Tata Steel gains on better-than-expected EBITDA

Reuters Market Eye - Shares in Tata Steel(TISC.NS) recover from early losses to gain as much as 2.6 percent, despite reporting April-June net profit that missed estimates, as operating profit came in above expectations.

Brokerage Kotak said Tata Steel's consolidated EBITDA of 34 billion rupees was 10 percent ahead of its estimates.

"The stock may not perform in the near term due to the economic slowdown and fears of steel dumping from China but valuations are attractive," it said in a note in the morning.

Tata Steel's shares last up 1.9 percent.
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BSE net profit dips 76% in June quarter

 MUMBAI: A combination of factors such as depressed trading volumes, prior period accounting adjustments and extraordinary expenses took their toll on the performance of BSE (formerly the Bombay Stock Exchange) in the quarter ended June 30, 2012.

Asia's oldest stock exchange posted a sharp 76% decline in its net profit to Rs 15.4 crore, while total income fell 9% to Rs 136.4 crore during the period.

A break-up of BSE's revenues showed that income from stock exchange activity, including transaction charges and listing fees among major sources, amounted to Rs 95 crore, down 11% over the figure recorded in the quarter ended June 30, 2011. Income from depository activity decreased 9% to Rs 29.5 crore.

Securities trading volume and turnover at BSE declined substantially in the last quarter due to generally dismal market conditions.

While volume fell 29% to 1,234 crore shares, turnover slipped 32% to Rs 1,28,275 crore in the period.
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Suzlon shrs hit new low after big loss in Q1

Suzlon Energy shares tumbled to a record low of  Rs 16.10 on NSE on Tuesday, after the wind turbine maker reported a huge loss of Rs 849 crore in the first quarter, much higher than the Rs 300 crore loss in Jan-March and profit of Rs 60 crore in the year ago quarter.

"This has been a disappointing first quarter. The macroeconomic environment, policy uncertainties in some markets, along with other external factors such as the depreciating rupee continue to impact us," Tulsi Tanti, Chairman said in a statement.

The company's revenue in April-June was up 10% year-on-year to Rs 4,747 crore and it has an orderbook of USD 7.2 billion.

"Our core business fundamentals remain sound -- high gross margins, strong and firm orderbook and high turbine availibility -- and we are embarking on a robust programme, project transformation, to reduce annual opex and manpower cost by 20% by the end of the year.  We have also made it a priority to strengthen our balance sheet significantly by deleveraging in India. This will be a defining year for Suzlon Group, even as our sector continues to face a number of challenges," Tanti added.

However, the street was not impressed by his "cautiously optimistic" outlook.

"Except for revenue, other numbers were much below our and market expectations. Net loss was over 6 times our and consensus estimate
range of Rs 120-130 crore...Though Suzlon has not cut its FY13 guidance (revenue between Rs 27,000-28,000 crore and an EBIT margin of 6%), we
expect guidance downgrade post the first half results...We see an increased downside risk to our numbers based on Q1 performance and tougher market conditions ahead," said Charanjit Singh and Jenny Cosgrove of HSBC.

The analysts further added that Suzlon remains highly leveraged with net debt to equity ratio of 2.9 times as of June 30 and there are debt repayment risks in FY13 and FY14.

HSBC has maintained its "underweight" rating on Suzlon, with a target price of Rs 10 on the stock.

At 10:50 hrs, Suzlon shares were at Rs 17.20, down near 3% from previous close.

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Nifty tests 5350, Sensex holds 17600 ahead of inflation data

NEW DELHI: The 50-share Nifty is stuck in a 20- point range, trading a shade below its crucial level of 5,350 ahead of monthly inflation data for July, which will be out later today (11:30 a.m. IST).

Inflation has probably crept up in July as poor monsoons drove food prices higher, a Reuters polls showed, giving the Reserve Bank of India less room to cut interest rates to revive the flagging economy.

"The Nifty spot has been forming higher-tops, higher-bottoms since the last three trading sessions. The index is holding to its support level of 5,290 in rangebound trade," Sujit Deodhar, Head-Technical Analyst at Wellworth Share & Stock Broking Ltd, said.

"Technical indicator RSI is in a strong buy mode. Also, the short-term moving averages like 20 and 50 DMA have a positive divergence. So the probability of the index heading higher to test 5,450 levels can be ruled out," Deodhar added.

"The rupee opened at 1-week low as high crude oil prices continue to weigh on sentiment. The rupee was at 55.52/54 after rising to 55.59, versus 55.34/35 last close," Reuters reported.
"Foreign bank dealers say the market was short overnight and panicked to cover at open," the report added.

At 10:10 a.m., the 50-share NSE index was at 5,344.80, down 3.10 points or 0.06 per cent. It has touched a high of 5,356.45 and a low of 5,336.75 today.

The 30-share Sensex was at 17,638.89, up 7.56 points or 0.04 per cent. It has touched a high of 17,659.66 and a low of 17,600.02 today.

Tata Steel Ltd rebounded from its early morning lows of over 1 per cent, after reporting in-line consolidated net profits of Rs 598 crore for the quarter ended June 30, 2012. The stock was trading 1.7 per cent higher at Rs 402.50. It has hit a low of Rs 388.60 and a high of Rs 405.71, today.

The BSE Midcap Index was up 0.35 per cent and the BSE Smallcap Index moved 0.56 per cent higher.

Among sectoral indices, the BSE Oil & Gas Index was up 0.5 per cent, the BSE Metal Index advanced 0.44 per cent and the BSE Banking Index moved 0.40 per cent higher.

The BSE Power Index declined 0.50 per cent and the BSE FMCG Index was down 0.34 per cent.

Sun Pharmaceutical (2.4 per cent), Sesa Goa (1.8 per cent), Sterlite Industries (1.7 per cent), Maruti Suzuki (1.3 per cent) and Tata Power (1 per cent) were the major Nifty decliners.

Coal India (2.1 per cent), Tata Steel (1.7 per cent), M&M (1.1 per cent), Tata Motors (1.05 per cent) and ICICI Bank (0.7 per cent) were the major Sensex gainers.
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Sensex remains in negative territory as weakness persists

The market, which opened on a weak note amid mixed global cues, continues to languish in negative territory with several key stocks from automobile, power, capital goods, metal and banking sectors trading weak on selling pressure.

Realty stocks, which found modest support early on in the session, are drifting lower now. Pharmaceuticals, information technology and FMCG stocks are off their highs. Select oil stocks are trading firm. Activity remains stock specific in midcap and smallcap segments.

At 17,540, nearly 40 points off the day's low of 17,503.57, the Sensex is now down 20.87 points or 0.12% from its previous closing mark. The Nifty, which had drifted down to 5303.75, is down 11.95 points or 0.22% at 5311 at present.

In the currency market, the rupee drifted down against the daoll, easing to 55.43 in early trades. On Thursday, the partially convertible Indian currency had settled at 55.27 against the greenback, recording a gain of 15 paise, thanks to strong dollar inflows.
Tata Motors and Hero Motocorp are trading lower by around 2.4% at Rs 233.60 and Rs 1912, respectively. Bajaj Auto is down 1.3% at Rs 1669 and Mahindra & Mahindra is trading 1.2% down at Rs 735, while Maruti Suzuki is up in positive territory with a gain of 1.2% at Rs 1158.50.

Tata Power is trading lower by 1.6%. Coal India, BHEL, Jindal Steel, Tata Steel, HDFC, HDFC Bank, Larsen & Toubro, Dr Reddy's Laboratories and Wipro are down 0.5% - 1.2%.

Bharti Airtel and Tata Consultancy Services are up more than a percent at Rs 260 and Rs 1271.50, respectively. Sterlite Industries, Reliance Industries, ITC, Cipla and Hindustan Unilever are up with modest gains.

State Bank of India is up marginally at Rs 1976 amid cautious trades ahead of announcement of results. Meanwhile, UBS has downgraded the stock's rating ahead of results, stating that it is quite high priced at present.

GMR Infrastructure, Mphasis, ABB, JP Infratech, Power Finance Corporation, Ranbaxy Laboratories, Engineers India, IDFC, IFCI, Reliance Capital, SAIL and Reliance Infrastructure are down with sharp losses.

Jain Irrigation Systems is up by over 6.5% on strong buying support. Indraprastha Gas has gained a little over 5.5%. Tech Mahindra is trading nearly 3% up thanks to impressive results.

Petronet LNG, Pipavav Defence, Idea Cellular, Aurobindo Pharma, Wockhardt, Zee Entertainment, Suzlon Energy, Apollo Tyres, MMTC, Shree Cement and Oracle Financial Services are also trading notably higher.
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UBS downgrades SBI to 'sell' ahead of earnings

UBS downgraded State Bank of India to 'sell' from 'buy', saying a weak monsoon would add to its 'already high' non-performing loans while expecting margins to decline due to rising cost of funds and potential cuts in the lending rate.

UBS lowered its fiscal 2013 and 2014 earnings forecasts by 13 per cent, while reducing its 12-month price target on India's biggest private lender by 30 per cent to Rs 1,800, in a note released late on Thursday.

SBI is due to report its April-June earnings later in the day.

The stock fell 4.5 per cent to Rs 1,968.75 on Thursday, its biggest daily percentage fall since February 22, because of worries it would report disappointing earnings.

deccan chronical

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Please read very carefully

Is the market rally just a set-up for a bigger 'collapse'?

Global stocks have been rallying in recent weeks, climbing a "wall of worry" and confounding the bears, leading a number of strategists to warn the gains are unlikely to last and investors should remain cautious.

"I think we're in choppy waters and that continues. You've got to remember to sell if you own the stock market now," Charlie Morris, Head of Absolute Return at HSBC Global Asset Management told CNBC Europe's "Squawk Box" on Wednesday.

Morris says with bad news on the global economy over the past year, the market had "tried to collapse", but with so many people short stocks, the conditions hadn't been ripe. That, he says, could change after the current rally ends.

"You need to trip the market to have a proper collapse. So you almost need to set it up with a rally, get everyone excited and then it can fall," Morris said. "If there are risks, the risks to a very negative market come after this rally fades."

US stocks gained for a third consecutive session on Tuesday with the S&P 500 finishing above 1400, while European stocks hit a 4-month high on expectations policymakers will soon decisively address the region's debt crisis. Asian stocks also hit a three-month high on Wednesday, with Japan's Nikkei breaking above its 75-day moving average.

Sandy Jadeja, Chief Technical Analyst at City Index told CNBC on Tuesday that despite being bullish on the Dow for the past two weeks he was now growing concerned. He said there was a clear divergence between the technical indicators and the current price levels on longer-term charts for the Dow.

"Watch out for the end of this week, if we start seeing a negative close by the end of the week, that would suggest that next week, and the week after, we'll start pushing to the lower side."

Other market watchers have been warning that based on economic fundamentals, the current rally is irrational. "The rally on Friday after the release of the employment figures and the consumer confidence index really has no economic merit," Dan Geller, chief research officer of the Money Market Index economic index told CNBC Monday. (Related: Jittery Market Basics)

Barclays equity strategist Barry Knapp also pointed out in a note to clients on Wednesday that the underlying factors in terms of "expectations of US and global growth deterioration, less accommodative monetary policy, earnings growth deceleration and elevated public policy uncertainty" were the same as they had been in the second quarter when US stocks dropped 10%.

He said investors who were defensively positioned could buy call options on small cap stocks and select cyclical stocks to ensure they didn't lose out on the rally. But, he added: "We remain unconvinced that investors should chase the low volume 'wall of worry' August rally."

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