The Indian stock market is looking for a direction since last week’s decline and it did not carry too far
We had mentioned in last week’s closing report this downtrend may start soon in the later part of this week. On Thursday, the indices witnessed a major plunge. Sensex closed at its lowest since 8 October 2013. However, on Friday, the benchmark made a quick recovery by the end of the session. The BSE Sensex closed the week that ended on 14th February, at 20,366.82 (down 10 points or 0.05%), while the NSE Nifty closed at 6,048.35 (down 15 points or 0.24%) for the week.
After a volatile session on Monday, Nifty ended in the negative after three days of positive move. Nifty closed at 6,053 (down 10 points or 0.16%). A survey showed that business activity across emerging markets expanded in January at the slowest pace in four months, dragged down by sluggish services sectors. HSBC's composite emerging markets index of manufacturing and services purchasing managers' surveys slipped for the second month running to 51.4 in January. It stayed under the 2013 average of 51.7 and well below the score of 64.1 posted last January.
Last Friday, back in US, the data showed that payrolls rose less than projected in January and the jobless rate unexpectedly dropped to the lowest level in more than five years.
Nifty could manage to cover up its Monday’s loss on Tuesday. Nifty closed at 6,063 (up 9 points or 0.15%). However, the bulls seemed less confident with the market awaiting global cues for further direction. India's trade deficit narrowed to $9.92 billion in January 2014, from $10.14 billion in December 2013.
Nifty closed at 6,084 (up 21 points or 0.35%) on Wednesday on the back of upbeat data from China where in the country's trade surplus widened to $31.86 billion and Janet Yellen, in her first public comments since taking over for Ben Bernanke said that she supports Bernanke's view that the economy is strengthening enough to withstand a pullback in the Fed's stimulus. The House of Representatives voted to suspend the US debt limit until March 2015, giving a win to President and Democrats in Congress who insisted that the ceiling be lifted without conditions.
After the market hours, on Wednesday, the government unveiled the data on inflation based on the combined consumer price index for urban and rural India for January 2014 eased more than anticipated to a 24-month low of 8.79% in January, helped by moderating food prices.
In spite of the favourable inflation data on Wednesday, market was pulled down on Thursday. Nifty closed at 6,001 (down 83 points or 1.36%).
Standard Chartered Bank estimates that the government will announce on Monday gross borrowing for 2014-15 of Rs5.8 trillion to Rs6 trillion, based on the government's fiscal deficit target of 4.2% of GDP. A United Nations report said that the government is unlikely to meet the fiscal deficit target of 4.8% of the GDP in the current fiscal due to low growth and high subsidies.
On Friday, inflation based on the wholesale price index provisionally rose 5.05% in January 2014 as compared to 6.16% (provisional) for December 2013 and 7.31% in January 2013. On global front, on one hand receipts at US retailers declined 0.4% in January and the number of Americans filing applications for unemployment benefits rose by 8,000 to 339,000 in the week ended 8 February while on the other hand Growth in Germany, France and the Netherlands beat economists’ estimates. Nifty closed at 6,048 (up 47 points or 0.79%).
For the week, among the other indices on the NSE, the top two performers were IT (2%) and Auto (2%) while the worst two performers were Media (4%) and PSU Bank (3%).
Among the Nifty stocks, the top five stocks for the week were Tata Motors (8%); HCL Technologies (7%); D L F (5%); ICICI Bank (3%) and ONGC (3%) while the top five losers were Cipla (10%); Ambuja Cements (7%); Hindalco Industries (6%); Bajaj Auto (5%) and BHEL (5%).
Of the 1,350 companies on the NSE, 443 companies closed in the green, 858 companies closed in the red, while 49 companies closed flat.
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
|Top ML sectors||Worst ML sectors|
|Software & IT Services||2%||Textiles||-4%|
Nifty has to stay above 6,035 for the upmove to gain strength
Until half way through the noon session the domestic indices were moving in a range bound manner. After which the benchmark made a plunge in the negative during which it hit the day’s low. But they made a quick recovery and closed in the positive covering up more than half of the yesterday’s loss.
The Sensex opened at 20,265 hit a low of 20,149 from where it bounced back to hit a high of 20,392 and closed at 20,367 (up 173 points or 0.86%) while the Nifty opened at 6,024 and moved in the range of 5,985 and 6,056. The Nifty closed at 6,048 (up 47 points or 0.79%). The NSE recorded a volume of 47.49 crore shares.
Market awaited the inflation based on the wholesale price index (WPI) for January 2014. Inflation based on the WPI provisionally rose 5.05% in January 2014 as compared to 6.16% (provisional) for December 2013 and 7.31% in January 2013.
Finance Minister P Chidambaram will present the Vote-on-Account or interim budget for the first four months of 2014 - 15 on 17 February 2014.
US indices closed in the positive on Thursday. Receipts at US retailers declined 0.4% in January amid bad weather and uneven progress in the labor market, a report yesterday showed, signaling the economy was off to a slow start this year. The decline was the biggest since June 2012. A Labor Department report showed the number of Americans filing applications for unemployment benefits rose by 8,000 to 339,000 in the week ended 8 February.
However the earnings and a $45.2 billion takeover of Time Warner Cable Inc. overshadowed an unanticipated drop in retail sales.
Except for Nikkei 225 (down 1.53%) and Straits Times (down 0.04%) all the other Asian indices closed in the negative. Shanghai Composite was the top gainer which rose 0.83%.
European indices were trading mostly in the green while US Futures are trading marginally higher.
Growth in Germany, France and the Netherlands beat economists’ estimates in the fourth quarter and Italy resumed expansion in a sign the fragile euro-area recovery is gaining traction. German gross domestic product rose 0.4% from the third quarter, when it increased by 0.3%. GDP rose 0.3% in France and 0.7% in the Netherlands, while the Italian economy grew 0.1%.
During the December quarter Eicher Motors reported growth of 2.18 times in its net profit to Rs74.43 on robust sales driven by mainly Royal Enfield motorcycle business and higher exports
Eicher Motors, the manufacturer of commercial vehicles and iconic ‘Royal Enfield’ brand motorcycles, said its fourth quarter net profit surged 118% on 72% increase in its sales in motorcycles and 60% higher exports.
For the quarter to end-December, the automobile manufacturer said its net profit grew 118% to Rs74.43 crore from Rs34.16 crore while its total revenues, including sales, rose 78% to Rs527.88 crore from Rs296.70 crore, a year ago period.
“While the industry continues with its down trend given the Indian economic scenario, Eicher Motors has once again reported a robust financial performance, Royal Enfield has again had a fantastic year and continues to grow from strength to strength. We continue to work towards increasing our overall market share in commercial vehicles through our 50:50 joint venture with the Volvo Group -VE Commercial Vehicles Ltd,” said Siddhartha Lal, managing director and chief executive of Eicher Motors.
According to Moneylife analysis, Eicher Motors net sales growth rate for the December quarter stood at 78%, which is 13% higher than its three-quarter year-on-year growth rate of 65%. Eicher Motors operating profit growth rate stood at 208%, far higher than its three-quarter year-on-year growth rate of 132%. Eicher Motors return on net worth stood at 45% while its market capitalisation is 28 times of its operating profit.
During the fourth quarter, Eicher Motors reported growth of 72% in Royal Enfield sales with highest record sales of 55,101 units as compared to 31,968 units. Its overall exports grew 60% to 1115 units during December quarter.
However, Eicher Motor commercial vehicle business sales remain negative during the quarter due to slowdown in auto industry. Its heavy duty truck sales fell by 46% to 1,024 units, light and medium duty trucks by 35% to 4,957 units and buses by 30% to 956 units respectively. Its Volvo truck sales grew 11% to 215 units from 193 units a year ago period.
Eicher Motors during November, expanded its Royal Enfield motorcycle range by launching ‘Continental GT’ in Indian markets. During December it also launched new pro series trucks and buses.
During the 12 months to end-December 2013, FIIs shareholding in the company grew to 19.95% from 10.68% in a same period a year ago. While, domestic institutional investors (DIIs) shareholding fell to 5.15% from 13.70%, public shareholding fell to 19.78% from 20.43%. However, promoter shareholding remained at 52.12%.
Eicher Motors reserves and surplus as on 31 December 2013 stood at Rs794.30 crore, an increase of 32% than Rs602.05 crore.
The company declared a final dividend of 300% or Rs30 per share for the year ended 2013.
Eicher Motors closed Friday marginally up at Rs4,847 on the BSE, while the 30-share benchmark also ended the day marginally higher at 20,326.
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