Weakness prevailed on the bourses for the second consecutive session today, 6 November 2013. A decision by State Bank of India (SBI), India's biggest commercial bank in terms of branch network, to raise lending rates by 20 basis points hurt investor sentiment adversely as borrowing costs will rise for the corporate sector. SBI's decision to raise lending rates comes close on the heels of another large Indian bank HDFC Bank raising its base rate by 20 basis points early this month. The barometer index, the BSE Sensex, and the 50-unit CNX Nifty, both, dropped to their lowest closing level in more than a week as a faster-than-estimated expansion in a US services gauge stoked speculation the world's largest economy is strong enough to allow the US Federal Reserve to reduce stimulus for the US economy earlier than analysts had projected. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The Sensex shed 79.85 points or 0.38%, up about 34 points from the day's low and off close to 150 points from the day's high. The market breadth, indicating the overall health of the market, was positive. In the foreign exchange market, the rupee weakened past 62 against the dollar.
Indian stocks fell for the second day in a row today, 6 November 2013. The Sensex has fallen 344.42 points or 1.62% in two trading sessions from a record closing high of 21,239.36 which it had attained during the special Diwali Muhurat trading session held on Sunday, 3 November 2013. The index has fallen 269.58 points or 1.27% in November so far (till 6 November 2013). The Sensex has garnered 1,468.23 points or 7.56% in calendar 2013 so far (till 6 November 2013). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,446.23 points or 19.75%. From a record high of 21,321.53 on 3 November 2013, the Sensex has fallen 426.59 points or 2%.
Coming back to today's trade, bank stocks dropped across the board. Metal stocks also edged lower. Bharat Heavy Electricals (Bhel) fell in choppy trade after weak Q2 results. Most telecom stocks gained.
The S&P BSE Sensex lost 79.85 points or 0.38% to settle at 20,894.94, its lowest closing level since 28 October 2013. The index fell 113.37 points at the day's low of 20,861.42 in late trade. The index rose 70.59 points at the day's high of 21,045.38 in morning trade.
The CNX Nifty shed 38 points or 0.61% to 6,215.15, its lowest closing level since 28 October 2013. The index hit a low of 6,208.70 in intraday trade. The index hit a high of 6,269.70 in intraday trade.
The S&P BSE Mid-Cap index fell 0.17% while the S&P BSE Small-Cap index rose 0.76%. Both these indices outperformed the Sensex.
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The market breadth, indicating the overall health of the market, was positive. On BSE, 1,296 shares rose and 1,158 shares fell. A total of 148 shares were unchanged.
The total turnover on BSE amounted to Rs 1874 crore, lower than Rs 2224.16 crore on Tuesday, 5 November 2013.
The S&P BSE Consumer Durables index (down 2.19%), the S&P BSE Bankex (down 1.87%), the S&P BSE Realty index (down 1.8%), the S&P BSE Metal index (down 1.31%), the S&P BSE Oil & Gas index (down 0.87%), the S&P BSE FMCG index (down 0.69%), the S&P BSE Auto index (down 0.64%), the S&P BSE Capital Goods index (down 0.54%) and the S&P BSE PSU index (down 0.4%), underperformed the Sensex.
The S&P BSE Healthcare index (up 0.86%), the S&P BSE Teck index (up 1%), the S&P BSE Power index (up 1.23%) and the S&P BSE IT index (up 1.39%), outperformed the Sensex.
Among the 30-share Sensex pack, 20 stocks fell and rest of them rose.
IT stocks gained after US based IT services firm Cognizant Technology Solutions Corp, which has most of its employees in India raised its full-year forecast for both profit and revenue at the time of announcing its Q3 September 2013 results on Tuesday, 5 November 2013. Cognizant reported a better-than-expected 22% rise in revenue in third quarter, helped by contracts from insurers setting up online exchanges as part of President Barack Obama's healthcare reforms. The company, which also raised its full-year forecast for both profit and revenue, said it would focus on winning more business from governments. The company's net income rose to $319.6 million, or $1.05 per share in the third quarter, from $276.9 million, or 91 cents per share, a year earlier. The company said it expects earnings of at least $4.01 per share on revenue growth of at least 20.3% to $8.84 billion for the year ending 31 December 2013. It had previously forecast earnings of at least $3.96 per share on revenue growth of at least 19% to $8.74 billion for 2013.
Tech Mahindra (up 3.41%), Infosys (up 1.25%) amd Wipro (up 0.50%), edged higher. However, HCL Technologies fell 1.2%.
Tata Consultancy Services (TCS) gained 2.43% after the company announced after market hours on Tuesday, 5 November 2013, that Zions Bancorporation, one of America's premier financial services companies, has chosen TCS BaNCS for its core banking transformation program to achieve standardization, centralization and straight through processing across the enterprise. In addition to the cost saving benefits, the ability to have a single, 360 degree view of its end-user customers is a key focus of the core replacement program.
The depth of TCS BaNCS' capabilities, its implementation track record and overall quality of banking and technology experts were among the major factors that influenced this selection by Zions Bancorporation, which consists of a collection of great banks in select Western US markets with combined total assets exceeding $50 billion. The transformation will be completed in phases, with Zions' management expecting significant improvements in operational efficiency and customer experience, and reduced operational and financial risk stemming from older legacy systems.
Positive economic data in the US also supported IT stocks. The US is the biggest outsourcing market for the Indian IT firms.
Bharat Heavy Electricals (Bhel) fell in choppy trade after weak Q2 results. The stock shed 1.3% to Rs 140.45. The scrip hit high of Rs 144.90 and low of Rs 138.70. The company's net profit fell 64.22% to Rs 455.95 crore on 11.31% decline in total income to Rs 9482.25 crore in Q2 September 2013 over Q2 September 2012. The Q2 result was announced during trading hours today, 6 November 2013.
Bharat Heavy Electricals (Bhel) said that the results for the quarter and half year ended 30 September 2013 includes financial results of HPVP unit (erstwhile M/s BHPV). Consequent to this, impact of HPVP unit for and upto the quarter ended on 30 September 2013 includes turnover of Rs 16.69 crore and loss of Rs 191.35 crore before tax. The impact on Reserves & Surplus is reduction by Rs 311 crore, Bhel said. In view of this, figures for the current reporting period are not comparable with the previously reported period figures, Bhel added.
Bhel's order book stood at Rs 102300 crore as on 30 September 2013.
Bajaj Auto fell 0.84% after the company reported a decline in sales in October 2013. The company said before market hours that its total sales fell 6% to 3.85 lakh units in October 2013 over October 2012. Motorcycles sales declined 4% to 3.48 lakh units in October 2013 over October 2012. Commercial vehicles sales dropped 26% to 37,000 units in October 2013 over October 2012. Exports rose 9% to 1.38 lakh units in October 2013 over October 2012.
Bank stocks dropped across the board. State Bank of India (SBI) dropped 3.4%. SBI today, 6 November 2013, said it has revised upwards the base rate by 20 basis points (bps) from 9.8% to 10% per annum (p.a) and the benchmark prime lending rate by 20 bps from 14.55% to 14.75% p.a with effect from Thursday, 7 November 2013. A bank's base rate is the rate it charges on floating-rate loans. The prime lending rate is the benchmark for floating-rate loans made before Indian banks shifted to the base rate in July 2010.
Among other PSU bank stocks, Indian Bank (down 8%), Syndicate Bank (down 5.53%), Oriental Bank of Commerce (down 4.58%), Union Bank of India (down 4.22%), Allahabad Bank (down 4.19%), Canara Bank (down 4.03%), Punjab National Bank (down 3.88%), IDBI Bank (down 3.44%), UCO Bank (down 2.84%), Indian Overseas Bank (down 2.82%), Vijaya Bank (down 2.8%), Bank of India (down 2.76%), Central Bank (down 1.56%) and Corporation Bank (down 1.5%), edged lower.
Bank of Baroda dropped 3.22%. The bank said during market hours that the bank has privately placed non-convertible redeemable unsecured Basel Ill complaint Tier II bonds (series XVI -- coupon 9.8% p.a) aggregating Rs 1000 crore for which allotment process has been completed.
HDFC Bank shed 1.23%. HDFC Bank has raised its base rate by 0.2 percentage point to 10% from 2 November 2013.
ICICI Bank declined 1.42% and Axis Bank fell 1.27%.
Shares of housing finance major HDFC lost 1.54%.
Shares of rice companies surged on price hike buzz. Usher Agro (up 11.03%), Chaman Lal Setia Exports (up 4.99%), Kohinoor Foods (up 4.39%), KRBL (up 2.95%), L T Foods (up 1.93%) and Lakshmi Energy and Foods (up 1.82%), edged higher. Media reports suggest that a decline in paddy production in eastern states and Andhra Pradesh has triggered speculation of a lower rice output this year. This may increase rice prices by 10-30%.
ABB India rose 2.52% on good Q3 result. The company's net profit jumped 78.14% to Rs 38.07 crore on 1.25% decline in total income to Rs 1786.82 crore in Q3 September 2013 over Q3 September 2012. The company said it continued to follow a policy of cash over revenue in its businesses to mitigate the credit risk in the market.
Focused initiatives in streamlining operations, optimizing costs and increasing localization are yielding sustainable improvements, ABB India said. Saving from these initiatives has helped balance the adverse impact of continuing price erosion and weak market condition, ABB India said.
ABB India's order intake rose 5% to Rs 1762 crore in Q3 September 2013 over Q3 September 2012. Emerging sectors like renewables, exports and rail continued to grow faster than the conventional segments, ABB India said. The company's order backlog stood at Rs 8252 crore as at 30 September 2013, lower than Rs 9062 crore as on 30 September 2012.
"The economic environment in India remains muted and capex investments continue to be deferred. While the renewed momentum in reforms is a welcome measure, the markets are yet to realize its tangible benefits. In the meantime, we continue to pursue new growth opportunities, indigenize our portfolio and innovate to stay ahead," said Bazmi Husain, Managing Director, ABB India.
Metal stocks dropped. NMDC (down 2.59%), Sesa Sterlite (down 2.5%), Jindal Steel & Power (down 2.01%), Hindalco Industries (down 1.87%), Tata Steel (down 1.51%), Hindustan Zinc (down 1.35%), Bhushan Steel (down 0.46%) and JSW Steel (down 0.39%), edged lower.
Most telecom stocks gained. Tata Teleservices (Maharashtra) (up 6.97%), MTNL (up 2.06%), Idea Cellular (up 0.94%) and Reliance Communications (up 0.72%), edged higher. But, Bharti Airtel fell 1.17%.
Media reports suggest that a government panel on Wednesday recommended raising the reserve price for mobile phone spectrum auctions by 15% more than the price suggested by a telecom regulator in the 1800 megahertz band, and by 25% in the 900 megahertz band.
The panel has reportedly recommended allowing mergers with a combined market share of up to 50%. The government plans to conduct its next mobile phone airwave auction in January and has estimated revenue of Rs 11000 crore from the sale of airwaves.
The telecoms regulator has recommended a sharp cut in the auction reserve prices after most carriers stayed away from bidding in the last two auctions saying the reserve price was too high. A ministerial panel and the cabinet will finalise the new reserve prices. The government is in the process of finalising rules for mergers and acquisitions in the telecommunications market of around a dozen players, and the government has said previously it will ease rules to help consolidate the crowded market, reports added.
GlaxoSmithkline Consumer Healthcare rose 2.46% on good Q2 result. The company's net profit rose 14.29% to Rs 146.93 crore on 19.44% increase in total income to Rs 1057.47 crore in Q2 September 2013 over Q2 September 2012. The company announced the result during market hours.
State Bank of India clocked a highest turnover of Rs 80.98 crore on BSE. Divi's Laboratories (Rs 47.94 crore), Yes Bank (Rs 44.39 crore), Bhel (Rs 38.05 crore) and ABB (Rs 33.30 crore), were the other turnover toppers on BSE in that order.
Unitech reported highest volumes of 42.68 lakh shares on BSE. Cals Refineries (42.22 lakh shares), SpiceJet (41.64 lakh shares), Reliance Power (28.47 lakh shares) and Jaiprakash Associates (27.13 lakh shares), were the other volume toppers on BSE in that order.
In the foreign exchange market, the rupee weakened past 62 against the dollar. The partially convertible rupee was hovering at 62.39, compared with its close of 61.625/635 on Tuesday, 5 November 2013. The rupee declined sharply on sustained dollar demand from state-run banks, leading to speculation that they were buying on behalf of oil refiners.
Indian government bond prices dropped after State Bank of India, the country's largest lender by assets, said interest rates it charges on floating-rate loans will increase by 20 basis points from Thursday, 7 November 2013. The yield on the benchmark government paper -- 7.16% GS 2023 -- was hovering 8.8196%, higher than its close of 8.7368% on Tuesday, 5 November 2013. Bond yield and bond prices are inversely related.
European stocks edged higher on Wednesday, 6 November 2013, as companies from Alstom SA to ING Groep NV posted earnings that beat estimates. Key benchmark indices in France, Germany and UK were up 0.13% to 0.96%.
UK industrial production rose more than economists forecast in September, helped by a rebound in manufacturing after a slump the previous month. Output increased 0.9% from August, when it fell 1.1 percent, the Office for National Statistics said today in London.
The European Union yesterday cut its forecast for euro-area growth next year and raised its unemployment estimate as the economy struggles to regain momentum after a record-long recession.
The European Central Bank (ECB) holds a monetary policy meeting tomorrow, 7 November 2013. The ECB is seen retaining its key policy rate at a record-low 0.5%.
Most Asian stocks were trading lower on Wednesday, 6 November 2013. Key benchmark indices in China, Singapore, Hong Kong and South Korea shed 0.01% to 0.82%. Key benchmark indices in Taiwan, Indonesia and Japan rose 0.24% to 0.79%.
China's leaders will meet in Beijing on November 9-12 to map out economic policies as the country heads for its slowest annual growth in more than two decades.
Indonesia's economy expanded less than 6% last quarter as higher interest rates weighed on consumption and exports fell. Gross domestic product increased 5.62% in the three months ended Sept. 30 from a year earlier, the Central Bureau of Statistics said in Jakarta today. That compares with 5.81% growth for the second quarter.
Trading in US index futures indicated that the Dow could jump 80 points at the opening bell on Wednesday, 6 November 2013. US stocks closed mostly lower on Tuesday, 5 November 2013, after a gauge of service industries climbed more than forecast in October, adding to the case for the Federal Reserve to taper monthly bond purchases.
The US Institute for Supply Management's gauge of service industries climbed more than strategists predicted, data showed yesterday, stoking concern that the world's biggest economy is faring well enough for the Fed to consider reducing asset purchases. Fed policy makers last week signaled diminishing concern over higher borrowing costs as they maintained their $85 billion in monthly bond-buying and sought more evidence of sustained growth before paring stimulus.
The US government will on Friday, 8 November 2013, release nonfarm payrolls figures for October 2013. The job data is a key economic indicator that has been watched closely in recent months to see whether the US Federal Reserve will roll back its bond-buying program.
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