Nifty, Sensex headed lower – Wednesday closing report
While the market indices may put in a short bounce, the trend is lower
We had mentioned in Tuesday’s closing report that Nifty may find a short-term support at 8,420 and that the indices were still weak. The major indices in the Indian stock markets have had a sharp fall of 1%-3% and the downtrend is threatening to continue. A second devaluation of the Chinese yuan today, a plunge in global commodity prices coupled with a depreciating rupee and stalled reforms process dampened sentiments in the Indian equity markets put a further dampner on stocks.
The negative global and local cues just ahead of the release of key economic data points unnerved investors, forcing the barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) to plunge 354 points in the day's trade. 
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also closed deep in the red. It ended 113 points or 1.33% down at 8,349.45 points.
The S&P BSE Sensex, which opened at 27,880.76 points, closed at 27,512.26 points, down 353.83 points or 1.27% from the previous day's close at 27,866.09 points.
The Sensex touched a high of 27,883.33 points and a low of 27,479.43 points in the intra-day trade.
Analysts observed that the domestic markets remained under pressure due to international cues even as commodity and banking stocks plunged. Profit bookings were widely witnessed in the mid and small cap counters.
Investors were also anxious over the Consumer Price Inflation (CPI) and Index of Industrial Production (IIP) data set to be released on Wednesday. 
According to Devendra Nevgi, chief executive of ZyFin Advisors, with more parties giving in-principle agreement to GST (goods and services tax), the chances of the bill getting passed in this session remained alive.
"There is still hope that the government will be able to pass the GST bill. However it is going to be close as only one day remains for the session to end," Nevgi told IANS.
The monsoon session of parliament ends on Thursday, with the fate of key legislations like the GST and the land bill hanging in the balance.
Sector-wise, banking, automobile, capital goods, metals and oil and gas stocks came under heavy selling pressure. However, IT, technology, entertainment and media (TECK), consumer durables and healthcare index ended in the green.
The S&P BSE banking index plunged by 644.35 points, followed by automobile index which tanked by 494.05 points, capital goods index sank by 370.99 points, metal index receded by 361.63 points and oil and gas index declined by 334.12 points.
The S&P BSE IT index zoomed by 292.25 points, TECK index jumped by 107.74 points, consumer durables index rose by 93.95 points and healthcare index gained by 86.25 points.
The top gainers and losers in the major indices in the market are given in the table below:
Among the Asian markets, Japan's Nikkei was down 1.58%, Hong Kong's Hang Seng declined by 2.38%, China's Shanghai Composite Index fell by 1.03%. 
In Europe, the London FTSE 100 index was down by 1.49%, Germany's DAX Index fell by 3.29%, and French CAC 40 fell by 3.37%.


Revenues of 728 companies down 1% in the June quarter
Even though large-caps reported good numbers, overall results disappointed
As many as 728 companies of Moneylife’s database of 1,377 companies have declared their June 2015 quarter results. Consolidated revenues of the 728 companies fell 0.95% year-on-year (y-o-y) to Rs8.19 lakh crore for the quarter ended June 2015. Lower raw material costs, mainly due to the fall in crude oil prices led to improved operating profit margins. The 700-odd companies reported a consolidated operating profit of Rs1.47 lakh crore in Q1FY16 up 10.60% from Rs1.33 lakh crore reported in the same quarter last year. The operating profit margin improved to 17.95% from 16.08% over the same period. However, net profit for Q1FY16 declined by 1.18% to Rs79,365 crore from Rs80,313 crore. Valuations defined by market-cap to sales soared by 24% to 2.36 times as on 10 August 2015 from 1.90 times as on 11 August 2014. 


Of the 119 mega-caps (market-cap above Rs10,000 crore) present in our list as many as 92 companies reported a growth in revenues. As many as 53 mega-cap reported a double digit growth. This included pharma companies like Torrent Pharmaceuticals, Glenmark Pharmaceuticals and banks such as Kotak Mahindra Bank and HDFC Bank. Many financial services firms too reported a significant growth in revenues. On top of the list were Bajaj Finserv, L&T Finance Holdings, Indiabulls Housing Finance and Bajaj Finance. 
Consolidated revenues of the 119 mega-caps went down 2.65% to Rs5.55 lakh crore in Q1FY16 from Rs5.70 crore in Q1FY15.  Operating profit margins improved to 19.98% from 17.54% over the same period. This led to a y-o-y operating profit growth of 10.92% in the June 2015 quarter. Had you invested an equal amount in each stock one year back your investment would have grown by 22%. This price rise was supported by improved investor sentiment. The overall price-to-earnings (PE) of the  mega-caps rose by nearly 26% over the year to 23.4 times from 18.5 times a year ago.


The set of 206 large-caps (market-cap of Rs2,000-Rs10,000 crore) reported a growth of 4% in revenues. Revenues grew to Rs1.87 lakh crore in Q1FY16 from Rs1.80 lakh crore in Q1FY15. As many as 147 of the 206 large-caps, reported a growth in revenues. As many as 51 companies reported a revenue growth of over 20%. Sun Pharma Advanced Research, Gruh Finance, Welspun India, Hexaware Technologies and Gujarat Fluorochemicals are a few of the top companies on the list which reported a revenue growth in excess of 20%. Companies like Balkrishna Industries, EID-Parry, Clariant Chemicals and Gujarat State Fertilizers & Chemicals would have disappointed investors with a decline in revenue.
Consolidated operating profit of the 206 mid-caps rose 14% y-o-y to Rs28,950 crore in Q1FY16 from Rs25,432 crore a year ago. Unlike mega-caps, the consolidated net profit of the large-caps rose 14% to Rs11,111 crore from Rs9,752 crore over the same period. The stock price of the large-cap companies gained an average of 28% for the one-year period ended 10 August 2015. The PE valuations rose 13% to 20.4 times from 18 times over the same period.


The 175 mid-caps (market-cap of Rs500-Rs2,000 crore) reported a y-o-y revenue growth of 4% in the June 2015 quarter. The consolidated revenues increased to Rs53,028 crore from Rs51,156 crore a year ago. Operating profit increased by 2% to Rs6,184 crore in Q1FY16 from Rs6,044 crore in Q1FY15. Net profit declined by 8% to Rs1,708 crore from Rs1,851 crore over the same period. Despite the lacklustre results, over the year these mid-caps would have returned around 25%. Investors seem very optimistic as PE valuations have risen by nearly 38% to 25.3 times as on 10 August 2015 from 18.4 times a year ago.
Just about 69 companies reported a revenue growth in excess of 10%. As many as 56 companies reported a decline in their top-line. Ramkrishna Forgings, Sonata Software MPS, Somany Ceramics and Navin Fluorine are a few companies which reported strong revenue growth.


Small-caps stocks (market-cap of Rs100-Rs500 crore) may have delivered the highest returns to investors over the past one year, however, the latest quarter results would have disappointed investors. The consolidated earnings of the 169 small-cap stocks on our list declined by 60% y-o-y to Rs456 crore in Q1FY16 from Rs1,140 crore in the same quarter a year ago. Revenues fell by 2% to Rs19,946 crore and operating profits too, declined by 9% to Rs1,563 crore. Profit margins fell as well. Operating profit margin fell to 7.84% as compared to 8.50% a year ago. Valuations too have increased significantly. MC/sales rose by 31% to 0.55 times from 0.42 times. The latest quarter annualised PE has risen to 23.3 times from 6.6 times a year ago.
Nitin Spinners, Omkar Speciality Chemicals, Ion Exchange, IFB Agro, Control Print and Alicon Castalloy are a few small-caps which reported strong first quarter results. As many as 80 out of the 169 small-caps have reported a decline in revenue. As many as 68 companies reported a decline in profit, while 17 companies reported a operating loss.


The 59 micro-caps (market-cap less than Rs100 crore) on our list reported a decline of 18% in revenues over the one year period. The companies reported a consolidated operating loss of Rs474 crore and a net loss of Rs908 crore in the latest quarter. Around 23 companies reported a revenue growth while 30 companies reported a net profit. Divyashakti Granites, Natural Capsules, Shree Ajit Pulp & Paper and Dynemic Products are a few companies that reported decent first quarter results. 


SEBI bars Rahul Inn Hospitality from mobilising funds from investors
The company was engaged in fund mobilising activity through issue of Secured Redeemable Debentures to more than 49 persons without complying with the relevant provisions of the Companies Act, 1956 and provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, according to a SEBI Order
SEBI passed an order directing Rahul Inn Hospitality from directing the company not to mobilise funds from investors. Further, the company, its present and past directors are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities.
The company and its directors have been directed not to dispose of any of the properties or alienate or encumber any of the assets of the company without prior permission from SEBI and not to divert any funds raised from public, which are kept in bank accounts.
The company was engaged in fund mobilising activity through issue of Secured Redeemable Debentures to more than 49 persons without complying with the relevant provisions of the Companies Act, 1956 and provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008.


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