Nifty to go above today’s high for an uptrend
The IIP numbers for September coming at a two-year low resulted in the market closing lower for the second straight day. We had mentioned in our Wednesday’s closing report that the Nifty may move between 5,160 and 5,325. The index opened with big gap below the lower limit and closed below that level, an 11 day closing low (including today). Today’s fall has been on a seven-day high (including today) volume of 60.52 crore shares on the National Stock Exchange (NSE). If the index is not able to close above today’s high, we may see the downtrend continuing.
Resuming after a day’s break, the Indian market opened lower on a slew of weak corporate earnings reports and concerns ahead of the release of industrial output data for September and food inflation numbers for the week ended 29 October. The Nifty started trade at 5,160, down 61 points, and the Sensex opened 174 points lower at 17,188.
Staying in the red, the market hit the day’s high in the first half hour of trade with the Nifty going up to 5,199 and the Sensex touching 17,279. The downward journey continued with the benchmarks touching the day’s lows on news that IIP for September plunged to a two-year low of 1.9%. At the lows, the Nifty fell to 5,142 and the Sensex was down at 17,097.
The market moved sideways in subsequent trade even as weekly food inflation for the week ended 29th October was marginally lower at 11.81%. The market headed higher in post-noon trade as the key European bourses in the positive ahead of the Italian policymakers vote on austerity measures and a new government assumes charge in Greece. But selling pressure kept the indices lower, with the market closing in the negative for the second day in a row. The Nifty closed 52 points down at 5,169 and the Sensex settled at 17,193, a cut of 169 points over its previous close.
The advance-decline ratio on the NSE was negative at 461:1263.
The broader indices underperformed the Sensex today. The BSE Mid-cap index declined 1.13% and the BSE Small-cap index tanked 1.57%.
BSE Oil & Gas (up 0.79%); BSE Auto (up 0.62%); BSE Healthcare (up 0.18%) and BSE Fast Moving Consumer Goods (up 0.06%) were the sectoral gainers. Rate-sensitive sectors—BSE Bankex (down 3.03%); BSE Metal (down 2.33%); BSE Capital Goods (down 2.32%); BSE Realty (down 2.24%) topped the losers’ list.
Mahindra & Mahindra (up 3.12%); Sun Pharma (up 2.48%); Reliance Industries (up 2.23%); Hero MotoCorp (up 1.85%) and Bajaj Auto (up 1.64%) were the top gainers on the Sensex. The key losers on the index were ICICI Bank (down 4.55%); Hindalco Industries (down 4.31%); Tata Steel (down 4.19%), State Bank of India (down 3.48%) and Larsen & Toubro (down 3.30%).
The best performers among Nifty stocks were M&M (up 3.20%); Sun Pharma (up 2.74%); RIL (up 2.64%); Bajaj Auto (up 1.81%) and Hero MotoCorp (up 1.63%). Axis Bank (down 5.06%); Hindalco Ind (down 4.31%); ICICI Bank (down 4.19%); Tata Steel (down 3.81%) and SBI (down 3.59%) settled at the bottom of the index.
Markets in Asia settled mostly higher on positive corporate news from the US overnight. However, investors were wary that the resolution of the European debt crisis is still a long way.
The Shanghai Composite added 0.06%; the Hang Seng surged 0.91%; the Nifty gained 0.16%; the Straits Times rose 0.14%; the Seoul Composite jumped 2.77% and the Taiwan Weighted climbed 0.80%. On the other hand, the Jakarta Composite lost 0.13% and the KLSE Composite fell by 0.26%.
Back home, foreign institutional investors were net buyers of stocks worth Rs559.04 crore on Wednesday, while domestic institutional investors were net sellers of shares totalling Rs531.86 crore.
India’s largest realty firm DLF on Thursday reported an 11% decline in consolidated net profit at Rs372.41 crore for the quarter ended 30th September, mainly due to higher tax expenses and interest charges. The company had posted a net profit of Rs418.38 crore in the year-ago period, DLF said in a statement.
Consolidated net sales during the second quarter, however, rose by 6.9% to Rs2,532.41 crore from Rs2,369.02 crore, it added. The stock declined 2.25% to Rs228.05 on the NSE.
Aban Offshore has received a firm order from state-owned explorer ONGC for the deployment of jack-up rig Aban II for a period of three years. The total value of this firm order is approximately $57 million (around Rs285 crore). The contract is expected to commence during the first quarter of calendar year 2012. Aban Offshore fell 1.76% to close at Rs421 on the NSE.
Tata Communications has reported a net profit of Rs17.70 crore for the second quarter of the current fiscal, against a loss of Rs. 57.70 crore in the same year-ago quarter. The turnaround was due to strong improvements in revenues and profit margins in its global voice and global data business. The company’s shares jumped 4.17% on the NSE to close at Rs195.
Lenders have already burned their fingers with the 'king of good times' carrier and yet, the government is eager to bailout the debt ridden Kingfisher for the second time
Kingfisher Airlines, which won the Skytrax award for India's best airliner in 2011, is again facing turbulence and instead of landing. There are efforts from certain quarters to keep the debt-ridden airline afloat. According to reports, Aviation Minister Vayalar Ravi indicated that the government might speak to lenders, especially state-owned banks for a possible bailout of the Airlines. Mr Ravi had been quoted as saying that he had spoken with Finance Minister Pranab Mukherjee and Petroleum Minister Jaipal Reddy, after Vijay Mallya, the flamboyant owner of Kingfisher sought government's help.
The question is why the is government eager to help bailout Mr Mallya and his debt-ridden Airlines for the second time, when its own national carrier, Air India is still not out of trouble? About a year ago, 18 lenders agreed to restructure Kingfisher's debt of Rs8,000 crore by cutting interest rates and converting part loans into equity shares. Lenders, including State Bank of India (SBI) and ICICI Bank converted debt of Rs1,400 crore into equities at around 60% premium at Rs64.48 per share to Kingfisher's market price of Rs39.9 a share in April 2011.
Considering Kingfisher's closing price of Rs19.85 per share on Friday the lenders already have lost Rs44.63 per share in the company. And yet, the politically well connected owner of the company is seeking government bailout.
Over the past four days, Kingfisher have grounded over 120 flights forcing the Directorate General of Civil Aviation (DGCA) to issue a show-cause notice to the carrier for not taking its prior permission to curtail its flight schedules. Kingfisher's chief executive Sanjay Agarwal told PTI that the entire exercise is part of its route rationalisation to improve profitability. “We decided to reduce frequency in some of the routes where we had multiple flights like Delhi-Mumbai or low passenger load like Nanded-Mysore,” he said.
According to reports, on Thursday, Kingfisher operated only 64% or 269 flights out of the 418 flights of its winder schedule allocated by the DGCA. Kingfisher’s action has caused immense heartburn to thousands of passengers as following the flight cancellations; they had to pay a premium of 20% to 40% to travel by other airlines. The cancellation of flights and alleged quitting of around 130 pilots from Kingfisher may be the airlines’ way to create some pressure on the government for a bailout package. However, the question remains, why the poor traveller had to suffer time and again even after paying a premium on Kingfisher ticket?The airline has suffered a loss of Rs1,027 crore in 2010-11 and has a mounting debt of Rs7,057.08 crore. Since starting its commercial operations in May 2005, Kingfisher has yet to see profit on annual and total cost basis. (see the table, courtesy Wikipedia)
Planning Commission deputy chairman Montek Singh Ahluwalia today said S&P has corrected the negative signals given by its global rival Moody’s. “I am happier at the outcome. The earlier Moody’s downgrade has been offset by S&P. What S&P has said has a lot of substance to it,” he added
New Delhi: Appreciating the views of Standard & Poor’s (S&P) on the Indian banking sector, Planning Commission deputy chairman Montek Singh Ahluwalia today said the rating agency has corrected the negative signals given by its global rival Moody’s, reports PTI.
“I am happier at the outcome. The earlier Moody’s downgrade has been offset by S&P. What S&P has said has a lot of substance to it,” Mr Ahluwalia told reporters here.
“Ours is a very well-regulated banking sector and there was no justification whatsoever for raising questions on the financial stability of the banking sector,” he added.
Yesterday, S&P had upgraded its rating of the Indian banking sector, stating that domestic regulations are in line with international standards.
“In our view, banking regulations in India are in line with international standards and the regulator Reserve Bank of India (RBI) has a moderately successful track record,” S&P said while upgrading the risk profile (BICRA) a notch higher to ‘Group 5’.
The action came a day after another global ratings agency, Moody’s, downgraded the outlook of the Indian banking system to ‘negative’ from ‘stable’ amid an economic slowdown that it said was affecting asset quality, capitalisation and profitability.
Asked if the downward revision of the economic growth projections for this fiscal is likely to affect the ratings agencies’ views on India's sovereign ratings, Mr Ahluwalia said: “The growth target has been already moderated... At 7.6%, the economy is growing much faster than any other economy in the world.”
“So I think our objective should not be to worry about the fact that it has slowed down, but should be to see how to make it grow at 8% plus next year,” he said.
He said a growth rate of 7.6%, as projected by the RBI, or of 8%, as projected by the Planning Commission, is reasonable.
He also termed the latest developments in Greece, where a national unity government has taken over, as positive.
“It looks that the political impasse in Greece, which actually prevented the implementation of the Greek package, may be overcome. There was also lot of concern whether eventually Greece would lead to contagion in other European countries... I am sure that the European finance ministers are looking at how to avoid the contagion,” he said.