Sensex flat; Q1 nos drag L&T, Reliance, Asian Paints down

It was another flat closing for the market Monday amid disappointing performance from largecap companies in Q1. The BSE Sensex gained more than 100 points in afternoon trade, but could not hold gains in late trade after poor numbers by L&T.

The 30-share benchmark gained 9.27 points to close at 20159.12, and the NSE Nifty rose 2.60 points to finish at 6031.80, but the BSE Smallcap Index fell 0.3 percent. Declining shares outnumbered advancing by 1224 to 1027 on the Bombay Stock Exchange.

C Jayaram, Joint MD of Kotak Mahindra Bank feels the market is unlikely to move dramatically over the next few weeks and will trade in a narrow range. He advises investors to go bottom fishing for specific stocks, but very cautiously.

According to him global cues and elections will provide the next big trigger for market but he sees fair amount pain still underlying in the economy. Jayaram stressed that it was unlikely that corporate earnings upgrade will happen over next two-three quarters.

Banking sector is unlikely to see further damage after the carnage experienced over last two weeks, capital goods companies will continue to languish due to delayed government decisions, he adds.

Financials, auto and technology stocks were gainers while losers were capital goods and oil & gas.

Larsen & Toubro (L&T) shares plunged 7.5 percent after engineering and construction major's net profit fell higher-than-expected 12.5 percent year-on-year to Rs 756 crore while analysts had expected it at Rs 991 crore,

In a press conference after results announcement, L&T says that situation is very challenging on the ground. Pressure on margins will continue in the coming quarters. EBITDA margin fell 60 bps to 8.5 percent in June quarter as against 9.1 percent in a year ago period due to industry pressures, but the company is hopeful of meeting sales and margin guidance in FY14.

Its rival BHEL tanked 7 percent. Amol Rao of Anand Rathi feels the state-owned engineering firm is facing headwinds of over capacity and slowdown in capex . He believes the stock is trading close to its lowest valuations.

Reliance Industries shares lost 1.6 percent post its earnings . CLSA maintained an outperform rating on the stock with a target price of Rs 1,000 while JP Morgan retained its neutral rating and said near-term earnings will stay muted.

Asian Paints , one of the largest paint companies in India, too posted weak performance in first quarter earnings. Consolidated net profit fell 1.7 percent year-on-year to Rs 283 crore as against analysts' forecast of Rs 309 crore. Shares slipped 1.7 percent.

Wockhardt shares crashed 9 percent, after it received a warning letter from the USFDA for its facility at Waluj in Maharashtra for not meeting manufacturing norms. Wockhardt says that it has already initiated measures to resolve the same.

Ambuja Cements lost 4.7 percent after Credit Suisse downgraded the stock to neutral with a target price of Rs 205. "The stock is trading at its peak multiples and already pricing in a margin recovery in CY14 as part of potential merger synergies with ACC ," Credit Suisse report said.
The brokerage house expects profit in June quarter to decline 25-35 percent year-on-year for Indian cement majors. Ambuja Cements could report a profit decline of 34 percent Y-o-Y.

Among others, ONGC and Tata Steel fell nearly 3 percent while HDFC , Sun Pharma and Mahindra & Mahindra gained 2.6-3.2 percent.

Country's largest telecom player Bharti Airtel and private sector lender ICICI Bank climbed 1.6 percent each.

Globally, Asian markets closed higher today while European markets were flat to negative at 04:15 hours IST.

02:59pm All capital goods stocks are under pressure after disappointing performance by L&T in Q1. BEML , Punj Lloyd and Siemens are down 3-4 percent.

Oil & gas majors Reliance Industries and ONGC slipped 1.9 percent and 2.7 percent, respectively.

Tata Steel shares extended losses to 2.8 percent from one percent.

Index heavyweights ITC and HDFC Bank declined 0.34 percent each.

02:50pm Market update
The BSE Sensex erased all its gains and is down 16.58 points at 20133.27 while the Nifty is down 0.25 points at 6028.95.

Indian rupee depreciated by 21 paise to 59.56 against the US dollar.

L&T press conference
In a press conference after results announcement, L&T says situation is very challenging on the ground. Pressure on margins will continue in the coming quarters.

EBITDA margin fell 60 bps to 8.5 percent in June quarter as against 9.1 percent in a year ago period due to industry pressures, but the company is hopeful of meeting sales and margin guidance in FY14. The stock lost 7% percent.

02:35pm Stocks in news
Reliance Industries is under pressure post its earnings, falling more than one percent. CLSA maintains an outperform rating on the stock with a target price of Rs 1,000 while JP Morgan retains its neutral rating and believes near-term earnings to stay muted.

Wockhardt shares plunged 10 percent, after it received a warning letter from the USFDA for its facility at Waluj in Maharashtra for not meeting manufacturing norms. Wockhardt says it has already initiated measures to resolve the same.

02:15pm Equity benchmarks came off day's high in afternoon trade after disappointing performance from Larsen & Toubro in Q1. Oil & gas stocks are also under perssure.

The BSE Sensex is up 48.12 points at 20197.97, and the Nifty is up 14.45 points at 6043.65.

Banking sector is unlikely to see further damage after the carnage experienced over last two weeks, capital goods companies will continue to languish due to delayed government decisions, C Jayaram, Joint MD of Kotak Mahindra Bank told CNBC-TV18 today.

He added that markets are unlikely to move dramatically over the next few weeks and will trade in a narrow range. He advises investors to go bottom fishing for specific stocks, but very cautiously.

Larsen & Toubro (L&T) disappointed the street on every parameter with the first quarter (April-June) net profit falling higher-than-expected 12.5 percent year-on-year to Rs 756 crore. Net sales increased lower-than-expected 5 percent to Rs 12,555 crore in June quarter from Rs 11,955 crore reported in a year ago period.

Analysts on an average had expected it to report net profit of Rs 991 crore on net sales of Rs 13,643 crore. Shares plunged more than 6 percent.

Its rival BHEL too is down over 6 percent. Amol Rao of Anand Rathi says that BHEL is facing headwinds of over capacity and slowdown in capex. He believes the stock is trading close to its lowest valuations.

The market continue to trade near day's high with the Nifty holding the 6050 level in afternoon trade on buying in technology, banks and auto stocks, but the selling in oil & gas stocks capped the upside.

The BSE Sensex is up 87.45 points at 20237.30, and the Nifty is up 24.95 points at 6054.15.

State-run capital goods major BHEL plunged nearly 5 percent. Motilal Oswal expects the company to report 42.6 percent degrowth year-on-year (down 83.4 percent sequentially) in net profit at Rs 528.4 crore in first quarter. Net sales may fall 9.3 percent Y-o-Y (down 59.9 percent Q-o-Q) to Rs 7552.2 crore during the quarter, Motilal Oswal adds.

ONGC shares lost 2.5 percent while Reliance Industries and GAIL sliped 1.5 percent each.

Dr Reddy's Labs and Tata Steel are other losers that fell 1.2 percent each.

Meanwhile, Bank Nifty jumped over 110 points as country's largest private sector lenders ICICI Bank and HDFC Bank gained 1.2 percent and 0.5 percent, respectively.

Housing finance major HDFC extended gains to over 3 percent and even healthcare company Sun Pharma gained nearly 3 percent.

12:59pm Buzzers
According to agencies, Texmaco Rail is planning to acquire 60-65 percent stake in Kalindee Rail . It is also looking to acquire full control of Kalindee Rail. It will spend Rs 100 crore on Kalindee stake buy and capex, agencies say. Texmaco Rail rallied 4.4 percent while Kalindee Rail gained 2 percent.

12:55pm Analyst talks on capital goods majors
Amol Rao of Anand Rathi says that BHEL , which is down 4 percent today, is facing headwinds of over capacity and slowdown in capex.

According to him, BHEL is trading close to its lowest valuations.

Margins for L&T (stock up 1 percent), which will declare its first quarter numbers today, is expected to remain under pressure, he adds.

12:45pm Global cues
European markets are flat to negative in early trade. France's CAC and Britain's FTSE fell 0.2 percent each while Germany's DAX declined 0.1 percent.

Meanwhile, Asian markets strengthened in late trade. Shanghai gained 0.6 percent and Nikkei rose 0.5 percent.

12:30pm Stock specific
Pratibha Industries received order worth Rs 227 crore from Rajasthan government, but the stock lost nearly 5 percent.

Infotech Enterprises gained close to 2 percent post block deal. 44 lakh equity shares (3.94 percent of total equity) change hands on BSE at Rs 180 apiece.

12:10pm Equity benchmarks extended gains in noon trade with BSE Sensex rising above 100 points as banks, IT, auto and realty indices rose 1 percent each.

The BSE Sensex is up 102.40 points or 0.51 percent at 20252.25, and the Nifty is up 31.40 points or 0.52 percent at 6060.60.

Larsen & Toubro shares climbed one percent ahead of earnings today. Heavy engineering and construction major is expected to report around 15 percent year-on-year jump in its June quarter profit to Rs 991 crore, boosted by an extra-ordinary income arising from forex gains.

Among technology stocks, Infosys advanced 1.5 percent while Wipro and TCS gained marginally.

Housing finance major HDFC led gainers, rising 2.7 percent. Top private sector lender ICICI Bank is up 1.4 percent.

Meanwhile, oil & gas majors Reliance Industries , ONGC and GAIL slipped 1.6 percent each.

State-owned capital goods major BHEL plunged 4 percent on order book conerns, likely margin pressure.

11:59am Market update
The market extended gains in noon trade with the Sensex rising 90.26 points to 20240.11. The Nifty is up 25.50 points at 6054.70.

Sun Pharma shares gained more than 2 percent while Larsen & Toubro rose one percent ahead of first quarter earnings.

11:55am Earnings
Piramal Glass shares rallied 2 percent as its first quarter consolidated net profit grew 145 percent year-on-year to Rs 26 crore due to forex gain of Rs 22.7 crore as against 7.4 percent reported in a year ago period.

Net sales of the company rose by 11 percent to Rs 428 crore from Rs 385 crore during the same period.

Nucleus Software also jumped 2 percent. Consolidated net profit increased to Rs 11.2 crore from Rs 10.4 crore and income from operations rose to Rs 86.3 crore from Rs 73.4 crore Q-o-Q.

11:45am Moody's on GDP
Moody's may lower FY14 GDP growth target to 5 percent from 5.5 percent.

"Current account deficit continues to remain major concern for Indian economy and fiscal deficit may be constraint due to growth constraints," Moody's said.

The rating agency does not see any danger to sovereign rating in short to mid-term while it's outlook is stable for India at this point.

11:25am Equity benchmarks remained firm in late morning trade with the BSE Sensex gaining 37.65 points at 20187.50.

The Nifty rose 10.95 points to 6040.15 while the BSE Midcap index gained 0.5 percent. Advancing shares outpaced declining ones by 956 to 843 on the BSE.

Wockhardt shares tanked 5 percent as the pharmaceutical company received a warning letter from US FDA over the Waluj plant for not meeting manufacturing norms. In May this year, the US FDA had issued an import alert on the Waluj facility that makes injectables and solid dosages. Earlier this month, Wockhardt was barred from producing drugs for Europe, after its Waluj factory failed to meet some guidelines from the UK regulator.

Kalindee Rail gained more than one percent after Texmaco Rail launched an open offer to buy 30 percent in the Gurgaon-based railway infrastructure company on saturday after buying out the entire promoters' stake of 11.74 percent in the firm for Rs 12.59 crore.

10:55am Market update
The market is trading marginally higher. The BSE Sensex is up 36.46 points at 20186.31, and the Nifty is up 12.40 points at 6041.60, underperforming broader markets.

The BSE Midcap Index rose 0.6 percent and Smallcap gained 0.3 percent. About 919 shares advanced while 699 shares declined on the BSE.

Shares of Hindalco Industries, Bajaj Auto, M&M and ICICI Bank, Bank of Baroda and IndusInd Bank gained 1.5-2.7 percent whereas GAIL, ONGC, Wipor, ACC and Ultratech Cement lost 1-2 percent.

10:35am Earnings reaction - Reliance Industries shares dropped 1.6 percent as its Q1 earnings were operationally weak, but treasury gains helped beat street estimates. Net profit fell by 4 percent quarter-on-quarter to Rs 5,352 crore while EBITDA dipped 9.5 percent Q-o-Q to Rs 7,075 crore from Rs 7,825 crore due to a dip in gross refining margin to USD 8.4 a barrel as against USD 10.1 a barrel in Q4.

Brokerage house - Ambuja Cements plunged 4 percent as Credit Suisse downgraded the stock to neutral with target price of Rs 205. "The stock is trading at its peak multiples and already pricing in a margin recovery in CY14 as part of potential merger synergies with ACC. We expect June quarter profits to decline 25-35 percent Y-o-Y for Indian cement majors," Credit Suisse report said.

10:15am Indian equity benchmarks recouped early trade losses amid volatility, supported by financials and auto stocks. The broader markets also trade with marginal gains. Advancing shares outnumbered declining ones by 697 to 510 on the BSE.

The BSE Sensex is up 47.77 points at 20197.62, and the Nifty is up 14.30 points at 6043.50.

HDFC led gainers, rising 2.7 percent while ICICI Bank rose 1.35 percent. HDFC Bank and State Bank of India advanced nearly 0.4 percent.

Auto stocks are also on buyers' radar. Tata Motors, Bajaj Auto, M&M and Hero Motocorp gained 1-2 percent while Maruti increased 0.6 percent.

Jal Irani of Macquarie says that Reliance Industries' (RIL) first quarter earnings were in-line with expectations. "We retained price target of Rs 1,100/share," he said. The stock lost 1.5 percent.

State-owned capital goods major BHEL dropped another 4 percent today on top of Friday's 8 percent fall due to order book concerns.

9:55 am Result poll: Asian Paints , the largest paint company in India, is set to announce its first quarter (April-June) results today. Analysts on an average expect the company' consolidated net profit to grow 7.3 percent year-on-year at Rs 309 crore, according to CNBC-TV18 poll.

Total income from operations are likely to increase by 11.1 percent to Rs 2,831 crore in April-June quarter from Rs 2,548 crore reported in a year ago period.

9:50 am Expert views: Calling Indian fundamental problems as 'self-evident', Sandeep Bhatia, executive director and head of sales, Kotak Equities says solutions for the country's issues too, are obvious. However, the same isn't the case for other emerging markets (EMs), says Bhatia in an interview to CNBC-TV18.

Bhatia says the obstacles in other EMs are only the tip of the iceberg, which is not the case with Indian fundamentals, which are improving.

Meanwhile, Bhatia is bullish and betting big on Idea Cellular . He says the stock could rally to Rs 180. Additionally, Bhatia expects the rupee to trade at the current levels and advises investors to stay away from HUL .

9:45 am Precious metals update: Gold jumped more than 1 percent to its highest level in a month on Monday as the US dollar slipped against other currencies, with gains in Japanese bullion futures adding extra support, reports Reuters.
       
Gold hit a high of USD 1,314.49 an ounce, its highest since June 20, and stood at USD 1,312.24 by 0024 GMT, up USD 16.50. Gold last week posted its second weekly gain after the Federal Reserve's assurance the timing of any tapering in economic stimulus is not set in stone.

9:40 am Big fall: Wockhardt sinks around 10 percent on the BSE as the pharma major said it has received a warning letter from US health regulator over its facility at Waluj in Maharashtra not meeting manufacturing norms.

The company had earlier in May announced that the US Food and Drug Administration (USFDA) had issued an import alert on its Waluj facility, which makes injectables and solid dosages.

9:35 am Houseviews: Credit Suisse has downgraded Ambuja Cement to neutral with a target price of Rs 205 per share. The stock is down around 3 percent on the BSE.

9:30 am Buzzing:  Texmaco surges around 5 percent as the Saroj Poddar's company has finally launched the open offer for Kalindee Rail (up 1.6 percent). Texmaco rail board has approved the acquisition of 19.37 lakh shares or 15.63 percent of Kalindee rail promoters. Texmaco will buy Kalindee rail promoters' stake at Rs 65 a share. They would make open offer for up to 49.52 lakh shares or 30 percent of Kalindee.

9:25 am Laggards: BHEL (down 3 percent) is the biggest loser in the Sensex as investors are concerned over weak order flows. On Friday, the stock tanked around 9 percent eroding market value of the company by Rs 3,708 crore to Rs 42,527 crore.

Reliance Industries is weak too (down around 2 percent) on the back of April-June quarter earnings . On Friday after market hours, the company announced a 19 percent year-on-year rise in June quarter profit to Rs 5352 crore, boosted by stronger margins in its main oil refining business and higher other income.

Sales have, however, declined to Rs 87645 crore, down 4.5 percent Y-o-Y on lower output from KG-D6 basin which has recorded a 50 percent decline to around 15 million standard cubic metres per day.

The market has kickstarted the day on a quite note as key corporate earnings remain in focus today. The Sensex is down 9.63 points at 20140.22 while the Nifty slips 4.20 points at 6025.00. About 366 shares have advanced, 251 shares declined, and 38 shares are unchanged.

In earnings to watch out today, L&T will announce April-June numbers today. According to a CNBC-TV18 poll, revenues may see 14 percent growth to Rs 13,643 crore. Profits too may surge 15 percent. Also watch out for margins, it may barely touch double digits. Asian paints too will declare earnings today.

The EGoM on gas allocation will meet again to find a solutions for the gas starved power plants. It will explore if extra gas can be given to power companies.

The Indian rupee opened on flat note at 59.29 per dollar versus 59.35 Friday.

Agam Gupta, Standard Chartered Bank said, "The rupee is likely to be flat on dollar weakness and heavy intervention by RBI on Friday, which indicated that any level close to 60/USD is not acceptable. The range for the day is seen between 59.10-59.50/USD."

US Vice President Joe Biden will land in India today for a 4-day visit. Sources say that the visit is to lay the ground work for Obama's visit to India later this year. Biden will meet Prime Minister Manmohan Singh and opposition leader Sushma Swaraj. The buzz is that the anti outsourcing bill will be diluted.

In the currency space, the euro rises to 1.31 to the dollar. The dollar index is below 82.50 mark. The dollar-yen is around 99. In ommodities, Brent crude trades above USD 108 a barrel. Nymex too is hovering around USD 108 a barrel. From precious metals space, gold rises to a one-month high amid US stimulus hopes, above USD 1310 an ounce.