The News International Team
It was another day of consolidation for the market on Wednesday as the Sensex fell more than 200 points intraday before recovering to close marginally lower. Metals stocks led the fall. Commodity led fall in global markets also dampened sentiment.
The 30-share BSE Sensex lost 78.91 points to 27346.82 and the 50-share NSE Nifty declined 21.85 points to 8277.55 while the broader markets also closed marginally lower.
Gautam Chhaochharia, Head of Research, UBS Securities says investors should brace for lower returns this year after a heady 2014, as the high base effect will temper gains. He expects a few earnings downgrades near term, but sees strong earnings growth as the key trigger during the latter part of the year.
In macro data, reversing a 6-month declining trend, WPI inflation rose marginally to 0.11 percent in December as food inflation jumped Y-o-Y. Core inflation fell to lowest level in 60 months at 1.3 percent, an indicative of manufacturing not picking up.
Global markets were weak today. Asian markets like Japan’s Nikkei closed with almost a 300 point cut while France and UK were marginally lower on the back of large scale sell off in commodities like oil and copper. Brent crude was trading at fresh 6-year low of USD 46.32 a barrel, down 0.6 percent (at 16 hours IST).
Copper prices fell to lowest levels since mid 2009. COMEX copper March futures fell 5 percent while copper, aluminum and zinc declined 1-3 percent on the LME. Globally, commodity giants like Vedanta, BHP and Rio Tinto crashed 6-15 percent.
In India too, metals stocks melted as the BSE Metal Index plunged 3.5 percent. Sesa Sterlite tanked 8 percent followed by Hindalco Industries with 6 percent loss. Tata Steel was down 4 percent.
Cigarette major ITC dropped 3.2 percent on reports that the health ministry is likely to ban sale of loose cigarettes. Shares of ICICI Bank and Reliance Industries were down 0.8 percent each.
However, FMCG major Hindustan Unilever resumed uptrend today after falling in previous session for the first time in last seven sessions. HUL gained 4 percent and Marico was up 5 percent after Barclays upgraded both stocks from underweight to equalweight rating. According to the brokerage, margin recovery is likely to be the dominant theme for the Indian consumer companies.
BHEL surged 4 percent followed by ONGC and Maruti Suzuki with more than a percent gain. Two-wheeler maker Bajaj Auto gained 1.6 percent ahead of third quarter earnings. CNBC-TV18 poll expects the company’s profit to fall 6 percent to Rs 850 crore for the quarter ended December 2014 Y-o-Y.
TCS, Kotak Mahindra Bank and Federal Bank were other companies that will announce their December quarter earnings on Thursday.
Infosys was up 2 percent. After meeting Prime Minister Narendra Modi, CEO Vishal Sikka disclosed that his company will spend USD 250 million for innovations in software and services in India.
In the earnings, state-run LIC Housing Finance’s Q3 net profit rose 5.3 percent year-on-year to Rs 344 crore supported by operating profit and other income, but was impacted by provisions and deferred tax liability. The stock gained 0.6 percent.
Yes Bank fell nearly 2 percent, may be due to higher provisions. Its Q3 profit climbed 30 percent to Rs 540.3 crore, driven by strong net interest income and other income. However, rise in provision limited profits to some extent.
In the broader space, ITI, Maxwell Industries, Dabur India, NHPC, Man Infra, Snowman Logistics, HMT, DHFL, UPL, Adani Ports and Voltas climbed 2-10 percent. However, Firstsource Solutions, DCB Bank, JK Tyre, Hindustan Zinc, Union Bank of India and Unitech were down 2-5 percent.
About 1262 shares advanced while 1604 shares declined on the Bombay Stock Exchange.