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 Realty stocks lead the gains http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Realty-stocks-lead-the-gains
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After trading in the positive territory during post noon trading session, the Indian equity markets gained further ground and closed the day in the green. While the BSE Sensex today closed higher by 481 points, the NSE-Nifty closed higher by 139 points. Midcaps and Smallcaps too closed on a strong note today. While the BSE Mid Cap index closed higher by 1.8%, the BSE Small Cap index was up by 2.7%. Realty and consumer durable stocks were the biggest gainers today.

As regards global markets, Asian indices also closed strong today with the exception of Korea and Hong Kong. The rupee was trading at Rs 60.95 to the dollar at the time of writing.

Mining stocks ended the day on a strong note today. Hindustan Zinc and MMTC Ltd were the biggest gainers. In order to ensure interrupted fuel supply to power plants, the government has directed Coal India to cut the quantity of coal it sells via auctions. It may be noted that Coal India sells coal in the open market as well as via auctions. The auction route is beneficial since it fetches higher realizations. However, this raises the cost of power and reduces the quantity of sales that happen in open market. As a result, the government has asked Coal India to cut the quantity of coal sold through the auction route. It is believed that loss of revenues due to lower quantum of sales via the auction route may prompt the company to raise the prices. If prices indeed increase it may attract investor interest into the stock.

Pharma stocks have closed the day on a positive note. The gains were led by the stocks of Dr. Reddy's, Divis Laboratories and Dishman Pharma, each of whom ended the day with gains upwards of 3%. As per a leading business daily, the export of pharmaceutical products from India is set to cross the Rs 1 trillion mark in value terms during FY15. This is up from Rs 900 bn during FY14. If this level of exports is achieved this year, it will in effect mean that pharmaceutical exports will have recorded a growth of 15% this year in FY15. The majority of the export revenues are being expected to come from formulations this financial year.

This article (Realty stocks lead the 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.]]>
Thu, 18 Sep 2014 10:30:00 GMT http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Realty-stocks-lead-the-gains
Indian stock markets consolidate gains http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Indian-stock-markets-consolidate-gains
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Indian stock markets consolidated their gains led by heavy buying activity across market segments during the previous two hours of trading. Currently, the market is trading at the day's high level.Stocks across sectors are trading on a firm note. Heavy buying is witnessed in the realty stocks, with the realty index trading up by over 4% today.

The BSE-Sensex is trading up by 450 points and the NSE-Nifty is trading up by 128 points. The BSE Mid Cap index is trading up 1.7% and the BSE Small Cap index is trading up 2.6% today. The rupee is trading at 61.05 to the US dollar.

Almost all power stocks are trading on a firm note today led by heavy buying in Indiabulls Power and Jaiprakash Power. As per a leading business daily, the state run power major NTPC is scouting for overseas coal assets for ensuring steady supply of imported coal. The company which generates over 43,000 MW of power from 38 power stations imports coal to meet its fuel requirement for generating power. It is believed that the company has invited proposals for seeking strategic stake from coal miners that are interested to offload their stake. Against this NTPC will provide long term commitment for coal off-take. The last date for submitting proposal bid is expected to be 1st October. The company might receive some attractive offers as the move comes at a time when imported coal prices are at an all time low levels. In FY14 the company consumed 148 m tonnes of domestic coal, while 10.8 m tonnes of imported coal. It is expected to use 17 m tonnes of imported coal in FY15. As such, tenders for 13 m tonnes imported coal has already been invited so for in the current fiscal. The stock of NTPC is trading higher by 2% today.

Most of the food & tobacco stocks are trading in the green led by Sterling Biotech and Golden Tobacco. As per a leading financial daily, Tata Global Beverages Ltd (TGBL) has relaunched Kanan Devan brand of tea in Kerala. With this launch, the company aims to raise its tea market share in Kerala from 25% to 30% over the next two years. Currently Tata Global Beverages has a national market share of 22% and is targeting to raise it to 25% in the next two years. As per the company, the tea brand enjoys resonance in the Kerala tea market due to its unique taste attributed to the location of Kanan hills in Munnar. TGBL stock is currently trading up by 1.5%.

This article (Indian stock markets consolidate 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.]]>
Thu, 18 Sep 2014 08:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Indian-stock-markets-consolidate-gains
Broad based buying in markets http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Broad-based-buying-in-markets
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After opening firm, the benchmark Indian Indices have remained well above the dotted line in the morning session. All sectoral indices are currently trading in the green. The buying interest is the highest in engineering stocks.

The BSE-Sensex is trading up 322 points. The NSE-Nifty is trading up 98 points. The BSE Mid Cap index is trading up 1.7% and the BSE Small Cap index is trading up 2.5%. The rupee is trading at 61.04 to the US dollar.

Most software stocks are trading higher today. HCL Technologies and Wipro are leading the gainers. As per a leading financial daily, India's leading mid-tier software firm Persistent Systems, has said that it will be acquiring stake in Pune-based Altizon for US$ 100,000. Altizon is a software product development firm focused on the Internet of Things (IoT). The company will buy the stake in one or more tranches over a period of time and it has remitted the first tranche before making the filing to the BSE. Persistent follows a strategy of making investments in innovative small IT firms to drive synergies with its core business. Persistent Systems is currently trading up 0.8%.

Most telecom stocks are trading higher today. Tata Teleservices and Mahanagar Telephone Nigam Limited (MTNL) are leading the gainers. As per a leading financial daily, Indian telecom firms have said that they have restored 80% of the network in the state of J&K. The state had witnessed the worst flooding in several decades which had disrupted services. However, a complete restoration of services will be possible only when water levels in the submerged areas recedes fully. The flooding had severely affected the operations of mobile towers in the state. Telcos have been working with local authorities to get the services up and running. The disruption in services is not likely to have a significant impact on the financials of the companies.

This article (Broad based buying in markets) 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.]]>
Thu, 18 Sep 2014 06:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Broad-based-buying-in-markets
Indian share markets open in the green http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Indian-share-markets-open-in-the-green
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Asian stock markets have opened the day on a mixed note with the markets in Japan (up 1.3%) and China (up 0.4%) leading the gains. However, the markets in Hong Kong (down 0.7%) and South Korea (down 0.7%) are trading in the red. The Indian share markets have opened the day on a positive note. Barring the IT index, all sectoral indices are trading firm with healthcare and consumer durables indices leading the gains.

The Sensex today is higher by around 131 points (0.5%), while the NSE-Nifty is up by about 42 points (0.5%). The mid and small cap stocks are also trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.6% and 1.2% respectively. The rupee is currently trading at Rs 60.95 to the US dollar.

FMCG stocks have opened the day mainly in the green with Archies Ltd and Kokuyo Camlin leading the gains. As per a leading financial daily, FMCG company Dabur India has launched wearable mosquito repellent products, including wristbands and patches, under its Odomos brand. In addition, it has also inked an agreement with Pogo under which Odomos will use the image of Pogo's character Chota Bheem to adorn the wristband and mosquito repellent patches. In a statement, the company has said that this new range is India's first range of 100% natural active wearable mosquito repellents. Moreover, the wristband and patch are both water resistant. The Odomos mosquito repellent wristband is priced at Rs 199. This can last up to 15 days. The Odomos Patches aim to provide protection from mosquitoes for 12 hours. They are available in two packs of 10 and 24 priced at Rs 120 and Rs 265 respectively.

Indian Pharma stocks have opened the day on a firm note with Elder Pharma Ltd and J.B.Chemicals Ltd leading the gains. In a filing with the BSE, Gurgaon-based drug maker Ranbaxy Laboratories has stated that it has received a Civil Investigation Demand (CID) from the US Department of Justice. The department has sought information relating to the manner in which the company reports pricing data for certain products eligible for reimbursement under the Medicaid program. The company has clarified that the CID is a request for documents and information. It is not an allegation of wrongdoing or demand for compensation. It must be noted that Ranbaxy has been penalized by US authorities in the past.

This article (Indian share markets open in the green) 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.]]>
Thu, 18 Sep 2014 04:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Indian-share-markets-open-in-the-green
Debt: India's Achilles' heel http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Debt-Indias-Achilles-heel
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The rally in the Indian stock markets has been driven primarily by liquidity. While the economy is reviving slowly, the markets have already discounted the good news and have reached record levels. Money has been available to FIIs thanks to the loose monetary policies of the US fed. Now it appears that China too may be joining the party. China's central bank has decided to pump in US$ 81 bn into the 5 largest banks in the country. This is being done to stave off an economic slowdown. In a world saddled with debt, is more debt the answer? We do not think so. Is India better off compared to China or the US on this front?

It is no secret that India's corporate sector is saddled with a huge debt burden. This is a serious issue regarding the government's finances too. We have seen the negative fallout of this problem on the economy. From the woes of the power sector to the NPA problems in PSU banks; high debt has levels have caused a lot of stress to overleveraged firms, the banks which lent them money and the investors who invested in them. The first priority of these firms will be to pay down the debt on their balance sheet. This will leave less money for investments. As we have seen during the UPA years, if the corporate sector does not invest; growth will take a hit.

There has been new optimism in the economy after the Modi government came to power in May 2014. However, a lot of the problems facing the economy are still with us. A high level of corporate debt is one of them. Thus it makes sense to ask if there has been any improvement in the situation. The answer, sadly, appears to be negative. As an article in the Livemint has stated, the concentration of debt in stressed sectors such as steel, power, and infrastructure remain worryingly high. As per global standards, Indian firms (apart from firms in a few sectors) have very high levels of debt. Thus it would be wrong to conclude that things have really improved on this front.

Even the government's finances is not in a good shape. PSU disinvestment seems to be the strategy being used, to bring down the fiscal deficit. This is not a very comforting sign. On the external front too, things are not very cozy. As per the RBI's FY14 annual report, India's external debt (as a % of GDP) increased from 22% to 23.3% over the previous year. This means that the volatility in the rupee, seen last year, did not prevent corporates from taking on higher amounts of foreign debt. Even worse; 40% of this debt is short term. If un-hedged, this debt can cause problems in the economy.

Overcoming these challenges will not be easy. Bailouts and asset reconstruction companies (ARCs) are not long term solutions. As long as PSU banks remain at the mercy of the government, NPA problems will keep on plaguing the sector. Regulators like RBI and SEBI must get even more proactive when dealing with leveraged firms. Stricter norms for defaulters are a welcome move. However, a lot more needs to be done to ensure corporates do not stretch their balance sheets beyond a point. Healthy corporate balance sheets will ensure that the recovery in the Indian economy remains robust.

This article (Debt: India's Achilles' heel) 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.]]>
Thu, 18 Sep 2014 03:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=9/18/2014&title=Debt-Indias-Achilles-heel