Auto, oil stocks and index heavyweight and housing finance major HDFC led losses for key benchmark indices. Key indices witnessed intraday volatility. The barometer index, the S&P BSE Sensex, hit 5-1/2-week closing low. The 50-unit CNX Nifty hit its lowest level in almost three weeks. The Sensex fell 102.15 points or 0.37% to settle at 27,459.23. The market breadth indicating the overall health of the market turned negative from positive in late trade. The market sentiment was edgy after the latest data showed that foreign portfolio investors (FPIs) pressed sales of Indian stocks yesterday, 27 July 2015.
Shares of index heavyweight and housing finance major HDFC edged lower after the company reported a muted growth in bottom line in Q1 June 2015. PSU bank shares were mixed. Private sector banks edged higher. Maruti Suzuki India (MSIL) edged higher in volatile trade after the company reported strong Q1 earnings. Ambuja Cements dropped after the company reported weak Q2 earnings.
Key indices edged lower for the fourth straight trading session today, 28 July 2015.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month July 2015 series to August 2015 series. The near month July 2015 derivatives contracts expire on Thursday, 30 July 2015.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said yesterday, 27 July 2015, that inflation targets should not be changed every three years as that would mean changing goal posts as soon as the system starts to internalize it.
Foreign portfolio investors sold shares worth a net Rs 760.39 crore into the secondary equity market yesterday, 27 July 2015, as per data from Central Depository Services (India). Domestic institutional investors (DIIs) bought shares worth a net Rs 238.66 crore yesterday, 27 July 2015, as per provisional data released by the stock exchanges.
In overseas markets, European stocks edged higher, recovering from a selloff during the previous trading session triggered by a rout in Chinese stocks. Asian stocks were mixed. US stocks fell yesterday, 27 July 2015, after the steepest decline in Chinese stocks in eight years raised concerns that cooling growth in the world's No. 2 economy could hurt China's trading partners.
The S&P BSE Sensex fell 102.15 points or 0.37% to settle at 27,459.23, its lowest closing level since 19 June 2015. The index fell 144.99 points at the day's low of 27,416.39 in mid-afternoon trade. The index jumped 115.27 points at the day's high of 27,676.65 in morning trade.
The Nifty dropped 24 points or 0.29% to settle at 8,337, its lowest closing level since 9 July 2015. The index hit a low of 8,321.75 in intraday trade. The index hit a high of 8,397.40 in intraday trade.
The BSE Mid-Cap index fell 20.02 points or 0.18% to settle at 10,974. The BSE Small-Cap index dropped 20.18 points or 0.17% to settle at 11,522.93. The decline in both these indices was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market turned negative from positive in late trade. On BSE, 1,388 shares fell and 1,363 shares rose. A total of 128 shares were unchanged.
The total turnover on BSE amounted to Rs 3307 crore, higher than turnover of Rs 2961.17 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE FMCG index (down 0.01%), BSE IT index (down 0.23%), BSE Bankex index (up 0.43%), BSE Capital Goods index (up 0.52%), BSE Consumer Durables index (down 0.2%) and BSE Power index (up 0.43%) outperformed the Sensex. The S&P BSE Healthcare index (down 0.87%), BSE Auto index (down 0.69%), BSE Metal index (down 0.73%), BSE Oil & Gas index ()down 0.45%) and BSE Realty index (down 2.72%) underperformed the Sensex.
HDFC fell 2.64% to Rs 1,300. The company's net profit rose 1.21% to Rs 1360.98 crore on 9.39% rise in total income to Rs 7068.28 crore in Q1 June 2015 over Q1 June 2014. The result was announced during market hours today, 28 July 2015. On consolidated basis, HDFC's net profit rose 17.69% to Rs 2204.29 crore on 13.76% growth in total income to Rs 11440.62 crore in Q1 June 2015 over Q1 June 2014.
HDFC's loan book stood at Rs 2.31 lakh crore as on 30 June 2015 as against loan book of Rs 2.03 lakh crore as on 30 June 2014. This is after considering the loans sold during the preceding 12 months amounting to Rs 10949 crore.
HDFC said that in the previous financial year, the company had received dividend of Rs 269.35 crore from HDFC Bank in June 2014 and accordingly the income was accounted for in Q1 June 2014. In the current year, dividend of Rs 314.57 crore from HDFC Bank has been received in July 2015. This income will consequently be accounted for in Q2 September 2015, HDFC said. To this extent, the result of Q1 June 2015 is not comparable with Q1 June 2014 results, the company said.
PSU bank shares were mixed. Bank of India (down 5.68%), United Bank of India (down 2.78%), Canara Bank (down 2.76%), Vijaya Bank (down 1.13%), Dena Bank (down 0.93%), Indian Overseas Bank (down 0.14%) and Central Bank of India (down 0.62%) edged lower. Bank of Baroda (up 1.22%), Andhra Bank (up 0.42%), UCO Bank (up 0.5%), Oriental Bank of Commerce (up 0.22%) and State Bank of India (up 0.12%) edged higher.
Punjab National Bank (PNB) rose 4.95% at Rs 142. The bank's net profit fell 48.7% to Rs 720.71 crore on 4.73% rise in total income to Rs 13432.05 crore in Q1 June 2015 over Q1 June 2014. The result was announced during trading hours today, 28 July 2015.
PNB's provisions and contingencies jumped 95.27% to Rs 1811.39 crore in Q1 June 2015 over Q1 June 2014. PNB's provisioning coverage ratio stood at 59.32% as on 30 June 2015.
The state-run bank said it has no direct exposure to the coal blocks/mines cancelled by the Supreme Court of India. However, the impact if any, of such cancellation on the valuation of security, penalty imposed and the consequent viability of the projects financed by the bank dependent on such coal blocks/mines, being unascertainable at this stage has not been considered, PNB said.
PNB's gross non-performing assets on absolute basis stood at Rs 25397.42 crore as on 30 June 2015, lower than Rs 25694.86 crore on 31 March 2015 and higher than Rs 19602.84 crore as on 30 June 2014. The ratio of gross non-performing assets to gross advances stood at 6.47% as on 30 June 2015, lower than 6.55% on 31 March 2015 and higher than 5.48% as on 30 June 2014. The ratio of net non-performing assets to net advances stood at 0.46% as on 30 June 2015, higher than 0.2% as on 31 March 2015 and lower than 1% as on 30 June 2014.
Union Bank of India shrugged off weak Q1 numbers. The stock rose 1.95% at Rs 157.15. The stock hit a high of Rs 160.80 and a low of Rs 151.35 in intraday trade. Union Bank of India's net profit fell 21.88% to Rs 518.78 crore on 5.79% growth in total income to Rs 9043.17 crore in Q1 June 2015 over Q1 June 2014. The result was announced during market hours today, 28 July 2015.
The bank's provisions and contingencies rose 63.53% to Rs 642.41 crore in Q1 June 2015 over Q1 June 2014.
Union Bank of India's ratio of gross non-performing assets (NPAs) to gross advances stood at 5.53% as on 30 June 2015 compared with 4.96% as on 31 March 2015 and 4.27% as on 30 June 2014. The ratio of net NPAs to net advances stood at 3.08% as on 30 June 2015 as against 2.71% as on 31 March 2015 and 2.46% as on 30 June 2014.
Private sector banks edged higher. Yes Bank (up 1.28%), Kotak Mahindra Bank (up 1.84%), HDFC Bank (up 1.1%), IndusInd Bank (up 1.37%) and Axis Bank (up 0.94%) edged higher. ICICI Bank (down 2.11%) edged lower.
Auto stocks declined. TVS Motor Company (down 3.73%), Bajaj Auto (down 1.26%) and Mahindra & Mahindra (down 0.54%) edged lower. Ashok Leyland (up 2.72%) and Eicher Motors (up 0.71%) edged higher.
Commercial vehicles major Tata Motors dropped 1.89% to Rs 370.45. The stock hit a high of Rs 375.10 and a low of Rs 366.25 in intraday trade. The stock had lost 3.46% to settle at Rs 377.60 yesterday, 27 July 2015.
Maruti Suzuki India (MSIL) edged higher after the company reported strong Q1 earnings. The stock rose 0.46% at Rs 4,195.65. The stock hit a high of Rs 4,243.90 and a low of Rs 4,152.50 in intraday trade. MSIL's net profit rose 56.5% to Rs 1192.90 crore on 18.1% growth in net sales (net of excise) to Rs 13078.30 crore in Q1 June 2015 over Q1 June 2014. The result was announced during market hours today, 28 July 2015.
During the quarter, higher volumes, cost reduction efforts, lower sales promotional expenses, and favourable foreign exchange helped improve the performance, MSIL said in a statement.
Hero MotoCorp fell 2.84% at Rs 2,531.55. The company announced during trading hours today, 28 July 2015, that HMCL NA, Inc. and HMCL Americas, Inc. (both wholly owned subsidiaries of Hero MotoCorp) have entered into a settlement agreement with the receiver appointed by the Circuit Court, Wisconsin, USA in the matter of Chapter 128 Receivership filed by the Erik Buell Racing, Inc. and Erik Buell LLC (EBR). As per the settlement agreement, HMCL Americas Inc. has agreed to acquire the ownership of certain tangible and intangible assets of EBR free and clear of all encumbrances, for a consideration of $2.8 million. HMCL and the receiver have also agreed to resolve all disputes and fully give mutual releases in terms of the settlement agreement for all subject matters which is in any way related to EBR.
The settlement agreement is, inter cilia, contingent upon the approval by the Circuit Court; and the approval of the board of directors of Hero MotoCorp, authorizing its joinder as a direct party to the Settlement Agreement on or before 10 August 2015. The performance of the settlement agreement will help Hero MotoCorp's in-house research and development teams to accelerate development of certain consulting projects, including the projects EBR was executing for the company at the time of filing of the Chapter 128 Receivership.
EBR Inc., in which MotoCorp has an equity investment, and EBR Inc.'s subsidiary EBR LLC had ceased their operations with effect from 15 April 2015 and had filed for the Chapter 128 Receivership before the Circuit Court. The notice of motion with regards to the settlement agreement will be filed in the Circuit Court in the next few days, Hero MotoCorp said.
Shares of upstream oil companies declined as crude oil prices declined. Oil India (down 1.61%), Cairn India (down 1.81%) and ONGC (down 0.53%) edged lower. Shares of Reliance Industries (RIL) were up 0.41%.
Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms.
Shares of public sector oil marketing companies (PSU OMCs) dropped. Indian Oil Corporation (down 2.09%) and BPCL (down 1.13%) edged lower. HPCL (up 1.25%) edged higher.
Tech Mahindra rose 0.64% at Rs 522.30. The stock hit a high of Rs 527.40 and a low of Rs 518 in intraday trade. Tech Mahindra's consolidated net profit rose 43.2% to Rs 676 crore on 2.9% growth in revenue to Rs 6294 crore in Q1 June 2015 over Q4 March 2015. The result was announced after market hours yesterday, 27 July 2015. Tech Mahindra's earnings before interest, taxation, depreciation and amortization (EBITDA) rose 0.8% to Rs 936 crore in Q1 June 2015 over Q4 March 2015. Tech Mahindra said Q4 March 2015 results include the results of Lightbridge Communications Corporation (LCC), USA and SOFGEN Holdings (SOFGEN) which were acquired as 100% subsidiary effective from 2 January 2015 and 14 March 2015 respectively.
In dollar terms, Tech Mahindra's consolidated net profit rose 40.5% to $106 million on 0.5% growth in revenue to $989 million in Q1 June 2015 over Q4 March 2015.
Commenting on the company's Q1 performance, Vineet Nayyar, Executive Vice Chairman of Tech Mahindra said that the company's results are in line with expectations and the management remains hopeful of improving the company's performance by expanding its business in the coming quarters. C P Gurnani, Managing Director & CEO of Tech Mahindra said that the company's strategic investments and initiatives across Digital are resonating well with the businesses it serves.
TCS rose 0.18% at Rs 2,501.50. The stock hit a high of Rs 2,518.95 and a low of Rs 2,492.05 in intraday trade. The company announced during trading hours today, 28 July 2015, that the Bank of Bhutan has selected its IT product TCS BaNCS for its Core Banking Solution to power its next generation banking services. Bank of Bhutan is the largest commercial bank in the Kingdom of Bhutan with a network of 46 branches, including extension branches, 62 ATMs, a state-of-the-art mobile banking solution and a dedicated contact center, fulfilling the banking needs of the public, business community and the Royal Government of Bhutan.
Ambuja Cements dropped after the company reported weak Q2 earnings. The stock dropped 1.62% at Rs 230.50. The stock hit a high of Rs 237.25 and a low of Rs 227.60 in intraday trade. Ambuja Cements' net profit fell 44.7% to Rs 226 crore on 7.9% decline in net sales to Rs 2493 crore in Q2 June 2015 over Q2 June 2014. The result was announced after market hours yesterday, 27 July 2015.
Ambuja Cements attributed the decline in bottom line during the quarter to lower operating EBITDA (earnings before interest, taxation, depreciation and amortization) and due to additional depreciation charge of Rs 22 crore on implementation of Schedule II of the Companies Act, 2013.
The company's operating EBITDA dropped 34.7% to Rs 384 crore in Q2 June 2015 over Q2 June 2014.
Ambuja Cements said that Q2 June 2015 witnessed muted cement demand. Sales volume increased marginally by 1.6% to 5.88 million tonnes in Q2 June 2015 over Q2 June 2014. The company said that the selling price for cement declined by approximately 10% on year-on-year basis in Q2 June 2015. Lower cost of input materials coupled with improved operational efficiencies has helped in reduction of overall costs, the company said. Nevertheless, these could not fully mitigate the impact of lower sales realisation, Ambuja Cements said.
With regard to future business outlook, Ambuja Cements said that mixed macro-economic indicators are pointing towards sluggish growth in cement demand in short term. With the onset of monsoon throughout the country, cement demand is expected to remain subdued in the next quarter, Ambuja Cements said. The long term outlook for cement demand remains positive due to government's initiatives towards housing, concrete roads, smart cities and emphasis on infrastructure developments, the company said. Ambuja Cements said that the management will continue to focus on improving the company's performance.
Ambuja Cements' board of directors approved the amalgamation of Dirk India, a 100% subsidiary of Ambuja Cements with the company, subject to necessary approvals.
Thermax edged lower amid volatility after the company reported strong Q1 earnings. The stock fell 2.69% at Rs 1,034.90. The stock hit a high of Rs 1,091 and a low of Rs 1,025 in intraday trade. Thermax's net profit rose 49% to Rs 62 crore on 19% growth in operating revenue to Rs 1001 crore in Q1 June 2015 over Q1 June 2014. The result was announced during market hours today, 28 July 2015.
The company's order balance as on 30 June 2015 stood at Rs 4275 crore, down 18% from order book of Rs 5206 crore as on 30 June 2014. The order intake jumped 32% to Rs 877 crore in Q1 June 2015 over Q1 June 2014, Thermax said in a statement.
At a consolidated level, the order intake jumped 23.96% to Rs 1020 crore in Q1 June 2015 over Q1 June 2014. The order book on consolidated basis stood at Rs 5537 crore as on 30 June 2015, compared to Rs 5948 crore as on 30 June 2014.
Dish TV India fell 4.12% at Rs 112.90. The stock hit a high of Rs 119.85 and a low of Rs 112.10 in intraday trade. The company reported a consolidated net profit of Rs 54.21 crore in Q1 June 2015 compared with net loss of Rs 14.97 crore in Q1 June 2014. Consolidated total income rose 20.66% to Rs 762.90 crore in Q1 June 2015 over Q1 June 2014. The result was announced during trading hours today, 28 July 2015.
Key indices today, 28 July 2015, dropped for the fourth straight trading session. The Sensex has lost 1,045.70 points or 3.66% in the preceding four trading sessions from a recent high of 28,504.93 on 22 July 2015. The Sensex has fallen 102.15 points or 0.37% in this month so far (till 28 July 2015). The Sensex has fallen 40.19 points or 0.14% in this calendar year so far (till 28 July 2015). From a 52-week low of 25,232.82 on 8 August 2014, the Sensex has risen 2,226.41 points or 8.82%. The Sensex is off 2,565.51 points or 8.54% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, in the global commodities markets, Brent crude oil futures edged lower on persistent worries about a global supply glut. Brent for September settlement was currently off 70 cents at $52.77 a barrel. The contract had fallen $1.15 a barrel or 2.11% to settle at $53.47 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said yesterday, 27 July 2015, that inflation targets should not be changed every three years as that would mean changing goal posts as soon as the system starts to internalize it. The RBI governor's comments follow the release of a new draft of the proposed Indian Financial Code which suggested that inflation targets should be reset every three years following consultations between the government and the RBI. The draft also suggested setting up a seven-member monetary policy committee (MPC) which would have four members appointed by the government. An earlier proposal to give the RBI governor veto power over decisions of the MPC has also been removed.
At the inauguration of the Meghnad Desai Academy of Economics in Mumbai, the RBI governor reiterated that there was no trade off between inflation and growth. The best way to achieve sustained growth is to try and achieve low inflation, Rajan said, according to reports. Beyond that growth depends on other factors, such as business environment, government policy, taxation policy, Rajan said. From a central bank's perspective over the last 20 years, there's been a focus on bringing inflation credibly down over the medium term, Rajan said.
Rajan also said that using foreign exchange reserves for funding various projects may not be prudent. Rajan mentioned that the RBI had received a number of proposals to use forex reserves to fund various projects at low rates of interest. Commenting on the issue of bad loans in the banking system, Rajan said that there was enormous pressure on the RBI to not call stressed assets as non-performing assets (NPAs).
Meanwhile, India's weather office, the India Meteorological Department (IMD), said in its daily monsoon update issued yesterday, 27 July 2015, that the Southwest Monsoon was vigorous over Rajasthan and Gujarat state and was active over Gangetic West Bengal, Odisha and West Madhya Pradesh during the past 24 hours until 8:30 IST.
For the country as a whole, cumulative rainfall during this year's monsoon season was 4% below the Long Period Average (LPA) until 27 July 2015. Region wise, the rainfall was 15% below the LPA in South Peninsula, 7% below the LPA in East & Northeast India, 5% below the LPA in Central India and 11% above the LPA in Northwest India until 27 July 2015.
The quantum of and the spatial distribution of rainfall this month holds key; July accounts for about 33% of precipitation during the June-September monsoon season and is critical for crops. 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.
In overseas markets, European stocks edged higher today, 28 July 2015, recovering from a selloff during the previous trading session triggered by a rout in Chinese stocks. Key indices in Germany, France and UK were up 0.82% to 1.44%.
In UK, the UK Office for National Statistics today, 28 July 2015, announced that UK's gross domestic product expanded 0.7% between April and June, an annualized rate of 2.8%. The figures are just a preliminary estimate, but they spell out that the economy has recovered from a slight slump in the first quarter--when quarterly growth was 0.4%--and is ready to gather pace during the remainder of the year.
Chinese shares edged lower in volatile trade today, 28 July 2015. In mainland China, the Shanghai Composite lost 1.68%. In Hong Kong, the Hang Seng index rose 0.62%. China's central bank People's Bank of China today, 28 July 2015, announced that it would inject 50 billion yuan ($8.05 billion) into money markets in its biggest liquidity boost since 7 July 2015. The central bank also said in a statement before the stock market opened that it would use "various monetary tools" to maintain "appropriate levels of liquidity", a signal that the further monetary easing could be in store. The Shanghai Composite Index fell 8.5% yesterday, 27 July 2015, marking its biggest one day drop in more than eight years.
In other Asian markets, key benchmark indices in South Korea and Taiwan were up 0.01% to 0.3%. Key benchmark indices in Japan, Singapore and Indonesia and were off 0.1% to 1.18%.
US stocks fell yesterday, 27 July 2015, after the steepest decline in Chinese stocks in eight years raised concerns that cooling growth in the world's No. 2 economy could hurt China's trading partners. Market reaction to better-than-expected durable-goods orders also was negative, as investors continued to view each data-point as a factor in the Federal Reserve's decision about the timing and pace of interest rate hikes.
Meanwhile, a two-day policy meeting of the Federal Reserve Open Market Committee (FOMC) begins today, 28 July 2015. The US central bank is widely expected to keep interest rates at a record low at the meeting, but expectations are rising that a rate hike could come later this year.
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