Sensex at 14-month closing low; Infosys hits 52-week low

Fears that higher interest rates will crimp corporate profit growth pulled the market lower for the second day in a row, with the barometer index BSE Sensex settling at 14-month closing low below the psychological 17,000 level. The market breadth, indicating the overall health of the market, was negative. The Sensex shed 219.77 points or 1.29%, off close to 410 points from the day's high and up close to 55 points from the day's low. Index heavyweight Reliance Industries (RIL) fell in choppy trade.

Investors investing in India have been worried that higher interest rates will crimp corporate profit growth. Two leading banks, State Bank of India (SBI) and ICICI Bank, on Thursday, 11 August 2011, raised lending rates. The Reserve Bank of India (RBI) late last month raised its key lending rate by a steeper-than-expected 50 basis points to rein in high inflation. The RBI has raised interest rates 11 times since March 2010 to control inflation, which still reigns close to double-digit levels because of high food prices and intensifying demand pressures in non-food commodities.



Tata Steel extended losses after the company posted a sharp surge in net profit for the first quarter on the back exceptional one-off gains. IT stocks fell on a likely economic slowdown in the US and Europe, with Wipro and Infosys hitting 52-week lows. The US and Europe are the two biggest market for Indian IT firms. India's largest commercial vehicle maker by sales Tata Motors tumbled more than 5% after the company reported a muted growth in bottom line for Q1 June 2011 on Thursday, 11 August 2011. Realty stocks declined on worries higher interest rates could dent demand for residential and commercial properties. BPCL fell after Q1 net loss widened. All the 13 sectoral indices on BSE were in the red.

Shares of L&T Finance Holdings, a unit of engineering & construction major L&T, settled at Rs 49.95 on BSE, a discount of 3.94% to the initial public offer price of Rs 52. The stock debuted at Rs 51, a discount of 1.92% to the initial public offer (IPO) price

The market pared gains after a firm start triggered by higher Asian shares. The market trimmed gains once again after recovering from the day's low in morning trade. The market slipped into the red once again after moving into positive terrain soon after strong industrial production data for June 2011 hit the market in mid-morning trade.

The market slumped to fresh intraday low in early afternoon trade as stronger-than-expected growth in industrial production in June 2011 along with current high inflation raised concerns that the central bank will stick to its tight monetary policy. The market pared losses after hitting fresh intraday low in early afternoon trade. The market weakened once again after extending recovery from the day's low in mid-afternoon trade.

The stock market remains shut on Monday, 15 August 2011, on account of Independence Day.

The BSE Sensex lost 219.77 points or 1.29% to 16,839.63, its lowest closing level since 9 June 2010. The index fell 274.84 points at the day's low of 16784.56 in early afternoon trade. The Sensex gained 187.48 points at the day's high of 17,246.88 in early trade, its highest level since Wednesday, 10 August 2011.

The S&P CNX Nifty was down 65.35 points or 1.27% to 5,072.95 its lowest closing level since 9 August 2011. The Nifty hit a high of 5,194.45 in intraday trade, its highest level since Wednesday, 10 August 2011. The Nifty hit a low of 5,053.35 in intraday trade.

The BSE Mid-Cap index fell 0.46% and the BSE Small-Cap index declined 0.44%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2450 crore, higher than Rs 2374.85 crore on Thursday, 11 August 2011.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,585 shares fell while 1,257 shares rose. A total of 111 shares remained unchanged. The market breadth was strong earlier in the day.

Among the 30-share Sensex pack, 24 fell and the rest rose.

India's largest commercial vehicle maker by sales Tata Motors fell 5.26% and was the top loser from the Sensex pack. The company reported a muted growth in bottom line for Q1 June 2011 at the fag end of the trading session on Thursday, 11 August 2011. Consolidated net profit 0.55% to Rs 2000 crore on 24.1% growth in net revenue to Rs 33572 crore in Q1 June 2011 over Q1 June 2010.

Tata Motors said cost pressures, including commodity price increase, resulted in a reduction in the operating margins to 8.4% in standalone financials. Earnings before interest taxes depreciation and amortization (EBITDA) fell 15% to Rs 999 crore in Q1 June 2011 over Q1 June 2011. The company's market share in commercial vehicle segment was 60.1%. The market share in passenger vehicles stood at 11.9%.

Jaguar Land Rover (JLR) revenues rose 19.9% to 2712 million pounds in Q1 June 2011 over Q1 June 2010. Cost pressures and impact of exchange rates resulted in a marginal reduction in the operating margins to 15.1%. EBITDA rose 16.9% to 408 million pounds in Q1 June 2011 over Q1 June 2010. Profit after tax fell 3.09% to 219 million pounds in Q1 June 2011 over Q1 June 2010.

In May 2011, JLR successfully completed issue of 7-year and 10-year bonds aggregating 1 billion pounds, part of which has been used for refinancing of existing loans and general corporate purposes. A new vehicle assembly plant was inaugurated in Pune, India in May 2011. The facility at present is assembling Land Rover's Freelander 2 vehicles supplied in complete knock down form, from the manufacturing plant in Liverpool.

Index heavyweight Reliance Industries (RIL) fell 1.95% to Rs 758.30. The stock hit high of Rs 781.60 and low of Rs 758. The stock had hit a 52-week low of Rs 754.25 in intraday trade on Tuesday, 9 August 2011. RIL on Tuesday, 9 August 2011, said it has received the government's formal approval to sell a 30% stake in 21 oil and gas production sharing contracts to BP PLC. "Following the approval, Reliance and BP will work together to conclude the deal expeditiously," RIL said in a statement.

The initial proposal was for RIL to sell the stake in 23 blocks to BP for $7.2 billion plus another $1.8 billion linked to exploration success. However, the government cleared only 21 blocks and RIL had said it would continue to seek approval for the remaining two blocks.

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.

Bank stocks fell on concerns higher interest rates may crimp loan growth. India's largest commercial bank by branch network State Bank of India fell 2.53% after bank announced after market hours on Thursday that it has revised the base rate upwards by 50 basis points (bps) from 9.50% per annum (p.a.) to 10.00% p.a. effective from 13 August 2011. The bank has also revised the benchmark prime lending rate upwards by 50 bps from 14.25% p.a. to 14.75% p.a. effective from 13 August 2011. The bank also revised upwards the deposit rates by 50 bps in '180 days to 240 days' maturity for domestic term deposits below Rs 1 crore effective from 13 August 2011.

India's largest private sector bank by net profit ICICI Bank shed 0.28% after the bank said on Thursday it will raise its base rate upwards by 50 basis points to 10% with effect from 13 August 2011. The bank has also announced an increase of 0.50% in its benchmark prime lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans).

India's second largest private sector bank by net profit HDFC Bank dropped 2.32%. Bank of India, Punjab National Bank and Bank of Baroda shed by between 1.57% to 2.07%.

HPCL declined 1.86% ahead of Q1 results. The company after market hours reported a net loss stood of Rs 3080.26 crore for Q1 June 2011, higher than a a net loss of Rs 1884.29 crore for Q1 June 2010. The company's total income rose 39.33% to Rs 41056.57 crore in Q1 June 2011 over Q1 June 2010.

BPCL rose 0.23%, reversing initial losses. The company reported a net loss of Rs 2561.89 crore for Q1 June 2011, higher than a net loss of Rs 1718.10 crore for Q1 June 2010. Total income rose 34.76% to Rs 46566.93 crore in Q1 June 2011 over Q1 June 2010.

Reliance Infrastructure (R-Infra) fell 0.18%. The company announced during market hours today that Maharashtra Electricity Regulatory Commission (MERC) by its order dated 11 August 2011 has granted license to the company for transmission and distribution of electricity in and around suburbs of Mumbai. The licence is valid for a period of 25 years effective from 16 August 2011 up to 15 August 2036. In the new distribution licence, MERC has also expanded the existing area of distribution to include Chene and Varsova areas falling under the Mira Bhayandar Municipal Corporation, R-Infra said.

Tata Power Company dropped 3.12% to Rs 1088.35, extending Thursday's 4.31% losses. The stock hit 52-week low of Rs 1078.65 today. The company's consolidated net profit after statutory appropriations jumped 34% to Rs 418.57 crore on 12.33% growth in revenue to Rs 5824.51 crore in Q1 June 2011 over Q1 June 2010. The result was announced after trading hours on Wednesday, 10 August 2011.

Tata Steel fell 1.69% to Rs 476.35. The company announced during market hours today that consolidated net profit surged 192.91% to Rs 5346.55 crore on 35.33% rise in total income to Rs 36882.43 crore in Q1 June 2011 over Q1 June 2010. The stock hit 52 week low of Rs 471.60 today.

Tata Steel's net profit zoomed due to 6445.71% jump in other income to Rs 3882.26 crore in Q1 June 2011 over Q1 June 2010. The other income includes profit of Rs 2879.29 crore on disposal of Tata Steel Global Mineral Holding's investment in Riversdale Mining. The other income also includes profit of Rs 511.01 crore on sale of part of investment in Tata Refractories. The other income also includes Rs 597.71 crore relating to arbitration with the Teeside Cast Products Consortium.

Hindalco Industries skidded 4.04% ahead of Q1 results today. National Aluminium Company fell 2.57% ahead of Q1 results today.

Realty stocks declined on worries higher interest rates could dent demand for residential and commercial properties. Purchases of both residential and commercial property are largely driven by finance. DLF, Indiabulls Real Estate and Unitech shed by between 0.68% to 3.06%.

IT stocks fell on a likely economic slowdown in the US and Europe. The US and Europe are the two biggest market for Indian IT firms. India's largest software services exporter TCS shed 2.71%. India's second largest software services exporter Infosys declined 2.64% to Rs 2374.45. The stock hit 52 week low of Rs 2343.70 today. India's third largest software services exporter Wipro fell 2.92% to Rs 343. The stock hit 52 week low of Rs 337.55 today.

Castrol India fell 3.45% after net profit declined 5.2% to Rs 142.50 crore on 6.2% rise in net sales to 790 crore in Q2 June 2011 over Q2 June 2010.

India's largest small car maker by sales Maruti Suzuki India fell 0.04%, reversing initial gains. The company is set to launch an upgraded model of the Swift hatchback this month. Maruti had said early this month that new Swift being manufactured at the company's Manesar plant will be launched nationally in mid-August 2011.

India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) gained 1.82%. The company's net profit to Rs 604.90 crore on 28.8% increase in gross revenue & other income to Rs 7294.30 crore in Q1 June 2011 over Q1 June 2010. M&M said profit before tax (PBT) rose 12.9% to Rs 814.30 crore. M&M said there was a sharp increase in non-cash charge arising from amortization of ESOPs granted in earlier years, at Rs 26.50 crore in Q1 June 2011 from Rs 0.90 crore in Q1 June 2010. Excluding this charge, PBT growth was 16.5% in Q1 June 2011, M&M said. M&M announced the results early this week.

M&M said despite a relentless increase in material costs the profit grew in the first quarter due to tight control on expenses and good volumes in both auto and tractor segments. Since prospects for agricultural and services sectors growth remain reasonably robust, the outlook for the company for the remaining part of the year remains positive but watchful, M&M said.

India's local car sales fell 16% to 1.33 lakh units in July 2011 over in July 2010 as rising loan rates and higher fuel costs crimped demand for new vehicles. Industry body, the Society of Indian Automobile Manufacturers, expects car sales to rebound from August 2011 because of the introduction of new cars and resumption of full production at Maruti Suzuki, the country's largest car maker by sales.

India's second largest bike maker by sales Bajaj Auto fell 0.22% on profit taking.

India's largest bike maker by sales Hero MotoCorp rose 1.79%. The company aims to increase annual revenue to $10 billion and two-wheeler sales to 10 million units a year in the next five to six years, as it expands in overseas markets and hopefully benefits from strong local demand. The company expects exports to contribute a tenth of its vehicle sales and revenue over the same period.

Hero MotoCorp's chief executive Pawan Munjal on Tuesday, 9 August 2011, said the company has identified 30 new markets in Africa, Southeast Asia and Latin America where it plans to sell one million two-wheelers in the next five to six years. Munjal said the company will start exporting two-wheelers to some countries in Africa in the October-December quarter. Hero MotoCorp will retain a link to Japan's Honda Motor, paying royalties to the latter for use of technology until end-2014.

Munjal said Hero MotoCorp is enhancing its research and development set-up and exploring opportunities for collaboration with international design houses and technology suppliers. The company on Tuesday, 9 August 2011, unveiled a new 110-cubic-centimeter scooter model, Maestro, and a 150cc motorcycle, Impulse.

Cals Refineries clocked highest volume of 6.77 crore shares on BSE. L&T Finance Holdings (4.4 crore shares), Lanco Infratech (84.02 lakh shares), Birla Cotsyn (80.95 lakh shares) and Karuturi Global (74.20 lakh shares) were the other volume toppers in that order.

L&T Finance Holdings clocked highest turnover of Rs 221.38 crore on BSE. SBI (Rs 146.37 crore), Tata Steel (Rs 106.61 crore), Inventure Growth Securities (Rs 90.81 crore) and Tata Motors (Rs 65.68 crore) were the other turnover toppers in that order.

State Bank of India, Aditya Birla Nuvo, Reliance Communications, Reliance Capital and Shipping Corporation of India unveil Q1 results on Saturday, 13 August 2011.

Industrial production grew 8.8% in June 2011 from a year earlier, helped by strong growth in manufacturing output, data released by the government today, 12 August 2011, showed. The reading was sharply higher than the upwardly revised 5.95% industrial output growth in May 2011. The June reading also beat market expectations by a wide margin.

Manufacturing output, which has a 75.5% weight in the index, rose 10% on year in June, compared with a revised 6.1% rise in May. Mining output grew 0.6%, compared with a revised 1.3% rise in May. Industrial output growth data in June 2011 is encouraging, Finance Minister Pranab Mukherjee told reporters on Friday, 12 August 2011.

According to poll carried out by Capital Market, economists expect headline inflation at 9.2% for July 2011, much above the Reserve Bank of India's perceived comfort level of 5% to 6%. The data is due on Tuesday, 16 August 2011.

Finance Minister Pranab Mukherjee on Wednesday, 10 August 2011, said the Indian government and the Reserve Bank of India (RBI) are working together to ensure stability in local markets, which have been partly influenced by the US Federal Reserve's comments on interest rates. There won't be any cash crunch in Indian markets, Mukherjee said adding that the markets' movements are reflecting a return of investors' confidence after jittery trades for the past two days following the US rating downgrade.

Mukherjee early this week said the government will fast-track economic reforms and that the Indian economy remains an attractive investment destination for foreign investors despite the global growth slowdown worries. Mukherjee on Tuesday, 9 August 2011, said the decline in global crude prices will help in managing India's inflation.

The RBI on Monday, 8 August 2011, said that the US rating downgrade has raised concerns of continuing turmoil in global financial markets as investors re-allocate portfolios in response to heightened risk perceptions stemming from the latest developments. As Friday's (5 August 2011) market behaviour demonstrated, India is not insulated from such developments, RBI said. It may, however, be noted that in the worst phase of the recent global financial crisis, the Indian economy grew by 6.8%, suggesting high resilience emerging from domestic factors, the RBI said in a statement.

While downside risks to growth may have increased in the wake of global developments, they are likely to have limited impact, RBI said. However, the policy and regulatory framework must anticipate and be prepared to respond to turbulent financial market conditions arising out of external developments, RBI said. In the immediate future, the RBI's priority is to ensure that adequate rupee and forex liquidity are maintained in domestic markets to prevent excessive volatility in interest rates and exchange rates.

RBI said it is closely monitoring all key indicators and will continuously assess the impact of global developments on rupee and forex liquidity and macroeconomic stability. "We will respond quickly and appropriately to the evolving situation, "RBI said.

Merchandise exports grew nearly 82% in July 2011 from a year earlier, totaling $29.3 billion, Commerce Secretary Rahul Khullar said Thursday. Imports in the just-ended month rose 51.5% from a year earlier to $40.4 billion, which widened the trade deficit to $11.1 billion from $7.66 billion in June.

Annual inflation in the Food Articles group rose to 9.9% in the week ended 30 July, from 8.04% in the previous week, the Commerce & Industry Ministry said in a statement on Thursday, 11 August 2011. It was at 16.45% in the corresponding period of last year. Inflation in the Primary Articles group climbed to 12.22% in the week under review, from 10.99% in the week ended 23 July 2011. Inflation in the Fuel & Power group stood at 12.19% in the week ended 30 July from 12.12% in the previous week, the Government data showed. It was at 12.40% in the comparable week of the previous year.

After a scare in July, monsoon has picked and the overall rains are likely to turn out to be decent for the current monsoon season except in select pockets. Good rains may help boost rural incomes and bring down food inflation.

The RBI holds a mid-quarter monetary policy review on 16 September 2011. The RBI raised its key lending rates by 50 basis points at a policy review on 26 July 2011, to tame high inflation. RBI had at time said that 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. A change in stance will be motivated by signs of a sustainable downturn in inflation, it had added.

European stock markets swung higher Friday as bank stocks remained the focus of attention after France introduced a ban on short selling financial stocks. The key benchmark indices in UK, France and Germany were up by 1.58% to 2.36%.

Economic data from France fell short of expectations, as the country's gross domestic product came in flat during the second quarter and missed expectations for a 0.3% rise.

Asian stocks were mixed on Friday, 12 August 2011. The key benchmark indices in Hong Kong, China and Singapore rose by between 0.13% to 1.94%. The key benchmark indices in Indonesia, South Korea, Japan and Taiwan fell by between 0.2% to 1.33%.

US index futures reversed initial losses. Trading in US index futures indicated that the Dow could gain 30 points at the opening bell on Friday, 12 August 2011.

US stocks jumped on Thursday, 11 August 2011, as bargain-hungry investors overcame the recent wave of fear that drove selling over the last two weeks. Labor Department data showed new US claims for unemployment benefits dropped to a four-month low last week, a dose of better news after a spate of soft economic data.