Prospects of victory for the Aam Aadmi Party (AAP) in assembly elections in Delhi, disappointing Chinese trade data and a setback for European stocks triggered by intensifying standoff between Greece's new government and the European Union (EU) sent key equity benchmark in India tumbling on the first trading session of the week. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest closing level in more than three weeks. Losses for the Sensex and the Nifty widened in late trade as shares of index heavyweight L&T slumped soon after the company reported weak Q3 December 2014 results. L&T's results hit the markets in late trade.
The weakness on the bourses was broad based. The market breadth indicating the overall health of the market was quite weak, with more than two losers for every gainer on BSE. Losses ranged from 2% to 20% for the side counters which edged lower. The Sensex declined 490.52 points or 1.71% to settle at 28,227.39. The BSE Mid-Cap index dropped 1.41%. The BSE Small-Cap index shed 1.5%.
On the political front, most exit polls released after the conclusion of single-day voting for assembly elections in Delhi on Saturday, 7 February 2015, indicated that the Aam Aadmi Party (AAP) will get majority and will be able to form the next government in the state.
Shares of public sector banks declined. Jammu & Kashmir Bank slumped after weak Q3 results. Sun TV Network jumped on good Q3 results. Shares of public sector oil marketing companies fell after global crude oil prices extended recent gains. Metal and mining stocks declined after weak Chinese trade data. Tata Steel edged lower after poor Q3 results. NMDC edged lower after the company announced a sharp reduction in iron ore prices for February 2015. Realty stocks declined.
Meanwhile, Prime Minister Narendra Modi has urged all Chief Ministers to work with the Centre to forge a model of cooperative federalism whereby the Centre and the states can come together to resolve differences and chart a common course to progress and prosperity. Meanwhile, the Ministry of External Affairs yesterday, 8 February 2015, clarified that India and the United States have reached an understanding on the issues related to civil nuclear liability and finalized the text of the Administrative Arrangement to implement the September 2008 Indo-US nuclear deal.
Foreign portfolio investors sold shares worth a net Rs 71.74 crore into secondary equity market during the previous trading session on Friday, 6 February 2015, as per data from Central Depository Services. Domestic institutional investors (DIIs) bought shares worth a net Rs 115.49 crore on Friday, 6 February 2015, as per provisional data released by the stock exchanges.
In overseas market, European stocks declined as concern grew over the political situation in Greece after Greece's Prime Minister Alexis Tsipras reaffirmed his rejection of the country's international bailout program. Asian stocks were mixed. US stocks edged lower during the previous trading session on Friday, 6 February 2015, as investors shrugged off a strong jobs report, which had provided a lift earlier in the trading session, and turned to fresh concerns about Greece.
In the foreign exchange market, the rupee weakened past 62 against the dollar as equities tumbled.
Brent crude oil futures edged higher in volatile trade. Global crude oil prices have bounced back over the past few days after a steep slide in prices over the past few months. The recent rebound in global crude oil prices will raise concerns pertaining to India's fiscal deficit, current account deficit and fuel price inflation. India imports about 80% of its crude oil requirements.
The BSE Sensex declined 490.52 points or 1.71% to settle at 28,227.39, its lowest closing level since 16 January 2015. The index slumped 534.59 points at the day's low of 28,183.32 in late trade. The index fell 151.41 points at the day's high of 28,566.50 in opening trade.
The CNX Nifty dropped 134.70 points or 1.56% to settle at 8,526.35, its lowest closing level since 16 January 2015. The index hit a low of 8,516.35 in intraday trade. The index hit a high of 8,605.55 in intraday trade.
The BSE Mid-Cap index declined 148.41 points or 1.41% to settle at 10,342.27. The BSE Small-Cap index shed 165.80 points or 1.5% to settle at 10,911.54. The decline in both these indices was lower than Sensex's fall in percentage terms.
The total turnover on BSE amounted to Rs 2938 crore, lower than turnover of Rs 3194.19 crore during the previous trading session.
The weakness on the bourses was broad based. The market breadth indicating the overall health of the market was quite weak, with more than two losers for every gainer on BSE. 1,911 shares declined and 927 shares rose. A total of 112 shares were unchanged.
Among sectoral indices on BSE, the S&P BSE Auto index (down 2.27%), BSE Bankex index (down 2.06%), BSE Capital Goods index (down 4.31%), BSE Metal index (down 2.54%), and BSE Realty index (down 2.73%) underperformed the Sensex. The BSE Consumer Durables (down 1.26%), BSE FMCG index (down 1.19%), BSE Healthcare index (down 0.26%), BSE IT index (down 0.04%), BSE Oil & Gas index (down 1.01%), BSE Power index (down 1.57%), and BSE Teck index (down 0.46%) outperformed the Sensex.
L&T slumped 6.61% to Rs 1,573 after weak Q3 results. The stock hit high of Rs 1,673.30 and low of Rs 1,549.85. The company's net profit fell 14.58% to Rs 1059.80 crore on 5.37% increase in total income to Rs 15616.91 crore in Q3 December 2014 over Q3 December 2013.
In a press release, L&T said that its recurring consolidated profit after tax (PAT) jumped 19% to Rs 867 crore in Q3 December 2014 over Q3 December 2013. Gross revenues rose 9.6% to Rs 24033 crore in Q3 Decmber 2014 over Q3 December 2013. The company announced Q3 results during market hours today, 9 February 2015.
The company's consolidated order intake rose 19% to Rs 34580 crore in Q3 December 2014 over Q3 December 2013. The consolidated order book of the group stood at Rs 225788 crore as on 31 December 2014, registering at 17% growth on year-on-year basis.
With regard to future business outlook, L&T said that with its leadership position in multiple sectors and inherent capabilities, the company is well poised to capitalise on the upcoming business opportunities, particularly in the infrastructure, power and defence sectors which are likely to benefit from the government's thrust on these sectors. L&T further said that the business sentiment in India has turned positive on the back of regulatory announcements and the government's resolve to create a business friendly environment in the country. Once achieved, it would further strengthen the investor confidence and provide fillip to domestic manufacturing and infrastructure development, L&T said. Early translation of various initiatives into sustainable and well administered policies and the ground level implementation of these would hold the key for broad based economic development, L&T said in a statement.
L&T said that while investments in the Oil & Gas sector in the Middle East may get impacted adversely due to decline in crude oil prices, it is expected that the spend on infrastructure development would continue in that region.
Metal and mining stocks declined after weak Chinese trade data. Sesa Sterlite (down 4.53%), JSW Steel (down 2.57%), Steel Authority of India (down 3.61%), Hindustan Copper (down 1.36%), Jindal Steel & Power (down 0.11%), National Aluminium Company (down 1.32%), and Hindalco Industries (down 0.61%) edged lower. Hindustan Zinc rose 2.29%. China is the world's largest consumer of copper, steel, and aluminium.
Tata Steel tumbled 5.79% at Rs 347.90. The stock hit high of Rs 361.35 and low of Rs 346.50. Tata Steel's consolidated net profit slumped 68.78% to Rs 157 crore on 8.44% decline in turnover to Rs 33633 crore in Q3 December 2014 over Q3 December 2013. Earnings before interest, taxes, depreciation and amortization (EBITDA) dropped 21.19% to Rs 3090 crore in Q3 December 2014 over Q3 December 2013. Profit before tax (PBT) fell 58.56% to Rs 578 crore in Q3 December 2014 over Q3 December 2013. Steel deliveries dropped 1.25% to 6.30 million tonnes in Q3 December 2014 over Q3 December 2013. The Q3 result was announced after market hours on Friday, 6 February 2015.
NMDC fell 0.36% at Rs 140.25. The stock hit a high of Rs 141 and a low of Rs 138.60. NMDC after market hours on Friday, 6 February 2015, announced reduction in prices of lump iron ore by 10.71% to Rs 3750 per wet metric tonnes (WMT) and cut fine iron ore prices by 9.8% to Rs 2760 per WMT for February 2015 over January 2015. NMDC's production rose 10.54% to 25.68 million tonnes for the ten months period ended January 2015 over ten months period ended January 2014. Sales rose 5.84% to 25.37 million tonnes for the ten months period ended January 2015 over ten months period ended January 2014.
GAIL (India) slumped 4.52% to Rs 400.95 on weak Q3 results. The stock hit high of Rs 408 and low of Rs 392.30. The company's net profit fell 64.03% to Rs 604.08 crore on 6.66% decline in total income from operations (net) to Rs 14969.41 crore in Q3 December 2014 over Q3 December 2013. The result was announced after market hours on Friday, 6 February 2015.
In terms of the decision of the Government of India (GoI) to share the under recoveries on LPG, GAIL (India) provided provisional discount of Rs 500 crore (related to Q2 September 2014) during Q3 December 2014. The company has not provided any discount for Q3 December 2014 as the company has not received orders from the MOP&NG relating to sharing of under recoveries on LPG for the quarter, GAIL (India) said.
Realty stocks declined. D B Realty (down 4.68%), Housing Development & Infrastructure (HDIL) (down 4.71%), Oberoi Realty (down 0.95%), Godrej Properties (down 0.51%), Anant Raj (down 3.98%), and Unitech (down 6.23%) declined.
DLF tumbled 4% at Rs 157.30 on worries that Aam Aadmi Party may win the Delhi assembly election. In late 2012, Arvind Kejriwal had reportedly alleged a malafide nexus between UPA chairperson Sonia Gandhi's son-in-law Robert Vadra and DLF which was facilitated by concessions made by the then ruling Congress government in Haryana to the realty major.
Meanwhile, DLF announces Q3 results today, 9 February 2015.
Sobha rose 4.36% at Rs 471.70 on bargain hunting after the stock fell 9.75% in the preceding seven trading sessions to Rs 452 on 6 February 2015, from a recent high of Rs 500.85 on 28 January 2015. Sobha will announce Q3 results on Thursday, 12 February 2015.
Shares of public sector oil marketing companies fell after global crude oil prices extended recent gains and as the rupee edged lower against the dollar. BPCL (down 3.07%), Indian Oil Corporation (IOCL) (down 2.29%) and HPCL (down 1.64%) edged lower.
Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel. A weakness in rupee against the dollar will also raise the cost of imports.
Shares of public sector banks declined. Union Bank of India (down 6.7%), Bank of India (down 5.53%), Indian Overseas Bank (down 1.9%), Oriental Bank of Commerce (down 5.94%) and Dena Bank (down 1.34%) declined.
State Bank of India (SBI) declined 3.65% at Rs 279.75. The government will infuse Rs 2970 crore in State Bank of India during the current fiscal year ending 31 March 2015 (FY 2015).
Bank of Baroda fell 1.42% at Rs 173.35. The government will infuse Rs 1260 crore in Bank of Baroda during FY 2015.
Punjab National Bank fell 2.17% at Rs 166.80. The government will infuse Rs 870 crore in Punjab National Bank during FY 2015.
Indian Bank declined 0.31% at Rs 176.85. The government will infuse Rs 280 crore in Indian Bank during FY 2015.
Andhra Bank fell 2.54% at Rs 84.30. The government will infuse Rs 120 crore in Andhra Bank during FY 2015.
Dena Bank fell 1.34% at Rs 55.15. The government will infuse Rs 140 crore in Dena Bank during FY 2015.
Canara Bank dropped 3.42% at Rs 400.80. The government will infuse Rs 570 crore in Canara Bank during FY 2015.
Syndicate Bank declined 4.39% at Rs 107.90. The government will infuse Rs 460 crore in Syndicate Bank during FY 2015.
Allahabad Bank dropped 3.56% at Rs 105.65. The government will infuse Rs 320 crore in Allahabad Bank during FY 2015.
The Ministry of Finance on Saturday, 7 February 2015, said that the government has decided to infuse Rs 6990 crore in a total of nine public sector banks during the current fiscal year based on efficiency parameters for individual banks. The methodology for arriving at the amount to be infused in these banks has been based on efficiency parameters, the finance ministry said. First of all, weighted average of return on assets (ROA) for all PSBs for last three years put together was arrived at and all those who were above the average have been considered. The second parameter that has been used is return on equity (ROE) for these banks for the last financial year. Those who have performed better than average have been rewarded, the finance ministry said in a statement.
Jammu & Kashmir Bank slumped 17.52% at Rs 111.55 after net profit fell 67.43% to Rs 104.64 crore on 2.58% increase in total income to Rs 1849.44 crore in Q3 December 2014 over Q3 December 2013. The result was announced on Saturday, 7 February 2015. Jammu & Kashmir Bank's (J&K Bank) ratio of net non-performing assets (NPAs) to net advances stood at 3.22% as on 31 December 2014, compared with 2.46% as on 30 September 2014 and 0.22% as on 31 December 2013. The bank's ratio of gross NPAs to gross advances stood at 5.81% as on 31 December 2014, compared with 4.73% as on 30 September 2014 and 1.65% as on 31 December 2013.
Sun TV Network jumped 9.02% at Rs 416.55 after net profit rose 15.3% to Rs 214.13 crore on 9.9% rise in total income to Rs 575.03 crore in Q3 December 2014 over Q3 December 2013. The result was announced after market hours on Friday, 6 February 2015. Sun TV Network's earnings before interest, taxes, depreciation and amortization (EBITDA) rose 15.07% to Rs 428.07 crore in Q3 December 2014 over Q3 December 2013. Advertisement revenue rose by approximately 7% to Rs 291.57 crore in Q3 December 2014 over Q3 December 2013. DTH revenue rose by approximately 18% to Rs 132.88 crore in Q3 December 2014 over Q3 December 2013.
Apollo Tyres lost 12.3% at Rs 187.15 after consolidated net profit dropped 45.5% to Rs 184.24 crore on 13.7% fall in total income to Rs 3115.96 crore in Q3 December 2014 over Q3 December 2013. The result was announced after market hours on Friday, 6 February 2015.
Shares of other tyre makers also declined after weak Q3 results by Apollo Tyres. JK Tyre & Industries (down 3.62%), MRF (down 4.01%), Goodyear India (down 3.89%), and CEAT (down 2.85%) declined.
Siemens rose 1.84% to Rs 1,126 after the company said it won orders worth Rs 450 crore from Diesel Locomotive Works. The announcement was made during trading hours today, 9 February 2015.
Key benchmark indices dropped for the seventh trading session in a row today, 9 February 2015. The Sensex has declined 1,454.38 points or 4.89% in seven trading days from a recent high of 29,681.77 on 29 January 2015. The Sensex has lost 955.56 points or 3.27% in this month so far (till 9 February 2015). The Sensex has risen 727.97 points or 2.64% in this calendar year so far (till 9 February 2015). The Sensex is off 1,616.77 points or 5.41% from a record high of 29,844.16 hit on 30 January 2015.
In the foreign exchange market, the rupee weakened past 62 against the dollar as key equity benchmark indices in India dropped. The partially convertible rupee was hovering at 62.15, compared with its close of 61.705 during the previous trading session on Friday, 6 February 2015.
Brent crude oil futures edged higher in volatile trade. Brent for March settlement was up 11 cents at $57.91 a barrel. The contract had advanced $1.23 a barrel or 2.17% to settle at $57.80 a barrel during the previous trading session.
On the political front, most exit polls released after the conclusion of single-day voting for assembly elections in Delhi on Saturday, 7 February 2015, indicated that the Aam Aadmi Party (AAP) will get majority and will be able to form the next government in the state. If the polls prove to be correct, Arvind Kejriwal, the anti-corruption activist-turned-politician and founder of the Aam Aadmi Party, will become the state's next chief minister for the second time. The counting of votes for the 70-member Delhi assembly takes place tomorrow, 10 February 2015. A party needs 36 seats to form government in the 70-member Delhi assembly.
An outright victory for the AAP would cast a shadow on the BJP's months-long winning spree and dent Prime Minister Narendra Modi's image as a larger-than-life, popular leader. Since Lok Sabha elections in May last year, in which the party won a historic majority in the lower house of the parliament, the BJP has dominated a series of state elections. Despite the pressures of his office, Modi has himself led BJP's election rallies in various state elections, projecting himself as the party's star campaigner.
As per various exit polls, AAP is projected to win a minimum of 31 seats and a maximum of 53 seats in the 70-member Delhi assembly. The BJP is projected to win 17 to 35 seats. The exit polls were unanimous in projecting decimation of the Congress party, the latest in a series of humiliating defeats for the party.
Meanwhile, Prime Minister Narendra Modi has urged all Chief Ministers to work with the Centre to forge a model of cooperative federalism whereby the Centre and the states can come together to resolve differences and chart a common course to progress and prosperity. Chairing the first meeting of the Governing Council of NITI Aayog held yesterday, 8 February 2015, Modi said that jobs cannot be created and poverty cannot be removed without economic growth. Therefore, he added, India must aim at a high rate of economic growth. He urged all Chief Ministers to focus on the cycle of investment, growth, job creation and prosperity. He also suggested that an officer be identified in the state governments to monitor and ensure a smooth resolution of the pending issues so as to expedite the project implementation. The Prime Minister emphasized that the Centre wished to empower the states with finances, with technology and knowledge so that they are able to plan better and execute even better. He said that for federalism to work well, states must also fulfill their role in promoting the shared national objectives. He said that the critical element for cooperative federalism to flourish is that states commit to the path they choose within the context of the shared national objectives and then deliver on that commitment.
Meanwhile, the government will release advance estimates of GDP for 2014-15, as well as for the first three quarters of the current financial year on the basis of the revised methodology today, 9 February 2015.
The Ministry of External Affairs yesterday, 8 February 2015, clarified that India and the United States have reached an understanding on the issues related to civil nuclear liability and finalized the text of the Administrative Arrangement to implement the September 2008 Indo-US nuclear deal. In this regard, the India Nuclear Insurance Pool has been instituted to facilitate negotiations between the operator and the supplier concerning a right of recourse by providing a source of funds through a market based mechanism to compensate third parties for nuclear damage. It would enable the suppliers to seek insurance to cover the risk of invocation of recourse against them. "It will be now up to the companies to follow up with their own negotiations and come up with viable techno-commercial offers and contracts consistent with our law and our practice so that reactors built with international collaboration can start contributing to strengthening India's energy security and India's clean energy options", the Ministry of External Affairs said.
On the global front, G-20 finance ministers and central bank governors meet in Istanbul for a two-day summit beginning today, 9 February 2015.
European stocks declined today, 9 February 2015, as concern grew over the political situation in Greece as Greece's Prime Minister Alexis Tsipras reaffirmed his rejection of the country's international bailout program. Key indices in France, Germany and UK fell by 0.61% to 1.35%.
Tsipras yesterday, 8 February 2015, unveiled plans to undo several austerity measures that were a condition of Greece's international bailout, putting his new government firmly on a collision course with its European partners. In a speech to lawmakers, Tsipras reiterated that Greece would seek a bridge loan from its international creditors until June, refusing to accept an extension of its current bailout, as demanded by European partners. Among the changes announced by Tsipras are raising the taxable income threshold; gradually increasing the minimum wage, starting next year; and dropping a recently introduced property tax. He also promised the retirement age wouldn't be changed. Greece's current euro 240 billion (roughly $272 billion) rescue runs out at the end of the month, and the government has warned it could run out of money in weeks unless it can gain access to additional funds. The Greek government also has said that it wants to change the terms of its funding agreement, which require the new leftist government to adhere to austerity measures agreed to by its predecessors. But Greece's partners in the European Unionled by Germanyhave insisted that promises made by the previous Greek government have to be kept if Athens wants to receive further assistance.
Global rating agency Standard & Poor's (S&P) cut Greece's long-term sovereign credit rating to B- from B on Friday, 6 February 2015, warning that liquidity restraints on Greek banks would limit the time the new government has to clinch a deal with its creditors. Left-wing Prime Minister Alexis Tsipras was elected barely two weeks ago on a promise to scrap unpopular austerity measures imposed under a 240 billion euro ($270 billion) international bailout and write off a chunk of the country's debt.
Just hours after S&P lowered its sovereign credit rating on Greece, Moody's Investors Service on Friday, 6 February 2015, placed its Caa1 rating on Greek government debt on review for a possible downgrade that would push it further into junk territory, citing the high level of uncertainty about the outcome of talks with its official creditors. The outcome could potentially have negative implications for Greece's ability to meet its funding and liquidity needs and for the probability of default on marketable securities, the rating agency said in a statement.
The French economy is likely to speed up in the first quarter of this year, a business confidence survey by the Bank of France showed Monday. French gross domestic product will likely expand 0.4% in the first quarter from the fourth, the central bank said.
German exports increased in monthly adjusted terms in December, data from the country's statistics office Destatis showed today, 9 February 2015. The rise of exports of 3.4% combined with the 0.8% decrease in imports and translated into a trade surplus of 21.8 billion euros.
Asian stocks were mixed today, 9 February 2015. Key indices in Taiwan, Singapore, South Korea, and Hong Kong were down 0.33% to 0.64%. Key indices in Japan, Indonesia and China rose by 0.11% to 0.62%.
Data published on Sunday, 8 February 2015, showed China's trade performance slumped in January, with exports falling 3.3% from year-ago levels while imports tumbled 19.9%, far worse than market expectations. The data highlighted deepening weakness in the Chinese economy.
Trading in US index futures indicated that the Dow could fall 69 points at the opening bell today, 9 February 2015. US stocks finished lower on Friday, 6 February 2015, as investors shrugged off a strong jobs report, which had provided a lift earlier in the day, and turned to fresh concerns about Greece.
The US Labor Department report showed that the economy added 257,000 jobs in January, while November and December numbers were revised sharply higher. In another good sign, hourly wages jumped 0.5%. Although the unemployment rate ticked up to 5.7% from 5.6%, it suggests that more people are entering the workforce. The US economy has added more than 200,000 jobs for 12 straight months.
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