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Reports India

Indian stock market and companies daily report (March 06, 2014, Thursday)

March 6, 2014, Thursday, 06:18 GMT | 01:18 EST | 10:48 IST | 13:18 SGT
Contributed by Angel Broking

Indian Markets are expected to open largely on a flattish note tracking mixed opening the Asian indices.

The US markets finished a choppy trading day on Wednesday generally lower with blue-chips falling the most, as investors reacted mildly to mostly disappointing economic reports. Payroll processor ADP released a report showing that the private sector added 139,000 jobs in February compared to estimates for an increase of about ~155,000 jobs. The report also showed a downward revision to the job growth in the previous month. Mark Zandi, chief economist of Moody's Analytics, noted that the bad winter weather weighed on payrolls. The Institute for Supply Management released a separate report showing that its non-manufacturing index fell to 51.6 in February from 54.0 in January, although a reading above 50 indicates continued growth in the service sector.

The Indian markets rose modestly on Wednesday, adding to the previous session's rally, as tensions over Ukraine receded and the Election Commission announced the much-awaited schedule for the Lok Sabha polls. Elections will be held from April 7 to May 12 spread over nine phases, with counting of votes to be held on May 16. The model code of conduct has come into force with immediate effect.

Markets Today

The trend deciding level for the day is 21,262 / 6,318 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,348 - 21,419 / 6,347 - 6,366 levels. However, if NIFTY trades below 21,262 / 6,31 8 levels for the first half-an-hour of trade then it may correct 21,191 - 21,105 / 6,299 - 6,269 levels.

3QFY2014 CAD narrows to 0.9% of GDP led by moderation in trade deficit

The CAD during 3QFY2014 narrowed sharply to 0.9% of GDP as compared to 1.2% of GDP in the previous quarter and 6.5% of GDP in 3QFY2013. The moderation can be attributed to the trade deficit narrowing drastically to USD33.2bn during the quarter from USD58.4bn a year ago. This is on account of both the rise in export growth as well as compression of imports.

Merchandise exports increased by 7.5% in 3QFY2014 as compared to a moderate 3.9% on the back of significant growth especially in the exports of engineering goods, readymade garments, iron ore, marine products and chemicals. At the same time merchandise imports declined steeply by 14.8% as against an increase of 10.4% in 3QFY2013 led mainly by the curbs on gold imports. Gold imports came in at just about USD3.1bn as compared to USD17.8bn in 3QFY2013. On the invisibles front, net services receipts improved with 8.9% growth in 3QFY2014 and outflow on account of primary income was lower than the previous quarter.

Owing to the efforts made by policymakers to attract NRI deposits in particular as well as on account of receding external sector risks, on a BoP basis, there was a net accretion of USD19.1bn to our foreign exchange reserves in 3QFY2014 as compared to a drawdown of USD10.4bn in the preceding quarter. The net NRI deposit inflows stood at USD21.4bn as compared to USD2.7bn in 3QFY2013 owing to the FCNR(B) deposits mobilization under the RBI's swap scheme offered during September-November 2013.

During 9MFY2014, the CAD has come in at a manageable level of 2.3% of GDP as against 5.2% of GDP in the corresponding period of the previous year. We continue to maintain that for FY2014 as a whole the CAD is likely to range between 2.0-2.5% of GDP as against 4.8% of GDP reported in FY2013.

FM clears policy to defer premium payment by road developers

The Finance Ministry has accepted Rangarajan Committee's suggestion to reschedule premium payment for highway projects. The approval is effective from Wednesday itself. Highway Ministry and the National Highways Authority of India (NHAI) will examine each project on case-to-case basis now. According to RP Singh, Chairman NHAI, this move is likely to benefit 21 highway projects.

The new norms allow stressed projects to avail revenue-shortfall loan clause in the model concession agreement. The shortfall between the toll revenue collected by the developer and the expenses incurred, which includes operational and maintenance costs, debt servicing and premium payments, will be extended as a loan to companies seeking rescheduling. The developer will have to pay interest equal to bank rate plus 2% on premium amount deferred. The project developer will have to clear the premium deferred over the years before its concession period gets over. The recommendations also propose penalty for projects delayed due to project developer's fault. According to RP Singh, the new norms are expected to benefit projects which have already started and are having difficulty in servicing debt. They can now service debt fully since it will be given priority over premium. The new norms are a step in positive direction and companies such as Gammon India, Ashoka Buildcon, IVRCL, GMR, GVK, among others are expected to benefit from the move.

Dr Reddys Lab- Announces launch of Moxifloxacin HCL tablets in US

Dr. Reddy's Laboratories announced that it has launched Moxifloxacin Hydrochloride Tablets, 400 mg, a therapeutic equivalent generic version of Avelox® (moxifloxacin HCl) tablets 400 mg in the US market on March 04, 2014, following the approval by the United States Food & Drug Administration (USFDA). The Avelox® (moxifloxacin HCl) tablets brand had U.S. sales of approximately US $195Mn for the most recent twelve months ending in December 2013 according to IMS Health. Currently the competition for the drug is low, with only two other generic players i.e Teva and Aurobindo Pharma with approvals. We expect the DRL, to post sales and net profit of US 20mn and US5mn respectively. We maintain our accumulate rating on the stock with a target price of Rs.3008.

Economic and Political News

- EC announces 9-phase LS polls from April 7 to May 12

- Government approves 8.75% rate of interest on PF deposits for EPFO subscribers for 2013-14

- Sebi finds serious anomalies in Subrata Roy's Sahara group papers on investors

- Services sector activity continues to decline in Feb: PMI

Corporate News

- Alstom bags 85mn euro contract from BHEL

- AstraZeneca defers delisting offer

- Oil India output drops due to protests in Assam

- Sanofi files cases against Glenmark on patent infringement

- Tata Power to finalize on Rs.2,000cr rights issue on Sat

- Volvo to make Eicher products in South Africa and Indonesia