After regaining positive terrain for a brief period, the key benchmark indices once again slipped into the red in morning trade. The market breadth, indicating the overall health of the market, turned negative from positive. Weakness in Asian stocks weighed on sentiment. The barometer index, the S&P BSE Sensex, was down 70.68 points or 0.33%, off about 75 points from the day's high.
Pharma stocks gained. Realty stocks also edged higher. TCS extended initial losses as the company's third quarter results fell short of market expectations.
Key benchmark indices edged lower amid initial volatility on weak Asian stocks. After regaining positive terrain for a brief period, the key benchmark indices once again slipped into the red in morning trade.
At 10:20 IST, the S&P BSE Sensex was down 70.68 points or 0.33% to 21,194.50. The index declined 72.82 points at the day's low of 21,192.36 in morning trade, its lowest level since 15 January 2014. The index rose 4.93 points at the day's high of 21,270.11 in morning trade.
The CNX Nifty was down 10.25 points or 0.16% to 6,308.85. The index hit a low of 6,304.40 in intraday trade. The index hit a high of 6,327.10 in intraday trade.
The market breadth, indicating the overall health of the market, turned negative from positive in morning trade. On BSE, 874 shares fell and 817 shares rose. A total of 89 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks rose and rest fell. Coal India (down 8.64%), HDFC Bank (down 1.37%) and HDFC (down 1.92%) declined.
TCS extended initial losses as the company's third quarter results fell short of market expectations. The stock was off 4.42%. The company's consolidated net profit rose 15.1% to Rs 5333 crore on 1.5% increase in revenue to Rs 21294 crore in Q3 December 2013 over Q2 September 2013. Operating profit grew 0.5% to Rs 6337 crore in Q3 December 2013 over Q2 September 2013. Operating margin was reported at 29.8% in Q3 December 2013. TCS announced the third quarter results after trading hours on Thursday, 16 January 2014.
Commenting on the Q3 performance, Chief Executive Officer and Managing Director, N Chandrasekaran, TCS said: "Strong international demand for our services and discipline in execution has helped TCS maintain its momentum and post robust growth in volumes as well as realisation. Our diversified market presence and services portfolio have helped us overcome seasonal weakness and soft demand in the Indian market. Based on initial discussions with our customers we believe 2014 will be a stronger year for us than 2013, as customers execute their business plans in a relatively stable environment. With Digital technologies rapidly changing the way an enterprise operates in multiple dimensions, our continuous investments positions us well to help customers reimagine their business".
Rajesh Gopinathan, Chief Financial Officer, TCS said: "We have been able to maintain our profitability by operating in a disciplined manner while sustaining our investments in customer-facing initiatives globally. We have also been able to significantly increase our cash generation due to efficient working capital management".
TCS said growth in Q3 December 2013 was driven by industries like Life Science & Healthcare, Manufacturing, Media, Travel & Hospitality and Telecom. The company's broad based presence across markets and services helped overcome seasonal weakness in some markets. Europe led growth, driven by the continuous investments being made in that market, while North America and UK also grew during the quarter, TCS said in a statement. Among growth markets, Latin America, APAC and MEA registered strong growth. India business suffered from volatility and declined sequentially, TCS said. Among service lines, Business Process Services, Enterprise Solutions, Global Consulting were the leaders.
Realty stocks edged higher. DLF (up 0.96%), HDIL (up 0.4%), Sobha Developers (up 0.23%) and Unitech (up 0.36%) rose.
Pharma stocks gained. Cipla (up 0.98%), Dr Reddy's Laboratories (up 0.63%), Lupin (up 0.36%), and Sun Pharmaceutical Industries (up 0.89%) gained.
Ranbaxy Laboratories dropped 0.48%. The company clarified during market hours that company does not disclose individual business transactions as a part of its normal course of business. Ranbaxy, as part of its strategy, evaluates alternate viable sourcing of materials from time to time and takes decisions based on the best value that can be derived in the interest of the company, Ranbaxy said. Media reports had suggested that the company is likely to announce a tie-up with a multinational company for sourcing active pharmaceutical ingredient (API) for its blood pressure drug -- Diovan.
Mindtree tumbled 4.67% after consolidated net profit declined 31.2% to Rs 88.50 crore on 2.7% growth in revenue to Rs 790.60 crore in Q3 December 2013 over Q2 September 2013. The Q3 result was announced after market hours on Thursday, 16 January 2014.
In dollar terms, Mindtree's consolidated net profit declined 31.5% to $14.20 million on 2.5% growth in revenue to $127.10 million in Q3 December 2013 over Q2 September 2013.
Mindtree reported a forex loss of Rs 27.20 crore in Q3 December 2013 compared with a net forex gain of Rs 20 crore in Q2 September 2013.
The company added 397 employees on a gross basis in Q3 December 2013.
Commenting on the results, Krishnakumar Natarajan, CEO & Managing Director, Mindtree said, "We are seeing good business momentum and traction with our clients. Our strong deal pipeline, improved client metrics, proven leadership, global right-sourcing delivery model, and ability to attract and retain talent demonstrate our confidence for a promising future. We will continue to invest in technology-led solutions as our clients are favourably responding to it by making Mindtree a significant part of their strategic initiatives".
Rallis India rose 1.41% after consolidated net profit surged 38% to Rs 30 crore on 17% growth in net sales to Rs 396 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Thursday, 16 January 2014.
Profit from operations (before exceptional items, other income and forex loss/(gain)) rose 18% to Rs 46 crore in Q3 December 2013 over Q3 December 2012.
Commenting on the performance, Mr. V Shankar, MD and CEO, Rallis India said, "I am pleased that we have reached new highs in this quarter both in revenues and profits. While the domestic business stood its ground with the strengthening relationship through the farmer programmes, international business grew well due to robust demand of the key products. Our continued focus on connecting with farmers through Rallis Kisan Kutumba initiatives, strong brands and value creating initiatives in agri space led to robust revenue growth and exceeding the full year profit of previous year by 11% in the nine months".
Further Mr. Shankar said, "There were shifts in farmer preferences for crops and Rallis, with the help of a strong understanding of the field level changes, moved with agility to cater to the changing needs. Our focus on the new initiatives such as More Pulses programme, Samrudh Krishi, etc, continued with vigour. Our new products in the Plant Growth Promoter segment did well and our key brands recorded good growth".
Rallis India said that the three cyclones affected standing crops in certain areas and also led to drop in yields. Rabi sowings registered an increase of 5.4% and should translate into an increased foodgrain and pulses production, the company said. The good rainfall during these months have increased soil moisture content which should augur well going forward into the Rabi season, Rallis India said in a statement.
In the foreign exchange market, the rupee edged higher against the dollar, tracking gains of other regional currencies against the dollar. The partially convertible rupee was hovering at 61.36, compared with its close of 61.535/545 on Thursday, 16 January 2014.
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 fell on Friday, 17 January 2014, as US bank earnings disappointed and investors waited for Chinese economic data due next week. Key benchmark indices in China, Singapore, Japan, South Korea and Taiwan were down 0.08% to 0.56%. Hong Kong's Hang Seng rose 0.84%. Indonesia's Jakarta Composite rose 0.01%.
Trading in US index futures indicated that the Dow could advance 23 points at the opening bell on Friday, 17 January 2014. US stocks ended lower on Thursday, 16 January 2014, snapping a two-day rally, after disappointing results from Best Buy Co. Inc., Citigroup Inc. and Goldman Sachs Group Inc. The Nasdaq Composite edged higher.
In economic news, the number of Americans who applied last week for unemployment benefits fell slightly and is now back to a level that prevailed shortly before the Thanksgiving holiday. Separately, US consumer prices rose a seasonally adjusted 0.3% in December, led by higher energy and shelter costs, the Labor Department said.
Fed Bank of Atlanta President Dennis Lockhart, who doesn't vote on monetary policy this year, said yesterday that he expects inflation that's been "too low" will accelerate toward the Fed's 2% target.
During an interview with Liaquat Ahamed, Fed Chairman Ben Bernanke defended the response to the financial crisis and said stock market valuations are within historic range. Commenting about the central bank's bond purchases, known as quantitative easing, he said: "The problem with QE is that it works in practice but it doesn't work in theory." Meanwhile, in a paper delivered at a Brookings Institution seminar on US monetary policy, San Francisco Fed President John Williams warned of "nagging concerns that large-scale asset purchases carry with them particular risks to the economy or the health of the financial system that we still don't fully understand." He also said the central bank's new forward-guidance tool seems "overly simplified and prone to misinterpretation."
The Senate cleared for President Barack Obama's signature a bipartisan $1.1 trillion bill to finance the US government through Sept. 30, making a debt ceiling increase the next potential fiscal showdown. The Democratic-controlled Senate voted 72-26 in favor of the spending measure a day after the Republican-led House passed it, 359-67. The bipartisan cooperation marks a turnaround from the Tea Party-fueled discord that caused a 16-day partial government shutdown in October.
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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