19th July, 2013 : Comments by Amar Ambani, Head of Research, India Infoline
Muted close to action packed week
The Indian equity market ended Friday on a flat note with a slight negative bias amid some selling in capital goods, banking, realty and pharma stocks. Even midcap and smallcap stocks were under pressure.
The benchmark indices opened with a positive gap extending Wednesday’s momentum. However, it was unable to sustain itself at higher levels amid profit-booking ahead of the weekend. It continued to trade in a tight range post that but better-than-expected Q1 FY14 earnings from Bajaj Auto and HDFC boosted sentiment. But this rally too fizzled out post disappointing non-performing asset numbers from UCO Bank.
In the case of HDFC, net profit increased 17% year-on-year at Rs. 11.73bn. Bajaj Auto net profit stood at Rs. 7.38bn, up 2.7% year-on-year.
Commenting on Bajaj Auto’s Q1 FY14 results, Amar Ambani, Head of Research at IIFL, said revenues were exactly in-line with estimates. “Gross margins benefited by steep rupee depreciation. A further weakness in the rupee will be earnings accretive. With rich valuations and risks to volume growth, we feel the room for upside is limited,” he said.
The Sensex closed at 20,150, up 21 points, while the Nifty shut shop flat at 6,029 after hitting an intra-day high of 6,067 and low of 6,020.
The advance-decline ratio favoured the bears. On the Bombay Stock Exchange, 1,310 stocks declined against 1,033 advances, while 144 stocks remained unchanged.
It was a day of low volatility as indicated by India VIX which ended down 0.7% at 18.27. It hit a day’s high of 18.28 and low of 17.71.
For the week, the benchmark indices – Sensex and Nifty — gained 0.9% and 0.3% respectively. Among sectoral indices, FMCG was the star gainer, up 6.9%, followed by oil and gas (4.2%) and IT (3.9%). The losers pack was led by banking, down 6.2%, along with realty (-4.3%) and metal (-3.8%).
FMCG behemoth Hindustan Unilever turned market favourite this week. The stock shot up over 13.5% on account of FTSE rebalancing. From July 22, its float increases to 33% from 24% in FTSE’s All-World and All Emerging indices. Meanwhile, the company has hiked prices of some of its best selling products in the soap category by up to 15%.
Stocks in News:
BHEL, IndusInd Bank, Axis Bank, Sun Pharmaceutical, Ranbaxy Laboratories, Kotak Mahindra Bank, HDFC and Jindal Steel lost out while TCS, Bajaj Auto, HCL Technologies, GAIL India, Hero MotoCorp, Tata Motors, Coal India and NMDC gained.