Nifty, Sensex show signs of minor reversal which may not be sustained: Friday Closing Report

Expect Nifty to find support at around 4,880

Another sign of a slowdown in the economy by way of disappointing industrial output numbers for the month of March pulled the market down today. The Nifty again followed the pattern of making a lower low and lower high and ended in the negative. An overall weak macro environment may see the fall continuing. The Nifty may hit 4,880 on Monday. The benchmark has to close above any previous day's high for a possible change in direction. The National Stock Exchange (NSE) saw a volume of 62.35 crore shares.

The market witnessed a gap down opening on weak cues from Asia following a negative close in the US no Thursday after JP Morgan announced that the company had incurred "significant mark-to-market losses". The political situation in Europe also weighed down on investors. The Nifty opened 27 points lower at 4,939 and the Sensex resumed at 16,356, down 64 points from its previous close.

Concerns about the industrial output numbers for the month of March, which were to be released later in the morning, kept the indices in the negative in early trade. A lower-than-expected 3.5% contraction in the March industrial output numbers saw the benchmarks slipping further in mid-morning trade. Prime minister's economic advisory panel chief C Rangarajan opined that Index of Industrial Production (IIP) data for March is very disappointing as it had not expected a contraction in industrial output.

A weak set of corporate results added to the woes resulting in the market dropping to the day's lows.  At the lows, the Nifty fell to 4,906 and the Sensex went back to 16,234. The market was range-bound in the negative till the noon session.

Buying in select heavyweights in the post-noon session saw the benchmarks emerge into the green and hit their intraday highs. At this point, the Nifty touched 4,976 and the Sensex scaled 16,447. However, the gains were short-lived as institutional selling once again pushed the market lower.

The market closed lower for the fourth day in a row. The Nifty finished 37 points down at 4,929 and the Sensex declined 127 points to close the session at 16,293.

The advance-decline ratio on the NSE was 494:1170.

The broader indices witnessed a bigger cut with the BSE Mid-cap index declining 0.83% and the BSE Small-cap index dropping 0.91%.

Eleven of the 13 sectoral indices settled lower, led by BSE Healthcare (down 1.97%); BSE Power (down 1.40%); BSE Fast Moving Consumer Durables (down 1.27%); BSE Metal (down 1.17%) and BSE IT (down 1.05%). The gainers were BSE Auto (up 0.58%) and BSE Bankex (up 0.02%).

The top Sensex gainers were Bajaj Auto (up 3.48%); Tata Motors (up 2.66%); BHEL (up 0.84%); DLF (up 0.59%) and State Bank of India (up 0.46%). The main losers were Tata Power (down 4.89%); Sun Pharma (down 3.87%); Hindalco Industries (down 3.32%); Coal India (down 2.21%) and Maruti Suzuki (down 2.10%).

Jaiprakash Associates (up 4.31%); Bajaj Auto (up 3.74%); Tata Motors (up 2.80%); Sesa Goa (up 2.40%) and IDFC (up 1.77%) were the key performers no the Nifty. Tata Power (down 5.70%); Grasim Industries (down 3.80%); Sun Pharma (down 3.78%); Ranbaxy (down 3.68%) and Hindalco Ind (down 3.62%) dragged the index lower.

Markets in Asia closed lower on weak economic data from within the region and across the globe. China's factory output in April witnessed a growth of 9.3% against a 12% that analysts had estimated. While the country's annual consumer inflation moderated to 3.4% in April from 3.6% in the previous month, it was above market expectations.

The Shanghai Composite declined 0.63%; the Hang Seng tanked 1.30%; the Jakarta Composite fell by 0.47%; the KLSE Composite fell by 0.24%; the Nikkei 225 dropped 0.63%; the Straits Times lost 0.70%, the KOSPI Composite saw a cut of 1.43% and the Taiwan Weighted settled 1.10% lower. At the time of writing, the main European indices were down between 0.42% and 0.90% and the US stock futures were in the red.

Back home, foreign institutional investors were net buyers of shares totalling Rs317.42 crore on Thursday. On the other hand, domestic institutional investors were net sellers of equities amounting to Rs143.53 crore.

Zicom Electronics Security Systems, an electronic security company, today launched Zicom SaaS (Security as a Service). Through this service, Zicom SaaS will provide a spectrum of services from the installation and maintenance of security systems to control room monitoring 24x7 by trained professionals. The stock declined 0.64% to close at Rs38.60 on the NSE.

Prithvi Information Solutions has received the nod from the board at the EGM (extraordinary general meeting) of the company to increase authorised capital of the company from Rs30 crore to Rs100 crore. The company will go for a preferential issue 1.65 crore equity shares to persons belonging to the non-promoter category at Rs26 a share. It would also issue 5 crore fully compulsorily convertible warrants to the same category at the same price. The stock tumbled 6.36% to close at Rs16.20 on the NSE.

Mumbai-based Uttam Galva is planning to pump in Rs500 crore in the current fiscal year to make high value products. The move is expected to ramp up the company's operating margins by 2% to about 12%. The stock settled 1.70% down at Rs69.20 on the NSE.


Lower provisioning pushes Federal Bank net up 38% in Q4

Federal Bank restructured around Rs920 crore assets during the quarter with the major chunk of Rs800 crore from the aviation industry and state electricity boards

Mumbai: Kochi-based private sector lender Federal Bank on Friday reported a 38.4% rise in its fourth quarter net profit to Rs237.6 crore from Rs 171.72 crore a year ago, on the back of a robust growth in interest income and lower provisioning, reports PTI.

The bank's net interest income rose 10% to Rs491 crore during the reporting quarter, while provisions, including taxes, came down a 24.5% to Rs134.83 crore due to improved asset quality.

Accordingly, the gross non-performing asset ratio of the country's fourth largest private sector lender by branch network fell to 3.35% from 3.49%, while net bad loan or NPA ratio came down to 0.53% from 0.6%.

"An improvement in the overall asset quality brought down our stressed assets and helped us report healthy numbers. The overall growth was also aided by a 27% rise in our footprint," bank's Managing Director and Chief Executive Shyam Srinivasan told reporters in a conference call.

"We have restructured around Rs920 crore assets during the quarter. The major chunk of around Rs800 crore came from the aviation industry and state electricity boards. We do not have any major restructuring case in the pipeline. Asset quality will improve in FY13," he added.

Executive director PC John said the lender wrote back Rs41 crore due to a decrease in NPAs. This led to reduction in NPA provisions.

Mr John further said during the quarter, the bank had fresh slippages of Rs269 crore, while it recovered or upgraded Rs 332 crore, including recovery of Rs 82 crore from previously written-off assets.


Economy & Nation Exclusive
Lupin Laboratories Q4 net profit falls 33% on higher tax outflow

Higher than normal tax outflow has hit Lupin while its sales were aided by a weaker rupee and is likely to face headwinds going forward

Lupin Laboratories says its net profit for the quarter ended March 2012 fell 33% to Rs161.19 crore from Rs240.55 crore a year ago. The company had shelled out Rs134.70 crore as tax during the quarter. However, for the year, the total tax outflows due to dividends from foreign subsidiaries amounted to Rs308 crore, a 168.3% jump. This actually led to a decline of net profits by 0.69%, to Rs804 crore for financial year 2012. It has reported a standalone net sales of Rs6,959 crore for FY11-12, which is 22% higher than FY10-11. This was aided by a weaker rupee as it depreciated nearly 22% against the dollar over the course of one year. Its net profit has shrunk from 17.97% to 14.94%, which is saying a lot.

Given the company's dependency on foreign markets, under the current circumstances, the company might face headwinds going forward. As per 2010-11 annual report, roughly 35% of the company's revenues come from the US. This year, a total of 52% of the net sales are from advanced markets, which includes US, Europe and Japan. Despite this, sales in formulation segment, from advanced markets increased by 25% to Rs2881.80 crore.

Currently, the market cap-operating profit ratio of the company is 15.29 and its price-earning ratio is 28.69, which indicates that the stock is expensive and could be vulnerable to a downfall. In the has a composite ranking of 36 out of 49 companies, which is based on the individual ranks given to valuation given on the basis of operating profit and past four quarters net profit to networth. It belongs to our database of mega cap companies, which has market capitalisation of more than Rs10,000 crore.

Another concern is the revenue expenditure on R&D which has decreased by 1% to 7.5% of net sales at Rs522.80 crore over the course of the fiscal. An increased R&D expenditure boosts chances of leading to more formulations and generics. However, the company may have reduced it given the difficult economic climate.

The company is in the process of setting up a new state-of-the-art formulation manufacturing facility at the Special Economic Zone (SEZ), MIHAN, Nagpur. The greenfield plant will take close to a year to be set up. According to media sources, the company has taken 24 acres land and plans to invest Rs417 crore, which will be spent over five years.

Headquartered in Mumbai, Lupin produces a wide range of generic and branded formulations and Active Pharmaceutical Ingredients (APIs). It has presence in the cardiovascular, diabetology, asthma, paediatrics, CNS, GI, anti-infectives and NSAID space.


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