Oil sector stocks led the upmove as the two key benchmark indices eked out small gains. The barometer index, the S&P BSE Sensex, rose 40.96 points or 0.15% to settle at 27,787.62. The Nifty 50 index rose 19.85 points or 0.23% to settle at 8,528.55. The Sensex and the Nifty alternately swung between positive and negative zone in intraday trade. The Sensex and the Nifty snapped two-day losing streak.
Stocks of public sector banks (PSU banks) witnessed a mixed trend after the government allocated Rs 22915 crore to 13 public sector banks for their capitalization needs during the current financial year. Stocks of private sector banks edged lower. Stocks of public sector oil marketing companies (PSU OMCs) edged higher as global crude oil prices dropped. Stocks of oil exploration and production (E&P) firms also gained. Pharma stocks edged higher.
Shares of FMCG major Hindustan Unilever (HUL) edged lower after the company reported a muted 4% growth in volumes in its FMCG business in Q1 June 2016. UltraTech Cement edged higher in volatile trade after reporting strong Q1 June 2016 results.
In overseas stock markets, European stocks edged lower as disappointing corporate updates soured investors' sentiment. Earlier during the global day, Asian stocks ended on a mixed note. Stocks in Japan rose for the sixth trading session in a row amid continued expectations that the Bank of Japan will soon roll out stimulus for the economy. The Nikkei 225 Average ended 1.37% higher. US stocks eked out small gains Monday, 18 July 2016, pushing both the Dow Jones Industrial Average and the S&P 500 Index to fresh all-time closing highs and the Nasdaq Composite Index to its highest finish of 2016. Stocks got a boost by a flurry of upbeat earnings reports from financial companies.
The Sensex rose 40.96 points or 0.15% to settle at 27,787.62, its highest closing level since 15 July 2016. The index rose 80.03 points, or 0.29% at the day's high of 27,826.69. The index lost 108.68 points, or 0.39% at the day's low of 27,637.98.
The Nifty rose 19.85 points or 0.23% to settle at 8,528.55, its highest closing level since 15 July 2016. The index rose 31.35 points, or 0.37% at the day's high of 8,540.05. The index shed 32 points, or 0.38% at the day's low of 8,476.70.
The BSE Mid-Cap index rose 0.18%, outperforming the Sensex. The BSE Small-Cap index fell 0.11%, underperforming the Sensex.
The market breadth indicating the overall health of the market was negative. On BSE, 1,456 shares fell and 1,214 shares rose. A total of 166 shares were unchanged.
The total turnover on BSE amounted to Rs 2806 crore, lower than turnover of Rs 3033.87 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Energy index (up 1.41%), the BSE Oil & Gas index (up 1.9%) and the BSE Power index (up 0.64%) outperformed the Sensex. The BSE FMCG index (down 0.62%), the BSE Consumer Durables index (down 0.29%) and the BSE Realty index (down 0.26%) underperformed the Sensex.
Stocks of public sector banks (PSU banks) witnessed a mixed trend after the government allocated Rs 22915 crore to 13 public sector banks for their capitalization needs during the current financial year.
Allahabad Bank was up 0.92%. The bank was allocated Rs 44 crore.
Bank of India was up 0.81%. The bank was allocated Rs 1784 crore.
Canara Bank was up 4.71%. The bank was allocated Rs 997 crore.
Corporation Bank was up 1.18%. The bank was allocated Rs 677 crore.
Dena Bank was up 1.63%. The bank was allocated Rs 594 crore.
Indian Overseas Bank was up 0.9%. The bank was allocated Rs 3101 crore.
State Bank of India was up 0.48%. The bank was allocated Rs 7575 crore.
Syndicate Bank was up 0.83%. The bank was allocated Rs 1034 crore.
UCO Bank was up 0.57%. The bank was allocated Rs 1033 crore.
Central Bank of India was down 1.92%. The bank was allocated Rs 1729 crore.
Punjab National Bank was down 0.83%. The bank was allocated Rs 2816 crore.
Union Bank of India was down 0.72%. The bank was allocated Rs 721 crore.
United Bank of India was down 0.43%. The bank was allocated Rs 810 crore.
The government today, 19 July 2016, allocated Rs 22915 crore to 13 public sector banks (PSU banks) for the current financial year (FY 2017), to provide liquidity support for lending operations as also to enable banks to raise funds from the market. The remaining amount, to be released later is linked to performance, with particular reference to greater efficiency, growth of both credit and deposits and reduction in the cost of operations, according to a statement released by the government during market hours today, 19 July 2016.
Among other state-run banks, Indian Bank (down 2.45%) and Bank of Baroda (down 0.41%) edged lower. IDBI Bank (up 0.62%) edged higher. No allocation of capital was made to these three state-run banks.
Stocks of private sector banks edged lower. IndusInd Bank (down 1.84%) and Axis Bank (down 1.06%) edged lower. Kotak Mahindra Bank (up 0.14%) and ICICI Bank (up 2.11%) edged higher.
Index heavyweight HDFC Bank was off 1.03% at Rs 1,218.05. The stock hit a high of Rs 1,232 and a low of Rs 1,214.25 in intraday trade.
Yes Bank fell 1.8% at Rs 1,153.60. Global credit rating agency Moody's Investor Service, vide its credit opinion dated 18 July 2016, has maintained its long term rating on Yes Bank at 'Baa3/P-3' with stable outlook. Moody's said that Yes Bank's Baa3/Prime-3 foreign currency deposit ratings are underpinned by the bank's standalone credit strength or baseline credit assessment (BCA) of ba1 and one notch of government support. The bank's BCA of ba1 reflects its sound asset quality, consistent profitability, and small but rapidly growing franchise when compared with its Indian banking sector peers.
The bank's BCA also reflects potential weaknesses in Yes Bank's funding and liquidity profile. While the bank maintained an adequate loans to customer deposit ratio of 95% at end-March 2016, its higher reliance on corporate deposits relative to its peers creates risks in volatile markets. Moody's also said that Yes Bank may encounter operating challenges at a time when it is expanding its retail presence. While the bank's current level of CASA deposits remains below the domestic peer average, it has been building up its deposit base as well as increasing its branch network.
Stocks of public sector oil marketing companies (PSU OMCs) edged higher as global crude oil prices dropped. HPCL (up 5.09%), Indian Oil Corporation (up 4.4%) and BPCL (up 3.17%) gained. Lower crude oil prices could decrease under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.
In the global commodities markets, crude oil prices dropped as concerns over a crude and fuel oil glut outweighed an expected cut in US shale production and a likely further draw in US crude stocks. Brent for September settlement was currently down 7 cents at $46.89 a barrel. The contract had fallen 65 cents or 1.36% to settle at $46.96 a barrel during the previous trading session.
Stocks of oil exploration and production (E&P) firms also gained. Oil India (up 1.7%), Cairn India (up 1.83%) and ONGC (up 0.98%) rose.
Index heavyweight Reliance Industries (RIL) was up 1.11% at Rs 1,015.40. The stock hit a high of Rs 1,021.80 and a low of Rs 995.25 in intraday trade.
Pharma stocks edged higher. Alkem Laboratories (up 3.8%), Lupin (up 1.52%), Ipca Laboratories (up 1.62%), Aurobindo Pharma (up 1.15%), Divi's Laboratories (up 0.79%), Sun Pharmaceutical Industries (up 0.71%), GlaxoSmithkline Pharmaceuticals (up 0.14%), Dr Reddy's Laboratories (up 0.16%) and Cadila Healthcare (up 0.12%) gained. Strides Shasun (down 0.4%), Wockhardt (down 0.45%), Cipla (down 0.47%) and Glenmark Pharmaceuticals (down 0.07%) edged lower.
Shares of FMCG major Hindustan Unilever (HUL) edged lower after the company reported a muted 4% growth in volumes in its FMCG business in Q1 June 2016. The stock fell 2.75% to Rs 895.15. The company's net profit rose 9.79% to Rs 1173.90 crore on 3.36% growth in total income to Rs 8235.77 crore in Q1 June 2016 over Q1 June 2015. The growth in bottom line was aided by a one-time write back of provision for pension benefits arising from plan amendments. Profit after tax before exceptional items grew by 6% to Rs 1128 crore in Q1 June 2016 over Q1 June 2015. HUL expects a muted growth in India's FMCG market in the short term.
HUL proposed to make an investment of about Rs 1000 crore towards the setting up of a new manufacturing unit in the vicinity of its existing factory premises in Doom Dooma, Assam. This investment is subject to receipt of requisite approvals and clearances. The new unit that is envisaged to be commissioned in early 2017 will augment the production capacity of personal care products for HUL.
UltraTech Cement edged higher in volatile trade after reporting strong Q1 June 2016 results. The stock rose 0.18% at Rs 3,505.90. Consolidated net profit rose 29% to Rs 780 crore on 4% growth in net sales to Rs 6538 crore in Q1 June 2016 over Q1 June 2015. The result was announced during market hours today, 19 July 2016. Operating costs fell on year on year basis in Q1 June 2016 on the back of operational efficiencies and a judicious power and fuel mix.
With regard to future business outlook, UltraTech Cement said that cement demand is expected to grow around 7% in the current financial year (FY 2017), given the governments' focus on infrastructure development, housing sector, smart cities, roads etc. UltraTech is positioned across the country to meet the rise in cement demand and participate in the next phase of growth in the country, the company said in a statement.
IT major Wipro fell 0.47% at Rs 549.40. The company's consolidated net profit fell 6% to Rs 2050 crore on 11% rise in gross revenue to Rs 13600 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours today, 19 July 2016. The results are as per International Financial Reporting Standards (IFRS).
MindTree lost 8.37% to Rs 562.45 after consolidated net profit declined 7.2% to Rs 123.50 crore on 0.6% growth in revenue to Rs 1327.60 crore in Q1 June 2016 over Q4 March 2016. The result was announced after market hours yesterday, 18 July 2016. In dollar terms, MindTree's consolidated net profit declined 5.8% to $18.50 million on 2% growth in revenue to $199 million in Q1 June 2016 over Q4 March 2016.
The company's CEO & Managing Director Rostow Ravanan said that while the global environment poses some short term challenges, the management remains confident that the company's investments are on the right track to accelerate growth for its clients and the company.
MindTree's board of directors at its meeting held yesterday, 18 July 2016, approved amalgamation of its wholly owned subsidiary Magnet 360, LLC subject to necessary approvals.
The Sensex and Nifty snapped two-day losing streak. The Sensex had dropped 195.45 points or 0.69% in previous two sessions to settle at 27,746.66 yesterday, 18 July 2016, from a close of 27,942.11 on 14 July 2016. The Sensex has risen 787.90 points or 2.91% in this month so far (till 19 July 2016). The Sensex has risen 1,670.08 points or 6.39% in calendar year 2016 so far (till 19 July 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 5,293.01 points or 23.53%. The Sensex is off 790.71 points or 2.76% from a 52-week high of 28,578.33 hit on 23 July 2015. The Sensex is off 2,237.12 points or 7.45% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, global credit rating agency Fitch Ratings yesterday, 18 July 2016, affirmed India's Long-Term Foreign- and Local-Currency Issuer Default Ratings at 'BBB-'. The outlook on the rating is stable. The affirmation of India's sovereign ratings balances a strong medium-term growth outlook and favourable external balances against a weak fiscal position and still-difficult business environment. Fitch expects the government's continued structural reform push to support GDP growth in the medium term. On the flip side, India still ranks lowest among sovereigns in the 'BBB' category in the World Bank's Ease of Doing Business index and Fitch does not expect change anytime soon.
According to the rating agency, the review of the Fiscal Responsibility and Budget Management Act leads to short-term uncertainty on the medium-term fiscal framework, but it might also provide an opportunity if it brings the fiscal parameters closer in line with India's peers. Fitch said that the main factors that could lead to positive rating action include fiscal initiatives that would cause the general government debt burden to fall more rapidly than expected in the medium term. Positive rating action could also arise from improved business environment resulting from implemented reforms and persistently contained inflation which would support higher private investment and real GDP growth.
The main factors that could lead to negative rating action include further deviation of the already high public-debt burden from the peer median, which may be caused by stalling fiscal consolidation or greater-than-expected deterioration in the banking sector's asset quality that would prompt large-scale sovereign financial support. Negative rating action could also arise from loose macroeconomic policy settings that cause a return of persistently high inflation levels and a widening current-account deficit which would increase the risk of external funding stress.
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