Market ekes out small gains

The market managed to garner small gains after moving in a tight range in the week ended 25 May 2012. The market fell in three out five trading sessions in the week just gone by. Investors cheered the government's announcement on Wednesday to allow state oil companies to raise petrol prices, seeing it as a step taken forward towards fiscal consolidation. A timely arrival of monsoon rains over the Andaman Sea also helped lift sentiment. State-run oil marketing firms raised petrol prices by Rs 7.50 per litre to Rs 73 per litre effective midnight 24 May 2012. This is the steepest ever increase in petrol prices. The revision in petrol prices comes as the rupee hit an all-time low against the dollar on Wednesday, 23 May 2012, leading to jump in oil import bill for state-run oil refining-cum-marketing firms. The barometer index, BSE Sensex rose 65.07 points or 0.4% to 16,217.82. The 50-unit S&P CNX Nifty gained 28.95 points or 0.59% to 4920.40. The BSE mid-Cap index gained 0.61% and the BSE Small-Cap index gained 1.01%. Both these indices outperformed the Sensex. Key benchmark indices edged higher in volatile trade on Monday, 21 May 2012 as European stocks rose. The BSE Sensex advanced 30.51 points or 0.19% to settle at 16,183.26, its highest closing level since 15 May 2012. Key benchmark indices snapped three-day winning streak on Tuesday, 22 May 2012 as macroeconomic worries and rupee's slide to a record low against the dollar hurt investor sentiment adversely. The BSE Sensex lost 156.85 points or 0.97% to settle at 16,026.41, its lowest closing level since 9 January 2012. Key benchmark indices dropped for the second day in a row on Wednesday, 23 May 2012 as macroeconomic worries arising from the country's high fiscal and current account deficits, sharply falling rupee against the dollar and slowing economic growth hurt investor sentiment adversely. The BSE Sensex shed 78.31 points or 0.49% to 15,948.10, its lowest closing level since 9 January 2012. Key benchmark indices snapped two-day losing streak and reached their highest level in more than one week on Thursday, 24 May 2012 as European stocks and US index futures rose. The BSE Sensex jumped 274.20 points or 1.72% to settle at 16,222.30, its highest closing level since 15 May 2012. Key benchmark indices ended almost unchanged after intraday volatility on Friday, 25 May 2012. The BSE Sensex fell 4.48 points or 0.03% to 16,217.82. From the 30 share Sensex pack, 16 rose while rest of them fell. Index heavyweight Reliance Industries (RIL) rose 0.49% to Rs 692. The company said it has selected Phillips 66's E-Gas technology for its planned gasification plants at Jamnagar in Gujarat. The planned gasification plants at Jamnagar will be among the largest in the world and will process petroleum coke and coal into synthesis gas utilizing the E-Gas technology, RIL said in a statement. The synthesis gas will be used as a feedstock for a new chemical complex and will fuel the Jamnagar refinery's existing gas turbine power generation units, RIL said in a statement. RIL recently said that as of 15 May 2012, the company bought back 1.41 crore shares for a total consideration of Rs 1028.71 crore. Moody's Investors Service on 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. Cigarette maker ITC shed 3.11%. During market hours on Friday, 25 May 2012, the company reported 25.97% growth in net profit to Rs 1614.36 crore on 16.91% growth in income from operations (net) to Rs 6954.64 crore in Q4 March 2012 over Q4 March 2011. The top line growth fell short of market expectations of about 20% growth. Power generation firm NTPC shed 2.38%. During market hours Friday, 25 May 2012, the company said that the unit 2 of 660 megawatts (MW) of Sipat Super Thermal Power Station Stage-I is declared for commercial operation with effect from midnight, 25 May 2012. With this the commercial capacity of Sipat Stage-I is 1,320 megawatts and that of NTPC group is 36,014 megawatts. Small-car maker Maruti Suzuki India lost 4.12% on worries the latest steep hike in petrol prices may hit car sales. The stock was the top loser from the Sensex pack. Shares of two-wheeler makers also declined as steep hike in petrol prices could hit demand for two wheelers. India's largest motorcycle maker by sales Hero MotoCorp fell 1.53%. Bike maker Bajaj Auto shed 2.39%. Shares of two-wheeler makers also witnessed selling pressure amid intensifying competition in the segment. Unlisted Honda Motorcycle & Scooter India recently launched 110cc Dream Yuga motorcycle at Rs 44,642 in New Delhi. The company expects to sell 3 lakh units of Dream Yuga motorcycle in the financial year through March 2013. Honda Motorcycle & Scooter India is a subsidiary of Japan's Honda Motor. India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) fell 0.9%. Auto major Tata Motors rose 3.56%. Tata Motors Group global sales, including Jaguar Land Rover, remained flat at 87,377 units in April 2012, Tata Motors said on 15 May 2012. Global sales of all commercial vehicles -- Tata, Tata Daewoo and the Tata Hispano Carrocera range -- were 38,008 units in April 2012, lower by 8%. Global sales of all passenger vehicles were at 49,369 units in April 2012, higher by 7%. Global sales of Tata passenger vehicles and the distribution offtake in India of Fiat cars were at 24,226 units in April 2012, lower by 9%. Global sales of Jaguar Land Rover in April 2012 were at 25,143 vehicles, higher by 29% over April 2011. Jaguar sales for the month were 3,603 units, higher by 17%, while Land Rover sales were 21,540 units, higher by 32%. Banking stocks were mostly higher. India's largest commercial bank in terms of branch network State Bank of India (SBI) rose 3.24%. The state-run bank, last week reported 19297.84% spurt in net profit to Rs 4050.27 crore on 27.97% growth in total income to Rs 33959.54 crore in the Q4 March 2012 over Q4 March 2011. The massive rise in SBI's net profit in the fourth quarter was due to base effect. It may be recalled that SBI had made massive one-time provisions in Q4 March 2011 on account of counter cyclical provisioning buffer, provisions for the teaser home loans and provision for deferred tax. This has resulted in low base effect for year-on-year comparison in Q4 March 2012. SBI's net profit jumped 41.65% to Rs 11707.29 crore on 24.33% growth in total income to Rs 120872.90 crore in the year March 2012 over year March 2011. SBI said it made an additional provision of Rs 1350 crore against certain non-performing domestic advances in the year ended March 2012. The bank's provision converge ratio stood at 68.10% as on 31 March 2012, higher than 64.95% as on 31 March 2011. SBI's board proposed a dividend of Rs 35 per share for the year ended 31 March 2012. SBI's consolidated net profit jumped 43.59% to Rs 15343.10 crore on 19.74% growth in total income to Rs 177032.80 crore in the year ended 31 March 2012 over the year ended 31 March 2011. India's largest private sector bank by net profit ICICI Bank gained 1.35%. India's second largest private sector bank by net profit HDFC Bank was flat at Rs 500.35. Software pivotals were mostly higher on recent steep slide in rupee against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. India's largest software services exporter by revenues Tata Consultancy Services (TCS) gained 0.83%. India's third largest software services exporter by revenue, Wipro rose 0.7%. India's second largest software services exporter by revenue, Infosys slipped 0.56%. Hindalco Industries rose 3.52%. The company's US unit Novelis said that the management continues to expect a market recovery going forward and as a result expects FY 2013 adjusted EBITDA to be above FY 2012 level of $1.05 billion. In addition, it expects FY 2013 free cash flow before capital expenditures to be between $600-700 million and capital expenditure of approximately $650-700 million primarily focused on its global expansion projects in Brazil, South Korea, China and the United States. Novelis reported a net loss of $107 million attributable to common shareholders for the quarter ended 31 March 2012 as against net profit of $50 million during the quarter ended 31 March 2011. Net sales declined 11.89% to $2.608 billion in Q4 March 2012 over Q4 March 2011. Novelis said adjusted EBITDA declined 16.78% to $233 million in Q4 March 2012 over Q4 March 2011. The decrease in EBITDA for the quarter and the year were primarily driven by weaker demand, partially offset by higher conversion premiums, Novelis said in a statement. "As expected we saw demand recovery from the third quarter and expect this trend to continue into fiscal 2013," said Steve Fisher, Chief Financial Officer for Novelis. Private sector steel major Tata Steel rose 2.1%. Tata Steel witnessed a marked improved in performance on sequential basis with a consolidated net profit of Rs 433 crore in Q4 March 2012, compared with a net loss of Rs 603 crore in Q3 December 2011. EBITDA jumped 69% to Rs 3419 crore on 2.7% growth in turnover to Rs 33999 crore in Q4 March 2012 over Q3 December 2011. The company announced the results after trading hours on Friday, 18 May 2012. Consolidated net profit plunged 89.63% to Rs 433 crore on 0.5% growth in turnover to Rs 33999 crore in Q4 March 2012 over Q4 March 2011. Earnings before interest, taxation, depreciation and amortization (EBITDA) declined 28.5% to Rs 3419 crore in Q4 March 2012 over Q4 March 2011. The result was announced after market hours on Friday, 18 May 2012. Net profit declined 39.99% to Rs 5390 crore on 11.9% growth in turnover to Rs 132900 crore in the year ended March 2012 (FY 2012) over the year ended March 2011 (FY 2011). EBITDA dropped 20.93% to Rs 13533 crore in FY 2012 over FY 2011. The company has recommended a dividend of Rs 12 per share for the year ended 31 March 2012. India's largest listed telecom services provider by subscribers Bharti Airtel gained 0.45%. The firm signed an agreement with Qualcomm to acquire an interest in Qualcomm Asia Pacific's Indian BWA entities. Bharti Airtel and Qualcomm on Thursday, 24 May 2012, announced that they have signed an agreement for Bharti to acquire an interest in Qualcomm Asia Pacific's (Qualcomm AP) Indian BWA entities. Under the agreement, Bharti has made an initial investment of approximately $165 million to acquire 49% interest in Qualcomm AP's India entities that hold BWA licenses in Delhi, Mumbai, Haryana and Kerala partly by way of acquisition of 26% equity interest equally held by Global Holding Corporation and Tulip Telecom, and the balance by way of subscription of fresh equity in those entities. The agreement contemplates that once commercial operations are launched, subject to certain terms and conditions, Bharti would assume complete ownership and financial responsibility for the BWA entities by the end of 2014. GAIL (India) surged 5.94% and was the top gainer from the Sensex pack. The company said it has signed a gas sales and purchase agreement (GSPA) for purchase of gas from Turkmenistan to be transported through the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline. The gas source for the pipeline would be Galkynysh (formerly Osman-Yolotan) in Turkmenistan which is estimated to have gas reserves of 13 to 21 TCM (Best estimates of 16 TCM). The 1680 km, 56 inch diameter pipeline will originate at South Yolotan-Osman in Turkmenistan and will traverse 145 km in Turkmenistan, 735 km in Afghanistan and 800 km in Pakistan before entering India at Fazilka in Punjab. Turkmenistan would be exporting 90 MMSCMD through this pipeline of which 14 MSCMD would be taken by Afghanistan and 38 MMSCMD each by India and Pakistan. The pipeline will be built at an estimated investment of about $7.6 billion, GAIL (India) said in a statement. Oil exploration giant ONGC gained 3.36%. Sun Pharmaceutical Industries declined 1.85%. The company said that the USFDA has granted its subsidiary an approval for its Abbreviated New Drug Application (ANDA) for its generic version of Astelin, Azelastine HCL Nasal Spray. This generic Azelastine HCL Nasal Spray, 0.1% (137 mcg/spray) is therapeutically equivalent to Astelin® Nasal Spray from Medpointe Pharm HLC. Azelastine HCL nasal spray has annual sales of approximately $ 144 million in the US. Private sector power generation major Tata Power Company declined 2.46%. The company reported consolidated net loss of Rs 1087.68 crore in the year ended March 2012 (FY 2012), compared with net profit of Rs 2059.60 crore in the year ended March 2011 (FY 2011). The reason for the reverse turnaround in FY 2012 was because the company made provisions for Mundra project impairment and deferred stripping costs. The company made provision of Rs 1800 crore for impairment for Mundra project and Rs 659.44 crore on account of deferred stripping costs. Based on assessment of fuel, forex and other operating costs on cash flows for the Mundra project, a total provision of Rs 1800 crore was made in FY 2012 as impairment loss for the year, Tata Power said. Given the volatility of coal prices and forex, the assumptions will be monitored on a periodic basis and necessary adjustments will be made if external conditions relating to the assumptions indicate that such adjustments are appropriate, Tata Power said. The company's consolidated revenue jumped 34% to Rs 25868.87 crore in FY 2012 over FY 2011. The company said the surge in revenue reflected strong operational performance and higher coal price realizations. The company reported consolidated net loss of Rs 628.75 crore in Q4 March 2012, compared with net profit of Rs 625.02 crore in Q4 March 2011. The reason for reverse turnaround in Q4 March 2012 was because of additional provision made for impairment of Rs 815 crore for Mundra project, Tata Power said. The impairment is mainly on account of forex losses incurred due to rupee depreciation, Tata Power said. Consolidated revenue jumped 44% to Rs 7169.85 crore in the Q4 March 2012 over Q4 March 2011. India's largest power equipment maker Bhel rose 3.48%. The company on 23 May 2012 reported 20.79% growth in net profit to Rs 3379.81 crore on 7.52% growth in total income to Rs 19987.85 crore in Q4 March 2012 over Q4 March 2011. The company's net profit rose 17.11% to Rs 7039.96 crore on 13.81% growth in total income to Rs 49244.44 crore in the year ended 31 March 2012 over the year ended 31 March 2011. Consolidated net profit rose 17.08% to Rs 7087.44 crore on 13.91% growth in total income to Rs 49627.25 crore in the year ended 31 March 2012 over the year ended 31 March 2011. The company recommended final dividend of Rs 3.68 per share for the year ended 31 March 2012. Shares of India's biggest engineering and construction firm in terms of order book, L&T, rose 2.13%. During market hours on Monday, 21 May 2012, the company said L&T Construction has bagged new orders valued Rs 744 crore during the first quarter of 2012-2013. Housing finance major HDFC gained 3.49%. The company's board of directors, last week, passed an enabling resolution approving the increase in the limit on shareholding by foreign institutional investors (FIIs) under the portfolio investment scheme, from 74% up to 100% of the paid-up equity share capital of the company. In February 2012, Citigroup had sold its entire stake of 9.85% held in HDFC, which was held under the FDI route. These shares were primarily acquired by FIIs. Consequently, the FlI shareholding in the firm now stands at about 66.7%, HDFC said. The equity warrants issued by HDFC in August 2009 representing about 3.37% of the diluted equity share capital, are due for exchange into equity shares on or before 24 August 2012. The exchange of these warrants with equity shares may increase the FII shareholding in the firm, HDFC said. On the macro front, if the government raises diesel and cooking gas prices, the price hike will help lift some pressure over its weak finances, which are strained by high food and fuel subsidies. In Union Budget 2012-13 unveiled in parliament in mid-March 2012, Finance Minister Pranab Mukherjee had said that the government intends to bring down subsidy to 1.75% of GDP in the next 3 years. The government has proposed to keep the subsidy bill under 2% of GDP in 2012-13, he had said at that time. Monsoon rains arrived over the Andaman Sea on Wednesday, 23 May 2012, after a delay of about three days, according to the India Meteorological Department. Conditions are favorable for a further advance of the southwest monsoon into more parts of the Bay of Bengal and remaining parts of the Andaman Sea during the next two to three days, the weather department said. The monsoon usually reaches the Andaman Sea by 20 May 2012, but this time rainfall was slightly delayed due to erratic weather patterns. After arriving over the southern state of Kerala, the monsoon gradually covers most of the central and northern grain- and oilseed-producing regions by July. Last month, the weather department forecast that rainfall this year would be normal. The Organization for Economic Cooperation and Development (OECD) in a report released on Tuesday, 22 May 2012, suggested that it would be prudent for the Reserve Bank of India (RBI) to wait for clear signs that inflation is falling back to more comfortable levels before reducing interest rates. The OECD report said the government needs to narrow its fiscal deficit to support monetary policy and ensure a sustained drop in inflationary pressures. The government's privatization program is way behind target and is now being held back by softening business confidence and falling equity prices, the report said. The report said India's economic growth is likely to remain subdued given the weakening global economy. In a White Paper on Black Money released by the government on Monday, 21 May 2012, the government said that money shifted out of India over the years through illicit outflows might have returned to India through foreign direct investment (FDI), participatory notes (PNs) and by way of misuse of global depository receipts (GDRs).