Market slides as industrial production growth slows sharply

Key benchmark indices edged lower in a volatile trading session as data showing a sharp slowdown in industrial production growth in December 2011 and weakness in European shares hit sentiment adversely. The barometer index, BSE Sensex, was down 82.08 points or 0.46%, off about 140 points from the day's high and up close to 120 points from the day's low.

The Sensex has jumped 555.14 points or 3.22% in February 2012 so far. The barometer index has surged 2,293.77 points or 14.84% in calendar 2012 so far. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,612.83 points or 17.26%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,062.45 points or 10.41%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) dropped. Bank stocks edged lower on profit taking after recent strong gains. Realty stocks also fell. IT stocks edged lower as the main industry body -- the National Association of Software and Services Companies (Nasscom) on Wednesday, 8 February 2012, said that the pace of revenue growth of the sector will likely moderate next fiscal year amid continued global economic uncertainty.

Tata Steel jumped more than 5% as the company issued an encouraging future outlook after reporting 3rd quarter net loss after trading hours on Thursday, 9 February 2012. Hindalco Industries extended Thursday's losses triggered by weak Q3 results. Airline stocks tumbled on profit taking. Except the BSE Metal index, all the other 12 sectoral indices on BSE were in the red. The market breadth was negative.

The market moved into positive terrain after a lower opening. The S&P CNX Nifty hit its highest level in more than 27 weeks in early trade. Key benchmark indices trimmed initial gains and swung alternately between positive and negative terrain near the flat line in morning trade. Key benchmark indices alternately swung between positive and negative terrain after paring gains after hitting fresh intraday highs in mid-morning trade. The market declined to hit fresh intraday low in early afternoon trade. The market weakened again after trimming losses after hitting fresh intraday low in mid-afternoon trade.

The BSE Sensex shed 82.08 points or 0.46% to settle at 17,748.69, its lowest closing level since 8 February 2012. The index declined 203.61 points at the day's low of 17,627.14 in mid-afternoon trade. The index rose 59.36 points at the day's high of 17,890.11 in mid-morning trade, its highest level since 28 October 2011.

The S&P CNX Nifty shed 30.75 points or 0.57% to settle at 5,381.60, its lowest closing level since 8 February 2012. The index hit a low of 5,341.05 in intraday trade. The index hit a high of 5,427.75 in intraday trade, its highest level since 4 August 2011.

The BSE Mid-Cap index rose 0.11% and outperformed the Sensex. The BSE Small-Cap index fell 0.02% and outperformed the Sensex.

BSE clocked turnover of Rs 3610 crore, higher than Rs 3326.44 crore on Thursday, 9 February 2012.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,513 shares fell and 1,435 rose. A total of 106 shares were unchanged. The breadth was strong earlier in the day.

Among the 30-member Sensex pack, 22 fell while the rest rose.

Index heavyweight Reliance Industries (RIL) fell 1.23%, with the stock reversing initial gains. RIL during market hours today said that its wholly owned subsidiary Reliance Holding USA, Inc has priced its $1 billion 5.4% Guaranteed Senior Notes due 2022. The notes will be fully and unconditionally guaranteed by RIL. The issue was nearly 8 times over-subscribed with an order book aggregating $7.8 billion, RIL said. Reliance Holding USA, Inc will apply the net proceeds of the issue to fund its ongoing capital expenditure, to make business investments, to refinance its debt and for general corporate purposes.

RIL last week started a Rs 10440-crore share buyback program. The company proposes to buy-back up to a maximum of twelve crore shares and a minimum of three crore shares. The maximum price for buyback has been set at Rs 870 per share. The company has set aside Rs 10440 crore for share buyback, which represents approximately 7.22% of the company's total paid-up equity capital and free reserves as on 31 March 2011.

Hindalco Industries tumbled 3.62%, with the stock extending Thursday's 1.31% losses triggered by weak Q3 results. The company announced during market hours on Thursday that net profit fell 1.95% to Rs 451 crore on 11% growth in net sales and operating revenue to Rs 6647 crore in Q3 December 2011 over Q3 December 2010. Hindalco said that volatile LME prices and foreign exchange fluctuations along with spiraling energy cost are posting a major challenge for the company in the short term context. Hindalco said its portfolio of LME neutral copper smelting operation and its integrated aluminium operation is providing the strategic balance in the volatile commodity cycle.

Hindalco said capacity expansions under implementation will enable the company to grow at a rapid pace and consolidate its leadership even further. The company said its focus continues to be on timely completion of the projects and successful ramp-up of production.

Hindalco Industries also said that the board of directors of the company has approved the issuance of up to 15 crore warrants to promoters/promoter group companies on preferential allotment basis, entitling the holder(s) of each warrant to apply for and obtain allotment of one equity share against such warrant.

Hindalco's US subsidiary -- Novelis on Wednesday, 8 February 2012, reported net loss of $12 million in Q3 December 2011, lower than net loss of $46 million in Q3 December 2010. Net sales dipped 4% to $2.5 billion in Q3 December 2011 over Q3 December 2010. The company attributed lower sales to lower volumes and decline in average aluminum prices. Novelis is a global leader in aluminum rolled products and aluminum can recycling.

Novelis has slightly revised downwards its adjusted EBITDA guidance for the year ending March 2012 (FY 2012) to between $1.05-1.08 billion. The company said the downward revision was due to the ongoing market pressures and higher than expected destocking levels in several regions in the third quarter. The company has reaffirmed its FY 2012 free cash flow before capital expenditure target of $600-700 million and capital expenditure of approximately $550-600 million primarily focused on its global expansion projects in Brazil, Korea and North America.

India's largest steel maker by sales Tata Steel jumped 5.3% as the company issued an encouraging future outlook after reporting 3rd quarter net loss after trading hours on Thursday, 9 February 2012. High volumes accompanied the rally in the counter. On BSE, 51.80 lakh shares were traded in the stock as against average daily volume of 14.71 lakh shares in past one quarter. The stock was the top gainer from the Sensex pack.

Tata Steel reported consolidated net loss of Rs 603 crore in Q3 December 2011 as against net profit of Rs 1003 crore in Q3 December 2010. Turnover rose 13.79% to Rs 33103 crore in Q3 December 2011 over Q3 December 2010.

Commenting on the results Tata Steel Managing Director Mr H M Nerurkar said: "Our Indian operations delivered steady performance during the last quarter, with flat product volumes increasing 3% year-on-year. Long product volumes dropped marginally due to planned shutdowns, but we increased our market reach, recording our highest ever quarterly retail long products sales. Company-wide cost saving measures benefitted margins in an otherwise difficult market. We expect steel demand to improve on expectations of the RBI relaxing monetary policy to aid growth and investment. An improvement in operating performance, coupled with a number of new marketing initiatives, should increase profitability at the South East Asian operations".

Tata Steel Europe MD & CEO Dr Karl-Ulrich Köhler said: "The December quarter marked the height of the cyclical cost-price squeeze. Tata Steel was one of the first steel companies in Europe last year to start adjusting its output and configuration to the slowdown in the recovery. The turnaround programme in our Long Products business is well on course for completion by the end of the financial year, as planned. Similar measures have been taken elsewhere in the company, most recently at some of our tubes operations in the Netherlands and the UK. Through our Step Up & Save initiative we are accelerating cash conservation in expectation of muted but stable demand in our core markets in 2012".

With regard to future outlook, Tata Steel said softening raw material prices is expected to ease product costing pressures from Q4 March 2012 onwards. Tata Steel said that steel demand in India is expected to improve with RBI indicating pro-growth monetary policy. Tata Steel said steel prices remain firm and with traditionally strong volumes in the fourth quarter, the company's profitability will improve. Tata Steel said that the outlook for steel demand in Europe remains stable. Strengthening steel prices in Europe and restocking will result in better margins of its European operations in the coming quarters, Tata Steel said.

Tata Steel said its South East Asian operations are expected to perform better with activities in Thailand coming back to normal. Reconstruction activities will boost long products demand, it said.

ACC fell 3.19% to Rs 1,344.60 on profit taking. The stock hit a record high of Rs 1421.95 today. The company after market hours on Thursday announced that consolidated net profit rose 86.1% to Rs 463.20 crore on 22.1% rise in total income to Rs 2746.16 crore in Q4 December 2011 over Q4 December 2010.

BPCL rose 0.48% in volatile trade after the company's net profit surged 1575.53% to Rs 3139.60 crore on 60.44% increase in net sales to Rs 58824.45 crore in Q3 December 2011 over Q3 December 2010. The result was announced during trading hours today, 10 February 2012.

HPCL rose 2.19% after reporting strong Q3 results. HPCL announced after market hours on Thursday that net profit surged 1191.37% to Rs 2725.18 crore on 40.94% growth in total income to Rs 48204.97 crore in Q3 December 2011 over Q3 December 2010.

Airline stocks tumbled on profit taking after recent strong gains. SpiceJet, Jet Airways and Kingfisher Airlines fell by between 3.26% to 4.67%. A government panel had recently recommended up to 49% foreign direct investment by foreign airlines and direct import of jet fuel by airlines. Currently, India allows up to 49% FDI in domestic airlines through the automatic route while NRIs can invest up to 100%. Foreign airlines are, however, barred from investing in domestic airlines.

Sun TV Network rose 3.81%. The company announced after market hours today that net profit fell 25.54% to Rs 167.88 crore on 26.14% decline in total income to Rs 448.32 crore in Q3 December 2011 over Q3 December 2010.

IT stocks were mixed. India's largest software services exporter by revenue TCS rose 0.29%. TCS said on Wednesday that it has formed a new joint venture (JV) with Mitsubishi Corporation for the Japanese market. Nippon TCS Solution Center will offer a full service suite of IT, BPO and infrastructure services to Japanese corporations. TCS Japan will have 60% stake with Mitsubishi Corporation holding 40% stake in JV. The new joint venture will also establish a near-shore delivery center in Japan.

TCS said on Monday that it won a multi-year, multi-million euro contract from Europcar, the car rental leader in Europe. Europcar Information Services, Europcar's IT subsidiary, has selected TCS to manage strategic IT services development for its French operations.

India's second largest software services exporter by revenue Infosys fell 0.87%. The company has given a muted guidance for Q4 March 2012. The company has projected a marginal 1.25% growth in non-annualised earnings per American Depositary Share at $0.81 in Q4 March 2012 over Q3 December 2011. The company has projected a flat to 0.22% growth in consolidated revenue in dollar terms at $1.806 billion to $1.81 billion in Q4 March 2012 over Q3 December 2011.

India's third largest software services exporter by revenues Wipro rose 0.8%. Wipro reported 12% growth in consolidated net profit to Rs 1456.40 crore on 10% growth in sales to Rs 9997.20 crore in Q3 December 2011 over Q2 September 2011. Wipro expects revenues from IT services business to grow 1% to 3% at $1.52 billion to $1.55 billion in Q4 March 2012 over Q3 December 2011. The company announced the 3rd quarter results on 20 January 2012.

The main industry body -- the National Association of Software and Services Companies (Nasscom) on Wednesday, 8 February 2012, said that the pace of revenue growth of the sector will likely moderate next fiscal year amid continued global economic uncertainty. Exports from the IT sector may grow 11%-14% in the year that starts on 1 April 2012 to $76 billion-$78 billion, compared with an estimated $68.7 billion this fiscal year, an increase of about 16%, Nasscom said. The body said it will review its export forecasts in October 2012.

With its large English-speaking and relatively cheap workforce, India remains a preferred outsourcing destination for companies in developed markets. India's share in global outsourcing was 58% in 2011, up from 55% in 2010, Nasscom said.

DLF fell 0.88% ahead of its Q3 results today, 10 February 2012.

Among other realty stocks, Indiabulls Real Estate, HDIL and Unitech shed by between 1.38% to 4.11%.

Bank stocks edged lower on profit taking after recent strong gains. India's largest private sector bank by branch network ICICI Bank fell 1.21%. A unit of Singapore state investment company Temasek Holdings Pte on Wednesday, 8 February 2012, sold 1.59 crore shares of ICICI Bank through bulk deals on NSE for Rs 1472 crore. Allamanda Investments Pte sold the shares in India's largest private-sector lender by assets at an average Rs 924.05 per share. Goldman Sachs Investments Mauritius mopped up 64.65 lakh shares in the bulk deal at a price of Rs 924 per share.

India's second largest bank by net profit HDFC Bank fell 1.14% to Rs 516.20. The stock hit a record high of Rs 525.70 today, 10 February 2012. HDFC Bank reported 31.4% growth in net profit to Rs 1429.70 crore on 35.6% increase in total income to Rs 8622.64 crore in Q3 December 2011 over Q3 December 2010. The result was announced on 19 January 2012.

HDFC Bank said its core CASA deposit ratio, adjusted for one-off current account balance of about Rs 4000 crore, was at 47.7% of total deposits as on 31 December 2011. The private sector bank said its asset quality remains healthy. The bank's capital adequacy ratio (CAR) remained strong at 16.3% as on 31 December 2011, against the regulatory minimum of 9%. The bank's Tier-I CAR was 11.2% as on 31 December 2011.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) shed 0.43%. SBI recently said that the Government of India has agreed to inject approximately Rs 7900 crore into bank by way of preferential allotment of equity shares to help SBI achieve minimum 8% Tier I CAR by 31 March 2012. The government currently owns 59.40% of SBI.

IDFC fell 3.01%. The lender to the infrastructure sector announced during market hours today that consolidated net profit rose 18.58% to Rs 381.21 crore on 25.18% increase in total income to Rs 1639.86 crore in Q3 December 2011 over Q3 December 2010.

Auto stocks reversed initial gains. Mahindra & Mahindra (M&M) fell 1.36%. The company said at the time of announcing 3rd quarter results early this week that it expects pressure on profit margin to continue in the near future. The combined net profit of M&M and Mahindra Vehicle Manufacturers (MVML), excluding extra-ordinary items, rose 16% to Rs 705.90 crore in Q3 December 2011 over Q3 December 2010. The combined gross revenue and other income of M&M and MVML jumped 33.9% to Rs 9011.20 crore in Q3 December 2011 over Q3 December 2010. MVML was set up a 100% subsidiary of M&M, with a view to sourcing contemporary products for expanding the market offerings of M&M. M&M announced the Q3 result on Tuesday, 7 February 2012.

M&M said growth in profit in Q3 December 2011 despite relentless increase in material costs was due to a good volume performance by both vehicles and tractors segments in a difficult market and due to tight control on expenses. M&M said it has always met challenges through its continuous focus on new product introductions, which has helped it drive volumes.

M&M said on Tuesday that it has received more than 25,000 bookings for its latest XUV500 sport-utility vehicle after it reopened applications. Bookings for the vehicle reopened on 25 January 2012 across 19 cities in the country and closed on 3 February 2012. M&M had introduced the SUV in September 2011 and received 8,000 bookings within 10 days. The company then had to stop taking fresh orders as it was working on monthly output of 2,000 units. The company said recently it increased the vehicle's monthly output to 3,000 in January 2012 and plans to further raise it 4,000-5,000 in June 2012.

India's largest commercial vehicle maker by sales Tata Motors was flat. The stock hit a 52-week high of Rs 261.80 in intraday trade today. The company has reportedly raised prices of most of its passenger vehicle models to offset higher input costs. The company has raised prices of all vehicle models except for the Nano small car and the Aria multipurpose vehicle by between Rs 7,000 and Rs 12,000. Tata Motors makes and sells the Indica hatchback, the Indigo sedan, the Safari sport-utility vehicle and the Sumo utility vehicle.

India's largest car maker by sales Maruti Suzuki India fell 1.99%. The car major last week said its total sales rose 5.2% to 1.15 lakh units in January 2012 over January 2011. Domestic sales rose 0.6% to 1.01 and exports jumped 54.3% to 14,386 units in January 2012 over January 2011.

Maruti early this month introduced a shorter, cheaper version of its Swift Dzire sedan as part of efforts to retain its position as the country's largest car maker by sales. The new Dzire is 3.95 meters in length, qualifying it for a lower federal excise tax, compared with the current 4.1 meter-long model. The government imposes a 10% tax on cars measuring up to 4 meters in length. These cars can have a diesel engine of only up to 1.5 liters or a gasoline engine of up to 1.2-liters. An excise tax of 22% is imposed on cars beyond 4 meters in length.

India's largest motorcycle maker by sales Hero MotoCorp declined 1.18%. The company reported 11.5% growth in sales to 5.20 lakh units in January 2012 over January 2011. The company announced the monthly sales data early this month.

Bajaj Auto gained 2.1%. The company early this month said its total vehicle sales rose 8% to 3.37 lakh units in January 2012 over January 2011. The company announced the monthly sales data early this month.

L&T fell 0.29%, with the stock reversing initial gains. The company announced during market hours on Thursday that L&T Rajkot Vadinar Tollway, a wholly owned subsidiary of L&T Infrastructure Development Projects, commenced commercial operation of the four-laned 132 kilometer stretch of SH-25 on 1 February 2012. L&T had announced during market hours on Tuesday that its construction division has bagged new orders valued over Rs 1880 crore across various business segments in Q4 March 2012.

Cairn India lost 1.93% to Rs 373.15 as crude oil prices fell from three-week highs on concerns the worsening Europe's debt crisis will curb global commodity demand. The stock hit a high of Rs 388.25 in intraday trade, which is a record high for the counter.

Suzlon Energy clocked highest volume of 1.47 crore shares on BSE. Cals Refineries (1.25 crore shares), Suzlon Energy (1.12 crore shares), Ambuja Cements (81.89 lakh shares) and Dazzel Confindiv (72.72 lakh shares) were the other volume toppers in that order.

Tata Steel clocked highest turnover of Rs 246.08 crore on BSE. Ambuja Cements (140.85 crore), SBI (Rs 133.23 crore), JSW Holdings (Rs 85.95 crore) and JSW Steel (66.74 crore) were the other turnover toppers in that order.

Industrial production rose a slower-than-expected 1.8% in December 2011, government data showed on Friday, 10 February 2011. The growth in December 2011 was sharply lower than 5.9% growth in November 2011. Manufacturing output, which constitutes about 76% of industrial production, rose 1.8% from a year earlier, the statistics office said.

Aditya Birla Nuvo and Oil India announce Q3 results on Saturday, 11 February 2012. State Bank of India, Cipla, Reliance Power, Indian Oil Corporation, Coal India, Sun Pharmaceuticals Industries and Steel Authority of India (Sail) unveil Q3 results on 13 February 2012. Tata Motors, Reliance Infrastructure, Jaiprakash Associates, Videocon Industries, Essar Oil, and Shipping Corporation of India unveil Q3 results on 14 February 2012. Ranbaxy Laboratories and ABB unveil Q4 December 2011 results on 23 February 2012.

India's January exports rose 10.1% to $25.4 billion while imports rose 20.3% to $40.1 billion, leaving a trade deficit of $14.7 billion, Trade Secretary Rahul Khullar said on Thursday. India's exports reached $242.8 billion between April and January, Khullar said, citing provisional data.

The Indian economy is estimated to grow 6.9% in the current fiscal year through March 2012 (FY 2012), sharply slower than the 8.4% expansion reported last year, according to a government forecast released on Tuesday, 7 February 2012. The new expectation is due to weaker growth in manufacturing and farm output, data from the ministry of statistics and implementation showed. The government expects manufacturing output to grow 3.9% this fiscal year compared with a 7.6% increase a year earlier. Farm output is expected to rise 2.5%, compared with 7% last year. In December 2011, the government had cut its growth projection for FY 2012 to between 7.25% and 7.75% from an initial forecast of 9%.

Finance Minister Pranab Mukherjee will present the annual budget for 2012/13 on 16 March 2012, while the railways budget will be presented on 14 March 2012. The budget session of parliament will start on 12 March 2012, Pawan Kumar Bansal, minister of parliament affairs, said recently. The government will present on March 15 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012.

European stocks dropped on Friday, 10 February 2012, after euro-zone finance ministers held off on approving a fresh trance of aid for Greece late the prior day. Key benchmark indices in France, Germany and UK shed by between 0.3% to 0.85%.

Greek political leaders clinched a deal on severe austerity measures and reforms indispensable for a second international bailout in two years, but the country's global lenders demanded more steps and a parliamentary seal of approval before providing any aid. Greek Prime Minister Lucas Papademos said the government's talks with international creditors had concluded successfully Thursday morning. "This program accompanies the new loan agreement to finance Greece with 130 billion euros," he added. The statement from Papademos came after days of haggling among Greece's main political parties.

But, European finance ministers refused to sign off on a second aid package for Greece until the parliament approved the austerity undertakings and economic reforms. The ministers are scheduled to meet next Wednesday and are expected to approve rescue funds provided Greece has taken the necessary steps.

The Bank of England kept rates steady but expanded the size of its QE program on Thursday.

Asia markets fell on Friday after Greece approved a long-awaited austerity agreement, but international backers called for ratification of the reforms before more bailout funds would be released. Key benchmark indices in Singapore, Hong Kong, Indonesia, Japan, Taiwan, and South Korea fell by between 0.61% to 1.67%. China's Shanghai Composite rose by 0.10%.

China's trade shrank in January from a year earlier, with factory shutdowns for Lunar New Year holidays exacerbating a slowdown in external demand that has set Beijing on a pro-growth policy course to support the domestic sector. Customs data on Friday showed imports sank 15.3 percent in January versus January 2011 -- the lowest since August 2009 -- while exports fell 0.5 percent over the same period, the worst showing since November 2009. It left China with a trade surplus of $27.3 billion in January, its biggest in six months and confounding expectations of a further narrowing.

Trading in US index futures indicated that the Dow could fall 54 points at the opening bell on Friday, 10 February 2012. US stocks closed higher for a third day Thursday after Greece said it had an austerity deal and as jobless claims fell again last week.