Banking, IT and capital goods stocks led losses as key equity benchmark indices edged lower for the second day in a row. The barometer index, the S&P BSE Sensex, lost 266.44 points or 1.1% to settle at 24,020.98. The losses for 50-unit Nifty 50 index were higher in percentage terms than those for Sensex. The Nifty lost 89.05 points or 1.21% to settle at 7,298.20. Weakness in global stocks weighed on sentiment on the domestic bourses. The Sensex reclaimed the psychologically important 24,000 mark after falling below that level in intraday trade. The Sensex and the Nifty, both, hit their lowest closing level in almost three weeks.
Auto stocks were mostly lower. JSW Steel declined after the company said that its crude steel production dropped 17.23% to 9.27 lakh tonnes in January 2016 over January 2015. Steel Authority of India dropped after the company reported reverse turnaround in its third quarter results. GAIL (India) rose after the company announced good Q3 December 2015 earnings.
In overseas stock markets, Japanese stocks fell sharply, joining global market selloff after the stock markets in the US and Europe fell sharply the day earlier on the back of steep declines in the banking and financial sectors' stocks. The Nikkei Stock Average ended 5.4% lower. Most other Asian markets were closed for the Lunar New Year holiday. US stocks trimmed sharp losses but still ended broadly lower yesterday, 8 February 2016, with the S&P 500 posting its lowest close since April 2014 amid a fresh drop in crude oil prices, jitters over European banks and continuing fears of a global economic slowdown.
The Sensex lost 266.44 points or 1.1% to settle at 24,020.98, its lowest closing level since 21 January 2016. The index fell 367.95 points or 1.51% at the day's low of 23,919.47. The index fell 176.23 points or 0.73% at the day's high of 24,111.19.
The Nifty lost 89.05 points or 1.21% to settle at 7,298.20, its lowest closing level since 21 January 2016. The index fell 112.10 points or 1.51% at the day's low of 7,275.15. The index fell 63.80 points or 0.86% at the day's high of 7,323.45.
The BSE Mid-Cap index shed 1.91%. The BSE Small-Cap index lost 1.34%. The losses for both these indices were higher in percentage terms than those for the Sensex.
The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,780 shares fell and 820 shares rose. A total of 118 shares were unchanged.
Among the sectoral indices on BSE, the S&P BSE Industrials index (down 1.65%), the BSE IT index (down 3.4%), the BSE Auto index (down 1.78%), the BSE Bankex index (down 1.23%), the BSE Capital Goods index (down 1.32%) and the BSE Metal index (down 2.47%) underperformed the Sensex. The S&P BSE FMCG index (down 0.85%), the BSE Oil & Gas index (up 0.2%) and the BSE Energy index (down 0.72%) outperformed the Sensex.
Bank stocks witnessed selling pressure. Among public sector banks, Bank of India (down 5.82%), Bank of Baroda (down 5.16%), Union Bank of India (down 4.26%), Canara Bank (down 3.42%), Corporation Bank (down 3.05%), State Bank of India (down 2.94%) and IDBI Bank (down 2.2%) declined.
Punjab National Bank (PNB) lost 6.89% at Rs 87.85 after net profit fell 93.41% to Rs 51.01 crore on 7.64% growth in total income to Rs 13891.20 crore in Q3 December 2015 over Q3 December 2014. The result was announced during market hours today, 9 February 2016. During the quarter, the bank has recognised deferred tax assets amounting to Rs 1132.04 crore which was hitherto recognised as at the year-end, in accordance with the applicable Accounting Standards. Accordingly, the results are not comparable with corresponding previous quarter, PNB said.
The bank's provisions and contingencies jumped 157.22% to Rs 3775.53 crore in Q3 December 2015 over Q3 December 2014. Provision coverage ratio as at 31 December 2015 stood at 53.85%.
On absolute basis, PNB's gross non-performing assets (NPAs) stood at Rs 34338.22 crore as on 31 December 2015 as against Rs 24945.24 crore as on 30 September 2015 and Rs 22211.43 crore as on 31 December 2014. The bank's ratio of gross NPAs to gross advances stood at 8.47% as on 31 December 2015 as against 6.36% as on 30 September 2015 and 5.97% as on 31 December 2014. The ratio of net NPAs to net advances stood at 5.86% as on 31 December 2015 as against 3.99% as on 30 September 2015 and 3.82% as on 31 December 2014.
The increase in provisioning as well as in NPAs comes in the wake of the Reserve Bank of India (RBI) directing banks to revise asset classification and provisions in respect of certain advance accounts over a period of two quarters starting from Q3 December 2015.
Among private sector banks, Yes Bank (down 2.63%), Axis Bank (down 1.96%), IndusInd Bank (down 1.79%) and HDFC Bank (down 1.15%) edged lower. ICICI Bank (up 0.36%) and Kotak Mahindra Bank (up 0.61%) edged higher.
Auto stocks were mostly lower. Ashok Leyland (down 1.17%), Mahindra & Mahindra (down 1.13%) and Eicher Motors (down 1.12%) declined. Bajaj Auto (up 1.29%) and Hero MotoCorp (up 0.45%) edged higher.
Tata Motors fell 4.12% at Rs 310.60. The company's British luxury car unit Jaguar Land Rover (JLR) yesterday, 8 February 2016, reported 24% rise in retail sales to 46,016 vehicles in January 2016 over January 2015. Land Rover sales rose 20% to 38,075 vehicles in January 2016 over January 2015. Jaguar sales rose 44% to 7,941 vehicles in January 2016 over January 2015.
Maruti Suzuki India fell 2.07% at Rs 3,656.60 after the company said its total production fell 4.66% to 1.15 lakh units in January 2016 over January 2015. The announcement was made during trading hours today, 9 February 2016.
Capital goods stocks declined. Havells India (down 3.64%), Suzlon Energy (down 3.81%), BEML (down 2.63%), Siemens (down 2.63%), Bharat Electronics (down 2.09%), L&T (down 1.4%), Alstom T&D India (down 0.82%), Praj Industries (down 1.1%) and Bharat Heavy Electricals (down 0.87%) edged lower. Crompton Greaves (up 1.02%), ABB India (up 1.15%) and Thermax (up 0.34%) edged higher.
Hindalco Industries rose 0.36% at Rs 69.95. The stock hit a high of Rs 70.80 and a low of Rs 67.60 in intraday trade. The company's net profit fell 88.74% to Rs 40.46 crore on 4.71% decline in total income to Rs 8400.38 crore in Q3 December 2015 over Q3 December 2014. The result was announced during trading hours today, 9 February 2016.
The decline in revenue from operations during the quarter was due to sharp decline in aluminium and copper realisations. However, a strong increase in aluminium volumes and the company's thrust on value addition partially offset the impact of severe fall in realisations, Hindalco said in a statement.
In a separate announcement, Hindalco Industries said that its board approved issuing non-convertible debentures worth Rs 1500 crore. The board also approved raising term loan up to Rs 2000 crore.
JSW Steel declined after the company said that its crude steel production dropped 17.23% to 9.27 lakh tonnes in January 2016 over January 2015. The stock lost 4.8% at Rs 999. The company said that the crude steel production was lower in January 2016 due to planned shutdown of one blast furnace each at all three locations viz. Vijayanagar, Dolvi and Salem; for capacity enhancement which are expected to resume production during February 2016. The announcement was made by the company during market hours today, 9 February 2016.
Steel Authority of India (Sail) lost 4.18% at Rs 38.95 after the company posted net loss of Rs 1528.73 crore in Q3 December 2015 compared with net profit of Rs 579.09 crore in Q3 December 2014. Total income declined 21.06% at Rs 9043.71 crore in Q3 December 2015 over Q3 December 2014. The result was announced during market hours today, 9 February 2016.
IT stocks tumbled after Cognizant Technology Solutions said at the time of announcement of its Q4 December 2015 results that the company expects revenue to remain flat on sequential basis in Q1 March 2016. Tech Mahindra (down 4.89%), HCL Technologies (down 4.52%), TCS (down 3.68%), Infosys (down 3.46%), Oracle Financial Services Software (down 1.75%) and Wipro (down 1.72%) edged lower.
IT services provider Cognizant estimates revenue to be between $3.18 billion and $3.24 billion in Q1 March 2016, about the same as in Q4 December 2015. Cognizant's revenue rose 1.4% to $3.23 billion in Q4 December 2015 over Q3 September 2015. Cognizant expects its revenue growth to slow to between 9.9% and 14.33% for year the ending 31 December 2016. The company's revenue jumped 21% to $12.42 billion in the year ended 31 December 2015 over the year ended 31 December 2014.
MindTree fell 3.03% at Rs 1,480.90. The company after market hours yesterday, 8 February 2016, announced that it has been selected by Sandvik, a global engineering group in tooling, materials technology, mining and construction, to foster its IT services integration capabilities.
GAIL (India) rose 1.48% at Rs 348.60 after net profit rose 9.96% to Rs 664.26 crore on 9.27% decline in total income to Rs 13708.49 crore in Q3 December 2015 over Q3 December 2014. There was no subsidy sharing burden on GAIL (India) in Q3 December 2015 as against a subsidy sharing burden of Rs 500 crore in Q3 December 2014 as the company has not received any orders from the Ministry of Petroleum & Natural Gas relating to sharing of under recoveries on LPG. The result was announced during trading hours today, 9 February 2016.
Dr Reddy's Laboratories lost 3.61% at Rs 2,959.65 after net profit rose 0.82% to Rs 579.20 crore on 2.65% increase in total income to Rs 3980.10 crore in Q3 December 2015 over Q3 December 2014. The result was announced during trading hours today, 9 February 2016.
Dr Reddy's Laboratories said that the revenue growth was driven by healthy performance in NAG, Europe and India, partially offset by emerging markets, which was impacted by unfavorable macro-economic conditions. The company's consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) fell 3.8% to Rs 1011.50 crore in Q3 December 2015 over Q3 December 2014. Selling, general and administrative expenses rose 8% to Rs 1203.90 crore in Q3 December 2015 over Q3 December 2014. Research and development expenses fell 5% to Rs 409.50 crore in Q3 December 2015 over Q3 December 2014.
Meanwhile, Dr Reddy's Laboratories announced before market hours today, 9 February 2016, that its US subsidiary, Promius Pharma, LLC, U.S., has received approval for Sernivo (betamethasone dipropionate) Spray, 0.05%, from the United States Food and Drug Administration (USFDA). Sernivo Spray, a prescription topical steroid, is indicated for the treatment of mild to moderate plaque psoriasis in patients 18 years of age or older. The commercial launch of the product is planned for the coming quarter.
Key indices declined for the second straight session. The Sensex has fallen 595.99 points or 2.42% in the past two trading sessions from its close of 24,616.97 on 5 February 2016. The Sensex has fallen 849.71 points or 3.41% in this month so far (till 9 February 2016). The Sensex has fallen 2,096.56 points or 8.02% in calendar year 2016 so far (till 9 February 2016). The Sensex is up 181.22 points or 0.76% from a 52-week low of 23,839.76 hit on 20 January 2016. The Sensex is off 6,003.76 points or 20% from a record high of 30,024.74 hit on 4 March 2015.
On the macro front, India's Gross Domestic Product (GDP) expanded at slower pace of 7.3% in Q3 December 2015 compared with 7.7% growth recorded in Q2 September 2015. However, the growth is showing acceleration from 6.6% growth recorded in Q3 December 2014. Meanwhile, the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, has revised its full year GDP growth estimate for the financial year ending March 2016 to 7.6% from 7.1-7.5% range earlier. The data was released after market hours yesterday, 8 February 2016.
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