Exit poll effect continues for third day
Closing

Ahead of the election results the Indian equity markets touched the new high levels. The Sensex breached the 24K mark during the morning trading session. However, post noon, the index pared some of its gains and closed below the 24k. The BSE-Sensex ended with gains of about 320 points, while the NSE-Nifty closed higher by 95 points. Barring stocks from healthcare sector, all the sectoral indices closed in the green. The BSE Mid Cap and BSE Small Cap indices too ended the day on a positive note with gains of about 1.44% and 1.71% respectively.

As regards global markets, majority of Asian stock markets closed in the green, while European markets opened on a firm note. The rupee was trading at Rs 60.44 to the dollar at the time of writing.

Stocks of pharmaceutical companies ended the day on mixed note. Dr Reddy's and Indoco remedies led the pack of losers while Panacea biotech and Aurobindo pharma were among leading gainers. Dr Reddys declared its results for quarter and year ended March 2014 recently. During 4QFY14, the company's sales witnessed poor growth of 4% YoY on the back of decline in sales of its active pharmaceutical segment. For the full year, revenues were up by 14% YoY. The formulations segment witnessed healthy growth of 27% YoY for FY14 and 21% YoY for 4QFY14. For full year, the Indian formulations were just up by 8% YoY; 18% YoY for 4QFY14. The Active pharmaceutical segment posted meek growth of 1% YoY for the year and for the quarter, the growth declined by 35% YoY. The operating margins of the company stood at 25% and 23% for the full year and the quarter ended March 2014 respectively. Net profits were up by 28% YoY for the year. However, net profits for the quarter were down by 16% YoY due higher taxes and depreciation. Dr Reddys closed down by 4%.

Markets continue to be in an unrelenting mood. It seems that every bit of positive information is getting priced in with election results just two days away. With most exit polls giving NDA a thumping majority, the northward journey may well continue in the days to come. Even India's Warren Buffett, aka, Rakesh Jhunjhunwala believes that this rally is just a beginning of what is going to be "Mother of All Bull markets" in India. It is true that policy deadlock at the Centre handicapped markets in the UPA regime. However, if NDA assumes power this time around we may well have an era where businesses would flourish without bureaucratic hindrance. But it nevertheless seems that the markets are pricing in this possibility way in advance.

What are you views on the same? Do you think that the stock markets have scope of moving higher from here on? Or do you believe NDA's victory is already priced in? Share your views on the Equitymaster Club

Engineering stocks surge
01:30 pm

Indian share markets continued to hover at high levels in the post-noon trading session. Barring pharma, all the sectoral indices are trading in the green with engineering, consumer durable and power stocks being the biggest gainers.

BSE-Sensex is up 354 points and NSE-Nifty is trading 97 points up. BSE Mid Cap is trading 1.2% up and BSE Small Cap index is trading up by 1.1%. The rupee is trading at 59.8 to the US dollar.

All the telecom stocks are trading positive led by MTNL and ITI. As per data released by Telecom Regulatory Authority of India (TRAI), the telecom industry saw an addition of over one million subscribers in March to reach a subscriber base of 933 million. Rural India was the growth driver with the mobile services subscriber base increasing by 2.8 m to reach 377.7 m in March. However, subscriber base in urban India declined by 1 m to 555.3 m for the month of March.

Indian Pharma stocks are trading mixed today. While Panacea Biotech and Aurobindo Pharma are trading higher, Dr. Reddy's is trading on a weak note. As per a leading business daily, Lupin is planning to restructure its domestic operations as domestic growth has slowed down due to lower drug prices on account of the new drug pricing policy. The company wants to divest those brands from its portfolio that generate minimal revenues and lack the key therapies. In addition, Lupin plans to add new products to its portfolio which constitutes critical therapies like cancer drug, where the company lacks presence currently. During 4QFY14, the company's Indian formulation business marginally grew by 2% YoY, while exports surged by 26.4% YoY. Over the past few quarters, growth in the company's domestic business has been under pressure. Lupin stock is trading up marginally.

Indian markets continue to soar
11:30 am

After opening firm, the Indian Indices have continued the upward trend in the last two trading hours. All indices are trading positive. Heavy buying is seen in capital goods and Power stocks.

The BSE-Sensex is trading up 415 points and the NSE-Nifty is trading up 131 points. Similarly, the BSE Mid Cap index is trading up 1.9%, while the BSE Small Cap index is trading up 1.7% today. The rupee is trading at 59.91 to the US dollar.

Most steel stocks are trading higher today. Tata Steel and Steel Authority of India (SAIL) are leading the gainers. As per a leading financial daily, Tata Steel is betting big on a cyclical upturn in European Steel demand. The company's European operations formerly known as Corus will raise US$ 1.24 bn as part of its mega re-financing plan of US$ 7 bn. Tata Steel is looking to lower its debt by over US$ 1 bn as a part of this initiative by re-financing existing loans with new loans and by shifting some debt of its books to other group companies. This is being done despite much of the company's existing debt not coming due until September 2015. Tata Steel is trading up 4.1% today.

Most telecom stocks are trading positive today. Mahanagar Telephone Nigam Limited (MTNL) and ITI Ltd are leading the gainers. As per a press release on BSE, Bharti Airtel has approached investors to sell seven-year euro-denominated bonds and 10-year securities in US dollars. The cost of the proceeds will be used for repaying costlier foreign-currency debt. The company is using this strategy to reduce financing cost. According to an executive, Bharti is likely to raise a minimum of US$ 500 m in each currency. The company is in the process to raise as much as US$ 2 bn this year to refinance its existing debt and bring down finance costs. As domestic interest rates are high, it is cheaper to raise debt abroad. After refinance existing foreign currency debt; rest of the funds will be used for general corporate purposes. Following a successful refinancing initially, Bharti was able to bring down its net debt by US$ 655 m to US$ 10 bn during FY14. The debt is essentially used for the company's Africa operations. The stock is trading up 0.9% today.

Indian share markets open firm
09:30 am

Barring Singapore (down 0.9%), the major Asian stock markets have opened the day on a positive note with stock markets in Japan (up 1.9%) and Korea (up 1.1%) leading the gains. The Indian share markets have also opened the day on a strong note. All sectoral indices have opened in the green with stocks in realty and power space leading the gains.

The Sensex today is up by around 300 points (1.3%), while the NSE-Nifty is up by about 86 points (1.2%). The midcap and smallcap stocks have also opened in the green with BSE Mid Cap and BSE Small Cap indices up by around 1.3% and 1.1% respectively. The rupee is currently trading at Rs 59.70 to the US dollar.

The key macroeconomic data on consumer price inflation (CPI) has been released for the month of April 2014. As per the data, the CPI for the month stood at 8.59%, slightly higher than 8.31 % in the month of March 2014. The data for CPI is at a three month high with food inflation at 9.66% versus 9.1% in March. The rural inflation and urban inflation numbers came in at 9.25% and 7.69% respectively, as compared to 8.89% and 7.51% respectively in the month of March. The combined core inflation data for April stood at 7.8%, almost in line with the numbers in March. The index of industrial production data has also been released for the month of March 2014. The IIP number brought some relief as it shrunk at a slower pace of -0.5% as against -1.8% in February. The overall IIP data for FY14 came in at -0.1% versus 1.1% in FY13.

Power stocks have opened the day mainly in the green with Reliance Infrastructure Ltd and Indiabulls Power Ltd leading the gains. As per a leading financial daily, National Thermal Power Corporation Ltd (NTPC) has cancelled a Rs 230 bn contract with Thiess Minecs India on account of delays in development and operation of the Pakri-Barwadih coal block. Thiess Minecs India was appointed mine developer and operator for the NTPC's captive block in Jharkhand on November 2010 after a global tender. NTPC wanted to start mining coal to reduce reliance on the market for the fuel. The contract was for a period of 27 years, with a development period that was 360 days ending November 25, 2011. As per the management, despite the fact that the development period of the contract was extended twice, Thiess Minecs has failed to make any progress.

Bringing back black money just got harder
Pre-Open

"If all the money kept in Swiss banks was got back to the country, it would not have to go looking for gold", quips the Prime Ministerial candidate of BJP. And we couldn't agree more. That's because India has more money in Swiss banks than all the other countries put together. The perils of black money have haunted the Indian economy for quite some time now.

Everyone has been talking about good governance. But a concrete action is usually given a miss. And discussions remain on paper. But many nations worldwide have woken up to the harsh reality of the menace created by black money. India too is seeing a silver lining. In an effort to seek details on suspected black money stashed in Swiss banks, India, Switzerland and 45 other nations have already agreed upon automatic exchange of tax information. This declaration will make available the details of alleged illicit funds parked in tax havens. Isn't that a revolutionary step in the history of our country? Of course it is. For no longer, money can be hidden on offshore accounts.

But still we have reasons to frown. For India and other countries' wait would last longer. And at least till 2017 when the new global standard for automatic exchange of tax information is expected to come into effect. Thus, the hopes to get the black money back to home country anytime soon have got dashed. The Paris-based think tank OECD is already working on lines of developing new global tax standards. But a lot of work needs to go into converting this standard into a domestic legislation. Also propping up of bank accounts to accommodate the new standards will consume time. And things are at an early stage. Also the new standard is expected to be finalized only in September this year.

It's high time the murky world of black money needs to get uprooted off the system. Let's face it! Challenges of dealing with black money are severe. But well begun is half done!

Do you think black money can be eradicated from the system? If yes, what are the means through which it can be done? Share your views on the Equitymaster Club.