The market could not weather big blows by weak September quarter earnings by index heavyweight like ITC and L&T. Dragged sharply by capital goods, auto and FCMG the benchmark indices ended lower for fifth straight day. The Nifty ended below 8100 mark, down 45.95 points or 0.6 percent at 8065.80. The Sensex slipped 181.31 points or 0.7 percent at 26656.83. About 996 shares have advanced, 1615 shares declined, and 194 shares are unchanged.
Sakhti Siva of Credit Suisse reiterates underweight call on India. MSCI India has underperformed MSCI Asia ex-Japan by 7.6 percent since the highs on 21 August. India has always underperformed MSCI Asia ex-Japan when its premium reaches 50 percent as it did in March 2006, December 2007, January 2015 and again in August 2015. While India’s current return on equity is 13.8 percent but implied ROE is 19.1 percent.
Ajay Srivastava, chief executive officer, Dimensions Consulting says, this is the best time to exit stocks that have disappointed on their quarterly numbers,
Speaking to CNBC-TV18, Srivastava says the current quarterly earnings (Q2) have been so far indifferent and hence, the time is ripe to exit badly performing stocks. The exit strategy is also based on his the belief that the market environment won’t be improving until atleast Q1FY17.
It was an action packed day as corporate earnings denting investor sentiment. Big boy ITC ended with over 4 percent loss as Q2 missed analysts’ expectations with profit rising to Rs 2,431 crore from Rs 2,425 crore in year-ago period, impacted by slow revenue growth in cigarette business. Weak revenue growth in agri business, hotels and paper business also hurt bottomline. Strong margin expansion and other income helped profit rise marginally. Revenue fell 1.4 percent to Rs 8,904 crore compared to Rs 9,024 crore in same period.
L&T slumped 4 percent and most disappointing factor that led sharp fall in stock was its cut in revenue as well as order inflow guidance for FY16. The engineering and construction major’s consolidated profit after tax increased 15.5 percent year-on-year to Rs 996 crore in July-September quarter, boosted by other income. Revenue grew by 10.6 percent to Rs 23,393 crore from Rs 21,159 crore in same period.
Other losers in the Sensex were Vedanta, M&M and BHEL. Capital Goods and FMCG index lost 2.7 and 2.4 percent respectively. Auto index fell over 1 percent.
NTPC gained 4 percent while ICICI Bank, Axis Bank, Dr Reddy’s Labs and Sun Pharma were up. Private sector lender ICICI Bank ‘s July-September quarter earnings matched analysts’ expectations on Friday with standalone profit rising 11.8 percent year-on-year to Rs 3,030 crore, aided by revenue, other income and operating profit.
Sun TV Network ended with 5 percent gains as the company is mulling to buy back shares. In a statement to the exchange, the media firm said that board of directors meeting will be held on November 5 to consider a proposal to buy back the fully paid-up equity shares of the company.
Among the midcaps, aviation stocks Jet Airways and SpiceJet were excited as draft aviation policy was proposed today to push the ailing sector. With a view to popularise air travel among the middle class, the draft civil aviation proposes to boost regional connectivity and cap airfares for one hour flights between small cities at Rs 2500 per passenger.