Mkt sheds gains on weak European cues, profit-booking

iifl10th July, 2013 : Comments by Amar Ambani, Head of Research, India Infoline 

Mkt sheds gains on weak European cues, profit-booking

The Indian equity market ended near the day’s low on Wednesday erasing the day’s gains on weak European cues and profit-booking at higher levels. The Nifty barely managed to close above the 5800 mark while the Sensex ended below the 19,300 mark.

The indices opened with a positive gap on overnight gains in the US market and strong Asian indices. But the gains were short-lived as sentiment took a hit after output in eight key infrastructure industries slowed to an annual 2.3% in May as against 2.4% in April.

In economic news, gross direct tax collections for the April-June period rose 11.52% at Rs. 1.23 trillion as against Rs. 1.11 trillion in the same period last year. Gross corporate tax collection showed an increase of 7.82% at Rs. 76.12bn as against Rs. 70.59bn YoY.

Oil and gas, realty, auto, capital goods, metal and power stocks lagged while consumer durables, IT and telecom stocks gained. After Tuesday’s phenomenal run, mid-cap stocks were under pressure in trade today.

The Sensex closed at 19,294, down 145 points, while the Nifty shut shop at 5,817, down 42 points over Tuesday’s close.

The advance-decline ratio favoured the bulls. On the Bombay Stock Exchange, 1,145 stocks advanced against 1,170 declines. Only 144 stocks remained unchanged.

Volatility, as measured by India VIX, rose 3.5% to end at 19.32. It hit a day’s high of 20.11 and day’s low of 18.33.

Stocks in News:

Hindalco, BPCL, Bank of Baroda, M&M, Cairn India, IndusInd Bank, Tata Steel, Bajaj Auto and HDFC Bank lost out while Lupin, HCL Technologies, UltraTech Cement, NMDC, Tata Power, TCS, Kotak Mahindra Bank, Jindal Steel, Asian Paints and Maruti gained.

Index heavyweight Reliance Industries was in the limelight today. Reports suggest gas prices hike may be capped and RIL may have to deliver outstanding gas at the old price of $4.2/mmbtu. The stock declined by 2% to close at Rs. 856 per share.

Commenting on the same, Amar Ambani, Head of Research at IIFL, said the net asset value for RIL’s KG-D6 block will fall if the same is implemented. “We presume that production from new blocks such as NEC-25 and CBM fields will earn a revised higher price. We would await clarity from the Oil Ministry before building this into our estimates and valuations.”

In earnings today, IndusInd Bank’s Q1 FY14 net profit rose 42% year-on-year at Rs. 3.35bn. It has come in higher than IIFL’s expectations of Rs. 3.23bn. The bank’s net interest income is up 40% while net non-performing assets is down to 0.21% in the period under review. The stock closed 2.3% lower at Rs. 495.95 per share.

Jet Airways plummeted 3.5% to close at Rs. 418 after its Rs. 20.58mn deal with Abu Dhabi’s Etihad Airways came under the Central Vigilance Commission’s scanner. The latter is examining a complaint of alleged corruption.

Tata Steel declined 2.3% to close at Rs. 255 after it posted hot metal and crude steel production of 2.46 MT, up 20% YoY, and 2.22MT, up 22% YoY, respectively for Q1 FY14.

Tata Motors closed at Rs.284.55, down Rs. 4.55 or 1.5%, on reports that Jaguar Land Rover is coming up with a back up plan to offset the impact of a looming strike by employees at its logistics partner DHL.