Lowest closing level for Sensex, Nifty in more than a week

Weak global cues pushed Indian stocks lower for the second straight session. The barometer index BSE Sensex and the 50-unit S&P CNX Nifty reached their lowest closing level in more than a week. European stocks dropped on Thursday after data from China and Europe pointed to a sharp slowdown in manufacturing activity. The Sensex fell 66.19 points or 0.36%, off close to 131 points from the day's high and up 21 points from the day's low. The market breadth, indicating the overall health of the market, which was positive in early trade turned negative as the session progressed.



Index heavyweight Reliance Industries (RIL) declined. Realty stocks fell on worries higher interest rates could dent demand for residential and commercial properties. Hero Honda Motors rose as growth its first quarter net profit surpassed market expectations. Hindustan Zinc edged higher on robust Q1 result. However, Exide Industries tumbled after weak Q1 result. Zee Entertainment Enterprises jumped after the company said a content focused approach combined with better monetization of subscription revenues would contribute to the company delivering steady return in the year ahead. FMCG stocks rose on defensive buying. PSU OMCs fell on reports that the government is unlikely to raise diesel prices again this year.

The market hit its lowest level in more than a week at the onset of the trading session on weak Asian shares. The market slipped once again into the red after reversing initial losses to hit fresh intraday high in morning trade. Key benchmark indices pared gains after regaining positive terrain in mid-morning trade. The market once again slipped into the red in early afternoon trade. Key benchmark indices hovered in the red in afternoon trade as European markets edged lower after a positive start. Intraday volatility continued as the key benchmark indices weakened once again after trimming losses in mid-afternoon trade tracking weak European stocks.

The BSE Sensex fell 66.19 points or 0.36% to 18,436.19, its lowest closing level since 12 July 2011. The Sensex rose 64.61 points at the day's high of 18,566.99 in morning trade. The index fell 87.02 points at the day's low of 18,415.36 in late trade.

The S&P CNX Nifty fell 25.45 points or 0.46% to 5,541.60, its lowest level since 12 July 2011. The Nifty hit low of 5,532.70 in intraday trade.

The BSE Mid-Cap index was down 0.43% and the BSE Small-Cap index was down 0.45%. Both the indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,643 shares fell and 1,187 shares rose. A total of 127 shares remained unchanged. The breadth was positive earlier in the day.

BSE clocked turnover of Rs 2705 crore, lower than Rs 3165.65 crore on Wednesday, 20 July 2011.

Among the 30-member Sensex pack, 21 stocks fell while the rest of them rose.

Index heavyweight Reliance Industries (RIL) declined 1.66% to Rs 860.75. The stock hit low of Rs 857.65 and high of Rs 876.35 so far during the day. The company unveils Q1 June 2011 results on Monday, 25 July 2011.

India's second largest listed telecom operator by sales Reliance Communications tumbled 4.24% to Rs 90.45 and was the top loser from the Sensex pack.

Jaiprakash Associates (down 1.39%), HDFC Bank (down 1.30%), NTPC (down 1.16%), Hindalco Industries (down 1.14%), DLF (down 0.86%), TCS (down 0.83%) and State Bank of India (down 0.81%), edged lower from the Sensex pack. Tata Motors (up 0.71%), Hindustries Unilever (up 0.60%), Wipro (up 0.58%), Infosys (up 0.57%), ONGC (up 0.53%) and ITC (up 0.36%), edged higher from the Sensex pack.

India's largest motorcycle maker by sales Hero Honda Motors rose 1.57% to Rs 1,788.85 after company announced during market hours today that net profit rose 13.46% to Rs 557.89 crore on 32.2% growth total turnover to Rs 5683.33 crore in Q1 June 2011 over Q1 June 2010. The growth in net profit surpassed market expectations even as revenue growth slightly lagged expectations. Hero Honda Motors was seen reporting 10.85% growth in net profit to Rs 545.06 crore on 32.92% growth in operating income to Rs 5711.34 crore in Q1 June 2011 over Q1 June 2010, as per average estimate of 11 brokerages.

Hero Honda's Managing Director and CEO Pawan Munjal said that the immediate focus of the management is to maintain operational excellence in the light of volatile costs of commodities such as steel, aluminium and rubber. Munjal said that Hero Honda will also carry on strengthening its product portfolio through new launches, network expansion and other customer outreach initiatives.

Ashok Leyland rose 1.10% to Rs 50.40 after the company announced during market hours today that it has been fixed 3 August 2011 as the record date for a liberal 1:1 bonus issue. Ashok Leyland's net profit fell 29.67% to Rs 86.25 crore on 6.28% increase in net sales to Rs 2495.50 crore in Q1 June 2011 over Q1 June 2010. The result was announced on Tuesday, 19 July 2011. The company said a change in accounting policy on amortization of the value of leasehold land in Q1 June 2011, resulted in a reduction in expenditure by Rs 9.46 crore during the quarter.

Hindustan Zinc rose 0.69% to Rs 138.20 after company announced during market hours today that net profit rose 67.79% to Rs 1494.91 crore on 44.63% growth in net sales to Rs 2821.35 crore in Q1 June 2011 over Q1 June 2010.

PSU OMCs fell on report government is unlikely to raise diesel prices again this year, allowing demand to expand, as concerns over inflation and state elections weigh. BPCL, HPCL and Indian Oil Corporation dropped by between 0.55% to 2.14%.

Zee Entertainment Enterprises jumped 6.1% to Rs 132.20, with the stock bouncing back from the day's low of Rs 117.75. The company announced during market hours today that consolidated profit after tax before exceptional items rose 7.5% to Rs 130.20 crore on 3.1% growth in total revenues to Rs 698.30 crore in Q1 June 2011 over Q1 June 2010. The sports business revenue during the quarter was Rs 87.30 crore, while the operating losses of the sports business stood at Rs 56.60 crore, Zee said.

The company said a significant part of the sports losses for this year has taken place in the first quarter itself. Zee Entertainment Enterprises (Zeel) Managing Director and Chief Executive Officer, Punit Goenka said, "We continue to reiterate our commitment to develop the sports genre which will see a far improved performance compared to fiscal 2011." Speaking about the future outlook for Zee Goenka said, "Our content focused approach combined with better monetization of subscription revenues, will contribute to the company delivering steady return in the year ahead."

The Zee Entertainment Enterprises stock had witnessed a steep slide in the run up to the results. The stock had fallen 11.88% in 17 trading sessions to settle at Rs 124.60 on Wednesday, 20 July 2011, from a recent high of Rs 141.40 on 27 June 2011.

Biotechnology company Biocon fell 1.94% to Rs 363.60 on profit taking. The company announced during market hours today that its consolidated net profit from continuing operations rose 7% to Rs 70 crore on 11% growth in total income to Rs 454 crore in Q1 June 2011 over Q1 June 2010. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 12% to Rs 133 crore in Q1 June 2011 over Q1 June 2010. The company said it expects to end the year on a note of strong performance.

The Biocon stock had witnessed a pre-result rally. The stock had jumped 9.83% in 20 trading sessions to settle at Rs 370.80 on Wednesday, 20 July 2011, from a recent low of Rs 337.60 on 22 June 2011.

Exide Industries tumbled 8.77% to Rs 154.95 after net profit fell 1.29% to Rs 163.20 crore on 8% growth in net sales to Rs 1244 crore in Q1 June 2011 over Q1 June 2010. The decline in Exide's net profit in the first quarter was in contrast with market expectations of a small rise. The 8% revenue growth reported by the firm also fell short of market expectations. The slower growth in automotive vehicle segment and lower demand for inverter batteries is now reflected in the company's financial performance for the quarter under review, the company said.

Exide Industries Managing Director and CEO T V Ramanathan said, "The demand growth that was seen in the country's automotive industry over the last several quarters has not been sustained, resulting in lower demand from original equipment manufacturers. The prevalent power supply situation and pleasant weather conditions in the north Indian markets also resulted in a lower inverter battery sales during the quarter. The demand contraction reduced the company's ability to pass on, in full, the cost of lead which surged 21% on year-on-year basis. These factors dampened sales and profitability".

"However, we feel that these setbacks are short term and our faith and confidence in the vibrancy of the Indian economy is very strong and there is no reason to worry about the longer term growth prospects of the company," Ramanathan added. He said various brand building and related marketing initiatives have been undertaken since June 2011 and the favorable impact of these initiatives will be reflected by Q3 December 2011.

IT stocks were mixed after robust Q2 results announced this week by tech heavyweights Intel, Apple and IBM Corp in the US. India's third largest IT exporter by sales Wipro rose 0.58% to Rs 400.90. The stock had lost 3.95% on Wednesday after the company reported a muted 1% growth in bottom line in Q1 June 2011. The company announced before market hours on Wednesday that consolidated net profit as per International Financial Reporting Standards (IFRS) rose 1% to Rs 1335 crore on 18% growth in total revenue at Rs 8564 crore in Q1 June 2011 over Q1 June 2010. Wipro expects 1.98% to 3.97% growth in revenues from IT services business at $1.436 billion to $1.464 billion in Q2 September 2011 over Q1 June 2011.

India's second largest IT company by sales Infosys Technologies gained 0.57% to Rs 2767.30. The stock had witnessed selling pressure recently after disappointing Q1 June 2011 results announced early last week. Consolidated net profit as per International Financial Reporting Standards fell 5.3% to Rs 1722 crore on 3.2% growth in revenue to Rs 7485 crore in Q1 June 2011 over Q4 March 2011.

India's largest IT company by sales TCS fell 0.83% to Rs 1122.65, with the stock falling for the second straight day. TCS' consolidated net profit fell 7.9% to Rs 2415 crore on 6.3% growth in revenue at Rs 10797 crore in Q1 June 2011 over Q4 March 2011. Operating profit declined 2% to Rs 2820 crore in Q1 June 2011 over Q4 March 2011. The result was announced after trading hours on Thursday, 14 July 2011.

Among other IT companies, Tech Mahindra, Oracle Financial Services Software, MphasiS, Rolta India and Mahindra Satyam fell by between 0.09% to 3.37%. HCL Technologies and iGate Patni rose 0.55% and 0.38%, respectively.

FMCG stocks rose on defensive buying. Cigarette maker ITC rose 0.36% to Rs 206.50. The stock hit record high of Rs 207.90 today. Among other FMCG stocks, Godrej Consumer Products, Marico, Hindustan Unilever and Britannia Industries rose 0.16% to 0.92%.

JSW Energy slumped 6.64% to Rs 71 after consolidated net profit fell 54.36% to Rs 136.31 crore on 34.44% growth in total income to Rs 1294.48 crore in Q1 June 2011 over Q1 June 2010.

Consumer durables stocks declined on profit taking. Titan Industries, Blue Star, Videocon Industries and Gitanjali Gems fell by 0.21% to 3.08%.

Realty stocks fell on worries higher interest rates could dent demand for residential and commercial properties. Purchases of both residential and commercial property are largely driven by finance. Orbit Corporation, Anant Raj Industries, Indiabulls Real Estate, Unitech, Phoenix Mills, HDIL, Peninsula Land, Ackruti City, Sobha Developers, DB Realty and Parsvnath Developers fell by 0.31% to 3.97%.

India's largest real estate company by market capitalisation DLF fell 0.86% to Rs 241.65.

Crompton Greaves clocked the highest turnover of Rs 166.27 crore on BSE. Rushil Decor (Rs 144.64 crore), State Bank of India (Rs 66.31 crore), TTK Healthcare (Rs 64.42 crore) and Petronet LNG (Rs 56.92 crore), were the other turnover toppers on BSE in that order.

Cals Refineries reported a highest volume of 13.40 crore shares on BSE. Sanra Software (1.70 crore), Crompton Greaves (92.42 lakh shares), Rushil Decor (88.83 lakh shares) and Birla Cotsyn (India) (79.75 lakh shares), were the other volume toppers on BSE in that order.

As the crucial corporate earnings season gathers steam, 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.

Private sector bank Axis Bank reports Q1 results tomorrow, 22 July 2011. Godrej Consumer Products reports Q1 earnings on 23 July 2011. Reliance Industries and Sterlite Industries will announce Q1 results on 25 July 2011. Car major Maruti Suzuki, steel major JSW Steel, power equipment major Bhel, decorative paints major Asian Paints and Shriram Transport Finance Company are set to unveil Q1 results on 26 July 2011. UltraTech Cement, HCL Technologies, GAIL (India), Bank of Baroda, Infrastructure Development Finance Company (IDFC), Oil India and Lupin unveil results on 27 July 2011.

State-run oil exploration giant ONGC, FMCG giant Hindustan Unilever, Cigarette major ITC, Sun Pharma, cement majors--ACC and Ambuja Cements, Jindal Steel & Power, state-run Punjab National Bank and GSFC unveil results on 28 July 2011. ICICI Bank, Power Finance Corporation and TVS Motor unveil Q1 results on 29 July 2011. Bharti Airtel unveils Q1 results on 3 August 2011. IL&FS Transportation Networks announces Q1 results on 5 August 2011. M&M announces Q1 results on 8 August 2011. ABB announces Q2 results on 9 August 2011. Tata Power unveils Q1 results on 10 August 2011. Hindalco and Coal India unveil Q1 results on 12 August 2011.

Annual inflation in the Food Articles group declined to 7.58% in the week ended 9 July 2011, from 8.31% in the previous week, the Commerce & Industry Ministry said in a statement. Inflation in the Primary Articles group inched lower to 11.13% in the week under review, from 11.58% in the week ended 2 July 2011. Inflation in the Fuel & Power group remained static at 11.89% as compared to the previous week, the data showed.

Finance Minister Pranab Mukherjee on Wednesday, 20 July 2011, said that inflation is expected to remain high between August-December 2011. Mukherjee's latest comments on inflation come just a few days ahead of a likely 25 basis points hike in its key lending rate by the Reserve Bank of India (RBI) at its first quarter review of the monetary policy 2011-12 on 26 July 2011, to tame inflation, which remains much above the central bank's perceived comfort level of 5% to 6%.

The country's crucial monsoon rains were 7% above normal in the week to 20 July picking up from about a fifth below average in the previous week, the weather office said on Thursday. The four-month monsoon rains are crucial to crop production in 60 percent of the country that does not have adequate irrigation.

European stocks dropped ahead of a closely watched summit of euro-zone leaders in Brussels. The key benchmark indices in UK, Germany and France were down 0.15% and 0.27%.

Euro-zone leaders are slated to meet in Brussels in the European afternoon Thursday to try to hammer out a definitive solution to the region's peripheral sovereign-debt woes. Germany and France have reportedly reached a joint agreement on a Greek bailout deal. There is intense pressure on euro-zone officials to agree on a package for Greece and prevent any further spread of the debt crisis to other nations, particularly Spain and Italy.

Private-sector activity across the 17-nation euro zone ground to a near-halt in July, with the composite purchasing managers index for the region falling more than expected to a 23-month low of 50.8, Markit Economics reported Thursday. The preliminary composite PMI reading declined to 50.8 from 53.3 in June. Economists had forecast a fall to 52.7. A reading of more than 50 indicates expanding activity, while a figure of less than 50 signals contraction. Manufacturing PMI fell to 50.4 from 52.0 in June, while services PMI declined to 51.4 in July from 53.7.

Asian stocks were mixed after preliminary results of a key survey on Chinese manufacturing hit a 28-month low, while investors awaited signs of progress on Europe's sovereign-debt crisis. The key benchmark indices in Indonesia, Singapore, Japan and Taiwan rose by between 0.04% to 0.43%. The key benchmark indices in China, Hong Kong, and South Korea fell by between 0.07% to 1.01%.

The HSBC "flash" version of its survey of Chinese manufacturing fell into contraction territory in July, at 48.9, down from a reading of 50.1 in June. The July reading was the lowest for 28 months, likely sparking worries about future strength of the Chinese economy. The data came as the International Monetary Fund said earlier Thursday that China should continue to withdraw stimulus in part to combat inflation risks.

Trading in US index futures indicated that the Dow could rise 3 points at the opening bell on Thursday, 21 July 2011. US stocks dropped on Wednesday, a day after Wall Street's best rally since March, as the oncoming debt ceiling deadline overshadowed strong earnings from Apple Inc. On the economic front, existing home sales fell unexpectedly to a seven-month low in June as cancellations of pending contracts surged, according to the National Association of Realtors.

The US government is approaching an August 2 deadline, after which the Treasury Department says it will be unable to meet all obligations.