Stocks
Nifty, Sensex headed lower – Thursday closing report
Nifty will head higher only if it closes above 7,596
 
We had mentioned in Wednesday’s closing report that Nifty, Sensex is still in a downtrend and the trend will reverse if Nifty manages to close above 7,700. Today the index made a lower high and a lower low and closed in the red. The trends of the major indices in Wednesday’s trading are given in the table below:
 
 
On Thursday, both the key indices opened on a firm note, on the back of a rebound in global crude oil prices and Wednesday's positive close to the US markets. However, the initial gains were ceded as selling and unwinding of long positions ahead of the fourth quarter (Q4) results season dented sentiments. The Q4 results season is scheduled to start from April 8. Infosys is expected to be the first blue chip to come out with its results on April 15.
 
On the other hand, positive cues from the FOMC (Federal Open Market Committee) minutes released late on Wednesday evening and a rebound in global crude oil prices helped pare some of the losses. The FOMC minutes disclosed that the US Federal Reserve has taken a cautious stand on future rate hikes.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of major Asian indices are given in the table below:
 

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Nifty, Sensex still in a downtrend – Wednesday closing report
Nifty will reverse its current downtrend if it closes above 7,700
 
We had mentioned in Tuesday’s closing report that Nifty is in a downtrend, which will get over if it closes above 7,655. After a major correction previous day, the Nifty today moved in a narrow range and remained in the positive zone for most of the session. The trends of the major indices in Wednesday’s trading are given in the table below: 
 
 
The wider 50-scrip Nifty of the National Stock Exchange (NSE) made marginal gains. It inched up by just 11.15 points or 0.15 percent, to 7,614.35 points.
 
The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 24,978.86 points, ended the day's trade at 24,900.63 points -- up a mere 17.04 points or 0.07 percent from the previous close at 24,883.59 points.
 
The Sensex touched a high of 25,000.65 points and a low of 24,834.16 points during the intra-day trade.
 
In contrast, the BSE market breadth was tilted in favour of bulls -- with 1,650 advances and 906 declines.
 
The barometer index had plunged by 516.06 points or 2.03 percent on Tuesday, while the Nifty receded by 156 points or 2.01 percent.
 
On Wednesday, both the key indices of the Indian equity markets opened on a flat-to-positive note in-sync with their Asian peers.
 
Further, value buying, after Tuesday's plunge, supported prices.
 
Besides, healthy macro-economic data on composite PMI (purchasing managers' index) restored investors' risk taking appetite.
In addition, rise in crude oil prices cheered investors.
 
Even, Tuesday's 25 basis points cut in key lending rates by the Reserve Bank of India (RBI) gave a positive cue to the equity markets.
The rate cut was announced during the RBI's first bi-monthly monetary policy review for 2016-17.
 
However, the FOMC (Federal Open Market Committee) minutes expected to be released on late Wednesday evening and the start of the fourth quarter (Q4) results season capped gains.
 
The FOMC minutes assume significance -- as they can give vital cues to a likely US rate hike. A hike in the US interest rates is expected to lead away Foreign Portfolio Investors (FPIs) from emerging markets such as India.
 
Metal, cements and reality were top gainers followed by media and auto indices.
 
Foreign institutional investors (FIIs) were net sellers during the day's trade, while the domestic institutional investors (DIIs) bought stocks.
The data with stock exchanges showed that FIIs sold stocks worth Rs.493.56 crore, while the DIIs bought stocks worth Rs.258.68 crore.
Sector-wise, healthy buying was witnessed in stocks of metal, capital goods and automobile, whereas scrip of banking, IT (information technology), and technology, entertainment and media (TECK) came under selling pressure.
 
The S&P BSE metal index increased by 170.03 points, followed by the capital goods index, which gained by 141.19 points; and the automobile index rose by 101.27 points.
 
However, the S&P BSE banking index receded by 78.25 points, followed by the IT index, which declined by 57.61 points; and the TECK index slipped by 17.72 points.
 
Major Sensex gainers during the day's trade were Tata Steel, up 5.24 percent at Rs. 328.45; Tata Motors, up 1.81 percent at Rs.377.20; Lupin, up 1.54 percent at Rs. 1,485.55; Bharti Airtel, up 1.30 percent at Rs.334.65; and Larsen and Toubro (L&T), up 1.22 percent at Rs.1,209.55.
 
Major Sensex losers during the day's trade were Axis Bank, down 1.71 percent at Rs.424.85; Infosys, down 1.44 percent at Rs.1,201.10; ICICI Bank, down 1.20 percent
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of major Asian indices are given in the table below:
 

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Insider Trading in Geometric Software?
The stock, which has remained stagnant for the past several years, rose 35% in just one month before announcement of its takeover by HCL Technologies 
 
On 2 April 2016, the board of Geometric, a software company with a focus on engineering and manufacturing, announced a scheme of arrangement with HCL Technologies and 3DPLM Software Solutions. According to the scheme, HCL will acquire the business of Geometric except for the 58% stake that Geometric owns in—3DPLM Software Solutions, a joint venture with Dassault Systems. 3DPLM Software Solutions will issue preference shares to the shareholders of Geometric and Geometric will cease to exist. 
 
But what’s strange is that the share price of Geometric had shot up as much as 35% in just a month before the announcement from Rs144 as on 29 February 2016 to Rs196 on 1 April 2016. For years, the share has been stagnant thanks to average to poor performance. On 4th April after the announcement when trading resumed, the scrip shot up another 19.39% to Rs234. What led to this massive rally? Was it insider trading?
 
In terms of fundamentals, Geometric was far from impressive. Over the past five quarters, Geometric’s average growth in sales was just 7%. Operating profit growth averaged a mere 5%. Its average operating profit margin is an unimpressive 11% and net profit margin averaged 8%. The price-to-earnings of Geometric, which was earlier at nine times, shot up to as much as 13 times before the announcement. Certainly, its financials did not demand such sudden optimism from investors.
 
It is interesting to note that on 2 March 2016, leading newspapers rumoured that ‘Godrej may sell Geometric to HCL Technologies’. Later in the day, Geometric confirmed that there were “no events or occurrences of the nature reported in the article”. 
 
On 16 March 2016, Geometric reported a trading volume of 1.28 million shares, up 11.50 times from its average trading volume of 111,400 shares over the past month. The trading activity took the price up 12% on the day. On the day, ET Now had reported, “HCL Tech will buy the stake at Rs210-220 per share this week” and that “the transaction will trigger a 26% open offer in Geometric”.  
 
Ace investor Rakesh Jhunjhunwala, together with his wife, holds around 18.9% stake in Geometric.
 
 
In December 2014 we had mentioned (Geometric: Target for Takeover?) that over the long term, due to its poor return on capital, Geometric had disappointed its shareholders (which include marquee names like Rakesh Jhunjhunwala) even though it operates in one of the most profitable business segments of India, that is, software development. We had said, “The real value of the company may be unlocked either with a change in management that can add more profitable business lines or through a takeover by a much larger company.”
 
HCL Technologies will issue 10 equity shares of Rs2 each to Geometric shareholders for every 43 equity shares of Geometric of Rs2 each. Subject to approval from the Reserve Bank of India, 1 fully paid up redeemable preference shares of Rs68 each of 3DL will be given for every 1 fully paid up equity share each of the Geometric. If the RBI does not approve, “such shareholders shall be issued and allotted 24 fully paid unlisted equity share of Rs10 each of 3DL for every 1,793 fully paid up equity shares” of Geometric.

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COMMENTS

shanti Patel

2 years ago

Dear Readers,

It is sad reality of indian stock market if it is true about insider trading.
Well known people have been cought
by SEBI in the past for insider trading.
This only shows that today MORALITY and ETHICS have taken back bench sitting.

Shanti Patel
Joint Secretary-Bombay Shareholders Associations

REPLY

Debashis Basu

In Reply to shanti Patel 1 year ago

SEBI has allowed many more people to get away

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