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 Mid, Smallcaps in Favour Today http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Mid-Smallcaps-in-Favour-Today
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The Indian equity markets began the week on a dull note as the indices were trading near the dotted line for majority part of the day. At the closing bell, the BSE Sensex closed higher by 5 points, while the NSE Nifty finished higher by 6 points. Meanwhile, the S&P BSE Midcap & the S&P BSE Small Cap witnessed buying activity and finished up by 0.8% and 1.6% respectively. Gains were largely seen in healthcare and capital goods' stocks.

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 2.39% and the Shanghai Composite rose 1.45%. The Hang Seng lost 0.21%. European stocks extended losses as the fallout from Britain's decision to leave the European Union (EU) continued, sending the pound to a 31-year low. Germany's DAX is down 1.55%, while France's CAC 40 is off 1.37% and London's FTSE 100 is lower by 1.21%.

The rupee was trading at 67.90 against the US$ in the afternoon session. Oil prices were trading at US$ 47.65 at the time of writing.

Investment and finance companies flourished in the green today with SREI Infra Finance and JM Financial gaining the most. Shares of Indiabulls Housing Finance finished the trading day on an optimistic note (up 0.3%) after it was reported that the company is planning to raise Rs 3 billion by issuing Unsecured Non-Convertible Redeemable Debentures (Tier II) in the nature of subordinated debt on private placement basis.

The company proposes to issue 30,000 unsecured non- convertible redeemable debentures (Tier-II) in the nature of subordinated debt with a face value of Rs 100,000 each. The non-convertible redeemable debentures have a 10-year tenure with a 9.30% per annum coupon rate.

In a similar development, Housing Development Finance Corporation is planning to raise Rs 10.35 billion through issuance of debentures on a private placement basis in a bid to augment its long-term capital resources. The proceeds of the issue will be utilised for financing/refinancing the housing finance business (Subscription Required) requirements of the corporation. The debentures will carry a coupon rate of 8.5% per annum.

With equity markets losing sheen, investors have turned their focus towards fixed income products especially corporate non-convertible debentures. NCDs are rated instruments that come with a coupon slightly higher than fixed deposits (FDs). In one of our older articles in The 5 Minute Wrap Up, we explained why non-convertible debentures were a better investment alternative compared to FDs.

Moving on to news from oil & gas sector. According to The Economic Times, Indian Oil Corporation, Oil India, Bharat Petroleum and Oil Natural Gas Corporation (ONGC) hope to extract 10.5 million tonne of crude oil from Vankor oilfield as the oilfield reaches peak production level.

ONGC announced a deal to buy 15% stake in Vankor last year, and is in talks to raise that to 26%. This month, a consortium of Indian Oil Corporation, Oil India and Bharat Petroleum struck a deal to acquire 23.9% in Vankor.

Vankor oilfield is Russia's second largest oilfield and has an output of 21 million tonne a year. This is the same as ONGC's entire production from all its Indian fields. Rosneft had announced in March last year that Vankor's output would decline slightly from the plateau level of 22 million tonne a year.

Last week, Rosneft said the "achieved evaluation" of the Vankor project was US$3.3 per barrel of reserves. Recoverable reserves of Vankor, the largest field commissioned in Russia in the last 25 years, stood at 361 million tonne of oil and condensate and 138 bcm of gas as of January this year.

ONGC finished the day up by 0.2% on the BSE.

In another development, Aban Offshore finished the trading day up by 3.3% after the company announced that its arm has received order from ONGC for the deployment of the Drillship Aban Abraham for a firm period of two years. The expected revenues from this deployment is US$ 87 million.

Buying activity was seen across majority of the oil & gas stocks with HPCL and BPCL leading the gains.



This article (Mid, Smallcaps in Favour 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.]]>
Mon, 27 Jun 2016 10:30:00 GMT http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Mid-Smallcaps-in-Favour-Today
Realty, Oil & Gas Lead Gains http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Realty-Oil--Gas-Lead-Gains
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After opening the day on a flat note, Indian Indices are trading in the green during the post-noon trading session. Sectoral indices are trading on a mixed note with stocks from the realty and oil & gas sectors leading the gains. IT stocks are however trading in the red.

The BSE Sensex is trading higher by 56 (up 0.2%) and the NSE Nifty is trading up by 23 points (up 0.3%). The BSE Mid Cap index is trading higher by 0.9% while the BSE Small Cap index is trading higher by 1.6%. Gold prices, per 10 grams, are trading at Rs 31535 levels. Silver price, per kilogram, is trading at Rs 42309 levels. Crude oil is trading at Rs 3255 per barrel. The rupee is trading at 67.84 to the US$.

Stocks in the paint sector are trading on a mixed note with Asian Paints and Berger Paints witnessing maximum selling pressure. As per an article in The Economic Times, Asian Paints Ltd has decided to revise the capacity of the proposed manufacturing unit for paints and intermediaries. The units will be set up in Visakhapatnam district of Andhra Pradesh and Karnataka.

The investment is valued at Rs 40 billion. The approximate amount that would be invested by the company including the cost of land would be Rs 17.8 billion.

Reportedly, the company re-looked at its product portfolio to be manufactured at the plant and decided to raise its capacity to 5,00,000 kilolitres from 4,00,000 kilolitres p.a. However, the company stated that short term demand conditions still remain uncertain in the financial year 2016-17.

In its results for the fourth quarter ended March 2016, the company's net sales from operations grew at 12.3% YoY. (Subscription Required).

The scrip of Asian paints was trading down by 0.8% while writing.

Moving on to the news from engineering sector. Shares of Larsen & Toubro Ltd were trading up by 1.4% as its construction arm won orders worth Rs 24.2 billion.

L&T said that the building & factories business of its construction arm won orders worth Rs 11.6 billion, power transmission & distribution business bagged orders worth Rs 11.2 billion and smart world and communication business won orders worth Rs 1.3 billion in June 2016.

Further, the company has bagged an order from a reputed customer in the Middle East, which includes construction of a medium voltage overhead line. The company said that it will enhance the reliability of the existing network.

On the domestic front, it received orders from Paschimanchal Vidyut Vitaran Nigam Limited (PVVNL) in Uttar Pradesh.

As per the March quarter results of the company, consolidated revenue from operation has grown by 10.14% YoY in FY16. (Subscription Required). Whereas the consolidated profit has grown by 12.25% YoY in FY16.



This article (Realty, Oil & Gas Lead Gains) 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.]]>
Mon, 27 Jun 2016 08:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Realty-Oil--Gas-Lead-Gains
Indian Indices Marginally Down http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Indian-Indices-Marginally-Down
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After opening the day on a flat note, the Indian indices witnessed choppy trades and continued to trade near the dotted line. Sectoral indices are trading on a mixed note with stocks from the software and telecom leading the losses. Realty and oil & gas stocks are witnessing buying interest.

The BSE Sensex is trading down 24 points (down 0.1%), while the NSE Nifty is trading flat. The BSE Mid Cap index is trading up by 0.7%, while the BSE Small Cap index is trading up by 1.3%. The rupee is trading at 67.89 to the US$.

As per an article in the Times of India, the Income Tax (IT) authorities have unearthed undisclosed income of Rs 130 billion in overseas bank accounts. Moreover, this colossal amount is collected from just two sets of information received in 2011 and 2013.

Reportedly, in at least 400 cases of Indians with deposits in HSBC, Geneva, the Income Tax authorities have unearthed undisclosed income of Rs 81.8 billion. The details of these deposits were received in 2011 which marks the highest disclosure ever from offshore bank accounts. The authorities have raised tax demand of about Rs 53.7 billion against such account holders.

Further, in another set of information disclosed in 2013, the officials have detected undisclosed income of Rs 50 billion in foreign bank accounts allegedly linked to 700 Indians.

Until now, the Income Tax department has filed 55 prosecution complaints before criminal courts in the International Consortium of Investigative Journalists (ICIJ) cases on charges of wilful attempt to evade tax.

The above development marks a success in bringing back the black money stashed overseas and bring them under the tax regime in India. Earlier this month, India and Switzerland agreed to move towards an early agreement for the implementation of automatic exchange of information (AEOI) between the two countries in order to keep a tab on the flow of black money stashed in offshore accounts.

Black money forms a major part of the Indian economy. The finance ministry recently stated that the government has taken sustained steps for curbing black money which includes enactment of a new Black Money Act with strict penalty provisions and new income disclosure scheme formulated for domestic black money.

Black money is money which has been earned, but on which tax has not been paid. Vivek Kaul, editor of Vivek Kaul's Diary, offered some interesting data that shows India's love for black money. In an article on this topic, he has shared some insights on what car sales tell us about black money.

Moving on to the news from currency markets... China weakened the yuan's by almost 1% against the dollar today. This is marked as the biggest downward since August and marks yuan's fixing to a five-and-a-half-year low against the dollar.

The People's Bank of China (PBoC) set the value of yuan at 6.6375 to the dollar. This was down 0.91% from Friday's fixing.

The development was seen as greenback surged last week after Britain voted to leave the European Union (EU).

To keep a regular tab on the movements in the yen and other currencies, you can read weekly market commentary from the Daily Profit Hunter team. Their weekly commentary tracks the developments in the global economy as well as equity, currency and commodity markets.



This article (Indian Indices Marginally Down) 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.]]>
Mon, 27 Jun 2016 06:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Indian-Indices-Marginally-Down
Indian Indices Open Flat http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Indian-Indices-Open-Flat
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After a mayhem in Asian markets after 'Brexit' on Friday, major Asian stock markets have opened the day on a mixed note. Stock markets in Japan and China are trading higher by 1.8% and 0.8% respectively. While, stock market in HongKong is trading lower by 0.9%.

Benchmark indices in Europe and US ended their previous session deep in red with stock markets in Germany, UK and US ending the day lower by 7%, 3.3% and 3.4% respectively. The rupee is trading at 68.01 per US$.

Indian stock markets have opened the day on a flattish note. The BSE Sensex is trading marginally lower by 22 points (down 0.1%) and the NSE Nifty is trading lower by 15 points (down 0.2%). However, BSE Mid Cap and BSE Small Cap are trading higher by 0.4% and 0.6% respectively.

Barring, information technology sector, major sectoral indices have opened the day in green. Stocks from FMCG and oil & gas sector are witnessing buying interest.

As per an article in Livemint, state owned lender Bank of Baroda has undertaken a comprehensive review of its business and has finalized a detailed plan to reposition it for the future.

The bank will sell its non-core assets gradually. This in-turn would help the company to exit its unprofitable ventures. Further, the move will also help the company to improve its margins and free up capital that could be deployed for customers with a better credit profile.

The company had posted a mammoth loss of Rs 50.6 billion in the preceding fiscal year. However, the management expects the bank to return to historical levels of profitability going forward.

Although the management is of the view that the asset quality has stabilized but fresh slippages or slippages from restructured assets cannot be ruled out. A check on the asset quality will be the key things to watch out for going forward. The stock is trading up by 1.4%.

In another news update, prospects for Mahindra and Mahindra have brightened as the tide turn in favour of its product portfolio.

Reportedly, the company's utility vehicle sales are growing at a healthy pace. The introduction of new models in the utility space has helped the company to regain its lost market share. Further, sales from farm equipment space are gaining traction. This segment had remained subdued since a while, owing to two successive years of deficit rainfall. The company's Korean unit too is clocking reasonable sales numbers.

The recovery in its passenger and farm equipment sales was evident in its numbers for the quarter ended March 2016. Auto and farm equipment sales clocked a growth of 15% and 13% respectively during the quarter as compared to a year ago.

The traction from the high margin farm equipment business coupled with the response for its new launches will be the key things to watch out for going forward.



This article (Indian Indices Open Flat) 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.]]>
Mon, 27 Jun 2016 04:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Indian-Indices-Open-Flat
Are Exports on the Cusp of Recovery? http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Are-Exports-on-the-Cusp-of-Recovery
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Exports contracted at its slowest pace in eighteen months in May. The contraction was marginal at 0.8% during the month as compared to a year ago. Further, the positive is that the growth in the non-petroleum exports turned positive. However, has the fall in exports bottomed out and is a sustainable recovery foreseeable?

To see a sustainable growth in exports, there must be a pick-up in the global economy. However, a pick-up in the global economy seems to be a far cry. Recently, the World Bank lowered its growth projections for global trade to 3.1% from the earlier projected 3.8%. Further, recent jobs data emanating from US is hardly encouraging. It suggests the weak economic situation prevailing there.

To add to this, low crude price of oil have depleted the foreign exchange reserves of the oil producing nations. This has led to lower export orders from their side. However, lately there has been a recovery in the oil prices.

But have Indian exports fallen just because of tepid global growth? As Vivek Kaul points out that there are structural factors too which has dragged the exports down. Here is his take on the same:

  • For instance, while world real GDP growth improved from 3.2% in 2009-2011 to 3.4% in 2012-2014, India's real growth of exports came down from 11.1% to 4.1%. Falling competitiveness is one of the structural factors restricting export growth. For key export items such as gems & jewellery and textiles, revealed comparative advantage has come down over the years. So Indian exports have come down also because their competitiveness vis a vis goods from other nations has gone down over the years. It's not just about slowing global economic growth.

The slower contraction of exports is a good sign for the Indian economy. However, the global economy continues to remain in a weak spot. Hence, a sustainable pick-up in the exports would only be visible once the structural economic issues are addressed and currency volatility is taken care of.



This article (Are Exports on the Cusp of Recovery?) 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.]]>
Mon, 27 Jun 2016 03:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=6/27/2016&title=Are-Exports-on-the-Cusp-of-Recovery