Market extends losses in late trade; Coal India tanks 8%

Key benchmark indices extended losses in late trade as European stocks moved off highs ahead of the crucial US nonfarm payrolls data. The barometer index BSE Sensex fell below the psychological 19,000 level, a day after regaining that mark on Thursday, 7 July 2011. The Sensex was provisionally down 247.16 points or 1.30%, off 300.56 points from the day's high and up 13.43 points from the day's low. The market breadth was weak.



Mining and metal stocks tumbled on 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. Auto stocks were off day's high on profit booking after recent gains triggered by expectations that sales will pick up in the second half of the year.

Index heavyweights Reliance Industries and ICICI Bank dropped. Mortgage lender HDFC slipped on profit taking after unveiling Q1 results. HDFC Bank struck a record high on expectations of robust Q1 earnings. Bharti Airtel struck 52-week high. IT bellwether Infosys slipped ahead of its Q1 June 2011 earnings on Tuesday, 12 July 2011.

The barometer index BSE Sensex and the 50-unit S&P CNX Nifty reversed direction soon after hitting 9-1/2-week highs at the onset of the trading session. The market hit a fresh intraday low in morning trade. Sustained selling pulled the market to fresh intraday low in mid-morning trade. The market came off lows in early afternoon trade. A bout of volatility was witnessed as the key benchmark indices declined once again after regaining positive zone for a short while in afternoon trade. Weakness persisted in mid-afternoon trade. The market extended losses in late trade.

As per provisional closing, the BSE Sensex was down 247.16 points or 1.30% to 18,831.14. The Sensex rose 53.40 points at the day's high of 19,131.70 in early trade, its highest level since 2 May 2011. The index lost 260.59 points at the day's low of 18,817.71 in late trade.

The S&P CNX Nifty was down 76.40 points or 1.33% to 5,652.55. The Nifty hit a high of 5,740.40 in intraday trade, its highest level since 2 May 2011.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1156 shares rose and 1770 shares declined. A total of 121 shares remained unchanged.

The total turnover on BSE amounted to Rs 3151 crore, compared with Rs 2423 crore by 14:25 IST

Among the 30-member Sensex pack, 22 stocks declined while the rest of them gained.

Index heavyweight Reliance Industries (RIL) lost 1.94% to Rs 853.45 after gyrating between Rs 852.10 and Rs 874. Reports on Thursday indicated that the petroleum ministry had on Wednesday recommended the $7.2 billion RIL-BP deal to the Cabinet Committee on Economic Affairs (CCEA) for an unconditional approval. The deal gives the British energy major a 30% stake in 23 oil and gas fields in India including RIL's gas-producing KG-D6. Reports added that the Cabinet will take up the issue for a decision next week.

Essar Oil surged 2.73% ahead of its Q1 June 2011 results on Monday, 11 July 2011.

India's largest mortgage lender by market capitalisation HDFC slipped 1.62% to Rs 711 in volatile trade swinging between Rs 732 and Rs 710.10. The company reported 21.58% rise in net profit to Rs 844.53 crore on 35.87% rise in income from operations to Rs 3800.67 crore in Q1 June 2011 over Q1 June 2010. The company announced the result during trading hours today.

The stock declined on profit taking. The HDFC stock had risen 14.54% in 13 trading sessions to settle at Rs 722.70 on Thursday, 7 July 2011, from a recent low of Rs 630.95 on 20 June 2011 in pre-result rally.

India's largest commercial bank by branch network State Bank of India (SBI) gained 0.17% as a further hike in lending rates may help the bank in mitigating the pressures arising from rise in cost of funds. 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 fell 0.12% to Rs 2561.80, after striking a record high of Rs 2582.50. The stock logged gains for the fifth straight session of trade on expectations a more than 30% growth in net profit in Q1 June 2011. Meanwhile, the bank has fixed 16 July 2011 as the record date for 5-for-1 stock split.

India's largest private sector bank by market capitalisation ICICI Bank shed 2.64%.

Mining and metal stocks tumbled on 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. Hindalco Industries (down 3.83%), Jindal Steel & Power (down 2.83%), Tata Steel (down 1.88%), Sesa Goa (down 4.27%), Hindustan Zinc (down 4.17%), JSW Steel (down 3.34%) and Steel Authority of India (down 3.7%), edged lower.

India's largest non-ferrous metals maker by sales Sterlite Industries (India) lost 3.88% to Rs 163.50, extending two-day losses. It was the top loser from the Sensex pack.

Coal India slumped 8.08% on reports the draft Mining Bill requires coal miners to share 26% of their 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.

IT bellwether Infosys shed 0.98% on profit taking ahead of its Q1 June 2011 earnings on Tuesday, 12 July 2011. 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 8 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 largest software services exporter TCS dropped 2.17%. The company unveils its Q1 June 2011 results on 14 July 2011.

India's third largest software services exporter Wipro rose 0.07%. The firm declares its Q1 June 2011 results on 20 July 2011.

India's top real estate developer by sales DLF rose 0.51% to Rs 235.20 and was the top gainer from the Sensex pack. Recent reports indicated the company plans to sell its shareholding in two IT special economic zones in Pune and Noida for Rs 1300 crore. It

India's largest listed cellular services provider by sales Bharti Airtel advanced 0.24% to Rs 399 after striking a 52-week high of Rs 409.45 in intraday trade today. The stock extended Thursday's rally triggered by the company's announcement that it has decided to merge its mobile, satellite television, fixed-line and broadband businesses into a single entity. "The new structure... is aimed at driving greater business and functional synergies, providing a common interface to customers, and creating a de-layered and more agile organization," Bharti Airtel Chairman and Managing Director Sunil Mittal said in a statement. The business units jointly make up 90% of the company's revenue.

Auto stocks were off day's high on profit booking after recent gains triggered by expectations that sales will pick up in the second half of the year. India's largest bike maker by sales Hero Honda Motors gained 0.5%. The company recently 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 was unchanged at Rs 1454.95. 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 truck maker by sales Tata Motors shed 0.28% in volatile trade.

India's largest tractor maker by sales Mahindra & Mahindra dropped 2.06%. The company, last week, 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.

India's largest car maker by sales Maruti Suzuki India slipped 0.22%. The company last week said its total vehicle sales dropped 8.8% to 80,298 units in June 2011 over June 2010. Domestic sales declined 3.8% to 70,020 units and exports sales plunged 32.7% to 10,278 units in June 2011 over June 2010.

India's largest power generation firm by capacity NTPC rose 0.11%. Reportedly, the company has priced a $500 million dollar bond to yield 2.55 percentage points over comparable US Treasurys.

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 on 12 July 2011. IT giant TCS unveils Q1 results on 14 July 2011. HDFC Bank and Ashok Leyland 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 and Biocon 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 and steel major JSW Steel are set to unveil Q1 results on 26 July 2011. Infrastructure Development Finance Company (IDFC) unveils Q1 results on 27 July 2011. Power Finance Corporation announces Q1 results on 29 July 2011.

Foreign institutional investors (FIIs) are on a buying spree. FIIs bought shares worth a net Rs 868.71 crore on Thursday, 7 July 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) sold shares worth Rs 161.03 crore on that day.

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 today, 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.

Monsoon rains were 25% below normal in the week to 6 July 2011, slowing from the 10% above average rains in the previous week, the weather office said on Thursday. 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.

Meanwhile, an Empowered Group of Ministers (EGoM) is reportedly scheduled to meet on 11 July 2011 to consider the crucial Food Security Bill and allow export of food grains.

European shares moved off initial highs on Friday ahead of the crucial US nonfarm payrolls data due later in the global day. The key benchmark indices in UK, France and Germany were down 0.05% to 0.44%.

On Thursday, the European Central Bank raised interest rates by a quarter of a percentage point to 1.5%, but the Bank of England kept its key interest rate at a record low 0.5% as worries about the lacklustre recovery outweighed any concern about above-target inflation.

Most Asian stocks rose as a stronger-than-expected US employment data released overnight improved risk appetite. Key benchmark indices in Hong Kong, Japan, Indonesia and Singapore were up by between 0.66% to 1.63%. Key benchmark indices in South Korea and Taiwan slipped 0.01% and 0.27%, respectively.

In China, the Shanghai Composite index rose 0.13% ahead of the release of much-awaited June inflation figures on Saturday, 9 July 2011. The National Bureau of Statistics brought forward the release date for the data, which was earlier to be announced on 15 July 2011.

Trading in US index futures indicated that the Dow could fall 15 points at the opening bell on Friday, 8 July 2011. US stocks rallied on Thursday in the wake of a report showing an increase in private-sector employment that outstripped economists' forecasts. The result buoyed expectations for the crucial US nonfarm payrolls report due later in the global day today, 8 July 2011.