Sunday, February 07, 2016

THE WEEK THAT WAS

Market drifts lower on weak global stocks


Key indices edged lower as weakness in global stocks affected sentiment on the domestic bourses. Nevertheless, the market recouped some losses in last two sessions of the week, tracking recovery in global stocks triggered by reduced expectations for further interest rate increases from the US Federal Reserve in this calendar year. Key indices fell in three out of five sessions in the week ended Friday, 5 February 2016. Meanwhile, the Reserve Bank of India kept its benchmark interest rate viz. the repo rate unchanged at 6.75% after a scheduled monetary policy review on 2 February 2016.

The barometer index, the S&P BSE Sensex, declined 253.72 points or 1.02% to settle at 24,616.97. The 50-unit Nifty 50 index dropped 74.45 points or 0.98% at 7,489.10. The BSE Mid-Cap index shed 0.78%. The decline for this index was lower in percentage terms than the Sensex's decline. The BSE Small-Cap index lost 2.76%. The decline for this index was higher in percentage terms than the Sensex's decline.

Trading for the week started on a weak note. After swinging between positive and negative zone alternately in intraday trade, the key benchmark indices registered small losses on Monday, 1 February 2016. The Sensex fell 45.86 points or 0.18% to settle at 24,824.83, its lowest closing level since 28 January 2016.

Stocks of metal and mining companies, oil sector firms and public sector companies led losses for key benchmark indices on Tuesday, 2 February 2016. The Sensex lost 285.83 points or 1.15% to settle at 24,539, its lowest closing level since 28 January 2016.

Metal, power and oil sector stocks led losses as key benchmark indices edged lower for the third day in a row on Wednesday, 3 February 2016. The Sensex lost 315.68 points or 1.29% to settle at 24,247.21, its lowest closing level since 21 January 2016.
Stocks of metal and mining firms, oil exploration and production companies and index heavyweight Infosys led gains for key benchmark indices on Thursday, 4 February 2016, in what was a choppy trading session on Thursday, 4 February 2016. The Sensex rose 115.11 points or 0.48% to settle at 24,338.43, its highest closing level since 2 February 2016.

Trading for the week ended on a positive note, as key equity benchmark indices registered strong gains on Friday, 5 February 2016, on firmness in global stocks. The Sensex rose 278.54 points or 1.14% to settle at 24,616.97.

From the 30-share Sensex pack, 15 stocks fell and the rest rose in the week ended Friday, 5 February 2016.

NTPC slumped 12.31%. The stock was the biggest loser from the Sensex pack.
Tata Steel dropped 6.42%. The company reported consolidated net loss of Rs 2127 crore in Q3 December 2015 compared with net profit of Rs 157 crore in Q3 December 2014. Turnover fell 16.63% to Rs 28039 crore in Q3 December 2015 over Q3 December 2014. Earnings before interest, taxation, depreciation and amortization (EBITDA) excluding one-offs and profit on sale of investments declined 69.96% to Rs 838 crore in Q3 December 2015 over Q3 December 2014. The result was announced on 4 February 2016.

GAIL (India) dropped 6.91%. GAIL (India) on 5 February 2016 announced that Prime Minister Narendra Modi on 5 February 2016, dedicated to the nation the Brahmaputra Cracker and Polymer (BCPL) petrochemical complex in Assam. BCPL is a central public sector enterprise under the Government of India (GoI), with GAIL (India) as the main promoter having 70% equity participation. The rest 30% is equally shared by Oil India, Numaligarh Refinery (NRL) and the state government of Assam. Set up with an investment of about Rs 10000 crore, the BCPL plant will have the capacity to manufacture 2.80 lakh tonnes per annum of polymer products which will result in the growth of new downstream plastic processing industries in the North Eastern region, besides reducing dependency on polymer supply from other parts of the country, GAIL (India) said in a statement.

Lupin jumped 5.33%. The stock was the second biggest gainer from the Sensex pack. Lupin's consolidated net profit rose 29.6% to Rs 529.80 crore on 7.1% growth in revenue from operations (net) to Rs 3555.80 crore in Q3 December 2015 over Q2 September 2015. Operating profit surged 30.5% at Rs 877.20 crore in Q3 December 2015 over Q2 September 2015. The operating profit margin (OPM) edged up to 24.66% in Q3 December 2015 from 20.23% in Q2 September 2015.

Among other pharma stocks, Sun Pharmaceutical Industries (down 1.86%) and Cipla (down 2.69%) declined. Dr Reddy's Laboratories rose 0.18%.

Bharat Heavy Electricals (Bhel) dropped 4.36%. The company announced that President of Sudan Omer Hassan Ahmed El-Basheer inaugurated the 500 megawatts (MW) Kosti Thermal Power plant built by the company. This is the largest thermal power plant in Sudan. Bhel had executed this 500 MW project comprising of 4 units of 125 MW each, on engineering, procurement and construction (EPC) basis, having designed, manufactured, supplied and installed the complete power project including associated civil works. The announcement was made on 5 February 2016.

L&T gained 3.4%. 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.

Most bank stocks declined. Axis Bank (down 2.27%), ICICI Bank (down 9.08%) and State Bank of India (down 6.53%) declined. HDFC Bank rose 0.71%.

Auto stocks were mixed. Tata Motors rose 0.16%. Jaguar Land Rover (JLR) North America on 3 February 2016, said its US sales rose 7% to 7,007 units in January 2016 over January 2015. JLR is the British luxury car unit of Tata Motors. Separately, Tata Motors on 1 February 2016 said total sales of Tata Motors passenger and commercial vehicles rose 10% at 47,034 vehicles in January 2016 over January 2015.

Hero MotoCorp rose 0.6%. The company said on 1 February 2016 its two-wheeler sales rose 0.89% at 5.63 lakh units in January 2016 over January 2015.

Maruti Suzuki India (MSIL) slumped 9.13%. The stock was the second biggest loser from the Sensex pack. MSIL on 4 February 2016 unveiled Concept Ignis and Concept Baleno RS on the second day of Delhi Auto Expo 2016. Concept Ignis is a smart compact urban concept vehicle built on a new-generation platform. Concept Baleno RS is a sporty version of premium hatchback Baleno. Ignis and Baleno RS will be launched in India in the festival season,

Separately, MSIL reported 2.6% decline in its total sales to 1.13 lakh units in January 2016 over January 2015.

Bajaj Auto rose 0.66%. Bajaj Auto's net profit rose 4.67% to Rs 901.49 crore on 0.21% growth in total income to Rs 5764.58 crore in Q3 December 2015 over Q3 December 2014. The result was announced on 4 February 2016.

Mahindra & Mahindra (M&M) declined 0.88%. The company on 4 February 2016 announced the launch of its new heavy commercial truck series under the BLAZO brand at the Auto Expo at Greater NOIDA. The BLAZO series of heavy commercial vehicles include multi-axle trucks, tippers and tractor trailers in the range of 25 to 49 ton GVW for the domestic market.

Bharti Airtel jumped 6.01%. The stock was the biggest gainer from the Sensex pack.
TCS rose 1.45%. The company announced on 3 February 2016 that Investec India, a part of wealth management giant Investec, has gone live on TCS BaNCS to power its front and back office operations in India.

Index heavyweight and IT major Infosys advanced 0.87%.

Meanwhile, the Reserve Bank of India kept its benchmark interest rate viz. the repo rate unchanged at 6.75% after a scheduled monetary policy review on 2 February 2016. The RBI kept the cash reserve ratio (CRR) unchanged at 4% of net demand and time liability (NDTL). While retaining accommodative stance of the monetary policy, RBI Governor Raghuram Rajan said in a statement that structural reforms in the Union Budget 2016-17 that boost growth while controlling spending will create more space for monetary policy to support growth. With unfavourable base effects on the ebb and benign prices of fruits and vegetables and crude oil, the January 2016 consumer price inflation target of 6% should be met, the RBI said. Consumer price inflation stood at 5.61% in December 2015.

Going forward, under the assumption of a normal monsoon and the current level of international crude oil prices and exchange rates, inflation is expected to be inertial and be around 5% by the end of fiscal 2016-17, RBI said. However, the implementation of the VII Central Pay Commission award, which has not been factored into these projections, will impart upward momentum to this trajectory for a period of one to two years, the RBI said.

Meanwhile, the outcome of a monthly survey showed on 1 February 2016 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 outcome of a monthly survey on 3 February 2016 showed that growth in India's services sector accelerated last month. The seasonally adjusted Nikkei India services purchasing managers' index (PMI) hit a 19-month high at 54.3 in January 2016. The Services PMI rose from December's reading of 53.6. Amid forecasts of further improvements in demand and favourable government policies, service providers in India expect output to continue to increase over the course of the next year. Additionally, the degree of optimism registered in January was the most pronounced in six months, Markit Economics said.

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