Sensex ends flat, shrugs off 41-month low inflation data

14 May 2013

Major equity benchmarks consolidated in trade today and closed flat shrugging off 41-month low April WPI inflation number of 4.89 percent, way below RBI's comfort zone.

The Sensex closed at 19722.2 up 30.62 points and the Nifty ended at 5995.40, up 14.95 points. About 1162 shares advanced, 1206 shares declined and 146 shares were unchanged.

Key gainers in the Nifty were Ranbaxy Labs, Bank of Baroda, Sun Pharma, Power Grid and GAIL, up over 1.5 percent each.

Laggards included Dr Reddy's Labs, Bajaj Auto, HCL Tech, BHEL and Reliance Industries, down between 0.5 to 2.5 percent.

Rate sensitive stocks of banks, realty and auto also ended flat since the Reserve Bank of India has clearly signaled there is no room for further easing in monetary policy.

Major results announced today
Generics drugs maker Dr Reddy's Laboratories ' fourth quarter consolidated net profit surged 67 percent year-on-year to Rs 571 crore, helped by a sharp increase in other income. Consolidated revenue for the  three-month period gained 26 percent to Rs 3,340 crore. The stock ended at Rs 2025, down 2.7 percent.

Reliance Infrastructure's Q4 consolidated net profit shot up by 76 percent at Rs 725 crore compared to Rs 411 crore, a year ago. Its consolidated total income was down 13 percent to Rs 6187 crore from Rs 7135  crore, in the corresponding quarter of the previous fiscal. The stock ended flat.

United Bank of India's (UBI) fourth quarter (January - March) net profit plunged 79 percent year-on-year to Rs 31 crore, squeezed by higher provisions. Excluding the tax component, United Bank of India reported net  loss of Rs 248 crore in the Q4, FY13 as against Rs 171 crore in Q4, FY12. The share closed at Rs 58.28, down 1 percent.

Buzzing Stocks
Ranbaxy Labs recouped its morning losses and closed in green despite the company agreed to pay USD 500 million as settlement against the felony charges related to drug safety.

Sales at Tata Motors owned British Jaguar Land Rover unit rose 12 percent year-on-year to 28,503 vehicles in April, while for the first four months, sales gained 16 percent. Retail sales last month were best ever for  April. The stock closed at Rs 300.5, up 1 percent.

Sun Pharma Advanced Research Company, a research division of parent company Sun Pharma surged 20 percent after the company reported net profit of Rs 44 crore against loss of Rs 21.6 crore in the same quarter  last year.

India has lifted ban on futures trade in Guar Seed and Guar Gum. Vikas WSP, India's foremost guar gum powder manufacturer was locked at 20 percent upper circuit.

HT Media lost close to 10 percent after the company's quarterly earnings missed street expectations. The topline and bottomline registered a fall of 8.5 percent and 25 percent respectively.

Pidilite Industries, Castrol India, Eicher Motors, Mphasis, Zydus Wellness, Page Industries and Sun Pharma Advanced were some of the stocks that touched 52-week high today.

Key equity benchmarks were consolidating today after shedding close to 2 percent Monday on widening trade deficit data that renewed concerns of India's current account deficit.

The Sensex was up 21 points at 19713 and the Nifty was up 10 points at 5990. About 1048 shares advanced, 1209 shares declined, and 140 shares were unchanged.

Major gainers in the BSE Sensex were ONGC, Bharti Airtel, Sun Pharma, GAIL and Tata Motors, up over a percent each.

Dr Reddys Labs, Bajaj Auto, HDFC Bank, BHEL and NTPC were key losers.

Earlier in the day Ranbaxy plummeted to Rs 423 after the company agreed to pay USD 500 million as settlement against the felony charges related to drug safety.

Brokerage Views
Brokerage house Nomura has assigned 'Reduce' rating on Reliance Power citing regulatory and fuel supply risks at 3 major projects. Nomura also feels that at current market price, the stock is trading at expensive  valuations.

Nomura has also assigned 'Neutral' rating on GAIL with a price target of Rs 350 on the stock. The tariff approved for KG basin was 53% lower than expectations.

Broking house Citi has assigned 'Buy' rating on Nestle India as the firm feels earnings are likely to recover in the next few quarters. Citi maintains a price target of Rs 5625.

The market gained in late afternoon trade after a quiet start. The Nifty climbed above 6000 led by oil & gas stocks. The mid and small caps too were buzzing.

The Sensex was up 67.24 points at 19758.91 while the Nifty gained 27.60 points to be at 6008.05.

GAIL, Bharti Airtel, Tata Motors, ONGC and Hindalco were the key gainers in the Sensex.

Eicher Motors jumped 6.9 percent after its March quarter  EBITDA beat street estimates by 26 percent. Aptech still continued to be buyer's favourite today with the stock gaining 8.6 percent on the BSE.

Meanwhile, consumer durables stocks were facing heavy selling pressure.

Dr Reddy's Lab (down 2.1 percent) was the biggest loser in the Sensex on the back of March quarter earnings. In the January-March quarter, the pharma company's consolidated net profit was at Rs 571 crore  compared to Rs 343 crore in the year-ago period. Its consolidated revenue stood at Rs 3,340 crore.

Muthoot reacted (down 4.2 percent) negatively to a bad set of numbers.

Other losing stocks in the Sensex were Bajaj Auto, BHEL, Wipro and Hero MotoCorp.

Indian shares were trading flat in the afternoon trade despite April wholesale price index inflation numbers touching a 41-month low. The April inflation number of 4.89 percent was much lower than the CNBC-TV18 poll  which had expected wholesale prices to have risen an annual 5.4 percent in April. European shares opened marginally in negative.

The Sensex was down 6 points at 19685 while the Nifty was flat at 5980. About 1024 shares advanced, 1138 shares declined and 143 shares were unchanged.

Shares of realty and banks were trading flat despite the April WPI inflation having fallen well below the RBI's comfort zone.

Key gainers in the Nifty were ONGC, Bharti Airtel, Power Grid, Ranbaxy Labs and GAIL, up over a percent each. Laggards included HCL Tech, Jaiprakash Associates, Ambuja Cements, BHEL and Bajaj Auto, down  between 1 to 2 percent.

The most active shares on NSE were SBI, United Spirits, ICICI Bank, Reliance Infra and ITC.

In the midcap space, shares of Berger Paints, Muthoot Finance, Amara Raja Batteries, J K Cement and Solar Industries were biggest losers.

Zydus Wellness, Eicher Motors, Hindustan National Glass, Sadbhav Enginering and Motherson Sumi made smart gains for long traders.

Even though April Wholesale Price Index (WPI) inflation eased to a 41-month low (down at 4.89 percent), the market didn't seem to notice it. The Sensex was up 103.56 point at 19795.23 while the Nifty gained 35.45  points to be at 6015.90.

Strength in oil stocks was supporting the indices. Some buying interest were seen in ONGC (up 1.9 percent) and OIL (up 2.2 percent) as news reports suggest both the oil companies have requested the government to  cut the discounts they must give refiners on crude purchases as oil prices have softened. ONGC has apparently sought a USD 60 per barrel realisation on sales, from the current USD 47 per barrel, while OIL wants its  realisation capped at USD 65 per barrel.

Crude slipped on news of rising production from the Organization of Petroleum Exporting Countries (OPEC). Brent was at USD 102 per barrel.

Bharti Airtel, GAIL, Hindalco and SBI were key gainers in the Sensex.

Among the midcaps, Aptech continued to hog limelight as the stock was still up around 9 percent after it announced a buyback at up to Rs 82 a share.

Meanwhile, selling pressure were seen in Wipro, Bajaj Auto, Dr Reddy's Labs, Tata Steel and BHEL.

Amara Raja remained under pressure as it cracked 5 percent after March quarter margins disappointed at around 14 percent.

Key equity benchmarks were trading up 0.5 percent ahead of the April WPI inflation data that will be announced today at 12.00 hours, IST. According to a CNBC-TV18 poll, the inflation number is expected to come at  5.4 percent versus 5.96 percent month-on-month. If the inflation does come at 5.4 percent, then inflation would be at a 41-42 week low.

The Sensex was up 106 points or 0.54% at 19798 and the Nifty was up 35 points or 0.59% at 6015. About 1092 shares have advanced, 846 shares declined and 112 shares were unchanged.

Selective buying was seen in oil & gas, telecom, pharma and IT stocks. The broader markets also remain muted in trade today.

Tata Steel was one of the biggest losers amongst the heavyweights. The stock was down 2.4 percent on the back of USD 1.6 billion non-cash impairment hit on their FY13 balance sheet.

Aptech surged 9 percent after the company announced a buyback of upto Rs 66.6 crore at a maximum price of Rs 82. The management also said the company has Rs 120 crore of cash on books and zero debt.

Aptech reported strong earnings with 40 percent revenue growth coupled with margin improvement to 21 percent and PAT of Rs 15.5 crore boosted by an exceptional gain of Rs 8 crore.

Ranbaxy's plea of guilty to felony charges at the justice department turned sentiments negative for the stock. The USD 500 million fine they are required to pay was already provided for by the company in December.  Ranbaxy recouped early losses and was trading flat.

Amara Raja cracked 7 percent after operating margins disappoint at 13.9 percent versus estimates of 15 percent. Core EBIDTA margin was a shocker. Sales were up 20 percent compared to same quarter last year but  profits also missed estimates at Rs 59.6 crore against estimates of Rs 80 crore.

The Indian rupee was trading marginally lower at 54.77 versus its close of 54.73 on Monday. It breached levels of 55 on Monday after major Asian currencies weakened against US dollar.

The market has opened on a cautious note after Monday's deep cut. Investors seem to be worried at the political drama as there are speculations of the growing rift between Prime Minister Manmohan Singh and UPA  Chairperson Sonia Gandhi. Experts also warn that the market may face some more profit booking pressure today.

The Sensex was up 45.47 points at 19737.14, and the Nifty gained 13.65 to be at 5994.10. Dr Reddy's Lab, Bharti Airtel, Coal India, Gail and TCS were the biggest gainers in the Sensex.

Among the midcaps, Aptech jumped 9.1 percent as the board approved buyback of shares from the open market.

Meanwhile stocks that were on losing side were Tata Steel, Bajaj Auto, Hero MotoCorp, Jindal Steel and HDFC.

Ranbaxy slipped 2.1 percent as the generic drugmaker has been fined USD 500 million by the US government after its subsidiary pleaded guilty to sale of adulterated drugs manufactured in India. It is the largest  settlement by a generic medicine maker till date. It includes USD 150 million in payments for a criminal fine and forfeiture and USD 350 million in payments for civil claims.

Elder Pharma fell another 10 percent in the early trade.

Companies which are expected to announce March quarter earnings today are Dr Reddy's Lab, Novartis India, Muthoot Finance, Pfizer, Reliance Infra, United Bank, Sun Pharma Elder Pharma and HT Media.