Key benchmark indices reversed initial strong gains and hit fresh intraday low in mid-morning 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 weak. The rupee edged lower against the dollar. Index heavyweight and cigarette maker ITC extended intraday losses. Reliance Industries (RIL) reversed initial gains. The barometer index, the S&P BSE Sensex, was down 108.51 points or 0.53%, off close to 260 points from the day's high and up about 50 points from the day's low.
Capital goods pivotals edged lower. Shares of two-wheeler makers also declined. 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 again. HDFC Bank extended intraday losses ahead of its Q2 results today, 15 October 2013.
The market edged higher in early trade on firm Asian stocks. The Sensex hit its highest level in more than 35 months. The 50-unit CNX Nifty hit 21-week high. A bout of volatility was witnessed as key benchmark indices gave away a lion's part of strong initial gains and hit fresh intraday low in morning trade. The Sensex slipped into the red and hit fresh intraday low in mid-morning trade.
In the foreign exchange market, the rupee reversed initial gains against the dollar. The partially convertible rupee was hovering at 61.66, weaker than its close of 61.55/56 on Monday, 14 October 2013.
At 11:20 IST, the S&P BSE Sensex was down 108.51 points or 0.53% to 20,499.03. The index fell 160.81 points at the day's low of 20,446.73 in mid-morning trade, its lowest level since 11 October 2013. 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 was down 40.95 points or 0.67% to 6,071.75. The index hit a low of 6,056.55 in intraday trade, its lowest level since 11 October 2013. The index hit a high of 6,156.30 in intraday trade, its highest level since 21 May 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,228 shares dropped and 700 shares rose. A total of 116 shares were unchanged.
Among the 30-share Sensex pack, 22 stocks fell and the rest rose.
Capital goods pivotals edged lower. L&T (down 1.13%) and Bhel (down 0.69%), declined.
Shares of two-wheeler makers declined. Bajaj Auto declined 0.83%. The company announces its Q2 result tomorrow, 16 October 2013.
Hero MotoCorp dropped 3.35%.
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 again. HDFC Bank fell 1.38%, with the stock extending intraday losses ahead of its Q2 results today, 15 October 2013.
Among other private bank stocks, Axis Bank (down 0.93%), Yes Bank (down 3.51%), and ICICI Bank (down 1.23%), dropped.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank shed 0.19% to 2.79%.
Index heavyweight and cigarette maker ITC fell 1.5% to Rs 334.40. The stock hit high of Rs 342.20 and low of Rs 333.55 so far during the day.
Reliance Industries (RIL) fell 0.15% to Rs 868.95. The scrip witnessed post-result volatility. The stock hit high of Rs 899 and low of Rs 865.60 so far during the day. 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".
The stock market remain closed tomorrow, 16 October 2013, on account of Bakri Id.
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.
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 0.12% to 1.04%. China's Shanghai Composite fell 0.15%. Stock markets in Singapore, Indonesia, Malaysia and the Philippines were shut for holidays.
Trading in US index futures indicated that the Dow could gain 9 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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