Volatility ruled the roost as key benchmark indices trimmed intraday losses in late trade. The barometer index, the S&P BSE Sensex, was provisionally down 135.79 points or 0.65%, up 139.46 points from the day's low and off 193.14 points from the day's high. The market breadth, indicating the overall health of the market, was negative. The market sentiment was hit adversely by weakness in Asian and European stocks and as trading in US index futures indicated a lower opening of US stocks later in the global day.
Hero MotoCorp gained in volatile trade after announcing Q2 result during market hours today, 23 October 2013. Hindustan Unilever rose in highly volatile trade. Wipro dropped in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. GAIL (India) advanced on a media reports that the oil ministry has decided to exempt the company from sharing subsidy burden with state-run oil retailers. Cairn India declined in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. Telecom stocks edged lower. L&T Finance Holdings declined after declaring Q2 result during market hours today, 23 October 2013.
Key benchmark indices trimmed initial gains triggered by expectations that lackluster US September jobs report will lead to the Federal Reserve maintaining stimulus for the US economy in the foreseeable future. A bout of volatility was witnessed as the key benchmark indices trimmed losses after reversing initial gains in morning trade. Key benchmark indices hovered in negative zone in mid-morning trade. Key benchmark indices extended intraday losses and hit fresh intraday low in early afternoon trade. The market further extended intraday losses and hit fresh intraday low in afternoon trade as European shares opened broadly lower. Weakness persisted on the bourses in mid-afternoon trade. Key benchmark indices trimmed intraday losses in late trade.
As per provisional closing, the S&P BSE Sensex was down 135.79 points or 0.65% to 20,729.18. The index lost 275.25 points at the day's low of 20,589.72 in afternoon trade, its lowest level since 18 October 2013. The index gained 57.35 points at the day's high of 20,922.32 in early trade.
The CNX Nifty was down 33.20 points or 0.54% to 6,169.60. The index hit a low of 6,116.60 in intraday trade, its lowest level since 18 October 2013. The index hit a high of 6,217.95 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,230 shares declined and 1,184 shares rose. A total of 179 shares were unchanged.
The total turnover on BSE amounted to Rs 2058 crore, lower than Rs 2161.85 crore on Tuesday, 22 October 2013.
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Hero MotoCorp gained in volatile trade after announcing Q2 result during market hours today, 23 October 2013. The stock gained 1.07% to Rs 2,092. The scrip hit a high of Rs 2,104.05 and low of Rs 2,036.50. The company's net profit rose 9.26% to Rs 481.41 crore on 10.49% growth in total income to Rs 5841.67 crore in Q2 September 2013 over Q2 September 2012.
Wipro dropped in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. The stock lost 4.56% at Rs 491.40. The scrip hit a high of Rs 514.50 and low of Rs 471.55. The company after market hours on Tuesday, 22 October 2013, reported 28% growth in consolidated net profit from continuing operations to Rs 1932 crore on 19% growth in revenue from continuing operations at Rs 10992 crore in Q2 September 2013 over Q2 September 2012. The results are as per International Financial Reporting Standards. Wipro said non-GAAP adjusted net profit from continuing operations jumped 29% to Rs 1932 crore in Q2 September 2013 over Q2 September 2012.
Non-GAAP constant currency IT services revenue in dollar terms grew 3.2% sequentially and 7.9% year-on-year (YoY), Wipro said. IT services revenue stood at $1.6311 billion in Q2 September 2013, a sequential increase of 2.7% and YoY increase of 5.9%. IT services revenues in rupee terms stood at Rs 10068 crore in Q2 September 2013, an increase of 20% YoY. IT services Earnings Before Interest and Tax (EBIT) was Rs 2264 crore in Q2 September 2013, an increase of 31% YoY.
Wipro expects 1.77% to 3.61% growth in revenues from IT services business at $1.66 billion to $1.69 billion in Q3 December 2013 over Q2 September 2013.
Azim Premji, Chairman of Wipro, commenting on the results said: "There are positive indicators on the global economy. Client confidence is on the uptick and we see it reflected in our results".
T K Kurien, Executive Director & Chief Executive Officer of Wipro said: "We achieved a broad based revenue growth across all industry verticals and continue to focus on executing to our strategy".
Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro said: "Our sustained execution towards increasing operational efficiencies in the business coupled with currency benefits helped offset the impact of wage hikes resulting in strong improvements in operating margins".
GAIL (India) advanced 3.98% on a media reports that the oil ministry has decided to exempt the company from sharing subsidy burden with state-run oil retailers. According to reports, the oil ministry has decided to exempt GAIL (India) from paying any compensation to public sector oil marketing companies (PSU OMCs) for selling diesel, kerosene and cooking gas below market rates, because GAIL does not make windfall profits when international crude oil and gas prices soar.
PSU OMCs -- BPCL, HPCL and Indian Oil Corporation -- suffer revenue loss on domestic sale of diesel, LPG and kerosene at a controlled price (The government decontrolled pricing of petrol in 2010). The government compensates these state-run oil marketing firms for their under-recoveries through oil bonds. The rest of the cost-price gap is borne by three state-run oil firms -- GAIL (India), ONGC and Oil India.
The report added that while ONGC and Oil India will continue to share oil subsidies, GAIL (India) will exit from the subsidy sharing mechanism because the reasons for it to share subsidy no longer exist. GAIL was asked to contribute because the government had allocated it cheaper APM (administered price mechanism) gas. Earlier, GAIL used to get gas at control rate of about $1.8 per unit. Now, it is forced to import costlier gas for its petrochemical units, report said.
As per the report, GAIL had been demanding exemption from sharing subsidy because it was not an upstream company and unlike them it does not gain from any jump in global oil and gas prices.
Cairn India declined in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. The stock lost 3.74% to Rs 320.10. The scrip hit high of Rs 334 and low of Rs 317.60. The company after market hours on Tuesday, 22 October 2013, said its consolidated net profit jumped 46% to Rs 3385 crore on 5% growth in revenue to Rs 4650 crore in Q2 September 2013 over Q2 September 2012. Cairn India reports revenues post profit-sharing with the government in all blocks in addition to royalty in the Rajasthan block.
Cairn India's earinings before interest, taxation, deprecation and amortization (EBITDA) rose 9% to Rs 3619 crore in Q2 September 2013 over Q2 September 2012. EBITDA margin surged to 77.8% in Q2 September 2013 from 74.5% in Q2 September 2012. The company reported foreign exchange fluctuation gain of Rs 429.16 crore in Q2 September 2013, as against foreign exchange fluctuation loss of Rs 785.81 crore in Q2 September 2012.
Elango P, whole time director, Cairn India said: ''We are happy to report increased gross operated production of almost 213,300 barrels of oil equivalent per day (boepd) during Q2 September 2013 and we remain on track for our financial year exit production rate guidance of over 225,000 boepd across all producing assets. We are focused on enhancing the recovery efficiency from our producing fields through the use of cutting edge EOR techniques. We have also been extremely active with the drill bit as we continue to aggressively develop our world class resource base. Whilst Rajasthan remains at the heart of the Company's operations, it is encouraging to see tangible results across our broader portfolio. We remain excited on the regulatory front and are pleased to share that the government has recently announced its policy on the Integrated Development Plan. Looking ahead, we have a strong balance sheet, underpinned by significant cash flow generation and low operating costs, allowing us the flexibility to further develop the asset base. This, combined with a highly motivated and innovative team working on our world class portfolio, will enable us to maintain our industry leading production growth trajectory in the long term.''
Hindustan Unilever rose in highly volatile trade. The stock rose 0.8% at Rs 613.70. The scrip jumped as much as 5.72% at the day's high of Rs 643.70. The stock fell as much as 1.44% at the day's low of Rs 600.10. The stock saw high volume of 7.58 lakh shares as compared with average volume of 2.03 lakh shares in the past one quarter.
Hindustan Zinc rose 0.37%. The company during market hours today, 23 October 2013, reported 7% rise in net profit to Rs 1640 crore on 25% growth in income from operations to Rs 3521 crore in Q2 September 2013 over Q2 September 2012. Hindustan Zinc attributed the increase in revenue to higher sales volume and rupee depreciation, partially offset by lower silver price.
Earnings before interest, taxation, depreciation and amortization (EBITDA) surged 28% to Rs 1904 crore in Q2 September 2013 over Q2 September 2012. The positive impact of higher EBITDA was partly offset by lower other income due to mark-to-market losses on investments during the quarter, the company said in a statement.
With regard to the status of the expansion projects, Hindustan Zinc said that the Rampura Agucha underground mine project is operational via ramps and commercial production will ramp up in Q3 and Q4 of FY 2014. The Kayad mine project will also commence commercial production in FY 2014, the company said.
As on 30 September 2013, the company had cash and cash equivalents of Rs 23632 crore. The company said that it follows a conservative investment policy and invests in fixed deposit with banks and high quality debt instruments including AAA/AA rated bonds and debt mutual funds.
Telecom stocks edged lower. Bharti Airtel (down 1.45%), Idea Cellular (down 1.6%) and Reliance Communications (down 1.52%) declined. The telecommunications regulator, Telecom Regulatory Authority of India (TRAI) today, 23 October 2013, reiterated its recommendations for a sharp cut in the reserve prices in an upcoming auction for mobile phone spectrum, responding to clarifications sought by the telecommunications ministry. TRAI had recommended last month that the reserve price for spectrum in the 900 megahertz band in some key cities be cut by about 60%, and also suggested a 37% cut in the reserve price for spectrum in the 1800 megahertz band.
The Union Cabinet has the final say on the spectrum price proposals, while a panel of ministers will decide on some other rules for the auction planned for January.
L&T Finance Holdings lost 2.59%. The company reported 8.34% rise in consolidated net profit to Rs 155.72 crore on 40.18% growth in total income to Rs 1320.06 crore in Q2 September 2013 over Q2 September 2012. The Q2 result was announced during trading hours today, 23 October 2013.
L&T Finance Holdings said that net interest margin of the lending business improved by 10 basis points (bps) year on year (y-o-y) to 5.6% in Q2 September 2013. L&T Finance Holdings (LTFH)'s loans & advances as on 30 September 2013 grew by 28.2% year on year to Rs 35458.7 crore and by 6.5% as compared to Rs 33309.90 crore as on 31 March 2013.
Gross non-performing assets (NPAs) stood at Rs. 992.90 crore as on 30 September 2013 or 2.89% as a percentage of gross advances as against Rs 846.40 crore or 2.54% as on 30 June 2013. The elevated gross NPAs is mainly due to one account in the infrastructure segment. The gross NPAs include Rs 92.90 crore (net of write off) in FamilyCredit (FCL), mainly contributed by legacy portfolio (fully provided for), L&T Finance Holdings said.
The ratio of net NPAs stood at Rs 654.6 crore or 1.93% as a percentage of gross advances as on 30 September 2013 as against Rs 551 crore or 1.67% as on 30 June 2013.
LTFH said that the company continues to follow a conservative provisioning policy with contingent and voluntary provisions of Rs 258 crore over and above RBI norms.
LTFH said that the company continues to be cautious in credit selection and with aggressive asset monitoring the company expects its asset quality to remain stable.
In the foreign exchange market, the rupee gave away almost entire initial gains against the dollar in choppy trade. The partially convertible rupee was hovering at 61.63, compared with its close of 61.655/665 on Tuesday, 22 October 2013. The rupee had surged to a high 61.05 in early trade after soft US jobs data led to hopes that the Federal Reserve would not start tapering monetary stimulus until 2014.
European stocks dropped on Wednesday, 23 October 2013, as investors digested more quarterly earnings and new ECB stress tests on euro-zone banks. Key benchmark indices in France, Germany and UK were off 0.49% to 0.77%.
The Bank of England on Wednesday lifted its growth estimates for the second half of the year, as a "robust" recovery in the UK continues to gather pace and unemployment looks set to fall faster than expected. The central bank said in its minutes from its policy-setting meeting earlier in October that growth in the second half would remain around 0.7% a quarter or a little higher, stronger than expected at the time of the August Inflation Report. In September, the BOE upgraded the growth expectations for the third quarter to 0.7% from the 0.5% forecast in August. "The recovery in growth since the end of 2012 appeared in part to reflect a dissipation of uncertainty -- for example, as the perceived tail risks in the euro area had receded -- against the backdrop of considerable monetary stimulus," the BOE said in the minutes, released on Wednesday. It also said that surveys indicate the joblessness rate for the rest of the year likely will fall faster than it anticipated in August. The UK's third-quarter gross-domestic-product number will be released on Friday, 25 October 2013.
The European Central Bank in November will begin a thorough review of the balance sheets of 130 financial institutions from Latvia to Germany, opening a year-long process aimed at removing doubts about the strength of European banks and restoring credit to the private sector. As part of the asset-review exercise, and subsequent stress tests of bank balance sheets, the ECB said Wednesday it will ask all banks included in the assessment to set aside 8% of their risk-adjusted capital as a buffer against losses on loans and other parts of their balance sheets. The central bank, which assumes a new role as single supervisor of euro-zone banks at the end of next year, said the asset review will include on-balance sheet and off-balance sheet exposures such as credit derivatives. The ECB will examine the banking and trading books of financial institutions. The euro bloc consists of 17 countries and will rise to 18 in January when Latvia adopts the euro.
Asian markets on Wednesday, 23 October 2013, reversed their initial gains triggered by expectations that lackluster US September jobs report will lead to the Federal Reserve maintaining stimulus for the US economy in the foreseeable future. Key benchmark indices in Japan, Hong Kong, China, South Korea, Singapore and Taiwan fell by 0.17% to 1.36%. Indonesia's Jakarta Composite rose 0.75%.
Trading in US index futures indicated that the Dow could fall 74 points at the opening bell on Wednesday, 23 October 2013. US stocks gained on Tuesday, 22 October 2013, further propelling the S&P 500's record rise, as the September nonfarm-payrolls report supported the notion that the Federal Reserve's monthly bond purchases would continue into next year.
The US created a modest 148,000 jobs in September but the number of people hired in August was higher than previously reported, indicating an economy on a zigzag course heading into the government shutdown. The nation's unemployment rate, meanwhile, fell a tick to a five-year low of 7.2%, as more people found work, according to figures released Tuesday by the Labor Department.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.
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