Nifty ends below 6200; Jubilant Life up 16%, IT drags

23 Oct 2013

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3:50 pm Market closing: The market ended on a negative note with the Nifty closing below 6200, after two straight days. The Nifty ended at 6178.35 down 24.45 points. The Sensex slipped 97.09 points to close at 20767.88. About 1176 shares have advanced, 1225 shares declined, and 176 shares are unchanged. Jet Airways will report its second quarter numbers today. The street expects Jet to report yet another big loss, as profitability is likely to take a hit due to rupee volatility and higher ATF prices. Margins also are likely to take a big hit again. However, Jet is expected to report a small growth on the topline.

3:40 pm FII View: The widely held view on the street is that indices are poised to make a new high shortly . That may well turn out to be true. Yet the rally could end badly as corporate earnings continue to disappoint, warns Neelkanth Mishra of Credit Suisse, and suggests that investors should be booking profits instead of adding to their existing positions. According to Mishra, expectations of the BJP-led NDA coalition returning to power, and hopes of delayed cutback in the monetary stimulus in the US have been the major drivers of the rally.

3:30 pm Result: Indias largest two-wheeler maker Hero Motocorp impressed the street on every parameter with second quarter (July-September) net profit rising 9.2 percent year-on-year to Rs 481 crore, driven by revenues and other income. Revenues increased 10.4 percent to Rs 5,726 crore in second quarter from Rs 5,187.4 crore in a year ago period. According to a CNBC-TV18 poll, analysts had expected profit of Rs 464 crore on revenues of Rs 5,670 crore for the quarter. Other income of two-wheeler maker rose a little over 16 percent on yearly basis to Rs 115 crore during September quarter.

The market is still reeling under selling pressure as the Nifty is struggling below the 6200-mark. The Nifty is down 38.60 points at 6164.20 while the Sensex is down 134.72 points at 20730.25 About 1060 shares have advanced, 1265 shares declined, and 162 shares are unchanged. Wipro , Bajaj Auto , NTPC , Sun Pharma and BHEL are among top losers in the Sensex. Meanwhile, only banking, capital goods and FMCG indices are in the green with gainers like GAIL , Cipla , SBI , L&T and ICICI Bank . ACC'S third quarter profits and margins missed street estimates, with profits coming in at Rs 118 crore versus estimates of Rs175 crore. The EBITDA margin fell to 11.4 percent versus 18 percent year-on-year. Net sales though were in line with estimates. Jubilant Life Sciences is up 16 percent as reports indicate the company may soon list itself on NYSE and is looking to raise USD150-200mn through IPO.

02:23pm Market update The market remained under pressure with the equity benchmarks falling one percent, weighed down by profit booking in heavyweights. The Sensex is down 197.93 points at 20667.04, and the Nifty is down 61.25 points at 6141.55. Declining shares outnumbered advancing ones by 1335 to 998 on the BSE. Shares of HDFC Bank, Reliance Industries, HDFC and TCS lost 1 percent each while Tata Motors, Sun Pharma, Bajaj Auto, NTPC and BHEL lost over 2 percent. Wipro is the major loser among frontliners in the Sensex, falling 4 percent after second quarter results while DLF is the top loser in the Nifty with 4.5 percent loss. However, State Bank of India rallied 2 percent as banking secretary says the finance ministry will infuse Rs 2,000 crore in SBI. Top lender is likely to raise Rs 5,000 crore through QIP. GAIL surged nearly 4 percent on reports that oil ministry decides to exempt GAIL from sharing oil subsidy because it does not make windfall profits from crude and gas price spikes.

2:05 pm Market check: The market is sliding further.  The Sensex is down 271.01 points or 1.30 percent at 20593.96, and the Nifty is down 85.00 points or 1.37 percent at 6117.80. About 977 shares have advanced, 1275 shares declined, and 156 shares are unchanged. HUL is up around 6 percent on the BSE.

2:00 pm Results: Cement maker ACC's third quarter (July-September) net profit fell 51 percent (higher than analysts' estimates) year-on-year to Rs 118.9 crore, impacted due to sluggish market conditions and lower realisations. "The macro-environment continued to be dull and characterised by slow industrial and agricultural growth, rising prices and volatile foreign exchange rates," the company said in its release. Blended realisations dropped 3.8 percent (Y-o-Y). Net sales declined marginally to Rs 2,509 crore during September quarter from Rs 2,542 crore in a year ago period, meeting analysts' forecast.

1:55 pm Management interview: Having beaten street expectations with its Q2 results, Rajat Monga, chief financial officer, YES Bank hopes to maintain the bank's margins at 2.9 percent. The bank's net interest margins (NIMs) remained flat on a year-on-year basis at 2.9 percent while its net profit increased 21.2 percent in the quarter ended September. "If one looks at our gross NPAs, it is 28 bps, net NPA is 4 bps. If I add some more asset quality features to it, our restructured book is 24 bps. So, that is about half of what it was same time last year. So, the old restructurings are now beginning to find redemptions of their scheduled repayments. Hence, the book is also reducing," adds Monga. On his outlook for loans, Monga says the festival season and agricultural season will help pull up loan growth, now at 13 percent, to 20 percent in FY14.

1:45 pm Results: Exide Industries disappointed the street with second quarter (July-September) net profit falling 1.3 percent year-on-year to Rs 118.6 crore, dented by weak demand and rupee depreciation. Revenue fell 6.5 percent - lower than analysts' expectations - to Rs 1,432 crore during September quarter from Rs 1,531 crore in a year ago period. The stock is down 2 percent on the BSE.

The Sensex is down 234.39 points at 20630.58, and the Nifty slips 71.40 points to 6131.40. About 955 shares have advanced, 1291 shares declined, and 159 shares are unchanged. Technology, autos and realty stocks are the worst hit. GAIL, Cipla, SBI, ICICI Bank are top gainers in the Sensex. On the losing side are Wipro, NTPC, Tata Motors, Sun Pharma and Dr Reddy's Labs. In earnings today, expectations are high from Hero MotoCorp with margins likely to top 14 percent in September quarter. Profits though are seen just 5 percent higher. Volume growth and market share will be the key things to watch out for.

12:45pm Hotel Leela gains strength Hotel Leela shares gained more than 4 percent as the company may divest stake in its Leela Palace Delhi and Chennai to reduce debt. The company is in talks with individual investors, reports CNBC-TV18 quoting sources. Hotel Leela's debt stands at over Rs 4,500 crore.

12:30pm YES Bank Boardroom Having beaten street expectations with its Q2 results , Rajat Monga, chief financial officer, YES Bank hopes to maintain the bank's margins at 2.9 percent. The bank's net interest margins (NIMs) remained flat on a year-on-year basis at 2.9 percent while its net profit increased 21.2 percent in the quarter ended September. A very important part of the result is the bank's gross non-performing asset (NPA) that stood at 0.28 percent. While asset quality continues to be a concern, the headline number for the same is quite modest says Monga. ''If one looks at our gross NPAs, it is 28 bps, net NPA is 4 bps. If I add some more asset quality features to it, our restructured book is 24 bps. So, that is about half of what it was same time last year. So, the old restructurings are now beginning to find redemptions of their scheduled repayments. Hence, the book is also reducing,'' adds Monga. On his outlook for loans, Monga says the festival season and agricultural season will help pull up loan growth, now at 13 percent, to 20 percent in FY14.

12:10pm The market extended losses in noon trade with the Sensex shedding more than 200 points on profit booking in index heavyweights. The Sensex is down 196.99 points at 20667.98, and the Nifty is down 57.50 points at 6145.30. BNP Paribas Securities feels that the narrow market looks tempting to book profits. Manishi Raychaudhuri, managing director, Asian equity strategist, head of research - India feels that although the market has rallied, there is still not much juice left. Improved current account and trade deficit may have been the reasons for the rally, he says. He advises investors not to plunge headlong in the midcaps, despite a relative divergence in valuation between them and large-caps. He also foresees poor earnings from PSU banks, Tier-II infrastructure companies are expected going forward. Oil & gas, auto, technology, healthcare and FMCG stocks are under pressure. HDFC and HDFC Bank fell 0.8 percent and 1.6 percent, respectively. Wipro is the biggest loser in the Sensex, falling nearly 5 percent post second quarter earnings and on the back of profit booking. In fact, TCS and Infosys too declined around 1 percent. Tata Motors and Bajaj Auto plunged 2.5 percent each whereas GAIL rallied more than 4 percent as reports indicated that oil ministry decides to exempt GAIL from sharing oil subsidy because it does not make windfall profits from crude and gas price spikes. State Bank of India rose nearly 2 percent as the government is likely to infuse Rs 2000 crore in the bank, reports CNBC-TV18 quoting sources. It is learnt that the bank is likely to raise Rs 5000 crore through QIP issue.

11:55 am Buzzer: GAIL gains 4.5 percent as reports suggest oil ministry has decided to exempt it from sharing oil subsidy because it does not make windfall profits from crude and gas price spikes. "GAIL's exit from the subsidy sharing mechanism is justified because the reasons for it to share subsidy no longer exist. Gail was asked to contribute because the government had allocated it cheaper APM gas," the report quoted a minsitry official.

11:40 am Results poll: State-run Power Grid Corporation of India will declare its second quarter (July-September) results today. According to a CNBC-TV18 poll, analysts expect the company's profitability will be increased due to commissioning of around Rs 16,080 crore worth of power projects in last four quarters and around Rs 1,700 crore in September quarter. Profit after tax may grow 11.3 percent year-on-year to Rs 1,253 crore and total income is likely to increase 15.8 percent on yearly basis to Rs 3,573 crore during September quarter.

11:40 am Brokerage view: Credit Suisse has downgraded Cairn India to "neutral" from "outperform" after saying its July-September profit-after-tax and revenue missed estimates. The investment bank says lower crude realisations "explains almost the entire magnitude of the miss" in revenue. "With the recent stock move, and with only 12 percent potential upside left, we downgrade to neutral," Credit Suisse said in a note on Wednesday, referring to its target price of Rs 372.

11:30 am Wipro boardroom: IT services major Wipro, which has been lagging its peers for a while now, hopes to match industry growth standard next financial year, the Wipro management told CNBC-TV18 in a discussion on its second quarter earnings. The company said that second quarter earnings were driven by a mix of operational efficiency as well as a favourable rupee. The banking and financial services vertical was the main driver of growth during the quarter that went by. The company has guided for a revenue growth of 1.7-3.6 percent in the current quarter. The company's strategy is to focus on its top 125 accounts that have been yielding results. Wipro said it is comfortable with a 13-15 percent attrition, and that its utilisation levels, excluding trainees, was between 75-78 percent.

The market is sliding further on profit booking. The Sensex is down 120.09 points at 20744.88, and the Nifty is down 37.05 points at 6165.75. About 951 shares have advanced, 799 shares declined, and 103 shares are unchanged. GAIL, SBI, Sesa Sterlite, Cipla and Tata Power are top gainers on the Sensex. Among the losers are Wipro, Tata Motors, Bajaj Auto, Dr Reddy's Labs and HDFC Bank. Asian markets turn tide with Japan and Shanghai hitting one week lows. Traders are attributing it to profit taking after strong gains last week and weak data from Chinese banks. The dollar index weakened and traded at a fresh 2-year low against the euro. In Asia the won and ringgit traded at multi-month highs. Gold traded at 4-week highs while Brent was mostly unchanged at levels of USD 109-USD 110 per barrel. Back home, the rupee gave up early morning gains but is still strong against the dollar following the overnight strength seen in other emerging market currencies. The bond maket trading is softer in-line with the strength seen in the currency on the better US jobs report.

10:50am Stocks In News GAIL gained 3 percent as reports suggest that oil ministry decides to exempt GAIL from sharing oil subsidy because it does not make windfall profits from crude and gas price spikes. ACC and Ambuja Cements are both down over 1 percent ahead of their results as lower realisations and higher input costs will result in lower margins. A CNBC-TV18 poll expects ACC to deliver a net profit which is lower by 28 percent while Ambuja's net profit is seen lower by 31 percent.  Sesa Sterlite rallied 2.5 percent on hopes of some relaxation of the mining and transportation bans of iron ore currently prevailing in Goa as the SC continues hearing this mining case today. Gujarat Pipavav surged 8 percent as the company reported good earnings with net profit up 60 percent Y-o-Y. Macquarie has an outperform rating on the stock and upped target price to Rs 64 versus earlier Rs 59. The brokerage house says earnings upgrade cycle is starting and the company is trading at compelling valuation. Jubilant Lifesciences gained 5.5 percent as reports indicated that the company may soon list itself on NYSE and is looking to raise USD 150-200 million through IPO.

10:35am Market Expert Amisha Vora, joint MD, Prabhudas Lilladher believes the Reserve Bank of India policy on October 29 will keep the market volatile as that will not only entail a repo rate hike but will also keep monetary policy and money supply tight. Vora expects slightly rural oriented companies like autos and within autos two-wheelers or stocks like Mahindra Finance to do better going ahead. However, she adds that in the last two years financials were leading the rally but for the next three-six months, in case market has the potential to rally, financials are unlikely to lead the rally.

10:16am Equity benchmarks declined amid choppy trade on Wednesday, but the broader markets continued to outperform benchmarks for the third consecutive session. The Sensex is down 71.27 points at 20793.70, and the Nifty is down 21.95 points at 6180.85 while the BSE Midcap and Smallcap indices gained 0.45 percent each. Two shares advanced for every share declined on the Bombay Stock Exchange. The market is consistently getting supported by foreign money especially after deferment of Fed tapering, that is why it has been holding its three-year high. Foreign institutional investors have bought nearly Rs 11,000 crore worth of shares in October so far, in addition to Rs 12,632.90 crore worth of buying in September. The recent rally in Indian equity market is all thanks to Fed deferring quantitative easing (QE3) and a global markets rally, says Jitendra Sriram, managing director and head of research, HSBC India. However, this rally is unlikely to continue adds Sriram. ''I am still quite cautious on the market. I do not think there is more upside to this market into this year-end at least. I still think that the market needs some time for earnings to catch up before it can form some higher base from hereon,'' he highlights. State Bank of India gained 2.6 percent as banking secretary on Tuesday said additional capital infusion in PSU banks will take place by March. SBI chairperson will also take decision on QIP within a month. Sesa Sterlite and GAIL rallied 2.5-3 percent while Hero Motocorp gained 0.25 percent ahead of second quarter numbers today. According to a CNBC-TV18 poll, analysts expect an unimpressive performance during the quarter, growth will be marginal given the slowdown in the sector. However, Wipro is the major loser, falling nearly 6 percent post September quarter earnings that were in-line with analysts' expectations. The stock seems to have discounted earnings. TCS and Infosys too are under pressure, losing 1.4 percent on profit booking.

10:00 am Market check: The Sensex is down 112.63 points at 20752.34, and the Nifty is down 37.20 points at 6165.60. About 701 shares have advanced, 461 shares declined, and 53 shares are unchanged.

9:50 am Results Poll: Hero Motocorp , the country's largest two-wheeler maker, will announce its second quarter (July-September) results on Wednesday. According to a CNBC-TV18 poll , analysts expect an unimpressive performance during the quarter, growth will be marginal given the slowdown in the sector. They expect profit after tax of the company to rise 5.5 percent year-on-year to Rs 464 crore during the quarter. Revenues may increase 9 percent on yearly basis to Rs 5,670 crore on the back of 6.3 percent volume growth.

9:40 am FII view: Jitendra Sriram, managing director and head of research, HSBC India feels the market rally is unlikely to continue. "I am still quite cautious on the market. I do not think there is more upside to this market into this year-end at least. I still think that the market needs some time for earnings to catch up before it can form some higher base from hereon," he adds Sriram believes the second half of the earnings season will be a dampener as the IT companies and private banks have already reported strong numbers. The other market moving event will be the Reserve Bank's monetary policy and Sriram expects the central bank to tighten rates by 50 basis points (bps) by March 2014.

9:30 am Big fall: Shares of Wipro  loses around 5 percent on the BSE. Wipro announced its September quarter results on Wednesday after market hours. Its consolidated net profit grew 28 percent year-on-year to Rs 1,932 crore and revenues jumped 19 percent on yearly basis to Rs 10,992 crore for the quarter ended September 2013. It crossed revenues Rs 10,000 crore for the first time in a quarter. Revenues from its IT services increased 12.67 percent sequentially (20 percent year-on-year) to Rs 10,068 crore in the quarter ended September 2013, meeting analysts' expectations. However, Ankita Somani, Analyst at Angel Broking is of the view that Wipro has been a laggard in terms of revenue growth among the top four IT companies. Her pecking order remains the same, with TCS leading the pack, followed by HCL Tech and Infosys and then Wipro.

The market has once again opened on a flat note. The Sensex is up 24.26 points at 20889.23, and the Nifty is up 9.95 points at 6212.75. About 278 shares have advanced, 77 shares declined, and 11 shares are unchanged. Weakness in Wipro, TCS, HDFC Bank , Infosys and Coal India are putting pressure to the indices. GAIL , Sesa Sterlite, Hindalco , Tata Power , Hero MotoCorp are among top gainers in the Sensex. The rupee strengthened by 55 paise in early trade on Wednesday at 61.10 per dollar as compared to previous day's closing of 61.65. Pramit Brahmbhatt of Alpari India feels a weak dollar due to poor US jobs data may aid rupee gains seen this week. Also healthy capital inflows by FIIs and dollar selling by exporters at around 62/dollar levels will add to gains, he adds. "However, strong month-end dollar demand from importers may cap gains. The range for the day is seen between 61.05-62/dollar," Alpari said. From precious metals space, gold prices hit at a three-week high after weak US jobs figures raised expectations no taper by the Fed well into 2014. Analysts see higher levels if the dollar weakens further today. Meanwhile, the markets in US recovered from session lows to close higher with the S&P 500 hitting a new high above 1,750, after the tepid September jobs report gave further evidence to investors that the Federal Reserve will continue to support the economy at the current pace. The Dow was trading within 1.5 percent of its all-time record set last month and the NASDAQ hit a fresh 13-year high. European markets too closed higher following the latest US labour report, whose disappointing numbers encouraged investors' hopes that the Federal Reserve will delay tapering off its monthly asset purchases. In Asia, Japan's Nikkei lingered near a one-month high. Momentum was stalled as investors await comments from Bank of Japan chief Haruhiko Kuroda later in the session for further cues. Australia's S&P/ASX 200 hit a fresh five-year high and South Korea's Kospi rose to a two-year peak.

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