Trading for the week started on a weak note as key benchmark indices edged lower today, 27 October 2014. After remaining range bound for a better part of the trading session, benchmark indices lost ground during the latter part of the trading session as European stocks reversed initial gains. The 50-unit CNX Nifty fell below the psychological 8,000 mark. The barometer index, the S&P BSE Sensex, and the Nifty, both, hit their lowest closing level in almost a week. The market breadth indicating the overall health of the market was negative. The Sensex lost 98.15 points or 0.37% to settle at 26,752.90.
Hindustan Unilever (HUL) slumped after the company at the time of announcing Q2 September 2014 results said that operating environment remained challenging with low market growth across categories during the quarter. Realty stocks dropped. DLF slumped after media reports suggested that the new BJP led state government in Haryana would inquire into all land scams, including the controversial deal between UPA chairperson Sonia Gandhi's son-in-law Robert Vadra and realty giant DLF. Jindal Steel & Power tumbled on buzz the Central Bureau of Investigation (CBI) has begun a probe into how Congress leader Naveen Jindal's company got permission from the environment ministry under Jayanti Natarajan in 2013, during United Progressive Alliance's government to mine iron ore in Asia's largest sal forest in the Naxal-affected Saranda area of Jharkhand. Index heavyweight Reliance Industries (RIL) declined.
Shares of PSU banks rose after Finance Minister Arun Jaitley said in a newspaper interview published yesterday, 26 October 2014, that the government intends to bring down its stake in PSU banks to about 52% to enable PSU banks to raise capital to meet the Basel-III norms.
In overseas markets, a Brazilian exchange-traded fund sank in pre-market New York trading after President Dilma Rousseff won elections, damping bets for a change in policies that left the Brazilian economy in recession. A slide in Italy's lenders sent European stocks lower. Asian stocks declined on concerns of slowdown in China.
Earlier, the Sensex and the 50-unit CNX Nifty had trimmed gains soon after hitting their highest level in almost five weeks at the onset of the trading session.
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month October 2014 series to November 2014 series. The near month October 2014 derivatives contract expire on Thursday, 30 October 2014.
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In the foreign exchange market, the rupee edged lower against the dollar in volatile trade as key equity benchmark indices dropped.
Brent crude oil futures edged lower in choppy trade on ample oil supplies.
The S&P BSE Sensex fell 98.15 points or 0.37% to settle at 26,752.90, its lowest closing level since 21 October 2014. The index fell 124.21 points at the day's low of 26,726.84 in late trade. The index jumped 143.91 points at the day's high of 26,994.96 at the onset of the trading session, its highest level since 23 September 2014.
The 50-unit CNX Nifty fell 22.85 points or 0.29% to settle at 7,991.70, its lowest closing level since 21 October 2014. The index hit a low of 7,985.65 in intraday trade. The index hit a high of 8,064.40 in intraday trade, its highest level since 23 September 2014.
The BSE Mid-Cap index fell 80.94 points or 0.84% to settle at 9,592.09, underperforming the Sensex. The BSE Small-Cap index lost 19.96 points or 0.19% to settle at 10,642.69, outperforming the Sensex.
Among the sectoral indices on BSE, the S&P BSE Realty index (down 3.79%), the S&P BSE Oil & Gas index (down 1.45%), the S&P BSE FMCG index (down 1.06%), the S&P BSE Auto index (down 0.79%), the S&P BSE Teck index (down 0.79%) and the S&P BSE IT index (down 0.54%), underperformed the Sensex.
The S&P BSE Metal index fell 0.23%, outperforming the Sensex. The S&P BSE Consumer Durables index (up 2.11%), the S&P BSE Capital Goods index (up 0.7%), the S&P BSE Bankex (up 0.48%), the S&P BSE Power index (up 0.47%) and the S&P BSE Healthcare index (up 0.06%), outperformed the Sensex.
The market breadth indicating the overall health of the market was negative. On BSE, 1,609 shares dropped and 1,245 shares rose. A total of 114 shares were unchanged.
The total turnover on BSE amounted to Rs 2603 crore.
Hindustan Unilever (HUL) slumped after the company at the time of announcing Q2 September 2014 results said that operating environment remained challenging with low market growth across categories during the quarter. The stock lost 4.75% to Rs 721.90. The company's net profit rose 8.13% to Rs 988.16 crore on 11.26% rise in total income to Rs 7837.13 crore in Q2 September 2014 over Q2 September 2013. The result hit the market during trading hours today, 27 October 2014.
HUL said that the domestic consumer business grew 10% in Q2 September 2014, ahead of market, with 5% underlying volume growth. HUL said that the operating environment remained challenging during the quarter with low market growth across categories during the quarter. Brand investments were sustained at competitive levels across segments, albeit lower than an exceptionally high base quarter. The impact of input cost inflation continued to be felt in Q2 September 2014 through higher consumption costs although commodities softened towards the end of the quarter. Profit before interest and tax (PBIT) grew by 14% and PBIT margin improved by 50 basis points, despite the higher consumption costs, additional depreciation charge and phasing out of excise duty benefits. Profit after tax before exceptional items, PAT (bei), grew by 8% to Rs 957 crore while net profit at Rs 988 crore, was up 8%, impacted by the increase in the effective tax rate, HUL said.
ONGC dropped 2.17% to Rs 394.75. The company's Chairman D.K. Sarraf was quoted as saying that the company wants to take advantage of falling oil prices to more than double its overseas output to the equivalent of 400,000 barrels per day of oil by 2018.
Realty stocks dropped. Sobha Developers (down 5.66%), Prestige Estates (down 4.22%), Indiabulls Real Estate (down 3.4%), Unitech (down 3.39%), Housing Development and Infrastructure (HDIL) (down 3.13%), Parsvnath Developers (down 1.23%), D B Realty (down 0.82%), Phoenix Mills (down 0.53%), Sunteck Realty (down 0.31%), Godrej Properties (down 0.19%) and Oberoi Realty (down 0.13%), edged lower.
DLF slumped 7.84% to Rs 110.50 after media reports suggested that the new Bharatiya Janata Party (BJP) led state government in Haryana would inquire into all land scams, including the controversial deal between UPA chairperson Sonia Gandhi's son-in-law Robert Vadra and realty giant DLF. The BJP garnered a majority in the recently held state elections and Manohar Lal Khattar took oath as Haryana Chief Minister yesterday, 26 October 2014.
Jindal Steel & Power tumbled 7.90% to Rs 152.70 on buzz the Central Bureau of Investigation (CBI) has begun a probe into how Congress leader Naveen Jindal's company got permission from the environment ministry under Jayanti Natarajan in 2013 during United Progressive Alliance's government to mine iron ore in Asia's largest sal forest in the Naxal-affected Saranda area of Jharkhand.
Index heavyweight Reliance Industries (RIL) declined 1.18% to Rs 941.70. The stock hit high of Rs 960.90 and low of Rs 937.65.
Shares of PSU banks rose after Finance Minister Arun Jaitley said in a newspaper interview published yesterday, 26 October 2014, that the government intends to bring down its stake in PSU banks to about 52% to enable PSU banks to raise capital to meet the Basel-III norms. Dena Bank (up 3.24%), Union Bank of India (up 2.94%), Andhra Bank (up 2.18%), UCO Bank (up 1.73%), Bank of Baroda (up 1.62%), Bank of India (up 1.59%), IDBI Bank (up 1.49%), Oriental Bank of Commerce (up 0.78%), Indian Overseas Bank (up 0.49%) and State Bank of India (up 0.47%), edged higher.
Shares of private sector banks also rose. Yes Bank (up 3.61%), Kotak Mahindra Bank (up 2.70%), IndusInd Bank (up 2.16%), Axis Bank (up 0.53%) and HDFC Bank (up 0.07%), edged higher. However, ICICI Bank fell 0.24%.
Shares of defence equipment makers rallied on reports the government on Saturday, 25 October 2014, cleared defence projects worth Rs 80000 crore. Walchandnagar Industries (up 9.99%), Pipavav Defence & Offshore Engineering Company (up 5%), BEML (up 4.98%), Astra Microwave Products (up 2.33%) and Bharat Electronics (up 0.39%), edged higher.
The big-ticket step was the decision to build six submarines in India at a cost of about Rs 50000 crore rather than sourcing it from outside, report said. The decision is in line with Prime Minister Narendra Modi's 'Make in India' pitch.
Tata Motors dropped 2.57%. The company announced during market hours the pricing of a dual-tranche $750 million senior unsecured notes (Notes) following strong demand aggregating $4.50 billion for the offering that was launched and priced within a single day on 23 October 2014. The notes issued include $500 million Senior Unsecured Notes due 2020 at a coupon of 4.625% per annum and $250 million Senior Unsecured Notes due 2024 at a coupon of 5.75% per annum. The proceeds from the issuance and sale of the notes will be used to refinance external commercial borrowing of the company, incur new additional capital expenditure and for general corporate purposes. The notes are expected to be settled by 30 October 2014, Tata Motors said.
Maruti Suzuki India (MSIL) rose 0.17% to Rs 3,169.95. The stock was volatile. The stock hit high of Rs 3,188.50 and low of Rs 3,140 in intraday trade. With respect to a news item captioned "MFs dig in for fight on Maruti's Gujarat plant", the company today, 27 October 2014, clarified that it had already informed the stock exchanges in March 2014 that the company's board has approved that a 100% Suzuki subsidiary should make the investment in establishing new manufacturing facilities in Gujarat. The Suzuki subsidiary would enter into an exclusive contract for manufacturing cars for MSIL. This arrangement will result in MSIL making the same profit as it would have made if it had invested its own money, with an additional treasury income arising from MSIL not having to invest its own money. This would mean higher return on investment as compared to the option of the company investing its own funds in Gujarat capacity.
Manufacturing alone cannot ensure the success of a car company in the market as can be seen from the market shares in India of some car manufacturing giants of the world, MSIL said. For most of these companies, a limited sales and service network has been the most decisive factor for their market position, MSIL said. MSIL further said that most car companies in the world and India have a high level of outsourcing of manufacturing -- generally three-fourths of the car by value is outsourced. A car company to be successful has to carry out several functions like R&D, product development, sourcing, manufacturing, sales, service and supply of after-market parts, MSIL said.
Lupin rose 0.39% to Rs 1,397. The stock was volatile. The stock hit high of Rs 1,399 and low of Rs 1,382 so far during the day. With respect to a news item captioned "Lupin scouts for acquisition opportunities in US market", the company clarified before market hours today, 27 October 2014, that the company in its ordinary course of business continuously explores and evaluates business opportunities and the comments of CFO Mr. S Ramesh are general in nature and do not allude to any specific acquisition opportunity. The company continues to evaluate opportunities and going forward acquisitions in the US would have to satisfy its multiple aspirations of creating a meaningful speciality business, bolstering its existing brands business and acquiring technological capabilities that it would like to work on, Lupin said. Terming the US as a high growth market for the company, the Mumbai-based firm said it aims to grow at around 25% in the world's largest drug market. For Lupin, the US is a high growth market and the major contributor to the company's overall revenue and profitability.
State Bank of India clocked a highest turnover of Rs 45.68 crore on BSE. Reliance Industries (Rs 41.69 crore), UltraTech Cement (Rs 40.14 crore), DLF (Rs 37.77 crore) and Dabur India (Rs 33.57 crore), were the other turnover toppers on BSE in that order.
Aadhaar Ventures India reported highest volumes of 4.68 crore shares on BSE. Avance Technologies (88.32 lakh shares), Birla Power Solutions (58.70 lakh shares), Rasoya Proteins (44.26 lakh shares) and Unitech (42.78 lakh shares), were the other volume toppers on BSE in that order.
In the foreign exchange market, the rupee edged lower against the dollar in volatile trade as key equity benchmark indices dropped. The rupee was hovering at 61.345, compared with its close of 61.28 during the previous trading session.
Brent crude oil futures edged lower in choppy trade on ample oil supplies. Brent crude for December delivery was off 74 cents at $85.39 a barrel. The contract had lost 70 cents to settle at $86.13 a barrel on Friday, 24 October 2014.
The Sensex and the Nifty snapped five-day winning streak today, 27 October 2014. The Sensex has risen 122.39 points or 0.46% in this month so far (till 27 October 2014). The Sensex has gained 5,582.22 points or 26.37% in calendar year 2014 so far (till 27 October 2014). From a record high of 27,354.99 on 8 September 2014, the Sensex has declined 602.09 points or 2.20%. From a 52-week low of 19,963.12 on 4 February 2014, the Sensex has risen 6,789.78 points or 34.01%.
The government's decision this month to decontrol diesel prices and a sharp decline in global crude oil prices recently will help India in containing its fiscal deficit. The fall in global crude oil prices will also help India in containing its current account deficit and fuel price inflation. India imports 80% of its crude oil requirement. A slump in Brent crude since the end of June contributed to consumer-price gains slowing to 6.46% last month, the least since 2012.
Meanwhile, on the political front, the Election Commission of India on Saturday, 25 October 2014, announced schedule for assembly election in Jharkhand and Jammu & Kashmir. Polls in both the states will take place in five phases from 25 November 2014 to 20 December 2014. The results of polls in both these states will be announced on 23 December 2014.
A slide in Italy's lenders sent European stocks lower today, 27 October 2014. Key benchmark indices in France, Germany and UK were off 0.30% to 0.70%.
German business confidence dropped for a sixth month as the specter of a recession haunts Europe's largest economy. The Ifo institute's business climate index, based on a survey of 7,000 executives, dropped to 103.2 in October from 104.7 in September. That's the lowest since December 2012.
The European Central Bank (ECB) yesterday, 26 October 2014, said none of the largest institutions is lacking in its assessment of the quality of balance sheets. The ECB released the results of the stress test yesterday, 26 October 2014, as it is about to take on a supervisory role for the euro area's lenders. Only eight of those with a shortfall haven't already plugged capital gaps or satisfied the central bank with plans to shrink. That means just 6.35 billion euros ($8.1 billion) remains from a 25 billion-euro hole, with half of that in Italy. No French, German or Spanish institutions were required to raise more funds.
Asian stocks declined today, 27 October 2014, on concerns of slowdown in China. Key benchmark indices in China, Hong Kong, Indonesia, and Taiwan were off 0.21% to 0.96%. Key benchmark indices in South Korea, Singapore and Japan were up 0.11% to 0.63%.
China's economic growth will slow to 7.2% in the current quarter, down from the previous three months, as domestic demand weakens, said Song Guoqing, an academic member of the People's Bank of China monetary policy advisory committee. The nation's economy will probably expand 7.3% next year, Song said at a forum in Beijing on 25 October 2014. That view contrasts with a prediction by Fan Jianping, chief economist at a state research institute, who said he expects 7% growth in 2015 unless the central government imposes stronger-than-expected stimulus measures.
Trading in US index futures indicated that the Dow could fall 16 points at the opening bell today, 27 October 2014. US stocks jumped on Friday, 24 October 2014, helped by earnings from Microsoft and Procter & Gamble and as concerns eased over the possible spread of Ebola in the United States.
A two-day meeting of the Federal Open Market Committee (FOMC) on US monetary policy review begins tomorrow, 28 October 2014. The Fed is expected to announce the end of quantitative easing after the meeting. Investors will be looking to see if the Fed drops the "considerable period" for keeping rates low at its two-day policy meeting. As several Fed officials have come out with dovish comments recently, investors largely expect that guidance to be reiterated.
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