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Sensex reverses direction after hitting over 35-month high

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Last Updated : Oct 21 2013 | 11:55 PM IST

A bout of volatility was witnessed as key benchmark indices reversed initial gains in morning trade. The barometer index, the S&P BSE Sensex, reversed direction after hitting its highest level in more than 35 months. The 50-unit CNX Nifty reversed direction after hitting 22-week high. The Sensex was down 7.11 points or 0.03%, off 95.14 points from the day's high and up 44.61 points from the day's low. The market breadth, indicating the overall health of the market, was strong. In the foreign exchange market, the rupee edged lower against the dollar, tracking mild weakness of Asian currencies against the dollar.

Shares of engineering and construction major L&T extended initial surge after the company reported a strong growth in order inflow in Q2 September 2013 at the time of announcing its Q2 results after market hours on Friday, 18 October 2013. UltraTech Cement trimmed initial losses triggered by the company reporting weak Q2 results on Saturday, 19 October 2013. Realty stocks rose on renewed buying. Petronet LNG dropped after reporting weak Q2 results.

Key benchmark indices edged higher in early trade on firm Asian stocks. A bout of volatility was witnessed as key benchmark indices reversed initial gains in morning trade. The barometer index, the S&P BSE Sensex, reversed direction after hitting its highest level in more than 35 months. The 50-unit CNX Nifty reversed direction after hitting 22-week high.

Foreign institutional investors (FIIs) bought shares worth a net Rs 1752.98 crore on Friday, 18 October 2013, as per provisional data from the stock exchanges.

At 10:20 IST, the S&P BSE Sensex was down 7.11 points or 0.03% to 20,875.78. The index gained 88.03 points at the day's high of 20,970.92 in morning trade, its highest level since 9 November 2010. The index fell 51.72 points at the day's low of 20,831.17 in morning trade.

The CNX Nifty was down 1.20 points or 0.02% to 6,188.15. The index hit a high of 6,218.95 in intraday trade, its highest level since 20 May 2013. The index hit a low of 6,188.15 in intraday trade.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,106 shares gained and 562 shares fell. A total of 95 shares were unchanged.

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The total turnover on BSE amounted to Rs 502 crore by 10:20 IST compared to Rs 162 crore by 09:30 IST.

Among the 30-share Sensex pack, 17 stocks gained and rest of them declined.

Engineering and construction giant L&T surged 4.18%, with the stock extending initial gains. The company after market hours on Friday, 18 October 2013, said its recurring profit after tax rose 7% to Rs 978 crore on 10% growth in gross revenue at Rs 14648 crore in Q2 September 2013 over Q2 September 2012. The company attributed top line growth to pick-up in execution of various jobs.

L&T said that the upward trend in order inflow was sustained in the second consecutive quarter of the year. Order inflow rose 27% to Rs 26533 crore in Q2 September 2013 over Q2 September 2012. L&T said that its order book at Rs 1.76 lakh crore as on 30 September 2013, increased 11% on year-on-year basis. International order book constituted 15% of the total order book.

L&T said that the macro-economic environment continues to remain weak and uncertain on account of the twin deficits, tight liquidity, persistent inflation and heightened volatility in the financial markets. Investment climate in the economy is yet to show sign of recovery. Deferral of new projects and delayed decision making/execution features the weak performance of the core sector this far, L&T said. The recent government measures such as improved allocation of resources to kick-start the stalled projects are, however, a welcome move to improve the investment sentiment, L&T said.

The company said its strategy of business development in select international markets has started yielding results as is evident from the increased share of international business. The company continues to focus on emerging prospects in the Middle East and other select international markets as part of its twin strategy to hedge against domestic slowdown and attain global competitiveness, L&T said in a statement. With its growing order book, increased international presence, and improved competiveness, the company is hopeful of meeting its growth aspirations in the near and medium term, L&T said.

UltraTech Cement was off 1.02% to Rs 1943.55, with the stock cutting initial losses triggered by the company's poor Q2 results. The stock lost as much as 4.66% at the day's low of Rs 1,872 at the onset of the trading session. The company's net profit plunged 52% to Rs 264 crore on 4.19% decline in net sales to Rs 4502 crore in Q2 September 2013 over Q2 September 2012. The cement major announced the second quarter results on Saturday, 19 October 2013.

The combined domestic cement and clinker sales remained unchanged on year on year basis at 9.1 millon tonnes (MnT) in Q2 September 2013. Sales volume of white cement and wall care putty rose 15.06% to 2.75 lakh metric tonnes (LmT) in Q2 September 2013 over Q2 September 2012.

UltraTech Cement said that the results for the quarter were adversely impacted by lower selling prices and subdued demand. Cement demand remained sluggish on account of prolonged monsoon and low off take from the infrastructure and housing sectors, UltraTech Cement said in a statement. The benefit of softening in prices of imported coal was negated by the devaluation of the rupee. Logistics and raw material costs continued to rise given the high diesel prices, UltraTech Cement said. However, optimization of the fuel mix helped in curbing power and fuel cost to some extent, the company added.

The company's capital expenditure plans are progressing on schedule. During the quarter, the company commissioned a 25 megawatts (MW) thermal power plant (TPP) at Rajashree Cement in Karnataka. The company's 1.6 million tonne per annum (mtpa) cement mill at Jharsuguda in Odisha went on stream this month, the company said.

With regard to future business outlook, UltraTech Cement said the outlook continues to remain challenging. Cement demand growth in FY 2014 is likely to be around 5%, though in the long term growth is likely to be over 8%. The key demand drivers will continue be housing and infrastructure spends, UltraTech Cement said.

Realty stocks were in demand on renewed buying. DLF (up 4.14%), Indiabulls Real Estate (up 2.68%), HDIL (up 1.38%), D B Realty (up 5.44%), Unitech (up 2.48%) and Parsvnath Developers (up 0.94%) gained.

Petronet LNG fell 2.62% on weak Q2 results. Net profit plunged 42.3% to Rs 181.75 crore on 26.2% growth in net sales to Rs 9448.87 crore in Q2 September 2013 over Q2 September 2012. The result was announced after market hours on Friday, 18 October 2013. Petronet LNG commissioned its 5 MMTPA Kochi LNG Terminal in Q2 September 2013.

Jagran Prakashan rose 1.31%. The company before market hours today, 21 October 2013, said its board of directors will consider a proposal for buy-back of equity shares along with Q2 September 2013 results on 30 October 2013.

In the foreign exchange market, the rupee edged lower against the dollar, tracking mild weakness of Asian currencies against the dollar. The partially convertible rupee was hovering at 61.53, weaker than its close of 61.27/28 on Friday, 18 October 2013. The rupee had hit two-month high of 60.94 in intraday trade on Friday, 18 October 2013. The Reserve Bank of India on Friday, 18 October 2013, said that its dollar window for oil marketing companies remains open, adding that any tapering would be done in a calibrated manner.

Asian markets rose on Monday, 21 October 2013, as traders continued buying spree that began last week on bets the US Federal Reserve will continue its monetary stimulus for the US economy. Key benchmark indices in Singapore, Hong Kong, China, Indonesia and Japan rose by 0.07% to 1.13%. Key benchmark indices in South Korea and Taiwan fell 0.15% to 0.34%.

Trading in US index futures indicated that the Dow could advance 25 points at the opening bell on Monday, 21 October 2013. US stocks rose on Friday, 18 October 2013, with the S&P 500 index continuing its record run, as investors applauded quarterly results from Internet-search titan Google Inc. and investment bank Morgan Stanley.

Federal Reserve officials largely avoided the topic of tapering in a series of speeches on Friday, 18 October 2013. Charles Evans, the president of the Chicago Fed, disputed the notion that interest rates have to normalize to bring stability to the financial system.

The US government will release the influential nonfarm-payroll data for September 2013 tomorrow, 22 October 2013. The data has been delayed due to the 16-day partial shutdown of the US government this month.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.

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First Published: Oct 21 2013 | 10:26 AM IST

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