Nifty, Sensex on a short downtrend: Friday closing report

Last week, we had predicted possible weakness after a strong spurt during 18th October. Our prognosis proved correct. Today, the markets finished below the crucial 6,160 support level. We may get a short downmove

Yesterday, we had mentioned that today would be a crucial day for Indian markets. It would need to move up to give ‘strong legs’ to the uptrend initiated exactly a week ago. However, this did not happen. The markets opened down and ended down after a brief respite in the middle of the trading session which saw the indices in a green only for a few minutes. But for the most of the part, the markets remained choppy and weak, indicating lack of direction. In fact, we had pointed out last weak that, despite the strong showing on 18th October, there would be chances that the markets would be weak after Tuesday/Wednesday. This is what has happened as markets finished below the crucial 6,150 levels.

The S&P BSE Sensex opened lower 20,725, then hit an intra-day low of 20,622 then hit an intra-day high of 20,782 before closing weak at 20,683 (down 41.91 points or -0.20%). Similarly, Nifty opened at 6,133, hit an intra-day low of 6,125 shortly after noon, followed by a sudden upturn which pushed the market to an intra-day high of 6,174 before closing at 6,133 (down 30.75 points or -0.50%).

The breadth of the market was negative, declines outpacing advances by double. Out of 1,221 stocks, 780 were down, 390 were up and 51 were unchanged. When compared to the rest of the week, the volumes on The National Stock Exchange plummeted to 52.49 lakh shares, underscoring lack of conviction among both bulls and bears.

All the sectoral indices were in the red except for IT and media, which were up 1.51% and 1% respectively. Incidentally, IT and media were the ones badly hit yesterday. Realty, metals and auto were badly hit today, dipping 2.33%, 1.31% and 1.09% respectively.

Of the 50 stocks in the Nifty, 14 stocks advanced and 36 declined, indicating clear weakness. The top five gainers were TCS (2.80%), HCL Tech (2.48%), Wipro (2.37%), NTPC (1.54%) and Sesa Sterlite (1.33%). The top five losers were Hindalco Jindal Steel (-4.93%), DLF (-4.83%), NMDC (-3.68%), Cairn (-3.53%) and Tata Steel (-3.10%).

One of the biggest international news today was the good news coming from United Kingdom (UK). In a region otherwise beset with problems and slow growth, the UK reported its fastest growth rate in more than three years, when its economy grew 0.8%.
This reinforces the fact that some sort of recovery is taking shape. However, the region still needs to sort itself out.

Meanwhile Norway’s sovereign wealth management, the world’s biggest, had warned that the recent gains may get erased and forecasted that a correction could be due.

European markets were mixed with UK’s FTSE barely up while many were trading similar, hovering around yesterday’s closing levels.

Most Asian markets were trading down with an exception from Australia and New Zealand which were flat. Nikkei was a big loser today, down by 398 points or 2.75%.

US stock futures were flat as they wait for data like consumer confidence and consumer durable goods.


ITC Q2 net profit up 21.5% on better performance from FMCG, agri-business

The company has reported a net profit of Rs2230.5 crore during September quarter despite sluggish sales, helped by its FMCG, paperboards and agri-businesses. However, its cigarette and hotel segments suffered

ITC, the software to tobacco company, has reported 21.5% increase in net profit to Rs2,230.53 crore for the quarter ending September 2013 from Rs1836 crore for the same period last year.  Its revenues for the September quarter increased to Rs7,775 crore compared with Rs7,146 crore for the year ago period.

The main contribution to revenue was the non-cigarette FMCG segment which grew 15.7% despite a sluggish demand environment. In the staples, spices and ready-to-eat foods business, ‘Aashirvaad’ atta continued to record impressive growth consolidating its leadership position across markets. In the instant noodles category, ‘Sunfeast Yippee!’ continues to grow at a rapid pace and gain consumer franchise. The recently launched premium 'Chinese Masala' variant continued to gain traction during the quarter.

However, its hotels business continues to be weak and impacted by poor macroeconomic environment and spurt in room additions in key markets. The hotel business recorded a modest growth of 4% in EBITDA over the same period last year and remains the leader amongst the lead players in the industry in terms of profitability.

Its cigarette business continues to be affected by punitive taxation and increased smuggling of unauthorised tobacco products. The company said, “Discriminatory and punitive taxation coupled with a growing incidence of smuggling and illegal manufacture are the biggest challenges confronted by the domestic cigarette industry.
These challenges were further compounded during the year by the steep increases in excise duty on cigarettes for the second successive year and, discriminatory and punitive increases in value added tax (VAT) on cigarettes by some states. Such increases not only undermine the legal domestic cigarette industry and sub-optimise revenue potential from this sector but also fail to achieve the objective of tobacco control in the country.”

ITC’s revenues from agro-business segment grew 8.5% during the quarter after adjusting for the high level of wheat exports in Q2 FY13 due to shortfall in global crop output last year. The segment results grew at a faster pace primarily driven by an enriched product mix and strong growth in leaf tobacco exports leading to significant improvement in profitability.

Paperboards, paper & packaging segment revenue grew 11.7%, driven by paperboards and flexible packaging. However, sharp escalation in input costs, particularly wood, impacted its profitability.

 ITC closed Friday at Rs340, down 0.74% on BSE while the benchmark Sensex ended marginally down at 20683.


Shree Cement Q1 net profit falls 25% on low sales, higher expenditure

Shree Cement’s September ended quarter net profit declined 25% due to higher expenditure

Shree Cement Ltd in its September quarter reported a fall of 25% in net profit at Rs172 crore compared with Rs228 crore a year ago, due to lower revenues and higher expenditure.

For the quarter to end-September, the cement producer reported marginal decline of 4% in net sales at Rs1,248 crore compared with Rs1,296 crore a year ago period.

Shree cement’s first September quarter total expenditure increased by 11% at Rs1,112 crore compared with Rs1,000 crore a year ago period.

During quarter to end-September, the company got MAT (minimum alternative tax) credit entitlement of Rs28.72 crore and deferred tax of Rs2.23 crore. This reduced total tax payable amount to Rs5.03 crore from Rs35.98 crore.

On Friday, Shree Cements closed marginally lower at Rs4,460 on the BSE, while the benchmark S&P BSE Sensex ended the day flat at 20,655


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