Tuesday, May 03, 2016

THE END SESSION ( 03 / 05 )

Benchmark indices edge lower for the second day in a row


IT, banking sector stocks, shares of public sector companies and index heavyweights ITC and Reliance Industries led losses for key benchmark indices triggered by weakness in global stocks. The barometer index, the S&P BSE Sensex, fell 207.27 points or 0.81% to settle at 25,229.70. The Nifty 50 index fell 58.90 points or 0.75% to settle at 7,747. World stocks fell after weak Chinese manufacturing data for April 2016. European stocks were hit additionally by strength in the euro against the dollar. The Sensex and the Nifty, both, hit 3-week closing low. The two key benchmark indices dropped for the second straight trading session.

State Bank of India (SBI) dropped after the bank announced reduction in lending rates by 5 basis points (bps) across tenures. Coal India edged lower as the company's coal production and offtake in April 2016 fell short of the company's internal target. Shares of public sector oil marketing companies (PSU OMCs) declined after the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas announced that the under-recoveries for the month of May 2016 on PDS Kerosene in Mumbai is expected to increase to Rs 9.12 per litre from Rs 8.73 per litre in April 2016.

Tata Steel eked out small gains on reports that the global metals group Liberty House will today, 3 May 2016, submit an indicative bid to buy Tata Steel's UK assets. Aurobindo Pharma surged on reports that a foreign brokerage has initiated coverage on the Aurobindo Pharma stock with an "outperform" rating. In overseas stock markets, European shares edged lower as the euro hit a roughly nine-month high against the dollar. Euro strength makes goods from European exporters more expensive to buy for holders of other currencies. Trading in US stock index futures pointed to losses for US stocks at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could slide 109.50 points at the opening bell today, 3 May 2016. Meanwhile, the San Francisco Federal Reserve President John Williams reiterated yesterday, 2 May 2016, his view that the US economy is ready for higher interest rates, but flagged the risk of broad-based declines in asset prices as a result.

Earlier during the global day, Asian stocks ended on a mixed note. Chinese stocks saw a divergent trend after the latest data showed deceleration in China's manufacturing activity in April 2016. In mainland China, the Shanghai Composite ended 1.85% higher. In Hong Kong, the Hang Seng index closed 1.85% lower. The Caixin China general manufacturing purchasing managers' index fell to 49.4 in April 2016 from 49.7 in March 2016. A reading below 50 indicates economic contraction. China's official manufacturing PMI, a competing gauge, came in at 50.1 in April 2016 compared with 50.2 in March 2016, according to data released by the National Bureau of Statistics on 1 May 2016. The Chinese economy is the world's second biggest economy after the United States. Meanwhile, Chinese leaders have called for strengthening the supervision of stock market and protecting investor interests, according to reports.

The Sensex fell 207.27 points or 0.81% to settle at 25,229.70, its lowest closing level since 12 April 2016. The index fell 244.03 points or 0.95% at the day's low of 25,192.94. The index rose 268.99 points or 1.05% at the day's high of 25,705.96.
The Nifty fell 58.90 points or 0.75% to settle at 7,747, its lowest closing level since 12 April 2016. The index fell 70.75 points or 0.9% at the day's low of 7,735.15. The index rose 84.35 points or 1.08% at the day's high of 7,890.25.

The market breadth indicating the overall health of the market was negative. On BSE, 1,476 shares declined and 1,164 shares rose. A total of 150 shares were unchanged. The BSE Mid-Cap index fell 0.85%. The decline in this index was higher than the Sensex's decline in percentage terms. The BSE Small-Cap index fell 0.28%. The decline in this index was lower than the Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 2718 crore, higher than turnover of Rs 2425.66 crore registered during the previous trading session.

Among sectoral indices on BSE, the S&P BSE Telecom index (up 2.09%), the S&P BSE Realty index (up 0.32%), the S&P BSE Industrials index (down 0.03%), the S&P BSE Consumer Discretionary Goods & Services index (down 0.23%), the S&P BSE Utilities index (down 0.3%), the S&P BSE Auto index (down 0.34%), the S&P BSE Basic Materials index (down 0.43%), the S&P BSE Capital Goods index (down 0.44%), the S&P BSE Power index (down 0.52%), the S&P BSE Consumer Durables index (down 0.57%), the S&P BSE Healthcare index (down 0.73%) and the S&P BSE Finance index (down 0.74%), outperformed the Sensex. The S&P BSE Teck index (down 0.97%), the S&P BSE Bankex (down 1.03%), the S&P BSE FMCG index (down 1.03%), the S&P BSE Oil & Gas index (down 1.04%), the S&P BSE Energy index (down 1.27%), the S&P BSE Metal index (down 1.34%) and the S&P BSE IT index (down 1.57%), underperformed the Sensex.

Most telecom stocks rose. Idea Cellular (up 1.91%) and Reliance Communications (up 1.33%), edged higher. Tata Teleservices (Maharashtra) (down 1.76%) and MTNL (down 2.39%), edged lower.

Bharti Airtel rose 1.97% to Rs 364.90. The company announced after market hours today, 3 May 2016, that its subsidiary Airtel M-Commerce Services has been renamed as Airtel Payments Bank after receiving necessary approvals from all concerned authorities. The company also unveiled a new logo to reflect its new identity. On 11 April 2016, Airtel Payments Bank became the first entity in India to receive a payments bank license from the Reserve Bank of India (RBI). The company plans to start rolling out its banking network in the second quarter of the current financial year. Airtel Payments Bank (which began operations in 2011 as Airtel M-Commerce Services) currently provides money transfer services and semi-closed wallet services (Airtel Money). The company has presence in 800 plus towns across India.

Shares of telecom tower company Bharti Infratel rose 1.83% to Rs 383.

Adani Ports and Special Economic Zone (APSEZ) rose 0.96% to Rs 235.90. On a consolidated basis, the company's net profit rose 38.34% to Rs 914.06 crore on 18% increase in total income to Rs 2161.65 crore in Q4 March 2016 over Q4 March 2015. EBITDA (earnings before interest, taxes, depreciation and amortization) excluding other income rose 12% to Rs 1225 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours today, 3 May 2016.

Cargo across all ports handled by the company rose 5% to 152 million metric tonnes (MMT) in the year ended 31 March 2016 over the year ended 31 March 2015. The company has given guidance of 10% to 15% growth in cargo volumes for the year ending 31 March 2017 (FY 2017). It has given guidance of 10% to 15% growth in net profit for FY 2017.

In a separate announcement, APSEZ said that its board of directors has decided to seek shareholders' approval to raise funds by issue of equity shares/convertible bonds for an aggregate amount of up to Rs 10000 crore. The board has also decided to seek shareholders' approval to issue secured/unsecured redeemable non-convertible debentures on private placement basis within the overall borrowing limits of the company.

Index heavyweight and cigarette major ITC fell 1.25% at Rs 316.90. The stock hit a high of Rs 323.25 and a low of Rs 314.50 in intraday trade.

Index heavyweight Reliance Industries (RIL) declined 1.04% at Rs 976.05. The stock hit a high of Rs 994.70 and a low of Rs 972.60 in intraday trade.

Tata Steel rose 0.48% at Rs 348.45 on reports that the global metals group Liberty House will today, 3 May 2016, submit an indicative bid to buy Tata Steel's UK assets. Tata Steel has put Tata Steel, UK on the block due to the deteriorating financial performance of the UK subsidiary.

IT stocks witnessed selling pressure. Hexaware Technologies (down 2.7%), Tech Mahindra (down 2.11%), HCL Technologies (down 1.84%), Oracle Financial Services Software (down 1.8%), TCS (down 1.78%), MindTree (down 1.73%), Wipro (down 0.86%) and Persistent Systems (down 0.64%) edged lower. MphasiS rose 0.28%.
Index heavyweight and software major Infosys fell 1.66% at Rs 1,180.75. The stock hit a high of Rs 1,212.05 and a low of Rs 1,174.30 in intraday trade.

Most pharmaceutical shares declined. Lupin (down 2.34%), Sun Pharmaceutical Industries (down 1.61%), Wockhardt (down 1.49%), Divi's Laboratories (down 1.32%), Cadila Healthcare (down 1.23%), Alkem Laboratories (down 1.16%), GlaxoSmithKline Pharmaceuticals (down 1.13%), Glenmark Pharmaceuticals (down 0.7%) and Cipla (down 0.37%), edged lower. IPCA Laboratories (up 0.08%), Strides Shasun (up 1.21%) and Piramal Enterprises (up 1.33%), edged higher.

Shares of Dr Reddy's Laboratories fell 1.69% at Rs 2,961.10, with the stock extending previous trading session's slide. The stock had declined 2.65% to settle at Rs 3,012.10 yesterday, 2 May 2016.

Aurobindo Pharma surged 4.19% at Rs 801.95 on reports that a foreign brokerage has initiated coverage on the Aurobindo Pharma stock with an "Outperform" rating. The brokerage has reportedly said in a research report that Aurobindo Pharma is a beneficiary of faster approvals for its drugs in the US. It added that all key plants of the company are compliant with the US Food and Drug Administration (USFDA) norms. The brokerage expects Aurobindo's US sales to rise at a CAGR of 20% over next two years. The US market contributes 80% to Aurobindo's profits, according to the brokerage.

Bank stocks edged lower. Among public sector banks, UCO Bank (down 2.8%), Bank of India (down 2.61%), Canara Bank (down 2.43%), Andhra Bank (down 2.27%), Punjab National Bank (down 1.66%), Bank of Baroda (down 1.64%), Corporation Bank (down 1.57%), Union Bank of India (down 1.43%), Syndicate Bank (down 1.16%), IDBI Bank (down 1.09%), Allahabad Bank (down 0.79%), Vijaya Bank (down 0.63%), Bank of Maharashtra (down 0.51%), Dena Bank (down 0.51%), Punjab and Sind Bank (down 0.42%), United Bank of India (down 0.26%), Indian Bank (down 0.1%) and Central Bank of India (down 0.06%), edged lower.

State Bank of India (SBI) fell 1.18% at Rs 184.20 after the bank announced reduction in lending rates by 5 basis points (bps) across tenures. SBI's Marginal Cost of Funds based Lending Rate (MCLR) for overnight loans will be 8.9%. MCRL for one-month loans will be 9% and for three-month loans it will be 9.05%. The MCLR on 6-month loans will be 9.1% and for one-year loans the rate would be 9.15%, the bank said. MCLR for two-year loans would be at 9.25% and loans with three-year maturity would carry an MCLR of 9.3%, the bank said. The announcement was made after trading hours yesterday, 2 May 2016.

All rupee loans sanctioned and credit limits renewed with effect from 1 April 2016 are priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which is the internal benchmark of the concerned bank. Actual lending rates are determined by adding the components of spread to the MCLR.

Among private sector banks, ICICI Bank (down 2.47%), Yes Bank (down 1.4%), Kotak Mahindra Bank (down 1.39%), Axis Bank (down 0.46%), IndusInd Bank (down 0.33%) and HDFC Bank (down 0.04%), edged lower. Federal Bank (up 0.86%) and City Union Bank (up 1.91%), edged higher.

Shares of public sector companies declined. Bharat Heavy Electricals (Bhel) (down 2.58%), ONGC (down 1.24%), GAIL (India) (down 1.08%), NTPC (down 1.01%), Bharat Electronics (down 1%) and NMDC (down 0.51%) edged lower.

Shares of public sector oil marketing companies (PSU OMCs) declined after the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas announced that the under-recoveries for the month of May 2016 on PDS Kerosene in Mumbai is expected to increase to Rs 9.12 per litre from Rs 8.73 per litre in April 2016. BPCL (down 1.25%) and HPCL (down 0.74%) edged lower.

Indian Oil Corporation (IOCL) fell 1.61%. The company after market hours yesterday, 2 May 2016, announced that in accordance with the approval accorded by Cabinet Committee on Economic Affairs (CCEA) on 13 May 2013, the Government of India (GOI) has offered 1.21 crore shares to the eligible employees of the company at a discounted price of Rs 367.65 per share. In connection with this, action has been initiated by the company for sale of equity shares to the eligible employees by the GOI, IOCL said. The offer for sale of share shall remain open from 2 May 2016 to 10 May 2016, IOCL said. GOI is the principal shareholders of IOCL. It holds 58.57% stake in IOCL.

Shares of state-run coal mining giant Coal India fell 3.07% at Rs 279.85 as the company's coal production and offtake in April 2016 fell short of the company's internal target. Coal India and its subsidiaries on provisional basis achieved 90% of targeted production at 40.09 million tonnes and 83% of targeted offtake at 42.45 million tonnes in April 2016. The announcement was made after market hours yesterday, 2 May 2016.

On the macro front, data released by the government after market hours yesterday, 2 May 2016, showed that the core sector registered a strong growth of 6.4% in March 2016 over March 2015. The eight core industries comprising of coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity have nearly 38% weightage in the index of industrial production (IIP). The core sector registered a growth of 2.7% in the year ended 31 March 2016 over the year ended 31 March 2015.
The Sensex and the Nifty edged lower for the second straight trading session. The Sensex has fallen 376.92 points or 1.47% in two trading sessions from its close of 25,606.62 on 29 April 2016. The Sensex has fallen 882.84 points or 3.38% in calendar year 2016 so far (till 3 May 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 2,738.09 points or 12.17%. The Sensex is off 3,346.63 points or 11.71% from a 52-week high of 28578.33 hit on 23 July 2015. The Sensex is off 4,794.04 points or 15.97% from a record high of 30,024.74 hit on 4 March 2015.

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