Monday, August 29, 2016

THE END SESSION ( 29 - 08 - 2016 )

Key indices register modest gains


Auto, metal stocks and index heavyweight Reliance Industries led modest gains for key benchmark indices in a volatile trading session. The barometer index, the S&P BSE Sensex, rose 120.41 points or 0.43% to settle at 27,902.66. The Nifty 50 index rose 34.90 points or 0.41% to settle at 8,607.45. The Sensex and the Nifty snapped two-day losing streak.

Stocks of public sector banks edged higher. Stocks of private sector banks were mixed. Tata Motors extended gains registered during the previous trading session in the wake of the announcement of Q1 June 2016 results. Vedanta rose after the company said third unit of its Talwandi Sabo power plant in Punjab achieved commercial operation date. Indian Oil Corporation (IOCL) fell after the company's average gross refining margin dropped in Q1 June 2016. L&T rose after company's Chairman A. M. Naik said that the company's goal is to achieve revenue of Rs 2 lakh crore by 2021 without compromising on profit margins.

The Sensex rose 120.41 points or 0.43% to settle at 27,902.66, its highest closing level since 24 August 2016. The index rose 170.60 points or 0.61% at the day's high of 27,952.85. The index fell 83.54 points or 0.3% at the day's low of 27,698.71.

The Nifty rose 34.90 points or 0.41% to settle at 8,607.45, its highest closing level since 24 August 2016. The index rose 49.45 points or 0.57% at the day's high of 8,622. The index fell 28.80 points or 0.33% at the day's low of 8,543.75.

The BSE Mid-Cap index rose 0.49%, outperforming the Sensex. The BSE Small-Cap index rose 0.09%, underperforming the Sensex.

The market breadth indicating the overall health of the market was negative. On BSE, 1,465 shares declined and 1,216 shares rose. A total of 206 shares were unchanged.
The total turnover on BSE amounted to Rs 2909 crore, higher than turnover of Rs 2799.42 crore registered during the previous trading session.

Among the sectoral indices on BSE, the S&P BSE Industrials index (up 1.44%), the BSE Auto index (up 1.44%), the BSE Capital Goods index (up 1.17%) and the BSE Metal index (up 1.07%) outperformed the Sensex. The BSE IT index (down 0.89%), the BSE Telecom index (down 0.81%), the BSE Bankex index (up 0.24%) and the BSE Realty index (down 0.81%) underperformed the Sensex.

Index heavyweight Reliance Industries (RIL) rose 2.85% at Rs 1,057. The company's Annual General Meeting (AGM) is scheduled on Thursday, 1 September 2016.

Stocks of public sector banks edged higher. Canara Bank (up 1.56%), Bank of Baroda (up 1.17%), Indian Bank (up 1.13%), State Bank of India (up 0.83%), Bank of India (up 0.54%), Punjab National Bank (up 0.29%) and Union Bank of India (up 0.26%),Punjab National Bank (up 0.29%) and Union Bank of India (up 0.26%) gained. United Bank of India (down 0.69%) and IDBI Bank (down 0.07%) edged lower.

Stocks of private sector banks were mixed. ICICI Bank (up 2.1%), Yes Bank (up 0.83%) and Axis Bank (up 0.34%) edged higher. IndusInd Bank (down 0.89%) and Kotak Mahindra Bank (down 0.12%) edged lower.

Index heavyweight HDFC Bank was down 1.55% at Rs 1,238.35. The stock hit a high of Rs 1,257.70 and a low of Rs 1,235.25 in intraday trade.

Auto stocks rose. TVS Motor Company (up 2.82%), Hero MotoCorp (up 2.81%), Bajaj Auto (up 1.49%), Eicher Motors (up 0.36%), Ashok Leyland (up 0.23%) and Maruti Suzuki India (up 0.18%) edged higher. Mahindra & Mahindra (down 0.21%) edged lower.

Tata Motors rose 4.18% at Rs 524.70, with the stock extending gains registered during the previous trading session in the wake of the announcement of Q1 June 2016 results. The Q1 result was announced during market hours on Friday, 26 August 2016, when the stock settled 2.01% higher at Rs 503.65. The stock has risen 6.24% in two trading sessions from its close of Rs 493.75 on Thursday, 25 August 2016.

Tata Motors' consolidated net profit declined 57.25% to Rs 2236 crore on 9.01% growth in revenue to Rs 67056 crore in Q1 June 2016 over Q1 June 2015. Tata Motors said that higher volumes in both standalone as well as Jaguar Land Rover (JLR) business was more than offset by the adverse foreign currency impact of Rs 2296 crore and adverse commodity derivatives impact of Rs 167 crore in the operating profit mainly in the Jaguar Land Rover business. The profitability was also adversely impacted by lower local market incentive in the JLR business as compared to the corresponding quarter last year and higher depreciation and amortization expenses as compared to the corresponding quarter last year. Tata Motors attributed the increase in top line during the quarter to strong sales from Jaguar Land Rover (JLR) business and continued volume growth in M&HCV segment and the LCV segment.
Meanwhile, Tata Motors' board approved raising funds aggregating Rs 3000 crore by way of issue of secured/unsecured debentures and/or bonds in one or more tranches, from time to time.

Metal and mining stocks gained. Hindalco Industries (up 2.1%), NMDC (up 2.37%), JSW Steel (up 0.93%), Steel Authority of India (up 0.52%), Tata Steel (up 0.88%), Hindustan Zinc (up 1.2%), Jindal Steel & Power (up 0.24%) and National Aluminium Company (up 0.11%) edged higher. Hindustan Copper (down 1.77%) edged lower.
Meanwhile, copper prices edged lower in global commodities markets. High Grade Copper for December 2016 delivery was currently down 0.02% at $2.084 per pound on the COMEX.

Vedanta rose 2.3% at Rs 173.20 after the company said third unit of its Talwandi Sabo power plant in Punjab achieved commercial operation date. The announcement was made during trading hours today, 29 August 2016. Vedanta said that the third 660 megawatts (MW) unit of its Talwandi Sabo power plant in Punjab has been put to commercial production on 24 August 2016 and will be capitalized in September 2016.
Further, the company said that commissioning of pots at the first line of the 1.25 mtpa Jharsuguda-ll Aluminium smelter was completed in end July 2016. The first line was impacted by a pot failure incident due to a power shut down in early August, post which 168 pots were taken out of production. The impacted pots are currently being repaired and relined. The commissioning of the second line commenced in July 2016 with 65 pots commissioned till date, and this line will ramp up in the next 3-6 months. The company said it plans to start commissioning of pots at the third line of the smelter in September 2016, well ahead of its earlier schedule of Q4 March 2017.
The 325kt BALCO-II smelter was successfully commissioned with all 336 pots operational in August, and are expected to be capitalized by October 2016. The current run-rate of aluminium production is about 1 mtpa and the overall FY 2017 volume guidance remains unchanged at 1.2 mtpa.

The company has secured 6.09 million tonnes per annum in a coal auction in August 2016 for its captive power plants that supply power to aluminium smelters at Jharsuguda and Balco. The tenor of the linkage is 5 years with an option to extend this further. The premium paid was Rs 96 per tonne, which is about 10% over the Coal India linkage price for captive power plants. This will contribute to the long-term security of coal requirement at a competitive price.

Indian Oil Corporation (IOCL) fell 0.32% at Rs 571.95 after the company's average gross refining margin dropped to $9.98 per barrel in Q1 June 2016 from $10.77 per barrel in Q1 June 2015. The company's net profit rose 25.46% to Rs 8268.98 crore on 5.72% fall in total income to Rs 107670.95 crore in Q1 June 2016 over Q1 June 2015. IOCL announced Q1 June 2016 results during market hours today, 29 August 2016.
IOCL accounted for budgetary support amounting to Rs 1331.69 crore from Government of India in Q1 June 2016 towards under recovery on sale of PDS kerosene (SKO), compared with Rs 1732.95 crore in Q1 June 2015. State-run oil marketing companies bear under-recoveries on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.
In Q1 June 2016, IOCL did not get any discount from ONGC/Oil India/Chennai Petroleum Corporation in respect of crude oil purchased from them compared with discount received of Rs 878.84 crore in Q1 June 2015.

Meanwhile, IOCL's board of directors recommended issue of bonus shares in ratio of 1:1 (one bonus share for each share held).

L&T rose 1.99% at Rs 1,456.20 after company's Chairman A. M. Naik said that the company's goal is to achieve revenue of Rs 2 lakh crore by 2021 without compromising on profit margins. Shares of L&T declined 2.02% to settle at Rs 1,427.85 on Friday, 26 August 2016, after the company presented to the stock exchanges a copy of Chairman Naik's speech made at the company's Annual General Meeting in Mumbai on that day.

Naik said at the company's Annual General Meeting that the company's goal is to achieve revenue of Rs 2 lakh crore ($30 billion) by 2021 without compromising on profit margins. L&T's net revenue from operations stood at Rs 1.02 lakh crore in the year ended 31 March 2016 (FY 2016) based on consolidated financial performance.
He said that economic conditions are starting to turn in favour of the company. Naik said that the opening of the defence sector will lead to business opportunities worth Rs 13 lakh crore over the next 10 years. He also said that there is estimated business opportunity of Rs 50000 crore over 10 years in nuclear power sector. Naik also said that L&T will tap business opportunity in government's Smart City projects and realty segment. Naik said that there are a number of projects in the road, ports, airports, railway sectors in pipeline with a total estimated value of over Rs 14 lakh crore. Naik said that L&T is also strengthening its operations in the Gulf, Africa and South East Asia.

Wipro fell 2.33% at Rs 478.55. The stock was volatile. The stock hit a high of Rs 492.10 and a low of Rs 476 in intraday trade. The company after market hours today, 29 August 2016, announced a partnership with Stibo Systems, a global leader in multi-domain Master Data Management (MDM) solutions. As part of the partnership, the two companies will collaborate to offer MDM solutions. This partnership is aimed at building trust-worthy data foundations to help joint customers derive accurate insights as they embrace digital transformation, Wipro and Stibo Systems said in a joint press release.

Key benchmark indices snapped two-day losing streak. The Sensex had fallen 277.69 points or 0.98% in the preceding two trading sessions to settle at 27,782.25 on Friday, 26 August 2016, from its close of 28,059.94 on 24 August 2016. The Sensex has fallen 149.20 points or 0.53% in this month so far (till 29 August 2016). The Sensex has risen 1,785.12 points or 6.83% in calendar year 2016 so far (till 29 August 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 5,408.05 points or 24.04%. The Sensex is off 387.30 points or 1.36% from a 52-week high of 28,289.96 hit on 9 August 2016. The Sensex is off 2,122.08 points or 7.06% from a record high of 30,024.74 hit on 4 March 2015.

In overseas stock markets, European and Asian stocks edged lower after Federal Reserve Chairwoman Janet Yellen on Friday, 26 August 2016 signaled the possibility of an interest-rate increase later this year. High US interest rates would pull money out of emerging markets and redirect it to the US. Japanese shares bucked a weak trend in Asian stocks on weaker yen. The Nikkei 225 Average settled 2.3% higher. A weaker local currency benefits exporters, as they can sell their goods at more competitive prices overseas.

US stocks closed mixed on Friday, 26 August 2016 Yellen signaled the possibility of an interest-rate increase later this year. On Friday, 26 August 2016, Yellen said in her highly-anticipated speech at an economic symposium at Jackson Hole, Wyoming that she was optimistic about the US economy, fueling expectations that interest rate hikes were ahead. She said the Federal Open Market Committee continued to anticipate gradual increases in the federal funds rate over time to achieve and sustain employment and inflation in line with the Fed's objectives. She added that the solid performance in the US labor market and outlook for economic activity and inflation had strengthened the case in recent months for an increase in the federal funds rate.

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