Key benchmark edged lower in early trade as better than expected October jobs report in US fueled concern the Federal Reserve may reduce monetary stimulus for the US economy sooner than expected. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in 3-1/2 weeks. The Sensex was down 97.39 points or 0.47%, off close to 30 points from the day's high and up about 85 points from the day's low. The market breadth, indicating the overall health of the market, was positive.
The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
United Spirits (USL) rose on strong Q2 result. Tata Motors dropped despite the company reported a strong Q2 result.
At 9:33 IST, the S&P BSE Sensex was down 97.39 points or 0.47% to 20,568.76. The index shed 183.74 points at the day's low of 20,482.41 in early trade, its lowest level since 17 October 2013. The index fell 69.75 points at the day's high of 20,596.40 in opening trade.
The CNX Nifty was down 32.15 points or 0.52% to 6,108.60. The index hit a low of 6,070.85 in intraday trade, its lowest level since 17 October 2013. The index hit a high of 6,115.90 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 463 shares rose and 399 shares fell. A total of 47 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks fell and rest of them rose. HDFC Bank (down 1.57%), Bajaj Auto (down 1.18%) and ICICI Bank (down 1.12%), declined.
Tata Motors dropped 0.18% despite the company reported a strong Q2 result. The company's consolidated net profit surged 70.7% to Rs 3542 crore on 31.1% rise in revenues to Rs 56882 crore in Q2 September 2013 over Q2 September 2012. The company said revenues grew despite weak operating environment in the India business which was more than offset by increase in wholesale volumes and richer product and market mix at Jaguar Land Rover (JLR).
JLR wholesale and retail volumes for the quarter ended 30 September 2013 grew by 31.6% and 21.1%, respectively, over the corresponding period last year and stood at 101,931 units and 102,644 units, respectively. Following strong response to its new products and powertrain options, Jaguar wholesale and retail volumes grew by 91.6% and 56.5% to 18,834 units and 20,024 units, respectively, as against 9,832 units and 12,798 units, respectively, in the corresponding quarter last year. Strong response to the All-New Range Rover and continued strong growth in Evoque and other products, Land Rover wholesale and retail volumes stood at 83,097 units and 82,620 units (growth of 22.9% and 14.8% over corresponding quarter last year).
JLR's revenues for the quarter ended September 30, 2013 of 4,612 million pounds, represented a growth of 40.3% over 3,288 million pounds in the corresponding quarter last year. Operating margins for the quarter ended 30 September 2013 stood at 17.8%. Operating profit (EBITDA) of 823 million pounds in the quarter, represented a growth of 69.3% over 486 million pounds in the corresponding quarter last year. Continued strong revenue growth and operating performance were supported by increase in wholesale volume, richer product mix, launch of new Range Rover Sport, new Range Rover and Jaguar F-TYPE. The profit before tax for the quarter ended 30 September 2013 grew by 55.0% over the corresponding quarter last year to 668 million pounds (431 million pounds in the corresponding quarter last year). Profit after tax for the quarter grew by 66.2% over the corresponding quarter last year to 507 million pounds (305 million pounds in the corresponding quarter last year).
Infosys declined 0.28%. The company said after market hours on Friday, 8 November 2013 that Infosys BPO, the business process outsourcing subsidiary of the company on Friday announced the opening of a new delivery center in Eindhoven, the Netherlands. The 120-seat center strengthens Infosys BPO's footprint and reinforces its position in Europe.
United Spirits (USL) rose 1.15% on strong Q2 result. The company's net profit surged 273% to Rs 94.30 crore on 7% growth in revenue to Rs 2038.70 crore in Q2 September 2013 over Q2 September 2012. The result was announced after market hours on Friday, 8 November 2013.
USL's profit before tax (PBT) jumped 267% to Rs 141.20 crore in Q2 September 2013 over Q2 September 2012.
USL sold 28.10 million cases in Q2 September 2013 as against 28.42 million cases in Q2 September 2012.
USL's interest costs are down Rs 33.60 crore in Q2 September 2013 and Rs 39.70 crore in first half of FY 2014 compared to their year ago periods as a consequence of the loan repayment of Rs 1857.40 crore effected from the proceeds of the issue of preferential capital and the sale of shares by USL's subsidiary companies to Diageo.
USL said that Extra Neutral Alcohol (ENA) prices continue to unfavorably impact the business. On average, the cost of this key ingredient has risen by Rs 20/case compared to Q2 September 2012 and first half of FY 2014. Given the huge volumes of the company this translates to approximately Rs 56 crore for Q2 September 2013 and approximately Rs 120 crore for first half of FY 2014. While a rise in cost of inputs is the stated reason for this increase, the truth lies elsewhere - an attempt by the sugar lobby to raise prices on the strength of an alternate high paying customer - the oil marketing companies (OMC) - for their willingness to pay higher prices to Indian Ethanol vendors is linked to the higher cost of imports, USL said. This is notwithstanding the fact the EBP is not beneficial to consumers in the long run, USL added.
USL said that its business in Tamil Nadu has been adversely affected by the skewed order placement by the parastatal buying agency in that state. Additionally, despite inflation and rising cost of inputs, the last price increase granted to manufacturers in Tamil Nadu was in December 2007, the company said.
United Spirits' board of directors at a meeting held on Friday, 8 November 2013, inter alia, has approved an arrangement to be entered into by the company with Enrica Enterprises inter-alia for transfer of business pertaining to the company's distillery at Poonamallee to Enrica Enterprises through a Scheme of Arrangement (Scheme) as well as franchising of its brands in Tamil Nadu.
USL'S Board has approved the relevant documents including the Scheme between USL and Enrica Enterprises and their respective shareholders which envisages transfer of business pertaining to Poonamallee distillery along with related assets and liabilities to Enrica Enterprises.
The Scheme provides for transfer of the undertaking, business, activities and operations pertaining to the Poonamallee distillery to Enrica Enterprises by way of slump sale on a going concern basis. In consideration, USL will receive lump sum cash consideration of Rs 125.07 crore in the manner specified in the Scheme. The Appointed Date for the Scheme is fixed as opening of business hours on 1 April 2013. Further, USL's Board has also approved the Franchise Agreement with the Enrica Enterprises pursuant to which the Enrica Enterprises will bottle the company's brands and in consideration for this bottling arrangement, USL will earn royalty income.
On the macro front, the government will unveil industrial production data for September 2013 on tomorrow, 12 November 2013. Index of industrial production (IIP) rose 0.6% in August 2013, showing moderation in growth from 2.8% growth recorded in July 2013.
Data on inflation based on the consumer price index (CPI) for October 2013 will be unveiled on tomorrow, 12 November 2013. The headline CPI inflation (combined) for September 2013 was placed at 9.84% (y-o-y), which came in higher than 9.52% (y-o-y) seen in August 2013.
Most Asian stocks rose on Monday after US payrolls and China's industrial production gained more than expected. Key benchmark indices in Singapore, Japan, Hong Kong, and South Korea rose 0.08% to 1.2%. Key benchmark indices in China, Taiwan and Indonesia shed 0.16% to 0.61%.
China's industrial output rose a more-than-estimated 10.3% from a year earlier in October, according to data released Nov 9 by the National Bureau of Statistics. October inflation was a less-than-forecast 3.2%, producer prices fell 1.5% from a year earlier and retail sales rose 13.3%.
The meeting of China's leaders in Beijing will end tomorrow, 12 November 2013 to map out economic policies as the country heads for its slowest annual growth in more than two decades.
US stocks applauded a better-than-expected October jobs report and rose on Friday amid hopes a more buoyant economy will improve business for American companies over the long run.
American employers added 204,000 workers last month after a revised 163,000 gain in September that was larger than previously estimated, Labor Department figures showed Nov. 8. The increase in payrolls topped the most optimistic forecast in a survey of economists.
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