Sensex slips 113 points ahead of RBI policy; ITC & SBI plunge

The market started off the F&O expiry week on a negative note with the Sensex shedding more than 100 points on Monday ahead of RBI's second quarter monetary policy review tomorrow.

Expectations on the street are largely in favour of repo rate hike as RBI governor Raghuram Rajan's focus remains to be inflation.

said he would bet that the focus in going to be on inflation control.

''While inflation control, on one hand, is important, on the other hand, you are buying dollars releasing more liquidity into the system and there is a bit of a dichotomy there,'' KR Bharat of Advent Advisors said. September inflation increased further to 6.46 percent as against 6.1 percent in August.

Meanwhile, Ambareesh Baliga of Edelweiss Financial Services does not see the market falling below 6000 level. ''The market is in range of 6000-6250. The results have been decent compared to what the expectations were. So I do not see there will be any reason for the market to really crack too much from these levels,'' he explained.

The Sensex was down 113.24 points to close at 20570.28 while the Nifty lost 43.80 points to 6101.10. Declining shares outpaced advancing ones by 1406 to 989 on the BSE. India's largest lender State Bank of India lost 2.4 percent followed by ICICI Bank and HDFC Bank with 0.7 percent loss.

Cigarette major ITC plunged 3.6 percent on volume growth concerns. CLSA revised down its FY14 volumes growth to -2 percent as against almost flat earlier and cut earnings per share estimates by around 2 percent post Q2. JP Morgan cut target price on the stock to Rs 385 from Rs 390 earlier. Hindustan Unilever fell 0.8 percent on profit booking. In initial trade, the stock had rallied 2.5 percent after reporting stable numbers during September quarter. Its volume growth was 5 percent in second quarter as against 4 percent in Q1, meeting analysts' forecast.

Metals lost shine today with the Sesa Sterlite and Tata Steel falling 3 percent each whereas the gainers were HDFC (up 1.4 percent), Reliance Industries (up 0.5 percent), L&T (up 1.9 percent), ONGC (up 1 percent) and Tata Motors (up 0.4 percent). On the earnings front, Dabur India plunged nearly 4 percent despite slightly higher-than-expected numbers during September quarter. Syndicate Bank slipped 0.3 percent as its asset quality worsened further while Ajanta Pharma, Tata Elxsi and Tinplate surged 14-15 percent after strong quarterly earnings. Ceat gained nearly 6 percent post earnings.

3:50 pm Market closing: After a volatile session, the market ended on a lower levels ahead of the RBI monetary policy review. The Sensex ended 113.24 points down at 20570.28, and the Nifty ended at 6101.10, down 43.80 points. About 990 shares advanced, 1405 shares declined, and 157 shares were unchanged. While capital goods and oil & gas remained in green and lend support to the market, bank, auto and FMCG were laggards. ITC (down 4 percent) continued to be hit in trade as its September quarter volume growth is worrisome. Other losers in the Sensex were Sesa Sterlite, Tata Steel , SBI and Hindalco . L&T, HDFC , ONGC , RIL and Wipro were major gainers in the Sensex.

3:40 pm Boardroom: JustDial's margins saw a sequential fall in Q2 due to addition of 500 employees and an one-time reward to employees; margins are likely to be impacted by 100-200 bps in the coming quarter as well on account of incremental ad spends, says Ramkumar Krishnamachari, CFO. But the company, which boasts of Amitabh Bachchan as an investor, is confident of a year-on-year improvement in its FY14 margins. The 28 percent rise in revenue, and 20 percent increase in EBITDA in July-September quarter justifies the euphoria surrounding Just Dial . The stock was on fire last week and had rallied over 57 percent in a month. The company has seen phenomenal success since its debut in the stock market in June. Krishnamachari informed that 95 percent of the pre-IPO retail investors have booked profits but FIIs have a sizeable presence in the company.

3:30 pm Results: Dabur India beat Dalal Street expectations on Monday with second quarter (July-September) consolidated net profit rising 23.4 percent year-on-year to Rs 249.7 crore, driven by strong growth across key categories. "With rural expansion programme, we have laid the foundation for strong and profitable growth in the future and this initiative started yielding positive results. We are seeing demand from rural India outpacing the urban markets," Sunil Duggal, CEO said. Net sales grew 14.8 percent growth on yearly basis to Rs 1,754 crore in three months period ended September 2013, led by strong operational performance.

3:20 pm Divestment: The government said the 5 percent stake sale in state-owned Coal India (CIL) is likely to take place either in November or December, reports PTI. "It is likely that it (stake sale in Coal India) may happen either in November or December," Coal Minister Sriprakash Jaiswal told reporters here. "You may be aware that Coal India Chairman has gone (overseas) for this purpose only," he added. To woo foreign investors for Coal India stake sale, the disinvestment department (DoD) has embarked on a roadshow spanning across five nations, including Germany and the UK. The roadshow began last week amid threats by workers of the state-owned firm to go on strike in December against the government move to divest its stake further. The market is slipping in the last trading hour of the day, dragged by weakness in banks, metals and FMCG.

The Sensex is down 88.20 points at 20595.32, and the Nifty down 38.10 points at 6106.80. About 921 shares have advanced, 1384 shares declined, and 147 shares are unchanged. L&T, HDFC, ONGC, Reliance and Maruti Suzuki are top gainers in the Sensex.  Among the laggards are ITC, Sesa Sterlite, Tata Steel, SBI and Hindalco. Brent crude rose above USD 107 a barrel, after three days of losses, amid expectations the Federal Reserve would keep its economic stimulus intact at this week's policy meeting, reports Reuters. The US central bank is unlikely to shift away from its monthly USD 85-billion bond purchases at the end of its two-day meeting on Wednesday as it waits for more evidence of how badly Washington's budget battle has hurt the economy.

02:50pm Dabur extends losses Dabur India mildly beat street on Monday with second quarter (July-September) consolidated net profit rising 23.4 percent year-on-year to Rs 249.7 crore, driven by strong growth across key categories. "With rural expansion programme, we have laid the foundation for strong and profitable growth in the future and this initiative started yielding positive results. We are seeing demand from rural India outpacing the urban markets," Sunil Duggal, CEO said. Strong demand from the hinterland following the mega initiative to double rural distribution footprint helped Dabur India sail through a challenging business environment and moderation in consumption expenditure to report a 14.8 percent growth on yearly basis in net sales to Rs 1,754 crore in three months period ended September 2013.

02:37pm The market lost ground in afternoon trade with the Sensex falling over 100 points ahead of RBI's second quarter monetary policy review on Tuesday. Experts believe the central bank may hike repo rate by 25 basis points and cut marginal standing facility tomorrow. The Sensex is down 103.64 points at 20579.88, and the Nifty is down 42.70 points at 6102.20. Declining shares outnumbered advancing ones by 1387 to 903 on the BSE. Country's largest lender State Bank of India dropped more than 2 percent while its rival ICICI Bank and HDFC Bank declined over 0.8 percent. Cigarette major ITC plunged more than 3 percent after CLSA revised down its FY14 volumes to -2 percent as againts almost flat earlier and cut earnings per share estimates by around 2 percent post Q2.

1:40 pm Buzzing: Shares of Indian finance companies which provide loans against gold rallied on Monday on speculation the RBI may allow them to lend 75 percent of the value of jewellery compared with 60 percent earlier, traders said. However, a person familiar with the central bank's thinking said the loan-to-value ratio had not been increased. "It (LTV) wasn't changed," the person said. Shares of Manappuram Finance and Muthoot Finance were up 5 percent and hit the day's upper trading limit.

1:30 pm Boardroom: Diwali demand is slack, says Amit Kalyani, ED, Bharat Forge . The company is relying on strong growth in overseas subsidiaries which are benefiting from improving European economy and a steady US market. In Q2, exports were about 55 percent of Bharat Forge 's revenue and Kalyani expects the third quarter to be the same. The company is also looking at non-auto markets where some demand pool is visible. It is also awaiting new product launches, which makes Kalyani hopeful that the second half will atleast remain neutral. He says it has seen some impact of rupee depreciation, but not the full extent of it because of the forward covers. So its realisation is still not in line with underlying market realisation

It is a listless trading session on Dalal Street. The Sensex is down 1.14 points at 20682.38, and the Nifty is down 8 points at 6136.90. About 918 shares have advanced, 1179 shares declined, and 145 shares are unchanged. Banks, capital goods and oil and gas companies are maintaining an upmove. L&T, Reliance , HDFc, Bajaj Auto and ONGC are top gainers in the Sensex while ITC , Sesa Sterlite, Tata Steel , Coal India and Hindalco are major laggards. The rupee is marginally in the red ahead of RBI's macro economic report today and the policy review tomorrow, Meanwhile, bond prices are lower on expectations of a 25 basis point repo rate hike. Globally, investors' focus this week is on the Fed Reserve two-day meeting on the 29- 30 October. The US Fed Reserve is expected to hold fire this week, will look for clear economic view before paring down stimulus.

12:56pm Syndicate Bank Q2 Syndicate Bank's second quarter net profit rose marginally to Rs 470 crore from Rs 463.4 crore in a year ago period and net interest income increased to Rs 1,411.3 crore from Rs 1,391 crore during the same period. Asset quality worsened sequentially, but provisions declined compared to previous quarter. The stock declined 1.4 percent.

12:50pm Ajanta Pharma Q2 earnings Ajanta Pharma shares rallied 9 percent on robust numbers during July-September quarter. Net profit jumped 154 percent year-on-year to Rs 55.8 crore and net sales grew 48 percent on yearly basis to Rs 270.8 crore in three months period ended September 2013.

12:40pm MCX shareholding Government wants MCX shareholding to be diversified among institutions, reports CNBC-TV18 quoting sources. It is learnt that it should not be in favour of 1 institution holding large stake in MCX. Government will take a call on Financial Technologies' stake in MCX after FMC decision on fit & proper, say sources. MCX fell 3 percent while Financial Technologies gained 1.3 percent.

12:35pm Block deal in Shoppers Stop Shoppers Stop shares fell more than 2 percent after a block deal worth Rs 69 crore. About 21 lakh equity shares (2.56 percent of total equity) changed hands on exchanges at Rs 328 per share.

12:22pm Equity benchmarks as well as broader markets are directionless in noon trade on Monday, awaiting RBI policy on Tuesday. Economists expect the RBI to hike repo rate by 25 basis points and cut in marginal standing facility. The Sensex is up 33.20 points at 20716.72, and the Nifty is up 0.15 points at 6145.05. Reliance Industries , L&T, HDFC , ICICI Bank and ONGC are the leading gainers, rising 1-2 percent while the laggards are ITC , Sesa Sterlite, Tata Steel and Coal India , down 1-3 percent.

Maruti Suzuki shares rose 1 percent ahead of Q2 earnings. Analysts expect profit after tax of country's largest car maker to fall 17 percent sequentially (up 130 percent year-on-year) to Rs 523 crore and revenues may grow 0.6 percent quarter-on-quarter (up 22.3 percent Y-o-Y) to Rs 10,158 crore in three months period ended September 2013.

Dabur India will also announce its second quarter (July-September) results today. Analysts on an average expect the FMCG company to fare better in a slowing consumption scenario due to significant share of product portfolio that skewed towards mass/mid segment, growing share of rural sales led by distribution enhancement and recovery in margins for overseas operations, according to a CNBC-TV18 poll. The stock is flat with a positive bias after hitting a record high of Rs 184.90 on the BSE.

11:55 am Result: Tower infrastructure services provider Bharti Infratel 's second quarter consolidated net profit fell 22.4 percent sequentially - higher than analysts' expectations - (up 12 percent year-on-year) to Rs 277.4 crore in three months period ended September 2013, impacted by higher finance cost and lower other income. Bharti Infratel is a subsidiary of Bharti Airtel . Its consolidated portfolio includes over 35,000 of its own towers and the balance from its 42 percent equity interest in Indus Towers.

11:40 am Market outlook: Momentum of money is what is driving the markets, not just in India but world over, says Nischal Maheshwari, head of research, Edelweiss Securities. Apart from that, this week there is credit policy and the market is expecting a 25 basis point increase in repo rate and a 25-50 bps cut in marginal standing facility. This, according to him, is already discounted for. But if anything happens beyond this, then markets will react, he adds. Depending on what the RBI does, there might be a rally in banks, feels Maheshwari. At the moment, most funds domestic as well as international are underweight on banks, he says. They are waiting for this policy to take a call, and there may just be a rally in banking stocks, he adds. Though he prefers private sector banks over PSU banks.

11:30 am Market outlook: Bullish Pathik Gandotra, partner, Dron Capital Advisors see Nifty touching a level of 6500 in May 2014. Speaking to CNBC-TV18, Gandotra says investors can expect atleast a 10 percent return on their investments as the market will focus on quality stocks for the next six months. He feels that the RBI monetary policy review is likely to be a non-event. "The view is that there will be a 25 bps hike in the repo rate and 25 bps cut in the MSF. So, it will be a non event. Now the only risk is if the RBI hikes repo rate by 50 bps and does not cut the MSF, then that is the only scenario in which the market will respond to the monetary policy," he adds. As an investment strategy, Gandotra is very bullish on ICICI Bank and IT major Infosys.

The market is going mild with a positive bias ahead of the RBI monetary policy review tomorrow. The Sensex is up 50.80 points at 20734.32, and the Nifty is up 7.45 points at 6152.35. About 881 shares have advanced, 820 shares declined, and 94 shares are unchanged. L&T, ICICI Bank, Reliance , HUL and ONGC are top gainers in the Sensex. ITC , Coal India , Sun Pharma , Sesa Sterlite and Cipla are among major losers. Asian markets are trending higher as investors speculate that the US Fed Reserve will not reduce the pace of its monthly bond buying programme. The euro continues its rise against the dollar trading at 1.38. The yen weakens after the Bank Of Japan said it is committed to continuing its easy monetary policy till its 2 percent inflation target is reached. Commodities saw crude oil futures marginally rise after the Friday sell off that led to the second consecutive week of decline. Gold prices are higher at levels of 1350 per 10 gram. The rupee is unchanged from Friday's levels and not taking cues from the strength in the euro. Meanwhile, government bond prices are marginally lower on caution ahead of the reserve bank of India's second quarter review of monetary policy tomorrow.

10:59am Market Expert Bullish on the Indian equities, Pathik Gandotra, partner at Dron Capital Advisors says the Nifty will see a level of 6500 in May 2014. Investors can expect atleast a 10 percent return on their investments as the market will focus on quality stocks for the next six months, he says. However, on a more imminent market-moving event, Gandotra says the Reserve Bank will keep status quo on its monetary policy and won't hike any rates, contrary to market consensus of a 25 bps repo rate hike.

10:47am Stocks In News Just Dial shares gained 2.5 percent after it reported a healthy set of numbers with its topline coming in higher by 29 percent, margins expanded by 300 basis points and profit after tax nearly doubled. Kolte-Patil rallied 3 percent as it showed a good expansion in margins and a surge in profitability during September quarter. JSW Energy lost 3 percent after it reported a 36 percent fall in PAT due to mark-to-market loss of Rs 168 crore as it has a high component of unhedged buyer's credit amounting to USD 200 million during September quarter. HOV Services surged 15 percent on a media report that SourceHOV, which is jointly owned by Citigroup Venture Capital International and HOV Services is put on the block with a asking valuation of USD 1.2 billion.

10:19am The market is still in a consolidation mode on Monday with the Nifty hovering around the 6150 level ahead of RBI policy on Tuesday and expiry on Thursday. "The market has digested the initial round of good results and now awaits both monetary policy and the start of PSU banks results this week, says Rakesh Arora of Macquarie. He feels some consolidation looks likely, but the trend remains on the upside. The Sensex is up 13.53 points at 20697.05, and the Nifty is up 3.45 points at 6148.35. Advancing shares outnumbered declining ones by 678 to 486 on the BSE. Shares of Reliance Industries , L&T, HUL , ICICI Bank and GAIL rallied more than a percent in morning trade whereas ITC is the major laggard, falling 3 percent on concerns over sales volume growth. Hindustan Unilever on Saturday delivered a stable set of second quarter results with a mild beat on profitability due to lower tax rate and an exceptional gain. Volume growth came in higher sequentially at 5 percent as against 4 percent in previous quarter. Brokerages, however, continue to be cautious on the stock as CLSA has a sell rating on the stock, nomura has a reduce rating and JP Morgan has an underweight rating.

10:00 am Gold: Gold prices may cross the Rs 33,000 level on 'Dhanteras', a day considered auspicious for buying the precious metal, on account of rising demand amid tight supplies, experts and bullion traders say, reports PTI. Despite the expected price rise, the festive demand for jewellery on 'Dhanteras' on November 1 is expected to remain stable, but sale of coins and bars would see a decline by almost 50 percent from the year-ago period, they estimated.

9:50 am Results poll: Maruti is up over 1 percent on the BSE, ahead of annoucing the September quarter results. According to a CNBC-TV18 poll, analysts on an average expect weak operational performance from the company during the quarter. Despite volumes rising 3.4 percent sequentially, revenues are expected to be flat due to adverse product mix. Only quarter-on-quarter comparison is valid for the performance of September quarter. Figures are not comparable on yearly basis as September 2012 numbers were standalone excluding the Suzuki Powertrain Engine business and this year the merged entity's performance will reflect in numbers (Suzuki Powertrain was merged into Maruti on October 3 2012).

9:40 am FII view: Rakesh Arora of Macquarie feels that the market has digested the initial round of good results and is now awaiting both monetary policy and the start of PSU banks results this week. "Some consolidation looks likely, but the trend remains on the upside. Buying on dips is recommended. We have introduced Infosys in our top 10 list, replacing HCL Technologies ," he says in an interview to CNBC-TV18. Ajay Kapur of Bank of America Merrill Lynch believes that investors seem to be taking inordinate risks with emerging market equities. "Prudent risk management demands recognising the risks in concentrated positioning in the EMs. We advise hedging these risks or closing this stretched position," he adds

9:30 am Weak: Shares of ITC falls 3 percent as the company's revenue growth remained a concern in the September quarter results. Net Sales increased 8.9 percent (far lower than analysts' expectations) to Rs 7,780 crore during September quarter from Rs 7,146 crore in a year ago period, dented by slow volume growth in cigarette business and fall in agri volume. However, ITC reported higher-than-expected 21.5 percent growth in its net profit of Rs 2,230 crore in three months period ended September 2013.

The market has opened in positive territory. The Sensex is up 39.53 points at 20723.05, and the Nifty up 10.20 points at 6155.10. About 255 shares have advanced, 85 shares declined, and 15 shares are unchanged. Hindustan Unilever is up over 2 percent as it delivered a stable set of numbers , largely in-line with estimates with a mild beat on profitability. The FMCG company reported a 13 percent growth in net profit to Rs 914 crore on a 10 percent rise in net sales to Rs 6,747 crore during the second quarter ended September 30. This was driven by a 5 percent growth in volumes. Other gainers in the Sensex include GAIL , M&M, Tata Steel and Maruti Suzuki. Indian rupee gained 6 paise in early trade Monday to 61.40 per dollar as against Friday's closing of 61.46. According to Agam Gupta of Standard Chartered, currency markets are expected to remain muted and cautious today ahead of monetary policy review tomorrow. "The range for the day is seen between 61.25-61.75/USD," Gupta said. Asian markets opened higher today with the Nikkei rallying a percent in early trade. In the UK, the third quarter GDP data showed a 0.8 percent rise from the previous quarter signaling the strongest growth since the second quarter of 2010. However, the widely watched IFO business climate data for Germany showed an unexpected fall for October. In commodities, Nymex trades a tad soft this morning after gaining for two straight days while Brent is stable at USD 107 per barrel levels as traders bet that increasing refinery operations and a major new mid-West pipeline would keep rising inventories in check. From the precious metals space, gold gives up a tad from USD 1350 levels earlier having run up on hopes that sluggish US data would persuade the Federal Reserve to keep its stimulus intact until well into 2014.