Capital goods stocks drop

A bout of volatility was witnessed as key benchmark indices hovered in negative zone in morning trade. The barometer index, the S&P BSE Sensex, was down 96.55 points or 0.46%, up about 30 points from the day’s low and off close to 65 points from the day’s high. Weakness in Asian shares dampened investor sentiment. The rupee edged lower against the dollar.

Auto stocks were mixed. TVS Motor Company dropped after the company reported a muted growth in sales for December 2013. Tata Motors dropped after the company reported weak sales for December 2013. Capital goods stocks dropped. The market breadth, indicating the overall health of the market, was positive.

A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak opening. The Sensex and the 50-unit CNX Nifty, both, hit two-week low at the onset of the trading session. Volatility continued as key benchmark indices hovered in negative zone in morning trade.

Foreign institutional investors (FIIs) bought shares worth a net Rs 674.05 crore on Thursday, 2 January 2014, as per provisional data from the stock exchanges.

Asian stocks dropped on Friday, 3 January 2014, after US equities retreated from record highs and a gauge of China’s non-manufacturing industries declined.

At 10:20 IST, the S&P BSE Sensex was down 96.55 points or 0.46% to 20,791.78. The index dropped 124.90 points at the day’s low 20,763.43 in early trade, its lowest level since 20 December 2013. The index fell 31.80 points at the day’s high of 20,856.53 in early trade.

The CNX Nifty was down 31.85 points or 0.51% to 6,189.30. The index hit a low of 6,178.85 in intraday trade, its lowest level since 20 December 2013. The index hit a high of 6,209.05 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 854 shares rose and 839 shares dropped. A total of 96 shares were unchanged.

Among the 30-share Sensex pack, 23 stocks fell and rest of them rose. Tata Power Company (down 3.66%), AXIS Bank (down 1.5%) and Hindalco Industries (down 1.49%) declined.

Capital goods stocks dropped. Bhel (down 1.39%), L&T (down 1.17%), Crompton Greaves (down 0.89%) and Punj Lloyd (down 0.83%) declined.

Auto stocks were mixed. Mahindra & Mahindra (M&M) declined 1.23%. M&M on Thursday, 2 January 2014, said SsangYong Motor’s total sales rose 11.8% at 13,271 units in December 2013 over December 2012. The total sales of 13,271 units in December 2013 comprised sales of 6,584 units in the domestic market and 6,687 of exports with CKD kits. SsangYong Motor is a Korean subsidiary of M&M.

SsangYong Motor’s total sales jumped 20.7% to 145,649 units in calendar year 2013 over calendar year 2012. SsangYong said its annual sales rose for the fourth consecutive year in 2013. The company stressed that such performance was largely driven by the successful launches of the face-lifted models which reflect consumer needs, settlement of healthy relations between labor and management, and the workers’ efforts and cooperation in order to expand supply.

Separately, M&M on Thursday, 2 January 2014, said that its total two-wheeler sales jumped 252% to 19,715 units in December 2013 over December 2012. Two-wheeler sales in the domestic market jumped 267% to 19,054 units in December 2013 over December 2012.

Volume growth is being driven by the innovative Mahindra Centuro motorcycle, which continues to receive an overwhelming response, M&M said. Mahindra Two Wheelers has been steadily expanding production of the Centuro to meet rising consumer demand, while also growing its sales and service touch points to over 1000 across the country in order to make the motorcycle more accessible to buyers, the company said.

M&M on 1 January 2014 said that its total tractor sales rose 15% to 17,037 units in December 2013 over December 2012. Tractor sales in the domestic market rose 19% to 16,257 units in December 2013 over December 2012. Exports fell 26% at 780 units in December 2013 over December 2012.

M&M on 1 January 2014 also said that its total auto sales declined 13% to 39,611 units in December 2013 over December 2012.

Ashok Leyland rose 2.26%. The company reported 14% decline in sales at 6,275 units in December 2013 over December 2012. Sales of medium and heavy commercial vehicles fell 26% at 3,890 units in December 2013 over December 2012. Light commercial vehicles sales rose 16% to 2,385 units in December 2013 over December 2012. The sales figures were announced after market hours on Thursday, 2 Janaury 2014.

Maruti Suzuki India rose 0.74%. The company on 1 January 2014 that its total sales fell 4.4% to 90,924 units in December 2013 over December 2012. Domestic sales rose 5.5% to 86,613 units in December 2013 over December 2012. Exports fell 67% to 4,311 units in December 2013 over December 2012.

Tata Motors dropped 2.49%, with the stock extending initial losses. The total sales (including exports) of Tata commercial and passenger vehicles plunged 42.28% at 37,852 units in December 2013 over December 2012. Tata Motors’ exports declined 26.79% at 2,842 units in December 2013 over December 2012. Tata Motors announced the monthly sales volume data on standalone basis after trading hours on Thursday, 2 January 2014.

Hero MotoCorp rose 0.08%, with the stock reversing initial losses triggered by the company’s weak December sales. The company announced after market hours on Thursday, 2 Janaury 2014, that its total sales fell 3.06% to 5.24 lakh units in December 2013 over December 2012. The company sold record 61.83 lakh two-wheelers in calendar year 2013.

Hero MotoCorp said that the management has put together plans to further consolidate the company’s leadership position in the two-wheeler industry. Year 2014 will be action-packed with radically new product launches from the company, entry into new markets backed by new, clutter-breaking campaign and continued network expansion.

Bajaj Auto rose 0.06%, with the stock reversing initial gains triggered by the company reporting weak sales for December 2013. The company said before market hours that its total sales declined 13% to 2.97 lakh units in December 2013 over December 2012. The company’s total exports rose 20% to 1.5 lakh units in December 2013 over December 2012. Motorcycles sales fell 13% to 2.6 lakh units in December 2013 over December 2012. Commercial vehicles sales fell 19% to 37,131 units in December 2013 over December 2012.

TVS Motor Company dropped 1.54% after the company reported a muted growth in sales in December 2013. The company’s total sales rose 2% at 1.59 lakh units in December 2013 over December 2012. Total exports rose 27% to 20,251 units in December 2013 over December 2012.

Total two wheeler sales rose 1% to 1.53 lakh units in December 2013 over December 2012. Domestic two wheeler sales declined 1.4% to 1.32 lakh units in December 2013 over December 2012. Two wheeler exports registered a growth of 21% to 20,694 units in December 2013 over December 2012.

Scooters sales grew 38% to 41,817 units in December 2013 over December 2012. Motorcycle sales declined 4.37% to 57,576 units in December 2013 over December 2012.

Three wheeler sales surged 37% to 6,137 units in December 2013 over December 2012.

In the foreign exchange market, the rupee edged lower against the dollar on global risk off sentiment. The partially convertible rupee was hovering at 62.35, weaker than its close of 62.26/27 on Thursday, 2 January 2014.

Prime Minister Dr Manmohan Singh will be addressing the media at 11:00 IST today, 3 January 2014. It will be his third press meet after he took charge as the Prime Minister in May 2004. The Prime Minister is likely to address several issues including the list of achievements of the UPA government in the last decade. Ahead of the upcoming Lok Sabha elections, the PM may list achievements of the UPA during its tenure in the last 10 years in the area of economic growth, employment generation and foreign policy in the press conference.

The next major trigger for the market is Q3 December 2013 corporate earnings. The Q3 earnings season will begin around mid-January 2014 and continue till mid-February 2014. Investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year and/or the next year.

The Reserve Bank of India’s Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.

Asian stocks dropped on Friday, 3 January 2014, after US equities retreated from record highs and a gauge of China’s non-manufacturing industries declined. Key benchmark indices in Hong Kong, Taiwan, Singapore, Indonesia, China and South Korea were off 0.63% to 1.75%. Japanese stock markets were closed for a holiday.

China’s non-manufacturing gauge fell to a four-month low in December, after data earlier this week showed two measures of factory output in the world’s second-largest economy declined. China’s purchasing managers’ index for the non-manufacturing sector fell to 54.6, the lowest reading since August, from 56 in November.

Trading in US index futures indicated that the Dow could drop 9 points at the opening bell on Friday, 3 January 2014. Stocks on Wall Street closed sharply lower on the first trading day of 2014 on Thursday, 2 January 2014, after data pointed to a slowdown in manufacturing expansion in China and the United States.

Data indicated applications for US unemployment benefits declined last week to the lowest level in a month. Jobless claims fell by 2,000 to 339,000 in the period ended Dec. 28, Labor Department data showed. A separate report showed the Institute for Supply Management’s factory index fell to 57 in December from the prior month’s 57.3, which was the highest since April 2011. Readings above 50 indicate expansion.

The US Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world’s largest economy. The US central bank is poised to continue winding down its stimulus measures gradually over the next year.

The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014.

In Europe, final readings on Thursday, 2 January 2014, confirmed that manufacturing in the euro zone expanded last month at the fastest pace since May 2011, while output in Germany, the currency bloc’s largest economy, expanded for a sixth consecutive month.