Sensex, Nifty in no man’s land: Thursday Closing Report

The outlook for medium term is still downward unless the Nifty decisively takes out 5,730

The market settled higher amid a high degree of volatility on the October F&O contracts expiry day. Today the Nifty moved almost in the same range as that on Tuesday. We had mentioned in our previous closing report that the benchmark is waiting for a breakout. We see the medium-term trend down unless the Nifty decisively takes out 5,730. The National Stock Exchange (NSE) saw a volume of 79.20 crore shares and an advance decline ratio of 717:1005.
The Indian market, which resumed trade after a day’s break, witnessed a flat opening on mixed cues from the global markets. US indices closed lower on a weak set of corporate earnings and a statement from the Federal Reserve saying that it would continue its mortgage-backed debt buying programme till the jobs markets revives. On the other hand, markets in Asia were trading in the green, amid cautiousness, following assertions from the ministry of industry and IT that the nation’s factory output would improve in the last three months of 2012.
The Nifty opened two points lower at 5,689 and the Sensex gained two points to resume trade at 18,712. The market, which was volatile since the opening bell, stayed on both sides of its previous close in early trade.
Profit booking saw the benchmarks touching their lows at around 10.30 am. At this point the Nifty fell to 5,686 and the Sensex went back to 18,699. But select buying soon lifted the indices into the positive.
Support from oil & gas, metal and auto stocks enabled the market move higher in late morning trade, amid range-bound trade. The gains resulted in the benchmarks hitting their highs in post-noon trade. At the highs, the Nifty climbed to 5,715 and the Sensex went up to 18,790.
However, a huge bout of profit taking, mainly in blue chips, saw the market momentarily dipping into the red. But a splendid recovery helped the market close with modest gains. The Nifty finished 14 points (0.24%) higher at 5,705 and the Sensex settled at 18,759, up 49 points (0.26%) over its previous close.
The broader markets settled mixed; the BSE Mid-cap index rose 0.15% while the BSE Small-cap index declined 0.17%.
The top sectoral gainers were BSE Auto (up 0.58%); BSE Capital Goods, BSE Bankex (up 0.35% each); BSE Oil & Gas (up 0.16%) and BSE Fast Moving Consumer Goods (up 0.09%).
Sixteen of the 30 stocks on the Sensex closed in the positive. The main gainers were Mahindra & Mahindra (up 3.59%); Hero MotoCorp (up 2.36%); HDFC (up 2.06%); Sterlite Industries (up 1.98%) and GAIL India (up 1.55%). The losers were led by Dr Reddy’s Laboratories (down 2.03%); State Bank of India (down 1.49%); Tata Motors (down 1.27%); Tata Steel (down 1.26%) and Hindustan Unilever (down 1.16%).
The top two A Group gainers on the BSE were—Oriental Bank of Commerce (up 7.05%) and Indiabulls Financial Services (up 4.73%).
The top two A Group losers on the BSE were—IRB Infrastructure Developers (down 15.69%) and Havells India (down 4.17%). 
The top two B Group gainers on the BSE were—Store One Retail India (up 19.91%) and Peninsula Land (up 15.48%).
The top two B Group losers on the BSE were—Centerac Technologies (down 19.98%) and Dynacons Technologies (down 18.37%).
Out of the 50 stocks listed on the Nifty, 28 stocks settled in the positive. The key gainers were M&M (up 4.03%); IDFC (up 2.51%); HDFC, Hero MotoCorp (up 2.07% each) and GAIL India (up 1.68%). The major losers were Dr Reddy’s (down2.47%); Ranbaxy (down 1.83%); Punjab National Bank, SBI (down 1.66% each) and Reliance Infrastructure (down 1.43%).
Markets across Asia closed mostly higher on signs that China’s factory output for October might show a smaller decline and rise in new home sales in the US in September.
The Hang Seng gained 0.21%; the Jakarta Composite rose 0.09%; the KLSE Composite gained 0.23%; the Nikkei 225 advanced 0.13%; the Straits Times climbed 0.42% and the Seoul Composite settled 0.55% higher. On the other hand, the Shanghai Composite declined 0.68% and the Taiwan Weighted tanked 0.72%.
At the time of writing, the key European markets were in the green on reports that the Spanish government will seek a bailout package of up to 60 billion euros to recapitalise its banking sector. At the same time, US stock futures were trading with gains. 
Back home, foreign institutional investors were net buyers of shares totalling Rs252.39 crore on Tuesday. On the other hand, domestic institutional investors were net sellers of equities amounting to Rs298.89 crore.
Betting big on power business, Adani Enterprises’ board has approved infusion of additional funds in its subsidiary Adani Power and increase promoters' stake to 75% from 68%. However, the former did not disclose the amount that would be pumped in for raising the stake. Adani Power rose 0.21% to settle at Rs48 on the NSE.
Pharma major Lupin’s subsidiary, Lupin Pharmaceuticals Inc, has received final approval from the United States Food and Drugs Administration (USFDA) to market its generic Levonorgestrel and Ethinyl Estradiol combined oral contraceptive tablets in the strength of 0.15 mg/0.03 mg. The tablets are generic version of Teva Branded Pharmaceuticals Seasonale tablets (Levonorgestrel and Ethinyl Estradiol Tablets, USP) in the same strength, Lupin said. Lupin gained 1.57% to close at Rs571.80 on the NSE.
JK Paper today said it has formed a joint venture with Japan’s Oji Holdings Corporation and Marubeni Corporation for manufacturing and sales of corrugated paper products with plans to invest Rs150 crore on a new plant in Rajasthan. In the new JV—Oji India Packaging Pvt Ltd (OIPPL)—Oji Holdings will hold 60% stake, while Marubeni and JK Paper each will have 20%. JK Paper settled tanked 3.03% to settle at Rs40 on the NSE.



Poor finish for Hero MotoCorp as net profit plummets 27% amidst weak sales volumes

The company had reported an extremely disappointing quarter as it changes its production plans over the last two months. The company sales declined 11% amidst increased competition

Hero MotoCorp, the world’s largest two-wheeler manufacturer, published a very poor second quarter results, with net sales plummeting by 11% year-on-year (y-o-y) owing to weak sales volumes. Net sales for 30 September 2011 was Rs5826.15 crore, and fell to Rs5187.46 crore for the quarter ended 30 September 2012. Its operating profit fell even further, by 22% y-o-y to Rs719.19 crore and net profit much further by 27% to Rs440.58 crore.

The company has been struggling in the past few quarters due to pressure from increased competition and its sales lacks momentum required to go to take the company to the next level.  Its y-o-y sales growth average, over the last three quarters, is an anaemic 4%, while y-o-y operating profit average growth rate is just 1% over the last three quarters as well. This points out an industry malaise as competitive dynamics have worked against the players in form of increased costs and intensive competition vis-a-vis price cuts. Despite recent poor showing, the valuation seems stretched and tad on the higher side, with its market capitalisation quoting at 12.50 times its operating profit. Its return on equity is quite impressive though, at 53%.

The company registered extremely weak volumes for September 2012 as it sold 4,04,787 units, which was 26.4% less than what it sold in the corresponding period last year. Likewise, it sold 8.8% less than August 2012. With the festival season coming up, it hopes to reverse the trend. For this, the company has started to dispatch its stylish new model —Passion X Pro —a 110cc motorbike. Apart from this, it has already received over 2 lakh units orders during the Navratras, which is a positive sign.

Commenting on the disappointing showing, Pawan Munjal, managing director, said, “The two-wheeler market in the country has been adversely impacted due to the overall market slowdown and prevailing sentiments since the beginning of this quarter. Sensing the slowdown in the market, we led the way in adjusting our production plans in August and September, and this has been reflected in our quarterly result figures. The onset of the festive season has been encouraging, with retail sales of over two lakhs in the Navratas.”

The share price declined 1.70% to Rs1795.95 on the Bombay Stock Exchange (BSE).


Sensex, Nifty still indecisive: Tuesday Closing Report

The Nifty is sill waiting for a breakout. The medium-term trend is down

The market, which was volatile throughout the session, settled in the red on selling pressure in heavyweights. Although the intraday high on the Nifty was almost the same as yesterday, the index made a higher low today. The benchmark is waiting for a breakout. However, we see the medium-term trend  down. The National Stock Exchange (NSE) saw a volume of 55.40 crore shares and the advance decline ratio of 711:1014.
The Indian markets will remain closed on Wednesday for a local holiday.
The Indian market witnessed a flat opening in the absence of any local triggers. In the global arena, US markets settled with marginal gains overnight following a late recovery and the Asian pack was in the green in morning trade today but concerns about corporate earnings kept a tab on the gains.
The Nifty opened one point lower at 5,716 and the Sensex resumed trade at 18,804, up 11 points over its previous close. Volatility, ahead of the F&O derivatives expiry on Thursday, was seen since the opening of trade, which kept the indices in and out of the red in the first hour of trade. But despite the volatility, select buying led the benchmarks to their intraday highs in early trade. At the highs, the Nifty rose to 5,721and the Sensex went up to 18,813.
The market slipped into the red around 10.00 am on selling pressure in consumer durables, IT, oil & gas and auto stocks. The benchmarks continued to remain in the negative in noon trade as a lower opening of the key European markets added to the woes back home.
The indices dropped to their lows in post-noon trade on selling in auto, fast moving consumer goods and technology stocks. At the low the Nifty went back to 5,681 and the Sensex retracted to 18,689.
The market closed off the lows on a minor bounce back in late trade. The Nifty finished trade at 5,691, down 26 points (0.45%), and the Sensex settled 83 points (0.44%) lower at 18,710.
Among the broader markets, the BSE Mid-cap index fell 0.23% and the BSE Small-cap index declined 0.25%.
The BSE Capital Goods index (up 0.90%) was the only sectoral gauge to settle in the green today. The top losers were BSE Consumer Durables (down 0.98%); BSE IT (down 0.88%); BSE Metal, BSE Fast Moving Consumer Goods (down 0.84% each) and BSE Power (down 0.82%).
Seven of the 30 stocks on the Sensex closed in the positive. The main gainers were Larsen & Toubro (up 1.91%); ICICI Bank (up 0.53%); Coal India (up 0.18%); Hindustan Unilever (up 0.16%) and Dr Reddy’s Laboratories (up 0.13%). The key losers were Jindal Steel (down 2.43%); Hero MotoCorp (down 1.90%); Hindalco Industries (down 1.56%); Infosys (down 1.42%) and TCS (down 1.29%).
The top two A Group gainers on the BSE were—L&T Finance Holdings (up 3.24%) and Bayer Corporation (up 3.23%).
The top two A Group losers on the BSE were—Jaiprakash Power Ventures (down 3.73%) and GMR Infrastructure (down 3.64%).
The top two B Group gainers on the BSE were—Indo Count Industries (up 19.96%) and Peninsula Land (up 19.93%).
The top two B Group losers on the BSE were—Jaihind Projects (down 19.91%) and Xchanging Solutions (down 19.71%).
Out of the 50 stocks listed on the Nifty, 12stocks settled in the positive. The top gainers were BPCL (up 1.91%); L&T (up 1.74%); Siemens (up 1.01%); IDFC (up 0.72%) and Coal India (up 0.46%). The major losers were Jindal Steel (down 2.57%); Hero MotoCorp (down 1.98%); Kotak Mahindra Bank (down 1.97%); Lupin (down 1.68%0 and Hindalco Ind (down 1.52%).
Markets in Asia settled mixed as the quarterly earnings season in the region is expected to come under pressure following the global slowdown. Fresh worries from Europe after ratings agency Moody’s Investor Services on Monday cut ratings of five Spanish regions on deteriorating liquidity positions also weighed on the investors.
The Hang Seng climbed 0.68%; the KLSE Composite gained 0.18%; the Nikkei 225 rose 0.04% and the Straits Times advanced 0.17%. On the other hand, the Shanghai Composite tanked 0.86%; the Jakarta Composite fell 0.26%; the Seoul Composite declined 0.76% and the Taiwan Weighted settled 0.48% lower.
At the time of writing, the key European indices were down between 0.83% and 0.92% and the US stock futures were in the negative, indicating a lower opening for US stocks. 
Back home, foreign institutional investors were net buyers of stocks totalling Rs241.68 crore on Monday whereas domestic institutional investors were net sellers of equities amounting to Rs137.88 crore.
Mumbai-based turnkey construction major Hindustan Construction Company has secured a third contract worth Rs373 crore from the Delhi Metro Rail Corporation. The order is for design and construction of a 2.2 km twin tunnel between Shalimar Baug and Netaji Subhash Place stations on the Mukundpur-Yamuna Vihar corridor under phase III of the Delhi Metro. The contract is scheduled for completion in 36 months. HCC settled 1.17% lower at Rs16.85 on the NSE today.
Elecon Engineering Company has procured domestic orders aggregating Rs17.13 crore from NMDC and Rs 7.19 crore from Tecpro Systems. While NMDC’s order is for supply, erection and commissioning of machines for its projects at Bacheli and Kirandul, the one from Tecpro Systems is for the Harihar project. Elecon Engineering gained 0.71% to close at Rs49.60 on the NSE today.
SAIF India IV FII Holdings, Mauritius has increased its stake in Hyderabad-based Pennar Industries from 7.74% to 9.85%. The overseas investment entity has hiked the stake by acquiring shares from the open market. Pennar Industries closed 0.56% higher at Rs27.15 on the NSE.


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