Bank stocks, Infosys lead decline

Weakness persisted on the domestic bourses for the second day in a row as world stocks fell on weak US job data and as euro-zone debt worries resurfaced. The market breadth was negative. The barometer index BSE Sensex and the 50-unit S&P CNX Nifty hit 1-1/2-week lows. The Sensex lost 136.65 points or 0.72%, off 122.58 points from the day's high and up about 42 points from the day's low. Banking stocks declined mirroring weakness in financials across Asia and Europe ahead of an emergency meeting of euro-zone officials planned for later Monday over concerns the sovereign-debt crisis could spread to Italy from Greece.



Index heavyweight Reliance Industries (RIL) was down marginally in volatile trade. IT bellwether Infosys led decline in IT pivotals on the eve of its Q1 June 2011 results due on Tuesday, 12 July 2011. Metal and mining stocks extended Friday's slide triggered by reports a panel of ministers has approved the draft Mining Bill, which calls for miners to give to local communities an amount equivalent to royalties so as to compensate people displaced by such projects. Select auto stocks rose, extending their recent gains triggered by expectations that sales will pick up in the second half of the year. Interest rate sensitive realty shares declined on fears rising interest rates will hit property demand.

The market came off lows after an initial slide triggered by weak Asian shares. The intraday recovery proved-short lived. The market came off highs in mid-morning trade. The market extended decline in early afternoon trade, with the S&P CNX Nifty sliding to a fresh intraday low. The market extended losses in afternoon trade as European stocks opened lower. A bout of volatility was witnessed in mid-afternoon trade as the key benchmark indices pared losses soon after hitting fresh intraday lows. Volatility continued as the key benchmark hit fresh intraday lows in late trade.

The BSE Sensex shed 136.65 points or 0.72% to settle at 18,721.39, its lowest closing level since 29 June 2011. The Sensex fell 14.07 points at the day's high of 18,843.97 in early trade. The index slipped 178.55 points at the day's low of 18,679.49 in late trade.

The S&P CNX Nifty was down 44.55 points or 0.79% to 5,616.10, its lowest closing level since 29 June 2011. The Nifty hit a low of 5,601.70 in intraday trade.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,568 shares declined and 1,324 shares gained. A total of 120 shares remained unchanged. The breadth was positive earlier in the day.

The total turnover on BSE amounted to Rs 2236 crore, lower than Friday's turnover of Rs 3214.40 crore.

The BSE Mid-Cap index slipped 0.31% and the BSE Small-Cap index fell 0.42%. Both these indices outperformed the Sensex

Among the 13-sectoral indices on BSE, 10 declined while three gained. The BSE FMCG (up 0.52%), the BSE Consumer Durables (up 0.5%), and the BSE Oil & Gas (up 0.13%), outperformed the Sensex. The BSE Realty (down 2.54%), the BSE IT (down 1.73%), and the BSE TecK (down 1.58%), underperformed the Sensex.

Among the 30-member Sensex pack, 23 stocks declined while the rest of them gained. ITC (up 1.07%), Reliance Communications (up 0.67%), and Tata Power (up 0.26%), edged higher from the Sensex pack. Bharti Airtel (down 1.91%), Jaiprakash Associates (down 1.57%), and Cipla (down 1.13%), edged lower from the Sensex pack.

Index heavyweight Reliance Industries (RIL) shed 0.26% to Rs 852.20 in volatile trade after gyrating between Rs 859.60 and Rs 847.45. As per reports, the Cabinet Committee on Economic Affairs (CCEA) is likely to clear RIL's sale of a 30% stake in 23 of its oil and gas blocks in India to BP PLC this week. Reports last week indicated that the petroleum ministry had recommended the $7.2 billion RIL-BP deal to CCEA for an unconditional approval.

India's largest oil exploration firm by net profit ONGC gained 1.67% to Rs 280.80 and was the top gainer from the Sensex pack. Reportedly, ONGC's subsidiary ONGC Videsh (OVL) is focusing on acquiring larger oil and gas properties worth $4-6 billion.

Essar Oil lost 0.93% on profit taking. After market hours today, 11 July 2011, the company reported a net profit of Rs 469 crore for Q1 June 2011, compared with net loss of Rs 70 crore for Q1 June 2010. Gross revenue rose 37% to Rs 16478 crore in Q1 June 2011 over Q1 June 2010. Quarterly current price gross refining margin (CP GRM) surged to $7.38 a barrel from $5.79 a barrel in Q June 2010. Essar Oil said it is increasing the focus on non-fuel retailing at its retail outlets.

Essar Oil's CEO and Managing Director Naresh Nayyar said that the company is quite close to completing the refining expansion project, which will enhance the refinery's complexity to 11.8, which in turn will have a strong positive impact on the refining margins.

The company is exploring the possibility of raising foreign currency loans to the extent of $1.5 billion in order to further optimize the finance cost. The company's net interest and finance charges declined sharply to Rs 96 crore from Rs 188 crore in Q June 2010.

Essar Oil has decided to seek re-validation of earlier approval of shareholders for passing an enabling resolution for the issue of further equity shares and/or convertible debentures and/or GDSs/ADRs/FCCBs by way of public and/or private offering in domestic/international market and/or qualified institutional placement for an amount not exceeding $2 billion.

Gujarat State Petronet rose 2.12% after a consortium led by the company received authorization for developing three cross country natural gas transmission pipelines.

Software pivotals were under pressure ahead of earnings from IT bellwether Infosys on Tuesday, 12 July 2011. Infosys was down 1.95% on profit taking. Analysts expect Infosys to revise upwards its revenue and earnings growth forecast for the year ending March 2012 (FY 2012) in rupee terms, with the company seen beating its own guidance for Q1 June 2011 and due to higher pricing.

Salary hike and increase in tax rates due to the expiry of Software Technology Parks of India (STPI) tax benefits is seen pulling Infosys' net profit lower in Q1 June 2011 even as a good revenue growth is expected from the IT bellwether on the back of volume growth and uptick in pricing. A total of 9 brokerages expect a between 1.1% to 7.1% fall in Infosys' consolidated net profit as per International Financial Reporting Standards (IFRS) at between Rs 1689 crore to Rs 1797.20 crore in Q1 June 2011 over Q4 March 2011. Revenue is seen rising 2.6% to 4.67% at between Rs 7435 crore to Rs 7589.20 crore in Q1 June 2011 over Q4 March 2011.

India's third largest software services exporter Wipro slipped 2.49%. The firm declares its Q1 June 2011 results on 20 July 2011.

India's largest software services exporter TCS declined 1.15%. The company unveils its Q1 June 2011 results on Thursday, 14 July 2011.

Banking stocks declined mirroring weakness in financials across Asia and Europe ahead of an emergency meeting of euro-zone officials planned for later Monday over concerns the sovereign-debt crisis could spread to Italy from Greece. India's largest private sector bank by market capitalisation ICICI Bank shed 0.57% to Rs 1,054.

India's largest commercial bank by branch network State Bank of India (SBI) fell 1.80%. After market hours on Thursday, 7 July 2011, the bank informed that it has revised the base rate upwards by 25 basis points (bps) from 9.25% per annum to 9.50% per annum effective from 11 July 2011. The bank has revised the Benchmark Prime Lending Rate upwards by 25 bps from 14% to 14.25% effective from July 11, 2011. The bank has also revised upwards deposit rates on some maturities by up to 100 basis points.

India's second largest private sector bank by net profit HDFC Bank slipped 1.5% to Rs 2519.80 on profit booking after a recent strong rally triggered by expectations of a more than 30% growth in bank's net profit in Q1 June 2011. Meanwhile, the bank has fixed 16 July 2011 as the record date for 5-for-1 stock split. The stock had struck a record high of Rs 2582.50 on Friday, 8 July 2011.

Shares of microfinance firm SKS Microfinance spurted 10% to Rs 542.50, extending last week's surge triggered by the finance ministry releasing the draft of a bill aimed at developing and regulating microfinance institutions. Shares of SKS Microfinance have surged 58.39% in just three trading sessions from a recent low of Rs 342.50 on Wednesday, 6 July 2011, after the release of the draft microfinance bill by the government after trading hours on Wednesday, 6 July 2011.

Mining and metal stocks extended Friday's slide triggered by reports a panel of ministers has approved the draft Mining Bill, which calls for miners to give to local communities an amount equivalent to royalties so as to compensate people displaced by such projects. Tata Steel (down 1.1%), National Aluminium Company (down 1.43%), JSW Steel (down 4.22%) and Steel Authority of India (down 3.18%), edged lower. Sterlite Industries (India) rose 0.21%, reversing intraday losses.

India's largest private sector aluminium maker by sales Hindalco Industries lost 4.35% to Rs 180.20 and was the top loser from the Sensex pack.

Coal India fell 1.37%, extending Friday's 8% slump triggered by reports the draft Mining Bill requires coal miners to share 26% of their project's profits with local communities so as to compensate people affected by such projects.

According to the reports, the draft Mining Bill will now go to the Cabinet for approval. The bill requires parliamentary approval after passing by the Cabinet to become a law.

Select auto stocks rose, extending their recent gains triggered by expectations that sales will pick up in the second half of the year. India's largest tractor maker by sales Mahindra & Mahindra rose 1.02%. The company, early this month, reported 29.11% jump in its total sales at 35,584 units in June 2011 over June 2010. Mahindra & Mahindra (M&M)'s domestic sales grew 28.69% to 33,772 units and exports surged 37.38% to 1,812 units in June 2011 over June 2010.

M&M on Monday said it has no immediate plans to buy the Indian government's 95.38% stake in loss-making three-wheeler producer Scooters India. "We have done our analysis, and we thought we won't pursue it [Scooters India]," Pawan Goenka, president of M&M's automotive business, told reporters. "As of now, we have no interest in Scooters India, but doesn't mean we won't pursue it later." In May 2011, the government decided to sell its entire Scooters India stake to a "strategic partner" in an effort to revive the loss-making public sector company.

Separately, Mr. Goenka, who is also president of Ssangyong Motor Co., said the South Korean auto maker will likely sell 65,000 vehicles in the July to December period. The company sold 55,000 vehicles between January and June.

India's largest car maker by sales Maruti Suzuki India slipped 1.67% on reports the company is once again headed for a confrontation with the rebel workers' body at its Manesar plant that witnessed a 13-day strike last month. According to reports, fresh trouble is brewing at Maruti Suzuki's Manesar plant as the rebel body--Maruti Suzuki Employees Union (MSEU)--has decided to boycott the union election slated for 16 July 2011.

India's largest truck maker by sales Tata Motors rose 0.07%. The company's total sales declined 0.7% to 66,358 units in June 2011 over June 2010. The company unveiled the monthly sales data on 1 July 2011.

India's largest bike maker by sales Hero Honda Motors fell 0.77%. The company, early this month, reported 20.12% jump in sales at 5.12 lakh units in June 2011 over June 2010. "This is the first time the company has sold five lakh-plus units in each of the three months of a quarter. Sequentially, this is the fourth consecutive month of five lakh-plus sales for the company," Hero Honda had said in a statement recently.

India's second largest motorcycle maker by sales Bajaj Auto shed 0.48%. The company's total sales rose 16% to 3.66 lakh units in June 2011 over June 2010. Bajaj Auto's motorcycle sales rose 14% to 3.22 lakh units and commercial vehicle sales jumped 34% to 43,830 units in June 2011 over June 2010. Exports rose 25% to 1.42 lakh units in June 2011 over June 2010. The company said premium bikes such as Pulsar and Discover contributed 66% of total motorcycle sales in June 2011. Bajaj Auto announced the monthly sales data during trading hours on 4 July 2011.

India's largest power generation firm by capacity NTPC fell 0.9% to Rs 188.20, reversing initial gains,. After market hours on Friday, 8 July 2011, NTPC said it has priced on Thursday, 7 July 2011, $500 million fixed rate senior unsecured notes under its $1 billion MTN programme. The notes carry a coupon of 5.625% per annum payable semi annually and are due for maturity on 14 July 2021.

NTPC has also signed a loan agreement of Rs 10000 crore with State Bank of India on 7 July 2011. The rupee term loan has a door to door maturity of 12 years with a drawdown period of 4 years. The above loans shall be utilized for financing the capital expenditure of ongoing/new projects of the company, NTPC said.

Interest rate sensitive realty shares declined on fears rising interest rates will hit property demand. Orbit Corporation (down 5.13%), Housing Development & Infrastructure (HDIL) (down 2.23%), Indiabulls Real Estate (down 1.5%), Unitech (down 6.02%), Parsvnath Developers (down 1.64%), DLF (down 3.59%), dropped.

Higher borrowing costs will make purchases of residential housing costlier for the buyer through the financing option. A number of commercial banks have raised lending rates recently.

Reliance Power fell 0.51%. During market hours today, the company said its Krishnapatnam Ultra Mega Power Project has got approval for carbon credits from United Nation Framework for Carbon Credits. Value of carbon credits from the project is estimated at Rs 1100 crore during the initial 10-year period.

Reliance Power now has two of its three Ultra Mega Power Projects (UMPP) registered with Clean Development Mechanism Executive Board (CDM-EB). Value of carbon credits from the two UMPPs--Krishnapatnam and Sasan projects--is estimated at over Rs 3000 crore during the initial 10-year period of operations, Reliance Power said in a statement.

Compact Disc India jumped 13.23% after the company said its board has decided to settle the outstanding dispute with HSBC. The announcement was made after trading hours on Friday, 8 July 2011.

Nile hit upper circuit limit of 10% after the company's board approved transfer of its glass lined equipment and pressure vessels division with all the assets and liabilities to De Dietrich Process Systems India. Nile made the announcement on Saturday, 9 July 2011.

Rushil Decor was the top traded counter on BSE with turnover of Rs 168.54 crore followed by State Bank of India (Rs 66.42 crore), Nesco (Rs 63.38 crore), Orchid Chemicals & Pharmaceuticals (Rs 55.86 crore), and Coal India (Rs 53.53 crore).

Cals Refineries clocked highest volume of 4.91 crore shares on BSE. Rushil Decor (1.24 crore shares), Birla Pacific Medspa (95.47 lakh shares), LML (53.66 lakh shares) and Unitech (40.77 lakh shares) were the other volume toppers in that order.

The crucial corporate earnings season has begun. Investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when Indian firms are witnessing cost pressures amid rising interest rates and staff costs. A hike in transportation costs will add to cost pressure of India Inc. As per reports, freight rates have gone up by 8% to 9% on all routes across India following the recent hike in diesel prices.

IT bellwether Infosys unveils Q1 results tomorrow, 12 July 2011. IT giant TCS and two-wheeler major Bajaj Auto unveil Q1 results on Thursday, 14 July 2011. HDFC Bank, Ashok Leyland and Crompton Greaves report Q1 results on 19 July 2011. Wipro, Dr Reddy's Lab and Exide Industries are set to announce Q1 results on 20 July 2011.

Zee Entertainment Enterprises, JSW Energy, Biocon and Kotak Mahindra Bank unveil Q1 results on 21 July 2011. Private sector bank Axis Bank reports Q1 results on 22 July 2011. Godrej Consumer Products reports Q1 earnings on 23 July 2011. Car major Maruti Suzuki, steel major JSW Steel and decorative paints major Asian Paints are set to unveil Q1 results on 26 July 2011. Infrastructure Development Finance Company (IDFC) unveils Q1 results on 27 July 2011. ICICI Bank and Power Finance Corporation unveil Q1 results on 29 July 2011.

On the political front, a reshuffle of the Union Cabinet is on the cards. The reshuffle is expected this week, reports said adding that the reshuffle was expected to address corruption issues, with the removal of under-performing ministers, and the induction of younger faces.

On the macro front, data on industrial production data for May 2011 will be unveiled on Tuesday, 12 July 2011. According to a poll carried out by Capital Market, economists expect industrial production growth rate at 8.2% for May 2011.

Merchandise exports jumped 46.4% to $29.2 billion in June 2011 over June 2010, Commerce Secretary Rahul Khullar said on Friday. Imports in June rose 42.4% to $36.9 billion. The trade gap in June almost halved from a month earlier to $7.7 billion. It was at $15 billion in May.

The government has set a target of merchandise exports of $300 billion in the fiscal year through March 2012, after shipments topped the government's estimate and rose to a record high of $245.9 billion last year.

Finance Minister Pranab Mukherjee on Friday, 8 July 2011, said the government's revenue collections so far have been healthy and he doesn't expect any slippage in the fiscal year target of Rs 7.9 lakh crore. He said the government will conduct its market borrowing programme for the current fiscal year in a non-disruptive manner, leaving enough space for private-sector borrowers. Mukherjee was speaking at a news conference after a meeting with the chief executives of state-run banks.

The annual monsoon covered the whole of India by 9 July 2011--a week earlier than the usual 15 July--but the total rainfall so far is 1% below normal, the weather department said on Sunday, 10 July 2011. The slight drop in rainfall is due mainly to a deficit of rains in Gujarat, Maharashtra and Andhra Pradesh. Gujarat is the country's largest cotton and groundnut producer, while Maharashtra is the top sugar producer and Andhra Pradesh is a key rice producer. Rainfall in Gujarat was 60% below normal at 96.2 millimeters, while that in Andhra Pradesh was about 15% below normal.

The country's oilseed sowing area until 8 July 2011 was 5.43 million hectares, down from 5.86 million hectares a year earlier. The weather office said in its latest update that fairly widespread rain is likely over Gujarat, Uttar Pradesh and some parts of Madhya Pradesh in the next three days. Rainfall in the month of July is considered crucial as sowing of a number of crops starts in June and good July rains determine the soil moisture and ensure proper development of the crops planted in June.

Bank stocks led European markets lower again on Monday, 11 July 2011, with Italian shares under particular pressure as sovereign debt worries continued to hang over the country. The key benchmark indices in UK, France and Germany were down by 0.38% to 1.72%. Italy is the euro zone's third-largest economy.

Top officials of the European Council, the European Central Bank and the European Commission will reportedly meet on Monday, 11 July 2011, amid concerns the region's debt crisis could spread. The emergency meeting has been convened aimed at preventing the Greek sovereign-debt contagion from spreading to Italy.

The European Central Bank (ECB) is seeking a bigger rescue fund for the euro zone, according to a report in a German newspaper.

Asian stocks declined on Monday, 11 July 201, as US unemployment unexpectedly increased in June 2011, dimming the outlook for the global economic recovery and Asian exporters' earnings. The key benchmark indices in Hong Kong, Japan, Indonesia, Singapore, South Korea and Taiwan were down by between 0.67% to 1.67%.

China's Shanghai Composite rose 0.18%. China's consumer prices accelerated to a three-year high in June 2011 as food prices soared, reaffirming expectations that Beijing won't be in a hurry to relax its tightening monetary-policy bias.

Trading in US index futures indicated that the Dow could fall 93 points at the opening bell on Monday, 11 July 2011. Fears about health of the US economy were sparked by a steep slowing in monthly jobs, according to data Friday, with nonfarm payrolls up by 18,000 in June, well below the 125,000 gain expected by economists.

Meanwhile, a closely watched meeting between congressional leaders and President Barack Obama to resolve the impasse over the US debt ceiling ended Sunday, with no immediate word of progress, according to reports. The negotiations are expected to resume on Monday, 11 July 2011. Obama is slated to hold a press conference on Monday ahead of the next round of talks, reports suggest.

Treasury Secretary Tim Geithner would also attend the Monday meeting, with the time of the talks yet to be determined. Sunday's gathering came a day after House Speaker John Boehner said Republicans would avoid a deal on a proposed $4 trillion package of cuts in favor of a smaller package of $2 trillion in reductions.