Sensex sheds over 100 pts, RBI policy eyed

Markets ended lower on Monday as investors turned cautious and booked profits ahead of the RBI monetary policy review on Tuesday. FMCG majors coupled with bank shares contributed the most to the decline.

The 30-share Sensex ended down 113 points at 20,570 and the 50-share Nifty closed 44 points lower at 6,101.

Reports suggest that the central bank may hike repo rate by 25bps as inflation continues to remain high.

Most Asian markets ended with gains on Monday tracking Friday's gain on Wall Street. Japan's Nikkei gained the most rebounding from Friday's 3% decline on value buying at lower levels and a weaker yen. The Nikkei ended up 2.2%. Among other indices in the region, Shanghai Composite, Hang Seng and Straits Times ended marginally higher.

The rupee recovered from the day's low and was unchanged at 61.46 versus its previous close of 61.46/47 and is off the session high of 61.35. Earlier, the rupee had weakened tracking weakness in equities with sentiment remaining cautious ahead of the Reserve Bank of India's monetary policy review on Tuesday.

FMCG index was the top loser among the sectoral indices on the BSE down 2.6% followed by Realty, Metal, Power, Bankex and Healthcare indices down 1-2% each.

ITC ended down 3.6% contributing the most to the Sensex decline after reporting lower than expected revenue and net profit growth for the second quarter ended September 2013 (Q2).

The cigarette-to-hotels major’s net sales were disappointing at 8.8% year on year (yoy) to Rs 7,776 crore, which was below an average analysts estimate of Rs 8,087 crore.

While cigarettes business posted a modest top-line growth of 10% yoy impacted by higher than expected de-growth in volumes, the growth in other FMCG business too tapered to 16.1% yoy due to sluggishness in demand.

Hindustan Unilever ended down 0.8% on profit taking after recent gains in the run up to its second quarter earnings.

In the banking space, SBI, HDFC Bank and ICICI Bank ended 0.7-2.4% lower.

Other Sensex losers include, Tata Steel and Sesa Sterlite which ended down 3-3.3% each.

Oil and gas shares such as Reliance Industries and ONGC were among the Sensex gainers along with HDFC and Larsen & Toubro.

Among other shares, Tata Elxsi surged 14.6% to end at Rs 225 after reporting over ten-fold jump in consolidated net profit at Rs 19.93 crore for the second quarter ended September 2013 (Q2) on back of higher other income due to foreign exchange gain. The Tata Group IT software products maker had profit of Rs 1.81 crore in a year ago quarter.

Colgate Palmolive (India) has dipped 4% to end at Rs 1,228 on BSE after reporting 24.5% year on year (yoy) decline in net profit at Rs 110 crore for the quarter ended September 2013 (Q2) due to higher advertising expenses. The personal products maker had profit of Rs 145 crore in a year ago quarter. Net sales grew 15.9% yoy at Rs 896 crore.

Ajanta Pharma has zoomed 14.7% to Rs 840 on reporting nearly three-fold jump in net profit at Rs 56 crore for the quarter ended September 2013 (Q2) on back of strong revenue growth. The pharmaceutical company had profit of Rs 21.88 crore in year ago quarter.

Everest Industries has tanked 14% to end at Rs 130 on reporting a net loss of Rs 6.65 crore for the quarter ended September 2013 (Q2) due to lower realization. The cement and cement products maker had net profit of Rs 12.51 crore in year ago quarter.

Alembic Pharmaceuticals has rallied 9% to end at Rs 197 on BSE after reporting a strong 45% year on year (yoy) jump in consolidated net profit at Rs 62 crore for the second quarter ended September 2013 (Q2) on back of strong performance from international generic formulation business. The pharmaceutical company had profit of Rs 42 crore in the same quarter year ago.

In the broader markets, the BSE Mid-cap and Small-cap indices ended 0.3-0.5% lower.

Market breadth ended negative with 1,394 losers and 930 gainers on the BSE.