Key benchmark indices edged lower in choppy trade, with market sentiment hit adversely by weakness in Asian and European stocks and as trading in US index futures indicated a lower opening of US stocks later in the global day. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, settle at their lowest level in almost a week. The Sensex shed 97.09 points or 0.47%, up close to 175 points from the day's low and off about 155 points from the day's high. The market breadth, indicating the overall health of the market, was negative.
Indian stocks fell for the second day in a row today, 23 October 2013. From a recent high of 20,893.89 on 21 October 2013, the Sensex has declined 126.01 points or 0.6% in two trading sessions. The Sensex has gained 1,388.11 points or 7.16% in this month so far (till 23 October 2013). The Sensex has gained 1,341.17 points or 6.9% in calendar 2013 so far (till 23 October 2013). From a 52-week high of 20,970.92 on 21 October 2013, the Sensex has declined 203.04 points or 0.96%. From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,319.17 points or 19.02%.
Coming back to today's trade, Hero MotoCorp gained in volatile trade after announcing Q2 result during market hours today, 23 October 2013. Hindustan Unilever rose in highly volatile trade. Wipro dropped in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. GAIL (India) advanced on a media reports that the oil ministry has decided to exempt the company from sharing subsidy burden with state-run oil retailers. Cairn India declined in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. Telecom stocks edged lower. L&T Finance Holdings declined after declaring Q2 result during market hours today, 23 October 2013.
The S&P BSE Sensex shed 97.09 points or 0.47% to settle at 20,767.88, its lowest closing level since 17 October 2013. The index lost 275.25 points at the day's low of 20,589.72 in afternoon trade. The index gained 57.35 points at the day's high of 20,922.32 in early trade.
The CNX Nifty shed 24.45 points or 0.39% to 6,178.35, its lowest closing level since 17 October 2013. The index hit high of 6,217.95 and a low of 6,116.60 in intraday trade.
The BSE Mid-Cap index fell 0.03% and the BSE Small-Cap index declined 0.26%. Both these indices outperformed the Sensex.
The BSE Capital Goods index (up 0.58%) BSE Bankex (up 0.56%), BSE Consumer Durables index (up 0.41%), BSE FMCG index (up 0.14%), BSE PSU index (down 0.07%) and BSE Metal index (down 0.45%), outperformed the Sensex.
The BSE Realty index (down 1.46%) BSE Power index (down 1.28%), BSE IT index (down 0.93%), BSE Teck index (down 0.88%), BSE Oil & Gas index (down 0.87%), BSE HealthCare index (down 0.77%) and BSE Auto index (down 0.73%), underperformed the Sensex.
The total turnover on BSE amounted to Rs 2058 crore, lower than Rs 2161.85 crore on Tuesday, 22 October 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,239 shares declined and 1,176 shares rose. A total of 178 shares were unchanged.
Hero MotoCorp gained in volatile trade after announcing Q2 result during market hours today, 23 October 2013. The stock gained 1.07% to Rs 2,092. The scrip hit a high of Rs 2,104.05 and low of Rs 2,036.50. The company's net profit rose 9.26% to Rs 481.41 crore on 10.49% growth in total income to Rs 5841.67 crore in Q2 September 2013 over Q2 September 2012.
Commenting the second quarter results, Mr. Pawan Munjal, MD & CEO, Hero MotoCorp said: "With our performance the second quarter, we have clearly demonstrated that we can have good margins even as we strengthen our market leadership. When we commenced our solo journey a little over two years ago, protecting our market share was the top-most priority. Having achieved that, our strategy now clearly is to build on that leadership and make our business more profitable through several innovations, including a cost rationalization initiative. The results are already showing. Going forward, as we move to consolidate our leadership through technology, innovation and youth-focused products, we will certainly strive to keep improving our profitability as well".
Mr. Munjal added: "These numbers bode well for the festive season. The sentiments are positive and there is a momentum for us in the market, and we are definitely looking at demonstrating our leadership by record dispatch and retail sales during the festive period. The country, however, is passing through a very challenging time, which is also reflected in the sluggishness in the industry. The rupee depreciation, which has adversely impacted several sectors, has also pulled up the costs of essential commodities such as steel, nickel, copper and rubber. Going forward, these higher input prices, combined with increasing labour costs, are likely to put a lot of pressure on margins in the industry. We will, therefore, be innovative in tackling these cost pressures to protect our margins".
Hero MotoCorp said that with the company fast augmenting its presence globally and further strengthening its leadership in the domestic market, the company has unveiled a global vision for brand Hero to be achieved by the year 2020. This entails a target of Rs 60000 crore in turnover by the year 2020.
Wipro dropped in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. The stock lost 4.41% at Rs 492.20. The scrip hit a high of Rs 514.50 and low of Rs 471.55. The company after market hours on Tuesday, 22 October 2013, reported 28% growth in consolidated net profit from continuing operations to Rs 1932 crore on 19% growth in revenue from continuing operations at Rs 10992 crore in Q2 September 2013 over Q2 September 2012. The results are as per International Financial Reporting Standards. Wipro said non-GAAP adjusted net profit from continuing operations jumped 29% to Rs 1932 crore in Q2 September 2013 over Q2 September 2012.
Non-GAAP constant currency IT services revenue in dollar terms grew 3.2% sequentially and 7.9% year-on-year (YoY), Wipro said. IT services revenue stood at $1.6311 billion in Q2 September 2013, a sequential increase of 2.7% and YoY increase of 5.9%. IT services revenues in rupee terms stood at Rs 10068 crore in Q2 September 2013, an increase of 20% YoY. IT services Earnings Before Interest and Tax (EBIT) was Rs 2264 crore in Q2 September 2013, an increase of 31% YoY.
Wipro expects 1.77% to 3.61% growth in revenues from IT services business at $1.66 billion to $1.69 billion in Q3 December 2013 over Q2 September 2013.
Azim Premji, Chairman of Wipro, commenting on the results said: "There are positive indicators on the global economy. Client confidence is on the uptick and we see it reflected in our results".
T K Kurien, Executive Director & Chief Executive Officer of Wipro said: "We achieved a broad based revenue growth across all industry verticals and continue to focus on executing to our strategy".
Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro said: "Our sustained execution towards increasing operational efficiencies in the business coupled with currency benefits helped offset the impact of wage hikes resulting in strong improvements in operating margins".
GAIL (India) advanced 3.98% on media reports that the oil ministry has decided to exempt the company from sharing subsidy burden with state-run oil retailers. According to reports, the oil ministry has decided to exempt GAIL (India) from paying any compensation to public sector oil marketing companies (PSU OMCs) for selling diesel, kerosene and cooking gas below market rates, because GAIL does not make windfall profits when international crude oil and gas prices soar.
PSU OMCs -- BPCL, HPCL and Indian Oil Corporation -- suffer revenue loss on domestic sale of diesel, LPG and kerosene at a controlled price (The government decontrolled pricing of petrol in 2010). The government compensates these state-run oil marketing firms for their under-recoveries through oil bonds. The rest of the cost-price gap is borne by three state-run oil firms -- GAIL (India), ONGC and Oil India.
The report added that while ONGC and Oil India will continue to share oil subsidies, GAIL (India) will exit from the subsidy sharing mechanism because the reasons for it to share subsidy no longer exist. GAIL was asked to contribute because the government had allocated it cheaper APM (administered price mechanism) gas. Earlier, GAIL used to get gas at control rate of about $1.8 per unit. Now, it is forced to import costlier gas for its petrochemical units, report said.
As per the report, GAIL had been demanding exemption from sharing subsidy because it was not an upstream company and unlike them it does not gain from any jump in global oil and gas prices.
Meanwhile, GAIL (India) announced after market hours that in a landmark development to expand the natural gas footprint in eastern India, GAIL (India) has signed a Gas Cooperation Agreement (GCA) for natural gas infrastructure and city gas distribution with the Department of Industries, Government of Bihar. Under the provisions of the GCA, GAIL and the Bihar Government will evaluate the feasibility for cooperation for the development of the use of eco-friendly fuel, especially natural gas, in the state as well as development of natural gas distribution and city gas infrastructure in identified urban areas and cities after obtaining due authorization from the Petroleum and Natural Gas Regulatory Board (PNGRB).
GAIL is constructing the 2,050 km. Haldia-Jagdishpur pipeline from transmission and distribution of natural gas, of which about 621 km. will pass through 14 districts of Bihar. The mainline of the Haldia Jagdishpur will cover 4 districts of Bihar such as Kaimur, Rohtas, Aurangabad, Gaya and 10 districts for the spur lines. GAIL will explore the possibility of City Gas Distribution in major towns of Bihar along this pipeline route.
GAIL and Industries Department, Bihar will also work towards promotion of joint venture for City Gas Distribution projects for domestic, commercial, industrial and transport sectors with the participation of GAIL or its wholly owned subsidiary GAIL Gas Limited and concerned departments of the Bihar Government, other state agencies or private players.
As per the GCA, Natural Gas Demand Assessment and Preliminary Techno Economic Feasibility Study will be undertaken for evaluation of medium and long term gas demand potential for the state for industrial, commercial, transport and residential sectors; assessment of pipeline infrastructure and associated facilities required for supply of natural gas including optical fibre network; and evaluation of natural gas supply options to Bihar on a long-term and competitive basis.
Cairn India declined in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. The stock lost 3.38% to Rs 321.30. The scrip hit high of Rs 334 and low of Rs 317.60. The company after market hours on Tuesday, 22 October 2013, said its consolidated net profit jumped 46% to Rs 3385 crore on 5% growth in revenue to Rs 4650 crore in Q2 September 2013 over Q2 September 2012. Cairn India reports revenues post profit-sharing with the government in all blocks in addition to royalty in the Rajasthan block.
Cairn India's earnings before interest, taxation, depreciation and amortization (EBITDA) rose 9% to Rs 3619 crore in Q2 September 2013 over Q2 September 2012. EBITDA margin surged to 77.8% in Q2 September 2013 from 74.5% in Q2 September 2012. The company reported foreign exchange fluctuation gain of Rs 429.16 crore in Q2 September 2013, as against foreign exchange fluctuation loss of Rs 785.81 crore in Q2 September 2012.
Elango P, whole time director, Cairn India said: ''We are happy to report increased gross operated production of almost 213,300 barrels of oil equivalent per day (boepd) during Q2 September 2013 and we remain on track for our financial year exit production rate guidance of over 225,000 boepd across all producing assets. We are focused on enhancing the recovery efficiency from our producing fields through the use of cutting edge EOR techniques. We have also been extremely active with the drill bit as we continue to aggressively develop our world class resource base. Whilst Rajasthan remains at the heart of the Company's operations, it is encouraging to see tangible results across our broader portfolio. We remain excited on the regulatory front and are pleased to share that the government has recently announced its policy on the Integrated Development Plan. Looking ahead, we have a strong balance sheet, underpinned by significant cash flow generation and low operating costs, allowing us the flexibility to further develop the asset base. This, combined with a highly motivated and innovative team working on our world class portfolio, will enable us to maintain our industry leading production growth trajectory in the long term.''
Hindustan Unilever rose in highly volatile trade. The stock rose 0.8% at Rs 613.70. The scrip jumped as much as 5.72% at the day's high of Rs 643.70. The stock fell as much as 1.44% at the day's low of Rs 600.10. The stock saw high volume of 7.58 lakh shares as compared with average volume of 2.03 lakh shares in the past one quarter.
Hindustan Zinc rose 0.37%. The company during market hours today, 23 October 2013, reported 7% rise in net profit to Rs 1640 crore on 25% growth in income from operations to Rs 3521 crore in Q2 September 2013 over Q2 September 2012. Hindustan Zinc attributed the increase in revenue to higher sales volume and rupee depreciation, partially offset by lower silver price.
Earnings before interest, taxation, depreciation and amortization (EBITDA) surged 28% to Rs 1904 crore in Q2 September 2013 over Q2 September 2012. The positive impact of higher EBITDA was partly offset by lower other income due to mark-to-market losses on investments during the quarter, the company said in a statement.
With regard to the status of the expansion projects, Hindustan Zinc said that the Rampura Agucha underground mine project is operational via ramps and commercial production will ramp up in Q3 and Q4 of FY 2014. The Kayad mine project will also commence commercial production in FY 2014, the company said.
As on 30 September 2013, the company had cash and cash equivalents of Rs 23632 crore. The company said that it follows a conservative investment policy and invests in fixed deposit with banks and high quality debt instruments including AAA/AA rated bonds and debt mutual funds.
Telecom stocks edged lower. Bharti Airtel (down 1.45%), Idea Cellular (down 1.6%) and Reliance Communications (down 1.52%) declined. The telecommunications regulator, Telecom Regulatory Authority of India (TRAI) today, 23 October 2013, reiterated its recommendations for a sharp cut in the reserve prices in an upcoming auction for mobile phone spectrum, responding to clarifications sought by the telecommunications ministry. TRAI had recommended last month that the reserve price for spectrum in the 900 megahertz band in some key cities be cut by about 60%, and also suggested a 37% cut in the reserve price for spectrum in the 1800 megahertz band.
The Union Cabinet has the final say on the spectrum price proposals, while a panel of ministers will decide on some other rules for the auction planned for January.
Capital goods pivotals were mixed. L&T rose 1.35%. The company during market hours on Tuesday, 22 October 2013, said that its construction division has secured new orders worth Rs 1333 crore in October 2013 in various business segments.
Bhel declined 1.93%.
Bank stocks gained on renewed buying. Among private bank stocks, Axis Bank (up 0.83%), and ICICI Bank (up 1.3%), gained. Kotak Mahindra Bank was flat. HDFC Bank fell 1.58%.
Among PSU bank stocks, State Bank of India (SBI) (up 2.25%), Punjab National Bank (up 1.66%), Bank of Baroda (up 4.58%), Bank of India (up 5.33%) and Union Bank of India (up 1.95%), advanced.
The Ministry of Finance after trading hours today, 23 October 2013, said that the Government of India (GoI) has approved infusion of a total of Rs 14000 crore in 20 public sector banks (PSBs) during Financial Year 2013-14 through preferential allotment of equity shares. The largest capital infusion will be SBI at Rs 2000 crore, followed by Rs 1800 crore each in Central Bank of India and IDBI Bank, Rs 1200 crore in Indian Overseas Bank and Rs 1000 crore in Bank of India. GoI will infuse Rs 550 crore in Bank of Baroda and Rs 500 crore in Punjab National Bank.
Shares of cement major ACC shrugged off the company's poor Q3 results. The stock rose 1.82% at Rs 1,156.95. The stock was volatile. The scrip hit high of Rs 1,164 and low of Rs 1,100. ACC's consolidated net profit plunged 50.85% to Rs 118.90 crore on 1.32% drop in sales turnover at Rs 2508.65 crore in Q3 September 2013 over Q3 September 2012. Operating EBITDA (earnings before interest, taxation, depreciation and amortization) dropped 38.51% to Rs 286.56 crore in Q3 September 2013 over Q3 September 2012. The result hit the market during trading hours today, 23 October 2013.
The company attributed reduced profitability during the quarter to sluggish market conditions and lower realizations.
ACC said that the macro-environment continued to be dull and characterized by slow industrial and agricultural growth, rising prices and volatile foreign exchange rates. There were increases in the prices of diesel, coal and railway freight which could be countered partly through the company's ongoing initiatives to achieve improvements in operations, sales and logistics. Work on the company's ongoing Jamul expansion project is progressing well with all the main structures now above ground. Work has also commenced at the Sindri site and is moving ahead on schedule, ACC said in a statement. While the extended monsoon is expected to have a favourable impact on the agricultural sector in coming months, the management anticipates a gradual but slow improvement in demand for cement and in the overall economy which may need some more time to recover.
Ambuja Cements rose 0.25% in choppy trade ahead of its quarterly earnings today, 23 October 2013.
UltraTech Cement was down 1.28%. The company had reported weak Q2 results on 19 October 2013.
Realty stocks edged lower. DLF (down 3.36%), HDIL (down 1.48%), D B Realty (down 3.31%) and Unitech (down 1.08%), edged lower.
Exide Industries declined 2.29% on weak Q2 results. Net profit fell 1.3% to Rs 118.63 crore on 6.96% decline in total income to Rs 1435.74 crore in Q2 September 2013 over Q2 September 2012. The result was announced during trading hours today, 23 October 2013.
Commenting on the performance, MD & CEO, Mr. P K Kataky said: "The depreciation of the Indian rupee and continued sluggish demand had its impact on the performance of the company in the second quarter. The demand for both automobile (especially OEM) and industrial batteries (including infrastructure, telecom and inverter) remained subdued. To improve its performance, the company has undertaken various cost control and technological upgradation initiatives. This will enable the company to succeed in its marketing efforts in a highly competitive market".
Cadila Healthcare fell 0.22%. The company has secured USFDA approval for initiating Phase I clinical trials of ZYDPLA1 -- a novel next generation orally active, small molecule DPP-4 inhibitor to treat Type 2 diabetes. The announcement was made during trading hours today, 23 October 2013.
ZYDPLA1 is an orally active, small molecule NCE, discovered and developed by the Zydus Research Centre, the NCE research wing of Cadila Healthcare. Currently, all available DPP-4 inhibitors are dosed once-daily. ZYDPLA1 with a once-a-week dosing regimen, would provide diabetic patients with a more convenient treatment alternative, Cadila Healthcare said in a statement.
Speaking on the latest development, Mr. Pankaj R. Patel, CMD, Cadila Healthcare said: "After a promising start with Lipaglyn, we take another big leap forward in the area of diabetic research and long term management of Type 2 diabetes. The IND approval by USFDA is another major regulatory milestone for us. We believe that ZYDPLA1 holds promise and would take us closer to our mission of reducing the burden of chronic diseases and addressing unmet medical needs in the treatment of diabetes".
L&T Finance Holdings lost 2.59%. The company reported 8.34% rise in consolidated net profit to Rs 155.72 crore on 40.18% growth in total income to Rs 1320.06 crore in Q2 September 2013 over Q2 September 2012. The Q2 result was announced during trading hours today, 23 October 2013.
L&T Finance Holdings said that net interest margin of the lending business improved by 10 basis points (bps) year on year (y-o-y) to 5.6% in Q2 September 2013. L&T Finance Holdings (LTFH)'s loans & advances as on 30 September 2013 grew by 28.2% year on year to Rs 35458.7 crore and by 6.5% as compared to Rs 33309.90 crore as on 31 March 2013.
Gross non-performing assets (NPAs) stood at Rs. 992.90 crore as on 30 September 2013 or 2.89% as a percentage of gross advances as against Rs 846.40 crore or 2.54% as on 30 June 2013. The elevated gross NPAs is mainly due to one account in the infrastructure segment. The gross NPAs include Rs 92.90 crore (net of write off) in FamilyCredit (FCL), mainly contributed by legacy portfolio (fully provided for), L&T Finance Holdings said.
The ratio of net NPAs stood at Rs 654.6 crore or 1.93% as a percentage of gross advances as on 30 September 2013 as against Rs 551 crore or 1.67% as on 30 June 2013.
LTFH said that the company continues to follow a conservative provisioning policy with contingent and voluntary provisions of Rs 258 crore over and above RBI norms.
LTFH said that the company continues to be cautious in credit selection and with aggressive asset monitoring the company expects its asset quality to remain stable.
Personal care products maker Emami dropped 0.21%. The company after trading hours today, 23 October 2013, reported 35.06% growth in consolidated net profit to Rs 79.96 crore on 13.59% growth in total income to Rs 423.17 crore in Q2 September 2013 over Q2 September 2012.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade. The partially convertible rupee was hovering at 61.59, compared with its close of 61.655/665 on Tuesday, 22 October 2013. The rupee had surged to a high 61.05 in early trade after soft US jobs data led to hopes that the Federal Reserve would not start tapering monetary stimulus until 2014.
European stocks dropped on Wednesday, 23 October 2013, as investors digested more quarterly earnings and new ECB stress tests on euro-zone banks. Key benchmark indices in France, Germany and UK were off 0.49% to 1.03%.
The Bank of England on Wednesday lifted its growth estimates for the second half of the year, as a "robust" recovery in the UK continues to gather pace and unemployment looks set to fall faster than expected. The central bank said in its minutes from its policy-setting meeting earlier in October that growth in the second half would remain around 0.7% a quarter or a little higher, stronger than expected at the time of the August Inflation Report. In September, the BOE upgraded the growth expectations for the third quarter to 0.7% from the 0.5% forecast in August. "The recovery in growth since the end of 2012 appeared in part to reflect a dissipation of uncertainty -- for example, as the perceived tail risks in the euro area had receded -- against the backdrop of considerable monetary stimulus," the BOE said in the minutes, released on Wednesday. It also said that surveys indicate the joblessness rate for the rest of the year likely will fall faster than it anticipated in August. The UK's third-quarter gross-domestic-product number will be released on Friday, 25 October 2013.
The European Central Bank in November will begin a thorough review of the balance sheets of 130 financial institutions from Latvia to Germany, opening a year-long process aimed at removing doubts about the strength of European banks and restoring credit to the private sector. As part of the asset-review exercise, and subsequent stress tests of bank balance sheets, the ECB said Wednesday it will ask all banks included in the assessment to set aside 8% of their risk-adjusted capital as a buffer against losses on loans and other parts of their balance sheets. The central bank, which assumes a new role as single supervisor of euro-zone banks at the end of next year, said the asset review will include on-balance sheet and off-balance sheet exposures such as credit derivatives. The ECB will examine the banking and trading books of financial institutions. The euro bloc consists of 17 countries and will rise to 18 in January when Latvia adopts the euro.
Asian markets on Wednesday, 23 October 2013, reversed their initial gains triggered by expectations that lackluster US September jobs report will lead to the Federal Reserve maintaining stimulus for the US economy in the foreseeable future. Key benchmark indices in Japan, Hong Kong, China, South Korea, Singapore and Taiwan fell by 0.17% to 1.95%. Indonesia's Jakarta Composite rose 0.75%.
Trading in US index futures indicated that the Dow could fall 77 points at the opening bell on Wednesday, 23 October 2013. US stocks gained on Tuesday, 22 October 2013, further propelling the S&P 500's record rise, as the September nonfarm-payrolls report supported the notion that the Federal Reserve's monthly bond purchases would continue into next year.
The US created a modest 148,000 jobs in September but the number of people hired in August was higher than previously reported, indicating an economy on a zigzag course heading into the government shutdown. The nation's unemployment rate, meanwhile, fell a tick to a five-year low of 7.2%, as more people found work, according to figures released Tuesday by the Labor Department.
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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