A bout of volatility was witnessed as key benchmark indices recouped entire initial losses in morning trade as investors heaved a sigh of relief after US lawmakers on Wednesday, 16 October 2013, voted to reopen the US government and raise the nation's debt ceiling. The barometer index, the S&P BSE Sensex, was currently almost unchanged for the day at 20,547.86, up about 75 points from the day's low and off close to 60 points from the day's high. The market breadth, indicating the overall health of the market, was strong.
Bajaj Auto rose on better-than-expected Q2 results. Bajaj Auto's better-than-expected Q2 result lifted shares of other two wheeler makers viz. Hero MotoCorp and TVS Motor Company. HCL Technologies and TCS, both, extended initial losses on profit booking after reporting strong quarterly results. Infosys fell on profit booking after recent gains triggered by the company raising its revenue guidance for the full year at the time of announcement of Q2 September 2013 results last week. FMCG major Hindustan Unilever extended initial gain.
The market slipped into the red after a positive start triggered by higher Asian stocks. A bout of volatility was witnessed as key benchmark indices recouped entire initial losses in morning trade.
In the foreign exchange market, the rupee edged higher against the dollar on global risk-on sentiment after the US lawmakers on Wednesday, 16 October 2013, voted to reopen the US government and raise the nation's debt ceiling. The partially convertible rupee was hovering at 61.62, stronger than its close of 61.835/845 on Tuesday, 15 October 2013. Indian financial markets were closed on Wednesday, 16 October 2013, on account of Bakri Id.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1136.23 crore on Tuesday, 15 October 2013, as per provisional data from the stock exchanges.
At 10:20 IST, the S&P BSE Sensex was flat at 20,547.86. The index declined 76.37 points at the day's low of 20,471.25 in morning trade. The index gained 58.31 points at the day's high of 20,605.93 in early trade.
The CNX Nifty was down 2.80 points or 0.05% to 6,086.25. The index hit a low of 6,064.85 in intraday trade. The index hit a high of 6,101.65 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,081 shares gained and 529 shares fell. A total of 88 shares were unchanged.
Among the 30-share Sensex pack, 23 stocks rose and rest fell. Bharti Airtel (up 1.52%), Tata Steel (up 1.51%) and ITC (up 1.47%), gained.
FMCG major Hindustan Unilever gained 1.97%, with the stock extending initial gain.
HCL Technologies declined 2.35% to Rs 1,133.10, with the stock extending initial losses on profit booking after reporting strong Q1 results. The stock had witnessed a pre result rally. The stock had hit record high of Rs 1,177 in intraday trade on Tuesday, 15 October 2013, ahead of the Q1 results. The company before trading hours today, 17 October 2013, said its consolidated net profit as per US accounting standards jumped 18.7% to Rs 1416 crore on 14% growth in revenue to Rs 7961 crore in Q1 September 2013 over Q4 June 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) jumped 29.5% to Rs 2093 crore in Q1 September 2013 over Q4 June 2013. EBITDA margin rose to 26.3% in Q1 September 2013 from 23.1% in Q4 June 2013.
Commenting on the company's first quarter earnings, Shiv Nadar, Chairman & Chief Strategy Officer, HCL Technologies, said: "Against the backdrop of encouraging macro economic trends, these results cement HCL's position as a company with a strong and differentiated business model. HCL remains well positioned in both existing and emerging momentum markets with exceptionally strong customer relationships driving sustainable growth".
Anant Gupta, President and CEO, HCL Technologies, said: "YoY growth of 42.8% in net income and 14.1% in revenues continues the 8 successive quarter of HCL's story of profitable growth. Our focus on Generation 2 propositions like Enterprise of the Future in ITO and ALT ASM in Application Services continues to drive the company's quality of revenue. HCL continues to strengthen its position in the momentum markets of the industry with Europe crossing a milestone run rate of $1.5 billion, reflecting a very healthy 23.6% growth YoY".
Anil Chanana, CFO, HCL Technologies, said: "With our layered hedging policy in place, we have been successful in delivering a Net Margin of 17.8% for this quarter, this being the 8 straight quarter of Net Margin expansion. This was supported by healthy Free Cash Flow to EBITDA conversion of 75% (On LTM Basis). We maintain our focus on shareholder value creation, and our Return on Equity remained at a high of 34%".
IT major TCS fell 2.62% to Rs 2,161, with the stock extending initial losses on profit booking after strong Q2 results. The stock had witnessed a pre result rally. The stock had hit record high of Rs 2,258.05 in intraday trade on Tuesday, 15 October 2013, ahead of the Q2 results. The company's consolidated net profit rose 20.7% to Rs 4633 crore on 16.6% growth in revenue to Rs 20977 crore in Q2 September 2013 over Q1 June 2013. Operating margin stood at 30.1% in Q2 September 2013. The result was announced after market hours on Tuesday, 15 October 2013.
TCS said that growth in Q2 was broad-based with all industries contributing to this holistic performance. Growth was led by Life Sciences, Media, Energy & Utilities and BFSI. All core markets grew smartly with Europe, North America and UK leading the pack, TCS said. There was balanced growth across IT and other service lines led by Asset Leverage Solutions, Assurance, Enterprise Solutions, Engineering Services and Infrastructure, TCS said.
Commenting on the Q2 performance, TCS Chief Executive Officer and Managing Director, N Chandrasekaran said: "It has been another great quarter. We have demonstrated all-round strong growth across markets and industries, highlighted by efficient and rigorous execution. Our ongoing investments in industry-led solutions and our efforts to provide insights and articulate the relevance of the digital revolution to business is helping us gain mindshare with customers and differentiate the TCS brand in the market. We continue to see a robust demand pipeline across markets and a unique opportunity to strategically partner and participate with clients as they reimagine their future in multiple dimensions".
TCS Chief Financial Officer Rajesh Gopinathan said: "Strong volumes, currency tailwinds and firm execution helped us post industry leading operating margins in this quarter. Our ability to manage operations with a degree of discipline has helped maintain the tempo of investments needed to sustain growth as well as provide superior shareholder returns".
Infosys fell on profit booking after recent gains triggered by the company raising its revenue guidance for the full year at the time of announcement of Q2 September 2013 results last week. The stock was down 0.16% at Rs 3,345. The scrip had hit 52-week high of Rs 3,360 in intraday trade on Friday, 11 October 2013.
Wipro rose 0.26% to Rs 511.75. The stock had hit 52-week high of Rs 519.50 in intraday trade on Tuesday, 15 October 2013.
Tech Mahindra declined 1.84% to Rs 1,554. The stock's intraday high matched 52-week high of Rs 1,594 hit on Tuesday, 15 October 2013.
Bajaj Auto rose 2.25%, with the stock extending initial gain triggered by the company's better-than-expected Q2 results. The company's net profit rose 13% to Rs 837 crore on 3% rise in turnover to Rs 5299 crore in Q2 September 2013 over Q2 September 2012. The company announced Q2 result on Wednesday, 16 October 2013. The net profit of Rs 837 crore is the highest ever quarterly profit recorded by the firm so far. The company recorded an all time high operating EBITDA (earnings before interest, taxation, depreciation and amortization) of Rs 1204 crore in Q2 September 2013. The EBITDA is calculated before taking into account mark-to-market foreign exchange loss, Bajaj Auto said. EBITDA margin edged up to 23.1% in Q2 September 2013 from 21.3% in Q1 June 2013 and 18.7% in Q2 September 2012.
After payment of dividend and cash theron amounting to Rs 1518 crore during Q2 September 2013, as on 30 September 2013, surplus cash and cash and cash equivalents stood at Rs 6516 crore. As on 30 June 2013, surplus cash and cash and cash equivalents stood at Rs 6391 crore.
The company said that the outperformance in margins can be attributed to factors including transforming itself into an Indian multi national company with international business contributing 40% of total revenue. Over the last five years, strategic initiatives taken in order to enter into difficult markets like Africa is yielding rich dividends. The benefits are now further enhanced with rupee depreciation, it said. The company has focused on high margin products with 75% of Bajaj Auto's revenue generated by business verticles which operate on EBITDA margins in excess of 20%. The company also said that it operates on an essentially variable cost structure with fixed cost, including depreciation, interest and even employee cost was under 8%. This protects the company from any slowdown in demand as being witnessed in the domestic market over last few quarters.
Bajaj Auto's better-than-expected Q2 result lifted shares of other two wheeler makers. Hero MotoCorp (up 1.38%) and TVS Motor Company (up 3.75%), gained.
Reserve Bank of India Governor Raghuram Rajan on Tuesday, 15 October 2013, said that the economy will pick up by the year-end thanks to the start-up of billions of dollars worth of stalled resource projects and a good monsoon season that will bolster agricultural production. He said about half of the $115 billion worth of stalled projects had been cleared. Rajan also said that the question of using interest rates to address inflation is more complicated in India than in the United States. "In the US you know there is a large interest rate-sensitive sector that is going to be affected when you raise interest rates ... But what if you have a large part of the country that is not connected directly to the financial system?" he said, referring to India's massive rural population.
The World Bank on Wednesday, 16 October 2013, sharply lowered its forecast for India's economic growth to 4.7% from 6.1% for the current fiscal year, citing a sharp slowdown in manufacturing and investment as well as negative business confidence. In a report released on Wednesday, the World Bank said that high headline inflation, an elevated current account deficit and rising pressure on fiscal balances from the depreciation of the rupee could impede the country's growth. Economic activity is expected to pick up in the second half of FY 2014, although the speed of economic recovery could be impacted by the country's present vulnerabilities, the World Bank said in its India Development Update report. The latest report forecasts economic growth to pick up to 6.2% in the 2014/15 fiscal year that begins next April.
Asian stocks rose as investors heaved a sigh of relief after the US lawmakers on Wednesday, 16 October 2013, voted to reopen the US government and raise the nation's debt ceiling. Key benchmark indices in China, Indonesia, South Korea, Japan, Hong Kong and Taiwan rose 0.23% to 1.04%.
Trading in US index futures indicated a flat opening of US stocks on Thursday, 17 October 2013. US stocks rose on Wednesday after US lawmakers came to an apparent deal to lift the debt ceiling and reopen government operations.
The US House of Representatives and the US Senate o Wednesday, 16 October 2013, voted to restore federal operations, funding the government through Jan. 15, and to raise the debt ceiling until Feb. 7. The House passed the Senate-crafted bill by a 285-to-144 margin. US President Barack Obama said he will sign the legislation immediately, and federal workers are expected to return to work Thursday. Investors worldwide had been concerned that the US could default on its debt obligations, resulting in a disruption of business activity and long-running efforts to encourage global economic growth.
The widely watched monthly US jobs report for September 2013 is among the data that weren't released during the 16-day government shutdown.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.
Powered by Capital Market - Live News
