Sensex, Nifty at 5-week closing lows on US debt worries

Key benchmark indices reached five-week closing lows on weak global stocks. The market extended losses for the fourth day in a row in what was a choppy trading session. The market breadth, indicating the overall health of the market, was weak. US and euro-zone debt worries weighed on the sentiment as stocks fell across the globe. The BSE Sensex was down 12.32 points or 0.07%, up close to 65 points from the day's low and off close to 135 points from the day's high. Index heavyweight Reliance Industries (RIL) hit 52-week low amid high intraday volatility.



ICICI Bank gained on strong Q1 results. Telecom shares rose on renewed buying. Idea Cellular surged to 52-week high on strong operational performance in the first quarter. Bharti Airtel, too, hit 52-week high. Realty stocks extended recent losses triggered by worries that higher interest rates could dent demand for residential and commercial properties. Jindal Steel & Power (JSPL) slumped after weak Q1 result. Many other metal stocks declined. Cigarette major ITC hit record high on strong Q1 results.

The market recovered soon after hitting its lowest level in more than a month at the onset of the trading session. The market surged to fresh intraday high in morning trade. The market once again slipped into the red in mid-morning trade on US debt worries. The market was marginally lower after trimming losses in early afternoon trade. Key benchmark indices once again entered positive terrain in afternoon trade. The market extended gains in mid-afternoon trade as ICICI Bank's strong Q1 results boosted sentiment. The market once again slipped into the red in late trade as index heavyweight RIL dropped.

The BSE Sensex lost 12.32 points or 0.07% to settle at 18,197.20, its lowest closing level since 23 June 2011. The Sensex rose 124.75 points at the day's high of 18,334.27 in morning trade, its highest level since Wednesday, 27 July 2011. The index fell 77.66 points at the day's low of 18,131.86 in early trade.

The S&P CNX Nifty was down 5.75 points or 0.1% to 5,482, its lowest closing level since 24 June 2011. The Nifty hit low of 5,453.95 in intraday trade. The Nifty hit a high of 5,520.30 in intraday trade, its highest level since Wednesday, 27 July 2011.

The BSE Mid-Cap index fell 0.68% and the BSE Small-Cap index declined 0.67%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 2953 crore, higher than Rs 2810.40 crore on Thursday, 28 July 2011.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,764 shares fell and 1,122 shares rose. A total of 115 shares remained unchanged. The breadth was positive earlier in the day.

From the 30 share Sensex pack, 18 stocks fell and the rest rose.

Jaiprakash Associates slumped 4.51%, with the stock falling for the fourth straight day.

Index heavyweight Reliance Industries (RIL) fell 1.15% to Rs 827.70, with the stock falling for the fourth straight day on weak Q1 operational performance. The stock hit 52-week low of Rs 824 today. The stock hit a high of Rs 847.65 in intraday trade. 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 growth in both net profit and net sales topped market expectations. RIL was seen reporting 15.44% growth in net profit to Rs 5600.35 crore on 28.7% growth in net sales to Rs 74951.47 crore in Q1 June 2011 over Q1 June 2010, as per average estimate of 10 brokerages. The result was announced early this week.

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.

State-run Oil & Natural Gas Corporation (ONGC) declined 2.89% to Rs 268.65, as a sharp surge in the company's subsidy sharing burden restricted first quarter profit growth. Net profit rose 11.83% to Rs 4094.90 crore on 18.7% rise in sales revenue to Rs 16268 crore in Q1 June 2011 over Q1 June 2010. ONGC's subsidy burden swelled 118.4% to Rs 12046 crore in Q1 June 2011 over Q1 June 2010. The result was announced after trading hours on Thursday, 28 July 2011.

Cigarette major ITC rose 1.09% to Rs 208.30 on strong Q1 results. The stock hit a record high of Rs 211.35 today. ITC's net profit jumped 24.51% to Rs 1332.72 crore on 20.57% rise in operating income to Rs 5860.18 crore in Q1 June 2011 over Q1 June 2010. A stronger-than-expected top line growth aided strong bottom line growth. The core operating profit margin declined to 33.72% from 33.81% in Q1 June 2010. The result was announced during trading hours on 28 July 2011.

Hindustan Unilever rose 0.39% after the company announced during market hours today that the scheme of arrangement for the transfer of certain assets, liabilities and properties of FMCG Exports Business Division of Hindustan Unilever to Unilever India Exports has been approved by the shareholders of the company.

ACC declined 0.8% after consolidated net profit fell 6.11% to Rs 328.12 crore on 17.17% rise in sales turnover to Rs 2538.97 crore in Q2 June 2011 over Q2 June 2010. The result was announced after trading hours on Thursday, 28 July 2011. ACC said while market conditions are presently subdued, the overall cement demand will pick up post monsoon and ACC is well placed to benefit from this expected increase in demand in the coming months.

Bharti Airtel rose 1.43% to Rs 437. The stock hit 52 week high of Rs 439.20 today. Reliance Communications gained 0.89%. As per recent reports, Vodafone Essar and Idea Cellular have raised telephone tariffs by 20% for certain prepaid plans in some telecom service areas. Prepaid users constitute more than 95% of subscribers for both operators. It may be recalled that Bharti Airtel, the country's largest telecom company by users, had raised tariffs for two of its prepaid schemes recently.

India's third largest listed telecom operator by sales Idea Cellular rose 4.83% to Rs 94.35, reversing initial losses. The stock hit 52 week high of Rs 95.35 today. The stock bounced back on the back strong operational performance in the first quarter. Idea's earnings before interest, taxation, depreciation and amortization (EBITDA) rose 11.97% to Rs 1204 crore on 6.7% increase in total revenue to Rs 4520.70 crore in Q1 June 2011 over Q4 March 2011. The EBITDA margin improved to 26.6% from 25.4% in Q4 March 2011.

Consolidated net profit fell 35.43% to Rs 177.26 crore in Q1 June 2011 over Q4 March 2011, mainly due to capitalization of interest costs due to the roll out of 3G services.

India's largest private sector bank by market capitalisation ICICI Bank jumped 1.99% to Rs 1037.75 on strong Q1 results. The stock was choppy. The scrip hit a low of Rs 1,004 and a high of Rs 1,050. Consolidated net profit rose 53% to Rs 1667 crore on 8.9% growth in total income to Rs 14749.79 crore in Q1 June 2011 over Q1 June 2010.

Standalone net profit increased 30% to Rs 1332 crore in Q1 June 2011 over Q1 June 2010. Net interest income increased 21% to Rs 2411 crore and fee income increased 12% to Rs 1578 crore in Q1 June 2011 over Q1 June 2010. The result hit the market during trading hours today.

The bank's ratio of net non-performing assets (NPAs) as on 30 June 2011 was 0.91%, lower than 0.94% as on 31 March 2011. The bank's provisions declined 43% to Rs 454 crore in Q1 June 2011 over Q1 June 2010. The bank's provisioning coverage ratio computed in accordance with RBI guidelines was 76.9% as at 30 June 2011, higher than 76% as at 31 March 2011.

The bank's advances increased by 20% year-on-year to Rs 220693 crore at 30 June 2011 from Rs 184378 crore at 30 June 2010. The bank's savings deposits increased by 18% year-on-year to Rs 66858 crore at 30 June 2011 from Rs 56546 crore at 30 June 2010. The CASA ratio at 30 June 2011 was 41.9%, despite the systemic decline in demand deposits, ICICI Bank said in a statement.

The CASA (current and savings account) ratio is the ratio of deposits in the current and savings accounts of a bank to its total deposits. A high CASA ratio indicates that a higher portion of the banks' deposits come from current and savings accounts. This means that the bank is getting money at low cost, since no interest is paid on the current accounts and the interest paid on savings account is usually low.

As at 30 June 2011, ICICI Bank had 2,533 branches and 6,245 ATMs, the largest branch network among private sector banks in the country.

Bank of Baroda rose 0.94% after the state-run bank announced during market hours today that it has decided to increase the bank's base rate for domestic advances by 50 basis points i.e. from 10.25% to 10.75% and benchmark prime lending rate (BPLR) by 50 basis points from 14.50% to 15.00% with effect from 1 August 2011. The bank has also decided to revise rates of interest payable on domestic term deposits below Rs 1 crore and on term deposits of Rs 1 crore and above with effect from 1 August 2011.

Bank of India fell 2.85% after the state-run bank said that it has decided to increase its base rate from the existing 10% per annum (p.a.) to 10.75% p.a. and benchmark prime lending rate (BPLR) from existing 14.25% p.a. to 15% p.a. with effect from 28 July 2011.

Indian Bank fell 0.6%, reversing initial gains. The bank announced during market hours today that net profit rose 10.53% to Rs 406.93 crore on 22.34% rise in total income to Rs 3030.74 crore in Q1 June 2011 over Q1 June 2010.

India's largest commercial bank by branch network State Bank of India (SBI) fell 0.61%. The bank's Chairman Pratip Chaudhari was quoted by the media as saying early this week that the bank sees a need to raise short-term deposit rates.

Punjab National Bank rose 1.93%. The state-run bank's net profit rose 3.44% to Rs 1105.07 crore on 36.94% rise in total income to Rs 9398.91 crore in Q1 June 2011 over Q1 June 2010. The result was announced during trading hours on Thursday. The bank announced after market hours today that it will increase the BPLR and base rate by 75 bps each to 14.25% and 10.75% respectively with effect from 1 August 2011. It will also raise interest rates on domestic term deposits by up to 75 basis points in selected maturity buckets with effect from 1 August 2011.

India's second largest private sector bank by net profit HDFC Bank fell 0.04%.

Bank of India fell 2.85% after the state-run bank said that it has decided to increase its base rate from the existing 10% per annum (p.a.) to 10.75% p.a. and benchmark prime lending rate (BPLR) from existing 14.25% p.a. to 15% p.a. with effect from 28 July 2011.

Oriental Bank of Commerce fell 0.6%. The bank has effected hike of BPLR and base Rate by 50 basis points each with effect from 1 August 2011. The bank has also changed the interest rates on term deposits across various maturities with effect from 1 August 2011.

Jindal Steel & Power (JSPL) slumped 4.17% after consolidated net profit after tax fell 2.5% to Rs 933.03 crore on 31.4% increase turnover to Rs 3944.10 crore in Q1 June 2011 over Q1 June 2010. The Q1 result was announced after market hours on Thursday.

In other metal shares, Hindustan Zinc, Sterlite Industries, Tata Steel, and Nalco shed by between 0.07% to 1.93%

JSW Steel slumped 5.49%. The company clarified after market hours today that the company has done all the transactions in a legally compliant manner after some media report suggested that Part II of the report of the Karnataka Lokayukta on the alleged illegal purchase of iron ore and certain transactions had linked company and another group company. The company will suitably respond at appropriate time to the authorities concerned as may be required after examining the said Lokayukta report in detail, JSW Steel said.

Steel Authority of India (Sail) fell 1.06% ahead of Q1 result. The company announced after market hours today that the net profit fell 28.77% to Rs 838.06 crore on 19.63% rise in total income to Rs 11389.04 crore in Q1 June 2011 over Q1 June 2010.

Realty stocks extended recent losses triggered by worries that higher interest rates could dent demand for residential and commercial properties. Purchases of both residential and commercial property are largely driven by finance. Indiabulls Real Estate, DLF, Sunteck Realty, Peninsula Land, Unitech, and HDIL fell by 0.02% to 5.97%.

State-run power equipment maker Bharat Heavy Electricals (Bhel) fell 0.46% to Rs 1,838.35 extending recent sharp losses triggered by disappointing Q1 results. The stock had hit 52-week low of Rs 1802 in intraday trade on Thursday. The company's net profit rose 22.15% to Rs 815.51 crore on 9.97% increase in net sales to Rs 7125.68 crore in Q1 June 2011 over Q1 June 2010. The net profit was boosted by a steep 52.12% jump in non-operational income to Rs 248.65 crore in Q1 June 2011 over Q1 June 2010. The result was announced during trading hours on Tuesday, 26 July 2011.

The top line growth fell short of market expectations. Analysts were expecting a much stronger revenue growth in Q1 June 2011 from Bhel on expectations of a strong execution of the large order book of the power equipment major. The company's outstanding order book was Rs 159600 crore as on 30 June 2011

Auto stocks were mixed. India's largest truck maker by sales Tata Motors fell 0.42%, with the stock falling for the fourth straight day.

India's largest car maker by sales Maruti Suzuki India rose 1.81% as production has resumed at the company's Manesar plant in Haryana after a temporary strike by workers on Thursday, 28 July 2011, protesting about the suspension of some of their colleagues. The loss of car production from Thursday's strike was marginal and will be recovered Friday, reports suggest.

This is the second time in two months that Maruti, the country's largest car maker by sales, had to halt production due to labor unrest at the Manesar factory. The company stopped production for 10 days there in June after nearly 2,000 workers went on a strike to demand recognition of a new union and the reinstatement of 11 colleagues who were sacked for indiscipline.

Utility vehicles and tractors major Mahindra & Mahindra (M&M) rose 0.43% reversing initial losses. Last week, Ssangyong Motor Company, the South Korean subsidiary of M&M, reported 43% growth in revenue to KRW 1349.2 billion in the first half of the calendar 2011 over the previous corresponding period. Ssangyong Motor's sales rose 53% to 55,873 vehicles in the first half of the calendar 2011 over in the first half of the calendar 2010. This is the highest level of sales volume achieved by the company in a half year period since 2007.

India's largest bike maker by sales Hero Honda Motors fell 2.14%. The company announced during market hours today that it has received a fresh copy of certificate of incorporation consequent upon change of name from Hero Honda Motors to Hero MotoCorp. India's second largest motorcycle maker by sales Bajaj Auto gained 0.16%

Ashok Leyland gained 0.49% ahead of record date for a liberal 1:1 bonus issue. The company has set 3 August 2011 record date for bonus issue.

Sanraa Media clocked highest volume of 1.07 crore share on BSE. GTL (82.13 lakh shares), GTL Infra (65.10 lakh shares), Idea Cellular (50.71 lakh shares) and Birla Power Solutions (48.96 lakh shares) were the other volume toppers in that order.

Adani Enterprises clocked highest turnover of Rs 207.58 crore on BSE. ICICI Bank (Rs 81.56 crore), State Bank of India (Rs 73.26 crore), GTL (Rs 61.47 crore) and Gitanjali Gems (Rs 59.47 crore) were the other turnover toppers in that order

Investors' focus continues on Q1 corporate earnings. 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.

Sun TV announces Q1 results on 1 August 2011. Power Grid Corporation unveils Q1 results on 2 August 2011. Bharti Airtel and United Spirits unveil Q1 results on 3 August 2011. Adani Power, Mundra Port And Special Economic Zone and Indian Hotels announce Q1 results on 4 August 2011. Cipla and IL&FS Transportation Networks are set to announce Q1 results on 5 August 2011.

M&M announces Q1 results on 8 August 2011. ABB, Tata Communications, Mahindra Satyam and GMR Infrastructure announce quarterly results on 9 August 2011. Tata Power and Rural Electrification Corporation unveil Q1 results on 10 August 2011. Tata Motors and Castrol India unveil quarterly results on 11 August 2011. Hindalco and Coal India unveil Q1 results on 12 August 2011. Aditya Birla Nuvo unveils Q1 results on 13 August 2011.

The stock market regulator Securities and Exchange Board of India (Sebi) on Thursday made sweeping changes to the takeover code, including raising the threshold that triggers an open offer to 25% from 15%. Sebi also changed the minimum open offer size, saying that when a company acquires at least 25% of another listed company, it must make a mandatory open offer for another 26%. Under current regulations, a company needs to make a mandatory offer for only an additional 20% stake. Partly accepting the recommendations of a Sebi-appointed panel on the matter, Sebi also decided to abolish the non-compete fees that acquirers generally pay to the sellers in merger and acquisition deals.

The government on Thursday approved draft legislation to create an anti-corruption ombudsman, an office that has come to define the debate over what India needs to do to try to stamp out graft. For the past several months, a handful of anti-corruption campaigners have been negotiating with the government over the creation of the office and the extent of the power of the Lokpal, or ombudsman. The government's proposed legislation would give the office the power to probe graft in the upper echelons of India's bureaucracy, in Parliament and in ministries, but would exempt the office of the serving prime minister and the judiciary.

On the macroeconomic front, food prices rose in the week ended 16 July 2011 due to costlier vegetables and fruits, the latest data showed. The wholesale price index for food articles rose 0.8% to 193.3 from 191.7 in the previous week, data from the Ministry of Commerce and Industry showed Thursday. The index has risen three out of four weeks ending July 16. Data also showed the index for primary articles, which includes food and non-food articles, was little changed at 198 in the week ended July 16, compared with 197.7 a week earlier.

The Reserve Bank of India (RBI) raised its key lending rates by 50 basis points at a policy review on Tuesday, 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.

Finance Minister Pranab Mukherjee on Wednesday, 27 July 2011, said food inflation at 8% around the current level, is not acceptable. He added that the government would take steps to support the RBI's battle against stubbornly high inflation, which is likely to see further rate rises. "I don't think we have reached the end of tunnel," Mukherjee said referring to the RBI's rate tightening cycle. "Appropriate measures will be taken," Mukherjee said, referring to government support of the central bank's policy action, without giving specifics.

Mukherjee said the government would keep its spending in check to meet its deficit target but did not give details. "We are looking at ways to compress expenditure. There is revenue buoyancy and together I think they will help us in reaching fiscal deficit target," he said.

RBI Deputy Governor Subir Gokarn on Wednesday said the decision to go for a 50 basis point increase in the policy rate, instead of the baby steps of 25 basis points that the RBI mostly has taken, was influenced by strong demand in the economy, which was partially unaffected by the interest-rate moves. The government's high spending was also fueling demand pressures, he said on a conference call with analysts.

Gokarn said the downside risks to growth from the rate increases would be "fairly bounded" and that a milder hike could have been perceived as inadequate. "We thought that the stronger action was essentially consistent with the new stance that we had signaled in May," he added.

European stock markets dropped on Friday, 29 July 2011, as fears of a possible US default grew after US lawmakers cancelled a key vote on deficit-reduction plans, while Moody's Investors Service warned it may downgrade Spain. Key benchmark indices in UK, France and Germany were down by 0.87% to 1.29%.

The losses came after the House Republican leadership late Thursday cancelled a vote on Speaker John Boehner's deficit-reduction plan after a rebellion from conservatives. The US is moving closer to an August 2 deadline, after which the Treasury says it will no longer be able to meet debt obligations.

Meanwhile, Moody's Investor Services on Friday put Spain's government-bond ratings on review for possible downgrade from Aa2. Moody's said it was considering the move due to continued funding pressures on the Spanish government, which it said "the precedent set for future euro-area support arrangements by the official package for Greece is likely to exacerbate." It also cited challenges facing the Spanish government's fiscal-consolidation efforts as another factor for placing the country's ratings on review. Moody's said its review will evaluate these risks against the government's high Aa2 rating and its credit strengths, which includes a relatively low public-debt ratio. Barring unexpected developments, Moody's expects that any rating change for Spain is most likely to be limited to one notch, it said.

Asian stocks fell on Friday, 29 July 2011, as the US debt impasse kept broad market sentiment in check, with Japan also suffered from weak earnings and profit outlooks. The key benchmark indices in South Korea, China, Indonesia, Singapore, Hong Kong, Japan, and Taiwan fell by between 0.02% to 1.40%.

Japan's jobless rate ticked higher in June and industrial output was softer than expected, while consumer prices rose less than forecast, according to data released Friday.

Trading in US index futures indicated that the Dow could fall 60 points at the opening bell on Friday, 29 July 2011. Weak earnings pulled US stocks lower on Thursday, 28 July 2011.

The latest data showed first-time applications for unemployment benefits declined 24,000 to 298,000 last week, marking the first time in four months that the number came in below 400,000. The National Association of Realtors's count of Americans signing contracts to purchase homes climbed for a second month in June, although the trade group also said a growing number of would-be buyers have been canceling contracts ahead of closings.