Sensex falls 167 points; GAIL tanks 7%, Infosys & HDFC Bank up

Profit-taking in banking & financials, oil & gas and auto stocks pulled the market down for the first time in last four sessions while the broader markets fell for the second day in a row after hefty run-up in previous six sessions.

The Sensex dropped 167.37 points or 0.68 percent to close at 24549.51 and the Nifty declined 41.05 points or 0.56 percent to 7318 after hitting an intraday low of 24422.33 and 7274.75, respectively. The BSE Midcap and Smallcap indices were down 0.66 percent and 0.45 percent, respectively.

Experts say the correction may continue in some more sessions, but that may not be big one. In fact, the market is yet to see new record highs going ahead and is eagerly waiting for triggers which are RBI policy and Budget.

UR Bhat, MD of Dalton Capital Advisors says one is likely to see some profit booking and sector rotation, but signs of a big market correction are not visible yet, he adds.

He sees more legs to this rally given the hopes market participants has pinned on the new government.

''The index is not terribly priced at these levels on a fundamental basis, but given the sort of hope that has been generated by the new government, there will be further steam left because retail investors are yet to join the party in a big way,'' he says. According to him, even now, the Indian equity market is fairly supported by FII funds.

GAIL was top loser in the Sensex 30, falling 7.56 percent on disappointing numbers in Q4FY14. Net profit fell by nearly 42 percent on sequential basis. Macquarie has a negative view on stock with a target of Rs 320 while Deutsche Bank downgraded the stock to sell from hold with a target price of Rs 340 per share.

BHEL tanked more than 5 percent. Shares of HDFC, Reliance Industries, State Bank of India, ONGC, Mahindra & Mahindra, Tata Motors, TCS, Axis Bank, Tata Power and Coal India were down 1-3 percent.

However, Infosys, Larsen & Toubro, HDFC Bank, Tata Steel and Hindalco Industries outperformed, gaining 0.8-1.8 percent.

In the broader space, Bharat Forge surged 5.5 percent as its fourth quarter net profit rose 138 percent year-on-year (up 28.3 percent quarter-on-quarter) to Rs 119 crore due to higher revenue, other income and exceptional gain.

Motherson Sumi was up 3.8 percent as the company is going to acquire wiring harness business of Stoneridge Inc for USD 65.7 million and McNally Bharat gained 5 percent as the board of directors will consider fund raising via security issue on May 30.

However, India Cements fell over 5 percent post weak Q4 results replicating the weak pricing and demand prevailing in South India.

Usha Martin slipped 5 percent after it reported consolidated net loss of Rs 9.7 crore in Q4FY14 as against profit of Rs 22.1 crore in the year-ago period.

Declining shares outnumbered advancing ones by a ratio of 1680 to 1259 on the Bombay Stock Exchange.

03:50 pm FDA inspection: The US Food and Drug Administration (FDA) has made some observations about the production process of the US unit of Indian generic drugmaker Wockhardt.

The FDA last year banned Wockhardt's two Indian units from exporting to the United States, its biggest market, citing quality lapses in the manufacturing process.

Managing Director Murtaza Khorakiwala told an analysts briefing the FDA had inspected the company's Chicago-based Morton Grove Pharmaceuticals unit, which accounts for more than 50 percent of its sales in the United States, in the March quarter. He did not give further details.

"It's difficult to say what kind of position the FDA will take but according to us the inspection was not a very negative inspection," Khorakiwala said.

03:40 pm Market closing: The market ended on a weak note but the Nifty managed to end above 7300. The Nifty was down 41.05 points at 7318.00. The Sensex was down 167.37 points at 24549.51. About 1269 shares have advanced, 1669 shares declined, and 119 shares are unchanged.

All indices were in red except IT, Metals and Healthcare. GAIL lost 7 percent, BHEL, M&M, SBI and Tata Power fell 3-5 percent each. Tata Steel, L&T, Infosys, Hindalco and HDFC Bank are top gainers in the Sensex.

03:30 pm International markets:  World shares hovered just off an all-time high and the euro was steady , as the European Central Bank made sure there was little doubt in investors minds that global liquidity will continue.

Britain's FTSE 100 opened up 0.3 percent as it played catch-up after a holiday. The rest of Europe's main bourses, which saw mostly steady starts, had made gains on Monday following European election results.

Asian trading had been timid too, but another solid session for Japan's Nikkei and shares in China, nudged MSCI's 45-country all-world index up to 420 points leaving it just below its 2007 record high of 428.63 points.

03:20 pm New government: The Finance Ministry said it has to be watchful of the current account deficit (CAD) as well as the rupee because global markets are still volatile. As per the latest data, India's CAD sharply narrowed to 1.7 percent of the GDP or USD 32.4 billion in 2013-14 from a record high of 4.7 percent in FY'13.

"It is comfortable, but we have to be watchful because global markets are still volatile. So we have to be very watchful on CAD and we will have to continue to keep a very close watch," Finance Secretary Arvind Mayaram said after having a brief meeting with new Finance Minister Arun Jaitley.

03:10 pm FII view
Adrian Mowat Chief Asian & Emerging Market Strategist, JP Morgan believes the Indian equity market's rally last week was surprising. While the market has resistance at higher levels, he believes the Nifty may breakthrough the psychological 7500 level once the new government makes some concrete policy announcements.

Speaking to CNBC-TV18, Mowat says the Indian market story will now be that of cyclical acceleration as multiple data points are not likely to improve. "I am not worried about valuations. The forward multiple is statistically insignificant in India and what I mean by that is well within the normal valuation history," he further adds. On sectoral preferences, Mowat is bullish on public sector banks and despite good businesses, prefers to avoid export-related stocks like IT and pharma.

02:59pm Bharat Forge gains nearly 4%
Bharat Forge's net profit more than doubled to Rs 119 crore in the quarter ended March 2014 from Rs 50.1 crore in same quarter last year.

Revenue grew 38 percent to Rs 930.5 crore from Rs 674.7 crore and operating profit jumped 62 percent to Rs 230 crore from Rs 142 crore year-on-year.

02:50pm McNally Bharat gains 2.6%
McNally Bharat Engineering Company says the board of directors on May 30 will consider proposal to raise resources in one or more tranche by way of fresh issue of equity shares/convertible debentures/equity share warrants/convertible instrument etc. or any combination thereof to promoters, domestic investors, institutional buyers, FIIs, NRIs & corporate bodies etc. on FPO/rights/ preferential-private placement basis or any other suitable mechanism to meet the working capital requirements and other purposes.

02:40pm Andrew Yule surges 8%
Andrew Yule and Company has turned profitable with fourth quarter net at Rs 15.2 crore as against loss of Rs 2.1 crore in the year-ago period.

Revenue grew 35 percent to Rs 135.1 crore in the quarter ended March 2014 from Rs 100.1 crore in same quarter last year.

02:30pm JP Associates fall 3% ahead of Q4 nos
Jaiprakash Associates (JPA) will announce its earnings for January-March quarter today. Profit after tax of the company is expected to be at Rs 15.8 crore during the quarter, down 87.2 percent compared to Rs 124 crore in the year-ago period, according to CNBC-TV18 poll estimates.

Analysts expect net sales to decline 2 percent to Rs 3,785 crore in the quarter ended March 2014 from Rs 3,864 crore in same quarter last year.

However, operating profit (includes other operating income) may rise 1 percent on yearly basis to Rs 903 crore and margin may expand 70 basis points to 23.9 percent in the quarter gone by.

Analysts expect JPA to report weak Q4 earnings on lower E&C execution & margin, weak cement volumes, poor real estate booking and higher depreciation & interest costs.

02:20pm Sugar stocks down
Shares of sugar refiners slump as sugar futures fall to their lowest level in 10 weeks on sluggish demand from bulk consumers ahead of the monsoon season, reports Reuters.

Bajaj Hindusthan shares lower 5 percent after gaining 44.67 percent in May until Monday.

Balrampur Chini Mills is down 5 percent after gaining 34.21 percent during the same period.

Stocks had rallied on hopes of firmer prices during the summer.

02:10pm Market Expert
UR Bhat, MD of Dalton Capital Advisors says one is likely to see some profit booking and sector rotation, but signs of a big market correction are not visible yet, he said.

He sees more legs to this rally given the hopes market participants has pinned on the new government.

''The index is not terribly priced at these levels on a fundamental basis, but given the sort of hope that has been generated by the new government, there will be further steam left because retail investors are yet to join the party in a big way,'' he told CNBC-TV18 in interview.  He added that even now, the Indian equity market is fairly supported by FII funds.

02:00pm Equity benchmarks continued to see profit booking in afternoon trade with the Sensex falling 208.25 points to 24508.63 and the Nifty losing 55.40 points to 7303.65. About 1006 shares have advanced, 1792 shares declined, and 103 shares are unchanged.

GAIL topped the selling list, declining more than 7 percent after its Q4 net profit fell by nearly 42 percent on sequential basis. Macquarie has a negative view on the stock with a target price of Rs 320 which is the lowest on the street while Deutsche Bank downgraded the stock to sell from hold with a target price of Rs 340/share.

BHEL, Mahindra & Mahindra, Punjab National Bank, Coal India and State Bank of India lost 2-6 percent followed by Reliance Industries, HDFC, TCS, ONGC, Axis Bank, Sesa Sterlite and Tata Motors with over a percent.

However, Hindalco Industries, Infosys, Larsen & Toubro, Bajaj Auto, Hero Motocorp, Jindal Steel and UltraTech Cement bucked the trend, gaining 1-3 percent.

Meanwhile, the rupee fell to a one week low on heavy dollar purchasing by corporates, down 24 paise to 58.95 a dollar.

2:00 pm FII view: Adrian Mowat Chief Asian & Emerging Market Strategist, JP Morgan believes the Indian equity market's rally last week was surprising. While the market has resistance at higher levels, he believes the Nifty may breakthrough the psychological 7500 level once the new government makes some concrete policy announcements.

Speaking to CNBC-TV18, Mowat says the Indian market story will now be that of cyclical acceleration as multiple data points are not likely to improve.

On sectoral preferences, Mowat is bullish on public sector banks and despite good businesses, prefers to avoid export-related stocks like IT and pharma.

1:50 pm Interview: Praising the NHAI on its move to defer premium payment of nine road projects, P Pradeep Kumar, MD-Corporate Banking, State Bank of India also hopes that some of the payments that are entangled in various arbitrations that get delayed often will get paid much faster.

On power projects, he believes the tariff increased by State Electricity Boards (SEBs) is positive for the entire sector. However, he does not see any dramatic improvement in the sector anytime soon. ''It's going to be a very slow improvement,'' he adds.

1:40 pm Market outlook: UR Bhat, MD of Dalton Capital Advisors sees more legs to this rally given the hopes market participants has pinned on the new government.

''The index is not terribly priced at these levels on a fundamental basis, but given the sort of hope that has been generated by the new government, there will be further steam left because retail investors are yet to join the party in a big way,'' he told CNBC-TV18 in interview.  He added that even now, the Indian equity market is fairly supported by FII funds.

One is likely to see some profit booking and sector rotation, but signs of a big market correction are not visible yet, he said.

Those looking to participate in this rally should majorly employ fresh money in cyclicals. Investors should also focus on materials, mining and infra sectors, he recommended.

Further, banking stocks will lead growth in coming days, he added.

1:30 pm Result poll:  State-owned Oil India will announce its fourth quarter (January-March) earnings today. According to CNBC-TV18 poll estimates, analysts expect net profit of the company to fall 14.5 percent year-on-year to Rs 772 crore during the quarter.

Net sales is likely to decline 11.5 percent to Rs 2,420 crore in the quarter ended March 2014 from Rs 2,730 crore in the year-ago period.

Operating profit may slip 11 percent on yearly basis to Rs 1,150 crore and margin may decline 30 basis points to 47 percent during January-March quarter.

1:20 pm Buzzing: Shares of Jubilant Life hit 15-month high at Rs 197.05 per share, up 6 percent intraday. Its earnings saw a spectacular growth in March quarter. Its consolidated net profit stood at Rs 98.81 crore for the fourth quarter ended March 31, 2014, against a net loss of Rs 30.97 crore in the corresponding period of previous fiscal.

Net sales of the company rose to Rs 1,551.62 crore for the fourth quarter, compared to Rs 1,380.18 crore in the same period of previous fiscal.

The drug company will also receive funding to strengthen its generic drug manufacturing facilities. It will get USD 147.5 million (over Rs 860 crore) funding from IFC, a member of the World Bank Group, to strengthen its generic drug manufacturing facilities.

The Sensex is down 167.23 points at 24549.65, and the Nifty is down 47.15 points or 0.64 percent at 7311.90. About 984 shares have advanced, 1733 shares declined, and 105 shares are unchanged.

All indices are in red while only IT and Healthcare are seeing some buying interest

The Modi cabinet gets set to meet for the first time today. Prime Minister Narendra Modi has finally announced his cabinet and gives the super ministries of Home to Rajnath Singh, Exernal Affairs to Sushma Swaraj and Finance, Corporate Affairs And Defence to Arun Jaitley.

Rupee is at over a one-week low on dollar purchases by corporate on month-end demand from oil importers. Likely dollar sales and fall in current account gap support.

Globally, Asian markets trade mixed as investors react to the latest flare up of tensions in the South China Sea and prospect of further monetary easing in Europe.

12:59pm Boardroom
National Buildings Construction Corporation expects a growth of 20-30 percent in its real estate business with a rise of 12-15 percent in margins in FY15, says CMD Anoop Kumar Mittal. The construction company aims to start five new projects in realty segment in FY15.

NBCC reported a net profit rise of 11.5 percent at Rs 107 crore against Rs 96 crore year-on-year. The current order book of the company stands at Rs 17,000 crore.

''I am expecting by end of 2014-15 this should be plus Rs 20,000 crore,'' Mittal adds.

12:50pm Hero Motocorp to announce Q4 nos on Wed
Hero Motocorp is expected to report profit after tax of Rs 522 crore in January-March quarter, down 9 percent compared to Rs 574.2 crore in same quarter last year. However, revenue may grow 6 percent year-on-year to Rs 6,518 crore during the quarter, according to CNBC-TV18 poll estimates.

Operating profit is likely to increase 3.6 percent on yearly basis to Rs 880.5 crore but margin may decline 40 basis points to 13.4 percent in the quarter gone by.

12:40pm Educomp falls 5%
Educomp Solutions' consolidated net loss has widened to Rs 168.2 crore in fourth quarter from Rs 147.9 crore in same quarter last year due to significant fall in revenue.

Net sales fell 74 percent to Rs 87.7 crore in the quarter ended March 2014 from Rs 336.4 crore in the year-ago quarter while total expenses declined to Rs 179.85 crore from Rs 371.3 crore during the same period.

12:30pm Wockhardt in focus
The US Food and Drug Administration (FDA) has made some observations about the production process of the US unit of Indian generic drugmaker Wockhardt, the company said.

The FDA last year banned Wockhardt's two Indian units from exporting to the United States, its biggest market, citing quality lapses in the manufacturing process.

Managing Director Murtaza Khorakiwala told an analysts briefing the FDA had inspected the company's Chicago-based Morton Grove Pharmaceuticals unit, which accounts for more than 50 percent of its sales in the United States, in the March quarter. He did not give further details.

Wockhardt on Monday reported a 78 percent drop in net profit for the March quarter, as it continues to reel under the US and UK import bans due to manufacturing quality lapses, reports Reuters.

12:20pm Interview
The newly anointed PM, Narendra Modi's move to integrate sectors under one ministry is a good start, opines AM Naik, executive chairman, L&T.

Speaking to CNBC-TV18, Naik says the newly-formed government will have to make infrastructure and its financial management its top priority.

''The government's decision to integrate infrastructure-related ministries is a good one. We were shuttling between coal, mining, power ministries. Bring them today will have one integrated approach, so issues will begin to get resolved within three months,'' he adds.

12:10pm Market Expert
Vibhav Kapoor of IL&FS expects the markets to go into a consolidation phase now, in the range of 6900-7500, adding that the markets may correct to 6900 before Budget. Kapoor also sees a correction of 20-30 percent in small stocks.

12:00pm Equity benchmarks continued to see selling pressure in noon trade weighed down by banking & financials, oil & gas, PSU, auto and metals stocks while the broader markets fell for the second day in a row with the BSE Midcap and Smallcap indices losing 1.25 percent and 1.5 percent, respectively.

The Sensex lost 212.02 points to 24504.86 and the Nifty dropped 59 points to 7300.05. About 874 shares have advanced, 1755 shares declined, and 95 shares are unchanged.

GAIL kept its top position in the selling list, falling over 6 percent after it reported dismal performance in fourth quarter earnings. BHEL, Mahindra & Mahindra, Sesa Sterlite, ONGC and IDFC declined 2-5 percent.

However, Infosys, Larsen & Toubro, Wipro, Dr Reddy's Labs, Bajaj Auto, UltraTech Cement, Jindal Steel and Asian Paints bucked the trend, rising 0.5-2 percent. HDFC Bank recouped losses, up 0.2 percent.

Among midcaps, Jubilant Life, Triveni Turbine, AIA Engineering, Gujarat Gas and Aurobindo Pharma rallied 3-4 percent whereas Jaypee Infratech, Suzlon Energy, India Cements, HMT and Unitech lost 7-10 percent.

12:00 pm Macro outlook: C Rangarajan, former chairman, Economic Advisory Council to the Prime Minister expects the new government to focus on reducing revenue deficit and hopes that current account deficit (CAD) would be in control in FY15 as well.

In Q4FY14, CAD narrowed sharply to USD 1.2 billion (0.2 percent of GDP) from USD 18.1 billion (3.6 percent of GDP) in Q4 of FY13.

The next key cue for the market would be Reserve Bank of India (RBI) bi-monthly monetary policy review on June 3. In an interview to CNBC-TV18, Rangarajan said that interest rate actions will largely depend on inflation trajectory. ''Only when inflation cools down, monetary authorties take a call on rates,'' he added.

11:50 am Results: Educomp Solutions' consolidated net loss has widened to Rs 168.2 crore in fourth quarter from Rs 147.9 crore in same quarter last year due to significant fall in revenue.

Net sales fell 74 percent to Rs 87.7 crore in the quarter ended March 2014 from Rs 336.4 crore in the year-ago quarter while total expenses declined to Rs 179.85 crore from Rs 371.3 crore during the same period.

Revenue from higher learning solutions slipped to Rs 4.23 crore from Rs 19.85 crore and school learning solutions business' revenue fell significantly to Rs 42.4 crore from Rs 184.15 crore in the quarter gone by, year-on-year.

11:40 am Fall: Shares of India Cements slumped 10 percent intraday post announcing weak March quarter earnings replicating the weak pricing and demand prevailing in South India.

Hit by a slump in demand and capacity "overhang", the Chennai-based company reported standalone net loss at Rs 30.56 crore for the fourth quarter ended March 31, 2014. It had reported Rs 26.28 crore net profit in the year ago period.

Vice-Chairman and MD N Srinivasan said that "capacity overhang in South (India) continues to put pressure (on financials). In 2009, there was 24 lakh tonne demand in Andhra (Pradesh). But now it is only 16 lakh tonnes".

Kotak has revised its earning estimates for FY2015e/16e downwards by 13 percent and 21 percent to factor continued weakness in cement realisations. It has downgraded the stock to reduce from add.

11:30 am Market outlook: Dipan Mehta, Member, BSE and NSE, believes one should get even more positive about the market. The market is expecting a slew of reforms over the next 100 days, which has the potential to keep the market extremely invested.

"I think unequivocally, it is the best time to get into the market, better to get in now when the index is at 8,000 or beyond which will happen eventually. So I would make a fantastic case for retail investors to come to the market because every time they come in at the higher levels, they buy the wrong stocks and then they are out of the Indian market for three-four years. So at least the mistakes of the previous bull market should not be repeated," he says.

Profit booking continues to drag the Sensex by 197.86 points at 24519.02. The Nifty is down 55.90 points at 7303.15. About 700 shares have advanced, 1693 shares declined, and 91 shares are unchanged.

IT stocks are going strong with the rupee at 59.03 per dollar levels. Infosys, Wipro, L&T, TCS and Cipla are top gainers in the Sensex. Among the losers are GAIL, BHEL, M&M, ONGC and Sesa Sterlite.

In the Asian markets, Japan's Nikkei share average climbed to a fresh seven-week high on Tuesday, extending gains into a fourth day as recent upbeat Chinese and US data continued to lift investors' risk appetite.

The Nikkei was up 0.8 percent at 14,724.84 in mid-morning trade after touching 14,732.68, its highest since April 8. It rose 1 percent to 14,602.52 on Monday.

10:59am GAIL tanks 7%
State-run natural gas processing and distribution company GAIL disappointed street on every parameter with the fourth quarter (January-March) net profit falling 42 percent sequentially to Rs 972 crore on lower revenue and weak operational performance.

According to CNBC-TV18 poll estimates, analysts had expected the company to report net profit of Rs 1,420 crore on revenue of Rs 16,050 crore for the quarter.

Net sales declined 9.5 percent to Rs 14,464 crore in the quarter ended March 2014 from Rs 15,980 crore in previous quarter.

10:50am Motherson Sumi gains
Shares of Motherson Sumi Systems rose over 1 percent as it is expanding presence in North America with an acquisition in the region. The auto part manufacturer has signed an agreement to acquire the wiring harness business of US-based Stoneridge through asset purchase at transaction value of USD 65.7 million.

''The acquisition is expected to close in the third quarter of 2014, subject to customary closing conditions. The acquired business has a turnover of approximately USD 300 million,'' it said in a statement.

The transaction includes six manufacturing facilities located in Portland, Indiana; Chihuahua, Mexico; Saltillo Mexico; and Monclova, Mexico; as well as an engineering and administrative center located in Warren, Ohio. It also involves approximately 4,700 employees.

10:40am Market Update
The 50-share NSE Nifty slipped below the 7300-mark due to further profit booking in banks and metals stocks. The index fell 78.25 points or 1.06 percent to 7280.80 and the Sensex dropped 289.59 points or 1.17 percent to 24427.29.

About 709 shares have advanced, 1525 shares declined, and 91 shares are unchanged.

10:30am Educomp Solutions drops 5%
Educomp Solutions' consolidated net loss has widened to Rs 168.2 crore in fourth quarter from Rs 147.9 crore in same quarter last year, driven by significant fall in revenue.

Net sales fell 74 percent to Rs 87.7 crore in the quarter ended March 2014 from Rs 336.4 crore in the year-ago quarter.

10:20am Britannia slips 2%
Bakery and dairy products manufacturer Britannia Industries' fourth quarter (January-March) standalone net profit grew 4 percent year-on-year to Rs 91.5 crore on higher revenue and better operational performance but provision for diminution in investment of Daily Bread capped the profitability.

Standalone total income rose 10 percent to Rs 1,653.1 crore in the quarter ended March 2014 from Rs 1,502.4 crore in same quarter last year while total expenses jumped nearly 9 percent to Rs 1,505 crore from Rs 1,385.4 crore during the same period, driven by higher raw material cost.

Britannia says it made a provision of Rs 20 crore for diminution on investment made in equity shares of Daily Bread Gourmet Foods during the quarter.

10:10am Cabinet Portfolio
Prime minister Narendra Modi has kept Personnel, Public Grievances and Pensions, Department of Atomic Energy and Department of Space portfolios to himself.

Along with finance and defence, Arun Jaitley has also been trusted with the corporate affairs portfolio.

The rest of the portfolio allocations are as follows:

  • Rajnath Singh: Home Affairs Minister
  • Sushma Swaraj: External Affairs Minister
  • Ravi Shankar Prasad: Law & Telecom Minister
  • Prakash Javadekar - MoS, I&B (Independent)
  • M Venkaiah Naidu: Urban Development Housing, Parliamentary Affairs
  • Ananth Kumar: Chemicals & Fertilisers Minister
  • Ashok Gajapathi Raju: Civil Aviation Minister
  • Anant Geete: Heavy Industries & Public Enterprises Minister
  • Sadananda Gowda: Railway Minister
  • Nitin Gadkari: Road Transport, Highways & Shipping Minister
  • Uma Bharati: Water Resources, River Dvpt, Ganga Rejuvenation
  • Najma Heptulla: Minority Affairs Minister
  • Gopinathrao Munde: Rural Development, Panchayati Raj Minister
  • Harsh Vardhan: Health & Family Welfare Minister
  • Smriti Irani: Human Resource Development Minister
  • TC Gehlot: Social Justice & Empowerment Minister
  • Radha Mohan Singh: Agriculture Minister
  • Jual Oram: Tribal Affairs Minister
  • Kalraj Mishra: Micro, Small & Medium Enterprises Minister
  • Narendra Tomar: Mines, Steel, Labour & Employment Minister
  • Harsimrat Kaur Badal: Food Processing Industries Minister
  • Maneka Gandhi: Women & Child Development Minister
  • Ram Vilas Paswan: Consumer Affairs, Food & Public Distribution
  • Inderjit Singh: MoS, Planning (Independent), Defence

10:00am Equity benchmarks extended losses with the Sensex falling 200 points weighed down by profit booking in banks, oil & gas, metals and auto stocks after the announcement of Modi's cabinet team. The BSE Midcap and Smallcap indices fell 1.3 percent each.

The Sensex lost 195.47 points or 0.79 percent to 24521.41 and the Nifty declined 52.95 points or 0.72 percent to 7306.10. Declining shares outnumbered advancing ones by a ratio of 1242 to 740 on the BSE.

Shares of ONGC and Reliance Industries slipped 2-4 percent while GAIL fell 6 percent on dismal performance in the quarter ended March 2014.

In the banking space, top lender State Bank of India dropped 2 percent followed by ICICI Bank, HDFC Bank and Axis Bank with 0.8-1.7 percent.

State-owned power equipment maker BHEL plunged 4.5 percent whereas technology stocks like Infosys, TCS and Wipro gained 1-2 percent. Pharma stocks too saw buying interest; Sun Pharma, Dr Redddy's Labs and Cipla advanced 0.4-0.7 percent.
 
Meanwhile, the rupee declined 30 paise to 59.01 a dollar.

10:00 am Deal: Motherson Sumi Systems has signed an agreement to acquire the wiring harness business of Stoneridge through asset purchase at transaction value of USD 65.7 million.

''The acquisition is expected to close in the third quarter of 2014, subject to customary closing conditions. The acquired business has a turnover of approximately USD 300 million,'' it said in a statement.

The transaction includes six manufacturing facilities located in Portland, Indiana; Chihuahua, Mexico; Saltillo Mexico; and Monclova, Mexico; as well as an engineering and administrative center located in Warren, Ohio.

It supplies wiring harness and assembled instrument panels principally to the commercial vehicles, agriculture equipment, material handling equipment and off-highway vehicle segments.

9:50 am Market check: The market continues to be under selling pressure as the Sensex is down 88.21 points at 24628.67. The Nifty is down 23.75 points at 7335.30. About 827 shares have advanced, 945 shares declined, and 67 shares are unchanged.

GAIL is down 5 percent while Sesa Sterlite, ONGC, M&M and BHEL are top losers in the Sensex. Among the gainers are Wipro, L&T, TCS, Infosys and Dr Reddy's Labs.

9:40 am FII view: Sakthi Siva, Credit Suisse says over March, April and so far in May, net foreign buying is a rather large USD 21 billion in Emerging Asia ex-China, ex-Malaysia. ''Of that USD 21 billion, India and Taiwan are by far the largest recipients with net foreign buying of USD 7.3 billion and USD 6.4 billion, respectively,'' she adds.

She further says, ''But on our preferred measure of crowdedness - India is running at 0.9 percent. This is below its historical average of 1.2 percent. Our two biggest overweight markets remain Korea and India.''

Bhuvnesh Singh, Barclays says compared to the start of the earnings season, most sectors except industrials (+37bps) and financials (+44bps) have witnessed earnings downgrades with the largest downgrades in FY15e growth seen in telecoms (-646bps), IT (-219bps) and materials (-176bps).''

9:30 am Portfolio assignment: The guessing game has finally come to an end. Prime minister Narendra Modi has kept Personnel, Public Grievances and Pensions, Department of Atomic Energy and Department of Space portfolios to himself. Along with finance and defence, Arun Jaitley has also been trusted with the corporate affairs portfolio.

9:20 am Current account deficit: Current account deficit plunged to 0.2 percent of the gross domestic product (GDP) in the March quarter, from 3.6 percent a year ago as imports fell due to curbing gold imports. On a Balance of Payment (BoP) basis, merchandise exports declined by 1.3 percent to USD 83.7 billion in Q4 of 2013-14 as against an increase of 5.9 per cent in Q4 of 2012-13.

Aditi Nayar, Economist, ICRA says that turnaround of CAD figures have been spectacular in terms of street expectations. Moving on, one of the key sensitivities will be exports' behaviour with a moderate improvement in growth.

Meanwhile, Barclays' Chief India Economist Siddhartha Sanyal believes the number is extremely healthy when looked at for the entire year, as the overall capital flows are comfortably covering the CAD. He feels these numbers are giving a confirmation that this trend will continue going ahead.

The market has opened on a tepid note with both the Sensex and Nifty slipping into red. The Sensex is down 82.27 points at 24634.61 and the Nifty is down 27.60 points at 7331.45. About 465 shares have advanced, 296 shares declined, and 26 shares are unchanged.

GAIL is down 6 percent while IT stocks are holding strong.

The rupee fell further in early trade. It opened at 58.80 a dollar, down 9 paise compared to previous day's closing value of 58.71 a dollar.

Ashutosh Raina, HDFC Banksays USD-INR currency pair has been trading in a 58-59 a dollar range with good capital flows offset by aggressive Central Bank intervention.

"A strong CAD number should also add to the prevailing positive sentiment," he adds. He expects the trading range of 58-59 a dollar to continue till we get some policy announcements from the new government.

Global cues, meanwhile, are positive with the European shares closing higher as investors reacted to the results of European parliament elections and presidential elections in Ukraine. Japanese shares too rose to a fresh seven-week high, posting a fifth session of gains.

In other asset classes, Brent crude fell below USD 110 per barrel, dipping further from last week's two-and-a-half month high as worries over Ukraine eased slightly after its presidential election.