Markets sink on global weakness, F&O expiry

Markets ended lower on Thursday following the expiry of July derivative contracts weighed down by profit taking in FMCG shares after recent gains.

ITC led the decline after the stock gained nearly 20% in the past one month followed by Hindustan Unilever which had gained 21%.

The Bombay Stock Exchange’s 30-share Sensex closed at 19,805 down 286 points.

The National Stock Exchange’s 50-share S&P CNXNifty closed at 5,908 down 83 points. The Sensex and Nifty touched an intra-day low of 19,764 mark and 5,896 levels, respectively.

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GLOBAL MARKETS

The Nikkei share average fell for a second day on Thursday in volatile trade, as investors were disappointed with company results such as for blue-chip Canon Inc , which tumbled after slashing its profit outlook.  

The benchmark Nikkei fell 1.1% to 14,562.93, after rising as high as 14,748.77 at the open. The broader Topix dropped 1.4% to 1,202.32.   

European assets were flat in early trade on Thursday as investors trod cautiously before German and British data expected to add weight to signs the continent's economy is reviving.

The German IFO survey out at 0800 GMT is likely to show business morale picked up for a third consecutive month in July, while the first reading for Britain's second quarter GDP is tipped to show growth to have doubled from the first quarter.  

The euro edged up 0.1% to about $1.3214 while Europe's broad FTSE Eurofirst 300 index was little changed at the open and Bund futures dipped slightly.   

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INDIAN RUPEE

The rupee today rose by 40 paise to 59.10/dollar on fresh dollar selling by banks and exporters, tracking a weakness in the US currency overseas. 

SECTORS & STOCKS

On the sectoral front, BSE FMCG index dropped by over 3% followed by counters like Power, Metal, Capital Goods, Healthcare, PSU, Bankex and IT, all declining between 1-2%. However, BSE Auto and TECk indices gained marginally.

Wipro slipped 4% to Rs 376 on NSE, ahead of its April-June (Q1) earnings tomorrow. Analysts expect the IT major to report a flat revenue growth in the recently concluded quarter.

From the FMCG space, ITC ended lower by 4.57% at Rs 359 after reporting 18% year-on-year (yoy) jump in net profit at Rs 1,891 crore on back of strong performance across business segments. Analyst on an average had expected profit of Rs 1,869 crore from the fast moving consumer goods (FMCG) major.

Hindustan Unilever (HUL) ended lower by over 3% at Rs 687, after its parent firm Unilever said that growth is slowing in emerging markets, as macro-economic headwinds influence consumer behavior.

Capital Goods shares continued to exhibit a weak trend post disappointing results from L&T. L&T and BHEL declined between 2-3%.

Other notable losers were Tata Power, JSPL, RIL, Sterlite, Cipla, Sun Pharma and Coal India.

On the gaining side, Auto major Hero MotoCorp rallied by over 4% after reporting 100 bps improvement in operating margins at 14.8% for the first quarter ended June 30, 2013 on sequential basis due to 10% quarter-on-quarter decline in other expenditure. The company had operating margins at 13.8% in March quarter.

The market breadth in BSE ended dismal 1,418 shares declining and 850 shares advancing.

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SMART MOVERS

Poor quarterly shows from India's two largest cement makers - ACC Ltd and Ambuja Cements have affected the sentiments on the other cement counters. Low demand and poor pricing is expected to take a hit on several of the cement makers.

Stocks of Ambuja Cements, which are leading the losses owing to the restructuring of ownership resulting into an outgo of Rs 3,500 crore from company's balance sheet to its parent company Holcim, lost a massive 11% on the BSE. ACC dropped by 3%.

Counter of Jaiprakash Associates, dominant major in central India, too slipped 9% on the stock exchanges.

Zee Entertainment Enterprises moved higher by 6%, in otherwise weak market, after reporting a better-than-expected 43% year-on-year (yoy) jump in its consolidated net profit at Rs 225 crore for the quarter ended June 30, 2013 (Q1) due to higher advertising revenues and other income.

Jaiprakash Associates tanked 9% to Rs 43, extending its Wednesday’s 6% fall, after Deutsche Bank downgraded the stock to sell from hold citing higher-than-expected debt.

Novartis India dipped 6% to Rs 442 after reporting 49% year-on-year (yoy) decline in net profit at Rs 139 crore for the quarter June 30, 2013 due to rupee depreciation and lower sales volume.

Central Bank of India tanked 8% to Rs 57 on reporting a sharp 94% year-on-year (yoy) drop in net profit at Rs 22 crore for the quarter ended June 30, 2013 (Q1) due to higher provisions for rising bad loans.

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