerce Department figures showed Thursday in Washington. Jobless claims in the week ended August 24 dropped 6,000 to 331,000 from a revised 337,000 the week before that was higher than initially reported, the Labor Department said
The prospect of imminent military strikes on Syria receded as the UK and France said they favor waiting for the results of a United Nations investigation into alleged use of chemical weapons. The US which says it has evidence that Syria's government was responsible, won't act without allies, Defense Secretary Chuck Hagel said.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled next month, with their focus squarely on the timing of tapering of Federal Reserve's bond purchases. The FOMC holds a two-day policy meeting on 17-18 September 2013 to decide on interest rates in the United States. 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.
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