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Jet Airways takes off as FIPB approves Jet-Etihad deal

A bout of initial volatility was witnessed as key benchmark indices pared gains after moving into the positive terrain after opening lower. The S&P BSE Sensex was up 5.41 points or 0.03%, off close to 25 points from the day's high and up about 30 points from the day's low. The market breadth, indicating the overall health of the market, was positive. Sesa Goa declined on weak Q1 result. Jet Airways rose after the Foreign Investment Promotion Board on Monday, 29 July 2013, approved a proposal by Jet Airways (India) to sell a 24% stake to Abu Dhabi-based Etihad Airways, with some conditions. Jindal Steel & Power rose ahead of its Q1 result today, 30 July 2013. Dr Reddy's Laboratories and NTPC, both, edged lower ahead of Q1 results today, 30 July 2013.

At 9:35 IST, the S&P BSE Sensex was up 5.41 points or 0.03% to 19.598.69. The index rose 32.31 points at the day's high of 19,625.59 in early trade. The index declined 21.73 points at the day's low of 19,571.55 in early trade.

The CNX Nifty was up 2.65 points or 0.05% to 5,834.30. The index hit a high of 5,844.75 in intraday trade. The index hit a low of 5,830.25 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 428 shares rose and 393 shares fell. A total of 34 shares were unchanged.

Among the 30-share Sensex pack, 16 stocks fell and rest of them rose. L&T (up 1.15%), Wipro (up 1.1%) and Sun Pharmaceutical Industries (up 0.77%), edged higher.

Dr Reddy's Laboratories lost 0.42% ahead of its Q1 result today, 30 July 2013.

Jindal Steel & Power rose 1.33% ahead of its Q1 result today, 30 July 2013.

NTPC dropped 0.6% ahead of its Q1 result today, 30 July 2013.

Reliance Infrastructure shed 0.7% ahead of its Q1 result today, 30 July 2013.

Tata Motors declined 0.1% as the stock turned ex-dividend today, 30 July 2013, for dividend of Rs 2 per share for the year ended 31 March 2013 (FY 2013).

ACC fell 0.7% as the stock turned ex-dividend today, 30 July 2013, for interim dividend of Rs 11 per share for the year ending 31 December 2013.

Ambuja Cements shed 1.78% as the stock turned ex-dividend today, 30 July 2013, for interim dividend of Rs 1.40 per share for the year ending 31 December 2013.

Swiss cement major Holcim had on 24 July 2013 announced a major restructuring of its India operations -- currently, Holcim owns a little over 50% stake in its two cement subsidiaries in India viz. ACC and Ambuja Cements. The board of directors of Ambuja Cements on 24 July 2013 approved a proposal, wherein Ambuja will first acquire from Holderind Investments, Mauritius (Holcim), a 24% stake in Holcim India for a cash consideration of Rs 3500 crore, followed by a merger of Holcim India into Ambuja. The intra-group transaction will result in Ambuja holding 50.01% stake in ACC. The merger swap ratio proposed by two independent accounting firms and approved by Ambuja's board, is one Ambuja share for 7.4 Holcim India shares, translating into an implied swap ratio of 6.6 Ambuja shares for every ACC share, Ambuja said in a statement. Based on the approved merger ratio, Ambuja will issue 58.4 crore new equity shares of the company to Holcim, as consideration for the merger. Post the merger, the expanded capital base of Ambuja (post cancellation of the shares held by Holcim India in Ambuja and the issuance of new shares as aforesaid) will increase by 28%. Holcim will then own 61.39% of Ambuja and Ambuja in turn own 50.01% of ACC.

In addition, Ambuja's board also provided its approval for Ambuja to make commercially reasonable efforts to invest up to Rs 3000 crore to acquire an economic ownership in ACC of up to 10% without triggering a mandatory open offer.

Ambuja said that this restructuring exercise is expected to be EPS accretive from year one post completion of the transaction. There is synergy potential of about Rs 900 crore through supply chain and fixed cost optimization expected to be realised in a phased manner over two years post completion of the transaction.

DLF dropped 0.62% as the stock turned ex-dividend today, 30 July 2013, for dividend of Rs 2 per share for the year ended 31 March 2013 (FY 2013).

Sesa Goa declined 2.31% on weak Q1 result. The company after market hours on Monday, 29 July 2013, reported 57.05% fall in net profit to Rs 414 crore on 78.18% fall in net sales/income from operations to Rs 378 crore in Q1 June 2013 over Q1 June 2012. The results are on consolidated basis. The sharp decline in net profit was due to suspension of iron ore operations at the company's mines in Goa and Karnataka. The company said its Karnataka mine has received clearance from the Supreme Court, and the company is now awaiting final statutory clearances in order to restart mining at the unit. The company expects to resume mining at Karnataka in Q2 September 2013, it said.

Regarding the suspension of mining in Goa, the date for hearing is yet to be fixed by the Supreme Court. Earlier, the Goa state government and major miners, including Sesa Goa, had filed their responses to the report submitted by the Central Empowered Committee. Separately, Sesa has filed an application to the Supreme Court for a modification or vacation of the court's existing order on the suspension of mining and restrictions on ore transportation.

The company said that exploration activities are progressing well at its Liberia iron ore project, with 91,500 meters of drilling completed till 30 June 2013 across the three deposits viz. Bomi, Bea and Mano River. The company said that the first phase of 2 million tonnes per annum is likely to be completed by December 2014, and that the company remains on track to deliver the first shipment by March 2014.

The company said proposed merger of Sterlite Industries (India) and Sesa Goa and Vedanta Group consolidation has received the approval of the High Court of Madras on 25 July 2013 and the approval of the High Court of Bombay at Goa on 3 April 2013. One of the shareholders of Sesa Goa has filed an appeal against the order passed by the High Court of Bombay at Goa before the Division Bench of the same court. The hearings before the Division Bench have been completed and the order is awaited.

Jet Airways rose after the Foreign Investment Promotion Board on Monday, 29 July 2013, approved a proposal by Jet Airways (India) to sell a 24% stake to Abu Dhabi-based Etihad Airways, with some conditions. The stock was up 2.13%. Last month, FIPB had deferred a decision on Jet-Etihad deal, asking for more details on effective control and ownership of the Indian carrier post the stake sale.

The Jet Airways stock had spurted recently on speculation that the FIPB will clear the Jet-Etihad deal as its meeting on Monday, 29 July 2013.

The Reserve bank of India (RBI) announces first quarter review of the Monetary Policy 2013-14 today, 30 July 2013.

The Reserve Bank of India (RBI) on Monday, 29 July 2013, said that amplifying macro-financial risks warrant cautious monetary policy stance. Recent currency depreciation and upward revisions in fuel prices have increased upside risks to both wholesale and consumer price inflation, the RBI said in a report. The RBI report serves as a backdrop to the First Quarter Review of Monetary Policy Statement 2013-14 to be announced today, 30 July 2013. The RBI has highlighted several risks facing the economy.

Global commodity price inflation is expected to remain contained in the near term, in part helped by slowing growth in China. However, upside risks to global crude oil prices remain from rising geo-political uncertainties in the Middle East, the report said.

Food inflation rose in May and June 2013 and put pressures on general price-level. These pressures could moderate somewhat if the monsoon remains on track during the rest of the season, the report said.

Global financial markets have entered into a period of fresh turbulence, with re-pricing of risks from likely tapering of quantitative easing (QE). Going forward, interest rates could continue to harden and financial conditions could tighten further, keeping markets episodically under stress, the report said. While the current account deficit (CAD) may fall in 2013-14, risks to CAD financing have increased with firming up of US bond yields, the report said. In this milieu, structural policy reforms are needed to reduce CAD and to improve its financing by attracting more stable capital flows to the Indian economy, the report said.

The Reserve Bank of India will endeavour to actively manage liquidity to reinforce monetary transmission that is consistent with the growth-inflation balance and macro-financial stability, the report said.

Asian stocks rose on Tuesday, 30 July 2013, after China's central bank injected funds into money markets easing cash crunch worries. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea, Indonesia and Taiwan rose by 0.6% to 1.56%.

China's central bank injected funds into money markets via open market operations on Tuesday for the first time since February, easing fears of another cash crunch ahead of the month end after a severe cash squeeze in June caused market panic.

Meanwhile, the results of two separate surveys on Chinese manufacturing activity in July are due on Thursday, 1 August 2013.

In Japan, data released on Tuesday, 30 July 2013, showed that Japan's industrial production unexpectedly fell a seasonally adjusted 3.3% in June from the level in May. Japanese household spending also declined, though the monthly unemployment rate eased to 3.9% from 4.1%.

US stocks edged lower on Monday, 29 July 2013, slipping after a decline in June home sales as investors look ahead to key data later in the week and the Federal Reserve's upcoming policy meeting. The National Association of Realtors said pending home sales fell 0.4% in June, with rising rates blamed for undercutting sales momentum.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting today (30 July 2013) and tomorrow (31 July 2013), with expectations that it will offer further clues on how long it will maintain its bond purchases. In his two-day testimony to Congress, which concluded on 18 July 2013, Federal Reserve Chairman Ben Bernanke said plans to taper asset purchases were not on a preset path and stressed intentions to be very responsive to data. Additionally, Bernanke said recent data have been mixed and it was way too early to make a judgment on when the central bank will slow down the pace of its asset purchases. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.

In Europe, the European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions on Thursday, 1 August 2013.

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