Sensex, Nifty end lower; Tata Steel falls 3%, HUL down 2%

25 Oct 2016

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3:30 pm Market closing: The market has closed lower with FMCG and IT stocks under pressure. The Sensex was down 87.66 points or 0.3 percent at 28091.42 and the Nifty was down 17.65 points or 0.2 percent at 8691.30. About 1352 shares advanced, 1438 shares declined and 234 shares were unchanged.

Adani Ports, Dr Reddy's Labs, Asian Paints, ICICI Bank and Axis Bank were gainers while M&M, Tata Steel, GAIL, HUL and ONGC.

2:59 pm Market Update: Equity benchmarks remained lower with the Sensex down 89.71 points at 28089.37 and the Nifty down 17.75 points at 8691.20.

About 1446 shares declined against 1291 advancing shares on the BSE.

2:50 pm Results: Public sector lender IDBI Bank disappointed analysts with its second quarter earnings on Tuesday. Profit during July-September quarter plunged 53.5 percent year-on-year to Rs 55.5 crore on higher provisions and low net interest income despite strong other income growth.

Net interest income during the quarter declined 0.4 percent to Rs 1,606 crore crore compared with year-ago period.

Asset quality deteriorated in the quarter ended September 2016 as gross non-performing assets (NPA) jumped to 13.05 percent from 11.92 percent and net NPA rose to 8.32 percent from 7.47 percent on sequential basis.

In absolute terms, gross NPA climbed 10.5 percent quarter-on-quarter to Rs 30,134 crore and net NPA spiked 12 percent to Rs 18,195 crore in Q2.

2:40 pm FII investment: Prudential Financial Inc (PFI) of the US today announced raising of its stake in DHFL Pramerica Life Insurance Company (DPLI) to 49 per cent, from 26 per cent, without disclosing the deal amount.

Under the new agreement, Prudential International Insurance Holdings, (PIIH), a wholly owned subsidiary of PFI, a financial services company headquartered in the US, has increased its stake in DPLI to 49 per cent, the maximum allowed by Foreign Direct Investment (FDI) regulations, a joint statement said.

"PIIH has acquired 12 per cent equity stake from Resources Realty Private Limited and 11 per cent equity stake from Yardstick Developers Private Limited," it said.

Mortgage firm DHFL, along with one of its promoter entities, holds 51 per cent stake in DPLI.

2:20 pm Earnings: Private sector lender Kotak Mahindra Bank has reported a whopping 42.8 percent growth in second quarter standalone profit at Rs 813.3 crore compared with year-ago period. The growth was driven by strong net interest income, other income and operating profit.

Net interest income grew by 18.9 percent year-on-year to Rs 1,995.3 crore in July-September quarter, which was in-line with estimates.

Profit beat analysts' estimates, which was expected at Rs 777.5 crore and net interest income estimated at Rs 1,970 crore for the quarter, according to analysts polled by CNBC-TV18.

Asset quality was stable during the quarter with standalone gross non-performing assets (NPA) at 2.49 percent against 2.50 percent and net NPA at 1.2 percent against 1.21 percent on sequential basis but in absolute terms, it weakened a bit.

2:00 pm Market Check
Benchmark indices continued to trade lower in afternoon due to consistent sell-off in technology, Tata Group and HDFC Group stocks. The 30-share BSE Sensex was down 85.90 points at 28093.18 and the 50-share NSE Nifty declined 18.40 points to 8690.55.

Tata group stocks were under pressure after Tata Sons sacked Cyrus Mistry as chairman yesterday. Tata Steel, Tata Motors and TCS declined 1-2 percent.

Eropean stocks remained higher with corporate earnings dominating market moves. France's CAC, Germany's DAX and Britain's FTSE were up 0.3-0.5 percent.

Markets in Asia finished mixed, as South Korea's shares slipped after data showed economic growth slowed in the third quarter.

The Kospi index closed down 10.57 points, or 0.52 percent, at 2,037.17, while the Korean won slipped from levels near 1132.80 to a low of 1139.40 against the dollar after the data was released.

1:55 pm Interview: PNB Housing Finance's portfolio quality is going to be better than industry average over the next 2-3 years, says company's Managing Director Sanjay Gupta. The company's portfolio currently consists of 62 percent of retail housing loans and 18 percent is loan against property. Construction finance consists of 9-10 percent of their overall portfpolio. Corporate term loans fill their remaining portfolio. He says the asset quality of the company is also superior.

1:45 pm Exclusive: The Tata Group CEOs meet concluded just now in which it is believed representatives from all companies were present. CNBC-TV18 learns from sources that Ratan Tata has assured continuity and has asked the group CEOs to refrain from speculation. Tata is also believed to have said that things are on track. The meet was called so that Tata could address concerns that CEOs have raised regarding possible changes. CNBC-TV18 also learns that the Tata Group Selection Committee will meet this evening. The names that are doing the rounds as possible replacements for Cyrus Mistry include Noel Tata and Indira Nooyi – the same names that were in the race back in 2012 before Mistry was appointed. All the group companies will also conduct a board meeting and Cyrus Mistry will step down from the boards of all of them soon.

1:30 pm Result: India's second largest private sector lender HDFC Bank's second quarter profit met analysts' expectations, rising 20.4 percent year-on-year to Rs 3,455.3 crore. Net interest income, other income, operating profit and lower provisions boosted profitability while asset quality remained stable, though net interest margin declined sequentially.

Net interest income, the difference between interest earned and interest expended, grew by 19.6 percent YoY to Rs 7,993 crore in July-September quarter, which missed estimates due to lower-than-expected loan growth.

Loan growth for the quarter stood at 18.1 percent against analysts' estimates of 22-23 percent. Net interest margin remained steady at 4.2 percent on yearly basis but sequentially declined 20 basis points from 4.4 percent.

The market continues to fall amidst Q2 earnings. The Sensex is down 138.63 points or 0.percent at 28040.45 and the Nifty is down 35.10 points or 0.4 percent at 8673.85. About 1222 shares have advanced, 1398 shares declined, and 219 shares are unchanged.

Dr Reddy's Labs, ICICI Bank, Axis Bank. Maruti and Bajaj Auto are top gainers while Tata Steel, GAIL, M&M, HUL and TCS are losers in the Sensex.

Arvind, textile manufacturer and flagship company of the Lalbhai Group, has reported a 1.5 percent growth in second quarter consolidated profit at Rs 71.7 crore on yearly basis. Revenue supported bottomline but weak margin limited growth.

Revenue increased 19.1 percent year-on-year to Rs 2,331 crore in July-September quarter with branded apparels business showing a 33 percent growth at Rs 752 crore. EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 2 percent to Rs 232.3 crore but margin contracted 160 basis points to 10 percent on yearly basis.

Arvind said it would sell 10 percent stake in Arvind Fashions to Multiples Equity, the PE firm founded by Renuka Ramnath.

Meanwhile, European stocks opened higher with corporate earnings dominating market moves.

The pan-European Stoxx 600 opened up 0.2 percent in morning trade. Several firms are reporting earnings, including Novartis, Norsk Hydro, Randstand and Swedbank.

12:59 pm Market Update: The Sensex was down 75.77 points at 28103.31, and the Nifty fell 16.55 points to 8692.40. About 1346 shares advanced against 1248 declining shares on the BSE.

12:50 pm Earnings: India's second largest private sector lender HDFC Bank's second quarter profit met analysts' expectations, rising 20.4 percent year-on-year to Rs 3,455.3 crore. Net interest income, other income, operating profit and lower provisions boosted profitability while asset quality remained stable, though net interest margin declined sequentially.

Net interest income, the difference between interest earned and interest expended, grew by 19.6 percent YoY to Rs 7,993 crore in July-September quarter. Net interest margin remained steady at 4.2 percent on yearly basis but sequentially declined 20 basis points from 4.4 percent.

According to analysts polled by CNBC-TV18, profit was estimated at Rs 3,443 crore and net interest income at Rs 8,214.8 crore for the quarter.

Provisions for bad loans dropped 13.5 percent year-on-year to Rs 749 crore in Q2 but sequentially increased 10 percent.

12:40 pm Europe opens: European stocks opened higher with corporate earnings dominating market moves.

The pan-European Stoxx 600 opened up 0.2 percent in morning trade.

Several firms are reporting earnings Tuesday, including Norsk Hydro, Randstand and Renault.

12:20 pm Global oil demand: Global oil demand will rise by 1.2 million barrels per day (bpd) in 2017, compared with oil demand growth this year of 1.8 million bpd, International Energy Agency Executive Director Fatih Birol told reporters on Tuesday.

Birol also said he was expecting global oil markets to rebalance in the second half of next year, unless there is a supply intervention that raises prices and draws suppliers back into production earlier than that.

"If there is an increase in the prices as a result of this (OPEC-led) intervention we may well see a response from higher cost production," he said.

OPEC members and other producers such as Russia have been discussing for some months cooperation on cutting back on crude supplies to support prices that are still less than 50 percent of levels two years ago.

12:00 pm Market Check: Benchmark indices remained under pressure in noon trade with the Sensex falling 97.90 points to 28081.18 and the Nifty down 22.15 points at 8686.80.

Dr Reddy's Labs gained more than 1 percent despite dismal performance in Q2 that was on expected lines due to weak US growth. Profit plunged 60.1 percent year-on-year to Rs 309 crore on weak operational performance but sequential performance was quite strong.

Arvind climbed over 2 percent as it is going to sell 10 percent stake in Arvind Fashions and to raise Rs 740 crore.

The BSE Midcap too was down 0.3 percent on weak breadth. About 1328 shares declined against 1198 advancing shares on the exchange.

11:45 am Interview: PNB Housing Finance's portfolio quality is going to be better than industry average over the next 2-3 years, says company's Managing Director Sanjay Gupta. The company's portfolio currently consists of 62 percent of retail housing loans and 18 percent is loan against property.

Construction finance consists of 9-10 percent of their overall portfpolio. Corporate term loans fill their remaining portfolio.

He says the asset quality of the company is also superior.

11:30 am Result: Dr Reddy's Labs has posted net profit of Rs 309 crore in July-September quarter down 60.1 percent from Rs 774.7 crore in corresponding quarter last fiscal. Its consolidated revenue also slipped 10.1 percent at Rs 3616.3 crore compared to Rs 4020.7 crore on annual basis. During the period, its EBITDA fell 43.9 percent at Rs 640 crore against Rs 1140.4 crore while margin was at 17.9 percent versus 28.4 percent year-on-year (YoY). Performance of Dr Reddy's Laboratories in July-September quarter was expected to be weak with profit falling 59 percent year-on-year to Rs 298 crore on poor operational performance.

The market continues to be under selling pressure as the Sensex is down 76.36 points or 0.3 percent at 28102.72. The Nifty is down 13.95 points or 0.2 percent at 8695. About 1150 shares have advanced, 1284 shares declined, and 185 shares are unchanged.

Dr Reddy's Labs, Axis Bank, Sun Pharma, Cipla and Maruti are top gainers while Tata Steel, GAIL, HUL, TCS and M&M are losers in the Sensex.

Gold prices rose Rs 29 to Rs 29,792 per 10 gram in futures trading today as participants widened bets, triggered by a firming trend overseas.

Analysts said expanding of positions by participants, tracking a firming trend in the global market mainly influenced the precious metal prices at futures trade.

Globally, gold rose 0.15 percent to USD 1,266.30 an ounce in Singapore today

10:59 am Market Update: Equity benchmarks remained under pressure with the Sensex falling 130.36 points to 28048.72 and the Nifty down 33.65 points at 8675.30.

10:40 am FII investment limit: Foreign investors have been allowed to raise their stake in Aditya Birla Nuvo to up to 30 percent.

"Foreign Institutional Investors/Registered Foreign Portfolios Investors can under the portfolio investment scheme (PIS) now invest up to 30 percent of the paid up capital of Aditya Birla Nuvo," RBI said in a notification.

The earlier limit was up to 24 percent.

The raise in foreign investment limit follows company's passage of a resolution by the Board of Directors and its shareholders' a special resolution agreeing for enhancing the limit for the purchase of its equity shares by the foreign investors.

FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through PIS.

10:20 am Poll: Bharti Airtel, the country's largest telecom operator in terms of subscribers, is expected to report a 28 percent degrowth in July-September quarter profit at Rs 1,050 crore QoQ on forex loss due to Naira devaluation & interest expenses.

Revenue is seen falling 0.2 percent quarter-on-quarter to Rs 25,495 crore in Q2.

It is traditionally a weak quarter for telecom companies. Hence, analysts say India Volumes may decline due to seasonality, though some pricing pressure may offset the volume decline.

Lower voice volume & voice revenue per minute may impact wireless EBITDA margin.

10:00 am Market Check
Equity benchmarks extended losses in morning trade with the Nifty falling below the 8700 level due to profit booking.

The 30-share BSE Sensex was down 127.57 points at 28051.51 and the 50-share NSE Nifty fell 34.65 points to 8674.30. The broader markets too remained under pressure on weak breadth. About 1169 shares declined against 862 advancing shares on the BSE.

HDFC, HDFC Bank, HUL, Bharti Airtel, NTPC and GAIL were down more than 1 percent whereas ICICI Bank, Axis Bank, Sun Pharma and Maruti were gainers in morning.

Tata Group stocks remained under pressure after Tata Sons sacked Cyrus Mistry as chairman on Monday. Tata Steel, TCS and Tata Motors were down 1-2 percent.

Sanjay Mookim of Bank of America Merrill Lynch says change of leadership at the Tata Group was unexpected. He feels increased uncertainty at the top could affect stock prices of listed companies in the near term.

9:55 am Why is Mistry out? An official word is yet to come on Cyrus Mistry's unprecedented exit from the Tata Group but speculations are being made that the ongoing legal battle between NTT DoCoMo may be one of the reasons that led to this development.

The issue with DoCoMo has been one of the simmering points between Ratan Tata and Cyrus Mistry, reports CNBC-TV18.

With the agreement signed between the Japanese telecom company and Tata Sons, Ratan Tata was leading the group and had assured DoCoMo that whenever they exit while incurring a loss, they will get half of the money they had invested in Tata Teleservices.

NTT DoCoMo had claimed USD 1.17 billion but Cyrus Mistry had made it into a legal battle which was not taken kindly to by Ratan Tata, reports Nisha Poddar. DoCoMo had also reached out to Tata Sons saying that they would like to deal only with Ratan Tata, she said.

9:45 am Result poll: HDFC Bank, the country's second largest private second lender, is likely to report a 20 percent growth in Q2 profit at Rs 3,443 crore on yearly basis, according to consensus estimates. Net interest income, the difference between interest earned and interest expended, is expected to grow 21.6 percent year-on-year to Rs 8,214.8 crore in July-September quarter. Key things to watch out for would be net interest margin, loan growth, asset quality, and commentary on FCNR (foreign currency non-resident) outflow & its impact on ALM (asset and liability management).

9:30 am Market outlook: Mahesh Patil of Birla Sun Life AMC said that a year down the line, one could look at much better outlook in earnings. "The past four quarters could see a decent earnings growth," he said adding that he doesn't see any reason for a re-rating from current levels. He expects earnings growth to be in the mid-teens. The drivers, according to him, that will be key, are auto, privae sector banks, consumer durables, pharma, cement and media to some extent. IT looks interest, he said. It is on his watchlist. He admits that long-term growth has come down. "We are at around 9-11 percent growth," he said. There will be periods when the sector will do well and there could be some buybacks or payouts. There could be some tactical play, he said.

The market has opened in red with focus in Tata group stocks. The Sensex is down 24.28 points at 28154.80 and the Nifty is down 2.35 points at 8706.60. About 615 shares have advanced, 309 shares declined, and 59 shares are unchanged.

Tata Steel is down over 3 percent while Tata Motors and TCS are slipping over 1 percent. Reacting to disappointing Q2 results, Idea is down 3 percent.

 ICICI Bank, Adani Ports, Cipla, GAIL and Maruti are top gainers in the Sensex.

The Indian rupee opened lower by 8 paise at 66.93 per dollar on Tuesday versus previous close 66.85.

Ashutosh Raina of HDFC Bank said, "The dollar index touched 9-month high of 98.85, with dollar continuing to rise against basket of major currencies on expectations of Fed hiking rates in December, with probability of December hike rising to almost 80 percent."

The US dollar hovered near a roughly nine-month high against a basket of major currencies and touched a one-week high against the yen on growing expectations of a Federal Reserve interest rate increase in December.

Among global markets, Asian shares edged higher while the dollar stood firm as upbeat US earnings boosted Wall Street and factory surveys in the United States and Europe boasted their best readings so far this year.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 percent with most components yet to trade.

Australian stocks added 0.5 percent and futures pointed to an opening gain of around 0.8 percent for Japan's Nikkei helped by a softening yen. Wall Street took encouragement from upbeat corporate results and the Dow rose 0.46 percent, while the S&P 500 gained 0.47 percent and the Nasdaq or 0.91 percent.

Back home, companies that will announce Q2 results are HDFC Bank, Bharti, Zee Entertainment, Asian Paints, Dr Reddy's Labs, Kotak Mahindra Bank and L&T Finance.

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