As suggested yesterday, the Nifty tried to bounce back from the 5955 area. If the benchmark heads higher, it may hit 6,000. However, the trend remains down for now
The market closed lower for the fourth day in succession on weak global cues and selling pressure heavyweights. As suggested yesterday, the Nifty tried to bounce back from the 5955 area. If the benchmark heads higher, it may hit 6,000. However, the trend remains down for now. The National Stock Exchange (NSE) saw a volume of 65.72 crore shares and advance-decline ratio of 440:1076.
The Indian market opened weak tracking subdued global cues. Markets in Asia were in the red in morning trade on a dip in US factory orders and fresh concerns from Europe. US markets closed around 1% lower as ratings agencies cut ratings for Chevron and Wal-Mart Stores and lower-than-expected macro-economic indicators.
Back home, the Nifty opened 39 points lower at 5,948 and the Sensex resumed trade at 19,666, down 85 points from its previous close. Selling in realty and metal stocks kept the market lower in early trade.
Across-the-board selling in late morning trade pushed the Nifty to its lows in noon trade with the index falling to 5,947. A mixed opening of the key European indices due to political uncertainty in Spain and Italy also weighed on domestic sentiments. The Sensex fell to its low in the post-noon session with the benchmark at 19,632.
The benchmarks closed off the lows but were down for the fourth day in a row. The Nifty closed 30 points (0.51%) lower at 5,957 and the Sensex declined 91 points (0.46%) to end the session at 19,660.
The broader indices continued to underperform the Sensex. The BSE Mid-cap index decline 0.66% and the BSE Small-cap index dropped 1.01%.
With the exception of the BSE Healthcare index (up 0.86%), all others settled lower. The top losers were BSE Consumer Durables (down 1.57%); BSE Fast Moving Consumer Goods (down 1.03%); BSE Power (down 0.75%); BSE Metal (down 0.74%) and BSE Oil & Gas (down 0.65%).
Eleven of the 30 stocks on the Sensex closed in the positive. The chief gainers were Sun Pharmaceutical Industries (up 4.06%); GAIL India (up 1.64%); Bajaj Auto (up 1.49%); Cipla (up 1.18%) and State Bank of India (up 0.57%). The main losers were BHEL (down 3.19%); Bharti Airtel (down 1.93%); Sterlite Industries (down 1.73%); Tata Motors (down 1.64%) and ITC (down 1.58%).
The top two A Group gainers on the BSE were—Berger Paints (up 4.23%) and Sun Pharma (up 4.06%).
The top two A Group losers on the BSE were—Jubilant Foodworks (down 8.24%) and Opto Circuits (down 6.77%).
The top two B Group gainers on the BSE were—La Opal RG (up 20%) and Jayaswal Neco Industries (up 19.64%).
The top two B Group losers on the BSE were—Camphor & Allied Products (down 15.42%) and Mahavir Impex (down 14.71%).
Out of the 50 stocks listed on the Nifty, 22 stocks settled in the positive. The major gainers were Sun Pharma (up 3.70%); Ambuja Cement (up 3.05%); ACC (up 2%); UltraTech Cement Company (up 1.56%) and GAIL (up 1.52%).
Markets in Asia, with the exception of the Shanghai Composite, settled lower on fresh concerns from Europe. The Spanish premier Mariano Rajoy faces corruption charges and uncertainty of the outcome of the elections in Italy weighed on investors.
The Hang Seng tumbled 2.27%; the Jakarta Composite fell 0.25%; the KLSE Composite shed 0.07%; the Nikkei 225 tanked 1.90%; the Straits Times declined 0.75%; the Seoul Composite dropped 0.77% and the Taiwan Weighted lost 0.46%. Bucking the trend, the Shanghai Composite rose 0.20%.
At the time of writing, the key European indices recovered from their early hiccups and were in the green and the US stock futures were in the positive.
Back home, foreign institutional investors were net buyer of equities amounting to Rs856.94 crore on Monday while domestic institutional investors were net sellers of stocks totalling Rs592.32 crore.
Market regulator Securities and Exchange Board of India (SEBI) today cleared global liquor giant Diageo Plc move to launch an open offer to acquire 26% stake from public shareholders of United Sprits. As part of the deal for purchase of 53.4% stake in the Vijay Mallya-led UB group firm, Diageo has made a Rs5,441-crore open offer for purchase of 26% stake in the company from non-promoter shareholders. United Spirits advanced 1.82% to close at Rs1,892 on the NSE.
Mirc Electronics, owner of the consumer durable and electronics brand Onida, is planning to set up a greenfield manufacturing facility in Maharashtra to manufacture air conditioners at an investment of around Rs400 crore. The proposed facility will be the fourth facility for the company in India. The stock declined 2.05% to close at Rs9.55 on the NSE.
Exide Industries has signed a new agreement with Japan’s Shin-Kobe Electric Machinery Company to implement new manufacturing processes for automotive batteries. Under the Technical Licence and Assistance Agreement, Shin-Kobe will provide “extensive technical support” for manufacturing of automotive batteries at Exide’s plants across the country. The stock gained 0.74% to close at Rs122.40 on the NSE.
The company that is known for Dominos Pizza has posted yet another strong quarter with good sales and profit numbers. Yet, the stock price is quoting at premium valuations. Is it worth it?
We had written about Jubilant Foodworks in our Moneylife issue dated 19 April 2012 (http://www.moneylife.in/article/jubilant-foodworks-good-spread/25344.html). The company, which has the rights to use the Dominos brand name in India, has reported 39% year-on-year (y-o-y) increase in net sales for the quarter ended December 2012. It reported net sales of Rs385.15 crore when compared to Rs277.05 crore for the corresponding period last year. Its net profit, likewise, jumped 27.9% y-o-y to Rs37.70 crore for the reporting quarter. The good results were attributed to cost efficiencies, continued preference as well as a reflection of changing tastes in Indian consumers, with increased preference for westernised fast foods.
A deeper insight into the Moneylife database reveals something more about Jubilant Foodworks. This is not a one-off quarter but it has been piecing together one consistent quarter after another. Its net sales has been very strong, with its three-quarter y-o-y growth rate at 42%. Even the operating profits were steadily in double-digit territory and did not show a single decline since we started tracking the company. Its three-quarter y-o-y growth rate at 35% while December 2012 quarter, operating profit grew 30%. However, there’s one catch—according to our database, the company is pricey, with its market capitalisation quoting at near 30 times its operating profit. This means the market expects the company to rapidly expand and open more new stores. Likewise, its return on networth is an astounding 62%.
During the quarter, the company opened 37 new stores and the total stores stood at 552 at the end of December 2012, higher than the 439 stores it was at the end of 2011. Now it is present in 118 cities and expanded to tier-II and tier-III towns such as Guntur, Navsari, Ankleshwar, Ambala and Tumur, to name a few. Same store sales growth during the December 2012 quarter was 16.1%. Same store measures how stores are doing excluding new stores to enable comparisons. Since the launch of its online ordering system, its delivery to sale was an impressive 14.6% while telephonic ordering was steady growing at 10.2%.
It has also launched new pizza products, including the Cheesy Boloroni Pizza, which is a mix of veg bolognese sauce and macaroni, as well as Taco Indiana, a sidedish blending Mexican and Indian flavours. Apart from selling pizzas, it has now started venturing into doughnuts. It has licensed the Dunkin’ Donuts brand and has launched eight stores as of 10 January. The company plans to roll-out 80-100 Dunkin’ Donuts stores in India.
The company has a 62% market share in the organised pizza market and 70% share in the pizza home delivery segment.
Commenting on the good results, Ajay Kaul, CEO, said, “I am pleased to announce that Q3 has been a promising quarter where we delivered sustained progress. It continues to be a period of action, relentless focus and strong execution. The business objectives pursued were to diversify the product range and above all to win new markets for both our brands.
The price of Jubilant Foodworks on Bombay Stock Exchange (BSE) was Rs1,040.75. The price has crashed since we had written about it last year but the market is still giving it premium valuations (http://www.moneylife.in/article/jubilant-foodworks-good-spread/25344.html). We had suggested that Rs900 would be an ideal price.
“The propose Bill will greatly reduce the prevailing rampant corruption in the real estate and housing sector. Not only will it protect the rights of home buyers, it will also bring in greater transparency,” said Ajay Maken, Union minister for housing and poverty alleviation, at a CII meeting in Mumbai
Home buyers may soon get a bigger say while buying a house as per the provisions of the proposed Real Estate Regulatory Authority Bill, which is to be tabled during the forthcoming Budget session of Parliament. Ajay Maken, Union minister for housing and poverty alleviation, at the ongoing International Conference in Mumbai on “Governance of Megacity Regions” organized by Confederation of Indian Industry (CII) and Centre for Policy Research (CPR), said that the Bill would aim to safeguard the interests of customers.
The Union minister is contemplating providing “infrastructure sector” status to the affordable housing segment, which will enable banks to come forward for providing loans to urban poor and provide an unprecedented boost in this segment. The banks will be able to provide long-term loans and also with the change in industry status, the ratio of Non-Performing Asset (NPA) from this category will reduce. The poorer section will receive easy financing options augmenting the affordable housing market and in totality giving a boost to the real estate industry.
Mr Maken said, “The propose Bill will greatly reduce the prevailing rampant corruption in the real estate and housing sector. Not only will it protect the rights of home buyers, it will also bring in greater transparency. Developers will be restricted from channelizing funds collected from customer for one project to another, which will provide better security to the home buyers’ investments. Even the property agreement documents, which are prepared and executed by the developers, will not remain one-sided, thereby not favouring the developer alone.”
On his suggestion to the Government of Maharashtra of raising the Floor Space Index (FSI) policy, Mr Maken said, “We had a deliberation with the state government and the latter has shown interest in considering this option for improving the living standards of poor and hutments at the urban establishments.”
Mumbai city’s metropolitan region requires inclusive development and community participation for mega development plans which is also the recommendation of Mr Maken, as one of the solutions to heightening urban evolution challenges.