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, small caps lead the gainers http://www.equitymaster.com/tm/tm.asp?date=9/2/2014&title=Mid-small-caps-lead-the-gainers
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Indian stock market continued its sustained northward journey led by continuous buying among the index heavyweights. The mid and small cap stocks lead the index gainers. Among the sectoral indices, barring metals, all sectoral indices are trading higher. Healthcare and realty sector stocks are leading the pack of gainers.

The BSE-Sensex is trading up 150 points. The NSE-Nifty is trading up 51 points. The BSE Mid Cap index is trading up 1.1% and the BSE Small Cap index is trading up 1.2%. The rupee is trading at 60.47 to the US dollar.

Auto stocks are trading mixed today. While TVS Motors is trading higher, Tata Motors is trading in the red. As per a leading business daily, Bajaj Auto reported its sales volume data for the month of August 2014. The two wheelers maker's total sales volume increased to 3.36 lakh units in the month, which was up by 8% YoY as compared to the same month the last year. Its motorcycle sales grew marginally by 2% YoY in August 2014. At 2.8 lakh units, the company's motorcycle volumes comprise over 80% of total sales volumes. Majority of the growth was witnessed in the commercial vehicles sales that grew by 56% YoY in the month to 52,538 units. Sales of exports increased by 21% YoY to 175,127 units. The company management expects it sales volumes to cross 4 lakhs unit mark in the current month. The stock of Bajaj Auto is trading higher by 1% today.

Almost all Indian Pharma stocks are trading on a positive note today. Cipla is leading the pack of gainers, however Wockhardat is trading lower. As per a leading business daily, Cipla has launched an anti-asthma inhaler in the European countries of Germany and Sweden. Cipla's asthma drug is a generic version of GlaxoSmithKline Plc's top selling product Advair. Advair is GSK's US$ 8 bn dollar product. Last December, Denmark became the first European country to approve marketing of GSK's Advair. Cipla's launch of generic version of Advair will dent latter's sales in the European countries. Cipla will market the drug under the name Serrofloin in Germany and Salmeterol or Fluticasone Cipla in Sweden.

This article (Mid, small caps lead the gainers) 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.]]>
Tue, 2 Sep 2014 08:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=9/2/2014&title=Mid-small-caps-lead-the-gainers
Pharma stocks lead the gains http://www.equitymaster.com/tm/tm.asp?date=9/2/2014&title=Pharma-stocks-lead-the-gains
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After opening firm, the Indian Indices have maintained the momentum and are trading above the dotted line in the morning session. Apart from the IT, capital goods and metal indices all other indices are trading in the green. Banking and pharma stocks are leading the gainers.

The BSE-Sensex is trading up 78 points. The NSE-Nifty is trading up 28 points. The BSE Mid Cap index is trading up 0.8% and the BSE Small Cap index is trading up 1.1%. The rupee is trading at 60.59 to the US dollar.

Most telecom stocks are trading higher today. Bharti Airtel and Idea Cellular are leading the gainers. India's largest telco, Bharti Airtel has expanded its operations in the country of Kenya. Bharti's African subsidiary's, has signed an agreement to acquire over 2.7 m subscribers of Essar Telecom's YuMobile in the country. The transaction is subject to the approval of the relevant authorities in Kenya. Bharti Airtel is the second largest telco in Kenya with about 5 m subscribers and this expansion will strengthen its position in the country. Bharti Airtel is trading up 3.3% today.

Most automobile stocks are trading higher today. Hero MotoCorp and TVS Motors are leading the gainers. TVS Motors has reported a robust 46% YoY growth is sales for the month of August 2014. The company has sold 227,482 units last month compared to 155,532 units in the same month last year. Two wheeler sales were up 47% YoY from 148,469 units (in Aug 2013) to 217,662 units (in Aug 2014). Scooter sales were up a huge 84% YoY and motorcycle sales were up 36% YoY. The stock of TVS Motors is trading at an all time high and is up 3% today.

This article (Pharma 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.]]>
Tue, 2 Sep 2014 06:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=9/2/2014&title=Pharma-stocks-lead-the-gains
Indian share markets open firm http://www.equitymaster.com/tm/tm.asp?date=9/2/2014&title=Indian-share-markets-open-firm
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Asian stock markets have opened the day on a mixed note with stock markets in Japan (up 1.4%) and Indonesia (up 0.4%) leading the gains. However, markets in South Korea (0.8%) and Taiwan (0.7%) are trading in the red. The Indian share markets have opened the day on a positive note. The sectoral indices have opened on a mixed note with the healthcare and consumer durables indices leading the gains. However, IT and metal indices are trading weak.

The Sensex today is up by around 48 points (0.2%), while the NSE-Nifty is up by about 15 points (0.2%). Mid and small cap stocks are also trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.4% and 0.7% respectively. The rupee is currently trading at Rs 60.55 to the US dollar.

Auto sector stocks have mainly opened the day in the green with TVS Motor Company and Hero MotoCorp leading the gains. After witnessing sluggish demand for two years, India's car market has shown a good revival in FY15 with four consecutive months of strong sales growth. As per a leading financial daily, India's leading passenger vehicle maker Maruti Suzuki reported strong growth of 29% YoY during the month of August 2014 with sales of 98,304 units. Japanese car maker Honda Motor registered the highest growth rate of 88% YoY with sales of 16,758 units. Maruti's close rival Hyundai Motors reported 19% YoY growth during the month. Change in government at the Centre, stable fuel prices as well as interest rates have helped improve consumer sentiment. Auto makers are now aiming for a slew of new launches to boost sales during the upcoming festive season.

Oil and gas stocks have mainly opened the day on a firm note with Indraprastha Gas Ltd (IGL) and Castrol India leading the gains. As per a leading financial daily, the retail price of diesel is almost close to the market rate. The difference between the retail price and the global benchmark price is just a meagre 8 paise per litre. The decline in the under-recoveries has been aided by softening international crude oil prices as well as regular monthly price increases. It is said that if the trend continues, retail diesel prices will be at par with international rates in about a week. It is worth noting that diesel prices have been raised every month by up to 50 paise per litre since January 2013. The cumulative rise has been Rs 11.81 per litre in 19 instalments.

This article (Indian share markets open firm) 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.]]>
Tue, 2 Sep 2014 04:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=9/2/2014&title=Indian-share-markets-open-firm
June quarter roundup http://www.equitymaster.com/tm/tm.asp?date=9/2/2014&title=June-quarter-roundup
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The dawn of Modi era has sent positive signals across Indian markets. Indian stocks have gathered steam in the past six months. The hopes of economic revival with the new government in place have set the upbeat tone. Retail investors are therefore gung ho about the Indian growth prospects too. Some industries such as automobiles and power are moving towards a growth trajectory. Softening of commodities prices such as crude oil has helped lower material costs. This is expected to help government to tackle the twin problems of inflation and deficit. But all this do not imply that India is out of woods. A meaningful economic recovery is still a distant dream for India. Its key economic indicators are still nothing to write home about.

A closer look at the June quarter corporate earnings corroborates this view further. The healthy industry growth did not reflect in the profitability of most companies. While the Earnings before interest, taxes, depreciation and amortization (EBITDA) of the BSE Sensex companies have risen 31% YoY, this growth was largely driven by three companies. Earnings for most of the companies have grown at a somber pace for the quarter gone by. Let's have a glimpse of few sectors to gauge the earnings performance of the companies for the quarter gone by.

Auto: The BSE auto index has outperformed the BSE Sensex. Few big auto component firms and automakers have reported strong operating margins. The outperformance was largely driven by the higher sales volumes for the auto majors. Demand uptick in the election months has also boosted the sales. However, two-wheeler firms posted a lackluster performance. Higher raw material costs and marketing spend weighed on the profitability of the companies. Moreover, the commercial vehicle segment has not been up to the mark.

Banking: The banking stock's rally post elections fizzled out when the bribery scandals in public sector banks were brought to light. Moreover, poor credit quality continues to haunt the earnings performance of Indian banks. The June quarter earnings lack any improvement in fundamentals for the banking sector. As per the financial daily Livemint, public sector banks have reported 3.4% QoQ jump in bad loans. Private banks on the other hand have reported 12% increase although on a lower base. Operating metrics for the banks lie weakened on account of higher additions to bad loans. Moreover, the sluggish profitability of the banks has also restricted sufficient provisioning putting the asset quality at further risk. What more? Lack of adequate capital and poor loan growth has exasperated the woes for Indian banks.

Capital goods: With post-election euphoria calming down, BSE Capital Goods index rally has abated too. June earnings have given an indication that the recovery is still away. Tepid order inflows and deferment of investment plans have impacted the sector earnings. Moreover, capital goods companies have been victims of stretched financials of clients and fuel shortages. Not surprisingly, one-third of the firms that make up the capital goods index have reported YoY decline in revenue. While the government support is expected to kick-start stalled projects, there are no clear signs of resolution of structural issues in the sector.

Cement: While the stable government promises revival in infrastructure and housing sectors in turn boosting the profitability of cement companies, the June quarter earnings have revealed a different picture altogether. Higher costs and subdued demand have depressed the profitability of the cement companies. Moreover, price realizations have stood weaker. Hence, the operating profits have declined too. Despite the challenging environment, the large cement companies have been trading at expensive valuations.

Metals: Metal stocks too had experienced a robust rally post the election results. But the underlying fundamentals of the companies stay weak. The net sales for the June quarter have declined YoY, and the financials of the metal companies have been looking distressed. The operating metrics have remained under stress on account of increase in employee costs, energy costs and other expenses. While the bigger picture is positive with the hopes of recovery, the demand creation may not happen on expected lines. Moreover, the global situation continues to remain uncertain.

Technology: The June quarter performance turned out to be mixed for IT companies. The picture here is not as rosy as was anticipated by the investor community. While couple of large firms has managed to hold on their growth figures, financial weakness has been observed with many others. Client-specific issues and elongation in sales cycles have marred the profits of few IT companies. Many IT companies have been struggling to grow business at a good pace.

Power: Lower realizations and expenses related to stalled projects have taken a toll on the earnings capability of the power companies during the quarter gone by. Moreover, unfavorable tariff regulations have depressed the profitability too. It's quite certain that the power sector is yet to see the daylight; given the slower pace of regulatory progress and reforms.

Pharma: This is one sector that has ruled the investment portfolios this season. The pharmaceutical companies have reported strong earnings for the June quarter by the virtue of improvement in the domestic pharmaceutical market and continued growth in generic drug sales in the US. While the sales growth has stood healthy, the gross margins for these companies have remained under pressure. But overall the sector performance is expected to remain upbeat with boisterous revenue growth and stable profitability.

It is quite apparent now that the earnings of the Indian corporate for the first quarter of the current fiscal stand elusive given the underlying challenges. There has been enormous hunger for reforms for quite some time now. Hence, speedy recovery only remains a wishful thinking. Against this backdrop, it will be only wise for the investors to exercise caution and focus on fundamentally strong value picks across sectors. And exactly here the Equitymaster Research Team will continue to reach out to you to help build up a resilient portfolio.

This article (June quarter roundup) 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.]]>
Tue, 2 Sep 2014 03:00:00 GMT http://www.equitymaster.com/tm/tm.asp?date=9/2/2014&title=June-quarter-roundup