Market jumps on strong global stocks
Key benchmark indices jumped in the week ended 15 July 2016, mainly boosted by a sharp jump witnessed on the opening day of the week on Monday, 11 July 2016 tracking gains in global stocks after better American jobs data and hopes for continued support from the world's central banks helped power Wall Street to a record high. The Sensex gained in four out of five sessions of the week. Recovery in monsoon rains also supported gains on the bourses. The Sensex settled below the psychological 28,000 mark after moving past that mark in intraday trade on Friday, 15 July 2016.
World stocks gained during the week as stronger-than-expected US jobs report announced last weekend suggested that the US economic recovery was back on track. Global markets were also boosted by the election in the upper house elections held on 10 July 2016, in which Prime Minister Shinzo Abe's ruling coalition led by his Liberal Democratic Party won a landslide victory, making it far easier for Abe to push through his economic agenda dubbed Abenomics. Anticipation was also growing that Abe would soon introduce a fresh fiscal stimulus package to help the stagnant economy.
The Sensex rose 709.60 points or 2.61% to settle at 27,836.50, in the week ended 15 July 2016. The Nifty gained 218.20 points or 2.62% to settle at 8,541.40. The BSE Mid-Cap index gained 2.06%. The BSE Small-Cap index rose 0.02%. Both these indices underperformed the Sensex.
Trading for the week started on a firm note. Banking, auto sector stocks and index heavyweights HDFC, ITC and Infosys led rally for the two key benchmark indices on Monday, 11 July 2016 triggered by firm global stocks. The Sensex jumped 499.79 points or 1.84% to settle at 27,626.69, its highest closing level since 19 August 2015.
Positive cues from global markets aided the latest upmove on the domestic bourses on Tuesday, 12 July 2016. The Sensex rose 181.45 points or 0.66% to settle at 27,808.14, its highest closing level since 19 August 2015.
In what was a lacklustre trading session, key benchmark indices settled near the flat line after movement was confined to a narrow range around the flat line throughout the session on Wednesday, 13 July 2016. The Sensex rose 7.04 points or 0.03% to settle at 27,815.18, its highest closing level since 19 August 2015.
Key benchmark indices logged decent gains in what was a volatile session of trade on Thursday, 14 July 2015 as upbeat European stocks boosted sentiment on the domestic bourses. The Sensex rose 126.93 points or 0.46% to settle at 27,942.11, its highest closing level since 14 August 2015.
A weak start to the earnings season weighed on the bourses on Friday, 15 July 2016. The Sensex fell 105.61 points or 0.38% to settle at 27,836.50.
From the 30-share Sensex pack, 25 stocks rose and 5 fell in the week ended 15 July 2016.
Bank stocks jumped. Axis Bank (up 3.35%), ICICI Bank (up 9.79%), HDFC Bank (up 4.38%) and State Bank of India (SBI) (up 6%) gained.
The BSE Bankex jumped 5.26%, outperforming the Sensex.
Engineering and construction major Larsen & Toubro rose 3.54%. The company has decided to participate in the offer for sale of equity shares by way of initial public offering (IPO) by L&T Technology Services. The company proposes to sell up to 15% of the equity shares held in L&T Technology Services through the IPO. L&T Technology Services, a wholly-owned subsidiary of L&T, is a pure play global engineering, research and development services company. The announcement was made on 15 July 2016.
The decision to sell 15% of stake in L&T Technology Services comes two days after L&T's IT subsidiary L&T Infotech received strong response from investors for its initial public offer (IPO) which concluded on Wednesday, 13 July 2016. IT outsourcing services provider L&T Infotech's IPO received bids for 14.31 crore shares compared to 1.22 crore shares on offer. The IPO was subscribed 11.69 times.
Index heavyweight Reliance Industries (RIL) rose 3.31%. The company announces its Q1 June 2016 results on Friday, 15 July 2016.
Index heavyweight and cigarette major ITC rose 1.24%.
Shares of PSU Coal mining major Coal India gained 2.57%. Coal India announced that its board of directors at a meeting held on 11 July 2016, approved the buyback of equity shares not exceeding 10.89 crore shares of the company, from all the shareholders holding equity shares of the company as on record date on a proportionate basis through the tender offer route. The buyback price was fixed at Rs 335 per share payable in cash for an aggregate consideration not exceeding Rs 3650 crore which is not exceeding 25% of the aggregate fully paid up share capital and free reserves of the company as per audited accounts of the company for the financial year ended 31 March 2016.
Sun Pharmaceutical Industries declined 1.05%. The company announced on 11 July 2016, the launch of Gemcitabine InfuSMART Ready-To-Administer in oncology therapy in Europe. InfuSMART is a technology in which oncology products are developed in a Ready-To-Administer (RTA) bag. With the roll-out of Gemcitabine InfuSMART, Sun Pharma becomes world's first pharmaceutical company to manufacture and launch a licensed RTA oncology product. This innovatively differentiated product will have a shelf life of two years. Over the next few months, Sun Pharmaceutical Industries will launch Gemcitabine lnfuSMART across Netherlands, UK, Spain, Germany, Italy and France.
Sun Pharma said it will introduce additional InfuSMART oncology products in the future.
Adani Ports and Special Economic Zone India jumped 6.16%. India Ratings & Research has assigned final 'IND AA+' rating with Stable Outlook for the NCDs of Rs 252 crore. Earlier on 28 June 2016, India Ratings & Research had assigned "Provisional IND AA+” rating with a stable outlook for proposed Non-Convertible Debentures (NCDs) of Rs 500 crore to the company. The announcement was made on 15 July 2016.
Tata Steel surged 17.03% and the stock was the biggest gainer from the Sensex pack. Recent rally in the stock materialized after the company's announcement that it has entered into discussions with strategic players in the steel industry, including Thyssenkrupp AG for a strategic collaboration for its European businesses. The decision had been taken as an alternative to the ongoing process for the divestment of loss making Tata Steel UK, the company said.
IT major and index heavyweight Infosys slumped 7.46%. The company trimmed revenue growth guidance for the year ending 31 March 2017 (FY 2017) at the time of announcing its Q1 June 2016 results on Friday, 15 July 2016. The stock slumped 8.81% in a single day on Friday after announcing the results. In constant currency terms, the company has forecast 10.5%-12% growth in revenue for FY 2017. At the time of announcement of Q4 March 2016 and FY 2016 results, the company had forecast 11.5%-13.5% growth in revenue for FY 2017 in constant currency terms.
On a consolidated basis, Infosys' net profit fell 4.5% to Rs 3436 crore on 1.4% growth in revenue to Rs 16782 crore in Q1 June 2016 over Q4 March 2016. The results are as per International Financial Reporting Standards (IFRS). Infosys CEO Vishal Sikka said in a statement that the company witnessed unanticipated headwinds in discretionary spending in consulting services and package implementations as well as slower project ramp-ups in large deals, resulting in a lower than expected growth in Q1 June 2016.
TCS rose 0.68%. The consolidated net profit as per International Financial Reporting Standards (IFRS) fell 0.4% to Rs 6317 crore on 3% rise in revenue to Rs 29305 crore in Q1 June 2016 over Q4 March 2016. Operating income fell 0.9% to Rs 7347 crore in Q1 June 2016 over Q4 March 2016. The result was announced on 14 July 2016.
Wipro declined 1.31%.
The BSE IT index dropped 3.56%, underperforming the Sensex.
Auto stocks gained. Tata Motors (up 5.95%), Maruti Suzuki India (up 7.18%), Mahindra & Mahindra (M&M) (up 0.82%), and Bajaj Auto (up 3.14%) gained.
Hero MotoCorp (HMCL) rose 2.45%. The company announced on 14 July 2016, the launch of the new Splendor iSmart 110, the first motorcycle to be developed completely in-house, with HMCL's own technology. Built on a completely new chassis and frame, the bike is powered by the new 110cc Torque on Demand engine that also features HMCL's patented i3S technology, the company said. The bike is now available at the Hero dealerships across India. The bike is priced at Rs 53,300 ex-showroom Delhi.
The BSE Auto index gained 3.62%, outperforming the Sensex.
On the macro front, data released by government on 12 July 2016, showed that India's industrial production increased 1.2% in May 2016 over May 2015, while snapping 1.35% dip recorded in the previous month. The manufacturing sector production rebounded 0.7%, after two months of decline, contributing to the rise in industrial output in May 2016.
Another data released by government on 12 July 2016, showed that inflation based on the consumer price index (CPI) accelerated to 5.77% in June 2016 from 5.76% in May 2016. Increase in food prices was responsible for the acceleration in consumer price inflation. The consumer food price index rose to 7.79% in June 2016 from 7.47% in May 2016. The core CPI inflation fell to 4.39% in June 2016 from 4.49% in May 2016.
Data released by the government on 14 July 2016 showed that the inflation based on wholesale price index (WPI), rose to 1.62% (provisional) in June 2016 as compared to 0.79% (provisional) in May 2016 and -2.13% in June 2015. WPI for April 2016 was revised higher to 0.79% from 0.34% reported earlier. Build up inflation rate in the financial year so far was 3.82% compared to a build up rate of 1.70% in the corresponding period of the previous year.
Meanwhile, India Meteorological Department (IMD) said in a weekly report issued on 14 July 2016, that the southwest monsoon has covered the entire country. For the country as a whole, the cumulative rainfall during this year's monsoon was 2% above the long period average (LPA) until 14 July 2016. Rainfall was 22% above LPA in Central India and 8% above LPA in South Peninsula. It was 1% below LPA in Northwest India and 24% below LPA in East & Northeast India until 14 July 2016. The IMD said in its extended range forecast upto 30 July 2016 that it expects above normal rainfall activity likely over Western Himalayan Region & Indo-Gangetic plains till 20 July and over northeastern states till 30 July. The weather office expects near normal rainfall activity over Peninsular India till 30 July. The IMD expects subdued rainfall activity over central and West India from 16 to 30 July.
The IMD has forecast rains to be above normal in July and August 2016 for the country as a whole. The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture. Around 70% of the country's farmlands are rain-fed.
Among global news during the week, the Bank of England (BOE) left key rates unchanged at 0.5% after a monetary policy review on 14 July 2016. The Monetary Policy Committee (MPC) voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion. BOE said in a statement that the MPC is committed to taking whatever action is needed to support growth and to return inflation to the target over an appropriate horizon. To that end, most members of the committee expect monetary policy to be loosened at the next MPC meeting in August. Committee members made initial assessments of the impact of UK's vote to leave the European Union on demand, supply and the exchange rate. According to the initial assessment, economic activity is likely to weaken in the near term. The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.
World stocks gained during the week as stronger-than-expected US jobs report announced last weekend suggested that the US economic recovery was back on track. Global markets were also boosted by the election in the upper house elections held on 10 July 2016, in which Prime Minister Shinzo Abe's ruling coalition led by his Liberal Democratic Party won a landslide victory, making it far easier for Abe to push through his economic agenda dubbed Abenomics. Anticipation was also growing that Abe would soon introduce a fresh fiscal stimulus package to help the stagnant economy.
The Sensex rose 709.60 points or 2.61% to settle at 27,836.50, in the week ended 15 July 2016. The Nifty gained 218.20 points or 2.62% to settle at 8,541.40. The BSE Mid-Cap index gained 2.06%. The BSE Small-Cap index rose 0.02%. Both these indices underperformed the Sensex.
Trading for the week started on a firm note. Banking, auto sector stocks and index heavyweights HDFC, ITC and Infosys led rally for the two key benchmark indices on Monday, 11 July 2016 triggered by firm global stocks. The Sensex jumped 499.79 points or 1.84% to settle at 27,626.69, its highest closing level since 19 August 2015.
Positive cues from global markets aided the latest upmove on the domestic bourses on Tuesday, 12 July 2016. The Sensex rose 181.45 points or 0.66% to settle at 27,808.14, its highest closing level since 19 August 2015.
In what was a lacklustre trading session, key benchmark indices settled near the flat line after movement was confined to a narrow range around the flat line throughout the session on Wednesday, 13 July 2016. The Sensex rose 7.04 points or 0.03% to settle at 27,815.18, its highest closing level since 19 August 2015.
Key benchmark indices logged decent gains in what was a volatile session of trade on Thursday, 14 July 2015 as upbeat European stocks boosted sentiment on the domestic bourses. The Sensex rose 126.93 points or 0.46% to settle at 27,942.11, its highest closing level since 14 August 2015.
A weak start to the earnings season weighed on the bourses on Friday, 15 July 2016. The Sensex fell 105.61 points or 0.38% to settle at 27,836.50.
From the 30-share Sensex pack, 25 stocks rose and 5 fell in the week ended 15 July 2016.
Bank stocks jumped. Axis Bank (up 3.35%), ICICI Bank (up 9.79%), HDFC Bank (up 4.38%) and State Bank of India (SBI) (up 6%) gained.
The BSE Bankex jumped 5.26%, outperforming the Sensex.
Engineering and construction major Larsen & Toubro rose 3.54%. The company has decided to participate in the offer for sale of equity shares by way of initial public offering (IPO) by L&T Technology Services. The company proposes to sell up to 15% of the equity shares held in L&T Technology Services through the IPO. L&T Technology Services, a wholly-owned subsidiary of L&T, is a pure play global engineering, research and development services company. The announcement was made on 15 July 2016.
The decision to sell 15% of stake in L&T Technology Services comes two days after L&T's IT subsidiary L&T Infotech received strong response from investors for its initial public offer (IPO) which concluded on Wednesday, 13 July 2016. IT outsourcing services provider L&T Infotech's IPO received bids for 14.31 crore shares compared to 1.22 crore shares on offer. The IPO was subscribed 11.69 times.
Index heavyweight Reliance Industries (RIL) rose 3.31%. The company announces its Q1 June 2016 results on Friday, 15 July 2016.
Index heavyweight and cigarette major ITC rose 1.24%.
Shares of PSU Coal mining major Coal India gained 2.57%. Coal India announced that its board of directors at a meeting held on 11 July 2016, approved the buyback of equity shares not exceeding 10.89 crore shares of the company, from all the shareholders holding equity shares of the company as on record date on a proportionate basis through the tender offer route. The buyback price was fixed at Rs 335 per share payable in cash for an aggregate consideration not exceeding Rs 3650 crore which is not exceeding 25% of the aggregate fully paid up share capital and free reserves of the company as per audited accounts of the company for the financial year ended 31 March 2016.
Sun Pharmaceutical Industries declined 1.05%. The company announced on 11 July 2016, the launch of Gemcitabine InfuSMART Ready-To-Administer in oncology therapy in Europe. InfuSMART is a technology in which oncology products are developed in a Ready-To-Administer (RTA) bag. With the roll-out of Gemcitabine InfuSMART, Sun Pharma becomes world's first pharmaceutical company to manufacture and launch a licensed RTA oncology product. This innovatively differentiated product will have a shelf life of two years. Over the next few months, Sun Pharmaceutical Industries will launch Gemcitabine lnfuSMART across Netherlands, UK, Spain, Germany, Italy and France.
Sun Pharma said it will introduce additional InfuSMART oncology products in the future.
Adani Ports and Special Economic Zone India jumped 6.16%. India Ratings & Research has assigned final 'IND AA+' rating with Stable Outlook for the NCDs of Rs 252 crore. Earlier on 28 June 2016, India Ratings & Research had assigned "Provisional IND AA+” rating with a stable outlook for proposed Non-Convertible Debentures (NCDs) of Rs 500 crore to the company. The announcement was made on 15 July 2016.
Tata Steel surged 17.03% and the stock was the biggest gainer from the Sensex pack. Recent rally in the stock materialized after the company's announcement that it has entered into discussions with strategic players in the steel industry, including Thyssenkrupp AG for a strategic collaboration for its European businesses. The decision had been taken as an alternative to the ongoing process for the divestment of loss making Tata Steel UK, the company said.
IT major and index heavyweight Infosys slumped 7.46%. The company trimmed revenue growth guidance for the year ending 31 March 2017 (FY 2017) at the time of announcing its Q1 June 2016 results on Friday, 15 July 2016. The stock slumped 8.81% in a single day on Friday after announcing the results. In constant currency terms, the company has forecast 10.5%-12% growth in revenue for FY 2017. At the time of announcement of Q4 March 2016 and FY 2016 results, the company had forecast 11.5%-13.5% growth in revenue for FY 2017 in constant currency terms.
On a consolidated basis, Infosys' net profit fell 4.5% to Rs 3436 crore on 1.4% growth in revenue to Rs 16782 crore in Q1 June 2016 over Q4 March 2016. The results are as per International Financial Reporting Standards (IFRS). Infosys CEO Vishal Sikka said in a statement that the company witnessed unanticipated headwinds in discretionary spending in consulting services and package implementations as well as slower project ramp-ups in large deals, resulting in a lower than expected growth in Q1 June 2016.
TCS rose 0.68%. The consolidated net profit as per International Financial Reporting Standards (IFRS) fell 0.4% to Rs 6317 crore on 3% rise in revenue to Rs 29305 crore in Q1 June 2016 over Q4 March 2016. Operating income fell 0.9% to Rs 7347 crore in Q1 June 2016 over Q4 March 2016. The result was announced on 14 July 2016.
Wipro declined 1.31%.
The BSE IT index dropped 3.56%, underperforming the Sensex.
Auto stocks gained. Tata Motors (up 5.95%), Maruti Suzuki India (up 7.18%), Mahindra & Mahindra (M&M) (up 0.82%), and Bajaj Auto (up 3.14%) gained.
Hero MotoCorp (HMCL) rose 2.45%. The company announced on 14 July 2016, the launch of the new Splendor iSmart 110, the first motorcycle to be developed completely in-house, with HMCL's own technology. Built on a completely new chassis and frame, the bike is powered by the new 110cc Torque on Demand engine that also features HMCL's patented i3S technology, the company said. The bike is now available at the Hero dealerships across India. The bike is priced at Rs 53,300 ex-showroom Delhi.
The BSE Auto index gained 3.62%, outperforming the Sensex.
On the macro front, data released by government on 12 July 2016, showed that India's industrial production increased 1.2% in May 2016 over May 2015, while snapping 1.35% dip recorded in the previous month. The manufacturing sector production rebounded 0.7%, after two months of decline, contributing to the rise in industrial output in May 2016.
Another data released by government on 12 July 2016, showed that inflation based on the consumer price index (CPI) accelerated to 5.77% in June 2016 from 5.76% in May 2016. Increase in food prices was responsible for the acceleration in consumer price inflation. The consumer food price index rose to 7.79% in June 2016 from 7.47% in May 2016. The core CPI inflation fell to 4.39% in June 2016 from 4.49% in May 2016.
Data released by the government on 14 July 2016 showed that the inflation based on wholesale price index (WPI), rose to 1.62% (provisional) in June 2016 as compared to 0.79% (provisional) in May 2016 and -2.13% in June 2015. WPI for April 2016 was revised higher to 0.79% from 0.34% reported earlier. Build up inflation rate in the financial year so far was 3.82% compared to a build up rate of 1.70% in the corresponding period of the previous year.
Meanwhile, India Meteorological Department (IMD) said in a weekly report issued on 14 July 2016, that the southwest monsoon has covered the entire country. For the country as a whole, the cumulative rainfall during this year's monsoon was 2% above the long period average (LPA) until 14 July 2016. Rainfall was 22% above LPA in Central India and 8% above LPA in South Peninsula. It was 1% below LPA in Northwest India and 24% below LPA in East & Northeast India until 14 July 2016. The IMD said in its extended range forecast upto 30 July 2016 that it expects above normal rainfall activity likely over Western Himalayan Region & Indo-Gangetic plains till 20 July and over northeastern states till 30 July. The weather office expects near normal rainfall activity over Peninsular India till 30 July. The IMD expects subdued rainfall activity over central and West India from 16 to 30 July.
The IMD has forecast rains to be above normal in July and August 2016 for the country as a whole. The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture. Around 70% of the country's farmlands are rain-fed.
Among global news during the week, the Bank of England (BOE) left key rates unchanged at 0.5% after a monetary policy review on 14 July 2016. The Monetary Policy Committee (MPC) voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion. BOE said in a statement that the MPC is committed to taking whatever action is needed to support growth and to return inflation to the target over an appropriate horizon. To that end, most members of the committee expect monetary policy to be loosened at the next MPC meeting in August. Committee members made initial assessments of the impact of UK's vote to leave the European Union on demand, supply and the exchange rate. According to the initial assessment, economic activity is likely to weaken in the near term. The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.
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