Markets this week
Despite some disappointing corporate earnings, the Indian equity markets have witnessed a rise in key indices over the past 5 trading sessions between 3 August 2015 and 7 August 2015. The 30 scrip BSE Sensex closed the week at 28,236.39 points – a rise of about 121.83 points or 0.43 percent over the last week’s closing level of 28,114.56 points. Retaining 28k+ levels has brought some cheer to the markets. The other major index from the NSE, the CNX Nifty which includes 50 scrips closed the week at 8,564.60 points (from previous week’s close at 8,532.85 points) – a weekly gain of about 31.75 points or 0.37 percent. This is the second straight weekly gain registered by the indices after almost 3 weeks of closing in the red. The top gainers at the Sensex include DLF, Tata Steel, SBI, Hindalco, and ONGC, while the top losers at the index were BHEL, HDFC, Reliance Capital, Hindustan Unilever, and Reliance Industries. Experts maintain that the markets will still remain volatile in the coming week. Retail investors may want to watch out for corporate earnings of companies like SBI, Coal India, Sun Pharma, HPCL, and Cipla. Another major factor that may play a role in the movement of scrips in the markets will be the inflation data – WPI inflation figures, July CPI, and June IIP stats – likely to be announced this week.
Despite falling prices, Indian gold importers have showed no signs of slowing down, going by this week’s news reports. India imported 96 metric tons of in July, 24 percent higher than the previous month June, when imports were pegged at 77.6 metric tonnes. The bullion market has remained volatile and buyers do not seem to have a great appetite for risk.
After three straight days of a decline, the Indian rupee closed Friday at 63.81 against the US dollar.
Corporate earnings this week – BHEL, Tata Motors, Britannia, Mahindra & Mahindra
Indigenous automobile major Tata major reported a 48.7 percent dip in net profits for the quarter ended 30 June. The consolidated net profit for the quarter is pegged at INR 2768.9 crore vis-a-vis a consolidated net profit of INR 5,398.2 crore in the same quarter last year. Tata Motor says that the decline is essentially due to a decline in Jaguar Land Rover sales.
Bharat Heavy Electricals (BHEL) reported a decline of 82.5 percent in its Q1 profit to INR 33.9 crore vis-a-vis a profit of INR 193.5 crore in the same quarter a year ago. The BHEL scrip dipped about 10 percent at the equity markets following the shocking announcement. The decline is attributed largely to operational losses and lower revenue.
FMCG major Britannia Industries Ltd also reported its Q1 earnings this week and net profit rose by about 67 percent this quarter vis-a-vis the June quarter last fiscal year. Net profit for the company was pegged at INR 189.7 crore due in great measure to lower procurement costs of ingredients and growth in sales volumes. Britannia reported a considerable growth in its biscuit sales and is eager to push more of its premium products in the coming quarters.
Mahindra & Mahindra Ltd reported a 3.35 percent fall in net profit for the first quarter of this fiscal year. The net profit is estimated at INR 852.2 crore as compared to a net profit of INR 881.78 crore the previous year. Sales of the tractors manufactured by M&M have shown a decline this quarter.
10 percent duty on wheat imports
The Indian government has decided to impose a 10 percent import duty on wheat in an effort to curb imports. The duty on wheat imports will be effective till 31 March 2016; the Finance Minister Arun Jaitley informed the parliament on Friday. The government anticipates a revenue gain of INR 90 crore for the fiscal year, he said. Private companies in India plan to import about 500,000 tonnes of wheat from Australia despite sufficient domestic stocks, thus affecting the supply chain of wheat farmers in India. Most of the wheat imported by India is the high protein variety used in instant packaged food. Indian farmers have had bumper wheat crops over the past seven years and government subsidies have helped stabilise wheat prices in the country over these years. Another major factor that went into the decision is Bangladesh’s rejection of a 520,500 tonne shipment of wheat which reached the country from France due to poor quality. Fears are that this shipment may now flood Indian markets.
Thomas Cook India acquires Kuoni Group’s India business
Thomas Cook India Ltd has announced the acquisition of rival Kuoni Group’s travel businesses in India and Hong Kong for INR 535 crore. All 1800 employees of Kuoni’s India, HK business will be taken on by Thomas Cook and the business will be run independently of Thomas Cook’s existing business, said news reports. Switzerland-based Kuoni Group had decided to sell its tour operating unit and refocus on corporate travel, its mainstay. The announcement furthers Thomas Cook’s spate of acquisitions in India. Previously in 2014, Thomas Cook bought Sterling Holiday Resorts India for INR 870 crore and earlier in 2013 it had acquired Ikya Human Solutions for INR 256 crore.
High Court provides NSEL-FTIL merger deadline
The Bombay High Court has given the government a deadline to take a final decision on the impending merger of National Spot Exchange Ltd (NSEL) with Financial Technologies (India) Ltd (FTIL). The GoI now has time till 30 October to pass the order and submit all documents required for the merger. The Ministry of Corporate Affairs will be required to hear all concerned parties before passing its final order. FTIL owns a major (99.99 percent) stake in the NSEL. Trading was discontinued on the NSEL on 31 July, 2013, following detection of an INR 5,574 crore payment crisis.