Key benchmark indices extended intraday fall in afternoon trade, with the S&P BSE Sensex hitting its lowest level in nearly three weeks after the Reserve Bank of India (RBI) today, 30 July 2013, said its priority has shifted towards managing the currency volatility and in turn to support the macro-financial stability rather than to try driving growth amid easing inflation. The 50- unit CNX Nifty hit three-week low. The Sensex was down 145.96 points or 0.74%, off 225.40 points from the day's high and up 1.73 points from the day's low. The market breadth, indicating the overall health of the market, was weak.
FMCG major Hindustan Unilever (HUL) extended losses for the third straight day after the company reported a muted growth in bottom line in Q1 June 2013. Shares of state-run oil and gas stocks companies dropped. In pharma pack, Ranbaxy Laboratories and Wockhardt hit 52-week low. Geometric slumped after the company experienced unexpected softness in the industrial vertical in Q1 June 2013 and said it expects this weakness to continue till the end of this calendar year.
A bout of initial volatility was witnessed as key benchmark indices pared gains after moving into the positive terrain after opening lower. Volatility continued as key benchmark indices recovered after hitting fresh intraday low in morning trade. The S&P BSE Sensex and the 50- unit CNX Nifty, both, hit their lowest level in nearly three weeks. High volatility was witnessed as key benchmark indices slipped into the red after surging to hit fresh intraday high in mid-morning trade soon after the Reserve bank of India (RBI) held its key policy rates viz. the repo rate and cash reserve ratio unchanged after a monetary policy review. The market extended losses to hit fresh intraday low in early afternoon trade. Key benchmark indices extended intraday losses in afternoon trade.
After First Quarter Review of Monetary Policy 2013-14, the RBI today, 30 July 2013, kept the repo rate unchanged at 7.25%. The central bank also kept the cash reserve ratio (CRR) unchanged at 4%. RBI said that the macroeconomic outlook for 2013-14 is subject to a number of risks and it scaled down the GDP growth forecast for 2013-14 to 5.5%, from its earlier projection of 5.7% growth. The RBI said that it will endeavour to condition the evolution of inflation to a level of 5% by March 2014, using all instruments at its command.
The RBI said that keeping in view global and domestic macroeconomic conditions, outlook and risks, the policy stance in this review is guided by the need for continuous vigil and preparedness to pro-actively respond to risks to the economy from external developments, especially those stemming from global financial markets, while managing the trade-off posed by increased downside risks to growth and continuing risks to inflation and inflation expectations.
The current situation -- moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth -- would have provided a reasonable case for continuing on the easing stance, RBI said. "However, India is currently caught in a classic impossible trinity trilemma whereby we are having to forfeit some monetary policy discretion to address external sector concerns", the RBI said.
The central bank said that its recent liquidity tightening measures aimed at checking undue volatility in the foreign exchange market will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling monetary policy to revert to supporting growth with continuing vigil on inflation. It should be emphasised that the time available now should be used with alacrity to institute structural measures to bring the current account deficit (CAD) down to sustainable levels, the RBI said. The RBI said it stands ready to use all available instruments and measures at its command to respond proactively and swiftly to any adverse development.
At 13:22 IST, the S&P BSE Sensex was down 145.96 points or 0.74% to 19,447.32. The index declined 147.69 points at the day's low of 19,445.59 in afternoon trade, its lowest level since 10 July 2013. The index rose 79.44 points at the day's high of 19,672.72 in mid-morning trade.
The CNX Nifty was down 45.60 points or 0.78% to 5,786.05. The index hit a high of 5,861.30 in intraday trade. The index hit a low of 5,784.25 in intraday trade, its lowest level since 8 July 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,329 shares fell and 669 shares rose. A total of 115 shares were unchanged.
The total turnover on BSE amounted to Rs 923 crore by 13:20 IST
Among the 30-share Sensex pack, 21 stocks fell and rest of them rose.
Shares of state-run oil and gas stocks companies dropped. Among PSU OMCs, HPCL (down 6.09%), BPCL (down 5.03%) and Indian Oil Corporation (down 4.83%) tumbled.
Shares of gas transmission and distribution major GAIL (India) dropped 3.75%.
Shares of oil exploration major ONGC were off 4.38%. RIL was off 0.75%. RIL and ONGC on 27 July 2013 announced signing a memorandum of understanding (MoU) to explore the possibility of sharing RIL's infrastructure facility in the East Coast. The MoU aims at working out the modalities for sharing of infrastructure, identifying additional requirements as well as firming up the commercial terms. The companies intend to enter into a definitive agreement after concluding a joint study which will be spread over the next nine months, RIL said in a statement on 27 July 2013.
FMCG major Hindustan Unilever (HUL) fell 2.2%, with the stock extending losses for the third straight day after the company reported a muted growth in bottom line in Q1 June 2013. The company's net profit declined 23.43% to Rs 1019.25 crore on 5.88% increase in total income to Rs 6985.79 crore in Q1 June 2013 over Q1 June 2012. The result was announced on 26 July 2013.
The company said that the year on year fall in net profit was due to significant exceptional income generated in Q1 June 2012 from the sale of properties. Profit after tax but before exceptional items rose 4% to Rs 885 crore in Q1 June 2013 over Q1 June 2012. HUL stated that while commodity costs were relatively benign, PFAD prices started to move up and the rupee sharply depreciated towards the end of the quarter. Competitive intensity remained at high levels and the company continued to invest in its brands. Advertisement and promotion (A&P) cost increased by Rs 70 crore on year on year basis in Q1 June 2013.
Ranbaxy Laboratories fell 4.46% to Rs 285 after hitting a 52-week low of Rs 284.45 in intraday trade today, 30 July 2013. The company announces Q2 results on 7 August 2013.
Wockhardt was locked at 5% lower circuit at Rs 491.25 at 12:11 IST on BSE, also its 52-week low, with the stock extending its recent steep slide.
Geometric slumped 17.78% after the company experienced unexpected softness in the industrial vertical in Q1 June 2013 and expects this weakness to continue till the end of this calendar year. On a consolidated basis, Geometric's net profit 38.8% to Rs 15.41 crore on 5.3% increase in revenues to Rs 260.27 crore in Q1 June 2013 over Q4 March 2013. The operating profit rose 55.7% to Rs 37.28 crore in Q1 June 2013 over Q4 March 2013. The result was announced after market hours on Monday, 29 July 2013.
Mr. Manu Parpia, Managing Director & CEO, Geometric said, Our new organization structure consisting of six verticals, each with P&L responsibility, came into effect this quarter. I believe this will have a strong positive impact on the performance of our organization as we go forward. While most of our verticals performed in line with our outlook, the industrial vertical which comprises of businesses like mining, agricultural, and construction equipment experienced unexpected softness. We anticipate this weakness to continue to the end of this calendar year.
In anticipation of this slowdown, the company deferred the salary increments of employees by a quarter, and therefore the impact of salary increases will be seen in Q2 September 2013, the company said in a statement.
The company said that attrition rate reduced to 11% in Q1 June 2013 due to strong employee engagement focus.
Havells India tumbled 10.48%. The company's net profit rose 18.2% to Rs 94.66 crore on 1.82% growth in total income to Rs 1054.50 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced during trading hours today, 30 July 2013. Havells India has invested Rs 19.70 crore in its wholly owned subsidiary Havells Holdings in Q1 June 2013.
Prestige Estates Projects rose 1.35% after net profit jumped 75.85% to Rs 86.66 crore on 114.85% growth in total income to Rs 529.31 crore in Q1 June 2013 over Q1 June 2012. The result was announced after market hours on Monday, 29 July 2013.
Akzo Nobel India lost 9.5% as the stock turned ex-dividend today, 30 July 2013, for total dividend of Rs 80 per share for the year ended 31 March 2013. Akzo Nobel India's board of directors at its meeting held on 20 May 2013 had recommended a dividend of Rs 20 per share plus a special dividend of Rs 60 per share for the year ended 31 March 2013.
Mahindra & Mahindra Financial Services (up 3.27%), Bharti Infratel (up 2.72%), Neyveli Lignite Corporation (up 2.61%), IPCA Laboratories (up 1.58%) and Tata Global Beverages (up 1.51%) were among the top gainers from BSE's 'A' group.
Jaiprakash Power Ventures (down 6.54%), Dish TV India (down 5.19%), Gitanjali Gems (down 5%), Siemens (down 4.08%) and Oriental Bank of Commerce (down 3.8%) were among the top losers from BSE's 'A' group
European stock markets opened higher on Tuesday, 30 July 2013, as investors weighed earnings from prominent companies such as UBS AG, Alcatel-Lucent and Barclays PLC. Key benchmark indices in UK, Germany and France were up 0.3% to 0.41%.
The European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions on Thursday, 1 August 2013.
Asian stocks rose on Tuesday, 30 July 2013, after China's central bank injected funds into money markets easing cash crunch worries. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea, Indonesia and Taiwan rose by 0.11% to 1.53%.
China's central bank injected funds into money markets via open market operations on Tuesday for the first time since February, easing fears of another cash crunch ahead of the month end after a severe cash squeeze in June caused market panic.
Meanwhile, the results of two separate surveys on Chinese manufacturing activity in July are due on Thursday, 1 August 2013.
In Japan, data released on Tuesday, 30 July 2013, showed that Japan's industrial production unexpectedly fell a seasonally adjusted 3.3% in June from the level in May. Japanese household spending also declined, though the monthly unemployment rate eased to 3.9% from 4.1%.
Trading in US index futures indicated that the Dow could gain 21 points at the opening bell on Tuesday, 30 July 2013. US stocks edged lower on Monday, 29 July 2013, slipping after a decline in June home sales as investors look ahead to key data later in the week and the Federal Reserve's upcoming policy meeting. The National Association of Realtors said pending home sales fell 0.4% in June, with rising rates blamed for undercutting sales momentum.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting today (30 July 2013) and tomorrow (31 July 2013), with expectations that it will offer further clues on how long it will maintain its bond purchases. In his two-day testimony to Congress, which concluded on 18 July 2013, Federal Reserve Chairman Ben Bernanke said plans to taper asset purchases were not on a preset path and stressed intentions to be very responsive to data. Additionally, Bernanke said recent data have been "mixed" and it was "way too early" to make a judgment on when the central bank will slow down the pace of its asset purchases. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.
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