Upward trend would be maintained as long as the Nifty does not close below any previous day’s low
The market settled over 1% higher on upbeat corporate news and global support. On Friday we had mentioned that lower low and a close below 5,342 may see Nifty slip to the level of 5,250. The index did not go anywhere near 5,342 and hit an intraday high of 5,425 which is the highest since 16 March 2012. The benchmark also managed to make a higher low. We may now see an upward trend if the benchmark sustains itself above the previous day’s low. One warning for the bulls was that the National Stock Exchange (NSE) saw a lower volume of 50.76 crore shares.
The Indian market, which opened after an extended weekend, saw a marginally higher opening on positive corporate news. On the global front, US markets closed flat with a negative bias as the European Central Bank was silent about the shape of the initiative being worked out to solve the debt crisis. Markets in Asia were also sideways on the back of the ECB stand.
Back home, the Nifty opened three points up at 5,369 and the Sensex rose 14 points to start off at 17,705. The opening figures on both benchmarks were also their intraday lows.
Among corporates, Maruti Suzuki was trading higher on reports that the company will resume production at its Manesar plant, which was shut for over a month following a labour dispute. Software major Infosys was buoyant as a US court dismissed an employee’s claims and ruled in the company’s favour.
The indices maintained their gains in subsequent trade on support from IT, auto, oil & gas and power sectors. The market moved further northwards in noon trade following a positive opening of the key European indices.
The benchmarks hit their highs in the last half hour with the Nifty crossing its psychological level of 5,400 to touch 5,425 and the Sensex within kissing distance of 17,900—at 17,898.
The market closed slightly off the highs on corporate cues and global support. The Nifty gained 55 points (1.02%) to 5,421 and the Sensex settled at 17,884, up 193 points (1.09%).
The advance-decline ratio on the NSE was in favour of the gainers at 928:742.
Among the broader indices, the BSE Mid-cap index gained 0.24% and the BSE Small-cap index advanced 0.52%.
Except the BSE Healthcare index (down 0.03%), all other sectoral gauged settled higher. The top gainers were BSE IT (up 1.76%); BSE Power (up 1.66%); BSE TECk (up 1.32%); BSE Realty (up 1.22%) and BSE Auto (up 1.19%).
The Sensex was led by Sterlite Industries (up 4.46%); NTPC (up 3.12%); HDFC (up 2.92%); GAIL India (up 2.58%) and Tata Power (up 2.52%). The key losers were Hindalco Industries (down 1.45%); Bharti Airtel (down 1.32%); Dr Reddy’s Laboratories, Tata Steel (down 0.66% each) and Hero MotoCorp (down 0.59%).
The top two A Group gainers on the BSE were—Hindustan Zinc (up 6.69%) and United Spirits (up 6.54%).
The top two A Group losers on the BSE were—Canara Bank (down 3.80%) and Adani Ports (down 2.95%).
The top two B Group gainers on the BSE were—Jenson & Nicholson India (up 20%) and Autoline Industries (up 19.99%).
The top two B Group losers on the BSE were—Plethico Pharmaceuticals (down 20%) and Omkar Overseas (down 14.44%).
The top gainers on the Nifty were Sterlite Ind (up 4.82%); DLF (up 3.83%); Sesa Goa (up 3.71%); NTPC and Ambuja Cements (up 3.36% each). The main losers on the index were Bharti Airtel (down 1.54%); Cairn India (down 1.17%); Punjab National Bank (down 1.01%); Hindalco Ind (down 0.79%) and Tata Steel (down 0.71%).
Most markets in Asia closed mixed as the ECB has not yet revealed the measures it would undertake to resolve ongoing debt crisis plaguing the continent. Trading volume was slightly thinner than usual, as markets in Indonesia and Malaysia were closed for public holidays.
The Shanghai Composite gained 0.54%; the Straits Times rose 0.12% and Taiwan Weighted surged 1.01%. Among the losers, the Hang Seng lost 0.02%; the Nikkei 225 and the Seoul Composite declined 0.16% each.
At the time of writing, the key European indices were up between 0.34% and 0.64% and the US stock futures were in the positive, an indication of a green opening of the US markets.
Back home, institutional investors—both foreign and domestic—were net buyers in the equities segment on Friday. While foreign institutional investors pooled in Rs308.22 crore, domestic institutional investors pumped in Rs40.19 crore.
Vedanta group firm Sesa Goa today said it has commissioned the third blast furnace at its pig iron plant at Goa, taking its total production capacity to 0.625 million tonne per annum. With the commissioning, Sesa’s pig iron plant becomes the largest producer of low phosphorous pig iron in India with an installed capacity of 0.625 MTPA, which is up from the earlier capacity of 0.250 MTPA. The stock jumped 3.71% to settle at Rs194.05 on the NSE.
Pharma major Wockhardt today said it has received final approval from the US health regulator to market generic Felodipine tablets used for treating hypertension in the United States. The company has received final approval from the United States Food and Drug Administration (USFDA) for marketing Felodipine extended release tablets in the strengths of 2.5 mg, 5 mg and 10 mg, Wockhardt said in a statement. The stock tanked 3% to close at Rs1,260.10 on the NSE.
Cellular operator Videocon said on Tuesday that it is targeting to double mobile subscribers’ base to three million in one year in Punjab. Finding Punjab as the most potential market in the country, Videocon plans to deepen its market by targeting youth segment in the age group of 15—35 years which constitutes 40% of state’s population. The stock fell 0.74% to close at Rs175.10 on the NSE.
The MNS leader blamed outsiders for the 11th August violence saying Maharashtrians were not responsible for it. Raj Thackeray also demanded immediate ouster of the state home minister RR Patil and Mumbai police chief Arup Patnaik
Reliance ADAG Company Reliance MediaWorks is reportedly in talks to sell off Big Cinemas to arch rival Inox in order to pare off its ballooning debt but talks are stymied on the price front
Reliance MediaWorks, part of the Anil Dhirubhai Ambani Group (ADAG) of companies, has plans to sell off its Big Cinemas franchise to its arch rivals Inox Leisure (Inox), in order to pare down its massive debt. According to those close to the deal, Anil Ambani expects to get around Rs150 crore from the deal while Inox is willing to pay less Rs100 crore. Clearly, Big Cinemas has virtually thrown down the towel and given up its fight to be the supreme leader of the box office, so to speak. Its financials have been bludgeoned by debt, which has seen its net worth eroded completely. The company had taken massive amounts of debt to ward away competition, especially from its arch-rival Inox, and acquire various properties, including splurging on the landmark joint venture with Steven Spielberg’s DreamWorks. Such ambitious plans saw the company’s current liabilities swell up to Rs2,317.31 crore as of 31 March 2012 as against its capital of Rs23.06 crore.
Reliance and Inox are bitter competitors and vying for the same space—the number one position. Their tussle for Fame India is well known. We had written a fair bit about the tussle between Inox and Reliance for Fame India (http://www.moneylife.in/article/fccbs-may-hold-the-key-in-battle-for-fame-india/4557.html) a while back. As of March 2012, INOX held 73.14% stake in Fame India, while Anil Ambani-promoted Reliance Capital owned 22.38%.
Its failure to acquire Fame meant a setback in Ambani’s plans for marrying Hollywood and Bollywood (vis-a-vis its joint venture with DreamWorks) and a whole lot of other expansions, which saw Reliance MediaWorks incur net losses of Rs327.96 crore and Rs128.03 crore in fiscal 2011 and fiscal 2010, respectively. Furthermore, for the 12 months ended 31 March 2012, its net losses swelled to Rs572.16 crore and its net worth stood at a negative Rs239.58 crore as at 31 March 2012. What is pertinent is that the company’s auditors have questioned whether the company is ever able to continue as a going concern basis. In a review released this past February, it said that the erosion of net worth casts a doubt about the company’s ability to continue as a going concern. The losses continued nevertheless, and it reported losses in the latest quarter as well. Its latest quarterly result ending 30 June 2012 is no exception either; it reported 9.29% higher consolidated net loss of Rs131.3 crore. The only way to stop this is to ask for more money, from the public or by selling off swathes of its properties.
Reliance MediaWorks had recently signed an indicative non-binding term sheet with a private equity fund to acquire a substantial minority stake in Reliance MediaWorks’ Film and Media Services division for an investment of Rs605 crore. It is not known which private equity fund is involved in this deal, which looks highly suspicious. Reliance MediaWorks had 262 screens in India and an additional 230 screens in Nepal, Malaysia and the United States as of 30 June 2012.