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HUL extends post-result losses

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Key benchmark indices extended initial losses to hit fresh intraday low in morning trade as weakness in Asian stocks dampened sentiment. The S&P BSE Sensex hit 2-1/2-week low. The 50-unit CNX Nifty hit its lowest level in almost three weeks. The Sensex was down 94.71 points or 0.48%, off close to 95 points from the day's high and up about 5 points from the day's low. The market breadth, indicating the overall health of the market, was weak.

IT major Wipro extended initial gain as the company issued upbeat revenue guidance for Q2 September 2013 at the time of announcing Q1 June 2013 results after trading hours on Friday, 26 July 2013. FMCG major Hindustan Unilever (HUL) extended Friday's losses triggered by the company reporting a muted growth in bottom line in Q1 June 2013. Index heavyweight and cigarette major ITC also declined. Shares of Jet Airways (India) surged for the second straight day on speculation that the Foreign Investment Promotion Board (FIPB) at its meeting scheduled today, 29 July 2013, may approve Jet's proposal to sell 24% stake to Etihad Airways. Shares of SpiceJet also rallied. Realty stocks edged lower.

 

The market edged lower in early trade on weak Asian stocks. The market extended initial losses to hit fresh intraday low in morning trade.

At 10:20 IST, the S&P BSE Sensex was down 94.71 points or 0.48% to 19.653.48. The index declined 99.01 points at the day's low of 19,649.18 in morning trade, its lowest level since 11 July 2013. The index rose 2.84 points at the day's high of 19,751.03 in early trade.

The CNX Nifty was down 31.10 points or 0.53% to 5,855.10. The index hit a low of 5,854.10 in intraday trade, its lowest level since 10 July 2013. The index hit a high of 5,886 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 713 shares declined and 437 shares rose. A total of 45 shares were unchanged.

Among the 30-share Sensex pack, 17 stocks fell and rest of them rose. Hindalco Industries (down 2.7%), Sterlite Industries (down 2.15%) and Maruti Suzuki India (down 2.29%), edged lower.

IT major Wipro surged 7.34%, with the stock extending initial gain as the company issued upbeat revenue guidance for Q2 September 2013 at the time of announcing Q1 June 2013 results after trading hours on Friday, 26 July 2013. Wipro expects 1.99% to 3.88% growth in revenue from IT services business at between $1.62 billion to $1.65 billion in Q2 September 2013 over Q1 June 2013.

The company's consolidated net profit rose 3% to Rs 1623.30 crore on 1% growth in revenue to Rs 9734.60 crore in Q1 June 2013 over Q4 March 2013. The results are as per International Financial Reporting Standards. The results are after adjusting for the spinoff of its non-technology businesses, completed in April.

IT services revenue rose 0.2% to $1.58 billion in Q1 June 2013 over Q4 March 2013. Non-GAAP constant currency IT services revenue in dollar terms was $1.60 billion, which was within the company's guidance range of $1.575 billion to $1.61 billion.

Wipro said that the pricing environment was largely stable during the quarter, and the growth was largely volume led. Effective from 1 June 2013, Wipro gave annual wage hike of between 6-8% for offshore employees and 2-3% for onsite employees.

Wipro added 28 new customers in Q1 June 2013.

Commenting on the first quarter results, Wipro Chairman Azim Premji said: "We are seeing higher confidence among our clients on the backdrop of positive macroeconomic developments, particularly in the US."

T K Kurien, Executive Director & Chief Executive Officer of Wipro said: "We are seeing a pickup in large deal closures which has reflected in strong order book in the current quarter. Our clients look to technology to pursue growth and profitability and increase organizational agility."

Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said: "Our investments in client mining have shown benefits with strong growth in our top clients. We have given wage hikes for both onsite and offshore employees effective June 2013, which has impacted our operating margins in the quarter."

Index heavyweight and cigarette major ITC declined 2.99%. ITC's net profit rose 18.05% to Rs 1891.33 crore on 10.5% increase in income from operations to Rs 7410.70 crore in Q1 June 2013 over Q1 June 2012. The result was announced on 25 July 2013.

FMCG major Hindustan Unilever (HUL) slumped 5.74%, with the stock extending Friday's 3.38% losses triggered by the company reporting a muted growth in bottom line in Q1 June 2013.. The company's net profit declined 23.43% to Rs 1019.25 crore on 5.88% increase in total income to Rs 6985.79 crore in Q1 June 2013 over Q1 June 2012. The result was announced during trading hours on Friday, 26 July 2013.

The company said that the year on year fall in net profit was due to significant exceptional income generated in Q1 June 2012 from the sale of properties. Profit after tax but before exceptional items rose 4% to Rs 885 crore in Q1 June 2013 over Q1 June 2012. HUL stated that while commodity costs were relatively benign, PFAD prices started to move up and the rupee sharply depreciated towards the end of the quarter. Competitive intensity remained at high levels and the company continued to invest in its brands. Advertisement and promotion (A&P) cost increased by Rs 70 crore on year on year basis in Q1 June 2013.

Shares of Jet Airways (India) surged for the second straight day on speculation that the Foreign Investment Promotion Board (FIPB) at its meeting scheduled today, 29 July 2013, may approve Jet's proposal to sell 24% stake to Etihad Airways. The stock was up 6.45%. The stock had jumped 17.43% on Friday, 26 July 2013. The FIPB last month deferred a decision on Jet's plan to sell a 24% stake to Etihad.

Shares of budget carrier, SpiceJet, jumped 7.55%.

Realty stocks edged lower. Realty major DLF dropped 0.96%. The company said on 25 July 2013 that it has signed definitive agreements to sell its 74% equity stake in its Life Insurance Joint Venture -- DLF Pramerica Life Insurance Company, a joint venture with Prudential International Insurance Holdings (PIIHL), a subsidiary of Prudential Financial, Inc USA to Dewan Housing Finance Corporation (DHFL) and its group entities. As these agreements are subject to regulatory approvals, hence the transaction consideration shall be disclosed post receipt of all such approvals, DLF said. The transaction is in line with the DLF's ongoing strategy to divest non-core assets.

Among other realty stocks, HDIL (down 2.4%), Unitech (down 1.39%), and D B Realty (down 0.46%), edged lower.

Prime Minister Dr. Manmohan Singh will meet the captains of Indian industry today, 29 July 2013, to review steps to revive the economy. The discussion will cover measures to correct the Current Account Deficit, measures to revive industrial growth, depreciation of the rupee and its impact on trade and industry, skill development and ways of accelerating it and development of the Delhi-Mumbai Industrial Corridor (DMIC), the Chennai-Bangalore Industrial Corridor (CBIC), and the Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC).

Asian stocks retreated on Monday, 29 July 2013, with Japanese equities skidding as a firm yen further dragged on the nation's exporters, while Chinese shares lost ground amid economic worries. Key benchmark indices in South Korea, Singapore, Indonesia and Taiwan were off 0.33% to 1.43%

Mainland Chinese and Hong Kong stocks retreated amid lingering economic worries, with sentiment weighed by official data released over the weekend showing profits at Chinese industrial firms slowed in June. The Shanghai Composite index was off 1.57%. In Hong Kong, the Hang Seng was off 0.57%. Data released over the weekend by the National Bureau of Statistics showed profits at industrial companies rose 6.3% in June from the year-earlier month, slowing sharply from a 15.5% increase in May, according to reports.

In Japan, the Nikkei 225 Average was off 2.15%. The benchmark had retreated 3% on Friday, 26 July 2013.

Japanese retail sales rose 1.6% from a year earlier in June, figures today showed, which was below the market expectations.

Trading in US index futures indicated that the Dow could fall 28 points at the opening bell on Monday, 29 July 2013. US stocks inched higher on Friday, 26 July 2013, to end the week virtually flat, as investors digested earnings reports and prepared for a busy economic calendar in the week ahead.

On the economic front, US consumer confidence unexpectedly rose at the end of this month, according to the Thomson-Reuters/University of Michigan's consumer-sentiment index.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on Tuesday (30 July 2013) and Wednesday (31 July 2013), after which it will release a statement on central bank policy. In his two-day testimony to Congress, which concluded on 18 July 2013, Federal Reserve Chairman Ben Bernanke said plans to taper asset purchases were not on a preset path and stressed intentions to be very responsive to data. Additionally, Bernanke said recent data have been "mixed" and it was "way too early" to make a judgment on when the central bank will slow down the pace of its asset purchases. 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.

The European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions on Thursday, 1 August 2013.

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First Published: Jul 29 2013 | 10:22 AM IST

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