Market hits almost 5-week high as BJP leads in exit polls

The market edged higher last week after a series of exit polls on Wednesday, 4 December 2013, predicted victory for Bharatiya Janata Party (BJP) in the Assembly elections held in four States. Growth in second quarter GDP and the improvement in HSBC India manufacturing index for November also boosted the market. The barometer index, the S&P BSE Sensex, settled a tad below the psychological 21,000 mark, having alternately moved above and below that mark during the week. The Sensex and the 50-unit CNX Nifty, both, hit their highest closing level in almost five weeks.

The S&P BSE Sensex rose 204.60 points or 0.98% to 20,996.53, its highest closing level since 3 November 2013. The 50-unit CNX Nifty rose 83.80 points or 1.36% to 6,259.90, its highest closing level since 3 November 2013.

The BSE Mid-Cap index rose 1% and the BSE Small-Cap index rose 2.07%. Both these indices outperformed the Sensex.

The Sensex has gained 204.60 points or 0.98% in this month so far (till 6 December 2013). The Sensex has garnered 1,569.82 points or 8.08% in calendar 2013 so far (till 6 December 2013). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,547.82 points or 20.33%. From a record high of 21,321.53 on 3 November 2013, the Sensex has fallen 325 points or 1.52%.

Trading for the week and month began on positive note on Monday, 2 December 2013, as key benchmark edged higher after the outcome of a business survey showed that India's manufacturing activity returned to growth in November 2013 as a strong rise in orders pushed factories to step up production. The S&P BSE Sensex rose 106.08 points or 0.51% to settle at 20,898.01. The CNX Nifty rose 41.75 points or 0.68% to settle at 6,217.85.

Key benchmark indices edged lower on Tuesday, 3 December 2013, as Asian and European stocks dropped on speculation the Federal Reserve will soon start tapering monetary stimulus to the US economy after data overnight showed US manufacturing activity unexpectedly climbed last month. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The S&P BSE Sensex lost 43.09 points or 0.21% to settle at 20,854.92. The CNX Nifty shed 16 points or 0.26% to settle at 6,201.85.

Key benchmark indices edged lower in choppy trade on Wednesday, 4 December 2013, on bets report on the US government's data on monthly payroll due on Friday, 6 December 2013, will add to signs the US economic recovery is gaining momentum and spur the Federal Reserve to start reducing stimulus to the US economy. The S&P BSE Sensex shed 146.21 points or 0.70% to settle at 20,708.71. The CNX Nifty fell 40.90 points or 0.66% to 6,160.95.

Key benchmark indices edged higher on Thursday, 5 December 2013, as exit polls on Wednesday, 4 December 2013, predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and Delhi. But, the key benchmark indices gave away a portion of the initial strong gains. The S&P BSE Sensex garnered 249.10 points or 1.20% to settle at 20,957.81. The CNX Nifty jumped 80.15 points or 1.3% to settle at 6,241.10.

Key benchmark indices edged higher in volatile trade on Friday, 6 December 2013, as European stocks rose and as trading in US index futures pointed to a higher open on Wall Street later in the global day. The S&P BSE Sensex advanced 38.72 points or 0.18% to settle at 20,996.53. The CNX Nifty advanced 18.80 points or 0.3% to settle at 6,259.90.

Among the 30 Sensex shares, 18 stocks rose and the remaining stocks fell.

Tata Power surged 10.82% to Rs 88.10. It was top Sensex gainer last week.

Select metal stocks edged higher as manufacturing in China continued to grow last month. China is the world's largest consumer of copper and aluminum. Jindal Steel & Power (up 9.95%) and Tata Steel (up 5.43%), edged higher.

Hindalco Industries (down 1.71%) and Sesa Sterlite (down 0.33%), edged lower.

Chinese manufacturing growth beat analyst estimates in November, indicating the nation's economic recovery is sustaining momentum amid government efforts to rein in credit growth. The Purchasing Managers' Index was 51.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on Sunday. A separate gauge from HSBC Holdings Plc and Markit Economics also indicated a reading above the 50 level dividing expansion from contraction. The HSBC China Manufacturing Purchasing Managers' Index had a final reading of 50.8 in November, compared with 50.9 in October.

Capital goods stocks were in demand. State-run Bhel surged 9.80% to Rs 171.35.

Engineering and construction major Larsen & Toubro (L&T) jumped 5.10% to Rs 1,096.55.

Bank shares were in demand after a foreign brokerage upgraded target prices of select bank shares. ICICI Bank (up 7.01% to Rs 1,142.75), HDFC Bank (up 3.19% to Rs 682.30) and State Bank of India (up 2.21% to Rs 1,861.80), edged higher.

The brokerage increased SBI's target price to Rs 2,200 from Rs 1,933. ICICI Bank's target price was raised to Rs 1,290 from Rs 1,250.

IT major Wipro rose 4.76% to Rs 493.35. Wipro said it will discontinue manufacturing of Wipro branded desktops, laptops and servers in its endeavor to strengthen its position as a system integrator and increase its focus on IT solutions and services. Wipro said that the company took this decision after evaluating the changing market scenario and customer needs. Wipro will, however, be present in the PC market by providing suitable brands as a part of its solution offerings in large integrated deals. The announcement was made after market hours on Wednesday, 4 December 2013.

Among other IT shares, Infosys (down 0.80% to Rs 3,326.60) and TCS (down 0.23% to Rs 1,999.95), edged lower.

Commercial vehicles major Tata Motors fell 1.91%. The company's British luxury car unit Jaguar Land Rover (JLR) on Thursday, 5 December 2013, said it has decided to set up a manufacturing facility in Brazil following a landmark agreement between the company and state authorities to build a plant in the State of Rio de Janeiro. An agreement paving the way for construction of the plant has been signed by Phil Hodgkinson, Global Business Expansion Director of JLR, and Sergio Cabral, State Governor of Rio de Janeiro. JLR's planned expansion into Brazil is the next major step in the company's strategy to increase its global manufacturing footprint and create additional capacity, the company said in a statement. This new facility will play an important role in supporting the significant growth opportunity identified in Brazil and across other South American markets, JLR said.

Dr Ralf Speth, CEO of Jaguar Land Rover, said: "Brazil and the surrounding regions are very important. Customers there have an increasing appetite for highly capable premium products. This new programme will enable us to bring exciting new vehicles to them, with outstanding British design and engineering, creating a world-class Jaguar Land Rover facility incorporating leading premium manufacturing technologies. We have established excellent working relationships with the State of Rio de Janeiro, the City of Itatiaia & the Rio de Janeiro State Industrial Development Company and we look forward to attracting new customers to our business in this important market".

Based in the City of Itatiaia, the new programme represents a total investment of 750 million reais by 2020. Construction of the premium manufacturing facility will commence in mid-2014. It is anticipated that the first vehicles will come off the assembly line in 2016, subject to the final approval of the plans from the Brazilian Federal Government under its Inovar-auto Programme, JLR said. The new plant will have a capacity to build 24,000 vehicles annually for the Brazilian market. Initially, the plant will employ almost 400 people. This number is expected to almost double by the end of the decade, JLR said. Following a detailed feasibility study, JLR selected the City of Itatiaia, close to the heart of the emerging Regional Automotive Zone, due to its excellent logistics links, access to the local supplier base and skilled workforce, the company said in a statement.

Sergio Cabral, Governor of Rio de Janeiro State commented: "The choice of Rio de Janeiro to host the Jaguar Land Rover's new facility is another historic achievement for our state. We offer perfect conditions to JLR to install its plant in Brazil, as we have an automotive hub in the South Fluminense region that concentrates qualified labour and important suppliers. It is a privilege to welcome this great group, with an estimated investment of up to R$750 million and we are confident that this agreement will bring to Brazil extraordinary results".

India's largest car maker by sales Maruti Suzuki India rose 1.23%. The company announced during market hours on Friday, 6 December 2013, that production fell 10.25% to 93,900 units in November 2013 over November 2012. The company had said on 2 December 2013 its total sales declined 10.7% to 92,140 units in November 2013 over November 2012. Domestic sales dropped 5.9% to 85,510 units in November 2013 over November 2012. Export sales declined 46.2% to 6,630 units in November 2013 over November 2012.

M&M rose 0.02%. The company announced after market hours on Thursday, 5 December 2013 that it would carry out preventive replacement of one part in its Scorpio Ex variant. This is in keeping with its customer centric approach as well as in compliance with the recently announced voluntary code on vehicle recall.

Mahindra will carry out preventive replacement of a pressure regulating valve in 800 units of only Scorpio's Ex variant which were manufactured between October/ November 2013. This replacement would be carried out with immediate effect and would be done free of cost for Scorpio Ex customers who would be individually contacted by the company/authorized dealers.

The recall is limited only to the Scorpio Ex variant manufactured during the said period and does not affect other Scorpio variants.

Shares of two-wheeler makers were mixed. Hero MotoCorp rose 2.35%, while Bajaj Auto fell 1.04%.

A foreign brokerage upgraded Hero MotoCorp to 'outperform' from 'sell'. The brokerage also upgraded Bajaj Auto to 'underperform' from 'sell'.

FMCG stocks tumbled. FMCG major Hindustan Unilever (HUL) tumbled 5.65% to Rs 560.85. It was the top Sensex loser last week.

India's largest cigarette maker by sales ITC fell 2.66% to Rs 311.65.

The BJP has emerged as the biggest winner in four key state elections, exit polls estimated on Wednesday, 4 December 2013, a possible blow to the ruling Congress ahead of a general election due next year. Assembly elections in Delhi, Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram were held over the past few weeks. The elections were marked by record high turnout in most states. Despite the gains predicted for the BJP it was unable to win a majority of seats in the capital Delhi, two polls showed. One poll suggested the race was close in Chhattisgarh. While the exact results varied from exit poll to exit poll, the general trend was clear: The ruling Congress party recorded embarrassing declines in support in Delhi as well as the western state of Rajasthan. Meanwhile voters in Madhya Pradesh and Chhattisgarh voted basically on the same lines they voted five years ago, backing the main opposition party, the BJP.

Counting of votes for assembly elections in Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan takes place on Sunday, 8 December 2013. Counting of votes for assembly elections in Mizoram takes place on 9 December 2013. The results are being closely watched by markets as a potential indicator of the mood of voters in the world's biggest democracy before the 2014 general election.

Indian manufacturing returned to growth last month as a strong rise in orders pushed factories to step up production, a business survey showed on Monday, suggesting a slow economic recovery is on its way. The HSBC Manufacturing PMI, compiled by Markit, rose to 51.3 in November from October's 49.6. The PMI index is the highest since March and marks its first time above the watershed level of 50 that divides growth from contraction in four months. The new orders sub-index rose to 51.9 last month, its highest since April. In October it shrank to 48.9.

"Manufacturing activity picked up, led by a rise in new domestic orders, which helped pull up output growth," said Leif Eskesen, chief economist for India at survey sponsor HSBC. Both input and output costs rose at a softer pace in November, the survey showed. Eskesen said the RBI would be getting closer to the end of its tightening cycle if the trend of easing inflation continues.

India's Gross Domestic Product (GDP) increased at improved pace of 4.8% in Q2 September 2013, compared with 4.4% growth recorded in Q1 June 2013. The economic activities which registered significant growth in Q2 September 2013 over Q2 September 2012 were 'agriculture, forestry and fishing' at 4.6%, 'electricity, gas and water supply' at 7.7% 'construction' at 4.3%, 'financing, insurance, real estate and business services' at 10% and 'community, social and personal services' at 4.2%.

The fiscal deficit touched Rs 4.58 lakh crore during April-October 2013, or 84.4% of the full-year target, data released by the government after trading hours on Friday, 29 November 2013, showed. In the annual budget presented in February, Finance Minister P. Chidambaram had committed to narrow the fiscal deficit to 4.8% of gross domestic product (GDP) this fiscal year from 4.9% a year ago.