Sensex gains 190 points; autos, IT & realty stocks lead
11 August 2014
03:30 pm Market closing
Auto and IT stocks led the market on Monday. The Sensex ended up 190.10 points or 0.75 percent at 25519.24, and the Nifty was up 57.40 points or 0.7 percent at 7625.95. About 1716 shares have advanced, 1221 shares declined, and 96 shares were unchanged.
M&M was up 6 percent, HDFC soared 4 percent while Tata Motors, Infosys and Sesa Sterlite were top gainers in the Sensex.
Among the losers were GAIL, Dr Reddy's Labs, NTPC, HUL and ITC.
03:10 pm Global markets
Global stocks bounced after recent sell-offs and core government debt prices fell on Monday as markets saw a lowered risk of direct conflict between Russia and Ukraine while Middle East tensions appeared less acute.
The MSCI World Index, which tracks stocks from developed economies, was up 0.4 percent at 0739 GMT - though still down 3.9 percent from July highs as the prevailing market mood remained a cautious one.
The pan-European FTSEurofirst 300 index followed Asia up 1 percent.
Both regions followed Wall Street's surge on Friday after Russia said it had finished military exercises close to the Ukrainian border, which the United States had criticised as provocative.
The Ukraine crisis has hit European markets particularly hard with the German blue-chip DAX index down 9.5 percent from its June peak, luring investors looking for attractively priced entry points into European equities.
02:55pm SAIL gains post Q1 nos
State-controlled Steel Authority of India (SAIL) has reported a 17.5 percent growth in net profit at Rs 530 crore in the quarter ended June 2014 compared to Rs 450.9 crore in the year-ago period aided by higher operating performance but impacted by lower other income and higher finance cost.
Analysts had expected profit at Rs 400 crore on revenue of Rs 11,250 crore for the quarter, according to CNBC-TV18 poll estimates.
Total income from operations grew by 10.8 percent to Rs 11,341 crore in the quarter ended June 2014 from Rs 10,233.8 crore in the year-ago period driven by Rourkela, Bokaro and Salem steel plants.
The stock gained 1.8 percent.
02:45pm Muthoot Finance under pressure
Gold loan financing company Muthoot Finance's net profit declined 7 percent to Rs 180 crore in the quarter ended June 2014 from Rs 194 crore in the year-ago period due to fall in total income.
Total income from operations slipped 15.3 percent year-on-year to Rs 1,087.5 crore in the quarter gone by due to fall in asset under management while total expenses increased by 8 percent on yearly basis to Rs 283.6 crore.
During the same period, net interest income, the difference between interest earned and interest expended, went down marginally to Rs 552.1 crore from Rs 554.4 crore.
Pawan Singh, CFO, PTC Financial Services, believes the thrust of the new government is on the renewable energy with the state government showing a lot of interest in this sector.
''With the clarity in policies a lot of investment is anticipated in the renewable energy space and that is where we also hope to make investment,'' he adds.
According to Singh, the past loan book of the company had a lot of thrust on wind energy but going forward, solar would also have equal weightage or slightly higher weightage with clarity in government policies.
The financial company has been getting a lot of attractive propositions through city bids that have happened recently after state governments have come out with clear-cut renewable energy policies.
Singh says the renewable energy segment constitutes nearly 30 percent of the loan book of the company. He expects the renewable energy loan book to go beyond 60 percent in the next two quarters as a lot of solar planrs have been set up by the state and many developers have approached the company to seek exposure to this segment.
Meanwhile, Singh expects the cost of capital to remain stable for the company.
02:15pm FII View
Rakesh Arora, Macquarie said global factors have overshadowed Indian markets in the absence of any specific domestic catalysts. ''Even in the current reporting season defensives have done better than cyclicals. However, interest from long-only FIIs has increased with lots of requests for reports and models,'' he added.
He recommends buying on dips.
02:00pm The buying interest continued in equity benchmarks as well as broader markets in afternoon trade. The Sensex rose 145.10 points to 25474.24 and the Nifty advanced 39.95 points to 7608.50.
About 1665 shares have advanced, 1104 shares declined, and 100 shares are unchanged.
Mahindra and Mahindra extended gains, rising over 6 percent followed by Tata Motors, Infosys, HDFC, Larsen and Toubro, DLF, Bank of Baroda and UltraTech Cement with 1.5-2.6 percent.
However, Dr Reddys Labs topped the selling list, down more than 2 percent. NTPC, HCL Technologies, Jindal Steel, GAIL, Tata Power and Tata Steel declined 1-1.7 percent.
Among midcaps, Birla Corporation, TVS Motor, Aurobindo Pharma, Akzo Nobel and Emami gained 5-10 percent whereas Bhushan Steel, Den Networks, IIFL Holdings and Dena Bank tanked 4-10 percent.
Adani Enterprises, M&M, SBI, Tata Steel, Aurobindo Pharma, Tata Motors, and Larsen and Toubro remained most active shares on exchanges.
1:30 pm Buzzing: Shares of Dena Bank fell 5.5 percent intraday as state-controlled lender's
first quarter (April-June) net profit fell 57 percent to Rs 81.5 crore on lower other income and slow growth in net interest income but supported by lower tax cost and flat provisions.
The profit in the year-ago period was Rs 189.2 crore. Net interest income, the difference between interest earned and interest expended, increased marginally to Rs 612 crore in the quarter ended June 2014 from Rs 604.7 crore in corresponding quarter of last fiscal while other income (non-interest income) dropped 60.5 percent to Rs 144.42 crore from Rs 365.51 crore during the same period.
Asset quality of the bank deteriorated with the gross non-performing assets (NPA) rising 151 basis points year-on-year (up 88 bps quarter-on-quarter) to 4.21 percent and net NPA increasing by 120 basis points on yearly basis (up 59 bps sequentially) to 2.94 percent in the quarter gone by.
The market is holding gains led by auto and capital goods stocks. The Sensex is up 189.61 points at 25518.75 and the Nifty is up 50.20 points at 7618.75. About 1628 shares have advanced, 1002 shares declined, and 95 shares are unchanged.
M&M is up 6 percent, while Tata Motors, Infosys, Hindalco and HDFC are other gainers in the Sensex. Among the losers are Dr Reddy's Labs, NTPC, GAIL, Tata Power and HUL.
Gold slipped further from a three-week high as investors eyed firmer equity markets and outflows from the world's top bullion fund, but held above USD 1,300 an ounce on concern over the Middle East and Ukraine.
"The only supporting factor for gold right now is the geopolitical situation. Though we have seen some easing in tensions over the weekend, the underlying problems have still not been resolved," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
01:00pm Market Expert
Krishna Kumar Karwa, MD, Emkay Global Financial Services, said the foreign institutional investment (FII) interest in India will remain robust as ''they are very optimistic and that can be seen in numbers (in terms of FII inflow) over the last few months''.
''The FII interest remains robust not only in the usual sectors like IT, pharma, consumers, financials, but also they are keenly looking to invest in the infra space. Thus they have been evaluating sectors which were earlier out of flavour,'' he told CNBC-TV18.
On midcaps, Karwa said the segment has bottom-up investing opportunity. While some of them may have run up ahead of their numbers or just with the overall buoyant investor sentiment, otherwise the ''midcap space offers opportunities for significant capital appreciation based on fundamental and devaluations''.
12:50pm 8K Miles Software Services on buyers' radar
Shares of 8K Miles Software Services rallied more than 14 percent after DSP Blackrock Micro Cap Fund bought 3.2 lakh shares (representing 3 percent equity) at Rs 175 apiece on Friday.
8K Miles is an internet company that is focused on building solutions around cloud computing and promoter's shareholding in the company is 66.3 percent.
12:40pm Europe opens
European markets gained strength in opening trade following positive cues from Asian and US peers. Germany's DAX gained 1 percent followed by France's CAC with 0.6 percent and Britain's FTSE with 0.5 percent.
12:30pm IRB Infrastructure under pressure
Shares in IRB Infrastructure Developers fall 1.5 percent, heading for a fourth consecutive daily fall.
IRB Infrastructure shares had nearly tripled this year as of the close of trade on August 5, tracking gains in the sector, which is expected to be a winner under the Modi government.
BNP Paribas downgraded the stock to "hold" from "buy", it said in a report today.
"We are downgrading IRB to "hold", as we believe the share price fairly reflects its growth prospects," BNP said, reports Reuters.
With the upturn in the telecom sector seen over the last 3-4 quarters after years of downturn, Akhil Gupta, Vice Chairman, Bharti Enterprises sees a promising trend benefitting the entire telecom space rather than a sole entity.
On the back of subscriber cost decelerating, realised rate on voice escalating along with strong data growth, Gupta sees data and voice realisation trends to persist. However, a steep hike in realisations are not intended. Realised rates will gradually increase to prevent negative elasticity.
Talking on Bharti's Africa business, in an interview with CNBC-TV18, he says capital allocation to Africa was the right decision considering it was a unique asset. Although the turnaround has taken longer than expected, clearer signs of Africa biz turnaround will be seen by the end of this fiscal, he adds.
Discussing the telecom major's balance sheet, the company is comfortable with leverage but says it is prudent to lower Airtel's debt
He dismisses the notion of payment bank as a business in itself.
12:00pm The market is on a strong footing with the 30-share BSE Sensex rising 178.02 points or 0.70 percent to 25507.16 aided by technology, auto, banking and financials, and capital goods stocks. The 50-share NSE Nifty advanced 48.05 points or 0.63 percent to 7616.60.
About 1591 shares have advanced, 954 shares declined, and 96 shares are unchanged.
Software services exporter Infosys and housing finance company HDFC gained 1.8 percent each while engineering and construction major Larsen and Toubro rose 1.5 percent.
Mahindra and Mahindra kept its top position in the buying list, up more than 5 percent to touch a record high of Rs 1,293.85 after the company's first quarter earnings beat brokerages' expectations.
12:00 pm Market outlook: There are signs of a new bull market for India, with rising risk appetite being one of them, says Raamdeo Agrawal of Motilal Oswal Securities.
In an interview with CNBC-TV18, he spoke of having seen four bull markets since 1987, and that bull markets were realised only in hindsight. Agrawal's advises investors to focus on companies than the market to be able to identify good stocks. He says TCS has been one of the biggest wealth creators, and that companies like it, M&M, Infosys and HDFC would continue to create wealth for investors.
He feels new set of wealth creators are few and that investors would be better off focusing on existing winners instead of trying to spot potential wealth creators. Agrawal expects the market to be rangebound near-term, but sees it surprising on the upside. He is bullish on Asian Paints , saying the company had a dominant market share in the paints business and would benefit from the boom in low cost housing.
11:40 am Interview: IT major Tech Mahindra is confident of performing well in the next two quarters. In an interview to CNBC-TV18, Executive Vice Chairman Vineet Nayyar said that the company will endeavour to keep its margins high. The company's operating profit margin in Q1FY15 dropped 310 basis points sequentially to 18.1 as against analysts' expectations of 19.6 percent.
Consolidated net profit increased by 2.7 percent quarter-on-quarter as against forecast of 8.1 percent growth but it beat street expectations on dollar revenue front that grew by 3.6 percent Q-o-Q to USD 855 million as against expectations of 3 percent growth. Sharing views on the Indian IT sector, Nayyar said that India will continue to be a major force in global IT services and technology space.
11:20 am Buzzing: Investors are falling on each other to lap up realty stocks, driving the index up over 2 percent in early trade. Stocks like Indiabulls Real Estate, DLF, HDIL, Mahindra Life, Oberoi Realty, Pheonix Mills and Unitech are rallying 2-4 percent, hoping for foreign fund inflow as Securities and Exchange Board of India (SEBI) has cleared new norms for setting up and listing of Real Estate and Infrastructure Investment Trusts.
The new guidelines, which herald a new investment avenue in India on the lines of one in developed markets like the US, UK, Japan, Hong Kong and Singapore, would allow trading in units of REITs and InvITs like any other security on stock exchanges. Small investors would have to wait for some time before they are allowed to invest in these new products, as minimum investment amount for REITs has been fixed at Rs 2 lakh and at Rs 10 lakh for InvITs for now, given the complex nature and potential risks associated with them. The industry and experts welcomed the guidelines and said it would help attract investments to the tune of USD 15-20 billion (over Rs one lakh crore) through such trusts, from foreign as well as domestic investors. The REITs alone can attract USD 8-10 billion worth funds.
Investors continued to buy taking the Sensex up 162.43 points at 25491.57. The Nifty is up 44.95 points at 7613.50. About 1576 shares have advanced, 796 shares declined, and 82 shares are unchanged.
M&M, Tata Motors, Infosys, L&T and Maruti are top gainers in the Senses while Dr Reddy's, Tata Power, NTPC, HUL and Bajaj Auto are major laggards. Realty stocks are gaining on hopes of foreign funds as Sebi cleared REITS norms.
Positive cues from other Asian markets in line with weekend rally in the US markets on easing of tensions in Ukraine, too fuelled buying activity on the domestic bourses, traders said.
Brent crude hovered above USD 105 a barrel, dropping from a one-week high hit. Analysts have said that US air strikes on Islamic State targets in northern Iraq over the weekend could help enforce stability in Iraq, curbing the risk of supply disruptions. Iraqi Kurdistan said on Friday that its oil output remained unaffected.
IT major Tech Mahindra is confident of performing well in the next two quarters. In an interview to CNBC-TV18, executive vice chairman Vineet Nayyar said that the company will endeavour to keep its margins high.
The company's operating profit margin in Q1FY15 dropped 310 basis points sequentially to 18.1 as against analysts' expectations of 19.6 percent. Consolidated net profit increased by 2.7 percent quarter-on-quarter as against forecast of 8.1 percent growth but it beat street expectations on dollar revenue front that grew by 3.6 percent Q-o-Q to USD 855 million as against expectations of 3 percent growth.
Sharing views on the Indian IT sector, Nayyar said that India will continue to be a major force in global IT services and technology space.
10:35am SBI rebounds
Jubilant investors are increasing positions in State Bank of India, taking the stock up half a percent. Most analysts are impressed by its April-June performance as it showed growth in profitability for the first time in last six quarters.
The country's lender surprised street with the first quarter net profit rising 3.3 percent year-on-year to Rs 3,349 crore on higher net interest income though it was impacted by higher provisions, tax cost and lower other income. Asset quality continued to be stable during the quarter despite marginal rise on net basis.
Jefferies advises to buy the stock with a target of Rs 3420. It agrees that cost control efforts are slowing bearing fruit, enabling the bank to utilise better pre-provision operating profit (PPOP) to aggressively write-off/sell down bad assets. Asset sale and write-offs led to gross NPA improving to 4.90 percent. Lower provision strength on top of sale of NPA resulted in higher net NPA sequentially of 2.66 percent.
10:20am Realty stocks rally
Securities and Exchange Board of India (SEBI) has issued final guidelines for REITs and Infra Investment Trusts (InvITs) to be listed in India . Apart from providing clarity on the tax front, the new guidelines have been made less stringent and hence become a viable option for small developers. With these new norms, the cash-strapped Indian realty sector is likely to see inflows worth Rs 1 lakh crore fund inflows from foreign and domestic investors.
REITs are listed entities which mainly invest in income-producing real estate assets. The earnings generated are mostly distributed to their shareholders. They generally get special tax treatment. The BSE Realty Index jumped over 2 percent.
10:00am Equity benchmarks continued to see buying interest with the Sensex rising 164.77 points to 25493.91 and the Nifty gaining 45.55 points to 7614.10 supported by auto, banks, metals and captial goods stocks.
The broader markets outperformed benchmarks; the BSE Midcap and Smallcap indices gained around a percent each. Advancing shares beat declining ones on the Bombay Stock Exchange by a ratio of 1405 to 513.
Mahindra and Mahindra topped the buying list, up 3.5 percent. Citi advises buying the stock with a target price of Rs 1,458 post Q1 earnings. Tata Motors surged over 2 percent ahead of first quarter earnings scheduled to be announced post market hours.
Analysts expect consolidated profit after tax of India's largest commercial vehicle maker and the owner of luxurious car manufacturer Jaguar Land Rover (JLR) to grow 104 percent to Rs 3,527 crore (the highest for any auto company in India) during the quarter from Rs 1,726 crore in the year-ago period driven solely by JLR, according to CNBC-TV18 poll estimates.
9:50 am RBI norms: The Reserve Bank of India said on Sunday its board has approved the transfer of a surplus profit of Rs 52,679 crore to the government for the year ended June 2014. This compares with a surplus transfer of Rs 33,010 crore last year. The central bank said the transfer will take effect from today.
9:40 am Buzzing: Shares of Adani Enterprise soared 5 percent, riding on its April-june qaurter earnings. The Gujarat-based company has turned profitable with the first quarter consolidated net at Rs 556.7 crore on strong revenue growth and operational performance and despite exceptional loss, lower other income, higher finance, depreciation and tax costs. The loss in the year-ago period was Rs 278.3 crore.
Consolidated total income from operations grew by 43.1 percent to Rs 16,524 crore in the quarter ended June 2014 from Rs 11,547 crore in same quarter last year driven by strong growth in trading, power and agro businesses.
9:30 am Poll: Tata Motors, India's largest commercial vehicle maker and the owner of luxurious car manufacturer Jaguar Land Rover (JLR), will declare its first quarter (April-June) quarter earnings today. Analysts expect consolidated profit after tax of the company to grow 104 percent to Rs 3,527 crore (the highest for any auto company in India) during the quarter from Rs 1,726 crore in the year-ago period driven solely by JLR, according to CNBC-TV18 poll estimates.
Consolidated revenue is seen going up by 33 percent to Rs 62,535 crore in the quarter ended June 2014 from Rs 46,785 crore in same quarter last year.
9:20 am FII view: Rakesh Arora of Macquarie says global factors have overshadowed Indian markets in the absence of any specific domestic catalysts. Even in the current reporting season, defensives have done better than cyclicals. However, interest from long-only FIIs has increased with lots of requests for reports and models. He recommends buying on dips.
Dalal Street has started Monday trade with a gap up opening. The Sensex is up 204.97 points or at 25534.11 and the Nifty gains 51.30 points at 7619.85. About 518 shares have advanced, 114 shares declined, and 31 shares are unchanged.
Tata Motors, GAIL, Tata Steel, Bharti Airtel and Infosys are top gainers while Dr Reddy's Labs is loser in the Sensex.
The Indian rupee opened higher by 8 paise in the early trade at 61.07 per dollar versus 61.15 Friday. Agam Gupta of Standard Chartered said, ''The trade data which could be released today will be closely watched and the market is likely to react if it is away from expectations. Expect exporters to sell above 61.30/dollar levels and the normal oil demand to kick in below 61/dollar. The pair should range between 60.95-61.35/dollar for the day."
In commodities, crude prices slipped as US air strikes in Iraq eased investor concerns over the risk of oil supply disruptions.
The SEBI board finalised guidelines for REITs and infra investment trusts. REITs trusts may likely to kick-start in 2 months. With minimum asset size reduced to 500 crore, SEBI has kept investment limit for retail investors unchanged at Rs 2 lakh.