Sensex closes below 26000, sheds 350 points; Hindalco down 6%

16 Oct 2014


03:30pm Market Closing
Equity benchmarks saw huge selling pressure in last hour of trade following weak Euroepan cues and drop in rupee. The Sensex fell 349.99 points or 1.33 percent to close at 25999.34, and the Nifty was down 115.80 points or 1.47 percent to 7748.20.

About 777 shares have advanced, 2155 shares declined, and 91 shares are unchanged.

The broader markets too saw big crack; the BSE Midcap and Smallcap indices losing 1.4 percent and 2.5 percent, respectively.

All sectoral indices closed in the red. BSE Power, Capital Goods, Oil & Gas, Auto, IT, Bank and Healthcare indices were down 1-3 percent while ITC, Gail India and Coal India were only gainers in the Sensex, up around a percent.

Hindalco Industries, Ultra Tech Cement, Grasim Industries, Mahindra and Mahindra, Sesa Sterlite, Tata Steel, Tata Power, Reliance Industries and BHEL topped the selling list, down 3-6 percent.

03:10pm Market Check
Equity benchmarks widened losses in last hour of trade with the Sensex crashing 358.04 points or 1.36 percent to 25991.29 and the Nifty falling 117.30 points or 1.49 percent to  7746.70 while European indices dropped 2-4 percent.

About 787 shares have advanced, 2083 shares declined, and 90 shares are unchanged.

Hindalco Industries, M&M, Sesa Sterlite, Tata Power, Tata Steel, UltraTech Cement, Grasim Industries and HCL Technologies (ahead of earnings on Friday) plunged 3-5.5 percent.

However, DLF, NMDC, ITC, BPCL and Coal India bucked the trend, up 1-4 percent.

The BSE Midcap and Smallcap indices slipped 1-2 percent.

03:00pm Modi unveils steps to reform labour sector
India will simplify employment rules and smooth the way for people to move social security funds when they change jobs, Prime Minister Narendra Modi said on Thursday, unveiling steps to reform the labour sector and boost employment.

India's archaic labour laws strictly regulate hiring and firing, while an onerous 'inspector raj' deluges employers with paperwork, discouraging them from expanding and taking on new staff.

"Fifty types of departments chase them, 50 types of forms have to be filled in. The world has changed," Modi said, adding that companies would now only need to fill a single form online.

The change would chiefly benefit firms that employ just a few employees, he said. In 2009, 84 percent of India's manufacturing workers were employed by firms with fewer than 50 workers, research by the Asian Development Bank shows, reports Reuters.

02:50pm Federa Bank plunges
The Sensex shed 191.47 points to 26157.86 and the Nifty broke 7800 level, down 68.05 points to 7795.95 while Federal Bank fell nearly 4 percent post Q2 earnings.

Kerala-based private sector lender Federal Bank's second quarter (July-September) net profit climbed 6.4 percent on yearly basis to Rs 240.3 crore led by strong other income, but impacted by higher provisions. Profit in the year-ago period was Rs Rs 225.8 crore.

02:45pm Crompton Greaves under pressure ahead of earnings
The Sensex slipped 156.91 points to 26192.42 and the Nifty fell 60.90 points to 7803.10 while Crompton Greaves tanked nearly 8 percent ahead of Q2 earnings.

Crompton Greaves is expected to report a 37.3 percent growth in consolidated profit after tax Rs 80.2 crore in July-September quarter compared to Rs 58.4 crore in same quarter last year, according to the average of estimates of analysts polled by CNBC-TV18.

Net sales may increase 9.5 percent to Rs 3,508 crore in the quarter ended September 2014 from Rs 3,205 crore in corresponding quarter last fiscal driven by overseas business especially due to growth from international power systems.

Key issues to watch out for are margin expansion in the power systems segment, given higher exports and increase in contribution from switchgears; improvement in the overseas automation and systems business performance, given execution of recent better margin order wins; and performance improvement in Hungary / Canada

02:30pm Results Boardroom
IT company Mindtree is gung-ho over its growth story and is confident of beating the NASSCOM industry growth target of 13-15 percent for FY15. According to CFO Rostow Ravanan, the Q3 will remain muted but the company will bounce back with strong growth in Q4 and so, the overall growth will be much better.

Speaking to CNBC-TV18 post announcement of Q2 earnings , CEO and MD Krishnakumar Natarajan said the company is overall very positive on its deal pipeline which is very strong across verticals. The company also aims to maintain current margins in Q3.

The midcap company is hopeful of starting with an aggressive growth in Europe in the next two quarters. The hi-tech segment has now delivered three quarters of consistent quarter-on-quarter growth for the company.

Mindtree added eight clients in Q2 and has signed deals worth USD 165 million during the same period.

02:00pm Market Check
After trading flat in the first half, the market succumbed to selling pressure post noon. The 30-share BSE Sensex fell 71.84 points to 26277.49 and the Nifty declined 28.40 points to 7835.60.

The market breadth is very weak today. About 1012 shares have advanced while 1767 shares declined on the Bombay Stock Exchange.
In an interview to CNBC-TV18, Vibhav Kapoor of IL&FS says he does not see a major downside to this market. According to him, 7300-7400 could be the worst level on the Nifty if global markets weaken.

Global markets are weak across the board today. European markets like France's CAC dropped more than 0.5 percent on top of a 3 percent slide in previous session. Germany's DAX and Britain's FTSE traded flat while Japan's Nikkei closed with more than 2 percent cut.

The Indian rupee is trading weak today on increased dollar demand amidst capital outflows, down to 61.59 a dollar from 61.44 a dollar in previous session.

Shares of Reliance Industries, Mahindra and Mahindra, HDFC, Sesa Sterlite, Hindalco Industries, Tata Steel, Bajaj Auto, BHEL and Tata Power declined 1-4 percent while ITC, HUL, Cipla, Gail India and Coal India gained 1-2 percent.

01:40pm Prestige Estates sales in Q2
Prestige Estates has reported yet another strong operational quarter with total pre-sales up 21 percent YoY at 2.2 million square feet (msf), aided by new launches of 2.8 msf in H1FY15. Total sales value has been up 21 percent at Rs 1290 crore, while total collections rose 31 percent at Rs 810 crore on a year-on-year basis.

With this, Prestige Estates has achieved 50 percent of its FY15 sales, collection and launch targets. The company has an extensive launch pipeline in Hyderabad, Cochin and Bengaluru and delivery schedule of 10 msf in the fourth quarter.

In an interview to CNBC-TV18, Irfan Razack, CMD, Prestige Estates, said the average realization stands at Rs 5,800 per sq ft against Rs 6,200 /sq ft on a quarter-on-quarter basis. The company had launched Leela Residences in the second quarter.

Though he did not revise the numbers, Razack is confident of surpassing Rs 5,000-crore sales guidance for FY15. The real estate firm is coming up with two launches in Bangalore and one in Kochi, which it expects to add to the topline soon.

01:20pm Nikkei Update
Japan's Nikkei share average tumbled 2.2 percent to 4-1/2-month lows on Thursday hit by deepening worries about weak global growth, lifting the safe-haven yen and dragging down exporters such as Toyota Motor Corp and Honda Motor Co.

The Nikkei ended 335.14 points lower at 14,738.38, its lowest closing level since May 30.

The benchmark stayed below its 200-day moving average for the third consecutive day, reports Reuters.

01:00pm Market Check
Equity benchmarks continued to see volatility in afternoon trade with the Sensex falling 34.48 points to 26314.85 and the Nifty losing 20.10 points to 7843.90. Midcap and Smallcap indices declined marginally too.

About 1097 shares have advanced, 1560 shares declined, and 109 shares are unchanged on the Bombay Stock Exchange.

Globally, European markets rebounded with major indices rising almost a percent recovering from yesterday's tumble. In other asset classes, Brent crude prices continued to slump, fell below USD 84 a barrel and Nymex crude dropped below USD 81 a barrel.

Back home, Reliance Industries, Mahindra and Mahindra, Sesa Sterlite, ONGC, Hindalco Industries, Bajaj Auto, Tata Steel, BHEL and Tata Power declined 1-3.5 percent while shares of ITC, TCS, HUL, ICICI Bank, Tata Motors, Cipla, Sun Pharma, Axis Bank, Gail India, Coal India and Hero Motocorp gained 0.5-1.7 percent.

Oil marketing companies like HPCL, BPCL and IOC climbed 1-3 percent after these companies started gaining Rs 3.56 a litre on diesel sale while tyre stocks like JK Tyre and Ceat surged 1-7 percent on fall in crude oil prices.

Meanwhile, Prime Minister Narendra Modi government made some big bureaucratic changes. Rajiv Mehrishi became the new economic affairs secretary, replacing Arvind Mayaram who now became the tourism secretary. Meanwhile, Anil Swarup appointed as the new coal secretary. These changes will be effective from october 31.

12:55pm Eicher Motors sees huge expansion
Calendar year 2014 has been a dream year for the company, says Siddhartha Lal, MD and CEO, Eicher Motors. The company has grown six-fold in last five years. Brokerages are upgrading the stock after stellar a performance last quarter. The stock has doubled this year and hit record high of Rs 12,372 on September 16, 2014.

Macquarie sees a 4x rise in earnings on the back of Royal Enfield business growth this quarter. The Royal Enfield sales were up 85 percent year-on-year to 74000 units. The company reported EBIT growth of 67 percent aided by motorcycle business.

Reports suggest Eicher aims to dominate the mid-sized motorcycle market in the US, which is currently dominated by Harley Davidson. The US is USD 7 billion motorcycle market, if Eicher cracks it, margins could be much higher.

Speaking to CNBC-TV18, Lal says the order book of the company has been growing for its motorcycle segment. Eicher Motors has over 95 percent market share for above 250cc motorcycle space.

According to management, the company has a lot of room to grow and is creating ground for mid-size motorcycle segment globally. The company is looking for a 70-75 percent capacity expansion going ahead.

12:35pm Europe rebounds
European markets like France's CAC, Germany's DAX and Britain's FTSE gained around a percent in early trade.

12:30pm Interview
Two-wheeler maker Bajaj Auto eyes very strong exports for October and November. According to MD Rajiv Bajaj, in terms of sustainability, everything looks good right now. 
''October looks good in terms of what we are shipping out, orders of November look promising. But in the last quarter everything just went right whether it was Sri Lanka, Bangladesh, Egypt, Nigeria, Colombia, all these markets one or two of which always played truant,'' he adds.

The company aims to recover its market share by June with the EBITDA margins maintained at 20 percent.

The overseas business of the company did well in Q2. Speaking to CNBC-TV18 post Q2 earnings, Bajaj says the company has entered Ghana and Argentina in recent months.

Bajaj Auto has planned two new launches over the next four months. The company expects its Pulsar to clock 60,000-65,000 units per month going ahead.

12:00pm Market Check
Equity benchmarks were not showing any sign of major move on either side. The Sensex fell 9.80 points to 26339.53 and the Nifty declined 9.05 points to 7854.95. Banking and financials, and FMCG stocks saw buying interest while metals, capital goods and power stocks were under pressure.

The market breadth was negative. About 1053 shares have advanced while 1417 shares declined on the Bombay Stock Exchange.

Shane Lee, Director, Economist & Strategist - Equity Research, CIMB is neutral on India. However, he adds that the Indian market has held up rather well. But he is waiting to see how things play out.

Shares of Hindustan Unilever, Gail, ITC, Tata Motors, Axis Bank, BPCL and NMDC climbed 1-4 percent whereas Hindalco Industries, Sesa Sterlite, Mahindra and Mahindra, Tata Power, Reliance Industries, UltraTech Cement and Cairn India slipped 1-4 percent.

In key earnings today, second quarter is expected to be a strong for TCS and Hero Motocorp. Dollar revenue of TCS may see a 7.3 percent sequential growth to USD 3,965 million with marginal improvement in margins while Hero may report a 43 percent growth in profit Y-o-Y.

In the midcap space, Cyient, Tilak Finance, Emami, DB Corp and Religare Enterprises gained 4-7 percent while Strides Arcolab, GSFC, Amtek Auto, Den Networks and Persistent Systems lost 5-16 percent.

11:58am Cyient hits 52-week high
Hyderabad-based engineering, network and operations solutions company Cyient (earlier known as Infotech Enterprises) reported a 31.7 percent (sequential) growth in second quarter net profit at Rs 90.2 crore led by strong revenue and operational performance. Profit in the previous quarter was Rs 68.5 crore.

The company missed street expectations on the bottomline front but rest of the numbers surpassed estimates. Profit in the quarter was expected at Rs 93.5 crore on revenue of Rs 584 crore, according to the average of estimates of analysts polled by CNBC-TV18.

Revenue during the quarter grew by 8.15 percent to Rs 672.4 crore compared to Rs 621.7 crore in previous quarter while dollar revenue growth was 6.7 percent at USD 111 million during the same period (as against forecast of USD 107.8 million).

Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 23.3 percent quarter-on-quarter to Rs 108.1 crore from Rs 87.7 crore and margin expanded by 200 basis points to 16.1 percent in the quarter ended September 2014, which were higher than analysts' expectations of Rs 105 crore and 16 percent, respectively.

11:30am Oil marketing companies' shares rally
Oil retailers IOC, BPCL and HPCL rallied 1-2 percent as government today said over-recovery on diesel for October 16-31 is expected to be at Rs 3.56 per litre, increased from Rs 1.9 per litre in previous fortnight (October 1-15). It means these companies are making gains of Rs 3.56 per litre.

OMCs' under-recovery on LPG and kerosene is expected to be at Rs 139 crore per day during the same period, declined compared to under-recovery of Rs 156 crore and Rs 190 crore in previous two fortnights, respectively.

The government said under-recovery on kerosene for Oct 16-31 is seen at Rs 31.22/litre and Rs 404.64 per cylinder for LPG.

Brent crude for November delivery was down 81 cents at USD 82.97 a barrel by 0450 GMT, its lowest mark since November 2010. The contract expires on Thursday.

Brent has lost more than 28 percent since June amid slow demand and abundant supply, with losses accelerating in recent weeks on signals that the Organization of the Petroleum Exporting Countries will not slash output to rescue prices.

US crude fell USD 1.03 to USD 80.75 a barrel. It fell to as low as USD 80.01 in the previous session, its weakest since June 2012.

11:00am Market Check
The market remained lacklustre with the Sensex falling 2.87 points to 26346.46 and the Nifty declining 8.25 points to 7855.75. The broader markets continued to consolidate too.

About 1014 shares have advanced, 1314 shares declined, and 109 shares are unchanged on the Bombay Stock Exchange.

Vibhav Kapoor of IL&FS is not surprised by the market resilience. According to him, while there have been a lot of global concerns, some of them are fairly to India's advantage. The fall in crude oil and commodity prices do have a beneficial impact on Indian economy both in terms of current account and fiscal deficit, he says, adding that good macro data and a favourable opinion poll for Assembly elections are definite positives, which are giving strength to the market.

He, however, thinks that a further correction in the index is possible as the global situation is quite precarious and FIIs have been selling on the back of risk aversion towards emerging markets. ''A deeper correction, if at all happens, would definitely be a good opportunity to add to your long positions,'' Kapoor says.

Hindalco Industries and Sesa Sterlite extended losses, falling over 3 percent. Reliance Industries, Mahindra and Mahindra, NTPC, Bajaj Auto, Tata Power and BHEL lost over a percent. However, DLF topped the buying list, up 6 percent followed by TCS, Tata Motors, ITC, HUL, Sun Pharma, Gail India, Hero Motocorp and Axis Bank with 0.5-1.5 percent gain.
DLF, Bajaj Auto, Ceat, SBI, Tata Steel, TCS and Tata Motors were most active shares on exchanges.

10:59am Strides Arcolab trades ex-dividend
Shares of Strides Arcolab are trading ex-dividend on Thursday. So to adjust the special dividend, the stock fell as much as 18 percent intraday.

The board of directors of the pharmaceutical, on October 07, had approved a special dividend of Rs 105 per equity share of Rs 10 each to the shareholders and said special dividend will be paid on or after October 22, 2014.

The record date for determining the eligibility of shareholders for payment of special dividend will be October 17, 2014. he company will distribute total dividend of Rs 625.4 crore to its shareholders.

Earlier on September 25, Strides agreed to receive from Mylan Inc., USA, an amount of USD 150 million as the full and final settlement against the contingent holdback of upto USD 250 million.

"In view of this development, the company intends to invest USD 20 million in Biotech business and after providing for taxes, the balance will be available for distribution to shareholders subject to the approval of board of directors," it said on September 26.

10:30am Hero Motocorp to declare earnings
Top two-wheeler maker Hero Motocorp is expected to report a 43 percent growth (year-on-year) in net profit at Rs 689 crore in the quarter ended September 2014 as the company does not need to pay any more lump sum royalty payment to Honda. Profit in the year-ago period was Rs 481.4 crore.

According to the average of estimates of analysts polled by CNBC-TV18, revenue is seen going up by 21.5 percent to Rs 6,960 crore during July-September quarter compared to Rs 5,726.2 crore in same quarter last year led by strong volume growth of 19.4 percent at 16.91 lakh units year-on-year. Volume growth was driven by new launches and pick up in rural growth.

10:00am Market Check
Equity benchmarks continued to consolidate ahead of Maharashtra and Haryana assembly elections results. The Sensex rose 5.10 points to 26354.43 while the Nifty declined 6.90 points to 7857.10.

About 828 shares have advanced, 1034 shares declined, and 89 shares are unchanged.

With domestic cues positively stacked in favour of India, market expert Ambareesh Baliga believes 7800-7850 to be good support levels. He doesn't see it breaking in a hurry.

However, he adds, global cues continue to be tricky, and hence he prefers neither to be a buyer nor a seller at the moment.

He says if 7850 breaks, then the downside for Nifty opens. Because of technical factors, market can crack further and the next level will be 7400, he adds. But if Nifty doesn't fall below 7800 level then the trading band will be 7800-8200, according to him.

Hindalco Industries, Sesa Sterlite and Tata Power topped the selling list, falling over 2 percent followed by Reliance Industries, ONGC, L&T, M&M, Bharti Airtel, BHEL, NTPC and Wipro with 0.6-1.6 percent loss.

However, TCS, Tata Motors and Gail India gained 1-2 percent. ITC, HDFC Bank, Hero Motocorp, HUL, Tata Steel and Cipla climbed 0.4-0.7 percent.

09:45am Ranbaxy in News
The BSE Sensex rose 65 points to 26414 while Ranbaxy Laboratories gained 1 percent.

The company has settled the litigation concerning its participation in the Texas Medicaid Program. Under the settlement agreement, Ranbaxy will make payments to the State of Texas totaling USD 39.75 million in a series of tranches through August 2015, said the company in its filing to BSE.

"The claims at issue related exclusively to the manner in which the Ranbaxy has historically reported pricing data to Texas Medicaid for certain of its drugs. As has been widely reported, the State of Texas has brought nearly identical claims against virtually every other major pharmaceutical manufacturer in the United States. Ranbaxy believes that it fully complied with all relevant laws, however the company settled the matter to avoid any further distraction and uncertainty of continued litigation with the State of Texas," it explained.

09:35am Market Expert
With domestic cues positively stacked in favour of India, market expert Ambareesh Baliga believes 7800-7850 to be good support levels. He doesn't see it breaking in a hurry.

However, he adds, global cues continue to be tricky, and hence he prefers neither to be a buyer nor a seller at the moment.

He says if 7850 breaks, then the downside for Nifty opens. Because of technical factors, market can crack further and the next level will be 7400. But if Nifty doesn't fall below 7800 level then the trading band will be 7800-8200.

Baliga says the results so far have been decent but most investors are making the mistake of buying these stocks at high prices (on exuberance) as soon as the results are out. He advices investors to let prices cool from the initial exuberance and then buy.

09:15am Market Check
Equity benchmarks opened flat despite weak global cues and ahead of outcome of Maharashtra and Haryana elections that will be on Sunday. The Sensex fell 1.37 points to 26347.96 and the Nifty declined 0.65 points to 7863.35.

About 432 shares have advanced, 530 shares declined, and 47 shares are unchanged.

DLF shot up 6.62 percent, showing a smart recovery after losing nearly 30 percent in previous session due to Sebi order.

Hero Motocorp and TCS gained nearly 2 percent ahead of second quarter earnings today later in the day. Tata Motors, BHEL and Tata Steel climbed over 1.5 percent.

However, Hindalco, Bajaj Auto (post 29 percent fall in Q2 profit), Reliance Industries, Sesa Sterlite, Tata Power and Cairn India lost 1-2.5 percent.

The Indian rupee opened marginally lower on Thursday at 61.48 per dollar compared to 61.41 a dollar in previous session.

Dollar hits a three-week low against the euro and a more than one-month low against the yen post weak US economic data that heightened concerns that the federal reserve would delay its first rate hike.

Mohan Shenoi of Kotak Mahindra Bank said, "Dollar weakness against global majors may not impact rupee significantly due to reduced custodial flows. The rupee is expected to trade today in a range of Rs 61.10-61.50/dollar."

On the global front, Asian markets (barring Shanghai) were trading lower with the Nikkei falling over 2 percent. US stocks closed down but recovered significantly from historic intraday losses amid concerns about Europe, Ebola and the economy. Stocks lost nearly 3 percent during the day but recovered in the close.

In Europe, stocks closed more than 2 percent lower as investors shunned risky assets on fears of crumbling global growth, weak economic data, and concerns about the political situation in Greece.

In commodities, Brent crude continues its slump, slips below USD 84 per barrel.

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