Choppy Sensex ends flat ahead of Maharashtra, Haryana polls
14 October 2014
It was a consolidation day for the market on Tuesday as investors turned cautious ahead of Maharashtra and Haryana elections that will be held on Wednesday. Benchmarks indices started of day on a strong note with more than 160 points gains on the Sensex due to easing CPI inflation in September and Reliance Industries' Q2 earnings, but those gains could not sustain for long – the index lost as much as 170 points. Post noon session, the index managed to trim losses due to steep fall in WPI inflation.
The 30-share BSE Sensex fell 34.74 points to close at 26349.33 and the 50-share NSE Nifty declined 20.25 points to 7864.
Investors are currently awaiting the Maharashtra and Haryana state election results on the assumption that once this event is out of the way, the Prime Minister will finally settle down and look at administration changes and reforms, says Saurabh Mukherjea, chief executive officer, Institutional Equities at Ambit Capital.
''We need reforms to come in soon now. Also the next Budget will be very critical for the market as the July Budget was a damp squib. The government should be able to convey its focus on fiscal discipline come what may,'' he adds.
Mukherjea isn't too worried about global slowdown. He has a year-end target of 30000 on the Sensex with a 10 percent downside risk if the policy reforms don't come in.
Equity, currency, commodity and debt market will remain shut on October 15 on account of general assembly election in Maharashtra.
Meanwhile, wholesale price index (WPI) inflation in September eased to 2.38 percent (hit a five-year low) from 3.74 percent in previous month aided by lower food inflation which hit a 33-month low at 3.52 percent. The WPI was expected to come in at 3.1 percent.
The consumer price inflation data for the month of September, which was released yesterday, cooled off to its all-time low of 6.46 percent (the lowest since India started computing consumer price index (CPI) in January 2012) from 7.73 percent in August led by lower food prices and fuel costs.
Realty major DLF was the biggest loser, falling 28.5 percent to close at record low of Rs 104.95 after falling as much as 30 percent intraday at Rs 102.70 after Sebi barred company and its six executives from accessing capital markets for three years. Analysts say there will be no major impact on company's operations but it will push forward any plans for further equity issuance and could postpone value unlocking.
Sesa Sterlite fell as much as 12.4 percent intraday post Supreme Court order but managed to recover in later part of the day, down just 0.3 percent at end after the company clarified that SC order on Goa mining is not related to company. Goa Mineral Ore Exporters' Association also clarified that Supreme Court order will impact only a part of total inventorised cargo of 15.2 million tonne out of which Sesa's share is seen to the tune of about 3-4 million tonne.
Among others, HDFC, Tata Motors, ITC, HDFC Bank, TCS, Infosys and ONGC were down 0.6-13 percent.
However, petrochemical and oil major Reliance Industries trimmed its gains in late trade to 0.3 percent. The stock gained as much as 2.3 percent intraday after reporting second quarter net profit at Rs 5,972 crore, beating street estimates, led by higher than expected USD 8.30 per barrel gross refining margins. Macquarie reiterated outperform rating on the stock, with a target of Rs 1100 while CLSA expects EBITDA to double over three years due to downstream capax plan.
Bajaj Auto rose 2.5 percent ahead of its September quarter earnings. A CNBC-TV18 poll sees net profit rising 4 percent to Rs 870 crore. Superior product mix, currency benefits and operating leverage are expected to aid margins.
State Bank of India, HUL, Bharti Airtel, BHEL, Tata Power and Coal India were other prominent gainers, up 1-4 percent.
On the global front, Asian markets closed mixed with the Nikkei falling over 2 percent. European markets declined with the France's CAC, Germany's DAX and Britain's FTSE slipping 0.6-0.9 percent (at 16 hours IST).
Brent crude fell further, down 1 percent to USD 87.97 a barrel after oil producing countries like Saudi Arabia, Iran and Iraq denied oil output cut.
About 1303 shares advanced while 1624 shares declined on the Bombay Stock Exchange.
03:30pm Market Closing
Equity benchmarks closed marginally lower amid consolidation on Tuesday ahead of two state elections (Maharashtra and Haryana) tomorrow. The Sensex fell 34.74 points to close at 26349.33 and the Nifty declined 20.25 points to 7864.
About 1301 shares have advanced, 1622 shares declined, and 109 shares are unchanged.
DLF tanked 28.56 percent post Sebi order. BPCL, Cairn India, HCL Technologies, Tata Motors, HDFC, ONGC, Sesa Sterlite and HDFC Bank were down 1-2 percent.
However, BHEL, Axis Bank, Bajaj Auto, Tata Power, SBI and IndusInd Bank topped the buying list, up 2-4 percent.
03:15pm Symphony Q1 earnings
Air coolers maker Symphony surpassed street expectations on every parameter with the first quarter (July-September) standalone net profit rising 51 percent to Rs 21.6 crore on the back of strong growth in revenue and operational income. Profit in the year-ago period was Rs 14.3 crore.
According to CNBC-TV18 poll estimates, analysts had expected the company to report profit of Rs 18 crore on revenue of Rs 96 crore for the quarter.
Net sales grew 42.5 percent to Rs 102.7 crore in the quarter ended September 2014 compared to Rs 72.1 crore in same quarter last year.
Operating profit or EBITDA climbed 71.4 percent on yearly basis to Rs 23.8 crore and margin expanded by 390 basis points to 23.2 percent during the quarter, which were expected at Rs 19.9 crore and 20.7 percent, respectively.
02:58pm Brent Crude check
Brent crude fell to just above USD 88 a barrel in a well-supplied market as expectations faded that OPEC could cut output in an effort to shore up prices.
The global oil benchmark has declined more than 20 percent from the 2014 high in June as supplies rose and demand slowed in the United States, Europe and China.
Investors expecting a production cut from OPEC to support prices were disappointed as Saudi Arabia and Kuwait played down the possibility of the Organization of the Petroleum Exporting Countries reducing output.
OPEC, which produces about 40 percent of the world's crude oil, is due to meet in late November to discuss output targets, reports Reuters.
Videocon Industries is looking to raise money via its D2H business. The company is planning to launch an initial public offering (IPO) worth Rs 700 crore by January-February 2015, said CMD Venugopal Dhoot, in an interview to CNBC-TV18. The IPO will value company at Rs 5,400 crore.
The Mumbai-headquartered company currently has a D2H base of around 90 lakh users which is likely to double over the next five years.
The company had earlier in the year sold 10 percent stake in its Mozambique plant to Oil India and ONGC Videsh for nearly Rs 15,000 crore. The board is yet to decide about how to use that money. The company may also look to cut down debt which currently stands at around Rs 22,000 crore.
Meanwhile, Dhoot says Videocon is likely to focus more on its Brazilian operations as the field there has 10 million barrel of oil and equivalents. He expects oil and gas discovery in Brazil. The Brazilian fields are expected to start production from FY16.
02:00pm Market Check
Equity benchmarks continued to trade in a tight range with the Nifty consolidating in 7850-7900 band ahead of Maharashtra and Haryana state elections that will be Wednesday. Banks and healthcare stocks supported the market while technology and HDFC twins remained under pressure.
The Sensex rose 13.94 points to 26398.01 while the Nifty declined 4.15 points to 7880.10. About 1309 shares have advanced, 1466 shares declined, and 107 shares are unchanged.
Shares of Axis Bank, State Bank of India, Bajaj Auto, BHEL, HUL, Hindalco and Tata Power topped the buying list, up 2-3.5 percent followed by Reliance Industries, Bharti Airtel, Gail and Coal India with 1 percent loss.
However, ITC, HDFC, TCS, Tata Motors, ONGC and Sesa Sterlite fell 1-1.7 percent.
DLF, BF Utilities, SBI, Sesa Sterlite, Axis Bank, Reliance Industries and Infosys were most active shares on exchanges.
In the midcap space, Den Networks, BF Utilities, NBCC, ABG Shipyard and Symphony shot up 7-19 percent while Risa International, HCC, Trinity Trade, Jyothy Labs and Hindustan National Glass declined 3-7 percent.
01:30pm Market Expert
The improving macro numbers will surely give us an advantage in this kind of a market, especially when the global markets are so volatile, says Taher Badshah of Motilal Oswal AMC.
The consumer price inflation for the month of September cooled off to its all-time low of 6.46 percent , the lowest since India started computing consumer price index (CPI) in January 2012, led by lower food prices and fuel costs. The food inflation trimmed down to 7.67 percent against 9.42 percent MoM.
''There are lot of good things going in our favour. We have seen a significant amount of decline in oil prices but the corresponding translation of it into the domestic economy is yet to happen. So, the market will probably wait for a cut in diesel prices post elections. I think that has the capability to drive down these inflation numbers even lower as we go ahead,'' he says.
According to Badshah, Indian market has the ability to resist heawinds of global effect, however the only thing that it is lacking right now is FII flow. ''When the weather becomes favourable, we may see the flows coming back,'' he adds.
01:00pm Market Check
Equity benchmarks remained marginally weak amid consolidation in afternoon trade with the Sensex declining 21.48 points to 26362.59 and the Nifty falling 14.70 points to 7869.55.
The index found 7850 as its support due to fall in inflation. September inflation eased to 2.38 percent (hit a five-year low) versus 3.74 percent in previous month aided by lower food inflation which hit a 33-month low at 3.52 percent.
DLF lost over 26 percent after Sebi barred company and six of its senior executives from accessing capital markets for three years. Analysts say there will be no major impact on company's operations but it will push forward any plans for further equity issuance and could postpone value unlocking.
Sesa Sterlite recovered from day's low, down 1.7 percent (compared to more than 10 percent fall in late morning trade) after Goa Mineral Ore Exporters' Association clarified that Supreme Court order will impact only a part of total inventorised cargo of 15.2 million tonne out of which Sesa's share is seen to the tune of about 3-4 million tonnes.
Reliance Industries' second quarter net profit came in at Rs 5,972 crore, beating street estimates, led by higher than expected USD 8.30 per barrel gross refining margins. Macquarie reiterated outperform rating on the stock, with a target of Rs 1100 while CLSA expects EBITDA to double.
Bajaj Auto is among the top Nifty gainers today ahead of its earnings. A CNBC-TV18 poll sees net profit rising 4 percent to Rs 870 crore. Superior product mix, currency benefits and operating leverage are expected to aid margins.
Plastic products manufacturer Sintex Industries has beat the street estimates with second quarter consolidated net profit rising 46.8 percent on yearly basis to Rs 107 crore on strong sales and operational performance.
Operating profit jumped 35.8 percent year-on-year to Rs 288 crore and margin expanded by 160 basis points to 17.1 percent during the quarter.
Sunil Kanojia, Group CEO, Sintex Industries, said the margin expansion have been achieved largely due to better capacity utilization.
The company sees big business opportunities in urban solid waste management and has been investing in niche areas under the segment, Kanojia said, adding that they have been planning to tie up meaningful orders with government in its cleanliness drive.
In an interview to CNBC-TV18, Kanojia said the company has spare capacity available in the pre-fab segment, but wants capacity utilisation to improve before further capex. He expects of achieving 30-40 percent growth in the segment. Sintex's current debt on books stands at Rs 4,200 crore.
Sintex is looking at 20-25 percent growth opportunities for FY15, Kanojia said, adding that the company typically achieves 60 percent of turnover in H2.
12:30pm Nikkei falls
Japan's Nikkei share average tumbled 2.4 percent to a fresh two-month closing low on Tuesday on fears global economic weakness will weigh on US growth, while a stronger yen dragged down exporters such as Toyota Motor Corp and Honda Motor Co.
The Nikkei share average dropped 364.04 points to end at 14,936.51, the lowest closing level since Aug. 8.
It also broke below its 200-day moving average, also for the first since Aug. 8.
The dollar crawled up 0.4 percent to 107.235 yen, but remained in close range of a one-month low of 106.76 hit earlier in the session, reports Reuters.
12:00pm The market recouped its morning losses after WPI inflation in September dropped to five-year low. The Sensex declined 27.63 points to 26356.44 and the Nifty fell 15.45 points to 7868.80.
Wholesale Price Index (WPI) inflation in September eased to 2.38 percent from 3.74 percent in August led by fall in fuel, food and manufactured products prices. The WPI was expected to come in at 3.1 percent.
The consumer price inflation data for the month of September, which was released yesterday, cooled off to its all-time low of 6.46 percent, the lowest since India started computing consumer price index (CPI) in January 2012, led by lower food prices and fuel costs.
Top lender State Bank of India and its rival Axis Bank gained 2 percent each. State-run power equipment maker BHEL topped the buying list, up 4 percent.
Shares of Reliance Industries, Sun Pharma, Bajaj Auto, Bharti Airtel, Cipla and Tata Power gained 1-1.9 percent. However, DLF fell 26 percent followed by Sesa Sterlite, ITC, TCS, HDFC and Tata Motors with 1-4 percent loss.
11:59am Inflation cools
Inflation data based on Wholesale Price Index (WPI) for September came in at 2.38 percent against 3.74 percent on a month-on-month basis. The WPI was expected to come in at 3.1 percent on a lower primary and fuel inflation.
The consumer price inflation data for the month of September, which was released yesterday, cooled off to its all-time low of 6.46 percent, the lowest since India started computing consumer price index (CPI) in January 2012, led by lower food prices and fuel costs. The food inflation trimmed down to 7.67 percent against 9.42 percent month-on-month. The vegetable price inflation lowered significantly to 8.59 percent versus 15.15 percent from August.
11:30am FII View
Mahesh Nandurkar, CLSA says international commodity prices are down 14-16 percent in 2014, which is good news for India as a net importer of oil, gold and coal.
''We estimate that the recent commodity correction saves USD 22 billion on a full-year basis, which should help the current account deficit and inflation. Volume growth and agri exports will somewhat moderate the benefit,'' he adds.
According to him, lower commodity prices should drive earnings upgrades for autos, cement, road builders, select consumer companies like Asian Paints and select utilities like JSW Energy.
11:00am Market Check
The market remained under pressure amid consolidation with the Sensex falling 117.56 points to 26266.51 and the Nifty declining 43.50 points to 7840.75 weighed down by private banks, metals and technology stocks.
About 1085 shares have advanced, 1225 shares declined, and 97 shares are unchanged.
Sesa Sterlite saw sharp cuts but recovered from the day's low reacting to the Supreme Sourt order saying the iron ore mined in Goa before 2007 is belonged to the state but only relates to inventory. The stock declined 6 percent.
DLF lost over 23 percent of its market cap today and hit a record low of Rs 111 after Sebi barred company and some of its executives/promoters from accessing capital markets for 3 years on account of non-disclosure violations in its IPO document in 2007. It is another regulatory pronouncement against the company in a short period but analysts do not see any major impact on operations however it will push forward any plans for further equity issuance and could postpone value unlocking in rent-yielding commercial portfolio through REITs. Barclays cut its target price to Rs 159 from Rs 222 maintaining its equal weight rating.
Shares of ITC, HDFC, ICICI Bank, Tata Motors, TCS, HDFC Bank, ONGC, Tata Steel and Hindalco Industries declined 1-2 percent.
However, Reliance Industries gained nearly a percent post second quarter earnings. Credit Suisse maintains its outperform rating on the stock. According to the brokerage, Standalone EBITDA and GRMs were ahead of estimates.
Bajaj Auto gained 2.8 percent ahead of Q2 earnings. Bank of America Merrill Lynch upgraded the stock to buy from underperform with a target price of Rs 3000. Indusind Bank climbed over 2 percent as Morgan Stanley hiked target price on the stock to Rs 850 from Rs 750 earlier, a 34 percent upside post earnings.
Globally, Asian markets remained mixed with the Nikkei hovering at 2-month lows but Hang Seng at one week highs. US markets fell for the third consecutive session with S&P 500 closing below its 200-DMA and the VIX spiking to the highest level in more than a year. Brent traded sub USD 88 a barrel.
10:58am: Market Check
Equity benchmarks fell further post Supreme Court order on Goa iron ore mining case. Supreme Court today said iron ore mined in Goa before 2007 is belonged to state. Earlier SC had said monitoring panel will auction all mined iron ore. Sesa Sterlite fell more than 7 percent.
The Sensex lost 127.19 points to 26256.88 and the Nifty declined 46.60 points to 7837.65. About 1054 shares have advanced, 1148 shares declined, and 89 shares are unchanged.
10:50am SpiceJet in Focus
Budget carrier SpiceJet's top official warned the loss-making airline still needs new funding to anchor its turnaround efforts, even as its operating performance improves with higher revenue per seat amid reduced capacity.
"Our challenge is our legacy losses and this cannot be solved by operational cash flows alone, but by funding or recapitalisation," Sanjiv Kapoor, chief operating officer at India's No. 3 airline by market share as of August, told Reuters in an interview. SpiceJet previously said it was in "advanced" talks with an external entity to get funding.
"Hopefully in due course of time, we'll see some good news on that front," said Kapoor, speaking late on Monday at a conference organised by consultancy CAPA.
Battling competition in an industry plagued by some of the world's steepest operating costs and cheapest fares, SpiceJet plunged to a first-quarter net loss of Rs 124 crore (USD 20 million) in April-June. This followed a record loss in the year to March 2014.
10:30am Market Expert
Investors are currently awaiting the Maharashtra and Haryana states elections results on the assumption that once this event is out of the way, the Prime Minister will finally settle down and look at administration changes and reforms, says Saurabh Mukherjea, chief executive officer, Institutional Equities at Ambit Capital.
Speaking to CNBC-TV18, Mukherjea says the economy continues to be soft and no infra project has taken off significantly.
''We need reforms to come in soon now. Also the next Budget will be very critical for the market as the July Budget was a damp squib. The government should be able to convey its focus on fiscal discipline come what may,'' he says.
The areas, Mukherjea says, that need attention to are: labour reforms, land reforms and goods and services tax (GST).
On the market-front, Mukherjea says the market will pick up pace only if reform momentum kicks off and adds that he isn't too worried about global slowdown. He has a year-end target of 30000 on the Sensex with a 10 percent downside risk if the policy reforms don't come in.
10:00am Market Check
Equity benchmarks continued to consolidate in morning trade with the Sensex losing 36.27 points to 26347.80 and the Nifty falling 16.55 points to 7867.70.
The BSE Midcap declined marginally but Smallcap Index rose 0.4 percent. The market breadth was positive; about 1182 shares have advanced while 873 shares declined on the Bombay Stock Exchange.
Realty major DLF kept its top position in the selling list, down more than 23 percent after Sebi barred company and its six executives from accessing capital markets for 3 years.
NMDC, Tata Steel, Jindal Steel, Tata Motors, Sesa Sterlite, ITC, HDFC, NTPC and Hindalco Industries declined 1-3 percent. Infosys, TCS, ONGC and HDFC Bank slipped 0.3-0.8 percent.
However, BHEL, Bajaj Auto, SBI, Bharti Airtel, Cipla, Reliance Industries, Axis Bank and IndusInd Bank gained 1-3 percent.
Equity benchmarks gained half a percent in opening trade led by easing CPI inflation in September and better-than-expected numbers from Reliance Industries in Q2, but could not sustain those gains.
The Sensex fell 45.99 points to 26338.08 and the Nifty declined 19.05 points to 7865.20 weighed down by technology, metals, private banking and financials stocks.
About 781 shares have advanced, 510 shares declined, and 39 shares are unchanged on the Bombay Stock Exchange.
DLF tanked 19 percent after market regulator SEBI barred company and its six executives from accessing capital markets for 3 years.
Shares of TCS, ITC, Infosys, Tata Motors, ONGC and HDFC declined 0.3-1 percent. Metals stocks like Tata Steel, Hindalco Industries and Sesa Sterlite fell 1-1.6 percent.
However, Bajaj Auto gained 1.5 percent ahead of Q2 earnings. Axis Bank, Coal India, Bharti Airtel and IndusInd Bank rose 1.3-1.6 percent.
Reliance Industries gained a percent after its second quarter net profit came in at Rs 5972 crore, beating street estimates, led by higher-than-expected USD 8.30 per barrel gross refining margins.
Meanwhile, the consumer price index (CPI) for September fell to all-time low of 6.46 percent versus expectations of 7.2 percent. Meanwhile, in key data today, the wholesale price index (WPI) for September is expected to soften further to 3.1 percent.
The Indian rupee gained in the opening trade. It rose 15 paise to 60.93 per dollar versus previous day's closing value of 61.08 a dollar.
Ashutosh Raina of HDFC Bank said the global growth concerns are back to haunt the markets, resulting in re-emergence of risk-off sentiment. "The WPI inflation number, declared after market hours yesterday, should cheer the markets," he added.
He expects the currency to trade in a 60.50-61.50/dollar range, with an appreciating bias."
The dollar fell against a basket of major currencies on persisting concerns about global economic growth and worries that the Federal Reserve may delay its first interest rate hike.
On the global front, markets were in the red with the US markets slumping and the S&P 500 falling below its average from the past 200 days. Meanwhile, the CBOE VIX jumped 16 percent, the highest level since June 2012. Nikkei that opened after a day's holiday tanked 2 percent on a strong yen.