Market registers decent gains in truncated trading week
Key benchmark indices edged higher in a truncated trading week, building on strong gains registered during the last week on hopes that Reserve Bank of India may further cut policy rates if the monsoon is good and inflation continues on a downward path. Last week, the weather office predicted good rains during the June-September 2016 southwest season. The Sensex gained in three out of four sessions of the week ended Friday, 22 April 2016. Stock market remained closed on Tuesday, 19 April 2016, on account of Mahavir Jayanti.
The barometer index, the S&P BSE Sensex, rose 211.39 points or 0.82% to settle at 25,838.14 in the week. The gains for the Nifty 50 index were lower than the Sensex's gains in percentage terms. The Nifty rose 48.85 points or 0.62% to settle at 7,899.30. The BSE Mid-Cap index rose 0.93%. The BSE Small-Cap index gained 1.24%. Both these indices outperformed the Sensex.
Trading for the week started on a positive note. Telecom stocks and index heavyweights Infosys, HDFC and ITC led gains for the two key benchmark indices on Monday, 18 April 2016. The Sensex rose 189.61 points or 0.74% to settle at 25,816.36, its highest closing level since 1 January 2016.
Amid a divergent trend among various index constituents, key benchmark indices settled near the flat line on Wednesday, 20 April 2016. The Sensex rose 27.82 points or 0.11% to settle at 25,844.18, its highest closing level since 1 January 2016.
A divergent trend was witnessed as the barometer index, the S&P BSE Sensex, registered small gains and the Nifty 50 index settled with marginal losses on Thursday, 21 April 2016. The Sensex rose 36.20 points or 0.14% to settle at 25,880.38. The Nifty 50 index fell 2.70 points or 0.03% to settle at 7,912.05.
A divergent trend among various index constituents resulted in small losses for key benchmark indices on Friday, 22 April 2016. The Sensex fell 42.24 points or 0.16% to settle at 25,838.14, its lowest closing level since 18 April 2016.
From a 30- share Sensex pack, 17 stocks rose and the rest of them fell.
Index heavyweight Reliance Industries (RIL) dropped 2.51%.
Bank stocks gained. ICICI Bank (up 4.54%), Axis Bank (up 7.69%) and State Bank of India (SBI) (up 4.25%) gained.
As per recent media reports, the Reserve Bank of India (RBI) has pruned the list of companies whose loans need to be provided for against the risk of default. Lower than anticipated provisioning for non-performing asset could restrict the negative impact on banks' bottom line in Q4 March 2016. RBI has reportedly informed banks individually that they don't have to provide in the March quarter for outstanding loans to 20 firms out of the 150 it had listed in December. The decision was prompted partly by the steps taken by companies to cut debt, according to reports. Banks were forced to make substantial provisions in the December quarter following an asset quality review (AQR) ordered by the central bank. Due to this, a number of banks reported losses in Q3 December 2015.
The BSE Bankex rose 2.66%, outperforming the Sensex.
HDFC Bank rose 1.02%. The bank's net profit rose 20.21% to Rs 3374.22 crore on 21.14% rise in total income to Rs 18862.61 crore in Q4 March 2016 over Q4 March 2015. The result was announced on 22 April 2016.
The bank's gross non-performing assets (NPAs) stood at Rs 4392.83 crore as on 31 March 2016 as against Rs 4255.20 crore as on 31 December 2015 and Rs 3438.38 crore as on 31 March 2015. The ratio of gross NPAs to gross advances stood at 0.94% as on 31 March 2016 as against 0.97% as on 31 December 2015 and 0.93% as on 31 March 2015. The ratio of net NPAs to net advances stood at 0.28% as on 31 March 2016 as against 0.29% as on 31 December 2015 and 0.25% as on 31 March 2015. The bank's provisions and contingencies rose 14.88% to Rs 662.45 crore in Q4 March 2016 over Q4 March 2015.
Capital goods stocks were mixed. L&T rose 2.23%. Bharat Heavy Electricals (Bhel) declined 4.24%. BSE Capital Goods index gained 1.01%, outperforming the Sensex.
Pharma stocks gained. Cipla (up 3.86%), Dr Reddy's Laboratories (up 1.14%), and Lupin (up 0.93%) gained. Sun Pharmaceutical Industries declined 1.39%.
The BSE Healthcare index rose 0.6%, underperforming the Sensex.
IT stocks were mixed. Wipro skidded 4.6%. The stock was the biggest loser from the Sensex pack. The company reported weak Q4 results and issued muted revenue growth guidance for Q1 June 2016. Wipro's consolidated net profit fell 2% to Rs 2240 crore on 12% rise in gross revenue to Rs 13630 crore in Q4 March 2016 over Q4 March 2015. The result was announced on 20 April 2016. Revenue from IT services business rose 2.4% to $1,882 million in Q4 March 2016 over Q3 December 2015. On sequential basis, the company expects 1% to 3.02% growth in revenue from IT services business at between $1,901 million to $1,939 million in Q1 June 2016.
Wipro's board of directors approved a proposal to buyback up to 4 crore equity shares of the company for an aggregate amount of up to Rs 2500 crore, being 1.62% of the total paid up equity share capital. The buyback will be through the tender offer route at Rs 625 per share. The promoters of the company have indicated their intention to participate in the proposed buyback.
IT major Infosys rose 3.57%. The company forecast strong revenue growth for the year ending 31 March 2017 (FY 2017) at the time of announcement of its Q4 March 2016 results on Friday, 15 April 2016, when the stock market was closed for a holiday. Infosys expects revenue growth of 11.8%-13.8% for FY 2017 in US dollar terms. In constant currency terms, the company has forecast 11.5%-13.5% growth in revenue for FY 2017. Infosys' revenue growth forecast is higher than 10% to 12% growth for the IT outsourcing sector for FY 2017 forecast by IT industry body National Association of Software and Services Companies (Nasscom) in February this year. Infosys has forecast 12.7%-14.7% growth in revenue in rupee terms for FY 2017 based on rupee dollar exchange rate of 66.26 as on 31 March 2016.
Infosys' consolidated net profit rose 3.8% to Rs 3597 crore on 4.1% growth in revenue to Rs 16550 crore in Q4 March 2016 over Q3 December 2015.
TCS dropped 4.2%. The company reported a 50 basis points decline in its operating profit margin at 27.7% in Q4 March 2016 from 28.2% in Q3 December 2015. On consolidated basis, the company's net profit rose 5% to Rs 6413.12 crore on 4% growth in sales to Rs 28448.61 crore in Q4 March 2016 over Q3 December 2015.
Higher non-operational income or the so-called other income boosted TCS' bottom line during the quarter. Other income rose 32% to Rs 917.01 crore in Q4 March 2016 over Q3 December 2015. Operating profit rose 2% to Rs 7887.27 crore in Q4 March 2016 over Q3 December 2015. The result was announced on 18 April 2016.
TCS on 22 April 2016 announced winning a long-term contract from full service carrier Vistara. As per the agreement, TCS will provide a broad range of IT services in the area of IT Management, application maintenance and application development to help Vistara achieve its goal in customer experience, operational excellence as well as cost leadership.
The BSE IT index rose 0.55%, underperforming the Sensex.
Index heavyweight and housing finance major HDFC gained 1.63%.
Auto stocks were mixed. Tata Motors rose 2.06%. Mahindra & Mahindra (M&M) (down 0.65%), Bajaj Auto (down 2.31%), and Hero MotoCorp (down 4.59%) fell.
Maruti Suzuki India gained 2.22% as the Japanese yen weakened against the dollar. A weak yen is expected to boost operating margins for Maruti Suzuki India. The company is scheduled to announce its Q4 March 2016 results on 26 April 2016.
The BSE Auto index declined 0.25%, underperforming the Sensex.
Tata Steel jumped 6.37%. As per reports, UK government is ready to take up equity stake in the company's UK plants in rescue deal. According to reports, the UK government could part-nationalise Tata's UK steel plants by taking a 25% equity stake, as part of a support package worth hundreds of millions of pounds designed to attract a buyer and save at least 10,000 jobs. On 11 April 2016, Tata Steel Europe announced that the company has commenced the formal process for the divestment of its entire holding in its British subsidiary Tata Steel UK. Tata Steel Europe has decided to sell its entire holding in Tata Steel UK due to the deteriorating financial performance of the UK subsidiary.
ITC (down 1.59%), Hindustan Unilever (down 1.25%), Adani Ports & Special Economic Zone (down 1.09%), GAIL (India) (down 0.62%) and Asain Paints (down 0.17%) dropped. NTPC (up 4.37%), Coal India (up 3.9%) and ONGC (up 1.48%) gained.
Meanwhile, the trade data showed on 20 April 2016 that India's merchandise exports continue to see decline on year on year basis. Merchandise exports declined 5.47% to $22.71 billion in March 2016 over March 2015. Non-petroleum exports declined 3.49% to $20.63 billion in March 2016 over March 2015. The Ministry of Commerce & Industry said that the trend of falling exports is in tandem with other major world economies. Imports declined 21.56% to $27.78 billion in March 2016 over March 2015. Oil imports dropped 35.3% to $4.79 billion in March 2016 over March 2015. Non-oil imports fell 17.92% to $22.99 billion in March 2016 over March 2015. The trade deficit declined sharply to $5.07 billion in March 2016 from $11.39 billion in March 2015.
On global front, the European Central Bank (ECB) on 21 April 2016, left monetary policy unchanged as expected. ECB President Mario Draghi retained a hawkish stance when he said that he would use all the tools at his disposal for as long as needed.
The barometer index, the S&P BSE Sensex, rose 211.39 points or 0.82% to settle at 25,838.14 in the week. The gains for the Nifty 50 index were lower than the Sensex's gains in percentage terms. The Nifty rose 48.85 points or 0.62% to settle at 7,899.30. The BSE Mid-Cap index rose 0.93%. The BSE Small-Cap index gained 1.24%. Both these indices outperformed the Sensex.
Trading for the week started on a positive note. Telecom stocks and index heavyweights Infosys, HDFC and ITC led gains for the two key benchmark indices on Monday, 18 April 2016. The Sensex rose 189.61 points or 0.74% to settle at 25,816.36, its highest closing level since 1 January 2016.
Amid a divergent trend among various index constituents, key benchmark indices settled near the flat line on Wednesday, 20 April 2016. The Sensex rose 27.82 points or 0.11% to settle at 25,844.18, its highest closing level since 1 January 2016.
A divergent trend was witnessed as the barometer index, the S&P BSE Sensex, registered small gains and the Nifty 50 index settled with marginal losses on Thursday, 21 April 2016. The Sensex rose 36.20 points or 0.14% to settle at 25,880.38. The Nifty 50 index fell 2.70 points or 0.03% to settle at 7,912.05.
A divergent trend among various index constituents resulted in small losses for key benchmark indices on Friday, 22 April 2016. The Sensex fell 42.24 points or 0.16% to settle at 25,838.14, its lowest closing level since 18 April 2016.
From a 30- share Sensex pack, 17 stocks rose and the rest of them fell.
Index heavyweight Reliance Industries (RIL) dropped 2.51%.
Bank stocks gained. ICICI Bank (up 4.54%), Axis Bank (up 7.69%) and State Bank of India (SBI) (up 4.25%) gained.
As per recent media reports, the Reserve Bank of India (RBI) has pruned the list of companies whose loans need to be provided for against the risk of default. Lower than anticipated provisioning for non-performing asset could restrict the negative impact on banks' bottom line in Q4 March 2016. RBI has reportedly informed banks individually that they don't have to provide in the March quarter for outstanding loans to 20 firms out of the 150 it had listed in December. The decision was prompted partly by the steps taken by companies to cut debt, according to reports. Banks were forced to make substantial provisions in the December quarter following an asset quality review (AQR) ordered by the central bank. Due to this, a number of banks reported losses in Q3 December 2015.
The BSE Bankex rose 2.66%, outperforming the Sensex.
HDFC Bank rose 1.02%. The bank's net profit rose 20.21% to Rs 3374.22 crore on 21.14% rise in total income to Rs 18862.61 crore in Q4 March 2016 over Q4 March 2015. The result was announced on 22 April 2016.
The bank's gross non-performing assets (NPAs) stood at Rs 4392.83 crore as on 31 March 2016 as against Rs 4255.20 crore as on 31 December 2015 and Rs 3438.38 crore as on 31 March 2015. The ratio of gross NPAs to gross advances stood at 0.94% as on 31 March 2016 as against 0.97% as on 31 December 2015 and 0.93% as on 31 March 2015. The ratio of net NPAs to net advances stood at 0.28% as on 31 March 2016 as against 0.29% as on 31 December 2015 and 0.25% as on 31 March 2015. The bank's provisions and contingencies rose 14.88% to Rs 662.45 crore in Q4 March 2016 over Q4 March 2015.
Capital goods stocks were mixed. L&T rose 2.23%. Bharat Heavy Electricals (Bhel) declined 4.24%. BSE Capital Goods index gained 1.01%, outperforming the Sensex.
Pharma stocks gained. Cipla (up 3.86%), Dr Reddy's Laboratories (up 1.14%), and Lupin (up 0.93%) gained. Sun Pharmaceutical Industries declined 1.39%.
The BSE Healthcare index rose 0.6%, underperforming the Sensex.
IT stocks were mixed. Wipro skidded 4.6%. The stock was the biggest loser from the Sensex pack. The company reported weak Q4 results and issued muted revenue growth guidance for Q1 June 2016. Wipro's consolidated net profit fell 2% to Rs 2240 crore on 12% rise in gross revenue to Rs 13630 crore in Q4 March 2016 over Q4 March 2015. The result was announced on 20 April 2016. Revenue from IT services business rose 2.4% to $1,882 million in Q4 March 2016 over Q3 December 2015. On sequential basis, the company expects 1% to 3.02% growth in revenue from IT services business at between $1,901 million to $1,939 million in Q1 June 2016.
Wipro's board of directors approved a proposal to buyback up to 4 crore equity shares of the company for an aggregate amount of up to Rs 2500 crore, being 1.62% of the total paid up equity share capital. The buyback will be through the tender offer route at Rs 625 per share. The promoters of the company have indicated their intention to participate in the proposed buyback.
IT major Infosys rose 3.57%. The company forecast strong revenue growth for the year ending 31 March 2017 (FY 2017) at the time of announcement of its Q4 March 2016 results on Friday, 15 April 2016, when the stock market was closed for a holiday. Infosys expects revenue growth of 11.8%-13.8% for FY 2017 in US dollar terms. In constant currency terms, the company has forecast 11.5%-13.5% growth in revenue for FY 2017. Infosys' revenue growth forecast is higher than 10% to 12% growth for the IT outsourcing sector for FY 2017 forecast by IT industry body National Association of Software and Services Companies (Nasscom) in February this year. Infosys has forecast 12.7%-14.7% growth in revenue in rupee terms for FY 2017 based on rupee dollar exchange rate of 66.26 as on 31 March 2016.
Infosys' consolidated net profit rose 3.8% to Rs 3597 crore on 4.1% growth in revenue to Rs 16550 crore in Q4 March 2016 over Q3 December 2015.
TCS dropped 4.2%. The company reported a 50 basis points decline in its operating profit margin at 27.7% in Q4 March 2016 from 28.2% in Q3 December 2015. On consolidated basis, the company's net profit rose 5% to Rs 6413.12 crore on 4% growth in sales to Rs 28448.61 crore in Q4 March 2016 over Q3 December 2015.
Higher non-operational income or the so-called other income boosted TCS' bottom line during the quarter. Other income rose 32% to Rs 917.01 crore in Q4 March 2016 over Q3 December 2015. Operating profit rose 2% to Rs 7887.27 crore in Q4 March 2016 over Q3 December 2015. The result was announced on 18 April 2016.
TCS on 22 April 2016 announced winning a long-term contract from full service carrier Vistara. As per the agreement, TCS will provide a broad range of IT services in the area of IT Management, application maintenance and application development to help Vistara achieve its goal in customer experience, operational excellence as well as cost leadership.
The BSE IT index rose 0.55%, underperforming the Sensex.
Index heavyweight and housing finance major HDFC gained 1.63%.
Auto stocks were mixed. Tata Motors rose 2.06%. Mahindra & Mahindra (M&M) (down 0.65%), Bajaj Auto (down 2.31%), and Hero MotoCorp (down 4.59%) fell.
Maruti Suzuki India gained 2.22% as the Japanese yen weakened against the dollar. A weak yen is expected to boost operating margins for Maruti Suzuki India. The company is scheduled to announce its Q4 March 2016 results on 26 April 2016.
The BSE Auto index declined 0.25%, underperforming the Sensex.
Tata Steel jumped 6.37%. As per reports, UK government is ready to take up equity stake in the company's UK plants in rescue deal. According to reports, the UK government could part-nationalise Tata's UK steel plants by taking a 25% equity stake, as part of a support package worth hundreds of millions of pounds designed to attract a buyer and save at least 10,000 jobs. On 11 April 2016, Tata Steel Europe announced that the company has commenced the formal process for the divestment of its entire holding in its British subsidiary Tata Steel UK. Tata Steel Europe has decided to sell its entire holding in Tata Steel UK due to the deteriorating financial performance of the UK subsidiary.
ITC (down 1.59%), Hindustan Unilever (down 1.25%), Adani Ports & Special Economic Zone (down 1.09%), GAIL (India) (down 0.62%) and Asain Paints (down 0.17%) dropped. NTPC (up 4.37%), Coal India (up 3.9%) and ONGC (up 1.48%) gained.
Meanwhile, the trade data showed on 20 April 2016 that India's merchandise exports continue to see decline on year on year basis. Merchandise exports declined 5.47% to $22.71 billion in March 2016 over March 2015. Non-petroleum exports declined 3.49% to $20.63 billion in March 2016 over March 2015. The Ministry of Commerce & Industry said that the trend of falling exports is in tandem with other major world economies. Imports declined 21.56% to $27.78 billion in March 2016 over March 2015. Oil imports dropped 35.3% to $4.79 billion in March 2016 over March 2015. Non-oil imports fell 17.92% to $22.99 billion in March 2016 over March 2015. The trade deficit declined sharply to $5.07 billion in March 2016 from $11.39 billion in March 2015.
On global front, the European Central Bank (ECB) on 21 April 2016, left monetary policy unchanged as expected. ECB President Mario Draghi retained a hawkish stance when he said that he would use all the tools at his disposal for as long as needed.
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