Late sell-off, Q1 earnings drag Sensex 119 points, Nifty below 8600
26 July 2016
After a consolidation, equity benchmarks extended losses in late trade Tuesday on profit booking, especially after June quarter earnings.
The 30-share BSE Sensex was down 118.82 points at 27976.52 and the 50-share NSE Nifty dropped 45 points to 8590.65. About 1659 shares declined against 1040 advancing shares on the Bombay Stock Exchange.
Experts believe that the uptrend in market remains intact in near term due to liquidity despite intermittent profit booking.
The recent liquidity rush will continue into emerging markets, Ajay Srivastava of Dimensions Consulting says, adding investors are now hoping for an economic recovery.
If results are not visible in the next one or two quarters, scepticism will return, he feels. A 5-10 percent increase on earnings per share (EPS) side is legitimate, according to him.
Foreign investors continued to pump in money in Indian equities as they have bought Rs 7,294 crore worth of shares in July so far (till July 25) against Rs 3,957.95 crore worth of inflow in June.
Dr Reddy's Labs shares plunged more than 4 percent after earnings fell short of expectations in Q1. Consolidated profit declined sharply by 76.3 percent year-on-year to Rs 153.5 crore, impacted largely by US business and weak operational performance.
Maruti Suzuki was down 1.4 percent as topline in June quarter missed analysts' estimates, though profit grew by 23 percent on other income support. TVS Motor declined 3 percent as margin expanded only 20 basis points year-on-year despite 12 percent revenue growth and 45 percent jump in profit in the quarter ended June 2016.
Axis Bank gained nearly 3 percent. CFO Jairam Sridharan expects slippages during Q2 to be a "little more contained" although he said it was early to comment on how the operating environment in the second quarter will affect business of its clients.
HDFC, Asian Paints, Bajaj Auto, Bharti Airtel and Dabur India were under pressure ahead of June quarter earnings that will be announced on Wednesday.
ICICI Bank was the leading contributor to Sensex's fall, down 2.6 percent followed by Tata Motors, SBI, Lupin, Hero Motocorp and ONGC with over a percent loss.
3:30 pm Market closing: After a volatile session, the market has ended in negative terrian. The Sensex was down 118.82 points or 0.4 percent at 27976.52, and the Nifty slipped 45 points or 0.5 percent at 8590.65. Axis Bank, Tata Steel, Wipro, Infosys and L&T were top gainers while Dr Reddy's, ICICI, Hero, Maruti and Coal India were losers in the Sensex.
3:10 pm Market slips: The market has fallen with the Nifty below 8600. The 50-share index is down 48.05 points or 0.6 percent at 8587.60. The Sensex is down 138.02 points or 0.5 percent at 27957.32. About 1016 shares have advanced, 1640 shares declined, and 195 shares are unchanged. Dr Reddy's is down 4 percent, ICICI Bank, Hero, Maruti and ONGC were losers in the Sensex.
2:40 pm Dr Reddy's disappoints: Dr Reddy's Laboratories missed analysts' expectations on all counts Tuesday with consolidated profit falling sharply by 76.3 percent year-on-year to Rs 153.5 crore, impacted by largely by US business and weak operational performance.
Revenue declined 14 percent to Rs 3,222.5 crore in the quarter ended June 2016 from Rs 3,752.2 crore in same period last year.
"Topline and bottomline impacted by a decline in volume growth, particularly in the US market and loss of business in Venezuela," the pharma major said.
The company further said price erosion and delayed launches as a result of warning letter also significantly impacted earnings.
2:20 pm Earnings: Maruti Suzuki's first quarter (April-June) profit beat analysts' expectations on Tuesday, growing 23 percent to Rs 1,486.2 crore compared with Rs 1,208.1 crore in year-ago period, driven majorly by other income.
Revenue growth during the quarter was lower than estimates, rising 11.6 percent to Rs 14,927.3 crore compared with corresponding period of last fiscal due to slow volume growth.
Volume growth slowed down from 14 percent in Q1FY16 to 2.1 percent in Q1FY17, impacted by production loss of 10,000 units due to fire at vendor Subros plant.
The company sold 3.48 lakh vehicles in June quarter against 3.41 lakh units in year-ago period. Domestic sales grew by 5.4 percent to 3.22 lakh units while exports declined 27 percent on yearly basis.
Profit was estimated at Rs 1,276 crore on revenue of Rs 15,081 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.
Other income in April-June quarter shot up 134 percent to Rs 483.3 crore while other expenses increased 16.2 percent to Rs 2,007.2 crore on yearly basis.
2:00 pm Market Check
Equity benchmarks remained directionless in afternoon trade with the Nifty hovering in a tight range of 20 points.
The 30-share BSE Sensex was up 27.33 points at 28122.67 and the 50-share NSE Nifty fell 0.55 points to 8635.10. The broader markets continued to trade higher despite weak market breadth.
The BSE Midcap index gained 0.9 percent and Smallcap rose 0.3 percent. About 1336 shares declined against 1231 advancing shares on the BSE.
Amtek group stocks rallied. Amtek Auto surged 12 percent followed by Castex Technologies and Metalyst Forgings with 5 percent upside.
Axit Bank and Tata Steel were biggest gainers among Sensex 30 stocks, up nearly 3 percent.
1:50 pm GST for India soon? Moving to a GST regime will be beneficial for the Indian economy on multiple counts, and though its impact on growth will be negative in the short-run, it is expected to be positive in the long-run, says a report.
Hopes are high that the long-standing Goods and Services Tax (GST), which has been pending for more than a decade, will be passed in the ongoing monsoon Parliament session.
"Failure to pass the Bill in the ongoing monsoon session could puncture some of the recent positive sentiment," DBS said in a research note.
1:30 pm Interview: Speaking to CNBC-TV18 Sajjan Jindal, Chairman and Managing Director of JSW Steel said that he will be focussing on adding value to steel products. Talking about future plans, he stressed that he is not particularly excited about acquisitions unless they are attractive. "The idea is to create consolidation," he said. He also said that the company's stated goal will be to reduce debt, and bring down the debt-equity ration to manageable levels. "We will remain conservative," he said. As regards fund-raising plans, he said the company's total capex is around Rs7000 crore in two years. "We will be raining funds to partly finance expansion and partly to replace our high cost debt."
The market is volatile on Tuesday with the Nifty below 8650. The 50-share index is down 10.90 points or 0.1 percent at 8624.75 and the Sensex is down 5.84 points at 28089.50, and the Nifty down 10.90 points or 0.13% at 8624.75. About 1222 shares have advanced, 1286 shares declined, and 174 shares are unchanged.
Tata Steel, Axis Bank, Reliance Wipro and Cipla are top gainers while Hero MotoCorp, Coal India, ICICI Bank, Lupin and Asian Paints are losers in the Sensex.
Amid a weakening global trend, gold futures traded Rs 63 down at Rs 31,188 per 10 gram today as speculators reduced their positions. Market analysts said the fall in gold futures was mostly in tune with a weak trend overseas as a stronger dollar and rebound in equities cut demand for the safe haven.
12:57 pm Market Update: Equity benchmarks remained directionless in afternoon trade. The Sensex was up 10.98 points at 28106.32 and the Nifty fell 6.90 points to 8628.75.
About 1252 shares advanced against 1222 declining shares on the BSE.
12:40 pm Europe opens: European markets opened mixed, as traders digest another slew of earnings, ahead of two important central bank meetings due to take place this week.
The pan-European STOXX 600 was hovering around the flatline but slightly lower.
12:35 pm Goa mining hit primary sector growth: Turmoil in Goa's iron ore mining industry has led the primary sector tumbling into the negative zone during 2014-15, according to the State's Economic Survey 2015-16 report.
The report, tabled in the Legislative Assembly here yesterday, stated that the growth in the primary sector slipped largely due to continued crisis in state's major revenue earner iron ore mining industry.
"The growth rate under primary sector, which was around 10 percent during 2013-14 (provisional), fell drastically to minus (-) 16.44 percent during 2014-15," the 233-pages Economic Survey report read, which diagnoses the financial health of the State.
"This can be attributed to a huge fall in mining and quarrying sub sector," it said.
After the ban of over two-and-a-half years on mining, the Supreme Court had conditionally allowed export and extraction of iron ore in the coastal State in 2015.
12:20 pm Interview: Bajaj Corp reported decent set of first quarter earnings which were in line with Street estimates and the volume growth in almond oil stood at 2.2 percent which beat market estimates.
In an interview CNBC-TV18, Sumit Malhotra, MD of Baja Corp said that the first quarter was disappointing in terms of volume growth as poor rural growth led to less consumption.
He said that the total hair oil market has declined by 1 percent in terms of volume and the urban growth is down by 5 percent.
Commenting on Patanjali's foray into the FMCG space, he said that it does not compete directly with any of Bajaj Corp brands and brands like Kesh King and Indulekha will be affected by its entry.
12:00 pm Market Check: Equity benchmarks remained rangebound in noon trade while the broader markets continued outperformance.
The 30-share BSE Sensex was up 31.63 points at 28126.97 and the 50-share NSE Nifty rose 1.95 points to 8637.60. The BSE Midcap and Smallcap indices gained 0.4-0.6 percent as about 1248 shares advanced against 1156 declining shares on the exchange.
Jindal Steel and Power was the biggest midcap gainer, up more than 13 percent followed by Bajaj Finance with 4 percent rally post earnings.
Bajaj Finance's first quarter (April-June) profit increased sharply by 54 percent to Rs 424 crore on strong net interest income despite higher provisions. The board of directors today approved issue of one fully paid bonus equity share for one share held and sub-division of equity shares of face value of Rs 10 each into Rs 2 each, subject to approval of the shareholders.
11:55 am Japan's moves: Japanese Finance Minister Taro Aso said he expected the Bank of Japan to continue doing its utmost to meet its 2 percent inflation target.
Aso, speaking at a news conference, said it was up to the BOJ to decide specific monetary policy steps.
The BOJ will hold a two-day policy meeting through Friday, and there is lingering speculation that it will expand quantitative easing to encourage inflation.
11:45 am Result: Bajaj Finance's first quarter (April-June) profit increased sharply by 54 percent to Rs 424 crore on strong net interest income despite higher provisions.
Total income from operations grew by 39 percent to Rs 2,286.4 crore and net interest income jumped 45 percent to Rs 1,418 crore compared with corresponding period of last fiscal.
Meanwhile, the board of directors today approved issue of one fully paid bonus equity share for one share held and sub-division of equity shares of face value of Rs 10 each into Rs 2 each, subject to approval of the shareholders.
The market is gradually climbing as the Sensex is up 31.04 pointsat 28126.38. The Nifty is up 2.85 points at 8638.50. About 1182 shares have advanced, 1031 shares declined, and 142 shares are unchanged.
Tata Steel, Axis Bank, Wipro, Cipla and NTPC are top gainers while Lupin, ICICI Bank, Hero MotoCorp, Asian Paints and HUL are losers in the Sensex.
Oil prices edged up slightly in Asia today after tumbling more than two percent the day before, while a weaker dollar also provided support, although fears about a global supply glut are returning to the fore.
After topping USD 50 a barrel early last month on the back of output disruptions, the cost of crude has tumbled about 15 percent in recent weeks as the crucial US holiday driving season comes to an end and global demand remains weak.
Traders have been spooked since last week when the US Energy Information Administration said US inventories had fallen less than expected, and that petrol supplies had risen, despite it being peak season for demand in the country.
10:40 am Acquisition: The race to acquire Jabong has come to an end finally with Flipkart's arm Myntra acquiring the fashion e-retailer on Tuesday. Competitors like Alibaba, Kishore Biyani's Future Group and Snapdeal were main contenders in the race.
Sachin Bansal, Flipkart's co-founder, confirmed the news by welcoming Jabong India to the Flipkart family in a tweet.
While the final deal valuation is not known yet, according to Mint, Kinnevik was seeking a valuation of USD 100-150 million for Jabong.
10:20 am Market Outlook: The domestic market will continue to move up as long as international markets remain stable. The recent liquidity rush will continue into emerging markets, says Ajay Srivastava, CEO of Dimensions Consulting.
Investors are now hoping for an economic recovery. If results are not visible in the next one or two quarters, skepticism will return, he says, adding that a 5-10 percent increase on earnings per share (EPS) side is legitimate.
''The current rally is simmering to a point where non-performing stocks are not getting penalised,'' he says. It is time for investors to look at stocks that are performing well.
10:00 am Market Check: Equity benchmarks remained lacklustre in trade after rallying 1 percent in previous session but the broader markets continued to outperform.
The 30-share BSE Sensex was up 0.69 points at 28096.03 and the 50-share NSE Nifty fell 2.45 points to 8633.20 while the BSE Midcap and Smallcap indices gained more than 0.4 percent each.
About 1146 shares advanced against 726 declining shares on the Bombay Stock Exchange.
Infosys, Tata Motors, Axis Bank, L&T, ITC and Tata Steel were positive contributors while ICICI Bank, HDFC, Lupin, TCS, Reliance Industries and HDFC Bank were laggards.
9:55 am Outlook on telcos: The Telecom Commission has proposed to go ahead with its earlier recommendation of determining the spectrum usage charge as per a weighted-average formula.
It is believed that such a proposal if it is ratified will impact a few telecom players which are now paying less than the 3 percent that the Telecom Commission is recommending.
Speaking to CNBC-TV18 Naveen Kulkarni of Philip Capital said that the impact on Idea Cellular will be limited. Idea Cellular doesn't have spectrum in the 2300 MHz band, and hence it will be little impacted, says Kulkarni. He did say that Reliance Jio might feel a pinch, but only a tad. "The impact on Jio isn't going to be signficant, though," he said.
He also spoke on sector earnings. Earnings from the sector for the first quarter should be okay, he said. He thinks voice volumes should be normal for Bharti Airtel and Idea. This quarter should be good fo Bharti and Idea. He has buy recommendations on both these telecom players.
9:45 am Japan's attempt: Japan will fail to meet its goal of achieving in fiscal 2020 nominal gross domestic product of 600 trillion yen (USD 5.7 trillion) even in fiscal 2024 if growth remains sluggish, the government's projections showed on Tuesday, adding pressure on policymakers struggling to revive the economy.
The world's third-largest economy now expects nominal GDP of 551 trillion yen in the fiscal year beginning in April 2020 assuming the current pace of growth, the Cabinet Office said.
Japan also expects to have a primary deficit of 9.2 trillion yen if growth remains weak, and fail to reach its target of a primary budget surplus even in fiscal 2024.
9:30 am New IPO: Bhopal-based Dilip Buildcon, a private sector road-focused EPC contractor, will be launching its initial public offering on August 1, 2016. It has fixed price band at Rs 214-219 per share. The IPO, which will close on August 3, comprises of fresh issue equity shares aggregating up to Rs 430 crore and an offer for sale of up to 11,36,364 shares by Dilip Suryavanshi, up to 11,36,364 shares by Devendra Jain and up to 79,54,545 shares by the BanyanTree Growth Capital, LLC. The company proposes to utilise issue proceeds of the fresh issue for prepayment or scheduled repayment of a portion of term loans, working capital requirements and general corporate purposes. It will not receive any proceeds from the offer for sale.
The market has opened flat on Tuesday with the Nifty holding 8600. The 50-share index is down 1.90 points at 8633.75 and the Sensex is up 25.61 points at 28120.95. About 264 shares have advanced, 75 shares declined, and 21 shares are unchanged.
GAIL, Cipla, Tata Steel, BHEL and ONGC are top gainers while HDFC, Lupin, ICICI Bank, Dr Reddy's and Axis Bank are losers in the Sensex.
The Indian rupee opened marginally lower at 67.41 per dollar against previous close 67.35.
Ashutosh Raina of HDFC Bank said, "US dollar has been gaining against most of the major and EM currencies, after some positive data. The USD-INR pair has also come off from recent highs after briefly trading below 67/dollar levels and subsequently settling in the 67-67.50/dollar range."
Among global markets, Asian markets slipped sending the safe-haven yen higher ahead of central bank meetings in the United States and Japan, while a fresh skid in oil dampened energy stocks on Wall Street.
Japan's Nikkei shed 1 percent, with investors seemingly unimpressed by a Nikkei report the government planned a direct fiscal stimulus of around 6 trillion yen (USD 56 billion) over the next few years.
US stocks receded from record highs on Monday as oil weighed on energy shares and investors awaited an avalanche of quarterly reports.
Oil prices edged away from three-month lows, supported by a weaker dollar, but concerns of ongoing oversupply weighed on markets and many traders are raising their bets on further price falls.
The dollar slipped ahead of the FOMC meet while the yen gained on hopes that the Bank of Japan will ease later this week. Gold pares losses as the dollar and global stock markets turned lower.