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Coal India extends gains on liberal interim dividend

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Last Updated : Jan 16 2014 | 11:57 PM IST

Key benchmark indices languished in negative zone in early afternoon trade. The barometer index, the S&P BSE Sensex, was down 34.80 points or 0.16%, up about 20 points from the day's low and off close to 125 points from the day's high. The market breadth, indicating the overall health of the market, was negative.

IT stocks were mixed. Tata Consultancy Services (TCS) reversed intraday gains ahead of its Q3 results today, 16 January 2014. Infosys scaled record high. HCL Technologies rose and hit record high after the company reported good Q2 result before trading hours. Index heavyweight Reliance Industries (RIL) rose. Coal India edged higher in choppy trade.

A bout of volatility was witnessed in initial trade as key benchmark indices pared gains after a firm start triggered by higher Asian stocks. The Sensex hit its highest level in more than five weeks at the onset of the trading session. The 50-unit CNX Nifty hit 2-week high at the onset of the trading session. Key benchmark indices reversed initial gains and hit fresh intraday low in morning trade. Key benchmark indices trimmed losses after hitting fresh intraday low in mid-morning trade. The Sensex languished in negative zone in early afternoon trade.

Foreign institutional investors (FIIs) bought shares worth a net Rs 713.29 crore on Wednesday, 15 January 2014, as per provisional data from the stock exchanges.

At 12:20 IST, the S&P BSE Sensex was down 34.80 points or 0.16% to 21,254.69. The index fell 52.54 points at the day's low of 21,236.95 in mid-morning trade. The index rose 89.80 points at the day's high of 21,379.29 in early trade, its highest level since 9 December 2013.

The CNX Nifty was down 4.75 points or 0.08% to 6,316.15. The index hit a low of 6,308.90 in intraday trade. The index hit a high of 6,346.50 in intraday trade, its highest level since 2 January 2014.

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The market breadth, indicating the overall health of the market, was negative. On BSE, 1,254 shares dropped and 1,029 shares rose. A total of 171 shares were unchanged.

Among the 30-share Sensex pack, 16 stocks rose and rest fell. Bharti Airtel (down 4.61%), ONGC (down 2.41%) and ITC (down 1.13%) edged lower from the Sensex pack.

Power Grid Corporation of India gained 0.67%. The company said during market hours that the board of directors of the company at its meeting held on 13 January 2014 has approved investment for two projects involving a total outlay of Rs 472.58 crore.

Ambuja Cements rose 0.25%. The company said in its clarification regarding a news report titled 'Ambuja Cements opens terminal in Mangalore', that the company has not added any additional cement manufacturing capacity. The Mangalore Terminal has been set up only as a transportation hub for supplying cement in Karnataka market which is a routine business activity without any material impact on the financials of the company, Ambuja Cements said.

Coal India advanced 1.74% to Rs 300.10, with the stock extending Wednesday's gains triggered by the company's board of directors approving payment of interim dividend of Rs 29 per share for the financial year ending March 2014. The stock was volatile. The scrip hit high of Rs 303.50 and low of Rs 292.90 so far during the day. Coal India has fixed 20 January 2014 as the record date for the purpose of payment of interim dividend. The dividend yield based on the current market price of Rs 300.10 works out to 9.66%

Index heavyweight Reliance Industries (RIL) rose 0.49% to Rs 890. The stock hit high of Rs 891.80 and low of Rs 885.60 so far during the day. RIL will join Bharti Airtel, Idea Cellular as well as the local units of Vodafone Group PLC and Telenor ASA in bidding for bandwidth in the auction in February. The government aims to raise at least Rs 11000 crore through two sets of auctions, one for a national service and another for a portion of bandwidth in Delhi, Mumbai or Kolkata, collectively home to over 32 million Indians.

RIL will bid to operate both nationally and in the three cities. A successful bid would mark the company's re-entry into the phone business after spinning-off its cellphone unit Reliance Communications in 2005, to brother Anil Ambani, as part of the division of the business empire built by their late father, Dhirubhai Ambani.

The auctions are crucial for Bharti and Vodafone India, whose bandwidth usage rights are set to expire in Delhi, Mumbai and Kolkata. Reliance Communications also has permits up for renewal in some regions in November this year. The companies will have to bid successfully in the upcoming auction to continue operations. The rights to use bandwidth last for 20 years. Idea Cellular and the Indian unit of Telenor, are also bidding in the hopes of expanding their services.

The Department of Telecommunications, which will conduct the auctions, will scrutinize the bids and announce the final list of bidders on 20 January 2014.

IT stocks were mixed. Tata Consultancy Services (TCS) fell 0.56%, with the stock reversing intraday gains ahead of its Q3 results today, 16 January 2014.

Tech Mahindra (down 0.91%) and Wipro (down 0.05%) dropped.

Infosys rose 0.28% to Rs 3723 with the stock extending recent gains triggered by the company raising its revenue growth guidance for the year ending 31 March 2014. The stock hit record high of Rs 3,730 in intraday trade. At the time of announcement of Q3 December 2013 earnings, Infosys, on 10 January 2014, raised its revenue growth guidance in both rupee and dollar terms for the year ending 31 March 2014. The company expects consolidated revenue in rupee terms to grow 24.4% to 24.9% for the year ending 31 March 2014 (FY 2014). This guidance is based on rupee dollar conversion rate of 61.81 for the rest of the financial year. The company expects consolidated revenue in dollar terms to grow 11.5% to 12% in FY 2014.

HCL Technologies rose 2.07% to Rs 1,363.05 after the company reported good Q2 result before trading hours. The stock hit record high of Rs 1,377.75 in intraday trade. The company's consolidated net profit rose 5.7% to Rs 1496 crore on 2.8% increase in revenue to Rs 8184 crore in Q2 December 2013 over Q1 September 2013. The results are as per US Generally Accepted Accounting Principles (US GAAP).

Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 1.6% to Rs 2126 crore in Q2 December 2013 over Q1 September 2013. EBITDA margin declined to 26% in Q2 December 2013, from 26.3% in Q1 September 2013.

HCL Technologies' consolidated net profit as per US GAAP rose 7.1% to $241.6 million on 4% growth in revenue at $1.3213 billion in Q2 December 2013 over Q1 September 2013. EBITDA rose 2.8% to $343.3 million in Q2 December 2013 over Q1 September 2013. EBITDA margin edged lower to 26% in Q2 December 2013, from 26.3% in Q1 September 2013.

Commenting on the company's Q2 performance, Shiv Nadar, Chairman & Chief Strategy Officer, HCL Technologies said: "As a company HCL has always differentiated itself on two key pillars -- corporate excellence and governance, and trust through transparency and flexibility. Our sustained efforts in these areas continue to be recognized".

Anant Gupta, President & CEO, HCL Technologies said: "HCL continues its profitable growth trajectory with yet another stellar quarter of 4% QoQ revenues growth and 39.1% YoY net income growth. The company also crossed many milestones during the quarter, with our calendar year 2013 revenues crossing the $5 billion landmark. In addition Infrastructure Services, Europe geography and Manufacturing vertical each crossed $1.5 billion in revenues. This quarter we also made significant progress in the execution of our Digital System Integration Services strategy by signing new engagements and establishing dedicated Centers of Excellence to further strengthen our thought leadership and thrust on Gen 2 Outsourcing".

Anil Chanana, CFO, HCL Technologies said: "We continue to deliver superior performance. The operating efficiencies, the scale of business in our Run-the-Business offering and the optimization of G&A spend helped in pushing the net income margin to another high of 18.3% this quarter. The asset light model reflected by our Fixed asset turnover at 10x of revenues, and efficient working capital management, continued to keep the return on equity at a historic high of 35% and operating cash flows in excess of 100% of net income".

South Indian Bank rose 2.97% after net profit rose 10.18% to Rs 141.31 crore on 11.79% growth in total income to Rs 1334.74 crore in Q3 December 2013 over Q3 December 2012. The Q2 result was announced during trading hours today, 16 January 2014.

South Indian Bank's provisions and contingencies declined 95.6% to Rs 2.02 crore in Q3 December 2013 over Q3 December 2012.

The bank's ratio of gross non-performing assets (NPAs) to gross advances improved to 1.66% as on 31 December 2013, from 1.92% as on 30 September 2013 but increased from 1.62% as on 31 December 2012. The ratio of net NPAs to net advances improved to 1.18% as on 31 December 2013, from 1.39% as on 30 September 2013 but increased from 0.68% as on 31 December 2012.

The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 12.2% as on 31 December 2013 as against 12.97% as on 30 September 2013.

In the foreign exchange market, the rupee edged lower against the dollar on broad gains in dollar triggered by strong US economic data. The partially convertible rupee was hovering at 61.58, compared with its close of 61.54/55 on Wednesday, 15 January 2014.

An India downgrade is not on the cards, a foreign news agency reported, citing Moody's rating analyst Thomas Byrne. Moody's has an investment grade rating of Baa3 on India with a stable outlook.

The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.

Asian stocks edged higher on Thursday, 16 January 2014, as better-than-projected bank earnings boosted investor confidence and drove US stock gauges to record highs on Wednesday, 15 January 2014. Key benchmark indices in China, Hong Kong, South Korea and Taiwan were up 0.04% to 0.38%. Key benchmark indices in Indonesia, Japan and Singapore fell 0.08% to 0.39%.

Trading in US index futures indicated that the Dow could advance 4 points at the opening bell on Thursday, 16 January 2014. The S&P 500 index closed at a record high Wednesday, narrowly beating its previous peak reached on December 31, as investors took upbeat manufacturing data, Bank of America Corp. earnings, and Apple Inc.'s China deal as signs economic growth was on solid ground.

The Federal Reserve said "moderate" growth across most of the US last month was buoyed by gains in holiday spending by consumers, an improving labor market and strength in manufacturing. "The economic outlook is positive in most districts, with some reports citing expectations of 'more of the same' and some expecting a pickup in growth," the Fed said yesterday in its Beige Book business survey, based on reports gathered on or before 6 January 2014.

The Federal Reserve Bank of New York said that its general business conditions index jumped to 12.51 in January from an upwardly revised 2.22 in December.

The US producer price index rose 0.4% in December, the biggest increase since June, recovering from a 0.1% decline in November and was 1.2% higher from a year earlier. Core PPI was up 0.3% in December and rose 1.4% on a year-over year basis, compared to expectations for a monthly increase of 0.1% and an annual gain of 1.3%.

The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.

International Monetary Fund Managing Director Christine Lagarde said yesterday that momentum in the world economy in the second half of last year should continue in 2014. The Washington-based fund plans to raise its forecast for global growth when it releases a report later this month.

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First Published: Jan 16 2014 | 12:13 PM IST

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