Stocks
Nifty, Sensex awaiting triggers – Tuesday closing report
We had mentioned in Monday’s closing report that Nifty, Sensex look weak. The major indices of the Indian stock markets were range-bound on Tuesday and closed with marginal gains over Monday’s close. The trends of the major indices in the course of Tuesday’s trading are given in the table below:
 
 
Indian equity markets traded lower during the mid-afternoon session on Tuesday as mixed global cues and lower crude oil prices subdued investors' sentiments. Selling pressure was witnessed in capital goods and oil and gas stocks. The BSE market breadth was minimally tilted in favour of the bears -- with 1,358 declines and 1,313 advances. On the NSE, on Tuesday, there were 678 advances, 785 declines and 77 unchanged.
 
On Tuesday, the benchmark indices opened on a flat-to-negative note on the back of lower Asian and US markets, although the European markets closed higher. The markets also traded with apprehension as caution prevailed ahead of a speech by Federal Reserve Chair Janet Yellen later in the week. Investors are vigilant of a possible interest rate hike in the US as this can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India. In addition, lower crude oil prices led the key indices to cap gains. Also, the foreign institutional investors have been net sellers for the first time in August.
 
Hindustan Petroleum Corporation Ltd (HPCL) on Monday reported a 30% rise in its net profit to Rs2,098.38 crore in the quarter ended 30 June 2016 as compared to Rs1,614.13 crore in the corresponding period last year. Net sales in the quarter under review stood at Rs51,599.52 crore, down 5.7% from Rs54,739.46 crore in the same quarter last year. The company's crude throughput (rate of production) grew to 4.48 million metric tonnes (MMT) in the June quarter from 3.75 MMT in the year-ago period. In volumes, domestic sales increased to 8.89 MMT in the first quarter of current fiscal from 8.46 MMT in corresponding quarter last year while exports fell to 0.03 MMT from 0.12 MMT. On Tuesday, HPCL shares closed at Rs1,149.95, down 5.32% on the BSE.
 
JK Tyre and Industries has said it will combine its several R&D centres under one roof to set up a world-class research centre. "JK Tyres has been using robotics technology since 2003, and we are using 14 such robots nicknamed 'Adams' in our Mysuru plant," chairman Raghupati Singhania told IANS in an interview, pointing to the robot which brought on stage the company's ten millionth radial at an event here on Monday. "Our R&D centres currently spread over different locations are now going to be brought under one roof in a world-class research centre here with an investment of Rs100 crore ($15 million). "It will house the most modern and advanced equipment manned by highly experienced engineers and scientists with deep insight into material resource, designs, aesthetics and structures, " he said, adding that the centre will start with 200 scientists, whose number will double during the next one year," Singhania said. Noting that JK Tyres pioneered radial technology in India, being the first to produce such tyres for trucks and buses in 1999, he said it is R&D which helps the company remain ahead as tyre technology is "ever evolving and developing rapidly". "JK Tyre is going greener, not only in manufacturing processes and plants, but also in products," he said. "The green tyres that we produce have low rolling resistance, which helps in saving fuel. Besides, we are constantly reducing our carbon footprint by reducing energy and water consumption -- two critical resources in tyre manufacturing," the chairman said. The shares of the company closed at Rs110.85, up 0.32% on the BSE.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

User

Piramal Enterprises and Bain Capital Credit to pursue distressed debt investing in India
Piramal Enterprises and Bain Capital Credit have signed a Memorandum of Understanding (MOU) to create a strategic partnership to invest in restructuring situations in India, according to a release from Piramal. Once finalised, the platform will invest capital directly into businesses and acquire debt of such businesses to drive sensible restructurings. The sponsors believe that there is over an USD 1 billion investing opportunity in this space over the next few years.
 
The platform’s mandate would be to look at all sectors other than real estate as an asset class. Within these, the platform’s preference will be to invest in businesses that require restructuring and have fundamentally strong growth prospects linked to India’s infrastructure and consumption needs.
 
Both Piramal and Bain Capital Credit have significant experience and a long track record in investing.  Piramal has over three decades of experience of spotting early trends in investment opportunities, acting decisively and successfully creating value for all concerned shareholders. Bain Capital Credit has invested in this asset class for 15 years in North America, Europe, Asia and Australia.
 
Shantanu Nalavadi, an experienced investing professional with 25 years of experience in India and currently Managing Partner of Piramal Capital, will lead this strategic partnership.
 

User

Economy in motion, but private corporate investment recovery still missing
While the Indian economy is in motion, growth not accelerating as expected with private corporate investment recovery turning out to be the missing link, says a report.
 
In a report, India Ratings and Research (Ind-Ra) says, "The key factor that is holding the acceleration of industrial growth is investment recovery. Besides stepping up its own capital expenditure, the incumbent government has taken several initiatives to revive private investment as also the manufacturing sector growth in the country. However, all this has failed so far to rekindle the animal spirit in the economy. In fact, the Business Confidence Index of National Council of Applied Economic Research (NCAER), which had reached 148.4 in January 2015, slipped to 121.6 in April 2016. Corporates, particularly those engaged in infrastructure, power, iron and steel and textile sectors, are either repairing their balance sheets or saddled with stagnation or even decline in capacity utilisation. We, therefore, expect investments to grow 5.0% in FY17, mainly driven by the government capital expenditure."
 
 
Although the government has tried to do its bit to revive the investment cycle as can be seen from the FY16 and FY17 budgets, unfortunately the share of state and central government capital expenditure in the total capital expenditure in the economy is only 16%. As the balance 84% comes from the private corporate sector, which includes central and state public sector undertakings, Ind-Ra says it believes government capital expenditure can play only a limited role in reviving the capex cycle. 
 
In the absence of investment demand, Ind-Ra says, the key support to industrial growth is coming from the consumption demand. Moderation in both inflation and lending rates of banks is aiding the consumption demand in urban areas. Salary revision of central government employees due to the award of the recommendations of the Seventh Central Pay Commission will further aid the urban consumption demand. Also, with favourable monsoon so far, Ind-Ra says it expects even rural demand to recover in FY17. However, it will still not be sufficient to drive the industrial growth higher than the 7.4% witnessed in FY16.
 
 
The ratings agency says it also feels that the situation is more complex than hitherto believed. As in the aftermath of debt-fuelled expansion both banks and corporates are repairing their balance sheets, it has led to a virtuous cycle whereby banks are not lending and private corporate sector is not investing. The impaired asset ratio of the banking system is expected to inch up to 12.5%, including assets reconstruction companies’ receipts but excluding Discom bonds, by FY17.
 
"The median debt-to-equity ratio for infrastructure, iron and steel and textiles sectors increased to four to six times in FY15 from under two times in FY10. Ind-Ra says its estimates suggest that 240 of the top 500 borrowers belong to the stressed and elevated risk of refinancing categories and will remain exposed to significant refinancing risk during FY17. Clearly, there is no easy way out as the process of balance sheet repairing or cleaning will take time, it added.
 
 
The ratings agency also revised also revised its gross domestic product (GDP) estimate for FY17 upwards to 7.8% (FY16: 7.6%) from its earlier forecast of 7.7%. It said, "The upward revision has been prompted by the progress of monsoon and the sowing of kharif crop so far. With the exception of East and Northeast, the rainfall in other regions of the country has been more than long period average (LPA). Cultivated area under kharif crops on 19 August 2016 was 5.7% higher than the normal area (average of latest available five fiscal years). As a result, we now expect the agricultural gross value added (GVA) to grow 3.0% yoy in FY17 compared to the 2.8% forecasted earlier."
 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)