Tuesday, March 20, 2018

WINNING STROKES
Photo: Financial Express
The stock market declined on a broad-based selling pressure. The barometer index, the S&P BSE Sensex, fell 252.88 points or 0.76% to settle at 32,923.12. The Nifty 50 index dropped 100.90 points or 0.99% to settle at 10,094.25. The Sensex settled below the psychological 33,000 level after slipping below that level in intraday trade. The Sensex fell for the fifth straight session while the Nifty declined for the fourth straight trading session. Both the Sensex, and the Nifty, hit lowest closing level in more than 12 weeks.

Metal and bank shares witnessed selling pressure. Drug major Lupin advanced after the company received approval from the US drug regulator for a generic drug indicated for the treatment of plaque psoriasis in patients 18 years of age or older.

Weak global cues ahead of the US Federal Reserve's policy decision later in the week influenced trading sentiment on the domestic bourses. A sharp widening of India's current account deficit (CAD) too weighed on investors' mood.

The S&P BSE Mid-Cap index tumbled 1.58%. The S&P BSE Small-Cap index tanked 1.98%. Both these indices underperformed the Sensex.

The broad market depicted weakness. There were nearly four losers against every gainer on BSE. 2,190 shares declined and 555 shares advanced. A total of 166 shares were unchanged.

The total turnover on BSE amounted to Rs 3230.08 crore, compared with the turnover of Rs 3683.79 crore registered during the previous trading session.

Among the sectoral indices on BSE, the BSE IT index (down 1.98%), the BSE Telecom index (down 3.4%), the BSE Bankex index (down 1.09%), the BSE Metal index (down 2.65%), the BSE Oil & Gas index (down 1.7%) and the BSE Realty index (down 3.01%) underperformed the Sensex. The BSE Auto index (down 0.74%), the BSE Capital Goods index (down 0.1%) and the BSE Power index (down 0.59%) outperformed the Sensex.

Bank stocks tumbled. Among public sector banks, IDBI Bank (down 7.35%), Bank of Baroda (down 7.2%), Punjab National Bank (down 2.53%) and State Bank of India (down 1.78%) declined.

Among private sector banks, Kotak Mahindra Bank (down 1.07%), ICICI Bank (down 1.04%), IndusInd Bank (down 0.61%) and HDFC Bank (down 0.4%) edged lower.

Yes Bank dropped 2.57%. The bank said that its Capital Raising Committee (CRC) would consider a potential issuance of second tranche of Notes under the Medium Term Note Programme of the bank, within the limits permitted by regulatory authorities, on or after 21 March 2018. The announcement was made after market hours on Friday, 16 March 2018. It may be recalled that Yes Bank had informed in November 2017 that the CRC of the board of directors of the bank had approved the setting up of the Medium Term Note Programme of the bank aggregating to an amount of $1 billion, out of which $600 million has already been drawn in the first tranche.

Axis Bank fell 0.61%. The bank said it has decided to introduce a new tier of 6% per annum interest for savings bank customers maintaining balance of Rs.10 crore and above. Customers will continue to get 3.50% per annum for savings deposit balances of less than Rs.50 lakh and 4% for savings deposit balances between Rs.50 lakh and less than Rs.10 crore. The above rates will be effective 19 March 2018. The announcement was made during trading hours today, 19 March 2018.

In a separate announcement after market hours on Friday, 16 March 2018, Axis Bank said it has reviewed and retained the marginal cost of funds based lending rates (MCLRs) across all tenors effective from 17 March 2018. The bank's MCLRs vary between 7.85% and 8.5% ranging from overnight to three-year tenors.

Metal shares declined. NMDC (down 6.47%), Hindustan Copper (down 5.8%), Steel Authority of India (down 5.43%), Tata Steel (down 4.24%), Hindalco Industries (down 3.54%), JSW Steel (down 2.29%), Hindustan Zinc (down 2.17%), Jindal Steel & Power (down 2.36%) and Vedanta (down 0.76%) edged lower. National Aluminium Company was up 1.82%.

Drug major Lupin rose 0.37% after the company announced that it has received final approval for its Desoximetasone Topical Spray, 0.25%, 30 ml, 50 ml, and 100 ml from the United States Food and Drug Administration (USFDA). Lupin's Desoximetasone Topical Spray, 0.25%, 30 ml, 50 ml, and 100 ml is the generic equivalent of Taro Pharmaceuticals U.S.A Inc.'s Topicort Topical Spray, 0.25%. It is a corticosteroid indicated for the treatment of plaque psoriasis in patients 18 years of age or older. Desoximetasone Topical Spray, 0.25%, 30 ml, 50 ml, and 100 ml had annual sales of approximately $19.5 million in the US (IQVIA MAT January 2018). The announcement was made during trading hours today, 19 March 2018.

Tata Power Company fell 0.81%. The company said it selected Tata Communications to launch its IoT based, Automated Meter Infrastructure(AMI) in partnership with L&T Meters in Mumbai. Tata power worked on a state-of-the-art IoT AMI solution to provide power measurement parameters such as instantaneous, load profile, tamper and billing information on periodic manner. The data will be then ingested into Tata power's Meter Data Management (MDM) system which will enable fast turnaround time of data provision to MDM thereby bringing in operational effectiveness and better reconciliation between distribution points and end customers. The announcement was made during trading hours today, 19 March 2018.

Grasim Industries was up 0.32%. The company said that the production capacity of Epoxy Resin, Reactive Diluents and Hardeners at company's Epoxy Plant at Vilayat ( Gujarat) has increased from 82,350 million tons per annum (MTPA) to 1,23,097 MT per annum through de-bottlenecking process. The announcement was made after market hours on Friday, 16 March 2018.

UltraTech Cement was off 1.63%. Binani Industries (BIL) which is independently seeking termination of the insolvency proceedings relating to its subsidiary Binani Cement (BCL) which was admitted by the National Company Law Tribunal (NCLT), Kolkata Bench based on reference filed by Bank of Baroda in terms of the provisions of the Insolvency and Bankruptcy Code, has approached the company for arranging funds to pay-off the lenders debts and other liabilities as admitted in the IBC proceedings against an offer of sale/transfer of its entire BCL equity shareholding through a shares sale and purchase agreement.

UltraTech Cement has in-principle concluded commercial understanding with BIL for purchase of 98.47% of the shareholding of BCL subject to termination of IBC proceedings, entering into definitive agreement and other customary and regulatory approvals. BIL has requested the company to issue a comfort letter which shall be used as a support in its application seeking termination of the IBC proceeding.

The Board of Directors of UltraTech Cement at its meeting held today, 19 March 2018, after considering the request made by BIL has agreed to issue the comfort letter confirming that the company will provide funds amounting to Rs 7266 crore, being the amount it had offered to the Committee of Creditors in terms of the Resolution Plan submitted by it for acquiring BCL. The announcement was made during market hours today, 19 March 2018.

On the macro front, India's current account deficit (CAD) was reported at $13.5 billion (2% of GDP) in Q3 of FY 2018, up from $8 billion (1.4% of GDP) in Q3 of FY 2017 and $7.2 billion (1.1% of GDP) in the preceding quarter. The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit ($44.1 billion) brought about by a larger increase in merchandise imports relative to exports.

On the political front, the Telugu Desam Party (TDP) and Yuvajana Shramika Rythu Congress Party (YSR Congress) moved no-confidence motions against the NDA government in the Lok Sabha today. However, no-confidence motion was not introduced, and Lok Sabha was adjourned till tomorrow after continuous uproar.

The Lok Sabha was held up for the 11th day as the TDP, YSR Congress, TRS and AIADMK continued their protests over various issues, including the banking scam and special status for Andhra Pradesh. The lawmakers from these parties trooped into the well holding placards. TDP, the BJP's erstwhile biggest ally in south which walked out of the NDA last week, and its arch-rival YSR Congress have demanded a no trust vote against the government.

The Rajya Sabha was adjourned for the day without transacting any business after parties from Tamil Nadu and Andhra Pradesh disrupted proceedings over their state specific demands. The government has only managed to get some key bills and the budget passed amid a din through a voice vote without a debate as the session has been a virtual washout so far.

The US Federal Reserve's two-day monetary policy meeting is scheduled on March 20-21. Strengthening labor market and a steady increase in price pressures could pave the way for the Federal Reserve to raise interest rates in upcoming meeting. The US central bank has forecast three rate increases for this year, but there are also expectations that it will raise its projection to four hikes at the meeting.

#Lanco Infratech Ltd recommended a couple of days back, hit another buyer freeze at Rs.1.25 in the NSE. The stock is expected to reach the targets mentioned earlier and hence accumulate on all dips. I will recommend a similar momentum counter by next week. Those who want to invest in that scrip should get enrolled in my Premium Service, by the end of this week. 

#In view of weak global and domestic cues, the Indian bourses are likely to fall further. The spot Nifty is probably heading towards 10030 and 9700 levels. Hence, avoid talking longs, unless there is a compelling story. 

#My recently recommended P C Jewelers Ltd, yesterday made an intraday high of Rs.381.8 before closing at Rs.365.3. The investors are suggested to keep a tight stop loss at Rs.362  and keep holding. 

#The stock of T V Vision Ltd yesterday fell from the intraday high of Rs.17.2 and closed at Rs.15.75. One good quarter for the company would take the scrip above Rs.50 and hence remain invested. 

#The scrip of 63 Moons Technologies Ltd yesterday made an intraday high of Rs.113.75 before closing at Rs.104.10. Unless the stop loss given earlier is broken the investors can hold the scrip. 

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