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Maruti Suzuki in top gear as yen weakens

Capital Market/ 14:16 , Apr 05, 2013

Key benchmark indices reversed intraday losses and moved into positive zone in mid-afternoon trade as index heavyweight Reliance Industries (RIL) extended intraday gains. The barometer index, the S&P BSE Sensex, was up 15.73 points or 0.08%, up about 135 points from the day's low. The market breadth once again turned positive from negative. Index heavyweight and cigarette maker ITC hovered in red.

Maruti Suzuki India jumped nearly 8% on hopes a weaker yen currency would improve margins by reducing the costs of importing auto parts from Japan after the Bank of Japan unleashed unprecedented monetary expansion. Pharma stocks gained. Most metal shares edged higher as LMEX, a gauge of six metals traded on the London Metal Exchange, rose 0.74% on Thursday, 4 April 2013.

The market edged lower amid volatility in early trade. The Sensex hit 19 week low. The 50-unit CNX Nifty hit lowest level in over 19 weeks. The market hovered in negative terrain in morning trade. The Sensex slipped into the red after moving into the positive terrain from negative terrain for a brief period in mid-morning trade. The market extended losses to hit fresh intraday low in early afternoon trade. Key benchmark indices recovered sharply after hitting fresh intraday low in afternoon trade. The Sensex reversed intraday losses and moved into positive zone in mid-afternoon trade.

Foreign institutional investors (FIIs) sold shares worth a net Rs 326.21 crore on Thursday, 4 April 2013, as per provisional data from the stock exchanges.

At 14:20 IST, the S&P BSE Sensex was up 15.73 points or 0.08% to 18,525.43. The index fell 120.41 points at the day's low of 18,389.29 in afternoon trade, its lowest level since 21 November 2012. The index rose 15.75 points at the day's high of 18,525.45 in mid-afternoon trade.

The CNX Nifty was down 5.25 points or 0.09% to 5,569.50. The index hit a low of 5,535.40 in intraday trade, its lowest level since 5 October 2012. The index hit a high of 5,577.30 in intraday trade.

The market breadth, indicating the overall health of the market, once again turned positive from negative. On BSE, 1,373 shares rose and 1,149 shares fell. A total of 122 shares were unchanged. Earlier, the breadth had turns negative from positive in early afternoon trade.

Among the 30-share Sensex pack, 19 stocks gained while rest of them fell.

Index heavyweight Reliance Industries (RIL) gained 1.53% at Rs 778.45. The scrip hit high of Rs 779 and a low of Rs 766.20 so far during the day. Shares of Reliance Communications rose 0.48%. Reliance Jio Infocomm and Reliance Communications (RCom) on Tuesday, 2 April 2013, announced the signing of a definitive agreement for approximately Rs 1200 crore as one time indefeasible right to use (IRU) fees for sharing RCom's nationwide inter-city fiber optic network infrastructure. Reliance Jio Infocomm will utilize multiple fiber pairs across RCom's 1.2 lakh kilometres inter-city fiber optic network to provide a robust and future proof backbone for rolling out its state-of-the-art 4G services. As per the agreement, RCom will in turn have reciprocal access to optic fiber infrastructure to be built by Reliance Jio Infocomm in the future.

The agreement provides for joint working arrangements to be put in place immediately for upgradation of the optic fiber network, to ensure seamless delivery of next generation services.

Index heavyweight and cigarette major ITC declined 2.03% to Rs 293.70 on profit booking. The scrip hit high of Rs 299.50 and a low of Rs 291.10 so far during the day. The stock had hit a record high of Rs 310.75 on 4 February 2013. The government raised the excise duty on cigarettes by about 18% on all cigarettes except cigarettes of length not exceeding 65 mm in Union Budget 2013-14, which was unveiled on 28 February 2013.

Maruti Suzuki India jumped 7.58% on hopes a weaker yen currency would improve margins by reducing the costs of importing auto parts from Japan after the Bank of Japan (BOJ) unleashed unprecedented monetary expansion. The yen slid to a 3-1/2 year low against the dollar on Friday, after suffering its biggest one-day tumble since late 2008 on Thursday, on the back of the BOJ's radical campaign to attack deflation.

Maruti announced during market hours on Tuesday, 2 April 2013, that its total sales declined 4.8% to 1,19,937 units in March 2013 over March 2012. The company's domestic sales fell 4.3% to 1,07,890 units in March 2013 over March 2012. The company's exports dropped 8.9% to 12,047 units in March 2013 over March 2012

Pharma stocks gained. Cipla, Dr. Reddy's Laboratories, Ranbaxy Laboratories and Sun Pharmaceutical Industries rose by 0.21% to 1.86%.

Most metal shares edged higher as LMEX, a gauge of six metals traded on the London Metal Exchange, rose 0.74% on Thursday, 4 April 2013. Sterlite Industries, Tata Steel, Hindalco Industries, Jindal Steel & Power and Hindustan Zinc rose by 0.28% to 2.44%. Bhushan Steel and JSW Steel shed by 0.06% to 0.11%.

Steel Authority of India (Sail) gained 0.73% after the company signed a Memorandum of Understanding (MOU) with Kerala State Industrial Development Corporation (KSIDC) and Kerala Minerals and Metals (KMML), for setting up a Titanium Project in joint venture in Kerala. Through this MOU, possibilities of setting up of the Titanium Project in joint venture in Kerala will be explored by Sail, KSIDC and KMML in a phased manner. To begin with, in Phase 1, setting up of a Titanium Sponge and Metal Plant based on supply of Titanium Tetrachloride by KMML will be considered. In subsequent phases, backward and forward integration will be explored for ensuring long term viability of the project.

Speaking on the occasion, Sail Chairman Mr. C.S. Verma stated that the state government of Kerala and Sail have a longstanding association. He further said that, Sail is continuously on the lookout for new business opportunities in the areas of its competency. The signing of MOU is a step in that direction, he said.

This will be the another major titanium project in Kerala after the nation's first titanium sponge plant was put up at KMML's Chavara complex in Kerala between KMML, Vikram Sarabhai Space Centre (VSSC) and the Defence Metallurgical Research Laboratory in the year 2011.

The Q4 March 2013 corporate earnings season will begin around mid-April 2013. Infosys announces Q4 results on 12 April 2013. IndusInd Bank announces Q2 results on 18 April 2013. Cairn India announces Q4 results on 22 April 2013. HDFC Bank announces Q4 results on 23 April 2013. Axis Bank will announce its Q4 March 2013 results on 24 April 2013. ICICI Bank announces Q4 results on 26 April 2013.

On the political front, the DMK on 19 March 2013 withdrew support to the Congress led UPA government at the Centre citing differences on the issue of atrocities on Tamils in Sri Lanka. After the withdrawal of support by the DMK to the UPA government on 19 March 2013, Parliamentary Affairs Minister Kamal Nath on 20 March 2013 said the government was not a lame duck government and was stable. He said that no party has challenged the government for a floor test.

The UPA has already been reduced to a minority government after Trinamool Congress withdrew support to the government in September last year. The Samajwadi Party (SP) along with its regional rival in Uttar Pradesh Bahujan Samaj Party (BSP) provide outside support to the UPA government. SP has 22 MPs in Lok Sabha and BSP has 21 MPs.

The Reserve Bank of India (RBI) will announce the Monetary Policy Statement 2013-14 on 3 May 2013. The RBI cut its key policy rate viz. the repo rate by 25 basis points to 7.5% after a mid-quarter monetary policy review on 19 March 2013. The key macroeconomic priorities are to raise the growth rate, restrain inflation pressures and mitigate the vulnerability of the external sector, RBI said at that time. Even as the policy stance emphasises addressing the growth risks, the headroom for further monetary easing remains quite limited, the RBI said. The RBI said it will continue to actively manage liquidity through various instruments, including open market operations (OMO), so as to ensure adequate flow of credit to productive sectors of the economy.

The upside on the bourses may be capped as reduction of promoter stake to meet the Securities & Exchange Board of India (Sebi) mandated minimum public shareholding of 25% for private companies and 10% for state-run firms will result in supply of equity in the market over the next few months. As per the Sebi mandated minimum public shareholding rule, private-sector companies must cut founders' stake to adhere to the rules by 30 June 2013, while the deadline for state-run firms is 31 August 2013. PSU divestment will also add to share sale glut in FY 2014. The government has set a target of Rs 40000 crore from divestment of government stake in state-run firms and Rs 14000 crore from divestment of stake in non-government companies for FY 2014.

The India Meteorological Department will issue its first forecast of 2013 southwest monsoon in this month.

The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.

The second half of the Budget session of the Parliament begins on 22 April 2013. The Budget Session of the Parliament ends on 10 May 2013. The government has lined up a number of key bills for consideration and passing during the Budget session of the parliament, which include The Forward Contracts (Regulation) Amendment Bill, 2010, The Pension Fund Regulator and Development Authority Bill, 2011, The Land Acquisition, Rehabilitation and Resettlement Bill, 2011, The National Food Security Bill, 2011 and The Insurance Laws (Amendment) Bill, 2008.

Assembly elections will be held in Karnataka on 5 May 2013 and the counting of votes and results of the election will be declared on 8 May 2013.

European markets were mostly lower on Friday on mounting worries over the pace of the US economic recovery ahead of monthly jobs data. Key benchmark indices in Germany and UK fell by 0.03% to 0.39%. France's CAC 40 rose 0.14%.

European Central Bank (ECB) President Mario Draghi yesterday signaled the ECB will keep monetary policy loose for an extended period and that further easing is possible if economic conditions deteriorate. ECB has left its main interest rate unchanged at the historic low of 0.75%.

The Bank of England has decided not to restart its bond-buying programme this month amid mixed signals on the health of the fragile UK economy. In a widely expected move, the Monetary Policy Committee on Thursday kept the stock of asset purchases in its quantitative easing programme on hold at £375bn. It also kept the BoE interest rate at an all-time low of 0.5%.

Most Asian stocks fell on Friday, 5 April 2013. Key benchmark indices in Indonesia, Hong Kong, Singapore and South Korea fell by 0.09% to 2.73%. Markets in China and Taiwan remain closed for a holiday.

Japan's Nikkei Average jumped 1.58%. The Bank of Japan yesterday boosted its stimulus program, saying it will double the monetary base within two years.

Trading in US index futures indicated that the Dow could fall 14 points at the opening bell on Friday, 5 April 2013. US stocks rose on Thursday as cheer over Japan's monetary stimulus overcame resistance that came as US jobless claims climbed to a four-month high. The Labor Department reported that those filing for state unemployment benefits rose by 28,000 to a seasonally adjusted 385,000, the highest number since November and more than expected. The data came ahead of Friday's monthly nonfarm-payrolls report and after data Wednesday showed the economy created just 158,000 private-sector jobs in March.


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