Sensex, Nifty to move sideways: Tuesday closing report

Only a close below 6,460 for Nifty will mean the start of a short downturn

Unlike most of the Asian indices, the Indian indices closed Tuesday in the red. The market opened almost at the same level at which it had closed on Monday. The indices made attempts to stay in the green in the morning but soon lost strength and started edging lower. Today, the NSE 50-share Nifty made a new high again but could not sustain at that level.


The BSE 30-share Sensex opened at 21,919 and moved to the level of 21,772 after hitting a high of 22,019. It closed at 21,826 (down 108 points or 0.49%). The Nifty opened at 6,537 and hit an all time high of 6,563 after which it edged lower to hit a low of 6,494. The Nifty closed at 6,512 (down 25 points or 0.39%). NSE recorded a volume of 80.99 crore shares.


Except for Realty (up 2.31%); Smallcap (up 0.21%) and IT (up 0.19%) all the other indices on the NSE closed in the red. The top five losers were Metal (3.31%); MNC (1.19%); Nifty Junior (0.86%); Pharma (0.84%) and Commodities (0.79%).


Of the 50 stocks on the Nifty, 21 ended in the green. The top five gainers were DLF (3.88%); Tata Power (3.66%); Grasim (2.68%); IDFC (2.63%) and IndusInd Bank (1.92%). The top five losers were Tata Steel (5.78%); Hindalco (4.02%); Sesa Sterlite (2.91%); Gail (2.91%) and Maruti (2.73%);


Of the 1,547 companies on the NSE, 606 closed in the green, 851 closed in the red while 90 closed flat.


The Indian government unveiled the trade data for February 2014 during trading hours. India's trade deficit narrowed to $8.13 billion in February 2014, from $14.12 billion in February 2013. Total imports declined 17.09% year-on-year at $33.81 billion in February 2014. Merchandise exports fell 3.67% year-on-year at $25.68 billion in February 2014. The trade deficit for the 11-month period April 2013 to February 2014 narrowed to $128.08 billion, from $179.92 billion during the period from April 2012 to February 2013.


US indices closed Monday in the negative. The Federal Reserve will continue to trim its monthly asset purchases at a $10 billion pace, Charles Evans, president of the Chicago Fed and among the most dovish US policymakers said on Monday.


Except for NZSE 50 (down 0.31%) all the other Asian indices closed in the green. Nikkei 225 (0.69%) was the top gainer.


China's central bank governor said on Tuesday that the country's deposit rates are likely to liberalised in one to two years. The central bank is widely expected to introduce a deposit insurance scheme before liberalising deposit rates to protect savers in case a freed-up market leads to major turbulence for smaller banks.


A report yesterday, 10 March 2014, showed aggregate financing in China dropped to 938.7 billion Yuan ($153 billion) last month amid a crackdown on shadow lending, down from January's record 2.58 trillion yuan.


Japan's central bank finishes a two-day meeting today, at which it's projected to keep its bond-buying program unchanged.


European indices had a mixed performance while US Futures were trading marginally lower. German exports increased more than estimated. Data today showed German exports rose 2.2% in January 2014. That was the biggest month-on-month growth since May 2012. Imports jumped 4.1% in the period, also exceeding estimates.


I-T dept searches Hiranandani group

Income tax department conducted searches simultaneously at about 20 locations of Hiranandani group in Mumbai, Bangalore, Chennai and Hyderabad

The Income Tax (I-T) department on Tuesday conducted searches at about 20 locations of Hiranandani group in Mumbai as well as in Bangalore, Chennai and Hyderabad in connection with alleged tax evasion by the realty company.


"We have conducted simultaneous searches at many locations of the group in Mumbai, Bangalore, Chennai and Hyderabad," an Income Tax source said.


Searches were also conducted at the residential premises of top company officials.


The source said some documents of accounts and transactions have been seized in the operation that was underway several hours after it started.


When contacted, a spokesperson of the Mumbai-based Hiranandani Group refused to comment on the matter.


Sources said some alleged mismatch on Tax Deducted at Source (TDS) receipts related to payments made were also being verified during the operations.


Hiranandani group is a major real estate player in Mumbai with its flagship post project located in Powai.


Recently, the group's co-founder Niranjan Hiranandani had filed a suit against his daughter Priya seeking to restrain the usage of name 'Hiranandani' in her business.


Some years back, the Central Bureau of Investigation (CBI) had also raided the offices and other premises of Hiranandani Builders for alleged provident fund evasion of Rs168 crore.


No signs of any ‘bottoming out’ of the current slowdown in demand for Hindustan Unilever

Urban growth has been weak for a while and there appear no signs of a turnaround yet

Broader demand trends seen in 3QFY14 have continued into the current quarter, and that there appears to be no signs of any ‘bottoming out’ of the current slowdown in demand for Hindustan Unilever. The company management does not expect any significant change in demand patterns in the near-term, and believes any recovery will come through only after a couple of quarters.


3QFY14 recorded 4% volume growth for the domestic business and trends seen so far this quarter are roughly similar. Rural growth which was strong up to 1QFY14 had started to see a slip post the quarter – which continues to be the case in the current quarter as well. Urban growth has been weak for a while and there appear no signs of a turnaround yet. While company management believes the current growth rate is lower than medium-term trend growth rates, it does not expect a pick-up over the near-term, according to a research note by Nomura on Hindustan Unilever.


According to Nomura, although market growth rate has slowed, competitive intensity remains strong across the sector. While there have been some withdrawals of promotions in the soaps and detergents segment, overall competitive intensity remains strong.


Overall, company management remains cautious as far as the near-term outlook is concerned, but the medium-term outlook for the sector appears more robust. As a market leader in several categories, the company sees itself being well positioned in terms of portfolio range as well as strong distribution network to take advantage of growth of the sector in the medium- to long-term, points out Nomura. Nomura believes that investors should reduce their exposure to HUL at the current levels.


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