L&T jumps after decent revenue and order flow guidance for FY 2013

Key benchmark indices snapped five-day losing streak as market sentiment improved after data showed foreign institutional investors (FIIs) bought shares for the third day in a row on Monday, 14 May 2012. The barometer index, BSE Sensex, jumped 112.41 points or 0.69%, off close to 40 points from the day's high and up about 205 points from the day's low. The market breadth, indicating the overall health of the market, turned positive from negative in late trade. Index heavyweight Reliance Industries (RIL) was flat for the day after seeing intraday volatility. Indian stocks today, 15 May 2012, snapped 5-day losing streak. From a recent high of 16,912.71 on 7 May 2012, the BSE Sensex had declined 696.87 points or 4.12% in five trading sessions to 16,215.84 on Monday, 14 May 2012. The Sensex has declined 990.56 points or 5.71% in May 2012 so far (till 15 May 2012). The Sensex has gained 873.33 points or 5.65% in calendar 2012 so far (till 15 May 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,192.39 points or 7.87%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 2,803.45 points or 14.65%. Coming back to today's trade, India's largest engineering & construction firm by sales, L&T, jumped more than 5% with the stock extending Monday's gains triggered by strong Q4 results. IT major Infosys gained over 3% after the head of the company's US business, Ashok Vemuri, said in a media interview on Monday that there are early signs of business picking up in the US -- its largest market. Power generation major NTPC hit 52 week low, with the stock extending recent slide triggered by the company slashing its capacity addition target for the next five years. State-run gas transmission and distribution major GAIL (India) hit 52-week low. Shares of top mobile carrier Bharti Airtel fell after the Minister of State for Finance S.S. Palanimanickam said the company is facing investigation under money laundering and foreign exchange rules. Aditya Birla Nuvo declined on poor Q4 results. Metal stocks rose on bargain hunting after recent losses. Realty stock reversed initial losses. Asian Paints hit record high, with the stock extending its winning streak triggered by strong Q4 results. The market cut losses soon after a weak opening triggered by lower Asian shares. The barometer index, BSE Sensex, and the 50-unit S&P CNX Nifty came off lows after hitting their lowest level in more than 17 weeks at the onset of the trading session. Key benchmark indices alternately moved between positive and negative terrain in morning trade. The market trimmed gains after hitting fresh intraday high in mid-morning trade. The market trimmed gains after hitting fresh intraday high in afternoon trade. Foreign institutional investors (FIIs) bought shares worth a net Rs 404.10 crore on Monday, 14 May 2012, higher than inflow of Rs 176.20 crore on Friday, 11 May 2012, data released by Securities & Exchange Board of India (Sebi) showed. The BSE Sensex jumped 112.41 points or 0.69% to settle at 16,328.25, its highest closing level since 10 May 2012. The index jumped 154.28 points at the day's high of 16,370.12 in afternoon trade. The index fell 92.80 points at the day's low of 16,123.04 at the onset of the trading session, its lowest level since 16 January 2012. The S&P CNX Nifty advanced 35 points or 0.71% to settle at 4,942.80, its highest closing level since 10 May 2012. The Nifty hit a high of 4,955.20 in intraday trade. The index hit a low of 4,868.55 in intraday trade, its lowest level since 16 January 2012. The BSE Mid-Cap index rose 0.63% and the BSE Small-Cap index gained 0.33%. Both these indices underperformed the Sensex. BSE clocked turnover of Rs 1808 crore, lower than Rs 1923.53 crore on Monday, 14 May 2012. The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,365 shares rose and 1,329 shares fell. A total of 132 shares were unchanged. Among the 30-share Sensex pack, 19 rose while the rest fell. Index heavyweight Reliance Industries (RIL) was flat at Rs 681.20. The stock was volatile. The scrip hit a high of Rs 687.90 and a low of Rs 674. The company said during market hours today that as of 11 May 2012, the company bought back 1.23 crore shares for a total consideration of Rs 904.92 crore. Moody's Investors Service on Monday, 14 May 2012, said that the cut by RIL in its proven gas reserves estimate is credit negative for the company as it confirms the technical difficulties it faces in the exploration and production business from declining output and lower cash flows. RIL had last week revised downward its assessment of its proven natural gas reserves by 6.7% and its proven developed reserves by 36.2%. The revisions follow nearly two years of declining production at its largest gas field, KG-D6, a deep-sea gas field in the Krishna-Godavari (KG) basin on the east coast of India. The 12.8 billion cubic meter reduction in proven reserves will reduce total cash flows of the company from the project by approximately $1.7 billion, based on an existing gas price of $4.2 per million British thermal units (BTU), Moody's said in its weekly credit outlook on Monday, 14 May 2012. The even greater decline of 38.8 billion cubic meters in proven developed reserves will require the company to make further investments, "although at this stage we cannot estimate the amount of those additional investments," Moody's said. The revision of reserves has resulted in the company's reserve life declining significantly, especially for proven developed reserves, based on last year's rate of production, Moody's said. Moody's expects the rate of production to decline further, which would help lengthen reserve life. Moody's also expects RIL to get technical support from BP Plc, which in February 2011 acquired a 30% stake in the block and RIL's other upstream assets in India for $7.2 billion. However, given the extent of the decline, Moody's does not expect the company to reach the target level of production in the next 12-18 months, the agency added. GAIL (India) fell 1.27% to Rs 314.60. The stock hit a 52-week low of Rs 312 today. Metal stocks rose on bargain hunting after recent losses. Sterlite Industries and Hindalco Industries gained by between 2.1% to 3.16%. Steel stocks gained. Tata Steel, Sail, JSW Steel, Bhushan Steel, and Jindal Steel & Power rose by between 0.53% to 5.43%. Steel bigwigs -- Tata Steel, JSW Steel and Sail -- are seen gaining from new rules to upgrade product quality. The Bureau of Indian Standards will reportedly introduce norms in September to improve steel used in buildings, bridges and roads. The government plans to improve the quality of infrastructure steel in the wake of last year's earthquake and tsunami in Japan. Interest rate sensitive realty stocks reversed initial losses. HDIL, DLF and DB Realty gained by between 2.5% to 4.03%. Unitech fell 1.24%. India's largest engineering & construction firm by sales L&T jumped 5.41% and was the top gainer from the Sensex pack. The stock extended Monday's 1.84% gains triggered by strong Q4 results. L&T said during trading hours on Monday its recurring profit after tax, adjusted for exceptional items, jumped 24.8% to Rs 1877 crore on 21.1% growth in gross revenue to Rs 18646 crore in Q4 March 2012 over Q4 March 2011. The order inflow for the year ended 31 March 2012 (FY 2012) stood at Rs 70574 crore which took the company's order book to Rs 145723 crore as on 31 March 2012. The order inflow and order book include proportionate share in the Integrated Joint Ventures. Decelerating growth momentum across the sectors during 2011-12 led to deferment of capital expenditure and fresh investment decisions, L&T said. Still the company was able to garner sizable new orders mainly from Building & Factories, Infrastructure, Power Transmission & Distribution and Minerals & Metals sectors, L&T said. With regard to the future outlook, L&T said that the performance of the company has strong linkage with the economic environment in India as well as the key markets such as Middle East. While strengthening its domestic presence, the company is accelerating forays into its major international markets, L&T said. Given its large order book, the company is well positioned to sustain revenue growth momentum in the medium term, L&T said in a statement. Despite current slowdown and policy paralysis, L&T's management expects to report 15-20% growth in net sales in the year ending March 2013 (FY 2013). This is largely due to healthy order backlog. On margin front, the L&T management has guided more of a flat to 50 bps on either side. On order inflow side, the management expects the order inflow to grow in between 15-20% in FY 2013. Shares of top mobile carrier Bharti Airtel fell 1.28% after the Minister of State for Finance S.S. Palanimanickam said the company is facing investigation under money laundering and foreign exchange rules. "It may not be in the interest of the ongoing investigations to provide any further details," Palanimanickam told lawmakers in a written reply to a question. Bharti Airtel said it has provided the relevant details requested by the authorities and that it will cooperate further if the need arises. The company said it maintains the highest standards of corporate governance and regulatory compliance. Cummins India rose 4.23% on bargain hunting after recent slide. The company announced during market hours today that net profit rose a muted 0.41% to Rs 144.57 crore on 0.42% fall in total income to Rs 1064.53 crore in Q4 March 2012 over Q4 March 2011. Cummins India had recently announced a price increase of up to 3% for its diesel generator sets and generator set engines in the range of 7.5 kVA and 3000 kVA, owing to the current industry dynamics and projected market conditions. The price increase will be effective from 1 June 2012. Cummins powered generator sets, transfer switches and paralleling systems are used for continuous, prime and standby power in a variety of commercial and industrial applications. Indraprastha Gas rose 3.08% after net profit rose 16.8% to Rs 80.76 crore on 41.4% growth in net sales to Rs 720.26 crore in Q4 March 2012 over Q4 March 2011. The growth in bottom line was aided by a change in depreciation policy. As a result of the change in depreciation policy, depreciation for Q4 March 2012 was lower by Rs 3.48 crore. India's largest power generation firm by capacity NTPC lost 2.94% to Rs 143.50. The stock hit a 52-week low of Rs 142.60 today, 15 May 2012. NTPC has more than halved its capacity addition target for the next five years through March 31, 2017, mainly due to fuel shortages and problems in land acquisition, its chairman Arup Roy Choudhury said last week. NTPC is now aiming to add 14 gigawatts (GW) of capacity in the next five years, compared with 29 GW earlier planned. NTPC has a generation capacity of 37.5 GW. NTPC's net profit fell 6.77% to Rs 2593.44 crore on 4.8% increase in net sales to Rs 16263.56 crore in Q4 March 2012 over Q4 March 2011. The result was announced during trading hours on 10 May 2012. Aditya Birla Nuvo declined 2.76% after the company announced during market hours today consolidated net profit fell 42.17% to Rs 170 crore on 15% growth in revenue to Rs 5994 crore in Q4 March 2012 over Q4 March 2011. The sharp fall in the company's net profit was due to the company making a provision of Rs 104 crore in Q4 March 2012 towards entry tax liability largely related to previous years which was earlier recognized as contingent liability with respect to Renukool (Uttar Pradesh) plant of the carbon black business. Aditya Birla Nuvo's (ABNL) consolidated net profit rose 8% to Rs 890 crore on 20% growth in revenue to Rs 21840 crore in the year ended 31 March 2012 over the year ended 31 March 2011. ABNL said the rise in depreciation and interest costs primarily relating to 3G investments in telecom business has constrained net profit. ABNL said its thrust is on capturing growth opportunities across its businesses to achieve the next higher level of growth, the company said in a statement. Asian Paints rose 1.77% to Rs 3766.05, with the stock extending its winning streak triggered by strong Q4 results. The stock hit record high of Rs 3775 today. Auto stocks were mixed. India's largest tractor and sports utility vehicles maker Mahindra & Mahindra (M&M) fell 0.13%. India's largest commercial vehicle makers by sales Tata Motors was flat. India's largest car maker by sales Maruti Suzuki India declined 2.57%. Two wheeler makers gained. Bajaj Auto rose 1.63% India's largest motorcycle maker by sales Hero MotoCorp gained 2.56%. Unlisted Honda Motorcycle & Scooter India today, 15 May 2012, launched 110cc Dream Yuga motorcycle at Rs 44,642 in New Delhi. The company expects to sell 3 lah units of Dream Yuga motorcycle in the financial year through March 2013. Honda Motorcycle & Scooter India is a subsidiary of Japan's Honda Motor. Ashok Leyland declined 0.77% after company's net profit fell 10.3% at Rs 565.98 crore on 14.9% growth in sales turnover of Rs 12841.99 crore in the year ended March 2012 (FY 2012) over the year ended March 2011 (FY 2011). The company achieved the highest overall sales volume of 1,01,990 vehicles in FY 2012. Production also touched an all-time high of 1,03,319 vehicles in FY 2012, Ashok Leyland said in a statement. "FY 2011-12 for us saw quite a few triumphs. Our sales and production numbers reached all-time highs, the initial market feedback for DOST was overwhelming, we climbed a new peak in International Operations both in terms of volumes and new markets tapped, our ramp up of the Pantnagar plant was robust and complete and, to top it all, we were able to sharpen our focus on our customers by significantly increasing our network," said Mr. Vinod K. Dasari, Managing Director, Ashok Leyland. On the domestic front, Mr. Dasari felt that more could have been achieved. Although the company gained precious market share in the Central region for the first time and in the Tipper and ICV segments, growth in other segments was muted. "We were hit from many sides: our strongest market - South - was depressed. Also, segments like ICV in which we are not too strong grew substantially. We have, however, rebounded. We gained market share in March 2012 and continued the good showing in April and hope to keep up this momentum," he added. The company's efforts to protect the bottom line through focus on non-cyclical or support businesses yielded rich dividends with Leyparts, the spare parts business, growing aggressively by 20% and both the Defence and Power Solutions businesses able to hold their own, Ashok Leyland said in a statement. About prospects for the year ending March 2013 (FY 2013), Mr. Dasari said, "We feel the full year volumes would grow as there are signs of robust growth in some segments. We also have a number of innovative products ready to roll out like the Jan Bus and the 10x2 and with a new thrust to our brand building efforts with our new Brand Ambassador, Mahendra Singh Dhoni, the coming year should be an interesting one for us," he concluded. Eicher Motors fell 2.78%. The company's consolidated net profit jumped 49.5% to Rs 109.57 crore on 21.7% growth in total income from operations (net) to Rs 1695.04 crore in Q1 March 2012 over Q1 March 2011. IT stocks were mixed. India's third largest software services exporter by revenue, Wipro rose 0.45%. India's largest software services exporter by revenues Tata Consultancy Services (TCS) fell 0.12%. The company announced during market hours today that the Spotless Group, an international services company specializing in outsourced facility management, has gone live with the first phase of its SAP transformation program. Spotless Selected SAP based management software to assist with its business and IT platform transformation program. To date, the project's scope of work has covered SAP Finance, Procurement, Service Asset Management, Sales and Distribution, Portal, Process Integration, Reporting and Human Resources. TCS is providing Spotless with SAP focused implementation expertise, consulting and ongoing support for the SAP solution. IT major Infosys gained 3.13% after the head of the company's US business, Ashok Vemuri, said in a media interview on Monday that there are early signs of business picking up in the US -- its largest market. Clients in the US are starting to spend on projects that aren't so critical to their business, though it's too early to term it a recovery in demand, Vemuri said. Business has improved from what it was toward the end of the January-March quarter, when clients unexpectedly tightened spending and slowed decision-making, Vemuri, who is also a member of Infosys' board, said. Oil exploration stocks were mostly lower as crude oil prices declined. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) fell 0.54%. India's second biggest state-run oil and gas exploration firm by revenue, Oil India, slipped 2.16%. But, Cairn India rose 3.98%. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms. PSU OMCs were mostly higher on recent report that oil marketing companies plan to raise petrol prices after the end of the budget session of Parliament this month and revise them every fortnight to recover Rs 5000 crore past revenue losses as they haven't increased rates since December due to political pressure. Indian Oil Corporation (IOC) rose 1.16%. HPCL fell 0.57%. BPCL gained 2.49% to Rs 728.15, after striking a 52-week high of Rs 739.60 today, 15 May 2012. The stock surged after the company's wholly owned subsidiary Bharat PetroResources (BPRL) announced extension of exploration success with new discovery area in offshore Mozambique. Anadarko Petroleum Corporation today, 15 May 2012, announced the Golfinho exploration well discovered a new, major natural gas accumulation nearly 20 miles (32 kilometers) northwest of its Prosperidade complex within the Offshore Area 1 of the Rovuma Basin. The Golfinho discovery well encountered more than 193 net feet (59 net meters) of natural gas pay in two high-quality Oligocene fan systems that are age-equivalent to, but geologically distinct from, the previous discoveries in the Prosperidade complex. Anadarko is the operator in the Offshore Area 1 with a 36.5% working interest. Co-owners include Mitsui E&P Mozambique Area 1 (20%), BPRL Ventures Mozambique B.V. (10%), Videocon Mozambique Rovuma 1 (10%) and Cove Energy Mozambique Rovuma Offshore (8.5%). Empresa Nacional de Hidrocarbonetos, ep's 15% interest is carried through the exploration phase. Pharma stocks edged higher on renewed buying. Cipla, Sun Pharmaceuticals Industries and Ranbaxy Laboratories gained by between 1.16% to 3.2%. Tyre stocks edged higher as rubber futures plunged to lowest in four months in Tokyo. Apollo Tyres, MRF and CEAT rose by between 2.43% to 3.04%. Natural rubber is key raw material in the manufacture of tyres. Bank stocks were mostly higher on bargain hunting after recent losses. India's largest bank by branch network State Bank of India (SBI) rose 1.07%. India's largest private sector bank by net profit ICICI Bank gained 2.2%. India's second largest private sector bank by net profit HDFC Bank fell 0.5%. Axis Bank declined 0.24%. Moody's Investors Service on Monday, 14 May 2012, downgraded the standalone bank financial strength rating (BFSR) of three Indian banks -- Axis Bank, HDFC Bank and ICICI Bank -- to D+ from C-, which now maps to a baseline credit assessment (BCA) of baa3 from baa2 on the long-term scale. The rating actions took place in the context of an ongoing global review affecting all banks whose standalone ratings are higher than the rating of the government where they are domiciled, and they conclude the review that was initiated on 30 April 2012, Moody's said. At the same time, the rating agency has downgraded the hybrid ratings of Axis Bank and ICICI Bank to Ba3 (hyb) from Ba2 (hyb). All revised ratings carry stable outlooks, Moody's said. The downward revision to the three Indian banks' standalone ratings reflects Moody's assessment that their creditworthiness are highly correlated with that of the Indian government's credit strength taking into account the extent to which their business depend on the domestic macroeconomic and financial environment, the degree of their reliance on market-based, and therefore more confidence-sensitive, funding and their direct or indirect exposures to domestic sovereign debt, compared with their capital bases, Moody's said. For all three banks, the key drivers for the rating action included the relatively low level of cross-border diversification of their operations, the high level of balance-sheet exposure to domestic sovereign debt compared with their capital bases and franchise resilience and intrinsic strength within the operating environment and the absence of ongoing support from foreign ownership, Moody's said. Bank of Baroda rose 1.46% to Rs 634.05, with the stock bouncing back from 52-week low of Rs 615 in early trade. The bank's consolidated net profit rose 18.38% to Rs 5248.57 crore on 34.06% growth in total income to Rs 34588.91 crore in the year ended March 2012 over the year ended March 2011. The company announced the consolidated result during trading hours today, 15 May 2012. Cals Refineries clocked highest volume of 83.97 lakh shares on BSE. Lanco Infratech (51.76 lakh shares), HDIL (49.69 lakh shares), SpiceJet (47.48 lakh shares) and Suzlon Energy (44.68 lakh shares) were the other volume toppers in that order. SBI clocked highest turnover of Rs 116.38 crore on BSE. L&T (Rs 112.72 crore), JSW Steel (Rs 50.34 crore), Tata Steel (Rs 40.79 crore) and ICICI Bank (Rs 37.39 crore) were the other turnover toppers in that order. Moody's Investors Service on Monday, 14 May 2012, downgraded to Baa3 from Baa2 the foreign currency insurance financial strength rating of the Life Insurance Corporation of India (LIC) -- India's biggest domestic institutional investor. The rating outlook is now stable. This revision takes place in the context of an ongoing global review affecting financial institutions whose ratings are higher than the rating of the government where they are domiciled, Moody's said. This rating action concludes the review for possible downgrade initiated on 30 April 2012, it said. The downgrade of LIC's rating reflects Moody's assessment that its creditworthiness is highly correlated with that of the Indian government's credit strength, considering the extent to which its business depends on the domestic economy, the limited degree of cross-border diversification within its operation, its significant level of balance-sheet exposure to domestic sovereign debt relative to its capitalization and the absence of strong foreign ownership. LIC is 100% owned by the Indian government. LIC generates almost all its premium income in India, reflecting its concentration in one market, its high reliance on the domestic economy, and its exposure to an evolving operating environment, Moody's said. Moody's review concludes that there is little, if any, reason to believe that LIC would be insulated from any government debt crisis, if it were to occur. LIC has meaningful and rapidly increasing direct or indirect exposures to the government through its holdings of government securities and its equity investments in government-related entities, including banks and corporations. Consequently, Moody's views the lower rating -- which is now positioned at the rating of the Indian government -- as more appropriate to capture the credit profile of LIC. The government guarantees all of LIC's policy liabilities, including associated declared bonuses, as prescribed in the LIC Act. Thus, Moody's views that LIC's credit strength is very much closely linked to the Indian's sovereign -- which justifies the insurer's current rating, Moody's said. On the macro front, inflation accelerated in April as prices of most commodities rose. The Wholesale Price Index (WPI) rose a faster-than-expected 7.23% in April from a year earlier, mainly driven by higher food prices and manufactured items, data released by the government on Monday, 14 May 2012, showed. However, there was a slowdown in price rises in the manufacturing sector -- a proxy for measuring price pressures excluding volatile food and fuel prices. The Reserve Bank of India next reviews monetary policy on 18 June 2012. The central bank will have May inflation and April industrial output data to study before then. The annual inflation reading for February was upwardly revised to 7.36% from 6.95% reported earlier. Reserve Bank of India (RBI) deputy governor Subir Gokarn late last week said that inflation remains the RBI's main focus, but it has to be sensitive to various other risks and pressures facing the economy. His comments come in the backdrop of a surprise decline in industrial production in March 2012. The data was announced during trading hours on Friday, 11 May 2012. Mr. Gokarn also said that interest rates are likely to be headed downwards, but the pace and magnitude of the fall would depend on trends in growth and inflation. Investors are closely watching India Inc's Q4 March 2012 and year ending March 2012 (FY 2012) earnings. Focus is on the guidance provided by the management for the year ending March 2013 (FY 2013) to gauge the earnings outlook. Bajaj Auto announces FY 2012 results on Thursday, 17 May 2012. State Bank of India, Tata Steel and Coal India unveil FY 2012 results on Friday, 18 May 2012. Tata Power Company announces FY 2012 results on 22 May 2012. Bharat Heavy Electricals (Bhel) unveils Q4 results on 23 May 2012. BPCL unveils FY 2012 results on 25 May 2012. Sun Pharmaceuticals Industries announces Q4 results on 29 May 2012. Tata Motors, Steel Authority of India and Power Grid Corporation of India announce FY 2012 results on 29 May 2012. GAIL (India) announces Q4 results on 30 May 2012. Mahindra & Mahindra (M&M) unveils FY 2012 results on 30 May 2012. European equities advanced on Tuesday after German gross domestic product figures came in significantly better than expected. Key benchmark indices in UK, Germany and France were up by 0.19% to 0.48%. Data showed Germany's economy, the largest in Europe, grew much more than expected in the first quarter, driven by a surge in net exports. GDP rose by 0.5% from the fourth quarter of last year, and was up 1.2% from the corresponding period last year. Italy's Gross Domestic Product (GDP) declined by 0.8% in the first quarter of 2012, compared to the previous three-month period, the nation's national statistics body, Istat, said on Tuesday. Concerns about Greece's possible exit from the European Union had rattled global equity markets on Monday, as the nation's political impasse stretched into a second week with no agreement on a unity government. Greek President Karolos Papoulias late Monday proposed a technocrat government but that plan drew weak support from bickering parties, according to reports, as global discussion about the country's removal from the currency bloc mounted. Euro group finance ministers sought to pour cold water on the speculation and said at a meeting in Brussels late Monday that no-one supported a Greek exit. Asia stocks were mixed Tuesday amid increasing concern over a Greek exit from the euro zone, despite the region's finance leaders declaring they weren't considering that possibility. Key benchmark indices in Japan, Indonesia, China, and South Korea were down by 0.18% to 0.77%. Key benchmark indices in Taiwan, Singapore and Hong Kong rose by 0.25% to 0.81%. Trading in US index futures indicated that the Dow could gain 61 points at the opening bell on Tuesday, 15 May 2012. US stocks ended at three-month lows on Monday, 14 May 2012.