Sensex down 175 points, Nifty ends below 8150; Infosys tanks 4%
12 October 2015
3:30 pm Market closing: After a volatile day, the market ended lower as corporate India kick-starts September quarter results. The Sensex ended down 175.40 points or 0.6 percent at 26904.11 and the Nifty slipped 46.10 points or 0.6 percent at 8143.60. About 1302 shares advanced, 1440 shares declined and 125 shares were unchanged.
Infosys ended down 4 percent while Lupin, Sun Pharma, Cipla and HDFC were major laggards. On the gaining side were Vedanta, Hindalco, GAIL, Tata Motors and BHEL.
3:10 pm Interview: Merely a few days after it announced its expansion plans and the induction of six new aircrafts, SpiceJet management has now said the company is well funded and has no cash flow issues, unlike contradictory reports that are currently doing the rounds.
Speaking to CNBC-TV18, Ajay Singh, propter and chief operating officer, says the company is poised to log better Q2FY16 revenues than the figures it reported a year ago. The significant fall in crude prices, an input for the low-cost carrier, will aid numbers, he explains.
The company beat market leader IndiGo and all other airlines with a passenger load factor of 92.1 percent this August. This comes at a time when domestic air travel grew almost 21 percent year on year.
Singh says he is hopeful of sustaining the higher load factors, adding that the company is on a strong wicket.
2:55 pm Market Update: Equity benchmarks extended losses. The Sensex fell 185.93 points to 26893.58 and the Nifty slipped 49.10 points to 8140.60.
About 1202 shares have advanced, 1459 shares declined, and 121 shares are unchanged on the BSE.
2:45 pm Buzzing: Shares of Motherson Sumi soared 7 percent intraday. UBS says that the auto ancilliary company's earnings may double in three years. The brokerage has maintained a buy rating on the stock with a target price of Rs 340 per share.
According to UBS, risk reward attractive for long term investors. It hopes that revenues of Samvardhana Motherson Reflectec (SMR) and Samvardhana Motherson Peguform (SMP) may grow 10 percent CAGR over FY16-18.
UBS sees strong revenue growth and margin expansion with a view that recent concerns about market share losses in India is overblown.
Though the stock has been under pressure after one of its biggest clients Volkswagen has admitted cheating on diesel emission tests in the USA, few analysts are still betting on it. Currently, Motherson has a limited exposure to Volkswagen in the USA. Volkswagen is a key customer for Motherson in Europe and sales to its group contributed 44 percent of its consolidated revenue in FY15.
2:35 pm Vedanta shines: Shares of Vedanta have surged nearly 12 percent intraday, in addition to 11.58 percent rally in previous trading session especially after Glencore slashed its zinc output. Goldman Sachs has reiterated its buy rating on the stock, citing higher zinc prices due to lower supply.
Switzerland-based Glencore, on October 9, announced that it will reduce zinc output by 5 lakh tonne per annum (which is 4 percent of global CY16 output) to preserve value of its reserves in the ground at a time of low zinc and lead prices.
Zinc prices rallied 10 percent on that day to USD 1,816 per tonne, in addition to 4-5 percent of global supply likely to go off with closure of Century/Lisheen mines.
Goldman Sachs believes cuts announced by Glencore will lead to tightening of the demand-supply situation and could provide support to zinc prices.
According to the brokerage, Vedanta is well placed to capture upside in zinc as USD 100 higher zinc/lead price leads to 3 percent/6 percent higher FY17 EBITDA/valuation for Vedanta.
2:20 pm Q2 earnings forecast: Revenues at India's top companies are expected to fall 8.2 percent in the July-September quarter, the biggest decline in at least four years, according to Thomson Reuters data, highlighting the precarious health of the corporate sector.
But analysts say cost-cutting measures and a lower base effect could see companies post a slight 0.4 percent rise in net income from the previous year, the first earnings growth in four quarters.
The mixed results could add to concerns about how a weaker-than-expected economy is pressuring Indian companies. While the Reserve Bank of India (RBI) has cut official interest rates by 125 basis points since January, banks have moved far more slowly.
The broader Nifty has fallen 10 percent since its record high in early March and is down 1.1 percent so far this year, a mediocre performance for a market that in dollar terms was Asia's second biggest gainer last year.
Another disappointing earnings season would make it harder to justify even current valuations: the NSE is trading at 18.4 times forward one-year earnings, the second highest in Asia after the Philippines.
2:00 pm Market Check
The market extended losses in afternoon trade, dragged by technology, FMCG and healthcare stocks. However, metals, capital goods and oil stocks gained strength.
The Sensex fell 123.73 points to 26955.78 and the Nifty declined 34.60 points to 8155.10. The broader markets erased gains to trade flat.
Infosys remained under pressure, down 2.7 percent after reduction in FY16 dollar revenue guidance (in dollar terms), CFO resignation, equity dilution woes and tepid volume growth despite strong earnings.
Shares of HDFC, TCS, Lupin, Sun Pharma, Dr Reddy's Labs, Wipro and Cipla were down 1-2 percent. However, Vedanta and Hindalco remained strong despite profit booking, up 5-7 percent. Tata Motors continued its uptrend for the sixth consecutive session today, rising 2 percent.
1:50 pm Recall: Volkswagen is recalling 1,950 diesel vehicles in China to correct engine software that the automaker has admitted cheats on emissions tests.
The recall applies to 1,946 Tiguan sport utility vehicles and four Passat B6 sedans, all of them imported, the company said Monday. It said technical solutions are being developed and have yet to be submitted to Chinese authorities for approval.
Volkswagen's business in China, the largest auto market by number of vehicles sold, has suffered little impact from the global emissions scandal due to the lack of popularity of diesel cars among Chinese drivers. But foreign companies are closely watched by Chinese authorities, and state media publicize suggestions of misconduct.
1:40 pm Buzzing: Shares of Motherson Sumi soared 7 percent intraday on Monday. UBS says that the auto ancilliary company's earnings may double in three years. The brokerage has maintained a buy rating on the stock with a target price of Rs 340 per share.
According to UBS, Risk reward attractive for long term investors. It hopes that revenues of Samvardhana Motherson Reflectec (SMR) and Samvardhana Motherson Peguform (SMP) may grow 10 percent CAGR over FY16-18.
UBS sees strong revenue growth and margin expansion with a view that recent concerns about market share losses in India is overblown.
1:30 pm Result analysis: Shares of IndusInd Bank rose 2 percent intraday on Monday riding on its September quarter results. Brokerages are also bullish on the private lender as its asset quality improved during the quarter with gross non-performing assets (NPA) falling 31 basis points (down 2 bps Q-o-Q) to 0.77 percent. Net NPA declined 2 bps year-on-year to 0.31 percent but sequentially it was unchanged.
Morgan Stanley has retained overweight stance on strong revenue growth. Driven by other income, its Q2 profit rose 30.2 percent year-on-year to Rs 560 crore. Net interest income, the difference between interest earned and interest expended, increased 31.3 percent to Rs 1,094.3 crore in September quarter compared to Rs 833.11 crore in same quarter last year due to strong growth in advances.
The market is volatile as corporate India starts declaring September quarter results. The Sensex is down 12.73 points at 27066.78 and the Nifty is up 0.25 points at 8189.95. About 1396 shares have advanced, 1102 shares declined, and 107 shares are unchanged.
Besides metals, capital goods, oil & gas and auto stocks are up. Vedanta, Hindalco, Tata Steel, Tata Motors and BHEL are gainers in the Sensex.
Gold prices rose by Rs 74 to Rs 26,696 per 10 grams in futures trading today as speculators enlarged positions. Market analysts said speculators enlarged their positions on the back of a firming global trend, supporting the upside in gold prices at futures trade. Meanwhile, gold rose 0.2 percent to trade at almost seven-week high of USD 1,158.20 an ounce in Singapore.
12:55 pm Market Update: Equity benchmarks remained flat. The Sensex declined 1.23 points to 27078.28 while the Nifty rose 1.20 points to 8190.90.
About 1342 shares have advanced, 1118 shares declined, and 109 shares are unchanged on the BSE.
12:45 pm Europe opens: European equities opened to mixed trade today, bucking the positive trend set in Asia as investors tread cautiously after a strong week of gains.
London's FTSE 100 was off by 0.1 percent, the German DAX was up 0.4 percent, while the French CAC was flat.
Equity markets in China led gains in Asia today, amid expectations that Beijing will roll out further stimulus measures to ward off a sharper slowdown in the world's second-largest economy.
The government will convene later this month to discuss the 13th five-year plan and investors seem excited about the prospects of stimulus, noted analysts at the Bank of America Merrill Lynch.
12:40 pm Expert on Infosys earnings: Commenting on Infosys stellar second quarter numbers , Moshe Katri, IT industry analyst said market should focus on the long-term strategy of the company because the management seems to be firing on all cylinders to get the growth rates back on track.
Katri is confident of the company meeting the FY16 constant currency guidance of 10-12 percent and match industry growth.
When the company is going through a transformation lot of things happen but the management is executing on all fronts to get the company back on track, so the long-term prospect of the stock remains bullish, said Katri.
According to him, Vishal Sikka the CEO and MD of the company is doing all the things he spoke of.
12:20 pm CPI, IIP estimates: The index of industrial production (IIP) for the month of August is seen rising to 5 percent versus 4.2 percent seen in the month of July. According to CNBC-TV18 poll the range will be between 4 to 6.7 percent.
Revision in the June IIP number is likely to be revised higher to 4.4 percent versus 3.8 percent. There will be a favourable base which will impact IIP and it is expected to impact IIP all the way to November.
Meanwhile, the September Consumer Price Index (CPI) is seen at 4.49 percent versus 3.66 percent recorded in the month of August. According to CNBC-TV18 poll, the CPI range will be between 3.9 to 5 percent.
The core inflation is likely to come around 4.2 to 4.3 percent versus 4.13 percent.
The reason for the hardening in CPI is primarily because of the favourable base impact declining as expected.
Also read - FII flows could drive Nifty, Sensex higher: Dipan Mehta
12:00 pm Market Check
The market remained rangebound after a rally in opening trade. Technology stocks were under pressure post Infosys earnings while metals, banks, capital goods and select auto stocks provided some support.
The Sensex fell 36.07 points to 27043.44 and the Nifty declined 7.35 points to 8182.35. However, the broader markets outperformed benchmarks; the BSE Midcap and Smallcap indices gained more than 0.3 percent. The market breadth was also positive as about 1288 shares advanced against 1085 declining shares.
Infosys slipped 2.5 percent on profit taking. The IT company has reported dollar revenue growth of 6 percent, the highest in 16 quarters. It has maintained its FY16 revenue guidance in constant currency terms. Vishal Sikka, MD & CEO said second half of the financial year will be challenging due to seasonality and client specific issues.
Bank of Baroda topped the selling list on Nifty, down 4 percent as the CBI carried out searches at a bank's branch in connection with alleged Rs 6,000 crore black money transfer. The bank does not foresee any financial loss on account of these raids.
HDFC, TCS, Lupin, HUL and Cipla declined 1-2 percent while Vedanta and Hindalco were biggest gainers on Sensex, up 9 percent and 6 percent, respectively. Tata Motors, Reliance Industries, ICICI Bank, ONGC, Tata Steel and GAIL gained 1-2.5 percent.
11:55 am Market outlook: Dipan Mehta, member BSE and NSE, expects Nifty and Sensex to rise with an increase in foreign institutional investment (FII) flows into the market. Last policy meet of the Reserve Bank has helped in improving domestic as well as FII sentiments, he told CNBC-TV18. He expects the second quarter corporate earnings to be subdued. However, he said most of the midcap companies could outperform. With large initial public offer (IPOs) expected over coming few months, there could be liquidity pressure in the market, he said.
11:45 am Interview: Inox Wind a fully integrated player in the wind energy market won an order for 50 MegaWatt (MW) to be executed in Lahori, Madhya Pradesh.
Commenting on the same, Kailash Tarachandani, CEO, Inox Wind said the company plans to complete the order by March 2016.
The revenues usually are always in these kind of projects are between Rs 6-6.5 crore per MW, which would be around Rs 300 crore and margins would be around 15 percent because the company has always been targeting around that number, said Tarachandani.
11:30 am Buzzing: Shares of YES Bank rose 1.5 percent intraday as the company has got an Reserve Bank Of India's (RBI) to sponsor a Mutual Fund and to set up a Asset Management Company (AMC) and a trustee company.
The AMC and the trustee companies shall be set up as wholly owned subsidiaries of YES Bank.
The company will now apply to Securities and Exchange Board of India (SEBI) to seek necessary approvals.
The market is completely flat after the initial euphoria on Infosys results. The Sensex is up 5.53 points at 27085.04 and the Nifty is up 4 points or 0.05 percent at 8193.70. About 1259 shares have advanced, 909 shares declined, and 90 shares are unchanged.
Vedanta, Hindalco, Tata Motors, Tata Steel and BHEL are top gainers while Infosys, Cipla, HDFC, Wipro and Lupin are major laggards in the Sensex. IT index is down 1 percent from previous close.
Oil prices climbed in Asia on Monday boosted by a weaker dollar and expectations a rise in demand will ease a global supply glut, while investors await the release of key Chinese economic data this week.
Both main crude contracts have rallied since hitting six-year lows in late August, with last week seeing healthy rallies in line with global equities on easing expectations the US Federal Reserve will hike borrowing costs this year, pushing the dollar lower. A softer dollar makes dollar-priced oil cheaper, spurring demand. Comments by OPEC secretary general Abdullah el-Badri at the weekend that the cartel sees a "more balanced" oil market next year also provided support.
10:35 am CBI raid on BoB: A recent Central Bureau of Investigation raid on 59 current account holders involved in suspected forex violations will have little to no impact on Bank of Baroda , its Executive Director BB Joshi said.
In an interview to CNBC-TV18, Joshi confirmed news reports that investigations with respect to money being transferred to Hong Kong under the disguise of being import payments were on, and said the bank itself had flagged these transactions to the investigative agency.
"However, the amount of the transactions may be less than the Rs 6,000 crore that is being talked about in news reports," he said.
Bank of Baroda has suspended two senior employees of the branch from where the operations took place, Joshi said.
10:15 am Oil Update: Oil prices climbed in Asia today boosted by a weaker dollar and expectations a rise in demand will ease a global supply glut, while investors await the release of key Chinese economic data this week.
Both main crude contracts have rallied since hitting six-year lows in late August, with last week seeing healthy rallies in line with global equities on easing expectations the US Federal Reserve will hike borrowing costs this year, pushing the dollar lower. A softer dollar makes dollar-priced oil cheaper, spurring demand.
Comments by OPEC secretary general Abdullah el-Badri at the weekend that the cartel sees a "more balanced" oil market next year also provided support.
10:00 am Market Check
The market is still flat with all focus on Infosys' Q2 results. The Sensex is up 37.11 points at 27116.62 and the Nifty is up 11.20 points at 8200.90. About 1008 shares have advanced, 705 shares declined, and 66 shares are unchanged.
Infosys touched record high at Rs 1219 intraday after September quarter results but soon cooled off. The stock is down 3 percent. Infosys' Q2 profit increased 12 percent to Rs 3,398 crore from Rs 3030 crore on sequential basis. CFO Rajiv Bansal has resigned.
Other losers are Cipla, HUL, HDFC and Maruti. Vedanta is up 7 percent while Tata Steel, Hindalco, ONGC and Tata Motors are top gainers.
The first phase of the high voltage Bihar assembly elections has begun as voting began for the first phase of today. As many as 49 constituencies from across 10 districts from the eastern and central part of the state will vote on Monday sealing the fate of 583 candidates including 54 women nominees. A total of 1,35,72,339 electorates, including 72,37,253 men, 63,17,602 women and 405 of third gender, are eligible to exercise their right to vote.
Gold is near its highest in seven weeks, bolstered by expectations the Federal Reserve will not hike US interest rates soon. The metal climbed to USD 1,159.80 on Friday, its highest since Aug. 28, after minutes from the Fed's September policy meet showed that the central bank was deeply cautious about tightening monetary policy.
Weakness in the dollar, which fell to a three-week low on Friday, also helped support gold.
9:50 am Sale: States in India are gearing up to sell up to USD 7.6 billion in debt to foreign investors for the first time, stepping up competition for funds that could force the country's spendthrift provinces to clean up their books and tighten spending controls.
States pay the second-highest government yields in Asian emerging markets after Indonesia: around 8.16 percent for a 10-year bond, much higher than government debt and nearly two and three times the yield on Philippines and Thai paper.
That is expected to be a big draw for overseas funds, which have already poured nearly USD 8 billion into government debt so far this year, attracted to economic fundamentals that have been relatively better than emerging market peers.
9:40 am Bihar goes to polls: The first phase of the high voltage Bihar assembly elections has begun as voting began for the first phase of at 7 am on Monday. As many as 49 constituencies from across 10 districts from the eastern and central part of the state will vote on Monday sealing the fate of 583 candidates including 54 women nominees. A total of 1,35,72,339 electorates, including 72,37,253 men, 63,17,602 women and 405 of third gender, are eligible to exercise their right to vote.
9:30 am Results: Infosys touched record high at Rs 1219 intraday after September quarter results but soon cooled off. The stock is down 4 percent. Infosys' Q2 profit increased 12 percent to Rs 3,398 crore from Rs 3030 crore on sequential basis. CFO Rajiv Bansal has resigned.
According to a CNBC-TV18 poll, profit was expected at Rs 3,244 crore (up 7 percent) and revenue at Rs 15,210 crore (up 5.9 percent). Dollar revenue growth was seen at 3.6 percent. In June quarter, Infosys had raised dollar revenue guidance for FY16 to 7.2-9.2 percent from 6.2-8.2 percent. Analysts had expected the company to maintain its FY16 guidance of 10-12 percent in constant currency.
The Sensex is up 0.59 points at 27080.10, and the Nifty is down 0.30 points at 8189.40. About 768 shares have advanced, 603 shares declined, and 69 shares are unchanged.
The market has opened firm kicked by Infosys Septemer quarter results. The Sensex is up 131.43 points or 0.5 percent at 27210.94 and the Nifty is up 41.80 points or 0.5 percent at 8231.50. About 454 shares have advanced, 121 shares declined, and 35 shares are unchanged.
Infosys gained 3 percent but soon fell off the cliff as CFO Rajiv Bansal stepped down. However, the IT major climbed Vedanta is up 6 percent while Hindalco, Tata Steel and Wipro are top gainers. GAIL, Cipla, M&M and HDFC Bank are losers in the Sensex.
The Indian rupee has opened lower by 8 paise at 64.82 per dollar against Friday's close of 64.74.
Agam Gupta of Standard Chartered said, "There will be some inflows during the course of the day as the limit increase for FII investors into central government and state government bonds is effective from today. We expect a range of 64.60-64.95/dollar for the day." The dollar was at multi-week lows against the euro on expectations for a later interest rate hike. The dollar index is below the 95 mark.
Asian stocks outside Australia and Singapore advanced, tracking the slightly stronger lead from Wall Street.
Major US averages finished higher on Friday, with the Nasdaq Composite leading gains by notching up 0.4 percent as investors digested dovish signals from the US Federal Reserve minutes. The blue-chip Dow Jones Industrial Average and the S&P 500 ticked up 0.2 and 0.1 percent respectively.
Meanwhile, markets in Japan are closed for the Health and Sports Day holiday.