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Friday, February 21, 2014

Market may open higher on firm Asian stocks

The market may edge higher in early trade on firm Asian stocks. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could gain 12 points at the opening bell. Asian stocks rose on Friday after a larger-than-forecast climb in a measure of US manufacturing in February tempered concern about global growth.

IT stocks may gain on positive economic data in US. US is the biggest outsourcing market for the Indian IT firms.

Bharti Airtel after market hours on Thursday, 20 February 2014 said the company is not satisfied with the judgment of the Court of Appeal, Lagos delivered on 14 February 2014 and will lodge an appeal against that decision at the Supreme Court of Nigeria. Bharti Airtel said that the judgment has no impact on the equity holding of Bharti Airtel or of the other shareholders in Airtel Networks Limited, Nigeria (Airtel Nigeria). Bharti Airtel owns 79.06% stake in Airtel Nigeria.

Airtel Nigeria has already launched an appeal before the Supreme Court of Nigeria against the Judgment of the Court of Appeal in Kaduna in the matter relating to Econet's claim for 5% shares in Airtel Nigeria. These shares in any case are held in an escrow account and do not affect Bharti Airtel's 79.06% stake in Airtel Nigeria, Bharti Airtel said in a statement.

Bharti Airtel and Airtel Nigeria have full confidence in the laws of the land, and believe the Supreme Court in Nigeria will determine the appeals on merits, Bharti Airtel said. Bharti Airtel wishes to assure its customers, employees and business partners that these judgments will in no way affect operations of Airtel Nigeria, the company said. "As regards the quantum of the claim as mentioned in some media reports, we would like to unequivocally state that neither of these orders of the Court of Appeals in Lagos and in Kaduna deal with the quantum of damages and no such quantum has been determined," Bharti Airtel said in a statement.

TCS after market hours on Thursday, 20 February 2014, announced that it has partnered with the Finnish Wheelchair Curling Team, supporting the team in their quest for Olympic glory at the Paralympic Winter Games in Sochi. TCS will serve as a partner to the team for one year and provide support for the team towards their equipment, logistics and digital devices such as smart phones at Sochi.

Adani Ports and Special Economic Zone (APSEZ) after market hours on Thursday, 20 February 2014 said that the company has received Letter of Award from Ennore Port for the development of a container terminal at Ennore Port on DBFOT basis.

Shree Renuka Sugars (SRS) after market hours on Thursday, 20 February 2014 said that it has entered into an agreement with Wilmar International (Wilmar), through its 100% subsidiary Wilmar Sugar Holdings (WSH), to facilitate the investment of approximately $200 million in primary capital into SRS.

SRS said that this investment into the company would be done in two steps. The first step would involve an investment of upto Rs 517 crore by WSH in SRS through a preferential allotment of upto 25.75 crore shares of fresh equity to WSH at a price of Rs 20.08 per share. After this preferential issue, the existing promoters and WSH would hold 27.5% of SRS' expanded equity share capital. As per Sebi guidelines, there will also be an open offer by WSH and the existing promoters for up to 26% of the expanded equity share capital of the SRS at a price of Rs 21.89 per share. The second step would involve Wilmar and the existing promoters of SRS jointly participating in a rights issue to raise upto a further Rs 725.40 crore of primary equity capital for SRS, the company said in a statement.

Under a joint venture (JV) agreement signed between the existing promoters, WSH and the company, SRS would be jointly controlled by the existing promoters and Wilmar, with both parties holding equal shareholding and board representation in SRS. The existing promoters will continue with the management of the company with Wilmar being actively involved in strategic decisions. The investment is subject to approval of shareholders of SRS, anti-trust clearances in India and Brazil and such other statutory clearances as may be deemed necessary, SRS said in a statement.

SRS said that the proceeds of this investment/fund-raising would be used to pay down existing debt of SRS in India. As a strategic shareholder, WSH's shareholding in SRS and the capital infusion will strengthen the company's financial and business position and also provide a further platform for growth, it added. Wilmar's global reach and strong presence in key sugar producing countries is complementary to Shree Renuka's business, the company said in a statement.

Narendra Murkumbi, Vice-Chairman and Managing Director of SRS said, "This is a path-breaking move in the sugar business which would create a very strong partnership in some of the key global markets for sugar. Wilmar's leadership position in the edible oil business globally and its strong reach in several countries across the world would be synergistic with our large footprint in India and Brazil, the two largest sugar producers in the world. Wilmar's trading expertise, strong financial strength and history of entrepreneurial growth makes it an ideal partner."

Kuok Khoon Hong, Chairman and CEO of Wilmar said, "We are very pleased to be partnering with Mrs. Vidya Murkumbi and Mr. Narendra Murkumbi. India is a very important market for Wilmar. Besides the benefit for our sugar business, this venture will complement the development of our edible oils and other businesses in India."

Jean-Luc Bohbot, Managing Director of Wilmar Sugar and Group Sugar Head at Wilmar said, "Shree Renuka Sugar, with their two well-located refineries, large storage capacity and competitive milling operations in India, good mills and logistics assets in Brazil, fits perfectly with Wilmar Sugar's existing global footprint and provides us with a unique opportunity to participate in the Indian sugar industry. Their unique expertise will be of great value to our partnership."

Wilmar International, founded in 1991 and headquartered in Singapore, is today Asia's leading agribusiness group. Wilmar is ranked amongst the largest listed companies by market capitalisation on the Singapore Exchange and has a market capitalization of about $17 billion and revenues of $44.1 billion, with profit of $1.3 billion in FY 2013. Wilmar's business activities include oil palm cultivation, oilseeds crushing, edible oils refining, sugar milling and refining, specialty fats, oleochemicals, biodiesel and fertilisers manufacturing and grains processing.

Shree Renuka Sugars (SRS) is a global sugar producer/refiner with a strategic portfolio of sugar assets across India, including port-based refining assets, sugar mills in productive cane growing regions and diversified revenue streams from ethanol and electricity co-generation. Additionally in Brazil, SRS has well located and best-in-class sugar, ethanol, cogeneration, port and logistics assets. The company operates eleven mills globally with a total crushing capacity of 20.7 million tonnes per annum and two port-based sugar refineries with sugar production capacity of 1.7 million tons per year. Shree Renuka Sugars has high level of integration in its mills with total cogeneration capacity of 584 MW and ethanol production capacity of 4,160 kilolitres per day.

Elder Pharmaceuticals after market hours on Thursday, 20 February 2014 in a clarification to the exchanges with reference to a news item titled "Elder Pharma in revamp mode" that "the company has informed the Exchange on 13 December 2013 about the sale of its formulation business in India and Nepal to Torrent Pharmaceuticals. Post this deal, the company's overall strategy is to focus on its remaining brands inclusive Eldervit and Somazina and position itself further in the growing neutraceuticals segment by launching more products of its own. Also the company is also planning to concentrate and build on its domestic business of anti-infectives, strength its in-licence portfolio and grow its business in UK and Europe. Hence the company has decided to have a strategic planning or realigning the group post the deal for which have decided to appoint Deloitte for advising on the reworking of the company post the transaction with torrent".

Orient Abrasives after market hours on Thursday, 20 February 2014 said that Mr. P. P. Khanna, Director of the company and his wife Mrs. Prabha Khanna have intimated to the company that on 20 February 2014, they have sold 8.24 lakh equity shares (aggregating 0.69%) held by them in the company at a price of Rs 25 per equity share to Mr. Arvind Shah.

Kesar Terminals turns ex-dividend today, 21 February 2014, for interim dividend of Rs 1.50 per share for the year ending 31 March 2014.

P I Industries turns ex-dividend today, 21 February 2014, for interim dividend of 50 paise per share for the year ending 31 March 2014.

On political front, lawmakers passed a bill to create India's 29th state on Thursday despite mayhem in parliament, as opponents made a futile last attempt to stop the upper house carving landlocked Telangana from coastal Andhra Pradesh. Demands that the southern region be made a separate state have existed almost as long as independent India. Thursday's vote fulfils a promise made by the government in 2009, and comes just weeks before a national election in April.

The vote passed with the support of the two main parties, who are usually bitterly opposed but are both seeking to build support in the south ahead of the election. The new state will have a population of around 3.5 crore people. The bill must now be signed by president to become law, a formality expected to take place in a few days.

The Reserve Bank of India will need to continue raising its policy interest rate given the sticky nature of inflation, the International Monetary Fund said on Thursday. "The ingrained nature of inflation and inflation expectations mean that reducing inflation-even over a protracted horizon-will require significant increases in policy rates, which will weigh on growth," the IMF said in a report.

"Should high inflation expectations persist and inflation remain sticky, a more front-loaded path of interest rate increases may be needed," the IMF said.

RBI Governor Raghuram Rajan, a former IMF chief economist, has raised the key repo rate by 75 basis points to 8% since becoming head of India's central bank in September. He has made consumer prices its key inflation barometer, a shift away from using wholesale price inflation.

The IMF expects India's consumer price index to remain near double digits well into next year driven by food prices. It endorsed giving more emphasis to consumer prices for making policy decisions. "Headline CPI should provide the principal nominal anchor for monetary policy, as food and fuel price shocks propagate rapidly into core inflation, and inflation expectations and wage formation are closely linked to CPI inflation," the IMF said.

The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.

Key benchmark indices edged lower on Thursday, 20 February 2014 on concern foreign capital inflow will slow after a Federal Reserve report on Wednesday, 19 February 2014, showed support for a plan to reduce monetary stimulus for the US economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets over the past few years. Data showing weakness in China's manufacturing sector this month also hit sentiment on the domestic bourses adversely as stocks fell across Asia and Europe. The S&P BSE Sensex lost 186.33 points or 0.9% to settle at 20,536.64 on that day, its lowest closing level since 17 February 2014.

Foreign institutional investors (FIIs) bought shares worth a net Rs 206.46 crore on Thursday, 20 February 2014, as per provisional data from the stock exchanges.

Asian stocks rose on Friday after a larger-than-forecast climb in a measure of US manufacturing in February tempered concern about global growth. Key benchmark indices in Indonesia, Taiwan, Singapore, Japan, Hong Kong and South Korea were up by 0.55% to 2.02%. China's Shanghai Composite fell 0.56%.

Minutes from the Bank of Japan's Jan. 22 policy meeting showed some board members said the central bank should provide a clearer explanation that an expected decline in second-quarter domestic growth was factored into its outlook.

US stocks rose on Thursday on data showing that US factory activity accelerated in February at its fastest pace in nearly four years.

The Markit Economics preliminary index of US manufacturing increased to 56.7 in February, surpassing economists' estimates, while Labor Department figures indicated fewer applications for unemployment benefits last week. The Conference Board's index of US leading indicators, a gauge of the outlook for the next three to six months, rose in January in line with estimates.

Federal Reserve policy makers backed away from their year-old commitment to consider raising interest rates when unemployment falls below 6.5%, according to minutes of their January meeting released on Wednesday, 19 February 2014. Federal Reserve Chairwoman Janet Yellen said last week that US growth has strengthened and that only a "notable change in the outlook" for the economy would prompt policy makers to slow the pace of cuts to the monthly bond-buying program.

The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion.

Sweeping reforms are urgently needed to boost productivity and lower barriers to trade if the world is to avoid a new era of slow growth and stubbornly high unemployment, the OECD warned on Friday.

In its 2014 study on "Going for Growth", The Organisation for Economic Co-operation and Development said momentum on reforms had slowed in the aftermath of the global financial crisis, with much of it now piecemeal and incremental.

"The widespread deceleration in productivity since the crisis could presage the beginning of a new low-growth era," warned Pier Carlo Padoan, deputy secretary-general and chief economist at the Paris-based OECD. "These concerns, already prevalent among advanced OECD countries for some time, now encompass emerging-market economies and are fuelled also by high unemployment and falling labour force participation in many countries."