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ITC reverses intraday gains in late trade as Q2 top line growth disappoints

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Capital Market
Last Updated : Oct 25 2013 | 11:55 PM IST

Key benchmark indices edged lower in choppy trade as Asian and European stocks dropped. The barometer index, the S&P BSE Sensex, was provisionally down 70.02 points or 0.34%, off 126.75 points from the day's high and up 32.86 points from the day's low. The market breadth, indicating the overall health of the market, was negative.

IT stocks gained as the rupee dropped against the dollar. Index heavyweight and cigarette major ITC reversed intraday gain in late as the company's top line growth in Q2 September 2013 disappointed investors. GAIL (India) dropped after the company reported weak Q2 result in late trade. Metal and mining stocks edged lower. NMDC fell after reporting weak Q2 result. Engineering and construction giant L&T dropped on profit booking after recent rally triggered by the company reporting strong growth in order inflow in Q2 September 2013 at the time of announcement of its Q2 September 2013 results on 18 November 2013.

As per provisional closing, the S&P BSE Sensex was down 70.02 points or 0.34% to 20,655.41. The index rose 56.73 points at the day's high of 20,782.16 in mid-afternoon trade. The index lost 102.88 points at the day's low of 20,622.55 in afternoon trade, its lowest level since 23 October 2013.

The CNX Nifty was down 30.75 points or 0.5% to 6,133.60. The index hit a high of 6,174.75 in intraday trade. The index hit a low of 6,125.95 in intraday trade, its lowest level since 23 October 2013.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,392 shares declined and 1,049 shares gained. A total of 160 shares were unchanged.

The total turnover on BSE amounted to Rs 1736 crore, lower than Rs 2073 crore on Thursday, 24 October 2013.

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Index heavyweight and cigarette major ITC reversed intraday gain in late as the company's top line growth in Q2 September 2013 disappointed investors. The stock fell 1.52% to Rs 337.35, with the scrip reversing intraday gain after the company declared Q2 result at fag end of the day's trading session. The stock hit a high of Rs 347 and low of Rs 336.20. Net profit jumped 21.46% to Rs 2230.53 crore on 9.42% growth in total income to Rs 8108.72 crore in Q2 September 2013 over Q2 September 2012.

GAIL (India) dropped after the company reported weak Q2 result in late trade. The stock lost 2.68%. GAIL (India)'s net profit fell 7.07% to Rs 915.67 crore on 21.94% rise in total income to Rs 14224.37 crore in Q2 September 2013 over Q2 September 2012. The result was announced during market hours today, 25 October 2013. In terms of the decision of the Government of India to share the under recoveries on LPG with public sector oil marketing companies (PSU OMCs), the company has provided provisional discount of Rs 698.68 crore in Q2 September 2013, lower than the discount of Rs 785.67 crore in Q2 September 2012.

Metal and mining stocks edged lower. Jindal Steel & Power (down 1.2%), Hindustan Zinc (down 1.68%), National Aluminium Company (down 2.37%), Tata Steel (down 3.04%), Sail (down 1.8%), and Hindalco Industries (down 4.8%), declined. Sesa Sterlite rose 1.31%.

NMDC lost 3.93% after net profit declined 21.46% to Rs 1318.36 crore on 5.53% fall in total income to Rs 3018.29 crore in Q2 September 2013 over Q2 September 2012. The company announced result after market hours on Thursday, 24 October 2013.

C.S. Verma, CMD of NMDC said: "NMDC is gearing up to ramp up its production and dispatches vigorously which is evident from these results. Inspite of adverse conditions, NMDC has outperformed by showcasing growth in both production and dispatches. The resilient nature of NMDC would ensure to cope up with the challenges and would create new opportunities for sustainable growth."

Shares of engineering and construction giant L&T dropped on profit booking after recent rally triggered by the company reporting strong growth in order inflow in Q2 September 2013 at the time of announcement of its Q2 September 2013 results on 18 November 2013. The stock shed 1.79% at Rs 947.30. L&T on 18 October 2013 said its recurring profit after tax rose 7% to Rs 978 crore on 10% growth in gross revenue at Rs 14648 crore in Q2 September 2013 over Q2 September 2012. The company attributed top line growth to pick-up in execution of various jobs.

IT stocks gained as the rupee dropped against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Infosys rose 0.55% to Rs 3,328. The scrip had hit a 52-week high of Rs 3,372 in intraday trade on Thursday, 24 October 2013. The company announced after market hours on Thursday, 24 October 2013, that the head of its banking services solution platform Finacle, Haragopal Mangipudi, and 11 others have been inducted to its top decision-making body, the Executive Council. The Council is the company's top-level body, which is responsible for strategic decision-making. It includes the company's executive board, the heads of its key business units and strategic business-enabler units, the company said in a filing with the Bombay Stock Exchange and the US Securities Exchange Commission.

TCS rose 2.76% to Rs 2,064.10. The stock turned ex-dividend today, 25 October 2013, for a second interim dividend of Rs 4 per share for the year ending 31 March 2014. The stock had hit record high of Rs 2,258.05 in intraday trade on 15 October 2013.

Wipro gained 2.42% on bargain hunting after recent steep fall triggered by the company's dollar revenue growth from IT services in Q2 September 2013 lagging that of its peer companies. Wipro announced Q2 result on Tuesday, 22 October 2013.

Wipro 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.

HCL Technologies gained 2.57% to Rs 1,080.95. The stock had hit record high of Rs 1,177 in intraday trade on 15 October 2013. The company last week said its consolidated net profit as per US accounting standards jumped 18.7% to Rs 1416 crore on 14% growth in revenue to Rs 7961 crore in Q1 September 2013 over Q4 June 2013.

In the foreign exchange market, the rupee edged lower against the dollar on dollar buying by custodial banks ahead of the Reserve Bank of India's monetary policy review next week. The partially convertible rupee was hovering at 61.57, compared with its close of 61.46/47 on Thursday, 24 October 2013.

European stocks dropped on Friday, 25 October 2013, after a disappointing take on German business confidence and as investors digested another round of quarterly earnings. Key benchmark indices in France, Germany and UK shed 0.03% to 0.19%.

German business sentiment unexpectedly deteriorated in October as sales expectations slipped in most sectors, including manufacturing, indicating that the economy is only gradually regaining its strength. The Ifo institute's business confidence index dropped for the first time in six months, to 107.4 in October from 107.7 in September.

The UK economy grew at the fastest rate in more than three years during the third quarter, official data showed Friday, an indication the recovery that began earlier this year is picking up speed. In its preliminary estimate, the Office for National Statistics said gross domestic product grew 0.8% between July and September compared with the second quarter, when it grew 0.7%. Friday's quarterly data is the strongest growth since the second quarter of 2010 when the economy grew 1%.

Economic output was 1.5% higher compared with the third quarter of 2012. On an annualized basis, GDP grew an estimated 3.2%, the ONS said.

Asian markets declined on Friday, 25 October 2013, as forecasts from Canon Inc. to Posco disappointed investors. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, Japan, Indonesia and South Korea fell by 0.3% to 2.75%.

South Korea's economic growth maintained the same robust pace in the third quarter as the preceding quarter, beating market expectations and bolstering hopes that Asia's fourth-largest economy stays on a recovery track. Gross domestic product rose a seasonally adjusted 1.1% in the July-September period from the previous quarter, when the economy grew at the same pace, the Bank of Korea said Friday. That is the strongest pace since the first quarter of 2011, when the economy grew 1.3% on quarter. On a year-on-year basis, the economy expanded 3.3% in the third quarter, accelerating from the second-quarter's 2.3% gain.

Trading in US index futures indicated that the Dow could fall 13 points at the opening bell on Friday, 25 October 2013. US stocks climbed on Thursday, with the S&P 500 gaining a day after halting a run to a record high, as economic data underscored views US monetary stimulus will be in place for long time.

The preliminary reading of Markit's US flash manufacturing purchasing managers index slipped to 51.1 in October from 52.8 in September, the lowest level for a year. Readings above 50 indicate expansion and the PMI in October signals only modest manufacturing growth.

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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First Published: Oct 25 2013 | 3:48 PM IST

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