Intraday volatility continued as the key benchmark indices once again trimmed losses in early afternoon trade. The barometer index, the S&P BSE Sensex, briefly turned positive. The Sensex was now down 24.75 points or 0.12%, off 33.13 points from the day's high and up 56.75 points from the day's low. Index heavyweight and cigarette major ITC extended intraday gains on defensive buying. Another index heavyweight Reliance Industries (RIL) extended intraday fall. The market breadth, indicating the overall health of the market was weak.
Auto major Tata Motors gained after announcing Q4 earnings after market hours on Wednesday, 29 May 2013. Pharma major Cipla dropped after the company declared weak Q4 result after market hours on Wednesday, 29 May 2013. Metal stocks declined for second day in a row after the International Monetary Fund (IMF) cut its growth forecast for China this year to 7.75% from 8%, citing a weak world economy and exports, adding to concerns that the world's second-largest economy is losing momentum.
Key benchmark indices edged lower in early trade on weak Asian stocks. The market recovered in morning trade. Intraday recovery proved short lived as weakness in Asian stocks pulled Indian stocks lower again in mid-morning trade. Intraday volatility continued as the key benchmark indices once again trimmed losses in early afternoon trade.
The market may continue to remain volatile today, 30 May 2013, as traders roll over positions in the futures & options (F&O) segment from the near-month May 2013 series to June 2013 series. The May 2013 derivatives contracts expire today, 30 May 2013.
At 12:20 IST, the S&P BSE Sensex was down 24.75 points or 0.12% to 20,122.89. The index fell 81.50 points at the day's low of 20,066.14 in early trade. The index rose 8.38 points at the day's high of 20,156.02 in morning trade.
The CNX Nifty was down 11.10 points or 0.18% to 6,093.20. The index hit a high of 6,103.40 in intraday trade. The index hit a low of 6,072.15 in intraday trade.
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The market breadth, indicating the overall health of the market, was weak. On BSE, 1,189 shares declined and 785 shares rose. A total of 142 shares were unchanged.
The total turnover on BSE amounted to Rs 2909 crore by 12:20 IST on BSE compared to Rs 2757 crore by 11:20 IST.
Among the 30-share Sensex pack, 20 stocks declined and the rest of them gained.
Index heavyweight Reliance Industries (RIL) shed 1.34% to Rs 835.90, with the stock extending intraday fall. RIL and its partners BP and NIKO on 24 May 2013 announced a significant gas and condensate discovery in the KG D6 block off the eastern coast of India. RIL is the operator of KG D6 with 60% equity. BP has a 30% share and NIKO the remaining 10%.
Meanwhile, ratings agency Standard & Poor's (S&P) on Wednesday, 29 May 2013, raised the long term corporate credit rating on RIL to "BBB+" from "BBB", with a "negative" outlook. RIL's articulation of its growth strategy removes the uncertainty regarding the company's use of its high cash balance, S&P said. RIL is planning to spend more than $30 billion on expansion over the next three years in core businesses such as refining, petrochemical, and exploration and production (E&P).
Commenting on the rating upgrade, V. Srikanth, Joint CFO, RIL, said that the upgrade recognizes the value of RIL's focused capital expenditure plan in strengthening the company's profitability and competitiveness.
Index heavyweight and cigarette major ITC was up 1.45% at Rs 347.20 on defensive buying. The stock had hit record high of Rs 355 in intraday trade on 11 May 2013.
Metal stocks declined for second day in a row after the International Monetary Fund (IMF) cut its growth forecast for China this year to 7.75% from 8%, citing a weak world economy and exports, adding to concerns that the world's second-largest economy is losing momentum. China is the world's largest consumer of copper and aluminum.
Sterlite Industries (India) (down 0.81%), Hindalco Industries (down 0.14%), JSW Steel (down 0.91%), Tata Steel (down 1.99%), Sail (down 0.34%) and Jindal Steel & Power (down 0.75%) edged lower. Hindustan Zinc rose 0.97%.
Pharma major Cipla lost 3.59% to Rs 387.10 and was the top loser from the Sensex pack. The company's net profit fell 8.3% to Rs 268 crore on 4.9% growth in revenue to Rs 1982 crore in Q4 March 2013 over Q4 March 2012. The result was announced after market hours on Wednesday, 29 May 2013. Cipla's revenue from India operations rose 5.2% to Rs 793 crore in Q4 March 2013 over Q4 March 2012.
The growth in revenue from the domestic business was largely on account of growth in anti-asthma, anti-biotics/infectives, and cardiovascular therapy segments. Exports of formulations rose 11.5% to Rs 954 crore in Q4 March 2013 over Q4 March 2012. Exports of active pharmaceutical ingredients (APIs) fell 24% to Rs 175 crore in Q4 March 2013 over Q4 March 2012. The company attributed growth in overall export revenue to growth in anti-asthma, anti-allergic, anti-depressants, and anti-retroviral segments.
Auto major Tata Motors gained 2.96% to Rs 312.80 and was the top gainer from the Sensex pack. The company's consolidated net profit declined 36.71% to Rs 3945 crore on 10% growth in revenue to Rs 56002 crore in Q4 March 2013 over Q4 March 2012. The fall in bottom line was due to base effect. Tata Motors had accounted for a large tax credit in Q4 March 2012. Tata Motors' British luxury car unit Jaguar Land Rover (JLR) had accounted for tax credit of 225 million pounds (Rs 1794 crore) in Q4 March 2012 for past income tax losses. Tata Motors' profit before tax (PBT) rose 6.1% to Rs 4694 crore in Q4 March 2013 over Q4 March 2012. Tata Motors attributed revenue growth to strong demand, growth in volumes and favourable market mix at JLR and favourable operating foreign exchange at the British luxury car unit. The result was announced after market hours on Wednesday, 29 May 2013.
Due to weak operating environment in the commercial vehicles and passenger car business in India, the board of Tata Motors pruned dividend to Rs 2 per share for the year ended 31 March 2013 (FY 2013) from Rs 4 per share for the year ended 31 March 2012 (FY 2012).
On the macro front, the government will announce Q4 March 2013 gross domestic product (GDP) data tomorrow, 31 May 2013. India's GDP grew 4.5% in Q3 December 2012, sharply slower than the 5.3% expansion reported for Q2 September 2012.
The Reserve Bank of India (RBI) undertakes mid-quarter review of the monetary policy on 17 June 2013. RBI Governor D Subbarao on 14 May 2013 said that the central bank will take note of falling inflation when discussing potential interest rate cuts. The RBI on 3 May 2013 cut its key policy rate viz. the repo rate by 25 basis points (bps) to 7.25% and kept the cash reserve ratio (CRR) for banks unchanged at 4% after a monetary policy review. RBI said at that time that the balance of risks stemming from its assessment of the growth-inflation dynamic provides little space for further monetary easing. The RBI said it will endeavour to condition the evolution of inflation to a level of 5% by March 2014, using all instruments at its command.
The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.
Asian stocks declined on Thursday, undermined by an overnight pullback in global equities as investors assessed the implications of a potential softening of the Federal Reserve's massive monetary stimulus programme. Key benchmark indices in Hong Kong, South Korea, Singapore, China, Taiwan and Indonesia were down by 0.05% to 1.16%.
Japan's Nikkei 225 dropped 5.15% amid concerns about market volatility as the yen strengthened against the dollar.
Trading in US index futures indicated that the Dow could slide 30 points at the opening bell on Thursday, 30 May 2013. US stocks fell sharply on Wednesday, with Wall Street giving back the prior day's gains, amid worries over global-growth prospects and fears the Federal Reserve will begin to scale back its bond-buying program.
In remarks prepared for a speech in Minneapolis, Federal Reserve of Boston President Eric Rosengren on Wednesday reiterated testimony last week by Federal Reserve Chairman Ben Bernanke, saying "significant accommodation remains appropriate at this time."
The Organization for Economic Cooperation and Development (OECD) on Wednesday cautioned that global growth could get hit as governments pare back easy-money programs. The OECD gave a bleaker forecast for the euro-zone economy this year. Also, the International Monetary Fund on Wednesday cut its estimate for China's economic growth in 2013 and 2014.
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