Decline in world stocks and hawkish comments on inflation on Thursday, 30 May 2013, from Reserve Bank of India governor D. Subbarao which dashed hopes that the central bank will continue to lower interest rates to boost economic growth, pulled Indian stocks sharply lower on the last trading day of the month. The 50-unit CNX Nifty fell below the psychological 6,000 mark. The barometer index, the S&P BSE Sensex, also fell below the psychological 20,000 level. The Sensex lost 455.10 points or 2.25%, off 430.99 points from the day's high and up 29.75 points from the day's low. The market breadth, indicating the overall health of the market, was weak.
Volatility was at the fore as the Sensex advanced 256.12 points or 1.31% in May 2013. The Sensex has gained 333.59 points or 1.72% in calendar 2013 so far (till 31 May 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 683.22 points or 3.34%. From a 52-week low of 15,748.98 on 4 June 2012, the Sensex has surged 4,011.32 points or 25.47%.
Coming back to today's trade, index heavyweight and cigarette major ITC dropped after turning ex-dividend. Anther index heavyweight Reliance Industries (RIL) also declined. Metal stocks edged lower as the International Monetary Fund (IMF) recently cut its growth forecast for China this year citing a weak world economy and exports, adding to concerns that the world's second-largest economy is losing momentum. Auto stocks declined. Mahindra & Mahindra (M&M) reversed direction after Thursday's post result rally. Realty stocks declined. Shares of real estate developer DLF fell after the company swung to loss in Q4 March 2013. Opto Circuits tumbled after poor Q4 results.
IT stocks rose on weak rupee. Bank stocks declined after the Reserve Bank of India (RBI) on Thursday, 30 May 2013, tightened rules for banks restructuring loans that are in danger of default. Telecom stocks edged lower. Cement stocks were mostly lower. Among FMCG stocks, Marico scaled record high. GlaxoSmithkline Consumer Healthcare hit record high as it will be included in MSCI India index from close of trading today, 31 May 2013.
Suzlon Energy tumbled to record low on weak Q4 result. GlaxoSmithKline Pharmaceuticals scaled record high. MMTC dropped after reporting dismal Q4 result. Jet Airways (India) dropped as an auction for sale of some of the promoters' stake through the stock exchange mechanism failed to garner the requisite response on Thursday, 30 May 2013. Bharat Electronics gained on strong Q4 result.
The S&P BSE Sensex lost 455.10 points or 2.25% to 19,760.30, its lowest closing level since 24 May 2013. The index lost 484.85 points at the day's low of 19,730.55 in late trade. The index slipped 24.11 points at the day's high of 20,191.29 in early trade.
The CNX Nifty was down 138.10 points or 2.26% to 5,985.95, its lowest closing level since 24 May 2013. The index hit a low of 5,975.55 in intraday trade. The index hit a high of 6,106.25 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,597 shares declined and 854 shares rose. A total of 117 shares were unchanged.
The total turnover on BSE amounted to Rs 2023 crore, lower than Rs 4029 crore on Thursday, 30 May 2013.
The BSE Mid-Cap index shed 1.33%. The BSE Small-Cap index declined 1.56%. Both these indices outperformed the Sensex.
The BSE IT index (up 0.87%), BSE Teck index (down 0.28%), BSE HealthCare index (down 0.93%), BSE Consumer Durables index (down 1.28%), BSE Capital Goods index (down 1.73%), BSE Auto index (down 1.78%), BSE Metal index (down 1.88%), BSE Power index (down 1.89%), BSE PSU index (down 2.15%) and BSE FMCG index (down 2.21%) outperformered the Sensex.
The BSE Realty index (down 3.38%), BSE Oil & Gas index (down 2.71%) and BSE Bankex (down 2.46%) underperformed the Sensex.
Among the 30-share Sensex pack, 27 stocks declined and only three of them gained. GAIL (India) (down 4.62%), HDFC (down 3.44%) and Bhel (down 2.92%) edged lower from the Sensex pack.
Index heavyweight Reliance Industries (RIL) lost 3.74% to Rs 804.60. The stock hit high of Rs 835 and low of Rs 802. RIL and its partners BP and NIKO on 24 May 2013 announced a significant gas and condensate discovery in the KG D6 block off the eastern coast of India. RIL is the operator of KG D6 with 60% equity. BP has a 30% share and NIKO the remaining 10%.
Index heavyweight and cigarette major ITC dropped 4.02% at Rs 340 as the stock turned ex-dividend today, 31 May 2013, for dividend of Rs 5.25 per share for the year ended 31 March 2013. The stock hit record high of Rs 355.75 in intraday trade on Thursday, 30 May 2013.
Marico advanced 3.54% to Rs 235.15 after striking a record high of Rs 251.10 in intraday trade today, 31 May 2013.
Beer maker United Breweries rose 3.06%. The company's net profit declined 19.64% to Rs 5.85 crore on 7.06% growth in total income from operations (net) to Rs 1003.62 crore in Q4 March 2013 over Q4 March 2012. The result was announced after trading hours on Thursday, 30 May 2013.
Metal stocks edged lower as the International Monetary Fund (IMF) recently cut its growth forecast for China this year citing a weak world economy and exports, adding to concerns that the world's second-largest economy is losing momentum. China is the world's largest consumer of copper and aluminum.
Sail (down 4.82%), Hindalco Industries (down 3.99%), Tata Steel (down 3.25%), Jindal Steel & Power (down 3.29%), Nalco (down 2.6%) and Hindustan Zinc (down 1.65%) declined. Sterlite Industries (India) gained 1.81%.
State-run iron ore miner NMDC fell 1.8%. NMDC's net profit declined 10.8% to Rs 1464.95 crore on 23.5% growth in turnover to Rs 3204 crore in Q4 March 2013 over Q4 March 2012. The result was announced after market hours on Wednesday, 29 May 2013.
Sesa Goa rose 3.04%. The stock turned ex-dividend today, 31 May 2013 for dividend of Rs 0.10 per share for the year ended 31 March 2013.
Auto stocks declined. Auto major Tata Motors fell 0.92% after jumping 4.31% on Thursday. The company's consolidated net profit declined 36.71% to Rs 3945 crore on 10% growth in revenue to Rs 56002 crore in Q4 March 2013 over Q4 March 2012. The fall in bottom line was due to base effect. Tata Motors had accounted for a large tax credit in Q4 March 2012. Tata Motors' British luxury car unit Jaguar Land Rover (JLR) had accounted for tax credit of 225 million pounds (Rs 1794 crore) in Q4 March 2012 for past income tax losses. Tata Motors' profit before tax (PBT) rose 6.1% to Rs 4694 crore in Q4 March 2013 over Q4 March 2012. Tata Motors attributed revenue growth to strong demand, growth in volumes and favourable market mix at JLR and favourable operating foreign exchange at the British luxury car unit. The result was announced after market hours on Wednesday, 29 May 2013.
Due to weak operating environment in the commercial vehicles and passenger car business in India, the board of Tata Motors pruned dividend to Rs 2 per share for the year ended 31 March 2013 (FY 2013) from Rs 4 per share for the year ended 31 March 2012 (FY 2012).
Mahindra & Mahindra (M&M) lost 3.94% on profit booking. The M&M stock had surged 4.61% on Thursday, 30 May 2013, after the company reported strong Q4 results. The combined profit before exceptional items and tax of M&M and its 100% subsidiary -- Mahindra Vehicle Manufacturers (MVML) -- jumped 41.8% to Rs 1230.40 crore in Q4 March 2013 over Q4 March 2012. MVML, located at Chakan near Pune in Maharashtra, has been set up as a 100% subsidiary of M&M with a view to source contemporary products for expanding the market offering of M&M.
The combined gross revenue of Mahindra & Mahindra (M&M) and Mahindra Vehicle Manufacturers (MVML) rose 9.8% to Rs 11342.30 crore in Q4 March 2013 over Q4 March 2012
India's largest car maker by sales, Maruti Suzuki India declined 1.83%.
Two wheeler makers also edged lower. Bajaj Auto shed 0.83%. India's largest motorcycle maker by sales, Hero MotoCorp, dropped 0.7%
Bank stocks declined after the Reserve Bank of India (RBI) on Thursday, 30 May 2013, tightened rules for banks restructuring loans that are in danger of default.
State Bank of India (SBI) shed 1.99%. ICICI Bank slipped 2.85%.
HDFC Bank fell 3.56% to Rs 698. The stock had hit a record high of Rs 727 in intraday trade on Thursday, 30 May 2013.
Corporation Bank lost 9.27% as the stock turned ex-dividend today, 31 May 2013, for dividend of Rs 19 per share for the year ended 31 March 2013.
The central bank has raised the provision in respect of new restructured standard accounts to 5% in a phased manner by March 2016 from 2.75% at present. The RBI also said that promoters' personal guarantee should be obtained in all cases of restructuring and corporate guarantee cannot be accepted as a substitute for personal guarantee. However, corporate guarantee can be accepted in those cases where the promoters of a company are not individuals but other corporate bodies or where the individual promoters cannot be clearly identified.
IT stocks were mostly higher on weak rupee. Tata Consultancy Services (TCS) rose 0.1%. Infosys gained 2.47%. Wipro lost 2.22%. HCL Technologies rose 0.59%. The domestic currency was at 56.47/47 versus Thursday's close of 56.38/39. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Realty stocks declined. Indiabulls Real Estate (down 5.46%), Oberoi Realty (down 0.94%), Sobha Developers (down 0.43%) and Parsvnath Developers (down 0.29%) declined.
Real estate developer DLF fell 4.85%. The company reported consolidated net loss of Rs 4 crore in Q4 March 2013 as compared to net profit of Rs 212 crore in Q4 March 2012. Revenue declined 16% to Rs 2319 crore in Q4 March 2013 over Q4 March 2012. Earnings before interest, taxation, depreciation and amortization (EBITDA) declined 12% to Rs 819 crore in Q4 March 2013 over Q4 March 2012. The result was announced after trading hours on Thursday, 30 May 2013.
Net profit declined 41% to Rs 712 crore on 11% decline in revenue to Rs 9096 crore in the year ended 31 March 2013 (FY 2013) over the year ended 31 March 2012 (FY 2012). DLF said that the revision in the accounting guidance note on real estate issued by ICAI adversely impacted the recognition of revenue on the new projects launched during FY 2013 and as a result reduced profits. The adoption of new guidance note envisages that the revenue can be recognized after reaching certain milestones, particularly incurring 25% of budgeted project cost (excluding cost of land). Had the new accounting norms not been adopted, the company's revenue would have been higher by Rs 750 crore approximately while EBITDA would have been higher by about Rs 400 crore, DLF said.
With regard to the future business outlook, DLF said that the management envisages an uncertain and lower growth environment and hence plans to move to a risk mitigated, steady state business environment by adopting a cautions and conservative approach. With the successful completion of IPP and anticipated closure of the residual divestment of non-core assets, the company expects its net debt to come down in the current fiscal, said Mr. Ashok Tyagi, Group CFO, DLF. DLF expects to double its EBITDA and reduce its debt by 50% over the next three years. The company expects to become free cash positive by FY 2015.
Unitech shed 0.84%. The company's consolidated profit after tax from ordinary activities galloped 3981.71% to Rs 133.88 crore on 21.18% growth in total income to Rs 933.91 crore in Q4 March 2013 over Q4 March 2012. The Q4 result was announced after market hours on Thursday, 30 May 2013.
Unitech's consolidated profit before tax (PBT) jumped 254.87% to Rs 180.13 crore in Q4 March 2013 over Q4 March 2012. During the quarter (Q4 March 2013), the company made a provision of Rs 103.52 crore towards dimunition in value of its investment in wireless business. Net profit for the quarter, therefore, was Rs 30.33 crore, Unitech said.
Housing Development and Infrastructure (HDIL) lost 5.71%, with the stock extending recent slide. HDIL on Wednesday, 29 May 2013, reported consolidated net loss of Rs 279.95 crore in Q4 March 2013, as against net profit of Rs 315.52 crore in Q4 March 2012. HDIL's consolidated total income declined 76.04% to Rs 155.54 crore in Q4 March 2013 over Q4 March 2012.
HDIL said that the Mumbai International Airport has served notice of termination on the company for Mumbai International Airport Slum Rehabilitation project citing unsubstantiated charges on which the company has initiated legal remedies. The board of HDIL following its conservative accounting policy has written off unrealised cost aggregating to Rs 441.98 crore pertaining to the Mumbai International Airport Slum Rehabilitation project as exceptional item in Q4 March 2013, HDIL said.
Cement stocks were mostly lower. ACC (down 1.56%) and UltraTech Cement (down 4.84%) declined. Ambuja Cement rose 0.9%.
Telecom stocks dropped. Bharti Airtel (down 4.48%), Idea Cellular (down 2.02%), MTNL (down 8.1%), Tata Teleservices (Maharashtra) (down 0.79%) and Reliance Communications (down 3.05%) edged lower.
Shares of Apollo Hospitals Enterprise (up 4.5%), GlaxoSmithkline Consumer Healthcare (up 10.59%) and Wockhardt (up 7.2%) gained as these stocks will be included in MSCI India Index from close of trading today, 31 May 2013.
Container Corporation of India gained 1.26% to Rs 1,132 after striking a 52-week high of Rs 1,211.30 in intraday trade today, 31 May 2013. The company's net profit declined 0.5% to Rs 225.84 crore on 15% growth in net sales to Rs 1231.39 crore in Q4 March 2013 over Q4 March 2012. The Q4 result was announced on 25 May 2013.
MMTC lost 4.43%. The company's net profit declined 97.5% to Rs 2.21 crore on 31.4% decline in net sales to Rs 7287.69 crore in Q4 March 2013 over Q4 March 2012. The result was announced after trading hours on Thursday, 30 May 2013.
MMTC reported net loss of Rs 70.62 crore for the year ended 31 March 2013 (FY 2013), as against net profit of Rs 70.72 crore for the year ended 31 March 2012 (FY 2012). Net sales declined 56.9% to Rs 28415.62 crore in FY 2013 over FY 2012.
GlaxoSmithKline Pharmaceuticals surged 9% to Rs 2,507.05 after striking a record high of Rs 2,550 in intraday trade today, 31 May 2013.
Bharat Electronics rose 2.69% after net profit rose 77.5% to Rs 592.70 crore on 22.2% growth in net sales to Rs 2727.63 crore in Q4 March 2013 over Q4 March 2012. The result was announced after trading hours on Thursday, 30 May 2013. Bharat Electronics expects order inflow at about Rs 6000 crore during the current financial year.
Videocon Industries jumped 5.24% to Rs 218.05 ahead of the company's year ended March 2013 (FY 2013) result announcement today, 31 May 2013.
Jet Airways (India) dropped as an auction for sale of some of the promoters' stake through the stock exchange mechanism failed to garner the requisite response on Thursday, 30 May 2013. The stock lost 7.48% to Rs 489.
On Thursday, 30 May 2013, Tail Winds, a promoter of Jet Airways (India), had put on block 43.17 lakh shares of the company, representing approximately 5% of the total paid up equity share capital, via Offer for Sale (OFS) through a separate window provided by the stock exchanges for this purpose. The OFS got bids for 29.86 lakh shares, compared with 43.17 lakh shares on offer, as per data from the stock exchanges. The OFS was subscribed 69.16% at an indicative bid price of Rs 515.17 per share. The floor price for the offer for sale was fixed at Rs 510.
Jet Airways (India) during market hours today, 31 May 2013, after the OFS from Tail Winds, the company has now complied with the minimum public share holding norms of 25% as stipulated by applicable regulatory requirements.
Torrent Pharmaceuticals jumped 9.07% to Rs 782 after striking a record high of Rs 809.50 in intraday trade today, 31 May 2013 after the company reported consolidated net profit of Rs 111 crore in Q4 March 2013, as against net loss of Rs 2 crore in Q4 March 2012. Torrent Pharmaceuticals' consolidated revenue rose 29% to Rs 871 crore in Q4 March 2013 over Q4 March 2012. The Q4 result was announced after market hours on Thursday, 30 May 2013.
Berger Paints India tumbled 7.79% after net profit rose 4.3% to Rs 50.90 crore on 8.1% growth in net sales to Rs 734.09 crore in Q4 March 2013 over Q4 March 2012. The Q4 result was announced after market hours on Thursday, 30 May 2013.
Suzlon Energy was locked at 10% lower circuit at Rs 11.74, also its record low. The company reported consolidated net loss of Rs 1912.72 crore in Q4 March 2013, higher than a net loss of Rs 300.24 crore in Q4 March 2012. Suzlon Energy's net sales fell 36.1% to Rs 4280.53 crore in Q4 March 2013 over Q4 March 2012. The result was announced after trading hours on Thursday, 30 May 2013.
GMR Infrastructure rose 1.96% after the company reported consolidated net profit of Rs 579.17 crore in Q4 March 2013, as against net loss of Rs 366.16 crore in Q4 March 2012. GMR Infrastructure's consolidated total income from operations rose 21.46% to Rs 2592.52 crore in Q4 March 2013 over Q4 March 2012. The company announced Q4 results during trading hours today, 31 May 2013.
Gujarat State Petronet rose 2.51% after net profit rose 24.92% to Rs 161.47 crore on 29.9% rise in net sales to Rs 358.96 crore in Q4 March 2013 over Q4 March 2012. The result was announced after trading hours on Thursday, 30 May 2013.
Opto Circuits (India) slumped 38.36% after consolidated net profit slumped 94.13% to Rs 12.29 crore on 32.95% decline in total income from operations to Rs 456.37 crore in Q4 March 2013 over Q4 March 2012. The result was announced after trading hours on Thursday, 30 May 2013.
On the macro front, India's GDP grew 4.8% Q4 March 2013, slightly higher than a revised 4.7% growth in Q3 December 2012, data released by the government today, 31 May 2013, showed. GDP grew at a decade low of 5% in fiscal year 2012-13.
The Reserve Bank of India (RBI) governor D. Subbarao on Thursday, 30 May 2013, said that the central bank is concerned about the country's wide current-account deficit (CAD) and still-high retail inflation. The result of the high current-account deficit has been the depreciation of the rupee, he said. Rupee depreciation is a problem because it pushes up the cost of our imports, it increases debt-servicing cost, it causes inflation and it erodes our external payment situation, he added. Mr. Subbarao said India's retail inflation is still a concern. Sacrificing growth in the short term is "inevitable" as the RBI strives to rein in inflation, he added.
RBI undertakes mid-quarter review of the monetary policy on 17 June 2013. 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.
European stock markets moved lower on Friday, pulling back from gains seen the prior day and with investors cautious to make any major moves ahead of data on US consumer spending and consumer sentiment. Key benchmark indices in France, Germany and UK shed 0.65% to 0.99%.
Asian markets were mostly lower today, 31 May 2013. Key benchmark indices in Indonesia, Hong Kong, China and Singapore were down by 0.41% to 1.19%. Key benchmark indices in South Korea, Taiwan and Japan rose by 0.05% to 1.37%.
Japan's industrial production rose 1.7% during April, the Ministry of Economy, Trade and Industry said today, 31 May 2013.
China will release the government-sponsored manufacturing data for May 2013 tomorrow, 1 June 2013. Investors will be watching to see if the government-sponsored Purchasing Managers' Index matches preliminary results from a privately-compiled version, produced by HSBC and Markit, which showed Chinese manufacturing activity contracting in May.
Trading in US index futures indicated that the Dow could fall 83 points at the opening bell on Friday, 31 May 2013. US stocks edged higher on Thursday, 30 May 2013, as another report cast a positive light on the US housing market and as weaker-than-expected data on first-quarter economic growth and jobless claims raised hopes the Federal Reserve may keep its current level of bond purchases.
Fed Chairman Ben Bernanke said last week that an improvement in data could trigger the central bank to start tapering its asset purchases in coming months, stoking fears that the $85-billion-a-month liquidity injection will soon come to an end.
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