Live Market Commentary
02:55pm Market Update
The market extended fall in last hour of trade. The Sensex is down 357.56 points or 1.73 percent at 20277.57, and the Nifty is down 109.85 points or 1.79 percent at 6013.05.
European markets, too, are under pressure on Fed tapering fears. France's CAC and Germany's DAX dropped 0.7 percent each while Britain's FTSE declined 0.3 percent.
Meanwhile, all emerging markets' currencies are weak against the US dollar. The rupee is down 32 paise to 62.89 against the US dollar.
02:45pm Kirloskar Oil Engines sees heavy volumes
Kirloskar Oil Engines gained more than 10 percent in intraday trade on Thursday on four big block deals worth Rs 51 crore in afternoon trade.
More than 31 lakh equity shares changed hands at Rs 163.50 apiece on both exchanges.
02:35pm Motilal Oswal's view on private banks
Motilal Oswal expects private banks to deliver around 18 percent earnings per share CAGR over FY13-15. ICICI Bank, Axis Bank and Federal Bank and YES Bank are its top picks.
"Better than expected performance by Private Banks in a volatile and challenging quarter enhances our confidence in their profitability. The cumulative benefit of RBI actions is likely to be felt more by bulk financiers like YES Bank and Axis Bank, and NIM outlook has improved. While the retail portfolio is holding up well, higher stress in the corporate segment and a challenging macro environment will drive up credit cost. Higher than expected credit cost is likely to be compensated by better NIM and operating leverage; thus, RoAs are likely to remain healthy. Overall return ratios are likely to remain strong, with RoA of 1.6%+ and RoE of ~17%; tier-I ratio for most banks would be at a comfortable level," Motilal elaborated.
02:25pm Ceat Boardroom
Ceat shares have nearly doubled over the last month as investors see the company's profits rising due to low rubber prices. The company some time back had decided to import natural rubber to gain from cheaper prices. This year so far, the company has imported roughly half its rubber requirements. A Subba Rao, CFO says he is flexible on this strategy and it would be driven by cost advantages.
Rao says tyre companies abroad don't see too much volatility in profit margins even if rubber prices fluctuate sharply. Indian companies too will have to learn to overcome these raw material cost increases and maintain profit margins.
Rao sees second half earnings and margins to be in line with those seen in the first half.
Around 30 percent of Ceat's revenues come from vehicle manufacturers, and the rest from the replacement market. "Auto industry has been going through one of its worst periods in the last decade; commercial vehicle growth – there is a negative growth of 25 percent for the second successive year, so passenger car sales is just at the breakeven level as compared to last year," he says. Rao doesn't expect any substantial improvement in demand from the OEM side, but he is trying to get new customers from the OEM segment.
02:15pm Equity benchmarks lost more than 1.5 percent in afternoon trade on fears that Fed tapering may start earlier-than-anticipated. All sectoral indices are in the red.
The Sensex is down 318.46 points at 20316.67, and the Nifty is down 96.80 points at 6026.10. About 822 shares have advanced, 1395 shares declined, and 142 shares are unchanged.
According to Laurence Balanco of CLSA, ultimately a break below 6,008-6,107 support should result in move down to the 5,870-5,880 area over the coming weeks. "This means is that the Nifty is likely to remain rangebound below the 6,330-6,340 resistance zone into 2014," he adds.
The biggest loser in the Sensex was HDFC with a 3 percent cut followed by Infosys, ITC, Sun Pharma, L&T, NTPC and Sesa Sterlite with a 2-2.5 percent loss.
Just Dial, SBI, Axis Bank, Infosys, ICICI Bank, Tata Steel and Wockhardt are most active shares.
Meanwhile, the rupee declined 31 paise to 62.88 against the US dollar.
Nizam Idris of Macquarie says dollar rupee will be stuck within that 62-64/USD range for now. He does not see massively strong data coming out of the US. He continues to expect tapering in March from the Federal Reserve.