Sensex, Nifty slips ahead of RBI policy meet

iifl28th October, 2013 : Comments by Amar Ambani, Head of Research, India Infoline (a well diversified financial services comp any)

After consolidating in a narrow trading range in the past couple of trading sessions, the Indian equity market slipped on Monday ending near days low on fears that the Reserve Bank of India (RBI) Governor Raghuram Rajan is likely to hike key policy interest rate by at least 0.25%. This will be the second increase in the repurchase or repo rate in nearly one-and-a-half months to curb inflation. The Reserve Bank policy review meeting is scheduled on Tuesday, 29th October.

The decline was mainly led by the FMCG, realty, metals, power and banking stocks. Even the mid-cap and the small-cap stocks were under pressure. Bucking the negative trend were the consumer durables, capital goods and the oil and gas stocks.

Finally, BSE Sensex closed at 20,507 down 113 points, while NSE Nifty closed at 6,101 down 44 points over the previous close.

Shares of ITC slumped by 4% to close at Rs322. Amar Ambani, Head of Research at IIFL said, “Revenues missed expectations as it recorded a modest ~9% yoy growth. Cigarette volumes also declined by ~4% yoy which were on expected lines. Net profit increased by ~21% yoy which were above our expectations. We expect ITC to witness a revenue/PAT CAGR of 17%/20% respectively over FY13-15.”

JP Associates, Bank of Baroda, ITC, PNB, Sesa Sterlite, DLF, IndusInd Bank, Tata Steel and SBI were among the major losers in the Nifty. On the other hand, LT, ONGC, HDFC, Wipro, Kotak Bank, Gail, Tata Motors, M&M and Reliance Industries were among the top gainers.

The advance-decline ratio was favoured the bears. On the BSE, 1409 stocks declined against 1004 advancing stocks, while 160 remained unchanged.

The INDIA VIX was up 4.2% at 21.29. It hit a day’s high of 21.56 and low of 20.11.

Syndicate Bank reported a 1.4% increase in net profit to Rs4.70bn for the July-September quarter. It had posted net profit of Rs4.63bn for the same period of last fiscal, 2012-13. The total income in Q2, 2013-14, increased to Rs48.5bn, from Rs45.46bn in the year-ago period. The stock closed flat at Rs73.

Shares of Dabur India slipped by 3.5% to close at Rs176.5. The company announced that it has posted a net profit of Rs2497.40mn for the quarter ended September 30, 2013 as compared to Rs2023.70mn for the quarter ended September 30, 2012.

Bharti Infratel reported a 12% jump in its net profit at Rs2.77bn for the quarter ended September 30, 2013. The stock slipped 3.5% to close at Rs152.

Globally, the Asian stocks ended higher with the Australian stock indices scaling a five-year peak after a record high finish on Wall Street. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8%. Japan’s Nikkei climbed 2.2%, clawing back most of Friday’s 2.7% drop.

Hong Kong’s Hang Seng index lagged, adding a modest 0.6% and in China stocks were flat.