Key benchmark indices declined on first trading session of the week as market sentiment was impacted adversely on concerns the Federal Reserve may reduce monetary stimulus for the US economy sooner than expected after latest data showed better than expected US October jobs report. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
The S&P BSE Sensex and the 50-unit CNX Nifty, both, settled at their lowest level in 3-1/2 weeks. The Sensex was down 175.19 points or 0.85%, up 37.81 points from the day's low and off 181.57 points from the day's high. The market breadth, indicating the overall health of the market, was negative.
Indian stocks fell for the fifth day in a row today, 11 November 2013. The Sensex has fallen 748.40 points or 3.52% in five trading sessions from a record closing high of 21,239.36 which it had attained during the special Diwali Muhurat trading session held on Sunday, 3 November 2013. The index has fallen 673.56 points or 3.18% in November so far (till 11 November 2013). The Sensex has garnered 1,064.25 points or 5.48% in calendar 2013 so far (till 11 November 2013). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,042.25 points or 17.44%. From a record high of 21,321.53 on 3 November 2013, the Sensex has fallen 830.57 points or 3.9%.
Tata Motors declined despite the company reporting a strong Q2 result. Shares of two-wheeler makers dropped. Capital goods pivotals also declined. Realty stocks dropped. Suven Life Sciences surged on strong Q2 result. Central Bank of India dropped after the bank reported a reverse turnaround in Q2 September 2013.
Divi's Laboratories jumped on strong Q2 result. PSU OMCs declined as a weak rupee will negate the impact of lower crude oil prices for PSU OMCs as the crude oil that refineries process is either imported or priced on import-parity. Index heavyweight and cigarette maker ITC dropped.
The market edged lower in early trade. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in 3-1/2 weeks. It weakened once again after it pared initial losses and hit fresh intraday high in morning trade. It hovered in negative terrain in mid-morning trade. It continued to hover in negative terrain in early afternoon trade. Key benchmark indices cut losses in afternoon trade. It weakened once again in mid-afternoon trade. It extended losses and hit fresh intraday low in late trade.
The rupee fell below the 63 level against the dollar. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
The S&P BSE Sensex was down 175.19 points or 0.85% to 20,490.96, its lowest level since 17 October 2013. The index shed 213 points at the day's low of 20,453.15 in late trade, its lowest level since 17 October 2013. The index rose 6.38 points at the day's high of 20,672.53 in afternoon trade.
The CNX Nifty was down 61.95 points or 1.01% to 6,078.80, its lowest level since 17 October 2013. The index hit a low of 6,067.75 in intraday trade, its lowest level since 17 October 2013. The index hit a high of 6,141.65 in intraday trade.
The total turnover on BSE amounted to Rs 1840 crore, lower than Rs 2001.86 crore on Friday, 8 November 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,339 shares fell and 1,056 shares rose. A total of 145 shares were unchanged.
The BSE Mid-Cap shed 0.8% and the BSE Small-Cap index declined 0.61%. Both these indices outperformed the Sensex.
Among the 30-share Sensex pack, 24 stocks fell and rest of them rose.
Index heavyweight and cigarette maker ITC shed 0.8% to Rs 317.
Reliance Industries lost 1.2% to Rs 865.
United Spirits (USL) lost 2.23%. The company's net profit surged 273% to Rs 94.30 crore on 7% growth in revenue to Rs 2038.70 crore in Q2 September 2013 over Q2 September 2012. The result was announced after market hours on Friday, 8 November 2013.
USL's profit before tax (PBT) jumped 267% to Rs 141.20 crore in Q2 September 2013 over Q2 September 2012.
USL sold 28.10 million cases in Q2 September 2013 as against 28.42 million cases in Q2 September 2012.
USL's interest costs are down Rs 33.60 crore in Q2 September 2013 and Rs 39.70 crore in first half of FY 2014 compared to their year ago periods as a consequence of the loan repayment of Rs 1857.40 crore effected from the proceeds of the issue of preferential capital and the sale of shares by USL's subsidiary companies to Diageo.
USL said that Extra Neutral Alcohol (ENA) prices continue to unfavorably impact the business. On average, the cost of this key ingredient has risen by Rs 20/case compared to Q2 September 2012 and first half of FY 2014. Given the huge volumes of the company this translates to approximately Rs 56 crore for Q2 September 2013 and approximately Rs 120 crore for first half of FY 2014. While a rise in cost of inputs is the stated reason for this increase, the truth lies elsewhere - an attempt by the sugar lobby to raise prices on the strength of an alternate high paying customer - the oil marketing companies (OMC) - for their willingness to pay higher prices to Indian Ethanol vendors is linked to the higher cost of imports, USL said. This is notwithstanding the fact the EBP is not beneficial to consumers in the long run, USL added.
USL said that its business in Tamil Nadu has been adversely affected by the skewed order placement by the parastatal buying agency in that state. Additionally, despite inflation and rising cost of inputs, the last price increase granted to manufacturers in Tamil Nadu was in December 2007, the company said.
United Spirits' board of directors at a meeting held on Friday, 8 November 2013, inter alia, has approved an arrangement to be entered into by the company with Enrica Enterprises inter-alia for transfer of business pertaining to the company's distillery at Poonamallee to Enrica Enterprises through a Scheme of Arrangement (Scheme) as well as franchising of its brands in Tamil Nadu.
USL'S Board has approved the relevant documents including the Scheme between USL and Enrica Enterprises and their respective shareholders which envisages transfer of business pertaining to Poonamallee distillery along with related assets and liabilities to Enrica Enterprises.
The Scheme provides for transfer of the undertaking, business, activities and operations pertaining to the Poonamallee distillery to Enrica Enterprises by way of slump sale on a going concern basis. In consideration, USL will receive lump sum cash consideration of Rs 125.07 crore in the manner specified in the Scheme. The Appointed Date for the Scheme is fixed as opening of business hours on 1 April 2013. Further, USL's Board has also approved the Franchise Agreement with the Enrica Enterprises pursuant to which the Enrica Enterprises will bottle the company's brands and in consideration for this bottling arrangement, USL will earn royalty income.
Reliance Power fell 2.59%. The company after market hours reported 4% rise in net profit to Rs 251 crore on 23% rise in total income to Rs 1457 crore in Q2 September 2013 over Q2 September 2012.
Hindalco Industries tumbled 4.55% ahead of company's US subsidiary Novelis Inc. Q2 results today, 11 November 2013. Hindalco Industries unveils Q2 result tomorrow, 12 November 2013.
Capital goods pivotals also declined. L&T (down 3.04%) and Bhel (down 1.44%), fell.
Auto stocks were mostly lower. M&M fell 1.25%. Car major Maruti Suzuki India rose 0.96%.
Tata Motors declined 1.95% despite the company reported a strong Q2 result. The company's consolidated net profit surged 70.7% to Rs 3542 crore on 31.1% rise in revenues to Rs 56882 crore in Q2 September 2013 over Q2 September 2012. The company said revenues grew despite weak operating environment in the India business which was more than offset by increase in wholesale volumes and richer product and market mix at Jaguar Land Rover (JLR).
JLR wholesale and retail volumes for the quarter ended 30 September 2013 grew by 31.6% and 21.1%, respectively, over the corresponding period last year and stood at 101,931 units and 102,644 units, respectively. Following strong response to its new products and powertrain options, Jaguar wholesale and retail volumes grew by 91.6% and 56.5% to 18,834 units and 20,024 units, respectively, as against 9,832 units and 12,798 units, respectively, in the corresponding quarter last year. Strong response to the All-New Range Rover and continued strong growth in Evoque and other products, Land Rover wholesale and retail volumes stood at 83,097 units and 82,620 units (growth of 22.9% and 14.8% over corresponding quarter last year).
JLR's revenues for the quarter ended September 30, 2013 of 4,612 million pounds, represented a growth of 40.3% over 3,288 million pounds in the corresponding quarter last year. Operating margins for the quarter ended 30 September 2013 stood at 17.8%. Operating profit (EBITDA) of 823 million pounds in the quarter, represented a growth of 69.3% over 486 million pounds in the corresponding quarter last year. Continued strong revenue growth and operating performance were supported by increase in wholesale volume, richer product mix, launch of new Range Rover Sport, new Range Rover and Jaguar F-TYPE. The profit before tax for the quarter ended 30 September 2013 grew by 55.0% over the corresponding quarter last year to 668 million pounds (431 million pounds in the corresponding quarter last year). Profit after tax for the quarter grew by 66.2% over the corresponding quarter last year to 507 million pounds (305 million pounds in the corresponding quarter last year).
Shares of two-wheeler makers dropped. Hero MotoCorp (down 2.38%) and Bajaj Auto (down 1.86%), declined.
Infosys rose 0.16%. The company said after market hours on Friday, 8 November 2013 that Infosys BPO, the business process outsourcing subsidiary of the company on Friday announced the opening of a new delivery center in Eindhoven, the Netherlands. The 120-seat center strengthens Infosys BPO's footprint and reinforces its position in Europe.
Bank stocks were mixed. ICICI Bank declined 0.98%. HDFC Bank rose 0.32% to Rs 655 in volatile trade. The stock reversed direction after falling as much as 2.78% at day's low of Rs 634.75. The stock hit a high of Rs 660.
Among PSU bank stocks, State Bank of India (down 2.55%), Canara Bank (down 2.95%), Union Bank of India (down 3.32%), Bank of India (down 1.39%), Bank of Baroda (down 2.01%) and Punjab National Bank (down 0.66%) declined.
Central Bank of India dropped 2.91% after the bank reported a reverse turnaround in Q2 September 2013. The bank has reported during market hours a net loss of Rs 1508.74 crore in Q2 September 2013 compared with net profit of Rs 329.92 crore in Q2 September 2012. Total income rose 9.78% to 6236.51 crore in Q2 September 2013 over Q2 September 2012.
GlaxoSmithKline Pharmaceuticals fell 0.24%. The company reported 33.73% fall in net profit to Rs 100.95 crore on 7.03% fall in total income to Rs 666.02 crore in Q3 September 2013 over Q3 September 2012. The Q3 result was announced during market hours today, 11 November 2013.
Divi's Laboratories jumped 7.98% on strong Q2 result. The company's net profit jumped 73.72% to Rs 205 crore on 19.62% growth in total income to Rs 567 crore in Q2 September 2013 over Q2 September 2012. The result was announced after market hours on Friday, 8 November 2013.
Divi's Laboratories reported a foreign exchange (forex) gain of Rs 31 crore in Q2 September 2013 as against a forex loss of Rs 21 crore in Q2 September 2012.
Divi's Laboratories said it has capitalized fixed assets aggregating to Rs 120 crore in the first half of the fiscal year ending March 2014 (FY 2014).
Lupin was almost unchanged at Rs 883.80. The company announced during market hours that its US subsidiary, Lupin Pharmaceuticals, Inc. (LPI) has launched its generic Rabeprazole Sodium delayed release tablets, 20mg. Lupin had earlier received final approval from the US FDA for the same. Lupin's Rabeprazole Sodium delayed release tablets, 20mg, are the generic equivalent of Eisai Inc.'s Aciphex delayedrelease tablets, 20mg, and are indicated for the treatment of Gastroesophageal reflux disease (GERD). Aciphex delayedrelease tablets, 20mg, had annual U.S sales of approximately $ 864.3 million (IMS MAT June 2013).
Suven Life Sciences surged 15.38% on strong Q2 result. The company's net profit surged 602% to Rs 45.50 crore on 202% spurt in revenues to Rs 151.50 crore in Q2 September 2013 over Q2 September 2012. The result was announced during trading hours today, 11 November 2013. EBITDA (earnings before interest, taxes, depreciation and amortization) surged 550% to Rs 71.50 crore in Q2 September 2013 over Q2 September 2012.
Suven Life Sciences said the growth in profit was a result of one new product, in addition to 2 products already commercialised during the first quarter, totaling 3 products under CRAMS (contract research and manufacturing services).
Zee Entertainment Enterprises jumped 5.44% to Rs 280.20. The stock hit a 52-week high of Rs 284.30 in intraday today, 11 November 2013.
Realty stocks declined. DLF (down 3.31%), HDIL (down 8.69%), Sobha Developers (down 0.59%) and Unitech (down 3.23%), declined.
PSU OMCs decline as a weak rupee will negate the impact of lower crude oil prices for PSU OMCs as the crude oil that refineries process is either imported or priced on import-parity. BPCL (down 3.49%), HPCL (down 3.83%) and Indian Oil Corporation (down 4.55%), edged lower.
Max India fell 2.11% after Q2 result. The company reported net profit of Rs 1.99 crore in Q2 September 2013 as against net loss of Rs 17.43 crore in Q2 September 2012. The Q2 result was announced after market hours on Friday, 8 November 2013.
Max India's total income rose 15.8% to Rs 214.16 crore in Q2 September 2013 over Q2 September 2012.
Commenting on the company's Q2 performance, Mr. Rahul Khosla, Managing Director, Max India said, Our Businesses of Life are positioned for sustained and profitable growth, and are setting the pace in their respective industries. These results are especially pleasing when evaluated against the backdrop of a generally challenging macroeconomic and regulatory environment. This positive financial performance, a healthy balance sheet and a comfortable liquidity position has led the board of directors to approve an interim dividend of 90%. I am confident that our commitment to core values and strategies will continue to deliver superior results in the future.
Mr. Mohit Talwar, Deputy Managing Director, Max India said, The liquidity position continues to be healthy at Rs 2300 crore across operating companies and the listed entity. This will ensure that the Group is well positioned to tap future growth opportunities.
Apollo Tyres jumped 4.05% after a US judge ruled that the Indian firm did not breach its obligation to close its $2.5 billion buyout of US-based Cooper Tire & Rubber Company. The company made the announcement during trading hours today, 11 November 2013.
Apollo Tyres said that a partial ruling on 8 November 2013, by Judge Sam Glasscock, III, Vice Chancellor of the Delaware Court of Chancery found that Apollo is not in breach of its merger agreement with Cooper Tire & Rubber Company. Furthermore, the Court found that Apollo has used reasonable best efforts to negotiate with the United Steel Workers (USW) and that, contrary to Cooper's claims, nothing in Apollo's conduct indicates buyer's remorse. Apollo said it continues to believe in the merits of the combination and is committed to finding a sensible way forward.
On 12 June 2013, Apollo Tyres announced that it would acquire Cooper, a company listed on the New York Stock Exchange, in an all-cash transaction valued at approximately $2.5 billion.
Later, Cooper accused Apollo of intentionally delaying the transaction and had gone to the US court to expedite the transaction. As per the terms of the bid, the deal can be terminated without any financial penalty after 31 December 2013.
Cooper in its filing with the court, on 4 October 2013, had blamed Apollo for delay in settling issues with some of its labour from USW union in the US plants. The USW represents Cooper employees at facilities in Findlay, Ohio and Texarkana, Arkansas. It said Apollo is also looking at reducing the deal price owing to labour issues at the company's US and China plants.
In its answer, Apollo had denied the allegations made by Cooper regarding the course of its negotiations with the USW and confirmed that it has worked diligently to reach a settlement with the USW to enable Cooper to overcome the USW injunction prohibiting Cooper from consummating the merger. Apollo said that conditions precedent to closing had not been satisfied because the marketing period for the financing, central to Cooper's claims in its complaint, had never commenced and that Cooper has failed to meet its contractual obligations.
Cooper is the 11th largest tyre company in the world by revenue and it supplies premium and mid-tier tyres worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.
The strategic combination of Apollo and Cooper will bring together two companies with highly complementary brands, geographic presence and technological expertise to create a global leader in tire manufacturing and distribution. If finalised, the pending merger will result in a strategic business combination that creates the seventh-largest tire company in the world.
CEAT rose 3.62% to Rs 245 after foreign fund Manulife Global FD-Asian Small Cap Equity Fund bought 2.5 lakh shares or 0.7% stake in CEAT at Rs 228.43 per share in a bulk deal on NSE on Friday, 8 November 2013.
Tata Communications surged 9.48% to Rs 286.40. The stock hit a 52-week high of Rs 289.50 in intraday today, 11 November 2013.
Ricoh India was locked at 20% upper circuit at Rs 71.50 on BSE after board of directors of the company approved delisting proposal. The announcement was made during trading hours today, 11 November 2013. Ricoh India said its board of directors at its meeting held today, 11 November 2013 approved a proposal of foreign promoters to delist shares of the company from the Bombay Stock Exchange (BSE). Japan's Ricoh plans to acquire upto 1.04 crore shares of Ricoh India from the public shareholders, representing 26.40% stake. Foreign promoters owned 73.6% stake in Indian unit as on 30 June 2013.
In the foreign exchange market, the rupee fell below the 63 level against the dollar as better than expected October US jobs report fueled concern the Federal Reserve may reduce monetary stimulus for the US economy sooner than expected. The partially convertible rupee was hovering at 63.28, compared with its close of 62.475/485 on Friday, 8 November 2013.
On the macro front, exports rose 13.47% to $ 27.27 billion in October 2013 over October 2012. Imports fell 14.5% to $ 37.82 billion in October 2013 over October 2012. Trade deficit stood at $10.55 billion in October 2013, lower than trade deficit of $20.21 billion in October 2012.
The government will unveil industrial production data for September 2013 tomorrow, 12 November 2013. Industrial output is projected to jump 3.7% in September 2013, as per the median estimate of the poll carried out by Capital Market. Index of industrial production (IIP) rose 0.6% in August 2013, showing moderation in growth from 2.8% growth recorded in July 2013.
Data on inflation based on the consumer price index (CPI) for October 2013 will also be unveiled tomorrow, 12 November 2013. The headline CPI inflation (combined) is projected to increase to 10% in October 2013, as per the median estimate of the poll carried out by Capital Market. The headline CPI inflation (combined) for September 2013 was placed at 9.84% (y-o-y), which came in higher than 9.52% (y-o-y) seen in August 2013.
European stocks edged higher on Monday, extending a fifth straight week of gains as China's industrial output growth unexpectedly accelerated. Key benchmark indices in France, Germany and UK rose 0.15% to 0.23%.
Most Asian stocks edged higher on Monday. Key benchmark indices in China, Singapore, Japan and Hong Kong rose 0.16% to 1.43%. Key benchmark indices in Taiwan, South Korea and Indonesia shed 0.38% to 0.78%.
China's industrial output rose a more-than-estimated 10.3% from a year earlier in October, according to data released Nov 9 by the National Bureau of Statistics. October inflation was a less-than-forecast 3.2%, producer prices fell 1.5% from a year earlier and retail sales rose 13.3%.
The meeting of China's leaders in Beijing will end tomorrow, 12 November 2013 to map out economic policies as the country heads for its slowest annual growth in more than two decades.
Trading in US index futures indicated that the Dow could gain 21 points at the opening bell on Monday, 11 November 2013. US stocks applauded a better-than-expected October jobs report and rose on Friday amid hopes a more buoyant economy will improve business for American companies over the long run.
American employers added 204,000 workers last month after a revised 163,000 gain in September that was larger than previously estimated, Labor Department figures showed Nov. 8. The increase in payrolls topped the most optimistic forecast in a survey of economists.
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