Sensex closes weak for 6th day; banks dive, telecom soars

31 Jul 2013

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The market recouped losses in last hour of trade Wednesday and closed the session with marginal loss. The weakness continued for the sixth consecutive session on rupee depreciation, asset quality concerns of banks, slower sales growth of FMCG companies and cut in FY14 GDP forecast by the RBI.

The BSE Sensex was down 2.64 points to close at 19345.70 after seeing a day's low of 19126.82 today, but crashed nearly 1000 points in the last six sessions. The NSE Nifty slipped 13.05 points to finish at 5742 after hitting an intraday low of 5675.75.

It has strong support in the 5750 area, says Sudarshan Sukhani of s2analytics.com. ''With all the ups and downs that support more or less is likely to hold at least in the short-term so markets will become choppy as markets test this support and decide what to do next,'' he adds.

Indian rupee approached a record low against the US dollar despite several measures the Reserve Bank of India had taken since July 15. The domestic currency fell 32 paise to 60.79 per dollar, though it recovered sharply from day's low of 61.10.

Federal Reserve's two-day meeting outcome today will be the key for equity market and currency tomorrow.

Nick Verdi, Barclays Capital believes if Ben Bernanke fails to give a timeline for tapering off quantitative easing in the FOMC meet today, then dollar will rally which will be a negative for emerging markets (EMs).

"Monetary conditions are actually tightening in India which is being seen as a negative for market and the situation in which the RBI could be in a position to cut rates will be one in which inflation is falling and growth could improve on the back of lower rates. But according to the market, that will not happen anytime soon and as a result the rupee is seeing a selloff," he reasoned.

Banks remained under pressure with the Bankex falling nearly 2 percent after the Reserve Bank of India's credit policy.

4:00 pm Midcap gainers and losers: Idea Cellular, Punj Llyod, Union Bank, South Indian Bank, Sun TV, JSW, OBC, BGR Energy were gainers. Meanwhile on the downside were Essar Oil , Hanung Toys, JP Infra, OnMobile, Geometric and Sintex.

3:55 pm Market closing: It was a volatile day for Dalal Street. The Nifty slumped around a percent before trimming its losses to close at 5742, down 13 points. The Sensex ends down 2.64 points at 19345.70. Both mid and smallcap index close down 0.9 percent. About 835 shares have advanced, 1378 shares declined, and 152 shares are unchanged.

3:50 pm Movers and losers: Bharti Airtel, Dr Reddys Labs, Hindalco, Wipro and BHEL are top gainers in the Sensex. Meanwhile, NTPC, HDFC Bank, ITC, HUL and Cipla are laggards.

3:45 pm FM's take on economy:

  • Will contain FY14 fiscal deficit at 4.8 percent
  • Will provide more money for subsidy bill if needed
  • No reason to doubt revenue projections
  • Planning to raise revenue by 21 percent in FY 14
  • Govt, RBI on same page to contain forex volatility
  • June-July gold imports down on Y-o-Y basis
  • Will take steps to up inflows; ask PSBs to raise funds abroad
  • Looking at some measures to attract long-term NRI bonds
  • Some import compression will take place on luxury goods
  • Target to keep FY14 gold imports well below 845 tonnes
  • Do not target a particular level for rupee
  • Sovereign bond issue an option but won't rush into a decision

3:35 pm RBI action on rupee: The Reserve Bank of India will consider bond sales to further drain cash and will "only" roll back current steps to defend the currency in "a calibrated" manner when volatility in exchange rates have subsided, Governor Duvvuri Subbarao said, reports Reuters.

Subbarao added in a conference call with analysts the RBI has refrained from describing its cash-tightening measures as "temporary" to avoid misleading markets as to the planned timing of its actions.

3:30 pm Stock Alert: Strides Arcolab plunges 15 percent as the drug company has submitted its response to observations made in June by the US Food and Drug Administration about its drug factories, the company's chief executive said, reports Reuters.

"We have submitted our response and we are confident about resolving it," Arun Kumar, group chief executive officer, told Reuters over the phone. "We continue to supply to the US."

3:25 pm Boardroom: After having posted a robust 41 percent year-on-year rise in its net profit , HCL Tech aims to maintain its growth in the upcoming quarters. The guidance comes on a day when the stock rallied to a new high of Rs 925.50 on the back of the strong Q1 numbers.

In an interview to CNBC-TV18 , Anant Gupta, chief executive officer & Anil Chanana, chief financial officer share their expectations from the company. Gupta explains the IT major is now shifting focus to the infrastructure markets as the penetration of infrastructure by Indian Outsourcing Providers (IOP) is less than 5 percent.

"I think the journey of an alternate operating model is available and it still is leading that charge. If one looks at the amount of deals which will get renewed from the rebid market in this calendar year going into calendar year 15, I think the market is there," adds Gupta.

The market is flat in the last trading hour of the day.  The Nifty is still struggling below 5750 level and is at 5736, down 20 points.  The Sensex is down 20.49 points at 19327.85. About 721 shares have advanced, 1387 shares declined, and 150 shares are unchanged.
 
Banks, FMCG and realty are under selling pressure but metals, oil and gas, auto and pharma stocks are adding strength to the indices.

Bharti Airtel is on fire (up 7 percent) while Idea Cellular surges 8 percent ahead of April-June quarter earnings expected tomorrow.

JSW Steel shares gained more 4 percent. The company reported a standalone loss at Rs 220 crore in Q1 as against profit of Rs 269 crore while consolidated net loss stood at Rs 382 crore versus profit of Rs 49.6 crore year-on-year, dragged by forex loss of Rs 850 crore on rupee depreciation.

The company says that steel demand across the world is sluggish. "EBITDA margins have improved Q-o-Q despite falling realisations. We expect turnaround of JSW Ispat by January 2014," it adds.

JSW Steel shares gained more 4 percent. The company reported a standalone loss at Rs 220 crore in Q1 as against profit of Rs 269 crore while consolidated net loss stood at Rs 382 crore versus profit of Rs 49.6 crore year-on-year, dragged by forex loss of Rs 850 crore on rupee depreciation.

The company says that steel demand across the world is sluggish. "EBITDA margins have improved Q-o-Q despite falling realisations. We expect turnaround of JSW Ispat by January

MD & CEO Chanda Kochhar says that first quarter recoveries were Rs 310 crore while net slippages were Rs 806 crore. Fresh slippages stood at Rs 1,116 crore during the quarter, she adds.

According to her, deposit book slipped Q-o-Q due to low term deposit growth. "We are consciously going slow on loans for commercial vehicles that fell 19 percent Y-o-Y as on June 30."

02:30pm Equity benchmarks trimmed losses in afternoon trade, helped by telecom, oil & gas, technology and metals stocks. However, banks remained under pressure.

The BSE Sensex is down 0.99 points at 19347.35, and the NSE Nifty is down 18.25 points at 5736.80.

Telecom stocks surged quite sharply after Bharti Airtel's first quarter earnings. Bharti, Reliance Communications and Idea Cellular rallied 6 percent each.

Country's largets private sector lenders ICICI Bank and HDFC Bank lost 1.5-2 percent while their rival State Bank of India declined 0.8 percent.

Given the macro economic environment is shaping up, there may be further slippages as far banks as concerned , cautions Nitin Kumar of Quant Broking.

The possibility of further liquidity measures from the Reserve Bank of India (RBI) cannot be ruled out considering the way the rupee is behaving and this is turn is taking a toll on banks, he told CNBC-TV18 in an interview. RBI's recent financial stability report says gross NPL at the systemic level will increase to 4.4 percent or near about even in severe risk case.

1:50 pm Boardroom: In an interview to CNBC-TV18, Ravi Uppal, managing director, Jindal Steel and Power confirmed of having taken an in-principle nod for the buyback programme. "We are confident of having the ability to go ahead with the buyback," said Uppal.

Meanwhile talking about Q1 numbers, he said that the firm's steel segment performed better than industry peers.

1:45 pm Macro outlook: Reserve Bank of India's dovish tone in the first quarter policy has diluted impact of its recent liquidity measures, believes Sonal Varma of Nomura India.

Instead of widely anticipated rate hike, RBI yesterday hinted at possible rate cut going forward. "The market is testing the RBI in terms of how far it can just go in terms of preserving currency stability and therefore the Central Bank's credibility is at stake here."

Varma stressed that considering the uncontrollable fall of Indian currency, there is a high risk of further tightening measures. The central bank has many tool in its kitty apart from key rates, to tighten money supply in the economy.

RBI can either further tighten refinancing options or can also hike the marginal standing facility (MSF) rate, Varma suggested.

1:35 pm Earnings: India's biggest private sector lender ICICI Bank's first quarter net profit rose higher-than-expected 25.3 percent year-on-year to Rs 2,274 crore, but higher provisions capped the further rise in profitability.

Net interest income rose lower-than-expected 19.65 percent on yearly basis to Rs 3,820.5 crore in the June quarter.

Analysts on an average had expected the lender to report profit after tax of Rs 2,252 crore and net interest income of Rs 3,850 crore for the quarter.

1:25 pm Loser: Axis bank slumps over 5 percent after agency reports indicate that it has hiked deposit rates for some tenures by 50-400 bps.

It's a difficult day of trade with the Nifty struggling below 5700 pulled lower by capital goods and banks. The Sensex is down 140.78 points at 19207.56 while the Nifty slips 57.95 points to 5697.10.

About 489 shares have advanced, 1473 shares declined, and 116 shares are unchanged.

The Bank Nifty is down 3 percent below the key 10,000 mark. The cuts are much deeper across mid and small caps. Globally all eyes on the crucial fed announcement later today.

The rupee fell sharply coming close to its previous all time low as dollar strengthened across Asia and emerging markets. Corporate and FIIs were note buying dollars; public sectors banks sold dollars around the USD 61.15 mark which eased the pressure on the rupee somewhat.

Bharti sees a smart 5 percent jump after Q1 margins improve to over 32 percent and the India wireless business clocks robust growth. Voice revenue per minute for the India wireless business rises to over 36 paise.

Equity benchmarks continued to trade with a negative bias on weakness in banks, FMCG, oil & gas and metals stocks. Shares of country's largest private sector lender ICICI Bank fell 2 percent on higher provisions during the first quarter of FY14.

Net profit grew higher-than-expected 25.3 percent year-on-year to Rs 2,274 crore while net interest income rose lower-than-expected 19.65 percent on yearly basis to Rs 3,820.5 crore in the June quarter.

The BSE Sensex is down 114.87 points at 19233.47, and the NSE Nifty is down 49.20 points at 5705.85, but the broader markets tumbled around 2 percent.

The market breadth remained weak; about 504 shares advanced while 1434 shares declined on the BSE.

The domestic currency lost 61 paise to 61.08 against the dollar. Bearish Richard Jerram, chief economist at Bank of Singapore says further depreciation of Indian rupee is almost unavoidable as the credit growth downgrade may put the currency under stress.

Structural slowdown and large current account deficit (CAD) have exposed the Indian economy and inability of the Reserve Bank (RBI) to cut interest rates worsens India's growth outlook, he told CNBC-TV18. He feels funding the deficit will be a challenge for India.

11:50 pm Weakling: NTPC plunges 7 percent on the back of poor April-June quarter earnings. On Tuesday, the company reported a marginal year-on-year rise in its June quarter profit to Rs 2527 crore as it managed to lower fuel cost. Sales, however shrunk over 3 percent year-on-year to Rs 15613 crore. EBITDA margins of the state-run firm came in at 27.3 percent as against 23.7 percent Y-o-Y.

11:45 pm Earnings: Public sector lender Andhra Bank's first quarter net profit fell 36 percent year-on-year to Rs 231.3 crore on higher provisions, sending shares around 8 percent lower to touch more than four-year low of Rs 62.85 on the BSE.

Net profit was majorly supported by other income that nearly doubled to Rs 467.7 crore in the quarter ended June 2013 from Rs 235.7 crore in a year ago period.

Net interest income of the bank also declined 6.87 percent on yearly basis to Rs 874 crore in first quarter.

Gross non-performing asset (NPA) increased 103 bps Q-o-Q (up 201 bps Y-o-Y) to 4.73 percent while net NPA rose by 82 bps sequentially (up 175 bps Y-o-Y) to 3.27 percent during the quarter.

11:35 pm Company press conference: The recent Trai guidelines have provided much-needed clarity on roaming, says Bharti Airtel . However, regulatory headwinds are still around, issues of one-time licencees, licence extensions, among others.

Bharti Airtel operates in nearly 20 countries in Asia and Africa. Bharti's business data grew in double digits. The company witnessed 17 percent growth in Africa data business. Its direct-to-home, or DTH, business witnessed a strong quarter with 34 percent growth year-on-year (Y-o-Y).

11:25 pm Management speaks: YES Bank, the country's fourth-largest private sector bank today announced a hike in its base rate by 25 bps to 10.75 percent in order to combat the rupee downturn. Speaking to CNBC-TV18 about its possible impact, CFO Rajat Monga says the hike will not affect the credit growth .

He says the base rate hike was accompanied by an increase in deposit rates. "Increase in base rate is more or less a balancing act between the deposit pricing and non-pricing," he adds.

The market is still reeling pressure as banking, FMCG, and realty stocks drag. The Sensex is down 119.25 points at 19229.09 while the Nifty slips 50.70 points at 5704.35. About 417 shares have advanced, 1259 shares declined, and 94 shares are unchanged.

The midcap stocks are punished the most with the index falling 2 percent.

Meanwhile, Asian shares are mixed before FOMC policy decision. Nikkei is weighed down by a stronger yen, while China is holding up ahead of china's official manufacturing data.

In currencies, dollar index is still below the 82 mark, euro above 1.32 and the yen has appreciated to 98 vs the dollar in the last few days.

In commodities, Brent retreats to sub USD 107, and Nymex below USD 104 on worries of slower global economy, gold continues to be stable at USD 1330 an ounce.

10:50am Havells India lost another 7 percent on top of yesterday's 12 percent fall post disappointing earnings. Bank of America Merrill Lynch has cut its target price to Rs 688 on the stock while maintained a neutral call on the stock.

Petronet LNG slipped more than 3 percent on disappointing earnings. Revenues remained unchanged at Rs 8444 crore while EBITDA dropped 8 percent year-on-year to Rs 398 crore profits plunged 8 percent Y-o-Y to Rs 225 crore in June quarter.

IFCI is down over 3 percent after reporting weak numbers. Net interest income plummeted 17 percent Y-o-Y to Rs 145 crore while profit after tax slipped 41 percent Y-o-Y to Rs 55 crore in June quarter on higher provisions that rose almost 200 percent to Rs 53 crore.

10:25am The market remained under pressure Wednesday with the Nifty falling below 5700 level, but the cuts are deeper in midcaps and smallcaps.

The BSE Sensex is down 134.75 points at 19213.59, and the NSE Nifty is down 52.80 points at 5702.25 after hitting an intraday low of 5675.75 in morning trade, but the broader markets are thrashed.

The BSE Midcap Index plunged 2.2 percent and Smallcap declined 1.75 percent. Declining shares outnumbered advancing ones by 1244 to 337 on the BSE.

Realty, Bank, PSU, Power and FMCG indices lost 2-3 percent while Oil & Gas, Metal and Capital Goods slipped 0.8-1.4 percent.

Indian rupee weakened further, depreciating by 59 paise to 61.06 against the US dollar.

Nizam Idris, head-fixed income and currency strategy, Macquarie believes the rupee weakening is due to the market reacting to the Reserve Bank of India's dovish comments in its June monetary policy. The rupee today approached a record low on doubts whether the central bank can defend the currency with its existing cash-draining measures.

In an interview to CNBC-TV18, Idris says that the market thought it was probably too soon for the central bank to make such dovish statements. He adds that the RBI may unveil a new set of measures to rein in the Indian currency if it sees a further weakening to 62 against the dollar.

Meanwhile, Bharti Airtel shares rallied 3.5 percent post first quarter earnings. Country's largest telecom operator's consolidated net profit rose higher-than-expected 35.5 percent quarter-on-quarter (down 10 percent Y-o-Y) to Rs 689 crore, but consolidated revenues dropped 0.9 percent Q-o-Q (9 percent growth on yearly basis) to Rs 20,264 crore during quarter.

The rupee depreciation and better-than-expected earnings in April-June quarter (fourth quarter) pushed HCL Technologies nearly 2 percent higher today. Consolidated net profit rose better-than-expected 41 percent year-on-year (16 percent quarter-on-quarter) to Rs 1,210 crore.

9:55 am Stock alert: The National Fertilizer falls 4 percent on the BSE as it kicks off offer-for-sale (OFS) today. The base price for the OFS has been fixed at Rs 27 apiece. The stock is currently at Rs 25.60 on the BSE.

9:50 am Market Outlook: Ajay Srivastava, CEO, Dimensions Consulting feels that the RBI should focus on growth since its rupee move failed. As an investment strategy, he stresses that it is not a time to buy and would short leveraged stocks. Srivastava advises to buy private banks only after three-four days.

9:45 am Weakling: Yes Bank , announced the revision of it's deposit rates by 0.25 percent-0.5 percent in select tenors. This provides an opportunity for retail depositors to lock in higher rates on term deposits.

Yes Bank has also consequently revised its base rate to 10.75 percent (an increase of 0.25 percent) effective August 1, 2013.

Meanwhile, the RBI said it may make necessary changes in the required norms on appointment of directors on the bank's boards if needed. "This boardroom battle which is going on (at YES Bank), we are studying it and if we think that some measure needs to be taken on the issue, we will look into that," said Deputy Governor in-Charge of Banking Supervision Anand Sinha during the customary post-policy interaction at the RBI headquarters.

The stock hits 52-week low and plunges 17 percent in the early trade. The stock is currently down 13 percent on the BSE.

9:40 am RBI action: The Reserve Bank of India likely sold dollars via state-run banks on Wednesday as the rupee headed towards a record low, three dealers told Reuters.

RBI likely sold dollars from 61.17 levels, they said. The rupee was last at 61.12/13, not far from the life low of 61.21 seen on July 8.

9:35 am Market stats: The Sensex is down 186.79 points  at 19161.55, and the Nifty slips 65.40 points to 5689.65. About 212 shares have advanced, 847 shares declined, and 50 shares are unchanged. Mid and smallcap stocks are bleeding with a lose of more than 1 percent from previous close.

9:30 am Earnings: Bharti Airtel's consolidated net profit rose higher-than-expected 35.5 percent quarter-on-quarter to Rs 689 crore, but consolidated revenues dropped 0.9 percent Q-o-Q to Rs 20,264 crore during quarter.

Analysts on an average had expected it to report net profit at Rs 650 crore on revenues of Rs 21,339 crore for the quarter.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased lower-than-expected 0.9 percent to Rs 6,545 crore in April-June quarter from Rs 6,487 crore in previous quarter and analysts expectations of Rs 6,767 crore.

9:20 am Earnings: HCL Technologies fourth quarter consolidated net profit grew 16.3 percent quarter-on-quarter to Rs 1,210 crore.

Consolidated rupee revenue rose slightly higher-than-expected 8 percent Q-o-Q to Rs 6,944 crore while dollar revenues soared 3 percent Q-o-Q to USD 1,227.6 million in April-June quarter.

Analysts on an average had expected it to report net profit at Rs 1,056 crore on revenues of Rs 6,900 crore and dollar revenues of USD 1224 million. The stock is up 2.2 percent on the BSE.

The market has opened on a quiet note but the rupee is playing havoc as it touched 61.06 per dollar. The Sensex is down 22.95 points at 19325.39, and the Nifty is at 5738.35, down 16.70 points. About 107 shares have advanced, 169 shares declined, and 30 shares are unchanged.

Meanwhile, Rupee opened weak by 36 paise at 60.84 per dollar against 60.48 Tuesday.

Pramit Brahmbhatt, Alpari India said, "With no new measures forthcoming from the central regulators and with policies that are hurting economic growth, the rupee has again revived its downward trend after consolidating for a couple of trading sessions. Moreover, month-end dollar demand will put more pressure on the rupee. The range for the day is seen between 60.10-60.90/USD."

Investor sentiment is cautious ahead of the Fed two-day meet outcome due today. The Federal Reserve is expected to maintain its accommodative monetary policy, but investors will be looking for hints on when the central bank might start scaling back on its monthly bond-buying programme. In addition, markets will also be eager for hints for who may replace Ben Bernanke next year as Fed chairman.

ICICI bank is expected to deliver a stable set of numbers. In a CNBC-TV18 poll, the bank is seen reporting 24 percent growth in profits year-on-year. Margins are seen to be stable sequentially.

In commodities, Brent crude prices slip to USD 106 per and Nymex slips to USD 103 per barrel.

From precious metals space, gold hovers around 1325 dollars an ounce.

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