Sensex stays under stress...Autos down; IT up

India Infoline News Service | Mumbai | May 30, 2012 12:45 IST

The key Indian stock indices continue to be under pressure in early afternoon trade, as investors ponder over a raft of corporate results amid persistent worries over the eurozone debt crisis and slowing growth in China.


The BSE Sensex and the NSE Nifty have lost ~0.5% apiece. The Nifty is hovering around 4,950. Market breadth is weak as broader indices are also trading with a negative bias. The INDIA VIX is up ~3%.


Auto, Consumer Durables, Capital Goods, Banking and Realty indices are among the top losers. Metals, PSU and Power indices are down marginally as well. Defensive plays like IT, Pharma and FMCG have fared better today.


At 12:39 pm (IST), the BSE Sensex was at 16,368, down 70 points over the previous close. It had earlier touched a day’s high of 16,391 and a day’s low of 16,299. It opened at 16,391.


The NSE Nifty was quoting at 4,963, down 27 points over the previous close. It earlier touched a day’s high of 4,970 and a day’s low of 4,945. It opened at 4,964.


The BSE Small-Cap index and the BSE Mid-Cap index were trading down by ~0.4% and ~0.5%, respectively.


Tata Motors is the biggest loser, down ~10%. Other top laggards include L&T, Tata Steel, ICICI Bank, RelInfra, IDFC, BPCL, BHEL, Axis Bank, DLF, Jp Associates, Sterlite, SBI, Kotak Bank, Siemens.

Tata Power, Sun Pharma, Wipro, ITC and Ambuja Cement are the only notable gainers in the BSE and NSE.


The Indian Rupee fell for a second straight session today and was likely to reach its record low against the dollar as local oil refiners stepped up their buying of the greenback to meet month-end commitments. A worsening of the global risk appetite also hit the rupee.

The rupee was also being weighed down by concerns about India's fiscal and economic challenges, and worries about slowing policy reforms.

The rupee had hit record low of 56.40 per on May 24 but recovered since then to as high as 55.01 on Monday.

The RBI has been intervening frequently this month, in both forwards and spot markets, besides unleashing more measures to lure overseas capital. However, the actions have not yielded the desired results so far.

The euro hit a two-year low, hurt by worries about Spain's soaring borrowing costs and expectations that more capital may be needed to fix its ailing banks.

The rupee weakened after the Bank of Spain said that the nation’s economy will sink deeper into a recession, fueling concern that Europe’s debt crisis will worsen.

It has lost 6% this month, making it Asia’s worst currency.

Tata Motors shares have taken a beating in opening trades after reporting a 30 basis points decline in EBIDTA margins for Q4 FY12 to 14.3%. The market expected a jump of over 100 basis points. JLR contributed about 95% of the Q4 profits of Tata Motors.

Tata Motors said that Q4 net profit also included tax credit of ~ Rs. 18bn. Tata Motor’s standalone profit after tax (PAT) for Q4 FY12 declined by 1.4% to Rs. 5.65bn. For FY12, Tata Motors' net profit was down 31.4% at Rs. 12.42bn.

Tata Motors' stock fell as much as 8.7% to Rs. 251.80. On April 12 this year, the stock hit a 52-week high of Rs. 320.60.

Tata Motors DVR too slipped.

On the other hand, shares of Sun Pharmaceutical Industries are trading higher after reporting a consolidated net profit of Rs 820 crore for the fourth quarter ended March 31, 2012.

The company had posted a net profit of Rs 443 crore for the same period of previous fiscal year. Net sales of the company stood at Rs 2,330 crore in Q4 FY12 as against Rs 1,463 crore during the corresponding period of previous fiscal.

The company's board has recommended a dividend of Rs 4.25 per equity share of Re 1 for the year ended March 31, 2012.

Sun Pharma expects 18-20% sales growth in the current fiscal year (FY13), Managing Director Dilip Shanghvi said in an earnings conference call on Wednesday.

Gujarat Pipavav Port shares climbed after the Reserve Bank of India (RBI) lifted the embargo on the purchase of equity shares and convertible debentures in Gujarat Pipavav Port by foreign institutional investors (FIIs) through portfolio investment scheme. The FII limit has been enhanced to 45% of the paid up capital.

"The RBI today notified that Gujarat Pipavav Port agreeing to enhance the limit of purchase of its equity shares and convertible debentures by FIIs, through primary market and stock exchanges, under the Portfolio Investment Scheme up to 45% of its paid up capital," RBI said in a release.

The limit was enhanced after passage of resolutions by the Company's Board of Directors and approval by shareholders at the annual general meeting (AGM), RBI said. "The restrictions placed on the purchase of shares in respect of Gujarat Pipavav Port may be treated as withdrawn with immediate effect," it said.

LKP Finance Ltd. shares rose after the Company said that its Board of Directors at a meeting held on May 29, inter alia, has approved to Buyback the Company's full paid up equity shares of Rs 10 each from open market at a price not exceeding Rs 80 a share. 


Global Markets Update:

Asian markets closed mostly lower today after a state-run Xinhua News Agency said that China has no plan to introduce growth-boosting stimulus measures of the scale announced unleashed during the height of the global financial crisis of 2008.

Also, the euro fell to a two-year low versus the US dollar as Spanish borrowing costs rose amid the nation's constant struggle to rescue its troubled banks, fueling concern that Europe’s debt crisis is spreading.

“The Chinese government’s intention is very clear: It will not roll out another massive stimulus plan to seek high economic growth,” Xinhua said yesterday. “Current efforts for stabilizing growth will not repeat the old way of three years ago.”

In 2008, Chinese policy makers had unveiled a fiscal stimulus of 4 trillion yuan ($586 billion at the time).

The European stock indices slipped in opening minutes of trade today, with Spanish stocks getting pounded after Egan-Jones Ratings Co. downgraded the country's debt further into junk territory. 

Spain’s 10-year bond yield rose to the highest level since November yesterday as the central bank said that the nation was sinking deeper into recession. Spain’s 10-year bond yields are approaching the 7% mark that heralded bailouts in Greece, Ireland and Portugal.

The euro was poised for the biggest monthly decline since September after Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned a month early amid criticism over the May 9 nationalization of Bankia group, Spain’s third-biggest lender.

The Spanish government’s plan for Bankia was rejected by the European Central Bank, according to reports.

The dollar gained versus peers. Australia’s dollar fell after retail sales decreased.

The euro has lost 5.9% this month, headed for its largest monthly drop since September, and touched $1.2458 today, the weakest level since July 1, 2010.