Key benchmark indices extended initial losses to hit fresh intraday low in morning trade as a further slide in rupee against the dollar rattled investor sentiment. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in nearly five weeks. The Sensex was down 208.36 points or 1.08%, off close to 190 points from the day's high and up about 15 points from the day's low. The market breadth, indicating the overall health of the market, was extremely weak.
Shares of Bharti Airtel extended initial gain, with the stock shrugging off the company's weak Q1 result. Dr Reddy's Laboratories rose, with the stock recovering from Tuesday's post-result slide. GAIL (India) extended Tuesday's losses triggered by a foreign brokerage downgrade. Shares of oil exploration major ONGC also extended Tuesday's sharp losses. Sterlite Industries (India) extended recent losses triggered by the company reporting weak Q1 results. Steel giant Tata Steel hit 52-week low. Shares of power equipment major Bhel also hit 52-week low.
The market slumped in early trade as a further slide in rupee against the dollar rattled investor sentiment. The Sensex extended initial losses to hit fresh intraday low in morning trade.
The rupee approached a record low against the dollar on Wednesday, 31 July 2013, with the local currency extending Tuesday's steep slide. The rupee was hovering at 61.04 versus the dollar, weaker than Tuesday's close of 60.47/48. The rupee had hit record low of 61.21 in intraday deals on 8 July 2013. The Reserve Bank of India (RBI) on Tuesday said that its recent liquidity tightening measures aimed at checking undue volatility in the foreign exchange market will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling monetary policy to revert to supporting growth with continuing vigil on inflation.
Bond prices extended Tuesday's losses. The yield on the most traded 8.2% GS 2025 was currently at 8.6692%, higher than Tuesday's close of 8.6416%. Bond yield and bond prices are inversely related.
At 10:20 IST, the S&P BSE Sensex was down 208.36 points or 1.08% to 19.139.98. The index declined 221.52 points at the day's low of 19,126.82 in morning trade, its lowest level since 28 June 2013. The index fell 22.95 points at the day's high of 19,325.39 in early trade.
The CNX Nifty was down 68.45 points or 1.19% to 5,686.60. The index hit a low of 5,678.80 in intraday trade, its lowest level since 27 June 2013. The index hit a high of 5,742.10 in intraday trade.
The market breadth, indicating the overall health of the market, was extremely weak. On BSE, 1248 shares fell and 338 shares rose. A total of 76 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks fell and rest of them rose. NTPC (down 4.31%), ICICI Bank (down 3.01%) and Jindal Steel & Power (down 2.77%), edged lower.
Coal India rose 1.2% to Rs 278.35 after Coal Minister Sriprakash Jaiswal on Tuesday, 30 July 2013, said the government has lowered the size of proposed divestment in Coal India to 5% from the 10% previously proposed in a bid to get trade unions on board. A meeting of Coal India's trade unions will be held on 5 August 2013 to discuss the divestment plan.
Shares of oil exploration major ONGC were off 4.2%, with the stock extending Tuesday's 5.64% losses. Reliance Industries (RIL) was off 0.12%. RIL and ONGC on 27 July 2013 announced signing a memorandum of understanding (MoU) to explore the possibility of sharing RIL's infrastructure facility in the East Coast. The MoU aims at working out the modalities for sharing of infrastructure, identifying additional requirements as well as firming up the commercial terms. The companies intend to enter into a definitive agreement after concluding a joint study which will be spread over the next nine months, RIL said in a statement on 27 July 2013.
GAIL (India) lost 3.9%, with the stock extending Tuesday's losses triggered by a foreign brokerage downgrade. The brokerage has downgraded the stock to underweight from overweight after cutting its EPS forecast for fiscal years 2014 to 2016. According to the brokerage report, the domestic gas output has fallen faster than expected due to a drop in output from the KG-D6 block. The brokerage expects a recovery in gas output to be 12-18 months away. The fall in output from KG-D6 will also raise gas costs for GAIL (India).
Sterlite Industries (India) fell 3.01%, with the stock extending recent losses triggered by the company reporting weak Q1 results. Sterlite Industries' consolidated net profit fell 22% to Rs 934 crore on 23% fall in net sales/income from operations to Rs 8190 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced on 25 July 2013.
Steel giant Tata Steel dropped 3.2% to Rs 202.90. The stock hit 52-week low of Rs 202.50 in intraday trade today, 31 July 2013.
Shares of power equipment major Bharat Heavy Electricals (Bhel) fell 2.26% to Rs 149.20. The stock hit 52-week low of Rs 148.35 in intraday trade today, 31 July 2013.
Dr Reddy's Laboratories rose 2.46%, with the stock recovering from Tuesday's post-result slide. The company's adjusted consolidated net profit rose 12% to Rs 320 crore on 12% rise in revenue to Rs 2840 crore in Q1 June 2013 over Q1 June 2012. The adjustments pertain to taxation. The tax rates for both the period i.e. for Q1 June 2013 and for Q1 June 2012 have been normalized to the annual effective tax rate for the concerned full year. The company announced Q1 result during market hours on Tuesday, 30 July 2013.
Shares of Bharti Airtel extended initial gain, with the stock shrugging off the company's weak Q1 result. The stock was up 3.48%. The company's consolidated net profit fell 9.6% to Rs 689 crore on 9.2% growth in total revenue to Rs 20264 crore in Q1 June 2013 over Q1 June 2012. The results are as per International Financial Reporting Standards (IFRS). The company announced the results during market hours today, 31 July 2013.
Derivatives and exchange fluctuation losses and a surge in tax outgo adversely hit the company's bottom line. Derivative and exchange fluctuation losses during the quarter were Rs 534 crore, mainly caused by the rupee depreciation, compared with derivatives and exchange fluctuation gains of Rs 160 crore in Q1 June 2012. Tax outgo surged 113.21% to Rs 968 crore in Q1 June 2013 over Q1 June 2012, mainly due to increase in tax outgo in Africa operations.
Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 19.3% to Rs 6545 crore in Q1 June 2013 over Q1 June 2012. EBITDA margin edged up to 32.3% in Q1 June 2013, from 29.6% in June 2012. EBITDA margin pertaining to India operations improved to 34.9% in Q1 June 2013, from 31.9% in Q1 June 2012. EBITDA margin pertaining international operations improved to 25.4% in Q1 June 2013, from 24% in Q1 June 2012.
Bharti Airtel said mobile revenue in India grew on the back of ARPU moving to Rs 200 in Q1 June 2013, up by Rs 16 over the corresponding period last year. The voice rate increase coupled with higher usage per customer has enabled this improvement in ARPU, Bharti Airtel said.
Consequent to the additional equity infusion of Rs 6796 crore by Qatar Foundation Endowment and after considering the full debt in the Qualcomm subsidiaries, the consolidated net debt has decreased by $908 million during the quarter. The consolidated net debt stood at $9.77 billion as on 30 June 2013. The Net Debt to EBITDA ratio (in dollar terms) now stands at 2.21 as compared to 2.50 at the end of the previous quarter.
Commenting on the first quarter results, Mr. Sunil Bharti Mittal, Chairman, Bharti Airtel, said: "Our results for the quarter reflect the overall stability of our operations, and demonstrate the potential for growth, particularly seeing robust data growth across all geographies. Results for Airtel India reflect rationality returning to the sector which needs to be complemented by a more enabling regulatory environment for a deeper penetration of telecom and broadband services".
On the political front, the ruling Congress party approved on Tuesday the creation of a new Telangana state, a move that has revived deep political divisions and raised fears of violence in the area, home to global firms including Google. The decision to break up Andhra Pradesh and establish Telangana comes ahead of elections next year.
Asian stocks fell on Wednesday, 31 July 2013, amid caution ahead of the Federal Reserve's policy decision. Key benchmark indices in Japan, Singapore, South Korea, Indonesia and Taiwan fell by 0.03% to 0.89%.
Chinese stocks rose after the powerful politburo of China's communist party on Tuesday said it would act to maintain steady growth in the second half of 2013. Key benchmark indices in Hong Kong and China were up 0.22% to 0.58%.
Meanwhile, the results of two separate surveys on Chinese manufacturing activity in July are due tomorrow, 1 August 2013.
Taiwan's economy expanded at a faster-than-estimated pace in the second quarter as domestic consumption improved, even as a slowdown in China damps the outlook for the island's exports. Gross domestic product rose 2.27% from a year earlier after increasing 1.67% in the first quarter, the statistics bureau said in a preliminary report in Taipei today.
Trading in US index futures indicated a flat opening of US stocks on Wednesday, 31 July 2013. US stocks closed mixed on Tuesday in quiet trading session as many investors remained on the sidelines ahead of the Federal Reserve's Wednesday announcement on interest rates and monetary policy.
The Federal Open Market Committee's (FOMC) two-day policy meeting ends today, 31 July 2013, with expectations that it will offer further clues on how long it will maintain its bond purchases. In his two-day testimony to Congress, which concluded on 18 July 2013, Federal Reserve Chairman Ben Bernanke said plans to taper asset purchases were not on a preset path and stressed intentions to be very responsive to data. Additionally, Bernanke said recent data have been "mixed" and it was "way too early" to make a judgment on when the central bank will slow down the pace of its asset purchases. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.
In Europe, the European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions tomorrow, 1 August 2013.
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