After extending initial gains in morning trade, the two key benchmark indices trimmed gains in mid-morning trade. At 11:15 IST, the barometer index, the S&P BSE Sensex, was up 140.86 points or 0.5% at 28,117.38. The Nifty 50 index was currently up 50 points or 0.58% at 8,640.65. The Sensex was currently trading above the psychologically important 28,000 level after crossing that level in early trade. The latest upmove on the bourses was triggered by expectations that the Goods and Services Tax (GST) constitution amendment bill may be passed in parliament during the ongoing monsoon session.
According to reports, the empowered committee of state finance ministers which met Finance Minister Arun Jaitley yesterday, 26 July 2016, has reached a consensus on key aspects of the constitutional amendment bill on GST. The committee has decided to keep the main GST rate low, according to reports. The GST bill is likely to be moved in the Rajya Sabha next week. The Rajya Sabha has already allotted five hours for discussion on the GST bill, according to media reports.
The GST bill, which has been approved by the Lok Sabha is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. A constitutional amendment bill requires at least 50% attendance and support of two-third of those present and voting in the house. For the GST bill to become a law, the bill also needs to be approved by half the state assemblies after its passage in the parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The GST seeks to create a seamless national market in the country by replacing plethora of state taxes and central taxes by one tax. The month-long monsoon session of the parliament will conclude on 12 August 2016.
The market breadth indicating the overall health of the market was strong. On BSE, 1,401 shares rose and 786 shares declined. A total of 153 shares were unchanged. The BSE Mid-Cap index was currently up 0.46%, underperforming the Sensex. The BSE Small-Cap index was currently up 0.75%, outperforming the Sensex.
In overseas stock markets, Asian stocks witnessed a mixed trend. Japanese stocks edged higher on expectations of further easing of monetary policy from Bank of Japan later this week. The Nikkei 225 Average was currently up 1.84%. Investors are hoping for further easing of monetary policy from the Bank of Japan (BOJ) after the conclusion of a two-day monetary policy meeting on 28-29 July 2016. Strength in the yen against the dollar post last month's Brexit vote and data showing a slowdown in the Japanese economy have triggered expectations of further easing of monetary policy from the BOJ. A stronger yen hurts the competitiveness of Japanese exporters.
Most US stocks edged higher in a lacklustre trading session yesterday, 26 July 2016. Investors were reluctant to carve out big positions ahead of the monetary policy outcome from the Federal Reserve. The Federal Open Market Committee (FOMC) is widely expected to keep the benchmark fed funds rates unchanged after the conclusion of two-day monetary policy today, 27 July 2016. Market participant will scrutinize the Fed statement for clues on policy direction. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
HDFC edged higher ahead of the announcement of first quarter earnings. The stock was up 1.63% at Rs 1,389.95. The stock hit a high of Rs 1,398 so far during the day, which is a 52-week high for the counter. The stock hit a low of Rs 1,372.30 so far during the day. The company is scheduled to announce Q1 June 2016 results today, 27 July 2016.
Telecom stocks rose on renewed buying. Idea Cellular (up 0.23%) and Reliance Communications (up 1.67%) edged higher.
Bharti Airtel was up 1.26% ahead of its Q1 June 2016 results today, 27 July 2016.
Shares of telecom towers company Bharti Infratel edged higher after the company reported a surge in bottom line in Q1 June 2016. The stock rose 4.35% at Rs 378.15. The company's consolidated net profit rose 71% to Rs 756 crore on 7% growth in revenue to Rs 3211 crore in Q1 June 2016 over Q1 June 2015. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 9% to Rs 1408 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 26 July 2016.
Bharti Infratel's Chairman Akhil Gupta said that the government's initiative on smart city would provide opportunities to infrastructure companies like Bharti Infratel. Bharti Infratel and Indus Towers are fully geared to serve their customers' demand and to look at the new opportunities coming up on the infrastructure front, Gupta said.
During the quarter, the company has taken approval of shareholders on the buyback of its equity shares for an issue size of Rs 2000 crore and is in the midst of completing the buyback process.
Bharti Infratel is a telecom tower arm of Bharti Airtel.
Cement stocks edged higher on renewed buying. UltraTech Cement (up 1.49%), ACC (up 0.82%) and Shree Cement (up 0.67%) rose.
Cement major Ambuja Cements edged higher after the company reported strong Q2 results. The stock was up 0.76% at Rs 272. The stock hit a 52-week high of Rs 278.35 in intraday trade. The stock hit a low of Rs 270.90 so far during the day. The company's net profit rose 77% to Rs 400 crore on 1.9% growth in net sales to Rs 2541 crore in Q2 June 2016 over Q2 June 2015. The result was announced after market hours yesterday, 26 July 2016.
The company's operating EBITDA (earnings before interest, taxation, depreciation and amortization) surged 56.5% to Rs 601 crore in Q2 June 2016 over Q2 June 2015.
On future business outlook, Ambuja Cements said that the medium to long term outlook for cement demand remains positive considering above normal monsoon forecast this year and government's focus on housing, concrete roads, smart cities and infrastructure development. Ambuja said it would continue to focus on improving operational efficiencies.
Grasim Industries was up 0.91%. Grasim has exposure to cement sector through its holding in UltraTech Cement.
Zee Entertainment Enterprises (Zee) edged higher after the company reported strong Q1 results. The stock was up 1.65% at Rs 482.40. The stock hit a 52-week high of Rs 493.65 in intraday trade. The stock hit a low of Rs 476.10 so far during the day. Zee's consolidated net profit rose 21.76% to Rs 216.96 crore on 14.74% increase in total income to Rs 1531.80 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 26 July 2016.
Advertising revenue rose 19.2% to Rs 912 crore in Q1 June 2016 over Q1 June 2015. Subscription revenue rose 14.2% to Rs 528.20 crore in Q1 June 2016 over Q1 June 2015. Earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 44.1% to Rs 453.20 crore in Q1 June 2016 over Q1 June 2015. EBITDA margin rose sharply to 28.83% in Q1 June 2016 from 23.71% in Q1 June 2015.
Tata Steel was down 1.33%. The company announced that Quec has announced financial contribution of C $175 million to Tata Steel Minerals Canada (TSMC) to support the achievement at Schefferville of a direct shipping iron ore project (DSO project) in which Tata Steel Group has invested an amount in excess of C $1 billion. The financial contribution includes equity stake of $125 million through the Capital Mining Hydrocarbons Fund and a loan of $50 million from Investissement Quec, acting as an agent of the government. The announcement was made before market hours today, 27 July 2016.
TSMC, founded in 2010, is an indirect subsidiary of Tata Steel, with equity participation from New Millennium Iron Corp. (NML), a TSX listed company headquartered in Montreal, to develop the DSO deposits located in Quebec and Newfoundland and Labrador. TSMC forecasts annual production of over 6 million tonnes of iron ore.
Separately, Tata Steel announced after market hours yesterday, 26 July 2016, that its hot metal production rose 16.5% to 3.01 million tonnes in Q1 June 2016 over Q1 June 2015. Crude steel production rose 7.6% to 2.52 million tonnes in Q1 June 2016 over Q1 June 2015. Saleable Steel production rose 4.8% to 2.34 million tonnes in Q1 June 2016 over Q1 June 2015 and sales rose 0.1% to 2.15 million tonnes in Q1 June 2016 over Q1 June 2015.
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