Markets This Week
The benchmark 30-share S&P BSE Sensex closed the week in the green at 27,957.50 (up 633 points or 2.31percent from last week’s Sensex closing level at 27,324.00 points). The other key index, NSE’s 50-share CNX Nifty closed at 8,458.95 points, a weekly gain of 196.6 points or 2.38 percent (over last week’s Nifty closing level at 8,262.35 points).
Indian markets received a boost from better than anticipated quarterly results posted by major companies and responded to positive cues from other Asian markets. Third consecutive weekly gain caused much relief to retail investors who were struggling to get a hold on a dragging market in April. On Friday, the last trading session of the week, the BSE Sensex had briefly breached the 28,000 level (Friday high – 28,071.16 points) fuelling expectations of a hearty trading week ahead.
Among the sectors in the market, realty, consumer goods, banking and metals saw profit booking while capital goods, pharma, and IT saw a climb in demand. Next week’s trade will be crucial in predicting the way the markets will turn as only about 60 percent of corporate earnings have been declared as yet. Market watchers believe that the rally is likely to continue despite dips and retail investors may use the dips to invest in strong scrips.
Gold demand for the week slowed down as the wedding season starts to cool. Sales figures have been lower than average. The government, on the other hand, has sent in the draft guidelines for the gold monetisation scheme promised in the Finance Minister’s budget speech in February. If the scheme takes off, it is likely to reduce India’s gold import bill considerably. The Indian rupee ended Friday’s trading session at 63.52 per dollar – a gain of 12 paise.
FDI in Multi-brand Retail: Whether to Retain or Reject?
Commemorating the Narendra Modi government’s first year in power, Finance Minister Mr. Arun Jaitley held a press conference in which he revealed that the central government and BJP may have differences regarding the enhancement of FDI in multi-brand retail. “My party’s views on this matter are known to everybody. But the policy formulated by the previous government is continuing and that is the position and that is the official position of the government”, said the FM.
BJP’s stance prior to the Lok Sabha elections of 2014 was one of staunch opposition to FDI in retail. Since his tenure as Prime Minister began, however, NaMo has stressed on inviting investments in India and has not denied the possibility of retaining the existing FDI in multi-brand retail as well. The UPA government’s policy of allowing foreign retailers to open up stores in India with about 51 percent stake was left unchanged in the FDI policy of the government that was released last week.
Union Minister for Industry and Commerce, Nirmala Sitharaman, on the contrary announced, “I will go back to the Cabinet and say should we delete one document…I am not going to entertain any proposal in multi-brand retail”. This is the first time there has been a public difference of opinion between any of the NDA ministers. Meanwhile, foreign investors are unsure about the fate of multi-brand retail in the country.
SBI, ITC Post Q4 Results
India’s largest bank, State Bank of India posted a 23 percent rise in net profit for Q4 of FY 2014-15. In fourth quarter of 2014-15, SBI’s net profit was pegged at INR 3,742 crore. In the same quarter, the previous year, the bank had reported a net profit of INR 3,040.74 crore. Much of the growth has been attributed to an improvement in asset quality.
SBI has also recommended a dividend of 350 percent or INR 3.50 per share. Total income of the bank for the quarter was estimated at INR 48,616.41 crore. A high volume of restructuring of loans, however, caused concern among investors bringing the value of the stock down by the end of trading session on Friday. Despite having risen to about INR 305.00 per share intraday following the announcement, the scrip closed the day at 282.45 a share (down 2.38 percent).
This week, ITC also posted its March quarter earnings and declared a net profit of INR 2361 crore, causing investors much disappointment. In the same quarter, last fiscal, ITC had declared a net profit of INR 2278 crore. ITC said that the company has been hit by a decline in cigarette consumption due to high cost factors and government policy. Britannia Industries also reported a 55 percent increase in net profit to INR 167 crore for the March quarter.
Gold Monetisation Scheme
On Tuesday, the central government released the draft guidelines for the gold monetisation scheme as promised in the 2015-16 Budget. The scheme aims at drawing out all the gold stockpiles in Indian households and use them effectively to curb further gold imports by the country. With a minimum deposit of 30 grams individuals can utilise gold to earn tax-free income. Interest rates offered on these gold deposits are, however, not yet clear. The scheme is launched in select cities for now, while infrastructure is being set up across the country.
