Friday, November 24, 2017

Winning Strokes
Benchmark indices settled with modest gains as Government promulgating the ordinance to amend the Insolvency and Bankruptcy Code, 2016 perked up sentiment. The barometer index, the S&P BSE Sensex, advanced 91.16 points or 0.27% to settle at 33,679.24. The Nifty 50 index rose 40.95 points or 0.4% to settle at 10,389.70. Gains in global stocks also underpinned sentiment. The Sensex and the Nifty, both, hit highest closing level in 2-1/2 weeks. IT and power stocks gained.
The market gained for the seventh straight day. The Sensex jumped 918.80 points or 2.8% in seven sessions, from a close of 32,760.44 on 15 November 2017.

The market opened higher and held firm in the positive terrain throughout the session.

The Sensex advanced 91.16 points or 0.27% to settle at 33,679.24, its highest closing level since 6 November 2017. The index gained 150.45 points, or 0.45%, at the day's high of 33,738.53. The index rose 51.90 points, or 0.15%, at the day's low of 33,639.98.

The Nifty 50 index rose 40.95 points or 0.4% to settle at 10,389.70, its highest closing level since 6 November 2017. The index gained 55.75 points, or 0.53%, at the day's high of 10,404.50. The index rose 13.50 points, or 0.13%, at the day's low of 10,362.25.

The S&P BSE Mid-Cap index rose 0.58%. The S&P BSE Small-Cap index advanced 0.45%. Both these indices outperformed the Sensex.

The breadth indicating the health of the market, was positive. On BSE, 1,551 shares rose and 1,225 shares declined. A total of 159 shares were unchanged.

The total turnover on BSE amounted to Rs 4485.71 crore, slightly higher than turnover of Rs 4422.42 crore registered during the previous trading session.

On the macro front, the Government of India promulgated yesterday, 23 November 2017, the ordinance to amend the Insolvency and Bankruptcy Code, 2016. Earlier, the President of India had given his assent to the ordinance to amend the code.

The ordinance aims at putting in place safeguards to prevent unscrupulous, undesirable persons from misusing or vitiating the provisions of the code. The amendments aim to keep-out such persons who have wilfully defaulted, are associated with non-performing assets, or are habitually non-compliant and, therefore, are likely to be a risk to successful resolution of insolvency of a company.

In addition to putting in place restrictions for such persons to participate in the resolution or liquidation process, the amendment also provides such check by specifying that the committee of creditors ensure the viability and feasibility of the resolution plan before approving it. The Insolvency and Bankruptcy Board of India (IBBI) has also been given additional powers.

Meanwhile, the Cabinet Committee on Parliamentary Affairs today, 24 November 2017, recommended that the winter session of Parliament be held from 15 December 2017 to 5 January 2018. The ensuing winter session will have a total of 14 sittings over a duration of 22 days. Three bills are to be taken up in the coming winter session to replace three ordinances namely, the Goods & Services Tax (Compensation to States) Ordinance, 2017 (promulgated on 2 September 17); Insolvency & Bankruptcy Code (Amendment) Ordinance, 2017 and Indian Forest (Amendment) Ordinance, 2017.

Overseas, European stocks edged higher in sluggish post-Thanksgiving trading. Asian stocks gained after volatile trade. Japanese manufacturing activity expanded at the fastest pace in more than three years in November, a preliminary survey showed. The Markit/Nikkei Japan Manufacturing flash Purchasing Managers Index (PMI) rose to 53.8 in November on a seasonally adjusted basis from a final reading of 52.8 in October.

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A2Z Infrastructure Ltd recommended yesterday reached its 2nd  target of Rs.42, as it made an intraday high of Rs.43.70. Those who are still holding some quantity of the shares, are requested to hold the same, with a SL at Rs.41.

Suzlon Energy Ltd recommended around Rs.13.50-14, today gave a break out on daily charts and is heading towards Rs.17-17.50 mark in the coming days. The company's fundamentals have improved a bit and a spike of crude oil prices is likely to give a forward kick to the shares of Energy Companies. Accumulate the scrip on intraday declines.

Jai Balaji Industries Ltd (Rs.13.80) today closed with slight gain in the NSE as the Steel Minister Chaudhary Birender Singh, assured of all possible support to secondary steel sector, which uses eco-friendly electric furnace to produce the commodity. Regarding, shortage of scrap which is required for making steel through electric furnace route and Duty on import of the commodity, Mr.Singh said that his ministry will take steps to address all issues of the sector which has the potential to create employment for 3 crore people.
Being an Integrated Steel Plant Jai Balaji Industries Ltd has both Blast Furnace and Electric Arc Furnace facilities. Moreover, as an integrated steel manufacturer its operations are sufficiently flexible to enable it to alter its product mix and position in order to minimize adverse effects in its business; in the highly cyclical steel industry. Besides, the government is also pushing investment through sectors like housing and railways, which will help boost demand for steel. 
This week, the NDA government through an amendment to the Insolvency and Bankruptcy Code, essentially barred a majority of the defaulting promoters from buying back their assets. However, if promoters can regularise the account by paying the overdue amount before the resolution process begins, they may be able participate in the bidding process. The steel assets are being bid out at a time when the steel price cycle has turned. While economic growth isn’t at its peak, it is expected to pick up from here.If at this stage in the cycle, a steel asset comes up for bidding, investors will probably not look away. Indeed that appears to be the case. As BloombergQuint has reported, both international and domestic steel firms have expressed interest in the steel assets that are being resolved through insolvency. 
Meanwhile, belying the earlier apprehension, the alloy and SS industry has started looking up. A part of it may be due to a mid-year revision of the availability figures in the official statistics that has made the finished steel availability in this segment to grow by 15.5% in October 2017 itself and by 14.5% during the first 7 months of the current fiscal. As a result, the apparent steel consumption in the country is maintaining its average growth rate of 4.5% in April-October period. Whatever may be the explanation, it looks pretty odd that during the last month, while consumption of non-alloy steel grew by 3.7% only, the alloy and SS consumption went up by a hefty 22.1%.
Raw materials consumed by the Jai Balaji Group includes: coking coal, non-coking coal, iron ore, scrap metal, manganese ore, high manganese slag, quartzite and dolomite among others. Steel Secretary Aruna Sharma recently informed the members of the industry that the duty on nickel has already been removed and the ministry has requested the Revenue Department to remove the duty on ferro-nickel and stainless steel scrap.

The shares of Reliance Communications Ltd today tanked to Rs.13.55, after a sell on rise call was suggested in this blog yesterday. 

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