Wednesday, July 27, 2016

THE END SESSION ( 27 / 07 / 2016 )

Sensex settles above 28,000 mark


Amid hopes for the passage of the Goods and Services Tax (GST) constitution amendment bill during the ongoing monsoon session of parliament, the two benchmark indices eked out small gains, with the barometer index, the S&P BSE Sensex, moving past the psychologically important 28,000 mark. The Sensex rose 47.81 points or 0.17% to settle at 28,024.33. The gains for the Nifty 50 index were higher than those for the Sensex in percentage terms. The Nifty rose 25.15 points or 0.29% to settle at 8,615.80.

According to reports, the empowered committee of state finance ministers which met Finance Minister Arun Jaitley yesterday, 26 July 2016, has reached a consensus on key aspects of the constitutional amendment bill on Goods and Services Tax (GST). The committee has decided to keep the main GST rate low, according to reports. The GST bill is likely to be moved in the Rajya Sabha next week. The Rajya Sabha has already allotted five hours for discussion on the GST bill, according to media reports.

The GST bill, which has been approved by the Lok Sabha is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. A constitutional amendment bill requires at least 50% attendance and support of two-third of those present and voting in the house. For the GST bill to become a law, the bill also needs to be approved by half the state assemblies after its passage in the parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The GST seeks to create a seamless national market in the country by replacing plethora of state taxes and central taxes by one tax. The month-long monsoon session of the parliament will conclude on 12 August 2016.

Index heavyweight and housing finance major HDFC edged higher after the company reported a surge in bottom line in Q1 June 2016 on the back of exceptional gains on sell of a part of its stake in its general insurance joint venture in favour of the joint venture partner. Passenger car major Maruti Suzuki India edged higher after the company announced that it will start sales of its first light commercial vehicle (LCV) Super Carry towards the end of August. Zee Entertainment Enterprises (Zee) edged higher after the company reported strong Q1 results.

Shares of Dr Reddy's Laboratories (DRL) tumbled, with the stock extending losses registered during the previous trading session triggered by weak Q1 June 2016 results. Shares of telecom towers company Bharti Infratel surged after the company reported a surge in bottom line in Q1 June 2016.

The Sensex rose 47.81 points or 0.17% to settle at 28,024.33, its highest closing level since 25 July 2016. The index jumped 234.36 points or 0.83% at the day's high of 28,210.88. The index lost 76.59 points or 0.27% at the day's low of 27,899.93.

The Nifty 50 index rose 25.15 points or 0.29% to settle at 8,615.80, its highest closing level since 25 July 2016. The index rose 74.35 points or 0.86% at the day's high of 8,665. The index lost 18.60 points or 0.22% at the day's low of 8,572.05.

The market breadth indicating the overall health of the market was negative. On BSE, 1,342 shares fell and 1,316 shares rose. A total of 207 shares were unchanged. The BSE Mid-Cap index rose 0.60%. The BSE Small-Cap index rose 0.49%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 3478 crore, lower than turnover of Rs 4138.75 crore registered during the previous trading session.

Among the sectoral indices on BSE, the S&P BSE Telecom index (up 1.26%), the S&P BSE Finance index (up 0.93%), the S&P BSE Bankex (up 0.89%), the S&P BSE Basic Materials index (up 0.75%), the S&P BSE Auto index (up 0.71%), the S&P BSE Industrials index (up 0.70%), the S&P BSE Teck index (up 0.61%), the S&P BSE Metal index (up 0.60%), the S&P BSE Capital Goods index (up 0.50%), the S&P BSE Consumer Discretionary Goods & Services index (up 0.41%), the S&P BSE IT index (up 0.39%), the S&P BSE Power index (up 0.19%) and the S&P BSE Oil & Gas index (up 0.17%), outperformed the Sensex. The S&P BSE Utilities index (up 0.05%), the S&P BSE Realty index (down 0.08%), the S&P BSE Consumer Durables index (down 0.23%), the S&P BSE Energy index (down 0.39%), the S&P BSE FMCG index (down 0.51%) and the S&P BSE Healthcare index (down 0.75%), underperformed the Sensex.
Asian Paints rose 0.11% to Rs 1,061.80. On a consolidated basis, the company's net profit after minority interest rose 17.9% to Rs 535 crore on 10.2% increase interest from operations to Rs 4082.10 crore in Q1 June 2016 over Q1 June 2015. Profit before depreciation, interest, and taxes (PBDIT) rose 20.9% to Rs 820.30 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours today, 27 July 2016.

K.B.S. Anand, Managing Director & CEO, Asian Paints said that the decorative business segment India registered double digit growth during the quarter. Lower raw material prices led to improved margins. Industrial business registered good growth in the industrial liquid paints category for the company's joint venture (JV) AP-PPG while the other JV PPG-AP saw good demand in the auto original equipment manufacturers (OEM) and general industrial segment. The company's international business performed well, aided by good growth in markets like Nepal, UAE and Fiji. Both the segments in the home improvement category -- the Kitchen (Sleek) and Bath (ESS ESS) businesses -- delivered good topline growth in the quarter as compared to the previous year.

Index heavyweight Reliance Industries (RIL) fell 1% to Rs 1,013.05. The stock hit a high of Rs 1,026.90 and a low of Rs 1,010 in intraday trade.

Index heavyweight and cigarette major ITC fell 1.51% to Rs 247.75. The stock hit a high of Rs 253.65 and a low of Rs 246.55 in intraday trade.

Index heavyweight and housing finance major HDFC edged higher after the company reported a surge in bottom line in Q1 June 2016 on the back of exceptional gains on sell of a part of its stake in its general insurance joint venture in favour of the joint venture partner. The stock rose 1.48% at Rs 1,387.85. The stock hit a high of Rs 1,398 in intraday trade, which is a 52-week high for the counter. The stock hit a low of Rs 1,371.50 in intraday trade. HDFC's net profit rose 37.45% to Rs 1870.73 crore on 19.4% growth in total income to Rs 8393.33 crore in Q1 June 2016 over Q1 June 2015. HDFC made a pre-tax gain of Rs 921.61 crore in Q1 June 2016 from sale of a part of its stake in HDFC ERGO General Insurance Company to Ergo International AG. Meanwhile, HDFC made an additional one time provision of Rs 275 crore in Q1 June 2016 towards standard assets and other contingencies.

HDFC's loan book increased to Rs 2.65 lakh crore as on 30 June 2016, from Rs 2.31 lakh crore as on 30 June 2015. This is after considering the loans sold during the preceding 12 months amounting to Rs 14011 crore. During the quarter, HDFC sold loans amounting to Rs 5108 crore of which Rs 3296 crore was sold to HDFC Bank and the balance to other banks.

On consolidated basis, HDFC's net profit rose 26.88% to Rs 2796.92 crore on 18.67% growth in total income to Rs 13531.48 crore in Q1 June 2016 over Q1 June 2015.
HDFC's board granted its approval for issuance of secured redeemable non-convertible debentures (NCD) aggregating to Rs 35000 crore on a private placement basis.

Passenger car major Maruti Suzuki India (MSIL) rose 1.64% to Rs 4,558.85 after the company announced that it will start sales of its first light commercial vehicle (LCV) Super Carry towards the end of August. With Super Carry, MSIL marks its entry into the LCV segment. Initially, the vehicle will be sold in three cities viz. Ahmedabad, Kolkata and Ludhiana. It will be retailed through a dedicated commercial sales channel. The vehicle is priced at Rs 4.03 lakh ex-showroom Ahmedabad. The announcement was made during market hours today, 27 July 2016.

The MSIL stock had fallen 1.43% to settle at Rs 4,485.25 yesterday, 26 July 2016 after the company announced disappointing Q1 June 2016 results. The company's net profit rose 23% to Rs 1486.20 crore on 12.1% growth in net sales to Rs 14654.50 crore in Q1 June 2016 over Q1 June 2015. The growth in bottom line was led by a sharp surge in non-operational income and decline in depreciation charge.

Two-wheeler maker Bajaj Auto edged lower after the company reported a minuscule growth in bottom line in Q1 June 2016 over Q1 June 2015. The stock shed 0.05%. The company's net profit rose 2.19% to Rs 978.37 crore on 2.72% increase in total income to Rs 6355.81 crore in Q1 June 2016 over Q1 June 2015. Operating earnings before interest, taxes, depreciation and amortization (EBITDA) rose 3.02% to Rs 1227 crore in Q1 June 2016 over Q1 June 2015. Operating EBITDA margin was reported at 21.2% in Q1 June 2016, slightly higher than 21.1% in Q1 June 2015.

On a consolidated basis, the company's net profit rose 13.77% to Rs 1039.70 crore on 4.22% increase in total income to Rs 6355.84 crore in Q1 June 2016 over Q1 June 2015. The result was announced during trading hours today, 27 July 2016.

Bajaj Auto said in a statement that the company continues to witness headwinds in exports markets viz. Nigeria and Egypt. The company said that its exports have been adversely impacted by external factors viz. non availability of foreign currency and depreciation of the local currency.

Cement major Ambuja Cements edged lower in volatile trade after announcing strong Q2 June 2016 results. The stock fell 0.81% at Rs 267.75. The stock hit a 52-week high of Rs 278.35 in intraday trade. The stock hit a low of Rs 266.25 in intraday trade. The company's net profit rose 77% to Rs 400 crore on 1.9% growth in net sales to Rs 2541 crore in Q2 June 2016 over Q2 June 2015. The result was announced after market hours yesterday, 26 July 2016. The company's operating EBITDA (earnings before interest, taxation, depreciation and amortization) surged 56.5% to Rs 601 crore in Q2 June 2016 over Q2 June 2015.

On future business outlook, Ambuja Cements said that the medium to long term outlook for cement demand remains positive considering above normal monsoon forecast this year and government's focus on housing, concrete roads, smart cities and infrastructure development. Ambuja said it would continue to focus on improving operational efficiencies.

Zee Entertainment Enterprises (Zee) edged higher after the company reported strong Q1 results. The stock rose 2.81% at Rs 487.90. The stock hit a 52-week high of Rs 493.65 in intraday trade. The stock hit a low of Rs 476.10 in intraday trade. Zee's consolidated net profit rose 21.76% to Rs 216.96 crore on 14.74% increase in total income to Rs 1531.80 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 26 July 2016.

Advertising revenue rose 19.2% to Rs 912 crore in Q1 June 2016 over Q1 June 2015. Subscription revenue rose 14.2% to Rs 528.20 crore in Q1 June 2016 over Q1 June 2015. Earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 44.1% to Rs 453.20 crore in Q1 June 2016 over Q1 June 2015. EBITDA margin rose sharply to 28.83% in Q1 June 2016 from 23.71% in Q1 June 2015.

Shares of telecom towers company Bharti Infratel surged after the company reported a surge in bottom line in Q1 June 2016. The stock rose 5.10% to Rs 380.90. The company's consolidated net profit rose 71% to Rs 756 crore on 7% growth in revenue to Rs 3211 crore in Q1 June 2016 over Q1 June 2015. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 9% to Rs 1408 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 26 July 2016.

Bharti Infratel's Chairman Akhil Gupta said that the government's initiative on smart city would provide opportunities to infrastructure companies like Bharti Infratel. Bharti Infratel and Indus Towers are fully geared to serve their customers' demand and to look at the new opportunities coming up on the infrastructure front, Gupta said.

During the quarter, the company has taken approval of shareholders on the buyback of its equity shares for an issue size of Rs 2000 crore and is in the midst of completing the buyback process.

Bharti Infratel is a telecom tower arm of Bharti Airtel.

Shares of Dr Reddy's Laboratories (DRL) tumbled, with the stock extending losses registered during the previous trading session triggered by weak Q1 June 2016 results. The stock fell 10.07% at Rs 2,988.40. The stock had fallen 4.37% to settle at Rs 3,322.85 yesterday, 26 July 2016. DRL's consolidated net profit fell 76.28% to Rs 153.50 crore on 14.06% decline in total income to Rs 3289.50 crore in Q1 June 2016 over Q1 June 2015. Meanwhile, a domestic brokerage has reportedly downgraded the DRL stock to ''sell'' from ''reduce'' and cut its price target to Rs 2,500 from Rs 3,100 stating that the company's US business would face headwinds from double-digit price erosion on base business.

Bank stocks were mixed. Among public sector banks, IDBI Bank (down 2.18%), Syndicate Bank (down 1.56%), United Bank of India (down 0.65%), Bank of Maharashtra (down 0.6%), Corporation Bank (down 0.59%), Allahabad Bank (down 0.51%), Central Bank of India (down 0.46%), Dena Bank (down 0.26%), Vijaya Bank (down 0.24%), UCO Bank (down 0.12%) and Punjab and Sind Bank (down 0.1%), edged lower. Bank of Baroda (up 0.32%), Indian Bank (up 0.49%), Union Bank of India (up 0.66%), State Bank of India (up 0.95%), Canara Bank (up 1.32%), Bank of India (up 1.49%) and Punjab National Bank (up 2.55%), edged higher.

Reserve Bank of India (RBI) Governor Raghuram Rajan yesterday, 26 July 2016, said that a clean-up of the balance sheet of public sector banks is underway and needs to be taken to its logical conclusion. Rajan was speaking at the 10th Statistics Day Conference 2016 in Mumbai.

Among private sector banks, ICICI Bank (up 3%), IndusInd Bank (up 2.14%), City Union Bank (up 2.09%), Federal Bank (up 1.01%) and Kotak Mahindra Bank (up 0.57%), edged higher. HDFC Bank (down 0.14%) and Axis Bank (down 0.9%), edged lower.

Yes Bank ended almost unchanged at Rs 1,200.10 on BSE after the private sector bank reported first quarter results. The stock hit a high of Rs 1,214 in intraday trade, which is a record high for the counter. The stock hit a low of Rs 1,176.25 in intraday trade. The bank's net profit rose 32.76% to Rs 731.80 crore on 25.43% growth in total income to Rs 4762.83 crore in Q1 June 2016 over Q1 June 2015. The result was announced during market hours today, 27 July 2016.

The bank's net interest income (NII) rose 24.2% to Rs 1316.60 crore in Q1 June 2016 over Q1 June 2015. Net interest margin (NIM) expanded to 3.4% in Q1 June 2016 from 3.3% in Q1 June 2015. The bank's provisions and contingencies jumped 110.93% to Rs 206.63 crore in Q1 June 2016 over Q1 June 2015.

The private sector bank said that it continues to show resilience on all asset quality parameters. Yes Bank said that the bank continues to witness a robust CASA (current and savings account) growth, with the CASA ratio improving to 29.6% as on 30 June 2016 from 23.4% as on 30 June 2015. Yes Bank Managing Director & CEO Rana Kapoor said in a statement that given the improving macroeconomic environment along with stable asset quality and accelerating retail franchise, Yes Bank is well poised to capture market share across retail and corporate segments at an enhanced pace.

Separately, Yes Bank announced before market hours today, 27 July 2016, that it has received an in-principle approval from the Securities & Exchange Board of India (Sebi) to sponsor a mutual fund and set up an asset management company (AMC) and a trustee company. The bank said it has already identified senior leadership and technology architecture to establish this business, and will commence operations within 12 months.

The Sensex has risen 1,024.61 points or 3.79% in this month so far (till 27 July 2016). The Sensex has risen 1,906.79 points or 7.3% in calendar year 2016 so far (till 27 July 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 5,529.72 points or 24.58%. The Sensex is off 393.26 points or 1.38% from a 52-week high of 28,417.59 hit on 10 August 2015. The Sensex is off 2,000.41 points or 6.66% from a record high of 30,024.74 hit on 4 March 2015.

In overseas stock markets, Asian and European stocks edged higher after media reports suggested that Japanese Prime Minister Shinzo Abe plans to introduce an economic stimulus plan worth more than 28 trillion yen next week. In Japan, the Nikkei 225 Average ended 1.72% higher. In addition to fiscal stimulus from the government, global investors are hoping for further easing of monetary policy from the Bank of Japan (BOJ) after the conclusion of a two-day monetary policy meeting on 28-29 July 2016. Strength in the yen against the dollar post last month's Brexit vote and data showing a slowdown in the Japanese economy have triggered expectations of further easing of monetary policy from the BOJ. A stronger yen hurts the competitiveness of Japanese exporters.

Most US stocks edged higher in a lacklustre trading session yesterday, 26 July 2016. Investors were reluctant to carve out big positions ahead of the monetary policy outcome from the Federal Reserve. The Federal Open Market Committee (FOMC) is widely expected to keep the benchmark fed funds rates unchanged after the conclusion of two-day monetary policy today, 27 July 2016. Market participant will scrutinize the Fed statement for clues on policy direction. It remains to be seen whether the Fed gives any signals on the possibility of a rate hike at its next policy meeting in September 2016. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.

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