A bout of volatility was witnessed as key benchmark indices hit fresh intraday low in mid-afternoon trade. The barometer index, S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest level in more than 10 weeks. The market breadth, indicating the overall health of the market, was negative. The Sensex was down 217.21 points or 1.06%, off about 185 points from the day's high and about 10 points from the day's low. The market sentiment was hit adversely as the government revised downwards the GDP growth rate for the year ended 31 March 2013 (FY 2013) to 4.5% from 5% reported earlier.
Capital goods stocks edged lower. Lupin rose after announcing strong Q3 results.
The market edged lower in early trade on weak Asian stocks. A recovery from lower level after initial losses proved short lived as key benchmark indices weakened once again. The Sensex languished in negative terrain in mid-morning trade. The Sensex extended losses and hit fresh intraday low in afternoon trade. A bout of volatility was witnessed as key benchmark indices hit fresh intraday low in mid-afternoon trade. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than 10 weeks.
The market sentiment was affected adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 31 January 2014. Foreign institutional investors (FIIs) sold shares worth a net Rs 652.97 crore on Friday, 31 January 2014, as per provisional data from the stock exchanges. Key benchmark indices slipped further and hit fresh intraday low in afternoon trade.
Global investors pulled out $6.3 billion from emerging-market equities in the week through 29 January 2014, according to reports.
At 14:20 IST, the S&P BSE Sensex was down 217.21 points or 1.06% to 20,296.64. The index lost 226.56 points at the day's low of 20,287.29 in mid-afternoon trade, its lowest level since 22 November 2013. The index declined 33.50 points at the day's high of 20,480.35 in early trade.
The CNX Nifty was down 64.45 points or 1.06% to 6,025.05. The index hit a low of 6,023.70 in intraday trade, its lowest level since 22 November 2013. The index hit a high of 6,074.85 in intraday trade.
The BSE Mid-Cap index was off 23.50 points or 0.37% at 6,284.55. The BSE Small-Cap index was off 6.18 points or 0.1% at 6,257.17. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market was negative. On BSE, 1,326 dropped and 1,061 shares rose. A total of 130 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks declined and rest of them rose. Hindalco Industries (down 4.06%), Tata Motors (down 3.7%), Bharti Airtel (down 2.86%) and Tata Steel (down 2.85%), edged lower from the Sensex pack.
Capital goods stocks edged lower. ABB (down 0.44%) , Bhel (down 0.78%), Crompton Greaves (down 2.12%) and Punj Lloyd (down 4.05%) dropped.
L&T was down 0.54%. L&T Power has successfully completed commissioning and testing of the first unit of its 2x700 megawatts (MW) supercritical thermal power plant of Nabha Power on 31 January 2014, L&T said in a statement today, 3 February 2014. The plant was constructed on a turnkey basis by L&T Power with more than 90% of the equipment sourced from the group companies of L&T.
Describing the Rajpura Plant as another important milestone in L&T's history, Mr Shailendra Roy, Member of the Board, L&T, said: "We have demonstrated our capability as the leading Power Plant EPC player in the country with the successful commissioning of the first unit of the Rajpura plant. The timely completion and stable operations further establishes L&T's ability to build large complex engineering marvels of global standards."
Commercial operations of the plant will significantly augment Punjab's generation capacity making the state power surplus, and will enable it to export power to the national grid. Based on supercritical technology, it will be one of the most eco-friendly and efficient coal-based thermal plants in India, L&T said.
Lupin rose 3.02% on strong Q3 results. The company's consolidated net profit jumped 42% to Rs 476.10 crore on 21% growth in net sales to Rs 2983 crore in Q3 December 2013 over Q3 December 2012. The result was announced during market hours.
Lupin's operating profit jumped 27.8% to Rs 773.30 crore in Q3 December 2013 over Q3 December 2012. Operating profit margin edged up to 25.9% in Q3 December 2013, from 24.5% in Q3 December 2012.
Operating working capital increased to Rs 2769.50 crore as on 31 December 2013, from Rs 2674.30 crore as on 30 September 2013. The working capital number of days stood at 94 days as on 31 December 2013, lower than 96 days as on 30 September 2013. The company incurred capital expenditure of Rs 104.10 crore in Q3 December 2013.
Lupin said that the company now is debt free at the net debt level.
Revenue expenditure on R&D for Q3 December 2013 stood at Rs 271 crore or 9.1% of net sales. In Q3 December 2012, revenue expenditure on R&D was Rs 238.20 crore or 9.7% of net sales.
Lupin filed 5 ANDAs and received 5 ANDA approvals in the quarter. Cumulative ANDA filings with the US FDA now stand at 186 with the company having received 96 approvals to date. The company received 5 approvals from European regulatory authorities in the quarter.
Commenting on the company's financial performance, Nilesh Gupta, Managing Director, Lupin, said: "We have had a robust quarter with record profits, driven in particular by strong business growth in the US. Other markets like India are getting back on track also. In addition, our consistent focus on ramping up operational efficiencies has led to higher margins and better profitability".
Lupin said that the board of directors of the company at its meeting held on 3 February 2014, inter alia, has declared an interim dividend of 150% i.e. Rs 3 per share absorbing a sum of Rs 134.50 crore for the year ending 31 March 2014.
Indraprastha Gas (IGL) jumped 7.7%. Oil Minister M Veerappa Moily today, 3 February 2014, said that the CNG prices will be cut by 30 per cent and PNG prices by 20 per cent in Delhi with effect from today, 3 February 2014. Also, the government will increase the availability of gas for domestic users. GAIL (India) will uniformly supply domestic gas to the distributors. The newly-formed AAP government in Delhi had moved the Supreme Court challenging the Central government's cut in allocation of domestic natural gas to Delhi following an order by the Gujarat High Court. The Allocation of domestic gas to GAIL (India) for supplying entities for CNG (transport) and PNG (domestic) segment has also been ordered to be increased with immediate effect. Moily said that Indraprashta Gas and other city gas distribution firms will now get cheaper domestic gas. "IGL and city gas entities will get entire requirement of gas from domestic fields as against previous 80 per cent," announced Moily. Meanwhile, the government has told Supreme Court that it will give CNG at uniform prices to all states having distribution network.
Berger Paints India rose 2.89% after consolidated net profit rose 7.1% to Rs 82.30 crore on 11.9% growth in net sales and other operating income to Rs 1029.80 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced on Saturday, 1 February 2014.
Berger Paints India's consolidated earnings before depreciation, interest and taxation (EBDIT) rose 12.6% to Rs 131.50 crore in Q3 December 2013 over Q3 December 2012.
Berger Paints India's net profit rose 0.33% to Rs 65.66 crore on 7.4% growth in net sales and other operating income to Rs 882.78 crore in Q3 December 2013 over Q3 December 2012.
Oberoi Realty lost 4.67% after consolidated net profit fell 49.4% to Rs 68.06 crore on 40.7% decline in net sales to Rs 169 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced on Saturday, 1 February 2014.
Commenting on the company's financial performance, Mr. Vikas Oberoi, CMD, Oberoi Realty said, "Domestic and global economic headwinds continue to be challenging. While business sentiments are likely to improve only after the results of the general elections, there will now also be opportunities for companies that have shown financial prudence and discipline. The recent Supreme Court order clearing the way for the development of our Mulund property is a great positive for Oberoi Realty".
Oberoi Realty said that the private forest issue relating to the Mulund property has been resolved in favour of the company by the order dated 30 January 2014 of the Supreme Court of India.
In the foreign exchange market, the rupee reversed initial gains against the dollar as equities dropped. The partially convertible rupee was hovering at 62.70, compared with its close of 62.68/69 on Friday, 31 January 2014.
Indian manufacturers signalled a further improvement in operating conditions during January, according to a survey. The headline HSBC India Purchasing Managers' Index (PMI) posted a reading of 51.4 for January 2014, up from 50.7 for December 2013. The latest reading was the highest since March 2013, but pointed to a marginal pace of expansion that was well below the series average (55.1). January saw new orders expand at the quickest rate in ten months, with survey participants reporting stronger demand from both domestic and overseas clients.
Concurrently, new business from abroad grew at a solid pace that was the fastest since June last year. Subsequently, Indian manufacturers raised their production levels for the third successive month. The rate of output growth was solid and the strongest since February 2013.
Sector data indicated that consumer goods continued to outperform the remaining two monitored categories, while operating conditions deteriorated at capital goods producers. Growth rates for output and new orders in the consumer goods sub-category surpassed those seen at intermediate goods companies.
Employment rose for the fourth month running in January, with all three broad areas of the manufacturing economy posting job creation. Despite being slight, the overall rate of expansion was broadly in line with the long-run series average. Companies operating in the Indian manufacturing sector signalled pressure on operating capacity in January, as backlogs of work increased solidly. Moreover, the latest increase in unfinished work was the eighteenth in as many months. All three market groups posted higher work-in-hand, with the sharpest increase noted at consumer goods firms.
Meanwhile, supplier performance improved in the latest month for the first time since September 2013. Anecdotal evidence suggested that shorter delivery times reflected a greater availability of raw materials at vendors.
Amid reports of new business gains, purchasing activity in the Indian manufacturing economy rose at the start of 2014, although the pace of expansion was only slight and well below the series average. Growth of buying activity was largely centred on the consumer goods sub-sector. Pre-production stocks increased at consumer goods producers, but fell at both capital and intermediate goods firms. This resulted in an overall decline of stocks of purchases across the Indian manufacturing economy as a whole.
Average input costs rose in January, with manufacturers reporting higher prices for a range of raw materials, including metals, chemicals and energy. The rate of cost inflation remained robust. Consequently, companies raised their tariffs again. Although the strongest in three months, the latest rise in output charges was moderate and much weaker than seen for input costs.
Commenting on the India Manufacturing PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "Manufacturing activity moved into higher gear led my faster growth in new orders. However, inflation pressures also firmed, suggesting that the RBI has to keep up its inflation guards".
The First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, for the year 2012-13 released on Friday, 31 January 2014, showed India GDP revised down to 4.5% in 2012-13 from 5% earlier and as against a growth of 6.7% in the year 2011-12. The downward revision was mainly due to lower than provisionally estimated output in primary and secondary sectors. The data also showed lower-than-estimated growth numbers for exports, capital investment and consumption sectors, thereby pointing out to deeper underlying weaknesses.
The Eight Core Industries having a combined weight of 37.9% in the Index of Industrial Production (IIP) increased by 2.1% in December 2013 compared with a growth of 7.5% growth in December 2012 and 1.7% growth in November 2013, data released by the government after trading hours on Friday, 31 January 2014, showed.
The fiscal deficit reached Rs 5.16 lakh crore during April-December 2013, or 95.2% of the full-year target, compared with 78.8% a year earlier, data released by the government after trading hours on Friday, 31 January 2014, showed. Factory gate duties were down 6.9% at Rs 1.02 lakh crore during April-December from the year-earlier period, while customs tax receipts rose 4.3% to Rs 1.24 lakh crore -- much lower than the 13.6% annual growth target.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Sighting elevated consumer price inflation, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
European stocks edged lower on Monday, 3 February 2014, after Chinese data out over the weekend added to worries about slowing growth in the country. Key benchmark indices in Germany and France were off 0.15% to 0.19%. In UK, the FTSE 100 index was up 0.09%.
Asian stocks fell on Monday, 3 February 2014, after a slowdown in Chinese manufacturing growth added to concern the global economic recovery is faltering. Key benchmark indices in Indonesia, Japan, Singapore and South Korea shed by 0.63% to 1.98%.
China's markets remain closed until 7 February 2014 for the Lunar New Year holiday, while markets in Hong Kong and Taiwan markets are shut until 4 February 2014.
A Chinese manufacturing gauge fell to a six-month low in January as output and orders slowed, adding to signs that government efforts to rein in excessive credit will cool growth in the world's second-largest economy. The Purchasing Managers' Index was at 50.5 in January 2014, compared with December's 51 reading, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Feb. 1 in Beijing. The survey showed jobs and export orders shrinking, amplifying risks of a deeper slowdown as Communist Party leaders clamp down on the $6 trillion shadow-banking industry and interbank borrowing costs rise. A separate private manufacturing gauge released by HSBC Holdings Plc and Markit Economics on Jan. 30 pointed to the first contraction in six months.
Growth in China's services sector cooled in January to its slowest pace in at least a year, data showed on Monday, the latest sign that the Chinese economy lost momentum last month in the run-up to the Lunar New Year holiday. The official non-manufacturing Purchasing Managers' Index slipped to 53.4 from December's 54.6, the lowest reading in at least a year but still above the 50-point level that indicates growth.
South Korea's exports contracted 0.2% in January from a year before, according to government data released on Saturday, 1 February 2014.
Trading in US index futures indicated that the Dow could drop 14 points at the opening bell on Monday, 3 February 2014. US stocks fell sharply on Friday amid continued unease over emerging markets and a number of high-profile earnings disappointments.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market.
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