Sensex closes above 20k, Hero Moto, HDFC decline post earnings

3:30 pm Today has been a busy earning day. Shares of Hero MotoCorp and HDFC Bank declined and those of ITC rose after the companies announced their results.

The Sensex closed above 20,000 but retreated from its two-year high to end at 20028, up 64 points while Nifty ended at 6058, up 20 points. BSE Sensex has provisionally closed above 20,000 level for the first time since Jan 6, 2011.

According to Vikas Khemani of Edelweiss Securities the markets are reading the diesel price hike very positively. "These are giving some indications that government is clearly resolved around getting the fiscal consolidation right and if that happens there will be a lot more belief around what they present in the budget. ," he told CNBC-TV18 in an interview.

BSE oil and gas index closed 3 percent higher while the BSE IT index closed down 1.3 percent with Wipro leading losses. Although Wipro's results were better than analyst estimates, the wide guidance band for Q4 revenue growth and fall in volume did not enthuse much confidence.

Among refiners, Hindustan Petroleum gained 5.6 percent, and Bharat Petroleum Corp ended 10.4 percent higher.Oil and Natural Gas Corp closed up 7.3 percent.

IOC is up more than 7 percent today and has gained almost 30 percent so far this month after the govt told retailers to raise the price of the subsidised fuel in small amounts every month, a move aimed at propping up public finances that should also improve revenues in the sector.

Hero MotoCorp fell more than 5 percent as the country's largest two-wheeler maker reported a 20.41 percent decline in net profit for the third quarter ended December 31.

The stock hit a 52-week low of Rs 1,720 on the Bombay Stock Exchange, in an otherwise strong stock market.

"In Q3 FY13, the performance of Hero MotoCorp came way below our as well as street expectation as the company's net profit declined 20.4 percent," Karvy Stock Broking said in a report.

Hero MotoCorp had yesterday reported a net profit of Rs 487.98 crore for October-December, due to lower sales and higher expenses. Net sales stood at Rs 6,151.31 crore, compared with Rs 5,983.55 crore in the year-ago period.

HDFC Bank shares declined more than 1 percent as investors booked profit after the bank's net profit grew 30 percent, a rate it has been managing to clock consistently for the last 30-31 quarters.

The bank, however, is not seeing much pressure on asset quality, although there may be an uptick in bad loans for some products, Executive Director Paresh Sukthankar said on Friday.

Its net profit stood at Rs 1,859 crore, and net interest income, or the difference between interest earned and paid out, rose nearly 22 percent to Rs 3,800 crore.

Other income increased 27 percent to Rs 1,800 crore aided by growth in fee and commission income.

Cigarettes-to-hotel conglomerate ITC, meanwhile, rose 0.4 percent after the company reported a better-than-expected 21 percent on-year increase in the third quarter net profit to Rs 2,052 crore, helped by strong growth in FMCG and agri-businesses.

Net sales grew 23 percent to Rs 7,627 crore. A CNBC-TV18 poll had seen the company reporting a net profit of Rs 2,007 crore on a revenue of Rs 7,220 crore.

Reliance Industries rose 1.16% to Rs 900, ahead of its Q3 December 2012 results today, 18 January 2013.

Reliance Industries on 10 January 2013 said it has bought back 4.62 crore shares for about of Rs 3359.76 crore till 8 January 2013 under its ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013.

Sensex struggles at 20,000, Nomura cautions on rally in oil stocks

2:15 pm The markets are off the day's high with the Sensex up only 0.16 percent at 1995 and the Nifty up 0.17 percent at 6049 an hour before the provisional close. Facing stiff resistance at higher levels the two frontline indices have trimmed initial gains.

IOC hit a 52-week high on oil rally after diesel price hike. The stock is currently trading at Rs349.80.However Nomura said the rally in PSU oil marketing companies was excessive and the action would not lead to any improvement in the bottom line of these companies.

"We reiterate that yesterday's actions are not a big reform, and there may not be much reduction in oil marketing companies' overall under-recoveries," Nomura wrote today. "Also, even as under-recoveries reduce, these may not result in any improvements in the bottom line of companies, in our view," the analysts added.

Nomura maintained its 'reduce' rating on ONGC and Oil India.

HDFC Bank fell 1.03% to Rs 660 a on BSE, on profit booking after the bank reported 30.03% rise in net profit to Rs 1859.07 crore on 21.84% growth in total income to Rs 10506.51 crore in Q3 December 2012 over Q3 December 2011.

Cigarette major ITC announced its market-beating third quarter numbers. The stock was trading at Rs 288.70 up 1.24% from its previous close of Rs 285.15.

Wipro is the top Sensex and Nifty loser, down 6 percent as the performance of the company's core IT services segment was not as strong as expected.

"The volume growth has been lower than the peer group. Additionally, guidance range for the next quarter is a wide at 0.5%-3% growth and is suggests that volume outlook is uncertain," said Rumit Dugar, telecom analyst at Religare Capital Markets.

RIL, SBI, ICICI Bank, Bharti Airtel, Sun Pharma, BHEL, HDFC, Tata Steel, Hero MotoCorp, ONGC, Dr Reddys Lab, Bajaj Auto, Hindalco Inds, are among gainers in Sensex and Nifty.

Infosys, Wipro, TCS, Tata Power, M&M, HUL are among losers in Sensex and Nifty

1:pm RIL's 52-week high is more about diesel than earnings

Shares of private petro-retailers Reliance Industries and Essar Oil have hit their 52-week highs of Rs 893 and Rs 78, respectively, as the two are likely to gain from the phased increase of diesel prices the state-run oil companies have been allowed to affect.

The move by the government, though not deregulation in its complete sense, will open up an opportunity for private sector oil companies to come back to fuel retailing.

These companies had abandoned some retail outlets as crude oil touched $150 a barrel and they found it difficult to match the discounted prices offered by the state-run oil firms.

Apart from allowing state-run oil companies to make small price corrections on diesel from time to time, the government has also completely deregulated the fuel sales for bulk consumers.

This is a lucrative market that is immediately opening up for the private sector oil companies.

As Firstpost's R Jagannthan points out deregulation on bulk buying may not help the public sector oil companies much but will surely help private oil companies like Reliance and Essar to supply bulk consumers at competitive prices.

Moreover, restarting the fuel retail outlets they had earlier shut will also make good business sense for Essar Oil and RIL.

But this is possible only in a year or so as PSU oil retailers are allowed to increase prices only gradually and they will be able to match offer market rates only over a long period.

A report in Times of India already points out that two are gearing up to regain lost market share. Once the OMCs start selling diesel at market rates, the two are likely to reopen their pumps.

Essar Oil and RIL had together captured about 17 percent of the domestic retail market for diesel by 2005 before heavily subsidised sales by the public sector knocked them out of the business.

Oil marketing companies help keep Sensex above 20,000

11:am Even though the Sensex has come off its high point of the day of 20,126.55, Indian markets are continuing their upswing with oil marketing companies pushing the Sensex higher.

At 11 am, the Sensex was trading 0.53 percent higher at 20070 while the Nifty was up 0.47 percent at 6067.

Both frontline indices hit their two-year highs supported by buying in oil and gas counters as shares of three state-run oil marketing firms rallied after diesel prices were raised by 51 paise per litre after a go ahead from the Centre.

The price hike was more limited than expected, given the oil ministry last month said it was working on a proposal to raise diesel prices by 1 rupee a month for 10 months, but was seen as more likely to be accepted politically ahead of state elections this year.

"Investors may rightfully question the ability of the government to raise prices continuously given high inflation and social and political issues," Kotak Institutional Equities wrote in a note on Friday.

"We think the companies can raise prices of diesel a few times over the next few months; the first nine months of the current calendar year are relatively free of state elections," the brokerage added.

Analysts said producers such as Oil India Ltd would benefit most from the diesel price hike, given they have been selling crude oil and associate products at a discount, and could be allowed to charge higher prices.

PK Goyal, chairman, IOC, (shares of which have surged 15 percent this morning) told CNBC-TV18 that IOC will revise diesel prices either fortnightly or monthly. "Another hike can be expected by next fortnight," he said. The IOC chairman clarified that deisel has been deregulated for bulk consumers like the Railways.

Gains in stocks of CDMA operators too aided the sentiments as scrip like Reliance Communication and Tata Teleservices (Maharashtra) edged higher after the Union Cabinet approved reduction in reserve price for the auction of spectrum for CDMA by 50% from the previous reserve price.

Reliance, ahead of its results, is flat at Rs 890. HDFC Bank and ITC are trading higher by 0.6-0.7%. Both companies will post their quarterly numbers later today.

Essar Oil advanced 3.97% to Rs 79.90 , with the stock extending recent gain triggered after the company reported turnaround Q3 results on Tuesday.

The top gainers on the Sensex were ONGC up by 9.48%, Gail India up by 3.68%, Maruti Suzuki up by 2.46%, SBI up by 1.73% and Hindalco Industries up by 1.60%.

On the flip side, Hero MotoCorp was down by 4.21%, Wipro was down by 3.56%, Mahindra & Mahindra was down by 2.14%, Dr Reddys Lab was down by 1.17% and Bharti Airtel was down by 1.16% were the top losers on the Sensex.

10am Wipro shares down as Q4 guidance disappoints

Wipro shares were down despite a better-than-expected earnings as investors were disappointed due to the muted revenue guidance.

Announcing the earnings for October-December, the company projected a growth of 0.5-3 percent growth in It services to $1.585-1.625 billion for the fourth quarter.

The company's revenue rose 3.5 percent on quarter to Rs 10,989.1 crore and net profit 6.6 percent to Rs 1,716.4 crores.

The company's IT services revenue grew 2.7 percent sequentially to Rs 8,601.8 crores.

"While the performance of Wipro's IT Services segment remained subdued, compared with its peers, the growth in bottom line was largely fueled by healthy performance of its Consumer Care and Lighting Business," brokerage Microsec said in a note to the clients.

9:30 am Sensex soars past 20,000, OMCs rally on 51 p/lit diesel hike

It's a brilliant start to the markets. Clearly the the government's decision to partially free up diesel prices is boosting sentiment. It appears to be firing on all cylinders. Consumers would get nine subsidised cooking gas cylinders a year, instead of six at present. Bulk consumers will have to pay market price, to be revised every fortnight.

The Sensex opened at 20,000 and is currently up 0.56 percent at 20075, while the Nifty is up 0.46 percent at 6068 levels.

Reuters

Oil marketing companies soared after the government raised diesel prices by 51 paise and planned similar monthly hikes in future to cut record subsidies.

The government's decision to partially free up diesel prices sent IOC up 15 percent, HPCL rose 8.4 percent, BPCL gained 5.9 percent; ONGC up 10 percent on hopes for reduced subsidy burden after the hike.

However, though the government's decision to partially deregulate diesel is going to help PSU OMCs it has potential to fuel inflation and may stop RBI from cutting key policy rates by the end of the month. However not all agree with this.

According to Samiran Chakrabarty, head of Research, Standard Chartered Banke Reserve of Bank of India would be in a more comfortable position to cut rates on January 29. "RBI has always put fiscal consolidation as a pre-condition for rate cuts. This is surely the most serious intent of fiscal consolidation seen in some time," he told CNBC-TV18..

Even Neeraj Gambhir of Nomura India feels that diesel de-regulation is very positive for bonds as it helps reduce the fiscal deficit in the governments borrowing programme and Rupee also as it shows the resolve of the government to continue with the reform process.

Wipro's stock is down around 3.2 percent e the fact the India's No.3 IT firm's Q3 results have exceeded estimates.

RIL, SBI, ICICI Bank, Bharti Airtel, Sun Pharma, BHEL, HDFC, Tata Steel, Hero MotoCorp, ONGC, Dr Reddys Lab, Bajaj Auto, Hindalco Inds, are among gainers in Sensex and Nifty.

Infosys, Wipro, TCS, Tata Power, M&M, HUL are among losers in Sensex and Nifty.

Meanwhile, the finance ministry has said software development at client locations and deployment of personnel abroad by India's IT firms will continue to get tax exemptions.

The telecom sector too will remain in action after the Union Cabinet approved a 50 per cent cut in the auction reserve price for the 800 MHz CDMA spectrum. There will be some buzz in the banking sector too, as the International Monetary Fund (IMF) has cautioned India that it should not rush to grant new bank licences to industrial houses and conglomerates

Results today: RIL, Wipro, HDFC Bank, Hindustan Zinc, Unichem Lab, Mindtree, NIIT, Oriental Hotels, IDBI Bank, Responsive Inds, ITC, Mahindra & Mah Fin, ASSAMCO, Atul, Blue Star, Dolphin Offsh, Esab India, GG Automotive, Mardia Samyoung.

Deutsche Equities too has joined counterparts in giving an " overweight" call on Indian markets and said BSE benchmark Sensex is poised to touch 22,500 points by 2013-end.

lobal biggies like Morgan Stanley, Goldman Sachs, JP Morgan, Nomura, Citigroup and Macquarie have already raised the Sensex target for 2013 to a high of 23,069 by December. Yesterday, Deutsche Equities too joined counterparts in giving an " overweight" call on Indian markets and said BSE benchmark Sensex is poised to touch 22,500 points by 2013-end.

It said the recent government actions have completely changed their views on India and this is reflected in the bullish target."22,500 is the base case scenario if oil remains in the $11-115 per barrel range and the government cuts current account deficit urgently."

Globally, US markets hit a 5-year high after the government reported a sharp rise in the number of new homes being built in December. First-time claims for unemployment benefits fell to a five-year low boosting sentiment.

Asian stocks are up. The yen is near a 30-month low. China's Shanghai is up 0.6%. Hong Kong's Hang Seng gained 0.8%. Prime Minister Shinzo Abe is expected to pursue more aggressive stimulus policies and this has sent the Nikkei higher by over 2% and is set to record its longest weekly gains since April 1987.