Key benchmark indices edged lower in choppy trade as the Reserve Bank of India's (RBI) latest measures to squeeze liquidity from the banking system to stem rupee's decline rattled investor sentiment. The market breadth, indicating the overall health of the market, was weak. The S&P BSE Sensex was provisionally down 185.67 points or 0.91%, up close to 125 points from the day's low and off about 135 points from the day's high. The Sensex snapped five-day winning streak today, 24 July 2013.
Bank stocks declined across the board after the Reserve Bank of India (RBI) on Tuesday, 23 July 2013 announced more measures to squeeze liquidity from the banking system to stem rupee's decline.
Engineering and construction major L&T hit 52-week low. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. IT stocks edged higher, with Tech Mahindra hitting 52-week high. IT major TCS hit record high after the company completed the acquisition of French IT services firm Alti SA. HCL Technologies revered direction after hitting record high in intraday trade. Jaiprakash Associates dropped after the foreign brokerage downgraded the stock to sell from hold. Dabur India scaled record high after good Q1 result.
The market trimmed losses after a weak start. The intraday recovery proved short lived as the market weakened again in morning trade. The market extended losses to hit fresh intraday low in mid-morning trade. The S&P BSE Sensex hit its lowest level in almost one week. The 50-unit CNX Nifty hit one-week low below the psychological 6,000 mark. It remained weak in early afternoon trade. Weakness continued on the bourses in early afternoon trade. Key benchmark indices cut intraday losses in afternoon trade as European markets edged higher in early trade. The Sensex regained the psychological 20,000 after falling below that mark in early afternoon trade. Intraday recovery witnessed in afternoon trade proved short lived as key benchmark indices weakened once again in mid-afternoon trade. Volatility continued in late trade as the Sensex once again pared intraday losses.
The market may remain volatile tomorrow, 25 July 2013, as traders roll over positions in the futures & options (F&) segment from the July 2013 series to August 2013 series. The near month July 2013 derivatives contracts expire tomorrow, 25 July 2013.
The Reserve Bank of India (RBI) on Tuesday, 23 July 2013, announced additional measures to squeeze liquidity from the banking system to stem rupee's decline. The central bank imposed restrictions on commercial banks' access to cash, allowing banks to borrow cash only up to 0.5% of their net deposits from the central bank' daily at the benchmark interest rate of 7.25%. The RBI also tightened rules on the cash reserve ratio (CRR) -- the percentage of deposits that banks must hold as cash with the central bank -- which is 4% at present.
As per provisional figures, the S&P BSE Sensex was down 185.67 points or 0.91% to 20,116.46. The index fell 307.88 points at the day's low of 19,994.25 in early afternoon trade, its lowest level since 18 July 2013. The index declined 49.43 points at the day's high of 20,252.70 in morning trade.
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The CNX Nifty was down 85.70 points or 1.41% to 5,992.10, as per provisional figures. The index hit a low of 5,962.60 in intraday trade, its lowest level since 17 July 2013. The index hit a high of 6,047.25 in intraday trade.
The total turnover on BSE amounted to Rs 1856 crore, higher than Rs 1632.17 crore on Tuesday, 23 July 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,519 shares declined and 780 shares rose. A total of 121 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks fell and rest of them rose. Jindal Steel & Power (down 3.49%), Sterlite Industries (down 3.01%) and M&M (down 2.89%), edged lower.
L&T fell 3.89% to Rs 867.40. The stock hit 52-week low of Rs 860.90 in intraday trade today, 24 July 2013. L&T's net profit declined 12.46% to Rs 756.03 crore on 3.69% growth in total income to Rs 13027.66 crore in Q1 June 2013 over Q1 June 2012. L&T attributed the decline in net profit to unfavorable job mix, lower margin accruals and lower other income. The Q1 result was announced during trading hours on Monday, 22 July 2013.
Dabur India rose 2.84% to Rs 175.70 on strong Q1 result. The stock hit record high of Rs 176.40 in intraday trade today, 24 July 2013. The company today, 24 July 2013, said consolidated net profit rose 25% to Rs 187.04 crore on 13% rise in revenue to Rs 1651.10 crore in Q1 June 2013 over Q1 June 2012. Dabur India's consolidated profit after tax (PAT) excluding exceptional items rose 20.7% year on year (YoY) in Q1 June 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 15.5% to Rs 277.50 crore in Q1 June 2013 over Q1 June 2012. EBITDA margin expanded 40 basis points (bps) to 16.8% from 16.4% in Q1 June 2012.
The company said the increase in revenue was on account of strong growth in key categories like Hair Care, Oral Care, Foods, Home Care and Skin Care.
Jaiprakash Associates tumbled 6.48% after a foreign brokerage downgraded the stock to sell from hold and cuts its sum-of-the-parts target price to Rs 42 from Rs 55, citing higher-than-expected debt and high valuation of the stock. The brokerage cut its FY 2014 earnings estimates by 14% and that of FY 2015 by 9%, citing a high degree of operating leverage in weak cement demand environment.
IT stocks edged higher. IT major TCS rose 1.79% to Rs 1781.10, with the stock extending recent gains triggered by the company's strong Q1 results. The stock hit a record high of Rs 1,791 in intraday trade today, 24 July 2013. The company said during market hours today, 24 July 2013, that it has completed the acquisition of French IT services firm Alti SA. The acquisition was initially announced in April 2013.
This strategic investment by TCS will help leverage the strong engineering talent in the country for the benefit of its customers in France and other markets globally, TCS said. A privately-held company with revenue of euro 126 million in 2012, Alti SA is regarded as one of the top system integrators of SAP solutions in France. It includes several top French corporations in the banking, financial services, luxury, manufacturing and utilities sectors as its key customers.
Infosys was up 0.25%. Infosys retained its revenue growth guidance in dollar terms for the year ending 31 March 2014 (FY 2014) at the time of announcing Q1 June 2013 result on 12 July 2013, belying fears that it may lower the guidance.
HCL Technologies fell 0.53% to Rs 895. The stock reversed direction after hitting a record high of Rs 908 in intraday trade today, 24 July 2013. The company declares year ended June 2013 results on 31 July 2013.
Tech Mahindra was up 2.6% to Rs 1209.60. The stock hit 52-week high of Rs 1,221.95 in intraday trade. The company on Tuesday, 23 July 2013, said it has signed an agreement with UBS Fund Services (Luxembourg) (UBS FSL) as the first client for its new platform, Tech Mahindra Managed Services, which is designed to support asset managers, wealth managers, investment banks, custodians and administrators. The contract is for an initial five-year term. Under the agreement, Tech Mahindra will provide UBS FSL with a fully managed service across four major areas of data management, pricing, corporate actions and tax data.
Wipro gained 1.9%.
Reliance Industries (RIL) fell 0.1% to Rs 908.,10. The stock was volatile. The scrip hit high of Rs 917 and low of Rs 895.65 so far during the day. The company's net profit rose 18.9% to Rs 5352 crore on 4.6% decline in revenue to Rs 90589 crore in Q1 June 2013 over Q1 June 2012. The result was announced on 19 July 2013.
Bank stocks dropped as the RBI's latest measures to squeeze liquidity from the banking system to stem rupee fall have made it costlier for banks to raise short term funds. ICICI Bank (down 3.72%) and HDFC Bank (down 2.83%) edged lower.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank dropped by 3.18% to 8.96 %.
The Reserve Bank of India took new steps on Tuesday to support the rupee, signalling it will stay the course with its defence of the currency despite the risks to economic growth. The central bank tightened liquidity further and made it even harder for lenders to access funds with measures including lowering the amount banks can borrow or lend under its daily liquidity window. The RBI lowered the overall limit for borrowing under the daily liquidity adjustment facility (LAF) -- which offers funds in exchange for collateral -- for each bank to 0.5% of deposits from 1%. The central bank also said banks now needed to maintain 99 percent of their daily cash reserve ratio requirements -- the deposits they must set aside -- with the RBI, compared with 70% now. The change takes effect from the two-weekly period starting July 27. The RBI also announced the sale of short end cash management bills of Rs 6000 crore to drain out more cash from the banking system.
Yes Bank tumbled 13.11%. The bank's net profit surged 38.15% to Rs 400.84 crore on 30.6% growth in total income to Rs 2839.97 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced during trading hours today, 24 July 2013.
IndusInd Bank tumbled 8.29%. The bank today, 24 July 2013, said it has opened a new branch in Greater Noida. The new branch will expand IndusInd bank's reach across NCR and Uttar Pradesh, the private sector bank said.
Shares of Shriram Transport Finance Company, an asset finance NBFC tumbled 5.49%. The stock was volatile. The scrip lost as much as 9.86% at the day's low of Rs 611. The stock rose 0.14% at the day's high of Rs 678.80 at the onset of the trading session. The company on Tuesday, 23 July 2013, said its consolidated profit after tax rose 7.07% to Rs 366.27 crore in Q1 June 2013 over Q1 June 2012. Net interest income rose 14.12% to Rs 962.88 crore.
European stock markets advanced on Wednesday, 24 July 2013, after better-than-expected purchasing managers' indexes from the region spurred hopes about the economic recovery. Key benchmark indices in UK, Germany and France were up by 0.56% to 0.87%.
The composite euro-zone index climbed to an 18-month high of 50.4 in July from 48.7 in June, moving above the 50-mark that separates expansion from contraction. In Germany, the composite index climbed to a five-month high of 52.8, while France's similar poll moved up to a 17-month high at 48.8.
Most Asian stocks edged lower on Wednesday, 24 July 2013, after a private survey showed manufacturing weakened further in July in China. Key benchmark indices in China, Indonesia, Japan, and Taiwan were down by 0.22% to 1.03%. Key benchmark indices in Hong Kong, Singapore and South Korea rose by 0.24% to 0.65%.
China's manufacturing weakened further in July, signaling the worst of the nation's slowdown has yet to be reached, according to a preliminary survey of purchasing managers. The reading of 47.7 for an index released today by HSBC Holdings Plc and Markit Economics, was less than estimated and if confirmed in the final report Aug. 1, would be the lowest in 11 months. Readings below 50 indicate contraction.
Japan's exports rose for a fourth straight month in June as a weak yen made the nation's products more competitive and shipments to the European Union rebounded. Exports gained 7.4% from a year earlier, the Finance Ministry said in Tokyo today.
Trading in US index futures indicated that the Dow could gain 18 points at the opening bell on Wednesday, 24 July 2013. US stocks ended mostly lower on Tuesday after a decline in a regional manufacturing gauge prompted concern, but the Dow Jones Industrial Average climbed to a record close. The Federal Reserve Bank of Richmond said manufacturing activity in the central Atlantic region weakened.
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