IMF lifts mood on Dalal Street: Sensex up 271 points, metals shine
12 March 2015
The market snapped three-day losing streak on Thursday, reacting to the Indian economy growth forecast by International Monetary Fund (IMF). The broader markets rallied too while metals, oil, select banks, IT and FMCG stocks led the key benchmarks higher.
The 30-share BSE Sensex rose 271.24 points or 0.95 percent to 28930.41 and the 50-share NSE Nifty climbed 76.05 points or 0.87 percent to 8776. The BSE Midcap and Smallcap indices gained 1.2 percent and 0.9 percent, respectively.
IMF on Wednesday raised its growth forecast for the current fiscal to 7.2 percent, even as it called for steps to revitalise the investment cycle and accelerate structural reforms in the country.
IMF also said India has emerged as one of the fastest-growing big emerging market economies and the growth rate would further accelerate to 7.5 percent in the next fiscal, 2015-16.
Meanwhile, US dollar Index hit the 100-mark while euro fell below USD 1.05 against dollar intraday for first time since January 2003.
Claudio Piron of Bank of America Merrill Lynch says dollar index will strengthen further and US companies earnings could be under stress as 40 percent of S&P 500 companies derive earnings from overseas. Most investors are bullish on Indian equities, he adds.
In the currency market, after three days of a dip, the rupee finally found some strength today to 62.5 a dollar, up 28 paise.
Insurance companies remained in the limelight today. Max India and Reliance Capital surged 5 percent and 11 percent, respectively on hopes that the Insurance Bill which seeks to raise FDI limit to 49 percent from 26 percent, is likely to be passed in the Rajya Sabha today.
Reliance Capital also reacted to the news that Japan-based Sumitomo MTB has completed acquisition of 2.77 percent stake in company. Reliance Capital received entire proceeds of Rs 371 crore for this stake.
Sun Pharma and Ranbaxy Labs climbed more than 2 percent as a media report indicated that the Sun has formed new leadership team of top executives, including Dilip Shanghvi's son Aalok Shanghvi, to lead the businesses of both the organisations.
Among metals, Jindal Stainless shot up 11.4 percent after India's trade ministry recommended anti-dumping duty on hot rolled flat products of stainless steel imports. Other steel companies rallied too on hopes that the anti-dumping duty may be extended to steel imports as well. Sesa Sterlite, Hindalco Industries and Tata Steel gained 2-3.6 percent.
ITC rose 2.35 percent as CNBC-TV18 learnt that the company has hiked cigarette prices by up to 20 percent. Sources see at least a 15 percent hike on an average. Fresh cigarette stock with price hike is yet to reach the market.
NTPC was up 3.5 percent as the company announced the ex-date of bonus debentures as March 23. Shareholders entitled to a bonus debenture of Rs 12.5 per share. The stock gained as traders played the arbitrage of going long on cash and short in the futures market.
Among others, Infosys, ICICI Bank, Tata Motors, Bharti Airtel and BHEL gained 1.5-2 percent. However, HDFC Bank, Dr Reddy's Labs, M&M, HUL, Coal India and Bajaj Auto were under pressure, down 0.4-1.4 percent.
The market breadth was positive. About 1647 shares advanced and 1231 shares declined on the Bombay Stock Exchange.
Global cues were mixed today. Asian markets gained boosted by better-than-expected jobs data from Australia and an unexpected rate cut in South Korea. Shanghai rallied 1.8 percent and Nikkei rose 1.4 percent. In Europe, France's CAC and Germany's DAX were flat (at 16 hours IST) as investors pondered the implications of the ECB's 1 trillion euro QE program. Britain's FTSE climbed 0.8 percent.
03:30 pm Market close: Boosted by IMF's positive stance on India, the market made some smart gains today. The market ended up 271.24 points or 0.9 percent at 28930.41 and the Nifty was up 76.05 points or 0.9 percent at 8776.00. About 1642 shares advanced, 1238 shares declined and 211 shares were unchanged.
Metals, power, infra, auto and FMCG stocks saw strong buying action. Sesa Sterlite, NTPC, Hindalco, Sun Pharma and BHEL were top gainers in the Sensex. Losers include Dr Reddy's Labs, M&M, Coal India, Bajaj Auto and HUL.
03:20 pm Buzzing: Shares of SpiceJet surged 14 percent intraday as it has increased payment for the services to AAI after the airline received Rs 500 crore equity infusion from the new owner. The budget carrier owes nearly Rs 300 crore to the national airports operator for landing, parking and other charges,
The airline is now paying Rs 75 lakh per day to the airports operator for availing the services as against its per day billing of about Rs 70 lakh, official sources said. SpiceJet was earlier paying Rs 50 lakh per day to AAI for the landing, parking and other charges.
However, the airline has now started paying Rs 75 lakh to it against its daily billing of about Rs 70 lakh," they said. Its total outstanding towards Airports Authority of India (AAI) at present stands at Rs 297 crore, they said, adding, "We are expecting a partial payment of these dues from the airline shortly".
03:10 pm Pharma ministry: The government may establish a separate Ministry for the pharmaceuticals sector, which would comprise all departments that deal with issues related to the industry.
"For the benefit of end user, the customer and considering the size of industry... there should be a separate Pharma Ministry.
"Therefore, I, along with Minister of State Hansraj Ahir, will approach Prime Minister and request him to look into this matter," Fertiliser Minister Ananth Kumar said.
At present, Central Drugs Standard Control Organisation (CDSCO) and Drug Controller General of India (DGCI), which deal in regulatory control over the import of drugs, approval of new drugs and clinical trials, are governed by Health Ministry.
02:50 pm Interview: India's trade ministry has recommended anti-dumping duty of USD 309 per tonne on Chinese import, USD 316 per tonne on Malaysian import and USD 180 per tonne on Korean import. Import from these three countries is 30 percent of India's domestic demand.
ERC Shekar, director, Sunflag Iron & Steel says if prices go up by 8-10 percent because of this, then overall it will help improve bottomline. 15 percent of the company's total sales comes from the stainless steel division. The company is functioning at sub-optimum levels in stainless steel business.
02:30pm Reliance Capital in focus: Sumitomo Mitsui Trust Bank, Limited of Japan has completed acquisition of 2.77 percent strategic stake in Reliance Capital, a part of Anil Ambani led Reliance Group.
The entire proceeds of Rs 371 crore (USD 58.4 million) for the 2.77 percent stake has been duly received from Sumitomo Mitsui Trust Bank, Limited.
The investment has been made at Rs 530 per share representing a premium of over 11 percent to the stock price of relevant date of Reliance Capital.
''We welcome Sumitomo Mitsui Trust as our strategic partner in Reliance Capital. We are confident of accelerating our growth and tap new opportunities with the help of SMTB's long standing experience and support'' said Mr. Sam Ghosh, CEO, Reliance Capital.
As part of the agreement, Reliance Capital intends to establish a new Bank in India, with support of Sumitomo Mitsui Trust Bank as strategic partner, as and when RBI's policies permit formation of the same.
02:00pm Market Check: The market maintained its strong uptrend with the Sensex rising 206.56 points to 28865.73 and the Nifty climbing 57.45 points to 8757.40, supported by metals, capital goods and telecom stocks.
About 1576 shares have advanced, 1175 shares declined, and 200 shares are unchanged on the BSE.
Shares of ITC, Tata Motors, NTPC, Bharti Airtel, Hindalco Industries and Tata Steel rallied 2-4 percent. ICICI Bank, Infosys, Sesa Sterlite, BHEL, Hero Motocorp and GAIL climbed over a percent.
However, HDFC Bank, HUL, Dr Reddy's Labs, M&M, Bajaj Auto, Wipro and Coal India fell 0.4-1.4 percent.
Sun Pharma Advanced, Nirlon, Reliance Capital, M&M Financial, Tata Elxsi, ITC, Bharti Airtel, HDFC, NTPC and ICICI Bank were most active shares on exchanges.
Sun Pharma has been ready with the leadership team for Ranbaxy merger with self. The team included Aalok Shanghvi, who will lead business of both companies. He will also head emerging market business while Abhay Gandhi will be head domestic business and Kal Sundaram will head North American business and Taro, reports PTI quoting CNBC-TV18. Both stocks gained 2 percent each.
1:45 pm Buzzing: Shares of NTPC shot up 7 percent intraday Thursday on approval from the Ministry of Corporate Affairs for issue of bonus debentures to shareholders.
"The issue of one secured, non-cumulative, non-convertible, redeemable, taxable, fully paid-up bonus debentures out of free reserves having face value of Rs 12.50 each for every one fully paid-up equity share of face value of Rs 10 has been approved by Ministry of Corporate Affairs," says the state-run power generation company in its filing to the exchange.
With the filing of the order with Registrar of Companies NCT of Delhi and Haryana on March 11, 2015, the Scheme has become effective, it adds.
1:30 pm FII view: Prospects of the US Fed raising interest rates makes the bonds in that country attractive says Claudio Piron, Head of emerging Asia Foreign Exchange and Fixed Income Strategy, Bank of America. In an interview with CNBC-TV18, Pirion says he expects the dollar index to strengthen further. The dollar index has already hit the psychological 100 mark and Pirion says it could climb another 3-4 percent. Pirion sees the euro at 1.08 to 1.1 to the dollar by end of 2015, and he expects Asian equity markets to be robust.
The market continues to rally with support from metals, auto and FMCG stocks. The Sensex is up 196.09 points or 0.7 percent at 28855.26, and the Nifty up 50.55 points or 0.6 percent at 8750.50. About 1555 shares have advanced, 1062 shares declined, and 182 shares are unchanged.
Jindal Stainless is up 17 percent after India's trade ministry has recommended anti-dumping duty on hot rolled flat products of stainless steel imports. Other steel companies are also on the rise on hopes that the anti-dumping duty may be extended to steel imports as well.
NTPC, Hindalco, Tata Motors, ITC and Tata Steel are top gainers in the Sensex. Among the losers are HUL, Bajaj Auto, Dr Reddy's Labs, Cipla and Wipro.
Sentiment was also boosted after the International Monetary Fund said India's economy was recovering and its ability to withstand external shocks had improved, although it noted growth is likely to fall short of government targets.
The IMF has said there is no reason why India could not resume an eight or nine percent or even higher growth rate in the coming years. The IMF has at least at this stage pegged a kind of medium-term growth for India at around "7 3/4 percent if, a lot of the structural reforms can be introduced". "There's certainly no reason why India could not resume 8, 9, even higher growth path going forward, but it will take some time to introduce these measures," Assistant Director and Mission Chief for India in the IMF's Asian and Pacific Department, Paul Cashin said.
12:50pm Market Expert: In the wake of the US dollar rally and the absence of any particular positive news, Indian shares may ''drift lower than most investors will be comfortable with'', Dipen Sheth of HDFC Securities told CNBC-TV18.
But he added that a correction will not change the larger thesis that local equities are in a long-term bull market.
''The market is not going to go up in a vertical line. Bull markets can test patience. But the beauty is correction gives you the chance to get in,'' he said.
Sheth also spoke about insurance stocks, which have seen a powerful rally amid hopes a bill to increase FDI in the sector will pass muster in the Rajya Sabha. ''There is a lot of juice left in insurance stocks [despite the rally],'' he said, adding that the growth of insurance was a long-term story in India.
12:25pm CPI data today: The consumer price index (CPI) data and the index of industrial production (IIP) numbers will be released today. Speaking to CNBC-TV18 on the expectation, Samiran Chakraborty of Standard Chartered Bank said the CPI is expected to come in inch to 5.25 percent versus 5.11 percent in the previous month.
According to him, the rise in CPI data is likely to be on account of rising food inflation. He expects food prices to rise 6.5 percent year-on-year but stay flat month-on-month.
To add to macro woes, he expects CPI to stay above 5 percent for March as well. CPI is likely to trend below 5 percent from April till September.
Chakraborty believes CPI over 5.5 percent may push the Reserve Bank (RBI) to pause rate cuts. However, sub-5 percent CPI will be positive for the market, he added.
On IIP, Chakraborty is expecting a subdued data on the back of weak exports and poor infrastructure growth.
12:00pm Market Check:
It is a strong day of trade on Dalal Street. The Nifty and the Sensex bounced back led by gains in select FMCG and energy stocks. The broader markets outperformed benchmarks, up 1 percent with the advance decline ratio at a healthy 3:1.
The Sensex jumped 172.88 points to 28832.05 and the Nifty rallied 49.25 points to 8749.20.
NTPC rallied nearly 4 percent as the company announced the ex-date of bonus debentures as March 23. Shareholders entitled to a bonus debenture of Rs 12.5 per share. The stock gained as traders played the arbitrage of going long on cash and short in the futures market.
ITC climbed 2.5 percent as CNBC-TV18 learnt that the company has hiked cigarette prices by up to 20 percent. Sources see at least a 15 percent hike on an average. Fresh cigarette stock with price hike is yet to reach the market.
Insurance companies like Max India and Reliance Capital surged 7 percent on hopes that the Insurance Bill, which seeks to raise FDI limit to 49 percent from 26 percent, is likely to be passed in the Rajya Sabha today.
Jindal Stainless shot up 15 percent after India's trade ministry recommended anti-dumping duty on hot rolled flat products of stainless steel imports. Other steel companies rallied on hopes that the anti-dumping duty may be extended to steel imports as well. Sesa Sterlite, Hindalco Industries and Tata Steel gained 3 percent each.
Meanwhile, the rupee gained strength after opening flat today, up 24 paise to 62.54 a dollar.
Asian markets gained boosted by better-than-expected jobs data from Australia and an unexpected rate cut in South Korea. Brent jumped to USD 58 per barrel while gold traded near a 3-month low.
11:50 am Macro outlook: The Indian economy is expected to disappoint on economic growth this year, which will put downward pressure on inflation. Soft inflation coupled with weaker-than-expected economic growth will lead the central bank to be very accommodative in its monetary policy stance. That's the thesis of Edward Teather, Senior Economist at UBS Investment Bank.
Teather expects February CPI, to be released today, to come at 5.1 percent, or the lower end of the consensus range. For the full year, UBS forecasts inflation to average 5.3 percent, he added. This would be on the back of economic recovery ''that's expected to disappointed relative to its potential,'' the UBS economist said.
11:30 am Buzzing: Shares of Glenmark Pharma rallied 2 percent on getting approval from Russia for asthma inhaler medication. "Glenmark has received approval for Salmecort (Salmeterol+Fluticasone) MDI inhaler, from the ministry of Health, Russia," says the pharma company in its filing to the exchange. This approval marked Glenmark's entry into the respiratory inhaler market in Russia. According to IMS, the total inhaler market in Russia is estimated to be around USD 283 million, out of which the total MDI market is valued at around USD 107 million.
It's a strong day of trade on Dalal Street. The Sensex is up 201.98 points at 28861.15 and the Nifty is up 59.60 points at 8759.55. About 1474 shares have advanced, 781 shares declined, and 163 shares are unchanged.
NTPC, ITC, Tata Steel, Tata Motors and Sesa Sterlite are top gainers in the Sensex. Among the losers are HUL, M&M, Wipro, Dr Reddy's Labs and Bajaj Auto.
Brent crude climbed towards USD 58 a barrel for the second straight session as speculators covered their positions ahead of the April contract's expiry, while a strengthening dollar and a build in US crude stocks capped prices. Geopolitical tensions in the Middle East and North Africa were also supporting crude futures. Analysts said the rise in crude oil futures was largely in tandem with a firming trend in Asia but gains were capped as dealers fretted over an oversupplied global market after US crude reserves once again swelled to a record high
10:55am ITC up 2%: Sources told CNBC-TV18 that ITC is likely to hike cigarette prices by up to 20 percent. Fresh cigarette stock with price hike is yet to reach market.
10:45am Crude Update: Brent crude climbed towards USD 58 a barrel today for the second straight session as speculators covered their positions ahead of the April contract's expiry, while a strengthening dollar and a build in US crude stocks capped prices.
Geopolitical tensions in the Middle East and North Africa were also supporting crude futures.
Brent for April delivery rose 24 cents to USD 57.78 at 0426 GMT after gaining USD 1.15, or 2 percent, in the previous session in a rebound from a one-month low.
West Texas Intermediate was flat at USD 48.17, after closing the previous session down 12 cents.
The April contracts for Brent and WTI expire next week.
10:20am CPI and IIP data: The February consumer price index (CPI) data and the January index of industrial production (IIP) numbers will be released today. The CPI is estimated to inch up to 5.26 percent compared to 5.11 percent in the previous month.
The rise is expected mainly due to food inflation. Food inflation in the previous month inched up to around 6.13 percent versus 4.78 percent month-on-month.
The IIP for January is expected to come in at a growth of around 0.5 percent versus 1.7 percent month-on-month. The range for IIP is anywhere with a decline of 1.7 percent to a growth of 2.3 percent this time around. This is because core sector growth wasn't inspiring, in fact, it was the slowest in a year at 1.8 percent. Auto production for January eased to around 2 percent growth versus 6 percent in December 2014; as per Society of Indian Automobile Manufacturers (SIAM) data.
10:00am Market Check
The market maintained early gains following upside in Asian equities. The Sensex climbed 189.22 points to 28848.39 and the Nifty jumped 56.30 points to 8756.25 led by banking & financials, capital goods and auto stocks.
The BSE Midcap and Smallcap outperformed benchmarks, up 1 percent each. Advancing shares outnumbered declining ones by a ratio of 1328 to 553 on the Bombay Stock Exchange.
The Insurance Bill will be tabled in the Parliament today, Ajay Bodke of Prabhudas Lilladher believes it will be a red-letter day if the bill could be passed. According to him, the passage of the Insurance Bill can bring nearly Rs 30,000-40,000 crore into the country.
Speaking to CNBC-TV18, Bodke said the market is eagerly waiting for the passage of other crucial bills like the Coal bill and the Mines and Minerals Bill. The three bills are expected to be cleared in the upper house by March 18.
State-run power company NTPC topped the buying list, up 5 percent followed by HDFC, Tata Motors, ICICI Bank, L&T, Maruti Suzuki, Sesa, Sterlite, Hero Motocorp and Tata Power with 1-1.5 percent upside.
However, Hindustan Unilever, Mahindra & Mahindra, Dr Reddy's Labs, Wipro and Bajaj Auto declined 0.5-1 percent.
9:50 am Exclusive: A day after the tax department was learnt to have issued a notice to London-based Cairn Energy in a three-year-old case, sources told CNBC-TV18 government officials believe the issue is a ''legacy of the previous government'' and that the incumbent regime is committed to ending the era of retrospective taxation.
Cairn Energy Plc has been embroiled in a USD 1.6 billion claim arising out of a ''business reorganization'' it carried out in 2007, prior to listing its former subsidiary Cairn India. (Shares of a foreign company holding Indian assets were transferred to the Indian subsidiary -- a move the tax department later said warranted payment of capital gains tax.)
Tax lawyers said the tax office was able to make a demand on a transaction that happened in 2007 due to a law passed by the UPA government in 2012, which allowed raising claims on past deals.
9:30 am Houseviews: Credit Suisse maintains an outperform rating on Wipro citing that significant pickup in growth may also result in re-rating.
The brokerage likes the stock for its valuations which is lowest among peer group. Credit Suisse says that management looks confident on the outlook and expects increased focus on client mining and its focus on execution to accelerate growth. Despite short-term headwinds in the energy vertical, management is optimistic on medium-term opportunities. It also sees an upside bias in the margins in the medium term.
Wipro had held its analyst day at its Bengaluru campus. Besides presentations on its strategy, demand environment, infrastructure management and the India/Middle-East business, it showcased its focus on execution and its capabilities in next-gen technologies.
The market has opened firm with the Sensex gaining 151 points at 28803.50. The Nifty is
at 8752, up 50.75 points. About 702 shares have advanced, 136 shares declined, and 93 shares are unchanged.
SBI, ICICI Bank, BHEL, Sesa Sterlite and HDFC are top gainers in the Sensex. Among the losers are Bajaj Auto, M&M, HUL, Hindalco and Bharti Airtel.
The Indian rupee opened flat at 62.77 per dollar against previous day's closing value of 62.78 a dollar.
The euro is struggle just above a fresh 12-year low early as the European Central Bank kicked off its 1 trillion euro bond-buying campaign. Meanwhile, the dollar climbs further, fueled in part by expectations the Federal Reserve is not far from lifting interest rates.
Mohan Shenoi of Kotak Mahindra Bank said, "Strong US jobs data last week has increased expectations of an early Fed rate hike. Safe heaven dollar buying has resulted in a dollar rally and weak equities across the board."
Among global markets, in the US, stocks closed mildly lower as equities failed to recover from Tuesday's sell-off, amid continued concern over dollar gains and the timing of a fed interest rate hike. Asian markets were trading higher this morning. Nikkei was higher as the yen is sitting pretty at 121 versus the dollar.
Kospi reversed its losses as the Bank of Korea surprised markets by cutting interest rates to a fresh record low. They cut its base rate for the first time in five months by 25 basis points to 1.75 percent. The Korean won traded at its lowest level since July 2013 aiding exporters.
In commodities, Brent crude rebounds from a 1-month low and is inching towards USD 58 dollar per barrel. From precious metals space, gold slips further to USD 1150 an ounce following a robust dollar and expectations of higher US interest rates curbed appetite for the metal.