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 Markets slump into the red http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Markets-slump-into-the-red
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Marking the biggest single-day fall since last a month, the Indian benchmark indices have slumped into the red, closing the day on a poor note. The equity benchmark indices widened losses especially in the post afternoon session particularly on account of weak global cues. All the sectoral indices have closed on a pessimistic note with consumer durables and oil and gas witnessing maximum selling pressures for the day. Both the BSE Mid Cap and the BSE Small Cap indices too lost steam and were down by 0.8% and 0.9% respectively. The BSE-Sensex closed lower by 414 points. The NSE-Nifty too was seen down by 119 points.

On the global front, the Asian indices have closed the day on a negative note. The European indices too have witnessed a poor performance. The rupee was trading at Rs 61.17 to the US dollar at the time of writing.

Barring few stocks such as TVS Motor Company, Maruti Suzuki and Maharashtra Scooters, automobile stocks today have closed the day on a weak note. Stocks like Escorts and Mahindra & Mahindra (M&M) have underperformed and lead the pack of losers. According to a leading daily, Tata Motors is set to launch a passenger car this month, the first new offering in four years. Now this is an important step in a bid to gain the lost market share and recoup losses in the domestic business. Economic slowdown had impacted the domestic business of the company. Tata Motors has reported losses in four of the last eight quarters and the new vehicle launch is the key towards revamp of the company's domestic strategy. While the company dominates the trucks and buses segment, the passenger cars have failed to make a cut. The industry data reveals that Tata's domestic car sales fell 39% YoY as at the end of March 31, 2014 and its market share also dropped to 4.2% at the end of June 2014 from 10.2% two years ago. With trucks and buses sales declining, the company has shifted focus to cars to combat the domestic business headwinds. The stock closed down today by 1.5%.

As per a leading financial daily, with the drop in losses on the sale of diesel to all-time low of Rs 1.33 per litre, the likelihood of deregulation of diesel sooner has increased. As per the official statements, the difference between the cost of diesel production and the retail selling price has narrowed to Rs 1.33 per litre from Rs 2.49 last month. Thanks to the softening of international oil rates and continuation of monthly price increases by the new government, the rates have observed a fall. It is said that the monthly increases had trimmed losses to less than Rs 3 per litre in May last year before a fall in rupee value led to losses on diesel sale widening to Rs 14.50 per litre in September 2013. With monthly increases, the rupee has strengthened too. And the losses have been diminishing since March 2014, especially post the new government came into power.

This article (Markets slump into the red) 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, 1 Aug 2014 10:30:00 GMT http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Markets-slump-into-the-red
Mid & small cap buck trend http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Mid--small-cap-buck-trend
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Indian share markets continued to trade in the red in the post-noon trading session. Sectoral indices are trading mixed with IT and capital goods stocks being the biggest losers whereas realty and banking stocks are trading positive.

BSE-Sensex is down 104 points and NSE-Nifty is trading 31 points down. Both BSE Mid Cap and BSE Small Cap indices are trading up by 0.3%. The rupee is trading at 60.81 to the US dollar.

Domestic pharma stocks are trading mixed with Divis's Laboratories and Glenmark Pharma being the major gainers whereas Ranbaxy Laboratories and Indoco Remedies are trading in the red. As per a leading financial daily, Cipla has entered into an agreement with US-based Bioquiddity Inc. to sell its anesthetic applications in the European Union. The commercial collaboration is for BioQuiddity's OneDose ReadyfusOR anaesthetic product pre-filled with drug Ropivacaine for post surgical pain management. Cipla also wants to launch the anaesthetic product under its own label in German market later during year. The deal has been executed through Cipla's wholly-owned subsidiary in Europe. Cipla stock is currently trading down marginally.

Automobiles stock are trading on a mixed note today. TVS Motors and Maruti Suzuki are leading the pack of gainers, whereas Mahindra & Mahindra is trading on a weak note. India's leader in car market, Maruti Suzuki has reported its sales number for the month of July 2014. In domestic market, the company sold a total of 90,093 cars for the month, which was 20% higher over the corresponding same month of previous year. At 11,287 units, exports in July were higher by 38.4% YoY. However, sales from small cars namely Alto, A-Star and WagonR declined 14.4% YoY and mid-range SX4 witnessed decline of 27% YoY during the month. However, growth was witnessed in compact cars segment like Swift, Estilo, Ritz and Celerio which together rose by 81% YoY to 25,500 units. Its compact sedan Dzire, one of the top selling cars, rose 22% YoY to 18,000 units. The stock of Maruti is trading up by 3.6% today.

This article (Mid & small cap buck trend) 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, 1 Aug 2014 08:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Mid--small-cap-buck-trend
Indian markets continue to trade weak http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Indian-markets-continue-to-trade-weak
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After opening weak, the Indian stock markets have continued to trade below the dotted line during the morning trading session. Barring stocks from automobile and FMCG sectors all the other indices are trading in red. Maximum selling is witnessed in stocks from Capital goods and Oil and gas sector.

The BSE-Sensex is trading down 120 points. The NSE-Nifty is trading down 27 points. The BSE Mid Cap index is trading down 0.1% and the BSE Small Cap index is trading up 0.1%. The rupee is trading at 60.82 to the US dollar.

Most Software stocks are trading lower today. HCL Technologies and Tech Mahindra are leading the losers. India's fifth largest software firm Tech Mahindra, has announced results for 1QFY15. Consolidated revenues for the quarter grew by 1.25% QoQ to Rs 51.2 bn. In dollar terms, revenues were up 3.6 % QoQ and came in at US$ 855 m. While topline growth was decent, the company's operational performance was a little disappointing due to a huge increase in seasonal visa related costs. Operating margins declined by 3.1% QoQ and the operating profits fell by 13.4% QoQ. Net profits increased by 2.7% QoQ to Rs 6.3 bn. The growth was driven by a pickup in business momentum in the US as well as in enterprise services. Tech Mahindra is trading down 2.3% today.

Indian Pharma stocks are trading mixed with, Ranbaxy Ltd and Sun pharma being the leading losers, while Divis laboratories and Glenmark pharma are among the leading gainers in the pack. As per the financial daily, Cadila healthcare has received 483 from USFDA on one of its products manufactured at Moraiya facility in Gujarat. Reportedly, the company is in process of reviewing the documents of the product on which the 483 was issued. The company is assessing the filed ANDA before its approval and the observations are being responded accordingly. Further, it is also reported that there are no good manufacturing practices (GMP)-related issues and as such and no business impact. USFDA issues the 483s to the firm's management at the conclusion of an inspection when an investigator had observed conditions that in their judgment might constitute violations of the Food Drug and Cosmetic (FD&C) Act and related Acts in the US. In approx a week's time Cadila is second company to receive 483 observations from USFDA. Few days back, even Ipca had received 483 letter from USFDA.

This article (Indian markets continue to trade weak) 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, 1 Aug 2014 06:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Indian-markets-continue-to-trade-weak
Indian share markets open weak http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Indian-share-markets-open-weak
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Barring China (up 0.1%), all major Asian stock markets have opened the day on a weak note with stock markets in Taiwan (down 0.7%) and Singapore (down 0.9%) leading the losses. The Indian share markets have also opened the day on a negative note. All sectoral indices have opened on a negative note with power and capital goods stocks leading the losses.

The Sensex today is down by around 136 points (0.5%), while the NSE-Nifty is down by about 53 points (0.7%). Mid and small cap stocks are trading in the red with the BSE Mid Cap and BSE Small Cap indices down by around 0.5% each. The rupee is currently trading at Rs 60.25 to the US dollar.

Auto stocks have opened the day on a weak note with Mahindra & Mahindra (M&M) and Ashok Leyland leading the losses. India's leading passenger vehicle manufacturer Maruti Suzuki India Ltd (MSIL) has announced the first quarter results for the financial year 2014-15 (1QFY15). During the quarter, the company's standalone net sales increased by 10.8% YoY to Rs 110,735.1 m. Operating profit grew by 13.9% YoY to Rs 13,282 m. Other income rose sharply by 45.1% YoY to Rs 2,965.3 m. At the bottomline level, net profit increased by 20.7% YoY to Rs 7,622.8 m. Net profit margin expanded from 5.5% in 1QFY14 to 6.2% in 1QFY15.

Oil and gas have opened the day mainly in the red with Reliance Industries LTD (RIL) Castrol India and GAIL India leading the losses. However, oil marketing companies such as Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd and Indian Oil Corporation (IOC) are trading in the green. As per a leading financial daily, petrol prices in Delhi are set to be cheaper by Rs 1.09 per litre starting today as state-run oil market companies (OMCs) have lowered the price of the fuel. This is the first time since mid-April that OMCs have lowered petrol prices. The move has come on the back of drop in benchmark gasoline rates in the international market. However, the OMCs increased diesel prices by 56 paise in Delhi. This will help lower the gap between pump and market rates by about Rs 1.5 per litre. Also, diesel pricing could be deregulated in three months if the trend continues.

This article (Indian share markets open weak) 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, 1 Aug 2014 04:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Indian-share-markets-open-weak
Promoters need corporate governance tuitions http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Promoters-need-corporate-governance-tuitions
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Corporate governance standards lie at the very root of a healthy stock market.

Why?

Because why would you, as minority investor, become co-owner in a listed company if you weren't confident that the guy controlling the company is going to act scrupulously? So the whole of the market for listed companies is based on the premise that good corporate governance standards will be followed, and errant promoters will be held accountable. Without this basic premise, everything else in the stock market will fall apart.

A recent report in a leading business daily highlights how there have been a few significant instances in corporate India that are serving to shake this foundation.

One such instance has been when Cairn India, of which the promoter Vedanta (an Anil Agarwal company) owns 60%, decided to give a Rs 75 bn loan to a promoter group company Sesa Sterlite. The company has maintained that the funds are being lent at 300 basis points above LIBOR. However, the fact remains that this is a related party transaction from a cash rich listed company with many minority shareholders to a debt burdened recipient.

Ideally, the minority shareholders would have liked to see this cash in their hands rather than in that of a leveraged promoter group company's, more so if their company so no avenues for investment in its business.

Real estate company Lavasa, which is going to come out with an IPO soon, has also raised eyebrows by giving a large construction contract to a group company on discomforting terms. JSW Steel too recently announced that it intends to pay an annual Rs 1.25 bn to a promoter company for owning and promoting the 'JSW' brand.

This is one area where corporate India needs to tread very carefully indeed.

If anything, Indian companies have a lot of catching up to do on this front already. The last thing Indian stock market investors need is a spate of high profile cases involving promoters trying to abuse their control of a company in which they are not the only owners.

This article (Promoters need corporate governance tuitions) 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, 1 Aug 2014 03:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=8/1/2014&title=Promoters-need-corporate-governance-tuitions