Telecom stocks and index heavyweights Infosys, HDFC and ITC led gains for the two key benchmark indices as the fourth quarter earnings season began on positive note. The barometer index, the S&P BSE Sensex, rose 189.61 points or 0.74% to settle at 25,816.36. The gains for the Nifty 50 index were higher in percentage terms than those for the Sensex. The Nifty rose 64.25 points or 0.82% to settle at 7,914.70. Shares of index heavyweight and IT major Infosys surged after the company forecast strong revenue growth for the year ending 31 March 2017 (FY 2017) at the time of announcement of its Q4 March 2016 results.
The Sensex gained for the fourth day in a row and the Nifty edged higher for the fifth day in a row. The Sensex and the Nifty, both, hit their highest closing level in more than fifteen weeks.
Telecom stocks gained after the finance ministry on 14 April 2016 clarified that no service tax is payable by telecom service providers (TSP) for spectrum assigned/auctioned to them before 1 April 2016. IT stocks moved higher after Infosys issued strong revenue growth guidance for the year ending 31 March 2017 (FY 2017). Pharma major Lupin edged higher after the company announced that its US subsidiary, Lupin Pharmaceuticals Inc. has launched its Fyavolv tablets in the United States. Mahindra & Mahindra (M&M) edged higher in volatile trade after a top official of the company said that the company is working on a range of gasoline engine options.
Stocks of oil exploration and production (E&P) firms edged lower as crude oil prices dropped. Stocks of public sector oil marketing companies (PSU OMCs) edged higher on decline in crude oil prices. National Aluminium Company jumped 9.71% in a single trading session after the company announced that a meeting of its board of directors would be held on 22 April 2016 to consider the proposal for buyback of equity shares of the company.
Index heavyweight and cigarette maker ITC rose after the company on Friday, 15 April 2016, announced that consequent upon a High Court order passed in favour of the company, the company will soon resume manufacture of cigarettes in its factories. State Bank of India (SBI) edged lower after the bank's Chairman Arundhati Bhattacharya was quoted as saying that the Reserve Bank of India (RBI) has directed the bank to provide for losses on food grain-related loans issued to the Punjab state government.
The Sensex rose 189.61 points or 0.74% to settle at 25,816.36, its highest closing level since 1 January 2016. The index jumped 243.28 points or 0.94% at the day's high of 25,870.03. The index gained 7.37 points or 0.02% at the day's low of 25,634.12.
The Nifty rose 64.25 points or 0.82% to settle at 7,914.70, its highest closing level since 1 January 2016. The index rose 70.15 points or 0.89% at the day's high of 7,920.60. The index fell 7.70 points or 0.09% at the day's low of 7,842.75.
The market breadth indicating the overall health of the market was positive. On BSE, 1,440 shares gained and 1,176 shares declined. A total of 150 shares were unchanged. The BSE Mid-Cap index gained 1.26%. The BSE Small-Cap index rose 1.11%. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 2168 crore, lower than turnover of Rs 2645.40 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Telecom index (up 2.45%), the S&P BSE Metal index (up 0.82%), the S&P BSE Capital Goods index (up 0.91%), the S&P BSE Realty index (up 4.4%), the S&P BSE Basic Materials index (up 1.24%), the S&P BSE Teck index (up 2.92%), the S&P BSE IT index (up 3.09%), the S&P BSE FMCG index (up 1.07%), the S&P BSE Energy index (up 0.1%), the S&P BSE Healthcare index (up 0.8%), and the S&P BSE Consumer Durables index (up 1.73%) outperformed the Sensex.
The S&P BSE Bankex (down 0.52%), the S&P BSE Industrials index (up 0.54%), the S&P BSE Auto index (down 0.27%), the S&P BSE Finance index (up 0.08%), the S&P BSE Utilities index (up 0.2%), the S&P BSE Consumer Discretionary Goods & Services index (up 0.68%), the S&P BSE Oil & Gas index (up 0.36%) and the S&P BSE Power index (up 0.61%) underperformed the Sensex.
Shares of IT major Infosys surged in volatile trade after the company forecast strong revenue growth for the year ending 31 March 2017 (FY 2017) at the time of announcement of its Q4 March 2016 results on Friday, 15 April 2016, when the stock market was closed for a holiday. The stock gained 5.73% to Rs 1,239.15. The stock hit a high of Rs 1,267.70 in intraday trade, which is a record high for the counter. The stock hit a low of Rs 1,233.45 in intraday trade.
Infosys expects revenue growth of 11.8%-13.8% for FY 2017 in US dollar terms. In constant currency terms, the company has forecast 11.5%-13.5% growth in revenue for FY 2017. Infosys' revenue growth forecast is higher than 10% to 12% growth for the IT outsourcing sector for FY 2017 forecast by IT industry body National Association of Software and Services Companies (Nasscom) in February this year. Infosys has forecast 12.7%-14.7% growth in revenue in rupee terms for FY 2017 based on rupee dollar exchange rate of 66.26 as on 31 March 2016.
Infosys' consolidated net profit rose 3.8% to Rs 3597 crore on 4.1% growth in revenue to Rs 16550 crore in Q4 March 2016 over Q3 December 2015. The results are as per International Financial Reporting Standards (IFRS). Infosys said that the employee attrition reduced further in Q4 March 2016. On annualized basis, the employee attrition rate declined to 17.3% in Q4 March 2016 from 18.1% in Q3 December 2015.
After the strong revenue growth guidance for FY 2017, Infosys' ADR jumped 8.4% to settle at $20 on the New York Stock Exchange on Friday, 15 April 2016.
IT stocks gained after IT major Infosys issued strong revenue growth guidance for the year ending 31 March 2017 (FY 2017). HCL Technologies (up 1.71%), Oracle Financial Services Software (up 2.55%), Tech Mahindra (up 1.37%), Wipro (up 1.09%), Hexaware Technologies (up 0.82%) and MphasiS (up 3.48%) rose.
IT major TCS slipped in volatile trade ahead of its Q4 March 2016 results today, 18 April 2016. The stock shed 0.12% to Rs 2,520.05. The stock hit high of Rs 2,553.15 and low of Rs 2,449 in intraday trade. Meanwhile, a US court has reportedly slapped nearly $1 billion penalty on the company for allegedly stealing information related to US-based Epic Systems' healthcare software. TCS, however, denied the charges and said it would appeal. In a statement issued on Saturday, 16 April 2016, TCS said that the jury's verdict on liability and damages was unexpected, as the company believes it is unsupported by the evidence presented during the trial. The company added that it did not misuse or derive any benefit from downloaded documents from Epic System's user-web portal. TCS said it plans to defend its position vigorously in appeals to higher courts. The company said it appreciates the trial judge's announcement from the bench that he is almost certain he will reduce the damages award. The jury verdict will not have any impact on the company's Q4 March 2016 and FY 2016 financial results, TCS said.
Pharma major Lupin rose 1.74% after the company announced that its US subsidiary, Lupin Pharmaceuticals Inc. has launched its Fyavolv tablets in the United States. The drug is a generic version of Warner Chilcott's Femhrt tablets. Lupin's Fyavolv tablets (Norethindrone Acetate and Ethinyl Estradiol Tablets USP, 0.5 mg/0.0025 mg and 1 mg/0.005 mg) are the AB rated generic equivalent of Warner Chilcott's Femhrt tablets (Norethindrone Acetate and Ethinyl Estradiol Tablets USP, 0.5 mg/0.0025 mg and 1 mg/0.005 mg). The drug is indicated for the treatment of moderate to severe vasomotor symptoms due to menopause and prevention of postmenopausal osteoporosis, Lupin said. Femhrt had US sales of $39 million (IMS MAT December 2015).
Mahindra & Mahindra (M&M) edged higher in volatile trade after a top official of the company said that the company is working on a range of gasoline engine options. The stock rose 0.63% to Rs 1,341.05. The stock hit high of Rs 1,354.70 and low of Rs 1,316.50 in intraday trade. M&M's Executive Director and Group President, Auto and Farm Equipment Sectors & Member of the Group Executive Board Dr. Pawan Goenka said in an interaction with auto industry analysts on 13 April 2016 that the company intends to launch gasoline options for its sports utility vehicles Scorpio and XUV500 within the next 12 months. KUV100 has received good response from customers. Currently, KUV100 has a waiting period of 6-8 weeks. The gasoline variant of KUV100 has received good response and contributes to about 45% of KUV100 sales. Goenka expects the ongoing momentum in M&M's exports growth to continue with the neighboring markets as well as Africa and South American markets.
With regard to the tractors business, Goenka said that the company is very well poised to take advantage of the expected growth in the tractors industry in India with a strong launch of its 'Yuvo' series (5 tractor models) in the mainstream segment of 30-45 hp which accounts for 80% of the tractors market size. The Yuvo has been developed after significant understanding of customer insights, he said.
Goenka said that complying with safety norms would mean an average cost of Rs 25,000 to Rs 30,000 per vehicle and complying with BSVI norms would increase the price by around Rs 1.50 lakh per vehicle (approximate cost increase of Rs 90,000 plus taxes) based on current technologies for complying with these norms. The capex requirement for M&M for BSVI compliance would be around Rs 500 crore. There will be additional capex to be incurred at the vendors end, Goenka said.
Metal stocks gained on renewed buying. JSW Steel (up 1.44%), Hindustan Copper (up 0.7%), Vedanta (up 3.62%), Hindalco Industries (up 0.83%), Hindustan Zinc (up 1.66%), Jindal Steel & Power (up 1.76%), and Steel Authority of India (Sail) (up 0.68%) gained. Bhushan Steel fell 0.67%. NMDC dropped 1.19%.
Tata Steel rose 0.72%. The company has announced changes in leadership at Tata Steel UK. Bimlendra Jha, an Executive Committee member of Tata Steel Europe has been appointed as the Chief Executive Officer of Tata Steel UK. Jha is currently Executive Chairman of Tata Steel Europe's Long Products Europe business and has successfully led the divestment process that resulted in the signing of a sale and purchase agreement with Greybull Capital on 11 April 2016. The announcement was made after market hours today, 18 April 2016.
Meanwhile, Tata Steel Europe has appointed Standard Chartered Bank as an additional adviser for the divestment of its entire holding in its British subsidiary Tata Steel UK. On 11 April 2016, Tata Steel Europe announced that the company has commenced the formal process for the divestment of its entire holding in its British subsidiary Tata Steel UK. Tata Steel Europe has decided to sell its entire holding in Tata Steel UK due to the deteriorating financial performance of the UK subsidiary.
National Aluminium Company jumped 9.71% to Rs 45.20 after the company announced that a meeting of its board of directors would be held on 22 April 2016 to consider the proposal for buyback of equity shares of the company. The announcement was made after market hours on Wednesday, 13 April 2016. The stock market was closed on 14 and 15 April 2016 for holidays.
Stocks of oil exploration and production (E&P) firms edged lower on decline in crude oil prices. Cairn India (down 3.71%) and Oil India (down 2.03%) edged lower. Lower crude oil prices would result in lower realization from crude sales for oil exploration firms.
ONGC shed 2.46%. ONGC after market hours on Wednesday, 13 April 2016, announced that the company has signed an agreement with Reliance Industries (RIL) and BG Group to take over a part of the abandoned assets of the Mid & South Tapti field in Western Offshore of India. The joint venture members signed the Tapti Asset Transfer Agreement on 12 April 2016 with ONGC. ONGC intends to utilize the Tapti facilities (comprising of the processing platforms along with the connected export pipelines) for use in its adjacent Daman Development and C-26 Cluster Development Projects. In December 1994, Government of India awarded the Mid & South Tapti field in Western Offshore of India under the Production Sharing Contract (PSC) regime to a consortium comprising ONGC (with 40% stake), British Gas (with 30% stake) and Reliance Industries (with 30% stake).
ONGC has committed an investment of over Rs 8600 crore towards Daman Development Project and C-26 cluster Development Project to enhance production of natural gas and condensate from its Daman block in Arabian Sea. The production from these two projects is expected to start in Q2 September 2016, with estimated peak production rate of about 11 MMSCMD of gas and over 11,000 barrels of condensate per day, ONGC said.
Reliance Industries (RIL) fell 0.35% after the company announced that the SEZ refinery of the company is planning to shut down one crude distillation unit for routine maintenance and inspection activities from 1 May 2016, for about 3 weeks. The other three crude distillation units including all secondary processing units are expected to operate at normal throughput at Jamnagar refinery complex, RIL said. The company said it does not anticipate any impact on its commercial commitments. The announcement was made before market hours today, 18 April 2016.
Stocks of public sector oil marketing companies (PSU OMCs) edged higher on decline in crude oil prices. BPCL (up 4.4%), HPCL (up 2.19%) and Indian Oil Corporation (up 2.53%) edged higher. Decline in crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already decontrolled pricing of petrol and diesel.
Meanwhile, PSU OMCs announced reduction in prices of both petrol and diesel with effect from the midnight of 15/16 April 2016. Indian Oil Corporation cut the retail-selling price of petrol by 74 paise per litre in Delhi, with corresponding price revision in other states. After the latest price reduction, the price of petrol in Delhi stands at Rs 61.13 a litre. The price of diesel has been cut by Rs 1.30 per litre in Delhi, with corresponding price revision in other states. After the latest price reduction, the price of diesel in Delhi stands at Rs 48.01 a litre.
Crude oil prices dropped after the world's major oil producers at a meeting held in Doha failed to reach an agreement yesterday, 17 April 2016, to freeze production aimed at boosting sagging crude prices. Brent for June settlement was currently down $1.41 a barrel at $41.69 a barrel. The key driver behind the breakdown was Saudi Arabia's refusal to participate in the deal without its geopolitical rival Iran pledging to do the same. Since economic sanctions against Iran were lifted in January, the country has vowed to keep ramping up production until output is back up to at least 4 million barrels a day.
Telecom stocks gained after the finance ministry on 14 April 2016 clarified that no service tax is payable by telecom service providers (TSP) for spectrum assigned/auctioned to them before 1 April 2016. Idea Cellular (up 5.27%), Bharti Airtel (up 1.92%), Tata Teleservices (Maharashtra) (up 1.51%) and Reliance Communications (up 1.98%) gained. The finance ministry also clarified that services provided by the central government by way of allowing a telecom service provider to operate as a telecom service provider or use radiofrequency spectrum during the year 2015-16 on payment of licence fee or spectrum user charges has been specifically exempted from service tax.
Private bank stocks were mixed. Kotak Mahindra Bank (down 1.37%), ICICI Bank (down 1.76%), IndusInd Bank (down 0.04%) declined. Yes Bank (up 2.74%) Federal Bank (up 1.01%), HDFC Bank (up 0.65%) and Axis Bank (up 0.77%) rose.
PSU bank stocks declined. Punjab National Bank (down 2.42%), Andhra Bank (down 0.65%), Bank of Baroda (down 2.76%), Canara Bank (down 1.32%), Bank of India (down 2.06%) and Union Bank of India (down 2.59%) dropped. IDBI Bank rose 2.07%.
State Bank of India (SBI) edged lower after the bank's Chairman Arundhati Bhattacharya was quoted as saying that the Reserve Bank of India (RBI) has directed the bank to provide for losses on food grain-related loans issued to the Punjab state government. The stock shed 2.56% to settle at Rs 186.85. Recent media reports have suggested that there has been a discrepancy in food grain stockpiles in the warehouses of the state government with regard to the foodgrains purchased through bank loans. The Punjab state government has reportedly denied any misuse of funds.
Index heavyweight and cigarette maker ITC rose after the company on Friday, 15 April 2016, announced that consequent upon a High Court order passed in favour of the company, the company will soon resume manufacture of cigarettes in its factories. The stock gained 1.33% at Rs 335.35. The stock hit high of Rs 338.40 and low of Rs 331.10 in intraday trade. Early this month, ITC announced temporary closure of manufacturing operations at all its cigarette factories in India with effect from 1 April 2016 due to lack of clarity on the quantum of mandatory pictorial health warning on cigarette packages.
The Sensex rose for the fourth straight trading session. The barometer index has risen 1,142.52 points or 4.63% in four trading sessions from its close of 24,673.84 on 8 April 2016. The Sensex has risen 474.50 points or 1.87% in this month so far (till 18 April 2016). The Sensex has fallen 301.18 points or 1.15% in calendar year 2016 so far (till 18 April 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the Sensex has risen 3,321.75 points or 14.76%. The Sensex is off 3,278.25 points or 11.26% from a 52-week high of 29,094.61 hit on 15 April 2015. The Sensex is off 4,208.38 points or 14.01% from a record high of 30,024.74 hit on 4 March 2015.
On the macro front, data released by the government today, 18 April 2016, showed that inflation based on the wholesale price index (WPI) remained in negative zone last month. WPI stood at negative 0.85% in March 2016 as compared to a reading of negative 0.91% in February 2016. Build up inflation rate in the financial year so far was minus 0.85% compared to a build up rate of minus 2.33% in the corresponding period of the previous year. Meanwhile, WPI for January 2016 was revised to a reading of negative 1.07% compared with a provisional reading of 0.9% reported on 15 February 2016.
Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview to a newspaper in Washington on Thursday, 14 April 2016, that if the monsoon is good, if inflation continues on a downward path and if there is continuing progress on food management reforms that reduce costs it will provide room for the RBI to further reduce policy interest rate. Recently, the weather office forecast good rains during the June-September 2016 southwest monsoon season. The RBI cut its benchmark policy rate viz. the repo rate by 25 basis points to 6.5% from 6.75% after a scheduled policy review on 5 April 2016. At that time, Rajan had indicated in his monetary policy statement that the RBI might cut the repo rate further in the coming months if macroeconomic and financial developments provide room for further rate cut. The RBI next undertakes monetary policy review on 7 June 2016.
Meanwhile, the finance ministry has clarified that taxes, cesses or duties such as excise duty, customs duty, Service Tax, State VAT, CST, income tax, wealth tax, stamp duty, taxes on professions, trades, callings or employment, octroi, entertainment tax, luxury tax and property tax are not liable to service tax. The government issued the clarification after the Union Budget 2016-17 slapped service tax on all services provided by the government or a local authority to a business entity with effect from 1 April 2016.
In overseas stock markets, resources sector led losses for European equities as crude oil prices fell after the world's major oil producers at a meeting held in Doha, Qatar failed to reach an agreement yesterday, 17 April 2016, to freeze production. Earlier during the global day, Japanese stocks led decline in Asian equities as the yen strengthened against the dollar in the wake of earthquakes in the Kumamoto prefecture since last week, including on Saturday, 16 April 2016. The Nikkei 225 Average settled 3.4% lower. The stronger yen makes Japanese exports less competitive and cuts into the value of repatriated earnings. US stocks closed modestly lower during the previous trading session on Friday, 15 April 2016, as a retreat in oil prices weighed on energy shares.
India's stock market remains closed tomorrow, 19 April 2016, on account of Mahavir Jayanti.
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