Market drifts lower as caution prevails ahead of Q4 GDP data

The key benchmark indices registered small losses, snapping last two days' gains, as caution prevailed ahead of Q4 March 2011 GDP growth data. Index heavyweight Reliance Industries (RIL) edged lower. The BSE Sensex was down 34.04 points or 0.19, up close to 30 points from the day's low and off close to 150 points from the day's high. The market breadth was positive.

M&M slumped more than 5% on uninspiring Q4 results. Most other auto stocks, too, declined. Hindalco Industries edged lower on profit taking after Friday's steep rally. Banking stocks rose for the third straight day. Indian Oil Corporation (IOC) declined on weak Q4 results. BPCL fell on profit taking after reporting good Q4 results.



The market pared gains after a firm start. The market soon regained strength. The market once again pared gains to hit fresh intraday low in morning trade. The key benchmark indices reversed direction and slipped into the red to hit fresh intraday low in mid-morning trade. The market cut losses in early afternoon trade. The key benchmark indices hovered near the flat line after swinging between positive and negative zone in afternoon trade. The key benchmark indices hovered in negative zone in mid-afternoon trade as RIL extended initial losses. The market moved in a range in late trade.

The BSE Sensex was down 34.04 points or 0.19% to 18,232.06. The Sensex jumped 114.07 points at the day's high of 18,380.17 in early trade, its highest level since 20 May 2011. The index fell 66.58 points at the day's low of 18,199.52 in mid-morning trade.

The S&P CNX Nifty was down 3 points or 0.05% to 5,473.10. The Nifty hit high of 5,509.30 in early trade, its highest level since 20 May 2011.

The BSE Mid-Cap index rose 0.85% and the BSE Small-Cap index gained 0.55%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2456 crore, lower than Rs 3237.72 crore on Friday, 27 May 2011.

The market breadth, indicating the health of the market, was positive. On BSE, 1,646 shares advanced while 1,150 shares declined. A total of 109 shares remained unchanged.

Among the 30-member Sensex pack, 16 stocks fell while the rest of them rose.

Index heavyweight Reliance Industries (RIL) fell 0.7% to Rs 939.70, after gyrating between the day's high of Rs 953 and the day's low of Rs 935.30. RIL is reportedly buying regasified liquified natural gas (R-LNG) from Royal Dutch Shell and Petronet LNG at double the price. The move comes in the wake of shortage of natural gas from its D6 fields in the Krishna-Godavari (KG) basin.

India's largest state-run oil & gas exploration firm by sales ONGC fell 1.63%. The stock declined on profit booking after advancing 7.74% in the prior two trading days. The company announces its Q4 results today.

BPCL fell 0.43% on profit taking after the company announced during market hours today that net profit rose 32.99% to Rs 935.18 crore on 20.5% rise in net sales to Rs 45251.51 crore in Q4 March 2011 over Q4 March 2010.

Indian Oil Corporation fell 0.25% after the company announced during market hours today that net profit declined 29.72% to Rs 3905.16 crore on 31,21% rise in net sales to Rs 87320.91 crore in Q4 March 2011 over Q4 March 2010.

Banking stocks rose for the third straight day. India's largest private sector bank by net profit ICICI Bank gained 0.42%. The bank announced on 20 May 2011 that it has successfully priced issue of 5.5 year $1 billion international bond offering. The bonds carry a coupon rate of 4.75%.

India's second largest private sector bank by net profit HDFC Bank gained 0.69%. The bank raised its base rate by 55 basis points (bps) to 9.25% per annum and prime lending rate (PLR) by 50 bps to 17.75% effective 12 May 2011.

India's largest commercial bank by branch network State Bank of India (SBI) rose 0.07% on bargain hunting after recent steep losses triggered by weak Q4 results. Net profit slumped 98.88% to Rs 20.88 crore on 18.07% rise in total income to Rs 26536.84 crore in Q4 March 2011 over Q4 March 2010. The result was announced on 17 May 2011.

Reliance Communications rose 2.94%, reversing initial losses ahead of its Q4 results today.

Power generation major Reliance Infrastructure (R-Infra) slipped 0.31%, on uninspiring financial performance for the year ended March 2011. The company announced after market hours on Friday, 27 May 2011, that consolidated net profit rose 2% to Rs 1552 crore on 4% rise in total operating income to Rs 15408 crore in the year ended March 2011 over the year ended March 2010. The company said it remains debt free at the net level and enjoys top end ratings from CRISIL and Fitch.

The company said it is developing 11 road projects worth Rs 12000 crore and three metro rail projects in Mumbai and Delhi worth about Rs 16000 crore. The Delhi metro rail project has already become operational. The company said the order book of its engineering, procurement and construction (EPC) division stood at Rs 29635 crore as on 31 March 2011.

Cigarette maker ITC shed 0.79% on reports the Union Ministry for Health and Family Welfare has cleared the new pictorial warnings for implementation for tobacco products packages. The new notification issued on 27th May 2011 provides for strong pictorial warnings for smoking (cigarettes, bidis, cigars etc) and smokeless or chewing forms of tobacco products. A set of four pictures each of lung and oral cancer have been notified and will come into effect from 1 December 2011. The warnings will be rotated every two years from then onwards.

Realty major DLF gained 2.58%. DLF, last week, said it is focusing on high margin residential projects. In the commercial leasing segment, the company's strategy is to increase average rentals and focus on leasing of semi-finished and ready-to-occupy properties. DLF also said it intends to strengthen operational cash flows and enhance momentum on non-core divestments. The company said it will moderate investments in land aggregation and capex. DLF said it has raised its overall target for asset divestments to Rs 10000 crore from Rs 4500 crore (ex wind power) previously.

DLF said the genuine actual user consumer/corporate demand both in both the residential and commercial leasing segments continues to be healthy. However, speculative demand has petered out and investment demand has slowed down considerably as the financing cost equation has changed for the worse, the realty major said. DLF said product pricing by developers will be done keeping the current/future inflationary trends in mind in an attempt to retain product profitability/margins.

Unitech rose 4.39% after the company said at the time of announcing its consolidated results for the year ended March 2011 (FY 2011) on Sunday, 29 May 2011, that it is targeting sales bookings of Rs 5000 crore for the year ending March 2012 (FY 2012), a projected growth of 15.66% over sales bookings of Rs 4323 crore in the year ended March 2011 (FY 2011). The company said it has a healthy balance sheet with a real-estate net debt to equity ratio of 0.46. As of 31 March 2011, the company had a net worth of Rs 11614 crore. The company's debt, net of cash, reduced by Rs 228 crore in FY 2011, it said.

Unitech also said that the ongoing telecom matter pertains to Unitech Wireless Tamilnadu (Uninor), which is a separate legal entity engaged in the telecom business, and will not impact Unitech (the real estate company). Unitech said it will continue to focus on its real estate business in the normal course.

Pharma major Cipla surged 3.55% and was the top gainer from the Sensex pack. Recent reports indicated that the company has received the final approval for abbreviated new drug application (ANDA) from US FDA (Food and Drug Administration) for the Risperidone tablets in multiple strengths of 0.25 mg, 0.5 mg, 1 mg, 2 mg, 3 mg, and 4 mg.

Sun Pharmaceuticals Industries gained 4.46% after consolidated net profit rose 12.2% to Rs 442.75 crore on 35.5% surge in net sales to Rs 1463.28 crore in Q4 March 2011 over Q4 March 2010.

IT stocks were mixed. India's second largest software services exporter Infosys fell 0.28%. The IT firm last week said it had received a subpoena from a grand jury in a US district court that requires the company to provide certain documents and records related the company's sponsorships for and uses of B1 business visas. Infosys said it intends to comply with the subpoena and to cooperate with the investigation.

India's largest software services exporter TCS gained 1.03%, with the stock gaining for the third straight day after company announced during market hours today that it has unveiled the next generation treasury solution and that leading private bank HDFC Bank will harness this integrated platform for greater efficiency.

India's third largest software exporter Wipro rose 0.24%, with the stock gaining for the second straight day. Wipro Infrastructure Engineering -- a division of company has signed an agreement with Spanish Company CESA for the manufacture of precision engineered components for the aerospace and defence sector. The agreement involves transfer of technology as well as manufacturing workload for aerospace actuators and related precision engineering components from CESA to Wipro. The announcement was made last week.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 5.34% and was the top loser from the Sensex on muted Q4 March 2011 results. The company said during market hours today that net profit rose 6.4% to Rs 606.50 crore on 27.3% rise in gross revenue and other income to Rs 7391.20 crore in Q4 March 2011 over Q4 March 2010. Regarding the future outlook, M&M said with both input costs and interest rates rising, the current economic environment is quite challenging. The company said it expects to rise to this challenge through continuous focus on new product introduction, process innovation and cost control.

Most auto stocks fell ahead of May 2011 monthly vehicle sales figures that will start trickling from Wednesday, 1 June 2011. India's largest car maker by sales Maruti Suzuki India declined 0.54%. India's top bike maker by sales Hero Honda Motors shed 0.8%.

India's largest commercial vehicles (CV) maker by sales, Tata Motors fell 0.96%, extending Friday's 6.25% losses triggered by cautious future outlook from the auto major. Tata Motors said at the time of announcing the year ended March 2011 (FY 2011) results after trading hours on Thursday, 26 May 2011, that the current macro economic factors like high inflation, rising interest rates, slower industrial growth have the potential to adversely impact CV demand. The company also said that commodity prices and concerns about rising costs continue for the CV division.

Tata Motors on Saturday, 28 May 2011, launched its budget car Tata Nano in Sri Lanka. The company said it is also introducing five new commercial vehicles in Sri Lanka viz. The Tata Divo luxury coaches and semi low-floor air-conditioned Tata Marcopolo buses for passenger transportation and, for cargo movement, the Tata Prima 4928 tractor-trailor, Tata 1618 truck and the Tata Super Ace, a high-end variant from the Tata Ace family. Tata Motors is a market leader in commercial vehicles in Sri Lanka.

India's second largest bike maker by sales Bajaj Auto rose 1.19% with the stock extending two days' gains. Net profit surged 164.89% to Rs 1400.39 crore on 23.54% rise in total income to Rs 4199.97 crore in Q4 March 2011 over Q4 March 2010. Huge extraordinary (EO) income boosted Bajaj Auto's net profit in Q4 March 2011. The result was announced on 18 May 2011.

Metal stocks were mixed after LMEX, a gauge of six metals traded on the London Metal Exchange gained 1.88% on Friday, 27 May 2011. Sesa Goa, Hindustan Zinc, JSW Steel and Sterlite Industries gained by between 0.14% to 2.32%. Sail and Jindal Steel & Power fell 1.22% and 0.96%, respectively.

Public sector aluminum producer National Aluminum Company jumped 6.65%. The company announced after market hours today that net profit declined 18.18% to Rs 305.26 crore on 12.26% rise in total income to Rs 1922.67 crore in Q4 March 2011 over Q4 March 2010.

India's largest steel maker by sales Tata Steel fell 0.85% on profit taking. The stock had gained during the last two trading sessions, boosted by turnaround results for the year ended March 2011 (FY 2011). The company reported consolidated net profit of Rs 8982.69 crore in the year ended March 2011 compared with a net loss of Rs 2099.22 crore in the year ended March 2010. The company's total income rose 15.59% to Rs 119734.10 crore in the year ended March 2011 over the year ended March 2010. The result was announced after trading hours on Wednesday, 25 May 2011.

Hindalco Industries fell 2.33% on profit taking after Friday's 5.78% rally triggered by turnaround results from its US unit -- Novelis Inc. Novelis reported net profit of $50 million for Q4 March 2011 as against a net loss of $1 million for Q4 March 2010. Top-line jumped 22.3% to $2.96 billion in Q4 March 2011 over Q4 March 2010. The turnaround result was largely due to higher prices and portfolio optimization.

Hindalco today, 30 May 2011, said it is set for quantum growth leap ahead on the back of large expansion projects being currently implemented by the company.

NMDC jumped 3.22% as net profit surged 96.9% to Rs 2098.62 crore on 90.1% rise in sales to Rs 3769.75 crore in Q4 March 2011 over Q4 March 2010. The company announced the Q4 results after trading hours on Friday, 27 May 2011.

Aanjaneya Lifecare clocked highest volume of 96.47 lakh shares on BSE. Cals Refineries (68.30 lakh shares), Sanghvi Forging (55.01 lakh shares), Lanco Infratech (47 lakh shares) and HFCL (46.80 lakh shares) were the other volume toppers in that order.

Aanjaneya Lifecare clocked highest turnover of Rs 307.52 crore on BSE. State Bank of India (Rs 91.88 crore), VIP Industries (Rs 56.72 crore), ARSS Infra (Rs 55.79 crore) and Sanghvi Forging (Rs 53.17 crore) were the other turnover toppers in that order.

On the macro front, recent data showing gain in food prices in mid-May 2011 will increase pressure on the Reserve Bank of India (RBI) to raise policy rates when it undertakes mid-quarter monetary policy review on 16 June 2011. The government unveils Q4 March 2011 GDP data on Tuesday, 31 May 2011. The data could provide cues on the likely monetary policy stance of the central bank at the mid-June 2011 review.

Meanwhile, the annual monsoon rains have reportedly hit Kerala two days earlier than expected, boosting prospects for a harvest that could spur Asia's third-largest economy. The India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA).

Good rains may help ease food inflation and boost rural income. Rainfall that comes within 96% to 104% of the long-term average is considered a normal monsoon season, but this alone doesn't guarantee a good crop. The timing and spread of the rains are equally important. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector, which lacks irrigation facilities on more than half its farm land. Monsoon rains usually enter India's mainland through the southern state of Kerala in the first week of June, gradually progressing to cover most of central and northern India by July, before retreating in September.

European markets held positive zone. The key benchmark indices in Germany and France were by 0.45% and 0.14%, respectively. The stock markets in UK were closed for a spring bank holiday.

Asian stocks were mixed on Monday. The key benchmark indices in China, Japan, Indonesia and South Korea fell by between 0.14% to 0.31%. The key benchmark indices in Singapore, Taiwan and Hong Kong rose by between 0.16% to 0.29%.

US markets are closed on Monday, 30 May 2011, for Memorial Day.