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Mixed week for global markets
Thu, 2 Apr RoundUp

In the week gone by, stock markets around the world witnessed a lot of volatility. Investors were nervous about the unstable geo-political situation in the Middle East. Volatility in crude oil prices also kept markets on tenterhooks. However, the US Fed has eased market nerves to an extent by not stating a clear time line for raising interest rates. Thus loose monetary policies can be expected to continue.

European markets also delivered a mixed performance in the week gone by. The possibility of tense negotiations between Greece and Germany did not impact the markets sentiment this week. The European Central Bank's bond buying program continued to help European stocks remain buoyant.

Back home, the Indian markets ended higher due to renewed FII interest. Investors continue to keenly watch for moves on the reforms front.

Key world markets during the week
Source: Yahoo Finance

Apart from IT stocks, all sectoral indices witnessed buying interest this week. Realty and pharma stocks registered the maximum gains.

BSE indices during the week
Source: BSE

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

According to the data reported by the Government of India, the core sector growth fell to 1.4% for the month of January. The growth has fallen to 16-month low levels. The month of December witnessed a reading of 1.8% and on a YoY basis the growth was 1.6%. Output in natural gas and steel sectors contracted most, which impacted the overall growth of the core sector. Factors that negatively affected the growth are steel, natural gas production, crude oil, refinery products, and fertilizers which fell 4.4%, 8.1%, 1.9%, 1% and 0.4% respectively. Coal, cement and electricity grew by 11.6%, 2.7% and 5.2%, respectively. These eight core industries form 38% of the constituents of industrial production.

As per a leading financial daily, the government will announce the much-awaited spectrum sharing and trading guidelines in three months. This is an important reform that will allow telecom firms to share unutilized spectrum with other service providers in the same circle. It will lead to more efficient use of spectrum thereby lowering costs as well as leading to better quality of service. The regulator TRAI had made this suggestion last year.

Movers and shakers during the week
Company25-Mar-151-Apr-15Change52-wk High/Low
Top gainers during the week (BSE-A Group)
Lanco Infratech56 22.7%15/4
Century Textiles567677 19.3%682/329
Future Retail91102 12.8%152/81
Ashok Leyland6774 10.1%76/22
GMR Infra1517 9.8%38/15
Top losers during the week (BSE-A Group)
HCL Tech1,005940 -6.5%1058/629
Bhushan Steel6964 -6.3%470/60
Bata India1,1511,095 -4.8%1495/998
Wipro660631 -4.4%677/475
Cairn India222213 -4.0%385/209
Source: Equitymaster

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

Engineering bellwether Larsen & Toubro (L&T) has won a couple of orders this week. The company bagged an order that is valued to be Rs 14.32 bn. The order has been awarded by the Defense Ministry. The order involves constructing and designing seven Offshore Patrol Vehicles (OPVs) for the Indian Coat Guards (ICG). The first OPV is expected to be delivered by the company within 36 months of signing the contract. The order has been awarded by the Defense Ministry keeping in focus the "Make in India" campaign started by the Government of India. Apart from this, L&T is already working on a project, awarded by the Defense Ministry" that involves designing and constructing 54 fast interceptor boats of which 25 has already been delivered.

Tata Steel has divested its 100% Sri Lankan based subsidiary named Lanka Special Steels Limited for a consideration of Rs 200 m. The company had an annual turnover of Rs 740 m. The facility had an installed capacity of 14,400 mtpa. The business of the company included supplying and manufacturing hot dip galvanized wire and nails.

Dr Reddys Lab has revealed that it would be acquiring a selected portfolio of UCB that includes India, Sri Lanka, Maldives and Nepal. The acquisition is valued to be Rs 8 billion. The selected portfolio of UCB will be sold on a "slump sale basis". It also has about 350 employees working in the company. This acquisition will help Dr. Reddy's leverage its footprint on a global basis and will also help it expand its portfolio of products in the therapeutic areas of dermatology, respiratory and pediatrics among others.

India's leading auto manufacturer Maruti Suzuki, posted disappointing sales figures. Export figures of the company dampened investors' sentiment towards the company. The sales of the company fell 1.6% YoY while the sales dropped over 5% MoM. The drop in the sales is attributable to fall in exports. The company sold 1.11 lakh units of cars in the month of March 2015 compared to 1.13 lakh units in March 2014 and 1.18 lakh units in the previous month. Exports dropped nearly 30%, however, domestic sales grew 1.4%. Sales of passenger cars and compact cars dropped 0.3% and 12.5%, respectively while utility vehicles witnessed a drop of 4.3%. Vans, however, saw a growth of 20.7% YoY.

Going ahead, the Indian markets will continue to look for cues from global events like the possibility of Greece exiting the Euro and the volatile situation in the Middle East. However, investors would be best served if they focus on the long term and invest only in fundamentally strong companies trading at attractive valuations.

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Jan 22, 2018 (Close)