Results disappointment drag benchmarks below crucial levels

Slew of disappointing second quarter results pushed key Indian benchmarks below their crucial 5,700 (Nifty) and 18,700 (Sensex) levels. The frontline gauges remained range-bound in early session, keeping their head above water, but drifted to lower levels in the second part of the day’s trade to settle near intraday low with a cut of around a percentage point after State Bank of India (SBI) reported bitter second quarter result. The company reported disappointing asset quality for the second quarter ending September 2012 though, India’s largest lender, on consolidated basis, reported 31.84% rise in its net profit at Rs 4575.31 crore for the quarter as compared to Rs 3470.43 crore for the same quarter in the previous year.

The sentiments continued to reel under pressure as ONGC reported awful Q2FY13 numbers. Its net profit for the quarter dropped 31.77% at Rs 5896.57 as compared to Rs 8642.23 crore in Q2 FY12. The company’s subsidy outgo has been more than doubled to Rs 12,330 crore in Q2 from Rs 5,713 crore in the same quarter of last fiscal. Moreover, the world’s sixth largest steel making company Tata Steel too disappointed the street by reporting lower than expected numbers on standalone as well as consolidated basis, sending its shares down by over 3 percent. The company consolidated (including Tata Steel Europe) a net loss of Rs 364 crore for the quarter as against profit of Rs 212.4 crore in the corresponding quarter of last fiscal. Some somberness also came after FICCI’s latest quarterly survey on manufacturing projected subdued growth in key sectors such as automotive, capital goods, metal and chemicals in the third quarter.

Feeble global cues too dampened the sentiments as the US equity markets fell overnight as concerns over the looming fiscal cliff overshadowed a pair of better-than-expected economic reports while, most of the Asian equity indices shut shop in the red weighed down by worries over the risk of a recession in the world’s largest economy as the United States faces a looming fiscal crisis, while Europe still awaits a bailout for Greece, keeping investor risk appetite subdued. However, European markets traded flat in the early deals as concerns about the US ‘fiscal cliff’ and the euro-zone economy were balanced by positive data from China, which suggest that the country’s economy has bottomed out.

Back home, selling intensified in the second half as PSU Bank counters tumbled about three percent after SBI disappointed with its Q2 numbers. Other PSU banks like Allahabad Bank, Andhra Bank, Bank of India, Canara Bank, Central Bank of India, Dena Bank, IOB, Indian Bank, OCB, UCO Bank and Union Bank were down 1-3 percent due to weak sentiment. Selling was also witnessed in Software counters on concerns about upcoming fiscal challenges for the United States, the biggest outsourcing market for Indian IT firms. Sentiments also went lower after stocks of Jet Airways, Dabur India and Reliance Industries cracked as a knee-jerk reaction post Arvind Kejriwal, an India Against Corruption Activist continued his string of revelations and pointed out that people associated with these companies hold accounts in the Geneva branch of HSBC.

The NSE’s 50-share broadly followed index Nifty declined by over fifty points to end below its psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over one hundred and sixty points to finish below the psychological 18,700 mark. Moreover, broader markets too traded in-line with benchmarks and snapped the session with a cut of 0.50-1 percent.

The overall volumes stood below Rs 1.70 lakh crore, which remained on the lower side as compared to that on Thursday. The market breadth remained in favor of declines as there were 1,120 shares on the gaining side against 1,735 shares on the losing side while 123 shares remain unchanged.

Finally, the BSE Sensex lost 162.58 points or 0.86% to settle at 18,683.68, while the S&P CNX Nifty declined by 52.50 points or 0.91% to end at 5,686.25.

The BSE Sensex touched a high and a low of 18,894.42 and 18,656.41, respectively. The BSE Mid-cap index was down by 0.99% and Small-cap index was down by 0.69%.

Bajaj Auto up 0.36%, Maruti Suzuki up 0.32%, Cipla up 0.14% and HDFC Bank up 0.09% were the major gainers on the Sensex. On the flip side, SBI down 3.89%, Tata Steel down 3.25%, ONGC down 3.05%, Sterlite Industries down 2.38% and BHEL down 2.13% were the major losers on the index.

The major losers on the BSE sectoral space were, PSU down 1.70%, Realty down 1.64%, Metal down 1.49%, Oil & Gas down 1.33% and Bankex down 1.20%, while there was no gainer on the BSE sectoral space.

Meanwhile, amid concerns raised by the telcos that the government is trying to jack-up the auction prices, the Supreme Court has asked the government to immediately explain why it is restricting the sale of airwaves in the upcoming auctions, and not selling all spectrum vacated by the 122 licences whose permits were cancelled earlier this year.

Earlier, Idea Cellular and the Cellular Operators Association of India (COAI), the industry body representing GSM operators, had challenged the government's decision to restrict the sale of airwaves in the upcoming sale. It was stated in the petition that 431 MHz of second generation airwaves was vacated by the apex court's February 2 verdict, but the government had only put 271 MHz up for auction.

The COAI had also asked the court to direct the government to include 83.6 MHz of GSM spectrum in the 1800 MHz band given to Tata Teleservices on the same date as the now-quashed 122 licences. But the court said it would deal with this issue separately.

In a related development, the Supreme Court expressed its displeasure that the Delhi High Court was hearing the matters relating to the 2G spectrum scam despite its order restraining courts below the apex court from adjudicating issues arising out of the case.

The S&P CNX Nifty touched a high and a low of 5,751.70 and 5,677.75 respectively.

The top gainers on the Nifty were Cairn up 1.01%, Ultratech Cement up 0.71%, Power Grid up 0.63%, Maruti up 0.27% and Grasim up 0.10%.

The top losers on the index were SBI down 3.98%, Tata Steel down 3.89%, ONGC down 3.07%, IDFC down 2.90% and Sesa Goa down 2.83%.

European markets were trading in red. France’s CAC 40 down 0.29%, Germany’s DAX down 0.84% and Britain’s FTSE 100 down by 0.36%.

Asian shares ended mixed on Friday, as investors’ sentiments were weighed down by worries over the risk of a looming fiscal crisis in the world's largest economy, while Europe still expects a bailout for Greece. However, better than expected Chinese data showing inflation at a new three-year low rendered some hope, giving authorities more space to ease the monetary policy, while industrial output figures were also in favor of growth. Shanghai ended down despite of in line economic data, while Nikkei touched biggest one-day percentage drop in two months.