Weakness continued on the bourses in early afternoon trade. The market breadth, indicating the overall health of the market, was negative. Weakness in Asian stocks hit investor sentiment adversely. The barometer index, the S&P BSE Sensex, was down 103.81 points or 0.5%, off close to 100 points from the day's high and up about 75 points from the day's low. Asian stocks fell on Friday, 8 November 2013, after faster US economic growth fueled concern the Federal Reserve may reduce monetary stimulus for the US economy sooner than expected. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
HDFC extended intraday losses. Realty stocks edged higher. Titan Industries extended Thursday's losses triggered by the Reserve Bank of India putting restrictions on fresh foreign portfolio investment in the company's shares. Aurobindo Pharma hit 52-week high after Q2 result. VA Tech Wabag declined on weak Q2 result. SpiceJet fell after the budget carrier reported record loss in Q2 September 2013.
A bout of volatility was witnessed as key benchmark indices trimmed initial losses triggered by weakness in Asian stocks. The Sensex and the 50-unit CNX Nifty, both, hit 1-1/2-week low. Weakness continued on the bourses in morning trade. The Sensex hovered in negative terrain in mid-morning trade. Weakness continued on the bourses in early afternoon trade.
At 12:20 IST, the S&P BSE Sensex was down 103.81 points or 0.5% to 20,719.48. The index lost 177.13 points at the day's low of 20,645.64 in early trade, its lowest level since 29 October 2013. The index fell 1.76 points at the day's high of 20,821.01 in morning trade.
The CNX Nifty was down 30.55 points or 0.49% to 6,156.70. The index hit a low of 6,139.85 in intraday trade, its lowest level since 29 October 2013. The index hit a high of 6,185.15 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,198 shares dropped and 890 shares rose. A total of 128 shares were unchanged.
Among the 30-share Sensex pack, 18 stocks fell and rest of them rose. Maruti Suzuki India (down 2.03%), ONGC (down 2.01%) and GAIL (India) (down 1.6%), dropped.
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India's largest dedicated housing finance firm by revenue, HDFC, fell 2.89%, with the stock extending intraday losses.
Realty stocks edged higher. DLF (up 0.91%), HDIL (up 0.8%), Sobha Developers (up 0.98%), and Unitech (up 0.89%), gained.
MSCI has dropped Unitech from MSCI India index among other changes in its MSCI India index. The changes will be effective as of the close of trade on November 26, the index provider said.
Titan Industries lost 2.42%, with the stock extending Thursday's losses triggered by the Reserve Bank of India putting restrictions on fresh foreign portfolio investment in the company's shares. The Reserve Bank of India (RBI) on Wednesday, 6 November 2013, notified that the aggregate net purchases of equity shares in Titan Industries by foreign institutional investors (FIIs) in the primary/secondary markets under Portfolio Investment Scheme (PIS) had reached the trigger limit. Hence, further purchases of equity shares of the company would be allowed only after obtaining prior approval of the RBI.
FIIs, at the end of September 2013, controlled 22.43% stake in Titan Industries, while promoters holding stood at 53.05%.
Aurobindo Pharma surged 10.22% to Rs 262.70. The stock hit 52-week high of Rs 264.35 in intraday trade. The company's consolidated net profit rose 5.7% to Rs 235 crore on 27.6% growth in operating revenue to Rs 1913.90 crore in Q2 September 2013 over Q2 September 2012. The Q2 result was announced after market hours on Thursday, 7 November 2013.
Aurobindo Pharma's consolidated EBITDA (earnings before interest, taxation, depreciation and amortization) before forex surged 75.1% to Rs 438.40 crore in Q2 September 2013 over Q2 September 2012. EBITDA margin before forex galloped by 620 basis points (bps) to 22.9% from 16.7% a year ago due to improved business mix resulting in decrease in materials consumption, staff cost and other expenses to net operating income by 2.4%, 0.9% and 2.9% respectively.
Commenting on the company's Q2 performance, Mr. N. Govindarajan, Managing Director, Aurobindo Pharma said, "The integrated business in generic Formulations is auguring well to drive the operating performance of the company. We are also investing in specific new, differentiated products offerings such as Oncology, Hormones, Peptides and OTC business which we believe will complement our business in the coming years".
SpiceJet fell 2.76% after the company recorded record loss in Q2 September 2013. The company reported net loss of Rs 559.49 crore in Q2 September 2013, higher than net loss of Rs 163.52 crore in Q2 September 2012. SpiceJet's total income from operations rose 6.07% to Rs 1257.22 crore in Q2 September 2013 over Q2 September 2012. The result was announced after market hours on Thursday, 7 November 2013.
SpiceJet said the company continued to grow passenger traffic by 9% and revenues by 6% during Q2 September 2013. However, the civil aviation sector in India continues to struggle under the burden of several adversities, mainly the Indian rupee that saw unprecedented weakness during the quarter. The approximate impact of currency depreciation alone, despite a hedging programme was around Rs 42 crore, the company said.
Aircraft maintenance costs were significantly impacted due to increase in periodic engine maintenance. These costs aggregated to Rs 78 crore additionally due to bunching up of engines sent for shop visits. Aviation turbine fuel (ATF) prices continued to rule firm and were 2% more expensive per litre Q2 September 2013 over Q2 September 2012. Fuel constituted 56% of total revenue in Q2 September 2013 as compared to 54% in Q2 September 2012.
SpiceJet said that the pricing environment continued to be weak, resulting in decline in the average passenger yields by 7% in Q2 September 2013 to Rs 3711 crore as against Rs 4001 crore in Q2 September 2012. Despite addition of capacity, SpiceJet operated with better efficiencies, load factor increased to 71.8% in Q2 September 2013 from 66.3% in Q2 September 2012.
Spicejet said that in order to improve its competitive position, the management is putting in place a strategic plan to refine the network, enhance revenues, rationalize costs and further improve reliability to deliver better value to customers. SpiceJet continues to focus on overall end-to-end service delivery, designing enhancements to the product and eliminating unnecessary "pain points" to make customer experience more pleasant, consistent and hassle-free.
VA Tech Wabag lost 3.48% on weak Q2 result. The company's net profit fell 3.2% to Rs 17.02 crore on 0.5% decline in net sales to Rs 216.74 crore in Q2 September 2013 over Q2 September 2012. The Q2 result was announced after market hours on Thursday, 7 November 2013.
Commenting on the company's Q2 performance, Mr. Rajiv Mittal, MD, VA Tech Wabag said, "It is very pleasing to see positive results for the hardwork put in by the team during difficult times. Both Indian & Overseas operations have shown excellent performance. I am glad that our International Business has achieved breakeven at the PAT level in the current quarter. We expect further improvement and favorable results from International business in the quarters to come. With a robust order intake during the year, we have successfully built a healthy order book of Rs 6600 crore".
VA Tech Wabag has surpassed Rs 2000 crore of order intake during the year. The company had earlier reported an order intake of over Rs 1000 crore during Q1 June 2013 and has repeated the achievement by garnering further Rs 1000 crore of order intake during Q2 September 2013.
Commenting on this achievement, Mr. Rajiv Mittal said, "I am happy that the company could repeat the robust order intake performance of Q1. Our order book is strong and I am confident that we will be meeting the annual guidance numbers on order intake provided to our investors much earlier than the targeted dates".
In the foreign exchange market, the rupee edged lower against the dollar as faster US economic growth fueled concern the Federal Reserve may reduce monetary stimulus for the US economy sooner than expected. The partially convertible rupee was hovering at 62.6825, compared with its close of 62.41/42 on Thursday, 7 November 2013.
Indian government bond prices dropped as faster US economic growth fueled concern the Federal Reserve may reduce monetary stimulus for the US economy sooner than expected. The yield on 10-year benchmark government paper -- 7.16% GS 2023 -- was hovering at 8.8857%, higher than its close of 8.8492% on Thursday, 7 November 2013. Bond yield and bond prices are inversely related.
Asian stocks fell on Friday, 8 November 2013, after faster US economic growth fueled concern the Federal Reserve may reduce monetary stimulus for the US economy sooner than expected. Key benchmark indices in Singapore, China, Japan, Hong Kong, Taiwan, Indonesia and South Korea shed 0.49% to 1.13%.
China's trade surplus expanded more than forecast to $31.1 billion last month from $15.21 billion in September. Exports grew 5.6% after contracting last month. Among the other October data, imports rose 7.6% in October 2013.
China is due to issue a heavy slate of other October data, including industrial production, consumer inflation and retail sales tomorrow, 9 November 2013.
China's leaders will meet in Beijing on November 9-12 to map out economic policies as the country heads for its slowest annual growth in more than two decades.
Trading in US index futures indicated a flat opening of US stocks on Friday, 8 November 2013. US stocks tumbled on Thursday, 7 November 2013, as speculation the Federal Reserve may scale back stimulus amid faster-than-estimated economic growth overshadowed a move by the European Central Bank to cut a key interest rate.
Data yesterday showed growth in the world's biggest economy accelerated to a 2.8% annualized rate last quarter, faster than the 2% median market estimates. Fewer Americans filed applications for unemployment benefits last week, indicating firings haven't picked up following the partial government shutdown. Jobless claims decreased by 9,000 to 336,000 in the week ended Nov. 2 from 345,000 the prior period, the Labor Department reported in Washington.
The US government will today, 8 November 2013, release nonfarm payrolls figures for October 2013. The job data is a key economic indicator that has been watched closely in recent months to see whether the US Federal Reserve will roll back its bond-buying program.
In Europe, global ratings agency Standard and Poor's cut France's sovereign credit rating by one notch to AA from AA+ on Friday, citing lack of progress in government reforms of the country's economy. In a statement, S&P said that it had lowered France's rating because it believed the French government's reforms to taxation, as well as to product, services, and labor markets, "will not substantially raise France's medium-term growth prospects, and that ongoing high unemployment is weakening support for further significant fiscal and structural policy measures". "Furthermore, we believe lower economic growth is constraining the government's ability to consolidate public finances," the agency said. S&P's outlook on France is stable, reflecting its view that the probability it will raise or lower France's rating over the next two years "is less than one-in-three."
The European Central Bank (ECB) on Thursday cut its benchmark interest rate to a record low after a drop in inflation to the slowest pace in four years threatened its mission to keep prices stable. Policy makers meeting in Frankfurt on Thursday reduced the main refinancing rate by a quarter point to 0.25%.
The Bank of England kept its benchmark rate at a record-low 0.5% in London on Thursday, while its bond-purchase plan stayed at 375 billion pounds ($603 billion).
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