Sensex extends losses

Key benchmark indices extended losses and hit fresh intraday low in early afternoon trade. The market breadth, indicating the overall health of the market, was weak. Weakness in Asian stocks weighed on sentiment. The barometer index, the S&P BSE Sensex, was down 128.57 points or 0.6%, off about 130 points from the day's high and up about 5 points from the day's low.

TCS extended initial losses as the company's third quarter results fell short of market expectations. Wipro dropped ahead of its Q3 results today, 17 January 2014. Infosys scaled record high. Index heavyweight and cigarette maker ITC edged lower in choppy trade after reporting Q3 result.

Key benchmark indices edged lower amid initial volatility on weak Asian stocks. After regaining positive terrain for a brief period, the key benchmark indices once again slipped into the red in morning trade. Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade. The Sensex further extended losses and hit fresh intraday low in early afternoon trade.

At 12:20 IST, the S&P BSE Sensex was down 128.57 points or 0.6% to 21,136.71. The index declined 133.52 points at the day's low of 21,131.66 in early afternoon trade, its lowest level since 15 January 2014. The index rose 4.93 points at the day's high of 21,270.11 in morning trade.

The CNX Nifty was down 30.50 points or 0.48% to 6,288.40. The index hit a low of 6,287.40 in intraday trade, its lowest level since 15 January 2014. The index hit a high of 6,327.10 in intraday trade.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,486 shares fell and 814 shares rose. A total of 127 shares were unchanged.

Among the 30-share Sensex pack, 17 stocks fell and rest rose. Coal India (down 9.18%), AXIS Bank (down 1.58%) and HDFC (down 2.45%) declined.

GAIL (India) rose 0.84%. The company said in its clarification with respect to a news item captioned "GAIL mulls time-swap deal to advance import" that the referred piece of information is a business information shared to a media query during the sidelines of an important Industry Conference based on a very preliminary stage discussion within the company. As regards information relating to US Shale Gas business, GAIL has undertaken long term agreements with US based companies like Carrizo s Eagle Ford Shale acreage and Cheniere Energy Partner from Sabine Pass Liquefaction, a subsidiary of Chenier, besides LNG deal with Dominion Resources, GAIL (India) said.

Index heavyweight and cigarette maker ITC edged lower in choppy trade after reporting Q3 result. The scrip was off 0.2% at Rs 325.05. The scrip hit high of Rs 328.20 and low of Rs 322.50. The company's net profit rose 16.25% to Rs 2385.34 crore on 13.4% increase in total income to Rs 9117.91 crore in Q3 December 2013 over Q3 December 2012. The company announced the results during market hours.

TCS extended initial losses as the company's third quarter results fell short of market expectations. The stock was off 5.05%. The company's consolidated net profit rose 15.1% to Rs 5333 crore on 1.5% increase in revenue to Rs 21294 crore in Q3 December 2013 over Q2 September 2013. Operating profit grew 0.5% to Rs 6337 crore in Q3 December 2013 over Q2 September 2013. Operating margin was reported at 29.8% in Q3 December 2013. TCS announced the third quarter results after trading hours on Thursday, 16 January 2014.

Commenting on the Q3 performance, Chief Executive Officer and Managing Director, N Chandrasekaran, TCS said: "Strong international demand for our services and discipline in execution has helped TCS maintain its momentum and post robust growth in volumes as well as realisation. Our diversified market presence and services portfolio have helped us overcome seasonal weakness and soft demand in the Indian market. Based on initial discussions with our customers we believe 2014 will be a stronger year for us than 2013, as customers execute their business plans in a relatively stable environment. With Digital technologies rapidly changing the way an enterprise operates in multiple dimensions, our continuous investments positions us well to help customers reimagine their business".

Rajesh Gopinathan, Chief Financial Officer, TCS said: "We have been able to maintain our profitability by operating in a disciplined manner while sustaining our investments in customer-facing initiatives globally. We have also been able to significantly increase our cash generation due to efficient working capital management".

TCS said growth in Q3 December 2013 was driven by industries like Life Science & Healthcare, Manufacturing, Media, Travel & Hospitality and Telecom. The company's broad based presence across markets and services helped overcome seasonal weakness in some markets. Europe led growth, driven by the continuous investments being made in that market, while North America and UK also grew during the quarter, TCS said in a statement. Among growth markets, Latin America, APAC and MEA registered strong growth. India business suffered from volatility and declined sequentially, TCS said. Among service lines, Business Process Services, Enterprise Solutions, Global Consulting were the leaders.

HCL Technologies fell 0.37% to Rs 1386.80 on profit booking after Thursday's sharp gains triggered by the company reporting good Q2 result before trading hours on Thursday, 16 January 2014. The stock reversed direction after hitting record high of Rs 1,398.70 in intraday trade today, 17 January 2014. The company's consolidated net profit rose 5.7% to Rs 1496 crore on 2.8% increase in revenue to Rs 8184 crore in Q2 December 2013 over Q1 September 2013. The results are as per US Generally Accepted Accounting Principles (US GAAP).

Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 1.6% to Rs 2126 crore in Q2 December 2013 over Q1 September 2013. EBITDA margin declined to 26% in Q2 December 2013, from 26.3% in Q1 September 2013.

HCL Technologies' consolidated net profit as per US GAAP rose 7.1% to $241.6 million on 4% growth in revenue at $1.3213 billion in Q2 December 2013 over Q1 September 2013. EBITDA rose 2.8% to $343.3 million in Q2 December 2013 over Q1 September 2013. EBITDA margin edged lower to 26% in Q2 December 2013, from 26.3% in Q1 September 2013.

Tech Mahindra dropped 2.85%.

Wipro shed 3.16% to Rs 552.35 ahead of its Q3 results today, 17 January 2014. The stock reversed direction after hitting 52-week high of Rs 575.35 in intraday trade.

Infosys rose 0.67% to Rs 3749.50 with the stock extending recent gains triggered by the company raising its revenue growth guidance for the year ending 31 March 2014. The stock hit record high of Rs 3,759 in intraday trade. At the time of announcement of Q3 December 2013 earnings, Infosys, on 10 January 2014, raised its revenue growth guidance in both rupee and dollar terms for the year ending 31 March 2014. The company expects consolidated revenue in rupee terms to grow 24.4% to 24.9% for the year ending 31 March 2014 (FY 2014). This guidance is based on rupee dollar conversion rate of 61.81 for the rest of the financial year. The company expects consolidated revenue in dollar terms to grow 11.5% to 12% in FY 2014.

In the foreign exchange market, the rupee edged higher against the dollar, tracking gains of other regional currencies against the dollar. The partially convertible rupee was hovering at 61.33, compared with its close of 61.535/545 on Thursday, 16 January 2014.

Bond prices rose as data released by the government this week showed inflation based on the wholesale price index (WPI) eased to a five-month low in December 2013, raising hopes that the central bank won't raise interest rates at its next monetary policy review later this month. The sentiments were also boosted by the absence of fresh supplies of gilts with the Reserve Bank of India deferring the bond auction scheduled for the current week. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.5928%, lower than its close of 8.6157% on Thursday, 16 January 2014. Bond yield and bond prices are inversely related.

The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.

On the political front, Congress President Sonia Gandhi said at a meeting of the All India Congress Committee (AICC) today, 17 January 2014, that the Congress party is ready and prepared for the 2014 Lok Sabha battle. "This election will be a battle for India as was conceived by our forefathers," Sonia Gandhi said. She also said the decision of the Congress Working Committee (CWC) on not naming Rahul Gandhi as the party's prime ministerial candidate for the 2014 Lok Sabha elections is final.

Sonia Gandhi also said that it was because of the Congress that changes and reforms were brought. Highlighting the Congress's achievements, Sonia Gandhi spoke about the MNREGA scheme and the Right to Information Act. She also praised Prime Minister Manmohan Singh for withstanding criticism. "The Prime Minister has achieved all its targets steadily," she said.

Asian stocks fell on Friday, 17 January 2014, as US bank earnings disappointed and investors waited for Chinese economic data due next week. Key benchmark indices in China, Singapore, Japan, Indonesia, South Korea and Taiwan were down 0.07% to 0.99%. Hong Kong's Hang Seng rose 0.84%.

China's central bank has vowed to maintain liquidity at appropriate levels while urging financial institutions to enhance their ability to manage liquidity. The authorities will use various liquidity management tools and will adjust liquidity levels if needed, Zhang Xiaohui, head of the People's Bank of China's (POBC) monetary policy department, wrote in an article published in China Finance magazine. The PBOC has been maintaining a relatively hawkish stance toward liquidity since a cash crunch occurred in the nation's financial system last June, refraining from injecting funds into the system in an effort to curb high debt levels in the economy. The central bank will also study measures to allow financial institutions to issue certificates of deposit to individuals and nonfinancial enterprises, Ms. Zhang wrote in the same article published in the magazine, which is run by the central bank. She didn't give a time frame.

China began allowing banks to issue negotiable certificates of deposit in the interbank market late last year, in a move seen as setting the stage for liberalizing deposit rates.

Trading in US index futures indicated that the Dow could advance 22 points at the opening bell on Friday, 17 January 2014. US stocks ended lower on Thursday, 16 January 2014, snapping a two-day rally, after disappointing results from Best Buy Co. Inc., Citigroup Inc. and Goldman Sachs Group Inc. The Nasdaq Composite edged higher.

In economic news, the number of Americans who applied last week for unemployment benefits fell slightly and is now back to a level that prevailed shortly before the Thanksgiving holiday. Separately, US consumer prices rose a seasonally adjusted 0.3% in December, led by higher energy and shelter costs, the Labor Department said.

Fed Bank of Atlanta President Dennis Lockhart, who doesn't vote on monetary policy this year, said yesterday that he expects inflation that's been "too low" will accelerate toward the Fed's 2% target.

During an interview with Liaquat Ahamed, Fed Chairman Ben Bernanke defended the response to the financial crisis and said stock market valuations are within historic range. Commenting about the central bank's bond purchases, known as quantitative easing, he said: "The problem with QE is that it works in practice but it doesn't work in theory." Meanwhile, in a paper delivered at a Brookings Institution seminar on US monetary policy, San Francisco Fed President John Williams warned of "nagging concerns that large-scale asset purchases carry with them particular risks to the economy or the health of the financial system that we still don't fully understand." He also said the central bank's new forward-guidance tool seems "overly simplified and prone to misinterpretation."

The Senate cleared for President Barack Obama's signature a bipartisan $1.1 trillion bill to finance the US government through Sept. 30, making a debt ceiling increase the next potential fiscal showdown. The Democratic-controlled Senate voted 72-26 in favor of the spending measure a day after the Republican-led House passed it, 359-67. The bipartisan cooperation marks a turnaround from the Tea Party-fueled discord that caused a 16-day partial government shutdown in October.

The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.

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