Metal, mining and oil stocks led losses as key equity benchmark indices tumbled amid a sharp slide in global stocks. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest closing level in more than two weeks. The market sentiment was also hit adversely after opposition parties once again stalled a discussion on the goods and services tax (GST) bill in the Rajya Sabha. Meanwhile, in the foreign exchange market, the rupee fell sharply against the dollar as China's move to devalue the yuan sparked fears of a global currency war. The Sensex lost 353.83 points or 1.27% to settle at 27,512.26.
The broad market depicted weakness. There were more than three losers against every gainer on BSE. The BSE Mid-Cap index lost 2.49%. The BSE Small-Cap index fell 2.13%. The decline in both these indices was higher than the Sensex's drop in percentage terms.
Stocks fell across the globe as concerns over China's growth outlook persisted after the country's central bank further guided its currency lower today, 12 August 2015, a day after it roiled global markets with its decision to devalue the yuan by nearly 2% by shifting to a more market-driven rate. For Asia, a weaker yuan is expected to pressure other central banks in the region to devalue their currencies to keep their economies competitive against China's.
Closer home, India's rupee fell sharply against the dollar as China's move to devalue the yuan sparked fears of a global currency war. The partially convertible rupee was currently hovering at 64.76 against the dollar, compared with its close of 64.2075 during the previous trading session.
In the stock market, shares of steel makers fell for the second straight day after Chinese central bank's decision to devalue its tightly controlled currency. NMDC dropped after reporting weak Q1 results. Tata Steel edged higher after the company announced first quarter results after trading hour yesterday, 11 August 2015. Vedanta and Hindalco Industries tumbled to 52-week low. Banking stocks declined. Index heavyweight and housing finance major HDFC fell. Index heavyweight and engineering and construction major L&T dropped. PSU OMCs declined sharply. Realty stocks also declined. IT stocks rose on a weak rupee.
Key benchmark indices dropped for the fourth day in a row today, 12 August 2015.
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Foreign portfolio investors (FPIs) sold shares worth a net Rs 634.99 crore into the secondary equity market yesterday, 11 August 2015, as per data from National Securities Depository (NSDL). Domestic institutional investors (DIIs) bought shares worth a net Rs 130.74 crore yesterday, 11 August 2015, as per provisional data released by the stock exchanges.
The S&P BSE Sensex lost 353.83 points or 1.27% to settle at 27,512.26, its lowest closing level since 28 July 2015. The index slumped 386.66 points at the day's low of 27,479.43 in late trade. The index gained 17.24 points at the day's high of 27,883.33 in early trade.
The CNX Nifty lost 112.90 points or 1.33% to settle at 8,349.45, its lowest closing level since 28 July 2015. The index hit a low of 8,337.95 in intraday trade. The index hit a high of 8,446.95 in intraday trade.
The market breadth indicating the overall health of the market was quite weak. There were more than three losers against every gainer on BSE. 2,148 shares declined and 691 shares rose. A total of 122 shares were unchanged.
The BSE Mid-Cap index fell 286.21 points or 2.49% to settle at 11,216.34. The BSE Small-Cap index fell 254.31 points or 2.13% to settle at 11,664.73. The decline in both these indices was higher than the Sensex's drop in percentage terms.
The total turnover on BSE amounted to Rs 3558 crore, lower than turnover of Rs 3888.80 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Realty index (down 5.42%), the S&P BSE Metal index (down 4.37%), the S&P BSE Oil & Gas index (down 3.42%), the S&P BSE Bankex (down 3.02%), the S&P BSE Auto index (down 2.54%), the S&P BSE Power index (down 2.12%), the S&P BSE Capital Goods index (down 2.06%) and the S&P BSE FMCG index (down 1.72%), underperformed the Sensex. The S&P BSE Healthcare index (up 0.49%), the S&P BSE Consumer Durables index (up 0.83%), the S&P BSE Teck index (up 1.72%) and the S&P BSE IT index (up 2.59%) outperformed the Sensex.
Index heavyweight and housing finance major HDFC fell 2.1% to Rs 1,259.65. The stock hit high of Rs 1,285 and low of Rs 1,257.90.
Index heavyweight and engineering and construction major L&T lost 2.07% to Rs 1,760.05. The stock hit high of Rs 1,795.10 and low of Rs 1,752.05.
Bank stocks declined. Among public sector banks, Punjab National Bank (down 2.14%), Allahabad Bank (down 3.51%), Bank of India (down 3.3%), State Bank of India (SBI) (down 4.75%), Bank of Baroda (down 0.87%), IDBI Bank (down 3.92%), Union Bank of India (down 3.45%) and Canara Bank (down 5.1%) edged lower.
Among private sector banks, Axis Bank (down 2.09%), HDFC Bank (down 2.14%), ICICI Bank (down 3.31%), Kotak Mahindra Bank (down 1.85%), Federal Bank (down 3.49%) and Yes Bank (down 3.41%) edged lower.
IndusInd Bank fell 4.37%. The private sector bank during market hours today, 12 August 2015, announced that the bank will use the capital raised through a recently completed preferential issue to promoters and qualified institutional placement to support the bank's growth and also to augment the Capital Adequacy Ratio. IndusInd Bank raised Rs 752.74 crore from preferential issue of shares to promoters on 6 August 2015. The bank had last month raised Rs 4327.98 crore from qualified institutional placement (QIP).
Shares of steel makers fell for the second straight day after Chinese central bank's decision to devalue its tightly controlled currency. Steel Authority of India (down 0.78%), JSW Steel (down 1.91%), Jindal Steel & Power (down 6.07%) and Bhushan Steel (down 0.42%) edged lower.
A devalued currency will make Chinese exports becoming cheaper. Dumping of cheaper steel products by China will hurt the Indian steel industry. The devaluation will also impact India's exports to China as a weaker yuan makes resources more expensive to Chinese buyers.
Tata Steel edged higher after the company announced first quarter results after trading hour yesterday, 11 August 2015. The stock was up 1.5% at Rs 249.50. The stock hit high of Rs 257.90 and low of Rs 246.25. On a consolidated basis, Tata Steel's net profit jumped 126.17% to Rs 762.96 crore on 16.81% fall in total income from operations (net) to Rs 30300.33 crore in Q1 June 2015 over Q1 June 2014.
Tata Steel's bottom line in Q1 June 2015 was boosted by a surge in non-operational income and also due to one-time and exceptional items. The operating performance was weak. The company's earnings before interest, taxation, depreciation and amortization (EBITDA) after adjusting for one-time and exceptional items fell 35.28% to 2799 crore in Q1 June 2015 over Q1 June 2014. Tata Steel's non-operational income or other income jumped 252.62% to Rs 762.17 crore in Q1 June 2015 over Q1 June 2014.
Consolidated steel deliveries fell to 6.33 million tonnes in Q1 June 2015 from 6.46 million tonnes in Q1 June 2014.
Tata Steel said that there was significant import of steel into India during the quarter which depressed local steel prices. Tata Steel's turnover from its Indian operations fell 13.12% to Rs 9094 crore in Q1 June 2015 over Q1 June 2014.
T V Narendran, Managing Director of Tata Steel India and South East Asia, said that the Indian steel industry continued to bear the brunt of a surge in imports and tepid domestic demand which led to a sharp drop in steel prices over the quarter. Phased commissioning of the 3 MTPA greenfield expansion project at Kalinganagar has started and the company is gearing up to commence commercial production in second half of year ending 31 March 2016.
With regard to European operations, Tata Steel said that the European operations' liquid steel production and deliveries, both, increased by more than 7% on year-on-year basis in Q1 June 2015, reflecting the more stable operating platform. But surging EU imports, especially from China, and, in the case of the UK operations, the appreciation of sterling against the euro, led to lower turnover and EBIT for the European operations, Tata Steel said. The company is combating these headwinds by progressing market differentiation strategy, improving cost base and shifting focus increasingly from volume to value, the company said.
At the EBIT level, the European operations of Tata Steel reported a loss of Rs 124 crore in Q1 June 2015 as against profit of Rs 136 crore in Q1 June 2014. EBITDA of Tata Steel's European operations fell 42.21% to Rs 575 crore on 13.91% decline in turnover to Rs 17855 crore in Q1 June 2015 over Q1 June 2014.
Separately, Tata Steel also said that the company yesterday, 11 August 2015, sold 1.93 crore shares (2.18% stake) of Titan Company to Tata Sons through a market sale for a net consideration of Rs 637.46 crore. Tata Steel made the announcement after market hours yesterday, 11 August 2015.
Shares of Titan Company rose 0.56%.
NMDC dropped after reporting weak Q1 results. The stock fell 3.01% to Rs 99.90. The stock hit a low of Rs 98 in intraday trade, which is a 52-week low for the stock. The company reported 47.25% fall in net profit to Rs 1010.12 crore on 48.04% fall in total income from operations (net) to Rs 1806.43 crore in Q1 June 2015 over Q1 June 2014. The result was announced after market hours yesterday, 11 August 2015.
Other metal stocks also declined. National Aluminum Company (Nalco) (down 4.72%) and Hindustan Zinc (down 3.67%) dropped.
Vedanta dropped 7.63% at Rs 114.40, after hitting 52-week low of Rs 113.25 in intraday trade.
Hindalco Industries lost 7.4% to Rs 95.70 after hitting 52-week low of Rs 95.50 in intraday trade.
Coal India declined 5.26% on reports that the Union Cabinet may consider a proposal for divestment of 5-10% stake in Coal India at a meeting scheduled today, 12 August 2015. Government of India (GoI) currently holds 79.65% stake in Coal India. The government had last sold a 10% stake in Coal India on 31 January 2015. Meanwhile, Coal India is scheduled to announce its Q1 June 2015 results today, 12 August 2015.
IT stocks rose on a weak rupee. HCL Technologies (up 3.05%), Wipro (up 1.37%), Tech Mahindra (up 2.86%) and Infosys (up 2.96%) edged higher. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
TCS rose 2.21%. The company announced during market hours today, 12 August 2015, that Mother Dairy Fruit and Vegetable Private limited, a subsidiary of the National Dairy Development Board (NDDB) and one of India's leading Dairy players, has started leveraging TCS' solutions and services to deliver sustainable savings on sourcing and procurement. This includes consulting on strategy and design of centralized procurement cell, spend analysis for enhanced visibility, as well as deployment of Sourcing and Procurement Platform for streamlined operations.
TCS enabled Strategic Sourcing has helped Mother Dairy to consolidate and standardize sourcing across its 18 plants in India for categories such as Transportation, Packaging, Refrigeration Equipment and Travel. This has helped Mother Dairy realize sustainable savings, thereby aligning with its vision of providing quality food and beverages at affordable prices to the consumers while ensuring fair returns to the producers.
Sun Pharmaceutical Industries gained 3.11%. On a consolidated basis, Sun Pharmaceutical Industries' net profit fell 60.23% to Rs 478.96 crore on 5.2% growth in total income to Rs 6862.96 crore in Q1 June 2015 over Q1 June 2014. The result was announced after market hours yesterday, 11 August 2015. Sun Pharmaceutical Industries said that the company's bottom line in Q1 June 2015 was adversely impacted by one-time and exceptional charges related to the integration of Sun and Ranbaxy businesses. The company's results for both Q1 June 2015 and Q1 June 2014 include the financials of Ranbaxy Laboratories.
Sun Pharmaceutical Industries' earnings before interest, taxation, depreciation and amortization (EBITDA) stood at Rs 1614 crore in Q1 June 2015, resulting in EBITDA margin of 24.7%. EBITDA for Q1 June 2015 includes certain one-time charges related to restructuring and other write-offs. Excluding these one-time items, adjusted EBITDA margin was at 28% in Q1 June 2015, lower than 30.2% in Q1 June 2014.
The company's net sales/income from operations rose 3% to Rs 6522 crore in Q1 June 2015 over Q1 June 2014. The company's R&D investments jumped 37% to Rs 511 crore in Q1 June 2015 over Q1 June 2014.
Sun Pharma reported a sharp surge in other operating income in Q1 June 2015. The company received the proceeds from brand divestments as mandated by various competition authorities pertaining to the Ranbaxy acquisition.
Dilip Shanghvi, Managing Director of Sun Pharmaceutical Industries said that the company continues to invest significantly in R&D and in building critical talent for enhancing specialty and complex generics pipeline.
PSU OMCs dropped sharply on concerns that gross refining margins and inventory gains could come off in Q2 September 2015 due to a sharp fall in crude oil prices. Brent crude oil prices have witnessed a sharp slide in Q2 September 2015 so far.
BPCL lost 6.03%. BPCL will announce Q1 results on Friday, 14 August 2015.
Indian Oil Corporation lost 7.44%. Indian Oil Corporation will announce Q1 results tomorrow, 13 August 2015.
HPCL lost 7.95%. HPCL after market hours yesterday, 11 August 2015, reported a sharp surge in bottom line in Q1 June 2015 as its gross refining margin (GRM) rose sharply. HPCL said that the sharp surge in GRM in Q1 June 2015 was due to improved cracks and inventory gains. HPCL's net profit jumped 3349.26% to Rs 1588.04 crore on 12.45% decline in total income to Rs 52034.17 crore in Q1 June 2015 over Q1 June 2014. HPCL's average gross refining margin (GRM) in Q1 June 2015 stood at $8.56 per barrel, up sharply from $2.04 per barrel in Q1 June 2014.
HPCL did not receive any subsidy from the Government of India (GoI) in Q1 June 2015 on sale of PDS kerosene and domestic LPG as against a subsidy receipt of Rs 176.95 crore in Q1 June 2014. HPCL received discount of Rs 218.25 crore on purchase of crude from ONGC in Q1 June 2015. This was much lower than discount of Rs 3608.69 crore which the company received from upstream companies on purchases of crude oil, PDS kerosene and domestic LPG in Q1 June 2014.
HPCL has accounted for Budgetary Support amounting to Rs 450.61 crore from GoI towards under-recoveries on sale of PDS SKO in Q1 June 2015. This was much lower than Budgetary Support from GoI amounting to Rs 2516.41 crore in Q1 June 2014.
Realty stocks declined. DLF (down 5.91%), Sobha (down 5.15%), Housing Development and Infrastructure (down 8.96%), D B Realty (down 6.15%), Indiabulls Real Estate (down 5.99%), Godrej Properties (down 4.64%), Oberoi Realty (down 5.37%), Unitech (down 7.49%), Oberoi Realty (down 5.37%), and Omaxe (down 0.3%) edged lower.
Key indices dropped for the fourth day in a row today, 12 August 2015. The Sensex has lost 785.87 points or 2.77% in the preceding four trading days from recent high of 28,298.13 on 6 August 2015. The Sensex has declined 602.30 points or 2.14% in this month so far (till 12 August 2015). The Sensex has risen 12.84 points or 0.04% in this calendar year so far (till 12 August 2015). From a 52-week low of 25,791.79 on 13 August 2014, the Sensex has risen 1,720.47 points or 6.67%. The Sensex is off 2,512.48 points or 8.36% from a record high of 30,024.74 hit on 4 March 2015.
The sentiment on the stock market was hit adversely today, 12 August 2015, as opposition parties once again stalled a discussion on the goods and services tax (GST) bill in the Rajya Sabha. Members of the Congress party yelled slogans in the well of the Rajya Sabha, leading the speaker to adjourn the proceedings of the upper house for the day. With the monsoon session of the Parliament slated to conclude tomorrow, 13 August 2015, the prospects of the GST bill getting approved by the Rajya Sabha are bleak. Failing to approve the GST bill in this session will make it hard for the government to meet a self-imposed deadline to implement a nationwide GST from 1 April 2016.
GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.
Meanwhile, investors continue to watch the progress of the monsoon rains which will have a bearing on food prices and rural income. India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 11 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 9% below the Long Period Average (LPA) until 11 August 2015. Region wise, the rainfall was 21% below the LPA in South Peninsula, 11% below the LPA in East & Northeast India, 9% below the LPA in Central India and 2% above the LPA in Northwest India until 11 August 2015.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
Among key macro economic announcements this week, the government is scheduled to unveil the consumer price index (CPI) data for the month of July 2015 and industrial production data for June 2015 at 17:30 IST today, 12 July 2015. The CPI inflation accelerated to 5.4% in June 2015 from 5.01% in May 2015. Industrial production rose 2.7% in May 2015, compared with a revised growth of 3.4% in April 2015.
The government will release data on inflation based on the wholesale price index (WPI) for July 2015 at around 12:00 noon on Friday, 14 August 2015. The WPI inflation continued to be in negative zone for the eighth straight month in June 2015. The WPI inflation stood at negative 2.4% in June 2015, unchanged from the level in May 2015.
In overseas markets, European stocks moved sharply lower today, 12 August 2015, as concerns over China's growth outlook persisted after the country's central bank allowed the tightly controlled yuan to slide even further. Key benchmark indices in UK, France and Germany were off 1.21% to 2.23%.
Britain's unemployment rate edged up in June and wage growth stayed flat, signs that the jobs market may be beginning to level off after months of strong employment gains. The Office for National Statistics said today, 12 August 2015, the number of people out of work rose in the three months to June by 25,000, pushing the jobless rate to 5.6%, up from 5.5% in the previous three months.
Asian stocks edged lower today, 12 August 2015, after China's central bank further guided its currency lower today, 12 August 2015, a day after it roiled global markets with its decision to devalue the yuan by nearly 2% in a surprise decision announced yesterday, 11 August 2015. Key indices in South Korea, Taiwan, Indonesia, Japan and Singapore were off 0.56% to 3.1%. A weaker yuan is expected to pressure other central banks in Asia to devalue their currencies to keep their economies competitive against China's.
In mainland China, the Shanghai Composite lost 1.06%. In Hong Kong, the Hang Seng index lost 2.38%.
Growth in Chinese industrial production slowed in July, according to official data released today, 12 August 2015, in a sign of additional economic sluggishness in the world's second-largest economy. Value-added industrial output in China rose 6% in July from a year earlier, slowing from a 6.8% year-over-year increase in June, data from the National Bureau of Statistics showed. Retail sales in China increased 10.5% in July from a year earlier, slowing from a 10.6% year-over-year increase in June.
Trading in US index futures indicated that the Dow could slide 146 points at the opening bell today, 12 August 2015. US stocks closed sharply lower yesterday, 11 August 2015, in the wake of a surprise devaluation of the yuan by Chinathe world's second-largest economy.
Meanwhile, Moody's Investors Service reportedly cut Brazil's credit rating to near-junk status yesterday, 11 August 2015, but said the country's investment grade status was safe for now.
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