Market provisionally declines in a lacklustre trading session

Key benchmark indices registered small losses in a lacklustre trading session. The barometer index, the S&P BSE Sensex lost 51.02 points or 0.18% at 28,078.82, as per the provisional closing data. The Nifty 50 index fell 4.25 points or 0.05% at 8,695.15, as per the provisional closing data. The Sensex provisionally settled above the psychologically important 28,000 level. The index swung above and below that level in intraday trade. Key indices trimmed intraday losses towards the fag end of trading session.

The Sensex lost 171.92 points or 0.61% at the day's low of 27,957.92 in mid-morning trade, its lowest level since 19 October 2016. The barometer index rose 33.57 points or 0.11% at the day's high of 28,163.41 in opening trade. The Nifty lost 47.35 points or 0.54% at the day's low of 8,652.05 in mid-morning trade, its lowest level since 19 October 2016. The index rose 9.70 points or 0.11% at the day's high of 8,709.10 in early trade.

In overseas stock markets, European and Asian stocks were mixed as investors remained on sidelines after the European Central Bank (ECB) kept its policy rate unchanged after a monetary policy meeting yesterday, 20 October 2016. Though ECB left its ultra-loose monetary policy unchanged, President Mario Draghi said the European region's central bank had left the door open to more monetary stimulus. US stocks registered small losses yesterday, 20 October 2016, after a sharp fall in oil prices, while investors parsed through key US economic data.

Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,453 shares rose and 1,320 shares declined. A total of 248 shares were unchanged. The BSE Mid-Cap index provisionally rose 0.31%. The BSE Small-Cap index provisionally rose 0.1%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 3180.87 crore, lower than turnover of Rs 3424.71 crore registered during the previous trading session.

Reliance Industries (RIL) lost 2.17% after consolidated net profit fell 22.9% to Rs 7206 crore on 9.6% increase in turnover to Rs 81651 crore in Q2 September 2016 over Q2 September 2015. The result was announced after market hours yesterday, 20 October 2016.

RIL's profit before depreciation, interest, and taxes (PBDIT) rose 24.8% to Rs 13551 crore in Q2 September 2016 over Q2 September 2015.

RIL said its turnover increased primarily on account of increase in volumes in refining, petrochemical and retail businesses.

RIL's revenue from the refining and marketing segment decreased by 0.4% to Rs 60527 crore in Q2 September 2016 over Q2 September 2015. Segment earnings before interest and taxes (EBIT) rose 9.7% to Rs 5975 crore in Q2 September 2016 over Q2 September 2015, aided by stronger volumes and yield shifts to capture higher margins.

Gross refining margin (GRM) stood at $10.10 per barrel in Q2 September 2016, a tad lower than $10.60 per barrel in Q2 September 2015.

Revenue from the petrochemicals segment increased by 5.6% to Rs 22422 crore in Q2 September 2016 over Q2 September 2015, primarily due to increase in volumes of fiber intermediates and polyester products.

Revenues for organized retail business grew by 63% to Rs 8079 crore in Q2 September 2016 over Q2 September 2015. The increase in turnover was led by growth in digital, fashion & lifestyle and petroleum products. During the quarter, Reliance Retail added 59 stores across various store concepts and strengthened its distribution network for consumer electronics. As on 30 September 2016, Reliance Retail operated 3,442 stores across 679 cities with an area of over 13 million square feet.

Commenting on the results, Mukesh D. Ambani, chairman and managing director, RIL said that the company has achieved outstanding second quarter results with strong refining business performance and record petrochemicals segment earnings. Refining business sustained high profitability in a tough environment highlighting the company's exceptional refining assets, dynamic response to market trends and robust operations. Petrochemicals segment gained significantly from higher volumes, integration and supportive product margins. RIL's projects in the hydrocarbon chain are at advanced stages of mechanical completion and precommissioning activities. These projects will further strengthen the company's position as a leading operator in the energy and materials businesses. RIL is delighted and humbled by the enthusiastic adoption of Jio by India. Jio is built to empower every Indian with the power of data.

RIL's outstanding debt as on 30 September 2016 was Rs 189132 crore compared to Rs 180388 crore as on 31 March 2016.

Cash and cash equivalents as on 30 September 2016 were at Rs 82533 crore compared to Rs 89966 crore as on 31 March 2016. These were in bank deposits, mutual funds, CDs and Government Bonds and other marketable securities.

Separately, RIL announced after market hours yesterday, 20 October 2016 that Reliance Jio Infocomm (RJIL) has received communication from Telecom Regulatory Authority of India (Trai) stating that the tariff plans offered by it are fully compliant with regulatory norms of IUC compliance, non-predatory and non-discriminatory. This clearly establishes the fact that all the tariffs offered by RJIL are in compliance with the prevailing regulations, RJIL said.

ACC lost 2.74% after consolidated net profit fell 28.85% to Rs 81.97 crore on 9.75% decline in turnover to Rs 2472.81 crore in Q3 September 2016 over Q3 September 2015. Operating EBITDA declined 12.61% to Rs 273.70 crore in Q3 September 2016 over Q3 September 2015. The result was announced during market hours today, 21 October 2016.

ACC said that on the supply side, the company expects its volumes to pick up as the newly commissioned units stabilize, especially in the fast-growing eastern region. On the overall demand side, the company maintains an optimistic outlook for the economy in the coming months.

Wipro rose 0.91%. The company is slated to announce Q2 September 2016 results today, 21 October 2016. Wipro after market hours yesterday, 20 October 2016 said it has signed a definitive agreement to acquire Appirio, a global cloud services company that creates next generation worker and customer experiences for a purchase consideration of $500 million. The acquisition is subject to customary closing conditions and regulatory approvals and is expected to be closed in Q3 December 2016.

HCL Technologies edged higher after the company retained revenue growth guidance for the year ending 31 March 2017 (FY 2017) at the time of announcing Q2 September 2016 results before market hours today, 21 October 2016. The stock rose 1.64%. HCL Technologies expects revenue growth between 12% to 14% in constant currency terms in FY 2017. This translates into 11% to 13% growth in dollar terms based on 30 September 2016 exchange rates. HCL Technologies expects its operating margin (EBIT) to be in the range of 19.5% to 20.5% for FY 2017.

The company's consolidated net profit fell 1.6% to Rs 2014 crore on 1.6% growth in revenue to Rs 11519 crore in Q2 September 2016 over Q1 June 2016. Revenue in constant currency rose 2.8% in Q2 September 2016 over Q1 June 2016.

HCL Technologies' CFO Anil Chanana said the conversion of net income to operating cash flow has been in excess of 100% for last twelve months ended 30 September 2016 while the return on equity continues to be robust at 28%.

HCL Technologies announced that C. Vijayakumar, Chief Operating Officer of the company has been elevated to the position of the President and Chief Executive Officer of the company with effect from 20 October 2016. Anant Gupta has decided to leave the company to pursue personal interests outside of HCL.

Separately, HCL Technologies before market hourst today, 21 October 2016 announced that it has entered into an agreement to acquire Butler America Aerospace, LLC (Butler Aerospace), a provider of engineering, design services and aftermarket engineering services to US Aerospace and Defense customers. Butler Aerospace is a wholly owned subsidiary of Butler America LLC. The proposed acquisition will exclude the staffing business of Butler America Inc. The consideration for the proposed transaction is $85 million to be paid in cash. The acquisition is subject to regulatory approvals including CFIUS approval in the US, along with other customary closing conditions. It is expected to be completed by 31 December 2016.

Butler Aerospace had revenues of $85.4 million for the year ended 31 December 2015 at EBIT of 12.2%. The acquisition when consummated is likely to be EPS accretive, HCL Technologies said.

Pharma major Cipla lost 1.78% after the company said that the Supreme Court today, 21 October 2016, decided in favour of the Government of India in an appeal filed against the company and others arising out of the judgement of the Allahabad High Court. The other petitions filed in the Bombay High Court on completely separate sets of grounds relating to alleged overcharged amounts are pending and are still subject to the interim stay granted by the Supreme Court in July 2016, Cipla said. The ruling was with reference to pending legal cases relating to alleged overcharging in respect of certain drugs under the Drugs (Price Control) Order, 1995.

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