Monday, 28 October 2013

BSE Sensex falls 113 points; banks, FMCG shares drag


At 2.25 p.m., the 30-share BSE index Sensex was down 87.27 points (0.42 per cent) at 20,596.25 and the 50-share NSE index Nifty was down 39.1 points (0.64 per cent) at 6,105.75.

On the BSE, consumer durables, capital goods and oil & gas indices remained investors' favourite ahead of expiry of F&O contracts this week and were up 1.58 per cent, 0.96 per cent and 0.39 per cent, respectively.

On the other hand, FMCG index fell the most by 2.43 per cent, followed by realty 1.79 per cent, metal 1.5 per cent and bankex 1.18 per cent.

L&T, RIL, HDFC, Bajaj Auto and Maruti were the top five Sensex gainers, while the top five losers were ITC, SSLT, Tata Steel, SBI and Hindalco.

Foreign institutional investors (FIIs) bought shares worth Rs 626.99 crore last Friday as per provisional data from the stock exchanges.

Most European shares were up as investors awaited US data on industrial production and housing for signs of the health of the world’s largest economy.

Stoxx 50 was down 4.46 points or 0.15 per cent at 3,034.50, FTSE 100 was up 8.16 points or 0.12 per cent at 6,721.34 and DAX was up 5.11 points or 0.06 per cent at 8,985.74.

Asian shares were up after weaker-than-estimated US consumer confidence spurred bets that the Federal Reserve will maintain the stimulus.

In the Asian trade, Japan's Nikkei surged 307.85 points or 2.19 per cent to 14,396, Hong Kong's Hang Seng rose 131.38 points or 0.58 per cent to 22,829.70 and Australia's S&P/ASX 200 climbed 55.06 points or 1.02 per cent to 5,441.41.

The US Fed is expected to continue its $85 billion-a-month stimulus package since signs of a rebound in the economy are not clear. It will also look into the US Government shutdown early this month and how it has affected the economy

The BSE Sensex fell on Monday for a fifth consecutive session to mark its lowest close in nearly 1-1/2 weeks, as lenders and other interest rate-sensitive shares declined ahead of the central bank's monetary policy review on Tuesday.

State Bank of India Ltd fell 2.65 percent, while DLF Ltd  ended 3.33 percent lower.
The benchmark BSE Sensex fell 0.55 percent, falling for a fifth straight session after hitting a string of near-three year highs last week.
The broader Nifty lost 0.71 percent.



Govt clears 13 FDI proposals worth Rs 1,258 cr

FIPB also deferred decision on 8 FDI applications while two were rejected

Government today said it has cleared 13 FDI proposals totalling Rs 1,258 crore and referred Axis Bank's proposal for increasing foreign equity amounting to about Rs 6,266 crore for consideration of the Cabinet.

The Foreign Investment Promotion Board (FIPB), in its September 19 meeting, had also deferred decision on 8 FDI applications while two were rejected, it said.

"Based on the recommendations of Foreign Investment Promotion Board (FIPB)...Government has approved 13 Proposals of foreign direct investment amounting to Rs 1258.53 crore approximately," the Finance Ministry said.

It further said the proposal of private sector lender Axis Bank, amounting to Rs 6,265.76 crore has been recommended for consideration of Cabinet Committee on Economic Affairs as the investment involved in the application is above Rs 1,200 crore.

The bank had sought FIPB's nod to increase the foreign equity from the existing 49 per cent to 62 per cent.

Among major proposals which have been approved include that of Shantha Biotechnics (Rs 755 crore), Equitas Holdings (Rs 222.8 crore) and Stork Titanium (Rs 156 crore).

Shantha Biotechnics has been given permission to buy out the shares held by NRIs and Indian residents and to infuse fresh equity investment.

Proposals on which decision was deferred include Jubilant Aeronatics, Soma Tollways, M D Shajahan Bablu, Bangladesh, and Green Destinations Holdings, Mauritius.

The Ministry also said that decisions on five proposals have been kept in abeyance.

During the April-August period of 2013-14 fiscal, FDI inflows into the country stood at USD 8.46 billion, up 4 per cent from USD 8.16 billion in the year ago period.

Dabur India Q2 net up 23.4% at Rs 250 cr

Net sales rise 14.85% to Rs 1,749 crore

Dabur India today reported 23.40% increase in consolidated net profit at Rs 250 crore for the second quarter ended September 30, 2013-14, on account of strong performance in the FMCG segment.

The company reported net profit of Rs 202 crore in the corresponding quarter of last fiscal, 2012-13.

Dabur's Q2, 2013-14 net sales went up by 14.85% to Rs 1,749 crore, compared to Rs 1,523 crore in the year-ago period.

Dabur's consumer care business increased by 18.33% at Rs 1,495 crore, while foods business grew by 15.71% to Rs 203 crore.

"Strong demand from the hinterland following the mega initiative to double our rural distribution footprint helped Dabur India Ltd sail through a challenging business environment and moderation in consumption expenditure," the company said in a statement.

Retail business was up 17.36% at Rs 16.56 crore while other businesses declined by 51% to Rs 33.37 crore.

Dabur India CEO Sunil Duggal said: "The rising cost pressures were managed through a mix of judicious price increases and improved buying efficiencies. We are seeing demand from rural India out pacing the urban markets."

On the overall expenses front, Dabur reported 12.55% jump at Rs 1,448.56 crore in the quarter ended September 30 this year as against Rs 1,287 crore in corresponding quarter last year.

International business ended the second quarter with 25.8% growth, led by Middle East & North Africa (MENA) markets and Bangladesh.

Dabur's stock was trading at Rs 178.40 on the BSE in the afternoon trade, down 2.27%.

Liquidity key for relevance of repo rate. But will Raghuram Rajan oblige?

It is widely expected that the central bank will restore the 100 bps corridor between the repo and the MSF rate on tuesday

In the last monetary policy review on September 20,, Reserve Bank of India (RBI) governor Raghuram Rajan -- which was his first policy announcement --   promised that he will take steps to bring the money market condition to normalcy where the repo rate becomes the operational rate once again.

He showed intention to keep his words as the central bank reduced the marginal standing facility rate further in October (after cutting in September policy review)  and opened another liquidity window.

Now, it is widely expected that the central bank will restore the 100 bps corridor between the repo and the MSF rate in tomorrow's second quarter review of monetary policy.

The corridor could be restored by a few ways, but the street feels hiking repo rate by 25 bps to 7.75% and simultaneously cutting MSF rate by the same magnitude to 8.75% is the most probable outcome. The other option is to cut the MSF rate by 50 bps. The later is ruled out on the ground that headline inflation is picking up which may call for a hike in the key policy rate.

Earlier this year, on July 15, RBI unleashed an array of measures -- including hike in the MSF rate by 200 bps to 10.25 % and simultaneously capping bank borrowing from liquidity adjustment facility window. These moves were meant to make short term money dearer so that it is not used for speculative purposes which were exerting pressure on the exchange rate.

Once, these measures, along with steps to encourage inflows started showing favorable impact on the exchange rate, it was time to return to normalcy.

According to  market participants, making liquidity available to banks to key for aligning short term rates to the repo rate. Merely restoring the repo-MSF corridor will not make the repo rate -- the key policy rate operational once again.

At the same time, the street is aware that Rajan will not allow any  any sharp fall in interest rate to dilute hawkish stance on inflation.

“The restriction on LAF borrowing which is 0.5% of NDTL should continue. Instead RBI should increased the 0.25% of the NDTL borrowing under 7-14 term repo to 0.5% NDTL. When that is done the total liquidity that the banking system can get between LAF and 7-14 day repo is about Rs 80,000 crore. If liquidity deficit in the system is Rs 80,000 crore or below, then MSF ceases to be an operative rate. This will help to find a rate which is in between repo and MSF rate. The near-term short-term rates will find a level somewhere in between the repo and MSF corridor. This will also suit the current compulsions of monetary policy. This way the rate will not go to 7.5% which is too low considering the inflation. The rate will also not go to 9% because that will be too high given the growth constraints. The rate will be kept in between,” said Mohan Shenoi, president - group treasury and global markets, Kotak Mahindra Bank.

At present, banks can borrow 0.5% of their net demand and time liabilities from the LAF window as compared to no restriction of the pre-July 15 regime. The market is debating if the cap will be raised to 0.75% or 1% and few are expecting a complete removal of the ceiling.

“If RBI goes for a 1% of NDTL cap for repo borrowing, a large part of funding will be done through repo, and any requirement above that will go to MSF window. If not 1% then probably then can go for 0.75% of NDTL cap for banks. My suspicion is that RBI may go for 1% of NDTL cap because that is a reasonable signal that the exchange rate market is in control now. This will also be a signal to the financial market to go back to normal days. The decision to increase the repo rate by RBI will be based on their judgment of inflation-growth dynamics. If the cap of repo borrowing is increased from 0.50% of NDTL to either 0.75% or 1% of NDTL, then it will also help to narrow the gap between repo rate and short-term rates,” said Hitendra Dave, managing director, head of global markets, India at Hongkong and Shanghai Banking Corporation (HSBC).

Relaxo Footwears Q2 Net up 13.4%

The company had reported a net profit of Rs 10.28 crore in the July-September quarter of last fiscal

Footwear firm Relaxo Footwears Ltd today reported 13.42% increase in net profit at Rs 11.66 crore for its second quarter ended September 30.

The company had reported a net profit of Rs 10.28 crore in the July-September quarter of last fiscal.

Relaxo Footwear's net sales stood at Rs 263.35 crore during second quarter of 2013-14, up 8.71%, compared to Rs 242.23 crore in the same period last fiscal, the company said in a BSE filing.

Citing economic slowdown as the reason for decline in sales, the company said, "Due to slowdown in economic conditions, revenue growth has been hampered. Moreover, this period is always under pressure due to lean season in footwear demand."

Overall expenses during the quarter under review were at Rs 244.78 crore, an increase of 9.03%, compared to Rs 224.5 crore in the same period last year.

The company said it is working on rationalisation of non-performing retail shoppes by either closing or dislocating.

Shares of the Relaxo Footwears were trading at Rs 886 per scrip in the afternoon trade, down 2.44% from its previous close on the BSE. 

Stressed broking industry seeing a shake-up

Almost 500 stock brokers have shut shop so far this year

In 2010, Ritesh Shah (name changed), just out of a Mumbai college, decided to test his luck in the stock-broking business. The timing looked perfect: The market had rebounded after one of its most turbulent phases, as the crisis sparked by a global economic slowdown since January 2008 seemed to have ebbed.

Shah, a commerce graduate, believing that to be the best time to start a business, went about expanding operations across of the country. Now, three years later, he has decided to get out of broking operations. “Broking was just not working out. There’s no money in it,” he says.

Shah is not lone man in the club. He has the company of many who have been forced to shut stock-broking business, mainly retail, as subdued volumes and a shift in trading activity to low-margin products has made the business unviable.

On an average, three brokers have called it quits each day since the financial year that started April 1. A total of 487 brokers have shut shop in 2013-14 so far, according to the latest data available from the Securities and Exchange Board of India. The debate about consolidation in the broking business has resurfaced, with even bigger players like HSBC India announcing shutdown of their retail broking businesses. The bigger surprise was the news report that India Infoline, which runs one of the largest retail broking operations, was effecting a major scale-down of its retail operations. This highlighted the stress among players.

In response to a request for comment from Business Standard, India Infoline said it would shift focus away from retail to higher-value clients, while it declined to comment on how much retail operations might be scaled down.

“It has become a high-cost and low-margin business,” says Motilal Oswal Financial Services Chairman & Managing Director Motilal Oswal. “As a result, there is some consolidation happening in the industry. It is difficult for players, unless there’s a clearly differentiated offering in terms of good research or some other such selling point,” he said.



Declining volumes in the cash segment, coupled with increased trading in low-margin options, have been some of the key reasons for brokers’ woes. Since January 2011, the average monthly volumes in the cash segment have been Rs 13,000-13,500 crore, against Rs 19,000 crore in 2010, as retail investors, in absence of visible returns, have retreated from equities and moved to fixed deposits and real estate.

While overall volumes have been on the rise, derivative trades have accounted for an increasing proportion of the turnover. The options trading accounted for 76 per cent of the overall market volume in 2012-13. Derivatives have accounted for 93.5 per cent share of the overall volumes so far this year.

“The addressable revenue pool for brokers is on the decline, especially due to a shift towards low-yield options segment,” says India Infoline Managing Director R Venkataraman.

Among the brokers who have exited operations so far this year, 591 have been from the cash segment, according to Sebi figures (which appear with a lag). There were 104 additions in the equity derivates segment, according to the data up to August. The net number of brokers for equities is down 487. The total number of brokers has fallen below the 18,000 mark, to 17,711.

“It is not just the smaller brokers; the larger ones are also ending their operations. This clearly shows the fundamental problem that there is scant commercial gain to be made in broking,: says Alok Churiwala, vice-chairman of the BSE Brokers’ Forum. “The lay investor has not found the market attractive for the past five years. For whatever little business there is, it’s a dog-eat-dog situation, with a tremendous amount of undercutting,” he adds.

Churiwala says the decline in the number of brokers has an impact on growth of equity markets across the country.

“This is a cause for great concern, not only for the broking industry but for the nation. We have a population of 1.2 billion, but less than 20 million investors. The number of brokers should be growing,” he says.

Various analyses show the outlook appears bleak for most in the industry. Rating agency Icra estimates a decline of Rs 400-500 crore in the revenue pool for 13 prominent brokers this financial year. Its October ‘Indian Brokerage Industry’ report pegged their total revenues at Rs 8,500 crore to Rs 9,000 crore for the whole year — less than IT giant Infosys’ revenue for a single quarter.

Against this backdrop, it does not come as a surprise that most players — from Ritesh Shah to India Infoline — are looking to the financing business for revenues. Shah is also advising small companies in their attempts to raise capital — debt or equity.

SEBI looking at allowing cos to raise funds via convertible bonds

As the IPO market still remains tepid forcing companies to borrow costly funds from other sources, capital markets regulator SEBI today said it is looking at allowing them to issue convertible debentures to raise money.

“The Primary Market Advisory Committee of SEBI is currently debating an alternative route to allow corporates to issue convertibles (debentures), which after certain time must be converted into either equity or other debt instruments,” SEBI Chairman, U.K. Sinha, told reporters on the investor protection in capital markets here.

The IPO market has been going through difficult times for quite some time and there were very few IPOs that raised money in the current fiscal.

While it has been difficult for companies to raise money through IPOs, by and large, investors have also not benefited by investing in the stock markets.

Sinha pointed out that nearly two-thirds of IPOs floated during the last three years are quoting below their issue price.

At this stage SEBI has not been able to finalise the stand whether safety net should be introduced or not, he said.

The proposed ‘safety net’ mechanism for investors has generated strong opposition from various stakeholders. SEBI will consider these views thoroughly, Sinha said.

“People are saying equities are risk instruments, so, why provide safety. But our current regulations do provide for voluntary safety net,” he added.

Under the proposed safety net scheme, if the market value of the shares falls below the issue price at any time during first six months of the listing, promoters will have to buyback shares at the sale price from original allottees.

However, the buyback is proposed to be subject to a maximum of 1,000 equity shares per allottee.

SEBI, in September 2012, had floated a discussion paper on ‘safety net’ and collected feedback on it from the market.

Sebi seeks tax incentives for REITs

Sinha says will talk to I-T dept regarding the issue

Securities and Exchange Board of India (Sebi) will ask tax authorities to consider incentives for real estate investment trusts, Sebi Chairman U K Sinha said on Monday.

"For REITs to be successful, they have to be tax efficient. There's no question about it," he told reporters on the sidelines of a conference.

"We'll talk to the I-T department to make it happen," he added, referring to the income tax department. Sinha did not provide more details.

The capital markets regulator had issued draft guidelines for launching real estate investment trusts (REITs) in India earlier this month. Investors have said the success of these investments would likely depend to a large extent on the tax incentives provided.

REITs are tax-efficient listed entities that mainly invest in income producing real estate assets from which most of the earnings are distributed to their shareholders.

Bharti Infratel net profit rises 12% to Rs 277 crore

Bharti Airtel’s tower business unit Bharti Infratel today reported a 12 per cent jump in its net profit at Rs 277 crore for the quarter ended September 30, 2013, on the back of incremental gains from increased sharing of infrastructure.

The company had reported a net profit of Rs 248 crore in the corresponding period last fiscal, the company said in a statement.

Revenue of the tower firm also rose 5 per cent to Rs 2,684 crore for the reported period as compared to Rs 2,556 crore for the same period last year, it added.

“With regulatory environment in telecom sector showing signs of stabilising and data revenues witnessing strong growth, the operators have started focusing on faster roll out of 3G networks. We expect this momentum to increase in coming quarters,” Bharti Infratel Vice Chairman and MD Akhil Gupta said.

He added the company’s business model remains robust and demonstrates significant incremental financial gains from increased sharing of its infrastructure.

The total tower base of the company stood at 82,476 as on September 30, 2013, while the average sharing factor increased to 1.93 from 1.91 in the same period last year.

Markets pare gains as FMCG heavyweights slip

Weakness in FMCG majors ITC, HUL along with Sesa Sterlite and Tata Steel weigh on the indices

Markets have given-up most of its morning gains and have turned flat with a negative bias. The ones weighing on the indices were FMCG majors ITC and HUL along with Sesa Sterlite and Tata Steel.

At 1245 hrs, the Sensex was down nine points at 20,674 and the Nifty gave off 12 points to trade at 6,132.

In the broader markets, the midcap index was down 0.4% and the smallcap index dipped.2%, both underperforming the BSE benchmark index which was down 0.05%.

On the sectoral front, FMCG index was down 2% followed by Metal, Realty, Health Care, Teck, Power and PSU indices down 0.4-1.3%.

Meanwhile, Consumer Durables index edged higher by 2% along with Capital Goods and Oil & Gas indices  up 1% each.

Auto index too was up 0.4%.

Among the Sensex-30, the top gainers were L&T, RIL, HDFC, ONGC and Bajaj Auto up 1-2%.

Tata Power, ICICI Bank, Maruti Suzuki, Tata Motors, Hero MotoCorp, Gail India and Wipro up 0.2-1% were the other notable gainers.

On the losing side were ITC down 3% after reporting lower than expected revenue and net profit growth for the second quarter ended September 2013 (Q2).

Tata Steel, Sesa Sterlite, Coal India and Hindalco down 1-2% were the major losers.

Sun Pharma, Cipla, SBI, Hindustan Unilever, Dr Reddys Lab, Mahindra & Mahindra and Jindal Steel down 0.2-0.8% were some of the other Sensex stocks in red.

The market breadth was negative. 1182 stocks declined while 921 stocks advanced on the BSE.

Global Markets

Asian stocks rose on Monday with Australia scaling a five-year peak after a record high finish on Wall Street helped offset worries about tighter credit in China, while investors gave the safe-haven yen a wide berth.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8%, recovering a chunk of last week's 1.1% loss -- the biggest in two months -- that was driven by concerns that China may tighten monetary policy to keep prices under control.

Japan's Nikkei climbed 2.2%, clawing back most of Friday's 2.7% drop.

Hong Kong's Hang Seng lagged, adding a modest 0.6%, and mainland Chinese stocks were flat, highlighting underlying concerns about China's attempts to cool consumer inflation and runaway property prices.

Coal India stake sale likely in November or December: Jaiswal


The Government today said the five per cent stake sale in State-owned Coal India (CIL) is likely to take place either in November or December.

“It is likely that it (stake sale in Coal India) may happen either in November or December,” Coal Minister Sriprakash Jaiswal told presspersons here.

“You may be aware that Coal India Chairman has gone (overseas) for this purpose only,” he added.

To woo foreign investors for the Coal India stake sale, the disinvestment department (DoD) has embarked on a roadshow spanning across five nations, including Germany and the UK.

The roadshow began last week amid threats by workers of the State-owned firm to go on strike in December against the Government move to divest its stake further.

The Minister also said though production at CIL has been hit in the current month on account of Cyclone Phailin, “We are hopeful that (Coal India) will achieve its production target (of 482 million tonnes) for the current fiscal.”

The Government currently holds 90 per cent stake in CIL. It has already selected seven merchant bankers, including Goldman Sachs, Credit Suisse and SBI Caps, to manage the stake sale which is to take place through the offer for sale route.

The disinvestment department originally planned to offload 10 per cent stake in CIL, but faced strong opposition from the employees’ union who threatened to go on strike.

The CIL workers’ union had in September decided to defer its proposed three-day strike to December 17. Earlier, it was planned from September 23.

CIL got listed on the bourses in 2010 through an initial public offering in which the Government raised Rs 15,199 crore by selling 10 per cent stake.

The company has a cash balance of about Rs 60,000 crore.

The Government plans to garner Rs 40,000 crore by way of disinvestment this fiscal and CIL’s stake sale is expected to be the largest.

80:20 rule for gold imports may be relaxed

This, as officials say the rule is inhibiting imports


The government and the RBI are considering easing the 80:20 rule that requires importers to supply at least 20% of their imports to exporters.

Officials said the rule is inhibiting imports and traders have made a presentation to the government to relax the condition as it is troublesome for them to show proof of export for every lot of imports.

"The government is considering a proposal whether importers can be allowed to make the declaration on an annual basis," said a finance ministry official.

On July 22, the RBI had said that a fifth of the gold purchases by importers in every lot would have to be exclusively made available for exporters. It said only 80% of the imports could be used for domestic purposes, and that too only for entities engaged in jewellery business, bullion dealers and banks.

If a nominated agency imports say 100 kg of gold, it has to be routed through custom bonded warehouses only. If considered necessary, the lot can be procured through two invoices - one for exporters (20%) and the other one for domestic users (80%). Next lot of imports is permitted only after the quantity earmarked for exporter clients is released.

The quantum of gold permitted to be imported in the third lot is restricted to five times the quantum for which proof of export is submitted. For import of gold in the subsequent lots, the cycle is repeated following the 20/80 principle.

Traders and jewellers argued that this would put them under pressure to export at any given price and as one would try to recover the loss on domestic sales this would make gold costlier.        

Due to 10% customs duty and import curbs, gold imports are expected to be below 750 tonne this year;a drop of 11% from last year.

ITC hits one month low post September quarter earnings

The stock was down nearly 3% at Rs 331 on the Bombay Stock Exchange.


ITC is trading lower by nearly 3% at Rs 331 on the Bombay Stock Exchange (BSE), after reporting lower than expected revenue and net profit growth for the second quarter ended September 2013 (Q2).

The stock opened at Rs 338 and touched a low of Rs 330, its lowest level since September 13 on the BSE. The stock, which has nearly 11% weightage on the S&P BSE Sensex, was the biggest drag on markets. ITC contributed nearly 55 points fall in benchmark index Sensex, which was up around 25 points at 1008 hours.

Cigarette-to-hotels major’s net sales rose by a disappointing 8.8% year on year (yoy) to Rs 7,776 crore, which was below an average analyst estimate of Rs 8,087 crore.

While cigarettes business posted a modest top-line growth of 10% yoy impacted by higher than expected de-growth in volumes, the growth in other FMCG business too tapered to 16.1% yoy due to sluggishness in demand.

The company’s profit after tax grew 21.5% yoy at Rs 2,230 crore, aided by write back of Rs 158 crore of liability towards rates and taxes pertaining to earlier years. The company also wrote back Rs 35 crore of interest pertaining to the aforesaid liability.

Gold futures down at Rs 30,460 per 10 gm

Gold prices fell 0.24 per cent to Rs 30,460 per 10 gram at the futures trade today as participants reduced their positions largely in tandem with a weak trend overseas amid profit-booking.

On the Multi Commodity Exchange, gold for delivery in far-month February eased Rs 73 or 0.24 per cent to Rs 30,460 per 10 gram in a business turnover of 26 lots. Likewise, the metal for delivery in December shed Rs 63 or 0.2 per cent to Rs 30,797 per 10 gram in 613 lots.

Analysts said a weak trend in the overseas market ahead of the US Federal Reserve meet mainly weighed on gold prices at the futures trade here.

US Federal Reserve policy makers at the two-day meeting beginning tomorrow may decide on the pace of monetary stimulus.

Globally, the yellow metal fell 0.23 per cent to $1,349.80 an ounce in Singapore today.

Tata Global Beverages gains on raising Rs 325 crore through issue of NCDs

Tata Global Beverages has raised a sum of Rs 325 crore by the issue of 3% Secured Redeemable Non Convertible Debentures (NCD) by way of private placement. The said NCDs will be listed on the wholesale debt market segment of the National Stock Exchange of India (NSE). The NCDs are redeemable after a period of three years with redemption premium.

Tata Global Beverages, formerly known as Tata Tea, is a multinational non-alcoholic Beverages Company headquartered in Kolkata, West Bengal, India and a subsidiary of the Tata Group. It is the world's second-largest manufacturer and distributor of tea. Tata Global Beverages markets tea under the major brands Tata Tea, Tetley, Good Earth Teas and JEMCA.

Iraq oil exports plunge to 19-month low

Iraq’s oil exports hit a 19-month low in September, Oil Ministry spokesman Assem Jihad said today, attributing the decline to maintenance and improvement projects at the country’s ports.

Iraq exported 62.1 million barrels of oil in September, or about 2.07 million barrels per day (bpd), Jihad said — the lowest daily average since February 2012.

The country earned $6.511 billion from the exports, its lowest monthly figure in over a year.

Sales of crude, which account for the vast majority of Iraq’s government income, had averaged 2.579 million bpd in August and raised revenues of $8.3 billion.

Jihad said the September decline was due to “periodic maintenance activities for the southern ports and projects” to add new floating oil storage facilities and increase the ports’ export capacities.

Iraq is heavily dependent on oil exports, and the government is seeking to dramatically ramp up its sales in the coming years to fund the reconstruction of its battered infrastructure.

Officials are aiming to increase production capacity to nine million bpd by 2017, a target that the International Monetary Fund and International Energy Agency have warned is over—optimistic.

Rupee opens a tad stronger at 61.43

The rupee opened a tad stronger at 61.43 per dollar against Friday's close of 61.46 ahead of Reserve Bank of India (RBI) monetary policy review tomorrow and a weak US currency overseas.

The domestic unit had strengthened last week on dollar sales by banks due to weakness of the greenback against other currencies overseas, coupled with persistent foreign capital inflows into the equity market.

Dealers expect the rupee movement to be muted ahead of the key events. The RBI policy meeting is scheduled tomorrow, while the US Federal Open Market Committee (FOMC) will meet on October 29-30.

Australian shares lead Asian rebound; yen softens

MSCI's broadest index of Asia-Pacific shares outside Japan rises 0.7%

Australian stocks scaled a five-year peak on Monday, leading a rebound in Asia after strong results from the likes of Microsoft pushed Wall Street to another record closing high, while investors gave the safe-haven yen a wide berth.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7%, recovering a chunk of last week's 1.1% loss -- the biggest in two months -- that was driven by concerns that China may tighten policy to keep prices under control.

Australian shares put on 1.2% to reach their highest since June 2008, Hong Kong's Hang Seng added 0.4%, and South Korea's KOSPI rose 0.3%.

Japan's Nikkei climbed 1.0%, clawing back some of Friday's 2.7% drop.

"The market is getting bought back after excessive selling on Friday... but I don't think we will be testing new highs," said Kenichi Hirano, strategist at Tachibana Securities of the Nikkei.

Many traders suspect further gains in Asia may be limited as investors keep a wary eye what steps Chinese policymakers might take to cool property prices and inflation.

Several markets in Asia are closed for public holidays on Monday, including New Zealand and the Philippines.

RISK IN PLAY

With risk appetite on the mend, demand for the safe-haven yen waned. That saw the Australian dollar gain 0.5% to 93.68 yen, and both the euro and dollar edged up slightly to 134.74 and 97.52 respectively.

Against the dollar, the euro was a tad firmer at $1.3814 and within striking distance of Friday's two-year high of $1.3833.

The dollar has been under broad pressure in the past few weeks on growing expectations the Federal Reserve will maintain its massive stimulus programme into next year.

The Fed's policy-setting arm meets on Oct 29-30 and is expected to hold off any move to scale down its $85 billion monthly bond-buying programme.

Analysts reckon policymakers want to see the impact of the US budget battle that took the country to the brink of a debt default and caused a partial government shutdown.

"The FOMC should be a non-event... the Washington debates cloud the growth outlook, so forget about tapering," analysts at JPMorgan wrote in a client note, adding the April 2014 meeting looked like the soonest start for any tapering.

In contrast to equities, commodities got off to a sleepy start with copper a touch lower at $7,178.25 a tonne, while US crude oil slipped 0.1% to $97.72 a barrel. Spot gold was steady $1,352.44 an ounce.

Historical data of Currency & Commodity











Gold smuggling surges with govt's import curbs

Apr-Sep seizures higher than in past 24 months; annual haul set to be 50% higher than total of past decade; at least 90% of illegal flow estimated to get in


The government’s clamp on gold import has led to a surge in smuggling, with seizures rising almost fourfold in April-September over the same period last year.

The catch in these first six months of this financial year is close to the total seizures of the past two years. The haul for the entire year is likely to be 50 per cent more than the total seizure in the past decade.

By provisional figures, gold worth Rs 130 crore was seized from 383 cases in April-September against Rs 28 crore from 339 cases in the year-ago period, an increase of 360 per cent in value terms. In volume, it went up from 99 kg to 500 kg in the first half. Seizures worth Rs 99 crore and Rs 46 crore were made in 2012-13 and 2011-12, respectively, adding to Rs 145 crore. Officials said as the data was still being updated, the seizures could touch Rs 150 crore in the first half and was likely to be close to Rs 250-300 crore for the entire year. Between 2003-04 and 2012-13, gold seizures of Rs 199 crore were made, of which Rs 99 crore was last year.

Rough estimates suggest only five to 10 per cent of smuggled gold is seized. The rest manages to get in unnoticed. Gold has replaced narcotics as the biggest smuggled item in value terms in the past few months.

“There was not a sharp rise in the number of cases but in value terms the seizures went up as smugglers brought in more gold to maximise gains due to the import curbs and a six percentage points increase in the duty in the past one year,” said a revenue department official who did not wish to be identified.

The seizures will add to the government’s coffers at a time when every paisa counts. While it does not contribute to the current account deficit, the government can auction the seized gold; smuggled gold cannot be claimed by anyone. This year, the government has planned to auction gold worth Rs 100 crore through the State Bank of India. The gains could go up in 2014-15, as the gold seized this year would go under the hammer only next year. The minimum time lag between  seizure and auction is six months but if a person challenges it in a court, an auction can be held up for several years.



Seizures might rise further in the coming quarters, as the gold duty was raised from eight per cent to 10 per cent in August. Officials said more than the increase in duty, the restrictions on gold imports by the Reserve Bank of India had contributed to the sharp rise in cases of smuggling. Imports fell from 142 tonnes in April to 11.2 tonnes in September, with the import value falling from Rs 36,223 crore to Rs 3,150 crore in the period.

The directorate of revenue intelligence and the Customs department have stepped up vigil on ports and airports, especially on flights originating from the West Asia region.

HUL Q2 net profit at Rs9138mn

Harish Manwani, Chairman commented: “We have delivered another quarter of competitive and profitable growth. The consistency and resilience of our performance, in what has been a challenging market environment for some quarters now, is a reflection of the discipline with which we are managing our business and executing our strategy."


Hindustan Unilever Limited announced its results for the quarter ending 30th September 2013.
The Company has posted a net profit of Rs. 9138.00 mn for the quarter ended September 30, 2013 as compared to Rs. 8069.20 mn for the quarter ended September 30, 2012.
Total Income has increased from Rs. 64595.60 million for the quarter ended September 30, 2012 to Rs. 70436.30 million for the quarter ended September 30, 2013.

During the quarter, the Domestic Consumer business grew at 10%, ahead of market, driven by 5% underlying volume growth.

Soaps and Detergents grew 6%; healthy volume growth                                                                                                                              
Skin Cleansing sustained its strong performance, registering its fourth successive quarter of double digit volume growth with Lifebuoy, Breeze and Lux leading category growth. The quarter saw price deflation arising from actions taken earlier in the year to pass on the benefit of lower commodity costs to consumers.

In Laundry, growth continued to be led by Surf and Rin while Wheel sales showed signs of stabilizing. Comfort fabric conditioners delivered robust growth on the back of sustained market development. Household Care continues to do very well with both Vim and Domex growing in double digit.

Personal Products grew 12% in a slowing market; double digit growth across categories
In Skin Care, growth stepped up to double digit, aided by a favorable comparator and good sales in advance of winter. Fair & Lovely was re-launched towards the end of the quarter with the new ‘Best Ever Formula’ and a focused activation plan. Vaseline and Dove lotions did particularly well, Lakme registered one of its strongest quarters of innovation led growth while Ponds saw good growth on talc. The portfolio was expanded with the Lakme Youth Infinity range and differentiated offerings in facial cleansing under Lakme, Ponds and Dove.

Hair Care had another very good quarter with broad based double digit volume growth and TRESemmé gaining further ground. Hair conditioners continued to lead market development with sustained high growth. The global portfolio was further leveraged to launch the Toni & Guy range of premium hair care and styling offerings.

In Oral Care, both brands delivered double digit growth in the context of a sharp increase in competitive intensity and in media spends. Pepsodent was re-launched with a superior product and proposition while Close Up continued to be driven by exciting activation. A&P investments were significantly stepped up to sustain our competitive position in this category.
Colour Cosmetics maintained its strong innovation led growth momentum across the Lakme portfolio. Growth was driven by premium make-up with Absolute and 9 to 5 and a further acceleration in the growth of Elle 18.

Beverages grew 16%; another strong performance by tea
Tea delivered one of its strongest quarters, sustaining broad based price-led growth and healthy volumes. All key brands grew in double digits led by mix improvements and strong in-market activities. The continued thrust on market development for tea bags enabled flavored and green teabags sales to nearly double in the quarter. In a slowing coffee market, Bru growth was led by the robust performance of Bru Gold.

Packaged Foods grew 9%; Kissan accelerates, Kwality Walls steps up
Kissan maintained its double digit growth with a very good quarter for Ketchups while Knorr sales was driven by Instant Soups. Despite challenging market conditions, Kwality Walls stepped up to double digit growth through sharper in-market execution and the rollout of the ‘Perfect Stores’ program for the category.

Volatile cost environment; competitive intensity heightens
The operating context during the quarter was challenging given the volatile cost environment, led by the Rupee depreciation, and heightened competitive intensity. Overall industry media spend was up to its highest levels in over 18 quarters, with a particularly sharp increase in Oral Care. We invested at competitive levels across segments with a significant step up in Personal Products – overall A&P spend was up by Rs. 185 Crores (+165 bps) in the quarter.

PBIT up 11%, margins expand +20bps
Despite a sharp increase in A&P spends, Profit before Interest and Tax (PBIT) grew by 11% with PBIT margin improving +20 bps. Profit after tax before exceptional items, PAT (bei), grew by 10% to Rs. 883 Crores while Net Profit at Rs. 914 Crores was up 13%.

The Board of Directors have declared an interim dividend of Rs 5.5 per equity share of face value Re. 1 each, for the year ending 31st March 2014.

Harish Manwani, Chairman commented: “We have delivered another quarter of competitive and profitable growth. The consistency and resilience of our performance, in what has been a challenging market environment for some quarters now, is a reflection of the discipline with which we are managing our business and executing our strategy. We continue to strengthen our business for the long term by driving innovation, investing behind our brands and further building organizational capabilities.”


Market opens higher on positive Asia cues

NSE Nifty opened at 6160, up 16 points while 30-share BSE Sensex opened 40 points higher with 25 components in green.

Market opened higher folowing firm Asian stocks; tracking CNX Nifty futures on the Singapore stock exchange, NSE Nifty opened at 6160, up 16 points while 30-share BSE Sensex opened 40 points higher with 25 components in green.

The rupee is trading at 61.45 per dollar; the unit closed at 61.46/47 on Friday

The market is expected to remain volatile in the week ahead as traders mull rolling over positions in November 2013 series from the near month October series in the futures & options segment.

BSE realty index rose 1.1% and is the  top sectoral gainer; FMCG index is the top looser in the sectoral pack with losses of 0.6%