Key benchmark indices edged lower in choppy trade as world stocks fell amid dimming hopes that US politicians will reach a debt deal before the end of the year. United States is the world's biggest economy. Index heavyweights ITC and Reliance Industries (RIL), both, edged lower. The barometer index, BSE Sensex, was provisionally down 49.85 points or 0.26%, up close to 90 points from the day's low and off about 95 points from the day's high. The market breadth was negative.
Auto stocks dropped on profit taking. Capital goods stocks also declined. Metal stocks gained for the fifth straight day after data on 14 December 2012 showed that a preliminary version of HSBC's China manufacturing Purchasing Managers' Index hit a 14-month high in December 2012. TCS rose after the company said its new software development campus at Rajarhat in West Bengal will be functional by the end of the financial year 2014-15. GMR Infrastructure gained after the company announced the commencement of commercial operations of the Hyderabad-Vijayawada section of National Highway 9 and the Hungund-Hospet section of National Highway 13.
The Sensex reached its highest level in more than one week at the onset of the trading session. The market soon lost ground. Intraday volatility continued as key benchmark indices alternately swung between gains and losses in morning trade. Key benchmark indices extended losses to hit fresh intraday low in mid-morning trade. The market hovered in negative zone in early afternoon trade. Key benchmark indices were range bound in negative terrain in afternoon trade. Key benchmark indices cut almost the entire intraday losses in mid-afternoon trade as index heavyweight Reliance Industries (RIL) trimmed intraday losses. The Sensex once again slipped into the red after moving into positive zone from negative zone for a short while in late trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1244.96 crore on Wednesday, 19 December 2012, as per provisional data from the stock exchanges.
As per provisional figures, the BSE Sensex was down 49.85 points or 0.26% to 19,426.15. The index lost 140.28 points at the day's low of 19,335.72 in mid-morning trade, its lowest level since 18 December 2012. The index rose 44.51 points at the day's high of 19,520.51 in early trade, its highest level since 11 December 2012.
The S&P CNX Nifty was down 22.40 points or 0.38% to 5,907.20, as per provisional figures. The index hit a low of 5,881.45 in intraday trade, its lowest level since 18 December 2012. The index hit a high of 5,937.60 in intraday trade.
The total turnover on the BSE amounted to Rs 2423 crore, lower than Rs 2501 crore on Wednesday, 19 December 2012.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,525 shares declined and 1,238 shares gained. A total of 133 shares were unchanged.
From the 30-share Sensex pack, 19 stocks declined while the rest of them gained.
Index heavyweight Reliance Industries (RIL) was down 0.18% to Rs 837.65. The stock hit a high of Rs 841 and a low of Rs 830. Russia's Spirit DPS early this week said that Indian telecom operator Infotel, a subsidiary of Reliance Group, has licensed its software TeamSpirit Voice and Video Engine. "Reliance intends to invest $10 billion in its LTE network and has turned to Spirit's software products for voice and video calls over LTE instead of waiting for phone makers who are slow in offering handsets transmitting voice and video in 4G networks. The lack of mobile devices supporting VoLTE (Voice-over-LTE) drives a growing number of carriers to implement a software-only product, which is more flexible, scalable and offers a quicker time to market. By using Spirit engines, Reliance will be able to offer its subscribers high-quality services as an alternative to Skype over cellular networks and attract new high-value subscribers that used services from other operators and commercial OTT service providers", Spirit DPS said in a statement.
RIL has bought back 4.62 crore shares for about of Rs 3358.09 crore till 11 December 2012 under its ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013.
Index heavyweight and cigarette maker ITC shed 0.45% to Rs 288.80. The stock hit a high of Rs 290.35 and low of Rs 286.05. The Ministry of Health and Family Welfare in October 2012 notified new pictorial health warnings to be depicted on tobacco product packs which will come into effect from 1 April 2013. The Ministry of Health and Family Welfare said in a statement on 22 October 2012 that three sets of warnings each have been notified for smoking as well as smokeless forms of tobacco product packages. The well-designed health warnings and messages are part of a range of measures to communicate health risks due to tobacco use. Pictorial health warnings communicate health risks in a visible way, provoke a greater emotional response and increase the motivation of tobacco users to quit and to decrease their tobacco consumption, the ministry's statement said. Graphic warning labels have a greater impact than text-only labels and can be recognized by low-literacy audiences and children, the statement added.
FMCG stocks rose. Dabur India, Hindustan Unilever and Godrej Consumer Products rose by between 0.31% to 2.26%.
TCS rose 1.23% after the company said its new software development campus at Rajarhat in West Bengal will be functional by the end of the financial year 2014-15. TCS said that the new campus will house over 16,000 seats and is being constructed with an investment of about Rs 1350 crore. The campus will be built in two phases, with the first phase to be completed in the first quarter of 2014 and the second phase by the fourth quarter of the year. In the first phase, 7,000 seats will be ready with the remaining 9,500 seats being completed in phase II, TCS said in a statement.
Commenting on the development, S Mahalingam, Chief Financial Officer & Executive Director, TCS said, "Our growing presence in Kolkata continues to be of strategic importance for our overall business growth. We remain committed to working in close collaboration with all stakeholders in the state to help development of local talent and provide our customers with world-class IT solutions from this location".
Commenting on the new facility, Ajoy Mukherjee, Executive vice president and Global Head, Human Resources, TCS said, "The new TCS Rajarhat facility will drive the next phase of our growth in the eastern region and help us access skilled professionals and students from in and around Kolkata. Our investment will also help catalyse further development of the talent and IT ecosystem in the area".
United Spirits rose 2.35% to Rs 1,979. The stock trades much above the open offer price by Diageo plc. Diageo on 20 November 2012 made a detailed public announcement as required by the Securities & Exchange Board of India (Sebi) takeover regulation, to acquire up to 3.77 crore equity shares of United Spirits (USL) constituting 26% the enlarged share capital of USL at Rs 1,440 per share. The open offer is a part of the deal inked by Diageo plc and the UB group early this month whereby Diageo plc will acquire 53.4% of the enlarged USL share capital at an aggregate cost of Rs 11166.50 crore (approximately £1,285 million) in two stages. The acquisition cost represents a 20x multiple of USL's EBITDA for the year ended 31 March 2012. The open offer will commence on 7 January 2013 and close on 18 January 2013.
GMR Infrastructure gained 2.42%. The company today, 20 December 2012, announced the commencement of commercial operations of the Hyderabad-Vijayawada section of National Highway 9 and the Hungund-Hospet section of National Highway 13. The Hyderabad-Vijayawada project is expected to generate revenue in the range of Rs 75 to 80 lakh per day whereas the Hungund-Hospet project is expected to generate revenue in the range of Rs 18 to 20 lakh per day, GMR Infrastructure said. With the commencement of these two projects, the GMR Group now has a portfolio of eight operating highways, the company said in a statement.
Metal stocks gained for the fifth straight day after data on 14 December 2012 showed that a preliminary version of HSBC's China manufacturing Purchasing Managers' Index hit a 14-month high in December 2012. China is the world's largest consumer of copper and aluminum. Sterlite Industries, Sail, Tata Steel, Jindal Steel & Power, JSW Steel and Hindalco Industries rose by between 0.61% to 2.55%.
Auto stocks dropped on profit taking. Tata Motors fell 1.48% to Rs 303. Shares of Tata Motors had rallied 11.24% in five trading sessions to settle at Rs 307.55 on Wednesday, 19 December 2012, from a recent low of Rs 276.45 on 12 December 2012. The company early this week announced the launch of a new variant of its crossover vehicle Tata Aria viz. Tata Aria Pure LX with a bouquet of features. The Tata Aria Pure LX has been priced at Rs 9.95 lakh (ex-showroom Bangalore), Tata Motors said.
Mahindra & Mahindra slipped 1.85% to Rs 950. The stock had hit record high of Rs 973.35 in intraday trade on Wednesday, 19 December 2012. The company early this week said that it intends to purchase Navistar Group's stake in Mahindra Navistar Automotives and Mahindra Navistar Engines for a total consideration of about Rs 175 crore. Following the purchase of Navistar Group's stake in Mahindra Navistar Automotives (MNAL) and Mahindra Navistar Engines (MNEPL), both MNAL and MNEPL would become wholly-owned subsidiaries of Mahindra & Mahindra (M&M). M&M would take complete ownership of operations and continue to sell MNEPL and MNAL products. The sale requires regulatory approval in India, is subject to the conclusion of definitive agreements, and is expected to be completed by early 2013, M&M said in a statement.
The agreement allows Navistar to continue sourcing components from India while Mahindra would continue to provide engineering services to Navistar. Navistar Group would continue to support M&M through a license agreement and extend necessary support to MNAL and MNEPL for the purpose of business continuity, M&M said in a statement.
Navistar and M&M had entered into the MNAL joint venture (JV) in late 2005 to manufacture trucks and buses in India, source components and provide engineering services for the design and development of Navistar vehicle products. The MNEPL JV was formed in 2007 and began producing engines in 2010.
Navistar International Corporation is a holding company whose subsidiaries and affiliates produce International brand commercial and military trucks, MaxxForce brand diesel engines, IC Bus brand school and commercial buses, and Navistar RV brands of recreational vehicles. The company also provides truck and diesel engine service parts.
Small car maker Maruti Suzuki India rose 0.09% to Rs 1,511. The stock had struck 52-week high of Rs 1,537 in intraday trade on 7 December 2012. The car major will reportedly raise prices of cars by up to Rs 20,000 from January 2013 to counter currency fluctuations. Japan accounts for up to a fourth of parts sourced by Maruti from overseas. More than half of the company's foreign exchange exposure is to the yen, as it also pays royalty its parent Suzuki for using its technology.
Maruti Suzuki India early this month said its total sales rose 12.5% to 1.03 lakh units in November 2012 over November 2011. Domestic sales rose 9.7% to 90,882 units in November 2012 over November 2011. Export sales jumped 38.4% to 12,318 units in November 2012 over November 2011.
Minister of Corporate Affairs Mr. Sachin Pilot on Monday, 17 December 2012, said that the Competition Commission of India (CCI), on receipt of information under Section 19(1) (a) of the Competition Act, 2002 alleging anti-competitive practices against certain car manufacturers, has initiated proceedings under the provisions of the Competition Act, 2002.
Two wheeler makers edged lower. Hero MotoCorp slipped 0.65%.
Bajaj Auto declined 1.53% to Rs 2,110 on profit booking. The stock had hit record high of Rs 2,155.20 in intraday trade on Wednesday, 19 December 2012. Bajaj Auto's total sales fell 1% to 3.72 lakh shares in November 2012 over November 2011. Motorcycle sales fell 2% to 3.26 lakh units in November 2012 over November 2011. The company said sales bigger and sportier Pulsar and Discover brands contributed 68% of motorcycle sales in November 2012. Sales of Discover brand totaled 1.5 lakh units in November 2012.
Bajaj Auto's three-wheeler sales rose 7% to 45,566 units in November 2012 over November 2011. The company said growth in its diesel three-wheeler sales and growth in the company's market share in this segment continues. Bajaj Auto's total exports fell 4% to 1.24 lakh units in November 2012 over November 2011.
Capital goods stocks declined. Bhel, Thermax, ABB and BEML shed by between 0.84% to 1.84%.
Engineering and construction major L&T lost 1.07%. The company on Wednesday, 19 December 2012, said its construction division won orders worth Rs 1009 crore in November 2012 and till date in December 2012.
Stock market regulator Securities & Exchange Board of India (Sebi) on Wednesday, 19 December 2012, raised the base minimum capital (BMC) for stock brokers holding registration as "stock-broker" in the cash segment. Sebi has also introduced BMC for members holding registration as "trading member" in any derivative segment. Only proprietary trading without Algorithmic trading (Algo) will require BMC of Rs 10 lakh, Sebi said in a circular. BMC is the deposit given by the member of the exchange against which no exposure for trades is allowed. All Trading Members/Brokers with Algo will be required to maintain BMC of Rs 50 lakh.
The stock exchanges will be permitted to prescribe suitable deposit requirements, over and above the Sebi prescribed norms, based on their perception and evaluation of risks involved, Sebi said. Minimum 50% of the deposit will be in the form of cash and cash equivalents. The existing guidelines on collateral composition shall continue to remain applicable, Sebi said. The new BMC norms will be applicable by 31 March 2013, Sebi said.
Indian companies will start unveiling Q3 December 2012 results from mid-January 2013. Investors and analysts will closely watch the management commentary that would accompany the result which could cause revision in their future earnings forecast of the company for the current year and or next year. Bajaj Auto unveils Q3 results on 16 January 2013. HDFC Bank unveils Q3 results on 18 January 2013. HDFC unveils Q3 results on 21 January 2013.
Finance Minister P. Chidambaram early this week said that the insurance bill won't come up in the current session. The minister didn't say anything about the pension bill. The insurance bill will aim to raise the limit for foreign direct investment in the sector to 49% from 26%, while the pension bill will seek to allow foreign investments of up to 49% in local pension-fund managers. Today is the last of the winter session of the parliament.
The Reserve Bank of India (RBI) undertakes Third Quarter Review of Monetary Policy 2012-13 on 29 January 2013. RBI kept its key policy rate viz. the repo rate unchanged at 8% after mid-quarter monetary policy review on 18 December 2012. The central bank said that in view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards. Liquidity conditions will be managed with a view to supporting growth as stated in the Second Quarter Review (SQR) of Monetary Policy 2012-13 on 30 October 2012, thereby preparing the ground for further shifting the policy stance to support growth, RBI said. Overall, recent inflation patterns and projections provide a basis for reinforcing October guidance about policy easing in the fourth quarter, RBI said. However, risks to inflation remain and accordingly, even as the policy emphasis shifts towards growth, the policy stance will remain sensitive to these risks, RBI said.
The Lok Sabha on Tuesday, 18 December 2012, approved the much-awaited Companies Bill, 2011, making it mandatory for profit-making companies to spend on activities related to corporate social responsibility (CSR). If a company does not do so, it will have to explain the reasons for it. The Bill, aimed at improving corporate governance, also contains provisions to strengthen regulations for companies and auditing firms.
The changes in the bill include provisions that make it mandatory for firms -- those that have reported profits of Rs 5 crore or more in last three years -- to spend at least two per cent of their average net profit on CSR activities. Companies failing to meet the obligation and not disclosing reasons for it in their books of account would face action, including penalty.
The Bharatiya Janata Party has secured a comfortable victory in assembly elections in Gujarat under the leadership of Chief Minister Narendra Modi. The Bharatiya Janata Party won 120 seats in 182 seats Gujarat Assembly. On the other hand, the Congress has trounced BJP to win assembly elections in Himachal Pradesh (HP). The Congress won 36 seats in the 68 seats HP Assembly.
The next general elections in India must be held before May 2014.
European stocks declined on Thursday, 20 December 2012, amid dimming hopes that US politicians will reach a debt deal before the end of the year. Key benchmark indices in Germany and France dropped by between 0.11% to 0.33%. UK's FTSE 100 rose 0.04%.
Asian stocks were mostly higher on Thursday, 20 December 2012. Key benchmark indices in Hong Kong, China and Singapore rose 0.16% and 0.54%. South Korea's Kospi rose 0.32% as investors returned from a one-day break for an election which ushered in the country's first female president, Park Geun-hye. Key benchmark indices in Japan, Indonesia and Taiwan were down by 0.49% to 1.19%.
The Bank of Japan announced Thursday it would add about 10 trillion yen ($119 billion) to its asset-purchase program, citing "a high degree of uncertainty concerning Japan's economy." The monetary policy committee also voted to keep its interest-rate target at 0 to 0.1%, as widely expected. The Bank of Japan said it would wait until its next meeting to discuss "the medium-to long-term price stability that the bank aims to achieve in the conduct of monetary policy." The central bank also sounded a downbeat note on the economy, saying Japan would stick to "somewhat weak movement for the time being," with the core consumer price index likely to remain flat.
In Australia, fiscal policy was under the spotlight after Treasurer Wayne Swan said that the Australian government is unlikely to reach its target of a budget surplus in the fiscal year ending June 30, 2013.
Trading in US index futures indicated a flat opening of US stocks on Thursday, 20 December 2012. US stocks edged lower on Wednesday, 19 December 2012, due to less optimism that politicians will reach a compromise agreement to stop billions of dollars of tax hikes and spending cuts taking place at the start of the year. US President Barack Obama told a news conference on Wednesday that Republicans find it "very hard" to say yes to him, while a spokesman for House Speaker John Boehner, the top Republican negotiator in the talks, called the White House "irrational."
The US fiscal cliff refers to the year-end deadline for the expiration of hundreds of billions of dollars worth of tax cuts and the triggering of $109 billion in across-the-board spending cuts, if the US Congress fails to act. The US Congress created the hazardous deadline of 31 December 2012 in August 2011 when it agreed to a deficit deal as a way out of a deadlock over raising the US debt ceiling. The Congressional Budget Office has estimated the US economy would drop into a recession in the first half of the new year if a deal is not reached.
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