Nifty may stage a rally till 6,150 but it may be met with selling
The weakness on the Indian bourses persisted almost all through the session on Thursday. By the end of the session, the stock market tried bouncing back from the day’s low but closed in the negative for the fifth consecutive session. The ongoing negative move has been caused by the scaling back of stimulus by Federal Reserve, decline in global markets and turmoil in select emerging markets like Turkey and Argentina.
The BSE Sensex and NSE Nifty opened in the negative. The Sensex opened 156 points lower at 20,492 while the Nifty opened 53 points lower at 6,067. The range bound move in the negative continued all through and by the end of the session the indices hit its low at 20,344 and 6,027. At that stage the indices pulled back and Sensex hit its days high at 20,528 and closed almost at the same level at 20,498 (down 149 points or 0.72%) while the Nifty hit its high at 6,083 and closed 6,074 (down 47 points or 0.76%). On account of the expiry of the futures and options the NSE recorded a higher volume of 74.48 crore shares.
The Finance Ministry said in a statement that India's economy is better prepared for the consequences, if any, of reduction in bond purchases by the US Federal Reserve and that the Government of India and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets.
India has no target for the rupee's exchange rate and the currency will remain range bound, the economic affairs secretary said, despite recent global market volatility. The government on Thursday increased the subsidy on cooking gas. The government has brought about increase in cylinders to 12 from 9 per household.
US indices closed in the negative on Wednesday. The Federal Reserve on Wednesday took another gradual step toward reducing the pace of monthly asset purchases. The Fed also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market.
Except for Jakarta Composite (up 0.03%) and KLSE Composite (up 0.83%) all the other Asian indices which were trading today closed in the negative. Nikkei 225 was the top loser which fell 2.45%. Taiwan stock markets are closed until 4 February 2014 for the Lunar New Year holiday.
The HSBC China Manufacturing Purchasing Managers' Index fell to a final reading of 49.5 in January 2014 from 50.5 in December 2013, HSBC Holdings PLC said today. New export orders declined for the second straight month and production grew marginally, HSBC said. The final reading was slightly lower than HSBC's preliminary January PMI of 49.6 published on 23 January 2014.
European indices were trading in the red while US Futures were trading in the green. German unemployment declined more than forecast in January as companies grew more confident in the strength of Europe’s largest economy. The number of people out of work decreased by a seasonally-adjusted 28,000 to 2.93 million, after falling a revised 19,000 in December, the Nuremberg-based Federal Labour Agency said today. The adjusted jobless rate unexpectedly fell to 6.8%, unchanged from a revised December figure and matching the lowest rate in at least two decades.
Morgan Stanley agrees with RBI policy to the extent that headline inflation is still very high and it believes the macro conditions warranted higher rates
In its mid-quarterly review of monetary policy, the Reserve Bank of India (RBI) increased key policy rates on 28th January. The policy repo rate under the liquidity adjustment facility (LAF) was increased by 25bps to 8%. In its research note, Morgan Stanley agrees with the RBI policy to the extent that headline inflation is still very high, and it believes the macro conditions warranted higher rates.
As the inflation war is still not fully conquered, Morgan Stanley analysts feel that there are several forces that should help moderate CPI inflation in line with the RBI’s base projection of about 8% during the quarter ending March 2015: the recent monetary tightening, reduced misallocation in household balance sheets (lower allocation to gold and property), the corporate sector’s focus on improving productivity, and the year-on-year decrease in global commodity prices. The key source of concern is the continued high wage growth.
Morgan Stanley points out that in its war against inflation, RBI could be compromising on GDP growth and that it is correct at this stage.
Overall, the RBI policy has been hawkish and the research note underlines it with the words, “we have been arguing that the macro environment warranted higher (interest) rates for some time and hence we do believe that the hawkish move is the right step. We see the policy action indirectly indicating that the RBI is moving towards implementing the recommendations of the Urjit Patel Committee Report.”
GoodLife Products, the Mahendran Holdings unit with help from IVFA has bought back ISS Hicare, the second largest pest control services provider in the country, from Danish ISS Global for an undisclosed sum
India Value Fund Advisors (IVFA) has partnered with GoodLife Products Ltd, a group company of Mahendran Holdings Ltd, to acquire ISS Hicare Pvt Ltd for an undisclosed sum. ISS Hicare is owned by ISS Facility Services India Pvt Ltd, the Indian unit of Danish multinational ISS World Services A/S.
Vikram Nirula and Haresh Chawla from IVFA will join as directors on the Board of GoodLife Products and Mahendran will be serving as the company's chairman.
"The Indian consumer deserves the utmost safety and efficacy in pest control services - we have many ideas on how to transform and invigorate the industry. Hicare is well-positioned to provide a global standard of pest control services to the Indian consumer," said Mahendran, chairman of Mahendran Holdings Ltd.
ISS Hicare was founded by Godrej Industries and Mahendran Holdings in 2004 to provide pest control services to residential customers in Mumbai, eventually expanding to become a pan-India player serving both residential and commercial customers. It was acquired by Danish multinational ISS Global in 2009 and is now India's second largest pest control services provider.