A disappointing start to the second quarter earnings season weighed on sentiment, pulling key benchmark indices lower on the first trading day of the week. The barometer index, the S&P BSE Sensex, dropped 175.40 points or 0.65% to settle at 26,904.11. The 50-unit CNX Nifty shed 46.10 points or 0.56% to settle at 8,143.60. The Sensex fell below the psychological 27,000 level. IT major and index heavyweight Infosys led losses for key benchmark indices, with the stock sliding after the company cut full year revenue growth guidance in dollar terms at the time of announcement of Q2 September 2015 earnings.
The Sensex and the Nifty reversed direction after both these key benchmark indices struck their highest level in more than 7 weeks at the onset of the trading session.
Metal and mining stocks gained after China's central bank announced fresh stimulus measures over the weekend. Gains in metal prices on the global commodities markets also aided gains in stock prices of metal companies. Bank of Baroda (BoB) edged lower after the Central Bureau of Investigation (CBI) began a probe into illegal overseas remittance of a large amount of foreign exchange from Bank of Baroda's Ashok Vihar, Delhi branch. Most auto stocks declined.
The Sensex dropped 175.40 points or 0.65% to settle at 26,904.11, its lowest closing level since 8 October 2015. The Sensex dropped 223.76 points or 0.82% at the day's low of 26,855.75 in mid-afternoon trade. The Sensex jumped 225.53 points or 0.83% at the day's high of 27,305.04 at the onset of the trading session, its highest level since 21 August 2015.
The Nifty shed 46.10 points or 0.56% to settle at 8,143.60, its lowest closing level since 8 October 2015. The index fell 61.50 points or 0.75% at the day's low of 8,189.70 in mid-afternoon trade. The Nifty jumped 54.80 points or 0.66% at the day's high of 8,244.50 at the onset of the trading session, its highest level since 21 August 2015.
The market breadth indicating the overall health of the market was negative. On BSE, 1,442 shares declined and 1,309 shares rose. A total of 118 shares were unchanged. The BSE Mid-Cap index gained 0.15%. The BSE Small-Cap index rose 0.01%. Both these indices outperformed the Sensex.
Among the sectoral indices on BSE, the S&P BSE Bankex (up 0.07%), the S&P BSE Oil & Gas index (up 0.21%), the S&P BSE Metal index (up 1.38%), the S&P BSE Power index (up 0.95%), the S&P BSE Consumer Durables index (up 0.17%), the S&P BSE Realty index (down 0.36%), the S&P BSE Auto index (up 0.23%) and the S&P BSE Capital Goods index (up 0.36%) outperformed the Sensex. The S&P BSE Healthcare index (down 0.96%), the S&P BSE IT index (down 2.08%), the S&P BSE Teck index (down 1.87%), and the S&P BSE FMCG index (down 0.77%), underperformed the Sensex.
The total turnover on BSE amounted to Rs 2381 crore, lower than turnover of Rs 2878.40 crore registered during the previous trading session.
Shares of IT major Infosys edged lower in choppy trade after the company lowered its full year revenue growth guidance in dollar terms for the year ending 31 March 2016 (FY 2016) at the time of announcement of Q2 September 2015 results. The stock lost 3.93% at Rs 1,122. The stock hit a high of Rs 1,219 in intraday trade, which is a record high for the counter. The stock hit a low of Rs 1,108.90 in intraday trade. Infosys now expects its revenue to grow 6.4%-8.4% in dollar terms for FY 2016. At the time of announcing Q1 June 2015 results, Infosys had forecast revenue growth of 7.2%-9.2% in dollar terms for FY 2016.
The revenue growth guidance for FY 2016 has been kept unchanged at 10%-12% in constant currency terms.
Thanks to weakness of the rupee against the dollar, Infosys has raised full year revenue growth guidance in rupee terms. Infosys now expects its revenue to grow 13.1%-15.1% in rupee terms in FY 2016. At the time of announcing Q1 June 2015 results, Infosys had forecast 11.5%-13.5% growth in the company's revenue in rupee terms for FY 2016. The revised guidance is based on rupee dollar exchange rate of 65.59.
Infosys' consolidated net profit rose 12.1% to Rs 3398 crore on 8.9% growth in revenue to Rs 15635 crore in Q2 September 2015 over Q1 June 2015. The results are as per International Financial Reporting Standards (IFRS). The result was announced during market hours today, 12 October 2015.
Meanwhile, Rajiv Bansal has stepped down as Chief Financial Officer (CFO) of Infosys effective 12 October 2015. Ranganath M. D. has been appointed as the new CFO.
Most other IT stocks declined after Infosys cut its full year revenue growth guidance in dollar terms at the time of announcement of its second quarter results. MindTree (down 2.33%), Wipro (down 1.38%) and Oracle Financial Services Software (down 1.66%) edged lower. Tech Mahindra (up 0.03%) and HCL Technologies (up 0.74%) edged higher.
TCS fell 1.6% at Rs 2,587.90. The company announces its Q2 September 2015 results tomorrow, 13 October 2015.
Index heavyweight and housing finance firm HDFC was off 1.37% at Rs 1,273. The stock hit a high of Rs 1,294.50 and a low of Rs 1,263 in intraday trade.
Another index heavyweight and cigarette major ITC was down 0.71% at Rs 340.80. The stock hit a high of Rs 348 and a low of Rs 338.75 in intraday trade.
Pharma stocks were mostly lower. Lupin (down 2.01%), Sun Pharmaceutical Industries (down 1.32%), Dr Reddy's Laboratories (down 1.59%), Cipla (down 1.55%), Ipca Laboratories (down 0.07%) and Strides Arcolab (down 0.1%) edged lower. GlaxoSmithkline Pharmaceuticals (up 0.2%), Glenmark Pharmaceuticals (up 2.23%), Divi's Laboratories (up 0.12%) and Wockhardt (up 0.35%) edged higher.
Metal and mining stocks gained after China's central bank announced fresh stimulus measures over the weekend. Hindalco Industries (up 5.02%), Jindal Steel & Power (up 4.68%), National Aluminium Company (up 2.83%) and NMDC (up 2.65%) edged higher. JSW Steel (down 0.93%) and Hindustan Zinc (down 1.79%) edged lower. China is the world's largest consumer of steel, copper and aluminum.
China's central bank announced over the weekend that it will expand a relending trial to nine more cities and provinces, including Shanghai and Beijing. The plan, currently in place in Shandong and Guangdong, allows banks to pledge certain assets to secure loans from the central bank.
Gains in metal prices on the global commodities markets also aided gains in stock prices of metal companies. High Grade Copper for December 2015 delivery was currently up 0.77% at $2.43255 per pound on the COMEX.
Shares of Steel Authority of India declined 0.36%.
Vedanta rose 6.37%. With reference to media reports titled Vedanta eyes Solar Energy Biz, plans to create 500 MW capacity, Vedanta after market hours on Friday, 9 October 2015, clarified that the company has no firm plans to enter the solar generation industry and termed the media reports as speculation.
Tata Steel dropped 0.22%. The company announced after market hours on Friday, 9 October 2015, that its hot metal production rose 3% to 2.66 million tonnes in Q2 September 2015 over Q2 September 2014. Crude steel production rose 11% to 2.51 million tonnes in Q2 September 2015 over Q2 September 2014. Saleable steel production rose 9% to 2.41 million tonnes in Q2 September 2015 over Q2 September 2014. Deliveries rose 11% to 2.33 million tonnes in Q2 September 2015 over Q2 September 2014.
Shares of state-run coal mining giant Coal India were off 0.13%.
Most auto stocks declined. Hero Motocorp (down 0.63%) and TVS Motor Company (down 0.04%), Maruti Suzuki India (down 0.82%), Eicher Motors (down 1.66%), and Bajaj Auto (down 0.91%) declined. Mahindra & Mahindra (M&M) (up 0.37%), Ashok Leyland (up 2.06%), and Tata Motors (up 2.28%) gained.
Shares of power generation firms gained. Adani Power (up 10.69%), Reliance Power (up 3.79%), JSW Energy (up 1.68%), Jaiprakash Power Ventures (up 0.86%), Reliance Infrastructure (up 0.36%), NHPC (up 2.63%), and Tata Power (up 0.29%) edged higher. GVK Power & Infrastructure (down 1.52%), Torrent Power (down 0.73%) and NTPC (down 0.99%) declined.
Shares of state-run power transmission major Power Grid Corporation of India (PGCIL) rose 0.42%.
Shares of PSU banks declined. Indian Overseas Bank (down 0.4%) IDBI Bank (down 2.28%), Vijaya Bank (down 1.24%), Union Bank of India (down 0.47%), Canara Bank (down 0.75%), Punjab National Bank (down 0.43%) and United Bank of India (down 1.33%) edged lower. Bank of India (down 0.24%), State Bank of India (up 0.37%) and Corporation Bank (up 1.23%) edged higher.
Bank of Baroda (BoB) edged lower after the Central Bureau of Investigation (CBI) began a probe into illegal overseas remittance of a large amount of foreign exchange from Bank of Baroda's Ashok Vihar, Delhi branch. The stock lost 3.29% at Rs 176.30. In a statement issued at the fag end of the trading session, BoB said that a sum of $546.10 million or about Rs 3500 crore was remitted through 38 current accounts of the bank's Ashok Vihar, Delhi branch to various overseas parties, mainly based in Hong Kong. BoB clarified that there may be an insignificant financial loss to the bank arising from the transactions. The CBI began investigation into the case after a complaint from BoB.
Shares of private sector banks were mixed. Kotak Mahindra Bank (up 0.72%), ICICI Bank (up 0.31%), and IndusInd Bank (up 0.43%), rose. Axis Bank (down 0.68%) and HDFC Bank (down 0.59%) edged lower.
Yes Bank edged higher after the bank announced during market hours today, 12 October 2015, it has received an approval from the Reserve Bank of India (RBI) to sponsor a mutual fund and to set up an asset management company (AMC), and a Trustee Company. The stock rose 0.03%. The AMC and the Trust Companies shall be set up as wholly owned subsidiaries of Yes Bank, the bank said in a statement. Yes Bank will now apply to the Securities and Exchange Board of India (Sebi) to seek necessary approvals.
In overseas stock markets, European stocks edged lower, taking a breather from a solid rally last week. Chinese stocks led gains in Asian markets on stimulus measures from China and signals of reform in China's telecommunications sector. In mainland China, the Shanghai Composite ended with gains of 3.28%.
The Sensex has risen 749.28 points or 2.86% in this month so far (till 12 October 2015). The Sensex has fallen 595.31 points or 2.16% in this calendar year so far (till 12 October 2015). From a 52-week low of 24,833.54 hit on 8 September 2015, the Sensex has risen 2,070.57 points or 8.33%. The Sensex is off 3,120.63 points or 10.39% from a record high of 30,024.74 hit on 4 March 2015.
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