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Sensex, Nifty upmove is maturing: Friday Closing Report

For the first time this year the Nifty has seen gains for eight consecutive trading days. The current move is maturing but be prepared to buy the dips

 
Domestic and global events saw the market closing around 2.5% higher and in the positive for the eighth day in succession. Today the Nifty reached a high of 5,587, which was its best since 23 February 2012 and closed almost at the day’s high. The Nifty’s 2.62% gain was its highest percentage gain since 7 June 2012. We see the index uptrend still continuing. The National Stock Exchange (NSE) saw a high volume of 80.01 crore shares and the advance decline ratio of 791:642.  
 
With the major international events behind us, the focus now shift to the Reserve Bank of India’s quarterly policy review on 17th September.
 
Riding on the two positive events—the diesel price hike in India and announcement of the QE3 by the US Federal Reserve—the Indian market opened with smart gains this morning. The Nifty opened at 5,528, a gain of 93 points over its previous close, and the Sensex added 264 points to resume trade at 18,285. All sectoral indices, led by banking, metals and oil and gas, were trading in the positive zone with gains of up to 3.36% in early trade.
 
Biting the bullet, the Indian government on Thursday hiked diesel prices by a steep Rs5.62 per litre and restricted the supply of subsidised cooking gas to six cylinders per household in a year to fetch an additional Rs20,300 crore.
 
Meanwhile, the Federal Reserve on Thursday fulfilled expectations of more stimulus to boost the US economy. The central bank said it will buy $40 billion of mortgage-backed securities per month in an attempt to help the recovery in the real estate market. The purchases will be open-ended, meaning that they will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve.
 
The opening figure on the Sensex was its intraday low while the Nifty fell to its lows soon after the opening bell with the index at 5,527. However, optimism in the Asian markets helped the benchmarks maintain their gains in subsequent trade. 
 
The market brushed aside the higher-than-expected monthly inflation numbers for August, which came in at 7.55% in August as against 6.87% in the previous month. Analysts pointed out that the hike in diesel prices would see inflation going up in the short term.
 
The positive opening of the key European indices saw the local benchmarks extending their gains in the second half of trade. The market scaled its high towards the close of trade. At this point the Nifty rose to 5,587 and the Sensex climbed to 18,499.
 
A minor bout of profit taking at the highs saw the market closing off the highs, but in the green for the eighth day in a row. The Nifty climbed 142 points (2.62%) to 5,578 and the Sensex jumped 443 (2.46%) points to settle at 18,464.
 
The broader indices lagged behind the Sensex today as the BSE Mid-cap index advanced 0.88% and the BSE Small-cap index gained 0.45%.
 
With the exception of BSE Healthcare (down 1.24%) and BSE Fast Moving Consumer Goods (down 0.49%), all other sectoral gauges ended higher. The top gainers were BSE Realty (up 4.78%); BSE Metal (up 4.25%); BSE Bankex (up 4.15%); BSE Capital Goods (up 3.48%) and BSE Auto (up 2.88%).
 
Twenty-four of the 30 stocks on the Sensex closed higher. The top performers were Jindal Steel (up 8.83%); Hindalco Industries (up 8%); State Bank of India (up 5.52%); Reliance Industries (up 5.35%) and ICICI Bank (up 4.97%). NTPC (down 1.61%); Dr Reddy’s Laboratories (down 1.59%); ITC (down 0.59%); ONGC (down 0.37%) and TCS (down 0.24%) were the key losers on the index.
 
The top two A Group gainers on the BSE were—Jindal Steel (up 8.83%) and Hindalco Ind (up 8%).
The top two A Group losers on the BSE were—Glenmark Pharmaceuticals (down 4.26%) and Lupin (down 4.01%).
 
The top two B Group gainers on the BSE were—Gujarat Themis Biosyn (up 20%) and Ravi Kumar Distilleries (up 19.98%).
The top two B Group losers on the BSE were—Mahavir Impex (down 15.38%) and Koa Tools India (down 12.50%).
 
Out of the 50 stocks listed on the Nifty, 40 stocks settled in the positive. The top gainers Jindal Steel (up 7.79%); Hindalco Ind (up 7.44%); DLF (up 7.43%); Jaiprakash Associates (up 6.72%) and Axis Bank (up 6.49%). The major losers on the index were Ranbaxy Laboratories (down 2.07%); NTPC (down 1.87%); Dr Reddy’s Laboratories (down 1.83%); Power Grid Corporation (down 1.36%) and BPCL (down 1.33%).
 
The US Fed QE3 announcement resulted in the Asian markets closing with smart gains. The US move increased the appetite for riskier assets like stocks. The Seoul Composite closed at its best in five months on Standard and Poor’s upgraded the country’s credit rating. On the other hand, the Japanese government cut its assessment of the economy for the second month in succession on the back of the global slowdown.
 
The Shanghai Composite gained 0.64%; the Hang Seng surged 2.90%; the Jakarta Composite climbed 2.07%; the KLSE Composite advanced 0.89%; the Nikkei 225 rose 1.83%; the Straits Times gained 1.33%; the Seoul Composite jumped 2.92% and the Taiwan Weighted settled 2.10% higher.
 
At the time of writing, the CAC 40 of France was up 1.97%; DAX of Germany climbed 1.46% and UK’s FTSE 100 was 1.54% higher. At the same time, the US stocks futures were in the positive, indicating a firm opening for US stocks.
 
Back home, foreign institutional investors were net buyers of shares totalling Rs361.48 crore on Thursday whereas domestic institutional investors were net sellers of equities amounting to 156.05 crore.
 
Uttam Sugar Mills today said it will raise Rs27.21 crore through rights issue to fund working capital requirement. The company would issue 1,23,69,120 equity shares at Rs22 per share, which is lower than the today's closing price of Rs 24.15 a piece on the BSE. The stock gained 0.82% to settle at Rs24.50 on the NSE.
 
Pennar Engineered Building Systems (PEBS Pennar), a subsidiary of Pennar Industries, has bagged orders worth Rs60 crore. The new orders takes the company’s order book to Rs260 crore, the company said in a press release. Pennar Industries settled at Rs25.10 on the NSE, up 0.20%.
 
Pharmaceutical firm Wockhardt, which had run into financial trouble, said its financials are improving and has settled its liabilities towards FCCBs. After defaulting on $110 million overseas bonds in 2009, the company earlier this year settled the issue with its foreign lenders. The sale of its nutrition business to Danone for Rs1,280 crore has helped the company reduce its debt to equity below 1 compared to 1.9 earlier. Wockhardt closed 0.13% up at Rs1,338 on the NSE.
 

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Bharti Infratel to raise $1 billion via IPO by year-end

Bharti Airtel, which owns around 86% stake in the tower unit, however said that it would not  participate in the share sale process of its mobile tower unit

 
Mumbai: Bharti Intratel, the telecom mast unit of mobile operator Bharti Airtel, on Friday filed for a $1 billion initial public offer (IPO) to divest 10% stake in the company by the year-end, reports PTI quoting said a senior merchant banking source directly involved with the deal.
 
However, Bharti Airtel, which owns around 86% stake in the tower unit, said in a filing to the BSE earlier in the day that it has decided against participating in the share sale process.
 
"The IPO will constitute a fresh issue of equity shares by Bharti Infratel and an offer for sale portion by Compassvale Investments, GS Strategic Investments, Anadale and Nomura Asia Investment," the filing said without saying how much stake these investors will dilute.
 
But the merchant banking source told PTI on condition of anonymity that "the investors will dilute 10% of their stake through the IPO which will hit the markets towards the end of the calendar year." 
 
Without attributing any reasons for deciding against participating in the stake sale process, Bharti filing said its committee of directors, which was looking at the details of listing of Bharti Infratel, has decided not to participate in the IPO.
 
Other investors in Bharti Infratel include Temasek Holdings, Kohlberg Kravis Roberts & Co, Goldman Sachs, Macquarie Group, Citigroup, Investment Corporation of Dubai and AIF Capital who together hold about 13%, according to the source.
 
The source further said 75% of the issue will be reserved for the primary market while the rest will be the quota for institutional investors.
 
Standard Chartered India is the lead-banker to the issue, with JP Morgan, UBS and Bank of America being the co-book-runners. 
 
Bharti Infratel has over 33,000 towers. Other players in the business include Anil Ambani-led Reliance Infratel and Viom Networks, a joint venture between Tata Teleservices and Kolkata-based Quippo Infrastructure.
 
So far, none of the tower companies is listed, although Reliance Infratel had plans to do so in the past but now is keen to sell off the business.
 
During the Reliance Communications AGM early this month, Chairman Anil Ambani had told shareholders that the tower arm will be sold as part of its effort to pare the huge debt pile, which currently is around Rs32,000 crore, next year.
 

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