Tuesday, February 02, 2016

THE END SESSION ( 01 / 02 )

Key indices edge lower after swinging between positive and negative zone


After swinging between positive and negative zone alternately in intraday trade, the two key benchmark indices registered small losses. The barometer index, the S&P BSE Sensex, fell 45.86 points or 0.18% to settle at 24,824.83. The losses for the Sensex were higher in percentage terms than those for the 50-unit Nifty 50 index. The Nifty lost 7.60 points or 0.1% to settle at 7,555.95. The Sensex failed to hold the psychological 25,000 level after surpassing that mark in intraday trade.

Shares of state-run oil marketing companies (PSU OMCs) edged lower after the government reportedly hiked the excise duty on petrol by Rs 1 per litre and on diesel Rs 1.50 per litre. ICICI Bank dropped, with the stock extending losses registered in previous trading session triggered by the private sector bank reporting increase in bad loans in Q3 December 2015. Yes Bank edged higher, with the stock extending gains registered in previous trading session triggered by the private sector bank's announcement at the time of unveiling Q3 December 2015 results that its non-performing assets remain under control. Maruti Suzuki India dropped after the company reported decline in sales volume in January 2016 due to lesser number of working days.

The Sensex fell 45.86 points or 0.18% to settle at 24,824.83, its lowest closing level since 28 January 2016. The index lost 82.11 points or 0.33% at the day's low of 24,788.58. The index rose 131.63 points or 0.52% at the day's high of 25,002.32.

The Nifty lost 7.60 points or 0.1% to settle at 7,555.95, its lowest closing level since 28 January 2016. The index lost 22.30 points or 0.29% at the day's low of 7,541.25. The index rose 36.90 points or 0.48% at the day's high of 7,600.45.

The market breadth indicating the overall health of the market was positive. On BSE, 1,427 shares rose and 1,262 shares declined. A total of 143 shares were unchanged. The BSE Mid-Cap index rose 0.57%. The BSE Small-Cap index gained 0.29%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 2543 crore, lower than turnover of Rs 2696.87 crore registered during the previous trading session.

Among sectoral indices on BSE, the S&P BSE Utilities index (down 0.53%), the S&P BSE Power index (down 0.55%), the S&P BSE Auto index (down 0.36%), the S&P BSE Finance index (down 0.75%), the S&P BSE Bankex (down 1.4%), the S&P BSE Oil & Gas index (down 0.26%), and the S&P BSE Consumer Discretionary Goods & Services index (down 0.2%), underperformed the Sensex. The S&P BSE Telecom index (up 1.94%), the S&P BSE Realty index (up 0.21%), the S&P BSE Healthcare index (down 0.14%), the S&P BSE Basic Materials index (up 0.34%), the S&P BSE Metal index (up 0.78%), the S&P BSE Teck index (up 0.7%), the S&P BSE IT index (up 0.57%), the S&P BSE Industrials index (up 0.96%), the S&P BSE FMCG index (up 0.98%), the S&P BSE Energy index (down 0.11%) and the S&P BSE Capital Goods index (up 0.98%) outperformed the Sensex.

Index heavyweight and cigarette maker ITC rose 1.63% to Rs 324.70. The stock hit high of Rs 325.25 and low of Rs 315 in intraday trade.

Shares of state-run oil marketing companies (PSU OMCs) edged lower after the government on 30 January 2016 reportedly hiked the excise duty on petrol by Rs 1 per litre and on diesel Rs 1.50 per litre. BPCL (down 1.68%) and HPCL (down 1.15%) edged lower. Indian Oil Corporation rose 0.64%. The basic excise duty on unbranded or normal petrol has been increased from Rs 8.48 per litre to Rs 9.48 and the same on unbranded diesel has been raised from Rs 9.83 per litre to Rs 11.33.

Meanwhile, data complied by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas shows that there will under-recovery of Rs 5.11 per litre for PSU OMCs on sale of PDS kerosene at government controlled prices for the month of February 2016. This is much lower than under-recovery of Rs 9.16 per litre in January 2016. The cash transfer to customer under DBTL for LPG gas cylinder for February 2016 will be Rs 155.78, out of which Rs. 108.12 will be cash compensation on domestic LPG by government to consumers and Rs 47.66 will be the cash compensation on domestic LPG by OMCs towards ‘Uncompensated Costs' to consumers.

Shares of oil exploration and production firms were mixed. ONGC (down 0.55%) and Reliance Industries (RIL) (down 0.67%) declined. Oil India (up 1.06%) and Cairn India (up 1.84%) gained.

In global commodities markets, Brent crude oil futures edged lower. Brent for April settlement was off 16 cents at $35.83 a barrel. The contract had gained $1.19 a barrel or 3.41% to settle at $35.99 a barrel during previous trading session on Friday, 29 January 2016.

Telecom stocks edged higher. Bharti Airtel (up 2.54%), Idea Cellular (up 1.7%) and Tata Teleservices (Maharashtra) (up 1.2%) gained. Reliance Communications (down 1.85%) and Mahanagar Telephone Nigam (down 0.53%) edged lower.

Shares of public sector banks edged lower. Union Bank of India (down 4.06%), State Bank of India (down 3.97%), Canara Bank (down 3.12%), Bank of Baroda (down 2.9%), Bank of India (down 2.45%), Punjab National Bank (down 1.04%) and IDBI Bank (down 0.76%) declined. Indian Bank (up 0.71%) and Corporation Bank (up 0.13%) edged higher.

Shares of private sector banks were mixed. HDFC Bank (up 1.34%) and Kotak Mahindra Bank (up 0.97%) edged higher. IndusInd Bank (down 0.02%) and Axis Bank (down 2.14%) edged lower.

Yes Bank rose 3.53% at Rs 773.25, with the stock extending gains registered in previous trading session on Friday, 29 January 2016, triggered by the private sector bank's announcement at the time of unveiling Q3 December 2015 results that its non-performing assets remain under control. The stock had surged 10.89% to settle at Rs 746.90 on 29 January 2016.

ICICI Bank dropped 5.48% at Rs 217.50, with the stock extending losses registered in previous trading session on Friday, 29 January 2016, triggered by the private sector bank reporting increase in bad loans in Q3 December 2015. The stock had declined 1.22% to settle at Rs 230.10 on 29 January 2016.

L&T edged higher after announcing Q3 earnings. The stock rose 1.61% at Rs 1,120. The company's consolidated net profit rose 19% to Rs 1035 crore on 8.4% growth in gross revenue to Rs 26058 crore in Q3 December 2015 over Q3 December 2014. The result was announced after market hours on Friday, 29 January 2016. The bottom line was boosted by a sharp surge in non-operational income or the so called other income. The other income jumped 90.8% to Rs 451.68 crore in Q3 December 2015 over Q3 December 2014 .

The company garnered fresh orders worth Rs 38528 crore in Q3 December 2015. The order inflow rose 11% on year-on-year (y-o-y) basis in Q3 December 2015. L&T has reduced the order inflow guidance for the year ending 31 March 2016 (FY 2016). The management expects flat to slight 1-2% growth in order inflow in FY 2016 as compared to previous guidance of 5-7% growth. In a post-result conference call, L&T's management said that the order pipeline is very healthy at around Rs 2 lakh crore. L&T's consolidated order book rose 14% on year-on-year basis at Rs 256458 crore as at 31 December 2015. International order book constituted 27% of the total order book.

The management has retained the guidance of 10-15% growth in net sales for FY 2016. The management expects increase in EBIDTA margin in FY 2016. However, according to the management, it is difficult to quantify the extent of expected increase in profit margin. The management had previously guided a 100 bps y-o-y improvement in EBIDTA for FY 2016.

Grasim Industries rose after announcing Q3 earnings. The stock rose 1.3% at Rs 3,433. The company's consolidated net profit rose 95% to Rs 650 crore on 13% growth in net revenue to Rs 9044 crore in Q3 December 2015 over Q3 December 2014. The result was announced on Saturday, 30 January 2016. Grasim Industries' earnings before interest, taxation, depreciation, and amortization (EBITDA) rose 43% to Rs 1795 crore in Q3 December 2015 over Q3 December 2014.

Aditya Birla Chemicals (India) (ABCIL) has been merged with the company on 4 January 2016 from the appointed date of 1 April 2015. Therefore, the current quarter results are not comparable with corresponding previous quarter. On like-for-like basis excluding ABCIL numbers, Grasim Industries' consolidated net profit rose 3% to Rs 650 crore on 4% growth in net revenue to Rs 9044 crore in Q3 December 2015 over Q3 December 2014. EBITDA rose 4% to Rs 1795 crore in Q3 December 2015 over Q3 December 2014.

With regard to future business outlook, Grasim Industries said that the cement demand is expected to pick up in the near term with the government's focus on infrastructure development, housing sector, smart cities, roads etc. The company is well positioned across the country to cater to the growth in demand, Grasim said in a statement. With regard to viscose staple fibre (VSF) business, Grasim said that VSF prices have seen some correction globally during the quarter due to lower demand on account of end of season. This may have an impact on margins in the near term, Grasim said.

Maruti Suzuki India dropped 3.68% after the company reported a 2.6% decline in its total sales to 1.13 lakh units in January 2016 over January 2015. Domestic sales rose 0.8% to 1.06 lakh units in January 2016 over January 2015. Domestic sales would have been higher, but lesser number of working days in January 2016 impacted overall production and dispatch, Maruti Suzuki said in a statement. Exports fell 34.6% to 7,223 units in January 2016 over January 2015. The company announced the sales volume data during market hours today, 1 February 2016.

Mahindra & Mahindra (M&M) declined 0.24% to Rs 1,229.70 after the company reported muted growth in tractor sales in January 2016. The company's total tractor sales rose 1% to 15,065 units in January 2016 over January 2015. Domestic tractor sales rose 4% to 14,402 units in January 2016 over January 2015. Exports declined 38% to 663 units in January 2016 over January 2015. The announcement was made during market hours today, 1 February 2016.

Separately, M&M said its total auto sales rose 10% to 43,789 units in January 2016 over January 2015. Domestic sales rose 10% to 40,693 units in January 2016 over January 2015. Exports rose 7% to 3,096 units in January 2016 over January 2015.
Tech Mahindra dropped 0.55%. The company's consolidated net profit fell 3.4% to Rs 759 crore on 1.3% increase in revenue to Rs 6701 crore in Q3 December 2015 over Q2 September 2015. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 3.2% to Rs 1136 crore in Q3 December 2015 over Q2 September 2015. The result was announced after market hours today, 1 February 2016.

The Sensex has fallen 1,292.71 points or 4.94% in calendar year 2016 so far (till 1 February 2016). The Sensex is up 985.07 points or 4.13% from a 52-week low of 23,839.76 hit on 20 January 2016. The Sensex is off 5,199.91 points or 17.31% from a record high of 30,024.74 hit on 4 March 2015.

Meanwhile, the outcome of a monthly survey showed that India's manufacturing sector returned to expansion mode in January 2016 as the industry recovered following the contraction seen at the end of calendar year 2015. Alongside a resumption of output at some firms impacted by December's flooding in Tamil Nadu, manufacturers also benefited from rising inflows of new business from domestic and export clients. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) rose to 51.1 in January 2016 from 49.1 in December 2015. A reading above 50 indicates expansion while one below points to contraction.

The Reserve Bank of India (RBI) is scheduled to announce its sixth bi-monthly monetary policy for the year 2015-16 at 11:00 IST tomorrow, 2 February 2016. In the fifth bi-monthly monetary policy on 1 December 2015, the RBI kept its benchmark interest rate viz. the repo rate unchanged at 6.75% and the cash reserve ratio (CRR) for commercial banks unchanged at 4% of net demand and time liability (NDTL).
In overseas stock markets, European stocks edged lower on disappointing Chinese manufacturing data. Chinese stocks edged lower after disappointing manufacturing data for January 2016. The Shanghai Composite index settled 1.78% lower. In Hong Kong, the Hang Seng index settled 0.45% lower. China's statistics bureau reported today, 1 February 2016, that the official manufacturing purchasing managers index fell to 49.4 in January from 49.7 in December, marking the lowest level since August 2012 and the sixth straight month of contraction.

Meanwhile, Japanese stocks extended a rally registered during the previous trading session on Friday, 29 January 2016, triggered by the Bank of Japan's (BOJ) announcement of expansion monetary stimulus. The Nikkei 225 Average ended 1.98% higher. The BOJ surprised financial markets by introducing a negative interest-rate policy for the first time after the conclusion of two-day monetary policy meeting on 29 January 2016.

US stocks closed sharply higher on Friday, 29 January 2016, amid a global equity rally following a surprise decision by the BOJ to push a key interest rate into negative territory.

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