Market slumps in early trade

Key benchmark indices slumped in early trade as most Asian stocks fell as investors remained caution ahead of the Federal Reserve's policy decision. The S&P BSE Sensex was down 190.13 points or 0.98%, off close to 170 points from the day's high and up about 5 points from the day's low. The market breadth, indicating the overall health of the market, was weak.

Bharti Airtel shrugged off weak Q1 result. HCL Technologies edged higher after strong Q4 result. Jindal Steel & Power (JSPL) declined after Q1 result. NTPC extended Tuesday's losses triggered by the company reporting a muted growth in bottomline in Q1 June 2013. Petronet LNG fell on weak Q1 result.

At 9:35 IST, the S&P BSE Sensex was down 190.13 points or 0.98% to 19.158.21. The index declined 193.90 points at the day's low of 19,154.44 in early trade. The index fell 22.95 points at the day's high of 19,325.39 in early trade.

The CNX Nifty was down 53.80 points or 0.93% to 5,701.25. The index hit a low of 5,700.85 in intraday trade. The index hit a high of 5,742.10 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 657 shares fell and 228 shares rose. A total of 28 shares were unchanged.

Among the 30-share Sensex pack, 23 stocks fell and rest of them rose. GAIL (India) (down 3.09%), Bhel (down 1.87%) and Tata Steel (down 1.93%), edged lower.

Bharti Airtel rose 0.61% after Q1 result. The company's consolidated net profit fell 9.6% to Rs 689 crore on 9.2% growth in total revenue to Rs 20264 crore in Q1 June 2013 over Q1 June 2012. The results are as per International Financial Reporting Standards (IFRS). The company announced the results during market hours today, 31 July 2013.

Derivatives and exchange fluctuation losses and a surge in tax outgo adversely hit the company's bottom line. Derivative and exchange fluctuation losses during the quarter were Rs 534 crore, mainly caused by the rupee depreciation, compared with derivatives and exchange fluctuation gains of Rs 160 crore in Q1 June 2012. Tax outgo surged 113.21% to Rs 968 crore in Q1 June 2013 over Q1 June 2012, mainly due to increase in tax outgo in Africa operations.

Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 19.3% to Rs 6545 crore in Q1 June 2013 over Q1 June 2012. EBITDA margin edged up to 32.3% in Q1 June 2013, from 29.6% in June 2012. EBITDA margin pertaining to India operations improved to 34.9% in Q1 June 2013, from 31.9% in Q1 June 2012. EBITDA margin pertaining international operations improved to 25.4% in Q1 June 2013, from 24% in Q1 June 2012.

Bharti Airtel said mobile revenue in India grew on the back of ARPU moving to Rs 200 in Q1 June 2013, up by Rs 16 over the corresponding period last year. The voice rate increase coupled with higher usage per customer has enabled this improvement in ARPU, Bharti Airtel said.

Consequent to the additional equity infusion of Rs 6796 crore by Qatar Foundation Endowment and after considering the full debt in the Qualcomm subsidiaries, the consolidated net debt has decreased by $908 million during the quarter. The consolidated net debt stood at $9.77 billion as on 30 June 2013. The Net Debt to EBITDA ratio (in dollar terms) now stands at 2.21 as compared to 2.50 at the end of the previous quarter.

Commenting on the first quarter results, Mr. Sunil Bharti Mittal, Chairman, Bharti Airtel, said: "Our results for the quarter reflect the overall stability of our operations, and demonstrate the potential for growth, particularly seeing robust data growth across all geographies. Results for Airtel India reflect rationality returning to the sector which needs to be complemented by a more enabling regulatory environment for a deeper penetration of telecom and broadband services".

HCL Technologies rose 1.34% on good Q4 result. The company before trading hours today, 30 July 2013, said its consolidated net profit as per US accounting standards rose 16.3% to Rs 1209.60 crore on 8.1% growth in revenue to Rs 6944.20 crore in Q4 June 2013 over Q3 March 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 13.2% to Rs 1628.80 crore in Q4 June 2013 over Q3 March 2013. EBITDA margin edged up to 23.5% in Q4 June 2014, from 22.4% in Q3 March 2013.

The company said that the return on equity (ROE) at 34% in the year ended 30 June 2013 (FY 2013) was the highest in the past five years.

Commenting on the company's performance for Q4 June 2014 and FY 2013, Shiv Nadar, Chairman & Chief Strategy Officer, HCL Technologies, said: "FY 2013 results have demonstrated significant business momentum, non-linearity and record customer satisfaction. HCL continues to excel in agility and innovation with a Business Model that is resilient in a dynamic environment".

Anant Gupta, President & CEO, HCL Technologies, said: "An exceptional growth of 22% during the Financial Year has propelled HCL's revenue past the Rs 25000 crore milestone. HCL continues to lead the industry in profitable growth, with seven successive quarters of net income margin expansion, having reported 62% growth in net income this year. We have consolidated our leadership position in the Infrastructure Management Services and verticals like Financial Service and Lifesciences & Healthcare".

Anil Chanana, CFO, HCL Technologies, said: "Backed by another strong quarter, we closed our Financial Year on a positive note. Our net income margin expanded by 400 bps and touched a five year high of 16%. Our Return on Equity for the year has been 34% which is amongst the best in the industry. EBITDA to Free Cash Flow conversion has been at a healthy 68%".

Private bank major, ICICI Bank lost 2.33% ahead of its Q1 result today, 31 July 2013.

Jindal Steel & Power (JSPL) declined 2.6% after Q1 result. The company's consolidated net profit rose 28.27% to Rs 494.28 crore on 2.65% decline in total income to Rs 4593.55 crore in Q1 June 2013 over Q1 June 2012. The result was announced after market hours on Tuesday, 30 July 2013.

The surge in net profit was due to base effect. JSPL's net profit in Q1 June 2012 was hit adversely by a huge write off of Rs 574.12 crore for impaired Bolivia investments.

The company said it has achieved impressive growth in its earnings notwithstanding a shrinking global and sluggish local market, adverse economic conditions in the home market, power transmission constraints and major devaluation of the Indian rupee. JSPL said that in spite of all challenges, the company has maintained the tempo in completing its 4x600 MW Tamnar Phase 2 power project as well as its new steel plants in Angul and Oman which would be fully commissioned as per the targeted schedule during 2013-14. JSPL said that the management remains cautiously optimistic and confident of achieving its targeted performance in the quarters to come.

Meanwhile, JSPL's board of directors at a meeting held on Tuesday, 30 July 2013, inter alia, has authorized Sub Committee of board of directors of the company to examine a buy-back of shares from the existing shareholders of the company and to seek or cause to be sought requisite clarifications, consents and approvals (including without limitation, from the lenders to the company), and to accordingly provide their recommendations in this regard to the board of directors for further consideration and evaluation and for taking such formal decision or action as the board of directors may deem fit, pursuant to applicable laws, market conditions and other relevant considerations.

NTPC shed 2.14%, with the stock extending Tuesday's losses triggered by the company reporting a muted growth in bottomline in Q1 June 2013. The company's net profit rose 1.13% to Rs 2527.02 crore on 2.9% fall in total income to Rs 16358.78 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result during market hours on Tuesday, 30 July 2013.

The company's board of directors at a meeting held on Tuesday, 30 July 2013, accorded the investment approval for Feroze Gandhi Unchahar Thermal Power Project (1x500 MW) to be implemented in Uttar Pradesh at an appraised current estimated cost of Rs 3363.12 crore.

Petronet LNG lost 4.13% on weak Q1 result. The company's net profit declined 16.81% to Rs 225.32 crore on 19.87% growth in total income to Rs 8459.44 crore in Q1 June 2013 over Q1 June 2012. The result was announced after market hours on Tuesday, 30 July 2013.

IFCI dropped 3.44% on weak Q1 result. The company's net profit fell 41.12% to Rs 55.11 crore on 15.76% decline in total income to Rs 561.53 crore in Q1 June 2013 over Q1 June 2012. The result was announced after market hours on Tuesday, 30 July 2013.

Grasim Industries fell 0.92% as the stock turned ex-dividend today, 31 July 2013, for dividend of Rs 22.50 per share for the year ended 31 March 2013 (FY 2013).

Nestle India declined 1% as the stock turned ex-dividend today, 31 July 2013, for interim dividend of Rs 18 per share for the year ending 31 December 2013.

National Fertilizers fell 2.43% to Rs 26.05. The Government of India (GoI) is selling 3.74 crore equity shares, constituting about 7.64% of the total paid-up equity share capital of the company through offer for sale (OFS) via the stock exchanges mechanism today, 31 July 2013. The floor price for the OFS has been fixed as Rs 27 per share. The GoI currently holds 97.64% stake in National Fertilizers. On successful completion of OFS, the GoI's stake in the company would come down to 90% thereby adhering to Sebi's minimum public shareholding rule of 10% in public firms by 8 August 2013.

On the political front, the ruling Congress party approved on Tuesday the creation of a new Telangana state, a move that has revived deep political divisions and raised fears of violence in the area, home to global firms including Google. The decision to break up Andhra Pradesh and establish Telangana comes ahead of elections next year.

Asian stocks fell on Wednesday, 31 July 2013, amid caution ahead of the Federal Reserve's policy decision. Key benchmark indices in Japan, Singapore, South Korea, Indonesia and Taiwan fell by 0.04% to 0.65%.

Chinese stocks rose after the powerful politburo of China's communist party on Tuesday said it would act to maintain steady growth in the second half of 2013. Key benchmark indices in Hong Kong and China were up 0.21% to 0.58%.

Meanwhile, the results of two separate surveys on Chinese manufacturing activity in July are due tomorrow, 1 August 2013.

Taiwan's economy expanded at a faster-than-estimated pace in the second quarter as domestic consumption improved, even as a slowdown in China damps the outlook for the island's exports. Gross domestic product rose 2.27% from a year earlier after increasing 1.67% in the first quarter, the statistics bureau said in a preliminary report in Taipei today.

US stocks closed mixed on Tuesday in quiet trading session as many investors remained on the sidelines ahead of the Federal Reserve's Wednesday announcement on interest rates and monetary policy.

The Federal Open Market Committee's (FOMC) two-day policy meeting ends today, 31 July 2013, with expectations that it will offer further clues on how long it will maintain its bond purchases. In his two-day testimony to Congress, which concluded on 18 July 2013, Federal Reserve Chairman Ben Bernanke said plans to taper asset purchases were not on a preset path and stressed intentions to be very responsive to data. Additionally, Bernanke said recent data have been "mixed" and it was "way too early" to make a judgment on when the central bank will slow down the pace of its asset purchases. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.

In Europe, the European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions tomorrow, 1 August 2013.

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