Nifty keeps head above 5300; earnings disaster continues

It was yet another day of consolidation for the Indian market. The bad news from the corporate front kept on pouring this week denting investor's sentiment. Veritas-Indiabulls tangle, tepid IIP numbers and substandard results from sectoral heavyweights like SBI, Bharti Airtel and Ranbaxy Labs sums up the entire week.

The Sensex ends flat at 17557.74 down 3.13 points or 0.02% and the Nifty closed at 5320.40 down 2.55 points or 0.05%. The breadth of the market worsens further. About 1139 shares advanced, 1575 shares declined, and 729 shares remain unchanged.

Asian markets also snapped a four-day rally on Friday and extended losses after China's July trade data fell far short of expectations, casting doubts on whether the sputtering global economy will regain traction any time soon.

SBI joins Infosys, Bharti earnings disaster club

SBI was the latest entrant to the earnings disaster club headed by Infosys and then followed by Bharti.

State Bank of India, the country's largest lender, reported healthy net profit for the second consecutive quarter on strong loan growth, but a rise in bad loans pulled down its shares.

SBI's net profit more than doubled to Rs 3752 crore from Rs 1584 crore a year earlier. Analysts, on average, had expected a net profit of Rs 3617 crore.

Its non-performing loans rose to nearly 5% at end-June compared with 3.5% a year earlier but provisions, or the funds set aside for bad loans and contingencies, were down 41% to Rs 2560 crore.

Sun Pharmaceutical Industries, India's top drugmaker by market capitalisation, reported 59% rise in quarterly net profit substantially beating street estimates, as sales in its key US market surged helped by robust business of Israeli unit Taro Pharma.

Net profit rose to Rs 796 crore during the fiscal first quarter ended June from Rs 501 crore a year earlier. Sales rose 62.5% to Rs 2658 crore.

SBI was the top loser in the Nifty. Ranbaxy Labs, Tata Motors, Bank of Baroda and IDFC also ended in red with hefty losses. BPCL, Kotak Mahindra, HUL, Maruti Suzuki and TCS managed to end in green.

FIIs trim financials, IT; upbeat on FMCG

FIIs are trimming their bigger overweights, such as financials and industrials, as well as some of their underweights such as IT services and energy, Citigroup says in a report on Friday. Foreigners portfolios are positioned for higher markets, tilting towards cyclical stocks, including banks, consumer discretionary and industrials.

FMCG, Pharma stocks hit lifetime high

Defensive stocks have attracted huge buying both from FIIS pushing stocks to lifetime high. HUL and ITC from the FMCG space while Sun Pharma, Wockhardt and Strides Arco from pharma hit all time high in trade today.

Gold fades

Gold traders in India took to the sidelines as prices steadied near the Rs 30,000 per 10 grams mark, despite seeking to stock for festivals, even as a drought threatens to cut demand from rural areas.

Rupee lacklustre

Rupee still lower, but trading in a narrow range tracking listless stocks, says dealers. The euro remained under pressure in Asia on Friday and the Australian dollar skidded after weaker-than-expected Chinese trade data raised fears of a slowdown.

The Nifty is struggling around 5325 in afternoon trade as autos, bank and realty continue to drag. Outside the index, the breadth remained weak. However, buying was seen in IT, oil & gas and FMCG stocks.

The Sensex was down 4.71 points or 0.03% at 17556.16, and the Nifty was down 3.30 points or 0.06% at 5319.65. About 1087 shares have advanced, 1470 shares declined, and 886 shares are unchanged.

SBI slips post earnings on asset quality concerns. The gross NPA rise to 4.99% compared to 4.44% last quarter at over Rs 47000 crore. The NII is largely inline with estimates to Rs 11,118 crore.

Top losers on the Sensex were SBI at Rs 1,895 down 3.9%, Hero Motocorp at Rs 1,912 down 2.38%, Tata Motors at Rs 233.80 down 2.32%, Bajaj Auto at Rs 1,674 down 1.01% and Sun Pharma at Rs 671.25 down 0.84%.

However, top gainers on the Sensex were Sterlite Ind at Rs 111.25 up 1.88%, HUL at Rs 494.80 up 1.54%, Hindalco at Rs 123.60 up 1.52%, Maruti Suzuki at Rs 1,157.80 up 1.11% and NTPC at Rs 171.60 up 1%.

FMCG major Hindustan Lever was trading at Rs 494.80 up 1.54% from its previous close of Rs 487.30.

Index heavyweight Reliance was trading at Rs 788.00 up 0.99% from its previous close of Rs 780.30.

Tech major Infosys was trading at Rs 2,298.00 up 0.83% from its previous close of Rs 2,279.00.

Cigarette major ITC was trading at Rs 268.00 up 0.81% from its previous close of Rs 265.85.

Refinery major HPCL was trading at Rs 320.00 up 1.75% from its previous close of Rs 314.50.

Globally, benchmark European indices were trading in negative terrain. In Asia, Nikkei and Hang Seng end with nearly 1% cuts each.

The benchmark index Nifty was trading perilously close to 5300 mark. The market was dragged lower primarily by SBI's quarterly results announcement. Bank Nifty also lost close to 1%.

State Bank of India, the country's largest lender, beat street expectations as its net profit surged for the second consecutive quarter on strong loan growth, but a rise in bad loans pulled down its shares.

SBI's net profit more than doubled to Rs 3752 crore from Rs 1584 crore a year earlier. Analysts, on average, had expected a net profit of Rs 3617 crore.

Its non-performing loans rose to nearly 5% at end-June compared with 3.5% a year earlier but provisions, or the funds set aside for bad loans and contingencies, were down 41% to Rs 2560 crore.

Earlier, UBS downgraded State Bank of India to 'sell' from 'buy', saying a weak monsoon would add to its "already high" non-performing loans, while expecting margins to decline due to rising cost of funds and potential cuts in the lending rate.

European markets open lower after Asian shares snapped a four-day rally on Friday and extended losses as China's July trade data fell far short of expectations, casting doubts on whether the sputtering global economy will regain traction any time soon.

Top losers on the Nifty were SBI, Ranbaxy Labs, Tata Motors, IDFC and Reliance Infra. BPCL, TCS, Maruti Suzuki, Cairn India and ITC were top gainers.

PSU banks like Bank of India, Bank of Baroda, Union Bank and Canara Bank were also bleeding after dismal SBI results. Also concerns of a looming drought would increase defaults of farm loans, leading to higher provisioning in coming quarters.

Results announced so far today

GMR Infra reports consolidated net loss of Rs 94.3 crore against Rs 66.7 crore, last year. The consolidated revenue stood at Rs 2,562 crore comapred to Rs 2089.8 crore.

IFCI records negative growth on bottomline front. The company reports PAT of Rs 93.6 crore versus Rs 132.1 crore in the same period last year.

Asian shares including India snapped a four-day rally on Friday and extended losses after China's July trade data fell far short of expectations, casting doubts on whether the sputtering global economy will regain traction any time soon. European stocks were likely to track Asia lower.

The Sensex was down 5.46 points or 0.03% at 17555.41, and the Nifty down 1.80 points or 0.03% at 5321.15. About 1127 shares advanced, 1190 shares declined, and 1126 shares remain unchanged.

China's July exports rose just 1% from a year earlier, undershooting forecasts by a big margin and adding to a downbeat set of monthly data that has boosted expectations of fresh government action to shore up the economy.

Fear of faltering demand from China's two biggest foreign customers - the European Union and United States - had seen economists peg back their consensus call for annual export growth to a three-month low of 8.6% in a Reuters poll last week

BPCL, Sterlite Industries, TCS, Maruti Suzuki and Cairn India were top gainers. The losers list was long. Ranbaxy Labs was leading from the front followed by Tata Motors, Reliance Infra, IDFC and Hero Motocorp.

Global Chart Check

After a decent rally in US markets, Mary Ann Bartels of BofA Merrill Lynch Global Research believes that fatigue is creeping in. According to her, the market is witnessing negative divergences. Given that September is historically the weakest month of the year, Bartels is of the opinion that another bout of correction awaits the market.

Top News

Sun Pharma Advanced, a subsidary of Sun Pharma approves rights issue at a price of Rs 67 per share.

GMR Infra reports consolidated net loss of Rs 94.3 crore against Rs 66.7 crore, last year. The consolidated revenue stood at Rs 2,562 crore comapred to Rs 2089.8 crore.

IFCI records negative growth on bottomline front. The company reports PAT of Rs 93.6 crore versus Rs 132.1 crore in the same period last year.

Stocks at All Time High

Heavyweights like Ambuja Cements, HUL and ITC recorded fresh highs in trade today. In the broader markets, stocks like Wockhardt, Bajaj Finance, KPIT Cummins and Strides Arco also scaled new highs.  

Crude slips

Brent crude fell below $113 a barrel on Friday as a sharp slowdown in China's trade flows heightened worries about demand for fuel, putting to one side hopes of stimulus measures aimed at lifting global growth that could boost oil use.

The Nifty was trading flat in the early morning trade. Auto and power stocks were on sellers radar today. The Sensex was down 45.79 points or 0.26% at 17515.08, and the Nifty was down 16.90 points or 0.32% at 5306.05. About 1088 shares advanced, 1007 shares declined, and 1348 shares remain unchanged.

BPCL, TCS, Bharti Airtel, Cairn India and Maruti Suzuki were top gainers. On the losing side, heavyweights like Ranbaxy Labs, Tata Motors, Hero Motocorp, IDFC and Reliance Infra were bleeding.

Traders say prolonging wait for government measures coupled with recent worries on GDP is not helping market and leading them to profit booking.

Corporate profits are also raising concerns after Bharti Airtel on Thursday slumped to its lowest close since October 2006, while State Bank of India earnings outcome is keenly awaited later in the day.

Bharti Airtel shares were up 2% on value buying after falling 12.61% in previous 2 sessions while Ranbaxy Lab lost 2% on earnings concerns.

Credit Suisse downgraded Tata Motors to "underperform" from "neutral" after cutting its volumes forecast and increasing its tax rate assumption for the Indian auto maker's unit Jaguar Land Rover.

Credit Suisse said Tata's earnings out on Thursday were in-line with expectations, but added margins for key unit JLR would decline due to increasing pricing pressures in various markets.

Debt-laden telecom carrier Reliance Communications is seeking shareholders' approval to increase its authorised share capital to Rs 2,500 crore from Rs 1,500 crore currently, it said in a notice for its annual general meeting.

"The company, in order to meet its growth objectives and to strengthen its financial position, may be required to generate long term resources by issuing securities," Reliance Communications said.

Broader nmarkets

Top gainers in the BSE Midcap and Smallcap space were eClerx Services, Jain Irrigation, IndraprasthaGas, Zydus Wellness, Bajaj Corp, Ram Kaashyap, Mahindra Life, National Perox, Flexituff Inter and Vikas WSP.

Glodyne Techno, S Mobility, Jaypee Infra, Bombay Dyeing, Torrent Pharma, Ahlcon Parent, Premier, Oscar Inv, Bartronics and
KGN Enterprises were top losers.

Results announced so far today

GMR Infra reports consolidated net loss of Rs 94.3 crore against Rs 66.7 crore, last year. The consolidated revenue stood at Rs 2,562 crore comapred to Rs 2089.8 crore.

IFCI records negative growth on bottomline front. The company reports PAT of Rs 93.6 crore versus Rs 132.1 crore in the same period last year.

It was a flat start for the market on final day of this week. Bharti Airtel stabilises in opening trade after losing 11% in last 2 days.

The Sensex was down 22.05 points or 0.13% at 17538.82, and the Nifty lost 8.80 points or 0.17% at 5314.15. The breadth of the market was poor. About 524 shares advanced, 459 shares declined, and 2460 shares remain unchanged.

Top gainers on the Nifty were Bharti Airtel, Sterlite Industries, ONGC, TCS and SBI. Disappointing results from heavyweights like Ranbaxy Labs, Tata Motors and BPCL pushed stocks lower.

UBS downgraded State Bank of India to "sell" from "buy", saying a weak monsoon would add to its "already high" non-performing loans, while expecting margins to decline due to rising cost of funds and potential cuts in the lending rate.

SBI is due to report its April-June earnings later in the day. Analysts on an average expect standalone profit after tax to grow by 129.25% year-on-year to Rs 3,630.24 crore due to low base effect in a year ago period, but quarter-on-quarter basis the same is expected to be flat to negative. Net interest income may go up by 20.17% to Rs 11,649.75 crore from Rs 9,699.5 crore during the same period.

Sun Pharmaceutical will also unveil its quarterly results today. Analysts on an average expect the consolidated net profit to grow by 30.58% year-on-year to Rs 654.22 crore. Net sales may go up by 41.22% to Rs 2,309.87 crore from Rs 1,635.7 crore during the same period.

Results announced so far

GMR Infra reports consolidated net loss of Rs 94.3 crore against Rs 66.7 crore, last year. The consolidated revenue stood at Rs 2,562 crore comapred to Rs 2089.8 crore.

IFCI records negative growth on bottomline front. The company reports PAT of Rs 93.6 crore versus Rs 132.1 crore in the same period last year.

Global Wrap

Asian shares paused on Friday as investors took stock of a four-day rally driven by optimism, yet to be borne out by action, that authorities will soon take the steps needed to ease concerns over the euro zone's debt crisis and weak growth.

US and European equities rallied for a fifth straight day on Thursday, with the leading index of European shares nearing a 2012 peak.

The euro traded at $1.2297, off Thursday's low of $1.2266 but below a one-month high of $1.2444 hit on Monday.

Nifty Chart Formation

The weekly 50% and 61.8% Fibonacci retracement levels of the rise from 15748 / 4770 (June 08, 2012) to 17631 / 5349 (July 13, 2012) are seen at 16690 / 5059 and 16467 / 4991 levels, respectively.

On the weekly chart, we are witnessing a ''Downward Sloping Trend Line'' resistance near 17450 / 5300 formed by joining the highs of 21109 / 6339 (November 5, 2010) 18524 / 5630 (February 24, 2012). The '20-day EMA' and '200-day SMA' are placed at 17183 / 5212 and 16892 / 5109 levels, respectively. The daily candle resembles a 'Shooting Star' pattern says Angel Broking report.

Rupee Check

The Indian rupee opens at 55.35 per dollar versus 55.27 yesterday. The dollar index against six major currencies was at 82.60, up by 0.31% from the previous day's close. ICICIdirect.com recommends traders to buy USDINR above 55.33 for targets of 55.52-55.60 and stop loss of 55.24.

Hopes on Policy front

Markets have been pinning their hopes on the possibility that the ECB will start buying sovereign bonds to lower borrowing costs for Spain, and that the Federal Reserve will expand its monetary easing, despite suggestions from the authorities that no steps were likely before September.

Crude remains a big worry

Crude prices gained with Brent above USD 113 per barrel levels lifted by stronger-than-expected economic data in the US and a lower outlook for North Sea Brent production. Gold prices gained on fresh stimulus hopes in China.