Tuesday, May 24, 2016

THE END SESSION ( 24 / 05 / 2016 )

Benchmark indices eke out small gains


An upward revision in monsoon forecast for the June-September 2016 south west monsoon season from private weather forecaster Skymet and gains in European stocks aided the upmove on the domestic bourses, with the barometer index, the S&P BSE Sensex, and the Nifty 50 index snapping a four-day losing streak. The Sensex gained 75.11 points or 0.3% to settle at 25,305.47. The Nifty rose 17.80 points or 0.23% to settle at 7,748.85. Skymet revised higher forecast for the 2016 southwest monsoon to 109% of the long period average (LPA) from 105% of the LPA predicted earlier. The announcement from Skymet hit the market towards the close of the trading session.

Shares of public sector oil marketing companies (PSU OMCs) declined on concerns surrounding a weak rupee. Novartis India surged a staggering 17% after the company said that its board of directors will consider a proposal for buyback of the company's equity shares along with the Q4 March 2016 result on 26 May 2016. Tata Power Company edged higher after the company announced strong Q4 results. Airline stocks declined as a weak rupee heightened concerns about its impact on operating costs. VRL Logistics tanked 20% after the company said its promoters may dilute a portion of their stake in the company to fund their proposed airline venture.

Private weather forecaster Skymet said that conditions are favorable for the timely onset of the southwest monsoon in Kerala. This is in contrast with state-run weather office the India Meteorological Department (IMD) predicting a delay of 6 days for the onset of the monsoon rains in Kerala this year from the normal onset date which is 1 June. The IMD also, last month, forecast good rains during the 2016 southwest monsoon season.

Skymet has cut its forecast of the quantum of rains in June 2016 to 87% of LPA from its earlier prediction of 90% of LPA. It has raised its forecast of the quantum of rains in July 2016 to 108% of LPA from earlier 105%. For August 2016, Skymet has raised its forecast to 113% of LPA from earlier 108%. For September 2016, Skymet has raised its forecast to 123% of LPA from earlier 115%.

Skymet expects the second half of the southwest monsoon season to be better than the first half. It also expects that the spell of good rainfall activities will spill over to October this year. Skymet expects good amount of rainfall in Central India and the West coast, excess rainfall in some pockets of Maharashtra and Madhya Pradesh, less rainfall in some pockets of Bihar and East Uttar Pradesh. Skymet's model suggests moderate risk of weak rainfall in Tamil Nadu, Northeast India and South Interior Karnataka.

According to Skymet, the El Niño is tapering down and it will collapse after the onset of the monsoon. There are more chances of getting into La-Niña in the latter part of this year. Skymet expects the total area under kharif foodgrains to increase by 15 to 20% in 2016 over last year. Area under oilseeds including soybean, groundnut, pulses (tur, moong and urad) and rice may increase. Area under cotton may reduce marginally. However, cotton production is expected to be better than last year. Total agricultural land under sugarcane may remain the same as previous year.

The Sensex gained 75.11 points or 0.3% to settle at 25,305.47, its highest closing level since 19 May 2016. The barometer index rose 110.11 points, or 0.43% at the day's high of 25,340.47. The Sensex fell 48.89 points, or 0.19% at the day's low of 25,181.47.
The Nifty 50 index rose 17.80 points or 0.23% to settle at 7,748.85, its highest closing level since 20 May 2016. The index rose 30.50 points, or 0.39% at the day's high of 7,761.55. The index shed 15.25 points, or 0.19% at the day's low of 7,715.80.

The market breadth indicating the overall health of the market was weak. On BSE, 1,606 hares fell and 902 shares rose. A total of 184 shares were unchanged. The BSE Mid-Cap index dropped 0.16%. The BSE Small-Cap index fell 0.65%. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 2599 crore, higher than turnover of Rs 2084.84 crore registered during the previous trading session.

Among the sectoral indices on BSE, the S&P BSE Oil & Gas index (down 1.01%), the S&P BSE Healthcare index (down 0.88%), the S&P BSE Telecom index (down 0.66%), the S&P BSE Teck index (down 0.4%), the S&P BSE IT index (down 0.32%), the S&P BSE Capital Goods index (down 0.3%), the S&P BSE Energy index (down 0.18%), the S&P BSE Realty index (down 0.16%), the S&P BSE Consumer Discretionary Goods & Services index (down 0.12%), the S&P BSE Consumer Durables index (down 0.08%), the S&P BSE Power index (down 0.07%), the S&P BSE Utilities index (down 0.01%), the S&P BSE Industrials index (up 0.1%), the S&P BSE FMCG index (up 0.18%), the S&P BSE Metal index (up 0.18%), the S&P BSE Basic Materials index (up 0.22%), the S&P BSE Bankex (up 0.28%) outperformed the Sensex. The S&P BSE Auto index (up 0.32%) and the S&P BSE Finance index (up 0.44%) underperformed the Sensex.

Shares of oil exploration and production (E&P) companies saw mixed trend. Cairn India (down 1.05%) and ONGC (down 0.86%) fell. Oil India rose 1.06%.

Index heavyweight Reliance Industries (RIL) rose 1.01% to Rs 939.40. The stock hit high of Rs 943.35 and low of Rs 929 in intraday trade.

Shares of public sector oil marketing companies (PSU OMCs) declined on concerns surrounding a weak rupee. HPCL (down 2.84%), BPCL (down 2.9%) and Indian Oil Corporation (down 2.15%) declined. Lower crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. The government has already freed pricing of petrol and diesel.

In the global commodities markets, Brent crude oil futures edged lower as concerns surrounding recent disruptions to crude production eased, renewing expectations that global supplies will continue to outpace demand. Brent for July settlement was currently down 30 cents at $48.05 a barrel. The contract had fallen 37 cents or 0.75% to settle at $48.35 a barrel during the previous trading session.

In the foreign exchange market, the rupee was currently hovering at 67.685, compared with its close of 67.4925 during the previous trading session.

Auto stocks were mixed. Tata Motors (up 1.63%), Ashok Leyland (up 2.35%), Mahindra & Mahindra (M&M) (up 0.21%) and Hero MotoCorp (up 0.28%) rose. Maruti Suzuki India (down 0.17%), Bajaj Auto (down 1.43%), Eicher Motors (down 0.48%) and TVS Motor Company (down 0.71%) declined.

The National Green Tribunal yesterday, 23 May 2016, passed an order banning registration of new diesel vehicles with capacity of 2000 cc and above except public transport and local authority vehicles in Kerala. It also directed that all diesel vehicles, which are more than 10 years old shall not be permitted to ply on the road in some major cities in Kerala to curb pollution.

Bank stocks saw mixed trend. Among private bank stocks, ICICI Bank (up 1.74%), Axis Bank (up 1.06%), HDFC Bank (up 0.26%) rose. IndusInd Bank (down 0.45%), Yes Bank (down 0.02%) and Kotak Mahindra Bank (down 0.75%) fell.

Among PSU bank stocks, Punjab National Bank (down 0.49%), Bank of Baroda (down 1.25%), IDBI Bank (down 0.23%), Bank of India (down 0.37%) dropped. Union Bank of India (up 1.52%), Canara Bank (up 0.64%) and State Bank of India (SBI) (up 0.92%) rose.

Index heavyweight and housing finance major HDFC advanced 1.33% to Rs 1,176. The stock hit high of Rs 1,177.80 and low of Rs 1,160.60 in intraday trade.

Tech Mahindra rose 0.91%. Tech Mahindra's consolidated net profit rose 18.15% to Rs 897 crore on 2.72% rise in revenue from services to Rs 6883.70 crore in Q4 March 2016 over Q3 December 2015. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 2.2% to Rs 1161.30 crore in Q4 March 2016 over Q3 December 2015. The EBITDA margin dropped to 16.87% in Q4 March 2016 from 16.95% in Q3 December 2015. The result was announced after market hours today, 24 May 2016.

Meanwhile, the company has dropped its plan to set up a payments bank. The company had received in-principle approval from the Reserve Bank of India in August 2015 for setting up a payments bank.

Pharma stocks declined. Wockhardt (down 3.96%), Aurobindo Pharma (down 3.72%), Cadila Healthcare (down 2.05%), Divi's Laboratories (down 0.55%) and Sun Pharmaceutical Industries (down 1.57%) declined. Dr Reddy's Laboratories (up 0.08%), Glenmark Pharmaceuticals (up 0.32%) and Lupin (up 0.25%) rose.
Cipla fell 0.6% ahead of its Q4 results today, 24 May 2016.

Novartis India surged 17% after the company said that its board of directors will also consider a proposal for buyback of the company's equity shares along with the Q4 March 2016 result on 26 May 2016. The announcement was made after market hours yesterday, 23 May 2016.

Cement stocks gained on renewed buying. ACC (up 1.59%), Ambuja Cements (up 1.1%), and UltraTech Cement (up 1.4%), gained. Shree Cement fell 1.17%.

Grasim Industries rose 2.13%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.

Tata Power Company rose after the company announced strong Q4 results. The stock gained 1.77%. The company's consolidated net profit rose 126% to Rs 360 crore on 17% growth in revenue to Rs 9626 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours yesterday, 23 May 2016. Tata Power said that the company aims to increase the share of non-fossil fuel based power generation output to 30-40% by 2025, up from its earlier target of 20%.

Airline stocks declined as a weak rupee heightened concerns about its impact on operating costs. SpiceJet (down 5.36%), Jet Airways (down 3.89%) and InterGlobe Aviation (down 1.4%) declined. A weak rupee impacts aviation sector adversely as almost a third of operational expenses of aviation firms are denominated in dollars. Among the payments made in dollars, include rentals of leased aircraft, maintenance, spare parts and salary paid out to foreign crew.

VRL Logistics tanked 20% at Rs 315.10 on BSE after the company said its promoters may dilute a portion of their stake in the company to fund their proposed airline venture. The company said that promoters Vijay Sankeshwar and Anand Sankeshwar informed the board of directors of the company that they are currently proposing to enter the civil aviation industry by incorporating a separate company to undertake the business of a regional airline. The announcement was made after market hours yesterday, 23 May 2016. The promoters said that they have taken this in-principle decision after a lot of study and inputs from industry experts. They intend to promote this new airline and induct a professional management to manage the day to day operations and grow this business, the statement said. The promoters have assured the company's board that they will continue to hold a majority stake in the company. Vijay Sankeshwar and Anand Sankeshwar held 34.84% and 34.27% stake respectively in VRL Logistics as on 31 March 2016.

Tara Jewels tumbled 10.78% after the company reported consolidated net loss of Rs 5.88 crore in Q4 March 2016 compared with net profit of Rs 9.87 crore in Q4 March 2015. The result was announced after market hours yesterday, 23 May 2016. Tara Jewels' net sales rose 8.7% to Rs 573.84 crore in Q4 March 2016 over Q4 March 2015.
Shriram EPC lost 5.61% after the company reported net loss of Rs 198.28 crore in Q4 March 2016, higher than net loss of Rs 90.73 crore in Q4 March 2015. The result was announced after market hours yesterday, 23 May 2016. Shriram EPC's net sales declined 9.8% to Rs 139.72 crore in Q4 March 2016 over Q4 March 2015.

HSIL tumbled 9.19% after net profit declined 4.3% to Rs 38.10 crore on 7.1% growth in net sales to Rs 579.44 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours yesterday, 23 May 2016.

The Sensex and the Nifty snapped a four-day losing streak. The Sensex had fallen 543.25 points or 2.1% in the preceding four trading sessions to settle at 25,230.36 yesterday, 23 May 2016, from its close of 25,773.61 on 17 May 2016. The Sensex has fallen 301.15 points or 1.17% in this month so far (till 24 May 2016). The Sensex has fallen 812.07 points or 3.1% in calendar year 2016 so far (till 24 May 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 2,810.86 points or 12.49%. The Sensex is off 3,272.86 points or 11.45% from a 52-week high of 28,578.33 hit on 23 July 2015. The Sensex is off 4719.27 points or 15.71% from a record high of 30,024.74 hit on 4 March 2015.

In overseas stock markets, European stocks reversed initial losses after the Federal Statistical Office in Germany said German economic growth accelerated at the start of the year helped by robust domestic demand. Confirming its earlier assessment of Europe's largest economy, Destatis said that Germany's gross domestic product grew at a quarterly rate of 0.7% in the first three months of the year, which translated into an annualized rate of 2.7%. Growth in the quarter was more than double the rate of 0.3% recorded in the fourth quarter of 2015.

Asian stocks dropped as speculation mounted that the US Federal Reserve will raise interest rates as early as next month. Investors in emerging markets are worried that higher interest rates in the US will drain liquidity from emerging markets and redirect it to developed economies.

US stocks finished lower yesterday, 23 May 2016, as the prospect that interest rates might rise as soon as next month weighed on utilities shares. Philadelphia Fed President Patrick Harker said yesterday, 23 May 2016, that he could see two to three rate hikes in calendar year 2016 and that if the US economy shows sufficient strength, a June increase would be appropriate. St. Louis Fed President James Bullard said holding rates too low for too long could cause financial instability. San Francisco Fed President John Williams said on Sunday, 22 May 2016, that the presidential election in the US this year wouldn't prevent the central bank from raising interest rates and that a hike in interest rate in June remains likely.

The minutes from the US Federal Reserve's April policy meeting released last week showed that Fed policy setters discussed the possibility of a June rate increase if the economy continued to strengthen. The Federal Open Market Committee next undertakes monetary policy review on 14-15 June 2016. The US central bank had lifted rates in December 2015 for the first time in nearly a decade

No comments: