Market registers minuscule losses
Key benchmark indices registered minuscule losses in a truncated trading week. Benchmark indices registered gains in two trading sessions and losses in the remaining two sessions. The barometer index, the S&P BSE Sensex, lost 18.01 points or 0.06% to settle at 27,126.90 in the week ended 8 July 2016. The Nifty 50 index fell 5.15 points or 0.06% to settle at 8,323.20. The BSE Mid-Cap index rose 22.81 points or 0.19% to settle at 11,880.37. The BSE Small-Cap index rose 91.31 points or 0.76% to settle at 11,976.74. Both these indices outperformed the Sensex.
A pick up in monsoon rains helped Indian stocks extend their winning streak on the first trading session of the week on Monday, 4 July 2016. The Sensex rose 133.85 points or 0.49% to settle at 27,278.76, its highest closing level since 26 October 2015.
Auto stocks and index heavyweight Infosys led losses for key benchmark indices on Tuesday, 5 July 2016, triggered by weak global cues. The Sensex lost 111.89 points or 0.41% to settle at 27,166.87, its lowest closing level since 1 July 2016.
Gains for index heavyweights ITC, HDFC and HDFC Bank outweighed losses for IT stocks, with the two key benchmark indices registering minuscule to small gains on Thursday, 7 July 2016. The Sensex rose 34.62 points or 0.13% to settle at 27,201.49, its highest closing level since 4 July 2016.
Trading for the week ended on a subdued note on Friday, 8 July 2016, as key benchmark indices edged lower as investors awaited US jobs data to get a clearer picture of the health of the world's biggest economy. The Sensex lost 74.59 points or 0.27% to settle at 27,126.90, its lowest closing level since 30 June 2016.
Among the 30-share Sensex pack, 14 stocks gained and the remaining stocks declined in the week ended Friday, 8 July 2016. Reliance Industries (up 0.66%), Asian Paints (up 0.85%) and HDFC (up 3.15%) edged higher. Bharti Airtel (down 3.72%), GAIL (India) (down 5%), ITC (down 2.57%), NTPC (down 1.82%), ONGC (down 0.33%) and Power Grid Corporation of India (down 0.54%) edged lower.
Bank stocks were mixed. The S&P BSE Bankex index gained 0.07%. ICICI Bank (up 0.47%) edged higher. HDFC Bank (down 0.14%) edged lower.
State Bank of India (SBI) was down 0.56% at Rs 218.40. The state-run bank announced that it has sold 5% stake in National Stock Exchange of India (NSE) for Rs 911.25 crore. SBI sold 5% stake in National Stock Exchange of India (NSE) to Mauritius-based foreign institutional investor Veracity Investments at Rs 4,050 per share. Post this transaction, SBI holds 5.19% stake in NSE while its subsidiary SBI Capital Markets holds another 4.33% in the NSE.
Meanwhile, SBI and Reliance Industries (RIL) signed shareholders' agreement on 30 June 2016 for setting up payments bank. RIL will hold a majority 70% stake and SBI as joint venture partner will hold 30% equity stake in the proposed payments bank. All requisite regulatory and statutory approvals will now be sought for operationalizing the payments bank.
Axis Bank was up 0.67% at Rs 546.45. The Union Cabinet approved increase in the ceiling on foreign investment in the private sector bank to 74% of equity capital on a fully fungible basis from 62% earlier. With the hike in foreign investment ceiling, foreign direct investment to the tune of Rs 12973.14 crore will be received in the country with an estimated creation of 6,000 to 7,000 jobs over the next three years, according to a government statement.
Auto stocks edged lower, with the S&P BSE Auto index declining 0.37%. Mahindra & Mahindra (down 0.65%) edged lower.
Maruti Suzuki India (MSIL) was down 0.25% at Rs 4,155.05. The company during market hours on Monday, 4 July 2016, announced that its production fell 4.53% to 90,262 units in June 2016 over June 2015. The production was adversely impacted due to fire at Subros plant. Subros is a key supplier of car airconditioners to Maruti.
Bajaj Auto fell 2.57% at Rs 2,600.30. The company reported 4% decline in total sales to 3.16 lakh units in June 2016 over June 2015. Bajaj Auto's total motorcycles sales fell 5% to 2.73 lakh units in June 2016 over June 2015. The company announced the monthly sales volume data during trading hours on Monday, 4 July 2016.
Hero MotoCorp (HMCL) lost 0.27% at Rs 3,168. The company's two-wheeler sales rose 1.32% to 5.49 lakh units in June 2016 over June 2015. The company announced the sales volume data after market hours on Friday, 1 July 2016.
Tata Motors rose 1.59% at Rs 465.20. The company said that its total passenger and commercial vehicle sales rose 8% to 44,276 vehicles in June 2016 over June 2015. The announcement was made after market hours on Friday, 1 July 2016.
IT stocks edged lower, with the S&P BSE IT index declining 1.41%. Wipro (up 0.63%) edged higher.
Index heavyweight and software major Infosys fell 1.13% at Rs 1,158.75. The company is scheduled to announce its Q1 June 2016 results on 15 July 2016.
TCS declined 3.04% at Rs 2,425.50. The company during market hours on Tuesday, 5 July 2016, announced that it is working with the Royal College of Physicians of Ireland (RCPI) to deploy iON Cloud solutions to transform how doctors interact with each other.
Pharma stocks edged higher, with the S&P BSE Healthcare index gaining 2.46%. Cipla (up 2.33%), Dr Reddy's Laboratories (up 2.25%) and Sun Pharmaceutical Industries (up 1.9%) edged higher.
Pharma major Lupin rose 5.74% at Rs 1,637.30. The company announced during market hours on Thursday, 7 July 2016 that it has received notification that the inspection carried out by the United States Food & Drug Administration (USFDA) in July 2015 at its Goa facility has been completed and that the agency has issued Establishment Inspection Reports (EIR). The stock jumped 6.25% at Rs 1,657.30. Lupin, however, cautioned that the responses from the March 2016 USFDA inspection and updates thereafter are still under review by the USFDA.
Tata Steel fell 2.67% at Rs 318.60. The company on provisional basis reported a 5.7% rise in saleable steel production at 2.356 million tonnes in Q1 June 2016 over Q1 June 2015. Hot metal production rose 16.4% to 3.012 million tonnes in Q1 June 2016 over Q1 June 2015. Crude steel production was up 7.7% to 2.525 million tonnes in Q1 June 2016 over Q1 June 2015. The announcement was made during market hours on Monday, 4 July 2016.
Coal India was up 0.49% at Rs 311.65. The company and its subsidiaries on a provisional basis achieved 99% of targeted production at 42.72 million tonnes in June 2016. With respect to coal offtake, 95% of target was achieved for the month. The company announced the monthly coal production and offtake performance after market hours on Friday, 1 July 2016.
Coal India announced during market hours on Tuesday, 5 July 2016 that a meeting of the board of directors of the company will be held on 11 July 2016 to consider the proposal of buyback of equity shares.
Adani Ports and Special Economic Zone (APSEZ) rose 1.22% at Rs 207.05. The company announced that it is considering the acquisition of TM Harbour Services. TM Harbour Services is engaged solely in providing tug services to The Dhamra Port Company (DPCL), a wholly-owned subsidiary of APSEZ.
L&T fell 0.57% at Rs 1,531.75. The company announced during market hours on Tuesday, 5 July 2016, that its joint venture companies L&T-MHPS Boilers Private and L&T-MHPS Turbine Generators Private Limited have won export orders worth a combined $71.30 million from Mitsubishi Hitachi Power Systems (MHPS).
Separately, L&T announced during market hours on Tuesday, 5 July 2016, that the company along with its joint venture partner STEC of China has commenced work on the Rs 5273 crore Mumbai Metro Line 3 project.
On the macro front, the outcome of a monthly survey showed that growth in India's services sector decelerated in June 2016 due to a softer expansion in new work. The Nikkei India Services Business Activity Index dropped to 50.3 in June 2016 from 51 in May 2016.
Meanwhile, global credit rating agency Moody's Investors Service said in a quarterly publication that India's GDP growth over the next two years will be challenged by lackluster global demand and high leverage of some large corporates. Impaired assets in the banking system will negatively affect credit supply, said Moody's Senior Vice President and Manager Marie Diron. The report states that India's medium-term growth potential will be supported by the gradual implementation of further targeted policy reforms, thereby improving the business environment, state of infrastructure and productivity growth. According to the rating agency, the United Kingdom's majority vote to leave the European Union will have limited impact on India because exports to the UK account for just 0.4% India's GDP. Exports to the rest of the European Union account for 1.7% of India's GDP. According to the rating agency, India is not significantly exposed to a potential sharp fall in capital flows to emerging markets arising from Britain's vote to leave the UK.
Meanwhile, Prime Minister Narendra Modi after expanding the Council of Ministers with 19 new members also reshuffled some portfolios in his Cabinet on Tuesday, 5 July 2016. Prakash Javadekar, who was earlier promoted to Cabinet rank, was given the HRD Ministry. He had been the Minister of State (Independent charge) for Environment and Forests. Smriti Irani has been shifted from HRD Ministry to Textiles Ministry. Other than that, Finance Minister Arun Jaitley has shed Information and Broadcasting (I&B) portfolio and Venkaiah Naidu has been given additional charge of I&B. The government has appointed Manoj Sinha as new Minister of Communications with independent charge in place of Ravi Shankar Prasad after splitting the Communications and Electronics & Information Technology ministry. Prasad continues to remain the minister of Electronics & Information Technology. The Council of Ministers now has 77 members. The previous strength of the government was 63. Five Ministers of State tendered their resignation on Tuesday, leaving 58 Ministers in the earlier batch. The total strength of the Union Council of Ministers has been capped at 82.
The India Meteorological Department (IMD) said in its latest update on Thursday, 7 July 2016 that in the week from 30 June to 6 July 2016, rainfall was above long period average (LPA) by 35% over the country as a whole. For the country as a whole, cumulative rainfall during this year's monsoon until 6 July has been 1% above LPA, thus making a further recovery of 13% from the week ended 29 June, the IMD said. The IMD said in its extended forecast upto 25 July that it expects above normal rainfall activity over central India till 15 July. The weather office expects normal to above normal rainfall over northern parts of the country and northeastern states between 16 to 25 July. The IMD expects a subdued rainfall activity over south Peninsular India.
The IMD has forecast rains to be above normal in July and August 2016. The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture. Around 70% of the country's farmlands are rain-fed.
On the global front, the latest data showed acceleration in growth in China's services sector in June 2016. The Caixin China services purchasing managers' index (PMI) rose to an 11-month high of 52.7 in June 2016 from 51.2 in May 2016. Readings above 50 indicate an expansion on a monthly basis, while readings below signal contraction.
In the United States, the minutes from the Federal Reserve's June policy meeting confirmed dovish stance from the US central bank. The minutes showed that the majority of policy makers were in favor of keeping rates on hold. The two-day Fed meeting on 14-15 June 2016 was held just a few days before the Brexit. The minutes showed that Fed officials saw risks to the US economy and global markets from the UK's then-upcoming vote on EU membership. Fed officials also had concerns about a possible slowdown in the US labour market.