Market extends losses; breadth weak

Key benchmark indices extended losses to hit fresh intraday low in mid-afternoon trade. The S&P BSE Sensex hit 2-1/2-week low. The 50-unit CNX Nifty hit its lowest level in almost three weeks as investors turned cautious ahead of the Reserve bank of India's (RBI) first quarter review of Monetary Policy 2013-14 tomorrow, 30 July 2013, after the central bank announced measures this month to tighten liquidity in the banking system to arrest slide in rupee against the dollar. The Sensex was down 130.32 points or 0.66%, off close to 130 points from the day's high and up about 35 points from the day's low. The market breadth, indicating the overall health of the market, was weak.

UltraTech Cement dropped after reporting weak Q1 result. IDFC declined after the infrastructure lender's first quarter results showed that its sticky loans rose. IT major Wipro surged as the company issued upbeat revenue guidance for Q2 September 2013 at the time of announcing Q1 June 2013 results after trading hours on Friday, 26 July 2013. Sterlite Industries (India) extended Friday's losses triggered by the company reporting weak Q1 results. Hindalco Industries also extended Friday's sharp losses.

The market edged lower in early trade on weak Asian stocks. The market extended initial losses to hit fresh intraday low in morning trade. The market weakened further to hit fresh intraday low in mid-morning trade. The market trimmed losses in early afternoon trade. Intraday recovery witnessed in early afternoon trade proved short lived as the market weakened again in afternoon trade. Key benchmark indices extended losses to hit fresh intraday low in mid-afternoon trade.

At 14:20 IST, the S&P BSE Sensex was down 130.32 points or 0.66% to 19,617.63. The index declined 163.56 points at the day's low of 19,584.63 in mid-afternoon trade, its lowest level since 11 July 2013. The index rose 2.84 points at the day's high of 19,751.03 in early trade.

The CNX Nifty was down 48.15 points or 0.82% to 5,838.05. The index hit a low of 5,829.85 in intraday trade, its lowest level since 10 July 2013. The index hit a high of 5,886 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,305 shares declined and 749 shares rose. A total of 114 shares were unchanged.

Among the 30-share Sensex pack, 18 stocks fell and rest of them rose. ITC (down 3.13%), Coal India (down 2.89%) and Dr Reddy's Laboratories (down 2.38%), edged lower.

UltraTech Cement dropped 0.91% on weak Q1 result. The company's net profit fell 13.49% to Rs 673 crore on 2.24% decline in net sales to Rs 4958 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result during market hours today, 29 July 2013.

UltraTech Cement said that the quarter witnessed an increasing trend in logistics and raw material costs, linked to increase in railway freight and diesel prices. The benefit of softening in prices of imported coal was partly offset by rupee depreciation, the company said.

UltraTech Cement said that the clinkerisation plant of 3.3 million metric tonnes in Karnataka has been commissioned. The company's board of directors has further sanctioned capital expenditure (capex) of Rs 2100 crore towards setting up grinding units and ready mix concrete plants across the country and also towards modernization. With this, the total capex under implementation is around Rs 13700 crore. UltraTech Cement said that the company is in the process of ramping up capacity by another 10 million tonnes by 2015. This will result in the company's total cement capacity getting augmented to 64.45 million tonnes.

The cement major said that the outlook continues to remain challenging. Growth in cement demand in the year ended 31 March 2014 (FY 2014) is expected to be around 6%, the company said. Over the long run, the demand for cement is likely to be at over 8%, with housing and infrastructure being the key demand drivers, the company said.

IDFC declined after the infrastructure lender's first quarter results showed that its sticky loans rose. The stock was off 1.99%. IDFC's consolidated net profit rose 46.74% to Rs 557.31 crore on 24.83% rise in total income from operations (net) to Rs 2298 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result during market hours today, 29 July 2013.

Based on standalone financials, the lender's gross non-performing assets edged up to Rs 181.67 crore in Q1 June 2013, from Rs 85.12 crore as on 31 March 2013 and Rs 150.26 crore as on 30 June 2012. The ratio of gross non-performing assets (NPA) to gross advances stood at 0.32% as on 30 June 2013, higher that 0.15% as on 31 March 2013 and 0.3% as on 30 June 2012. The lender's ratio of net non-performing assets (NPA) to net advances stood at 2.81% as on 30 June 2013, higher than 2.61% as on 31 March 2013 and 2.47% as on 30 June 2012.

IT major Wipro surged 5.03% to Rs 402.05 and was the top gainer from the Sensex pack. The stock came off the day's high of Rs 417.50. The company issued upbeat revenue guidance for Q2 September 2013 at the time of announcing Q1 June 2013 results after trading hours on Friday, 26 July 2013. Wipro expects 1.99% to 3.88% growth in revenue from IT services business at between $1.62 billion to $1.65 billion in Q2 September 2013 over Q1 June 2013.

The company's consolidated net profit rose 3% to Rs 1623.30 crore on 1% growth in revenue to Rs 9734.60 crore in Q1 June 2013 over Q4 March 2013. The results are as per International Financial Reporting Standards. The results are after adjusting for the spinoff of its non-technology businesses, completed in April.

IT services revenue rose 0.2% to $1.58 billion in Q1 June 2013 over Q4 March 2013. Non-GAAP constant currency IT services revenue in dollar terms was $1.60 billion, which was within the company's guidance range of $1.575 billion to $1.61 billion.

Wipro said that the pricing environment was largely stable during the quarter, and the growth was largely volume led. Effective from 1 June 2013, Wipro gave annual wage hike of between 6-8% for offshore employees and 2-3% for onsite employees.

Wipro added 28 new customers in Q1 June 2013.

Sterlite Industries (India) fell 4.11%, with the stock extending Friday's losses triggered by the company reporting weak Q1 results. Sterlite Industries' consolidated net profit fell 22% to Rs 934 crore on 23% fall net sales/income from operations to Rs 8190 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced on 25 July 2013.

Hindalco Industries slumped 4.98%, with the stock extending Friday's steep losses. The stock had tumbled 7.59% on Friday, 26 July 2013.

Prime Minister Dr. Manmohan Singh will meet the captains of Indian industry today, 29 July 2013, to review steps to revive the economy. The discussion will cover measures to correct the Current Account Deficit, measures to revive industrial growth, depreciation of the rupee and its impact on trade and industry, skill development and ways of accelerating it and development of the Delhi-Mumbai Industrial Corridor (DMIC), the Chennai-Bangalore Industrial Corridor (CBIC), and the Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC).

European stock markets edged higher on Monday, 29 July 2013, with shares of Danone SA on the rise after a well-received earnings report and Elan Corporation PLC rallying after a takeover deal. Key benchmark indices in Germany and France were up 0.31% to 0.32%. UK's FTSE 100 fell 0.45%.

The European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions on Thursday, 1 August 2013.

Asian stocks retreated on Monday, 29 July 2013, with Japanese equities skidding as a firm yen further dragged on the nation's exporters, while Chinese shares lost ground amid economic worries. Key benchmark indices in South Korea, Singapore, Indonesia and Taiwan were off 0.09% to 1.48%

Mainland Chinese and Hong Kong stocks retreated amid lingering economic worries, with sentiment weighed by official data released over the weekend showing profits at Chinese industrial firms slowed in June. The Shanghai Composite index lost 1.72%. In Hong Kong, the Hang Seng was off 0.54%. Data released over the weekend by the National Bureau of Statistics showed profits at industrial companies rose 6.3% in June from the year-earlier month, slowing sharply from a 15.5% increase in May, according to reports.

The drop in Chinese equities also came after Beijing ordered China's National Audit Office to conduct an urgent review of overall public debt.

In Japan, the Nikkei 225 Average lost 3.32%. The benchmark had retreated 3% on Friday, 26 July 2013.

Japanese retail sales rose 1.6% from a year earlier in June, figures today showed, which was below the market expectations.

Bank of Japan Governor Haruhiko Kuroda indicated little concern that a planned sales-tax rise would derail the nation's economic rebound. A two-step sales tax increase won't give major damage to growth in Japan's economy, Kuroda said in a speech today in Tokyo, referring to the BOJ's growth forecasts. We consider a downturn in overseas economies to be the largest risk factor to the outlook for economic activity and prices.

Trading in US index futures indicated that the Dow could fall 40 points at the opening bell on Monday, 29 July 2013. US stocks inched higher on Friday, 26 July 2013, to end the week virtually flat, as investors digested earnings reports and prepared for a busy economic calendar in the week ahead.

On the economic front, US consumer confidence unexpectedly rose at the end of this month, according to the Thomson-Reuters/University of Michigan's consumer-sentiment index.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on Tuesday (30 July 2013) and Wednesday (31 July 2013), after which it will release a statement on central bank policy. In his two-day testimony to Congress, which concluded on 18 July 2013, Federal Reserve Chairman Ben Bernanke said plans to taper asset purchases were not on a preset path and stressed intentions to be very responsive to data. Additionally, Bernanke said recent data have been "mixed" and it was "way too early" to make a judgment on when the central bank will slow down the pace of its asset purchases. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.

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