Nifty, Sensex will try to break out – Wednesday closing report

The uptrend is strong and may get reversed only if Nifty goes below 7,900.


We had mentioned in our Tuesday closing report that Nifty may try to rally but it is likely to be muted. Ahead of August futures and options expiry indices had an all-time high opening after which it moved in a range except for a minor setback in the last hour of the session when it hit its day’s low. But it fully recovered within minutes.

The S&P BSE Sensex opened at 26,553 and moved in the range of 26,493 and 26,599 and closed at 26,560 (up 117 points or 0.44%) while CNX Nifty opened at 7,934 and moved between 7,917 and 7,947 and closed at 7,936 (up 31 points or 0.40%). NSE recorded a volume of 75.55 crore shares. India VIX fell 6.04% to close at 13.0625.

Among the other indices on the NSE, the top five gainers were CPSE (1.35%), Auto (0.91%), Smallcap (0.73%), IT (0.68%) and PSE (0.67%) however the only five losers were Realty (1.40%), Media (0.77%), Infra (0.45%), Pharma (0.11%) and Metal (0.09%).

Of the 50 stocks on the Nifty, 32 ended in the green. The top five gainers were IndusInd Bank (3.27%), Jindal Steel (3.12%), HCL Technologies (2.96%), ONGC (2.61%) and ICICI Bank (2.45%). The top five losers were DLF (4.49%), Bhel (1.72%), Sesa Sterlite (1.39%), IDFC (1.36%) and NMDC (1.14%).

Of the 1,616 companies on the NSE, 852 companies closed in the positive, 694 companies closed in the negative while 70 companies closed flat.

Central Board of Trustees of the Employees' Provident Fund Organization has decided against investing in equities and exchange traded funds. The finance ministry had suggested EPFO to invest in equities to enhance returns for subscribers.

Department of Industrial Policy and Promotion DIPP) on Tuesday notified increase in foreign direct investment (FDI) limit to 49% from 26% in the defence sector. The composite ceiling of 49% includes all kinds of foreign investments such as FDI, foreign institutional investors (FIIs), foreign portfolio investors (FPIs), non-resident Indians (NRIs), foreign venture capital investors (FVCI) and qualified foreign investors (QFIs).


Portfolio investment by FPIs, FIIs, NRIs, QFIs and investments by FVCIs has been capped at 24% of the total equity of the investee or joint venture company. One such player in the sector, Bharat Electronics (20%) was the top gainer in ‘A’ group on BSE.

Havells today again hit a new 52-week high and was among the top two gainers (8.27%) in ‘A’ group on the BSE.

Uco Bank (8.24%) was the top loser in ‘A’ group on the BSE. The government has ordered limited forensic audit into some of its non-performing accounts to find out any irregularities in sanction of loans.

ONGC (2.31%) was the top gainer in Sensex 30 pack. The oil ministry proposes to rationalise the subsidy-sharing mechanism for state-run oil producers, a move that is expected to reduce the burden on ONGC and Oil India Ltd as well as raise income for oil-bearing states such as Gujarat and Assam.

Sesa Sterlite (1.67%) was the top loser in Sensex 30 stock. After the recent ruling of Supreme Court on the coal allocation being illegal, market anticipates this stock to be one among the others to be worst hit.

US indices closed in the positive on Tuesday. Bookings for goods meant to last at least three years climbed by a record 22.6% in July after a 2.7% gain in June that was bigger than previously reported, data from the Commerce Department in Washington showed.


The Conference Board's US consumer confidence index rose to 92.4 in August, the highest since October 2007.

Except for Hang Seng (0.62%) all the other Asian indices closed in the green. Taiwan Weighted (0.98%) was the top gainer.

European indices were showing mixed performance while US Futures were trading marginally higher.


Chettinad Cement shareholders refuse MAM Ramaswamy’s reappointment

Shareholders have chosen “not” to  re-appoint MAM Ramaswamy, the majority stakeholder, as director of Chettinad Cement, one of the popular companies in South India


Shareholders of Chettinad Cement Corp has rejected the proposal to re-appoint MAM Ramaswamy, noted industrialist and promoter of Chettinad Group of companies, as director of the company.


“Resolved that Dr MAM Ramaswamy, Director, who retires by rotation pursuant to Section 152 of Companies Act 2013, be and is hereby not reappointed as Director of the Company”, the resolution moved in the company's annual general meeting (AGM) said.


Ramaswamy has been chairman of Chettinad Cement while his adopted son MAMR Muthiah serves as its managing director. At the 51st Annual General Meeting of Chettinad Cement in Chennai, a resolution seeking his non-appointment as director of the company was moved, according to shareholders.


Ramaswamy holds 24% of the flagship company Chettinad Cement, while his adopted son Muthiah holds 15% and his wife, Geetha Muthiah has 18% stake in the company.


Ramaswamy’s non-election as director of Chettinad Cement comes a day after the Central Bureau of Investigation (CBI) arrested Chennai's Registrar of Companies (RoC) for allegedly demanding and accepting Rs10 lakh as bribe from Ramaswamy.


The Registrar M Manu Neethi Cholan was nabbed red handed by CBI for allegedly demanding and accepting Rs10 lakh as illegal gratification from Ramaswamy to declare “null and void” the resolutions adopted at Wednesday’s meeting, where the rival group within the Chettinad Group management was planning to take control over the companies.


However, CBI which registered a case of bribery against Ramaswamy, did not arrest him considering his age.


With shareholders rejecting Ramaswamy’s reappointment as director, the post of chairman of Chettinad Cement Corporation would become vacant.


Apart from cement business, the Chettinad group is engaged in activities in granite, engineering, silica, garnet, Information Technology, education, healthcare, plantations, shipping, transportation.


Ramaswamy was also Pro-Chancellor of Annamalai University at Chidambaram in Tamil Nadu, but it was taken over by the State government due to alleged ‘financial irregularities’.


Market valuation of large-cap companies have gone up six times more than their profits

Large-cap companies as per Moneylife’s classification reported a 11% growth in net profits for the June quarter but enjoyed a 68% jump in valuation


Companies classified by Moneylife as large-cap (market-cap between Rs2,000 crore and Rs10,000 crore) reported a 9% growth in aggregate sales and a 11% growth in net profit for the quarter ended June 2014 compared to the quarter ended June 2013. As many as 140 companies, of the 241 large-cap companies, reported an increase in net profit.


Interestingly, the market-cap of these 241 companies shot up by a 37% during the quarter. From the end of the June quarter till date, the aggregate market-cap has fallen by -1.67%.

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, 241 are large-caps. The aggregate revenues of the large-caps form a share of 16% of the total revenues of the 1,222 companies. The aggregate net-profits of the large-caps form 11.63% of the total net profits.

Among the top performers from the large-cap sample, PTC India, Atul, PI Industries, Kajaria Ceramics and VST Industries have reported an average of 23% growth in sales for the June 2014 quarter, compared to the same period last year. The net profits of these companies have grown by an average of 51%. Companies such as Bhushan Steel, Dish TV India, Fortis Healthcare, Hathway Cable & Datacom and Indian Hotels, reported a profit for the June quarter last year, but have reported a net loss in the latest quarter. These companies have reported a drop in operating profits as well.

As many as 152 large-caps have reported a growth in operating profit and 126 companies have reported a higher operating profit margin. However, the aggregate operating profit margins were marginally lower at 14.51% for the June 2014 quarter, compared to a margin of 14.94% in June 2013. Aggregate net profit margins increased marginally to 5.38% in the quarter ended June 2014 from 5.28% in the quarter ended June 2013.

Valuations of the 241 large-caps measured by market-cap to operating profit (latest quarter annualised) increased by 68.47% to 8.5 times on 18 August 2014 compared to a year ago, when valuations were at five times. The market-cap to net profit increased by 60.85% to 22.9 times from 14.2 times over the same one-year period. Out of the 241 companies as many as 79% or 190 companies are quoting a higher valuation compared to a year ago.


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