Key benchmark indices edged lower in choppy trade as better-than-anticipated US economic data raised expectations that the Federal Reserve will slow the pace of monetary stimulus to the US economy. Weakness in rupee and increase in bond yields weighed on sentiment. The S&P BSE Sensex and the 50-unit CNX Nifty, both, settled at their lowest closing level in more than five weeks. The Sensex was down 153.17 points or 0.79%, off close to 290 points from the day's high and up about 85 points from the day's low. The market breadth, indicating the overall health of the market, was weak.
Indian stocks fell for the eighth straight session today, 2 August 2013. The Sensex has fallen 1,138.11 points or 5.6% in eight trading sessions from a recent high of 20,302.13 on 23 July 2013. The Sensex shed 231.79 points or 1.19% in July 2013. The Sensex has declined 262.69 points or 1.35% in calendar 2013 so far (till 2 August 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 1,279.60 points or 6.25%. From a 52-week low of 17,026.97 on 3 August 2012, the Sensex has surged 2,137.05 points or 12.55%.
Coming back to today's trade, Bhel hit 52-week low. Interest rate sensitive realty stocks extended recent losses as the Reserve Bank of India (RBI) kept its key lending rate viz. the repo rate and cash reserve ratio unchanged after a monetary policy review on 30 July 2013, as the central bank focused on managing the currency volatility rather than pushing for growth. DLF hit 52-week low. Power Grid Corporation of India slumped on equity dilution concerns after the company's board of directors on 1 August 2013 approved a Follow on Public Offer (FPO) of 15% of existing paid up share capital. Metal and mining stocks declined. Coal India dropped after announcing monthly production and offtake data for July 2013.
The rupee which has been highly volatile off late, weakened today, 2 August 2013. The rupee was hovering at 60.12 against the dollar, weaker than its close of 60.43/44 on Thursday, 1 August 2013.
Bond prices fell sharply. The yield on the benchmark government paper 7.16 GS 2023 was hovering at 8.2828%, higher than Thursday's close of 8.0653%. Bond yield and bond prices are inversely related.
The S&P BSE Sensex lost 153.17 points or 0.79% to 19,164.02, its lowest closing level since 27 June 2013. The index fell 238.47 points at the day's low of 19,078.72 in late trade. The index jumped 134.51 points at the day's high of 19,451.70 in early trade.
The CNX Nifty was down 49.95 points or 0.87% to 5,677.90, its lowest level since 26 June 2013. The index hit a low of 5,649 and a high of 5,761.85 in intraday trade.
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The BSE Mid-Cap index fell 0.4% and outperformed the Sensex. The BSE Small-Cap index declined 1.32% and underperformed the Sensex.
The total turnover on BSE amounted to Rs 1808 crore, lower than Rs 2244.66 crore on Thursday, 1 August 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,491 shares fell and 775 shares rose. A total of 145 shares were unchanged.
Among the 30-share Sensex pack, 23 stocks fell and rest of them rose.
Bank stocks declined. HDFC Bank (down 0.17%), ICICI Bank (down 2.85%), and State Bank of India (down 0.12%), edged lower.
Bank of Baroda fell 5.51% to Rs 487.70, with the stock extending Thursday's 7.92% losses triggered by rise in sticky loans in Q1. The stock hit 52-week low of Rs 483 in intraday trade today, 2 August 2013. The bank's ratio of gross non-performing assets (NPA) to gross advances increased to 2.99% as on 30 June 2013, from 2.4% as on 31 March 2013 and 1.84% as on 30 June 2012. The ratio of net NPA to net advances increased to 1.69% as on 30 June 2013, from 1.28% as on 31 March 2013 and 0.65% as on 30 June 2012.
The bank's net profit rose 2.54% to Rs 1167.87 crore on 14.89% rise in total income to Rs 10717.49 crore in Q1 June 2013 over Q1 June 2012. The bank announced Q1 result during market hours on Thursday, 1 August 2013.
Among other PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, and Punjab National Bank shed by 4.67% to 7.56%.
Index heavyweight Reliance Industries (RIL) rose 0.84% to Rs 857.45, off the day's high of Rs 871.90.
PSU OMCs declined on higher crude oil prices. BPCL (down 4.67%) and HPCL (down 3.78%), edged lower. US crude oil futures for September delivery climbed 8 cents to $107.97 a barrel in electronic trading today, 2 August 2013.
Higher crude oil prices could increase under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
The weakness in rupee also raised concerns about increased costs of importing oil. PSU OMCs import about 70-75% of their crude oil needs and rely heavily on foreign currency borrowings, which largely remain unhedged.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas after trading hours on Thursday, 1 August 2013, said that the under-recovery on high speed diesel (HSD) applicable for first fortnight of August 2013 went down to Rs 9.29 per/litre from Rs 9.45 per litre for the second fortnight of July 2013. The under-recovery on, both, PDS Kerosene and Domestic LPG, has risen sharply for August 2013. The under-recovery on PDS Kerosene has surged to Rs 33.54 per litre for August 2013, from Rs 30.52 per litre in July 2013. The under-recovery on Domestic LPG has surged to Rs 412 per cylinder for August 2013, from Rs 368.58 per cylinder in July 2013. While the under-recovery on diesel is calculated on fortnightly basis, the under-recovery on PDS Kerosene and Domestic LPG is calculated on monthly basis.
PSU OMCs are currently incurring combined daily under-recovery of about Rs 379 crore on the sale of diesel, PDS Kerosene and Domestic LPG at government controlled prices.
Oil marketing companies hiked petrol price by 70 paise per litre and diesel by 50 paise a litre effective Thursday, 1 August 2013.
Indian Oil Corporation (IOC) dropped 1.46%. The Union Cabinet on Thursday, 1 August 2013, approved a proposal to sell a 10% stake in state-run refiner and fuel retailer Indian Oil Corporation (IOC). The government currently owns 78.92% stake in IOC.
IT stocks rose on positive economic data in US and on weak rupee. US is the biggest outsourcing market for the Indian IT firms.
TCS rose 1.66% to Rs 1845.35 after hitting a record high of Rs 1849.50 in intraday trade today, 2 August 2013.
Infosys gained 1.04% to Rs 3006.70 after hitting a 52-week high of Rs 3019.95 in intraday trade today, 2 August 2013.
Wipro (up 0.58%) and HCL Technologies (up 0.7%), edged higher.
A weak rupee also supported IT stocks. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Jaiprakash Associates declined 8.47% to Rs 29.70 after hitting a 52-week low of Rs 29.05 in intraday trade today, 2 August 2013.
Bajaj Auto fell 1.26% after reporting weak July sales. The company announced during market hours today, 2 August 2013, that total sales fell 18% to 2.81 lakh units in July 2013 over July 2012. Motorcycles sales fell 20% to 2.46 lakh units in July 2013 over July 2012. Commercial vehicles sales fell 2% to 34,499 units in July 2013 over July 2012. Exports fell 12% to 1.10 lakh units in July 2013 over July 2012.
Reliance Communications (RCom) dropped 5.94% to Rs 123.60 on weak Q1 results. The company's consolidated net profit declined 33.33% to Rs 108 crore on 1.74% growth in total income to Rs 5412 crore in Q1 June 2013 over Q1 June 2012. The result hit the market after trading hours on Thursday, 1 August 2013.
RCom said that its operating income rose 3.6% to Rs 5315 crore in Q1 June 2013 over Q4 March 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 2% on comparable basis at Rs 1701 crore in Q1 June 2013 over Q4 March 2013. The company said its EBITDA margin at 31.4% in Q1 June 2013 was amongst the highest in the industry, with strong contribution from both Wireless and GEBU businesses. The company said revenue per minute (RPM) rose 4% to 45.7 paisa in Q1 June 2013 over Q4 March 2013. The company said the increase in RPM was led by tariff hikes and strong focus on paid and profitable minutes.
RCom said that the company remains free cash flow (FCF) positive and this shall continue in succeeding years.
Idea Cellular shed 5.26% to Rs 158.55 on equity dilution worries. The stock reversed direction after hitting record high of Rs 176.35 in early trade. The company after trading hours on Thursday, 1 August 2013, said its net profit jumped 143.8% to Rs 482.90 crore on 18% growth in total revenue to Rs 6535.50 crore in Q1 June 2013 over Q1 June 2012. The multiple drivers of this sharp profitable growth have been robust 'Voice' and 'Mobile Data' revenue coupled with scale benefits and better cost management, Idea Cellular said. The net profit was also boosted by dividend income of Rs 83.80 crore from Indus Towers.
Earnings before interest, taxation, deprecation and amortization (EBITDA) jumped 43% to Rs 1843.60 crore in Q1 June 2013 over Q1 June 2012. EBITDA margin surged to 28.2% in Q1 June 2013, from 23.3% in Q1 June 2012.
Idea Cellular said that the company revised the life of some fixed assets to 10 years from 13 years in Q1 June 2013. This change in depreciation policy resulted in a higher depreciation of about Rs 180 crore in Q1 June 2013. The company said that the total impact of the change in depreciation policy for the entire year i.e. for the year ending 31 March 2014 (FY 2014), will be about Rs 450 crore.
With consistent network investment, market place agility, customer centricity and emphasis on building world class Indian brand, Idea Cellular remains on course for performance driven leadership in the mobile business, the company said in a statement. The company's strong balance sheet gives the management confidence to overcome the current volatile and uncertain phase of Indian wireless business and benefit from emerging triple play telecom opportunities in Voice, Data and Video, it said.
Meanwhile, Idea Cellular's board of directors has approved raising up to Rs 3000 crore from placement of equity shares to qualified institutional buyers. The board has also approved raising up to Rs 750 crore from preferential issue of equity shares to Axiata Group Berhad (or its nominee entity). The timing, pricing and exact quantum of equity shares to be issued are to be decided by the Securities Allotment Committee, a Committee of the Board of Directors, mandated for the purpose.
Bhel declined 0.93% to Rs 149.25 after hitting a 52-week low of Rs 147.95 in intraday trade today, 2 August 2013. The company today, 2 August 2013, said that
Bhel announced after market hours today, 2 August 2013 that Bhel Power Plant Piping Unit, Thirumayam and Bhel High Pressure Boiler Plant (Unit-II), Tiruchirappalli have been dedicated to the nation by the Prime Minister of India today, 2 August 2013 at Bhel Power Plant Piping Unit Thirumayam, Pudukottai District, Tamil Nadu.
Coal India dropped 5.73%. The company announced during market hours today, 2 August 2013, that the company and its subsidiaries achieved 98% of targeted production at 32.77 million tonnes in July 2013. The company achieved 106% of targeted offtake at 38.22 million tonnes in July 2013.
Metal and mining stocks declined. Steel giant Tata Steel skidded 3.9% to Rs 201.95. The stock hit a 52-week low of Rs 201.30 in intraday trade today, 2 August 2013.
Hindalco Industries fell 0.06% to Rs 87.40. The stock had hit a 52-week low of Rs 84.50 in intraday trade on 31 July 2013.
Sterlite Industries (India) lost 4.32% to Rs 71. The stock had hit a 52-week low of Rs 70.50 in intraday trade on 31 July 2013.
Jindal Steel & Power slumped 7.94% to Rs 185.60 after hitting a 52-week low of Rs 181.55 in intraday trade today, 2 August 2013. It was the top loser from the Sensex pack.
JSW Steel (down 4.5%), Sail (down 5.44%), Sesa Goa (down 3.62%) and NMDC (down 2.03%) edged lower.
Power Grid Corporation of India slumped 11.56% to Rs 91.05 on equity dilution concerns. The stock hit 52-week low of Rs 86.70 in intraday trade today, 2 August 2013. The company on Thursday, 1 August 2013, said its board of directors has approved the Follow on Public Offer (FPO) of 15% of existing paid up share capital comprising fresh issue of 69.44 crore shares, for augmenting resources of company to fund its investment programme, subject to necessary approval of Government of India.
The company's net profit rose 19.56% to Rs 1040.34 crore on 21.03% rise in total income to Rs 3634.03 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result after market hours on Thursday, 1 August 2013.
Interest rate sensitive realty stocks extended recent losses as the Reserve Bank of India (RBI) kept its key lending rate viz. the repo rate and cash reserve ratio unchanged after a monetary policy review on 30 July 2013, as the central bank focused on managing the currency volatility rather than pushing for growth. Purchases of both residential and commercial property are largely driven by finance. HDIL (down 1.61%), Unitech (down 3.77%) and D B Realty (down 2.14%), edged lower.
Realty major DLF tumbled 7.18% to Rs 127.95 after hitting a 52-week low of Rs 125.60 in intraday trade today, 2 August 2013.
Adani group stocks tumbled. Adani Enterprises (down 10.44%), Adani Power (down 6.73%), and Adani Ports and Special Economic Zone (down 10.77%), slumped.
IRB Infrastructure Developers jumped 13.76% to Rs 61.60 on bargain hunting after Thursday's steep slide. Shares of IRB Infrastructure Developers tanked 25.52% to Rs 54.15 on Thursday, 1 August 2013, after media reports suggested that the company, which had formed a consortium to bid for the Rs 9630-crore Mumbai TransHarbour Link project, decided not to participate in the bidding process. The IRB-Hyundai Engineering consortium was among the five shortlisted firms to develop the project.
The company's chief Virendra Mhaiskar was quoted by media as saying that the decision to quit the project was taken due to the bitter experience the company had in one of its toll BOT (build-operate-transfer) projects in Kolhapur where the company did not receive the expected support from the government.
Shares of organised retailers were mixed after the Union Cabinet on Thursday, 1 August 2013, approved relaxation of rules for foreign direct investment (FDI) in multibrand retail trade. Future Retail rose 5.11%. Shoppers Stop fell 3.52%. Trent declined 0.8%.
The Union Cabinet on Thursday, 1 August 2013, approved the proposal for amendment in the existing FDI policy in Multi-Brand Retail Trading (MBRT). At least 50% of total FDI brought in the first tranche of $100 million, shall be invested in 'backend infrastructure' within three years, where 'back-end infrastructure' will include capital expenditure on all activities, excluding that on front-end units. For instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure. Subsequent investment in the back-end infrastructure would be made by the MBRT retailer as needed, depending upon his business requirements.
The government also said at least 30% of the value of procurement of manufactured/processed products purchased shall be sourced from Indian micro, small and medium industries which have a total investment in plant & machinery not exceeding $2 million. This valuation refers to the value at the time of installation, without providing for depreciation. The 'small industry' status would be reckoned only at the time of first engagement with the retailer and such industry shall continue to qualify as a 'small industry' for this purpose even if it outgrows the said investment of $ 2 million, during the course of its relationship with the said retailer. Sourcing from agricultural co-operatives and farmers cooperatives would also be considered in this category. The procurement requirement would have to be met, in the first instance, as an average of five years' total value of the manufactured/ processed products purchased, beginning 1st April of the year during which the first tranche of FDI is received. Thereafter, it would have to be met on an annual basis.
It added retail sales outlets may be set up only in cities with a population of more than 10 lakh as per the 2011 Census or any other cities as per the decision of the respective State Governments, and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities; retail locations will be restricted to conforming areas as per the Master/Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking.
The amendment in the extant FDI policy relating to Multi-Brand Retail Trading in respect of 'small industry' will bring in a balance between the business exigencies of the MBRT entity and intent of the policy which is to extend the benefits of the FDI policy in multi-brand retail trading to a larger constituency of small industries. The amendment in the provision regarding 'back-end infrastructure' will give more clarity to the policy. The amendment to the provision regarding location of retail outlets will bring in parity in the policy as it is proposed to extend such dispensation to all States.
Shares of Financial Technologies witnessed a further steep slide after Thursday's carnage in stock triggered by the National Spot Exchange's decision to suspend trading of all contracts, other than e-Series contracts, till further notice. The stock lost 21.12% at Rs 151.25 after slumping a staggering 64.59% in a single trading session on Thursday, 1 August 2013. Financial Technologies is one of the two promoters of the National Spot Exchange.
In a clarification to the stock exchanges, Mr. Jignesh Shah, Chairman & Managing Director of Financial Technologies (India) (FTIL) during trading hours on Thursday, 1 August 2013, said that this action of NSEL does not entail any financial liability on FTIL and that the business of FTIL is as usual.
Shares of Multi Commodity Exchange of India (MCX), a commodity futures exchange promoted by Financial Technologies, fell by the maximum permissible level of 20% to Rs 409.65, with the stock extending Thursday's 20% slide. MCX during trading hours on Thursday, 1 August 2013, said that there will not be any impact of NSEL's circular on the operations and financials of MCX.
Sun TV Network rose 4.29% as the TV broadcaster's net profit, excluding IPL revenue and expenses, rose 12% to Rs 184.78 crore on 18% growth in revenue to Rs 503.31 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced during trading hours today, 2 August 2013.
Earnings before interest, taxation, depreciation and amortization (EBITDA) excluding IPL revenue and expenses, rose 19% to Rs 384.44 crore.
Advertising revenue for the quarter grew 15% year on year (YoY) to Rs 279.22 crore. Subscription revenues continue to maintain a significant uptrend with cable TV revenues growing by 38% and DTH subscription revenue up by 20% over corresponding previous quarter.
Sun TV Networks' revenue including the IPL revenue rose 41% to Rs 601.85 crore in Q1 June 2013 over Q1 June 2012.
The Reserve Bank of India on Thursday, 1 August 2013, said that foreign institutional investors who have issued a participatory note, can hedge their forex risk in these securities provided they have a mandate from the participatory note holder.
The Union Cabinet on Thursday, 1 August 2013, approved proposals to relax foreign-investment rules in a number of sectors including telecommunications, multibrand retail and defense.
European stock markets moved in a narrow range on Friday, 2 August 2013, as investors remained cautious ahead of the much awaited nonfarm-payrolls report from the US. Key benchmark indices in Germany and France were up 0.05% to 0.09%. UK's FTSE 100 fell 0.09%.
The European Central Bank on Thursday, 1 August 2013, kept its key financing rate at a record low, and ECB President Mario Draghi said interest rates would remain at or below present levels for an extended period of time. The Bank of England also on Thursday also left its benchmark interest rate and bond-buying program unchanged.
Asian stocks rose on Friday, 2 August 2013, as global manufacturing reports beat forecasts and central banks in Europe vowed to maintain stimulus. Key benchmark indices in Hong Kong, China, Japan, Indonesia, Singapore, Taiwan and South Korea rose by 0.02% to 3.29%.
China's non-manufacturing purchasing managers' index is scheduled to be released tomorrow, 3 August 2013 after the manufacturing gauge unexpectedly strengthened in July, data yesterday showed.
Indonesia's economy grew less than 6% last quarter, adding to risks for the Southeast Asian nation as investments ease, inflation accelerates and the currency slumps. Gross domestic product increased 5.81% in the three months ended June 30 from a year earlier, the Central Bureau of Statistics said in Jakarta today.
Trading in US index futures indicated that the Dow could gain 18 points at the opening bell on Friday, 2 August 2013. US stocks kicked off the month by rallying Thursday, 1 August 2013, to all-time highs in the wake of upbeat economic signals from around the globe. Factory output from the US to China and Europe expanded in July, reports on Thursday showed, while American jobless claims fell to a five-year low. The Institute for Supply Management's US factory index increased to 55.4 in July 2013, the strongest since June 2011, from 50.9 in June 2013. Readings above 50 indicate expansion.
The influential US non-farm payroll data for July 2013 is due later in the global day today, 2 August 2013. The job data is a key piece of data which the Federal Reserve monitors in its assessment of its monetary-stimulus program. 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.
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