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Global Stock Markets remain buoyant
Wed, 23 Mar RoundUp

Most of the equity markets around the world have recouped losses arising from the fallout of the terror attacks in Belgium and are trading positive in the week so far. In the Indian markets, the trading week has been truncated on 23rd March on account of holidays due to the upcoming Holi and Good Friday festivals. The Japanese market has been the biggest gainer on the back of the weak yen that lent support to exports. India and China were the other Asian indices that have logged positive gains till now.

Barring France, all the European indices have recovered from the pessimism that had pulled down markets earlier. Even the US market recorded a marginal fall in return.

Indian stock markets have firmed up during the week after the cut in interest rates on small savings schemes have fueled expectation of a reduction in lending rates by banks. This has also rekindled hopes that RBI would be slashing rates in its policy review on 5th April 2016. BSE Sensex ended the week up by 1.5%.

Key World Markets During the Week

All sectoral indices ended in the green for the week. Buying interest was witnessed in realty, auto and metal stocks.

BSE Indices During the Week

Now let us discuss some key economic and industry developments during the week gone by.

India's current account deficit (CAD) as a share of the gross domestic product (GDP) reduced to 1.3% in the December 2015 quarter as compared to 1.5% in the corresponding year-ago period. For the nine-month period April-December 2015, the CAD narrowed down to 1.4% of the GDP as compared to 1.7% in the corresponding year-ago period. This contraction comes on the back of fall in the country's trade deficit in line with low global commodity prices.

In a bid to enable banks in the better transmission of interest rates, the government slashed the interest rates on small savings schemes by 60-130 basis points. Public Provident Fund will now fetch a return of 8.1% as against the present rate of 8.7%. The interest rate on Kisan Vikas Patra has been reduced from 8.7% to 7.8% whereas that on National Saving Certificate has been reduced from 8.5% to 8.1%. The interest rate on the Sukanya Samriddhi Account and the Senior Citizens Savings Scheme has been cut to 8.6% from 9.2% and 9.3%, respectively. The new rates will come into effect from June 2016 quarter onwards. The small savings interest rates will be recalibrated every quarter.

The finance and steel ministries are working towards preparing a financial package to revive the steel sector. The options being explored are equity infusion into these companies by external or international investors. Last month, the government had announced a minimum import price on 173 steel products for six months in order to shield the industry from large scale dumping of cheap Chinese goods.

Movers and Shakers During the Week
Company15-Mar-1623-Mar-16Change52-wk High/Low
Top Gainers During the Week (BSE A Group)
Nevyeli Lignite657515.3%94/60
Bharat Electronics1,0601,19913.1%1,417/975
GSK Pharma3,2663,69013.0%3,825/2,966
MMTC Ltd353912.0%58/30
MRPL576412.0%83/48
Top Losers During the Week (BSE A Group)
Lupin Ltd1,7271,525-11.7%2,127/1,502
Torrent Power Ltd235218-7.3%253 / 137
Opto Circuits1110-5.8%23 / 8
Cadila Healthcare339320-5.4%454 / 296
Eicher Motor19,55218,506-5.4%21,618 / 13,930

Source: Equitymaster

Now let us move on to some of the key corporate developments in the week gone by.

Mahindra & Mahindra (M&M) has set a target to achieve a fivefold jump in annual turnover from the powertrain segment to US$1 billion over the next six years. For this the company would focus on high-capacity gensets and full-fledged engines. The company will be developing gensets with a capacity to generate 125 KV to 1 MW in the coming years. Moreover, the company has also secured the rights, from former commercial vehicle partner Navistar, for the manufacture of 9.3-litre diesel engine. This engine is likely to be used in high-powered gensets and big mining trucks.

It should be noted that M&M created the powertrain business by recently merging its Powerol genset and engine businesses. The company is planning to make gensets targeted at the telecom, retail, marine and industrial customers and engines for heavy construction machinery. It doesn't have any products for some of these sectors at present.

Bharti Airtel has signed an agreement with American Tower Corporation to sell around 1,350 towers in Tanzania. The deal is pegged at around US$ 179 million. Reportedly, this is the ninth African country where Bharti has executed such a deal after it purchased Kuwait-based Zain's Africa assets across 17 countries.

On completion of this deal that is expected to be completed in the first half of 2016, the company would have raised more than US$ 2 billion from tower sales in Africa. The deal will improve the company's ability to focus on its core business and reduce its debt.

Dabur India has been aggressively promoting its ayurvedic cough syrup, Dabur Honitus. Recently, the company published an article stating the virtues and positives of using its cough syrup. This product is being positioned as an alternative to other cough syrups, many of which have been banned by the government recently. The ban is an outcome of a clampdown on fixed dose combination drugs. By publishing the article, Dabur wants to capitalize on the ban and increase its market share.

National Aluminium Company (Nalco) is planning to invest in excess of Rs 370 billion over the next 5-7 years to expand existing facilities, set up of new smelter unit overseas, develop mines and diversify into the power segment.

Reportedly, the company is undertaking capex to tackle depressed realisations by trimming operational expenses. The company is in advanced stages of discussions to explore the possibility of setting up smelter of 0.5 million tonne a year (mtpa) capacity in Iran. The proposed smelter will come up at an estimated cost of Rs 120-130 billion. It should be noted that Nalco has the largest integrated alumina-aluminium complex of Asia. Its integrated operations cover the entire aluminium production value chain from mining bauxite, refining alumina, smelting aluminium, captive power generation to a strong logistic network in terms of rail & port facilities.

Bharat Heavy Electricals (BHEL) has commissioned the second 270 MW coal-based thermal generating unit at the same site in the state of Punjab within one month of the successful commissioning of the first unit. The unit has been commissioned at the 2x270 MW Goindwal Sahib coal-fired Thermal Power Project of GVK Power & Infra (GVKPIL), located in Goindwal Sahib in Tarn Taran district.

BHEL has so far contracted 35 sets of 270 MW rating, out of which 13 sets have been commissioned so far. Notably, all the operational sets of 210-270 MW class in the state of Punjab have been supplied, erected and commissioned by BHEL. In addition to thermal projects, BHEL also has a lion's share of 95% in the hydro generating capacity of Punjab State Power Corporation (PSPCL). Presently, BHEL is executing Electro-Mechanical works for hydro-electric power plants at Shahpur Kandi in Gurdaspur (206 MW) and Mukerian (18 MW) in the state of Punjab.

Markets will remain volatile tracking global and domestic macro factors. However, instead of getting bogged down by these short-term gyrations, investors should focus on underlying fundamentals in their stock selection process.

And here's an update from our friends at Daily Profit Hunter...

The index finally broke out above 7,600 levels on Monday after two-week long consolidation. This breakout has given bulls an advantage over the bears as 7,600 will now act as a cushion for them in the next few days. However, the ride won't be as smooth as it has been so far. The bulls will have to face supply pressure near higher levels of 7,800. You can read the detailed market update here...

NSE Nifty Ends Above 7,700

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Read the latest Market Commentary

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