Markets end flat amid volatility, Capital goods slump

Markets ended flat on Monday, amid a volatile trading session, weighed down by profit taking in L&T after the engineering major announced disappointing first quarter earnings.

Larsen and Toubro tanked 7.46% to Rs 902 after reporting a 12.5% year-on-year (yoy) drop in its net profit at Rs 756 cr for the quarter ended June 30, 2013 (Q1) on account of job mix, lower margin accruals and lower other income.

The 30-share Sensex ended up 9 points at 20,159 mark and the 50-share Nifty inched up 3 points at 6,032 levels.

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GLOBAL MARKETS

World shares were testing a five-year high on Monday as a strengthening of Japanese Prime Minister Shinzo Abe's grip on power in weekend elections were seen as a boost for his radical stimulus policies.

European stocks saw a steady start to the week, dipping 0.1 percent as upbeat results from Philips and Julius Baer helped offset the temptation to book profits on the 9 percent gain the FTSEurofirst 300 index.

Japanese stocks led Asian markets higher on Monday after Prime Minister Shinzo Abe's big election win over the weekend, but a rebound in the yen prompted some profit taking that knocked the Nikkei off highs.

Most other Asian share markets were modestly higher, although Hong Kong's Hang Seng and mainland Chinese stocks lost a bit of ground.

Tokyo's Nikkei ended 0.5 percent higher, having earlier climbed as much as 1.2%.

Indian Rupee

The rupee was at 59.55 against the dollar at the Interbank Foreign Exchange market on increased demand for the US currency from importers amid a weak opening in local equities.

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SECTORS & STOCKS

BSE Capital Goods index slumped by almost 6% followed by counters like Oil & Gas, Power, PSU, Realty and Consumer Durables, all falling down between 1-2%.

However, BSE Auto, Bankex and IT indices gained by 1% each.

Engineering & construction major L&T witnessed a sharp fall today post the announcement of Q1 numbers.

The stock reported a 12.5% year-on-year (yoy) drop in its net profit at Rs 756 crore for the quarter ended June 30, 2013 (Q1) on account of job mix, lower margin accruals and lower other income.

BHEL tumbled by over 7%. HDFC Securities in a recent report on BHEL maintained “Sell” rating on the stock and reduce target price to Rs 147.

Analyst believe that for the foreseeable future, BHEL’s order inflows have peaked out in FY11 (Rs 60,000 crore) as India’s coal constraints will ensure cautious ordering from developers.

Index heavyweight Reliance Industries dipped nearly 2% on BSE after the company has reported 18.9% year-on-year (yoy) jump in its net profit at Rs 5,352 crore for the quarter ended June 30, 2013 %, as gross refining margin (GRM) rose to $8.4 per barrel compared with $7.6 a barrel in the same period last year.

Other notable losers were Tata Steel, ONGC, Dr Reddy’s, Cipla and GAIL.

On the gaining side, HDFC was the top Sensex gainer, up over 3%. HDFC is planning to buy Hindustan Unilever's former headquarters, Lever House, located at Backbay Reclamation in the southern tip of the megapolis.

Other notable gainers included M&M, Sun Pharma, HUL and ICICI Bank, all gaining between 2-3%.

The broader markets ended almost flat. The market breadth in BSE ended marginally negative with 1,229 shares declining and 1,037 shares declining.

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SMART MOVERS

Shares of Zuari Agro Chemicals and Mangalore Chemicals and Fertilisers rallied between 5-15% each on the National Stock Exchange.

Blue Star Infotech surged over 9% on reporting nearly five fold jump in its consolidated net profit at Rs 10.38 crore for the quarter ended June 30, 2013 on back of strong growth in operational income.

Ambuja Cements dipped over 4% on BSE after the Credit Suisse downgrades the stock to "neutral" from "outperform".

Financial Technologies (India) dipped over 6%, extending its over 17% fall in past five trading sessions, after government asked National Spot Exchange (NSEL) not to launch contracts of new commodities until the government finalises a new regulatory framework.

Wockhardt slipped 9% after the pharmaceutical company said it has received warning letter from the US Food and Drug Administration for its facility at Waluj in Maharashtra not meeting manufacturing norms.