Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade. The market breadth, indicating the overall health of the market, was weak. All the thirteen sectoral indices on BSE were in the red. The market sentiment was hit adversely by Reserve Bank of India (RBI) governor Raghuram Rajan's comments on Thursday, 23 January 2014, that inflation is a destructive disease which is forcing the central bank to keep interest rates high. Weakness in Asian stocks and overnight losses for US stocks also hit sentiment on the domestic bourses adversely. The barometer index, the S&P BSE Sensex, was down 215.66 points or 1.01%, off close to 175 points from the day's high and up about 10 points from the day's low. The BSE Small-Cap and Mid-Cap indices were off more than 1% each.
Auto stocks fell across the board. Metal stocks extended Thursday's losses triggered by data showing that a private gauge of China's manufacturing in January unexpectedly contracted this month.
A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak start triggered by weak Asian stocks. The Sensex languished in negative zone in morning trade. The Sensex extended losses and hit fresh intraday low in mid-morning trade.
At 11:26 IST, the S&P BSE Sensex was down 215.66 points or 1.01% to 21,158. The index dropped 226.05 points at the day's low of 21,147.61 in mid-morning trade, its lowest level since 20 January 2014. The index declined 40 points at the day's high of 21,333.66 in early trade.
The CNX Nifty was down 71.20 points or 1.12% to 6,274.45. The index hit a low of 6,271.55 in intraday trade, its lowest level since 20 January 2014. The index hit a high of 6,331.45 in intraday trade.
The BSE Mid-Cap index was off 1.18%. The BSE Small-Cap index was off 1.1%. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,431 shares fell and 677 shares rose. A total of 92 shares were unchanged.
Among the 30-share Sensex pack, 28 stocks fell and only two rose. Bhel (down 2.98%), HDFC Bank (down 1.88%) and Bharti Airtel (down 1.86%) edged lower from the Sensex pack.
Auto stocks fell across the board. Maruti Suzuki India (down 0.39%), M&M (down 1.7%), Ashok Leyland (down 1.42%) and Tata Motors (down 2.17%) declined.
Shares of two wheeler companies also declined. Hero MotoCorp (down 0.67%), TVS Motor Company (down 3.19%) and Bajaj Auto (down 0.52%) declined.
Metal stocks extended Thursday's losses triggered by data showing that a private gauge of China's manufacturing in January unexpectedly contracted this month. China is the world's largest consumer of copper and aluminum. Hindustan Copper (down 1.41%), Hindalco Industries (down 0.31%), Tata Steel (down 1.95%), Steel Authority of India (down 0.36%), National Aluminum Company (down 0.54%), JSW Steel (down 1.24%), Bhushan Steel (down 0.29%) and Jindal Steel & Power (down 0.92%) declined.
Hindustan Zinc (down 1.69%) and Sesa Sterlite (down 1.24%) dropped. Hindustan Zinc clarified after market hours on Thursday, 23 January 2014, regarding a media report about Sesa Sterlite likely to merge Hindustan Zinc with itself. Hindustan Zinc (HZL) said that there is no such proposal before the board of directors of Hindustan Zinc for merger of HZL with Sesa Sterlite. Sesa Sterlite also clarified that there is no proposal before the board of directors of the company for merger of HZL with the company.
Mastek fell 2.81% on profit booking after the company announced good Q3 December 2013 results after market hours on Thursday, 23 January 2014.
Mastek after market hours on Thursday, 23 January 2014, announced that its net profit rose 21.9% to Rs 18.30 crore on 1.6% increase in total income to Rs 242.40 crore in Q3 December 2013 over Q2 September 2013.
The company reported EBITDA (earnings before interest, taxes, depreciation and amortization) of Rs 35.80 crore (14.8% of total income) in Q3 December 2013 compared with Rs 28.90 crore (12.1% of total income) in Q2 September 2013.
The company's operating revenue was Rs 240.20 crore in Q3 December 2013 compared with Rs 236.70 crore in Q2 September 2013, reflecting an increase of 1.5% in rupee terms and 0.7% in constant currency terms.
The product research & development spends during the quarter was Rs 15.60 crore compared with Rs 14.4 crore in Q2 September 2013.
Mastek said its 12-month order backlog was Rs 513 crore ($83 million) as on 31 December 2013 and in constant currency stood at Rs 515 crore ($82.50 million) as compared to Rs 558 crore ($89.10 million) at the end of Q2 September 2013, reflecting a drop of 8% quarter over quarter (QoQ) in rupee terms (drop of 7.5% QoQ in constant currency).
The company said it added 2 new clients during Q3 December 2013. Total client count as of 31 December 2013 was 123 (LTM).
Commenting on the results, Mr. Sudhakar Ram, Group CEO & Managing Director, Mastek, said: We had a steady quarter with a marginal increase in the top line despite the continued ramp down in our IT services accounts. The shift in focus to high end products and solutions has helped us improve our operating margins. While there may be a short term impact due to the NA account ramp-down, I am confident that we will be able to grow both our revenues and margins over the next few quarters.
Mr. Farid Kazani, Group CFO and Finance Director, Mastek, said: "The highlight of the quarter has been the resilience in margins despite increased employee and product expenses. And, the cash flows remain healthy allowing us to reward the shareholders with the proposed buyback.
Updating on the previous announcement dated 15 November 2013, Mastek said that due to the reprioritizing of the multi-vendor transformation program by a major North American customer, resulting in a slowdown in the program implementation, there will be impact on the revenues of Mastek.
The drop in revenues would be approximately $2.4 million per quarter (based on December quarter revenues) until the program regains momentum. However, the company continues to see good momentum in its insurance business in North America and is confident of bridging this gap in revenue over the next few quarters, the company said.
Mastek's total cash/cash equivalent stood at Rs 249.40 crore on 31 December 2013 as compared to Rs 250.70 crore at the end of 30 September 2013.
As on 31 December 2013, the company had a total of 3,128 employees, of which 2,370 employees were based offshore in India while the rest were at various onsite locations outside India. Employee count at the end of 30th September 2013 was 3,185.
In the foreign exchange market, the rupee edged lower against the dollar on global risk off sentiment. The partially convertible rupee was hovering at 62.21, compared with its close of 61.9275/9375 on Thursday, 23 January 2014.
Bond prices dropped after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high, according to reports. "Industrialists complain about high interest rates but we don't have a choice but to keep interest at a high rate because inflation is high at 8%", Rajan said. The strong warning against inflation comes ahead of the central bank's policy review early next week. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6948%, higher than its close of 8.6653% on Thursday, 23 January 2014. Bond yield and bond prices move in opposite direction.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
Asian stocks edged lower on Friday, 24 January 2014, amid concern earnings growth will miss estimates on signs of weakness in China's economy. Key benchmark indices in Japan, South Korea, Singapore, Indonesia, Taiwan and Hong Kong were down 0.16% to 1.02%.
Japanese stocks slumped after the yen strengthened against the dollar yesterday by the most since Sept. 18. The Nikkei 225 average was off 2.03%.
China's Shanghai Composite rose 0.64%. A preliminary reading of HSBC's January China manufacturing Purchase Manufacturing Index fell to 49.6, below the 50 boundary between expansion and contraction, and down from 50.5 in the final result for December. It was the first contraction for the sector in six months, according to the HSBC data which was released on Thursday, 23 January 2014.
China's central bank on 21 January 2014 announced that it is injecting more liquidity into the system ahead of the Lunar New Year holiday.
Funds investing in emerging markets had outflows of $2.4 billion in the week ended 22 January 2014, according to a report by Citigroup Inc., citing data from EPFR Global.
Trading in US index futures indicated that the Dow could drop 30 points at the opening bell on Friday, 24 January 2014. US stocks closed sharply lower on Thursday as weak economic data from China prompted investors to sell resource stocks and emerging-markets assets and seek safety in bonds, gold, and high-dividend paying sectors.
Among economic data, an early gauge of US manufacturing dipped in January from the prior month, but some of the slowdown was due to cold weather, Markit reported Thursday. The US flash purchasing managers index slipped to 53.7 in January, down from December's level of 55, which was an 11-month high. This is the slowest improvement in conditions since October. US initial jobless claims rose slightly to 326,000 last week. The leading economic index rose 0.1% in December, marking its sixth gain in a row, the nonprofit Conference Board said Thursday. In the housing sector, sales of existing homes rose 1% in December to a 4.98 million annual rate, while the median sale price climbed 9.9% to $198,000.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
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