Monday, September 05, 2016

THE END SESSION ( 02 - 09 -2016 )

Market settles at 16-1/2 month closing high


Trading for the week ended on a positive note as key benchmark indices settled higher led by gains in auto stocks as firmness in European stocks boosted sentiment. The barometer index, the S&P BSE Sensex rose 108.63 points or 0.38% to settle at 28,532.11. The Nifty 50 index gained 35 points or 0.4% to settle at 8,809.65. Key indices remained in positive terrain for the most part of the session with buying momentum gathering pace in late trade. The Sensex and the Nifty, both, hit their highest closing level in 16-1/2 months.

The Sensex rose 108.63 points or 0.38% to settle at 28,532.11, its highest level since 16 April 2015. The index rose 158.10 points or 0.55% at the day's high of 28,581.58. The index rose 4.15 points or 0.01% at the day's low of 28,427.63.

The Nifty gained 35 points or 0.4% to settle at 8,809.65, its highest level since 13 April 2015. The index rose 49.45 points or 0.56% at the day's high of 8,824.10. The index shed 6.45 points or 0.07% at the day's low of 8,768.20.

In overseas stock markets, European stocks edged higher and Asian stocks were mixed ahead of the influential US non-farm payrolls data, which will be released later in the global day today, 2 September 2016. US stocks finished mostly higher yesterday, 1 September 2016, recovering from earlier losses, as investors braced for the much-anticipated August jobs data, which could set the stage for a near-term interest-rate increase by the Federal Reserve. A report from the Institute of Supply Management (ISM) yesterday, 1 September 2016 showed US factory activity contracted for the first time in six months in August as new orders and production tumbled.

Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,528 shares rose and 1,198 shares declined. A total of 169 shares were unchanged. The BSE Mid-Cap index gained 0.49%. The BSE Small-Cap index rose 0.36%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 3655 crore, almost unchanged compared to turnover of Rs 3655.19 crore registered during the previous trading session.
The stock markets will remain close on Monday, 5 September 2016 on account of Ganesh Chaturthi holiday.

Bank stocks gained. Among public sector banks, Bank of Baroda (up 3.23%), Bank of India (up 2.41%), IDBI Bank (up 1.61%), Punjab National Bank (up 0.32%), Union Bank of India (up 1.82%) and State Bank of India (up 1.03%) edged higher. Indian Bank declined 1.76%.

Among private sector banks, Yes Bank (up 1.86%), Axis Bank (up 0.49%), ICICI Bank (up 0.17%), IndusInd Bank (up 0.27%) and Kotak Mahindra Bank (up 0.07%) edged higher.

Index heavyweight HDFC Bank rose 0.33% at Rs 1,284.45. The stock hit a high of Rs 1,288.50 and a low of Rs 1,281.50 in intraday trade.

Shares of power generation and power distribution companies gained. NTPC (up 0.69%), NHPC (up 0.9%), Tata Power Company (up 0.9%), Adani Power (up 1.3%), and Reliance Power (up 1.17%) gained. Power Grid Corporation of India (down 0.49%) and Torrent Power (down 1.3%) declined.

Reliance Infrastructure (RInfra) rose 4.76% after the company said it has won arbitration awards for two road projects of Rs 170 crore and that projects worth Rs 14000 crore are under advanced stages of arbitration. The announcement was made during market hours today, 2 September 2016. The company said it welcomed the series of initiatives approved by the Cabinet Committee on Economic Affairs (CCEA) to revive the construction sector. CCEA on 31 August 2016 approved a series of initiatives to revive the construction sector. As per the new initiatives, CCEA allowed contractors to move to the new speedier arbitration process, approved release of 75% of the amount in dispute against margin free bank guarantee and provided for a conciliation board comprising of independent subject experts in order to ensure speedy disposal of pending or new cases.

Welcoming the move Lalit Jalan, CEO, Reliance Infrastruture, said that this landmark initiative by the CCEA will boost the stressed infrastructure sector and also help infuse much required liquidity in the system. It is a very positive and bold move by government to help revive the stalled projects which suffer due to long settlement periods, Jalan said.

Reliance Infrastructure said it has already won arbitration awards for two road projects of Rs 170 crore. In addition, over Rs 14000 crore are under advanced stages of arbitration for various projects.

Under the new initiative approved by CCEA, in case where arbitration award is in favour of the concessionaire/contractor but public sector undertaking (PSU)/Government agencies have challenged it, 75% of award amount will have to be released to concessionaire/contractor against bank guarantee. The move will ensure that projects are not stranded due to long arbitration disputes between concessionaire/contractor and government agencies and lack of funds.

Lalit Jalan further added that CCEA has created an enabling framework for government agencies/PSUs to release 75% of arbitration award to concessionaires/contractors, without worrying about subsequent scrutiny. He also lauded the government's initiative of allowing the disputing parties to migrate to new Act even if arbitration was initiated prior to enactment of amended Arbitration Act of 2015.

Under the new scheme of arrangement, all PSUs/departments may consider setting up conciliation committees comprising of independent experts to ensure speedy disposal of pending or new cases.

Coal India fell 1.64% after the company reported lower than targeted coal production and offtake in August 2016. The company announced the monthly coal production and offtake performance after market hours yesterday, 1 September 2016. Coal India and its subsidiaries on a provisional basis achieved 79% of targeted coal production at 32.43 million tonnes in August 2016. Coal offtake stood at 36.72 million tonnes in August 2016 which was 83% of targeted offtake for the month.

Reliance Industries (RIL) dropped 1.58% at Rs 1,012.85, with the stock sliding for the second day in a row on concerns that aggressive pricing by the company's digital venture may adversely affect its profitability in the near term. Shares of RIL fell 2.73% to settle at Rs 1,029.15 yesterday, 1 September 2016, after Chairman Mukesh Ambani at the company's Annual General Meeting yesterday, 1 September 2016, announced the launch of digital services by Reliance Jio Infocomm (RJIL), a subsidiary of RIL. RJIL will launch of its digital services with Jio Welcome Offer which will be effective from 5 September 2016. As part of the Jio Welcome Offer, users will have access to unlimited 4G LTE data and national voice, video and messaging services along with the full bouquet of Jio applications and content, free of cost up to 31 December 2016. Domestic voice calls to any network across the country would be free for Jio subscribers even beyond the Jio Welcome Offer. Domestic roaming services would also not be charged separately. Average data prices would be around Rs 50 per gigabyte (GB), which would be amongst the lowest in the world.

In addition to fixed and wireless broadband connectivity offering superior voice and data services on an all-IP network, Jio will also offer end-to-end solutions that address the entire value chain across various digital services in key domains such as education, healthcare, security, communication, financial services, government-citizen interfaces and entertainment.

Media reports suggested that the plans offered by Reliance Jio are highly competitive in nature, but at the same time they would not become meaningful revenue creator. Hence, it would be a drag on profitability, reports said. Reports added that investors will closely monitor the roll out and effectiveness of Reliance Jio, in conjunction with plans by competitors to tackle new scenario.

In 2015, RJIL successfully acquired the right to use 4G spectrum in 13 key circles across India.

Auto stocks gained. Maruti Suzuki India (up 1.92%) and Mahindra & Mahindra (M&M) (up 1.17%) gained. Ashok Leyland (down 0.6%) and Eicher Motors (down 0.2%) declined.

Tata Motors rose 1.01% after the company's announcement that its total passenger and commercial vehicle sales rose 6% to 43,061 vehicles in August 2016 over August 2015. The announcement was made after market hours yesterday, 1 September 2016. Tata Motors's domestic sales of Tata commercial and passenger vehicles rose 3% to 36,466 units in August 2016 over August 2015. Tata Motors passenger vehicles sales in the domestic market rose 16% to 13,002 units in August 2016 over August 2015. Sales of passenger cars rose 17% at 11,435 units in August 2016 over August 2015, due to strong demand for the recently launched Tiago.

The overall commercial vehicles sales in the domestic market fell 3% to 23,464 units in August 2016 over August 2015. Sales of Tata Motors light commercial vehicles in the domestic market rose 10% at 13,495 units in August 2016 over August 2015. Medium and heavy commercial vehicles (M&HCV) sales fell 17% to 9,969 units in August 2016 over August 2015. The segment saw subdued demand, with the slowdown of recent months continuing, as a result of postponement of replacement and fleet expansion. The company's sales from exports rose 27% to 6,595 units in August 2016 over August 2015.

Hero MotoCorp rose 0.42% to Rs 3,561.70 after the company reported a 28% growth in total sales at 6.16 lakh units in August 2016 over August 2015. The announcement was made after market hours yesterday, 1 September 2016. The stock hit a high of Rs 3,614.35 in intraday trade, which is a record high for the counter. At the time of announcement of the monthly sales volume data, Hero MotoCorp said the company will launch 15 new products across segments in domestic and global markets in the year ending 31 March 2017 (FY 2017) out of which three motorcycles will be introduced in the domestic market before the festive season. These include the new Achiever 150cc motorcycle and the Super Splendor and Passion PRO motorcycles with the Hero patented i3S technology.

Bajaj Auto rose 0.12% to Rs 3,000. The stock was volatile. The stock hit high of Rs 3,010.45 and low of Rs 2,922.70 in intraday trade. The company reported 5% decline in total sales to 3.25 lakh units in August 2016 over August 2015. The announcement was made during market hours today, 2 September 2016. Bajaj Auto's total motorcycles sales fell 4% to 2.79 lakh units in August 2016 over August 2015. 

Domestic motorcycles sales rose 27% to 1.74 lakh units in August 2016 over August 2015. Motorcycle exports fell 31% to 1.05 lakh units in August 2016 over August 2015.
Bajaj Auto's total commercial vehicle sales fell 12% to 45,436 units in August 2016 over August 2015. Sales of commercial vehicles in the domestic market rose 14% to 25,595 units in August 2016 over August 2015. Exports of commercial vehicles fell 32% to 19,841 units in August 2016 over August 2015.

Total sales of motorcycles and commercial vehicles in the domestic market rose 25% to 2 lakh units in August 2016 over August 2015. Combined exports of motorcycles and commercial vehicles fell 31% to 1.25 lakh units in August 2016 over August 2015.
SML Isuzu gained 1.39% after total sales rose 12.7% to 1,082 units in August 2016 over August 2015. The company announced the monthly sales volume data after market hours yesterday, 1 September 2016.

Index heavyweight HDFC rose 1% to Rs 1,436.10, with the stock extending recent gains. The stock hit a high of Rs 1,441.60 in intraday trade, which is a record high for the stock. The stock has gained 5.78% in six sessions from a close of Rs 1,357.60 on 25 August 2016 to its current ruling price. The company said that it has closed the second issue of Rupee denominated bonds to overseas investors aggregating Rs 500 crore yesterday, 1 September 2016. The bonds carry yield of 7.5% per annum payable semi-annually and will mature on 9 January 2020. The entire issue has been subscribed by The Province of British Columbia. The announcement was made by the company after market hours yesterday, 1 September 2016.

The Sensex has risen 2,414.57 points or 9.24% in calendar year 2016 so far (till 2 September 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 6,037.50 points or 26.83%. The Sensex is off 1,492.63 points or 4.97% from a record high of 30,024.74 hit on 4 March 2015

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