Key benchmark indices edged lower in choppy trade as the Reserve Bank of India's (RBI) latest measures to squeeze liquidity from the banking system to stem rupee's decline rattled investor sentiment. The market breadth, indicating the overall health of the market, was weak. The S&P BSE Sensex settled at one-week low. The 50-unit CNX Nifty settled at one-week closing low below the psychological 6,000 mark. The Sensex shed 211.45 points or 1.04%, up close to 100 points from the day's low and off about 160 points from the day's high.
The Sensex snapped five-day winning streak today, 24 July 2013. From a recent low of 19,851.23 on 16 July 2013, the Sensex had gained 450.90 points or 2.27% in five trading sessions to settle at 20302.13 on 23 July 2013. The Sensex has risen 694.87 points or 3.41% so far in July 2013 (till 24 July 2013). The Sensex has gained 663.97 points or 3.41% in calendar 2013 so far (till 24 July 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 352.94 points or 1.72%. From a 52-week low of 16,598.48 on 26 July 2012, the Sensex has surged 3,492.20 points or 21.03%.
Coming back to today's trade, bank stocks declined across the board after the Reserve Bank of India (RBI) on Tuesday, 23 July 2013 announced more measures to squeeze liquidity from the banking system to stem rupee's decline.
Engineering and construction major L&T hit 52-week low. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. IT stocks edged higher, with Tech Mahindra hitting 52-week high. IT major TCS hit record high after the company completed the acquisition of French IT services firm Alti SA. HCL Technologies revered direction after hitting record high in intraday trade. Jaiprakash Associates dropped after the foreign brokerage downgraded the stock to sell from hold. Dabur India scaled record high after good Q1 result.
The market may remain volatile tomorrow, 25 July 2013, as traders roll over positions in the futures & options (F&) segment from the July 2013 series to August 2013 series. The near month July 2013 derivatives contracts expire tomorrow, 25 July 2013.
The Reserve Bank of India (RBI) on Tuesday, 23 July 2013, announced additional measures to squeeze liquidity from the banking system to stem rupee's decline. The central bank imposed restrictions on commercial banks' access to cash, allowing banks to borrow cash only up to 0.5% of their net deposits from the central bank' daily at the benchmark interest rate of 7.25%. The RBI also tightened rules on the cash reserve ratio (CRR) -- the percentage of deposits that banks must hold as cash with the central bank -- which is 4% at present.
The S&P BSE Sensex lost 211.45 points or 1.04% to settle at 20,090.68, its lowest closing level since 17 July 2013. The index fell 307.88 points at the day's low of 19,994.25 in early afternoon trade. The index declined 49.43 points at the day's high of 20,252.70 in morning trade.
The CNX Nifty lost 87.30 points or 1.44% to 5,990.50, its lowest closing level since 17 July 2013. The index hit a low of 5,962.60 and a high of 6,047.25 in intraday trade.
The BSE Mid-Cap index fell 1.82% and the BSE Small-Cap index declined 1.42%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 1856 crore, higher than Rs 1632.17 crore on Tuesday, 23 July 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,524 shares declined and 773 shares rose. A total of 123 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks fell and rest of them rose.
Mining and metal stocks edged lower after a survey showed that China's manufacturing-sector activity is slowing further this month. China is the world's largest consumer of copper and aluminum. JSW Steel (down 4.13%), Jindal Steel & Power (down 3.99%), Sail (down 3.28%), Sterlite Industries (down 3.13%), Sesa Goa (down 3.11%), Hindustan Zinc (down 2.09%), Hindalco Industries (down 1.81%), Tata Steel (down 1.98%), and NMDC (down 1.28%), edged lower.
Interest rate sensitive auto stocks edged lower as RBI's latest measures to tighten liquidity in the banking system to stem rupee's slide have virtually wiped off possibility of any downward revision in RBI's key policy rate viz. the repo rate at its first quarter review of Monetary Policy 2013-14 on 30 July 2013. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Mahindra & Mahindra (M&M) (down 2.94%), Maruti Suzuki India (down 2.37%), Ashok Leyland (down 2.36%), and Tata Motors (down 0.52%), edged lower.
Bajaj Auto rose 1.56%.
Two-wheeler major Hero MotoCorp dropped 1.5%. The company after trading hours today, 24 July 2013, reported 10.86% decline in net profit to Rs 548.58 crore on 1.25% decline in total income to Rs 6271.78 crore in Q1 June 2013 over Q1 June 2012. The company said the net profit declined due to higher tax rate on account of the expiry of 5 years (April 2018-March 2013) of 100% exemption in Haridwar, where the largest-producing manufacturing plant of the company is located. With the expiry of the tax benefit, the tax liability of the company went up to 26.9% in Q1 June 2013, from 16.3% from Q1 June 2012. The decline in net profit is also reflective of the newly-levied higher surcharge in the Finance Bill 2013, Hero MotoCorp said in statement.
Commenting the first quarter results, Mr. Pawan Munjal, MD and CEO, Hero MotoCorp said: "The fact that our profit before tax has surpassed the previous as well as the corresponding quarter, despite a marginal de-growth in our volumes during the quarter and the overall economic downturn, is a strong statement of our intent and vision. Our operating profit has also improved compared to the previous and the corresponding quarter. We are determined to sustain the trajectory of positive momentum in the coming quarters as well. Q1 of this fiscal was an action-packed quarter for us when we rolled out a slew of innovative initiatives including the 'industry-first' five-year warranty on our entire range of products and our own dedicated retail financing arm. We continued to grow ahead of the industry in both scooters and 125cc motorcycles this quarter, thereby building further on our market share gain in these segments. We had a record month in May, with our highest ever dispatches in a month. Retails also kept pace with record 1.1 million-plus retail sales in April-May -- the highest-ever retails in a non-festival period. Heavy and early rains in June have slowed down the momentum a bit, but we are optimistic about growth in the second half of the fiscal. Our product launches that are planned around the festive season should contribute towards accelerating growth. On the new market front, after entering Central America and Africa, we are now geared-up for Latin American markets of Peru and Ecuador which should be in the month of August".
Shares of telecom services provider were in demand on hopes the government may reduce spectrum price for the upcoming third round of auctions. Reliance Communications, Idea Cellular and Bharti Airtel rose by 0.51% to 3.58%. MTNL and Tata Teleservices (Maharashtra) shed by 1.69% to 3.11%.
On Tuesday, the Telecom Regulatory Authority of India (TRAI) released consultation paper on valuation and reserve price of spectrum for the third auction. TRAI has invited comments on the quantity of spectrum that should be kept for auction, time that winner of airwaves should be given to roll out network and the method to be used for valuation and estimation of reserve price. The regulator has also hinted at the possibility of lowering the base price for spectrum. TRAI has sought view from parties interested in the process by August 14 and counter comments by August 21. It will also hold an open house discussion on the subject on August 26.
Interest rate sensitive realty stocks edged lower as RBI's latest measures to tighten liquidity in the banking system to stem rupee's slide have virtually wiped off possibility of any downward revision in RBI's key policy rate viz. the repo rate at its first quarter review of Monetary Policy 2013-14 on 30 July 2013. HDIL (down 1.59%), Unitech (down 2.89%), Sobha Developers (down 3.17%) and D B Realty (down 4.89%), edged lower. But, DLF rose 0.11%.
Ambuja Cements declined 2.92% ahead of its Q2 results today, 24 July 2013.
Cairn India dropped 0.63%. The company's consolidated net profit fell 18% to Rs 3127 crore 8% decline in revenue to Rs 4063 crore in Q1 June 2013 over Q1 June 2012. Cairn India reports revenue net of profit-sharing with the government in all blocks and Rajasthan block royalty expense. The company announced Q1 result after market hours today, 24 July 2013.
Shares of power equipment major Bharat Heavy Electricals declined 1.27%. The company said on Tuesday, 23 July 2013, it has won turnkey contracts worth Rs 132 crore from NTPC for setting up two eco-friendly grid-connected solar power plants of 10 MW each at Unchahar in Uttar Pradesh and Talcher in Orissa.
L&T fell 3.93% to Rs 867.05. The stock hit 52-week low of Rs 860.90 in intraday trade today, 24 July 2013. L&T's net profit declined 12.46% to Rs 756.03 crore on 3.69% growth in total income to Rs 13027.66 crore in Q1 June 2013 over Q1 June 2012. L&T attributed the decline in net profit to unfavorable job mix, lower margin accruals and lower other income. The Q1 result was announced during trading hours on Monday, 22 July 2013.
Dabur India rose 2.4% to Rs 174.95 on strong Q1 result. The stock hit record high of Rs 176.40 in intraday trade today, 24 July 2013. The company today, 24 July 2013, said consolidated net profit rose 25% to Rs 187.04 crore on 13% rise in revenue to Rs 1651.10 crore in Q1 June 2013 over Q1 June 2012. Dabur India's consolidated profit after tax (PAT) excluding exceptional items rose 20.7% year on year (YoY) in Q1 June 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 15.5% to Rs 277.50 crore in Q1 June 2013 over Q1 June 2012. EBITDA margin expanded 40 basis points (bps) to 16.8% from 16.4% in Q1 June 2012.
The company said the increase in revenue was on account of strong growth in key categories like Hair Care, Oral Care, Foods, Home Care and Skin Care.
Jaiprakash Associates tumbled 6.48% after a foreign brokerage downgraded the stock to sell from hold and cuts its sum-of-the-parts target price to Rs 42 from Rs 55, citing higher-than-expected debt and high valuation of the stock. The brokerage cut its FY 2014 earnings estimates by 14% and that of FY 2015 by 9%, citing a high degree of operating leverage in weak cement demand environment.
IT stocks edged higher. IT major TCS rose 1.79% to Rs 1781.10, with the stock extending recent gains triggered by the company's strong Q1 results. The stock hit a record high of Rs 1,791 in intraday trade today, 24 July 2013. The company said during market hours today, 24 July 2013, that it has completed the acquisition of French IT services firm Alti SA. The acquisition was initially announced in April 2013.
This strategic investment by TCS will help leverage the strong engineering talent in the country for the benefit of its customers in France and other markets globally, TCS said. A privately-held company with revenue of euro 126 million in 2012, Alti SA is regarded as one of the top system integrators of SAP solutions in France. It includes several top French corporations in the banking, financial services, luxury, manufacturing and utilities sectors as its key customers.
Infosys was up 0.25%. Infosys retained its revenue growth guidance in dollar terms for the year ending 31 March 2014 (FY 2014) at the time of announcing Q1 June 2013 result on 12 July 2013, belying fears that it may lower the guidance.
HCL Technologies fell 0.53% to Rs 895. The stock reversed direction after hitting a record high of Rs 908 in intraday trade today, 24 July 2013. The company declares year ended June 2013 results on 31 July 2013.
Tech Mahindra was up 2.32% to Rs 1206.30. The stock hit 52-week high of Rs 1,221.95 in intraday trade. The company on Tuesday, 23 July 2013, said it has signed an agreement with UBS Fund Services (Luxembourg) (UBS FSL) as the first client for its new platform, Tech Mahindra Managed Services, which is designed to support asset managers, wealth managers, investment banks, custodians and administrators. The contract is for an initial five-year term. Under the agreement, Tech Mahindra will provide UBS FSL with a fully managed service across four major areas of data management, pricing, corporate actions and tax data.
Wipro gained 1.9%.
Reliance Industries (RIL) fell 0.1% to Rs 908.,10. The stock was volatile. The scrip hit high of Rs 917 and low of Rs 895.65. The company's net profit rose 18.9% to Rs 5352 crore on 4.6% decline in revenue to Rs 90589 crore in Q1 June 2013 over Q1 June 2012. The result was announced on 19 July 2013.
Bank stocks dropped as the RBI's latest measures to squeeze liquidity from the banking system to stem rupee fall have made it costlier for banks to raise short term funds. ICICI Bank (down 3.72%) and HDFC Bank (down 2.83%) edged lower.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank dropped by 3.18% to 8.96 %.
The Reserve Bank of India took new steps on Tuesday to support the rupee, signalling it will stay the course with its defence of the currency despite the risks to economic growth. The central bank tightened liquidity further and made it even harder for lenders to access funds with measures including lowering the amount banks can borrow or lend under its daily liquidity window. The RBI lowered the overall limit for borrowing under the daily liquidity adjustment facility (LAF) -- which offers funds in exchange for collateral -- for each bank to 0.5% of deposits from 1%. The central bank also said banks now needed to maintain 99 percent of their daily cash reserve ratio requirements -- the deposits they must set aside -- with the RBI, compared with 70% now. The change takes effect from the two-weekly period starting July 27. The RBI also announced the sale of short end cash management bills of Rs 6000 crore to drain out more cash from the banking system.
Yes Bank tumbled 12.63%. The bank's net profit surged 38.15% to Rs 400.84 crore on 30.6% growth in total income to Rs 2839.97 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced during trading hours today, 24 July 2013.
IndusInd Bank tumbled 8.46%. The bank today, 24 July 2013, said it has opened a new branch in Greater Noida. The new branch will expand IndusInd bank's reach across NCR and Uttar Pradesh, the private sector bank said.
United Phosphorous fell 1.16% after Q1 result. The company's consolidated net profit rose 4.8% to Rs 212.65 crore on 10.33% growth in total income to Rs 2482.26 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced during market hours today, 24 July 2013.
NBFC shares declined across the board after the Reserve Bank of India (RBI) on Tuesday, 23 July 2013, announced additional measures to squeeze liquidity from the banking system to stem rupee's decline.
Mahindra and Mahindra Financial Services (down 6.65%), Bajaj Finserv (down 2.1%), Bajaj Finance (down 2.12%), Reliance Capital (down 2.85%), L&T Finance Holdings (down 3.55%), Cholamandalam Investment & Finance Company (down 6.1%) and Religare Enterprises (down 0.46%) declined.
IDFC dropped 8.44% to Rs 117.65 after hitting a 52-week low of Rs 117 in intraday trade today, 24 July 2013. A brokerage downgraded the stock to underweight from equal-weight and slashed its target price on expectations of rise in funding costs. The brokerage said asset quality risk is also increasing for IDFC as the economy slows and rates rise.
Shares of Shriram Transport Finance Company, an asset finance NBFC, tumbled 5.49%. The stock was volatile. The scrip lost as much as 9.86% at the day's low of Rs 611. The stock rose 0.14% at the day's high of Rs 678.80 at the onset of the trading session. The company on Tuesday, 23 July 2013, said its consolidated profit after tax rose 7.07% to Rs 366.27 crore in Q1 June 2013 over Q1 June 2012. Net interest income rose 14.12% to Rs 962.88 crore.
European stock markets advanced on Wednesday, 24 July 2013, after better-than-expected purchasing managers' indexes from the region spurred hopes about the economic recovery. Key benchmark indices in UK, Germany and France were up by 0.86% to 1.09%.
The composite euro-zone index climbed to an 18-month high of 50.4 in July from 48.7 in June, moving above the 50-mark that separates expansion from contraction. In Germany, the composite index climbed to a five-month high of 52.8, while France's similar poll moved up to a 17-month high at 48.8.
Most Asian stocks edged lower on Wednesday, 24 July 2013, after a private survey showed manufacturing weakened further in July in China. Key benchmark indices in China, Indonesia, Japan, and Taiwan were down by 0.22% to 1.03%. Key benchmark indices in Hong Kong, Singapore and South Korea rose by 0.24% to 0.65%.
China's manufacturing weakened further in July, signaling the worst of the nation's slowdown has yet to be reached, according to a preliminary survey of purchasing managers. The reading of 47.7 for an index released today by HSBC Holdings Plc and Markit Economics, was less than estimated and if confirmed in the final report Aug. 1, would be the lowest in 11 months. Readings below 50 indicate contraction.
Japan's exports rose for a fourth straight month in June as a weak yen made the nation's products more competitive and shipments to the European Union rebounded. Exports gained 7.4% from a year earlier, the Finance Ministry said in Tokyo today.
Trading in US index futures indicated that the Dow could gain 32 points at the opening bell on Wednesday, 24 July 2013. US stocks ended mostly lower on Tuesday after a decline in a regional manufacturing gauge prompted concern, but the Dow Jones Industrial Average climbed to a record close. The Federal Reserve Bank of Richmond said manufacturing activity in the central Atlantic region weakened.
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