Key benchmark indices saw a sell-off in ate trade as world stocks dropped ahead of economic data in US, the world's largest economy. The barometer index, the S&P BSE Sensex, was provisionally down 460.18 points or 2.28%, off 436.07 points from the day's high and up 24.67 points from the day's low. Indian stocks were also hit by Reserve Bank of India governor D. Subbarao's hawkish comments on inflation on Thursday, 30 May 2013, which dashed hopes that the central bank will continue to lower interest rates to boost economic growth. The market breadth, indicating the overall health of the market, was weak.
Index heavyweight and cigarette major ITC dropped after turning ex-dividend. Anther index heavyweight Reliance Industries (RIL) also declined. Metal stocks edged lower as the International Monetary Fund (IMF) recently cut its growth forecast for China this year citing a weak world economy and exports, adding to concerns that the world's second-largest economy is losing momentum. Realty stocks declined. Shares of real estate developer DLF fell after the company swung to loss in Q4 March 2013.
Key benchmark indices dropped in early trade as hawkish comments by Reserve Bank of India governor D. Subbarao on Thursday, 31 May 2013, on inflation dashed hopes that the central bank will continue to lower interest rates to boost economic growth. The market extended initial fall in morning trade, with Sensex sliding below the psychological 20,000 mark. Weakness persisted on the bourses in mid-morning trade as latest data showed that India's economy grew at its lowest pace in a decade in fiscal year 2012-13. Key benchmark indices hovered in red in early afternoon trade. The market weakened to hit fresh intraday low in afternoon trade. The market extended losses to hit fresh intraday low in mid-afternoon trade. Market dropped to fresh intraday low in late trade.
As per provisional closing, the S&P BSE Sensex was down 460.18 points or 2.28% to 19,755.22. The index lost 484.85 points at the day's low of 19,730.55 in late trade, its lowest level since 27 May 2013. The index slipped 24.11 points at the day's high of 20,191.29 in early trade.
The CNX Nifty was down 139.60 points or 2.28% to 5,984.45. The index hit a low of 5,975.55 in intraday trade, its lowest level since 27 May 2013. The index hit a high of 6,106.25 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,597 shares declined and 854 shares rose. A total of 117 shares were unchanged.
The total turnover on BSE amounted to Rs 2023 crore, lower than Rs 4029 crore on Thursday, 30 May 2013.
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Among the 30-share Sensex pack, 27 stocks declined and only three of them gained. GAIL (India) (down 4.62%), HDFC (down 3.44%) and Bhel (down 2.92%) edged lower from the Sensex pack.
Index heavyweight Reliance Industries (RIL) lost 3.74% to Rs 804.60. The stock hit high of Rs 835 and low of Rs 802. 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%.
Index heavyweight and cigarette major ITC dropped 4.02% at Rs 340 as the stock turned ex-dividend today, 31 May 2013, for dividend of Rs 5.25 per share for the year ended 31 March 2013. The stock hit record high of Rs 355.75 in intraday trade on Thursday, 30 May 2013.
Metal stocks edged lower as the International Monetary Fund (IMF) recently cut its growth forecast for China this year 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.
Hindalco Industries (down 3.99%), Tata Steel (down 3.25%), Jindal Steel & Power (down 3.29%), Nalco (down 2.6%) and Hindustan Zinc (down 1.65%) declined. Sterlite Industries (India) gained 1.81%.
Sail tumbled 4.82%. The company's consolidated net profit declined 38.46% to Rs 2180.52 crore on 3.59% fall in total income from operations (net) to Rs 44697.61 crore in the year ended 31 March 2013 (FY 2013) over FY 2012. The result was announced during market hours on Thursday, 30 May 2013.
State-run iron ore miner NMDC fell 1.8%. NMDC's net profit declined 10.8% to Rs 1464.95 crore on 23.5% growth in turnover to Rs 3204 crore in Q4 March 2013 over Q4 March 2012. The result was announced after market hours on Wednesday, 29 May 2013.
The company said it achieved a record production and sales of iron ore for the 4th quarter. This was accomplished inspite of the slurry pipeline not being available at all for evacuation, NMDC said.
NMDC said it has been pursuing its growth programme vigorously. NMDC, as part of its forward integration programme and value addition, is setting up a 3 million tonnes per annum (MTPA) steel plant at Nagarnar in Chhattisgarh, for which most of the major packages have been finalized and awarded. So far, cumulative orders worth Rs 13475 crore have already been placed and expenditure of over Rs 2346 crore has already been incurred. Work on some of the packages have already started and the project is expected to be completed by 2015-16, NMDC said.
NMDC said it incurred capital expenditure of Rs 1607.24 crore in the year ended 31 March 2013 (FY 2013) under various schemes. For the year ending 31 March 2014 (FY 2014), an expenditure of Rs 2720 crore is planned to be expended, NMDC said.
Realty stocks declined. Indiabulls Real Estate (down 5.46%), Oberoi Realty (down 0.94%), Unitech (down 0.84%), Sobha Developers (down 0.43%) and Parsvnath Developers (down 0.29%) declined.
Real estate developer DLF fell 4.85%. The company reported consolidated net loss of Rs 4 crore in Q4 March 2013 as compared to net profit of Rs 212 crore in Q4 March 2012. Revenue declined 16% to Rs 2319 crore in Q4 March 2013 over Q4 March 2012. Earnings before interest, taxation, depreciation and amortization (EBITDA) declined 12% to Rs 819 crore in Q4 March 2013 over Q4 March 2012. The result was announced after trading hours on Thursday, 30 May 2013.
Net profit declined 41% to Rs 712 crore on 11% decline in revenue to Rs 9096 crore in the year ended 31 March 2013 (FY 2013) over the year ended 31 March 2012 (FY 2012). DLF said that the revision in the accounting guidance note on real estate issued by ICAI adversely impacted the recognition of revenue on the new projects launched during FY 2013 and as a result reduced profits. The adoption of new guidance note envisages that the revenue can be recognized after reaching certain milestones, particularly incurring 25% of budgeted project cost (excluding cost of land). Had the new accounting norms not been adopted, the company's revenue would have been higher by Rs 750 crore approximately while EBITDA would have been higher by about Rs 400 crore, DLF said.
With regard to the future business outlook, DLF said that the management envisages an uncertain and lower growth environment and hence plans to move to a risk mitigated, steady state business environment by adopting a cautions and conservative approach. With the successful completion of IPP and anticipated closure of the residual divestment of non-core assets, the company expects its net debt to come down in the current fiscal, said Mr. Ashok Tyagi, Group CFO, DLF. DLF expects to double its EBITDA and reduce its debt by 50% over the next three years. The company expects to become free cash positive by FY 2015.
Housing Development and Infrastructure (HDIL) lost 5.71%, with the stock extending recent slide. HDIL on Wednesday, 29 May 2013, reported consolidated net loss of Rs 279.95 crore in Q4 March 2013, as against net profit of Rs 315.52 crore in Q4 March 2012. HDIL's consolidated total income declined 76.04% to Rs 155.54 crore in Q4 March 2013 over Q4 March 2012.
HDIL said that the Mumbai International Airport has served notice of termination on the company for Mumbai International Airport Slum Rehabilitation project citing unsubstantiated charges on which the company has initiated legal remedies. The board of HDIL following its conservative accounting policy has written off unrealised cost aggregating to Rs 441.98 crore pertaining to the Mumbai International Airport Slum Rehabilitation project as exceptional item in Q4 March 2013, HDIL said
India's GDP grew 4.8% Q4 March 2013, slightly higher than a revised 4.7% growth in Q3 December 2012, data released by the government today, 31 May 2013, showed. GDP grew at a decade low of 5% in fiscal year 2012-13.
In Q4 March 2013, the 'agriculture, forestry and fishing' segment registered a growth of 1.4%, the manufacturing sector reported 2.6% growth, 'electricity, gas and water supply' segment clocked growth of 2.8%, the construction sector grew 4.4%, 'trade, hotels, transport and communication' segment clocked 6.2% growth, 'financing, insurance, real estate and business services' segment clocked 9.1% growth and 'community, social and personal services' segment registered 4% growth. The mining and quarrying segment reported a decline of 3.1%.
The Reserve Bank of India (RBI) governor D. Subbarao on Thursday, 30 May 2013, said that the central bank is concerned about the country's wide current-account deficit (CAD) and still-high retail inflation. Mr. Subbarao, while speaking at an event in Ahmedabad, said the RBI will factor in the current-account gap while formulating its monetary policy. He said the wide deficit is weakening the local currency and may fan inflation that has slowed in recent months. The bank is concerned about the size of the deficit as well as the way India funds it, Mr. Subbarao said. The result of the high current-account deficit has been the depreciation of the rupee, he said. Rupee depreciation is a problem because it pushes up the cost of our imports, it increases debt-servicing cost, it causes inflation and it erodes our external payment situation, he added. Mr. Subbarao said India's retail inflation is still a concern. Sacrificing growth in the short term is "inevitable" as the RBI strives to rein in inflation, he added.
RBI undertakes mid-quarter review of the monetary policy on 17 June 2013. 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.
European stock markets moved lower on Friday, pulling back from gains seen the prior day and with investors cautious to make any major moves ahead of data on US consumer spending and consumer sentiment. Key benchmark indices in France, Germany and UK shed 1.01% to 1.33%.
Asian markets were trading mostly lower today, 31 May 2013. Key benchmark indices in Indonesia, Hong Kong, China and Singapore were down by 0.41% to 1.19%. Key benchmark indices in South Korea, Taiwan and Japan rose by 0.05% to 1.37%.
Japan's industrial production rose 1.7% during April, the Ministry of Economy, Trade and Industry said today, 31 May 2013.
China will release the government-sponsored manufacturing data for May 2013 tomorrow, 1 June 2013. Investors will be watching to see if the government-sponsored Purchasing Managers' Index matches preliminary results from a privately-compiled version, produced by HSBC and Markit, which showed Chinese manufacturing activity contracting in May.
Trading in US index futures indicated that the Dow could fall 93 points at the opening bell on Friday, 31 May 2013. US stocks edged higher on Thursday, 30 May 2013, as another report cast a positive light on the US housing market and as weaker-than-expected data on first-quarter economic growth and jobless claims raised hopes the Federal Reserve may keep its current level of bond purchases.
Fed Chairman Ben Bernanke said last week that an improvement in data could trigger the central bank to start tapering its asset purchases in coming months, stoking fears that the $85-billion-a-month liquidity injection will soon come to an end.
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