Sensex dives 175 points; rupee breaches 63/$, Hindalco down 4%
11 November 2013
The 30-share BSE Sensex started the week with a 175-point loss, continuing downward journey for the fifth consecutive session. Fed tapering fears and weakness in rupee against the dollar resulted in selling pressure.
Manish Wadhawan, MD and HD- interest rates, HSBC India attributes the all round weakness to the shock from US jobs data and high inflation numbers expected this week. Strong US jobs data last week may be indicated that Federal Reserve may look at reduction of monthly fiscal stimulus.
The market also disappointed with the India's October trade deficit data. Deficit increased to USD 10.56 billion in the month gone by, compared to USD 6.7 billion in September. However, trade deficit fell significantly to USD 10.56 billion in October from USD 20.21 billion in a year ago period.
The Sensex declined 175.19 points or 0.85 percent to close at 20,490.96 while the Nifty closed way below the 6100 level at 6,078.80, down 61.95 points or 1.01 percent from previous close.
FMCG, capital goods, financials, oil & gas and auto stocks saw selling pressure while IT outperformed.
Hindalco was the biggest loser among largecaps in the Sensex, falling more than 4 percent ahead of September quarter earnings on Tuesday. According to a CNBC-TV18 poll, analysts on an average expect profit after tax to grow 18.4 percent year-on-year to Rs 425 crore during September quarter, but operating profit margin may decline compared to a year ago period.
Tata Motors lost over 2 percent as leading brokerage houses downgraded the stock post second quarter earnings. CLSA downgraded its rating from buy to outperform with a target of Rs 415. The brokerage says most of the JLR positives are in the price and excluding incentives, EBITDA margins did not improve quarter-on-quarter despite better product mix.
State Bank of India , ONGC and Larsen & Toubro plunged between 2-3 percent while Reliance Industries , ICICI Bank and Bharti Airtel declined over a percent.
SAIL declined 1.8 percent as it disappointed street with the net profit falling significantly to Rs 123.74 crore (excluding Rs 1,056.26 crore compensation) during September quarter from Rs 543 crore in a year ago period.
However, Dr Reddys Labs bucked the trend with nearly 3 percent gains. Cairn India rallied over 2 percent on upmove in crude oil prices.
Tata Steel maintained its uptrend despite weakness in market, gaining over 1 percent ahead of quarterly earnings on Wednesday.
TCS and Infosys gained marginally on rupee depreciation.
In the broader space, Divis Labs gained 8 percent and Suven Life rose 15 percent whereas United Bank and Dena Bank lost 6-8 percent after second quarter earnings.
Meanwhile, the rupee today breached 63 level for the first time since September 30. It lost 75 paise to 63.23 against the US dollar after hitting an intraday low of 63.46.
4:00 pm Weak rupee:
The positive trade data does little to lift the spirits on Mint Street. The rupee continues to tumble against the US dollar breaching the 63-mark. Higher foreign institutional investors (FIIs) demand for the greenback take the rupee lower.
03:50 pm Market closing:
There is simply no respite on Dalal Street as the market ends the day with deep cuts for the 5th straight session. The Nifty tumbles below 6,100 losing 61.95 points, to end at 6078.80. The Sensex sheds 175.19 points to close at 20490.96. About 1036 shares have advanced, 1338 shares declined, and 147 shares are unchanged.
Capital Goods index fell over 2 percent while auto, bank, oil and gas, metals and FMCG stocks were under heavy pressure.
IT stocks remained favourite on buyers' list as rupee tanked to a 8-week low. TCS and Infosys are top gainers in the Sensex. Dr Reddy's Labs., Tata Steel and Maruti Suzuki are among others gainers.
Hindalco lost over 4 percent, while L&T, SBI and Tata Motors were other laggards.
03:40 pm Boardroom: In an interview to CNBC-TV18, Mushtaq Ahmad, Chairman & CEO, Jammu and Kashmir Bank said the bank aims to maintain net interest margins (NIMs) above 4 percent for FY14.
He further added that the bank expects loan book to grow at 20-25 percent and profitability around 20 percent going forward.
The NIM for the bank stood at 4.25 percent for H1FY14. The bank reported a decent set of number for the second quarter ending September 2013. The net profit for the bank increased 18 percent on half yearly basis.
03:30 pm Commodity update:
David Lennox, Fat Prophets is of the view that going forward crude prices could ease on back of fresh supply of crude oil in US and lower than expected demand from China.
Moreover, OPEC also is comfortable with Brent crude around USD 100 per barrel.
03:20 pm Results:
State-run Steel Authority of India's (SAIL) second quarter (July-September) net profit more than doubled to Rs 1,180 crore from Rs 543 crore in a year ago period, driven by one-time gain of Rs 1,056 crore.
"The company received Rs 1,056.26 crore towards damages due to non supply of full quantity of contracted hard coking coal by foreign suppliers," according to a release.
After excluding one-time gain, the company disappointed the street on every paramter. Net profit of the company stood at Rs 123.74 crore for the quarter.
3:10 pm Update:
Chennai Petroleum has restarted a crude distillation unit at its 190,000 barrels per day (bpd) Manali refinery in Chennai, south India, after a one-month planned maintenance, industry sources said on Monday.
The company had shut its No. 1 crude unit with a capacity of about 50,000 bpd in October for a planned maintenance and returned the unit online on November 5, a sources close to the matter said.
There are two other crude units at the refinery.
03:00pm Market Update
The market extended losses again as the Sensex lost 157.50 points to 20,508.65 and the Nifty fell 55.30 points to 6,085.45. Hindalco, L&T, ONGC, Jindal Steel and Hero MotoCorp are top losers in the Sensex. Meanwhile on the gaining side are Dr Reddy's Labs, Tata Steel, TCS, Maruti Suzuki and Cipla.
02:55pm United Bank boardroom
United Bank posted a net loss of Rs 489 crore in the September quarter . But CMD Archana Bhargava is hopeful that the worst is over for the bank. According to her, the bank has been expanding both the credit base and the core deposit base. It has added 25 lakh new accounts, 150 new branches have been opened up and more than Rs 200 crore of recovery has happened during the current quarter.
Bhargava says the bank suffered loss in the second quarter due to corrective action taken in order to bring down the non-performing assets (NPAs) from past years. But now most of the NPAs have now been removed and the bank is hopeful of recoveries to the tune of Rs 600 crore in the coming quarters, she adds.
Going ahead, the bank hopes to break even definitely by Q4, if not Q3, adds Bhargava.
02:42pm Gainers and Losers
L&T plunged nearly 3 percent followed by ONGC with 2 percent loss. Reliance Industries, Tata Motors, Hindustan Unilever, ICICI Bank, ITC and SBI declined 0.4-1.6 percent.
However, Dr Reddys Labs and Tata Steel extended gains to 2.7 percent and 2 percent, respectively. Cipla gained 1 percent ahead of second quarter earnings on Wednesday.
02:19pm The market sees selling pressure in afternoon trade as the rupee declined 94 paise to 63.42 against the US dollar on fears of Fed tapering.
The Sensex is down 92.57 points at 20573.58, and the Nifty is down 36.70 points at 6104.05.
Rakesh Arora of Macquarie feels some worries have emerged again about Fed tapering. "We still expect sector rotation to continue. After banks, now it is the turn of the power sector to take centre stage. We advise booking some profits and waiting for a correction to re-enter," he adds.
Shares of Hindalco Industries lost 3 percent ahead of second quarter earnings on Tuesday. According to a CNBC-TV18 poll, analysts on an average expect profit after tax to grow 18.4 percent year-on-year to Rs 425 crore during September quarter, but operating profit margin may decline compared to a year ago period.
Tata Chemicals' second quarter consolidated net profit nearly halved to Rs 134.4 crore from Rs 256.8 crore in corresponding quarter of last fiscal, dented by forex loss of Rs 91.2 crore. The company has received one-time gain of Rs 152.4 crore on termination of supply contract.
2:00 pm Market check: The market has fallen further. The Sensex is down 106.16 points at 20559.99, and the Nifty down 39.90 points or 0.65% at 6100.85. About 987 shares have advanced, 1209 shares declined, and 131 shares are unchanged.
1:50 pm Results poll: State-run Steel Authority of India ( SAIL ) will announce its second quarter (July-September) results today. According to a CNBC-TV18 poll, analysts on an average expect profit after tax of the steel maker to rise 27.8 percent year-on-year to Rs 694 crore for the quarter.
Net sales are seen going up by 11.9 percent to Rs 11,930 crore in three-month period ended September 2013 from Rs 10,663.2 crore in a year ago period, driven by higher sales volumes.
SAIL recorded 2.2 million tonne of sales in July-August period of FY14, so volumes are expected to increase 19 percent Y-o-Y to 3.1 million tonne, feel analysts.
1:40 pm Bond market outlook: The 10-year bond yields on Friday rose to 8.99 percent following strong US treasury yields boosted by the better-than-expected US jobs data which may allow Federal Reserve to pullback its monetary stimulus shortly.
Speaking to CNBC-TV18, Kenneth Andrade, head investment, IDFC Mutual Fund says the issue of bond yields is just one part of the problem which is putting up a near-term pressure, but the bigger worry is the macro-environment which is yet to show signs of recovery. Only companies earning revenues in dollars will do well, he adds. He believes that any positive data from the US will be bad news for India's financial markets in the short term due to rupee weakness.
1:30 pm Interview: Market regulator Sebi is taking a close look at the Biyani-owned Future Retail 's restructuring plan of Future Retail. Media reports suggested that Sebi has raised objections to the proposed deal, which involves the merger of subsidiary Future Value Retail Ltd (FVRL) with Future Retail, on concern that the move might lead to dilution of a sizeable equity in the listed parent, hurting minority shareholders.
However, in an interview to CNBC-TV18, Rakesh Biyani of Future Retail clarified that there won't be any dilution and these debentures will be redeemed and replaced. "The response is already filed with Sebi and we expect that Sebi will be giving us the request permission very shortly," he says.
Selling in Dalal Street continued for the fifth straight trading session. The Sensex is down 26.29 points at 20639.86, and the Nifty is down 12.55 points at 6128.20. About 972 shares have advanced, 1137 shares declined, and 112 shares are unchanged.
Oil and gas, cap goods and infra stocks are among the major laggards while IT and pharma stocks continue their gaining streak.
Rupee recouped some losses as banks sold dollars post October trade deficit data was announced. However, pressure continues as dollar is still strong globally following the US jobs data. Bond yields are off highs on the trade data. Sentiment, though, remains cautious ahead of the inflation data to be released this week.
Trade deficit for October comes in at USD 10.56 billion dollars, higher than the 6.7 billion deficit in September. Imports at USD 37.7 billion are down 15 percent year-on-year. However, exports were up 13.5 percent Y-o-Y to USD 27.2 billion.
12:55pm Market Update
The market trimmed losses significantly in afternoon trade. The Sensex is down 16.04 points to 20650.11, and the Nifty is down 8.15 points to 6132.60, helped by beaten down banks.
HDFC Bank extended gains to 0.9 percent while its rivals ICICI Bank and SBI turned positive.
12:50pm Cairn India on buyers' radar
Shares in Cairn India gain 2.3 percent after Brent oil futures rebound from a nearly four-month low, while the rupee hits nearly two-month low versus the US dollar
Higher crude oil prices and a weaker rupee help oil exploration firms such as Cairn India, which sells crude in dollars, analysts say.
Brent crude edged towards USD 106 a barrel in Asia, after gaining nearly USD 2 per barrel on Friday as traders covered short positions, while Iran and six world powers failed to reach a deal on Tehran's nuclear programme, reports Reuters.
12:45pm Apollo Tyres on hot wheels
Shares of Apollo Tyres jumped around 6 percent intraday trade on Monday after a favourable US ruling in Cooper Tire row . The judgement ruled that Apollo Tyres did not breach its obligation to close its USD 2.5 billion buyout of Cooper Tire & Rubber Co.
"We are pleased that the Delaware Court has found that Apollo is not in breach of its merger agreement with Cooper Tire. Furthermore, the Court found that Apollo has used 'reasonable best efforts' to negotiate with the United Steelworkers (USW) and that, contrary to Cooper's claims, 'nothing in Apollo's conduct indicates buyer's remorse'," Apollo Tyres said in a statement.
In October, Cooper filed a complaint in Delaware Court of Chancery to push for completion of their merger and stated that the Indian firm was seeking to delay an agreement with USW, which represents Cooper employees at facilities in Findlay, Ohio, and Texarkana, Arkansas.
Apollo had denied this but sought price reduction in the $2.5-billion deal citing problems related to the US firm's operations in China and concessions to the workers' union but was rejected by Cooper.
12:25pm Tata Motors loses ground
Shares of Tata Motors tanked 3 percent in intraday trade on Monday. Analysts are cautious on the stock due to Jaguar Land Rover margin concerns. While JLR numbers were strong, its margins were higher only due to incentives received in UK.
CLSA downgraded its rating from buy to outperform with a target of Rs 415. The brokerage says most of the JLR positives are in the price and excluding incentives, EBITDA margins did not improve quarter-on-quarter despite better product mix.
12:04pm The market remains under pressure in noon trade on weakness in L&T and Tata Motors. Trade deficit for October has widened to USD 10.56 billion from USD 6.7 billion in September due to increase in imports and marginal decline in exports.
Imports increased 10 percent M-o-M to USD 37.83 billion, driven by higher crude, gold and silver imports. Exports declined to USD 27.27 billion in October from USD 27.68 billion in previous month.
The Sensex is down 76.80 points at 20589.35, and the Nifty is down 31.10 points at 6109.65. Declining shares outpaced advancing ones by a ratio of 1068 to 898 on the BSE.
Manish Wadhawan, MD and HD-interest rates, HSBC India attributes this fall to the shock from US jobs data and high inflation numbers expected this week. More of domestic factors and a change of stance in the monetary policy by the Reserve Bank (RBI) that is happening in the market, he tells CNBC-TV18.
Shares of L&T, Tata Motors, ONGC and Hindalco Industries slipped between 2-2.7 percent followed by ICICI Bank, Hindustan Unilever , State Bank of India , Sun Pharma and Bharti Airtel with 0.6-0.9 percent loss.
However, Reliance Industries , HDFC and HDFC Bank bounced back with 0.2-0.5 percent gains. TCS , Dr Reddys Labs and Tata Steel remained in bull grip with 1-1.5 percent upmove.
12:00 pm Market data: Foreign institutional investors (FIIs) poured in almost Rs 3,000 crore in the Indian equity market so far in November amid renewed optimism about the economy and a delayed tapering of the US monetary stimulus.
According to data from the Securities and Exchange Board of India (Sebi), total foreign investment in the stock market reached Rs 91,892 crore (USD 16.67 billion) so far in 2013.
FIIs were gross buyers of equities worth Rs 15,370 crore and sellers of Rs 12,412 crore of shares during November 1-8, a net inflow of Rs 2,958 crore (about USD 480 million).
11:50 am Results poll: Britannia Industries will announce its second quarter earnings today. According to a CNBC-TV18 poll, analysts expect another strong quarter from the company. They expect 4 percent volume growth and topline growth will be further driven by price hikes and product upgrades.
They feel the company will benefit from easing raw material costs, lower operating costs, which should lead to margin expansion. Gross margin may see a 350 basis points expansion Y-o-Y.
Analysts expect profit after tax of the food company to rise 93 percent year-on-year to Rs 88 crore and total income to increase 12.6 percent Y-o-Y to Rs 1,596 crore in the quarter gone by.
11:40 am Update: The government is reviving plans to sell its 10 percent stake in state refiner Indian Oil Corp , worth about USD 800 million, and will launch investor roadshows in the United States on Tuesday, two sources with direct knowledge of the matter said, reports Reuters.
The government's Department of Disinvestment (DoD), which oversees stake sales in state companies, has also completed most of the overseas roadshows to sell a 5 percent stake in state miner Coal India , which could fetch about USD 1.5 billion, the sources told Reuters.
11:30 am Market opinion: Sameer Lumba, MD and CEO-institutional equities, JM Financial is positive on IT and pharmaceutical. Also, he is bullish on private sector financials.
He does not see a taper of foreign institutional flows due to the economic prospects of the country. FIIs are investing in good quality companies with effective and credible management, irrespective of the macro situation, he tells CNBC-TV18.
"Iwould advocate that stick to fundamentals, be granular, buy the right companies because that is the only strategy which is going to work. If you look at some of the pharmaceutical companies like Lupin, Ipca, Dr Reddy's, even Alembic, you look at the five-year returns," he said in an interview to CNBC-TV18.
11:20 am Buzzer: Shares of Apollo Tyres jumped around 6 percent after a US judgment. The judgement ruled that Apollo Tyres did not breach its obligation to close its USD 2.5 billion buyout of Cooper Tire & Rubber Co .
The judge rejected Cooper's allegations that Apollo was intentionally dragging its feet in talks with the United Steel Workers as an excuse to cut the deal's price. When the two companies announced the deal in June they anticipated it would close by October 4.
Correction in the market continues as the Sensex is down 121.08 points at 20545.07. The Nifty is at 6094.95, down 45.80 points. About 779 shares have advanced, 960 shares declined, and 92 shares are unchanged.
Banking stocks are under pressure with SBI and ICICI Bank falling over 1 percent. Among the big losers in the Sensex are L&T, Hindalco, Hero MotoCorp, Tata Motors and ONGC.
Meanwhile, IT stocks are on buyers' list on the back of weakness in rupee. TCS, Dr Reddy's Labs, Infosys, ITC and Cipla are the major losers in the Sensex.
The rupee weakened to the 63 per dollar mark and is close to its eight-week low tracking the global dollar strength.
Meanwhile, government bond yields rose sharply to hit a 12-week high of 9.14 percent post strong US jobs data and ahead of the inflation data this week.
In commodities, crude prices are firm as Iran talks fail to reach headway and gold prices weaken on the unexpectedly strong jobs data.
The Asian market kicked off the week mixed despite a record close on Wall Street as attention turned to an early reduction of the Federal Reserve's stimulus programme and a key policy meeting in China.
10:55am Market Update
The market remained under pressure due to weak financials. The Sensex is down 148.93 points at 20517.22, and the Nifty is down 51.30 points at 6089.45. Declining shares outnumbered advancing ones by a ratio of 934 to 790 on the BSE.
The rupee touched 63-mark against the US dollar for the first time since September 30. It slipped 78 paise to 63.26 per dollar.
10:44am Apollo Tyres
Shares of Apollo Tyres rose as much as 5.65 percent on Monday after a US judge ruled that the Indian company did not breach its obligation to close its USD 2.5 billion buyout of Cooper Tire & Rubber Company.
The judge rejected Cooper's allegations that Apollo was intentionally dragging its feet in talks with the United Steel Workers as an excuse to cut the deal's price. When the two companies announced the deal in June they anticipated it would close by October 4, reports Reuters.
10:29am Market Expert
The unexpectedly strong US jobs data released Friday has reignited fears that the Federal Reserve could begin trimming the monetary stimulus shortly. There 204,000 job additions compared with expectations of around 125,000, showing resilience of the economy despite a partial government shutdown.
Peter Hooper, MD and chief economist, Deutsche Bank believes if the US data continues to be good, Fed is likely to taper earlier than expected.
Speaking to CNBC-TV18, Hooper says that Fed tapering may initially affect the Indian market a bit negatively, but strengthening of the US economy will finally end the quantitative easing, which in itself will be a positive.
10:07am The market continued to trade weak in morning session, as the Nifty fell 0.5 percent, weighed down by banks, FMCG and auto stocks.
The Sensex is down 76.27 points at 20589.88, and the Nifty is down 31.25 points or 0.51 percent at 6109.50.
Dena Bank and United Bank of India shares plunged 7-8 percent post disappointing set of numbers in the quarter gone by. Dean Bank's net profit fell 55 percent year-on-year to Rs 107.4 crore and United Bank of India posted a net loss of Rs 489.5 crore during second quarter as against profit of Rs 144.6 crore in a year ago period. Higher provisions and weak asset quality impacted profits of both banks.
Country's largest lenders State Bank of India, ICICI Bank and HDFC Bank slipped 1-1.6 percent while housing finance company HDFC declined 0.3 percent.
Commercial vehicle maker Tata Motors lost 1.5 percent despite strong second quarter results. CLSA downgraded rating on the stock from buy to outperform with a target price of Rs 415 apiece. The brokerage house expect the stock to stay rangebound for next 6-9 months.
However, TCS , Infosys and Wipro are strong again after the rupee fell below the 63 level today. These stocks gained between 1-2 percent.
10:00 am Market outlook: Rakesh Arora of Macquarie feels ater a sharp rally, the market is tiring and needs to consolidate. "Election polls are showing mixed trends making investors jittery. Some worries have emerged again about Fed tapering. We still expect sector rotation to continue. After banks, now it is the turn of the power sector to take centre stage. We advise booking some profits and waiting for a correction to re-ente," he said in an interview to CNBC-TV18.
9:50 am Buzzers: IT stocks are seeing strong buying interest as rupee breached 63 per dollar mark. The IT index is up around 1 percent from its previous close led by TCS (up over 1 percent), HCL Tech (up 2 percent) and Tech Mahindra (up 2 %).
Meanwhile banking stocks are under pressure. Bank Nifty is down around 2 percent, Auto and Realty have fallen over 1 percent.
9:40 am Alert: As airlines continue to find it tough to generate profits and raise funds, auditors of all three listed carriers - Jet Airways, Spicejet and Kingfisher - have raised red-flags on their 'going concern' status, reports PTI.
In their latest quarter review reports, the auditors of all three airlines have said that the "appropriateness of the going concern basis" is dependent on the respective company's ability to generate adequate finance to meet short-term and long-term obligations and to operate profitably.
9:30 am Market check: The Sensex is down 131.30 points at 20534.85, and the Nifty is down 44.20 points at 6096.55.
About 515 shares have advanced, 454 shares declined, and 49 shares are unchanged.
9:20 am Bond market outlook: Ajay Manglunia, Edelweiss said, "US Fed tapering concerns may regain traction as better than forecast jobs data saw US 10-year treasury yields surging to 2.75 percent. This will add to the negative sentiment in the Indian bond market and gilts are likely to extend steep losses of the last two weeks. The range for the 10-year yield is seen between 8.95-9.10 percent today."
The market has opened in the negative terrain. The Sensex is down 174.88 points at 20491.27. The Nifty slips 26.05 points to 6114.70.
About 241 shares have advanced, 204 shares declined, and 20 shares are unchanged.
HDFC Bank, ICICI Bank, NTPC, L&T and Bajaj Auto are major laggards in the Sensex. Among the top gainers are Dr Reddy's Labs, Tata Steel, Cipla, Wipro and Infosys.
The rupee breached 63 per dollar for the first time since September 30. The Indian currency had slipped in the early trade against the dollar. It opened lower by 42 paise at 62.99 per dollar compared to Friday's close of 62.47.
The US dollar holds near two-month highs having staged a broad rally after the upbeat US jobs data and the euro dollar holds near 1.33.
Ashok Gautam, Axis Bank said, "Earlier than expected close of the RBI swap window could impact on dollar-rupee movement in medium term."
"If currency markets sense oil related dollar outflows, rupee could come under medium term pressure. The range for the day is seen between 62.2-62.8/USD," he added.
In Asia, index heavyweight Softbank rose 2 percent while automakers Toyota and Honda motor jumped over 1 percent each. Data out on early Monday showed Japan's current account surplus unexpectedly rose an annual 14.3 percent in September.
In commodities, Brent trades at USD 105/bbl and Nymex futures trade firmer in early Asian trade after meetings between Iran and six western nations failed to reach a deal on Tehran's nuclear programme.
From precious metals space, gold prices eased to trade near three-week lows after an unexpectedly strong US jobs report reignited fears the Federal Reserve could begin scaling back its support for the economy soon.