Sensex, Nifty again in negative zone: Friday Closing Report

A close above 5,555 on the Nifty may bring in some gains. On the downside, support remains in the region of 5,480-5,450

The market closed lower on a sell-off in IT and technology shares after Infosys announced disappointing fourth quarter results this morning and on weak economic indicators. A close above 5,555 on the Nifty may bring in some gains. On the downside, support remains in the region of 5,480-5,450. The National Stock Exchange (NSE) reported a lower volume of 49.99 crore shares and advance-decline ratio of 548:761.


The Indian market opened on a subdued note on the back of disappointing fourth quarter numbers and growth guidance by IT services major Infosys and concerns about the industrial growth figures for February, which would be released later in the day. Markets in Asia were mixed in morning trade as the yen strengthened against the dollar while US markets closed higher overnight on reports that jobless claims for the week ended 6th April fell more than expected.


The Nifty opened 73 points down at 5,521 and the Sensex resumed trade at 18,276, a cut of 266 points from its previous close. The lacklustre performance by Infosys pulled the BSE IT index down 9% in early trade.


The Bangalore-based IT services company Infosys reported a 3.4% rise in net profit to Rs2,394 crore while revenues grew 18.09% to Rs10,454 crore on a year on year basis. However, the company stated that its revenues are expected to grow between 6% and 10% in FY14.


The benchmarks hit their high, albeit in the negative terrain in initial trade on select buying. At this point the Nifty touched 5,545 and the Sensex inched up to 18,338. However, the market remained range-bound in the negative terrain on worries that Infosys’ muted growth would influence other companies.


Of the economic indicators released this morning, retail inflation declined to 10.39% in March, snapping a five-month rising trend, on the back of a fall in prices of vegetables and protein-based items. This apart, industrial growth slipped to 0.6% in February this year mainly on account of contraction in power generation and mining output and poor performance of manufacturing sector.


A lower opening of the key European markets also weighed on domestic sentiments in moon trade. The decline led the indices to their lows with the Nifty going down to 5,495 and the Sensex retracting to 18,186.


The market continued to trade lower dragged by IT and technology stocks in the late session and settled sharply lower. The Nifty declined 65 points (1.17%) to 5,529 and the Sensex plunged 300 points (.62%) to finish the trading session at 18,243.

Among the broader indices, the BSE Mid-cap index fell 0.14% and the BSE Small-cap index declined 0.39%.


The top sectoral gainers were BSE Fast Moving Consumer Goods (up 1.95%); BSE Power (up 1.02%); BSE Bankex (up 0.96%); BSE Oil & Gas (up 0.64%) and BSE PSU (up 0.47%). The main losers were BSE IT (down 11.09%); BSE TECk (down 8.87%); BSE Capital Goods (down 0.69%); BSE Consumer Durables (down 0.61%) and BSE Realty (down 0.48%).


Sixteen of the 30 stocks on the Sensex closed in the positive. The chief gainers were ITC (up 2.75%); State Bank of India (up 1.98%); Hindalco Industries (up 1.61%); Hindustan Unilever (up 1.49%) and Bajaj Auto (up 1.38%). The top losers were Infosys (down 21.33%); Wipro (down 4.72%); Coal India (down 1.78%); TCS (down 1.63%) and Larsen & Toubro (down 1.31%).


The top two A Group gainers on the BSE were—Jaiprakash Associates (up 4.98%) and JSW Steel (up 4.24%).

The top two A Group losers on the BSE were—Infosys (down 21.33%) and Wockhardt (down 9.99%).


The top two B Group gainers on the BSE were—HB Stockholdings (up 20%) and Sankhya Infotech (up 19.96%).

The top two B Group losers on the BSE were—Yash Papers (down 19.90%) and Jindal Hotels (down 19.85%).


Of the 50 stocks on the Nifty, 36 ended in the green. The key gainers were Jaiprakash Associates (up 4.67%); Ambuja Cement (up 3.54%); ITC (up 2.51%); BPCL (up 2.38%) and Lupin (down 2.17%). The key losers were Infosys (down 22.07%); Coal India (down 1.83%); HCL Technologies (down 1.65%); TCS (down 1.62%) and Maruti Suzuki (down 1.61%).


Markets across Asia closed mostly lower as the strengthening of the yen against the dollar saw the Nikkei 225 falling 0.5% in trade today. The Chinese market ended lower on nervousness ahead of the release of key economic data on Monday and sentiment in South Korea was impacted by ongoing concerns of a possible conflict with the North.


The Shanghai Composite declined 0.58%; the Hang Seng lost 0.06%; the KLSE Composite fell 0.50%; the Nikkei 225 contracted 0.47%; the Straits Times slipped 0.44%, the Seoul Composite tanked 1.31% and the Taiwan Weighted fell 0.46%. Bucking the trend, the Jakarta Composite added 0.26%.


At the time of writing, the top European markets were down between 0.46% and 1.23%. At the same time, the US stock futures were in the negative, indicating a lower opening for US stocks later in the day.


Bank home, institutional investors, both foreign and domestic, were net buyers in the equities segment on Thursday. While FIIs pooled in Rs36.63 crore in stocks, DIIs infused 57.71 crore in equities.


The board of Oil India, the nation’s second biggest state-owned explorer, has approved the setting up of an overseas arm to acquire oil and gas properties abroad. The subsidiary will be set up on the lines of ONGC Videsh, the overseas arm of state-owned ONGC, and Bharat PetroResources, a unit of state refiner Bharat Petroleum Corp (BPCL). Oil India closed 0.27% down at Rs526 on the NSE.


Pharma major Dr Reddy’s Laboratories is recalling its muscle relaxant tizanidine tablets from the US market due to labelling issues. The recall was initiated voluntarily by the Hyderabad-based company, as per an intimation from the company to the US Food and Drug Administration. The stock gained 1.85% to close at Rs1,920 on the NSE.


Indian auto major Mahindra & Mahindra has suffered a production loss of around 3,000 engines due to the “tools down” protest by workers of its Igatpuri engine manufacturing facility near Nashik even as the stir entered the fourth day. The plant produces 1,100 engines per day in three shifts for Mahindra’s vehicles such as XUV 500, Bolero, Xylo, Genio and Maxximo. The stock declined 1.32% to close at Rs821.15 on the NSE.


SEBI directs bourses to maintain up-to-date broker information

As per SEBI’s directions, all trading members of stock exchanges would be required to submit on a continuous basis, the general business and organisation details, key personnel details, subsidiary and associate or group company details, among others

Market watchdog Securities and Exchange Board of India (SEBI) has asked the exchanges to maintain an up-to-date database of their trading members’ group and staff details. The move is aimed at checking suspicious activities of brokers through front entities.
As per SEBI’s directions, all trading members of stock exchanges would be required to submit on a continuous basis, the general business and organisation details, key personnel details, subsidiary and associate or group company details, among others.
This latest step has been taken by SEBI as part of its efforts to keep a check on any possible market manipulations or other unlawful activities that could be conducted through undisclosed related entities.
Pursuant to SEBI’s directions, leading exchange BSE today put in place an online filing system to enable trading members submit these details on a continuous basis.
The new facility, named BSE Electronic Filing System (BEFS) where BSE trading members can continuously edit and update the required details, would be made available to them with effect from 15th April.
The BSE said the new facility has been introduced pursuant to SEBI’s directions for submission of these details on a continuous basis by the trading members.
The details that need to be submitted on this system include the trading member’s business group—whether it is a subsidiary of another corporate entity—information about the CEO or business head and details about other key officials, along with PAN details of all the mentioned entities.
The members would also have to mention whether any other capital market activities, such as merchant banking, depository, etc, were being carried out by the member, along with the details of those activities as well.


Railways, roads and housing to drive cement demand in FY14: Credit Suisse

A new report released by Credit Suisse has revealed that roads and railways are likely to drive up demand for cement, albeit at a gradual pace over the next 12 months

Indian cement sector is poised to pick up, albeit gradually during FY 2014 and it is expected that the the next 12 months would be good for the industry as a whole as it provides raw materials to key ancillary industries namely road, housing and railways, all of which are expected to pick up, says Credit Suisse.

The investment bank in a report said, “We expect accretive price increases for the cement sector in FY14 as demand growth improves to 7% (5% in FY13). The recovery should be driven by strong growth in rural housing and pick-up in roads and railways investment.”

One of the key focuses for the government and policymakers is to provide low-cost housing and rural housing, all of which require pucca (and therefore cement) houses. As much as 85% of the cement demand for rural housing stems from pucca houses, it said.

Even rising rural incomes is expected to drive demand for housing. Currently, the penetration of pucca housing is low, at only 52%. To facilitate increased housing for the poor, the government has set its budget 70% higher. “Under the Indira Awas Yojna (IAY), the central government has increased allocation per household by 55% to Rs70,000 and thus the FY14 budget is set 70% higher than FY13,” Credit Suisse said.

Another key catalyst is investment on construction of roads, which has been suffering for the past three years due to policy inaction, tight financing and poor implementation. Credit Suisse feels this could change. The report states, “If initiatives taken by the NHAI (National Highway Authority of India) to revive road sector to bear fruit, it should further add to cement demand growth. Railways investment grew by 16% in FY13 and should grow 20% in FY14 with project awards expected for a dedicated freight corridor.”

However, some of the big initiatives by the government may go a long way to speeding up road construction. One of them is delinking of environmental clearance from forest clearance, in which the NHAI has moved the Supreme Court on this matter, according to Credit Suisse. Earlier, infrastructure companies had to obtain not just environmental clearance but also forest clearance which resulted in many projects being stymied or stuck. If the Supreme Court verdict is positive, it will be a big plus for the cement sector.

The second key factor is the recent Reserve Bank of India (RBI) circular which could result in banks being more lenient and more free to issue loans and bonds to infrastructure and construction companies. The  circular RBI/2012-13/445 dated 18 March 2013, stated: “Prudential Norms on Advances to Infrastructure Sector to treat annuities under Build-Operate-Transfer model in respect of road/highway projects and toll collection rights, where there are provisions to compensate the project sponsor if a certain level of traffic is not achieved, as tangible securities. This is subject to the condition that banks’ right to receive annuities and toll collection rights is legally enforceable and irrevocable.” While this is more of a technicality, it could also saddle banks with more bad loans.

It is expected that railways increase investment outlay towards the Dedicated Freight Corridor (DFC) by as much as five times, to Rs7,100 crore. This would mean speedier transport (due to wide gauge) and little traffic, plus more cargo that can be carried on double-decker trains, all at cheaper rates. Cement companies, by and large, transport their cement through trains as it is cheaper than road transport.

The report expects cement sector to slowly expand margins albeit at a gradual pace for the 2014 fiscal. The report said, “Overall, we expect 7% cement demand growth in FY14 with housing growing at 8% and infrastructure at 5%. As the demand growth required to break-even new capacity is 6%, we expect margin expansion in FY14.”

Credit Suisse has picked Ambuja and ACC to perform well. “Ambuja and ACC both have strong balance sheets, with net cash at 15% of market cap and ROE at 18-19% with next two years earnings CAGR expected at 18-19%. We prefer Ambuja because of its superior regional exposure (high exposure to North India and low exposure to South India), while ACC has the highest sensitivity to both price and volumes and low exposure to Western and Central India, which are our least preferred regions due to high supply pressure,” said the report by Credit Suisse.

Earlier, Credit Suisse had written a report on cement sector which can be accessed here: Cement industry to pick up steam over the next two years: Credit Suisse




4 years ago

“Simplicity is the ultimate sophistication” – Leonardo Da Vinci - moladi moulds mortar - addressing the huge housing backlog

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