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Market slumps on escalating US-North Korea tensions

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Key benchmark indices dropped sharply in tandem with global stocks to register losses for the fourth day in a row. The barometer index, the S&P Sensex, lost 266.51 points or 0.84% at 31,531.33, as per the provisional closing data. The 50 index lost 87.80 points or 0.89% at 9,820.25, as per the provisional closing data. Global stocks declined on escalating tensions between the US and North Korea.

The fell 41.57 points or 0.13% at the day's high of 31,756.27 in mid-morning trade. The index lost 375.04 points or 1.18% at the day's low of 31,422.80 in late trade, its lowest level since 7 July 2017. The fell 15.40 points or 0.16% at the day's high of 9,892.65 in mid-morning trade. The index lost 131.85 points or 1.33% at the day's low of 9,776.20 in late trade, its lowest level since 10 July 2017.

Domestic stocks nudged lower in early trade on negative global cues weighed by escalation in tensions between the US and North Korea. Key indices cut losses in mid-morning trade after hovering in negative zone in morning trade. Volatility gripped bourses in late trade as the key indices cut losses soon after extending fall to hit fresh intraday low. The hit its lowest level in over one month while the hit one-month low in late trade.

The S&P Mid-Cap index provisionally fell 2.64%. The S&P Small-Cap index provisionally fell 2.9%. The fall in both these indices was higher than the Sensex's decline in percentage terms.

The broad market depicted weakness. There were over five losers against every gainer on BSE. 2,181 shares declined and 390 shares rose. A total of 112 shares were unchanged.

Tata Motors slumped 8.6% to Rs 380.90 after declaring Q1 result after market hours yesterday, 9 August 2017. The stock had hit a high of Rs 404 during the day. The stock hit a low of Rs 376 during the day, which is a 52-week low. Tata Motors' consolidated net profit rose 41.59% to Rs 3200 crore on 9.92% drop in revenue to Rs 58651 crore in Q1 June 2017 over Q1 June 2016.

Tata Motors' consolidated revenue was lower due to translation impact from Pound to Rupee. Also, PAT in Q1 June 2017 was boosted by a one-time gain of Rs 3609 crore relating to the changes made to the Jaguar Land Rover (JLR) pension plans.

The operating performance broadly reflects lower wholesale volumes for JLR business excluding the China joint venture, and continuation of higher competitive incentive levels and launch and growth costs seen in FY 2017.

In standalone business, a significant de-growth in the medium & heavy commercial vehicles (M&HCV) segment, flat light commercial vehicles (LCV) segment and moderate growth in passenger vehicle segment was seen.

Pharma shares edged lower. Cadila Healthcare (down 2.61%), Sun Pharmaceutical Industries (down 2.69%), Alkem Laboratories (down 3.88%), Cipla (down 2.47%), Dr Reddy's Laboratories (down 4.67%), Glenmark Pharmaceuticals (down 5.52%), Lupin (down 0.88%) and Wockhardt (down 3.39%) fell. GlaxoSmithKline Pharmaceuticals (up 0.73%) rose.

Aurobindo Pharma rose 1.37%, with the stock recovering from Wednesday's losses after the company reported Q1 June 2017 results after market hours yesterday, 9 August 2017. Shares of Aurobindo Pharma had declined 5.84% in a single trading session yesterday, 9 August 2017 to settle at Rs 684.15, ahead of announcing Q1 results.

Aurobindo Pharma's consolidated net profit fell 11.4% to Rs 518.50 crore on 2.3% decline in revenue from operations to Rs 3678.70 crore in Q1 June 2017 over Q1 June 2016.

EBITDA (earnings before interest, taxation, depreciation and amortization) before forex and other income fell 5.3% to Rs 841.60 crore in Q1 June 2017 over Q1 June 2016. EBITDA margin contracted to 22.9% in Q1 June 2017, from 23.6% in Q1 June 2016.

The company's Managing Director N. Govindarajan said that its key markets continue to maintain its momentum in both YoY and QoQ despite headwinds. It expects the momentum to sustain going forward driven by changing product mix towards complex products. It remains focused on strengthening its existing businesses and developing a differentiated and specialty driven product basket, Govindarajan said.

Separately, Aurobindo Pharma said after market hours yesterday, 9 August 2017 that it will increase its stake in Tergene Biotech to 80% from 60% by subscribing additional 56.50 lakh equity shares of Rs 10 each at par aggregating to Rs 5.65 crore. Tergene Biotech was a 60:40 joint venture between the company and promoters of Tergene.

Meanwhile, India Meteorological Department (IMD) said that area weighted rainfall for the country as a whole till 9 August 2017 was 3% below the normal rainfall. The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture. Around 70% of the country's farmlands are rain-fed.

Overseas, European and Asian stocks declined as investors continued to take risks off the table even as American officials tried to ease concerns amid an escalation in tensions between the US and North Korea.

Meanwhile, North Korea dismissed warnings by US President Donald Trump that it would face fire and fury if it threatened the United States as a load of nonsense and outlined detailed plans on for a missile strike near the US Pacific territory of Guam. North Korea's apparently rapid progress in developing nuclear weapons and missiles capable of reaching the US mainland has fueled tensions that erupted into a war of words between Washington and Pyongyang this week, unnerving global investors.

French industrial production fell further than expected in June as manufactured goods output declined, statistics showed. Industrial output in the eurozone's second-largest economy fell 1.1% on the month in June.

US stocks closed lower yesterday, 9 August 2017 as tensions between North Korea and the US added a dollop of geopolitical uncertainty to markets, and as high-profile companies disappointed with their quarterly results.

In the latest escalation of tensions between Washington and Pyongyang, the isolated Asian country threatened a missile strike at US territory Guam. That saber-rattling came a day after US President Donald Trump said he would respond with fire and fury like the world has never seen if the country doesn't halt its threats.

On the Federal Reserve front, Chicago Fed President Charles Evans said he supported starting a reduction of the central bank's $4.5 trillion balance sheet in September but was ambivalent about another rate hike this year.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, August 10 2017. 15:54 IST