Global stock markets end in red

Sat, 1 Jun RoundUp

   Previous Close   

Most of the major global indices ended the week and the month in negative territory. Only markets in Germany, China and India managed to post marginal gains. Japan registered the steepest correction of 5.7%. The sell-off was on account of rising concerns about the effectiveness of the efforts by Prime Minister Shinzo Abe to pull the country out of the decade-long inflation. Singapore and Hong Kong are the other Asian indices that declined by 2.4% and 1%, respectively.

The US markets remained volatile after mixed signals on the pick-up in economic activity added to speculation that the US Federal Reserve may ease its monetary stimulus measures. The Dow index was down by 1.2% for the week. Even the Brazil market fell by a steep 5% for the week. Fears of winding up in the quantitative easing program by US unnerved markets in UK that fell by 1.1%.

The India equity markets saw a sharp slide of 2.3% on Friday. A host of factors such as weak economic growth, sliding rupee, dampening hopes of a rate cut as well as subdued global cues led to the huge correction. However, the index ended marginally higher for the week.

The Indian stock markets witnessed strong buying in Britannia, GSK Consumer, Astrazeneca Pharma, & Mphasis shares during the week.

Source: Yahoo Finance

Majority of the sectoral indices ended in green with consumer durables (up 3.5%), auto (up 2.7%),IT (up 1.8%), and FMCG (up 1.7%) witnessing the maximum gains. Realty (down 6.3%), Banking (down 2.3%), capital goods (down 1.9%) and metal (down 1.8%) were the biggest losers during the week.

Source: BSE

Now let us discuss some of the economic developments of the week gone by. The Central Statistical Organization (CSO) released the GDP numbers for March 2013 quarter and the financial year 2013. The country's Gross Domestic Product (GDP) posted a slight recovery and grew by 4.8% in March 2013 quarter as compared to a growth of 4.7% recorded in December 2012 quarter. Barring Mining, that saw its output contract by 3.1%, all the other sectors posted growth in the March 2013 quarter. The manufacturing sector grew by 2.6%, agriculture, forestry & fishing sector grew by 1.4% whereas financing, insurance, real estate and business services sector increased by a steep 9.1% during the quarter.

For the full year FY13, India's GDP grew by 5% aided by strong growth of over 6% recorded by each of the trade, hotels, transport & communication and finance, insurance, real estate & business services industries. Manufacturing and agriculture reported a tepid growth of 1% and 1.9% respectively while mining output was down by 0.6% in FY13.

Now let us move to some news from the corporate world. Companies continued to declare their results for the quarter ended March 2013.

State-run steel firm SAIL has announced its financial results for the quarter and year ended March 2013. During the quarter, the company reported a 9.9% YoY fall in standalone revenues to Rs 123,304.2 m, Operating profit margin nearly halved from 12.4% in 4QFY12 to 6.7% in 4QFY13. Interest expenses shot up by 77.1% YoY to Rs 2,145.9 m. Exceptional gains were lower by 97.7% YoY at Rs 164.9 m. As a result, the company's bottomline dropped sharply by 71.7% YoY to Rs 4,465.3 m. Net profit margin declined from 10.5% in 4QFY12 to 3.2% in 4QFY13. During FY13, the company's standalone net sales were lower by 3.8% YoY at Rs 445,982.6 m. Net profits for the year fell by 38.7% YoY to Rs 21,703.5 m.

Tata Motors reported a dismal financial performance for the full year ended March 2013. On a standalone basis, revenues for FY13 fell by 18% YoY whereas net profits plunged 76% YoY due to a weak macro-economic environment and high competition. In terms of segments, the MHCV business witnessed a tepid growth of 1% YoY for the year. In this, the medium and heavy commercials performed poorly on account of slowdown in economic growth, sluggish infrastructure spending and higher operating costs for transport operators. The light commercial vehicles did reasonably better and helped prop up overall growth in the MHCV space. Volumes of the company's passenger vehicles tumbled by 31% YoY. However, the SUV segment put up a strong show and was supported by new launches. Jaguar Land Rover (JLR) displayed a mixed performance for the year. Sales for JLR were up by 17% YoY for the full year on the back of strong demand, new product launches and growth in China. However, profits fell by 18% YoY due to higher depreciation and amortization charges as well as exchange revaluation.

Tata Power turned in the black and posted a net profit of Rs 1.8 bn for the quarter ended March 2013, against a net loss of Rs 6.3 bn in the year-ago period. The company's fourth quarter revenue has risen by 25% YoY to Rs 90.3 bn. For FY13, the company has reported a consolidated loss of Rs 854 m, against a net loss of Rs 11 bn in 2011-12, as provisioning related to the Mundra ultra mega power project (UMPP) has fallen sharply. Revenue for the year has risen by 27 per cent to Rs 330.3 bn, owing to additional sales from the Mundra UMPP and higher volume traded at Tata Power Trading.

Movers and shakers during the week

Company	24-May-13	31-May-13	Change	52-wk High/Low
Top gainers during the week (BSE-A Group)
Britannia	576	724	25.7%	709/400
GSK Consumer	4,929	5,822	18.1%	5360/2179
Astrazeneca Pharma	717	832	16.0%	1984/595
Mphasis Ltd.	435	485	11.5%	513/317
Titan Industries	270	294	8.9%	314/204
Top losers during the week (BSE-A Group)
Opto Circuits	46	32	-31.8%	167/43
Housing Dev. Infra	51	42	-17.3%	124/44
Jet Airways	584	492	-15.9%	689/301
Jaypee Infratech	38	33	-12.3%	62/34
Suzlon Energy	13	12	-12.1%	13/27

Source: Equitymaster
In some other news, Reliance Industries Ltd (RIL) along with its partners British Petroleum (BP) and NIKO have made a significant gas discovery in KG-D6 block. The discovery named D-55 is present 2,000 meters below the already producing reservoirs in D1-D3 gas fields. Reportedly, RIL has discovered 18 gas fields in the KG-D6 block of which only D1 & D3 have been put to production whereas satellite fields are being planned to be developed.

Coal India has hiked the prices of two premium grades of coal (G3 and G4) by about 12.5% whereas prices of lesser grades of coal (G5 to G17) have been lowered by nearly 10%. This price revision has been effected after a gap of more than two years. As the company sells more quantity of lower quality coal, it is expected that the overall realization would increase by about 5%. As per the company, this should bring in addition revenues of Rs 25 bn for the year.

The global stock markets remained weak as uncertainty clouded the stimulus measures across the world. The Indian markets have been on a relatively better footing. But tepid economic growth number and weakening rupee played spoilsport reversing some of the gains. Even RBI's cautious stance on rate-cuts is further adding to the volatility. But with the economy growing at a steady pace, these short term pressures are expected to ease in future.