Disappointing first quarter results from passenger car major Maruti Suzuki India (MSIL) and weak results from Dr Reddy's Laboratories (DRL) pulled market lower towards the fag end of the trading session. The barometer index, the S&P BSE Sensex, lost 143.85 points or 0.51% at 27,951.49, as per the provisional closing data. The Nifty 50 index lost 45 points or 0.52% at 8,590.65, as per the provisional closing data. The Sensex provisionally settled below the psychologically important 28,000 level after falling below that level towards the fag end of the trading session.
After moving in an extremely narrow range for most part of the trading sessions, the two key benchmark indices lost ground in late trade after MSIL and DRL results hit the market in late trade. The Sensex lost 168.21 points or 0.59% at the day's low of 27,927.13 in late trade. The barometer index rose 54.19 points or 0.19% at the day's high of 28,149.53 in mid-afternoon trade, its highest level since 11 August 2015. The Nifty lost 58.50 points or 0.67% at the day's low of 8,577.15 in late trade. The index rose 9.25 points or 0.1% at the day's high of 8,644.90 in mid-afternoon trade, its highest level since 23 July 2015.
The market breadth indicating the overall health of the market was weak. On BSE, 1,642 shares fell and 1,056 shares rose. A total of 200 shares were unchanged. The BSE Mid-Cap index was provisionally up 0.17%, outperforming the Sensex. The BSE Small-Cap index was provisionally down 0.69%. The decline in this index was higher than the Sensex's decline in percentage terms.
In overseas stock markets, main European markets witnessed a mixed trend. Earlier during the global day, Japanese stocks edged lower as expectations receded with regard to the government's soon-to-be announced fiscal stimulus package. The Nikkei 225 Average ended 1.43% lower. According to reports, the Japanese government will inject 6 trillion yen ($57 billion) in direct fiscal outlays into the economy over the next few years, double the amount initially planned. However, the spending will come over several years, which means the initial impact will be less than hoped. Meanwhile, investors are hoping for further easing of monetary policy from the Bank of Japan (BOJ) after the conclusion of a two-day monetary policy meeting on 28-29 July 2016. Strength in the yen against the dollar post last month's Brexit vote and data showing a slowdown in the Japanese economy have triggered expectations of further easing of monetary policy from the BOJ. A stronger yen hurts the competitiveness of Japanese exporters.
US stocks edged lower yesterday, 25 July 2016, as investors turned cautious ahead of a busy week of earnings and central bank meetings. The Federal Open Market Committee (FOMC) is widely expected to keep the benchmark fed funds rates unchanged after the conclusion of two-day monetary policy tomorrow, 27 July 2016. Market participant will scrutinize the Fed statement for clues on policy direction. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
The total turnover on BSE amounted to Rs 4127 crore, higher than turnover of Rs 3866.53 crore registered during the previous trading session.
Dr Reddy's Laboratories (DRL) declined after the company announced weak Q1 results. The stock was off 4.89% at Rs 3,305. The company's consolidated net profit fell 76.28% to Rs 153.50 crore on 14.06% decline in total income to Rs 3289.50 crore in Q1 June 2016 over Q1 June 2015. The result was announced during market hours today, 26 July 2016.
DRL co-chairman and CEO GV Prasad said that the company's topline and bottom line were adversely impacted by a decline in volume growth, particularly in the US market and the loss of business in Venezuela. He further said that DRL also faced a number of challenges in the quarter, including price erosion and delayed launches as a result of the warning letter from the US drug regulator in November 2015, which significantly impacted earnings.
Weak results from DRL hit other pharma stocks. Ipca Laboratories (down 2.45%), Glenmark Pharmaceuticals (down 2.38%), Aurobindo Pharma (down 1.85%), Wockhardt (down 1.81%), Strides Shasun (down 1.84%), Divi's Laboratories (down 1.26%), Lupin (down 1.09%), Sun Pharmaceutical Industries (down 0.68%), Cipla (down 0.24%) and GlaxoSmithkline Pharmaceuticals (down 0.56%) edged lower. Cadila Healthcare (up 0.77%) and Alkem Laboratories (up 0.13%) edged higher.
Passenger car major Maruti Suzuki India (MSIL) edged lower after announcing disappointing Q1 June 2016 results. The stock was down 1.6% at Rs 4,478. The stock hit a high of Rs 4,584.95 and a low of Rs 4,460 in intraday trade. The company's net profit rose 23% to Rs 1486.20 crore on 12.1% growth in net sales to Rs 14654.50 crore in Q1 June 2016 over Q1 June 2015. The result was announced during market hours today, 26 July 2016.
The growth in bottom line was led by a sharp surge in non-operational income and decline in depreciation charge. Non-operational income jumped 134.04% to Rs 483.30 crore in Q1 June 2016 over Q1 June 2015. On the other hand, depreciation charge was lower by Rs 83.30 crore in Q1 June 2016 due to increase in the estimated useful life of dies & Jigs and intangible assets from 4 years to 5 years with effect from 1 April 2016.
MSIL's sales in June 2016 were adversely affected due to a fire accident at a key vendor of the company. The company hopes to recover the lost sales during the course of the current financial year (FY 2017).
Cement major ACC edged lower amid volatility after announcing strong Q2 June 2016 results. The stock was off 0.48% at Rs 1,670. The stock hit a high of Rs 1,711.15 and a low of Rs 1,661 in intraday trade. The company's consolidated net profit rose 79.2% to Rs 239.12 crore on 3.1% decline in turnover to Rs 2869.84 crore in Q2 June 2016 over Q2 June 2015. The result was announced during market hours today, 26 July 2016.
The company's operating EBITDA (earnings before interest, taxation, depreciation and amortization) rose 36.5% to Rs 457.56 crore in Q2 June 2016 over Q2 June 2015.
With regard to its future business outlook, ACC said that it will continue to maintain its focus on reducing costs. The company expects that stabilization of the Jamul integrated project will help in increasing the company's presence in the fast growing East markets, as well as the overall profitability. Prospects of a good monsoon, coupled with the impetus from the government's thrust on infrastructure development, housing and other mega projects are also factors that are expected to have a positive impact on the overall momentum of construction activity in the coming quarters, ACC said in a statement.
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