Volatility continued as key benchmark indices trimmed losses after hitting fresh intraday low in afternoon trade. The barometer index, the S&P BSE Sensex, was currently hovering below the psychological 25,000 level, having alternately moved above and below that level so far during the day. The Sensex hit its lowest level in three weeks. The 50-unit CNX Nifty hit its lowest level in 5-1/2 weeks The Sensex was down 84.22 points or 0.34%, up about 50 points from the day's low and off close to 155 points from the day's high. The market breadth indicating the overall health of the market was weak.
IT and cement stocks edged lower.
At 13:20 IST, the S&P BSE Sensex was down 84.22 points or 0.34% to 24,940.13. The index rose 71.41 points at the day's high of 25,095.76 at the onset of the trading session. The index fell 132.35 points at the day's low of 24,892 in afternoon trade, its lowest level since 23 June 2014.
The CNX Nifty was down 17.55 points or 0.24% to 7,442.05. The index hit a high of 7,471.65 in intraday trade. The index hit a low of 7,422.15 in intraday trade, its lowest level since 5 June 2014.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,673 shares declined and 885 shares rose. A total of 102 shares were unchanged.
The BSE Mid-Cap index was down 29.72 points or 0.33% at 8,845.52, outperforming the Sensex. The BSE Small-Cap index was off 69.49 points or 0.72% at 9,618.62, underperforming the Sensex.
Among the 30-share Sensex pack, 15 stocks declined and rest of them gained.
Sesa Sterlite (down 3.15%), Bharti Airtel (down 1.89%) and Coal India (down 1.77%) edged lower from the Sensex pack.
IT stocks edged lower. HCL Technologies (down 2.27%), Tech Mahindra (down 0.51%) and Wipro (down 2.24%) declined. But, TCS rose 1.42%.
IT major Infosys dropped 3.15%. While Infosys shares had risen 1% amid intraday volatility on Friday, 11 July 2014, after the announcement of the results before trading hours on that day, the company's ADR had lost 2.57% on that day. The company's consolidated net profit as per International Financial Reporting Standards (IFRS) fell 3.5% to Rs 2886 crore on 0.8% decline in revenue to Rs 12770 crore in Q1 June 2014 over Q4 March 2014. The result was announced before market hours on Friday, 11 July 2014.
Infosys expects its consolidated revenue to grow 7%-9% in dollar terms in the year ending 31 March 2015 (FY 2015). The guidance is unchanged compared to the one the company had given at the time of announcement of Q4 March 2014 results in April this year. The guidance in rupee terms has also been kept unchanged from that given in April as the company has assumed rupee dollar conversion rate of 60 which is exactly the same conversion rate given in April guidance. The company expects its revenue to grow 5.6%-7.6% in rupee terms in FY 2015.
At a conference call held after the first quarter results, Infosys management said it expects margins to remain flattish in the current year, excluding the impact of the depreciation as it plans to invest in the business as growth remains top priority. Infosys' depreciation outgo was lower by sharp 36% at Rs 230 crore in Q1 June 2014 over Q4 March 2014 due to a change in depreciation policy during the quarter.
Infosys said that the deal pipeline is stable with marginal improvement. There is greater comfort in the pipeline over the last year due to the increase in the discretionary spending, the management said in conference call. The company is focusing lot more on execution.
No major sops were announced in the Union budget 2014-15 for the IT industry. While presenting the Union Budget 2014-15 on 10 July 2014, Finance Minster Arun Jaitley said all Central Government Departments and Ministries will integrate their services with a single window IT platform - the eBiz platform -- on priority by 31 December this year. Jaitley also announced the launch of a pan India programme viz. Digital India. This would ensure broad band connectivity at village level, improved access to services through IT enabled platforms, greater transparency in government processes and increased indigenous production of IT hardware and software for exports and improved domestic availability.
The increase in tax from 10% to 20% on long term capital gains from transfer of units of mutual funds, other than equity oriented funds is negative for the Indian IT companies as they invest surplus cash in these instruments.
The BSE IT index rebounded 1.42% on Saturday, 11 July 2014 after falling 0.89% on Friday, 10 July 2014, the budget day.
Most cement stocks declined. ACC (down 0.82%), Ambuja Cement (down 0.09%) and Shree Cement (down 0.37%) dropped. UltraTech Cement rose 0.72%.
The Union Budget 2014-15 announced on 10 July 2014 is positive for the cement sector as benefits from government's thrust on affordable housing and increase in expenditures for infrastructure development will be more than offset by hike in fuel cost due to hike in clean energy cess and custom duty on imported coal. The outlay towards roads and highways is Rs 37900 crore for 2014-15, which is 13% higher than spend in 2013-14. The outlay towards urban infrastructure is Rs 20100 core in 2014-15, more than twice allocated in 2013-14. The outlays for housing has doubled to Rs 15000 crore and that for irrigation has been hiked three-fold to Rs 1500 crore, year-on-year.
The sector indirectly benefits from thrust on affordable housing in the budget. The higher disposable income in the hands of tax payers due to increase in minimum tax slab to Rs 2.50 lakh from Rs 2 lakh and increase in the deduction on interest paid on a housing loan for a self-occupied property to Rs 2 lakh will promote investments in the housing sector.
Duties and tariffs directly levied on cement were left unchanged. Clean energy cess on coal has been hiked to Rs 100 per tonne and basic customs duty on imported coal is hiked to 2.5%, which would increase power and fuel cost.
Key benchmark indices reversed direction after a higher opening triggered by gains in Asian stocks. Key benchmark indices reversed intraday fall to regain positive zone in morning trade. Volatility continued on the bourses as the key benchmark indices reversed intraday gain in mid-morning trade. Volatility ruled the roost in early afternoon trade as the key benchmark indices edged lower once again after staging an intraday recovery after the latest data showed easing of inflation based on the wholesale price index (WPI) in June 2014 and upward revision in WPI inflation for April 2014. Key benchmark indices trimmed losses after hiting fresh intraday low in afternoon trade. The Sensex hit its lowest level in three weeks. The 50-unit CNX Nifty hit its lowest level in 5-1/2 weeks.
Revenue Secretary Shaktikanta Das was quoted by the media as saying on Saturday, 12 July 2014, that the government would shortly take a view on whether tax law General Anti-Avoidance Rules (GAAR) should be implemented from the scheduled date of April 2015. Reports that the government has reiterated that General Anti Avoidance Rules (GAAR) will be applicable from 1 April 2015 spooked the market on Friday, 11 July 2014 -- a day after the presentation of the Union Budget 2014-15 on 10 July 2014. GAAR is a tool to curb tax avoidance. There was an expectation that the new government will postpone the implementation of GAAR to a future date. The Sensex lost 1.37% on Friday, 11 July 2014.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 60.025, compared with its close of 59.93/94 on Friday, 11 July 2014.
On the macro front, inflation based on the wholesale price index eased to 5.43% in June 2014, from 6.01% in May 2014, data released by the government during trading hours today, 14 July 2014, showed. Core inflation or non-food manufacturing inflation edged up to 3.9% in June 2014, from 3.8% in May 2014. Meanwhile, WPI inflation for April 2014 was revised upwards to 5.55%, from 5.2% reported earlier.
The government is scheduled to announce the data of inflation based on consumer price index (CPI) for the month of June 2014 after trading hours today, 14 July 2014.
Industrial output grew at its strongest pace in 19 months at 4.7% in May 2014, higher than 3.4% growth in April 2014, data released by the government after market hours on Friday, 11 July 2014, showed.
European stocks advanced on Monday, 14 July 2014, as oil dropped as the threat of supply disruptions in the Middle East abated. Key benchmark indices in France, UK and Germany rose 0.2% to 0.42%.
European markets had risen on Friday, 11 July 2014, as investors decided that losses associated with the founding family of Banco Espirito Santo were unlikely to disrupt Portugal's financial system or revive broader worries about the bloc's weaker economies.
Asian markets edged higher on Monday, 14 July 2014, as euro zone banking jitters faded. Key benchmark indices in South Korea, China, Taiwan, Hong Kong and Japan were up 0.26% to 0.96%. Key benchmark indices in Indonesia and Singapore were off 0.05% to 0.08%.
The Bank of Japan concludes a two-day monetary policy meeting tomorrow, 15 July 2014.
Singapore's economy unexpectedly contracted in the second quarter as a tight labor supply and company moves to shift production overseas hurt manufacturing. Gross domestic product fell an annualized 0.8% in the three months through June from the previous quarter, when it expanded a revised 1.6%, the trade ministry said in a statement today, 14 July 2014.
Trading in US index futures indicated that the Dow could rise 18 points at the opening bell on Monday, 14 July 2014. US stocks rose on Friday, 11 July 2014 as a rally in Amazon.com Inc. and EBay Inc. led an intraday rebound from declines spurred by concern over financial stress in Europe.
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