Bear hug costs Sensex 1392 pts in 8 days; Hero Honda up 6%

The mood on Dalal Street has not improved yet after the key rates hike and hawkish tone set by the RBI governor Duvvuri Subbarao in a policy meeting on May 3. The Sensex shed nearly 259 points on Thursday, with continuing downtrend for eighth consecutive session.

Experts see earnings downgrade in the quarter ended June 2011 after the 50 basis points hike in repo and reverse repo rate. Interest cost of the companies will increase going ahead as banks have slowly been increasing their lending rates.

Deven Choksey of KR Choksey Shares & Securities feels that people basically want to sit on cash for a simple reason that there is a kind of possibility of earning downgrade happening going forward once this particular oil price hike is announced.

Inflation is a major cause of concern, says Finance Minister Pranab Mukherjee. "Food and oil prices are major inflation factors," he said. Food articles inflation for the week ended April 23 was at 8.53% as against 8.76% in previous week. Fuel group inflation was unchanged at 13.53% during same period. RBI governor has made the move to contain inflation without hurting country's growth.

Robert Prior-Wandesforde, Credit Suisse says that the Indian economy and markets are facing a particularly unpleasant combination of macroeconomic circumstances right now. "This includes high inflation, rising interest rates and the likelihood of downside growth surprises. This situation may continue for some months making us pessimistic about the equity market outlook," he said.
The 30-share BSE Sensex dropped 258.78 points or 1.40%, to close at 18,210.58 and the 50-share NSE Nifty closed below the 5500 mark for first time since March 23, down 77.30 points or 1.40% to 5,459.85, dragged down by 42 shares out of 50.

Choksey feels that the Nifty could possibly stay in range of 5400-5700 because the option traders are basically taking a strong long bet on the 5400 level.

Amit Dalal, Executive Director, Tata Investment Corporation said there would be some more pressure mainly because people have to still adjust their portfolios worldwide. "So there maybe some largecaps where there maybe selling based on global perspective," he said.

Realty, power, FMCG, healthcare, banking, metal, technology and capital goods stocks saw selling pressure today, with respective indices falling 1-3%.

Bharti Airtel plunged more than 3% after less than expected bottomline reported in fourth quarter on dip in margins. India's largest telecom operator reported net profit of Rs 1,401 crore on consolidated basis as against street expectations of Rs 1,740 crore.

Largecaps like TCS, NTPC, ITC, ICICI Bank, Sterlite, HDFC Bank, HUL and BHEL were down 1-3%. Tata Power, Reliance Power, PNB and Reliance Communications plunged 5-6%.

Ranbaxy Labs was the biggest loser on Nifty, with falling 6%. US Federal prosecutors are negotiating a settlement with Ranbaxy that could result in fines and payments exceeding USD 1 billion, as mentioned in the Fortune Magazine, for fraudulent conduct alleged by the FDA, reports CNBC-TV18 quoting sources.

ACC and Ambuja Cements tumbled about another 4% after Holcim increased stake above 50% in both companies.

However, Hero Honda showed outstanding performance today, with rising 6% on short covering. Analysts feel that company's fourth quarter EBITDA performance was better than street expectations.

The broader indices too were down around 1%. Midcap stocks like HDIL, Shriram City, Redington, Hathway Cable and Marico lost 5-8%.

However, Jyothy Labs, Apollo Hospital, United Phosphorous, Tulip Telecom and Religare Enterprises gained 3.5-7%. Rs 474.75 3.51%

About 899 shares advanced as against 1955 shares declined on Bombay Stock Exchange.

Hero Honda declares 3,500 pc interim dividend

The country's largest two-wheeler maker Hero Honda today declared a 3,500 per cent interim dividend of Rs 70 per equity share of Rs 2 each.

In its board meeting held today, the company considered and declared "an interim dividend at the rate of 3,500 per cent that is Rs 70 per equity share of Rs 2 each", Hero Honda said in a filing to the Bombay Stock Exchange (BSE).

The company, however, did not mention how much will be the capital outgo due to this exercises and other details regarding the period for the dividend.

Repeated calls to Chief Financial Officer Ravi Sud and to a company spokesperson remained unanswered.

Reacting sharply, the shares of Hero Honda were trading 6.28 per cent up at Rs 1,742 a piece on the BSE during late-afternoon.

In March last year, the company declared a Silver Jubilee Special Dividend of 4,000 per cent or Rs 80 per equity share of Rs 2 each.

In 2009, Hero Honda had said it was sitting on a huge cash reserve of over Rs 4,000 crore and the company was looking at many options to use the fund, including special dividend to its shareholders or expanding capacity.

During April-December, 2010, the company's net profit fell by 12.66 per cent to Rs 1,426.29 crore from Rs 1,633.02 crore in the same period previous year.

The total net operating income during the 9-month period increased by 19.36 per cent to Rs 14,010.22 crore from Rs 11,738.19 crore in the year-ago period.

Meanwhile, Hero Honda appointed Toshiyuki Inuma as a Non-Executive Additional Director with effect from April 13.

Besides, the company also approved resignations of its Non-Executive Director Yuji Shiga and Non-Executive and Independent Director Shobhana Bhartia from its board with effect from April 13.

In December last year, the Indian promoter of the two-wheeler maker, the B M Munjal family, had agreed to buyout the entire 26 per cent stake of the Japanese promoter Honda Motor Co in Hero Honda for Rs 3,841.83 crore. The process of Honda exiting the joint venture completed this month.

The Economic Times

Sensex, Nifty open in red

BSE Sensex was trading at 19,363, down 87 points over the previous close. It opened at the day's high of 19,382 and went onto touch a day's low of 19,311.

The benchmark Indian equity indices have opened in the red in early morning trade, with the BSE Sensex and the NSE Nifty down 87 points and 26 points respectively.

At 09:20 am (IST), the BSE Sensex was trading at 19,363, down 87 points over the previous close. It opened at the day's high of 19,382 and went onto touch a day's low of 19,311.

NSE Nifty was quoting 5, 815, down 28 points over the previous close. It had earlier touched a day's high of 5,818 and a day's low of 5,804. It opened at 5,805.

The BSE Small Cap index and the BSE Mid cap index were down 0.2% and 0.5% respectively.
Realty, Auto and Banking stocks are among the leading losers in terms of sectors. While, Metal, Power, PSU, Oil & Gas, Consumer Durables and select IT shares are struggling for direction.

Tata Power, Sterlite, Sun Pharma, Bharti Airtel, Sesa Goa, Tata Steel, BHEL, Grasim, Cairn India, Reliance Infra were among the notable leaders in the Sensex and the Nifty.

Siemens, IDFC, HDFC Bank, DLF, JP Associate, RCOM, BPCL, Hero Honda, Axis Bank, Bajaj Auto, SAIL, ONGC and TCS were among the notable losers in the Sensex and the Nifty.

The market breadth is negative on the BSE with 773 shares falling and 564 shares rising.

India Infoline

Maruti, Hero Honda, Toyota, M&M, Nissan sales end fiscal year in top gear

NEW DELHI: Indian automobile manufacturers ended fiscal year 2010-11 on a high note. Most leading car and two-wheeler companies posted record sales, as rising disposable income with the middle-class and a pick up in new product launches kept the demand momentum going, despite price hikes.

The country's largest carmaker Maruti Suzuki and number one two-wheeler manufacturer Hero Honda posted their best-ever monthly and fiscal sales numbers despite pressure from rising interest rates and soaring crude-oil prices.

Maruti Suzuki reported 28% year-on-year growth in sales to 121,000 units in March, which includes all-time high domestic sales of 110,000 units, up 39%. The company's A2 segment vehicles, including Alto, WagonR, Estilo, Swift , A-Star and Ritz, witnessed 43% sales growth to 78,460 units. In April-March 2010-11, the company's total sales stood at 11.32 lakh units, up 30% from a year ago.

Toyota Kirloskar Motor sold a record number of 9,726 units in March, a growth of 41% year-on-year, led by 3,257 units sales of its sedan Etios. Mahindra & Mahindra registered 19% growth in its passenger car sales during the month to 17,320 units, while new entrant Nissan Motor sold 2,101 cars, including 2,060 units of its hatchback Micra. Czech carmaker Skoda Auto posted 65% year-on-year jump in sales to 3,009 units.

However, some like Hyundai Motor , the country's second-largest carmaker, could not quite cash in on the customer enthusiasm due to rising input cost. Hyundai Motor's domestic sales in March remained flat year on year at 31,822, while exports grew a tad by 0.9% to 23,526 units. Its total sales in March were up a mere 1% to 55,552 units.

"We managed to grow our overall volumes but the rate has slowed down signalling tough times ahead," Hyundai's director, marketing and sales, Arvind Saxena, said.

The two-wheeler segment was also on the fast track with Hero Honda selling a record 515,852 bikes in March. For the full year, the company posted its highest ever sales number of 54.02 lakh, up 17% year-on-year. Chennai-based TVS Motors sold 191,000 units in March, up 28%.

Fiscal year 2010-11 was the best year for the Indian automobile industry, but further rate hikes by the Reserve Bank of India could weigh on sales in the year ahead, said industry experts and analysts.

However, some analysts have a more optimistic take on the sector for the months ahead. According to Umesh Karne, analyst with Brics Securities, even if the central bank hikes key rates by 50-100 basis points, it will not likely be an immediate dampener for the automobile sector, though any further rate increase could hit car sales in coming months.

"For FY12-13, Indian auto industry is likely to record a volume growth of 14%, with passenger cars expected to be the leader. Growth will be fuelled by urbanisation and rising per capita income," said Karne.

economictimes.indiatimes.com