Sensex, Nifty end lower; IT laggards, SBI & BHEL gain 1%
07 August 2014
03:45 pm Food prices at 6-month low
Global food prices hit a six-month low in July led mainly by sharp declines in grains, oilseeds and dairy, which balanced out rising meat and firm sugar prices, the United Nations food agency said on Thursday.
The Food and Agriculture Organisation's (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 203.9 points in July, down 4.4 points or 2.1 percent from June.
The figure was 3.5 points or 1.7 percent below July 2013.
FAO raised its outlook for global cereal production by 18 million tonnes to 2.498 billion tonnes. FAO revised its estimate for world cereals stocks at the end of the 2015 season to 604.1 million tonnes, 5 percent higher than its previous estimate of 576 million tonnes.
03:30 pm Market closing
The market ended at lower levels. The Nifty ended tad below 7650, losing 22.80 points at 7649.25. The Sensex was down 76.26 points at 25589.01. About 1330 shares advanced, 1613 shares declined, and 112 shares were unchanged.
Among the gainers were Tata Steel, Maruti, ONGC, BHEL and SBI. IT stocks remained under pressure as Cognizant's lower guidance sparked fears. Infosys and TCS fell 1-2 percent each. Other laggards were Hindalco, Sesa Sterlite and Tata Motors.
03:20 pm Gold
Gold edged lower on after rising more than 1 percent the previous day as a firmer dollar offset concerns that tensions between Russia and the West over Ukraine could escalate.
A build-up of Russian troops on the border with Ukraine and tit-for-tat economic sanctions between the West and Moscow on Wednesday drove investors out of assets seen as higher risk including stocks and into the relative safety of bonds and gold.
European shares, which had fallen sharply, showed signs of stabilising , while the dollar index edged up 0.1 percent. Gold, which is priced in dollars, tends to lose ground when the US unit firms.
03:10 pm Results
India Cements has posted a net loss of Rs 2.96 crore in the quarter ended June 2014 as against profit of Rs 16.8 crore in the year-ago period but the loss was reduced compared to loss of 30.56 crore in January-March quarter.
Total income from operations fell 1 percent (up 9 percent sequentially) to Rs 1,228.4 crore in April-June quarter from Rs 1,240.7 crore in same quarter last year.
Operating profit slipped 17 percent on yearly basis to Rs 160 crore in the first quarter of current financial year 2014-15 and margin dropped 260 basis points year-on-year to 13 percent in the quarter gone by but that improved by 360 bps sequentially from 10.6 percent in Q4FY14.
03:00pm Market Check
The market erased all its gains with the Sensex falling 95.60 points to 25569.67, and the Nifty losing 23.65 points to 7648.40. Infosys and TCS fell 1.5 percent followed by Hindalco Industries, Sesa Sterlite and Sun Pharma with over a percent.
About 1249 shares have advanced, 1601 shares declined, and 117 shares are unchanged.
With Cognizant lowering its guidance for the full year from 16.5 percent to 14 percent, investor concern and fear that it is a industry-wide phenomenon has grown. This despite the company management repeatedly saying that the lowered guidance is on the back of client-specific issues .
Krishnakumar Natarajan, co-founder, CEO and MD, Mindtree does not think Cognizant's guidance has any industry-wide implications. Mindtree is not facing or seeing any issues at its client-end, he says. The company is optimistic about FY15 and believes it will be better than FY14, he adds.
Natarajan says he continues to see fairly strong demand momentum, led by sectors such as insurance and consumer-driven segments such as retail, He says BFS though is not on a negative trend, it is clearly soft.
02:45pm Bharti Airtel in focus
Bharti Airtel is likely to complete the sale of its Africa towers business this month. The remaining towers in Africa may be sold within the month fetching USD 1.2-1.5 billion, reports CNBC-TV18 quoting sources.
It is learnt that there are approximately 15,000 towers in Africa out of which 3100 towers worth USD 460-500 million have already been sold to Helios Towers.
The other players include Eaton Towers, IHS and American Tower Company (ATC). The Eaton Towers deal is likely to be closed within the week while the remaining deals may be closed by the end of the month. There may be an announcement once all three tower deals are closed, suggest sources.
02:30pm Reliance Communications in News
Reliance Communications today said it has received the first instalment of Rs 650 crore from the promoter group for preferential allotment of 8.67 crore warrants aggregating Rs 1,300 crore.
The remaining Rs 650 crore will be received by the firm before March 31, 2015, RCom said in a statement.
"The company has received Rs 650 crore from Telecom Infrastructure Finance Private Limited equivalent to 50 percent of the issue price of the equity shares upon allotment of
warrants and balance amount of Rs 650 crore will be received on or before March 31, 2015," it said.
The proceeds of the preferential issue will be used to reduce debt, the company said.
02:15pm Jubilant Foodworks falls post earnings
Jubilant Foodworks, which operates Domino's pizza chain in India, missed street expectations on every parameter with the first quarter (April-June) net profit falling 18.5 percent to Rs 27.7 crore compared to Rs 34 crore in the year-ago period, impacted by weak operational performance.
Analysts had expected the Jubilant Bhartia Group Company to report net profit at Rs 32.4 crore on revenue of Rs 485 crore for the quarter.
Total income from operations grew by 20.3 percent to Rs 477 crore in the quarter ended June 2014 from Rs 396.5 crore in corresponding quarter of last fiscal. The stock lost over a percent.
02:00pm The market recouped all its losses in afternoon trade with the Nifty reclaiming 7700 level supported by banks, capital goods, oil & gas and FMCG stocks. Technology stocks trimmed losses.
The Sensex rose 105.38 points to 25770.65 and the Nifty climbed 33.40 points to 7705.45. About 1328 shares have advanced, 1427 shares declined, and 113 shares are unchanged.
Shares of ICICI Bank, HDFC Bank, ITC, ONGC, Tata Steel, Dr Reddy's Labs, Coal India and BHEL rallied 1-2 percent followed by Reliance Industries, L&T and M&M with over half a percent.
However, IT majors TCS and Infosys trimmed losses to 1 percent from nearly 2 percent earlier. Tata Motors and Sun Pharma declined half a percent.
1:50 pm Bond market: Post RBI Governor's hawkish tone on the bi-monthly credit policy, Agam Gupta, Managing Director, Head of FXRC, South Asia, Standard Chartered Bank believes the mildly disappointed market has been witnessing outflows in debt FII segment.
The 50 bps SLR cut has put bonds under pressure. However, they could stabilise after a 5-7 bps sell-off from current levels, says Gupta in an interview with CNBC-TV18.
Furthermore, the rupee fell to over a four-month low in-line with global US dollar strength and weakness in emerging market currencies due to which, the Reserve Bank could be supplying dollars in the markets in the range between 61.5 - 62 against the greenback.
1:40 pm Boardroom: RK Baheti, CFO and director, Alembic says the company's branded formulations business posted good performance despite the impact of the new NPPA pricing and the carry forward effect of the old pricing. The pharma company grew on the back of its specialty business this quarter. Its specialty and acute segments grew by 25 percent and 4 percent, respectively.
Going ahead, Baheti is confident of the specialty business growing strongly, though maybe not at a similar pace. He is also confident of seeing 15-18 percent growth in branded formulation business.
1:30 pm Results: Gati declared its financial results for the first quarter ended June 30, 2014. In Q1FY'15, the company's consolidated net profit stood at Rs 15 crore as against Rs 7.2 crore, up by 111 percent in the corresponding quarter previous year.
Consolidated income increased by 23 percent at Rs 400 crore versus Rs 326 crore.
The company's EBITDA rose 68 percent at Rs 40.4 crore vurses Rs 24 crore.
Commenting on the company's quarterly performance, Mr. Mahendra Agarwal, Founder & CEO, ''We at Gati are dedicated to provide value-added and quality services which once again have rewarded us with a good set of numbers. The boom in the E-commerce sector has brought a wave of transformation in the retail space. With a wide range of services offered by Gati's E-connect, our aim is to reach every nook and corner of the country to enhance the experience of online shopping''.
1:20 pm Interview: Krishnakumar Natarajan, co-founder, CEO and MD, Mindtree does not think Cognizant's guidance has any industry-wide implications. Mindtree is not facing or seeing any issues at its client-end, he says.
The company is optimistic about FY15 and believes it will be better than FY14, he adds. Natarajan says he continues to see fairly strong demand momentum, led by sectors such as insurance and consumer-driven segments such as retail, He says BFS though is not on a negative trend, it is clearly soft.
The market is drifting away on growing selling pressure. The Sensex is down 90.70 points at 25574.57 and the Nifty is down 21.40 points at 7650.65. About 1148 shares have advanced, 1516 shares declined, and 108 shares are unchanged.
Except Metals and Oil & Gas, other indices are in red. Tata Steel, ONGC, Coal India, BHEL amd Hero are top gainers in the Sensex. Among the losers are Infosys, Sin Pharma, TCS, Hindalco and Tata Motors.
IT stocks loose ground as Cognizant cuts full year revenue guidance to 14 percent versus 16.5 percent. The rupee recovered as sentiment improves after the cabinet approved FDI in defense and railway.
Asian stocks lose ground for the third successive session while Europe opened with caution fearing an escalation of geo-political tensions.
12:55pm Essar Oil in focus
Essar Oil will shut a 40,000-barrel-per-day unit at its Vadinar refinery for a week for maintenance in the second half of this month, a company spokesman said today.
Essar operates a 400,000-barrel-per-day refinery at Vadinar in Gujarat.
"Our smaller CDU will go under maintenance shutdown in the fourth or the fifth week this month for about seven days. Our crude throughput during the maintenance period will be reduced by 350,000 to 400,000 barrels," the spokesman said.
However, industry and trade sources said the shutdown could last for about 10 days, reports Reuters.
RM Malla, managing director and chief executive officer, PTC India Financial Services credits the company's increased balancesheet size for its robust Q1 performance.
The infrastructure financing company's profit rose 2.13 times to Rs 52.13 crores in Q1.
Malla further says the company has a healthy spread of 4.34 percent and will continue to have robust asset quality thanks to stringent norms before giving its nod to any project or promoter.
12:30pm Bhushan Steel falls 20% again
Bhushan Steel continued to see selling pressure, falling 20 percent for the second consecutive session today after Delhi court refused anticipatory bail for company's vice chairman and managing director Neeraj Singal yesterday in connection with Syndicate Bank bribery case.
Special CBI Judge Swarana Kanta Sharma dismissed the anticipatory bail plea of Singal observing that the offence alleged in the case was serious in nature as it involves huge amount of public money.
12:15pm FII View
Anindya Chatterjee, senior portfolio manager, City National Rochdale Emerging Markets Fund is bullish on Indian equity market post election and remains constructive on the Indian Economy. However, he cautions of a minor correction in the market since he feels that the Narendra Modi-led government may not able to deliver reforms at the pace which the market expects.
In an interview to CNBC-TV18, Chatterjee said that global investors will follow policy actions of Indian government very closely.
On specific sectors, he is upbeat on export-oriented sectors like IT service and pharmaceuticals and has sizeable exposure to these two sectors. City National Rochdale Emerging Markets Fund has also been a buyer in Indian consumer space, he said.
12:00pm The market continued to see selling pressure on the back of weak global cues. Technology and auto stocks dragged while private banks led support. The BSE Midcap and Smallcap indices too lost half a percent each.
The Sensex declined 90.74 points to 25574.53 and the Nifty lost 24 points to 7648.05. About 1083 shares have advanced, 1425 shares declined, and 85 shares are unchanged.
Asian stocks slipped for the third successive session fearing an escalation of Geo-political tensions. Nikkei fell to a month low while the Hang Seng closed with triple digit losses.
The Indian rupee gained just 9 paise to 61.40 a dollar on news of the government allowing more foreign capital in railways and defense sectors.
IT majors TCS and Infosys dropped 1.6 percent each followed by Sun Pharma and Hindalco Industries with over a percent. However, private lenders ICICI Bank and HDFC Bank gained marginally.
11:50 am Crude prices: Oil prices edged higher in Asia but remained under pressure over ebbing fears about armed conflicts around the world and concerns about weakening US demand, analysts said. US benchmark West Texas Intermediate for September delivery rose nine cents to USD 97.01 in mid-morning trade, after falling 46 cents in New York to its lowest closing level since February 3.
Oil prices have seen a build in risk premium in recent months over armed insurgencies in crude producers Iraq and Libya, as well as Ukraine, a key conduit for Russian energy exports to Europe.
11:40 am Market opinion: Arindam Ghosh, MD & CEO, BlackRidge Capital Advisors says the Indian market currently seems to be trading in an unchartered territory but the concerns are more of a global nature than local.
According to him, the macro fundamentals in India look much better than they did a year back and feels India is the better positioned amongst other emerging markets (EMs).
Sector specific, he recommends buying PSU banks on declines. He says, valuations across PSU banks continue to be attractive.
He is also upbeat on the performance of auto and auto ancillaries.
11:30 am Buzzing: Shares of Cadila Healthcare rallied as much as 2.4 percent intraday on getting final approval from USFDA for drug that is used in prevention of kidney stones.
"Zydus Cadila has received the final approval from the United States Food and Drug Administration (USFDA) to market Potassium Citrate ER tablets 5, 10 and 15 mEq, used in prevention of kidney stones," said the company in its filing.
The estimated sales in 2014 for Potassium Citrate ER tablets is USD 131.7 million, as per IMS data.
The group now has 94 approvals and has so far filed 239 abbreviated new drug applications (ANDAs) from the commencement of the filing process in FY03-04.
11:20 am Market expert: India is likely to see a secular uptrend in the capital markets from current levels. That's the word coming in from Kalpana Morparia CEO, JPMorgan India, who points to the fact that beleaguered mutual fund industry has started seeing net inflows. "There is going to be a floor in terms of selling," she told CNBC-TV18.
The FII ownership of Indian equities remains close to historical highs. FIIs are overweight financials, telecom, consumer discretionary and utilities. They are underweight on energy, IT services and consumer staples, while DIIs are overweight on them (except IT services) along with industrials. Currently, FII portfolios are positioned relatively more aggressively compared to DIIs. But it is a unique situation wherein both FIIs and DIIs are buying into the market
The market is refusing to budge ahead in absence of any positive trigger. The Sensex is down 36.70 points at 25628.57 and the Nifty down 12.15 points at 7659.90. About 1157 shares have advanced, 1109 shares declined, and 87 shares are unchanged.
Tata Steel, Coal India, Maruti, BHEL and HDFC Bank are top gainers in the Sensex. Among the losers are TCS, Infosys, Wipro, Sun Pharma and HUL.
Gold held on to overnight gains above USD 1,30, trading near its highest in more than a week as fears of Russian military action against Ukraine and retaliation by Moscow over Western sanctions burnished gold's appeal as a safe haven.
Russia will ban all imports of food from the United States and all fruit and vegetables from Europe, the state news agency reported on Wednesday, even as NATO said Russia had massed around 20,000 combat-ready troops on Ukraine's border. The troop build-up sapped risk appetite, sending equities lower and global bond prices higher.
11:00am Jubilant Foodworks Q1 expectations
Jubilant Bhartia Group Company Jubilant Foodworks, which operates Domino's pizza chain, is expected to report profit after tax at Rs 32.4 crore, down 4.7 percent year-on-year while total income from operations may grow 22.3 percent Y-o-Y to Rs 485 crore during the quarter.
Operating profit is expected to increase 2.4 percent to Rs 68.3 crore in the quarter ended June 2014 from Rs 66.7 crore in the year-ago period but margin may decline 270 basis points to 14.1 percent in the quarter gone by.
Analysts expect same-store-sales growth between negative 1 percent to positive 5 percent. If the company reports a marginal recovery on this number, it will be taken as a positive by the street.
In Q3FY14, the company posted a negative 2.6 percent SSS growth, which led to big brokerage downgrades. That was followed by negative 3.4 percent SSS Growth in Q4FY14.
10:40am RBI tightens ARC norms
In a bid to tackle non performing asset (NPA) situation plaguing the banking system, the Reserve Bank of India has tightened norms for the sale of bad loans to asset reconstruction companies (ARCs).
The central bank has said that ARCs will now have to invest and hold minimum 15 percent security receipts as against 5 percent held earlier. Also, the planning time for NPA realisation has been cut to 6 months from 12 months currently.
Sharing views on revised norms, P Rudran, MD & CEO, Asset Reconstruction Company of India (ARCIL) said this move will result in better discipline from banks and ARCs. Initially, he expects to see reduction in loans bought by ARCs.
He further added that according to the new rules, the management fees will be calculated based on the value of the NAV.
10:20am FII View
India is likely to see a secular uptrend in the capital markets from current levels. That's the word coming in from Kalpana Morparia CEO, JPMorgan India, who points to the fact that beleaguered mutual fund industry has started seeing net inflows. "There is going to be a floor in terms of selling," she told CNBC-TV18.
Bharat Iyer MD & Head, Equity Research India JPMorgan believes market is likely to gain another 12-15 percent by the end of FY15. ''We trading at 16-17 times forward multiple, which is barely ahead of the long-term average and even if we presume that here onwards gains will be driven by earnings growth, we are going to see a pick up in earnings growth, about 12-14 percent this year and upwards of 16 percent next year. So even without significant re-rating, this market can deliver a decent return,'' he said.
10:00am The market continued to consolidate with the Sensex rising 16.65 points to 25681.92 and the Nifty gaining 5 points to 7677.05. The broader markets outperformed equity benchmarks; the BSE Midcap and Smallcap indices advanced 0.3 percent and 0.5 percent, respectively.
About 1219 shares have advanced, 641 shares declined, and 64 shares are unchanged.
Jindal Steel topped the buying list in Nifty, up 4 percent after good numbers in Q1FY15 primarily driven by inventory liquidation in the steel segment. Citi advises buying stock with a target price of Rs 385, citing Q1FY15 numbers beat despite heavy burden of fixed costs and profit after tax was intact signifying profitability potential.
However, technology stocks remained under pressure from early trade after Cognizant disappointed street by cutting CY14 dollar revenue guidance to 14 percent from 16.5 percent earlier. Barclays says while the overall demand environment remains positive but client-specific challenges may put a spanner in the works. Shares of TCS, Infosys and Wipro declined 1-1.6 percent.
9:55 am Poll: India Cements, which will announced first quarter (April-June) earnings today, is likely to turn profitable during the quarter. According to CNBC-TV18 poll estimates, analysts expect the cement maker to report profit of Rs 6.5 crore as against net loss of Rs 23 crore in the year-ago period.
Total income may fall 4 percent to Rs 1,185 crore in the quarter ended June 2014 from Rs 1,240 crore in corresponding quarter of last fiscal. Operating profit is seen slipping 28 percent on yearly basis to Rs 140 crore and margin may decline 380 basis points to 11.8 percent in the first quarter of current financial year 2014-15.
9:45 am IT stocks fall: Even a weak rupee have not been able to save technology stocks from sharp selling in trade today. Shares of Infosys, TCS, Wipro, HCL Tech and Tech Mahindra fell 2-3 percent intraday on Wednesday as Cognizant's lowering its guidance sparked fears about a growth slowdown of the entire sector.
The Nasdaq-listed IT firm slashed its growth guidance for the full year from 16.5 percent to 14 percent. Higher IT spending in North America and Europe helped the company clock 16.5 percent rise in quarterly revenue and net income rose to USD 371.9 million from USD 300.4 million, a year ago.
R Chandrasekaran, executive vice chairman of Cognizant had clarified the reduced guidance is on the back of specific and certain client situations.
9:35 am Buzzing: Shares of Bharti Infratel, the telecom tower infrastructures provider, dropped more than 6 percent in early trade Thursday, the day when it is selling 8.5 crore equity shares through offer for sale issue (representing 4.5 percent equity stake). The issue will close today itself at 3:30 pm.
"Bharti Airtel proposed to sell up to 4.5 crore equity shares of Bharti Infratel through a sale on the separate window provided by BSE and NSE. In addition to the sale shares, the seller may also sell up to 4 crore shares in the sale," said the company in its filing. A minimum of 25 percent of the sale shares are reserved for allocation to mutual funds, it added.
The company has set a floor price for this issue at Rs 250 per share.
9:25 am Opinion: John Paul Smith, Deutsche Bank says whilst momentum still appears to be positive for emerging markets, the transformation of sentiment towards EMs in general and China in particular, removes the major obstacle to a correction later in the year if the contrarian pattern of the past four years holds. He believes that EM equities are unlikely to break out of their post-GFC trading range, although we concede that they may enter a technical bull market before any correction.
The market has opened on a flat note. The Sensex is down 28.78 points at 25636.49 and the Nifty down 20.90 points at 7651.15. About 403 shares have advanced, 180 shares declined, and 27 shares are unchanged.
M&M, L&T, HUL, Bhati Airtel and Hindalco are top gainers are top gainers in the Sensex. Among the top losers are Infosys, Wipro, TCS, NTPC and Hero.
Rail and defence stocks are buzzing with the Modi government stepping up its FDI hunt as Cabinet cleared the proposal to allow 100 percent FDI in railway infrastructure. It also waved the green flag for 49 percent FDI in the defence sector via the FIPB route, the management control will however rest with Indians.
The Indian rupee opened higher by 12 paise at 61.37 per dollar versus 61.49 Wednesday.
Euro nursed broad losses after a batch of disappointing data from Italy and Germany soured sentiment for the currency ahead of a policy review by the European Central Bank.
Mohan Shenoi of Kotak Mahindra Bank said, "Global risk-off scenario arising out of geopolitical developments in Russia combined with strong US ISM data has resulted in global dollar rally and has caused rupee weakness."
In the US, stocks ended slightly changed with the S&P 500 holding steady near a two-month low, as investors sorted through developments in Ukraine and considered two derailed deals. The CBOE volatility index fell 3 percent to 16.37.
On the economic data front, US trade deficit narrowed more than expected in June. The drop was driven by a 1.2 percent fall in imports, largely on the account of a sharp decline in petroleum imports. On the other hand, exports edged up 0.1 percent supported by a surge in automobiles.
In commodities, crude steadied in trade pressured by ample supplies in the world's top oil consumer as crude stockpiles at the key cushing delivery hub rose. Gold soared past USD 1300 mark on safe-haven buying triggered by geopolitical worries.