Volatility ruled the roost as the key benchmark indices once again weakened in mid-afternoon trade on worries about global economic growth. The barometer index BSE Sensex was below the psychological 18,000 mark after regaining that level briefly in afternoon trade. The Sensex was down 179.05 points or 0.99%, up close to 70 points from the day's low and off close to 75 points from the day's high. The market breadth was weak.
Index heavyweights, Reliance Industries (RIL), Larsen & Toubro (L&T) and ICICI Bank, declined. Bharti Airtel fell after the company reported a surprise fall in first quarter net profit on sequential basis. Bhel hit 52 week low. Other capital goods stocks declined. Auto stocks were mixed.
The market sentiment remains weak, with investors worried that higher interest rates will crimp corporate profit growth. A number of commercial banks have raised lending rates recently after the Reserve Bank of India (RBI) raised its key lending rate by 50 basis points at a policy review early last week.
The market tumbled to 5-1/2-week low at the onset of trading session on weak Asian stocks. The market trimmed losses in morning trade. High intraday volatility was witnessed as key benchmark indices weakened once again after hitting fresh intraday highs in morning trade. The market tumbled to fresh 5-1/2-week low in early afternoon trade. Key benchmark indices sharply pared losses in afternoon trade as US index futures rose. Volatility ruled the roost as the key benchmark indices once again weakened in mid-afternoon trade
At 14:20 IST, the BSE Sensex was down 179.05 points or 0.99% to 17,930.84. The Sensex fell 104.13 points at the day's high of 18,005.76 in afternoon trade. The index dropped 250.39 points at the day's low of 17,859.50 in early afternoon trade, its lowest level since 24 June 2011.
The S&P CNX Nifty was down 58.40 points or 1.07% to 5,398.15. The Nifty hit low of 5,378.85 in intraday trade, its lowest level since 24 June 2011.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,837 shares fell and 900 shares rose. A total of 116 shares remained unchanged.
From the 30 share Sensex pack, 23 stocks fell and the rest rose. Reliance Infrastructure, ITC and ONGC rose by between 0.54% to 2.09%. DLF, Jindal Steel & Power and ICICI Bank fell by between 2.42% to 3.01%.
Index heavyweight Reliance Industries (RIL) fell 0.79% to Rs 828.50. The stock was volatile. The stock hit low of Rs 824 and high of Rs 836 so far during the day. The stock had it a 52-week low of Rs 818.15 on Tuesday, 2 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 on Tuesday. 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.
India's largest listed telecom operator by sales Bharti Airtel shed 1.68% to Rs 424.80 after the company reported a surprise fall in first quarter net profit on sequential basis. Nevertheless, the stock came off the day's low of Rs 413.10. 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. The result was announced during trading hours today.
Bharti's consolidated profit was seen rising 8.21% to Rs 1515.81 crore on 3.83% growth in revenue to Rs 16888.87 crore in Q1 June 2011 over Q4 March 2011 according to average estimate of 12 brokerages.
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.
Capital goods stocks fell in a weak market. State-run power equipment maker Bharat Heavy Electricals (Bhel) fell 0.51% to Rs 1805.20. The scrip extended recent sharp losses triggered by disappointing Q1 results. The stock hit 52-week low of Rs 1786 in intraday trade today. The company's net profit rose 22.15% to Rs 815.51 crore on 9.97% increase in net sales to Rs 7125.68 crore in Q1 June 2011 over Q1 June 2010. The net profit was boosted by a steep 52.12% jump in non-operational income to Rs 248.65 crore in Q1 June 2011 over Q1 June 2010. The result was announced on 26 July 2011.
The top line growth fell short of market expectations. Analysts were expecting a much stronger revenue growth in Q1 June 2011 from Bhel on expectations of a strong execution of the large order book of the power equipment major. The company's outstanding order book was Rs 159600 crore as on 30 June 2011.
Engineering & construction bellwether Larsen & Toubro (L&T) fell 4.24%, with the stock falling for the second straight day. The company's unit L&T Finance Holdings has priced its recently concluded initial public offer (IPO) at Rs 52 a share, near the lower end of the Rs 51-59 price band. The issue closed on Friday, 29 July 2011. The IPO was subscribed 5.34 times. The IPO is an important part of Larsen & Toubro's plan to spin off some of its non-core businesses into self-sustaining units with independent access to capital markets.
Among other capital goods stocks, ABB, BEML, Siemens and Thermax shed by between 0.25% to 3.83%.
Auto stocks were mixed after mixed vehicle sales data for July 2011 released recently by individual auto firms. India's largest truck maker by sales Tata Motors fell 2.92%, with the stock falling for the second straight day on weak July 2011 vehicle sales. The company's total sales fell 6% to 63,761 units in July 2011 over July 2010. Tata Motors' domestic sales of Tata commercial and passenger vehicles fell 9% to 57,990 in July 2011 over July 2010. The company's commercial vehicle sales increased 14% to 40,798 units. LCV sales were 24,962 units, a growth of 22% over July last year. M&HCV sales stood at 15,836 units, a growth of 4% over July last year. The monthly sales data was released during trading hours on Monday, 1 August 2011.
Tata Motors' domestic car and sport-utility vehicle sales plunged 38% to 17,192 units in July 2011 over July 2010.
Tata Motors plans to restructure its local dealership network for its passenger vehicles this year in a bid to boost sales. The company plans to set up 300 dealerships specifically for its Nano minicar as well as 100 for its utility vehicles such as the Aria and Safari by the end of March 2012. The company had 250 full-range dealerships as of April 2011. Tata Motors today, 2 August 2011, launched a new version of the Aria, which will be sold in three variants priced between Rs 11.6 lakh and Rs 14.3 lakh.
Utility vehicles and tractors major Mahindra & Mahindra (M&M) fell 2.59%, with the stock falling for the second straight day. The company's total automobile sales jumped 41% to 39,633 units in July 2011 over July 2010. Domestic sales increased 42% to 37,323 units and exports rose 32.30% to 2310 units in July 2011 over July 2010. The Verito sedan registered a strong growth of 117% having clocked 1630 units in July 2011, as against 752 units in July 2010, maintaining its upward growth trend since Mahindra took over the brand.
The Passenger Vehicles segment (which includes utility vehicles and Verito) registered a growth of 35%, having sold 17312 units in July 2011, as against 12825 units during July 2010. The 4 wheeler commercial segment which includes the passenger and load categories has registered a phenomenal growth of 91%. Speaking on the monthly sales data, Rajesh Jejurikar, Chief Executive, Automotive Division, Mahindra & Mahindra said, We are delighted with the 41% growth in our Automotive Business in July 2011 and the record for highest ever sales. All our brands have been doing very well and Verito continues its very strong demand momentum. The monthly sales data was released during trading hours on Monday, 1 August 2011.
India's largest car maker by sales Maruti Suzuki India rose 0.35%, reversing initial losses. The company announced during market hours on Monday, 1 August 2011, that total sales fell 25.3% to 73,500 units in July 2011 over July 2010. The company said sales was negatively impacted to the extent of about 17,000 units due to discontinuation of old Swift and due shifting of Swift Dzire from Manesar plant to Gurgaon plant. The company said new Swift being manufactured at the Manesar plant will be launched nationally in mid-August 2011.
Hero MotoCorp rose 0.69%, reversing initial losses. The company's total motorcycle sales rose 14.82% to 4.91 lakh units in July 2011 over July 2010. Anil Dua, Sr. Vice-President (Marketing & Sales), Hero MotoCorp said the good numbers of July 2011 have come about despite constraints on supply from the company's Haridwar plant due to 'Kawar' movement in the region during the month. The company had to keep the Haridwar plant closed for a few days in July 2011 due to this reason. Dua said the company is looking to ride the current buoyancy in sales into the festive season by launching the company's new identity, innovative products and engaging campaigns.
Hero MotoCorp came into being last week after the company received the necessary statutory approval from the Registrar of Companies (RoC) for the changeover to the new name. As a next step, Hero MotoCorp will unveil its new global brand identity in London on 9 August 2011. Wolff Olins, a part of the Omnicom group, had been engaged to work on the new brand identity, including the brand architecture, brand name, brand logo and brand positioning. The company has also roped in Law & Kenneth (L&K) as a creative partner to give shape to the communication for launching and establishing the new brand.
Bajaj Auto fell 1.72%. The company announced during market hours on Tuesday that total sales rose 14% to 3.63 lakh units in July 2011 over July 2010. Motorcycle sales rose 14% to 3.18 lakh units and commercial vehicles sales rose 18% to 45,617 units. The company said it clocked record 3-wheeler sales in July 2011. The company's exports jumped 35% to 1.43 lakh units in July 2011 over July 2010.
TVS Motor Company rose 0.57% on strong Q1 results. Net profit surged 45.7% to Rs 58.80 crore on 24.7% rise in net sales to Rs 1707.27 crore in Q1 June 2011 over Q1 June 2010. The result was announced after trading hours on Friday, 29 July 2011. The company on Monday, 1 August 2011, reported a 14% growth in total sales to 1.89 lakh units in July 2011 over July 2010. Scooter sales grew 22% to 49,333 units, while motorcycle sales increased 15% to 70,170 units.
ACC declined 1.32%, after the stock turned ex-dividend today, 3 August 2011, for interim dividend of Rs 11 per share for the year ending December 2011.
Borosil Glass Works declined 1.89%, after the stock turned ex-dividend today, 3 August 2011, for dividend of Rs 15 per share for the year ended March 2011.
Investors' focus continues on Q1 corporate earnings. 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.
United Spirits unveil Q1 results today, 3 August 2011. Adani Power, Mundra Port And Special Economic Zone and Indian Hotels announce Q1 results on Thursday, 4 August 2011. Cipla and IL&FS Transportation Networks are set to announce Q1 results on Friday, 5 August 2011.
M&M announces Q1 results on 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, Castrol India and Shipping Corporation of India unveil quarterly results on 11 August 2011. Tata Steel, Hindalco, Coal India, National Aluminium Company and HPCL unveil Q1 results on 12 August 2011. Aditya Birla Nuvo unveils Q1 results on 13 August 2011.
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.
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.
European stock markets fell sharply on Wednesday, 3 August 2011, with Societe Generale leading the decline after the French bank warned that its 2012 earnings target will be hard to achieve. Key benchmark indices in UK, France and Germany were down by 0.32% to 0.93%.
European debt worries came back to the fore on Tuesday, 2 August 2011, when Italian and Spanish five-year credit-default-swap spreads hit new record highs.
Asian shares fell heavily across the board on Wednesday, 3 August 2011, with investors exiting equities on mounting concerns about slowing global growth and shaky sovereign debt. The key benchmark indices in China, South Korea, Indonesia, Singapore, Hong Kong, Japan, and Taiwan fell by between 0.03% to 2.59%.
A key Chinese non-manufacturing gauge rose for the first time in three months in July, indicating that some pockets of the world's No.2 economy are not doing that badly despite a series of monetary tightening steps taken by the government to cool inflation. However, a separate survey by HSBC showed moderation in China's services sector in July for a second successive month due to a weaker rate of increase in new business.
HSBC reported early this week that that its China manufacturing purchasing managers' index fell to 49.3 during the month from 50.1 in June. A separate, official survey by the China Federation of Logistics and Purchasing showed the nation's PMI slipped to 50.7 in July from 50.9 in June, but remained above the expansion/contraction boundary of 50
Trading in US index futures indicated that the Dow could gain 73 points at the opening bell on Wednesday, 3 August 2011. US stocks slumped on Tuesday as the wrangling over the US debt ceiling faded and investors turned their attention to the stalling economy. US Senate on Tuesday approved on a 74 to 26 vote the $2.1 trillion deficit-reduction plan, already passed on Monday by the Republican-controlled House of Representatives. President Barack Obama immediately signed the bill into law, lifting the government's $14.3 trillion debt ceiling hours before a Tuesday midnight deadline
Shortly after the Senate vote, Fitch Ratings said the agreement to raise the US borrowing capacity means the risk of a sovereign default is extremely low and commensurate with a AAA rating. But it warned Washington must reduce its debt or face a downgrade.
Meanwhile, a government report showed US consumer spending fell unexpectedly in June for the first decline in nearly two years as incomes barely rose. The government's key monthly jobs report for July 2011 is due on Friday, 5 August 2011, and will be closely watched by investors.
Moody's Investors Service late on Tuesday confirmed the US' triple-A rating following the increase in its debt ceiling. However, the rating agency assigned a negative outlook on the rating. The ratings agency also said the debt deal is the first step in long-term fiscal consolidation that is the key in maintaining the sovereign rating at triple-A. Moody's also warned that the negative outlook indicates that there is a risk of a downgrade if the US fiscal environment weakens further and its economic outlook deteriorates significantly.
Index heavyweights, Reliance Industries (RIL), Larsen & Toubro (L&T) and ICICI Bank, declined. Bharti Airtel fell after the company reported a surprise fall in first quarter net profit on sequential basis. Bhel hit 52 week low. Other capital goods stocks declined. Auto stocks were mixed.
The market sentiment remains weak, with investors worried that higher interest rates will crimp corporate profit growth. A number of commercial banks have raised lending rates recently after the Reserve Bank of India (RBI) raised its key lending rate by 50 basis points at a policy review early last week.
The market tumbled to 5-1/2-week low at the onset of trading session on weak Asian stocks. The market trimmed losses in morning trade. High intraday volatility was witnessed as key benchmark indices weakened once again after hitting fresh intraday highs in morning trade. The market tumbled to fresh 5-1/2-week low in early afternoon trade. Key benchmark indices sharply pared losses in afternoon trade as US index futures rose. Volatility ruled the roost as the key benchmark indices once again weakened in mid-afternoon trade
At 14:20 IST, the BSE Sensex was down 179.05 points or 0.99% to 17,930.84. The Sensex fell 104.13 points at the day's high of 18,005.76 in afternoon trade. The index dropped 250.39 points at the day's low of 17,859.50 in early afternoon trade, its lowest level since 24 June 2011.
The S&P CNX Nifty was down 58.40 points or 1.07% to 5,398.15. The Nifty hit low of 5,378.85 in intraday trade, its lowest level since 24 June 2011.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,837 shares fell and 900 shares rose. A total of 116 shares remained unchanged.
From the 30 share Sensex pack, 23 stocks fell and the rest rose. Reliance Infrastructure, ITC and ONGC rose by between 0.54% to 2.09%. DLF, Jindal Steel & Power and ICICI Bank fell by between 2.42% to 3.01%.
Index heavyweight Reliance Industries (RIL) fell 0.79% to Rs 828.50. The stock was volatile. The stock hit low of Rs 824 and high of Rs 836 so far during the day. The stock had it a 52-week low of Rs 818.15 on Tuesday, 2 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 on Tuesday. 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.
India's largest listed telecom operator by sales Bharti Airtel shed 1.68% to Rs 424.80 after the company reported a surprise fall in first quarter net profit on sequential basis. Nevertheless, the stock came off the day's low of Rs 413.10. 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. The result was announced during trading hours today.
Bharti's consolidated profit was seen rising 8.21% to Rs 1515.81 crore on 3.83% growth in revenue to Rs 16888.87 crore in Q1 June 2011 over Q4 March 2011 according to average estimate of 12 brokerages.
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.
Capital goods stocks fell in a weak market. State-run power equipment maker Bharat Heavy Electricals (Bhel) fell 0.51% to Rs 1805.20. The scrip extended recent sharp losses triggered by disappointing Q1 results. The stock hit 52-week low of Rs 1786 in intraday trade today. The company's net profit rose 22.15% to Rs 815.51 crore on 9.97% increase in net sales to Rs 7125.68 crore in Q1 June 2011 over Q1 June 2010. The net profit was boosted by a steep 52.12% jump in non-operational income to Rs 248.65 crore in Q1 June 2011 over Q1 June 2010. The result was announced on 26 July 2011.
The top line growth fell short of market expectations. Analysts were expecting a much stronger revenue growth in Q1 June 2011 from Bhel on expectations of a strong execution of the large order book of the power equipment major. The company's outstanding order book was Rs 159600 crore as on 30 June 2011.
Engineering & construction bellwether Larsen & Toubro (L&T) fell 4.24%, with the stock falling for the second straight day. The company's unit L&T Finance Holdings has priced its recently concluded initial public offer (IPO) at Rs 52 a share, near the lower end of the Rs 51-59 price band. The issue closed on Friday, 29 July 2011. The IPO was subscribed 5.34 times. The IPO is an important part of Larsen & Toubro's plan to spin off some of its non-core businesses into self-sustaining units with independent access to capital markets.
Among other capital goods stocks, ABB, BEML, Siemens and Thermax shed by between 0.25% to 3.83%.
Auto stocks were mixed after mixed vehicle sales data for July 2011 released recently by individual auto firms. India's largest truck maker by sales Tata Motors fell 2.92%, with the stock falling for the second straight day on weak July 2011 vehicle sales. The company's total sales fell 6% to 63,761 units in July 2011 over July 2010. Tata Motors' domestic sales of Tata commercial and passenger vehicles fell 9% to 57,990 in July 2011 over July 2010. The company's commercial vehicle sales increased 14% to 40,798 units. LCV sales were 24,962 units, a growth of 22% over July last year. M&HCV sales stood at 15,836 units, a growth of 4% over July last year. The monthly sales data was released during trading hours on Monday, 1 August 2011.
Tata Motors' domestic car and sport-utility vehicle sales plunged 38% to 17,192 units in July 2011 over July 2010.
Tata Motors plans to restructure its local dealership network for its passenger vehicles this year in a bid to boost sales. The company plans to set up 300 dealerships specifically for its Nano minicar as well as 100 for its utility vehicles such as the Aria and Safari by the end of March 2012. The company had 250 full-range dealerships as of April 2011. Tata Motors today, 2 August 2011, launched a new version of the Aria, which will be sold in three variants priced between Rs 11.6 lakh and Rs 14.3 lakh.
Utility vehicles and tractors major Mahindra & Mahindra (M&M) fell 2.59%, with the stock falling for the second straight day. The company's total automobile sales jumped 41% to 39,633 units in July 2011 over July 2010. Domestic sales increased 42% to 37,323 units and exports rose 32.30% to 2310 units in July 2011 over July 2010. The Verito sedan registered a strong growth of 117% having clocked 1630 units in July 2011, as against 752 units in July 2010, maintaining its upward growth trend since Mahindra took over the brand.
The Passenger Vehicles segment (which includes utility vehicles and Verito) registered a growth of 35%, having sold 17312 units in July 2011, as against 12825 units during July 2010. The 4 wheeler commercial segment which includes the passenger and load categories has registered a phenomenal growth of 91%. Speaking on the monthly sales data, Rajesh Jejurikar, Chief Executive, Automotive Division, Mahindra & Mahindra said, We are delighted with the 41% growth in our Automotive Business in July 2011 and the record for highest ever sales. All our brands have been doing very well and Verito continues its very strong demand momentum. The monthly sales data was released during trading hours on Monday, 1 August 2011.
India's largest car maker by sales Maruti Suzuki India rose 0.35%, reversing initial losses. The company announced during market hours on Monday, 1 August 2011, that total sales fell 25.3% to 73,500 units in July 2011 over July 2010. The company said sales was negatively impacted to the extent of about 17,000 units due to discontinuation of old Swift and due shifting of Swift Dzire from Manesar plant to Gurgaon plant. The company said new Swift being manufactured at the Manesar plant will be launched nationally in mid-August 2011.
Hero MotoCorp rose 0.69%, reversing initial losses. The company's total motorcycle sales rose 14.82% to 4.91 lakh units in July 2011 over July 2010. Anil Dua, Sr. Vice-President (Marketing & Sales), Hero MotoCorp said the good numbers of July 2011 have come about despite constraints on supply from the company's Haridwar plant due to 'Kawar' movement in the region during the month. The company had to keep the Haridwar plant closed for a few days in July 2011 due to this reason. Dua said the company is looking to ride the current buoyancy in sales into the festive season by launching the company's new identity, innovative products and engaging campaigns.
Hero MotoCorp came into being last week after the company received the necessary statutory approval from the Registrar of Companies (RoC) for the changeover to the new name. As a next step, Hero MotoCorp will unveil its new global brand identity in London on 9 August 2011. Wolff Olins, a part of the Omnicom group, had been engaged to work on the new brand identity, including the brand architecture, brand name, brand logo and brand positioning. The company has also roped in Law & Kenneth (L&K) as a creative partner to give shape to the communication for launching and establishing the new brand.
Bajaj Auto fell 1.72%. The company announced during market hours on Tuesday that total sales rose 14% to 3.63 lakh units in July 2011 over July 2010. Motorcycle sales rose 14% to 3.18 lakh units and commercial vehicles sales rose 18% to 45,617 units. The company said it clocked record 3-wheeler sales in July 2011. The company's exports jumped 35% to 1.43 lakh units in July 2011 over July 2010.
TVS Motor Company rose 0.57% on strong Q1 results. Net profit surged 45.7% to Rs 58.80 crore on 24.7% rise in net sales to Rs 1707.27 crore in Q1 June 2011 over Q1 June 2010. The result was announced after trading hours on Friday, 29 July 2011. The company on Monday, 1 August 2011, reported a 14% growth in total sales to 1.89 lakh units in July 2011 over July 2010. Scooter sales grew 22% to 49,333 units, while motorcycle sales increased 15% to 70,170 units.
ACC declined 1.32%, after the stock turned ex-dividend today, 3 August 2011, for interim dividend of Rs 11 per share for the year ending December 2011.
Borosil Glass Works declined 1.89%, after the stock turned ex-dividend today, 3 August 2011, for dividend of Rs 15 per share for the year ended March 2011.
Investors' focus continues on Q1 corporate earnings. 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.
United Spirits unveil Q1 results today, 3 August 2011. Adani Power, Mundra Port And Special Economic Zone and Indian Hotels announce Q1 results on Thursday, 4 August 2011. Cipla and IL&FS Transportation Networks are set to announce Q1 results on Friday, 5 August 2011.
M&M announces Q1 results on 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, Castrol India and Shipping Corporation of India unveil quarterly results on 11 August 2011. Tata Steel, Hindalco, Coal India, National Aluminium Company and HPCL unveil Q1 results on 12 August 2011. Aditya Birla Nuvo unveils Q1 results on 13 August 2011.
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.
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.
European stock markets fell sharply on Wednesday, 3 August 2011, with Societe Generale leading the decline after the French bank warned that its 2012 earnings target will be hard to achieve. Key benchmark indices in UK, France and Germany were down by 0.32% to 0.93%.
European debt worries came back to the fore on Tuesday, 2 August 2011, when Italian and Spanish five-year credit-default-swap spreads hit new record highs.
Asian shares fell heavily across the board on Wednesday, 3 August 2011, with investors exiting equities on mounting concerns about slowing global growth and shaky sovereign debt. The key benchmark indices in China, South Korea, Indonesia, Singapore, Hong Kong, Japan, and Taiwan fell by between 0.03% to 2.59%.
A key Chinese non-manufacturing gauge rose for the first time in three months in July, indicating that some pockets of the world's No.2 economy are not doing that badly despite a series of monetary tightening steps taken by the government to cool inflation. However, a separate survey by HSBC showed moderation in China's services sector in July for a second successive month due to a weaker rate of increase in new business.
HSBC reported early this week that that its China manufacturing purchasing managers' index fell to 49.3 during the month from 50.1 in June. A separate, official survey by the China Federation of Logistics and Purchasing showed the nation's PMI slipped to 50.7 in July from 50.9 in June, but remained above the expansion/contraction boundary of 50
Trading in US index futures indicated that the Dow could gain 73 points at the opening bell on Wednesday, 3 August 2011. US stocks slumped on Tuesday as the wrangling over the US debt ceiling faded and investors turned their attention to the stalling economy. US Senate on Tuesday approved on a 74 to 26 vote the $2.1 trillion deficit-reduction plan, already passed on Monday by the Republican-controlled House of Representatives. President Barack Obama immediately signed the bill into law, lifting the government's $14.3 trillion debt ceiling hours before a Tuesday midnight deadline
Shortly after the Senate vote, Fitch Ratings said the agreement to raise the US borrowing capacity means the risk of a sovereign default is extremely low and commensurate with a AAA rating. But it warned Washington must reduce its debt or face a downgrade.
Meanwhile, a government report showed US consumer spending fell unexpectedly in June for the first decline in nearly two years as incomes barely rose. The government's key monthly jobs report for July 2011 is due on Friday, 5 August 2011, and will be closely watched by investors.
Moody's Investors Service late on Tuesday confirmed the US' triple-A rating following the increase in its debt ceiling. However, the rating agency assigned a negative outlook on the rating. The ratings agency also said the debt deal is the first step in long-term fiscal consolidation that is the key in maintaining the sovereign rating at triple-A. Moody's also warned that the negative outlook indicates that there is a risk of a downgrade if the US fiscal environment weakens further and its economic outlook deteriorates significantly.
