Key benchmark indices edged lower after witnessing intraday volatility as Asian and European stocks fell on concerns US monetary policy will soon become less accommodative after Federal Reserve officials on Tuesday, 6 August 2013, said a reduction in asset purchases is likely later this year. The S&P BSE Sensex was provisionally down 86.74 points or 0.46%, up about 100 points from the day's low and off close to 165 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
Tata Power Company recovered after Tuesday's steep losses triggered by the company reporting reverse turnaround in Q1. Metal stocks gained in choppy trade. Lupin declined after reporting strong Q1 results. Index heavyweight Reliance Industries (RIL) gained. Another index heavyweight and cigarette maker ITC declined. Tata Motors declined in choppy trade after weak Q1 result. NMDC shrugged off weak Q1 result.
A bout of initial volatility was witnessed as key benchmark indices slipped into the red after opening higher. Volatility continued as key benchmark indices trimmed losses after hitting fresh intraday low in morning trade. The market pared losses once again after hitting fresh intraday low in mid-morning trade. Volatility continued as key benchmark indices trimmed intraday losses in early afternoon trade. Key benchmark indices hovered in red in mid-afternoon trade. High volatility was witnessed in late trade as the Sensex slipped into the red after regaining positive terrain.
The rupee trimmed intraday losses against the dollar on Wednesday, 7 August 2013. The partially convertible rupee was hovering at 60.995, weaker than its close of 60.77/78 on Tuesday, 6 August 2013. The rupee had staged a strong intraday rebound on Tuesday after hitting record low of 61.80.
As per provisional figures, the S&P BSE Sensex was down 86.74 points or 0.46% to 18,646.30. The index fell 181.69 points at the day's low of 18,551.35 in mid-morning trade, its lowest level since 26 June 2013. The index rose 78.42 points at the day's high of 18,811.46 in late trade.
The CNX Nifty was down 29.25 points or 0.53% to 5,513, as per provisional figures. The index hit a low of 5,486.85 in intraday trade, its lowest level since 10 April 2013. The index hit a high of 5,561.45 in intraday trade.
The total turnover on BSE amounted to Rs 1874 crore, higher than Rs 1682.11 crore on Tuesday, 6 August 2013.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,248 shares rose and 1,043 shares fell. A total of 101 shares were unchanged.
Among the 30-share Sensex pack, 16 stocks fell and rest of them rose. HDFC (down 3.53%), TCS (down 2.86%) and Bajaj Auto (down 2.18%), edged lower.
Metal stocks gained in choppy trade. Sterlite Industries (up 4.2%), Sesa Goa (up 4.16%), Jindal Steel & Power (up 3.94%), Bhushan Steel (up 0.24%), Hindustan Zinc (up 2.2%) and JSW Steel (up 1.17%), gained.
Steel major Tata Steel gained 4.83% to Rs 208.20, with the stock reversing direction after hitting a 52-week low of Rs 195.40 in intraday trade today, 7 August 2013.
Sail rose 0.92% to Rs 38.50, with the stock reversing direction after hitting a 52-week low of Rs 37.65 in intraday trade today, 7 August 2013.
Hindalco Industries rose 0.99% to Rs 86.40, with the stock reversing direction after hitting a 52-week low of Rs 83.05 in intraday trade today, 7 August 2013.
NMDC jumped 5.48% after Q1 result. The company's net profit fell 17.51% to Rs 1572.19 crore on 0.02% decline in total income to Rs 3391.53 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result during market hours today, 7 August 2013.
NMDC's selling expenses including freight jumped 706.28% to Rs 291.07 crore in Q1 June 2013 over Q1 June 2012. During Q1 June 2013, the company exported 4.92 lakh tons (against nil in Q1 June 2012) due to which the selling expenditure on exports has gone up by Rs 255 crore. Further, on account of the Supreme Court judgment dated 18 April 2013 on illegal mining cases at Karnataka, 10% of sale proceeds of Donimalai sector amounting to Rs 66 crore (previous corresponding period nil) has been accounted in other expenses in the current quarter, towards contribution of Special Purpose Vehicle to be formed in Karnataka.
NMDC's total outgo under the head 'other expenses' spurted 124.52% to Rs 212.49 crore in Q1 June 2013 over Q1 June 2012.
HDFC Bank declined 1.26%. The private sector bank has increased the minimum interest rate it charges to borrowers or the base rate by 20 basis points to 9.8% with effect from 3 August 2013.
Tata Motors declined 2.11% to Rs 284.70 on weak Q1 result. Nevertheless, the stock trimmed losses after tumbling 5.16% at the day's low of Rs 272.50 soon after announcing Q1 result. The result hit the market in late trade. The company's consolidated net profit fell 23.11% to Rs 1726 crore on 8% growth in revenue (net of excise) to Rs 46785 crore in Q1 June 2013 over Q1 June 2012. The company said that strong demand, growth in volumes, richer product mix and favourable foreign exchange movement at Jaguar Land Rover (JLR) helped offset weak operating environment in Tata Motors' standalone business.
Tata Power Company jumped 7.78% to Rs 76.90, with the stock reversing intraday losses. The stock came off the day's low of Rs 68.60 today, 7 August 2013. The scrip had tumbled 14.76% in a single trading session on Tuesday, 6 August 2013, after the company reported reverse turnaround in Q1. The stock had hit 52-week low of Rs 68.25 in intraday trade on Tuesday. The company reported a consolidated net loss of Rs 114.70 crore in Q1 June 2013, compared with net profit of Rs 145.93 crore in Q1 June 2012. The company's total income rose 24.53% to Rs 9111.57 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result during market hours on Tuesday, 6 August 2013.
Tata Power said that the company's performance at the operational front was strong in Q1 June 2013. The company said net loss in Q1 June 2013, as against net profit in Q1 June 2012 was due to higher forex loss on realignment of liabilities due to weakening of rupee against the dollar and due to higher finance cost related to the Mundra ultra mega power project (UMPP). Tata Power said that Central Electricity Regulatory Commission (CERC) has notified Coastal Gujarat Power (CGPL) which is the special purpose vehicle which operates the 4,000 megawatts Mundra UMPP of its decision for a compensatory tariff to be paid till the fuel situation stabilizes. CERC has set up a committee to evaluate the decision. Tata Power said that this decision of CERC is an important step in resolving the major impasse affecting imported coal based power plants in the country. Tata Power said that CGPL has approached regulatory authorities to seek tariff revision and it is eagerly awaiting early resolution.
Infosys fell 0.67%. The company announced during market hours today, 7 August 2013 the launch of the latest version of its Finacle wealth management solution. The new offering from Finacle allows banks to quickly introduce new products and services, such as financial planning and investment products, along with traditional retail banking services.
Index heavyweight and cigarette maker ITC dropped 2.51%.
Another index heavyweight Reliance Industries (RIL) rose 3.28% to Rs 868.
Lupin lost 7.03% to Rs 823. The company's consolidated net profit rose 43.03% to Rs 401.06 crore on 9.1% growth in net sales to Rs 2420.70 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result during market hours today, 7 August 2013. The earnings before interest, taxation, depreciation and amortization (EBITDA) jumped 43.5% to Rs 690.50 crore in Q1 June 2013 over Q1 June 2012. EBITDA margin expanded to 28.5% of net sales in Q1 June 2013, from 21.7% in Q1 June 2012.
Commenting on the results, Dr. Kamal K. Sharma, Managing Director, Lupin, said, "We have had a good quarter fuelled by strong business performance in the US as well as improved operational efficiencies that have led to stronger margins. We continue on the road to growth in EBIDTA."
During the period under review, Lupin's revenue expenditure on R&D stood at 8.1% of net sales at Rs 195.60 crore. Lupin's debt-equity ratio as on 30 June 2013 was 0.07.
Earlier during the day, Lupin announced that it has signed a strategic licensing agreement with US pharmaceutical company Romark Laboratories, L.C. (Romark) which grants Lupin exclusive rights to promote, distribute and market Alinia (nitazoxanide) for Oral Suspension in the US. Alinia (nitazoxanide) is the first thiazolide approved by the USFDA for the treatment of diarrhea caused by Cryptosporidium and Giardia and is the only USFDA-approved treatment for Cryptosporidium. Alinia for Oral Suspension is indicated for the treatment of diarrhea caused by Giardia lamblia or Cryptosporidium parvum in patients 1 year of age and older. These are the two most common protozoal causes of diarrhea in the developed and developing world, Lupin said.
Ranbaxy Laboratories rose 4.58% ahead of its Q2 results today, 7 August 2013. Dr Reddy's Laboratories rose 1.18%.
The government on Tuesday, 6 August 2013, named Dr. Raghuram Rajan as the next Governor of the Reserve Bank of India (RBI) for a term of three years after D Subbarao's tenure ends on 4 September 2013. Rajan, who is currently Chief Economic Adviser in the finance ministry, joined the government last August, having previously been chief economist at the International Monetary Fund and a professor at the University of Chicago.
European shares edged lower on Wednesday, 7 August 2013, after Federal Reserve officials on Tuesday, 6 August 2013, said a reduction in asset purchases is likely later this year. Key benchmark indices in UK, France and Germany were down by 0.36% to 0.63%.
Most Asian stocks dropped on Wednesday, 7 August 2013, after overnight losses in the US on monetary-policy concerns, with Japan taking an especially heavy hit from gains for the yen. Key benchmark indices in China, Japan, Hong Kong, Taiwan, and South Korea were off 0.67% to 4%. Singapore's Straits Times rose 0.16%.
The Bank of Japan (BoJ) holds two-day policy meet on 7 and 8 August 2013. The BoJ is widely expected to maintain its pledge of increasing the monetary base at an annual pace of about 60 trillion to 70 trillion yen ($600 billion-$700 billion).
Trading in US index futures indicated that the Dow could fall 70 points at the opening bell on Wednesday, 7 August 2013. US stocks extended losses into a second day Tuesday after Fed Bank of Chicago President Charles Evans, who has been among the strongest proponents of the record monetary accommodation in the US said he expects the central bank to begin tapering its asset-purchase program by the end of the year. Separately, Atlanta Fed Bank President Dennis Lockhart said tapering of monetary stimulus, or quantitative easing, could be announced at any of this year's remaining policy meetings.
The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.
Data yesterday showed the US trade deficit narrowed more than economists expected in June to the least since October 2009. Separately, job openings rose to 3.94 million in June from 3.91 million in May, the US Department of Labor reported.
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