Cautiousness ahead of the onset of the Q3 earnings season, weak Asian markets and fall in Indian ADRs on Friday pulled the market lower today. IT, telecom and auto shares led the fall. However select side-counters surged, and the market breadth remained quite strong.
The 30-share BSE Sensex lost 208.37 points or 1.5% to settle at 13,652.15. The barometer index came off the lower level after having lost as many as 260.65 points, to hit 13,599.87, at 12:01 IST. The S&P CNX Nifty shed 50 points or 1.2% to settle at 3,933.40.
Asian shares dropped on Monday, led lower by resources and financial stocks. Key benchmark indices in Hong Kong, South Korea, Singapore and Taiwan were down by between 0.9% to 1.2%. Tokyo's market was closed for a public holiday. There is widespread anticipation that the Bank of Japan will hike interest rates as early as next week.
US stocks closed lower on Friday (5 January) as a stronger-than-expected US job growth in December cast doubts on hopes for an early US interest rate cut. The Dow Jones industrial average fell 82.68 points, or 0.66%, to 12,398.01. The Standard & Poor's 500 Index was down 8.63 points, or 0.6%, at 1,409.71. The Nasdaq Composite Index ended down 19.18 points, or 0.78%, at 2,434.25.
The market-breadth showed strength. For 1,731 shares rising on BSE, 929 declined. Just 45 shares were unchanged. Gainers outpaced losers by a ratio of 1.86:1.
Select side-counters surged. Datamatics Tech (up 20% to Rs 64.80), HFCL Infotel (up 20% to Rs 22.50), KIC Metaliks (up 20% to Rs 62.40), Syngenta India (up 20% to Rs 398.25), JCT (up 15% to Rs 11.53), Elnet Tech (up 13% to Rs 141.30), Kinetic Motor (up 11.9% to Rs 44), TV Today Network (up 11.7% to Rs 93.60), Aksh Optifibre (up 11% to Rs 56), Ginni Filaments (up 10.8% to Rs 23.60), Mukta Arts (up 10% to Rs 57.50), and Zandu Pharma (up 10% to Rs 5905.30) advanced.
BSE Small-Cap index rose 59.09 points or 0.8% to settle at 7,250.64. BSE Mid-Cap index shed 24.66 points or 0.4% to 5,912.01. The much-awaited rally in small-cap and mid-cap shares has materiliased since late December 2006. Small-cap and mid-cap shares had underperformed the market after a sharp setback on the bourses in May-June 2006.
The BSE clocked Rs 3716 crore in turnover, compared to Friday’s Rs 4545 crore.
IT shares drifted lower on profit taking. Infosys shed 3% to Rs 2205. A block deal of 1.2 lakh shares was executed in the counter at Rs 2,215 per share. Infosys' BPO, the back-office unit, Monday announced a tie-up for offering hospitality industry outsourcing solutions. Infosys' BPO and New York-based HVS International, will jointly offer ways to improve productivity and optimise costs for global hospitality firms, the company said in a statement.
Satyam Computer shed 3% to Rs 486, while Wipro lost 2.8% to Rs 582. Satyam and Wipro are tracking a fall of 3% and 2.8%, respectively, in their ADRs.
Infosys flags off the earnings season on 11 Jan 2006. According to Citigroup’s Q3 IT sector preview, volume growth will remain strong for the IT sector in Q3, but an appreciation of the rupee against the US dollar will impact operating margins by 90 basis points. Citigroup expects a marginal uptick in pricing of the last few quarters to continue and opines that more clarity on price increases will be a key to the stocks' performance.
Another foreign brokerage Merrill Lynch expects another strong quarter for IT firms with a year on year 45% growth in combined net profit and 41% growth in combined revenue of the integrated IT services and BPO companies. `Despite almost 100 basis points margin erosion due to the rupee appreciation, we expect about 40 basis points EBITDA (earnings before interest, taxation, depreciation and amortisation) margin expansion for the sector overall, driven by scale economies, greater offshore mix, slight increase in pricing and absorption of wage hikes in previous quarter due the broadening of the employee mix’, it has stated in the Q3 earnings preview. `We see only limited upside to FY 2007 guidance given the rupee appreciation’, the report says.
A recovery in oil prices lifted ONGC. The stock gained 2.5% to Rs 919 and it was the top gainer from 30 Sensex stocks. US light crude rose 1 percent to $56.90 a barrel on Monday, stemming losses of up to 10 percent last week, as some OPEC members raised the prospect of deeper supply cuts by suggesting the group could meet as soon as next month. Oil prices were also lifted by supportive US jobs data, which eased fears of a sharp economic slowdown in the world's top consumer. The US Labour Dept. said a better than expected 1,67,000 jobs were created last month.
Auto shares drifted lower. Car major Maruti Udyog plunged 4% to Rs 896. The stock has lost 8% in the past three trading sessions from a recent high of Rs 974.55 on 3 January 2007. Bajaj Auto shed 2.6% to Rs 2709. Tata Motors shed 1% to Rs 923 in volatile trade. Tata Motors' ADR lost 3.4% on Friday to $20.86.
Cement maker ACC lost 3% to Rs 1022. A block deal of 2.06 lakh shares was struck in the counter on BSE at Rs 1036 per share.
Reliance Communications (down 2.8% to Rs 434.40) extended Friday’s 3.7% fall. Britain's Vodafone is to begin due diligence on Monday on Indian mobile phone firm Hutchison Essar, the Financial Times reported. The access to the books has been denied to Vodafone's Indian competitors, who are also bidding for the mobile teleservices operator. Bharti Airtel shed 2.2% to Rs 622.
Hindalco shed 2.4% to Rs 167 and Sterlite Industries dropped 2.4% to Rs 530. Metal prices remained under pressure on Monday, with copper extending last week’s fall as inventories continued to show signs of rising
State Bank of India lost nearly 3% to Rs 1210. State Bank of India said on Saturday that interest rates on domestic term deposits of Rs 15 lakh and above but less than Rs 1 crore, will be 8.25% across all maturities of 1 year and more. This rate will be on offer for a limited period, from Jan. 8 to March 31, the bank informed. At present, the deposit rates for amounts of Rs 15 lakh to less than Rs 1 crore, range between 7.75% for 1 - 3 years and 8.25% for 5 - 10 years.
ICICI Bank ended flat at Rs 910. ICICI Bank’s dollar-denominated, three-tranche debt offering has reportedly received strong response from investors. The transaction, expected to raise at least $300 million, has attracted orders worth over $2 billion and is likely to price on Tuesday during New York trading hours, reports suggest.
Reliance Industries shed 1% to Rs 1274.50. 7.4 lakh shares changed hands in the counter on BSE.
Ranbaxy gained 1.2% to Rs 418.80, extending its rally on expectations of strong Q4 December 2006 results. Ranbaxy’s board meets on 18 January 2007 to consider Q4 outcome. Dr Reddy’s Lab (up 0.1% to Rs 810.05), too, continued scoring on expectations of strong Q3 December 2006 results.
Triven Engineering dropped 1.7% to Rs 54.60. Triveni Engineering reportedly plans to export 20,000 tonnes of refined sugar soon to meet its obligations under a raw sugar import scheme.
Indiabulls Financial Services plunged 8% to Rs 277. As many as 11.5 lakh shares changed hands in the counter on BSE.
Dabur Pharma (up 2.5% to Rs 83.10) rose for the second day in a row after the company last Thursday launched its new nano technology based chemotherapy agent, Nanoxel, in the country.
Eicher Motors dropped 2.6% to Rs 357.80. The company said Monday its December sales of commercial vehicles were up by 6% at 2,419 units compared to the same month a year ago.
Eastern Silk Industries rose 0.3% to Rs 336.05. The company today reported a net profit of Rs 18.40 crore for the quarter ended December 2006 as compared to a net profit of Rs 10.93 crore for the quarter ended December 2005. Net sales rose 5.2% to Rs 125.14 crore from Rs 118.87 crore.
KLG Systel dropped 4% to Rs 363.95. The company’s net profit jumped 407.8% for the quarter ended December 2006 to Rs 7.11 crore from Rs 1.40 crore. Net sales rose 234% to Rs 40.99 crore from Rs 12.27 crore. The results hit the market during trading hours today.
Exide Industries gained 2.3% to Rs 39.85. A block deal of 5.03 lakh shares was registered in the scrip on BSE at Rs 39.90.
Zandu Pharma jumped 10% to Rs 5805.30 after the company fixed 20 January 2007 as record date for 1:3 bonus issue.
Television broadcaster TV Today rose 10.5% to Rs 92.50 after 7,80,325 shares changed hands in a block deal on the BSE.
Jewellery maker Gitanjali Gems rose by its maximum daily limit of 10 percent to Rs 245.70 after its board approved a preferential issue of 1.55 million equity shares on a private placement basis.
Gujarat Ambuja Exports jumped 9.2% to Rs 30.40 after it said its board would meet on Jan. 16 to consider a buyback of shares for up to 10 percent of the paid-up capital and free reserves.
Ashok Leyland dropped 2.2% to Rs 44.15. A block deal of 7,00,050 shares was executed in the counter on BSE at Rs 44.20 on BSE.
IPCA Labs rose 1.4% to Rs 625. A block deal of 1 lakh shares was executed at Rs 610 on BSE.
Manappuram General Finance & Leasing jumped 10% to Rs 56.15 after the company scheduled a board meeting on 15 Jan 2006, to consider a 1:1 bonus issue.
Software services provider SQL Star International gained 4% to Rs 46.20. The company's board will meet on 23 Jan to consider raising up to $15 million through an issue of securities in the domestic or global markets. The board will also consider acquiring an IT staffing company in the US, SQL said in a statement.
IFCI rose nearly 8% to Rs 14.10 after a block deal of 5.05 lakh shares was executed in the counter on BSE at Rs 13.99.
Textile firm Ritesh Industries jumped 5% to Rs 77.05, after the company said on Monday it had set up a joint venture with Ansal Properties and Infrastructure for a Rs 800 crore real estate project in Ludhiana.
Textile firm Spentex Industries rose 2.5% to Rs 70.50. The company will issue nine shares for every 10 held in Indo Rama Textiles, in which Spentex acquired 84.02% stake last year. Indo Rama Textiles rose nearly 7% to Rs 60.50.
Cairn India lists on BSE and NSE tomorrow. The issue had managed to scrape through in a volatile market in December 2006. The company had priced the IPO at lower end of the Rs 160 to Rs 190-price band.
In the near term, Q3 December 2006 results and budget expectations will dictate trend on the bourses. Market men expect tax cuts in the budget due to government’s comfortable position with its finances. India has to make its tax regime more liberal, phase out exemptions and switch over to a goods and services tax (GST), Prime Minister Manmohan Singh said on Monday. Singh added the cash-strapped government needed to maintain fiscal discipline, while taking steps to promote growth.