Sensex firm, Nifty below 8550, RBI policy eyed; SBI up 4%

03 Aug 2015

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03:30 pm Market close: The market ended with gains ahead of monetary policy review tomorrow. The Sensex ended up 72.50 points at 28187.06 and the Nifty was up 10.20 points at 8543.05. About 1775 shares advanced, 1147 shares declined, and 148 shares are unchanged.

SBI was up 4 percent while ICICI Bank, Maruti, Dr Reddy's Labs and ITC were top gainers in the Sensex. Among the losers were Vedanta, M&M, Lupin, Coal India and HDFC Bank.

03:00 pm Greek markets:  The Athens stock exchange was trading around 20 percent lower by mid-morning on Monday, after falling nearly 23 percent after it reopened for the first time in five weeks.

Greek banking stocks were the worst hit with Alpha Bank, Attica Bank and Eurobank Ergasius, Bank of Piraeus and the National Bank of Greece were all trading around 30 percent lower - the daily volatility limit. Similar losses were seen in other stocks outside of the banking industry as well too.

There was further bad news for the Greek economy earlier, with flash manufacturing PMI figures for July down to 30.2 the lowest reading since Markit began compiling data in 1999.

02:45 pm Subsidy to OMCs: The Finance Ministry will pay state-owned fuel retailers Rs 1,300 crore cash subsidy for kerosene for the first quarter ended June 30, but the same on LPG will be decided later.

The Ministry has sanctioned a total of Rs 1,300.42 crore kerosene subsidy for April-June, a senior official said here. Of this, Rs 878.84 crore will be paid to Indian Oil Corporation (IOC), Rs 203.33 crore to Bharat Petroleum Corporation (BPCL) and Rs 218.25 crore to Hindustan Petroleum Corporation (HPCL).

The subsidy payout is as per a new formula approved by the government wherein the dole on kerosene has been capped at Rs 12 per litre. Kerosene through public distribution system (PDS) is sold at Rs 14.96 per litre against the actual cost of Rs 33.47.

The difference between the two, Rs 14.95 per litre, is termed as under-recovery or revenue loss.

02:25 pm Oil weakens: Oil extended losses to multi-month lows on worries of oversupply as OPEC pumped at record levels in July, while weak China data stoked concerns about slower growth at the world's second largest oil consumer.

Oil output by the Organization of the Petroleum Exporting Countries (OPEC) reached the highest monthly level in recent history in July, a Reuters survey showed, with Saudi Arabia and other key members showing no sign of wavering in their focus on defending market share instead of prices.

The lack of a plan by OPEC to make room for the return of more Iranian oil further fuelled supply worries.

Iran expects to raise output by 500,000 barrels per day (bpd) as soon as sanctions are lifted and by a million bpd within months, its Oil Minister Bijan Zanganeh has said.

"The market seems to again focus on the supply situation ... one of the difficulties is that Iran may be coming back and there is no obvious sign that OPEC will make room for them," Ric Spooner, chief market analyst at CMC Markets in Sydney said.

Brent crude fell 2 percent to USD 51.18 a barrel and NYMEX crude declined 1.6 percent to USD 46.4 a barrel.

02:00 pm Market Check
The market remained in a positive terrain, supported by major banks, technology, pharma and select auto stocks. The Sensex gained 132.92 points at 28247.48 and the Nifty advanced 26.60 points to 8559.45.

About 1763 shares have advanced, 1044 shares declined, and 144 shares are unchanged on the Bombay Stock Exchange.

Private sector lender ICICI Bank extended rally in afternoon trade, up 3.4 percent and PSU banks like State Bank of India jumped over 4 percent followed by Punjab National Bank (up 2.5 percent) and Bank of Baroda (up 4.5 percent). However, HDFC Bank and HDFC fell 1 percent each.

1:50 am Houseviews: CLSA maintains buy call rating on L&T with a target of Rs 2275 per share stating that the company is well positioned in domestic market to take advantage of the revival in infrastructure investment and capex cycle. It expects earnings per share (EPS) CAGR of 26 percent over FY15-17 as a reduction in losses from subsidiaries and improved execution widen its margin.

"While a 15 percent growth in order inflows on a high base may bedifficult to achieve, especially given weakness in the Middle East, L&T may achieve sales and margin guidance," it says in a note.

After posting Q1 results, the company said it will maintain FY16 order growth guidance and FY16 guidance for order inflow and revenue remained unchanged at 15 percent.

Credit Suisse retains outperform rating. It is positive on execution pick-up from large backlog, large orders execution,weaker segments losing weight and  margin support from operating leverage and commodities.

1:30 pm Buzzing: Shares of Suzlon surged 18 percent intraday  riding on its April-June quarter. The wind turbine maker's Q1 consolidated net profit was at Rs 1,047.41 crore from a net loss of Rs 750.74 crore in the year-ago period.

The company's total income was 2,627.71 crore in first quarter compared to Rs 4,671.99 crore year-on-year. The company said its consolidated net debt (excluding foreign currency convertible bonds) was down to Rs 7,010 crore from Rs 14,821 crore as of 31 March 2015. It has also said that it has brought down interest cost down by 36 percent quarter-on-quarter.

The market is standing firm ahead of RBI monetary policy tomorrow.  According to a CNBC-TV18 poll, the Reserve Bank of India is likely to stay put on rates. Governor Raghuram Rajan has always maintained that RBI rate cut decision is data dependent and with falling inflation, RBI indeed cut repo rate by 75 basis points to 7.25 percent from January through June 2015.

The 50-share index is up 17.75 points or at 8550.60. The Sensex is up 91.53 points at 28206.09. About 1790 shares have advanced, 883 shares declined, and 149 shares are unchanged.

Coal India, L&T, Lupin, M&M and HDFC are among laggards while SBI, ICICI Bank, Maruti, Tata Motors and ITC are top gainers in the Sensex.

Oil prices fell in Asia on persistent concerns about the global supply glut after the OPEC cartel's indication that it will not budge from its current lofty output levels, analysts said.

Prices were facing downward pressure following "signs that top producers in the Middle East were continuing to pump at record levels despite a growing global glut," said Singapore's United Overseas Bank in a market commentary.

At 12:55 pm Market Update: The market remained in a positive terrain. The Sensex gained 117.61 points at 28232.17 and the Nifty rose 27.10 points to 8559.95. About 1776 shares have advanced, 882 shares declined, and 145 shares are unchanged on the BSE.

12:45 pm Earnings: Berger Paints has reported a strong 34.4 percent growth in first quarter consolidated net profit at Rs 77.3 crore compared to Rs 57.5 crore in the year-ago period, driven by strong operational performance due to lower crude oil prices.

Profit was slightly ahead of expectations while topline was in line. According to a CNBC-TV18 poll, the bottomline was estimated at Rs 71 crore on revenue of Rs 1,145 crore for the quarter.

Revenue increased by 5.8 percent to Rs 1,121 crore compared to Rs 1,060 crore during the same period, impacted by lower sales volumes.

Operating profit (earnings before interest, tax, depreciation and amortisation) shot up 30.7 percent year-on-year to Rs 149 crore and margin expanded by 250 basis points to 13.3 percent in the quarter gone by. Analysts had estimated operating profit at Rs 135 crore and margin at 11.8 percent for the quarter.

Gross margin expanded by 270 basis points to 42.3 percent due to benign rutile (TiO2) and falling crude linked input costs. Raw material cost slipped 0.9 percent to Rs 551.8 crore and raw material cost to revenue ratio declined to 49 percent from 52 percent on yearly basis.

12:25 pm Interview: HCL Tech's fourth quarter has missed the street forecast on bottomline while revenue met the expectations. Speaking to CNBC-TV18, Anant Gupta, President and CEO of the company maintains that its margins guidance of 20-21 percent for the year.

He says digitalization in infrastructure, modern application and engineering services is going to aid HCL's growth. Along with the European market, Germany and France will also serve as an opportunity for the company, says Gupta.

HCL Tech is continuously focusing on the changing technological environment and is investing accordingly, says Gupta, adding, the company is investing in co-innovation labs and in increased re-hiring, which will start benefiting by the second half of this year.

12:00 pm Market Check
Equity benchmarks continued to see buying interest amid consolidation while the broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices climbing 1 percent each.

The 30-share BSE Sensex rise 105.10 points to 28219.66 and the 50-share NSE Nifty advanced 24.75 points to 8557.60 led by PSU banks. About 1724 shares have advanced against 818 shares declined on the Bombay Stock Exchange.

State Bank of India and Punjab National Bank surged 4 percent each. Bank of Baroda rallied 6 percent while its rival ICICI Bank rose 2.5 percent.

Maruti Suzuki and Tata Motors climbed 2 percent post July auto sales data while Hero Motocorp and Mahindra & Mahindra lost 1 percent each.

HCL Technologies plunged 5 percent as it met expectations on revenue front in the fourth quarter but EBIT margin at 20.1 percent was a huge miss.

All eyes are on Hero Motocorp ahead of its first quarter earnings today. A CNBC-TV18 poll expects muted revenue growth due to lower volumes. Analysts expect margin to remain weak on the back of lower operating leverage.

11:50 am Interview: While July has been a lean month for two-wheeler maker Bajaj Auto, S Ravikumar, president- business development, says the company's domestic market share has improved to 19 percent in the month. Going ahead with a similar momentum, he is confident of increasing market share to 21 percent by October. Any semblance of revival, however, is not visible as the company's domestic market is yet to see a pick-up in demand, he adds.

'Market share numbers are getting computed but we should be in the 19 plus minus type of a range. We find that the new Pulsars are all doing quite well if I can just take you through brand wise at this point in time and domestic, the top end Pulsars which we launched, the RS is almost about 4,000 plus units sold in the domestic in this particular month and there is still awaiting order book of about a month plus," he says.

11:30 am Rate cut? Research firm Moody's Analytics said the Reserve Bank is likely to cut the benchmark rate by 0.25 percent in its monetary policy review tomorrow as inflation is likely to remain subdued on the back of average rainfall and lower commodity prices.

"The Reserve Bank of India could deliver fireworks in its monetary policy meeting on Tuesday by cutting the repo rate by 25 basis points to 7 percent," it said in a report, 'Asia Spotlight: More Rate Cuts in India'. Moody's Analytics is a division of Moody's Corporation and is engaged in economic research and analysis.

The market is still holding early gains supported majorly by banks and auto. The Sensex is up 83.57 points at 28198.13, and the Nifty is up 19.70 points at 8552.55. About 1611 shares have advanced, 739 shares declined, and 131 shares are unchanged.

SBI, ICICI Bank, Maruti, Tata Motors and Axis Bank are top gainers in the Sensex. Among the losers are Hero, L&T, Coal India, HUL and M&M.

Meanwhile,Asian dividend-paying equity funds are reducing investments in traditional safe bets in favour of companies with rising dividend payouts to guard against investors selling out from the funds when US interest rates rise.

Dividend funds usually invest in stable assets that yield more than bonds and pay predictable returns, but these will become less attractive to investors amid rising returns from Treasuries when the Federal Reserve starts to hike rates.

Some fund managers say they are shifting from traditional favourites such as investment trusts, telecoms and utilities to emerging market companies offering faster earnings growth and cheaper valuations.

10:55 am Market Update: The Sensex gained 71.41 points at 28185.97 and the Nifty rose 16.30 points to 8549.15. About 1580 shares have advanced, 731 shares declined, and 120 shares are unchanged on the BSE.

10:40 am Earnings estimates: Two-wheeler maker Hero Motocorp's first quarter net profit is expected to increase 23 percent year-on-year to Rs 692.1 crore as the company does not have to pay quarterly royalty payment to Honda post June 2014. It will announce its earnings on August 3.

Revenue may see muted growth on lower sales volumes, rising 0.6 percent to Rs 7,081 crore from Rs 7,037 crore during the same period, according to average of estimates of analysts polled by CNBC-TV18. It may be supported by higher realisations that may rise 3.3 percent to Rs 42,167 per unit Y-o-Y.

Sales volumes in Q1 declined 4 percent year-on-year to 16.45 lakh units on weak rural demand (which contributes 50 percent of Hero sales).

Operating profit (earnings before interest, tax, depreciation and amortisation) may fall 1.3 percent year-on-year to Rs 935 crore and margin may drop 20 basis points to 13.3 percent in June quarter due to lower operating leverage. However, fall in commodity costs and normalisation of advertising expenses may aid margin.

10:20 am Market Expert: Nifty is likely to remain volatile in the short-term and trade in the 8000-8500 range, says Andrew Holland, CEO of Ambit Investment Advisors. However, he still sees Nifty at 11000 by December 2016.

Despite the lacklustre performance this earnings season, Holland says he is seeing some greenshoorts. "Mid-to-small sized companies are seeing better order levels (pick-up). In the July-August-September period, you will see a lot more optimism from India Inc," he told CNBC-TV18.

Globally, he believes the risk off environment is here to stay on the back of slowdown in China and the US employment number coming in weak. He feels that India is likely to be a relative outperformer since it is a net importer of commodities. However, he cautions that the markets can still fall. According to him, the market is taking the meltdown in China too lightly.

10:00 am Market Check
The market gained strength in morning with the Sensex rising 101.09 points to 28215.65 and the Nifty climbing 26.25 points to 8559.10. Banks, healthcare, technology and select auto stocks led strength.

The BSE Midcap and Smallcap indices outperformed benchmarks, rising 1 percent and 0.8 percent, respectively. About 1461 shares have advanced while 605 shares declined on the Bombay Stock Exchange.

State Bank of India topped the buying list on Sensex, up nearly 4 percent followed by ICICI Bank with 2 percent upside. Maruti Suzuki surged over 2 percent on strong 20.1 percent sales growth in July over a year-ago period. Tata Motors gained 1 percent while Hero Motocorp and Mahindra & Mahindra declined 1-2 percent post sales data.

9:50 am Market news: Foreign investors have turned net buyers in July and pumped in Rs 5,300 crore in the Indian equity market, after pulling out hefty funds in preceding two months. The net inflow by Foreign Portfolio Investors (FPIs) in equities stood at Rs 5,319 crore in July while the same for the debt market was at Rs 4 crore, taking the total to Rs 5,323 crore (USD 842 million), according to the latest data from depositories. Prior to that, FPIs pulled out a net sum of Rs 3,344 crore from the stock markets in June and Rs 5,768 crore in May.

According to market analysts, rout of Chinese equities and crisis in Greece has helped the Indian stock markets. In addition, decline in crude and gold prices may help the country further bring down its twin deficits, boost individual savings and increase consumers purchasing power, they added. Overall, experts are bullish on FPI inflows in the Indian capital markets in the long-term.

9:30 am Buzzing: Shares of aviation stocks continued to rally after a good run-up last week.  Both Spicejet and Jet Airways were up 5-8.5 percent intraday. What is keeping shareholders happy is lower aviation turbine fuel price (ATF). Fuel price is slashed by a massive 9.5 percent, or Rs 4,860, to Rs 46,407/kiloLitre.

With the latest price cut, jet fuel prices have fallen about 40 percent from a peak of around Rs 80,000 last year

Low aircraft fuel expenses aided SpiceJet in posting a stellar April-June quarter. Its aircraft fuel expenses slipped 53.6 percent at Rs 359 crore in Q1 against Rs 773 crore year-on-year. EBITDA, during the quarter, was at Rs 100 crore against loss of Rs 72 crore (Y-o-Y).

The market has opened on flat note. The Sensex is up 13.97 points  at 28128.53, and the Nifty is down 2.55 points or 0.03 percent at 8530.30. About 686 shares have advanced, 223 shares declined, and 81 shares are unchanged.

ICICI Bank, Maruti, Bajaj Auto, Tata Motors and Dr Reddy's Labs are top gainers while L&T, Hero, M&M, BHEL and ONGC are among laggards.

The Indian rupee recovered in the early trade. It opened higher by 12 paise at 64.01 per dollar versus 64.13 Friday.

Agam Gupta of Standard Chartered said, "The US data released on Friday was weaker than expected. We expect a range of 63.90-64.20/dollar. The demand from local government banks should emerge in the 63.90-63.95/dollar zone whereas we should continue to see exporters sell USD on upticks towards 64.20/dollar."

Asian stocks stumbled as weaker energy prices and fresh manufacturing data out of China sapped risk appetite. The final reading for Caixin China purchasing managers' index (PMI) for July came in at 47.8, lower than the preliminary reading of 48.2 and marking a two-year low.

China's Shanghai Composite index plummeted 1.6 percent, with heavyweight PetroChina leading the slide. The oil and gas company fell more than 3 percent, while Sinopec and China Oilfield Services dropped 1.3 and 0.7 percent, respectively.

US stocks closed mildly lower on Friday as investors digested energy earnings misses and soft data that could push an initial rate hike further out. On the data front, US labour costs in the second quarter recorded their smallest increase in 33 years. The 10-year yield edged lower, trading near 2.20 percent.

Gold continued to trade below 1100 dollars an ounce.

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