Stocks
Nifty, Sensex will continue to face selling at higher levels – Thursday closing report
Nifty rallies may not sustain even if new highs are hit
 
We had mentioned in Wednesday’s closing report that NSE's CNX Nifty will make attempts to make new highs, but will come under selling pressure. On Thursday, for the first time, after nine consecutive days of positive closing for the S&P BSE Sensex, and after five consecutive days of positive closing on the Nifty, the indices closed in the negative.
 
Sensex managed to open marginally in the positive at 27,165, while the Nifty opened at 8,114. Hitting the day’s high almost at the same level as the opening, the benchmarks edged lower. Sensex hit a low of 26,972 and closed at 27,086 (down 54 points or 0.20%), while Nifty hit a low of 8,061 and closed at 8,096 (down 19 points or 0.23%). The NSE recorded a higher volume of 107.67 crore shares. India VIX fell 2.35% to close at 13.0775.
 
Among the other indices on the NSE, the top five gainers were Pharma (0.46%), Dividend Opportunities (0.34%), Midcap (0.23%), FMCG (0.18%) and Auto (0.07%) while the top five losers were Realty (4.00%), Metal (1.60%), PSU Bank (1.13%), Infra (0.99%) and Smallcap (0.80%).
 
Of the 50 stocks on the Nifty, 18 ended in the green. The top five gainers were Bajaj Auto (3.63%), Hero MotoCorp (2.42%), Power Grid (2.09%), NTPC (1.79%) and HDFC (1.58%). The top five losers were DLF (8.15%), Bhel (4.29%), Jindal Steel (3.93%), Hindalco (3.28%), Tata Steel (2.96%).
Of the 1,597 companies on the NSE, 537 companies closed in the positive, 1,016 companies closed in the negative while 44 companies closed flat.
Ratings agency Standard & Poor’s (S&P) has expressed “cautious optimism” for India’s sovereign rating. S&P might scale up the outlook on its India rating from negative to stable instead of effecting an upgrade.
 
India's Intelligence Bureau (IB) has reportedly issued an all-India alert after al-Qaeda leader Ayman al Zawahri announced the formation of an Indian branch of his militant group.
UPL (7.81%) hits its 52-week high today and was the top gainer in ‘A’ group on the BSE. Post stock split, Jammu & Kashmir Bank (6.87%) was among the top two gainers in ‘A’ group on the BSE. The company had announced a stock split in the ratio of 1:10.
 
After 18 consecutive days of trading in the negative, when Bhushan Steel stock price crashed as much as 76% (from Rs380.75 on 5 August 2014 to Rs91.50 on 2 September 2014), the stock has closed in the positive today for the second consecutive session. Today, it rose 5% and was among the top four gainers in the ‘A’ group on the BSE.
 
Jaiprakash Associates (17.60%) was the top loser in the ‘A’ group on the BSE on rumours that the promoters were selling their shares. The company has clarified that one of the promoters holding 72.36 crore shares, constituting 29.75% of its share capital, has sold only 1.45% of such shareholding and continues to hold 68.83 crore shares, constituting 28.30% of the company's share capital. This small shareholding has been sold by the promoter company to meet its requirement of funds (including for social cause).
 
Bajaj Auto (3.25%) was the top gainer in Sensex 30 pack. It has registered 8% growth in total sales during August to 3.36 lakh units. It expects to sell 4 lakh units in September.
 
Mahan Coal, a joint venture between Hindalco Industries and Essar Power, which has invested Rs20,000 crore for setting up end-use plants, is missing from the list of 46 blocks for which the government requested the Supreme Court for an exemption. Hence, the chances of a de-allocation have risen. Hindalco (3.40%) was among the top two losers in the ‘A’ group on the BSE.
 
US indices had a mixed closing on Wednesday. The US economy expanded at a modest to moderate pace over the past six weeks as a booming auto industry and tourism continued to drive growth, the Federal Reserve said in its Beige Book on Wednesday.
 
Asian indices showed a mixed performance. Shanghai Composite (0.80%) was the top gainer while Jakarta Composite (0.36%) was the top loser. The Bank of Japan kept its record stimulus unchanged today. European indices were trading in the green. US Futures too were trading higher.
 
German factory orders surged the most in more than one year in July, after weak demand in the second quarter contributed to an economic contraction. Orders, adjusted for seasonal swings and inflation, rose 4.6% from June, when they slid a revised 2.7%, the Economy Ministry in Berlin said today. That's the biggest increase since June 2013.

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Delhi amends APMC rules. Will other states follow?
The Amendment to APMC Rules in Delhi makes it possible for farmers and co-operatives to open wholesale markets for selling fruits and vegetables directly to customers at rates cheaper than APMC traders-resellers
 
The Delhi government has issued a notification, which could end the dominance of the three  agriculture produce market committees (APMCs), Azadpur, Keshopur and Shahdara, in the fruits and vegetables trade. This amendment would allow farmers, private organizations and government agencies to sell fruits and vegetables anywhere in the city, except the APMC markets. The move would also result in customers receiving much fresh fruits and vegetable at reasonable rates. There, the question, now is will other states follow Delhi's example to ease inflation that is troubling common man across the country.
 
This Amendment to the Delhi APMC Rules comes subsequent to a notification issued on 19th June inviting suggestions and objections to the curtailing the regulatory authority of APMCs. At a time when inflation does not seem to be subsiding, this could help bring down prices for the consumer, while passing on more profits to the farmers and farmer organisations that may now be able to take part in wholesale sales.
 
As of now, in all states other than Delhi, marketing of all agricultural products has to be done through the APMC ecosystem, which has resulted in giving a lot of power to traders and middlemen, who have traditionally dominated their respective APMCs and sub-markets.
 
After this notification, co-operatives, Kisan Mandis, NAFED, Mother Dairy, SAFAL and Small Farmers' Agribusiness Consortium (SFAC) will be able to set up new markets, thereby increasing competition and better prices for customers and farmers. The Amendment will help farmers' organisations and new markets to avoid the APMC agents' commission of 6% and the APMC fee of 1%.
 
The Amendment however, will not have an effect on the already existing APMC market yards at Azadpur, Keshopur and Shahdara, in Delhi. This comes as a welcome move to battle the creaking APMC system and may put Delhi in the lead to be followed by other states in reforming their own laws and markets.
 

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Small-cap stocks rally despite so-so results
Even though the aggregate sales of small-caps on Moneylife’s database declined, the market valuation of these stocks have shot up by over 65% 
 
Companies classified by Moneylife as small-cap (market-cap between Rs100 crore and Rs500 crore) reported a decline in their revenues for the June 2014 quarter compared to the same period last year. The aggregate sales of the 320 small-cap companies declined by 7% to Rs56,050 crore in the June 2014 quarter from Rs60,301 reported in the June 2013 quarter. Despite this, the aggregate market-cap of the companies has increased by 67% over the year as on 28 August 2014 and valuations too, have increased substantially.
 
Moneylife tracks a database of 1,294 companies, of which 1,222 companies have declared their results for the June 2014 quarter. Of these 1,222 companies, 320 are small-caps. Aggregate revenues of the small-caps form a share of 4% of the total revenues of the 1,222 companies
While the aggregate sales may have fallen, as many as 65% of the small-cap companies have reported an increase in revenues in the June 2014 quarter over the same quarter last year. As many as 57% of the companies reported an increase in operating profit and 54% of reported an increase in net profit over the same period. Though the overall profitability margins fell, 53% of the companies reported a higher operating profit margin in the June 2014 quarter compared to the June 2013 quarter and 154 or 48% of the companies reported an increase in the net profit margins. The aggregate operating profit margin for the small-cap sample fell to 6.43% in the June 2014 quarter from 7.18% in the previous quarter.
 
Valuations as measured by market-cap-to-operating profit has more than doubled to 5.6 times as on 28 August 2014, compared to 2.8 times as on 26 August 2013. As many as 252 or 79% of the companies are quoting a higher valuation compared to a year back. In comparison to other cap-wise segments, mid-caps are quoting an MC/OP of 6.9 times and large-caps are quoting an MC/OP of 8.5 times. Mega-caps command the highest valuation of 12.8 times operating profit. Market-cap to sales of small-caps have risen to 1.43 times, up 80% compared to 0.80 times a year ago.

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COMMENTS

sathya cumaran

3 years ago

sathyacumaran dhandapani
After the advent of new BJP Govt do the govt had made any substantial changes that the economy is recovering and what is reason why the stock market is trading its all time high of nifty being 8100 and sensex crossing 26000 points do these say any healthy sign as an international journalist we feel that market is gearing up with terriost black money and other politicians black money with this 100 days of modi govt there is not substantial development the petrol price as well as diesel price on the rise and the inflation is also on the rise once the diesel rise it would pave way for price rise of all the goods and as such this growth in stock market we feel is not an healthy sign as rightly said by Shri Raghuram Rajan that stock market is heading for another crash when is the big question mark

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