Yes Bank slumps after raising deposit rates, base rate

A bout of volatility was witnessed as key benchmark indices trimming losses after hitting fresh intraday low in mid-morning trade. The S&P BSE Sensex, was down 126.76 points or 0.66%, up close to 100 points from the day's low and off almost equal points from the day's low. The market breadth, indicating the overall health of the market, was weak. A further slide in rupee against the dollar dampened investor sentiment. Weakness in Asian stocks also weighed on sentiment. Asian stocks fell as investors remained caution ahead of the Federal Reserve's policy decision.

Shares of Bharti Airtel extended intraday gain, with the stock shrugging off the company's weak Q1 result. PSU OMCs extended Tuesday's steep losses as rupee weakened further against the dollar. IT stocks rose on weak rupee. IT major Wipro extended gains for the third straight day after the company issued upbeat revenue guidance for Q2 September 2013 at the time of announcing Q1 June 2013 results on 26 July 2013. TCS hit record high. HCL Technologies scaled record high after reporting strong Q4 result. Yes Bank tumbled after the private sector bank announced increase in base rate and increase in deposit rates on select tenors.

The market slumped in early trade as a further slide in rupee against the dollar rattled investor sentiment. The Sensex extended initial losses to hit fresh intraday low in morning trade. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in nearly five weeks. A bout of volatility was witnessed as key benchmark indices trimming losses after hitting fresh intraday low in mid-morning trade.

The rupee approached a record low against the dollar on Wednesday, 31 July 2013, with the local currency extending Tuesday's steep slide. The rupee was hovering at 61.08 versus the dollar, weaker than Tuesday's close of 60.47/48. The rupee had hit record low of 61.21 in intraday deals on 8 July 2013. The Reserve Bank of India (RBI) on Tuesday said that its recent liquidity tightening measures aimed at checking undue volatility in the foreign exchange market will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling monetary policy to revert to supporting growth with continuing vigil on inflation.

Bond prices extended Tuesday's losses. The yield on the most traded 8.2% GS 2025 was currently at 8.6623%, higher than Tuesday's close of 8.6416%. Bond yield and bond prices are inversely related.

At 11:20 IST, the S&P BSE Sensex was down 126.76 points or 0.66% to 19.221.58. The index declined 221.52 points at the day's low of 19,126.82 in morning trade, its lowest level since 28 June 2013. The index fell 22.95 points at the day's high of 19,325.39 in early trade.

The CNX Nifty was down 49.50 points or 0.86% to 5,705.55. The index hit a low of 5,675.75 in intraday trade, its lowest level since 27 June 2013. The index hit a high of 5,742.10 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,357 shares fell and 462 shares rose. A total of 97 shares were unchanged.

Among the 30-share Sensex pack, 16 stocks fell and rest of them rose. NTPC (down 6.13%), GAIL (India) (down 4.24%) and ONGC (down 3.83%), edged lower.

Index heavyweight and cigarette major ITC fell 3.14%.

PSU OMCs extended Tuesday's steep losses as rupee weakened further against the dollar today, 31 July 2013, raising concerns about increased costs of importing oil. BPCL (down 6.9%), Indian Oil Corporation (down 3.28%) and HPCL (down 1.91%), declined. PSU OMCs import about 70-75% of their crude oil needs and rely heavily on foreign currency borrowings, which largely remain unhedged.

IT stocks rose on weak rupee. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

TCS rose 1.66% to Rs 1820.40. The stock hit record high of Rs 1830.10 in intraday trade today, 31 July 2013. TCS on Monday, 29 July 2013, said it has won a three-year contract from the Zambia Revenue Authority (ZRA) for the modernisation of its domestic tax system.

IT major Wipro was up 0.67%, with the stock extending gains for the third straight day after the company issued upbeat revenue guidance for Q2 September 2013 at the time of announcing Q1 June 2013 results 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.

HCL Technologies rose 1.85% to Rs 922.60 on good Q4 result. The stock hit record high of Rs 929.50 in intraday trade today, 31 July 2013. The company before trading hours today, 31 July 2013, said its consolidated net profit as per US accounting standards rose 16.3% to Rs 1209.60 crore on 8.1% growth in revenue to Rs 6944.20 crore in Q4 June 2013 over Q3 March 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 13.2% to Rs 1628.80 crore in Q4 June 2013 over Q3 March 2013. EBITDA margin edged up to 23.5% in Q4 June 2014, from 22.4% in Q3 March 2013.

The company said that the return on equity (ROE) at 34% in the year ended 30 June 2013 (FY 2013) was the highest in the past five years.

Commenting on the company's performance for Q4 June 2014 and FY 2013, Shiv Nadar, Chairman & Chief Strategy Officer, HCL Technologies, said: "FY 2013 results have demonstrated significant business momentum, non-linearity and record customer satisfaction. HCL continues to excel in agility and innovation with a Business Model that is resilient in a dynamic environment".

Anant Gupta, President & CEO, HCL Technologies, said: "An exceptional growth of 22% during the Financial Year has propelled HCL's revenue past the Rs 25000 crore milestone. HCL continues to lead the industry in profitable growth, with seven successive quarters of net income margin expansion, having reported 62% growth in net income this year. We have consolidated our leadership position in the Infrastructure Management Services and verticals like Financial Service and Lifesciences & Healthcare".

Anil Chanana, CFO, HCL Technologies, said: "Backed by another strong quarter, we closed our Financial Year on a positive note. Our net income margin expanded by 400 bps and touched a five year high of 16%. Our Return on Equity for the year has been 34% which is amongst the best in the industry. EBITDA to Free Cash Flow conversion has been at a healthy 68%".

But, Infosys fell 0.11%.

Shares of Bharti Airtel extended intraday gain, with the stock shrugging off the company's weak Q1 result. The stock was up 7.64%. The company's consolidated net profit fell 9.6% to Rs 689 crore on 9.2% growth in total revenue to Rs 20264 crore in Q1 June 2013 over Q1 June 2012. The results are as per International Financial Reporting Standards (IFRS). The company announced the results during market hours today, 31 July 2013.

Derivatives and exchange fluctuation losses and a surge in tax outgo adversely hit the company's bottom line. Derivative and exchange fluctuation losses during the quarter were Rs 534 crore, mainly caused by the rupee depreciation, compared with derivatives and exchange fluctuation gains of Rs 160 crore in Q1 June 2012. Tax outgo surged 113.21% to Rs 968 crore in Q1 June 2013 over Q1 June 2012, mainly due to increase in tax outgo in Africa operations.

Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 19.3% to Rs 6545 crore in Q1 June 2013 over Q1 June 2012. EBITDA margin edged up to 32.3% in Q1 June 2013, from 29.6% in June 2012. EBITDA margin pertaining to India operations improved to 34.9% in Q1 June 2013, from 31.9% in Q1 June 2012. EBITDA margin pertaining international operations improved to 25.4% in Q1 June 2013, from 24% in Q1 June 2012.

Bharti Airtel said mobile revenue in India grew on the back of ARPU moving to Rs 200 in Q1 June 2013, up by Rs 16 over the corresponding period last year. The voice rate increase coupled with higher usage per customer has enabled this improvement in ARPU, Bharti Airtel said.

Consequent to the additional equity infusion of Rs 6796 crore by Qatar Foundation Endowment and after considering the full debt in the Qualcomm subsidiaries, the consolidated net debt has decreased by $908 million during the quarter. The consolidated net debt stood at $9.77 billion as on 30 June 2013. The Net Debt to EBITDA ratio (in dollar terms) now stands at 2.21 as compared to 2.50 at the end of the previous quarter.

Commenting on the first quarter results, Mr. Sunil Bharti Mittal, Chairman, Bharti Airtel, said: "Our results for the quarter reflect the overall stability of our operations, and demonstrate the potential for growth, particularly seeing robust data growth across all geographies. Results for Airtel India reflect rationality returning to the sector which needs to be complemented by a more enabling regulatory environment for a deeper penetration of telecom and broadband services".

Yes Bank tumbled after the private sector bank announced increase in base rate and increase in deposit rates on select tenors. The stock was off 9.52%. The bank during market hours today, 31 July 2013, said it has raised deposit rates by 0.25% to 0.5% in select tenors. This provides an opportunity for retail depositors to lock in higher rates on term deposits, the private sector bank said. Yes Bank has also consequently raised its base rate by 0.25% 10.75% with effect from 1 August 2013.

Shares of Power Finance Corporation dropped slumped 7.41%.

On the political front, the ruling Congress party approved on Tuesday the creation of a new Telangana state, a move that has revived deep political divisions and raised fears of violence in the area, home to global firms including Google. The decision to break up Andhra Pradesh and establish Telangana comes ahead of elections next year.

Asian stocks fell on Wednesday, 31 July 2013, amid caution ahead of the Federal Reserve's policy decision. Key benchmark indices in Japan, Singapore, Indonesia and Taiwan fell by 0.15% to 0.82%. South Korea's Kospi rose 0.08%.

Chinese stocks rose after the powerful politburo of China's communist party on Tuesday said it would act to maintain steady growth in the second half of 2013. Key benchmark indices in Hong Kong and China were up 0.04% to 0.42%.

Meanwhile, the results of two separate surveys on Chinese manufacturing activity in July are due tomorrow, 1 August 2013.

Taiwan's economy expanded at a faster-than-estimated pace in the second quarter as domestic consumption improved, even as a slowdown in China damps the outlook for the island's exports. Gross domestic product rose 2.27% from a year earlier after increasing 1.67% in the first quarter, the statistics bureau said in a preliminary report in Taipei today.

Trading in US index futures indicated a flat opening of US stocks on Wednesday, 31 July 2013. US stocks closed mixed on Tuesday in quiet trading session as many investors remained on the sidelines ahead of the Federal Reserve's Wednesday announcement on interest rates and monetary policy.

The Federal Open Market Committee's (FOMC) two-day policy meeting ends today, 31 July 2013, with expectations that it will offer further clues on how long it will maintain its bond purchases. 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.

The influential US non-farm payroll data for July 2013 is due on Friday, 2 August 2013.

In Europe, the European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions tomorrow, 1 August 2013.

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