Key benchmark indices edged lower on the last trading session of the week after the Reserve Bank of India (RBI) governor's strong warning on inflation. Weakness in Asian and European stocks and overnight losses for US stocks also hit sentiment on the domestic bourses adversely. The market breadth, indicating the overall health of the market, was weak. All the thirteen sectoral indices on BSE dropped. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, reached one-week closing low. The Sensex shed 240.10 points or 1.12%, off close to 200 points from the day's high and up about 10 points from the day's low. The BSE Small-Cap and Mid-Cap indices were off more than 1.5% each.
Indian stocks snapped four-day winning streak today, 24 January 2014. The Sensex had garnered 310.04 points or 1.47% in four trading sessions to settle at a record closing high of 21,373.66 on Thursday, 23 January 2014, from a recent low of 21,063.62 on 17 January 2014. The Sensex has fallen 37.12 points or 0.17% in this month so far (till 24 January 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,684.85 points or 21.11%.
Coming back to today's trade, interest rate sensitive banking, realty and automobile stocks dropped after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high.
The S&P BSE Sensex lost 240.10 points or 1.12% to settle at 21,133.56, its lowest closing level since 17 January 2014. The index dropped 249.67 points at the day's low of 21,123.99 in late trade. The index declined 40 points at the day's high of 21,333.66 in early trade.
The CNX Nifty lost 77 points or 1.21% to settle at 6,268.85, its lowest closing level since 17 January 2014. The index hit a low of 6,263.90 and a high of 6,331.45 in intraday trade.
The BSE Mid-Cap index lost 1.66%. The BSE Small-Cap index plunged 1.81%. Both these indices underperformed the Sensex.
Info Edge (India) (down 8.71%), Just Dial (down 5.7%), Biocon (down 5.61%), Oriental Bank of Commerce (down 5.47%), KPIT Technologies (down 5.15%), Century Textiles (down 4.9%), JSW Energy (down 4.68%), Kirloskar Oil Engines (down 5.13%) and PC Jeweller (down 4.91%) topped losers from the BSE Mid-Cap index.
Luminaire Technologies (down 10.16%), Midland Polymers (down 9.96%), Indian Metals & Ferro Alloys (down 7.37%), Tribhovandas Bhimji Zaveri (down 6.85%), Aptech (down 6.64%), Kolte Patil Developers (down 7.63%), Bhansali Engineering (down 6.65%), S R K Industries (down 6.5%) and Ashapura Minechem (down 6.61%) topped losers from the BSE Small-Cap index.
The total turnover on BSE amounted to Rs 2668 crore, higher than Rs 1876.47 crore on Thursday, 23 January 2014.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,759 shares fell and 890 shares rose. A total of 148 shares were unchanged.
Among the 30-share Sensex pack, 27 stocks fell and only 3 of them gained.
Realty stocks declined after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high. Purchases of both residential and commercial property are largely driven by finance. DLF (down 3.87%), HDIL (down 4.57%), Sobha Developers (down 0.12%) and Unitech (down 1.83%) declined.
Bank stocks dropped across the board after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high. ICICI Bank (down 1.96%), AXIS Bank (down 0.77%), HDFC Bank (down 0.8%) declined.
Among PSU bank stocks, State Bank of India, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank shed 2.12% to 5.44%.
Canara Bank dropped 6.67% as the stock turned ex-dividend today, 24 January 2014, for the interim dividend of Rs 6.50 per share for the year ending 31 March 2014.
Cairn India fell 0.08% on weak Q3 result. The company after market hours on Thursday, 23 January 2014, reported 14% fall in consolidated profit after tax (PAT) to Rs 2884 crore on 17% growth in revenue to Rs 5000 crore in Q3 December 2013 over Q3 December 2012. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 10% to Rs 3555 crore in Q3 December 2013 over Q3 December 2012. EBITDA margin fell to 71.1% in Q3 December 2013, from 75.8% in Q3 December 2012.
PAT declined 15% to Rs 2884 crore on 8% growth in revenue to Rs 5000 crore in Q3 December 2013 over Q2 September 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) fell 2% to Rs 3555 crore in Q3 December 2013 over Q3 December 2012. EBITDA margin fell to 71.1% in Q3 December 2013, from 77.8% in Q2 September 2013.
Cairn India said that the 8% growth in revenue on sequential basis in Q3 December 2013 was driven by increased volumes. The company said EBITDA fell 2% on sequential basis in Q3 December 2013 as the contribution from higher revenues was primarily offset by increased exploration costs and one time charge on account of adoption of fair value methodology of stock option valuation. The company said that the 15% decline in PAT on sequential basis in Q3 December 2013 was primarily due to a foreign exchange loss on the dollar deposits with the strengthening of the rupee against the dollar.
With regard to future business outlook, Cairn India said that the production remains on track to meet the fiscal year exit guidance of over 225,000 boepd from all producing assets, supported by continued infill drilling. Cairn India said it targets to commence implementation of Polymer Flood EOR programme by Q4 FY 2015 for enhancing ultimate recovery from the Mangala field. The company further said that it is actively working on plans to extend the EOR programme to other fields in future. The company said it remains focussed on developing and enhancing production from the already discovered and new fields through the use of advanced technology in the low permeability reservoirs.
Cairn India said it remains on track to drill out 50% of gross risked prospective resources in Rajasthan by fiscal year end including 2 high impact wells expecting to test deeper gas plays. Successful exploration outcomes in the southern part of the basin indicate potential for gas, Cairn India said.
Mr. Elango P, Whole time Director, Cairn India said: "Cairn remains committed to discover new resources and deliver accelerated value from its assets. Our focus on execution is yielding results. Production rose by over 5% compared with the previous quarter and we remain on track to meet the full year exit guidance of over 225,000 boepd. With strategic focus on increasing ultimate recovery from operating fields, we have commenced execution of Polymer Flood Enhanced Oil Recovery project at Mangala, making us one of the front runners in technology adoption. The renewed exploration and appraisal programme during 2013 resulted in 3 discoveries in Rajasthan and declaration of commerciality of Nagayalanka discovery in KG-Onshore block. Our strategy of active exploration across the portfolio opens up potential for resource accretion in the near term. We are keen on evaluating the blocks in NELP-X announced by MoPNG recently, to build on our exploration led growth in India".
Most IT stocks edged lower. Tata Consultancy Services (TCS) fell 0.27%. The company early this week announced the launch of the Digital Software & Solutions Group, a new business unit designed to help customers undergo critical digital transformations through modular, fully integrated, industry-tailored licensed software and solutions.
Wipro shed 0.9% to Rs 573.20, with the stock reversing direction after hitting 52-week high of Rs 586.65 in intraday trade.
Tech Mahindra fell 1.94%.
Infosys fell on profit booking after recent gains triggered by the company raising its revenue growth guidance for the year ending 31 March 2014 at the time of announcement of Q3 December 2013 earnings on 10 January 2014. Infosys fell 0.89% to Rs 3,759.05. The stock had hit a record high of Rs 3,799 in intraday trade on Thursday, 23 January 2014.
HCL Technologies gained 0.51%.
Mastek fell 4.03% on profit booking after the company announced good Q3 December 2013 results after market hours on Thursday, 23 January 2014.
Mastek after market hours on Thursday, 23 January 2014, announced that its net profit rose 21.9% to Rs 18.30 crore on 1.6% increase in total income to Rs 242.40 crore in Q3 December 2013 over Q2 September 2013.
The company reported EBITDA (earnings before interest, taxes, depreciation and amortization) of Rs 35.80 crore (14.8% of total income) in Q3 December 2013 compared with Rs 28.90 crore (12.1% of total income) in Q2 September 2013.
The company's operating revenue was Rs 240.20 crore in Q3 December 2013 compared with Rs 236.70 crore in Q2 September 2013, reflecting an increase of 1.5% in rupee terms and 0.7% in constant currency terms.
The product research & development spends during the quarter was Rs 15.60 crore compared with Rs 14.4 crore in Q2 September 2013.
Mastek said its 12-month order backlog was Rs 513 crore ($83 million) as on 31 December 2013 and in constant currency stood at Rs 515 crore ($82.50 million) as compared to Rs 558 crore ($89.10 million) at the end of Q2 September 2013, reflecting a drop of 8% quarter over quarter (QoQ) in rupee terms (drop of 7.5% QoQ in constant currency).
The company said it added 2 new clients during Q3 December 2013. Total client count as of 31 December 2013 was 123 (LTM).
Commenting on the results, Mr. Sudhakar Ram, Group CEO & Managing Director, Mastek, said: We had a steady quarter with a marginal increase in the top line despite the continued ramp down in our IT services accounts. The shift in focus to high end products and solutions has helped us improve our operating margins. While there may be a short term impact due to the NA account ramp-down, I am confident that we will be able to grow both our revenues and margins over the next few quarters.
Mr. Farid Kazani, Group CFO and Finance Director, Mastek, said: "The highlight of the quarter has been the resilience in margins despite increased employee and product expenses. And, the cash flows remain healthy allowing us to reward the shareholders with the proposed buyback.
Updating on the previous announcement dated 15 November 2013, Mastek said that due to the reprioritizing of the multi-vendor transformation program by a major North American customer, resulting in a slowdown in the program implementation, there will be impact on the revenues of Mastek.
The drop in revenues would be approximately $2.4 million per quarter (based on December quarter revenues) until the program regains momentum. However, the company continues to see good momentum in its insurance business in North America and is confident of bridging this gap in revenue over the next few quarters, the company said.
Mastek's total cash/cash equivalent stood at Rs 249.40 crore on 31 December 2013 as compared to Rs 250.70 crore at the end of 30 September 2013.
As on 31 December 2013, the company had a total of 3,128 employees, of which 2,370 employees were based offshore in India while the rest were at various onsite locations outside India. Employee count at the end of 30th September 2013 was 3,185.
Index heavyweight and cigarette maker ITC fell 1.44% to Rs 324.20 in volatile trade amid high volume. The stock hit high of Rs 330.10 and low of Rs 323.80. On BSE, 46.89 lakh shares were traded in the counter as against average daily volume of 4.64 lakh shares in the past one quarter.
Index heavyweight Reliance Industries (RIL) rose 0.11% to Rs 867 in volatile trade. The stock hit a high of Rs 874.50 and low of Rs 862.35. The company's net profit rose 0.2% to Rs 5511 crore on 10.5% growth in revenue to Rs 106383 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced on 17 January 2014.
Telecom stocks were in red. Idea Cellular (down 1.13%), Tata Teleservices (Maharashtra) (down 1.46%), Bharti Airtel (down 0.43%) and Reliance Communications (down 3.55%) declined.
L&T Finance Holdings lost 4.21% after consolidated net profit declined 62.77% to Rs 109.68 crore on 30.52% growth in total income to Rs 1283.37 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after trading hours on Thursday, 23 January 2014.
Consolidated net profit (excluding exceptional items) fell 7.3% to Rs 109.70 crore in Q3 December 2013 over Q3 December 2012. L&T Finance Holdings said that the consolidated net profit (excluding exceptional items) has been impacted by higher credit costs compared to previous year.
Gross NPA (non performing assets) stood at Rs 1065.2 crore or 2.93% as a percentage of gross advances as on 31 December 2013 as against Rs 992.9 crore or 2.89% as on 30 September 2013. The continuing stress in the economy has resulted in slippages in asset quality mainly in the construction equipment, commercial vehicle, corporate and restructured assets. Net NPA stood at Rs 739.8 crore or 2.05% as a percentage of gross advances as on 31 December 2013 as against Rs 654.6 crore or 1.93% as on 30th September 2013.
Capital goods stocks dropped. ABB (down 3.27%), Bhel (down 3.39%), Crompton Greaves (down 4.2%) and Thermax (down 3.47%) declined.
L&T fell 2.63%. The company said after market hours on Wednesday, 22 January 2014, that its recurring profit after tax rose 12% to Rs 1136 crore on 12% growth in gross revenue to Rs 14534 crore in Q3 December 2013 over Q3 December 2012. L&T said the results are excluding the performance of the hydrocarbon business segment, which has been transferred to a wholly-owned subsidiary of the company with effect from 1 April 2013. Consequently, the figures for the previous periods have been restated to make a like-to-like comparison, L&T said.
L&T said its order inflow rose 21% to Rs 21722 crore in Q3 December 2013 over Q3 December 2012, shrugging off prevailing weak investment climate. The international order inflow during the quarter at Rs 8237 crore, more than doubled on the back of major orders secured in the Middle East. The order backlog rose 13% year-on-year at Rs 171184 crore as on 31 December 2013. International order book constituted 15% of the total order book.
L&T has pruned its order inflow forecast for the year ending 31 March 2014, to 15% from 20% earlier due to the poor investment climate in India.
L&T said that while the company continues to focus on maximizing the domestic opportunities, it is strengthening its international presence in select overseas markets. Competitive value proposition to the clients and disciplined execution have helped the company sustain its profitable growth momentum, L&T said. Presence in the diverse sectors, healthy order book, proven track record and strong balance sheet are the key enablers for the company to steer through the near to medium challenges and meet its growth aspirations, L&T said in a statement.
Auto stocks fell across the board after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. Maruti Suzuki India (down 1.25%), M&M (down 0.56%), Ashok Leyland (down 3.4%) and Tata Motors (down 3.26%) declined.
Shares of two wheeler companies also declined. Hero MotoCorp (down 1.33%), TVS Motor Company (down 4.11%) declined.
Bajaj Auto rose 0.2%.
Metal stocks extended Thursday's losses triggered by data showing that a private gauge of China's manufacturing in January unexpectedly contracted this month. China is the world's largest consumer of copper and aluminum. Hindustan Copper (down 2.45%), Hindalco Industries (down 0.22%), Tata Steel (down 3.36%), Steel Authority of India (down 0.22%), JSW Steel (down 2.48%), and Jindal Steel & Power (down 1.82%) declined.
Hindustan Zinc (down 1.47%) and Sesa Sterlite (down 2.92%) dropped. Hindustan Zinc clarified after market hours on Thursday, 23 January 2014, regarding a media report about Sesa Sterlite likely to merge Hindustan Zinc with itself. Hindustan Zinc (HZL) said that there is no such proposal before the board of directors of Hindustan Zinc for merger of HZL with Sesa Sterlite. Sesa Sterlite also clarified that there is no proposal before the board of directors of the company for merger of HZL with the company.
Pharma stocks declined. Cipla (down 1.08%) and Sun Pharmaceutical Industries (down 1%) declined.
Dr Reddy's Laboratories fell 0.41% to Rs 2656.05, with the stock reversing direction after hitting record high of Rs 2,690 in intraday trade.
Ranbaxy Laboratories slumped on high volumes after the company announcement that the US Food and Drug Administration notified the company that it is prohibited from manufacturing and distributing active pharmaceutical ingredients (APIs) from its facility in Toansa, India, for FDA-regulated drug products. The stock slumped 19.33%. On BSE, 48.64 lakh shares changed hands on the counter, compared with average daily volume of 4.4 lakh shares in the past one quarter. The Toansa facility is now subject to certain terms of a consent decree of permanent injunction entered against Ranbaxy in January 2012, Ranbaxy said in a statement.
Subsequent to the Form 483 issued in early January 2014, Ranbaxy voluntarily and proactively suspended shipments of API from this facility to the US market when it received the inspection findings. Ranbaxy said that the management is disappointed with the recent FDA action and would like to apologize to all its stakeholders in for the inconvenience caused by the suspension of shipment. Arun Sawhney, CEO and Managing Director of Ranbaxy said: "This development is clearly unacceptable and an appropriate management action will be taken upon completion of the internal investigation".
Ranbaxy further said that the company is committed to highest standard of patient safety and quality, and shall constantly endeavour to strengthen its systems and processes. Ranbaxy will cooperate with the FDA and shall comply with the Consent Decree in both the letter and spirit, it said.
Sun Pharma Advanced Research Company rose 0.28% after the company announced that its licensee has received an approval from the Drug Controller General of India for a drug used in treatment of breast cancer. The announcement was made before market hours today, 24 January 2014.
Sun Pharma Advanced Research Company (SPARC) announced that its licensee has received an approval from the Drug Controller General of India (DCGI) for Paclitaxel Injection Concentrate for Nanodispersion (PICN), indicated for the treatment of metastatic breast cancer.
Novartis India dropped 4.06% after net profit fell 47.5% to Rs 15.23 crore on 4.3% fall in net sales to Rs 218.54 crore in Q3 December 2013 over Q3 December 2012. The company announced results after market hours on Thursday, 23 January 2014. Novartis India said that reduction in the selling prices of some key products arising out of the notification of the new Drug Price Control Order continued to have a significant adverse impact on the revenue and operating profits of the company. Depreciation of the rupee further impacted profits, the company said in a statement.
Novartis India's total income from operations fell 3.92% to Rs 224.64 crore in Q3 December 2013 over Q3 December 2012.
The company's pharmaceuticals business recorded 11.69% decline in total income from operations to Rs 142.90 crore in Q3 December 2013 over Q3 December 2012.
The generics business recorded 1.91% rise in total income from operations of Rs 16 crore in Q3 December 2013 over Q3 December 2012.
The animal health business registered 17.08% rise in total income from operations of Rs 28.10 crore in Q3 December 2013 over Q3 December 2012.
OTC business recorded 16.72% rise in total income from operations of Rs 37.70 crore in Q3 December 2013 over Q3 December 2012.
MBL Infrastructures rose 0.43% after the company said it bagged five orders worth Rs 502.28 crore. The company made the announcement after market hours on Thursday, 23 January 2014.
Triveni Turbine fell 4.13% after net profit fell 31.80% to Rs 20.80 crore on 19.53% decline in net sales to Rs 140.90 crore in Q3 December 2013 over Q3 December 2012. The company announced results after market hours on Thursday, 23 January 2014.
Triveni Turbine's (TTL) EBITDA (earnings before interest, taxes, depreciation and amortization) fell 34.90% to Rs 31.90 crore in Q3 December 2013 over Q3 December 2012.
EBITDA margin stood at 22.7% in Q3 December 2013, lower than 28% in Q3 December 2012.
Bharat Electronics declined 1.98% after net profit fell 2.96% to Rs 191.74 crore on 18.29% decline in total income to Rs 1303.11 crore in Q3 December 2013 over Q3 December 2012. The company announced the results during trading hours today, 24 January 2014.
Vakrangee rose 0.54% after the company said that the Reserve Bank of India has granted the company the final authorization of the White Label ATM license today, 24 January 2014. The announcement was made during trading hours today, 24 January 2014.
Under the White Label ATM (WLA) license, Vakrangee is entitled to set up and run minimum 15,000 ATMs across the country in next three years. WLA's are those which are not run by the banks but by a non- banking entity in its own brand name (like Vakrangee ATM) after passing through all the stringent qualification and due-diligence process undertaken by the Reserve Bank of India (RBI). These ATMs shall have all the functionalities like that of a bank -run ATMs, Vakrangee said.
Vakrangee said that the WLA business is a perfect strategic fit for the company's current business of rural bank branch management wherein Brick and Mortar bank branches (As Common BC) being set up and run by Vakrangee for the PSU banks with real time banking transactions happening at these out-sourced PSU bank branches by seamless integration with the core banking solution (CBS) of respective PSU Banks.
In the foreign exchange market, the rupee declined sharply against the dollar on global risk off sentiment. The partially convertible rupee was hovering at 62.68, compared with its close of 61.9275/9375 on Thursday, 23 January 2014.
Bond prices dropped after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high, according to reports. "Industrialists complain about high interest rates but we don't have a choice but to keep interest at a high rate because inflation is high at 8%", Rajan said. The strong warning against inflation comes ahead of the central bank's policy review early next week. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.7376%, higher than its close of 8.6653% on Thursday, 23 January 2014. Bond yield and bond prices move in opposite direction.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
European stocks edged lower in choppy trade on Friday, 24 January 2014. Key benchmark indices in France, Germany and UK were off 0.74% to 1.13%.
Fitch Ratings today affirmed Germany's credit rating at AAA with a stable outlook, citing a decline in the debt level of Europe's biggest economy. Germany continues to have the components of a declining public debt path, Fitch said in a statement. The economy is growing, the budget position is relatively favorable and nominal interest rates are low. Standard & Poor's on Jan. 10 affirmed Germany's AAA credit grade and the stable outlook for the rating. Germany had the outlook for its Aaa rating lowered to negative by Moody's Investors Service in July 2012.
Asian stocks edged lower on Friday, 24 January 2014, amid concern earnings growth will miss estimates on signs of weakness in China's economy. Key benchmark indices in South Korea, Singapore, Indonesia, and Hong Kong were down 0.36% to 1.31%. Taiwan's Taiwan Weighted rose 0.04% in choppy trade.
Japanese stocks slumped after the yen strengthened against the dollar yesterday by the most since Sept. 18. The Nikkei 225 average lost 1.94%.
China's Shanghai Composite rose 0.6%. A preliminary reading of HSBC's January China manufacturing Purchase Manufacturing Index fell to 49.6, below the 50 boundary between expansion and contraction, and down from 50.5 in the final result for December. It was the first contraction for the sector in six months, according to the HSBC data which was released on Thursday, 23 January 2014.
China's central bank on 21 January 2014 announced that it is injecting more liquidity into the system ahead of the Lunar New Year holiday.
Funds investing in emerging markets had outflows of $2.4 billion in the week ended 22 January 2014, according to a report by Citigroup Inc., citing data from EPFR Global.
Trading in US index futures indicated that the Dow could drop 122 points at the opening bell on Friday, 24 January 2014. US stocks closed sharply lower on Thursday as weak economic data from China prompted investors to sell resource stocks and emerging-markets assets and seek safety in bonds, gold, and high-dividend paying sectors.
Among economic data, an early gauge of US manufacturing dipped in January from the prior month, but some of the slowdown was due to cold weather, Markit reported Thursday. The US flash purchasing managers index slipped to 53.7 in January, down from December's level of 55, which was an 11-month high. This is the slowest improvement in conditions since October. US initial jobless claims rose slightly to 326,000 last week. The leading economic index rose 0.1% in December, marking its sixth gain in a row, the nonprofit Conference Board said Thursday. In the housing sector, sales of existing homes rose 1% in December to a 4.98 million annual rate, while the median sale price climbed 9.9% to $198,000.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
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