Sensex settles at over two-week low below 21,000

Key benchmark indices edged lower in the week ended Friday, 3 January 2014 to settle at over two-week low on weak domestic and global economic data. The market declined in four out of five trading sessions in the week just gone by. The BSE Mid-Cap and the BSE Small-Cap indices outperformed the Sensex during the week.

In the week ended Friday, 3 January 2014, the 30-share S&P BSE Sensex fell 342.25 points or 1.61% to 20,851.33, its lowest closing level since 19 December 2013. The 50-unit CNX Nifty declined 102.65 points or 1.62% to 6,211.15, its lowest closing level since 19 December 2013.

The S&P BSE Mid-Cap index slipped 4.58 points or 0.06% to 6,659.18 and the S&P BSE Small-Cap index rose 36.92 points or 0.56% to 6,553. Both these indices outperformed the Sensex.

Key benchmark indices edged lower on the first trading session of the week on Monday, 30 December 2013 after Reserve Bank of India (RBI) Governor Raghuram Rajan said that the commencement of tapering by the US Federal Reserve will mean a repricing of certain assets with consequent volatility in the global financial markets and that a potential additional source of uncertainty for India is the coming general election. The S&P BSE Sensex shed 50.57 points or 0.24% to settle at 21,143.01, its lowest closing level since 26 December 2013.

Key benchmark indices eked out small gains on the last trading session of 2013 on Tuesday, 31 December 2013. The S&P BSE Sensex garnered 27.67 points or 0.13% to settle at 21,170.68, its highest closing level since 27 December 2013.

Key benchmark indices edged lower on the first trading session of 2014 on Wednesday, 1 January 2014 after the latest data on government's finances raised concerns that India may overshoot its ambitious target of containing fiscal deficit at 4.8% of GDP this year and after another data showed a muted growth in the core sector in November 2013. A breach of the target could prompt rating agencies to downgrade India's debt to junk, which India must avoid if it hopes to emerge from a prolonged and painful economic slowdown. The S&P BSE Sensex shed 30.20 points or 0.14% to settle at 21,140.48, its lowest closing level since 26 December 2013.

Key benchmark indices dropped in choppy trade on Thursday, 2 January 2014 as European stocks declined as gauges of manufacturing in China -- the world's second-biggest economy -- declined. The S&P BSE Sensex lost 252.15 points or 1.19% to settle at 20,888.33, its lowest closing level since 19 December 2013.

Key benchmark indices edged lower on Friday, 3 January 2014 in a volatile trading session. The S&P BSE Sensex was down 37 points or 0.18% at 20,851.33, its lowest closing level since 19 December 2013.

Among the 30-share Sensex pack, 22 stocks declined and rest of them gained in the week ended Friday, 3 January 2014.

Index heavyweight and cigarette major ITC fell 2.25% to Rs 314.85.

Index heavyweight Reliance Industries slipped 1.55% to Rs 865.

Coal India lost 1.83%. The company said during market hours on Thursday, 2 January 2014 that the combined production of the company and its subsidiaries as per provisional figures was 99% of the target at 44.49 million tonnes in December 2013. The coal offtake was 99% of the target at 42.92 million tonnes in December 2013.

Metal and mining stocks dropped. Weak Chinese economic data weighed on metal stocks during the week. China is the world's largest consumer of copper and aluminum. Sesa Sterlite (down 1.29%), Tata Steel (down 2.68%), and Hindalco Industries (down 2.86%) edged lower.

Bank stocks edged lower. Prime Minister Dr. Manmohan Singh on Friday, 3 January 2014 expressed concern about the failure in controlling persistent inflation.

State Bank of India declined 3.04%. The state-run bank after market hours on Thursday, 2 January 2014, said that the Executive Committee of the Central Board of the bank at its meeting held on Thursday, 2 January 2014, has accorded its approval for the issuance and allotment of 1.12 crore equity shares at an issue price of Rs 1782.74 per share to the Government of India (GoI) on preferential basis. The committee also approved the allotment of Basel III compliant Tier 2 bonds of Rs 2000 crore, issued for 120 months (10 year bullet), at an annually payable coupon of 9.69%, by way of private placement.

AXIS Bank (down 2.52%), ICICI Bank (down 3.69%) and HDFC Bank (down 0.88%) declined.

Pharma pivotals were mostly lower. Cipla (down 3%) and Dr Reddy's Laboratories (down 0.82%) fell. Sun Pharmaceutical Industries rose 0.77%.

Capital goods pivotals dropped. Bhel (down 4.27%) and L&T (down 6.06%) declined.

Auto stocks declined on weak December sales. Mahindra & Mahindra (M&M) lost 6.68%. M&M during market hours on Wednesday, 1 January 2014, also said that its total auto sales declined 13% to 39,611 units in December 2013 over December 2012.

M&M during market hours on Wednesday, 1 January 2014, said that its total tractor sales rose 15% to 17,037 units in December 2013 over December 2012. Tractor sales in the domestic market rose 19% to 16,257 units in December 2013 over December 2012. Exports fell 26% at 780 units in December 2013 over December 2012.

M&M on Thursday, 2 January 2014, said SsangYong Motor's total sales rose 11.8% at 13,271 units in December 2013 over December 2012. The total sales of 13,271 units in December 2013 comprised sales of 6,584 units in the domestic market and 6,687 of exports with CKD kits. SsangYong Motor is a Korean subsidiary of M&M.

SsangYong Motor's total sales jumped 20.7% to 145,649 units in calendar year 2013 over calendar year 2012. SsangYong said its annual sales rose for the fourth consecutive year in 2013. The company stressed that such performance was largely driven by the successful launches of the face-lifted models which reflect consumer needs, settlement of healthy relations between labor and management, and the workers' efforts and cooperation in order to expand supply.

Separately, M&M on Thursday, 2 January 2014, said that its total two-wheeler sales jumped 252% to 19,715 units in December 2013 over December 2012. Two-wheeler sales in the domestic market jumped 267% to 19,054 units in December 2013 over December 2012.

Volume growth is being driven by the innovative Mahindra Centuro motorcycle, which continues to receive an overwhelming response, M&M said. Mahindra Two Wheelers has been steadily expanding production of the Centuro to meet rising consumer demand, while also growing its sales and service touch points to over 1000 across the country in order to make the motorcycle more accessible to buyers, the company said.

Tata Motors dropped 2.27%. The total sales (including exports) of Tata commercial and passenger vehicles plunged 42.28% at 37,852 units in December 2013 over December 2012. Tata Motors' exports declined 26.79% at 2,842 units in December 2013 over December 2012. Tata Motors announced the monthly sales volume data on standalone basis after trading hours on Thursday, 2 January 2014.

Maruti Suzuki India rose 1.3%. The company on 1 January 2014 said that its total sales fell 4.4% to 90,924 units in December 2013 over December 2012. Domestic sales rose 5.5% to 86,613 units in December 2013 over December 2012. Exports fell 67% to 4,311 units in December 2013 over December 2012.

Hero MotoCorp rose 0.46%. The company announced after market hours on Thursday, 2 January 2014, that its total sales fell 3.06% to 5.24 lakh units in December 2013 over December 2012. The company sold record 61.83 lakh two-wheelers in calendar year 2013.

Hero MotoCorp said that the management has put together plans to further consolidate the company's leadership position in the two-wheeler industry. Year 2014 will be action-packed with radically new products launches from the company, entry into new markets backed by new, clutter-breaking campaign and continued network expansion.

Bajaj Auto slipped 1.86%. The company said before market hours on Friday, 3 January 2014 that its total sales declined 13% to 2.97 lakh units in December 2013 over December 2012. The company's total exports rose 20% to 1.5 lakh units in December 2013 over December 2012. Motorcycles sales fell 13% to 2.6 lakh units in December 2013 over December 2012. Commercial vehicles sales fell 19% to 37,131 units in December 2013 over December 2012.

IT stocks rose. Wipro (up 0.31%) and TCS (up 2.92%) gained.

Infosys rose 0.09%. The company announced after market hours that it has appointed Mr. B. G. Srinivas and Mr. U. B. Pravin Rao as Presidents of the company, reporting to Mr. S. D. Shibulal, Chief Executive Officer & Managing Director. These appointments are effective immediately. The business portfolios will be realigned under the two Presidents.

Financial services, insurance, manufacturing, engineering services, energy & communications, Infosys public services, Infosys Lodestone, strategic global sourcing, marketing and alliances will report to Mr. Srinivas.

Retail, consumer packaged goods and logistics, life sciences, resources and utilities, services, growth markets, cloud & mobility, quality & productivity and Infosys Leadership Institute wil report to Mr. Rao.

In addition, Mr. Srinivas will focus on global markets and Mr. Rao will focus on global delivery and service innovation. In view of these changes, the Executive Council, as a forum, will cease to exist with effect from 1 April 2014, Infosys said.

Infosys unveils Q3 December 2013 results on 10 January 2014. At the time of announcement of Q2 September 2013 results in October 2013, Infosys had forecast 9% to 10% growth in revenue in dollar terms for the year ending 31 March 2014 (FY 2014). At that time, the company had issued a forecast of 21% to 22% growth in revenue in rupee terms based on the assumption of rupee dollar conversion rate of 62.61 for the rest of the fiscal year.

Tata Power Company dropped 6.19%. Rejecting the contention of private power distributors, the Delhi government on Wednesday, 1 January 2014 ordered a CAG audit of their finances. Delhi Chief Minister Arvind Kejriwal had early this week announced that the power tariffs in Delhi will be slashed by 50% for up to 400 units. The Delhi government will provide the subsidy and the money will be directly paid to the distribution companies. The cut in electricity tariffs, part of the AAP manifesto for the 4 December state assembly election, will entail a cost of Rs 61 crore over next three months.

ONGC (down 5.56%), NTPC (down 3.89%) and Hindustan Unilever (down 0.62%) edged lower from the Sensex pack.

On the macro front, India's manufacturing sector ended 2013 on an encouraging footing, according to a monthly survey from Markit Economics released on Thursday, 2 January 2014. Operating conditions improved for the second successive month in December, as both output and new orders increased. Consequently, firms raised their workforce numbers further in the latest month.

Down slightly from 51.3 in November to 50.7 in December, the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) signalled a second consecutive monthly improvement in business conditions. Although weaker than its long-run trend, the PMI average for the final quarter of the year at 50.5 was greater than that seen for Q3 at 49.4. Manufacturing production rose for the second month running, but at only a marginal rate. Supporting the latest increase in total output was a further gain in incoming new business. Sector data indicated that the overall expansion in production volumes was largely centred on the consumer goods sub-sector, Markit Economics said.

The eight core industries with a combined weight of 37.90% in the Index of Industrial Production (IIP) has shown an increase of 1.7% in November 2013. During April-November 2013, the eight-core sector has shown growth of 2.5% against 6.7% growth registered in April-November 2012. The government announced the core sector data after trading hours on Tuesday, 31 December 2013.

The government's fiscal deficit touched Rs 5.1 lakh crore during April-November 2013, or 93.9% of the full-year target, raising concerns that India may overshoot its ambitious target of containing fiscal deficit at 4.8% of GDP this year. Net tax receipts touched Rs 3.96 lakh crore in the first eight months of the current fiscal year to March 2014, while total expenditure was Rs 10.21 lakh crore. The government unveiled the data on its finances after trading hours on Tuesday, 31 December 2013.

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.

The Confederation of Indian Industry (CII) on Monday, 30 December 2013, said that the CII Business Confidence Index (CII-BCI) rose sharply to 54.9% in Q3 December 2013, from 45.7% in Q2 September 2013. The pick-up in BCI for the current quarter comes as a major relief for the economy which has been braving the onslaught of the slowdown for the last several quarters and awaiting the return of growth, the CII said in a statement. The survey also strikes a note of caution as the downside risks to growth have still not abated and supply side bottlenecks continue to pose a problem, CII said. "With some positive signals emanating from the global economy, which finds a resonance in our improved export performance and is causing our current account deficit to decline, we believe that the slowdown in the domestic economy may have bottomed out in the second quarter and the trend could reverse henceforth", observed Mr. Chandrajit Banerjee, Director General, Confederation of Indian Industry.

The 85th Business Outlook Survey is based on the responses from over 174 industry members. Majority of the respondents (63%) belong to large-scale firms, while 12% are from medium-scale firms and 25% were from small-scale. Further, 65% of the respondents were from manufacturing sector while 35% were from services.

The survey reveals that 58% of the respondents expect an increase in their sales in the third quarter of 2013-14, much higher than 45% who witnessed the same during the previous quarter. As regards the input cost in the current quarter, majority of the respondents also expect it to increase. The silver lining, however, is that the percentage of respondents who expect expenses on raw materials, electricity, and wages and salaries to increase has declined significantly from the last quarter, CII said.

In his foreword of the central bank's Financial Stability Report (FSR) - December 2013 released on Monday, 30 December 2013, RBI Governor Raghuram Rajan said that the commencement of tapering by the US Federal Reserve will mean a repricing of certain assets with consequent volatility in the global financial markets and that a potential additional source of uncertainty for India is the coming general election. A stable new government would be positive for the economy. With confidence in the financial system still fragile, six years into the crisis, policy certainty is something investors look for in the current environment, Rajan said.

The RBI governor said that the outlook for the economy has improved, with export growth regaining momentum, but growth is still weak. The challenges of containing inflationary pressures limit what monetary policy can do, he said. It is imperative that long-delayed legislative reforms are pushed through, stalled infrastructure project clearances continue and fiscal consolidation remains on track, Rajan said.

In global economic data, China's manufacturing purchasing managers' index came in at 51 for December, the National Bureau of Statistics and the nation's logistics federation said on Wednesday, 1 January 2014. A separate manufacturing PMI report from HSBC Holdings Plc and Markit Economics showed the gauge coming in at 50.5, from 50.8 in November.