India's BSE index ends flat after hitting 2-month high; volatility may continue

Mon Jul 22, 2013 4:40pm IST

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* BSE index gains 0.05 pct; NSE ends 0.04 pct higher
    * L&T slumps after Q1 profit misses estimates
    * Ambuja Cements falls after Credit Suisse downgrade

    By Abhishek Vishnoi
    MUMBAI, July 22 (Reuters) - India's benchmark index rose
slightly on Monday after hitting its highest in two months led
by gains in stocks such as HDFC on value-buying, but Larsen &
Toubro Ltd slumped after posting disappointing
earnings. 
    The slight gains allowed the BSE index to post its fourth
consecutive winning session, with sentiment also improved after
foreign institutional investors snapped a four-day selling
streak by buying 2.52 billion rupees ($42.26 million) of shares
on Friday. 
    Analysts said a mixed set of earnings, concerns over a
reversal in the central bank policy and the expiry of July
derivatives on Thursday are expected to keep shares volatile for
the next few days.
    Investors are also looking for additional government or
central bank measures to stabilise the rupee. 
    Reuters reported the government is looking to attract dollar
inflows through non-resident Indian deposits to support the
rupee and has dropped the option of issuing sovereign bond for
now, while also considering raising interest rates, according to
two senior government officials. 
    "Some rate hike fears are there but the RBI most likely will
not, while earnings have slanted towards being mixed after L&T
and Reliance disappointed. Volatility may continue," said G.
Chokkalingam, managing director and chief investment officer at
Centrum Wealth Management.
    The benchmark BSE index rose 0.05 percent, or 9.27
points, to end at 20,159.12, gaining for a fourth consecutive
session. It rose to 20,264.90 in intraday trading, its highest
level since May 21.
    The broader NSE index rose 0.04 percent, or 2.60
points, to end at 6,031.80.
    Housing Development Finance Corp Ltd gained 3.4
percent on value-buying after falling 5.7 percent last week.
    Hero MotoCorp Ltd rose 1 percent a day ahead of
its June-quarter earnings.
    Bajaj Auto Ltd, India's second-largest motorcycle
maker, gained 1 percent, rising for a second day as its
June-quarter operating margins, after adjusting for
mark-to-market loss, beat estimates at 20.4 percent on Friday.
 
    Biocon Ltd rose 1.4 percent after Morgan Stanley
upgraded the stock to "overweight" from "equal-weight" and
raised its target price to 392 rupees from 283 rupees, citing
improving base business, progress in the bio-similar platform
and inexpensive valuations. 
    However, Larsen & Toubro Ltd's (L&T) shares fell
7.4 percent, marking their biggest daily fall in four years,
after the company said earnings slumped 12.5 percent in the June
quarter from a year earlier, missing consensus estimates by a
wide margin.  
    L&T's results also hit rivals such as Bharat Heavy
Electricals Ltd which ended 7.1 percent lower.
    Reliance Industries Ltd fell 1.6 percent even
after reporting market-beating earnings late on Friday, as other
income, mainly from treasury-related gains, accounted for 38
percent of pretax profit for the quarter, according to the
company. 
    Ambuja Cements Ltd slumped 4.7 percent after
Credit Suisse downgraded the stock to "neutral" from
"outperform", while maintaining its target price at 205 rupees.
    The investment bank said the stock is trading at its peak
multiple and is already pricing in margin recovery in 2014 and
part of the potential merger synergies with ACC Ltd.
 
   
   For additional stocks on the move double click        
     
   FACTORS TO WATCH                                             
* Yen up after Japan PM's election win, but gains may wane 
* Oil above $108 as US oil extends premium to Brent        
* Shares eye 5-year high after Abe win, yen choppy   
* Foreign institutional investor flows          
* For closing rates of Indian ADRs                       
                       
   ASIA-PACIFIC STOCK MARKETS:                                  
Pan-Asia........ Japan.......   S.Korea... 
S.E. Asia.......        Hong Kong...  Taiwan.... 
Australia/NZ....        India.......  China..... 
                        
   OTHER MARKETS:                                               
Wall Street ....         Gold ....... Currency.. 
Eurostocks.....         Oil ........  JP bonds... 
ADR Report .....       LME metals. US bonds.. 
Stocks News US.. Stocks News Europe     
                       
   DIARIES & DATA:                                              
Indian Data Watch   Asia earnings diary 
U.S. earnings diary     European diary       
Indian diary          Wall Street Week Ahead  
Eurostocks Week Ahead                                   
                         
   TOP NEWS:                                                    
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 (Editing by Subhranshu Sahu)
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