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Nifty Hits New High; Sun Pharma Surges 4%
Tue, 14 Mar Closing

Share markets in India finished strong as investors cheered an unprecedented victory by the Bharatiya Janata Party (BJP) in the Uttar Pradesh assembly elections. At the closing bell, the BSE Sensex stood higher by 496 points, while the NSE Nifty finished up by 152 points.

Currently, the NIFTY-50 is trading at a price to earnings ratio of 23.2 times. The valuations look very expensive. However, one of the reasons of the steep valuation is the depressed earnings of the NIFTY-50 companies.

Return Ratios Sliding Downwards

Return Ratios Sliding Downwards

Our in-house gurus Rahul Shah and Tanushree Banerjee always look out for big picture ideas.

Here's Rahul:

  • The aggregate data we have pulled for Nifty companies suggests that profit margins were at a ten-year low at the end of FY15. Even if they were to rise to the average of the last ten years, not immediately, but three years out, the upside would be close to 70%.

    Put differently, markets will go up significantly over the next three years if profit margins revert to the mean.

Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished up by 1.4% and 1.2% respectively. Gains were largely seen in realty stocks, bank stocks & capital goods' stocks.

Sun Pharma share price surged 3.6% today's trade after USFDA lifted the import alert imposed on the company's Mohali manufacturing facility and removed the facility from the Official Action Initiated (OAI) status. This development illustrates Sun Pharma's commitment to work closely with the US FDA and strive for 100% cGMP compliance at its manufacturing facilities.

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Asian stock markets finished mixed ahead of the Federal Reserve's two-day monetary policy meeting and as European political uncertainty weighs on sentiment. The Shanghai Composite gained 0.07%, while Japan's Nikkei 225 was off 0.12%. The Hang Seng finished flat. European markets too are mixed. The FTSE 100 is higher by 0.12%, while the CAC 40 is leading the DAX lower. They are down 0.30% and 0.12% respectively.

The rupee was trading at Rs 66.18 against the US$ in the afternoon session. Oil prices were trading at US$ 48.55 at the time of writing.

NTPC share price finished the trading day on an encouraging note (up 1.6%) after it was reported that the company has started power generation from India's largest floating solar power plant at Kayamkulam in Kerala.

The 100 kWp floating solar generation plant, largest of its kind in India, was indigenously developed as a part of 'Make In India' initiative, at Rajiv Gandhi Combined Cycle Power Plant in Kerala's Kayamkulam district.

Floating solar generation systems are fast emerging as an alternative to conventional ground mounted photo-voltaic systems which are land intensive. As per the reports, installation potential of such type of systems in India is huge because of abundance of water bodies, within NTPC, the potential is approximately 800 MW in various reservoirs of existing stations.

In another development, The German Development Bank today signed a loan agreement of over Euro 200 million with India's Energy Efficiency Services Limited. With this, the total German commitment for better energy efficiency in India stands at Euro 600 million. The Indo-German development cooperation addresses mutual interests of mitigating global warming

Additionally, a financing agreement of EUR 500,000 was signed with Indian Renewable Energy Development Agency (IREDA). IREDA will use these funds to assure the quality of solar PV projects and to mitigate the challenges faced in solar rooftop PV projects by establishing an implementation structure.

Moving on to news from stocks in automobile sector. According to a leading financial daily, Tata Motors' subsidiary, Jaguar Land Rover (JLR), has started construction work on a £200 million redevelopment of its design and engineering centre at Gaydon in Warwickshire.

The expansion represents the first major construction project at one of the company's non-manufacturing sites in over a decade. The development is intended to become one of the world's foremost automotive product, engineering and design sites - fitting for a company with ambitious plans for continued global growth.

In recent years Jaguar Land Rover has invested heavily in its UK vehicle manufacturing facilities at Castle Bromwich, Halewood and Solihull to support the introduction of all-new vehicles. It has also made significant progress in building its international manufacturing presence over the last year, with a new manufacturing facility under construction in Slovakia and the opening of its plant in Brazil.

Tata Motors share price finished up by 0.2% on the BSE.

Meanwhile, M&M share price finished the trading day up by 2% after the company divested 7.5% stake in the group hospitality arm Mahindra Holidays & Resorts India (MHRIL) for around Rs 2.74 billion. Pursuant to approval of the board of directors, the company sold 6,658,565 shares representing 7.5% of the share capital of MHRIL.

The sentiments also remained upbeat as the company's South Korean subsidiary, SsangYong Motor's February sales grew by 2.3% over February 2016 driven by the continued popularity of the Tivoli brand models.

SsangYong Motors sold a total of 10,816 units in February 2017 - 8,106 units in domestic sales and 2,710 in exports. In terms of February's domestic sales, it is the highest volume in February in 13 years since February 2004 when the company sold 8,660 cars at home.

Its domestic sales rose for the second month in a row, with an increase of 16.1% to 8,106 units over February 2016, attributed to a sales uptrend based on the Tivoli's strong sales growth of 42.3% year-on-year. However, its exports declined by 24.6% over the same month last year due to the economic recession all over the world including the emerging markets.

Automobile stocks finished the day on a strong note with TVS Motors and Eicher Motors leading the gains.

And here's a note from Profit Hunter:

After facing resistance from 8,950-9,000 for three weeks, the Nifty 50 Index has finally overcome this major hurdle.

The index opened 157 points gap up as investors cheered the ruling BJP's clean sweep in the Uttar Pradesh assembly elections, along with victories in three other states.

After a strong opening, the index printed a lifetime high of 9,122.75, topping the previous high of 9,119.20. The index traded strongly throughout the day without any major correction. It seems bulls are likely to continue to dominate the Indian markets.

But if we see index go back below the 8,950-9,000 levels, the bears might take the charge.

For now, the bulls are in control, and this will create major trends in the Indian markets. To take advantage of these big trends, Apurva Sheth, research analyst, has launched a new trading service, Peak Profit Alert. This service is built on a proprietary trading system called SCOREFASTTM, which Apurva intends to use to generate double and triple-digit returns in just a few weeks or months.

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Nifty 50 Closed at Life High
Nifty 50 Closed at Life High  

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Mar 20, 2018 (Close)