Sensex tanks 363 points on renewed selling pressure

Hit by a string of negative developments, the domestic markets came under renewed selling pressure with the financials and interest rate sensitive sectors succumbing to heavy selling pressure.

What weighed with the global investors appears to be the possible shutdown of the US Government because of the showdown between the Conservatives and Democrats over Obamacare.

With just about a week remaining to find an amicable solution, fears of government shutdown led to a sharp decline in the US markets on Friday and the impact is being felt among the Asian markets, including India.

The domestic market, apart from the US developments, also seems to have been hit by the growing concerns over interest rates remaining high, and as the market expiry is due this week.

What added to market nervousness further was the report by many brokerages that RBI may tighten the interest rates further with a view to tame the inflation.

The BSE Sensex closed at 19,900.96 points, down 1.79 per cent or 362.75 points from Friday's close. The Nifty index was down 2.04 per cent or 122.35 points at 5,889.75.

Banking and realty stocks fell the most by 4.41 per cent and 4.33 per cent, respectively followed by capital goods 3.28 per cent and PSU 2.56 per cent.

On the other hand, consumer durables, IT and TECk stocks remained investors' favourite and were up 2.36 per cent, 0.91 per cent and 0.43 per cent, respectively.

Sesa Goa, Hindalco, Wipro, Coal India and Dr Reddy's were the top five Sensex gainers, while the top five losers were SBI, ONGC, ICICI Bank, Maruti and L&T

'Brace for a further fall'

A HDFC Securities report cautioned that markets must brace for a further fall. The report said: "The markets have done an about turn. Brace for a further fall. The markets were hoping for a rate cut and they got a repo rate hike. The market’s swoon on Friday only partially discounts the development. Thursday’s post Fed rally has authored an expanding triangle in the Sensex. Expanding triangles have bearish connotations."

The report also drew attention to the fact that many of the US Fed's Open Market Committee members are expected to talk this week and this may trigger more confusion.

Support for Nifty

The report added that if the support of 5,798 breaks, the Nifty could retrace its steps to 5,688 and 5,552. It said that the attention of the markets is going to come back to FMCG and cement, but there should be no hurry.

Repo rate hike

While agreeing with the RBI decision to hike the repo rate, the report said that considering the increase in repo and reduction in marginal standing facility, banks are better off post this policy than what they were post the July intervention of RBI.

Hedging currency exposures

But high rates are here to stay and urged corporates to get used to it. It also drew attention to the need for hedging currency exposures by Indian corporates. Now that the rupee has come off the lows of 68.80, they should at least hedge now, the report said.

European stocks were unchanged as investors weighed the Germany election results.

Asian stocks were down as investors weighed the Fed stimulus outlook after a Federal Reserve policy maker said that a small taper may occur next month.

The negative sentiment was despite upbeat manufacturing data from China. Global banking giant HSBC today said its preliminary purchasing managers’ index for the manufacturing sector in China hit 51.2 in September, the highest since March when the index stood at 51.6.

The upbeat Chinese manufacturing data showed a promising pick-up in export orders, another sign of stabilisation in the world's second biggest economy.

SMC Global ties with Saxo Bank to offer online intn'l trading

SMC GLOBAL Securities will offer Saxo Bank's online trading platform to its clients in India. Saxo Bank A/S, which is a multi-asset online investment bank, provides access to equities, ETFs and bonds spanning 33 stock exchanges across USA, Europe, Asia, South America and Australia.

Headquartered in Denmark, Saxo Bank is an European Union-licensed bank with presence in 25 countries and a client base spanning 180 countries. It offers trading platforms to banks and brokerage companies licensed to hold client funds.

Introducing brokers of Saxo Bank are allowed to offer the co-branded platforms under their own brand, which would be serviced by Saxo Bank.

Subhash C Aggarwal, Chairman and Managing Director of SMC Group, said, “With the growing appetite of Indian investors for overseas investing, we are introducing international trading platforms by Saxo Bank which aims to provide the opportunity for the investor to truly diversify their portfolio across geographies, sectors, exchanges and products.”

IT stocks hold themselves in a weak market

Buffeted by a string of negative developments, the Indian markets came under renewed selling pressure with the financials and interest rate sensitive sectors bearing the brunt of selling.

It was however the IT sector that provided some relief with the major IT stocks posting gains and the CNX IT index staying firm with a gain of about 114 points.

What weighed with the global investors appears to be the possible shutdown of the US Government because of the showdown between the Conservatives and Democrats over Obamacare.

With just about a week remaining to find an amicable solution, fears of government shutdown led to a sharp decline in the US markets on Friday and the impact is being felt among the Asian markets that are open today, including India.

The Indian markets, apart from the US developments, also seem to have been hit by the growing concerns over interest rates remaining high, and as the market expiry is due this week.

Though the Nifty itself was down by about 110 points, the IT frontliners remained firm, providing some stability to an otherwise weak market with stocks such as HCL Tech, TCS and Infosys making gains.

HCL Tech gained Rs 28.40 to trade at Rs 1,090.20. Infosys was up by Rs 29.20 at Rs 3,024.35 and TCS jumped by Rs 16.45 at Rs 1,966.75. Hero MotoCorp was a major non-IT gainer, up by Rs 18.25 at Rs 1,999.90.

Financials and auto stocks were among the major losers. M&M shed Rs 15.70 to trade at Rs 858.50, Tata Motors was down by Rs 3.95 at Rs 334.40 and Maruti lost Rs 56.05 at Rs 1411.20.

Bank stocks were also badly hit. HDFC Bank was down by Rs 21.70 at Rs 637.35, ICICI Bank shed Rs 40.25 at Rs 947, SBI lost Rs 86.55 to trade at Rs 1,661 and Axis Bank lost Rs 56.25 to trade at Rs 1,046.10 and Kotak Mahindra Bank was down to Rs 717.55, a loss of Rs 30.65.

What added to market nervousness further was the report by many brokerages that the RBI may tighten the interest rates further to rein in inflation.

Tata Power signs MoU with EESL for energy conservation

Tata Power, India's largest integrated power utility, has signed an operating Memorandum of Understanding (MOU) with EESL (Energy Efficiency Services), a joint venture of Public Sector Units under the Ministry of Power, to carry out collaborative activities and partnerships in the field of Energy Efficiency and Demand Side Management (DSM). The MoU commenced from August 26, 2013 and will remain in force till August 25, 2016.

The MOU provides overarching framework and strategy for collaborative activities and partnership for energy efficiency and conservation. This initiative is to implement energy efficiency projects for large Heating, Ventilation and Air-conditioning (HVAC) consumers and also to promote the replacement of R22 based chillers with new environment friendly and energy efficient chillers.

Tata Power is India's largest integrated power company with a significant international presence. The Company has an installed generation capacity of 8521 MW in India and a presence in all the segments of the power sector viz. Generation (thermal, hydro, solar and wind), Transmission, Distribution and Trading.

TCS trades with traction on the bourses

Tata Consultancy Services is currently trading at Rs. 1967.00, up by 14.15 points or 0.72% from its previous closing of Rs. 1952.85 on the BSE.

The scrip opened at Rs. 1945.00 and has touched a high and low of Rs. 1978.00 and Rs. 1941.05 respectively. So far 41228 shares were traded on the counter.

The BSE group 'A' stock of face value Rs. 1 has touched a 52 week high of Rs. 2075.85 on 04-Sep-2013 and a 52 week low of Rs. 1197.60 on 18-Dec-2012.

Last one week high and low of the scrip stood at Rs. 1988.45 and Rs. 1895.10 respectively. The current market cap of the company is Rs. 386110.77 crore.

The promoters holding in the company stood at 73.96% while Institutions and Non-Institutions held 21.57% and 4.47% respectively.

Tata Consultancy Services (TCS), a leading IT services, consulting, and business solutions organisation, has been recognised with the FY13 Certified Implementation Specialist Leader award by Oracle PartnerNetwork for its commitment to customer enablement by achieving Oracle product certifications. The award signifies TCS’s commitment to implementing Oracle solutions on a large scale and recognises TCS for certifying the largest number of new implementation specialists, more than 500, in Oracle’s high-value growth products during fiscal year 2013 (June 1, 2012 - May 31, 2013).

TCS has a long-standing relationship with Oracle, dating back to 1987. Today, the company is a Diamond level member of Oracle PartnerNetwork. With more than 15,000 Oracle-certified specialists across a variety of different product and speciality areas, TCS’s specialists are equipped with the tools they need to develop and implement end-to-end solutions (such as Oracle on Oracle) for their customers. These trained specialists are supported by TCS’s Centers of Excellence - 11 dedicated to Oracle technologies alone - which serve joint TCS Oracle customers in Asia Pacific, Europe, South Africa, the Middle East and North America.

Tata Consultancy Services is an IT services, consulting and business solutions organisation that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPO, infrastructure, engineering and assurance services.

Sensex plunges 275 points; Bank, realty stocks major losers

Indian equities were trading weak carrying over the negative sentiment from the previous trading session amid weak Asian cues.

The Sensex had dropped 383 points on Friday as the markets gave a thumbs down to Governor Raghuram Rajan's first credit policy announcement.

At 11.40 am, the BSE Sensex was trading at 19,989.06 points, down 1.36 per cent or 274.65 points from Friday's close. The Nifty index was down 1.47 per cent or 88.65 points at 5,923.45.

Banking and realty stocks succumbed to heavy selling pressure and were down 3.75 per cent and 2.88 per cent, respectively followed by capital goods 2.11 per cent and PSU 1.72 per cent.

On the other hand, IT, consumer durables and TECk stocks capped the Sensex losses and were up 1.43 per cent, 1.39 per cent and 0.79 per cent, respectively.

Wipro, Hero MotoCorp, Sesa Goa, Infosys and Cipla were the top five Sensex gainers, while the top five losers were SBI, ICICI Bank, HDFC, Bharti Airtel and Maruti.

'Brace for a further fall'

A HDFC Securities report cautioned that markets must brace for a further fall. The report said: "The markets have done an about turn. Brace for a further fall. The markets were hoping for a rate cut and they got a repo rate hike. The market’s swoon on Friday only partially discounts the development. Thursday’s post Fed rally has authored an expanding triangle in the Sensex. Expanding triangles have bearish connotations."

The report also drew attention to the fact that many of the US Fed's Open Market Committee members are expected to talk this week and this may trigger more confusion.

Support for Nifty

The report added that if the support of 5,798 breaks, the Nifty could retrace its steps to 5,688 and 5,552. It said that the attention of the markets is going to come back to FMCG and cement, but there should be no hurry.

Repo rate hike

While agreeing with the RBI decision to hike the repo rate, the report said that considering the increase in repo and reduction in marginal standing facility, banks are better off post this policy than what they were post the July intervention of RBI.

Hedging currency exposures

But high rates are here to stay and urged corporates to get used to it. It also drew attention to the need for hedging currency exposures by Indian corporates. Now that the rupee has come off the lows of 68.80, they should at least hedge now, the report said.

Asian stocks were trading weak as investors stated weighing down the Fed stimulus outlook after a Federal Reserve policy maker said that a small taper may occur next month.

Japan's Nikkei was down 23.76 points or 0.16 per cent at 14,742.40, Hong Kong's Hang Seng shed 100.64 points or 0.43 per cent to 23,401.90 and Australia's S&P/ASX 200 was down 24.19 points or 0.46 per cent at 5,252.50.

The negative sentiment was despite upbeat manufacturing data from China. Global banking giant HSBC today said its preliminary purchasing managers’ index for the manufacturing sector in China hit 51.2 in September, the highest since March when the index stood at 51.6.

The upbeat Chinese manufacturing data showed a promising pick-up in export orders, another sign of stabilisation in the world's second biggest economy.

The Dow Jones industrial average had ended with a loss of 1.2 per cent, while the S&P 500 Index had eased 0.7 per cent on Friday.

Pawan Goenka promoted as M&M Executive Director

Mahindra & Mahindra today said that its board has promoted Pawan Goenka as Executive Director of the company for a period of five years with effect from today.

“He will now be designated Executive Director and President (Automotive and Farm Equipment sectors),” Mahindra & Mahindra said in a filing to the BSE.

Commenting on the development, Mahindra Group Chairman Anand Mahindra said: “Pawan has played an integral role in transforming the group’s automotive product development capabilities, and has provided growth and strategic direction to both automotive and tractor businesses. I am confident he will add tremendous value to the board by providing fresh insights and invaluable guidance on key issues facing the company.”

Before this, Goenka was President of Automotive and Farm Equipment sectors, a position he held since April 2010.

“I am truly honoured and delighted to join the Mahindra board... I look forward to the future with a greater sense of responsibility, and will strive to contribute my best to meet the long-term aspirations of all stakeholders,” Executive Director and President (Automotive and Farm Equipment sectors) Pawan Goenka said.

Goenka has been responsible for the development of several new products, including the Scorpio SUV, the company said.

Infosys trades higher on the BSE

Infosys is currently trading at Rs. 3020.00, up by 24.45 points or 0.82% from its previous closing of Rs. 2995.55 on the BSE.

The scrip opened at Rs. 2995.55 and has touched a high and low of Rs. 3042.00 and Rs. 2995.55 respectively. So far 15,000 shares were traded on the counter.

The BSE group 'A' stock of face value Rs. 5 has touched a 52 week high of Rs. 3172.70 on 11-Sep-2013 and a 52 week low of Rs. 2190.00 on 29-Apr-2013.

Last one week high and low of the scrip stood at Rs. 3049.00 and Rs. 2980.00 respectively. The current market cap of the company is Rs. 1, 73,419 crore.

The promoters holding in the company stood at 16.04% while Institutions and Non-Institutions held 57.83% and 13.59% respectively.

Infosys has launched Finacle 11E, an advanced universal banking solution that simplifies banking transformation. The solution’s componentized approach helps banks of all sizes to rapidly modernize their operations, in a phased manner while minimizing risk. Its enterprise-class components are expected to enhance the efficiency of a bank's operations, while improving customer experience across all channels.

Finacle 11E is the latest release of the award-winning Finacle universal banking solution. It builds on Finacle’s success of delivering powerful benefits to global banks, including an annual rate of return of over 55% on core banking transformation investments. It also facilitates the launch of new products and services faster. Finacle clients have experienced an average improvement of 33 per cent in their time to market.

Infosys is a global leader in business consulting and technology solutions. As a proven partner focused on building tomorrow’s enterprise, Infosys enables clients in more than 30 countries to outperform the competition and stay ahead of the innovation curve.

Apollo Hospitals to raise $400 million via stake sale

In a bid to pare debt and build new hospitals, Apollo Hospitals is reportedly planning to mop-up $400 million through sale of around 51% to 75% stake in a business trust to overseas investors through listing on the Singapore Stock Exchange.

At present, the Apollo Hospitals group owns over 8,420 beds across 51 hospitals in India and overseas, 92 primary care and diagnostic clinics, 100 Telemedicine units across 10 countries.

Apollo Hospitals, is the leading private sector healthcare provider in Asia and owns and manages a network of speciality hospitals and clinics, a chain of Pharmacy retail outlets across the country, and provides Consultancy Services for commissioning and managing the Speciality Hospitals.

IIFL NCD to close today

The issue has so far garnered Rs 835 cr against total size of Rs 1,050 cr

India Infoline Finance (IIFL) has said it will close its Rs 1,050 crore-non-convertible debenture (NCD)  offering today, much ahead of its scheduled closing date of October 4.

The IIFL NCD, which had opened for subscription on September 17, has so far mopped up around Rs 835 crore, stock exchanges data show.

The company needs a little over Rs 200 crore on the last day to ensure that the issue gets fully covered. The aggregate issue size is Rs 1,050 crore, of which half is the green shoe option.

Sources said the decision to close the issue prematurely was taken following RBI’s move to hike interest rates.

The central bank on Friday raised the repo rate by 25 basis points, which saw yields on the 10-year benchmark government security harden by over 40 basis points. Barring the short-term paper, yields across the board have hardened on concerns of further rate increases to calm inflation.

“The interest rate outlook has turned bearish, which could have impacted the incremental subscription for the issue. Also, as yields harden there was also a risk of few investors withdrawing their applications,” said a source.

If the interest rates increase further the IIFL NCDs could list at a discount to their issue price, resulting into notional losses for investors.

The IIFL offering, however, has seen strong response from retail investors who were attracted towards the monthly payment feature. Bulk of subscriptions for the NCD has opted for the monthly interest payment option, where the effective yield works out to 12.68% as against 12% for the annual interest payment option.

Foreign direct investment in services sector declines 36.5 percent during April-July, 2013

Foreign direct investment (FDI) into Indian services sector declined by 36.5 percent to $1.02 billion during the April-July, 2013 as against $1.64 billion received in same period last year. In FY13, foreign investment in services fell by 7.29 percent to $4.83 billion from $5.21 billion in FY12.

The services sector, which includes banking, insurance, outsourcing, courier and technology testing represent around 60 percent share in Indian GDP. The declined FDI in the sector was mainly due to the factors like lack of financial reforms, restrictions on outsourcing to India by developed economies, inconsistencies in policies and political uncertainties, impacting sentiments of foreign investors. However, country’s overall FDI has grown by 20 percent to $7.05 billion during the April-July, 2013 from $5.90 in the corresponding period of last year.

Meanwhile, the government has taken several policy decisions to attract foreign investments including allowing FDI in multi-brand retail, telecoms and civil aviation sectors. Presently, the government is also considering raising the FDI cap in the insurance sector to 49 per cent from 26 per cent. Meanwhile, India would require around $1 trillion in the 12th five year plan (2012-2017), to overhaul its infrastructure sector such as ports, airports and highways to boost growth. Further, a rise in FDI will help support the rupee, which recently depreciated to record low of over 68.50 against the US dollar.  

India, China SMEs to explore greater business ties

Both countries have agreed to scale up two-way trade to $100 billion by 2015

India and Chinawill identify greater business opportunities in the small and medium enterprises (SMEs) segment across wide range of sectors from agricultural products to glassware and chemicals.

In a symposium organized by the Confederation of Indian Industry (CII) today several Chinese companies will be having business-to-business meetings with Indian SMEs.

Some of the Chinese companies taking part in the meeting are – Sinochem Group, Sinosteel Raw Materials Company Ltd, China Salt Import and Export Co Ltd, China National Township Enterprises Corporation, Chinatex Corporation and Shandong Hanbang Household Glassware Co Ltd among others.

The symposium will be addressed by Jia Guoyong, vice director general, Trade Development Bureau of China, who is leading 50-member business delegation, and Wang Hejun, economic and commercial counsellor, Embassy of China.

Even as India grapples to narrow the increasing trade imbalance with China, both sides have agreed to scale up the two-way trade to $100 billion by 2015 from $67.82 billion in 2012-13.

Trade between India and China has witnessed exponential growth during the last few years. Bilateral trade has gone up from $2.09 billion in 2001-02 to $75.59 billion in 2011-12 and then coming down to $67.83 billion during the year 2012-13. Simultaneously, India’s trade deficit increased from $1.08 billion in 2001-02 to $40.77 billion in 2012-13, according to data by ministry of commerce and industry.

In his visit to India in May this year, Chinese Premiere Li Keqiang had urged Indian leaders to explore the Chinese market so as to increase investments there with competitive products. He had also urged Chinese companies to identify sectors where China can bring in more investments into India.

China ranks 31st among countries contributing FDI to India. FDI inflows from China into India currently stands at $0.575 billion while that from India to China reached $0.898 billion, according to official data.

Some of the major Chinese companies present here are Huawei, ZTE, Haier, Sino Steel, Lenovo, Beijing
Automotive Industrial Corporation, Xindia Steel and SANY among others.

Year	2006-2007	2007-2008	2008-2009	2009-2010	2010-2011	2011-2012	2012-2013
India's export to China	8.32	10.87	9.35	11.61	15.52	18.11	13.52
India's imports from China	17.47	27.14	32.49	30.82	43.47	57.51	54.30
India's total trade with China	25.79	38.01	41.84	42.43	58.99	73.90	67.82
India's Trade Balance with China	9.15	16.27	23.14	19.21	27.95	39.40	40.78

Values in $ billion

Source: Ministry of Commerce and Industry

JSPL expects to get approval from Union cabinet for CTL project in Odisha

Jindal Steel and Power (JSPL) is expecting to get approval from Union cabinet for its Rs 77,450 crore Coal-to-Liquid (CTL) project in Odisha. The mega venture has been suffering on account of delays in grant of Prospecting License (PL) for an attached coal block -- Ramchandi Promotional -- and forest clearance from the state government. In this regard, the company has submitted the issues pending for resolution before the Cabinet Committee on Investment (CCI).

The project, which would convert coal into petroleum products like diesel and naphtha, has been hailed as first-of-its-kind as it will reduce the country’s import dependence for crude.

Ramchandi Promotional block, with estimated reserves of 1,500 million tonne (MT), was allocated to JSPL in 2009 and production from the block is to commence in November 2014.

JSPL is a part of Jindal Group and is a leading player in Steel, Power, Mining, Oil & Gas and Infrastructure. The company produces economical and efficient steel and power through backward integration from its own captive coal and iron-ore mines and passes on the benefits to its customers.

Power Ministry proposes to pool domestic, imported natural gas prices

In a move to help gas-starved power plants, power ministry has moved a draft note to Cabinet to seek approval for pooling imported liquefied natural gas (LNG) with the fuel available from the KG-D6 block after meeting the requirements of fertiliser units. At present, 7,800 MW of gas-based power generation is stuck due to scarcity of natural gas. Under the gas-pooling mechanism, around 3,000 MW capacity power plants will get gas in the financial year 2014-15 and the electricity produced from these plants will be sold at a tariff of Rs 7 per unit. Meanwhile, the remaining 4,800 MW capacity plants will be able to get natural gas in FY 2015-16.

The proposed electricity tariff by power ministry was derived after pooling the prices of imported and domestic gas and deducting government subsidy. Earlier, in June, the government had approved the pricing of all domestically produced gas at an average of international hub rates and cost of imported LNG. Such averaging pricing will raise the effective gas price to $11.43 per million British thermal unit (mmBtu) from $4.2 per mmBtu, leading to cost of electricity generation of Rs 10.47 per unit. Meanwhile, the ministry had already stated that consumers cannot absorb such a high cost of electricity and so the government should subsidise any cost over and above Rs 7 per unit. The power ministry proposal will be finalised once the government agrees to provide the subsidy.

India’s total installed power generation capacity is 225,793 MW, of which 18,714 MW or nearly 8 percent, is gas-based. At present, power plants in the country get just 17.25 million standard cubic metres per day of gas from domestic fields as against an allocation of 71.29 mmscmd on account of declining gas supplies from Reliance Industries' eastern offshore KG-D6 fields. The Gas production at the Reliance KG-D6 field fell 53 percent to 49.2 billion cubic feet in the April-June quarter from a year earlier mainly due to geological complexity, natural decline in the fields and higher than envisaged water ingress. 

Rupee weakens by 33 paise to 62.60

 The rupee shed 33 paise to 62.60 per dollar in the opening session against the previous close of 62.27 on the back of weakness in the domestic equity market.

Last week, the domestic unit had gained significantly as the US Federal Reserve chief Ben Bernanke said it plans to continue with its $85-billion quantitative easing programme.

However, on Friday, the RBI had cut back on some of the emergency measures taken to support the rupee in the monetary policy announcement.

Monetary policy announcement

In the monetary policy announcement, RBI raised the repo rate (the rate at which banks borrow from RBI) by 25 basis points to 7.5 per cent.

However, providing a leeway to banks, the central bank cut the marginal standing facility rate to 9.5 percent and also reduced the minimum daily maintenance of the cash reserve ratio (CRR) from 99 per cent of the requirement to 95 per cent.

According to Srinivasaraghavan, Head of Treasury at Dhanlaxmi Bank, the rupee may be under pressure during the current weak due to month-end demand for dollar.

Call rates, G-Secs

Yields on the 10-year benchmark 7.16 per cent government bond, which matures in 2023, jumped to 8.61 per cent from 8.57 per cent. Prices for the 10-year bond fell to Rs 90.55 after opening at Rs 90.8.

Srinivasaraghavan said that bond yields will stay within the range of 8.65 to 8.40 per cent as there is expected to be devolvement in Monday's bond auction.

Inter-bank call money rates, the rates at which banks borrow from each other to meet their short-term funding needs, opened higher at 9.65 per cent from the previous close of 9.25 per cent.

SAIL surges on plan to build-up Bhilwara iron ore mine in Rajasthan

Steel Authority of India is currently trading at Rs 53.25, up by 1.15 points or 2.21% from its previous closing of Rs 52.10 on the BSE.

The scrip opened at Rs 52.60 and has touched a high and low of Rs 53.70 and Rs 52.25 respectively. So far 244463 shares were traded on the counter.

The BSE group 'A' stock of face value Rs 10 has touched a 52 week high of Rs 101.60 on 07-Jan-2013 and a 52 week low of Rs 37.65 on 07-Aug-2013.

Last one week high and low of the scrip stood at Rs 52.85 and Rs 47.00 respectively. The current market cap of the company is Rs 21520.04 crore.

The promoters holding in the company stood at 80.00% while Institutions and Non-Institutions held 16.54% and 3.45% respectively.

In a bid to partially meet its increased iron ore need, state-owned steel major Steel Authority of India (SAIL) is planning to build-up Bhilwara iron ore mine in Rajasthan and set up a pellet plant with 2 million tonne per annum capacity at the site. In this regard, the company will invest Rs 800 crore.

The company will start looking for required approval soon after getting the Letter of Intent (LoI) from Rajasthan government and production from the mine is likely to start in 3-4 years.

The company in general requires 1.6 tonnes of iron ore for producing every tonnes of steel and the Bhilwara mine will help the company will to partially meet its increased iron ore need. Though, the company never had iron ore problem. Last year, it had produced 21.48 MT ore to make 13.4 mt crude steel.

Sensex sheds 148 points

Indian stock markets fell over 0.7 per cent in the opening session on Monday on sustained selling by funds and retail investors despite firm Asian cues.

The 30-share BSE index Sensex was trading down by 147.88 points (0.73 per cent) at 20,115.83 and the 50-share NSE index Nifty was trading down by 48.45 points (0.81 per cent) at 5,963.65.

Asian stocks rose with the regional benchmark index trading near a four-month high on upbeat manufacturing data from China.

Global banking giant HSBC today said its preliminary purchasing managers’ index for the manufacturing sector in China hit 51.2 in September, the highest since March when the index stood at 51.6.

CSR spending may pump in Rs. 27, 000 cr a year

The new Companies Act, 2013, which proposes that 2% of profits earned by a certain class of companies must be spent on corporate social responsibility (CSR) activities,  would mean an estimated Rs. 27,000 crore will flow into grassroots development and social enterprise sectors every year, says a think-tank.

According to the Indian Institute of Corporate Affairs, of the 1.3 million companies in India, about 6,000-7,000 companies are covered under the new CSR rule as it is applicable only to companies that have a minimum net worth of Rs. 500 crore, turnover of Rs. 1,000 crore or net profit of Rs. 5 crore.

It is currently estimated that the average CSR spend currently is 1-1.25% of profits, while the Companies Act, 2013, prescribes 2%.  While the new Act does not make this kind of a CSR spending compulsory, it mandates reporting any failure in meeting this target, creating social pressure on companies.

While corporate affairs minister Sachin Pilot insists the new CSR rule is driven by the principles of self-regulation and self-disclosure, corporate leaders like Bajaj Group chairman Rahul Bajaj and Infosys vice-chairman Kris Gopalakrishnan have raised concerns over the government dictating terms on philanthropic initiatives of companies.

On the other hand, many including Kotak Mahindra Bank managing director Uday Kotak welcome the new rule. “There is a very fundamental change in CSR. Making it part of the law is path breaking,” Kotak said at a Confederation of Indian Industry (CII) conference on the Companies Act, 2013, early this week.

Asian shares cheered by upbeat China data

MSCI's broadest index of Asia-Pacific shares outside Japan 0.3% higher

Most Asian markets crept higher on Monday after a closely-watched measure of Chinese manufacturing hit its highest in six months and showed a promising pick up in export orders, another sign of stabilisation in the world's second biggest economy.

The news helped shake off a soft lead from Wall Street and nudged MSCI's broadest index of Asia-Pacific shares outside Japan 0.3% higher.

Shares in Shanghai gained 0.6%, Taiwan's main index was up 0.9% and South Korea firmed 0.3%. Japanese markets were closed for a holiday.

The flash HSBC Purchasing Managers' Index (PMI) for China climbed to 51.2 in September, from August's 50.1, with 10 out of 11 sub-indices up in the month. Dealers had looked for a reading of around 50.9.

New export orders jumped to a 10-month peak of 50.8, the first time in six months that exports have grown. Readings on manufacturing across Europe are due later on Monday.

The upbeat report sent the Australian dollar a quarter of a US cent higher to $0.9430. China alone takes around one-third of all Australia's exports, chiefly commodities such as iron ore.

Earlier, the euro had only the briefest of lifts from Chancellor Angela Merkel's victory in Germany's general election.

Having initially gained a quarter of a US cent to $1.3555, it quickly faded to $1.3525. Against the yen, the common currency eased to 134.18, from an early 134.56.

That left the dollar index little changed at 80.398, not far from a seven-month trough of 80.060 plumbed last week.

While Merkel won by a landslide, her conservatives appeared just short of the votes needed to rule on their own.

That left open the possibility of a "grand coalition" with the centre-left Social Democrats (SPD), who came a distant second. In the past, establishing a coalition accord has taken between four and eight weeks.

"The formation of a grand coalition could be a positive outcome for the euro zone," said Peter Dragicevich, a currency strategist at Commonwealth Bank of Australia.

"The SPD is in favour of further euro zone integration. As such, a grand coalition may be more willing to work with the ECB and euro zone governments to find a sustainable solution to the issues plaguing the euro zone periphery."

He noted one of the SPD's 2013 election policy proposals was the creation of a European debt redemption fund funded by euro zone bonds.

Second-guessing the Fed

The Dow Jones industrial average finished Friday with a loss of 1.2%, while the S&P 500 Index eased 0.7%.

Some of Friday's dip was attributed to comments from St. Louis Federal Reserve Bank President James Bullard who said that a start to winding down the stimulus program was possible in October, depending on coming economic data.

That was a surprise to most analysts who had thought there would not be enough fresh economic news by the October 29-30 meeting to swing the Fed from its dovish course.

"We do not expect the economy to look much different in the coming months and, in fact, some of the data on housing could look softer," said Michelle Girard, chief economist at RBS.

Girard thought it more likely the taper would begin in either December or March next year.

"We think the hurdle for tightening in December is somewhat high, and thus believe that the time frame for tapering has most likely been pushed back all the way to March."

If it is March, then the Fed could continue buying debt for much of 2014. That in turn would further push back the day when it might finally start raising interest rates.

Some clarity might come later on Monday since no less than three Fed officials are speaking, headlined by New York Fed President William Dudley. He is thought to be close to Chairman Ben Bernanke and to speak for the dovish majority of voting members.

Even the thought the Fed might start tapering in October jolted commodity markets, leaving gold down at $1,320.39 an ounce, from Thursday's peak of $1,374.54. Copper futures were off 1.1%.


Brent crude oil was steady at $109.22 a barrel, while US crude edged up 5 cents to $104.80.

Economy news of the day

Total tax collection in Mumbai (including corporate tax and income tax) for the June-September quarter has risen 13.5% to Rs755bn

RBI Governor raised the repo rate by 25 basis points to 7.5%. The rate on the marginal standing facility was cut 75 basis points to 9.5%. The minimum daily cash reserve ratio to be maintained was cut to 95% from 99%. (ET) 

The Power Ministry is likely to give the state electricity boards of Karnataka, Jharkhand and Bihar a breather by allowing them to convert their outstanding loans, till March 2013, into bonds as part of an amendment to the discom debt restructuring package. (BS)

Total tax collection in Mumbai (including corporate tax and income tax) for the June-September quarter has risen 13.5% to Rs755bn, according to data collated by the I-T Department. (ET)


The Cabinet approved a 10% hike in dearness allowance, which will benefit about 5mn central government staff and 3mn pensioners. The hike will be applicable from July 1. 

Factory output data across the globe hold key to gold

Gold prices on spot and futures markets are likely to be under pressure on Monday after prices dropped during the weekend. Prices tumbled as fears of the US Federal Reserve pruning its $80-billion-a-month stimulus package began to grip the market again.

James Bullard, President of St Louis Fed, said the US Federal Reserve could still consider tapering the stimulus at its meeting in October.

In addition, the US Commodity Futures Trading Commission reported that hedge funds and money managers cut their bullish bets in gold futures and options market.

The world’s largest exchange-traded fund in gold, SPDR Trust, reported nearly two tonnes fall in its holding of gold to 910.19 tonnes.

Factors deciding gold’s movement

Gold’s movement could be decided on Monday on a couple of factors too. One, a slew of purchase managers’ index or factory output data is due across the globe starting from China to nations in Europe to the US. It could hold clue to how the economy has recovered or are there any signs of recovery at all.

All Asian markets’ movements were influenced on hopes that China would report some recovery.

Currency movements, particularly the rupee’s against the dollar, will have some impact as any gain in the Indian rupee will make imports of commodities such as gold, crude oil and vegetable oils cheaper.

In early Asian trade, spot gold quoted at $1,314.83 an ounce after rising to $1,326.75 an ounce and gold futures maturing in December fell to $1,314.

Spot gold, gold futures

In Mumbai on Saturday, gold for jewellery (99.5% purity) dropped to Rs 30,000 and pure gold (99.9% purity) to Rs 30,145 for 10 gm.

On MCX, gold contracts expiring in October could drop to levels of 30,000.

Crude oil

Crude oil prices are likely to trade sideways as worries over supply disruptions in West Asia have eased. Also, Brent crude is seen under pressure to drop to levels of $100 a barrel once the US cuts its stimulus programme.

Additional supplies and the emergence of shale gas as an alternative that are other factors that could cast a shadow on crude oil in the long-term.

For the time-being, the purchase managers index could hold key as any recovery in the economy can propel the complex higher.

Brent crude for delivery in November quoted at $109.07 a barrel and West Texas Intermediate crude for the same month at $104.56.

Oils and Oilseeds

The oils and oilseed complex could head south as the peak production season is set to begin in Indonesia and Malaysia for palm oil. Kharif oilseeds harvest in India will add to the pressure.

A global meet on vegetable oils in Mumbai was told during the weekend that Malaysian palm oil could find its bottom at 2,100 ringgit in the near-term, though it could drop further if crude oil slips below $100 and rains prove beneficial in South America around Christmas time.

In early trade, Chicago Board of Trade soyabean contracts maturing in November ruled flat at $13.15 a bushel. Malaysian palm oil had closed during the weekend at 2,297 ringgit or $$734 a tonne.

Grains complex

Prospects of higher production and carryover stocks could begin driving the grains complex lower. However, higher export orders are keeping wheat prices up currently.

In early trade, corn (industrial maize) December contracts gained at $4.47 a bushel, while wheat contracts for the same month ruled at $6.48 a bushel.

ING Vysya Bank: Re-rating on the cards

Improving profitability, strong asset quality and strong growth prospects are key positives. Attractive valuations offer attractive risk-reward

ING Vysya Bank (ING) has delivered robust loan growth and asset quality trends over the past six-eight quarters despite the tough macro environment. The bank’s efforts to improve productivity and prudent lending practices have boosted its credit as well as earnings quality. Analysts expect ING to deliver 20-22 per cent net profit growth over FY13-15. Its loan growth is pegged at 23-24 per cent over the same period.

The bank’s future growth will be driven by SME (33 per cent of loan book) and retail segments. It has also increased focus on high-margin products such as gold loans and loan against property, which now form about half of incremental retail disbursements.

At Friday’s closing price of Rs 499 per share, the stock trades at 1.3 times estimated adjusted book value for FY14; in-line with its historical average one-year forward price/book value ratio. Most analysts remain positive on the bank.

“ING Vysya is currently trading at 1.1 times 12-month forward book but we believe it could re-rate to 1.7 times on the back of strong fundamentals, its ability to grow faster, and improving return profile”, says Rahul Jain, Banking analyst at Goldman Sachs Research. He has a target price of Rs 640 on the scrip, implying upsides of 28 per cent from Friday’s closing price.

Increasing competition, worsening macro and execution issues which could make deposit gathering a more expensive exercise are the key risks for the bank going forward. It also has limited pricing power as far as lending to quality corporates is concerned. A rising interest rate environment could thus rub off negatively on its net interest margin (NIM).

“Going forward, while the sharp rise in short-term rates could hit NIM, it could be partially offset by the recent capital infusion of Rs 1,800 crore”, says Kaitav Shah, analyst at Anand Rathi Securities.

ING’s focus on improving efficiency has led to fall in the bank’s cost to income ratio 14.8 per cent over FY05-09 to 64.5 per cent and stood at 56.2 per cent in FY13. Going forward, analysts expect this metric to futher come down to 52 per cent levels over the next couple of years. The bank is focussing on improving its employee productivity, brand awareness and product mix. Apart from pushing cost efficiencies, these efforts will lead to a higher CASA ratio for the bank, believe analysts.

The bank management remains fairly confident of maintaining its asset quality except for some minor pressures on its mid-corporate loan book. Notably, ING has reduced its gross non-performing assets (GNPA) ratio from 3.0 per cent in FY10 to about 1.75 prevailing. Its well-diversified loan book along with strong credit appraisal and underwriting practices have led to this improvement. ING’s restructured assets too are relatively lower at 1 per cent of total advances. Going forward as well, its high provision coverage ratio can adequately take care of any asset quality shocks.

“Despite uncertainties surrounding macros, the bank’s well capitalized position coupled with high provision coverage 89 per cent and marginal exposure to stressed segments lends comfort”, says Nilesh Parikh, Banking analyst at Edelweiss Securities.