Sensex gains 8.97% in 2013

Key benchmark indices eked out small gains on the last trading session of 2013. The barometer index, the SP BSE Sensex, garnered 27.67 points or 0.13%, up 48 points from the day’s low and off 60.20 points from the day’s high. The market breadth, indicating the overall health of the market, was positive. Gains in Asian and European stocks supported domestic bourses.

The Sensex garnered 378.75 points or 1.82% in December 2013. The barometer index clocked a gain of 1,743.97 points or 8.97% in calendar 2013. From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,721.97 points or 21.33%. From a record high of 21,483.74 hit on 9 December 2013, the Sensex is off 313.06 points or 1.45%.

The 50-unit CNX Nifty garnered 127.90 points or 2.07% in December 2013. The index registered a gain of 6.75% in calendar 2013.

The BSE Small-Cap index garnered 451.61 points or 7.4% in December 2013. But, the index registered a massive loss of 11.23% in calendar 2013. The BSE Mid-Cap index surged 379.98 points or 6% in December 2013. But, the index registered a loss of 5.72% in calendar 2013.

Coming back to today’s trade, shares of power generation and power distribution companies edged higher. Among IT stocks, Wipro scaled 52-week high. Index heavyweight Reliance Industries (RIL) rose. Another index heavyweight and cigarette major ITC edged lower in volatile trade. FMCG stocks declined. Shares of Tata group organized retailer Trent edged higher after the Foreign Investment Promotion Board (FIPB) on Monday, 30 December 2013, approved UK-based Tesco Plc’s proposal to enter the Indian multi-brand retail segment in joint venture with Trent. Shares of other organised retailers also rose.

Metal stocks edged lower. Shares of Apollo Tyres surged after US based tyre maker Cooper Tire Rubber Company on Monday, 30 December 2013, announced that it has terminated the merger agreement with Apollo Tyres. Shares of local search engine Just Dial scaled record high. Tata Communications hit 52-week high.

Foreign institutional investors (FIIs) bought shares worth a net Rs 130.30 crore from the secondary equity markets on Monday, 30 December 2013, as per data from Securities Exchange Board of India.

The SP BSE Sensex garnered 27.67 points or 0.13% to settle at 21,170.68, its highest closing level since 27 December 2013. The index rose 87.87 points at the day’s high of 21,230.88 in early trade. The index fell 20.33 points at the day’s low of 21,122.68 in morning trade.

The CNX Nifty garnered 12.90 points or 0.21% to settle at 6,304, its highest closing level since 27 December 2013. The index hit a high of 6,317.30 in intraday trade. The index hit a low of 6,287.30 in intraday trade.

The total turnover on BSE amounted to Rs 1646 crore, lower than Rs 2561.37 crore on Monday, 30 December 2013.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,497 shares gained and 1,060 shares fell. A total of 162 shares were unchanged.

The BSE Small-Cap index rose 0.72% and the BSE Mid-Cap index gained 0.32%. Both these indices outperformed the Sensex.

The SP BSE Power index (up 0.6%), the SP BSE Oil Gas index (up 0.52%), the SP BSE PSU index (up 0.32%), the SP BSE Healthcare index (up 0.21%), the SP BSE Capital Goods index (up 0.21%), the SP BSE Consumer Durables index (up 0.18%), the SP BSE Realty index (up 0.17%), the SP BSE IT index (up 0.16%), the SP BSE Teck index (up 0.16%) outperformed the BSE Sensex.

The SP BSE Bankex (up 0.12%), the SP BSE Auto index (up 0.05%), the SP BSE FMCG index (down 0.06%) and the SP BSE Metal index (down 0.21%) underperformed the BSE Sensex.

Among the 30-share Sensex pack, 17 stocks gained and rest of them declined.

Index heavyweight and cigarette major ITC fell 0.5% to Rs 320.80. The stock hit a high of Rs 324 and low of Rs 320.50.

FMCG stocks declined. Britannia Industries (down 0.32%), Colgate-Palmolive (India) (down 0.59%), Dabur India (down 0.35%), Hindustan Unilever (down 0.2%), Marico (down 1.48%) and Nestle India (down 0.97%) edged lower. Godrej Consumer Products rose 0.68%.

Index heavyweight Reliance Industries rose 0.98% to Rs 894.05. The stock hit a high of Rs 898 and low of Rs 886.10.

ONGC shed 0.14%. ONGC Videsh, through its affiliates has acquired an additional 12% Participating Interest (PI) in Block BC-10, a deepwater offshore block in Campos Basin, Brazil taking its total PI in the block to 27%. The operator, Shell now holds the balance 73% PI in the block.

ONGC Videsh had acquired 15% PI in Block BC-10 in 2006. In August 2013, Petrobras entered into an agreement with Sinochem for sale of its 35% PI in the block. This agreement was subject to pre-emption rights of the partners. Shell and ONGC Videsh exercised their pre-emption rights for acquisition of 23% PI and 12% PI respectively. On approval of the Brazilian regulatory authorities for acquisition, the transaction has been completed on 30 December 2013, ONGC said in a statement today, 31 December 2013. ONGC Videsh has paid a purchase consideration of $561 million for 12% stake in the block. ONGC Videsh is a wholly-owned subsidiary of ONGC.

The Block BC-10 also known as Parque das Conchas is in Campos Basin of Brazil and includes 4 offshore deep-water fields — Ostra, Abalone, Argonauta and Nautilus and a few identified exploration prospects. The block is in the deep-waters of Brazil in the water depths ranging from 1,500 to 1,950 meters. The project is being developed in three phases. Production from Phase I started in year 2009. The Phase II of the Project has come on stream in October 2013 with an expected peak production of about 35,000 barrels of oil equivalent per day (boepd) in 2014. The current oil production from the block is about 50,000 boepd. The Phase III is to come on stream in 2016 with expected peak production of about 28,000 boepd in 2017. The production from all the phases is expected to be about 75,000 boepd in 2017.

IT stocks were mostly higher. TCS gained 0.66% to Rs 2,172.

HCL Technologies rose 1.55% to Rs 1,267.40. The stock had hit record high of Rs 1,269 in intraday trade on Monday, 30 December 2013. The company on 27 December 2013 announced that Vineet Nayar, Director of the company since 2008, has decided to retire from the board in order to devote more time to his Foundation. HCL Technologies also announced on Friday, 27 December 2013, the appointment of Vineet Nayar as a Senior Advisor to HCL Technologies and HCL Corporation.

As a Senior Advisor, Vineet will advise HCL Corporation on key strategic issues and also work with the board of HCL Technologies on initiatives such as driving a high performance culture amongst senior managers and new strategies for growth.

Wipro rose 1.25% to Rs 559 after hitting 52-week high of Rs 561.25 in intraday trade.

Tech Mahindra fell 0.4% to Rs 1,839. The stock had hit 52-week high of Rs 1,875 in intraday trade on Monday, 30 December 2013.

Infosys shed 0.62% to Rs 3,480. The stock had hit record high of Rs 3,575 in intraday trade on Monday, 30 December 2013.

Auto stocks were mixed. Maruti Suzuki India declined 0.84%. MM fell 0.6%, with the stock falling for the second day in a row. Ashok Leyland was unchanged at Rs 17.15.

Tata Motors rose 0.48%.

Shares of two-wheeler majors — Bajaj Auto and Hero MotoCorp–edged higher. Bajaj Auto rose 0.48%. Hero MotoCorp gained 0.36%.

TVS Motor Company fell 3.74% on profit booking. The stock had surged 14.84% on Monday, 30 December 2013.

Shares of Apollo Tyres jumped 5.77% to Rs 107.15 after US based tyre maker Cooper Tire Rubber Company on Monday, 30 December 2013, announced that it has terminated the merger agreement with Apollo Tyres. The stock witnessed high intraday volatility. The stock hit record high of Rs 113 at the onset of the trading session. The stock hit low of Rs 102.55 in intraday trade. High volumes accompanied the rally in the stock. On BSE, 59.32 lakh shares changed hands in the counter, compared with average daily volume of 10.54 lakh shares during the past one quarter.

Cooper Chairman, Chief Executive Officer and President, Roy Armes, said: “It is time to move our business forward. While the strategic rationale for a business combination with Apollo is compelling, it is clear that the merger agreement both companies signed on June 12 will not be consummated by Apollo and we have been notified that financing for the transaction is no longer available. The right thing for Cooper now is to focus on continuing to build our business. Our business model is strong, and despite the challenges this year, we are coming off record operating profit through the first half of the year and expect to continue to be profitable for the second half, ending the year with a strong balance sheet. We look forward to continuing to execute on our strategy in 2014, and we have a very strong base from which to do this-brands that are respected for quality, a loyal customer base, a flexible global network of manufacturing facilities, a skilled workforce, and top technical capabilities”.

“While Cooper believes Apollo has breached the merger agreement, and we will continue to pursue the legal steps necessary to protect the interests of our company and our stockholders, our focus will be squarely on our business and moving it forward,” Armes said.

“Addressing the situation at Cooper Chengshan Tire (CCT) in Rongcheng, China is our top priority in the near term. The issues at CCT were driven by the merger agreement, and with the agreement now terminated, Cooper is working independently to restore normal operations at CCT, including obtaining the information needed for Cooper to resume regular financial reporting as soon as possible. Once the situation at CCT is resolved and regular financial reporting has resumed, Cooper will be in a position to address additional options for the deployment of capital targeted at returning value for our stockholders,” he added.

Apollo Tyres on Monday, 30 December 2013, issued a press statement in response to Cooper Tire Rubber Company’s decision to terminate merger agreement with Apollo Tyres. The company said that the management is disappointed as Cooper has prematurely attempted to terminate the merger agreement. While Cooper’s lack of control over its largest Chinese subsidiary — Cooper Chengshan Tire Company — and its inability to meet its legal and contractual financial reporting obligations has considerably complicated the situation, Apollo has made exhaustive efforts to find a sensible way forward over the past several months, Apollo Tyres said. However, Cooper has been unwilling to work constructively to complete a transaction that would have created value for both the companies and their shareholders, Apollo Tyres said. Cooper’s actions leave Apollo no choice but to pursue legal remedies for Cooper’s detrimental conduct, Apollo Tyres said.

“Importantly, Apollo has many other compelling growth opportunities around the world that we are continuing to pursue. Our business is performing well, as evidenced by the strong top line and bottom line results we reported last quarter and we remain focused on executing our standalone strategic plan to maximum value for Apollo’s shareholders. We are confident that Apollo is well positioned for continued success”, Apollo Tyres said.

Shares of power generation and power distribution companies edged higher. Power Grid Corporation of India (up 0.51%), GVK Power Infrastructure (up 1.5%), Tata Power Company (up 2.53%), NTPC (up 0.4%), Reliance Infrastructure (up 0.27%), Torrent Power (up 2.71%), JSW Energy (up 2.92%), and Reliance Power (up 0.21%) gained.

Shares of power finance firms rose. Power Finance Corporation (up 4.02%) and Rural Electrification Corporation (up 3.96%) gained.

Bank stocks were mostly in green. Among PSU bank stocks, Union Bank of India (up 2.27%), Bank of India (up 1.27%), Bank of Baroda (up 0.56%) and Punjab National Bank (up 0.26%) gained.

State Bank of India (SBI) slipped 0.08%

Canara Bank rose 2.02%. The state-run bank after market hours on Monday, 30 December 2013, announced increase in lending rates. The bank has raised its base rate to 10.20% from 9.95%, with effect from 1 January 2014. The bank has raised its benchmark prime lending rate (PLR) to 14.45% from 14.20% from 1 January 2014.

The state-run bank also announced increase in term deposit rates for the maturity bucket 180 days to 269 days, to 7.4% from 7%, for deposits of less than Rs 1 crore. The hike in rate is effective from 1 January 2014.

ICICI Bank (up 0.34%) and AXIS Bank (up 1.12%) gained. HDFC Bank dropped 0.57%.

Metal stocks edged lower. JSW Steel (down 0.71%), Jindal Steel Power (down 0.8%), Sesa Sterlite (down 0.72%), Hindustan Zinc (down 0.11%), National Aluminum Company (down 0.53%), Tata Steel (down 0.48%), Hindustan Copper (down 0.28%), NMDC (down 0.07%) and Sail (down 0.34%) edged lower. Hindalco Industries rose 0.58%.

Shares of Tata group organized retailer Trent edged higher after the Foreign Investment Promotion Board (FIPB) on Monday, 30 December 2013, approved UK-based Tesco Plc’s proposal to enter the Indian multi-brand retail segment in joint venture with Trent. The stock rose 0.58%.

Trent had announced on 17 December 2013 that the company is in discussions with British retailer Tesco regarding an investment by Tesco in Trent Hypermarket (THL) which operates the Star Bazaar retail business and is engaged in multi-brand retail trading. Trend had announced at that time that Trent and Tesco will each own a 50% stake in THL.THL currently operates 16 stores across the Southern and Western regions of India. The proposed partnership will operate and build on the existing portfolio of Star Bazaar stores in Maharashtra and Karnataka, Trent had said on 17 December 2013.

Shares of other organised retailers also rose. Future Retail (up 7.1%) and Shoppers Stop (up 0.98%) gained.

Hospitality shares were in demand. Taj GVK Hotels, Hotel Leela Ventures, Indian Hotels, EIH, EIH Associated Hotels and Royal Orchid Hotel rose 1.58% to 14.48%.

Aviation stocks rose. SpiceJet (up 1.74%), Jet Airways (India) (up 3.22%) and Kingfisher Airlines (up 9.77%) gained.

Glenmark Pharmaceuticals rose 0.37%. Glenmark Pharmaceuticals and Glenmark Generics Inc., USA today, 31 December 2013, said that Cephalon Inc. has filed a patent infringement suit on 26 December 2013 in the US District for the District of Delaware, seeking to prevent Glenmark from commercialising its Abbreviated New Drug Application (ANDA) Bendamustine Hydrochloride product, a generic version of Treanda, prior to expiration of the Orange Book patents. A complaint against Glenmark has been filed on US patent 8,445,524. This lawsuit was filed under the provisions of the Hatch-Waxman Act, Glenmark Pharmaceuticals said in a statement.

Bendamustine is indicated for the treatment of patients with chronic Lymphocytic Leukemia. The ANDA has been filed from Glenmark’s Argentina lyophilized injectable facility. For the twelve month period ending September 2013, Treanda achieved sales of $659 million in the United States, according to IMS Health data.

GMR Infrastructure (GMR) rose 1.64% after the company said after market hours on Monday, 30 December 2013, that it has signed a definitive agreement with Malaysian Airports Holding Berhard (MAHB) to divest its 40% equity stake in Sabiha Gokcen International Airport (ISGIA) and its operating company LGM Tourism (LGM) for euro 225 million (i.e. approximately Rs 1910 crore), subject to certain adjustments. Definitive agreements have been signed subsequent to the exercise of Right of First Refusal (ROFR) by MAHB under the existing shareholders agreement of ISG, on 23 December 2013, GMR said.

GMR said that the transaction is subject to customary closing conditions including the approval of the relevant government authorities and the project lenders to ISG.

Commenting on the transaction, G M Rao, Chairman, GMR Group said, “This transaction is yet another evidence of GMR Group’s ability to implement appropriate strategy to face the challenges of changing times. We at GMR Group continue to focus on creating liquidity and enhance value by effective portfolio management under our ALAR (Asset Light Asset Right) strategy. The efforts of the Group taken in recent times shall strengthen our balance sheet”.

ISG is one of the world’s fastest-growing airports. It currently hosts more than 58 different carriers covering over 125 destinations. The consortium of Limak Holidng, GMR Group and MAHB was selected as the preferred bidder for upgrading and maintaining the airport in July 2007. The airport’s new terminal was commissioned in October 2009, 12 months ahead of schedule. LGM undertakes the operation of non-zero services at the airport such as hotel, food beverages, and lounge. GMR’s equity investment at ISG is around euro 71.6 million.

Realty stocks rose in volatile trade. DLF (up 0.12%), Indiabulls Real Estate (up 0.73%), Oberoi Realty (up 2.47%), Godrej Properties (up 0.55%), Omaxe (up 0.12%) gained. Unitech was unchanged at Rs 15.30. HDIL fell 0.19%.

Just Dial gained 1.21% to Rs 1,435 after striking a record high of Rs 1,459 in intraday trade.

Tata Communications advanced 4.18% to Rs 308.80 after hitting a 52-week high of Rs 309.65 in intraday trade.

Jain Irrigation Systems rose 2.04% after the company said it bagged one of the country’s largest irrigation projects worth Rs 385.70 crore in Karnataka. The announcement was made after trading hours on Monday, 30 December 2013.

The project mooted by Krishna Bhagya Jal Nigam (KBJNL), a division of Water Resources Department of Karnataka, intends to irrigate 30,381 acres owned by over 7,000 farmers in 35 villages. KBJNL selected Jain Irrigation Systems through national competitive bidding process.

The project involves survey, planning, design, supply and execution of distribution system using HDPE / PVC piping network. Besides, it involves formation of Water Users Co-operative Societies in convenient blocks, installation of on-farm fully automated Micro Irrigation System on the field and two year’s maintenance after commissioning. The company will also train farmers on proper use of micro irrigation system and capacity building of farmers, Jain Irrigation Systems said in a statement.

Successful commissioning of this project will assume the status of being the largest Micro Irrigation project in the world for improving water use efficiency in canal command areas through conduit distribution and use of Micro Irrigation Systems, Jain Irrigation said.

Commenting on the development, Jain Irrigation Joint Managing Director Atul Jain said: “We are excited to receive such large order for uniquely designed project, which will usher in significant benefits to all stakeholders considering backdrop of dwindling water supply in our country in inverse proportion to more demand for agriculture produce.”

Deep Industries rose 3.63% after the company said it allotted 29.50 lakh convertible warrants of Rs 34 each on a preferential basis to five promoter group entities. The company made the announcement during trading hours today, 31 December 2013.

In the foreign exchange market, the rupee edged higher against the dollar in choppy trade after the Foreign Investment Promotion Board (FIPB) on Monday, 30 December 2013, cleared Vodafone and Tesco’s investment proposals, worth around $1.7 billion in total. The partially convertible rupee was hovering at 61.80, compared with its close of 61.91/92 on Monday, 30 December 2013.

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.

Against the backdrop of an expected improvement in sales growth and moderation in inputs cost, majority of the respondents (43%) expect an increase in their pre-tax profit margin in the third quarter, much higher than 31% in the previous quarter.

Another positive signal emerging from the survey is that an improvement in capacity utilization is expected in the current quarter, CII said. As compared to 56% respondents experiencing less than 75% capacity utilization in the second quarter, only 45% respondents expect capacity utilization to fall below 75% in the third quarter, CII said. Underlining the need for continuing policy intervention to step up investment, 53% of firms did not expect their capacity to expand in the current quarter.

What is also encouraging is to note that the export prospects look positive in the current quarter whereas imports are seen to be restrained, CII said. 53% of firms expected their exports to increase in the current quarter, up from 49% in the previous quarter. Similarly, 56% of the respondents didn’t expect their imports to increase during the current quarter.

In the 85th Business Outlook Survey, domestic economic/political instability, slackening consumer demand, high level of corruption, persistent high inflation and risk from exchange rate volatility emerged as the top five current concerns in order of severity to most firms, CII said.

The next major trigger for the market is Q3 December 2013 corporate earnings. The Q3 earnings season will begin around mid-January 2014 and continue till mid-February 2014. Investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year and/or the next year.

Prime Minister Dr. Manmohan Singh will hold a press conference on 3 January 2014. The press conference is likely to set the tone for the Congress party’s election agenda in 2014, according to reports. Dr. Singh is likely to officially opt himself out of the prime minister’s race after the 2014 elections, reports suggest.

Amidst demands that the Congress party should reveal its prime ministerial candidate for the 2014 Lok Sabha elections, Information and Broadcasting Minister Manish Tiwari today, 31 December 2013, said that the decision will be taken and announced at the appropriate time.

European stocks edged higher on Tuesday, 31 December 2013, amid shortened trading hours for New Year’s Eve before American consumer confidence and housing data. Key benchmark indices in France and UK were up 0.25% to 0.28%. The stock market in Germany was closed for holiday.

Asian stocks edged higher on the last trading session of the year on Tuesday, 31 December 2013, as energy shares advanced. Key benchmark indices in China, Hong Kong and Singapore were up 0.26% to 0.88%. Taiwan’s Taiwan Weighted fell 0.14%. Stock markets in Japan, South Korea, Indonesia, Thailand, the Philippines and Vietnam were closed for holidays.

China is scheduled to post its manufacturing purchasing managers’ index for December 2013 tomorrow, 1 January 2014.

China’s central bank on Monday, 30 December 2013, said it would continue with a “prudent” monetary policy, maintain an appropriate level of liquidity and bring about the “reasonable growth” of credit. The People’s Bank of China (PBOC) made the comments in a statement on its website following a quarterly monetary policy meeting.

The PBOC said financial markets have been steady, while domestic prices have been “basically stable.” China’s consumer price inflation this year has been benign, and has not exceeded the officially targeted ceiling of 3.5% in any single month. The PBOC also said it would carry out further interest rate liberalization and exchange rate reform, though it did not give any timetable. China took a step toward interest rate reform in July, scrapping most controls on lending rates, but a cap on the interest paid on bank deposits remains. The central bank continues to intervene heavily in foreign currency markets to control the exchange rate.

The PBOC said it would closely monitor changes in domestic and international liquidity conditions. The global economy is expected to continue to recover at a slow pace, the PBOC said, although uncertainties remain.

Trading in US index futures indicated a flat opening of US stocks on Tuesday, 31 December 2013. US stocks finished little changed on Monday, 30 December 2013, although the Dow Jones Industrial Average managed to eke out its 51st record close of 2013 in the next-to-last trading session of the year, while shares of Twitter extended a decline. The National Association of Realtors said its index of pending home sales rose 0.2% in November to 101.7, slightly above a 10-month low of 101.5 in October, but down from 103.3 in November 2012. The data had little impact on stocks.

The US stock market is closed tomorrow, 1 January 2014, for New Year’s Day holiday.

The US Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world’s largest economy. The US central bank is poised to continue winding down its stimulus measures gradually over the next year.

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Sensex gains 8.97% in 2013