Todays Market from Equitymaster http://www.equitymaster.com/tm.asp The happenings in the stock markets, including a pre-open and closing commentary. Todays Market from Equitymaster http://www.equitymaster.com/icons/eqtm_small1.gif http://www.equitymaster.com/tm.asp http://blogs.law.harvard.edu/tech/rss Sensex, Nifty Trade in Red; Metal & Pharma Stocks Lead the Losses http://www.equitymaster.com/tm/tm.asp?date=7/28/2017&title=Sensex-Nifty-Trade-in-Red-Metal--Pharma-Stocks-Lead-the-Losses
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Indian share markets continued to trade in red during the noon session and were trading well below the dotted line amid disappointing earnings by corporates. Losses are largely seen in metal stocks, capital goods stocks and pharma stocks, while consumer durables stocks and software stocks traded in green.

The BSE Sensex is trading lower by 189 points and the NSE Nifty is trading higher by 49 points. Meanwhile, the BSE Mid Cap index is trading up by 0.3% & the BSE Small Cap index is up by 0.2%. The rupee is trading at 64.12 to the US$.

In news from mining sector, Vedanta has reported 44% rise in aluminium production in the April-June quarter. Total aluminium output in the quarter was 0.35 million tonnes despite pot outages at the company's Jharsuguda smelting unit. The production hike came on the back of capacity ramp-ups at the Jharsuguda-II and Balco-II smelters.

The Balco-II smelter was ramped up and capitalised during the quarter. Aluminium production was flat quarter-on-quarter, as the continued ramp up at Jharsuguda-II and Balco-II was offset by lower production from the Jharsuguda-I smelter due to the pot outage in early April 2017.

Meanwhile, as per an article in The Economic Times, Vedanta has initiated talks with South India-based Deccan Gold Mines Ltd (DGML) to acquire a controlling stake in the company as it seeks to get a bigger foothold in the new segment of precious metal mining in the country.

Reportedly, Vedanta is negotiating to buy a 26% stake to begin with and that in turn will trigger an open offer, giving it the opportunity to get a controlling ownership.

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Established in 2003, DGML is India's first private sector gold exploration company and the sole gold exporter. The company has a large portfolio of exploration prospects in Karnataka and Andhra Pradesh. As many as 15 of its prospecting licence applications and three mining lease applications are awaiting approvals from government authorities.

Deccan Gold Mines share price was trading jubilantly on the BSE (up 20%), while Vedanta share price was trading down by 1.6%.

Moving on to news from automobile sector. Automobile stocks are trading on a mixed note with Escorts Ltd share price and Maharashtra scooters share price leading the gains.

Mahindra & Mahindra (M&M) is reportedly in race for a US$6 billion order from the US government for postal delivery vehicles, and will submit over a dozen prototypes for road-testing between September and November this year as the process enters its final round.

It is competing with four other companies for this high-value contract. If the company bags this contract, it will provide 1.8 lakh vehicles over a six-year period as the postal department liquidates its old fleet.

While the per vehicle cost is expected to be over US$35,000, the company also hopes to gain from the maintenance and repair contract.

As per the reports, the company is also planning to pump in Rs 50 billion for bringing out four new off-roaders in the SUV and utility vehicles space, including two from a new global platform.

It is also expected that the company will dig into its overseas product development teams during the making of the new vehicles. These will include the technical centre in the US.

M&M share price is presently trading down by 0.7%.

India Tops Growth in PV Sales

India is the fastest growing market for passenger vehicles (PV) among the top seven car markets. China continues to be the world's biggest auto market by volume.

During January- May 2017 period, India's PV sales expanded by 11.3% YoY. This came when the top two markets, China and the US saw a declining trend where volumes declined by 2.6% YoY and 9.8% YoY respectively. India's double-digit growth was led by companies like Maruti Suzuki, Hyundai, Honda and Tata Motors.

The double-digit growth came despite the auto industry witnessing some turbulent time in the last six months as demonetisation put a pause on a great run. Towards the end of fiscal year, a Supreme Court order banning the sale of vehicles that don't conform to Bharat Stage IV emission rules saw some fire sale.



This article (Sensex, Nifty Trade in Red; Metal & Pharma Stocks Lead the Losses) is authored by Equitymaster.

Equitymaster is a leading 'independent' equity research initiative focused on providing well-researched and unbiased opinions on stocks listed on the Bombay Stock Exchange.]]>
Fri, 28 Jul 2017 08:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=7/28/2017&title=Sensex-Nifty-Trade-in-Red-Metal--Pharma-Stocks-Lead-the-Losses
Indian Indices Continue Downtrend; Healthcare Stocks Witness Selling http://www.equitymaster.com/tm/tm.asp?date=7/28/2017&title=Indian-Indices-Continue-Downtrend-Healthcare-Stocks-Witness-Selling
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Share markets in India are presently trading on a negative note. Sectoral indices are trading on a mixed note with stocks in the healthcare sector and telecom sector witnessing maximum selling pressure.

The BSE Sensex is trading down 172 points (down 0.5%) and the NSE Nifty is trading down by 34 points (down 0.4%). The BSE Mid Cap index is trading up by 0.5%, while the BSE Small Cap index is trading up by 0.4%. The rupee is trading at 64.73 to the US$.

In other news, Idea Cellular share price is witnessing selling pressure today. This comes as the compnany on Thursday posted a consolidated loss of Rs 8.2 billion for the quarter ending June 30. The company had reported Rs 3.3 billion losses for March quarter.

The company is facing pressure on voice and data prices triggered by the entry of Reliance Jio Infocomm.

One shall note that the entry of Reliance Jio Infocomm has led to faster than expected consolidation in the telecom sector. Developments are already seen with merger proposal of Telenor India and Bharti Airtel, acquisition of telecom business of Sistema Shyam Tele Services by Reliance Communications and the planned merger of two of the biggest telecom companies Vodafone India and Idea Cellular.

The pricing disruption in the Indian telecom market caused by the entry of a new operator has led to industry revenue declines and created further stress on sector profitability, cash flows and leverage.

The declining sales revenue of the telecom players is also expected to have an adverse impact on government revenue collection in the form of spectrum usage charges and licence fee in the current financial year.

Just Released: Multibagger Stocks Guide
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In the news from IPO pace, two more IPOs are set to hit the primary market within a week.

Cochin Shipyards IPO opens on 1 August. The Rs 14.7 billion IPO is priced in Rs 424 to Rs 432 range.

Security and Intelligence Services (SIS) IPO opens on 31 July. The company has priced its Rs 7.8 billion IPO in Rs 805-815 range. The initial public offer (IPO) comprises fresh issue of shares worth Rs 3.6 billion and an offer for sale of up to 51,20,619 shares by the existing shareholders.

Speaking of IPO space, we don't need thousands of IPOs to get rich. That's not how super investors make their fortunes. But a few good IPOs could certainly become the multibaggers in your portfolio in a few years.

We, at Equitymaster, have always recommended IPOs cautiously. Here's Rahul Shah, co-head of research at Equitymaster, explaining our rationale behind the approach:

  • 'We know what a dirty game the IPO business is. We've seen it over and over again: It's a game where the odds are stacked against investors. So for us, the equation is simple. We'd rather face criticism in the short run than see our subscribers lose money over the longer term. We weren't afraid to do this during the hot IPO days of 2007, and we're not afraid to do it today.'

The Bottomline: You need to evaluate each IPO on its merits by considering its fundamentals, and most importantly, the valuations. And this is particularly important when the hype surrounding IPOs is at its peak.

Are IPOs a Sure Shot Way to Make Money?

We have reviewed some of the recent IPOs and have released their recommendation notes. You can check the same on our IPO page.

You can also download our FREE report and discover How to Get Rich with IPOs. This guide will show you how to safely profit from the 2017 IPO rush.



This article (Indian Indices Continue Downtrend; Healthcare Stocks Witness Selling) is authored by Equitymaster.

Equitymaster is a leading 'independent' equity research initiative focused on providing well-researched and unbiased opinions on stocks listed on the Bombay Stock Exchange.]]>
Fri, 28 Jul 2017 06:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=7/28/2017&title=Indian-Indices-Continue-Downtrend-Healthcare-Stocks-Witness-Selling
Share Markets in India Open Lower; Dr Reddy's Bleeds on Poor Q1 Result http://www.equitymaster.com/tm/tm.asp?date=7/28/2017&title=Share-Markets-in-India-Open-Lower-Dr-Reddys-Bleeds-on-Poor-Q1-Result
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Asian indices are pressured today as the dollar firmed overnight and as investors looked ahead to more corporate earnings due during the session. The Shanghai Composite is off 0.04% while the Hang Seng is down 0.51%. The Nikkei 225 is trading lower by 0.42%. US equities traded higher on Thursday as the tech sector was lifted by strong earnings.

Back home, share markets in India have opened the day on a negative note. The BSE Sensex is trading lower by 173 points while the NSE Nifty is trading lower by 24 points. The BSE Mid Cap and BSE Small Cap index both opened the day down by 0.3%.

Barring consumer durables stocks, FMCG stocks and capital goods stocks, all sectoral indices have opened the day in red with healthcare stocks and metal stocks leading the losses. The rupee is trading at 64.12 to the US$.

Food & Tobacco stocks opened the day on a mixed note with Tata Global Beverages and Agro Tech Foods leading the losses. ITC share price gained 1.4% after the company posted a muted 7.4% increase in quarterly net profit from a year earlier as consumption stayed subdued in the run-up to the implementation of the goods and services tax (GST).

The company reported a net profit of Rs 25.6 billion in the quarter ended June compared with Rs 23.9 billion in the same period last year. Revenue rose 4.1% to Rs 138 billion.

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Notably, pre-tax profit from cigarettes rose 9% year-on-year to Rs 32.7 billion; revenue from the segment grew 6.6% to Rs 87.7 billion. It is an indication that the operating profit margin expanded, largely on account of price hikes.

The high incidence of taxation on cigarettes was further compounded by the steep increase in taxes announced by the GST Council on 17 July 2017.

The intent of the GST Council behind increasing the compensation cess was to correct an apparent anomaly in cigarette taxation under the new tax regime announced earlier, on account of removal of the cascading effect of Excise Duty which existed in the pre-GST regime.

The GST became the order of the day at the start of this month. The overall impact of it is going to be a little bit more nuanced than what is being written and talked about currently in the mainstream media.

Our colleague Vivek Kaul, has studied the finer aspects of the GST and predicted what could go right and wrong.

Download his special report - The Good, the Sad and the Terrible (GST).

Moving on to the news from stocks in bank sector. ICICI Bank reported 8% drop in its net profit to Rs 20.5 billion for the quarter ended June due to fall in non-interest income.

Its non-interest income was Rs 33.9 billion in Q1 compared to Rs 34.3 billion (US$531 million) in Q1-2017.

On the asset quality front, net non-performing assets came down on a sequential basis from Rs 254.5 billion to Rs 253.1 billion. Its gross NPAs have also fallen from Rs 425.5 billion to Rs 431.5 billion, sequentially.

The bank has seen a healthy recovery and upgradation during the quarter which was around Rs 25.8 billion, mainly aided by loan repayment by a large cement firm following resolution of stress.

On the business front, the bank reported a loan growth of 11% while its retail loan book, which is now 53% of the overall loan book, grew by 19%.

To know more about the company's financial performance, subscribers can access ICICI Bank latest result analysis and ICICI Bank stock analysis on our website.

ICICI Bank share price opened the day down by 2.5%.

Dr. Reddy's share price slumped over 5% after it posted 53.2% year-on-year fall in consolidated net profit at Rs 0.6 billion for the quarter ended 30 June 2017 against Rs 1.3 billion in the corresponding quarter last year.

Expediting Drug Approval Process to be a Positive for Industry

Speaking of valuations, the BSE Healthcare Index is down 16.5% in two years. This is a mighty fall compared to the benchmark index, which is up 11% during the same period. A downgrade in the earnings estimates has led to a sell-off in the pharma space, which has led to a contraction in the price to earnings ratio (PE) of the pharma index.

The PE ratio of the Nifty Pharma Index for a five year period stands at 46 times. This ratio has contracted to 35 times currently. The headwinds being faced by this sector, have led to such lethal contraction.



This article (Share Markets in India Open Lower; Dr Reddy's Bleeds on Poor Q1 Result) is authored by Equitymaster.

Equitymaster is a leading 'independent' equity research initiative focused on providing well-researched and unbiased opinions on stocks listed on the Bombay Stock Exchange.]]>
Fri, 28 Jul 2017 04:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=7/28/2017&title=Share-Markets-in-India-Open-Lower-Dr-Reddys-Bleeds-on-Poor-Q1-Result
Corporate Earnings, Global Key Events & Top Cues in Action Today http://www.equitymaster.com/tm/tm.asp?date=7/28/2017&title=Corporate-Earnings-Global-Key-Events--Top-Cues-in-Action-Today
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Indian share markets pared gains to end flat on Thursday, led by losses in Dr Reddy's, Bharti Airtel, Tata Motors and TCS.

However, the Nifty managed to settle the July series of derivatives expiry above 10,000 after the index surged past 10,100-mark in intraday trade.

Global Shares Rise on Fed Signals

Stocks, bonds and commodities were all on a roll in Asia on Thursday, as bulls scented a softening in the Federal Reserve's confidence on inflation that promised to keep US interest rates low for longer than some had expected.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.9% to heights not seen since December 2007. It has gained over 5% so far this month.

The Fed also said it expected to start winding down its massive holdings of bonds "relatively soon," cementing expectations of a September start.

While that would be an effective tightening in financial conditions it might also lessen the need for actual hikes in rates, which matter more for currency valuations.

Just Released: Multibagger Stocks Guide
(2017 Edition)

In this report, we reveal four proven strategies to picking multibagger stocks.

Well over a million copies of this report have already been claimed over the years.

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NO-SPAM PLEDGE - We will NEVER rent, sell, or give away your e-mail address to anyone for any reason. You can unsubscribe from The 5 Minute WrapUp with a few clicks. Please read our Privacy Policy & Terms Of Use.

Global Key Events to Watch Out Today

  • The US commerce department will release second quarter GDP growth data today. Economists surveyed by Bloomberg expect the economy to have rebounded to a 2.5% annual growth pace, from 1.4% in the first quarter.
  • Japan will release inflation, unemployment and retail sales for June the same day, supplying the latest snapshot of the economy and the Bank of Japan's progress toward reaching 2% inflation.
  • Corporate results still ahead this week include Credit Suisse Group AG, Nomura Holdings Inc., Exxon Mobil Corp., Chevron Corp., UBS Group AG, Barclays Plc and BNP Paribas SA.

Company Earnings That Will Drive Indian Markets Today

L&T ltd would release its quarterly financials for the quarter on 28th July 2017. The stock has beaten the benchmark so far this year with year to date returns of 31%.

ITC share price will in focus today as it released its Q1 results yesterday.

Dr Reddy's Laboratories share price will be in news after it reported 57% decline in profit for the April June quarter impacted by GST-led destocking. The company said headwinds from U.S. price erosion continue, which also contributed to the profit decline.

IDFC Bank reported a 65% rise in quarterly profit on Thursday, helped by higher interest income and as the bad loans ratio fell from a year earlier.

Idea Cellular posted a consolidated loss of Rs 8.2 billion for the June quarter. The company had reported Rs 3.3 billion losses for March quarter.

Meanwhile, Maruti Suzuki India Ltd.'s net profit grew the least in five quarters and margins fell as India's largest carmaker compensated its dealers for tax losses they incurred while moving to the Goods and Services Tax.

Top Cues in Action Today

Axis Bank share price will be in limelight today after the lender decided to enter into a share purchase agreement with Jasper Infotech Pvt. Ltd. to acquire 100% equity capital of Accelyst Solutions Pvt. Ltd. and Freecharge Payment Technologies Pvt. Ltd.

The transaction, subject to regulatory approvals is for a cash consideration of Rs 3.9 billion.

Coal India has asked five of its seven subsidiaries to keep aside a total of 40 million tonnes of coal for auction to independent power producers under the Shakti scheme.

As per an article in The Economic Times, South Eastern Coalfields and Central Coalfields will supply 12 million tonnes each, while Northern Coalfields will provide 4 million tonnes; Mahanadi Coalfields 9 million tonnes and Western Coalfields 3 million tonnes.

Nestle share price will be in focus today after it trimmed its sales guidance and reported worse-than-expected underlying sales for the first half of 2017.

Faced with a trend towards healthier eating, makers of packaged foods are seeking to win back consumers' favour by reducing sugar, salt and fat in their products and to reassure worried investors by improving efficiency and cutting costs.

IPO Buzz

Two more IPOs are set to hit the primary market within a week:

Cochin Shipyards IPO opens on 1 August. The Rs 14.7 billion IPO is priced in Rs 424 to Rs 432 range.

Security and Intelligence Services (SIS) IPO opens on 31 July. The company has priced its Rs 7.8 billion IPO in Rs 805-815 range. The initial public offer (IPO) comprises fresh issue of shares worth Rs 3.6 billion and an offer for sale of up to 51,20,619 shares by the existing shareholders.

Speaking of IPO space, we don't need thousands of IPOs to get rich. That's not how super investors make their fortunes. But a few good IPOs could certainly become the multibaggers in your portfolio in a few years.

We, at Equitymaster, have always recommended IPOs cautiously. Here's Rahul Shah, co-head of research at Equitymaster, explaining our rationale behind the approach:

  • 'We know what a dirty game the IPO business is. We've seen it over and over again: It's a game where the odds are stacked against investors. So for us, the equation is simple. We'd rather face criticism in the short run than see our subscribers lose money over the longer term. We weren't afraid to do this during the hot IPO days of 2007, and we're not afraid to do it today.'

The Bottomline: You need to evaluate each IPO on its merits by considering its fundamentals, and most importantly, the valuations. And this is particularly important when the hype surrounding IPOs is at its peak.

We have reviewed each of them and have released their recommendation notes. You can check the same on their IPO page.



This article (Corporate Earnings, Global Key Events & Top Cues in Action Today) is authored by Equitymaster.

Equitymaster is a leading 'independent' equity research initiative focused on providing well-researched and unbiased opinions on stocks listed on the Bombay Stock Exchange.]]>
Fri, 28 Jul 2017 03:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=7/28/2017&title=Corporate-Earnings-Global-Key-Events--Top-Cues-in-Action-Today