Market slips on euro-zone debt woes

The market tumbled last week, dragged by sharp losses in bank and metal stocks, with declines in European indices adding to the selling pressure in a truncated trading week. A lack of clarity on the timing of the resignation of Italian Prime Minister Silvio Berlusconi, which markets view as a step toward resolving the euro-zone's debt mess, concerned investors. The domestic equity market was shut on Monday, 7 November 2011 on account of Bakri-Id and again on Thursday, 10 November 2011 on account of Gurunanak Jayanti.



The BSE Sensex fell 369.79 points or 2.11% to 17,192.82 in the week ended Friday, 11 November 2011. The 50-share S&P CNX Nifty fell 115.35 points or 2.18% to 5,168.85.

The BSE Mid-Cap index fell 2.16% while the BSE Small-Cap index fell 2.78%. Both these indices underperformed the Sensex.

Foreign institutional investors (FIIs) inflow in November 2011 totaled Rs 1927.90 crore while the inflow in calendar 2011 totaled Rs 3313.60 crore (till 9 November 2011).

Trading for the week began on a flat note. Key benchmark indices ended marginally higher on Tuesday, 8 November 2011, as index heavyweight Reliance Industries (RIL) inched up in volatile trade. The BSE Sensex rose 6.92 points or 0.04% to settle at 17,569.53. The S&P CNX Nifty rose 5.15 points or 0.10% to settle at 5,289.35.

Weakness in European markets pushed Indian stocks lower on Wednesday, 9 November 2011, with the key benchmark indices settling at their lowest level in two weeks. The BSE Sensex fell 207.43 points or 1.18% to settle at 17,362.10. The S&P CNX Nifty fell 68.30 points or 1.29% to settle at 5,221.05.

Key benchmark indices fell for the second straight day to hit 2-1/2 week closing lows on Friday, 11 November 2011, as the latest data showed that industrial production rose a dismal 1.9% in September 2011, the lowest rate of growth in 2 years and that food inflation remained at elevated level in late October 2011. The BSE Sensex was down 169.28 points or 0.97% to 17,192.82. The S&P CNX Nifty was down 52.20 points or 1% to 5,168.85.

Among the 30 Sensex shares, 23 declined and the remaining rose.

Bank stocks fell last week as the 10-year benchmark bond yield approached 9% level on Friday, 11 November 2011. Bond yields and bond prices are inversely related. Lower bond prices may result in depreciation in valuation of banks' portfolio of government securities.

Meanwhile, global rating agency Standard & Poor's (S&P) upgraded the Indian banking sector, saying its domestic regulations are in line with international standards differing with the downgrade accorded by Moody's. "In our view, banking regulations in India are in line with international standards and the regulator (RBI) has a moderately successful track record," S&P said while upgrading the risk profile (BICRA) a notch higher to 'Group 5'. The latest BICRA (Banking Industry Country Risk Assessments) of S&P comes a day after US-based Moody's changed the outlook for the sector to negative from stable on Wednesday, 9 November 2011, a move which evoked sharp criticism from Indian government and bankers.

India's largest bank by branch network State Bank of India (SBI) was the top Sensex loser last week. The stock tumbled 8.48% to Rs 1797.65, triggered by an increase in the bank's bad loans in Q2 September 2011. The ratio of bank's gross non-performing assets (NPAs) to gross advances increased to 4.19% as on 30 September 2011 from 3.35% as on 30 September 2010. The ratio of net non-performing assets to net advances increase to 2.04% as on 30 September 2011 from 1.7% as 30 September 2010. Net profit rose 12.35% to Rs 2810.43 crore on 23.43% rise in total income to Rs 29394.32 crore in Q2 September 2011 over Q2 September 2010. Provision for non-performing assets rose 35.08% to Rs 2921.22 crore in Q2 September 2011 over Q2 September 2010. The bank announced Q2 results during market hours on Wednesday, 9 November 2011.

SBI's consolidated net profit rose 46.8% to Rs 3470.43 crore on 8.76% rise in total income to Rs 41249.08 crore in Q2 September 2011 over Q2 September 2010.

India's largest private sector bank by net profit ICICI Bank shed 7.08% to Rs 822.50. ICICI Bank's consolidated net profit rose 43% to Rs 1992 crore in Q2 September 2011 over Q2 September 2010. Standalone profit after tax increased 22% to Rs 1503 crore in Q2 September 2011 over Q2 September 2010. Net interest income increased 14% to Rs 2506 crore in Q2 September 2011 over Q2 September 2010. Fee income increased 7% to Rs 1700 crore in Q2 September 2011 over Q2 September 2010. Provisions decreased 50% to Rs 319 crore in Q2 September 2011 over Q2 September 2010. The result was announced during trading hours on 31 October 2011.

ICICI Bank's current and savings account (CASA) ratio stood at 42.1% as on 30 September 2011. Net non-performing asset ratio decreased to 0.8% as at 30 September 2011 from 1.37% as at 30 September 2010 and 0.91% as at 30 June 2011.

India's second largest private sector bank by net profit HDFC Bank fell 3.76% to Rs 463.95. The bank's net profit rose 31.48% to Rs 1199.35 crore on 37.4% rise in total income to Rs 7929.38 crore in Q2 September 2011 over Q2 September 2010. The result was announced on 19 October 2011.

Realty major DLF declined 7.48% to Rs 228.35. The company announced on Thursday that consolidated net profit fell 10.98% to Rs 372.41 crore on 2.27% rise in total income to Rs 2577.16 crore in Q2 September 2011 over Q2 September 2010.

DLF said it expects second half of the year ending March 2012 (FY 2012) to witness a stronger operational performance, both in terms of a scale up in launches in the plotted and group housing segments and deliveries of its projects across the cities of Gurgaon, Chennai and Cochin. DLF also expects the momentum on the non-core divestment plan to continue with increasing traction in the proposed divestment of its hospitality assets which would further help in moderation of its debt levels. With strategic capital expenditures being undertaken on improving the quality of its land bank and the build out of select commercial and infrastructure assets, the company is well positioned to capitalize on the growth opportunities as and when the demand scenario revives, DLF said in a statement.

DLF said that the Competition Appellate Tribunal has on 9 November 2011 issued a stay order on the demand on penalty and kept in abeyance the directions relating to modifications of conditions. This pertains to the order passed by the Competition Commission of India dated 12 the August 2011. While this is an interim order, the company believes that it has a strong case based on merits, DLF said. It may be recalled that the Competition Commission of India had imposed a Rs 630-crore penalty on the country's biggest property developer by sales in August as it found the company abusing its marker leadership position to the disadvantage of residents at a housing complex.

India's largest steel maker by sales Tata Steel tumbled 8.10% to Rs 430. The company announced on Thursday, 10 November 2011, that consolidated net profit fell 89.26% to Rs 212.43 crore on 11.73% rise in total income to Rs 32918.33 crore in Q2 September 2011 over Q2 September 2010. The company said its performance was adversely impacted by higher global raw materials costs and lower average selling prices at Tata Steel Europe. Tata Steel's net debt at the end of September 2011 stood at Rs 45056 crore, compared to Rs 46627 crore at the end of March 2011.

India's largest aluminium maker by sales Hindalco Industries fell 7.41% to Rs 128.70. The company announced on Thursday that net profit rose 16% to 503 crore on 7% rise in revenues to Rs 6272 crore in Q2 September 2011 over Q2 September 2010.

Hindalco Industries said that the second half of FY 2012 (year ending March 2012) will be difficult due to global uncertainties, falling LME prices, and persisting cost pressures. The intensity of resource challenge, which accentuated in the first half of FY 2012 due to monsoon related issues is expected to moderate, the company said. Overall, the second half of FY 2012 is expected to be challenging in terms of cost pressure, domestic demand and realizations, Hindalco said in a statement. Various initiatives of asset sweating and cost optimization are expected to cushion the results, the company said. With some of the projects slated to go on stream in second half of FY 2012, the start-up, quick ramp-up and speedy stabilization of production are going to be key focus areas for the company, Hindalco said.

India's largest car maker by sales Maruti Suzuki India fell 5.71% to Rs 1059.20. Maruti had recently clarified that the decision to purchase land in Gujarat is towards building additional capacity. It had also said that the board of directors approved the purchase of land in Gujarat for future capacity requirements of the company. The logistics for reaching the finished cars to the large domestic markets in West and South India and the close proximity of the Mundra port for future exports, played an important role in the decision, Maruti said.

The company also clarified that its investment plans for Haryana stay on course. These include installation of the 2.5 lakh units capacity assembly line in Manesar (Manesar C), a world class R&D center and test course in Rohtak. The company has lined up a direct investment of over Rs 3400 crore towards these facilities In addition to company's investment, its vendors and joint venture partners will continue to appropriately invest in Haryana for the future expansion, Maruti said.

Maruti's total sales slumped 53.2% to 55,595 units in October 2011 over October 2010. Domestic sales fell 52.2% to 51,458 units while exports tumbled 63.6% to 4,137 units in October 2011 over October 2010. Labour unrest at Maruti's Manesar unit during October 2011 adversely impacted the company's sales. The firm lost production of 40,000 units during the month. Maruti announced the monthly sales data on 1 November 2011.

India's largest state-run oil & gas exploration firm by sales, ONGC, fell 4.27% to Rs 265.80. The company announced after market hours last Friday, 4 November 2011, that net profit rose 60.37% to Rs 8642.23 crore on 24.41% growth in total income to Rs 24058.33 crore in Q2 September 2011 over Q2 September 2010.

Sterlite Industries (India) (down 4.67% to Rs 117.40), L&T (down 4.47% to Rs 1330.65), Jaiprakash Associates (down 4.10% to Rs 76) and Jindal Steel & Power (down 3.80% to Rs 555.35), edged lower from the Sensex pack.

FMCG giant Hindustan Unilever (HUL) was the top Sensex gainer last week. The stock rose 4.57% to Rs 396.15. The stock hit a record high of Rs 397.80 on Friday, 11 November 2011. HUL's net profit rose 21.69% to Rs 688.92 crore on 17.75% rise in total income to Rs 5610.48 crore in Q2 September 2011 over Q2 September 2010. The result was announced on 31 October 2011.

Select IT stocks rose amid weakness in rupee. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. The Indian rupee was marginally lower on Friday, 11 November 2011, after pulling back from its lowest level in more than two-and-a-half years, as weak local shares continued to weigh. The partially convertible rupee was at 50.22/23 per dollar, compared with Wednesday's close of 50.1050/1150, after falling to 50.4200 against the dollar, a level last seen on 28 April 2009.

India's largest software services exporter TCS rose 2.88% to Rs 1130.80. The company announced during market hours on Wednesday, 9 November 2011, that Diligenta, a subsidiary of the company, has won a $2.2 billion 15-year contract from UK-based pensions and insurance provider Friends Life.

India's third largest software services exporter Wipro gained 2.73% to Rs 381.70. The company announced after market hours on Tuesday, 8 November 2011, that Premier Foods has selected Wipro Technologies, the global IT, consulting and outsourcing business of Wipro, as a strategic technology partner. As part of the five year strategic relationship, Wipro will be supporting both systems and processes to enhance efficiency of Premier Foods' supply chain. This relationship will enable Premier Foods to realise quantifiable benefits for a known budgetary expenditure with minimal exposure to variable costs.

Index heavyweight Reliance Industries (RIL) rose 0.48% to Rs 883.85. Natural gas production from RIL's KG-D6 fields off the East Coast has reportedly declined to a one-year low of less than 42 million standard cubic metres per day.

RIL early this week said its unit Infotel Broadband Services has acquired a 38.5% stake in privately held digital learning firm Extramarks Education. It did not disclose the financial details of the investment. The deal will help Extramarks develop its digital distribution services and expand market penetration, RIL said. Last year, Reliance acquired Infotel Broadband, the only company to win a nationwide licence for broadband wireless spectrum in a government auction, for $1 billion, marking its return to the telecom business.