Key benchmark indices edged lower in choppy trade as inflation rates continued to accelerate in September 2013, adding to concerns that the central bank is likely to increase its main lending rate again. The market breadth, indicating the overall health of the market, was negative. Investors turned cautious ahead of the October 17 deadline to lift the US debt ceiling -- Indian financial markets are closed tomorrow, 16 October 2013, on account of Bakri Id. The rupee edged lower against the dollar. The barometer index, the S&P BSE Sensex, shed 59.92 points or 0.29%, off 211.96 points from the day's high and up 100.89 points from the day's low.
Indian stocks snapped five-day winning streak today, 15 October 2013. The S&P BSE Sensex had garnered 712.44 points or 3.58% in five trading sessions to settle at 20,607.54 on Monday, 14 October 2013, from a recent low of 19,895.10 on 7 October 2013. The Sensex has gained 1,138.19 points or 5.87% in this month so far (till 15 October 2013). The Sensex has gained 1,091.25 points or 5.62% in calendar 2013 so far (till 15 October 2013). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,069.25 points or 17.59%.
Coming back to today's trade, index heavyweight and cigarette maker ITC edged lower in choppy trade. HDFC Bank dropped as the bank's net interest margin (NIM) declined to 4.3% in Q2 September 2013 from 4.4% in Q2 September 2012. Shares of two-wheeler makers declined. Reliance Industries edged lower in choppy trade as its Q2 results came more or less in line with market expectations.
Infosys extended recent gains triggered by the company raising its revenue guidance for the full year at the time of announcement of Q2 September 2013 results on Friday, 11 October 2013. Many other IT stocks extended recent gains triggered by IT major Infosys' upward revision in its revenue guidance for the full year. IT major TCS scaled record high today, 15 October 2013. Wipro and Tech Mahindra hit 52-week high.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.85, weaker than its close of 61.55/56 on Monday, 14 October 2013.
The S&P BSE Sensex shed 59.92 points or 0.29% to 20,547.62, its lowest closing level since 11 October 2013. The index fell 160.81 points at the day's low of 20,446.73 in mid-morning trade. The index jumped 152.04 points at the day's high of 20,759.58 in morning trade, its highest level since 11 November 2010.
The CNX Nifty lost 23.65 points or 0.39% to 6,089.05, its lowest closing level since 10 October 2013. The index hit a low of 6,056.55 in intraday trade. The index hit a high of 6,156.30 in intraday trade, its highest level since 21 May 2013.
The BSE Mid-Cap index fell 1.3% and the BSE Small-Cap index shed 0.95%. Both these indices underperformed the Sensex.
The BSE Metal index (up 0.91%), the BSE IT index (up 0.61%), the BSE Teck index (up 0.59%) and the BSE FMCG index (up 0.17%) outperformed the Sensex.
The BSE Oil & Gas index (down 0.39%), the BSE HealthCare index (down 0.48%), the BSE Auto index (down 0.6%), the BSE Power index (down 0.7%), the BSE Capital Goods index (down 0.75%), the BSE PSU index (down 0.95%), the BSE Consumer Durables index (down 1.2%), the BSE Realty index (down 1.6%) and the BSE Bankex (down 2.59%) underperformed the Sensex.
The total turnover on BSE amounted to Rs 1894 crore, higher than Rs 1676.30 crore on Monday, 14 October 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,435 shares dropped and 984 shares rose. A total of 143 shares were unchanged.
Index heavyweight and cigarette maker ITC fell 0.15% to Rs 339. The stock hit high of Rs 342.20 and low of Rs 333.55.
Many other FMCG stocks were mostly lower. Britannia Industries (down 2.92%), Dabur India (down 0.47%), Godrej Consumer Products (down 0.27%) and Tata Global Beverages (down 1.57%) declined. Colgate-Palmolive (India) (up 1.02%), Hindustan Unilever (up 0.66%) and Marico (up 1.99%) gained.
Reliance Industries (RIL) fell 0.55% to Rs 865.50. The scrip witnessed post-result volatility. The stock hit high of Rs 899 and low of Rs 863.70. The company after trading hours on Monday, 14 October 2013, said its net profit rose 1.5% to Rs 5490 crore on 14.2% growth in turnover to a record Rs 106523 crore in Q2 September 2013 over Q2 September 2012. Net profit rose 2.6% on 17.6% growth in turnover in Q2 September 2013 over Q1 June 2013.
RIL's gross refining margin (GRM) declined to $7.7 per barrel in Q2 September 2013, from $8.4 a barrel in Q1 June 2013 and $9.5 a barrel in Q2 September 2012. RIL said that the company's refining business performance during the quarter was positively impacted by increased crude throughput, stable middle distillate and naphtha cracks, and favourable exchange rate movement. This was partly offset by weak gasoline and solid products (pet-coke/sulphur) cracks, widening Brent-Dubai differential and lower domestic sales on weak demand.
The company said that its petrochemicals business performance during the quarter was positively impacted by higher volumes, stable demand, improved deltas for key polymers (PP/PE) and fibre intermediates (PX/MEG), and favourable exchange rate movement. Though polyester margins were weak, RIL benefited due to integrated chain economics. During the quarter, domestic demand for polymer products was higher by 1%, mainly driven by stable domestic consumption in some of the major end-use sectors viz. packaging sector, moulded products, extrusion coating, pipes and films. The growth in demand for polymer products was subdued in Q2 September 2013 and the anticipated festive season demand did not materalise fully, RIL said.
RIL's other income or income from sources other than core business declined 2.46% to Rs 2060 crore in Q2 September 2013 over Q2 September 2012. Other income declined 18.73% in Q2 September 2013 over Q1 June 2013. Other income's influence on RIL's profitability continues to remain high.
RIL's outstanding debt as on 30 September 2013 was Rs 83982 crore, higher than Rs 72427 crore as on 31 March 2013. RIL had cash and cash equivalents of Rs 90540 crore as on 30 September 2013. These were in bank deposits, mutual funds, CDs and Government securities/bonds. RIL was debt free on a net basis as on 30 September 2013.
The net addition to fixed assets for the half year ended 30 September 2013 was Rs 20154 crore, including exchange rate difference capitalization. Capital expenditure was principally on account of ongoing expansions projects in the petrochemicals and refining business at Jamnagar, Dahej, Silvassa and Hazira, RIL said in a statement.
Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries said: "RIL's first half performance reflects the resilience of our business model in a period of volatility and uncertainty. Our diversified and integrated petrochemicals business captured margins across segments - delivering near-record profit levels even as the domestic economy slowed. Optimal utilization of best-in-class refinery assets and inherent flexibility in sourcing, product delivery contributed to healthy operating profits from our refining business. Retail business continues to break new ground, growing 41% in 1H FY14. Reliance's ongoing counter-cyclical investments will strengthen our competitive position in each business segment".
Indian Oil Corporation declined 1.16%. The company after market hours on Monday, 14 October 2013, said that subsequent to the invitation of financial bid for disinvestment of 39.99% equity shares of Haldia Petrochemicals (HPL) held by West Bengal Industrial Development Corporation (WBIDC) and 100% preference shares of Haldia Petrochemicals held by WBIDC, West Bengal Industrial Infrastructure Development Corporation (WBIIDC) and West Bengal Industrial Development Finance Corporation (WBIDFC) being disinvested by the state government of West Bengal (GoWB), Indian Oil Corporation has been announced by the GoWB, as the selected bidder, in line with the process laid in the Request for Proposal.
The acquisition of the stake is subject to certain existing shareholders' exercise of right of first refusal on the entire sale shares, as per the existing Articles of Association of HPL and proceedings pending before courts; and exercise of tag along rights by certain existing shareholder. The consummation of the transaction, also, remains subject to execution of definitive agreements and obtaining of applicable regulatory approvals and certain third party consents, Indian Oil Corporation said.
Bank stocks declined as inflation rates continued to accelerate in September 2013, adding to concerns that the central bank is likely to increase its main lending rate viz. the repo rate again.
Among other private bank stocks, Kotak Mahindra Bank (down 2.95%), Axis Bank (down 2.8%), Yes Bank (down 4.62%), and ICICI Bank (down 2.07%), dropped.
HDFC Bank dropped as the bank's net interest margin (NIM) declined to 4.3% in Q2 September 2013 from 4.4% in Q2 September 2012. The stock fell 2.88%. The bank's net profit rose 27.07% to Rs 1982.32 crore on 17.65% rise in total income to Rs 11937.69 crore in Q2 September 2013 over Q2 September 2012. The bank announced Q2 result during market hours.
HDFC Bank's ratio of net non-performing assets to net advances stood at 0.3% as on 30 September 2013, compared with 0.3% as on 30 June 2013 and 0.2% as on 30 September 2012. The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 1.1% as on 30 September 2013, compared with 1% as on 30 June 2013 and 0.9% as on 30 September 2012.
Provisions and contingencies fell 1.02% to Rs 385.93 crore in Q2 September 2013 over Q2 September 2012. Provisions and contingencies dropped 26.78% in Q2 September 2013 over Q June 2013.
The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 14.6% as on 30 September 2013, compared with 15.5% as on 30 June 2013.
Net interest income (interest earned less interest expended) in Q2 September 2013 accounted for 71% of net revenues and grew by 15.3% to Rs 4476.50 crore from Rs 3881.90 crore in Q2 September 2012. Net interest margin was at 4.3% in Q2 September 2013, lower than 4.4% in Q2 September 2012.
Other income (non-interest revenue) at Rs 1844.4 crore was 29% of the net revenues in Q2 September 2013 and grew by 25.3% over Rs 1471.8 crore in Q2 September 2012. The four components of other income in Q2 September 2013 were fees & commissions of Rs 1354.40 crore (Rs 1220.30 crore in the corresponding quarter of the previous year), foreign exchange & derivatives revenue of Rs 501.40 crore (Rs 235.90 crore for the corresponding quarter of the previous year), loss on revaluation / sale of investments of Rs 173.30 crore (loss of Rs 105.90 crore in Q2 September 2012) and miscellaneous income including recoveries of Rs 161.90 crore (Rs 121.60 crore for the corresponding quarter of the previous year).
Operating expenses for the quarter were Rs 2934.20 crore, an increase of 9.3% over Rs 2685.40 crore during the corresponding quarter of the previous year. The cost-to-income ratio for the quarter was at 46.4% as against 50.2% in Q2 September 2012. Provisions and contingencies were Rs 385.90 crore (consisting of specific loan loss and general provisions) in Q2 September 2013 as against Rs 389.90 crore in Q2 September 2012. The profit before tax was Rs 3000.70 crore, an increase of 31.7% over Q2 September 2012. Provision for taxation was Rs 1018.40 crore, an increase of 41.8% over Q2 September 2012 primarily due to increase in income tax surcharge from 5% to 10%. After providing for taxation the Bank earned a net profit of Rs 1982.30 crore, an increase of 27.1% over Q2 September 2012.
Advances as of 30 September 2013 were Rs 268617 crore, an increase of 16% over 30 September 2012. This loan growth was contributed by both segments of the bank loan portfolio, with retail loans growing by 16.9% and wholesale loans by 15% resulting in a retail:wholesale loan mix of 53:47. Total deposits as of 30 September 2013 were Rs 313011 crore, an increase of 14.2% over 30 September 2012. Savings account deposits grew 17.9% over the previous year to reach Rs 93,285 crore. The CASA ratio as at 30 September 2013 was 45%.
Among PSU bank stocks, State Bank of India (down 2.68%), Canara Bank (down 6.6%), Union Bank of India (down 5.94%), Bank of India (down 7.27%), Bank of Baroda (down 3.79%) and Punjab National Bank (down 3.97%) declined.
L&T Finance Holdings lost 2.37%. A Committee of Directors of the company has approved the allotment of 2.5 crore listed 9% cumulative compulsorily redeemable preference shares of face value Rs 100 each at par on private placement aggregating to Rs 250 crore at its meeting held on 15 October 2013, to eligible allottees on pro-rata basis. The company made this announcement after market hours today, 15 October 2013.
Metal stocks edged higher. Tata Steel (up 2.83%), Sail (up 0.17%), JSW Steel (up 1.59%), Sesa Sterlite (up 0.87%), Hindustan Zinc (up 3.05%), edged higher. But, Jindal Steel & Power fell 0.54%.
Hindalco Industries reversed initial losses triggered by media reports that the Central Bureau of Investigation has named Hindalco and Aditya Birla Group Chairman Kumar Mangalam Birla in another high profile chargesheet in the coal scam. The stock rose 1.72%. In its reaction to the media reports on FIR in coal scam Hindalco after trading hours said that the FIR seems to be a part a part of a larger case entailing coal allocation, and being one of the companies, Hindalco is also being investigated. "We wish to state unambiguously that we have followed every process required for allocation of coal completely as stipulated by the government," Hindalco said in a statement.
Shares of Nalco were off 0.61%. The company during market hours today, 15 October 2013, said it has no information about any FIR filed against Nalco on coal block allocation.
Infosys extended recent gains triggered by the company raising its revenue guidance for the full year at the time of announcement of Q2 September 2013 results on Friday, 11 October 2013. The stock was up 0.98% at Rs 3,356.15. The scrip had hit 52-week high of Rs 3,360 in intraday trade on Friday, 11 October 2013.
Many other IT stocks extended recent gains triggered by IT major Infosys' upward revision in its revenue guidance for the full year.
Tech Mahindra rose 1.65% to Rs 1,583.05. The stock hit 52-week high of Rs 1,594 in intraday trade. The central bank recently enhanced the limit for foreign institutional investors to purchase shares in the company to 45% of the paid up capital of the company. The Reserve Bank of India (RBI) enhanced the limit for foreign institutional investors (FIIs) to invest to up to 45% of the paid-up capital of Tech Mahindra. This limit has been revised from the earlier limit of 35% of the paid-up capital of the company under the Portfolio Investment Scheme (PIS). FIIs, at the end of September 2013, controlled 32.59% stake in the company, while promoters holding stood at 36.46%.
Wipro rose 1.82% to Rs 510. The stock hit 52-week high of Rs 519.50 in intraday trade.
IT major TCS rose 0.15% to Rs 2,218.05. The stock pared gains after hitting record high of Rs 2,258.05 in intraday trade. TCS' 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 today, 15 October 2013.
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 industryleading 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".
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.
CMC rose 1.91% after the company reported strong Q2 results after trading hours on Monday, 14 October 2013. CMC's consolidated net profit jumped 27% to Rs 67.31 crore on 15% growth in operating revenue to Rs 560.75 crore in Q2 September 2013 over Q1 June 2013. CMC is a subsidiary of IT major TCS.
HCL Technologies declined 0.18% to Rs 1,157.95. The stock reversed direction after hitting record high of Rs 1,177 in intraday trade.
Tata Motors fell 0.33% to Rs 389.55. The stock was volatile. The stock rose as much as 0.55% at the day's high of Rs 393, matching its record high hit in intraday trade on Monday, 14 October 2013. The stock fell as much as 2.16% at the day's low of Rs 382.40. Shares of Tata Motors were on a roll recently, gaining 12.33% in five trading days to Rs 390.85 on 14 October 2013 from a recent low of Rs 347.95 on 7 October 2013.
Shares of two-wheeler makers declined. Bajaj Auto declined 1.27%. The company announces its Q2 result tomorrow, 16 October 2013.
Hero MotoCorp dropped 2.62%.
Capital goods pivotals saw mixed trend. L&T fell 0.89%. Bhel rose 0.45%.
Most pharma stocks declined. Dr Reddy's Laboratories (down 0.49%), Ranbaxy Laboratories (down 2.61%) and Sun Pharmaceutical Industries (down 0.53%), dropped. But, Cipla rose 0.39%.
Fortis Healthcare was unchanged at Rs 104.35. The scrip was volatile. The stock hit high of Rs 111.25 and low of Rs 104.20. The company after trading hours on Monday, 14 October 2013, said that Fortis Healthcare International Pte, a Singapore based subsidiary of Fortis Healthcare, has decided to divest its entire shareholding in Altai Investments, the holding company for Quality Healthcare (QF), Hong Kong, to Bupa, for $355 million. The offer price is reflective of the value and efficiencies added through improved operations and the introduction of new and specialised medical centres while QH has been a part of the Fortis group, Fortis Healthcare said in a statement. The deal is expected to be completed in October 2013, Fortis Healthcare said.
Realty stocks edged lower as inflation rates continued to accelerate in September 2013, adding to concerns that the central bank is likely to increase its main lending rate viz. the repo rate again. Purchases of both residential and commercial property are largely driven by finance. HDIL (down 3.16%), Indiabulls Real Estate (down 0.4%), Godrej Properties (down 0.69%), Unitech (down 4.71%), DLF (down 0.49%) and D B Realty (down 2.03%) edged lower.
Andhra Pradesh Paper Mills lost 3.98% after the company reported net loss of Rs 45.05 crore in Q2 September 2013, as against net profit of Rs 7.55 crore in Q2 September 2012. The result was announced after market hours on Monday, 14 October 2013. Andhra Pradesh Paper Mills' net sales rose 3.1% to Rs 246.49 crore in Q2 September 2013 over Q2 September 2012.
Bond prices declined after data released by the government after trading hours on Monday, 14 October 2013, showed that consumer price inflation accelerated in September 2013, adding to concerns that the central bank is likely to increase its main lending rate viz. the repo rate again. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.6598%, higher than its close of 8.5747% on Monday, 14 October 2013. Bond yield and bond prices are inversely related.
The annual rate of inflation based on the combined consumer price index (CPI) for urban and rural India rose 9.84% in September 2013, from 9.52% in August 2013. The CPI inflation for rural and urban areas rose 9.71% and 9.93% in September 2013, respectively. Inflation rates (final) for rural and urban areas for August 2013 were 8.93% and 10.32% respectively. The headline CPI (combined) has seen a rise of 1.19% (m-o-m) in September 2013.
Data released by the government during trading hours on Monday, 14 October 2013, showed that inflation based on the wholesale price inflation (WPI) accelerated to a seven-month high in September 2013. Increase in WPI inflation in September 2013 was mainly driven by surge in inflation for crude oil and non-food primary articles viz. fibres and oilseeds. Core inflation accelerated to 2.06% in September 2013 from 1.97% in August 2013. Inflation for July 13 was revised upwards to 5.85% from 5.79% reported earlier.
European stocks edged higher on Tuesday, 15 October 2013, as investors welcomed signs US lawmakers are making progress in hammering out a deal to raise the debt ceiling before the deadline on Thursday. Key benchmark indices in UK, France and Germany were up 0.62% to 0.84%.
Asian stocks rose on Tuesday, 15 October 2013, as Senate leaders on Monday, 14 October 2013, said they're optimistic they will forge a deal to reopen the US government and avoid a breach of the debt limit this week. Key benchmark indices in South Korea, Japan, Hong Kong and Taiwan rose 0.26% to 1.14%. China's Shanghai Composite fell 0.19%. Stock markets in Singapore, Indonesia, Malaysia and the Philippines were shut for holidays.
Trading in US index futures indicated that the Dow could gain 24 points at the opening bell on Tuesday, 15 October 2013. US stocks staged a strong intraday rebound on Monday, 14 October 2013, amid signs lawmakers could reach a deal before the government loses its ability to borrow money later this week.
Senate Majority Leader Harry Reid said on the Senate floor on Monday, 14 October 2013, that he is very optimistic about concluding a deal this week to raise the debt limit as well as end the government shutdown. Sen. Mitch McConnell, the Republican minority leader, said he shared Reid's feeling that "we'll get a result that's acceptable to both sides."
Markets worldwide have been watching Washington as it nears an estimated Oct. 17 deadline for Congress to allow the Treasury to borrow in order to pay the government's bills. Without legislative action, the US could default on its debt obligations at a time when the global economy is still recovering from the financial crisis.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. The lack of data may make it harder for the Federal Reserve to assess the economy's strength as policy makers mull the timing of reductions in bond buying. Government data from payrolls to retail sales will be delayed as long as the shutdown continues. 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.
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