Key benchmark indices edged higher amid expectations that further monetary stimulus in the euro zone could trigger more foreign fund flows to emerging markets. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, attained record closing high. High volatility was witnessed in late trade as key indices recovered from lower level soon after trimming intraday gains. The Sensex gained 117.34 points or 0.44% to settle at 26,560.15. The market breadth indicating the overall health of the market was positive. The market sentiment was boosted by provisional data showing that foreign funds were net buyers of Indian during the previous trading session.
Shares of defence equipment makers rose after the government notified increase in foreign direct investment limit to 49% from 26% in the defence sector. Most bank stocks advanced. FMCG stocks gained. Shares of companies with significant sales to Europe gained as expectations grew for further monetary stimulus measures from the European Central Bank. Shares of PSU OMCs and state-run upstream oil and gas stocks companied edged higher on hopes of announcement of reforms by the government on subsidies. IT stocks rose on positive economic data in US, the biggest outsourcing market for the Indian IT firms. HCL Technologies hit record high. Auto stocks were mixed. Maruti Suzuki India fell as the stock turned ex-dividend. Shares of two-wheeler makers gained.
Key indices remained in green throughout the trading session after a firm opening triggered by higher Asian stocks and a first closing for S&P 500 index in the US above 2,000 on Tuesday, 26 August 2014.
European shares edged lower after worse-than-projected German confidence data. Asian stocks rose after US data on durable goods and consumer confidence boosted optimism in the strength of the world’s largest economy. Crude oil prices rose ahead of the weekly US oil inventory data from the US government.
The Sensex garnered 117.34 points or 1.44% to settle at 26,560.15, a record closing high. The index jumped 156.31 points at the day’s high of 26,599.12 in early trade. The index rose 49.69 points at the day’s low of 26,492.50 in late trade.
The CNX Nifty advanced 31.30 points or 0.4% to settle at 7,936.05, a record closing high. The index hit a high of 7,946.85 in intraday trade. The index hit a low of 7,916.55 in intraday trade.
The market breadth indicating the overall health of the market was positive. On BSE, 1,606 shares gained and 1,379 shares fell. A total of 122 shares were unchanged.
The BSE Mid-Cap index advanced 67.77 points or 0.73% to settle at 9,326.59. The BSE Small-Cap index gained 80.49 points or 0.79% to settle at 10,253.87. Both these indices outperformed the Sensex.
Among the Sensex pack, 21 stocks advanced while remaining shares declined.
IT stocks rose on positive economic data in US, the biggest outsourcing market for the Indian IT firms. Wipro (up 1.19%), MphasiS (up 4.1%), MindTree (up 4.72%), and TCS (up 0.47%) gained. But, Tech Mahindra fell 0.83%.
HCL Technologies rose 3.02% to Rs 1,645.45 after hitting record high of Rs 1,651.50 in intraday trade.
Infosys rose 0.34%. At an investor conference yesterday, 26 August 2014, Infosys’ chief operating officer UB Pravin Rao reportedly reiterated the company’s 7% to 9% dollar revenue growth guidance for the current financial year. Rao also reportedly said that Infosys would look to maintain operating profit margins at 24-25% for the current year.
Shares of defence equipment makers rose after the government notified increase in foreign direct investment limit to 49% from 26% in the defence sector. Astra Microwave Products (up 8.55%), Bharat Forge (up 1.17%), Tata Power Company (up 0.91%), Dynamatic Technologies (up 3.31%), Walchandnagar Industries (up 9.91%) and Pipavav Defence & Offshore Engineering Company (up 0.99%) edged higher. Shares of L&T lost 0.1%.
Bharat Electronics rose by the maximum permissible level of the day of 20%. BEML rose by the maximum permissible level of the day of 5%.
The Department of Industrial Policy and Promotion (DIPP) yesterday, 26 August 2014, notified increase in foreign direct investment (FDI) limit to 49% from 26% in the defence sector. The FDI limit of 49% is a composite ceiling. It includes all kinds of foreign investments such as FDI, Foreign Institutional Investors (FIIs), Foreign Portfolio Investors (FPIs), Non-Resident Indians (NRIs), Foreign Venture Capital Investors (FVCI) and Qualified Foreign Investors (QFIs). Portfolio investment by FPIs, FIIs, NRIs, QFIs and investments by FVCIs has been capped at 24% of the total equity of the investee or joint venture company.
The applicant company seeking permission of the government for FDI up to 49% in defence sector should be an Indian company owned and controlled by resident Indian citizens. The management of the applicant company should be in Indian hands.
Foreign direct investment proposals in the defence sector above 49% will have to seek the approval of the Cabinet Committee on Security on case to case basis, wherever it is likely to result in access to modern and state of the art technology in the country, according to the press note of DIPP.
Auto stocks were mixed. Mahindra & Mahindra (M&M) fell 0.26%, with the stock reversing gains after hitting record high of Rs 1,413.90. M&M proposes to appeal against the Competition Commission of India’s recent order before the appropriate forum. The Competition Commission of India (CCI) on 25 August 2014 levied a total penalty of Rs 2544.64 crore on 14 car makers at the rate of 2% of the average turnover after it found them to be in contravention of the provisions of the Competition Act, 2002. The amount of penalty imposed on M&M is Rs 292.25 crore.
Tata Motors gained 1.7%. The company after market hours on Tuesday, 26 August 2014, said that it would be filing an appeal against the CCI order before the appropriate authorities. The penalty levied on Tata Motors is Rs 1346.46 crore.
Maruti Suzuki India fell 0.21% as the stock turned ex-dividend today, 27 August 2014, for final dividend of Rs 12 per share for the year ended 31 March 2014. The CCI’s penalty on Maruti is Rs 471.14 crore.
The CCI said it found that the conduct of the car companies was in violation of the provisions of section 3(4) of the Competition Act, 2002 with respect to its agreements with local Original Equipment Suppliers (OESs) and agreements with authorized dealers whereby it imposed absolute restrictive covenants and completely foreclosed the aftermarket for supply of spare parts and other diagnostic tools.
Ashok Leyland gained 2.08% at Rs 36.75.
Shares of two wheeler makers gained. Hero MotoCorp (up 1.61%), TVS Motor Company (up 1.19%) and Bajaj Auto (up 1.49%) advanced.
DLF tumbled 4.44% on reports the Supreme Court today, 27 August 2014, penalised the company Rs 630 crore for exploiting its dominant position to the disadvantage of its customers in three projects in Gurgaon. The court said that DLF will deposit Rs.50 crore of the Rs 630 crore within three weeks and the balance of Rs 580 crore within three months from today. The court directed the registry to put this amount in a fixed deposit in a nationalised bank.
MCX jumped 5.08% after the company during market hours said that the commodities market regulator Forward Market Commission (FMC) has approved Kotak Mahindra Bank’s (KMBL) proposed acquisition of upto 15% of equity share capital of MCX. In July 2014, Financial Technologies (India) (FTIL) entered into a share purchase agreement (SPA) to sell 15% stake in MCX to Kotak Mahindra Bank for a total consideration of Rs 459 crore.
Shares of KMBL were down 1.59% at Rs 1,039.90 on reports that a foreign brokerage has downgraded the stock to “neutral” from “outperform. The brokerage has cited the stock’s massive outperformance and stiff valuation for the downgrade.
FMCG stocks advanced. Dabur India (up 2.31%), Godrej Consumer Products (up 2.63%), Nestle India (up 0.58%), Colgate-Palmolive (India) (up 1.76%), and Hindustan Unilever (up 1.02%) gained. Shares of Marico shed 0.3%.
Most bank stocks gained. Federal Bank (up 3.4%), IndusInd Bank (up 2.59%), ICICI Bank (up 2.05), Punjab National Bank (up 1.56%), Yes Bank (up 1.08%), State Bank of India (up 0.4%), Axis Bank (up 0.23%), Bank of India (up 0.09%) gained. Bank of Baroda (down 0.35%), HDFC Bank (down 0.7%), and Canara Bank (down 1.12%) declined.
Deepak Nitrite rose 2.73% at Rs 77.05 after the company during market hours said that the commercial paper of Rs 20 crore issued on 28 May 2014 has been repaid on 26 August 2014.
Cox & Kings jumped 4.2% at Rs 304.85 after the company during market hours in a clarification with regard to news item titled Cox & Kings to operate Deccan Odyssey” said that the Maharashtra Tourism Development Corporation (MTDC) appointed the company as its outsourced partner to operate the luxury train, Deccan Odyssey from October 2014. This partnership will cover full management of on-board and off-board services, sales, marketing and operational activities. The agreement is for a period of 5 years with scope for extension for another 5 years, Cox & Kings said.
Venus Remedies surged 14.77% after the company said it has entered into a collaborative agreement with Israel-based generic drug maker Teva Pharmaceutical Industries for selling an anti-cancer drug in the Canadian market. The announcement was made after market hours on Tuesday, 26 August 2014.
GVK Power & Infrastructure was locked at 5% upper circuit at Rs 13.02 on BSE after the company led consortium leased a land parcel in Mumbai for commercial development to Oasis Realty for Rs 580 crore.
Shares of PSU OMCs and state-run upstream oil and gas companies advanced on hopes of announcement of reforms by the government on subsidies. BPCL (up 2.59%), HPCL (up 1.6%), Indian Oil Corporation (up 0.77%) and Oil India (up 2.73%) edged higher.
ONGC gained 2.31% at Rs 427.75 on hopes of announcement of reforms by the government on subsidies and gas prices ahead of its share sale. The government plans to sell a stake in ONGC later this year.
Public sector oil marketing companies (PSU OMCs) suffer under-recoveries on domestic sale of diesel, LPG and kerosene at a controlled price. The government has adopted the policy of gradually increasing diesel prices to eliminate under recovery and deregulate the diesel prices. The government has already freed pricing of petrol.
State run upstream companies share a part of the under recoveries of state-run oil marketing companies (PSU OMCs) by allowing discount in the prices of crude oil, PDS kerosene, and domestic LPG based on the rates of discount communicated by the Ministry of Petroleum and Natural Gas and the Petroleum Planning and Analysis Cell.
GAIL (India) rose 0.35% at Rs 435.25. The stock was volatile. The stock hit a high of Rs 437.45 and a low of Rs 426.30. The stock turned ex-dividend today, 27 August 2014, for final dividend of Rs 5.90 per share for the year ended 31 March 2014.
Mangalore Refinery and Petrochemicals (MRPL) rose 0.16% at Rs 60.85 after the company said that Petro Fluidized Catalytie Cracking unit has been successfully commissioned today, 27 August 2014 in Phase-III project of the company and products are being routed to respective destinations. This will increase LPG, light distillates and production of Propylene which is a feed for Polypropylene unit, MRPL said.
Shares of companies with significant sales to Europe gained as expectations grew for further monetary stimulus measures from the European Central Bank. Havells India surged 8.27% at Rs 295.30. Motherson Sumi Systems rose 4.37% at Rs 372.40. Dr. Reddy’s Laboratories rose 1.26% at Rs 2,927.
The market sentiment was boosted by provisional data showing that foreign funds were net buyers of Indian during the previous trading session. Foreign portfolio investors (FPIs) bought shares worth a net Rs 364.72 crore on Tuesday, 26 August 2014, as per provisional data from the stock exchanges.
The market may remain volatile tomorrow, 28 August 2014, as traders roll over positions in the futures & options (F&O) segment from the near month August 2014 series to September 2014 series. The near-month August 2014 F&O contracts expire tomorrow, 28 August 2014.
The Sensex edged higher for the fifth day in a row today, 27 August 2014. The barometer index has risen 245.86 points or 0.93% in five trading sessions from a recent low of 26,314.29 on 20 August 2014. The Sensex has gained 665.18 points or 2.56% in this month so far (till 27 August 2014). The Sensex has gained 5,389.47 points or 25.45% in calendar year 2014 so far (till 27 August 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 9,111.44 points or 52.21%.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 60.46, compared with its close of 60.44 on Tuesday, 26 August 2014.
Crude oil prices rose ahead of the weekly US oil inventory data from the US government. Brent for October settlement was up 19 cents at $102.69 a barrel. The contract fell 15 cents to settle at $102.50 a barrel yesterday, 26 August 2014, after reaching $103.40 during the session. The US is the world’s biggest oil consumer.
Geopolitical developments were in focus. Talks between the Russian and Ukrainian presidents yesterday, 26 August 2014, were inconclusive, and the conflict in eastern Ukraine continued with Kiev releasing videos of captured Russian soldiers.
At a meeting yesterday, 26 August 2014, the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organization (EPFO) decided against investing in equities and Exchange Traded Funds (ETFs). The finance ministry had suggested EPFO to invest in equities to enhance returns for subscribers.
The government yesterday, 26 August 2014, notified increase in foreign direct investment limit to 49% from 26% in the defence sector. The hike in FDI ceiling could encourage domestic manufacture of defence goods which are imported.
European shares edged lower after worse-than-projected German confidence data. Key indices in Germany and France were off 0.1% to 0.12%. In UK, the FTSE 100 index was up 0.1%.
A consumer confidence index in Germany will fall to 8.6 in September from a revised 8.9 in August, GfK AG forecast in a report today, 27 August 2014.
There are expectations of quantitative easing and other steps by the European Central Bank (ECB) to bolster growth and counter downward pressures on prices in the euro zone. At US Federal Reserve’s annual symposium in the United States on 22 August 2014, ECB President Mario Draghi said that expectations of future inflation in Europe exhibited significant declines at all horizons this month.
Asian stocks rose today, 27 August 2014, after data signaled a stronger US economy and Russia’s president hailed as “positive” talks over Ukraine. Key benchmark indices in Indonesia, Japan, China, Taiwan, Singapore and South Korea were up 0.11% to 0.98%. Hong Kong’s Hang Seng fell 0.62%.
Trading in US index futures indicated that the Dow could gain 14 points at the opening bell on Wednesday, 27 August 2014. US stocks edged higher on Tuesday, 26 August 2014, to lift the S&P 500 index just a hair above the 2,000 mark, its first close above that milestone, after data that pointed to a brighter future for the US economy.
Bookings for goods meant to last at least three years climbed by a record 22.6% in July after a 2.7% gain in June that was bigger than previously reported, data from the Commerce Department in Washington showed. The Conference Board’s US consumer confidence index rose to 92.4 in August, the highest since October 2007, the New York-based private research group said.