The News International Team
After Diwali celebration last week with more than 3 percent gains on equity benchmarks, investors took some profits off the table on Monday. FMCG major Hindustan Unilever’s (HUL) quarterly earnings and weak European cues too dampened the mood.
The market started off trade on a strong note with the Sensex rising nearly 150 points and the Nifty hitting 8050 level following positive US cues but those gains could not sustain for long. The 30-share BSE Sensex fell 98.15 points to 26752.90 while the 50-share NSE Nifty closed below the 8000 level, down 23.95 points to 7991.70.
The market may see volatility (and consolidation) this week as the futures and options contracts of October month will expire on Thursday, say experts.
Adrian Mowat, Chief Asian & Emerging Equity Strategist, JPMorgan said the key focus of the markets will be on the US Federal Reserve meeting this week, where the Fed might announce a closure of QE3. Mowat expects Fed to maintain low interest rates for a considerable period of time.
The research firm has downgraded Brazil to neutral and recommends moving money from Brazil to markets like India. He expects 20 percent returns from the Indian equity market in next 12 months.
On the global front, European markets erased early gains with the France’s CAC, Germany’s DAX and Britain’s FTSE falling more than 0.6 percent while Asian markets closed mixed. Hang Seng and Shanghai fell more than 0.5 percent while Nikkei gained 0.6 percent.
Brent crude continued to lose after falling for five straight weeks, down 0.66 percent to USD 85.56 a barrel. Goldman Sachs cut its Brent crude price forecast to USD 85 a barrel versus USD 100 earlier predicting supply growth from non-OPEC producers will outpace demand.
On the home front, oil, FMCG, technology and auto stocks lost ground while banking & financial (except ICICI Bank) and capital goods supported the market.
HUL tanked 4.8 percent as the company said the operating environment remained challenging with low market growth across categories and underlying volume growth of 5 percent (versus 6 percent Y-o-Y and 5 percent Q-o-Q). Net profit of the company grew by 8.1 percent year-on-year to Rs 988 crore on revenue of Rs 7,639 crore (up 10.8 percent) and operating profit margin expanded 50 basis points.
Oil producer Cairn India plunged 3.65 percent on fall in crude oil prices.
DLF and Jindal Steel plunged nearly 8 percent. In case of DLF, media reports indicated that the new BJP government in Haryana is going to heavily probe the company’s land deals with Robert Vadra (son-in-law of Sonia Gandhi) while in case of JSPL, reports suggested that CBI registered preliminary enquiry against the company and some environment ministry officers for alleged diversion of forest land.
Among others, Tata Motors, Reliance Industries, ONGC, Tata Steel, Wipro (on lower than expected dollar revenue growth in Q2) and Hindalco Industries were down 1-2.6 percent.
However, state-run power equipment maker BHEL topped the buying list, up 5 percent followed by Dr Reddy’s Labs with 1.7 percent gain. HDFC, L&T, SBI, Axis Bank, Bharti Airtel, Gail India and Coal India climbed 0.4-0.9 percent.
In the midcap space, Nelco, Suven Life, ITI, Rico Auto, HCL Infosystems, PC Jeweller, Sintex and Dena Bank rallied 3-14 percent while HFCL, Financial Technologies, Crompton Greaves, GMR Infra, Indiabulls Real, Jaiprakash Associates, Unitech and LIC Housing lost 3-6 percent.
Declining shares outnumbered advancing ones by a ratio of 1616 to 1246 on the Bombay Stock Exchange.