Sensex, Nifty settle at 2-week lows

Weakness in European markets pushed Indian stocks lower, with the key benchmark indices settling at their lowest level in two weeks. European stocks reversed initial gains and US index futures tanked after independent clearing house LCH.Clearnet raised the margins traders must provide to trade Italian debt, escalating worries about Italy's ability to fund itself. The BSE Sensex fell 207.43 points or 1.18%, off about 296 points from the day's high and up close to 31 points from the day's low. The market breadth was weak.



Banking and metal shares bore the brunt of selling pressure while shares in FMCG sector bucked the weak trend. FMCG giant Hindustan Unilever (HUL) hit record high. Bank stocks fell after global rating agency Moody's downgraded its outlook for India's banking system to "negative" from "stable". State Bank of India (SBI) fell almost 7% as the bank's latest results showed that its bad loans rose. Lupin rose after good Q2 results. Ranbaxy Laboratories declined on weak Q3 results. PSU OMCs and airline stocks dropped on higher crude oil prices. Index heavyweight Reliance Industries (RIL) extended initial losses.

The market edged higher amid initial volatility. Volatility continued as key benchmark indices recovered after slipping into the red to hit fresh intraday lows in morning trade. The market regained strength after alternately moving between positive and negative terrain in mid-morning trade. The market trimmed losses after slipping into the red once again to hit fresh intraday low in early afternoon trade. Volatility continued as the key benchmark indices recovered after hitting fresh intraday lows in early afternoon trade. The Sensex alternatively swung between gains and losses near the flat line in mid-afternoon trade. The market tumbled in late trade.

The stock market remains closed tomorrow, 10 November 2011 on account of Gurunanak Jayanti.

The BSE Sensex fell 207.43 points or 1.18% to settle at 17,362.10, its lowest level since 26 October 2011. The index tumbled 238.30 points at the day's low of 17,331.23 in late trade. The index gained 88.81 points at the day's high of 17,658.34 in early trade, its highest level since 4 November 2011.

The S&P CNX Nifty fell 68.30 points or 1.29% to settle at 5,221.05, its lowest level since 26 October 2011. The Nifty hit a high of 5,317.50 in intraday trade, its highest level since 4 November 2011. The Nifty hit a low of 5,211.75 in intraday trade.

The BSE Mid-Cap index underperformed the Sensex, falling 1.25%. The BSE Mid-Cap index outperformed the Sensex, falling 1.06%.

BSE clocked turnover of Rs 2565 crore, higher than Rs 1984.53 crore on Tuesday, 8 November 2011.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,879 shares fell and 991 rose. A total of 104 shares were unchanged.

From the 30-share Sensex pack, 24 fell and the rest of them rose.

Index heavyweight Reliance Industries (RIL) fell 1.96% to Rs 864.55. The stock was volatile. The stock hit a high of Rs 892.50 and a low of Rs 860.90. RIL on Tuesday 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.

RIL recently refuted speculation that it is considering acquiring Valero Energy, Inc. Valero Energy is a Fortune 50 company based in San Antonio, and through its subsidiaries is the world's largest independent petroleum refiner and marketer.

RIL, last month, neither confirmed nor denied media reports of a likely suspension of oil and gas drilling operations. RIL said on 17 October 2011 that it has always communicated any material event to the stock exchanges first before disseminating to the media. Media reports had suggested recently that RIL may suspend oil and gas drilling operations for an unspecified time until an internal valuation of its exploration and production strategy.

India's largest state-run oil & gas exploration firm by sales, ONGC, fell 2.43% to Rs 271.25 on fears of higher subsidy burden due to higher global crude oil prices. The company announced after market hours on 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.

Shares of public sector oil marketing companies (PSU OMCs) fell for the second straight day as higher crude oil prices will increase under-recoveries of PSU OMCs on domestic sale of diesel, LPG and kerosene at controlled prices. PSU OMCs, last week, raised petrol prices by Rs 1.80 per litre to Rs 1.91 per litre. That was the 13th increase in petrol prices since the fuel was decontrolled in June last year, and second since the middle of last month when prices were raised by more than Rs 3 a litre

Indian Oil Corporation fell 3.73% to Rs 288 after the company reported a net loss of Rs 7485.55 crore in Q2 September 2011, compared with a net profit of Rs 5293.95 crore in Q2 September 2010. Total income rose 14.78% to Rs 89769.60 crore in Q2 September 2011 over Q2 September 2010. The result was announced during trading hours today, 9 November 2011.

BPCL (down 5.54% to Rs 569.80) and HPCL (down 4.93% to Rs 315.95), were the other PSU OMCs that tumbled.

Airline stocks fell on higher crude oil prices. Jet Airways fell 2.97% and SpiceJet tumbled 6.01%. Aviation turbine fuel, or jet fuel constitutes more than 50% of operating cost for airliners. Prices of jet fuel are directly linked to crude oil prices. State-run oil marketing companies--Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation revise jet fuel prices on the 1st and 16th of every month based on the average international crude price in the preceding fortnight.

India's No. 2 carrier Kingfisher Airlines, controlled by liquor baron Vijay Mallya tumbled 9.01% to Rs 21.70 after the company said on Tuesday it has cut frequency on some of its flights that run mostly over the weekend or are on routes where demand has been slow. "For a limited period, these flights are either being cancelled or clubbed with other KFA (Kingfisher) flights in a well-controlled pre-determined manner," it said in a statement. There will not be any "significant change" to its network, it said. In its efforts to focus on the full-service market, Kingfisher said it has started reorganising its aircraft, requiring few of its flights to be out of service for the next few weeks. "Once the reconfiguration is complete, these aircraft will be pressed back into service immediately," it said.

Crude oil for December delivery fell $1.12, or 1.16% to $95.68 a barrel in Asian electronic trading today. The contract yesterday advanced $1.28, or 1.3% to $96.80, the highest settlement since 28 July 2011.

Metal stocks tumbled in a weak market. JSW Steel (down 4.49%), Tata Steel (down 4.08%), Nalco (down 3.72%), Hindalco Industries (down 3.69%), Sterlite Industries (down 3.03%), Sail (down 2.73%), Bhushan Steel (down 2.59%), Sesa Goa (down 2.59%), Hindustan Zinc (down 1.51%), NMDC (down 0.96%), Jindal Steel & Power (down 0.95%) and Coal India (down 0.35%), tumbled.

Ranbaxy Laboratories fell 4.31% to Rs 475.40 after company reported a consolidated net loss of Rs 464.58 crore in Q3 September 2011, compared with a net profit of Rs 307.93 crore in Q3 September 2010. The company's total income rose 8.7% to Rs 2197.56 crore in Q2 September 2011 over Q2 September 2010. The company announced results during market hours today.

Ranbaxy Laboratories said that sales and EBITDA (earnings before interest, tax, depreciation and amortization) margins on base business continued to improve, adding that growth was seen in most major markets including CIS, Africa, Europe, Asia Pacific, and Active Pharmaceutical Ingredients business (API). The company said that its profitability below EBITDA line was impacted adversely owing largely to the requirement to mark-to-market (MTM) the long dated derivatives transactions entered into by the company in earlier years and which remain currently outstanding as well as on the forex denominated loans.

Commenting on the business results for Q3 September 2011, Arun Sawhney, CEO & Managing Director, Ranbaxy, said, "Ranbaxy's focus on long term improvement of its base business and margins has begun to reflect in the company's performance. This is resulting from an increased focus on strengthening manufacturing processes while re-aligning our products and markets for value creation."

Lupin fell 1.22% to Rs 475. The company announced during market hours today that consolidated net profit rose 24.11% to Rs 266.87 crore on 23.6% rise in total income to Rs 1772.39 crore in Q2 September 2011 over Q2 September 2010.

Among other healthcare stocks, Orchid Chemicals and Pharmaceuticals (down 5.81%), Apollo Hospitals (down 4.79%), Sterling Biotech (down 4.19%), SPARC (down 3.60%), Aurobindo Pharma (down 3.57%), Wockhardt (down 2.73%), Opto Circuits (India) (down 2.52%), GlaxoSmithKline Pharmaceuticals (down 2.14%), Dishman Pharmaceuticals & Chemicals (down 1.94%), Sun Pharmaceutical Industries (down 1.88%), Ipca Laboratories (down 1.82%), Biocon (down 1.53%), Cipla (down 1.15%), Dr Reddy's Laboratories (down 1.02%), Glenmark Pharmaceuticals (down 0.70%) and Divi's Laboratories (down 0.59%), edged lower.

India's largest real estate firm by market capitalization DLF lost 3.59%. The Competition Appellate Tribunal has reportedly stayed a Rs 630-crore penalty on DLF imposed by the country's competition watchdog, Competition Commission of India. The Competition Commission of India imposed the 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.

The owners' association in the complex complained that DLF, which had planned to build 19 floors in 36 months had instead built 29 floors, which disadvantaged existing buyers and led to delays. DLF challenged the order for the penalty at the country's Competition Appellate Tribunal in October, according to reports. While staying the penalty on Wednesday, 9 November 2011, the tribunal said, however, that if DLF loses the case it will have to deposit the entire amount with additional 9% interest charges, reports added.

Among other real estate stocks, Anant Raj Industries (down 4.66%), HDIL (down 4.65%), Indiabulls Real Estate (down 3.68%), D B Realty (down 2.41%), Sobha Developers (down 2.17%), Unitech (down 1.73%), Parsvnath Developers (down 0.73%), Peninsula Land (down 0.59%) and Godrej Properties (down 0.38%), declined.

FMCG stocks rose on defensive buying. FMCG giant Hindustan Unilever (HUL) jumped 2.85% to Rs 391.30. The stock hit a record high of Rs 395.80 today. 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 results was announced on 31 October 2011.

Among other FMCG companies, United Spirits (up 4.89%), Godrej Consumer Products (up 1.13%), Marico (up 1.11%), Nestle India (up 0.92%), ITC (up 0.71%), Britannia Industries (up 0.59%), Ruchi Soya Industries (up 0.27%) and United Breweries (up 0.14%), edged higher.

IT stocks were mixed amid a weak 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 rupee weakened to its lowest in two weeks on Wednesday on strong dollar demand from corporates that offset a firm euro and positive local shares.

India's largest software services exporter TCS rose 1.77% to Rs 1123 after the company announced during market hours today 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 2.14% to Rs 376.60, after the company announced after market hours on Tuesday 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.

However, India's second largest software services exporter Infosys fell 0.25% to Rs 2832.10. The company's consolidated net profit as per International Financial Reporting Standards (IFRS) rose 10.68% to Rs 1906 crore on 8.2% growth in revenue to Rs 8099 crore in Q2 September 2011 over Q1 June 2011. The company announced the results on 12 October 2011.

Infosys has forecast 9.72% to 11.11% growth in non-annualized earnings per American Depositary Share at $0.79 to $0.80 in Q3 December 2011 over Q2 September 2011. It has forecast 3.2% to 5.3% growth in revenue at $1.802 to $1.84 billion in Q3 December 2011 over Q2 September 2011.

The company has for the second quarter in a row revised upwards its dollar earnings guidance for the year ending March 2012 (FY 2012). The company expects 15.3% to 16.8% growth in earnings per American Depositary Share at $3.02 to $3.06 in FY 2012 over the year ending March 2011 (FY 2011). However, the company has revised downwards dollar revenue growth guidance for FY 2012. The company expects 17.1% to 19.1% growth in revenue at $7.08 billion to $7.20 billion in FY 2012 over FY 2011.

Bank stocks fell after global rating agency Moody's downgraded its outlook for India's banking system to "negative" from "stable", as it warned of slowing growth at home and overseas hitting asset quality, capitalization and profitability.

India's largest bank by branch network State Bank of India (SBI) fell 6.76% to Rs 1862.50 as the ratio of 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'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.

Consequent to the notification of the acquisition of State Bank of India Commercial & International Bank issued by the Govt. of India, the undertaking of State Bank of India Commercial & International Bank (SBICI) stands transferred to and vests in State Bank of India, with effect from July 29, 2011, the effective date. The results for the quarter and six months ended September 30, 2011 include the results of operations of the erstwhile SBICI for the period from 29 July 2011 to 30 September 2011 and the hence the results are not comparable to that extent.

India's largest private sector bank by net profit ICICI Bank shed 2.16% to Rs 861.75. 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 Monday, 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 1.50% to Rs 477.45. 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 during market hours on 19 October 2011.

Bank of Baroda (down 3.63%), IDBI Bank (down 3.19%), Federal Bank (down 2.82%), Axis Bank (down 2.47%), IndusInd Bank (down 2.27%), Union Bank of India (down 2.10%), Punjab National Bank (down 1.37%), Kotak Mahindra Bank (down 1.26%), Canara Bank (down 1.21%), Yes Bank (down 1.08%) and Bank of India (down 0.69%), dropped.

A curbing of economic growth and increased borrowing by the government will drain funds from the private credit market, Moody's said. "With asset quality, given the tightening environment, we anticipate that it will deteriorate over the next 12-18 months, thereby causing an increase in provisioning needs for the banks in FY 2012 and FY 2013," Vineet Gupta, Moody's vice-president and senior analyst, was quoted as saying in the statement. Moody's defines a "negative" outlook as one characterized by volatility and uncertain conditions.

The rating agency said monetary tightening and a slowdown in the economy would cut bank loan growth, while a recent liberalization of savings deposit rates by the central bank would pressurize lenders' profitability. "For those banks with weaker capital ratios on average and higher asset quality pressures relative to their individual rating levels, their standalone ratings are likely to come under pressure," the Moody's statement added.

Incidentally, Reserve Bank of India deputy governor Subir Gokarn had said at a televised event on Tuesday that bad loans are not threatening the entire banking system in India.

Reliance Infrastructure fell 1.39% to Rs 468.90. The order book positions of the company's engineering, procurement and construction (EPC) business remains robust Rs 24325 crore (as on 30 September 2011). The company announced after market hours on Tuesday that consolidated net profit inched up 0.4% to Rs 361.63 crore on 48.50% increase in total income to Rs 5855.34 crore in Q2 September 2011 over Q2 September 2010.

Power Finance Corporation fell 1.03% to Rs 168.80 after company announced during market hours today that net profit fell 40.16% to Rs 419.33 crore on 23.89% rise in total income to Rs 3145.05 crore in Q2 September 2011 over Q2 September 2010.

State Bank of India clocked a highest turnover of Rs 518.06 crore on BSE. Flexituff International (Rs 110.08 crore), ICICI Bank (Rs 57.58 crore), Tata Steel (Rs 48.33 crore) and TCS (Rs 44.99 crore), were the other turnover toppers on BSE in that order.

Cals Refineries reported a highest volume of 3.11 crore shares on BSE. Shree Ashtavinayak Cine Vision (88.59 lakh shares), Sujana Towers (77.15 lakh shares), Nu Tek India (49.04 lakh shares) and Flexituff International (38.87 lakh shares), were the other volume toppers on BSE in that order.

Stock-specific activity may dominate trade in the near-term with the earnings season as its peak. Investors will closely watch the management commentary at the time of announcement of Q2 September 2011 results, which will provide cues on futures earnings outlook.

DLF, Tata Steel, Hindalco, Pantaloon Retail (India), Mahindra Satyam, Rural Electrification Corporation and CEAT unveil quarterly results on Thursday, 10 November 2011. Jet Airways (India), GE Shipping, Reliance Capital, Housing Development & Infrastructure and Tata Chemicals unveil Q2 results on Friday, 11 November 2011. Coal India, National Aluminium Company and Shipping Corporation of India report Q2 results on Saturday, 12 November 2011.

Sun Pharma unveils Q2 results on Sunday, 13 November 2011. Tata Motors, Mahindra & Mahindra, Tata Power, Bhel, Jaiprakash Associates, Bhushan Steel, JSW Steel and India Cements unveil Q2 results on 14 November 2011. Tech Mahindra unveils Q2 results on 15 November 2011.

Trinamool Congress chief and West Bengal Chief Minister Mamata Banerjee has issued a fresh threat to the government, saying her party will withdraw support if the government hikes diesel and LPG prices. This is a climbdown of sorts for Mamata, after she failed to have her way on the petrol hike issue, when Prime Minister Manmohan Singh refused to commit to a rollback in the petrol price hike during a meeting with the Trinamool MPs. Mamata has reportedly asked the Centre to compensate her state for years of Left rule that she claims stripped the state treasury bare. Mamata also reportedly said that the issues of the West Bengal financial package and petrol price rise are separate and should not be mixed up.

PSU OMCs last week raised petrol prices by between Rs 1.80 per litre to Rs 1.91 per litre. That was the 13th increase in petrol prices since the fuel was decontrolled in June last year, and second since the middle of last month when prices were raised by more than Rs 3 a litre.

India's October exports rose an annual 10.8% to $19.9 billion, while imports for the month rose 21.7 percent to $39.5 billion, the trade secretary said on Tuesday, citing provisional data. India's trade deficit in October is seen at $19.6 billion, the highest in four years, Rahul Khullar said. At this rate, the trade deficit for the year could breach the $150 billion mark, he added.

India's service sector contracted for a second straight month in October, as new business grew at its weakest pace since May 2009, dragged by sagging global demand and tight monetary policy, a survey showed on Thursday, 3 November 2011. The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms, slumped to 49.1 in October, its lowest reading in two-and-a-half years and below the 50-mark which separates growth from contraction. It was at 49.8 in September.

India's manufacturing activity in October expanded--though modestly--indicating an improvement in business conditions from a month ago as growth in new orders accelerated, a survey showed Tuesday, 1 November 2011. The seasonally adjusted HSBC Purchasing Managers' Index, prepared by Markit, rose to 52 in October from 50.4 in September. A figure above 50 indicates expansion.

The food price index rose 12.21%, its highest in 9 months, and the fuel price index climbed 14.50% in the year to October 22, government data on Thursday, 3 November 2011, showed. In the previous week, annual food and fuel inflation stood at 11.43% and 14.70% respectively. The primary articles price index was up 12.08% compared with an annual rise of 11.75% a week earlier.

India needs to guard against imported inflationary pressure as the euro-zone continues to reel under the debt crisis, Prime Minister Manmohan Singh said on Wednesday, 2 November 2011. "In an increasingly interdependent world, we have to be wary of contagion effects," Mr. Singh said in a statement before his departure to attend a conference of the Group of 20 industrial and developing economies in Cannes, France.

Bad loans are not threatening the entire banking system and the policy guidance given so far would hold until further notice, a deputy governor of the Reserve Bank of India, Subir Gokarn, said at a televised event on Tuesday, 8 November 2011.

RBI announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably.

Mr. Sudipto Mundle, a member of the Reserve Bank of India's technical advisory committee on monetary policy, on Thursday, 3 November 2011, said he expects inflation to ease in the January-March quarter as global commodity prices will begin to cool by then, helped by a favorable base. However, it will still overshoot the RBI's March-end projection of 7%, possibly ending the fiscal year at as high as 8%, he added. Mr. Mundle expects the economy to grow 7%-7.5% this fiscal year, below the RBI's 7.6% forecast.

European stocks reversed initial gains on Wednesday, 9 November 2011, after independent clearing house LCH.Clearnet raised the margins traders must provide to trade Italian debt, escalating worries about Italy's ability to fund itself. Key benchmark indices in France, Germany and UK fell by between 2.03% to 2.64%.

The 10-year Italian-government-bond yield rose 14 basis points or 0.14 percentage point, to 6.72% following the announcement from LCH.Clearnet. The news comes as embattled Prime Minister Silvio Berlusconi said on Tuesday that he will resign after the Italian parliament approves austerity measures.

Asian shares rose in volatile trade on Wednesday, 9 November 2011, after the latest Chinese data indicated cooling inflation and still-robust economic activity in that country. Key benchmark indices in Hong Kong, China, South Korea, Indonesia, and Japan rose by between 0.23% to 1.71%. Key benchmark indices in Taiwan and Singapore fell by between 0.21% to 0.51%.

Chinese consumer inflation eased in October for the third month in a row, as food and energy price gains softened, while wholesale prices saw an even sharper cooling, potentially giving monetary-policy makers more room for selective easing. The consumer price index rose 5.5% from a year earlier, while the producer price inflation was up 5%. The closely watched results compared to September's data, which showed a year-on year rise of 6.1% year-on-year rise in the CPI and a 6.5% gain in the PPI.

Trading in US index futures indicated that the Dow could tumble 224 points at the opening bell on Wednesday, 9 November 2011. US stocks closed higher on Tuesday for a second day in a row as late-day news about Europe sparked an afternoon rally that erased early weakness.