Credit Rating – I: What To Expect from Rating Agencies
After the deep mess in which Infrastructure Leasing & Financial Services (IL&FS) has landed, everybody’s attention is back on credit ratings. The rating agencies have been accused of deteriorating financials of IL&FS. Whether or not we know much about the functions of rating agencies, it does not stop us from cursing them. 
 
Under the current system, companies pay rating agencies...
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Nifty, Sensex May Rally a Bit If Today’s Low Holds – Monday closing report

The key equity indices closed in the green on Monday on the back of value buying after last week's heavy declines and expectations of a positive set of corporate earnings. Sector-wise, buying was witnessed in oil and gas, banking and auto counters. In addition, a slight fall in Brent crude oil price aided in the upward trajectory. On the NSE, there were 502 advances, 1,283 declines and 287 unchanged. The trends of the major indices in the course of Monday’s trading are given in the table below:

IndiGo Airlines reported a technical snag in its nationwide system which the budget carrier said was subsequently rectified. Indigo passengers at the Delhi airport reported long queues, delay and inconvenience caused by the system failure. "We regret the inconvenience caused to our passengers this afternoon due to system being down across airports for around 90 minutes. Our flights and check-in systems are operating normally now," an Indigo statement said. Earlier, the airline had also issued an advisory on Twitter over its system failure at all airports. It asked its passengers to contact the airline through Twitter, Facebook, its website or its contact number for assistance. InterGlobe Aviation shares closed at Rs779.70, up 1.44% on the BSE.
 
The continued weakness of the Indian rupee, along with cues on any further rise in US lending rates and the direction of foreign fund flows are likely to determine the trajectory of the Indian equity markets in the coming week. According to market observers, high crude oil prices and expensive stock valuations will dent investors' sentiments. It is a perfect storm for the India equity markets with rising the USD, US treasury rates and oil, coupled with an over-valued market vis-a-vis its historical averages, a weak Indian rupee, rising local bond yields and domestic financial instability over the IL&FS and NBFC issues. The Reserve Bank of India's (RBI) status quo on policy rates and its hands-off approach on the rupee would probably add to the uncertainty. The volatility is expected to continue this week as global markets continue to fall due to rising US rates. Lately, a multitude of factors, including geopolitical developments and the wider trade deficit, have pulled the Indian rupee to fresh record intra-day and closing lows.
 
The Real Estate Development & Construction Corporation of Rajasthan Limited (REDCCOR), a 50-50 JV between the Government of Rajasthan and NBCC, which has executed an MoU (memorandum of understanding with Government of Rajasthan for redevelopment of old MREC campus at Gandhi Nagar, Jaipur for an amount of Rs250 crores. NBCC has executed an MoU with Mussoorie Dehradun Development Authority (MDDA), Government of Uttarakhand for River Front Development Project on Rispana & Binda rivers in Dehradun for a total estimated value of Rs750 crore as Project Implementing Agency. NBCC India shares closed at Rs54.30, up 0.93% on the BSE.
 
The Power T&D Business of L&T Construction has received EPC orders worth Rs1,881 crore for constructing 22 132/11kV Substations in Kuwait. Additional orders have been received from ongoing Transmission Line projects in India and Egypt. Larsen & Toubro shares closed at Rs1,216.00, down 1.08% on the BSE.
 
Steel Strips Wheels bagged another Exports order of 50,000 wheels worth US$ 4.80 million from Egypt to be dispatched from its Truck wheels plant in Chennai from January, 2019 onwards. Steel Strips Wheels shares closed at Rs1,006.00, down 1.07% on the BSE.
 
PNB Housing Finance has raised USD 200 million (Rs1,470 crore) through External Commercial Borrowing (ECB), it’s first under the automatic route of RBI (Reserve Bank of India). The funds would be used for normal business operations i.e. lending purpose. PNB Housing Finance shares closed at Rs890.00, up 4.35% on the BSE.
 
Power Mech Projects received LoI (Letter of Intent) / Work Orders worth Rs530 crore for two projects. It secures a first contract worth Rs350 crore in the Railway Electrification Segment from Western Railways. It also, received Structural & Electrical contract of Rs180 crore from Bangladesh. Power Mech Projects shares closed at Rs822.00, up 1.88% on the BSE.
 
Cadila Healthcare - Zydus Cadila received the final approval from the USFDA (US Food & Drug Administration) to market Exemestane Tablets. It is used in women after menopause for the treatment of early breast cancer. Cadila Healthcare shares closed at Rs376.55, down 0.67% on the BSE.
 
Lupin launched Potassium Chloride Oral Solution USP, a generic equivalent of Genus Lifesciences, Inc.'s Potassium Chloride Oral Solution. It is indicated for the treatment and prophylaxis of hypokalemia. Lupin shares closed at Rs847.30, up 0.99% on the BSE.
 
Dilip Buildcon received Letter of Acceptance from Madhya Pradesh Metro Rail Co. Ltd for two Metro Rail project works at Bid project cost of Rs247.06 crore and Rs228.96 crore in Madhya Pradesh. Dilip Buildcon shares closed at Rs561.50, down 7.45% on BSE.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

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Correction Gets Deeper. Relief Rally Likely – Weekly closing report

We had mentioned in last week’s closing report that Nifty, Sensex might rise on relief rally. The major indices of the Indian stock markets suffered a correction on Friday and closed with weekly losses over last Friday’s close. The major trends of the Indian stock markets during the week’s trading are given in the table below:

 

 

The major indices of the Indian stock markets rallied on Monday. On the NSE, there were 725 advances, 1,034 declines and 318 unchanged.

 
Commercial vehicles major Ashok Leyland Ltd on Monday said it closed September 2018 with a 26% growth in sales. In a statement here, the company said it sold 19,373 units last month, up from 15,371 units sold in September 2017. 
 
Pharma major Dr Reddy's Laboratories Ltd on Monday announced the sale of its antibiotic manufacturing facility and related assets in Tennessee, US, for an undisclosed sum. 
 
Gayatri Projects has been awarded with two add-on works to the existing works of Chintalapudi Lift Irrigation Scheme (Package-1 & 2). These two additions lead to a consolidated increase of Rs548.98 crores, nearly 55% of the existing value. 
 
On Tuesday, the stock markets had a holiday on account of Gandhi Jayanthi.  
 
The major indices of the Indian stock markets suffered a correction on Wednesday. On the NSE, there were 1,033 advances, 753 declines and 276 unchanged.
 
Owing to a weak rupee and broadly negative global cues the S&P Sensex tanked over 500 points and the Nifty50 slipped by 130 points on Wednesday.
 
Automobile major Maruti Suzuki India has recalled over 600 Super Carry vehicles to inspect for a possible defect in the fuel pump assembly. According to the company, 640 vehicles in the domestic market, manufactured between January 20 and July 14, 2018, will be covered in this recall campaign. 
 
Tata Communications, a leading global digital infrastructure provider, on Wednesday said it was acquiring Teleena, a Netherlands-based Internet of Things (IoT) connectivity specialist and mobile virtual network enabler (MVNE). This acquisition follows Tata Communications' investment in Teleena in January 2017, when the company became the single largest shareholder in Teleena with a 35% stake.
 
Software major Tech Mahindra on Wednesday announced a strategic partnership with ELTA Systems Ltd., a subsidiary of Israel Aerospace Industries (IAI), to provide next generation cyber solutions and services to state and enterprise customers in India and globally. 
 
The S&P BSE Sensex, plunged over 800 points on Thursday, as a steady decline in the domestic currency and concerns that the central bank would raise the policy interest rate soured investor sentiments. The wider Nifty50 of the National Stock Exchange also lost 240 points. The Indian rupee earlier on Thursday sunk to its fresh low of 73.77 to a dollar, as global crude oil prices continued to climb. India imports nearly 80% of its crude requirements, and a higher price will potentially worsen the current account deficit of Asia's third-largest economy. The Reserve Bank of India will unveil its monetary policy on Friday, where it is likely to raise the repurchase rate by 25 basis points. The repo rate currently stands at 6.5%.
 
Global software major Tata Consultancy Services (TCS) on Thursday said it signed a Memorandum of Understanding (MoU) with the Institute of Industrial Science (IIS) at University of Tokyo to collaborate on technology research and facilitate inter-personnel exchange. 
 
The Indian equity indices plunged on Friday, even though the Reserve Bank of India (RBI) changed its policy stance and kept key benchmark lending rates intact. The RBI was expected to raise rates. Apart from the policy decision, the free-fall in the Indian rupee's value to over 74 a US dollar eroded investor’s sentiments. 
Announcing the fourth bi-monthly policy review of the fiscal, Reserve Bank of India (RBI) Governor Urjit Patel said the Monetary Policy Committee (MPC) has decided to keep the repo, or the short term lending rate for commercial banks, unchanged at 6.5%. Elaborating on the change to "calibrated tightening", the Governor said that it implied that "in this cycle, a rate cut is not the table and we are not bound to increase rates every time we meet." "With this stance we have two options, we can either increase rates or hold them," he said. A "neutral" stance allows the RBI to move either way on rates.
 
Reliance Capital Ltd. on Friday said its wholly owned Reliance Health Insurance has got the R3 approval from Insurance Regulatory Authority of India (IRDAI). Reliance Capital shares closed at Rs254.00, down 6.03% on the NSE.
 
Weak demand conditions along with a rise in inflationary pressures eased growth of India's service sector output during September, a macro-economic data showed on Thursday. Accordingly, the seasonally adjusted Nikkei India Services Business Activity Index declined to 50.9 in September from 51.5 in August. An index reading of above 50 indicates an overall increase in economic activity and below 50 indicates an overall decrease. Consequently, the seasonally adjusted Nikkei India Composite PMI Output Index posted a level of 51.6 during the month under review from 51.9 in August. "Growth of India's services economy spluttered during September amid reports of faltering demand for services. And despite a slight pick-up in manufacturing output growth during the month, overall private sector activity rose at the weakest rate since May," said Paul Smith, Economics Director at IHS Markit, and author of the report. "Rising price pressures were cited as a factor weighing on market activity, with reports from panellists of rising fuel and import prices, in turn mainly driven by the stronger US dollar."

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