Key benchmark indices weakened to hit fresh intraday low in morning trade as Asian stocks reversed intraday gains. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in 2-1/2 weeks. The Sensex was down 91.92 points or 0.47%, off about 250 points from the day's high and up close to 15 points from the day's low. Index heavyweight and cigarette major ITC edged lower. Another index heavyweight Reliance Industries (RIL) reversed initial gains. The market breadth, indicating the overall health of the market, turned negative from positive.
Hindustan Copper jumped on good Q4 results. India's largest steel maker by sales, Tata Steel jumped despite reporting reverse turnaround in Q4 results. Other metal stocks were mixed.
In a bout of initial volatility, key benchmark indices pared entire gains after opening higher tracking mostly firm Asian stocks. The CNX Nifty slipped below the psychological 6,000 mark after regaining that mark at the onset of the trading session. It weakened to hit fresh intraday low in morning trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 316.23 crore on Thursday, 23 May 2013, as per provisional data from the stock exchanges.
At 10:30 IST, the S&P BSE Sensex was down 91.92 points or 0.47% to 19,582.14. The index declined 105.84 points at the day's low of 19,568.49 in morning trade, its lowest level since 6 May 2013. The index jumped 158.81 points at the day's high of 19.833.14 in early trade.
The CNX Nifty was down 25.75 points or 0.43% to 5,941.30. The index hit a high of 6,015.30 in intraday trade. The index hit a low of 5,940.95 in intraday trade, its lowest level since 6 May 2013.
The market breadth, indicating the overall health of the market, turned negative from positive. On BSE, 749 shares fell and 595 shares rose. A total of 64 shares were unchanged.
Among the 30-share Sensex pack, 22 stocks fell and the rest of them rose. Sun Pharmaceutical Industries, Tata Motors and Bhel shed by 2.02% to 3.13%.
Index heavyweight Reliance Industries (RIL) fell 0.27% to Rs 783, off the day's high of Rs 794.
Index heavyweight and cigarette major ITC fell 0.6% to Rs 330.30. The stock had hit record high of Rs 355 in intraday trade on 11 May 2013. The company's net profit rose 19.43% to Rs 1927.98 crore on 19.12% growth in total income to Rs 8511.38 crore in Q4 March 2013 over Q4 March 2012. The result was announced on 17 May 2013. ITC's net profit rose 20.38% to Rs 7418.39 crore on 18.74% growth in total income to Rs 30839.97 crore in the year ended March 2013 over the year ended March 2012.
On a consolidated basis, ITC's net profit rose 21.57% to Rs 7608.07 crore on 19.02% growth in total income to Rs 32505.14 crore in the year ended March 2013 over the year ended March 2012.
ITC's board of directors at its meeting held on Friday, 17 May 2013, recommended a dividend of Rs 5.25 per share for the financial year ended 31 March 2013.
India's largest steel maker by sales, Tata Steel jumped 4.17% despite reporting reverse turnaround in Q4 results. The company reported consolidated net loss of Rs 6529 crore in Q4 March 2013, as against net profit of Rs 433 crore in Q4 March 2012. Turnover rose 1.91% to Rs 34650 crore in Q4 March 2013 over Q4 March 2012. The result was announced after market hours on Thursday, 23 May 2013.
Tata Steel's consolidated earnings before interest, taxation, depreciation and amortization (EBITDA) rose 27.75% to Rs 4368 crore in Q4 March 2013 over Q4 March 2012. EBITDA margin improved to 12.6% in Q4 March 2013, from 10.1% in Q4 March 2012 and 7% in Q3 December 2012.
Tata Steel reported consolidated net loss of Rs 7058 crore in the year ended 31 March 2013 (FY 2013), as against net profit of Rs 5390 crore in the year ended 31 March 2012 (FY 2012). Turnover rose 1.36% to Rs 1.34 lakh crore in FY 2013 over FY 2012. EBITDA declined 6.49% to Rs 12654 crore in FY 2013 over FY 2012. EBITDA margin declined to 9.4% in FY 2013, from 10.2% in FY 2012.
Tata Steel monetised its portfolio by selling part of its stake in Titan Industries to realise profits of Rs 962 crore in FY 2013.
The primary reason behind Tata Steel reporting net loss in Q4 March 2013 and FY 2013 was due to the non-cash impairment charge of Rs 8356 crore in Q4 March 2013. Tata Steel said that the Eurozone crisis has pushed regional economies in Europe and UK into a recession and the current steel demand is almost 30% lower than the pre-2008 financial crisis level. These severely depressed conditions are expected to continue over the short-to-medium term and have led to a downward revision of cashflow expectations and the valuation of the Groups' European operations. Reflecting these conditions, the Group took an impairment charge of Rs 8356 crore in Q4 March 2013. This is a non-cash charge and does not affect any of its financial covenants and its funding position, the company said. A significant portion of this impairment charge relates partly to the goodwill created on the acquisition of Corus Group plc in 2007 and partly to the assets of the business units that have been adversely affected by the severe contraction in demand, especially in the construction sector, Tata Steel said. The balance impairment relates to the assets in Tata Steel KZN in South Africa, Tata Steel Thailand and Tata Metaliks for Redi Plant, the company added.
During FY 2013, Tata Steel Group raised Rs 31799 crore of debt from various banks and financial markets taking its gross debt to Rs 66074 crore. An amount of Rs 15472 crore was incurred on capital expenditure (capex) and Rs 27099 crore was utilised towards repayment of principal obligations, Tata Steel said in a statement. The closing cash and cash equivalents as of 31 March 2013 stood at Rs 10652 crore. The net debt as of 31 March 2013 stood at Rs 55421 crore, as against net debt of Rs 47657 crore as of 31 March 2012.
Tata Steel Group has also secured above Rs 24000 crore through significant financing deals in April and May 2013, the company said in a statement.
The Group was able to successfully negotiate financial closure for its 6 mtpa Kalinga Project. It has tied up Rs 22800 crore of project financing with a consortium of 21 banks and financial institutions. This will meet the funding requirement of both the phases of the project, Tata Steel said in a statement.
Tata Steel Managing Director Mr. HM Nerurkar said, "Despite the weakening market conditions in the last year, the Indian operations posted a strong growth in production and deliveries. Our investment over the years in customer relationship building, developing distribution chain, undertaking market research and retail focus paid dividend through the significant sequential increase in deliveries in the last quarter. I convey my heartiest congratulations to all the employees for achieving this commendable performance. The brownfield expansion is now fully ramped up and we are committed to commissioning the greenfield plant in Odisha on schedule. The South East Asian operations have performed well with improving demand, product differentiation, efficiency improvement and restructuring measures."
Tata Steel Europe MD & CEO Dr Karl-Ulrich Kler said, "Europe's economic deterioration last year reversed the modest recovery in European steel demand that had been going on since 2009 and our deliveries fell as a consequence. We acted decisively in response to the renewed downturn by focusing intensely on costs and cash flow management. We took $250 million of cost out of the business and reduced our steel stocks to record lows by year-end. We also acted to restructure our support functions and asset base. But we did not allow the downturn to divert us from our longerterm objective of building an all-weather business. We invested significantly in improvements to our operational base and we made substantial progress in strengthening our long-term relationships with end customers in our chosen sectors. And we increased the proportion of high-value, differentiated products and services in our sales, which have risen by almost 20% in the last two years. These improvements have given us a firmer foundation as we enter another tough year of subdued steel demand in Europe."
Tata Steel's board of directors at a meeting held on Thursday, 23 May 2013, recommended dividend of Rs 8 per share for FY 2013.
Other metal stocks were mixed. JSW Steel, Sail, Sterlite Industries, Jindal Steel & Power, and Hindalco Industries shed by 0.1% to 2.85%. Bhushan Steel and Hindustan Zinc rose by 0.11% to 0.97%.
Hindustan Copper rose 2.72% on good Q4 results. The company's net profit surged 36.86% to Rs 188.09 crore on 11.62% decline in total income to Rs 550.45 crore in Q4 March 2013 over Q4 March 2012. The result was announced after market hours on Thursday, 23 May 2013.
Hindustan Copper's net profit rose 9.94% to Rs 355.64 crore on 0.02% growth in total income to Rs 1572.84 crore in the year ended 31 March 2013 (FY 2013) over the year ended 31 March 2012 (FY 2012).
Hindustan Copper's board of directors at a meeting held on Thursday, 23 May 2013, recommended dividend of Re 1 per share for FY 2013.
As per the Q4 results calendar, Coal India unveils consolidated FY 2013 results on Monday, 27 May 2013. Sun Pharma, Power Grid Corporation of India, GAIL (India) and Hindalco Industries unveil Q4 results on 28 May 2013. Tata Motors, ONGC, Cipla, NMDC and BPCL unveil Q4 results on 29 May 2013. DLF, M&M and Tata Power unveil Q4 results on 30 May 2013.
Global credit rating agency Standard & Poor's (S&P) on 17 May 2013, affirmed India's sovereign rating at BBB-minus with a negative outlook, reiterating there was a one-in-three chances of a ratings downgrade over the next 12 months. S&P said the government's ability to prop up investment growth remains uncertain. The ratings agency, however, said there was scope to upgrade the sovereign ratings if the government unleashes public and private investments to spur economic growth.
The monsoon rains may arrive on the southern coast around 3 June 2013, the weather office forecast on 15 May 2013. The rains, which run from June to September, are vital for the 55% of farmland without irrigation in India, one of the world's largest producers and consumers of food. The India Meteorological Department (IMD) has predicted normal rains this year.
The Reserve Bank of India (RBI) undertakes mid-quarter review of the monetary policy on 17 June 2013. RBI Governor D Subbarao on 14 May 2013 said that the central bank will take note of falling inflation when discussing potential interest rate cuts. The RBI on 3 May 2013 cut its key policy rate viz. the repo rate by 25 basis points (bps) to 7.25% and kept the cash reserve ratio (CRR) for banks unchanged at 4% after a monetary policy review. RBI said at that time that the balance of risks stemming from its assessment of the growth-inflation dynamic provides little space for further monetary easing. The RBI said it will endeavour to condition the evolution of inflation to a level of 5% by March 2014, using all instruments at its command.
The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.
Asian stocks reversed gains on Friday. Key benchmark indices in Japan, South Korea, Taiwan and Hong Kong shed by 0.13% to 1.33%. Key benchmark indices in China and Indonesia rose by 0.1% to 0.57%. Singapore markets were closed today for public holiday.
Trading in US index futures indicated that the Dow could fall 21 points at the opening bell on Friday, 24 May 2013. U.S. stocks fell modestly on Thursday, substantially paring intraday losses after upbeat U.S. economic reports and gains for Hewlett-Packard Co. countered worries about the Federal Reserve potentially tapering its bond-buying program.
Economic data on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week, while new single family home sales rose.
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