Nifty, Sensex stalls: Monday Closing Report

As suspected, the Nifty has stalled. The next two days will determine whether we see a pullback or a rally to new short-term highs. If the market goes down, the support is at 5,865

The market snapped its four-day gaining streak and settled lower amid a highly volatile session on nervousness ahead of the release of key economic indicators and negative cues from Europe. As suspected, the Nifty has stalled. The next two days will determine whether we see a pullback or a rally to new short-term highs. If the market goes down, the support is at 5,865. The National Stock Exchange (NSE) reported a lower volume of 55.23 crore shares and advance-decline ratio of 740:775.


The market opened flat on nervousness ahead of the release of key domestic economic indicators this week and mixed cues from Asia. Chinese real estate prices soared 77% in the first two months of 2013 while another report said that inflation in China touched a 10-month high in February.


The Nifty opened unchanged at 5,946 and the Sensex was down three points to 19,680 at the opening bell. Buying in oil & gas, healthcare and power stocks pushed the benchmarks higher in early trade.


However, profit booking amid volatility led the market into the negative at around 10.30am. Choppiness continued with the benchmarks hovering between the red and green in morning trade.


Domestic passenger car sales dropped by 25.71% to 1,58,513 units in February while motorcycle sales fell by 4.48% to 8,00,185 units from 8,37,743 units, according to data released by the Society of Indian Automobile Manufacturers (SIAM).


Meanwhile, the country’s exports rose by 4.25% to $26.26 billion in February, growing for the second month in a row. Imports also rose by 2.6% to $41.1 billion in the month under review, leaving a trade deficit of $14.92 billion.


Another round of buying in pre-noon trade pushed the indices into the positive once again. The gains helped the market hit its intraday high in noon trade. The Nifty rose to 5,971 and the Sensex climbed to 19,755 at their highs.


The market could not sustain the gains and was down again in a short time. A negative opening of the key European indices after ratings agency Fitch downgraded Italy’s credit rating to BBB plus on Friday, kept the domestic indices on both sides of their previous closing levels in post-noon trade.


A huge bout of selling towards the end of the trading session led the market to its lows. At this point the Nifty touched 5,930 and the Sensex fell to 19,603.


The market broke its four-day gaining streak and settled marginally in the negative. The Nifty closed three points (0.06%) down at 5,942 and the Sensex fell 37 points (0.19%) to finish trade at 19,646.


The BSE Mid-cap index advanced 0.22% and the BSE Small-cap index climbed 0.28%.


Except for BSE Realty (up 1.32%); BSE Capital Goods (up 0.59%); BSE Healthcare (up 0.53%) and BSE Power (up 0.52%), all the other sectoral indices closed in the negative. The top losers were BSE Consumer Durables (down 1.38%); BSE IT (down 0.67%); BSE Metal (down 0.56%); BSE TECk (down 0.53%) and BSE Oil & Gas (down 0.45%).


Ten of the 30 stocks on the Sensex closed in the positive. The main gainers were Tata Power (up 2.28%); HDFC (up 1.91%); Sun Pharma (up 1.79%); Mahindra & Mahindra (up 1.10%) and Gail (up 0.97%). Among the losers were Hero MotoCorp (down 2.51%); Wipro (down 1.35%); Bajaj Auto (down 1.33%); Jindal Steel & Power (down 1.24%) and TCS (down 1.05%).


The top two A Group gainers on the BSE were—Opto Circuits (up 7.34%) and Siemens (up 5.17%).

The top two A Group losers on the BSE were—Oracle Financial Services Software (down 3.35%) and Max India (down 3.30%).


The top two B Group gainers on the BSE were—Jenson & Nicholson India (up 20%) and Shalimar Paints (up 19.98%).

The top two B Group losers on the BSE were—CCL International (down 19.96%) and SAAG RR Infra (down 19.67%).


Of the 50 stocks on the Nifty, 19 ended in the green. The key gainers were Siemens (up 4.78%); DLF (up 2.71%); Tata Power (up 2.63%); Asian Paints (up 2.24%) and HDFC (up 2.18%). The main losers were Hero MotoCorp (down 2.88%); Bajaj Auto (down 1.90%); IDFC (down 1.56%); Wipro (down 1.49%) and TCS (down 1.43%).


Markets in Asia settled mixed on not-so-impressive economic indicators from China and on Fitch’s downgrade of Italy.


The KLSE Composite gained 0.24%; the Nikkei 225 climbed 0.53%; the Straits Times added 0.10% and the Taiwan Weighted rose 0.29%. Among the losers, the Shanghai Composite fell 0.35%; the Hang Seng ended flat (down 1.13 points); the Jakarta Composite declined 0.41% and the Seoul Composite slipped 0.13%.


At the time of writing, the CAC 40 of France was down 0.42%; the DAX of Germany fell 0.35% while UK’s FTSE 100 rose 0.03%. At the same time, the US stock futures were in the negative, indicating a lower opening for US stocks later in the day.


Back home, foreign institutional investors were net buyers of stocks amounting to Rs1,283.58 crore on Friday while domestic institutional investors were net sellers of equities totalling Rs836.58 crore.

Berger Paints has agreed to acquire the architectural operations of Sherwin Williams Paints India Pvt Ltd, for an undisclosed sum, through its wholly-owned subsidiary firm Brushworks Paints. This transaction is expected to significantly increase presence of the company in key markets and building on to the strategy to grow its architectural paint business throughout India. The stock rose 2.10% to close at Rs206.20 on the NSE.


Bosch has informed that the illegal “Tool down” strike that was resorted to by the workmen of Bangalore plant has been withdrawn with effect from the night shift of 9 March 2013, based on the agreement reached between the management and the workmen union. The stock rose 0.68% to close at Rs 8,411.05 on the NSE.



Colgate expected to grow but valuation at a premium

The oral care segment will likely remain a profitable but a competitive segment over the next 3-5 years, says Nomura Equity Research

Colgate Palmolive (India) is the dominant market leader in the oral care segment in India. Category growth is still attractive and profitable, and it is expected that the company holds its market share and deliver stable earnings growth over the next couple of years, says Nomura Equity Research in its report on Colgate Palmolive.


According to Nomura analysts, “While we expect Colgate Palmolive to continue to deliver stable earnings growth, we believe current valuations build in a significant premium versus the long-term average.”


Positive catalysts for the share could come if the company is able to gain significant a market share in the toothpaste segment. The oral care segment will likely remain profitable but a competitive segment over the next 3-5 years. Downside risk could come from disruptive competition from other players, which could force Colgate Palmolive to increase its A&P (advertising and promotion) spend. However, the company has already demonstrated its ability to face heightened competition, and Nomura is confident about the company’s ability to maintain this over the medium term.


The strong market share performance has not been at the expense of margins. Although Colgate Palmolive spends a significant level of money on A&P, over the past five years it has only grown in line with the sales CAGR (compounded annual growth rate). This has been the most impressive growth recorded by the company, and has surprised positively.


Colgate Palmolive trades at 25.6x FY15F EPS (earnings per share). The stable and attractive nature of the business has already been captured in the current premium valuation versus the sector. Nomura has upgraded the stock to Neutral, but it believes that valuations leave only limited upside potential from current levels.


Over the past year, Colgate Palmolive has seen a significant re-rating, partly driven by the open offer made by GlaxoSmithKline Plc for its listed Indian subsidiary GlaxoSmithKline Consumer Healthcare for which the parent increased its stake from 43.16% to 72.46%. Colgate Palmolive’s current valuation may be building in the possibility of a similar open offer from parent company Colgate. However, Nomura analysts consider such an offer unlikely.


CBI registers fresh case in coal scam

A CBI probe revealed several irregularities in the allotment of a coal block to Jharkhand Ispat Private Limited, for its sponge iron plant

The Central Bureau of Investigation (CBI) on Monday carried out searches in five cities after registering a new case against Jharkhand Ispat Private Limited for alleged irregularities in the allotment of coal blocks.


CBI sources said that Jharkhand Ispat Private Limited, a company of the RC Rungta Group, was allotted North Dhadu coal block on 13 January 2006 for its sponge iron plant.


They said the agency detected several irregularities in the allotment after which a case was filed against it and unknown public officials.


The sources said details of the FIR could not be revealed as searches were still going on at Varanasi, Hazaribagh, Kolkata, Ranchi and Delhi.


The CBI has so far registered 10 FIRs, including this one, in connection with the coal scam.


The agency had earlier also booked some companies for alleged cheating, forgery and misrepresentation of facts in their applications for coal blocks.


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