A sharp slide in European stocks and US index futures pulled key equity benchmark indices in India sharply lower. As sell-off gripped the bourses in late trade, the barometer index, the S&P BSE Sensex, fell below the psychological 26,000 mark. The Sensex and the 50-unit CNX Nifty, both, hit their lowest closing level in more than 9 weeks. The broad market showed weakness with almost three losers for every gainer on BSE. Shares of a number of small-cap and mid-cap companies dropped. The Sensex declined 349.99 points or 1.33% to settle at 25,999.34. Slide in BSE Small-Cap and Mid-Cap indices was sharper than the Sensex's decline in percentage terms. The BSE Small-Cap index lost 2.71%. The BSE Mid-Cap index was off 2.42%. All the 12 sectoral indices on BSE edged lower.
Metal and capital goods stocks led today's decline. Foreign portfolio investors sold shares worth a net Rs 679.79 crore into the secondary equity market during the previous trading session on Tuesday, 14 October 2014, as per data from Securities & Exchange Board of India. Meanwhile, India's merchandise export registered a muted growth of 2.7% in September 2014, data released the government early this week showed.
Meanwhile, various exit polls released after assembly elections in Maharashtra and Haryana showed that the BJP is set to wrest power from the Congress party in Haryana and will emerge as the single largest party in Maharashtra. Polling was held yesterday, 15 October 2014, for assembly elections in Maharashtra and Haryana. The counting of votes for elections in both these states takes places on Sunday, 19 October 2014, and the results will be out on the same day. BJP's seat tally in Maharashtra, according to various exit polls, varied from just over 100 to 150-plus, the latter a clear majority mark in a 288-member assembly. In 90-seat Haryana, exit polls gave BJP between 37 and 50-plus seats; the latter a majority mark. BJP's strong showing in assembly elections in Maharashtra and Haryana could boost Prime Minister Narendra Modi's ability to carry forward legislative reforms.
Index heavyweight Reliance Industries declined. Bajaj Auto declined after weak Q2 earnings. DLF edged higher in volatile trade after a steep slide in the stock during the previous trading session. IT stocks edged lower. Cairn India tumbled to 52-week low on lower crude oil prices. UltraTech Cement and Grasim Industries dropped on reports that UltraTech Cement is eyeing the assets being divested by Lafarge and Holcim in Europe and Brazil as part of their merger plans. Telecom stocks declined after Telecom Regulatory Authority of India yesterday, 15 October 2014, proposed the starting prices for a coming auction of frequencies to cellphone companies whose permits are set to expire later this year. Among tyre stocks, CEAT scaled record high. Strides Arcolab tumbled on turning ex-dividend.
Earlier, a high volatility was witnessed at the onset of the trading session as key indices staged a strong recovery after a weak opening.
In overseas markets, European stocks tumbled as Spain's government fell short of its maximum target in a bond sale. Asian stocks declined amid growing concerns over economic growth around the world. Trading in US index futures indicated a weak opening of US stocks later in the global day.
Brent crude fell to near four-year lows amid growing concerns over the global economy.
In the foreign exchange market, the rupee edged lower against the dollar as India's trade deficit more than doubled to $14.25 billion in September 2014 from $6.12 billion in September 2013.
The S&P BSE Sensex lost 349.99 points or 1.33% to settle at 25,999.34, its lowest closing level since 13 August 2014. The index lost 415.35 points at the day's low of 25,933.98 in late trade. The index jumped 112.75 points at the day's high of 26,462.08 in early trade.
The CNX Nifty lost 115.80 points or 1.47% to settle at 7,748.20, its lowest closing level since 13 August 2014. The index hit a low of 7,729.65 in intraday trade. The index hit a high of 7,893.90 in intraday trade.
The BSE Mid-Cap index fell 229.13 points to settle at 2.42% at 9,243.95. The BSE Small-Cap index declined 288.16 points or 2.71% to settle at 10,343.09.
The market breadth indicating the overall health of the market was weak with almost three losers for every gainer on BSE. 2,173 shares declined while 756 shares gained. A total of 90 shares were unchanged.
The total turnover on BSE amounted to Rs 3216 crore, lower than turnover of Rs 3226.25 crore on Tuesday, 14 October 2014.
All the 12 sectoral indices on BSE edged lower. The S&P BSE Healthcare index (down 1.46%), the S&P BSE IT index (down 1.57%), the S&P BSE Teck index (down 1.77%), the S&P BSE Oil & Gas index (down 1.89%), the S&P BSE Capital Goods index (down 2.06%), the S&P BSE Auto index (down 2.09%), the S&P BSE Metal index (down 2.28%), the S&P BSE Power index (down 2.91%) and the S&P BSE Consumer Durables index (down 4.25%) underperformed the Sensex.
The S&P BSE FMCG index (down 0.04%), the S&P BSE Realty index (down 0.22%) and the S&P BSE Bankex (down 1.03%) outperformed the Sensex.
Index heavyweight Reliance Industries (RIL) lost 3.21% at Rs 930.25. The stock was volatile. The stock hit a high of Rs 956.80 and a low of Rs 928.45. RIL's consolidated net profit rose 1.7% to a record Rs 5972 crore in Q2 September 2014 over Q2 September 2013. Turnover declined 4.3% to Rs 113396 crore in Q2 September 2014 over Q2 September 2013. The result was announced early this week.
Cairn India fell 3.27% at Rs 274.80. The stock hit 52-week low of Rs 272.65 in intraday trade as Brent crude fell to the lowest level in four years amid growing concerns over the global economy. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms like Cairn India.
ITC rose 1.28% at Rs 352. The stock was volatile. The stock hit a high of Rs 353.50 and a low of Rs 343.65.
Union Health Minister Dr Harsh Vardhan yesterday, 15 October 2015, issued a notification requiring cigarette manufacturing companies to devote at least 85% of the surface areas of cigarette packets on both sides to graphically and literally represent the statutory warning. Beginning 1 April 2015 every cigarette packet will carry on both sides pictorial depiction of throat cancer and a message in English, Hindi or any Indian language.
Among other cigarette makers, Godfrey Philips India fell 1.11%. VST Industries rose marginally by 0.02%.
Metal and mining stocks declined as global commodity prices tumbled. Hindalco Industries (down 5.66%), JSW Steel (down 5.06%), Jindal Steel & Power (down 3.63%), Hindustan Zinc (down 1.57%), and Steel Authority of India (down 1.23%) edged lower.
Tata Steel declined 3.57% at Rs 439.85. The stock was volatile. The stock hit a high of Rs 468 and a low of Rs 437.10. The company before market hours today, 16 October 2014, announced the signing of a Memorandum of Understanding with Klesch Group to undertake detailed due diligence and negotiations for the potential sale of its long products Europe business and associated distribution activities. The memorandum covers several UK-based assets including Tata Steel's Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a rail consultancy in York, as well as other operations in France and Germany.
Sesa Sterlite lost 4.09% at Rs 239.35. The company after market hours on Tuesday, 14 October 2014, in a clarification with regard to news item titled "Sesa Sterlite slumps on Supreme Court Order" said that the latest developments in Supreme Court does not relate to Sesa Sterlite. The written order of the Supreme Court is still awaited, the company said. As per the company's understanding, the situation, which is prevailing since 21 April 2014 judgment of Supreme Court, remains the same even today, Sesa Sterlite said.
Earlier, media reports indicated that the Supreme Court had on 14 October 2014 reiterated a prior ruling that all iron ore mined in Goa before 2007 belonged to the state. The court has ordered pre-2007 iron ore to be auctioned by a monitoring panel, reports stated.
Capital goods stocks edged lower. Crompton Greaves (down 7.54%), ABB (down 5.23%), Siemens (down 4.19%), Bharat Heavy Electricals (down 2.79%), and L&T (down 1.43%) declined.
Bajaj Auto lost 1.7% at Rs 2,369.15. The stock was volatile. The stock hit a high of Rs 2,440 and a low of Rs 2,348.80. The company reported 29.41% fall in net profit to Rs 590.90 crore on 14.67% rise in total income to Rs 6076.70 crore in Q2 September 2014 over Q2 September 2013. The result was announced after market hours on Tuesday, 14 October 2014. The Q2 September 2014 net profit was weighed by an exceptional item of Rs 340.29 crore of National Calamity Contingency Duty (NCCD). Excluding exceptional item, profit after tax, would have rose 1.91% to Rs 853 crore in Q2 September 2014 over Q2 September 2013, Bajaj Auto said.
It may be recalled that Bajaj Auto had filed a writ petition before the Uttarakhand High Court in October 2011, claiming benefit of exemption from payment of NCCD by Pantnagar plant. On 9 October 2014, the court ruled otherwise, the company said. Accordingly in Q2 September 2014, the company recognised liability for the last seven and a half years (1 April 2007 to 30 September 2014) aggregating to Rs 340.29 crore. This is a one time only charge and going forward, the monthly charge towards NCCD is expected to be around Rs 3 crore per month, it added.
The company's export revenue rose 28.75% to Rs 2736 crore in Q2 September 2014 over Q2 September 2013. Operating earnings before interest, taxes, depreciation and amortization (EBITDA) before mark-to-market loss and CSR spends rose 3.65% to Rs 1248 crore in Q2 September 2014 over Q2 September 2013. Operating EBITDA margin before mark-to-market (MTM) gain/loss was reported at 20.8% in Q2 September 2014, lower than 23.1% in Q2 September 2013.
Given the initial response to the Discover 150, the company looks forward to a very rewarding future, Bajaj Auto said.
IT stocks fell. HCL Technologies (down 4.03%), Infosys (down 0.89%), and Wipro (down 1.42%) declined.
TCS lost 1.01% at Rs 2,672.45. The stock was volatile. The stock hit a high of Rs 2,751.55 and a low of Rs 2,665. The company's consolidated net profit fell 5.8% to Rs 5244 crore on 7.7% growth in revenue to Rs 23816 crore in Q2 September 2014 over Q1 June 2014. The result was announced after market hours today, 16 October 2014.
CMC rose 2.03%. CMC after market hours said that the Board of Directors of the company at its meeting held today, 16 October 2014, have approved the Scheme of Amalgamation of the Company with the Tata Consultancy Services (TCS), based on the recommendation of the Audit Committee. As per the terms of the scheme, shareholders of CMC (other than TCS) will receive 79 equity shares of Rs 1 each of TCS for every 100 equity shares of Rs 10 each of CMC held by them.
Tech Mahindra declined 2.88%. The company after market hours on Tuesday, 14 October 2014, said that Pursuant to Clause 17(C) of the Scheme of Amalgamation and Arrangement of Mahindra Engineering Services with Tech Mahindra and their respective shareholders and creditors ('the Scheme'), the company's board of directors has extended the validity of the scheme by a further period of three months i.e. upto 31 January 2015.
MindTree lost 3.39%. The company's net profit rose 6.2% to Rs 137.4 crore on 5.3% rise in revenue to Rs 888.60 crore in Q2 September 2014 over Q1 June 2014. The company announced Q2 results on 15 October 2014, when stocks markets were closed on account of assembly elections in Maharashtra.
Persistent Systems lost 5.99%. On Tuesday, 14 October 2014, the Reserve Bank of India (RBI) notified that the foreign shareholding by Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) in Persistent Systems have gone below the revised threshold limit. Hence, the restrictions placed on the purchase of shares of the company are withdrawn with immediate effect. The RBI further advised that FIIs/RFPIs can now invest upto 49% of the paid up capital of Persistent Systems under the Portfolio Investment Scheme.
Hero MotoCorp lost 0.41% at Rs 2,845. The stock was volatile. The stock hit a high of Rs 2,912 and a low of Rs 2,725.25. The company announces its Q2 September 2014 results today, 16 October 2014.
Bank stocks reversed intraday gains in volatile trade. Among private bank stocks, Axis Bank (down 1.4%), ICICI Bank (down 1.33%), HDFC Bank (down 1.58%) and Kotak Mahindra Bank (down 2.96%) declined. Yes Bank rose marginally by 0.03%.
IndusInd Bank shed 0.87% to Rs 644.50. The stock reversed direction after scaling a record high of Rs 657.90 in intraday trade. IndusInd Bank's net profit rose 30.27% to Rs 430.20 crore on 20.60% increase in total income to Rs 2937.03 crore in Q2 September 2014 over Q2 September 2013. The result was announced during trading hours on 13 October 2014.
Among PSU bank stocks, State Bank of India (SBI) (down 1.95%), Punjab National Bank (down 0.75%), Bank of Baroda (down 0.75%), Bank of India (down 1.96%) and Union Bank of India (down 2.99%) declined.
Scheduled commercial banks' (SCBs) credit growth has shown a pick-up to 11% at Rs 62690.07 crore as on 03 October 2014 from single digit level of 9.7%, a five-year low, in the previous fortnight.
UltraTech Cement dropped 6.74%. As per reports, UltraTech Cement is eyeing the assets being divested by Lafarge and Holcim in Europe and Brazil as part of their merger plans. Lafarge and Holcim have put a few assets on the block globally to reduce their dominance in a particular region, reports indicated. Both the companies have placed a proposal before the Brazilian competition authority to sell three integrated cement plants and two grinding stations with annual capacity of 3.6 million tonne and a ready-mix plant all located in the south-eastern Brazil, reports added.
Grasim Industries declined 4.98%. Grasim Industries has exposure to the cement sector through its subsidiary UltraTech Cement.
Ranbaxy Laboratories fell 1.38%. The company during market hours said that it has settled the litigation concerning its participation in the Texas Medicaid Program. Under the settlement agreement, Ranbaxy will make payments to the State of Texas totaling $39.75 million in a series of tranches through August 2015. The claims at issue related exclusively to the manner in which the Ranbaxy has historically reported pricing data to Texas Medicaid for certain of its drugs, the company said. As has been widely reported, the State of Texas has brought nearly identical claims against virtually every other major pharmaceutical manufacturer in the United States, Ranbaxy said. Ranbaxy believes that it fully complied with all relevant laws, however the company settled the matter to avoid any further distraction and uncertainty of continued litigation with the State of Texas, Ranbaxy Laboratories said.
Separately, Ranbaxy Laboratories during market hours said it has notified the Bank of New York Mellon (hereinafter "The Bank") to terminate the Deposit Agreements dated 7 July 1994 (under which the Rule 144A Global Depositary Shares/Regulation S Global Depositary Shares have been issued) and underlying GDR programme. The Bank has on 15 October 2014 issued the notice of termination of GDR Programme to the GDR holders and accordingly the bank will complete the process of termination of GDR programme as per the terms of such notice of termination, Ranbaxy said.
Strides Arcolab tumbled 18.29% to Rs 650 as the stock turned ex-dividend today, 16 October 2014, for a special dividend of Rs 105 per share.
Telecom stocks declined after Telecom Regulatory Authority of India (Trai) yesterday, 15 October 2014, proposed the starting prices for a coming auction of frequencies to cellphone companies whose permits are set to expire later this year. Idea Cellular (down 3.64%), MTNL (down 3.14%), Bharti Airtel (down 1.96%), Tata Teleservices (Maharashtra) (down 4.19%) and Reliance Communications (down 3.07%) declined.
The Trai suggested that the Department of Telecommunications auction frequencies in the 900-megahertz band with a starting price of Rs 3004 crore per unit and in the 1800-megahertz band at Rs 2138 crore. The auctions are crucial to top four cellphone operators viz. Bharti Airtel, the local unit of Vodafone Group PLC., Idea Cellular and Reliance Communications, whose permits in some of the service areas are set to expire in the next two years. These operators use frequencies in both bandwidths to provide cellphone services. Auctions won't be held for the 900-megahertz band in four service areas, and in two service areas for the 1800-megahertz band as frequencies aren't available in those areas, the regulator said.
The telecommunications regulator has also asked the government to put up for auction frequencies that allow operators to offer high-speed third-generation and fourth-generation telecommunications services on cellphones and tablet computers, before the current set of proposals are finalized. The proposals will now be discussed by the Telecom Commission.
DLF rose 5.19% at Rs 110.40. The stock was volatile. The stock hit a record low of Rs 100 in intraday. The scrip hit high of Rs 115.85. The stock had tumbled a staggering 28.46% in a single trading session on Tuesday, 14 October 2014, after stock market regulator Securities and Exchange Board of India (Sebi) issued an order on Monday, 13 October 2014, barring DLF and its chairman K.P. Singh along with five other company executives from accessing India's capital markets for three years. The order is related to lapses in disclosures made at time of the company's IPO in 2007. DLF has decided to contest the Sebi order.
Credit rating agency CRISIL yesterday, 15 October 2014, placed its ratings on the bank facilities and debt instruments of DLF on 'Rating Watch with Negative Implications'. CRISIL said that the Sebi order will adversely impact DLF's ability to access the capital markets and constrain its financial flexibility, which has been one of its key rating strengths, CRISIL said. The order will impact DLF's plans to raise funds through capital market instruments such as equity, commercial mortgage-backed securities (CMBS) and real estate investment trusts (REITs) over the medium term, CRISIL said.
CRISIL said it will remove the ratings from watch and take an appropriate rating action once it gets clarity on above issues, the extent of the impact that the order has on DLF's financial flexibility and its liquidity profile. CRISIL will continue to monitor the developments, and is in discussions with the company to understand the issues in detail, and its plans, it added. CRISIL has also placed its ratings on the bank facilities of DLF Info City Developers (Kolkata) (DLFICDK) on 'Rating Watch with Negative Implications'. DLFICDK is a wholly owned subsidiary of DLF and was set up to undertake the Kolkata Information Technology Park project. The company has completed the construction work and has leased out the project.
Ashok Leyland dropped 4.15%. The company during market hours said that the company through its joint venture in Sri Lanka has received an order for 630 buses worth $17 million from private bus operators - backed by the Government of Sri Lanka. Coming on the heels of the order for 2,200 buses, Ashok Leyland further consolidates its position as the market leader in the Sri Lankan market, the company said.
CEAT jumped 4.13% to Rs 823.55 after scaling a record high of Rs 863.75 in intraday trade.
Key indices fell for second day in a row today, 16 October 2014. The Sensex lost 384.73 points or 1.45% in two trading days from recent high of 26,384.07 on 13 October 2014. The Sensex has lost 631.17 points or 2.37% in this month so far (till 16 October 2014). The Sensex has gained 4,828.66 points or 22.8% in calendar year 2014 so far (till 16 October 2014). From a record high of 27,354.99 on 8 September 2014, the Sensex has declined 1,355.65 points or 4.95%. From a 52-week low of 19,963.12 on 4 February 2014, the Sensex has risen 6,036.22 points or 30.23%.
In the foreign exchange market, the rupee edged lower against the dollar as India's trade deficit more than doubled to $14.25 billion in September 2014 from $6.12 billion in September 2013. The partially convertible rupee was hovering at 61.81, compared with its close of 61.42 during the previous trading session.
India's merchandise export rose 2.7% to $28.90 billion in September 2014, data released after market hours on Tuesday, 14 October 2014 showed. Exports of engineering goods exports jumped 20.2%, exports of gems & jewellery rose 11.1%, exports of readymade garments rose 15.9%, rice exports rose 17.7% and exports of organic and inorganic chemicals rose 7.1%. The merchandise imports surged at more than two-and-half year pace of 26% to $43.15 billion in September 2014. Thus, the trade deficit more than doubled to $14.25 billion in September 2014 from $6.12 billion in September 2013, while also galloped from $10.84 billion in August 2014.
Brent crude fell to near four-year lows amid growing concerns over the global economy. Brent for November settlement was off 72 cents at $83.06 a barrel. The contract expires today, 16 October 2014. Brent for December settlement was off 80 cents at $83.32 a barrel.
Lower crude oil prices will help India in containing its fiscal deficit, current account deficit and fuel price inflation. India imports 80% of its crude oil requirement. However, the weakness in rupee against the dollar will restrict the benefit of lower crude oil prices.
European stocks tumbled today, 16 October 2014, as Spain's government fell short of its maximum target in a bond sale. Key benchmark indices in UK, France and Germany were off 1.65% to 2.6%.
The yield on Spain's 10-year bond jumped the most since June 2013 after the government raised 3.2 billion euros ($4.1 billion) in bond actions, below its maximum target of 3.5 billion euros. Greek bonds extended their drop to a fourth day.
The European Union has reportedly started a two-week probe of euro-area governments' draft budgets. As yields on 10-year securities from Europe's most-indebted nations surged yesterday, 15 October 2014, led by Greece and sweeping up Portugal, Ireland and Italy, the European Commission started a process of picking apart nations' 2015 spending plans, seeking to defuse potential fiscal time bombs.
German Chancellor Angela Merkel told parliament today, 16 October 2014, that Europe must push ahead with efforts to cut public deficits and improve competitiveness because the euro zone debt crisis has not yet been overcome and its causes have not been eliminated. Merkel said European Union leaders must bear in mind, as they debate ways to boost growth, that painful fiscal reforms have begun to pay off.
The European Union said in its latest report today, 16 October 2014, that euro area annual inflation declined 0.3% in September 2014, from 0.4% in August. This is the lowest rate recorded since October 2009. In September 2013, the rate was 1.1 %. Monthly inflation was 0.4 % in September 2014. Annual Core inflation also slowed to 0.8% from 0.9% last month.
Mounting anxiety over global growth and the spread of Ebola dragged Asian bourses lower today, 16 October 2014. Key indices in China, Hong Kong, Singapore, Japan, South Korea, Indonesia, and Taiwan were off 0.25% to 2.22%.
China attracted $9 billion of foreign direct investment in September, up 1.9% from a year earlier, the Ministry of Commerce said in a statement today, 16 October 2014. The figure was up from August's $7.2 billion, which was down 14% from a year earlier and the lowest level since July 2010.
Trading in US index futures indicated that the Dow could fall 161 points at the opening bell today, 16 October 2014. US stocks closed lower on Wednesday, 15 October 2014, but retraced some lost ground in late trading from historic intraday losses, as disappointing economic data fueled growth fears, which were compounded by the spread of Ebola after a second case was reported in the US. Data yesterday, 15 October 2014, showed that US retail sales fell 0.3% last month on a broad pullback in consumer spending in the world's largest economy.
According to the Fed's Beige Book of economic conditions data released yesterday, 15 October 2014, officials there see the economy moving at a modest-to-moderate pace, with consumer spending gaining at a slight-to-moderate pace.
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