Intraday volatility continued with the barometer index BSE Sensex alternatively swinging between gains and losses in early afternoon trade. The Sensex fell below the psychological 18,000 mark, after regaining that level earlier in the day. The Sensex was down 29.73 points or 0.17%, off 121.73 points from the day's high and up 18.16 points from the day's low. The market breadth was positive.
Telecom pivotals saw divergent trend after sector bellwether Bharti Airtel reported a surprise fall in first quarter net profit on Wednesday, 3 August 2011. Aviation stocks rose as a fall in crude oil prices eased concerns about the impact of high jet fuel prices on operating costs of these companies. State-run oil marketing companies (PSU OMCs) rose as crude oil prices continued their recent downtrend. Bank stocks rose on bargain hunting after a recent slide triggered by worries that higher lending rates will crimp loan growth. HDFC rose after raising housing loan rates recently.
Index heavyweight Reliance Industries (RIL) was trading lower, reversing initial gains. Reliance Infrastructure advanced on reports the company has won regulatory approval to collect tariff arrears in Mumbai suburbs. Shares of cigarette maker ITC and auto pivotals declined on reports the government is considering a hike in excise duty on tobacco products and on diesel run cars to prevent an expected shortfall in tax revenues.
The market has witnessed a steep slide recently on concerns that higher interest rates will crimp corporate profit growth. The Sensex tumbled 930.74 points or 4.93% in seven trading sessions to a 5-1/2-week closing low of 17,940.55 on Wednesday, 3 August 2011, from a recent high of 18,871.29 on 25 July 2011, hit by the Reserve Bank of India's (RBI) aggressive rate hike at a policy review on 26 July 2011.
The market nudged higher in early trade as bargain hunting emerged after a recent steep slide. Volatility ruled the roost as the key benchmark indices retreated from intraday highs in morning trade. Intraday volatility continued as the key benchmark indices hit fresh intraday lows in mid-morning trade as weak Asian shares weighed on the sentiment. Intraday volatility continued with the Sensex alternatively swinging between gains and losses in early afternoon trade.
At 12:18 IST, the BSE Sensex was down 29.73 points or 0.17% to 17,910.82. The Sensex fell 47.89 points at the day's low of 17,892.66 in mid-morning trade. The index rose 92 points at the day's high of 18,032.55 in morning trade, its highest level since Tuesday, 2 August 2011.
The S&P CNX Nifty was down 10 points or 0.19% to 5,394.80. The Nifty hit a high of 5,434.50 in intraday trade, its highest level since Tuesday, 2 August 2011. The Nifty hit a low of 5,388.65 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,491 shares rose and 1,039 shares fell. A total of 121 shares remained unchanged.
The turnover on BSE amounted to Rs. 1123 crore by 12:25 IST compared with Rs. 865 crore by 10:25 IST
From the 30 share Sensex pack, 17 declined while the rest gained.
Index heavyweight Reliance Industries (RIL) slipped 0.15% to Rs. 823.90, off day's high of Rs. 831.65. The stock had hit a 52-week low of Rs. 818.15 in intraday trade on Tuesday, 2 August 2011, hit by disappointing Q1 June 2011 results. The prized KG-D6 fields of RIL produced 31% less than previously projected natural gas output in the April-June 2011 quarter, the Oil Ministry said recently. The average gas production during April-June 2011 from KG-DWN-98/3 (KG-D6) block was 48.60 million metric standard cubic meters per day (mmscmd), less than the approved Field Development Plan (FDP) rate of 70.39 mmscmd, the ministry said.
RIL's operating profit margin (OPM) declined sharply to 12.25% in Q1 June 2011 from 16.04% in Q1 June 2010 as weak performance from the oil & gas and petrochemicals businesses offset strong performance from the refining segment. RIL's net profit rose 16.69% to Rs. 5661 crore on 39.1% increase in net sales to Rs. 81018 crore in Q1 June 2011 over Q1 June 2010. The result was announced on 25 July 2011.
RIL's gross refining margin (GRM) surged to $10.3 a barrel from $7.3 a barrel in Q1 June 2010. Gas production from RIL's KG-D6 field off the east coast declined 18% to 156.2 BCF in Q1 June 2011 over Q1 June 2010. Production of gas condensate from the filed jumped 81.6% to 0.21 million barrels in Q1 June 2011 over Q1 June 2010. The company said gas sales have been prioritized as per government's directive with effect from 9 May 2011.
India's largest oil exploration firm by market capitalisation Oil & Natural Gas Corporation (ONGC) rose 0.18% on reports the company plans to commence oil and gas production from the Krishna Godavri basin in a month and start pumping hydrocarbons from another block in the offshore region next May 2012.
Aviation stocks rose as a fall in crude oil prices eased concerns about the impact of high jet fuel prices on operating costs of these companies. SpiceJet (up 2.51%), Jet Airways (India) (up 3.13%) and Kingfisher Airlines (up 0.45%), edged higher. Easing of crude oil prices may bring down prices of jet fuel, which accounts for over 50% of airlines' operating cost. Jet fuel prices are linked to crude oil prices.
State run oil marketing companies (PSU OMCs) rose as crude oil prices continued their recent downtrend. Indian Oil Corporation (IOC) (up 2.34%), HPCL (up 2.82%) and BPCL (up 1.78%), edged higher. Lower crude oil prices could reduce under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.
Crude oil extended its recent slide in Asian electronic trade on Thursday, 4 August 2011, as worries about economic growth sparked concern about future demand. US September 2011 crude futures were down 17 cents or 0.18% to $91.76 a barrel.
India's largest listed cellular services provider by sales Bharti Airtel shed 0.64%, extending Wednesday's over 1% decline triggered by a surprise fall in first quarter net profit on sequential basis reported by the firm during market hours on that day. Bharti's consolidated net profit as per International Financial Reporting Standards (IFRS) fell 13.2% to Rs. 1215.20 crore on 4.18% growth in total revenue to Rs. 16974.90 crore in Q1 June 2011 over Q4 March 2011.
Bharti Airtel said income before taxes fell 17.03% to Rs. 1719 crore in Q1 June 2011 over Q1 June 2010, mainly on account of higher interest outgo of Rs. 344 crore (due to the Africa acquisition and 3G investments in India), and 3G license fee amortization of Rs. 159 crore. The effective tax rate for Q1 increased to 29.9%, mainly due to reduction in tax holiday benefits in India, Bharti said in a statement.
The consolidated operating free cash flow was at Rs. 1357 crore in Q1 June 2011. Continued robust cash generation has resulted in improvement of the Net Debt Equity ratio to 1.20 in Q1 June 2011 compared with 1.38 on 30 June 2010.
In a post result statement Sunil Bharti Mittal, Chairman & Managing Director, Bharti Airtel said, Bharti Airtel has started this fiscal year on a stable note. Revenue growth has been steady across all geographies, with Africa recording a healthy sequential growth of approximately 6%, and annual growth of 21%. In India, the company's efforts in the area of cost efficiencies have helped arrest the margin decline. The new customer facing organization in India will see more agile and responsive teams in action. This will also give a fillip to growth in value added services, broadband, digital TV and airtel money. Overall, 2011-12 promises to be an exciting year of transformation.
India's second largest listed cellular services provider by sales Reliance Communications rose 2.13%, halting three-day fall, on bargain hunting.
Auto pivotals softened on reports the government is considering a hike in excise duty on diesel run cars to prevent the expected shortfall in tax revenues. A hike of Rs. 20000, Rs. 50,000 and Rs. 70,000 is being considered depending on the size of the car, varying from a small car to a big car, reports added.
India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (down 1.61%), Tata Motors (down 0.84%) and Maruti Suzuki India (down 0.34%), were the other losers from the auto pack.
Bike makers saw divergent trend. India's largest bike maker by sales Hero MotoCorp rose 0.96% while India's second largest bike maker by sales Bajaj Auto fell 1.21%.
India's largest cigarette maker by sales ITC shed 1.33% on reports the government is considering a hike in excise duty on tobacco products. The excise duty rates on cigarettes currently varies depending on the length of the cigarette.
Banking stocks rose on bargain hunting after a recent slide triggered by worries that higher lending rates will crimp loan growth. A number of commercial banks have raised lending rates recently after the central bank raised its key lending rate by a steeper-than-expected 50 basis points at a policy review on 26 July 2011.
India's second largest private sector bank by net profit HDFC Bank rose 0.09% and India's largest private sector bank by market capitalisation ICICI Bank advanced 0.21%. India's largest commercial bank by branch network State Bank of India (SBI) gained 0.57%.
India's largest mortgage finance lender by total income Housing Development Finance Company (HDFC) rose 0.96% as higher lending rates could help protect net interest margins. HDFC has revised its retail prime lending rate (RPLR) by 50 basis points (bps) on its loans with effect from 1 August 2011. HDFC said the hike in lending rates is in line with interest rates in the economy, which have hardened due to increase in the policy rates by 75 bps since June 2011.
Private sector power utility major Reliance Infrastructure advanced 2.14% to Rs. 572.55 on reports the company has won regulatory approval to collect tariff arrears in Mumbai suburbs. The company can now collect Rs. 2316 crore in tariff arrears. The firm has 27 lakh consumers in the city.
India's largest power generation firm NTPC lost 1.96% to Rs. 177.85 and was the top loser from the Sensex pack. The stock declined after the company's chairman Arup Roy Choudhury on Wednesday, 3 August 2011, said that the company's plans to acquire coal mines abroad have been hit by high valuations and proposed rule changes in Indonesia and Australia that could make the fossil fuel there more expensive. High coal prices have driven up valuations of mines. Also, the cost of coal produced will go up as Australia plans to levy a tax of A$23 ($24.79) for each metric ton of carbon emitted from 2012 and Indonesia is set to link the price of coal exported to international coal indexes this year.
NTPC, India's largest power producer, requires 164 million tons of coal this fiscal year through March to run its plants. The company, which meets part of its fossil fuel requirement through imports, has been scouting for overseas assets to secure raw material.
Adani Power rose 0.51% after net profit rose 54% to Rs. 177 crore on 132% rise in net sales to Rs. 819 crore in Q1 June 2011 over Q1 June 2010. The result was announced during market hours today. The power generation company's average realization declined to Rs. 2.82/kWh in Q1 June 2011 from Rs. 3.36/kWh in Q1 June 2010.
Indian Hotels rose 0.97% on expectations of strong Q1 results today, 4 August 2011. The owner of the Taj group of hotels, Indian Hotels, is seen reporting strong Q1 June 2011 results on the back of higher occupancy rates (OR) and higher average room rates (ARR). The re-opening of its Taj Heritage wing, Mumbai, will aid revenue growth. The bottom line will get a boost from lower interest costs post repayment of loans from warrants proceeds.
FIIs sold shares worth a net Rs. 869.69 crore on Wednesday, 3 August 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) bought shares worth Rs. 422.48 crore on that day.
The Q1 June 2011 earnings season is drawing towards a close. Investors are focusing on the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when Indian firms are witnessing cost pressures amid rising interest rates and staff costs.
Mundra Port and Special Economic Zone will announce its Q1 results today, 4 August 2011. Cipla and IL&FS Transportation Networks are set to announce Q1 results on Friday, 5 August 2011.
M&M announces Q1 results on Monday, 8 August 2011. ABB, Tata Communications, Mahindra Satyam, GMR Infrastructure and VIP Industries announce quarterly results on 9 August 2011. Tata Power and Rural Electrification Corporation unveil Q1 results on 10 August 2011. Tata Motors, Castrol India and Shipping Corporation of India unveil quarterly results on 11 August 2011. Tata Steel, Hindalco, Coal India, National Aluminium Company, Jaiprakash Associates and HPCL unveil Q1 results on 12 August 2011. Aditya Birla Nuvo and Shipping Corporation of India unveil Q1 results on 13 August 2011.
Food price index rose 8.04% and the fuel price index climbed 12.12% in the year to 23 July 2011, government data on Thursday showed. In the previous week, annual food and fuel inflation stood at 7.33% and 12.12%, respectively. The primary articles price index was up 10.99%, compared with an annual rise of 10.49% a week earlier.
The Reserve Bank of India (RBI) on Tuesday, 2 August 2011, tightened its rules on sales of derivative products, in a move aimed at preventing the mis-selling of these complex products to local firms. RBI said in a notification that no bank can be a market maker in a product that it can't price independently, even if it covers the risk from the deal with another bank immediately. A market maker is a financial middle-man, typically a bank, that helps the price discovery process and adds liquidity to the market by quoting both bid and ask prices for financial products.
The new rules prevent foreign banks from being market makers in a product if they can't price it locally. Banks must also now make sure that officials to whom they sell derivative products are backed by the board to execute such transactions, the RBI said. RBI didn't specify what derivatives are covered by the new rules.
The services sector expanded at its fastest clip in three months in July 2011, driven by solid expansion of new business, but input prices also rose faster, a survey showed on Wednesday, 3 August 2011. The HSBC Markit Business Activity Index, based on a survey of around 400 companies, rose to 58.2 in July from 56.1 in June, staying above the 50 mark that separates growth from contraction for the 27th consecutive month. The new business sub-index recorded its strongest growth since February, rising to 59.3 from 57.1, as demand improved and firms found new customers.
The economy will grow at 8.2% in the year to March 2012, but it faces a challenge in achieving the fiscal targets set in the annual budget, a top economic advisory panel said in a report released early this week. Headline inflation would remain close to 9% till October, before beginning to ease, and would be at 6.5% in March, the prime minister's Economic Advisory Council said.
Exports grew by an impressive 46% to $29 billion in June 2011, despite uncertainty in the US and European markets, the latest data showed. Merchandise exports had aggregated to $20 billion in June 2010. During the April-June quarter, overseas shipments grew by 46% to $79 billion, according to Commerce Ministry data released on Monday, 1 August 2011. Though imports grew by 42% to $37 billion in June, the trade deficit of $7.6 billion was almost half the level of $15 billion seen in May, lessening concerns over the country's balance of payments situation.
Growth in manufacturing sector fell for the third month in a row in July as a long series of interest rate hikes and faltering global demand weighed on new orders and output growth, a survey showed on Monday, 1 August 2011. The HSBC Markit Business Activity Index, based on a survey of around 500 companies, fell to a 20-month low of 53.6 in July from 55.3 in June, though it remained above the 50 mark that separates growth from contraction for the 28th consecutive month.
The Reserve Bank of India (RBI) raised its key lending rates by 50 basis points at a policy review on 26 July 2011, to tame high inflation. The RBI has raised its end March 2012 inflation target to 7% as against the previous estimate of 6%, saying inflation has been higher than its expectations. It kept its economic growth forecast of 8% for this fiscal year. The RBI revised downwards non-food bank credit growth projection to 18% for the year ending March 2012 (FY 2012) from 19% earlier.
Although the impact of past monetary policy actions is still getting transmitted, considering the overall growth and inflation scenario, there is a need to persevere with the anti-inflationary stance, the RBI said. Going forward, the monetary policy stance will depend on the evolving inflation trajectory, which, in turn, will be determined by trends in domestic growth and global commodity prices, the RBI said. A change in stance will be motivated by signs of a sustainable downturn in inflation, it added.
The uncertain global macro-economic environment poses a challenge for the domestic economy from the perspective of financing the current account deficit, RBI said. In this context, the composition of capital flows remains a concern. In recent months, some shift in composition of capital flows towards foreign direct investment (FDI) has been observed. This trend needs to be reinforced through policy actions to improve the quality of financing of the current account deficit, RBI said.
Most Asian stocks fell on Thursday, 4 August 2011, extending their recent losses triggered by worries about a slowdown in the global economy. Many of the regional markets reversed the gains they made earlier after a positive finish on Wall Street on Wednesday, 3 August 2011. The key benchmark indices in South Korea, Singapore, Indonesia Hong Kong and Taiwan fell by between 0.62% to 2.31%. Mainland Chinese shares rose. The Shanghai Composite index was up 0.21%
Japanese stocks rose with exporters getting a lift as Japan intervened in the foreign-exchange market to stem the yen's recent rise. The Nikkei 225 average was up 0.23%.
The Bank of Japan announced additional monetary easing Thursday, while keeping its policy interest-rate target range unchanged at 0 to 0.1%.
The Bank of England (BoE) is likely to leave its main interest rate at a record-low 0.5% on Thursday, 4 August 2011, amid weak economic growth in Britain and lingering debt strains in the neighbouring eurozone. The BoE is also set to decide against pumping more new money into the economy, with British inflation still far above the central bank's target rate. Also on Thursday, the European Central Bank (ECB) is tipped to keep its main interest rate at 1.50%, with inflation falling, business confidence down and markets nervous about debt contagion in the eurozone.
Trading in US index futures indicated that the Dow could gain 26 points at the opening bell on Thursday, 4 August 2011.
US stocks rose on Wednesday on speculation that the Federal Reserve might consider a new stimulus programme to boost the sagging economy. The Dow Jones Industrial Average gained 29.82 points or 0.25% at 11,896.44. The S&P 500 rose 6.29 points or 0.50% at 1,260.34 and the Nasdaq advanced 23.83 points or 0.89% at 2,693.07.
The US government's key monthly jobs report for July 2011 is due on Friday, 5 August 2011, and will be closely watched by investors to gauge the health of the world's biggest economy.
