Market Report 22 July 2009
The key benchmark indices dropped, reversing intraday 2% gains, as investors booked profits after recent sharp rally. The BSE 30-share Sensex fell 219.37 points or 1.46%, off close to 495 points from the day's high and up close to 55 points from the day's low. Index heavyweight Reliance Industries (RIL) slipped. Capital goods, power, IT stocks fell.
The barometer index BSE Sensex fell below the psychological 15,000 mark. Weak European markets and lower US index futures soured sentiment. The market breadth was negative compared to a strong breadth earlier in the day. Concerns over the progress of India's annual monsoon triggered profit taking after a recent strong rally in share prices.
India's largest power equipment maker by sales Bharat Heavy Electricals and India's largest dedicated housing finance company by sales, HDFC dropped despite good Q1 results announced during trading hours. India's largest oil exploration firm by revenue ONGC rose ahead of its Q1 June 2009 results tomorrow, 23 July 2009.
The market was volatile. The market surged in early trade tracking firm global stocks. Reports that the government can fetch a large sum from divestment this year also aided the surge in equities. The market extended gains in morning trade with the barometer index BSE Sensex hitting its highest level in more than a month. The market pared gains in early afternoon trade. The Sensex slipped into the red and fell below the psychological 15,000 mark later as lower European stocks and fall in US index futures soured sentiment. The market cut losses in mid-afternoon trade.
The BSE Sensex has lost 347.89 points or 2.29% in the last two trading sessions. Before the two-day slide, the the market had surged on the back of good initial batch of Q1 June 2009 results. From a low of 13,400.32 on 13 July 2009, the Sensex had risen 1,790.69 points or 13.36% in just five trading sessions to 15,191.01 on Monday, 20 July 2009.
The Sensex is up 5,195.81 points or 53.85% in calendar year 2009 as on 22 July 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 6,682.72 points or 81.89% as on 22 July 2009.
The Q1 June 2009 results announced so far have encouraging, with lower costs helping bottomline growth. The combined net profit of 283 companies rose 52.1% Rs 15,199 crore on 11.7% growth in sales to Rs 1,13,379 crore in Q1 June 2009 over Q1 June 2008.
New flow on divestment may keep market firm in the coming months. The steel ministry has reportedly initiated steps to sell small stakes in profit-making state-run firms Manganese Ore India (MOIL) and NMDC (formerly National Mineral Development Corporation), which it estimates could fetch up to Rs 25,000 crore. While the ministry has cleared a proposal to divest 10% in unlisted MOIL through an initial public offering (IPO), a proposal to divest 8-20% stake in listed NMDC is under its active consideration, report said.
The Union Budget, presented by finance minister Pranab Mukherjee on 6 July 2009, refrained from making any major commitment and proposed a modest disinvestment target of Rs 1,120 crore for the current financial year, although the government clarified later that there could be more sell-off proposals later in the year.
But weak rains is a cause for concern. The likely emergence of El Nino, the name given to the warming of the Pacific Ocean and which often influences the Indian monsoon adversely, coupled with the failure of the monsoon to gather momentum in the key north-western agricultural belt, has added to the worry. Under the circumstances, the assertion by the India Meteorological Department (IMD) that much of the rain deficit in June will be made up in July (which is mostly over) and August has fetched little results.
More than two-thirds of the people live in villages and 60 % of the farm land depends on the annual rains. While some sense an imminent drought, resulting in a poor kharif harvest, the agriculture ministry still hopes that agricultural production will be in the normal range. The Finance Ministry is worried, as a drought is the last thing it would like to cope with during an economic downturn.
Meanwhile, Junior trade minister Jyotiraditya Scindia said today that India is unlikely to meet $200 billion export target for FY 2010. He said shrinking global demand is affecting textile, leather, gems and jewellery exports.
India's direct tax receipts in Q1 June 2009 rose 3.65% to Rs 59,465 crore. Corporate tax receipts in the same period rose 3.31% to Rs 35,709 crore an official of the Central Board of Direct Taxes said. Income tax receipts were up 4.38 % to Rs 24,564 crore.
European shares fell in choppy trade on Wednesday, ending a seven-day winning run as profit taking emerged after recent surge. Analysts cautioned about earnings expectations. The key benchmark indices in Germany, UK and France were down by between 0.09% to 0.18%.
Asian stocks rose today led by material producers and electronics makers, amid mounting speculation a global recovery will boost earnings. Key benchmark indices in China, South Korea, Hong Kong, Japan, and Taiwan rose by between 0.34% to 2.6%. The key benchmark indices in Hong Kong and Singapore were down by between 0.14% to 1.3%.
Trading in the US index futures indicated Dow could fall 41 points at the opening bell today, 22 July 2009.
US markets ended with modest gains after a late rally on Tuesday, 21 July 2009. The Dow gained 67.79 points, or 0.8%, to 8,915.94. The S&P 500 index rose 3.45 points, or 0.4%, to 954.58. The Nasdaq rose 6.91 points, or 0.4%, to 1,916.20. In key corporate earnings after the bell, Apple posted a quarterly profit way past Wall Street forecasts on strong sales of MAC computers and improved margins. The popular search engine, Yahoo's second-quarter profit rose 8% boosted by the company's cost-cutting measures.
The BSE 30-share Sensex was down 219.37 points or 1.46% at 14,843.12. At the day's high of 15,369.42, Sensex rose 306.93 points in mid-morning trade, its highest level since 12 June 2009. At the day's low of 14,786.58, the Sensex fell 275.91 points in late trade.
The S&P CNX Nifty was down 70.20 points or 1.57% to 4,398.90. Nifty July 2009 futures were at 4413.15, at a premium of 14.25 points as compared to the spot closing of 4398.90. Turnover in NSE's futures & options (F&O) segment spurted to Rs 91,641.08 crore from Rs 65,459.06 crore on Tuesday, 21 July 2009.
BSE clocked a turnover of Rs 6,643 crore, higher than Rs 6,215.28 crore on Tuesday, 21 July 2009.
The market breadth, indicating the overall health of the market turned negative from strong breadth earlier in the day. On BSE, 1,227 shares rose as compared with 1373 that fell. A total of 98 shares remained unchanged. From the 30 shares Sensex pack, 26 fell and rest rose.
The BSE Mid-Cap index was down 0.97% and the BSE Small-Cap index was down 0.35%. Both the indices outperformed the Sensex.
All the sectoral indices on BSE were in red. The BSE PSU index (down 0.08%), the BSE Realty index (down 0.24%), the BSE Consumer Durables index (down 0.44%), the BSE FMCG index (down 0.65%), the BSE Oil & Gas index (down 0.75%), the BSE Bankex (down 1.23%), the BSE Healthcare index (down 1.3%), outperformed the Sensex.
The BSE Capital Goods index (down 1.87%), the BSE Auto index (down 1.61%), the BSE Power index (down 1.6%), the BSE IT index (down 1.6%), the BSE TECk index (down 1.54%), the BSE Metal index (down 1.45%), underperformed the Sensex.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 1.99% to Rs 1,977.30. The stock came off the day's high of Rs 2,056.30. The Supreme Court on Monday, 20 July 2009, asked the energy giant and former group firm Reliance Natural Resources (RNRL) why a gas pact between the two should not be cancelled. The court has scheduled next hearing on the dispute over the gas supply to Reliance Natural Resources (RNRL) on 1 September 2009.
RNRL has asked the Supreme Court to dismiss the government's affidavit on the dispute, even as the petroleum ministry has suggested that the court treats the pact between the two brothers null and void. The dispute concerns supply of Natural Gas from RIL's field, off the Andhra Pradesh coast, as also the price at which Reliance Natural Gas will get the fuel for power projects within the group.
In reply to the lawsuit filed by Reliance Industries challenging the Bombay High Court order, RNRL has said the government has no role to play in the private gas sharing dispute, and certainly not as a party to the row. The government, however, has said that the country's interest must be taken into consideration first and that cannot be held to ransom by a dispute between two industrialists or a previous, private pact between them.
India's largest oil exploration firm by revenue ONGC rose 4.6% ahead of its Q1 June 2009 results on 23 July 2009. Recent reports suggested ONGC has hired Citigroup to advise it on a bid for Kosmos Energy's stake in an oil field in Ghana in a deal that could be worth between $3 billion and $5 billion.
India's largest dedicated housing finance company by sales, HDFC fell 4.43% even as net profit rose 20.68% to Rs 564.92 crore on 22.86% rise total income to Rs 2,849.07 crore in Q1 June 2009 over Q1 June 2008. The lender announced its result during late trade today.
HDFC has reportedly cut lending rates for new customers by 25-50 basis points. The financial institution has restructured its loan baskets to create a new product where loans up to Rs 15 lakh are available at 8.75% as against 9.25% earlier.
India's largest electric equipment maker by sales Bharat Heavy Electricals (BHEL) fell 2.89% even as net profit rose 22.41% to Rs 470.59 crore on 27.64% rise in total income to Rs 5,898.51 crore in Q1 June 2009 over Q1 June 2008. Bhel outstanding order book stood at Rs 1,24,000 crore. The company announced the result during market hours today.
India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 1.63%. The company, last week, stood by its stated outlook of 25% growth in order inflows for the current year even as the first quarter ended with a negative note. At the time of announcing Q1 June 2009 results, L&T had during trading hours on Thursday, 16 July 2009 said its order inflow was down 22 % in Q1 June 2009 over Q1 June 2008. The company's order backlog at the end of the June quarter was Rs 71, 650 crore ($14.7 billion).
Other capital goods stocks, Thermax, Siemens, ABB, Crompton Greaves, fell by between 0.23% to 5.41%.
Some cement stocks fell on profit taking after a recent rally triggered by a thrust on infrastructure sector in the Union budget 2009-2010. Ultratech Cement fell 3.28% even as net profit rose 61.41% to Rs 427.77 crore on 30.5% rise in total income to Rs 1,987 crore in Q1 June 2009 over Q1 June 2008. The company announced the results during trading hours on Tuesday
ACC and Grasim Industries fell by between 2.02% to 3.32%.
Construction stocks too fell. Era Infra Engineering, Hindustan Construction Company, IVRCL Infrastructure & Projects, JP Associates fell by between 0.11% to 4.29%.
Finance Minister Pranab Mukherjee on 6 July 2009, provided a thrust on various infrastructure projects in the Budget which may result in increase in orders for construction firms and help boost cement demand. The government announced more spending for urban, water and road projects. The allocation to National Highway development program allocation was increased 23% to Rs 15948 crore.
IT stocks fell on profit taking reversing early gains triggered by better-than-expected Q1 June 2009 result by India's third largest IT exporter by sales Wipro. Wipro fell 1.52%. Wipro's consolidated net profit as per Indian accounting rules rose 0.54% to Rs 1015.50 crore on 2.5% fall in sales to Rs 6289.10 crore in Q1 June 2009 over Q4 March 2009. The company announced the results before trading hours today.
Wipro expects 0.91% to 1.9% growth in consolidated revenue from IT Services at between $1035 million to $1053 million in Q2 September 2009 over Q1 June 2009. The guidance is based on constant currency exchange rates. Its American depository receipt (ADR) fell 1.17% on Tuesday, 21 July 2009.
India's largest IT exporter by sales TCS fell 2.42%. The company's net profit rose 15.27% to Rs 1276.44 crore on 0.12% fall in sales to Rs 5609.60 crore in Q1 June 2009 over Q4 March 2009. The company announced the result after trading hours on Friday, 17 July 2009.
India's largest IT firm by sales Infosys fell 1.23%. The government has launched a Government-to-Business (G2B) services e-biz project with Infosys as the technology partner. The project is among the 27 Central, State and Integrated Mission Mode Projects (MMPs) under the National E-Governance Plan (NEGP).
Power stocks reversed early gains triggered by strong response to Tata Power Company's global depository receipts. Tata Power Company fell 0.75% to Rs 1,120.40. The stock was volatile. It hit a high of Rs 1,160 and low of Rs 1,115. Tata Power Company during trading hours today, 22 July 2009, said it has raised $335 million from an issue of global depository receipts (GDR). The company said a strong investor responce enbale the company to raise GDR issue size to $335 million from $250 million.
Other power stocks, Reliance Power, Reliance Infrastructure, Power Grid Corporation of India, fell by between 1.18% to 3.36%.
Bank stocks fell on profit taking reversing intraday gains. Finance Secretary Ashok Chawla on 17 July 2009, said the government will introduce seven bills in parliament, including proposals for pension and banking reforms and efforts to raise the foreign investment limit in insurance companies.
India's largest private sector bank by net profit ICICI Bank fell 1.44% to Rs 760.85 as its American depository receipt (ADR) fell 2.16% overnight. The stock came off the day's high of Rs 807.
India's biggest bank in terms of branch network State Bank of India (SBI) fell 0.87%. Finance secretary Ashok Chawla said the Centre will seek Cabinet approval to dilute government stake in the state-run bank.
India's second largest private sector bank in terms of operating income HDFC Bank fell 1.08% as its ADR fell 0.72% overnight. The bank on Monday, 20 July 2009, slashed its benchmark lending rate by 25 basis points to 15.75%. The cut in lending rate follows the reduction in the fixed deposits rate effective from 18 May 2009, the private sector bank said.
FMCG firms fell on concerns over the India's annual monsoon. FMCG firms derive substantial revenue from rural sector. ITC, Hindustan Unilever, REI Agro and United Spirits fell by between 0.3% to 5.36%.
Some realty stocks rose on government's thrust on the housing sector in the Budget. Housing Development & Infrastructure, Omaxe, DLF, Sobha Developers rose by between 0.27% to 3.58%.
Select auto shares slipped on profit taking. India's largest commercial vehicle maker by sales Tata Motor fell 0.79%. India's largest tractor maker by sales Mahindra & Mahindra fell 1.43%. India's largest small car maker by sales Maruti Suzuki India fell 1.83% ahead of its Q1 June 2009 result tomorrow, 23 Jul y 2009.
Unitech clocked the highest volume of 2.38 crore shares on BSE. Cals Refineries (2.19 crore shares), Mahindra Satyam (2.17 crore shares), Suzlon Energy (1.97 crore shares) and Ispat Industries (1.6 crore shares) were the other volume toppers in that order.
Tata Steel clocked the highest turnover of Rs 237.15 crore on BSE. ICICI Bank (Rs 220.23 crore), Reliance Capital (Rs 219.15 crore), DLF (Rs 214.72 crore) and Housing Development & Infrastructure (Rs 205.08 crore) were the other turnover toppers in that order.