Friday, April 04, 2014
Nifty April 2014 futures were at 6774.15, at a premium of 38.05 points over spot closing of 6736.10. Turnover on NSE's futures & options (F&O) segment rose to Rs 122922.57 crore from Rs 108345.78 crore on Wednesday, 2 April 2014.
IDFC April 2014 futures were at 125.55, at a premium over spot closing of 124.70.
Aurobindo Pharma April 2014 futures were at 570.50, at a premium over spot closing of 568.50.
State Bank of India April 2014 futures were at 1905.95, at a premium over spot closing of 1894.
In the spot market, the 50-unit CNX Nifty lost 16.45 points or 0.24% to settle at 6,736.10, its lowest closing level since 1 April 2014.
The April 2014 derivatives contracts expire on 24 April 2014.
Ranbaxy Laboratories, Shriram City Union Finance, Jaiprakash Power Ventures and Thermax are among the other gainers.
Pharmaceutical company Wockhardt jumped 8.85% to Rs 600.85. The stock topped the gainers in the BSE's 'A' group.
Pharmaceutical company Ranbaxy Laboratories galloped 5.12% to Rs 424.80. The stock was second biggest gainer in 'A' group.
Non-banking financial company Shriram City Union Finance spurted 4.81% to Rs 1232. The stock was third biggest gainer in 'A' group.
Power generation firm Jaiprakash Power Ventures climbed 4.68% to Rs 15.44. The stock was fourth biggest gainer in 'A' group.
Energy and environment solutions provider Thermax rose 4.41% to Rs 748.05. The stock was fifth biggest gainer in 'A' group.
Key benchmark indices reversed direction after scaling record high after the result of a survey showed that business activity in the Indian private sector fell in March 2014, after a fractional increase in February 2014. Volatility ruled the roost in late trade as key benchmark indices trimmed losses soon after extending intraday fall in mid-afternoon trade. The market breadth, indicating the overall health of the market was negative. The barometer index, the S&P BSE Sensex, was down 42.42 points or 0.19%, up 139.79 points from the day's low and off 111.58 points from the day's high.
The Sensex snapped six-day winning streak today, 3 April 2014. The Sensex had garnered 496.28 points or 2.25% in six trading sessions to 22,551.49 on 2 April 2014 from a recent low of 22,055.21 on 25 March 2014. The Sensex has gained 1,338.39 points or 6.32% in calendar year 2014 (so far till 3 April 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 5,060.36 points or 29%.
Bank stocks fell after the Reserve Bank of India (RBI) on Wednesday, 2 April 2014, clarified that as indicated in its circular dated 23 August 2013 the option for spreading the Mark to Market (MTM) losses over the three quarters has ended on 31 March 2014 and no further extension has been allowed. Capital goods stocks also declined.
A bout of volatility was witnessed as key benchmark indices reversed gains after hitting fresh record high at the onset of the trading session. The Sensex and the 50-unit CNX Nifty, both, hit fresh record high at the onset of the trading session. The Sensex hovered in negative zone in morning trade. Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade after the result of a survey showed that business activity in the Indian private sector fell in March 2014, after a fractional increase in February 2014. The Sensex further extended losses and hit fresh intraday low in early afternoon trade. Key benchmark indices hovered in negative terrain in afternoon trade. Volatility ruled the roost in late trade as key benchmark indices trimmed losses soon after extending intraday fall in mid-afternoon trade.
The S&P BSE Sensex was down 42.42 points or 0.19% to 22,509.07, its lowest closing level since 1 April 2014. The index fell 182.21 points at the day's low of 22,369.28 in late trade, its lowest level since 1 April 2014. The index gained 69.16 points at the day's high of 22,620.65 in early trade, a record high for the barometer index.
The CNX Nifty was down 16.45 points or 0.24% to 6,736.10, its lowest closing level since 1 April 2014. The index hit a low of 6,696.90 in intraday trade, its lowest level since 1 April 2014. The index hit a high of 6,776.75 in intraday trade, a record high for the index.
The BSE Mid-Cap index was off 28.17 points or 0.39% at 7,170.75, underperforming the Sensex. The BSE Small-Cap index was off 12.91 points or 0.18% at 7,207.45, outperforming the Sensex.
The total turnover on BSE amounted to Rs 2955 crore, lower than Rs 3290.90 crore on Wednesday, 2 April 2014.
The market breadth, indicating the overall health of the market was negative. On BSE, 1,504 shares dropped and 1,279 shares rose. A total of 133 shares were unchanged. .
The S&P BSE Healthcare index (up 0.95%), the S&P BSE FMCG index (up 0.44%), the S&P BSE Metal index (up 0.35%), the S&P BSE Consumer Durables index (up 0.32%), the S&P BSE IT index (down 0.02%) and the S&P BSE Auto index (down 0.13%) outperformed the Sensex.
The S&P BSE Teck index (down 0.23%), the S&P BSE Power index (down 0.44%), the S&P BSE Realty index (down 0.44%), the S&P BSE Capital Goods index (down 0.83%), the S&P BSE Oil & Gas index (down 0.87%) and the S&P BSE Bankex (down 1.09%) underperformed the Sensex.
Among the 30-share Sensex pack, 15 stocks declined and rest of them rose. Coal India (down 2.15%) and GAIL (India) (down 2.09%) edged lower from the Sensex pack.
Index heavyweight and cigarette major ITC rose 0.8% to Rs 347. The stock hit high of Rs 347.50 and low of Rs 341.25.
Pidilite Industries rose 1.88% to Rs 314.50 after hitting record high of Rs 317.90 in intraday trade.
Reliance Industries (RIL) shed 0.53% to Rs 951.85, with the stock reversing direction after hitting 52-week high of Rs 962.20 in intraday trade.
Bank stocks fell after the Reserve Bank of India (RBI) on Wednesday, 2 April 2014, clarified that as indicated in its circular dated 23 August 2013 the option for spreading the Mark to Market (MTM) losses over the three quarters has ended on 31 March 2014 and no further extension has been allowed. The RBI further said that as indicated in that circular, banks are permitted to exceed the limit of 25% of total investments under the Held to Maturity (HTM) category provided the excess comprises only SLR securities and the total SLR securities held in the HTM category is not more than 24.5% of their Net Demand Time Liabilities (NDTL) as on last Friday of the second preceding fortnight. The position will be reviewed based on evolving situation, the RBI said.
Among private sector banks, ICICI Bank (down 0.21%), IndusInd Bank (down 1.86%), Yes Bank (down 2.07%), Federal Bank (down 2.35%), Kotak Mahindra Bank (down 1.44%) and HDFC Bank (down 0.48%), declined.
Axis Bank dropped 1.98%. The bank announced after market hours on Wednesday, 2 April 2014, that the board of directors of the bank on 2 April 2014 has passed a resolution approving the allotment of Senior Notes aggregating to $30.6 million under the MTN Programme through its Dubai International Financial Centre (DIFC) branch.
Among other PSU bank stocks, State Bank of India (SBI) (down 2.1%), Canara Bank (down 1.06%), Union Bank of India (down 1.31%), Bank of India (down 1.78%), and Bank of Baroda (down 2.96%) dropped.
Punjab National Bank shed 2.41%. The bank said during market hours today, 3 April 2014, that it has raised Rs 500 crore capital through Tier-2 (Basel III compliant) Bonds on 3 April 2014.
IDBI Bank declined 1.53%. The bank announced after market hours on Wednesday, 2 April 2014, that it has divested its entire equity holding of 39.9 lakh shares (18.95%) in Stock Holding Corporation of India (SHCIL) to IFCI.
Shares of banking licence applicants fell after the Reserve Bank of India granted in-principle approval for new bank licences to only two firms viz. IDFC and Bandhan Financial Services. SREI Infrastructure Finance (down 7.97%), L&T Finance Holdings (down 9.77%), IFCI (down 8.7%), Magma Fincorp (down 4.75%), Muthoot Finance (down 2.44%), IIFL Holdings (down 3.64%), Tourism Finance Corporation of India (down 4.51%), Reliance Capital (down 4.55%), LIC Housing Finance (down 1.27%), Indiabulls Housing Finance (down 1.52%), Religare Enterprises (down 0.39%), JM Financial (down 8.21%), Bajaj Finserv (down 0.78%) and Aditya Birla Nuvo (down 2.35%), edged lower. Edelweiss Capital gained 5.76%.
IDFC shed 2.46%, with the stock reversing intraday gains.
The Reserve Bank of India (RBI) has decided on Thursday to grant "in-principle" approval to two applicants viz., IDFC and Bandhan Financial Services Private, to set up banks under the Guidelines on Licensing of New Banks in the Private Sector issued on 22 February 2013 (Guidelines). These two applicants were also recommended as suitable for grant of "in-principle" approval by the High Level Advisory Committee (HLAC) set up by the RBI. The HLAC had also recommended that in the case of Department of Posts which has applied for licence, it would be desirable for the RBI to consider the application separately in consultation with the Government of India. The RBI has accepted the recommendation of the HLAC.
The "in-principle" approval granted will be valid for a period of 18 months during which the applicants have to comply with the requirements under the Guidelines and fulfil the other conditions as may be stipulated by the RBI. On being satisfied that the applicants have complied with the requisite conditions laid down by the RBI as part of “in-principle” approval, they would be considered for grant of a licence for commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949. Until a regular licence is issued, the applicants would be barred from doing banking business.
Capital goods shares edged lower. Bharat Heavy Electricals (Bhel) (down 2.84%), Bharat Electronics (down 1.05%), Punj Lloyd (down 3.7%), ABB India (down 1.77%), and Crompton Greaves (down 2.52%) edged lower.
Shares of engineering and construction major L&T edged lower in choppy trade on reports that the company is likely to write off Rs 15000-crore worth of slow-moving orders when it announces earnings for the year ended 31 March 2014. The stock shed 0.54% to Rs 1,292. L&T clarified during trading hours today, 3 April 2014, that the company evaluates its order book on a regular basis. The slow moving orders in that process may be removed to enable carry forward of healthy backlog of orders, L&T said. There is no negotiation with the clients for this process, L&T said. Removal of such orders has no impact on revenue, L&T said. The new orders which the company has received has compensated for any such removal of orders, L&T said. The company as part of its communication to the press in January 2014 during the announcement of results had disclosed this aspect, L&T said.
Sesa Sterlite rose 0.42% and Hindustan Zinc gained 1.16% after global credit rating agency Moody's Investors Service upgraded its outlook for parent company Vedanta Resources Plc to stable from negative. Moody's said Vedanta has taken steps to improve its credit profile, simplifying its group structure through the formation of Sesa Sterlite - the result of a merger between Sesa Goa and Sterlite Industries - and through its more proactive approach to refinancing debt.
Moody's has a "Ba1" corporate rating on Vedanta and a "Ba3" rating on the miner's senior unsecured debt.
Tata Steel lost 1.4% to Rs 397.80, with the stock sliding on profit booking after recent rally. Shares of Tata Steel were on a roll recently. The stock had surged 11.49% in eight trading sessions to settle at Rs 403.45 on Wednesday, 2 April 2014, from a recent low of Rs 361.85 on 22 March 2014.
JSW Steel rose 3.27% to Rs 1,062, also its 52-week high. The company early this week said it has reduced prices for its two steel products -- hot rolled coil and wire rod with effect from 1 April 2014. The quantum of the cut will be Rs 500-750 per tonne for HRC and Rs 500 for Wire rod, the company said after trading hours on Tuesday, 1 April 2014.
Bharti Airtel declined 1.21%. The company and IBM in a joint statement issued after market hours on Wednesday, 2 April 2014 said they have signed a new agreement to manage Airtel's infrastructure and application services in India over the next five years.
This agreement builds on the 10 year relationship between the two organizations which has driven the co-creation of industry leading telco solutions and customercentric services.
The agreement is based on Airtel's new IT vision that defines the next generation of services for its ever-growing customer base and to offer best in class services to its customers through solutions leveraging cutting edge technology. As part of the new vision, Airtel is also building inhouse capabilities and a strong partner eco-system, and has selected IBM to manage the IT infrastructure and applications for its operations in India.
The new model offers Airtel greater flexibility to scale services and adapt in real-time to changing market dynamics and offer a differentiated customer experience leveraging IBM's industry solutions and global experience.
Gopal Vittal, MD & CEO, Bharti Airtel (India & South Asia) said, "As we embark on the next phase of Airtel's growth journey, I am confident that the agreement with IBM will help us offer innovative and cutting edge products and services to our customers, enabling us achieve our vision of being the most loved brand."
Vanitha Narayanan, Managing Director, IBM India, said, "In the last decade, Bharti's customer base has increased from a few million to over 285 million. Airtel partnered with IBM to drive this growth, by using technology to respond with intuitive offers for customers, managing service delivery, and improving organizational efficiency. This pioneering partnership will continue to bring innovation to Airtel's customers, which is the foundation for long term strategy."
Harmeen Mehta, Chief Information Officer, Airtel said, "Our "Next Generation Sourcing model" is all about creating a smarter IT – from the data center to the end-user's experience with a view to ultimately offer new and innovative solutions to our customers. IBM's global expertise to manage large infrastructure operations and application management, coupled with the new IT capabilities we are developing in-house is the latest milestone in our strategy to build a worldclass IT services platform as we enter into a new phase in our growth journey in both data and voice."
Airtel and IBM also have partnerships for IT infrastructure and services across Airtel's international operations spanning 19 countries including Africa, Sri Lanka and Bangladesh
Wipro shed 0.96%. The company announced after market hours on Wednesday, 2 April 2014 that Pratik Kumar, CEO of Wipro Infrastructure Engineering (WIN), who has been handling additional responsibility of providing leadership to the HR function as Executive Vice President - HR for Wipro will now move full-time into WIN as its CEO. Saurabh Govil, Sr. Vice President will head Human Resources for Wipro. These changes are effective 1 April 2014.
GlaxoSmithKline Pharmaceuticals fell 1.06% after the stock turned ex-dividend today, 3 April 2014, for a dividend of Rs 50 per equity share for the year ended 31 December 2013.
Natco Pharma fell 0.77%. The company during market hours today, 3 April 2014, issued a clarification with regard to launch of generic Copaxone. The firm said that there has been recent speculation as to the role of Natco in the future decision(s) related to potential launch and/ or pricing of generic Copaxone in the United States. Natco confirmed the final decision as to when or whether and pricing of generic Copaxone is launched in the US rests with its Partner Mylan. Natco said it remains committed and working to take steps and deploy the necessary resources to ensure that a quality generic US FDA approved Copaxone is made available to patients suffering from Multiple Sclerosis upon market formation. Natco said the Stock Exchange will be duly informed whenever such a decision is made in the future.
Earlier this week, Natco Pharma announced that the US Supreme Court has agreed to hear an appeal filed by Teva Pharmaceutical in a patent fight over top-selling multiple sclerosis drug Copaxone. According to reports, the development is a big negative for Natco Pharma as by agreeing to hear the case the US Supreme Court cast into doubt a July 2013 ruling by another US Court that ruled in favour of companies developing cheaper generic of Copaxone.
Glenmark Pharmaceuticals dropped 0.8%. The company announced during market hours that its Novel Chemical Entity (NCE) 'GRC 27864' is entering human trials. This NCE program targets Microsomal Prostaglandin E synthase-1 (mPGES-1) as a novel therapeutic target in pain management. Selective mPGES-1 inhibitors are expected to inhibit increased prostaglandin E2 (PGE2) production in the disease state without affecting other prostanoid metabolites and, consequently, may be devoid of the GI (gastrointestinal) and cardiovascular side effects seen with NSAIDs and COX-2 inhibitors, respectively. Glenmark has completed preclinical studies and Phase 1 enabling GLP studies for its selected lead molecule, GRC 27864 and has filed a Phase 1 application for first-in-human trial with the MHRA, UK. The Phase 1 studies are to be initiated soon and are likely to get completed by January 2015. Following this, Glenmark will also be initiating a proof of concept study in patients with acute pain.
Dr. Michael Buschle, Chief Scientific Officer, Glenmark Pharmaceuticals said: "We are excited that our mPGES-1 discovery program is moving forward to human trials. This is another potential first-in-class molecule and there is a significant unmet medical need. This announcement also reaffirms our position globally in the development of novel pain therapies".
GRC 27864 is a potent, selective, and orally bioavailable inhibitor of mPGES-1, an enzyme which is up-regulated under inflammatory conditions. Blocking the mPGES-1 enzyme is a novel strategy and expected to selectively inhibit increased PGE2production during inflammation, without affecting other prostanoids of physiological importance. PGE2is a potent pro-inflammatory prostanoid and mediator of inflammatory response, which has been implicated in many pathological conditions including inflammation, pain, atherosclerosis, and fever. Thus, GRC 27864 has the potential to be beneficial in the chronic treatment of inflammatory diseases and associated pain.
GRC 27864 is currently being developed as a drug for the potential treatment of chronic inflammatory disorders such as osteoarthritis (OA) and rheumatoid arthritis (RA).
Glenmark has entered into a Collaboration and Option Agreement with Forest Laboratories (Forest), a leading, fully integrated, specialty pharmaceutical company, for the development of novel mPGES-1 inhibitors to treat chronic inflammatory conditions, including pain. Forest has an exclusive option to obtain license rights to the program upon the completion of Phase 1 clinical trials. Under the terms of the agreement signed in FY 2013, Forest made $6 million upfront payment and also provided an additional $3 million to support the next phase of work. In September 2013 and March 2014, Glenmark received additional amounts of $2 million and $4 million, respectively, as research fee payments from Forest. Hence, the total amount received by Glenmark from Forest towards its novel mPEGS-1 inhibitors program is $15 million.
Ashok Leyland slipped 0.21%. The company said it has bagged a contract valued at approximately $50 million from the Ministry of Tourism & Hospitality Industry, Government of Zimbabwe for supplying 670 vehicles. The announcement was made after market hours on Wednesday, 2 April 2014.
Ashok Leyland said that the order is planned to be executed in the financial year 2014-15.
Separately, Ashok Leyland after market hours on Wednesday, 2 April 2014 said that Ashley Services, a wholly-owned subsidiary (WOS) of the company has merged with Ashok Leyland.
Eicher Motors rose 0.43% to Rs 6,159 after hitting record high of Rs 6,175 in intraday trade.
Tayo Rolls jumped 1.35% to Rs 45.05 after the company today, 3 April 2014, said that a Committee of the Board of Directors of the company at its meeting held on 28 March 2014 has allotted 87 lakh 8.5% non-cumulative Redeemable Preference Shares of Rs 100 to Tata Steel on preferential basis. Shares of Tata Steel were off 1.1%.
Most realty stocks edged higher. D B Realty (up 0.25%), Sobha Developers (up 2.11%), and Housing Development & Infrastructure (HDIL) (up 2.14%), gained. But, DLF fell 2.95%.
Unitech rose 1.81%. Unitech today, 3 April 2014, said that Unitech Corporate Parks Plc (UCP) has announced that it has received an approach from a third party expressing interest in potential acquisition of its wholly owned subsidiary Candor Investment and that it is currently in discussions regarding a possible sale of this subsidiary. Unitech also said that along with the approach to UCP, the Unitech Group has also been approached by a third party in relation to a strategic alliance for carrying out the remaining development of the IT SEZs/Parks currently under development along with the potential acquisition of its stake in certain IT SEZs/Parks.
Aviation stocks were mixed after Wednesday's sharp rally triggered by state-run oil marketing companies on Tuesday, 1 April 2014, announcing reduction in the price of aviation turbine fuel. SpiceJet gained 2.26%. Jet Airways (India) fell 0.79%. The state-run oil marketing companies on Tuesday, 1 April 2014, announced reduction in the price of aviation turbine fuel (ATF), reflecting global trends. ATF price at Delhi was cut by Rs 3,025.34 per kl, or 4%, to Rs 71,800.21 per kl. In Mumbai, jet fuel costs Rs 74,105.16 per kl as against Rs 77,322.6 per kl previously. Rates at different airports vary because of difference in local Sales Tax or VAT.
Jet fuel constitutes over 40% of an airline's operating costs and the price cut will reduce the fuel cost of the cash-strapped carriers.
Siti Cable Network advanced 4.3% after the company said the promoters have invested additional Rs 243 crore in the business to support the company's aggressive growth plans. The announcement was made before market hours today, 3 April 2014.
Siti Cable Network (Siti Cable) said it has achieved the landmark of 4 million digital customers as on 31 March 2014. Encouraged by the significant improvement in the performance in FY 2013-14 & to support the aggressive growth plan to grow subscriber base to 10 million in FY 2014-15, the promoters have invested additional Rs 243 crore in the business. As per the approval received from Foreign Investment Promotion Board (FIPB) in March 2013 to raise Rs 324 crore from promoter entities, the company has already received first tranche Rs 81 crore in March 2013 and this is balance tranche fund of Rs 243 crore. With this total promoter shareholding rises to 72.82%. The funds will be utilized primarily for Business expansion and to partially reduce debt, the company said.
Commenting on this development, Mr. V D Wadhwa, CEO of SITI Cable said, "For the wider digitization roll out, the company needs to invest in upgrading its digital infrastructure further and enter into newer strategic markets. We plan to seed over 6 million set-top-boxes in phase-3&4 markets through organic and in organic growth. We believe that we are well poised to benefit from the ongoing digitization implementation and ready to penetrate the market at a faster rate".
Separately, Siti Cable Network after market hours on Wednesday, 2 April 2014 said that as per the terms of 16.20 crore warrants issued by the company on 19 March 2013 on preferential basis, the Allotment Committee of the Board of Directors of the company at its meeting held on Wednesday, 2 April 2014 has upon receipt of balance 75% consideration aggregating to Rs 140.25 crore approved further allotment of 9.35 crore equity shares upon conversion of such remaining warrants at an issue price of Rs 20 per share. Out of 9.35 crore equity shares, 5.77 crore shares were allotted to Essel Media Ventures and 3.57 crore shares were allotted to Essel International.
On the political front, the Bharatiya Janata Party (BJP) today, 3 April 2014, said that the party will release its poll manifesto on 7 April 2014, the day the 9-phase Lok Sabha election begins. The party today, 3 April 2014, issued its manifesto for the North East region, wherein it stated that it will develop the area as a BPO hub if voted to power. The BJP has already released a Delhi-specific manifesto wherein it has made an array of promises like granting full statehood, reducing power tariff by 30% and controlling price rise within one month if BJP is voted to power. The party, which had lost all the seats in the national capital to Congress in 2009 Lok Sabha polls, said it will set up a helpline for the national capital to receive complaints of corruption. It also promised to bring police, DDA and other land-owning agencies under one roof to streamline governance in the national capital.
In the foreign exchange market, the rupee edged lower against the dollar on speculation the central bank will slow gains after it strengthened beyond 60 per dollar in late March 2014 for the first time since July 2013. The partially convertible rupee was hovering at 60.2050, compared with its close of 59.90/91 on Wednesday, 2 April 2014.
Indian government bond prices dropped as demand for existing securities slowed before a debt auction tomorrow, 4 April 2014. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 9.0051%, higher than its close of 8.9627% on Wednesday, 2 April 2014. Bond yield and bond prices move in opposite direction.
Reserve Bank of India Governor Raghuram Rajan said in a newspaper interview published today, 3 April 2014, that the Indian rupee at 55 to the dollar would be too strong. His comments came after a sharp surge in rupee against the dollar over the past few days. "And today I would say that if we were at 55 (against the dollar), it would be too strong. In the summer of last year, I said 70 (against the dollar) would be too weak," Rajan said in the interview. On Wednesday, 2 April 2014, Rajan had said in an interview to TV channel that the rupee strengthening to 45 or 50 per dollar could hit exports and added saying the RBI was fine with a "certain amount of leeway" in the currency.
Business activity in the Indian private sector fell in March, following a fractional increase in the previous month. Adjusted for seasonal influences, the HSBC India Composite Output Index declined from 50.3 in February to 48.9 in March. Production at manufacturers rose at a weaker rate, whereas service sector output dropped again.
The headline HSBC Services Business Activity Index adjusted for seasonal factors fell from 48.8 in February to 47.5 in March. Registering below the 50 no-change level for the ninth successive month, the latest reading pointed to a moderate drop in activity that was the most pronounced since last December, Markit Economics said today, 3 April 2014. Anecdotal evidence highlighted falling new orders and a difficult economic climate. Sector data signalled lower new business in three of the six categories, namely Financial Intermediation, Renting & Business Activities and Transport & Storage.
New business received by Indian services companies decreased for the ninth month running in March. As was the case for output, the rate of contraction was the quickest in three months. Panellists commented that weaker client demand, partly linked to the forthcoming elections, led to the latest drop in new work intakes, Markit Economics said. New orders placed at manufacturing companies rose at a softer rate. Concurrently, incoming new work in the private sector as a whole decreased, although slightly.
Backlogs of work in the Indian private sector were reported to have increased during March, with both manufacturing and services companies signalling expansion. Service providers linked the latest accumulation in outstanding business to cashflow difficulties and delayed payments from clients, while manufacturers commented onraw material shortages.
March data signalled employment growth in the Indian service sector, but the rate of increase was only slight. Where job creation was reported, this was attributed to forecasts of higher levels of new work in coming months. Payroll numbers in the private sector as a whole rose, although slightly and at a broadly unchanged pace from February.
Inflationary pressures in the Indian private sector softened during March, with both input costs and output prices rising at weaker rates. Additionally, input cost and output price inflation were weak in the context of historical data. Softer increases for charges and costs were registered at both manufacturers and service providers.
Indian service providers were optimistic in March that activity would rise over the next 12 months. Growth of new business, supported by improved economic conditions and new marketing initiatives, is expected to drive the expansion in activity. Confidence strengthened in the latest month and was at its highest since last July.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "Following some stabilization in recent months, service sector activity weakened again in March led by softer domestic demand. Meanwhile, inflation pressures eased. Looking ahead, growth is expected to remain subdued in coming months, but pick up gradually during the second half of 2014. This, however, assumes that the election outcome provides the elected government with a workable mandate".
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on Tuesday, 1 April 2014.
The next major trigger for the stock market is Q4 March 2014 and year ended 31 March 2014 (FY 2014) corporate earnings. Investors and analysts will closely watch the management commentary that would accompany the results to see if there is any revision in their future earnings forecast of the company for the year ending 31 March 2015 (FY 2015) and/or for the year ending 31 March 2016 (FY 2016). Indian companies will start reporting their Q4 and full year results from mid-April 2014. The result season will conclude in end-May 2014.
A major near term trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will take place on 16 May 2014. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31. Along with the Lok Sabha election, Andhra Pradesh (AP), including the regions comprising Telangana, Odisha and Sikkim will go to polls to elect new assemblies. AP, Odisha and Sikkim assemblies come to end on June 2, June 7 and May 7 respectively.
European stocks were slightly lower on Thursday, 3 April 2014, before European Central Bank's (ECB) rate decision. Key benchmark indices in UK and France fell 0.05% to 0.07%. In Germany, the DAX index was up 0.11%.
Euro-area services output remained close to the highest level since 2011 in March, signaling that the economic recovery in the 18-nation euro area is on track. An index based on a survey of purchasing managers slipped to 52.2 from 52.6 in February, London-based Markit Economics said in a statement today.
UK services growth unexpectedly slowed in March and measures of new business and hiring by companies declined. A Purchasing Managers' Index declined to 57.6 from 58.2 in February, Markit Economics said in London today.
A policy meeting of the Governing Council of the European Central Bank (ECB) will be held today, 3 April 2014, in Frankfurt to decide euro zone interest rates. The ECB will probably leave its benchmark interest rate unchanged at a record low 0.25% after today's monetary policy review.
Asian stocks edged higher on Thursday, 3 April 2014, after data showed US companies added workers and China outlined economic stimulus plans. Key benchmark indices in Hong Kong, Indonesia, Japan and Singapore were up 0.18% to 0.85%. Key benchmark indices in China, South Korea and Taiwan were off 0.18% to 0.74%.
China yesterday, 2 April 2014, outlined a package of measures including railway spending and tax relief to support the economy and create jobs after a slowdown endangered Premier Li Keqiang's target of 7.5% growth this year.
Growth in China's services sector slowed slightly in March, data showed on Thursday, but it is still a bright spot after a string of recent weakening indicators that reinforced fears of an economic slowdown. The official services Purchasing Managers' Index (PMI) released by the National Bureau of Statistics dipped to 54.5 from February's 55, but remained well above the 50 level that is the dividing line between expansion and contraction.
The HSBC China services Purchasing Managers' Index rose to 51.9 in March from 51 in February, HSBC Holdings PLC said on Thursday. A reading above 50 indicates on-month expansion and a reading below that indicates contraction. Despite the stronger reading for services, weakness in the Manufacturing PMI suggests the economy is weakening overall, HSBC chief economist for China Qu Hongbin said in a statement.
Trading in US index futures indicated that the Dow could advance 25 points at the opening bell today, 3 April 2014. The US stock market ended a choppy session moderately higher on Wednesday, 2 April 2014, with the S&P 500 closing at a record, as data showing companies added to payrolls last month fueled optimism on growth in the economy.
Private-sector-employment gains picked up in March, with employers adding the most jobs in three months, and quicker hiring may be ahead, Automatic Data Processing Inc. reported Wednesday. ADP said private-sector employers added 191,000 jobs last month, up from 178,000 in February. A prior estimate pegged February's increase at 139,000. Separately, orders for goods produced in US factories rose 1.6% in February, the US Commerce Department said Wednesday. Orders for durable goods--products meant to last at least three years--rose 2.2% in February. Orders for nondurable goods increased 1%.
The influential US non-farms payroll data for March 2014 will be released tomorrow, 4 April 2014.
Two Federal Reserve officials speaking publicly on Wednesday offered slightly different views about the timing of the first rate hike. St. Louis Fed President James Bullard said that he expects the first rate hike to come in the first quarter of 2015, though he conceded that he's ahead of most of his colleagues. Atlanta Fed President Dennis Lockhart said that the first rate hike is not likely to be warranted until at least the last half of next year.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
Brazil's central bank on Wednesday, 2 April 2014, raised interest rates for the ninth straight time, prolonging one of the world's longest-running monetary tightening cycles after a surge in food prices stoked already high inflation in an election year. The unanimous decision by the central bank's monetary policy committee raised its benchmark Selic rate by 25 basis points to 11%, its highest level in over two years. Policy makers in their statement removed language used in previous statements that had signaled the probability of additional rate increases.