Published on March 6, 2014
India-Global Market Summary 6-3-2014 • Market surged after data released by the Reserve Bank of India showed that India's current account deficit declined sharply in Q3 December 2013. The market breadth, indicating the overall health of the market was strong. The market sentiment boosted by data showing that foreign institutional investors (FIIs) remained buyers of Indian stocks on Wednesday, 5 March 2014. Gains in Asian and European stocks also boosted sentiment on the domestic bourses. Sensex jumped 1.11% to settle at 21,513.87 and Nifty garnered 1.15% to settle at 6,601.15. Among the 30-share Sensex pack, 24 stocks rose and rest of them fell. • In the foreign exchange market, the rupee rose sharply against the dollar after data released by the Reserve Bank of India (RBI) after trading hours on Wednesday, 5 March 2014, showed that India's current account deficit declined sharply in Q3 December 2013. Indian government bond prices rose on optimism a shrinking current-account deficit will boost the rupee and prompt foreign investors to buy more local debt. • India's current account deficit (CAD) narrowed sharply to $4.2 billion or 0.9% of GDP in Q3 December 2013, from $31.9 billion or 6.5% of GDP in Q3 December 2012. CAD in Q3 December 2013 was also lower than $5.2 billion or 1.2% of GDP in Q2 September 2013. The lower CAD was primarily on account of a decline in the trade deficit as merchandise exports picked up and imports moderated, particularly gold imports, the Reserve Bank of India (RBI) said.
• • • • • • • On a BoP basis, merchandise exports rose 7.5% year-on-year to $79.8 billion in Q3 December 2013 on the back of significant growth especially in the exports of engineering goods, readymade garments, iron ore, marine products and chemicals. On the other hand, merchandise imports dropped 14.8% year-on-year at $112.9 billion in Q3 December 2013. The decline in imports in Q3 December 2013 was primarily led by a steep decline in gold imports, which amounted to $3.1 billion as compared to $17.8 billion in Q3 December 2012 and $3.9 billion in Q2 September 2013. Net services receipts improved during Q3 December 2013, essentially reflecting a decline in payments on account of services imports. Net services at $18.1 billion in Q3 December 2013 recorded a growth of 8.9% year-on-year. In the financial account, on net basis, foreign direct investment registered inflows of $6.1 billion and foreign portfolio investment recorded inflows $2.4 billion in Q3 December 2013. Within portfolio investment, the debt segment showed net outflow in Q3 which, however, was offset by higher net inflows of $6.2 billion under the category of equity. On a BoP basis, there was a net accretion of $19.1 billion to India's foreign exchange reserves in Q3 December 2013 as compared to a drawdown of $10.4 billion in the preceding quarter, the RBI said in a statement. The turnaround in export growth and decline in imports from July 2013 onwards led to a sharp improvement in the trade deficit to $116.9 billion in April-December 2013, from $150 billion in April-December 2012. Contraction in the trade deficit, coupled with a rise in net invisibles receipts, resulted in a reduction of the CAD to $31.1 billion (2.3% of GDP) in AprilDecember 2013, from $69.8 billion (5.2% of GDP) in April-December of 2012. Net inflows under the capital and financial account (excluding change in foreign exchange reserves) declined to $39.7 billion in April-December 2013, from $68.5 billion in corresponding period of 2012-13 owing to net outflows on account of portfolio investment, higher repayment of loans, and trade credit & advances. On BoP basis, foreign exchange reserves increased by $8.4 billion during April-December 2013, as compared with an accretion of $1.1 billion in April-December 2012. Business activity across emerging markets expanded in February at the slowest pace in five months, weighed down by weaker manufacturing in big developing countries such as Russia and China, a survey showed on Thursday, 6 March 2014. HSBC's composite emerging markets index of manufacturing and services purchasing managers' surveys slipped for the third month running to 51.1 in February. It stayed under the 2013 average of 51.7 and well below a long-run level of 54. But the monthly index remained above the 50 threshold which marks the difference between expansion and contraction. Based on data from purchasing managers at about 8,000 firms in 17 countries, the survey showed Chinese factory output stayed below the 50 mark. Manufacturing in Russia, India and Brazil hovered just above 50. On the domestic political front, the Election Commission on Wednesday, 5 March 2014, announced the dates for 2014 Lok Sabha elections. The polls will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will be take place on 16 May 2014.
• • • • • • • • • • • • ITC rose 0.35% to Rs 334.05. Reliance Industries (RIL) rose 2% to Rs 823. Shares of PSU OMCs rose as crude oil prices declined and as the rupee edged higher against the dollar. Gains in rupee against the dollar aided gains in shares of PSU OMCs. A firm rupee will reduce cost of crude oil imports. PSU OMCs import about 70-75% of their crude oil needs. PSU OMCs hiked the price of petrol by 60 paise and diesel by 50 paise per litre effective 1 March 2014 midnight amid rising crude oil prices and depreciation of rupee against the dollar. This price hike is exclusive of local taxes. PSU OMCs also hiked the price of jet fuel or aviation turbine fuel by 1% effective 1 March 2014. Astrazeneca Pharma India fell 7.13% after the company said its board deferred the proposed delisting of the firm's shares from the domestic stock exchanges Separately, the price of non-subsidized cooking gas (LPG), which customers buy after using up their quota of 12 subsidised cylinders, was cut by Rs 53.5 per cylinder, the second straight reduction in rates since February. Lupin announced that it has received final approval for its Doxycycline Capsules USP, 50 mg, 75 mg, and 100 mg from FDA to market a generic version of Aqua Pharmaceuticals Monodox Capsules 50 mg, 75 mg, and 100 mg. Lupin's Doxycycline Capsules 50mg, 75mg and 100mg are the AB-rated generic equivalents of Aqua Pharmaceuticals, Zee Entertainment Enterprises rose 0.68%. Zee Entertainment Enterprises said that the company has issued and allotted 20,169,423,120 6% Cumulative Redeemable Non-Convertible Preference Shares of Re 1 each fully paid as bonus to the company's equity shareholders Tech Mahindra said it has inaugurated the Texas Instruments Lab, in Bengaluru. This lab will allow the company to launch innovative solutions based on the concept of Internet of Things (IoT) in Industrial, Medical and Automotive sectors, Tech Mahindra said. ALSTOM India rose 2.92% after the company said it won a contract worth approximately Rs 679 crore from state-run Bhel to supply two supercritical boilers for a super thermal power project in Odisha. IL&FS Transportation Networks jumped 6.29% after the company said it has approved the allotment of 1,000 rated, listed, redeemable, non-convertible debentures aggregating to Rs 100 crore on a private placement basis. Thomas Cook (India) rose 2.3% after the firm said it has partnered with meet & greet service provider marhaba to ensure a swift, smooth and safe passage for Indian travelers at Dubai, Abu Dhabi and Bahrain airports Tata Power Company said that the duly empowered committee of the board of directors of the company will meet on Saturday to consider and decide upon the terms and conditions of the proposed rights issue including the rights entitlement ratio, the issue price, the issue size, record date, the timing of the rights issue and other related matters. Maruti Suzuki India said its total production declined 9.8% to 1.08 lakh units in February 2014 over February 2013.
Global news • European stocks edged higher on Thursday, 6 March 2014, as investors awaited the European Central Bank's interest-rate decision and US data on jobless claims. Asian stocks edged higher on Thursday, 6 March 2014, with shares of telecommunications companies leading gains. Trading in US index futures indicated that the Dow could advance 25 points at the opening bell on Thursday, 6 March 2014. US stocks finished a choppy trading day on Wednesday generally lower with bluechips falling the most, as investors reacted mildly to mostly disappointing economic reports. • The UK's central bank slashed interest rates to record low of 0.5% at the height of the financial crisis in 2009. • European Union leaders will consider repercussions for Russia at an emergency meeting today, 6 March 2014, on the Ukraine crisis, after Russia's foreign minister fended off a US effort to ease tensions in the Crimean peninsula. Western nations are threatening Russia with sanctions over its military intervention in Crimea while pursuing diplomacy in an effort to defuse the situation. • China's Finance Minister Lou Jiwei today, 6 March 2014, said economic growth below the government's target is acceptable, with employment, not the exact level of expansion, being key. China's Premier Li Keqiang yesterday, 5 March 2014, kept China's annual growth target unchanged at 7.5% for 2014. • US companies added 139,000 workers in February, fewer than the market estimates, a sign that employers were waiting for a pickup in demand before boosting headcount, a report from the ADP Research Institute in Roseland, New Jersey showed on Wednesday. • Separate data indicated that service industries in the US expanded in February at the slowest pace in four years, reflecting a plunge in hiring that shows the biggest part of the economy is struggling as harsher weather weighs on consumers and businesses. The Institute for Supply Management's non- manufacturing index slipped to 51.6 in February from 54 the previous month. • The Federal Reserve said the economy in most regions grew last month even as harsh winter weather impeded hiring, disrupted supply chains, and kept customers away from stores and auto dealerships. Eight of the Fed's 12 districts "reported improved levels of activity, but in most cases the increases were characterized as modest to moderate," the central bank said in its Beige Book business survey.
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