A sell-off gripped the bourses with the key benchmark indices collapsing to fresh intraday lows on an across-the-board slide in share prices. Indian shares slumped today, 5 August 2011, in a global rout in equities triggered by fears of a possible US double-dip recession and worsening European sovereign-debt woes. The barometer index BSE Sensex hit its lowest level in more than 13 months below the psychological 17,000 mark. The Sensex soon regained that level. The 50-unit S&P CNX Nifty hit its lowest level in more than 13 months. The Sensex was down 671.51 points or 3.8%, up 30.76 points from the day's low and off 336.51 points from the day's high.
All the 13-sectoral indices on BSE were trading lower, with shares from metal, IT and realty worst hit. The market breadth was extremely weak. Index heavyweight Reliance Industries (RIL) lost over 3% after sliding to a 52-week low in intraday trade today, 5 August 2011. Cairn India hit 52-week low as crude oil prices tumbled. Shares of offshore oil services firms declined as a sharp decline in crude oil prices raised worries that oil firm may go slow on expansion of exploration and production activities.
Metal stocks declined on worries the global economic slowdown may crimp demand. Shares of Sterlite Industries (India) dropped over 6% after sliding to a 52-week low of Rs 141.10 in intraday trade. Telecom pivotals declined on profit booking after the recent upmove triggered after increase in call rates.
Software pivotals dropped on concerns the US economic recovery is petering out. European debt woes also weighed on IT shares. The US and Europe are the two biggest markets for the Indian IT firms. Auto shares extended Thursday's (4 August 2011) slide triggered by comments from Finance Minister Pranab Mukherjee on that day that the government may look at charging higher diesel prices for luxury cars and commercial users.
The market sentiment remains weak, with investors worried about a likely slowdown in corporate earnings growth due to higher interest rates. A number of commercial banks have raised lending rates recently after the central bank raised its key lending rate by a steeper-than-expected 50 basis points at a policy review on 26 July 2011.
Intraday volatility on the bourses was high. The market recovered soon after an initial slide caused by a setback in Asian shares. The market weakened again later, with the Sensex hitting a fresh intraday low. The market cut losses in morning trade. Volatility ruled the roost as the key benchmark indices slumped to fresh intraday lows in mid-morning trade. The market plummeted to fresh intraday low in early afternoon trade.
At 12:25 IST, the BSE Sensex was down 671.51 points or 3.8% to 17,021.67. The Sensex lost 702.27 points at the day's low of 16,990.91 in early afternoon trade, its lowest level since 10 June 2010. The index fell 335 points at the day's high of 17,358.18 in mid-morning trade.
The S&P CNX Nifty was down 204.10 points or 3.83% to 5,127.70. The Nifty hit a low of 5,116.45 in intraday trade, its lowest level since 11 June 2010.
The market breadth, indicating the overall health of the market, was extremely weak. On BSE, 2,448 shares declined while just 286 shares managed gains. A total of 68 shares remained unchanged.
The turnover on BSE amounted to Rs 1777 crore by 12:25 IST compared with Rs 1197 crore by 11:25 IST
ONGC was the lone gainer from the 30-share Sensex pack. Shares of India's largest oil exploration firm by market capitalization rose 0.6% to Rs 274.80. Reportedly the company plans to commence oil and gas production from the Krishna Godavri basin in a month and start pumping hydrocarbons from another block in the offshore region next May 2012.
Index heavyweight Reliance Industries (RIL) lost 3.28% to Rs 785.85, after sliding to a fresh 52-week low of Rs 783.35 in intraday trade today, 5 August 2011. The prized KG-D6 fields of RIL produced 31% less than previously projected natural gas output in the April-June 2011 quarter, the Oil Ministry said recently. The average gas production during April-June 2011 from KG-DWN-98/3 (KG-D6) block was 48.60 million metric standard cubic meters per day (mmscmd), less than the approved Field Development Plan (FDP) rate of 70.39 mmscmd, the ministry said.
RIL's operating profit margin (OPM) declined sharply to 12.25% in Q1 June 2011 from 16.04% in Q1 June 2010 as weak performance from the oil & gas and petrochemicals businesses offset strong performance from the refining segment. RIL's net profit rose 16.69% to Rs 5661 crore on 39.1% increase in net sales to Rs 81018 crore in Q1 June 2011 over Q1 June 2010. The result was announced on 25 July 2011.
RIL's gross refining margin (GRM) surged to $10.3 a barrel from $7.3 a barrel in Q1 June 2010. Gas production from RIL's KG-D6 field off the east coast declined 18% to 156.2 BCF in Q1 June 2011 over Q1 June 2010. Production of gas condensate from the filed jumped 81.6% to 0.21 million barrels in Q1 June 2011 over Q1 June 2010. The company said gas sales have been prioritized as per government's directive with effect from 9 May 2011.
Cairn India slipped 5.09% at Rs 292 as crude oil prices tumbled. The stock hit a low of Rs 284.45 so far during the day, which is also a 52-week low for the counter. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms such as Cairn India.
Shares of offshore oil services firms declined as a sharp decline in crude oil prices raised worries that oil firm may go slow on expansion of exploration and production activities. Aban Offshore (down 5.56%), Deep Industries (down 6.94%), Great Offshore (down 5.64%), Dolphin Offshore (down 6.27%), Shiv-Vani Oil & Gas Exploration Services (down 6.95%), Seamec (down 4.28%), and Jindal Drilling (down 1.18%), declined.
Crude-oil futures slumped 4% during Asian hours on Friday, 5 August 2011, reaching their lowest level since September 2010, as fears of a possible US double-dip recession and worsening European sovereign-debt woes fueled a global market rout. After tumbling 5.8% on Thursday, 4 August 2011, crude oil for September delivery fell another 4% to trade as low as $82.87 a barrel in electronic trading on the New York Mercantile Exchange.
Telecom pivotals declined on profit booking after the recent upmove triggered after increase in call rates. India's largest listed cellular services provider by sales Bharti Airtel lost 2.89%, extending recent losses triggered by a surprise fall in first quarter net profit on sequential basis reported by the firm during market hours on Wednesday, 3 August 2011. Bharti's consolidated net profit as per International Financial Reporting Standards (IFRS) fell 13.2% to Rs 1215.20 crore on 4.18% growth in total revenue to Rs 16974.90 crore in Q1 June 2011 over Q4 March 2011.
Bharti Airtel said income before taxes fell 17.03% to Rs 1719 crore in Q1 June 2011 over Q1 June 2010, mainly on account of higher interest outgo of Rs 344 crore (due to the Africa acquisition and 3G investments in India), and 3G license fee amortization of Rs 159 crore. The effective tax rate for Q1 increased to 29.9%, mainly due to reduction in tax holiday benefits in India, Bharti said in a statement.
The consolidated operating free cash flow was at Rs 1357 crore in Q1 June 2011. Continued robust cash generation has resulted in improvement of the Net Debt Equity ratio to 1.20 in Q1 June 2011 compared with 1.38 on 30 June 2010.
In a post result statement Sunil Bharti Mittal, Chairman & Managing Director, Bharti Airtel said, Bharti Airtel has started this fiscal year on a stable note. Revenue growth has been steady across all geographies, with Africa recording a healthy sequential growth of approximately 6%, and annual growth of 21%. In India, the company's efforts in the area of cost efficiencies have helped arrest the margin decline. The new customer facing organization in India will see more agile and responsive teams in action. This will also give a fillip to growth in value added services, broadband, digital TV and airtel money. Overall, 2011-12 promises to be an exciting year of transformation.
India's second largest listed cellular services provider by sales Reliance Communications shed 4.13%. The stock exits the BSE 30-share Sensex from Monday, 8 August 2011.
OnMobile Global slumped 16.59% after consolidated net profit fell 31.21% to Rs 12.78 crore on 9.3% rise in total income to Rs 142.21 crore in Q1 June 2011 over Q1 June 2010. The company announced Q1 results after market hours on Thursday, 4 August 2011.
Software pivotals dropped on concerns the US might fall back into recession following a deal to raise the debt ceiling, which includes severe austerity measures despite recently weak economic data. European debt woes also weighed on IT shares. The US and Europe are the two biggest markets for the Indian IT firms. India's second largest software services exporter Infosys shed 5.57% and India's third largest software services exporter Wipro declined 3.64%. India's largest software services exporter TCS lost 5.71%
The latest data showed that the manufacturing sector in the US expanded at the weakest pace in two years, US consumer spending unexpectedly fell and the US services industries grew at the slowest pace since February 2010.
Auto shares extended Thursday's (4 August 2011) slide triggered by comments from Finance Minister Pranab Mukherjee on that day that the government may look at charging higher diesel prices for luxury cars and commercial users to ensure they don't benefit from a policy designed to help the needy. Automakers are investing heavily in rolling out diesel-run vehicles to meet growing demand from consumers, who are increasingly shifting to such vehicles as diesel price is kept sharply lower than that of petrol. Oil Minister Jaipal Reddy on Thursday, 4 August 2011, said such a proposal is at an early stage and needs considerable discussion.
Mahindra & Mahindra (down 4.79%), Tata Motors (down 3.77%), Maruti Suzuki India (down 1.68%), Hero MotoCorp (down 1.59%), Bajaj Auto (down 3.35%), declined.
Mukherjee said 15% of the total diesel consumption in the country is by passenger cars.
Metal stocks declined on worries the global economic slowdown may crimp demand. LMEX, a gauge of six metals traded on London Metal Exchange, fell 1.84% to $4093.50 on Thursday, 4 August 2011.
India's largest non-ferrous metal firm by capacity Sterlite Industries (India) dropped 6.42% to Rs 141.50 after sliding to a 52-week low of Rs 139.80 in intraday trade today, 5 August 2011. Sterlite Industries (India)'s American depository receipts, or ADR plunged 6.16% to $13.11 on the New York Stock Exchange on Thursday, 4 August 2011.
India's largest private sector steel maker by sales Tata Steel dived 4.34%. The company on Thursday said it will invest 7 million pounds ($11.4 million) in its European unit to enhance welding and material handling capabilities of its mill in Hartlepool in the UK. This investment will help us retain our position as a world-leading supplier of pipes and tubes, said Ramsay Ross, a director of Tata Steel's tubes business, said in a statement.
Hindalco Industries (down 3.19%), Hindustan Zinc (down 4.21%), Jindal Saw (down 4.43%), Sesa Goa (down 5.88%), Steel Authority of India (down 3.63%), Jindal Steel & Power (down 2.97%), JSW Steel (down 2.8%) and National Aluminium Company (down 4.63%), declined.
India's largest dam builder by sales Jaiprakash Associates slumped 5.82% to Rs 59.80 after declining to a 52-week low of Rs 59.20 in intraday trade today, 5 August 2011.
Shares of pharma major Cipla fell 0.18% ahead of its Q1 results today, 5 August 2011. Cipla is seen reporting a muted 1.61% growth in net profit at Rs 261.56 crore in Q1 June 2011 over Q1 June 2010 as per average estimate of 9 brokerages. The company's top line is expected to register a decent growth on the back growth in formulations exports led by the ramping up of its Indore Special Economic Zone (SEZ) facility and on growth in domestic formulations.
The market has witnessed a steep slide recently, with investors worried that higher interest rates will crimp corporate profit growth. The Sensex tumbled 1,178.11 points or 6.24% in eight trading sessions to a six-week closing low of 17,693.18 on Thursday, 4 August 2011, from a recent high of 18,871.29 on 25 July 2011, hit by the Reserve Bank of India's (RBI) aggressive rate hike at a policy review on 26 July 2011. A number of commercial banks have raised lending rates recently after the central bank raised its key lending rate by a steeper-than-expected 50 basis points on 26 July 2011.
FIIs sold shares worth a net Rs 254.55 crore on Thursday, 4 August 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) bought shares worth Rs 316.5 crore on that day.
The Q1 June 2011 earnings season is drawing towards a close. Investors are focusing on the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when Indian firms are witnessing cost pressures amid rising interest rates and staff costs.
IL&FS Transportation Networks announces Q1 results today, 5 August 2011. M&M announces Q1 results on Monday, 8 August 2011. ABB, Tata Communications, Mahindra Satyam, GMR Infrastructure and VIP Industries announce quarterly results on 9 August 2011. Tata Power and Rural Electrification Corporation unveil Q1 results on 10 August 2011. Tata Motors, Reliance Infrastructure, Reliance Power, Castrol India and Shipping Corporation of India unveil quarterly results on 11 August 2011.
Tata Steel, Hindalco, Coal India, National Aluminium Company, Jaiprakash Associates, Unitech and HPCL unveil Q1 results on 12 August 2011. State Bank of India, Aditya Birla Nuvo and Shipping Corporation of India unveil Q1 results on 13 August 2011.
Congress president Sonia Gandhi has notified a four-member committee, including AICC general secretary Rahul Gandhi, to oversee the functioning of the party while she recuperates from a surgery abroad. Sonia Gandhi on Thursday underwent successful surgery in a New York hospital for an undisclosed ailment. She is likely to be out of the country for three weeks.
Meanwhile, banking operations across the country are likely to be affected today, 5 August 2011, due to a day-long strike by employees protesting against the proposed banking sector reforms. Crucial banking arms such as clearing houses, forex departments, call money markets and the Reserve Bank offices too could remain closed.
The Reserve Bank of India (RBI) on Tuesday, 2 August 2011, tightened its rules on sales of derivative products, in a move aimed at preventing the mis-selling of these complex products to local firms. RBI said in a notification that no bank can be a market maker in a product that it can't price independently, even if it covers the risk from the deal with another bank immediately. A market maker is a financial middle-man, typically a bank, that helps the price discovery process and adds liquidity to the market by quoting both bid and ask prices for financial products.
The new rules prevent foreign banks from being market makers in a product if they can't price it locally. Banks must also now make sure that officials to whom they sell derivative products are backed by the board to execute such transactions, the RBI said. RBI didn't specify what derivatives are covered by the new rules.
Monsoon rains are likely to pick up over most parts of the country in the next four to five days, after sharply slowing for two consecutive weeks during the most important sowing period for summer crops. A news agency on Thursday, 4 August 2011, quoted an unnamed senior official with the state-run India Meteorological Department (IMD) as saying that the country's important rice-and oilseed-growing regions, the eastern and central parts, are likely to receive more rains in the near future after getting intermittent showers in the past few days.
Rains were 22% below normal in the week to 3 August 2011, recording marginal improvement from 23% below average showers in the previous week. Total rainfall since the beginning of the June-September monsoon season has been 6% below average. Rainfall has been normal or above in 73% of the country so far this season, while 27% of the country is facing a deficit. In some parts of eastern India such as Orissa, Bihar and Jharkhand, rainfall is below normal, but in the key rice-growing state of West Bengal rainfall is above normal. A rainfall deficit in the southern state of Andhra Pradesh, a top rice-producer, has largely been bridged.
In the northern grain bowl region of Punjab, the monsoon rain deficit is 26%. However, since most farmland in Punjab is irrigated, rice production may not be adversely affected in the state. But, low rainfall in the western regions is likely to adversely affect the output of groundnut, the second biggest summer-sown oilseed crop after soybean. In Gujarat, rainfall is 37% below average.
Food price index rose 8.04% and the fuel price index climbed 12.12% in the year to 23 July 2011, government data on Thursday showed. In the previous week, annual food and fuel inflation stood at 7.33% and 12.12%, respectively. The primary articles price index was up 10.99%, compared with an annual rise of 10.49% a week earlier.
The services sector expanded at its fastest clip in three months in July 2011, driven by solid expansion of new business, but input prices also rose faster, a survey showed on Wednesday, 3 August 2011. The HSBC Markit Business Activity Index, based on a survey of around 400 companies, rose to 58.2 in July from 56.1 in June, staying above the 50 mark that separates growth from contraction for the 27th consecutive month. The new business sub-index recorded its strongest growth since February, rising to 59.3 from 57.1, as demand improved and firms found new customers.
The economy will grow at 8.2% in the year to March 2012, but it faces a challenge in achieving the fiscal targets set in the annual budget, a top economic advisory panel said in a report released early this week. Headline inflation would remain close to 9% till October, before beginning to ease, and would be at 6.5% in March, the prime minister's Economic Advisory Council said.
Exports grew by an impressive 46% to $29 billion in June 2011, despite uncertainty in the US and European markets, the latest data showed. Merchandise exports had aggregated to $20 billion in June 2010. During the April-June quarter, overseas shipments grew by 46% to $79 billion, according to Commerce Ministry data released on Monday, 1 August 2011. Though imports grew by 42% to $37 billion in June, the trade deficit of $7.6 billion was almost half the level of $15 billion seen in May, lessening concerns over the country's balance of payments situation.
Growth in manufacturing sector fell for the third month in a row in July as a long series of interest rate hikes and faltering global demand weighed on new orders and output growth, a survey showed on Monday, 1 August 2011. The HSBC Markit Business Activity Index, based on a survey of around 500 companies, fell to a 20-month low of 53.6 in July from 55.3 in June, though it remained above the 50 mark that separates growth from contraction for the 28th consecutive month.
The Reserve Bank of India (RBI) raised its key lending rates by 50 basis points at a policy review on 26 July 2011, to tame high inflation. The RBI has raised its end March 2012 inflation target to 7% as against the previous estimate of 6%, saying inflation has been higher than its expectations. It kept its economic growth forecast of 8% for this fiscal year. The RBI revised downwards non-food bank credit growth projection to 18% for the year ending March 2012 (FY 2012) from 19% earlier.
Although the impact of past monetary policy actions is still getting transmitted, considering the overall growth and inflation scenario, there is a need to persevere with the anti-inflationary stance, the RBI said. Going forward, the monetary policy stance will depend on the evolving inflation trajectory, which, in turn, will be determined by trends in domestic growth and global commodity prices, the RBI said. A change in stance will be motivated by signs of a sustainable downturn in inflation, it added.
The uncertain global macro-economic environment poses a challenge for the domestic economy from the perspective of financing the current account deficit, RBI said. In this context, the composition of capital flows remains a concern. In recent months, some shift in composition of capital flows towards foreign direct investment (FDI) has been observed. This trend needs to be reinforced through policy actions to improve the quality of financing of the current account deficit, RBI said.
Asian shares nose-dived on Friday, 5 August 2011, joining a global rout in equities triggered by growing concerns that the US might fall back into recession following a deal to raise the debt ceiling, which includes severe austerity measures despite recently weak economic data. The key benchmark indices in South Korea, Singapore, Indonesia, Hong Kong, Taiwan, China and Japan were down by between 1.99% to 5.58%. Euro-zone debt worries also weighed on markets.
A series of weak economic data points has heightened growth concerns recently and, amid fragmented policy response to current global market issues, European shares tumbled and US stocks fell into correction mode on Thursday, 4 August 2011. The Dow Jones Industrial Average slumped 512.46 points or 4.31% at 11,383.98, its biggest one-day fall since December 2008. The S&P 500 fell 60.21 points or 4.78% at 1,200.13 and the Nasdaq Composite index tanked 136.68 points or 5.08% at 2,556.39.
Bank of New York Mellon, citing an overwhelming influx of cash deposits from large clients in reaction to world economic events, on Thursday 4 August 2011, said it will begin passing along some insurance fees on selected accounts that exceed a depositor's prior monthly average. The bank, one of the largest custodial banks in the world, said it would impose a fee on above-average deposits made by institutional customers, because the deposits could weaken its capital position and raise its deposit insurance premiums.
The European Central Bank (ECB) on Thursday left its key lending rate unchanged at 1.5% amid market turmoil, as widely expected by markets and economists. ECB President Jean-Claude Trichet indicated that the central bank has resumed bond purchases while highlighting downside risks to economic growth as the region struggles with sovereign-debt issues.
The Bank of England (BOE) on Thursday kept its monetary policy unchanged as the central bank policymakers continued to be trapped between higher-than-normal inflation and a slowing British economy. The nine-member Monetary Policy Committee left the bank's key lending rate steady at a record low 0.5% and left the size of its asset-purchase program unchanged.
The Bank of Japan announced additional monetary easing Thursday, 4 August 2011, while keeping its policy interest-rate target range unchanged at 0 to 0.1%.
Trading in US index futures indicated that the Dow could fall 62 points at the opening bell on Friday, 5 August 2011. The US government's key monthly jobs report for July 2011 is due today, 5 August 2011, and will be closely watched by investors. Economists are expecting that the US likely gained 75,000 jobs last month.
Data recently showed that US consumer confidence dropped to its lowest level in more than two months.
All the 13-sectoral indices on BSE were trading lower, with shares from metal, IT and realty worst hit. The market breadth was extremely weak. Index heavyweight Reliance Industries (RIL) lost over 3% after sliding to a 52-week low in intraday trade today, 5 August 2011. Cairn India hit 52-week low as crude oil prices tumbled. Shares of offshore oil services firms declined as a sharp decline in crude oil prices raised worries that oil firm may go slow on expansion of exploration and production activities.
Metal stocks declined on worries the global economic slowdown may crimp demand. Shares of Sterlite Industries (India) dropped over 6% after sliding to a 52-week low of Rs 141.10 in intraday trade. Telecom pivotals declined on profit booking after the recent upmove triggered after increase in call rates.
Software pivotals dropped on concerns the US economic recovery is petering out. European debt woes also weighed on IT shares. The US and Europe are the two biggest markets for the Indian IT firms. Auto shares extended Thursday's (4 August 2011) slide triggered by comments from Finance Minister Pranab Mukherjee on that day that the government may look at charging higher diesel prices for luxury cars and commercial users.
The market sentiment remains weak, with investors worried about a likely slowdown in corporate earnings growth due to higher interest rates. A number of commercial banks have raised lending rates recently after the central bank raised its key lending rate by a steeper-than-expected 50 basis points at a policy review on 26 July 2011.
Intraday volatility on the bourses was high. The market recovered soon after an initial slide caused by a setback in Asian shares. The market weakened again later, with the Sensex hitting a fresh intraday low. The market cut losses in morning trade. Volatility ruled the roost as the key benchmark indices slumped to fresh intraday lows in mid-morning trade. The market plummeted to fresh intraday low in early afternoon trade.
At 12:25 IST, the BSE Sensex was down 671.51 points or 3.8% to 17,021.67. The Sensex lost 702.27 points at the day's low of 16,990.91 in early afternoon trade, its lowest level since 10 June 2010. The index fell 335 points at the day's high of 17,358.18 in mid-morning trade.
The S&P CNX Nifty was down 204.10 points or 3.83% to 5,127.70. The Nifty hit a low of 5,116.45 in intraday trade, its lowest level since 11 June 2010.
The market breadth, indicating the overall health of the market, was extremely weak. On BSE, 2,448 shares declined while just 286 shares managed gains. A total of 68 shares remained unchanged.
The turnover on BSE amounted to Rs 1777 crore by 12:25 IST compared with Rs 1197 crore by 11:25 IST
ONGC was the lone gainer from the 30-share Sensex pack. Shares of India's largest oil exploration firm by market capitalization rose 0.6% to Rs 274.80. Reportedly the company plans to commence oil and gas production from the Krishna Godavri basin in a month and start pumping hydrocarbons from another block in the offshore region next May 2012.
Index heavyweight Reliance Industries (RIL) lost 3.28% to Rs 785.85, after sliding to a fresh 52-week low of Rs 783.35 in intraday trade today, 5 August 2011. The prized KG-D6 fields of RIL produced 31% less than previously projected natural gas output in the April-June 2011 quarter, the Oil Ministry said recently. The average gas production during April-June 2011 from KG-DWN-98/3 (KG-D6) block was 48.60 million metric standard cubic meters per day (mmscmd), less than the approved Field Development Plan (FDP) rate of 70.39 mmscmd, the ministry said.
RIL's operating profit margin (OPM) declined sharply to 12.25% in Q1 June 2011 from 16.04% in Q1 June 2010 as weak performance from the oil & gas and petrochemicals businesses offset strong performance from the refining segment. RIL's net profit rose 16.69% to Rs 5661 crore on 39.1% increase in net sales to Rs 81018 crore in Q1 June 2011 over Q1 June 2010. The result was announced on 25 July 2011.
RIL's gross refining margin (GRM) surged to $10.3 a barrel from $7.3 a barrel in Q1 June 2010. Gas production from RIL's KG-D6 field off the east coast declined 18% to 156.2 BCF in Q1 June 2011 over Q1 June 2010. Production of gas condensate from the filed jumped 81.6% to 0.21 million barrels in Q1 June 2011 over Q1 June 2010. The company said gas sales have been prioritized as per government's directive with effect from 9 May 2011.
Cairn India slipped 5.09% at Rs 292 as crude oil prices tumbled. The stock hit a low of Rs 284.45 so far during the day, which is also a 52-week low for the counter. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms such as Cairn India.
Shares of offshore oil services firms declined as a sharp decline in crude oil prices raised worries that oil firm may go slow on expansion of exploration and production activities. Aban Offshore (down 5.56%), Deep Industries (down 6.94%), Great Offshore (down 5.64%), Dolphin Offshore (down 6.27%), Shiv-Vani Oil & Gas Exploration Services (down 6.95%), Seamec (down 4.28%), and Jindal Drilling (down 1.18%), declined.
Crude-oil futures slumped 4% during Asian hours on Friday, 5 August 2011, reaching their lowest level since September 2010, as fears of a possible US double-dip recession and worsening European sovereign-debt woes fueled a global market rout. After tumbling 5.8% on Thursday, 4 August 2011, crude oil for September delivery fell another 4% to trade as low as $82.87 a barrel in electronic trading on the New York Mercantile Exchange.
Telecom pivotals declined on profit booking after the recent upmove triggered after increase in call rates. India's largest listed cellular services provider by sales Bharti Airtel lost 2.89%, extending recent losses triggered by a surprise fall in first quarter net profit on sequential basis reported by the firm during market hours on Wednesday, 3 August 2011. Bharti's consolidated net profit as per International Financial Reporting Standards (IFRS) fell 13.2% to Rs 1215.20 crore on 4.18% growth in total revenue to Rs 16974.90 crore in Q1 June 2011 over Q4 March 2011.
Bharti Airtel said income before taxes fell 17.03% to Rs 1719 crore in Q1 June 2011 over Q1 June 2010, mainly on account of higher interest outgo of Rs 344 crore (due to the Africa acquisition and 3G investments in India), and 3G license fee amortization of Rs 159 crore. The effective tax rate for Q1 increased to 29.9%, mainly due to reduction in tax holiday benefits in India, Bharti said in a statement.
The consolidated operating free cash flow was at Rs 1357 crore in Q1 June 2011. Continued robust cash generation has resulted in improvement of the Net Debt Equity ratio to 1.20 in Q1 June 2011 compared with 1.38 on 30 June 2010.
In a post result statement Sunil Bharti Mittal, Chairman & Managing Director, Bharti Airtel said, Bharti Airtel has started this fiscal year on a stable note. Revenue growth has been steady across all geographies, with Africa recording a healthy sequential growth of approximately 6%, and annual growth of 21%. In India, the company's efforts in the area of cost efficiencies have helped arrest the margin decline. The new customer facing organization in India will see more agile and responsive teams in action. This will also give a fillip to growth in value added services, broadband, digital TV and airtel money. Overall, 2011-12 promises to be an exciting year of transformation.
India's second largest listed cellular services provider by sales Reliance Communications shed 4.13%. The stock exits the BSE 30-share Sensex from Monday, 8 August 2011.
OnMobile Global slumped 16.59% after consolidated net profit fell 31.21% to Rs 12.78 crore on 9.3% rise in total income to Rs 142.21 crore in Q1 June 2011 over Q1 June 2010. The company announced Q1 results after market hours on Thursday, 4 August 2011.
Software pivotals dropped on concerns the US might fall back into recession following a deal to raise the debt ceiling, which includes severe austerity measures despite recently weak economic data. European debt woes also weighed on IT shares. The US and Europe are the two biggest markets for the Indian IT firms. India's second largest software services exporter Infosys shed 5.57% and India's third largest software services exporter Wipro declined 3.64%. India's largest software services exporter TCS lost 5.71%
The latest data showed that the manufacturing sector in the US expanded at the weakest pace in two years, US consumer spending unexpectedly fell and the US services industries grew at the slowest pace since February 2010.
Auto shares extended Thursday's (4 August 2011) slide triggered by comments from Finance Minister Pranab Mukherjee on that day that the government may look at charging higher diesel prices for luxury cars and commercial users to ensure they don't benefit from a policy designed to help the needy. Automakers are investing heavily in rolling out diesel-run vehicles to meet growing demand from consumers, who are increasingly shifting to such vehicles as diesel price is kept sharply lower than that of petrol. Oil Minister Jaipal Reddy on Thursday, 4 August 2011, said such a proposal is at an early stage and needs considerable discussion.
Mahindra & Mahindra (down 4.79%), Tata Motors (down 3.77%), Maruti Suzuki India (down 1.68%), Hero MotoCorp (down 1.59%), Bajaj Auto (down 3.35%), declined.
Mukherjee said 15% of the total diesel consumption in the country is by passenger cars.
Metal stocks declined on worries the global economic slowdown may crimp demand. LMEX, a gauge of six metals traded on London Metal Exchange, fell 1.84% to $4093.50 on Thursday, 4 August 2011.
India's largest non-ferrous metal firm by capacity Sterlite Industries (India) dropped 6.42% to Rs 141.50 after sliding to a 52-week low of Rs 139.80 in intraday trade today, 5 August 2011. Sterlite Industries (India)'s American depository receipts, or ADR plunged 6.16% to $13.11 on the New York Stock Exchange on Thursday, 4 August 2011.
India's largest private sector steel maker by sales Tata Steel dived 4.34%. The company on Thursday said it will invest 7 million pounds ($11.4 million) in its European unit to enhance welding and material handling capabilities of its mill in Hartlepool in the UK. This investment will help us retain our position as a world-leading supplier of pipes and tubes, said Ramsay Ross, a director of Tata Steel's tubes business, said in a statement.
Hindalco Industries (down 3.19%), Hindustan Zinc (down 4.21%), Jindal Saw (down 4.43%), Sesa Goa (down 5.88%), Steel Authority of India (down 3.63%), Jindal Steel & Power (down 2.97%), JSW Steel (down 2.8%) and National Aluminium Company (down 4.63%), declined.
India's largest dam builder by sales Jaiprakash Associates slumped 5.82% to Rs 59.80 after declining to a 52-week low of Rs 59.20 in intraday trade today, 5 August 2011.
Shares of pharma major Cipla fell 0.18% ahead of its Q1 results today, 5 August 2011. Cipla is seen reporting a muted 1.61% growth in net profit at Rs 261.56 crore in Q1 June 2011 over Q1 June 2010 as per average estimate of 9 brokerages. The company's top line is expected to register a decent growth on the back growth in formulations exports led by the ramping up of its Indore Special Economic Zone (SEZ) facility and on growth in domestic formulations.
The market has witnessed a steep slide recently, with investors worried that higher interest rates will crimp corporate profit growth. The Sensex tumbled 1,178.11 points or 6.24% in eight trading sessions to a six-week closing low of 17,693.18 on Thursday, 4 August 2011, from a recent high of 18,871.29 on 25 July 2011, hit by the Reserve Bank of India's (RBI) aggressive rate hike at a policy review on 26 July 2011. A number of commercial banks have raised lending rates recently after the central bank raised its key lending rate by a steeper-than-expected 50 basis points on 26 July 2011.
FIIs sold shares worth a net Rs 254.55 crore on Thursday, 4 August 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) bought shares worth Rs 316.5 crore on that day.
The Q1 June 2011 earnings season is drawing towards a close. Investors are focusing on the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when Indian firms are witnessing cost pressures amid rising interest rates and staff costs.
IL&FS Transportation Networks announces Q1 results today, 5 August 2011. M&M announces Q1 results on Monday, 8 August 2011. ABB, Tata Communications, Mahindra Satyam, GMR Infrastructure and VIP Industries announce quarterly results on 9 August 2011. Tata Power and Rural Electrification Corporation unveil Q1 results on 10 August 2011. Tata Motors, Reliance Infrastructure, Reliance Power, Castrol India and Shipping Corporation of India unveil quarterly results on 11 August 2011.
Tata Steel, Hindalco, Coal India, National Aluminium Company, Jaiprakash Associates, Unitech and HPCL unveil Q1 results on 12 August 2011. State Bank of India, Aditya Birla Nuvo and Shipping Corporation of India unveil Q1 results on 13 August 2011.
Congress president Sonia Gandhi has notified a four-member committee, including AICC general secretary Rahul Gandhi, to oversee the functioning of the party while she recuperates from a surgery abroad. Sonia Gandhi on Thursday underwent successful surgery in a New York hospital for an undisclosed ailment. She is likely to be out of the country for three weeks.
Meanwhile, banking operations across the country are likely to be affected today, 5 August 2011, due to a day-long strike by employees protesting against the proposed banking sector reforms. Crucial banking arms such as clearing houses, forex departments, call money markets and the Reserve Bank offices too could remain closed.
The Reserve Bank of India (RBI) on Tuesday, 2 August 2011, tightened its rules on sales of derivative products, in a move aimed at preventing the mis-selling of these complex products to local firms. RBI said in a notification that no bank can be a market maker in a product that it can't price independently, even if it covers the risk from the deal with another bank immediately. A market maker is a financial middle-man, typically a bank, that helps the price discovery process and adds liquidity to the market by quoting both bid and ask prices for financial products.
The new rules prevent foreign banks from being market makers in a product if they can't price it locally. Banks must also now make sure that officials to whom they sell derivative products are backed by the board to execute such transactions, the RBI said. RBI didn't specify what derivatives are covered by the new rules.
Monsoon rains are likely to pick up over most parts of the country in the next four to five days, after sharply slowing for two consecutive weeks during the most important sowing period for summer crops. A news agency on Thursday, 4 August 2011, quoted an unnamed senior official with the state-run India Meteorological Department (IMD) as saying that the country's important rice-and oilseed-growing regions, the eastern and central parts, are likely to receive more rains in the near future after getting intermittent showers in the past few days.
Rains were 22% below normal in the week to 3 August 2011, recording marginal improvement from 23% below average showers in the previous week. Total rainfall since the beginning of the June-September monsoon season has been 6% below average. Rainfall has been normal or above in 73% of the country so far this season, while 27% of the country is facing a deficit. In some parts of eastern India such as Orissa, Bihar and Jharkhand, rainfall is below normal, but in the key rice-growing state of West Bengal rainfall is above normal. A rainfall deficit in the southern state of Andhra Pradesh, a top rice-producer, has largely been bridged.
In the northern grain bowl region of Punjab, the monsoon rain deficit is 26%. However, since most farmland in Punjab is irrigated, rice production may not be adversely affected in the state. But, low rainfall in the western regions is likely to adversely affect the output of groundnut, the second biggest summer-sown oilseed crop after soybean. In Gujarat, rainfall is 37% below average.
Food price index rose 8.04% and the fuel price index climbed 12.12% in the year to 23 July 2011, government data on Thursday showed. In the previous week, annual food and fuel inflation stood at 7.33% and 12.12%, respectively. The primary articles price index was up 10.99%, compared with an annual rise of 10.49% a week earlier.
The services sector expanded at its fastest clip in three months in July 2011, driven by solid expansion of new business, but input prices also rose faster, a survey showed on Wednesday, 3 August 2011. The HSBC Markit Business Activity Index, based on a survey of around 400 companies, rose to 58.2 in July from 56.1 in June, staying above the 50 mark that separates growth from contraction for the 27th consecutive month. The new business sub-index recorded its strongest growth since February, rising to 59.3 from 57.1, as demand improved and firms found new customers.
The economy will grow at 8.2% in the year to March 2012, but it faces a challenge in achieving the fiscal targets set in the annual budget, a top economic advisory panel said in a report released early this week. Headline inflation would remain close to 9% till October, before beginning to ease, and would be at 6.5% in March, the prime minister's Economic Advisory Council said.
Exports grew by an impressive 46% to $29 billion in June 2011, despite uncertainty in the US and European markets, the latest data showed. Merchandise exports had aggregated to $20 billion in June 2010. During the April-June quarter, overseas shipments grew by 46% to $79 billion, according to Commerce Ministry data released on Monday, 1 August 2011. Though imports grew by 42% to $37 billion in June, the trade deficit of $7.6 billion was almost half the level of $15 billion seen in May, lessening concerns over the country's balance of payments situation.
Growth in manufacturing sector fell for the third month in a row in July as a long series of interest rate hikes and faltering global demand weighed on new orders and output growth, a survey showed on Monday, 1 August 2011. The HSBC Markit Business Activity Index, based on a survey of around 500 companies, fell to a 20-month low of 53.6 in July from 55.3 in June, though it remained above the 50 mark that separates growth from contraction for the 28th consecutive month.
The Reserve Bank of India (RBI) raised its key lending rates by 50 basis points at a policy review on 26 July 2011, to tame high inflation. The RBI has raised its end March 2012 inflation target to 7% as against the previous estimate of 6%, saying inflation has been higher than its expectations. It kept its economic growth forecast of 8% for this fiscal year. The RBI revised downwards non-food bank credit growth projection to 18% for the year ending March 2012 (FY 2012) from 19% earlier.
Although the impact of past monetary policy actions is still getting transmitted, considering the overall growth and inflation scenario, there is a need to persevere with the anti-inflationary stance, the RBI said. Going forward, the monetary policy stance will depend on the evolving inflation trajectory, which, in turn, will be determined by trends in domestic growth and global commodity prices, the RBI said. A change in stance will be motivated by signs of a sustainable downturn in inflation, it added.
The uncertain global macro-economic environment poses a challenge for the domestic economy from the perspective of financing the current account deficit, RBI said. In this context, the composition of capital flows remains a concern. In recent months, some shift in composition of capital flows towards foreign direct investment (FDI) has been observed. This trend needs to be reinforced through policy actions to improve the quality of financing of the current account deficit, RBI said.
Asian shares nose-dived on Friday, 5 August 2011, joining a global rout in equities triggered by growing concerns that the US might fall back into recession following a deal to raise the debt ceiling, which includes severe austerity measures despite recently weak economic data. The key benchmark indices in South Korea, Singapore, Indonesia, Hong Kong, Taiwan, China and Japan were down by between 1.99% to 5.58%. Euro-zone debt worries also weighed on markets.
A series of weak economic data points has heightened growth concerns recently and, amid fragmented policy response to current global market issues, European shares tumbled and US stocks fell into correction mode on Thursday, 4 August 2011. The Dow Jones Industrial Average slumped 512.46 points or 4.31% at 11,383.98, its biggest one-day fall since December 2008. The S&P 500 fell 60.21 points or 4.78% at 1,200.13 and the Nasdaq Composite index tanked 136.68 points or 5.08% at 2,556.39.
Bank of New York Mellon, citing an overwhelming influx of cash deposits from large clients in reaction to world economic events, on Thursday 4 August 2011, said it will begin passing along some insurance fees on selected accounts that exceed a depositor's prior monthly average. The bank, one of the largest custodial banks in the world, said it would impose a fee on above-average deposits made by institutional customers, because the deposits could weaken its capital position and raise its deposit insurance premiums.
The European Central Bank (ECB) on Thursday left its key lending rate unchanged at 1.5% amid market turmoil, as widely expected by markets and economists. ECB President Jean-Claude Trichet indicated that the central bank has resumed bond purchases while highlighting downside risks to economic growth as the region struggles with sovereign-debt issues.
The Bank of England (BOE) on Thursday kept its monetary policy unchanged as the central bank policymakers continued to be trapped between higher-than-normal inflation and a slowing British economy. The nine-member Monetary Policy Committee left the bank's key lending rate steady at a record low 0.5% and left the size of its asset-purchase program unchanged.
The Bank of Japan announced additional monetary easing Thursday, 4 August 2011, while keeping its policy interest-rate target range unchanged at 0 to 0.1%.
Trading in US index futures indicated that the Dow could fall 62 points at the opening bell on Friday, 5 August 2011. The US government's key monthly jobs report for July 2011 is due today, 5 August 2011, and will be closely watched by investors. Economists are expecting that the US likely gained 75,000 jobs last month.
Data recently showed that US consumer confidence dropped to its lowest level in more than two months.
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