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A Strong Week for Global Stock Markets
Thu, 14 Apr RoundUp

All the major global stock markets ended the week* on a firm note with stock markets in Japan and Brazil leading the gains. Major Asian currencies across the board dropped sharply against the US dollar. Japan closed firm on a weaker Yen as this would lead to higher exports for the country.

Another positive development was seen in the Dragon nation. China has reported sharp jump in its exports. For the month of March, the exports have grown by 11.5% YoY. This is the first increase since June 2015. This is believed to be well above the market forecasts.

On the other hand, oil prices have continued to remain under pressure. Major oil supplying countries will be meeting in Doha this weekend, to discuss curbing oil output to support prices.

Following the global rally, the Indian indices too surged by around 3.9% in a week's time. Strong monsoon forecast too boosted the market sentiments.

Key World Markets During the Week

*Please note, the returns are from 8th April 2016 to 14th April 2016.
**Trading prices as on 14th April 2016
***Closing prices as on 13th April 2016

All sectoral indices ended on a positive note. Maximum buying interest was witnessed in Auto, and banking stocks.

BSE Indices During the Week

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

As reported in a financial daily, the weather forecast department of India, Indian Meteorological Department (IMD) predicted above normal rains in the upcoming monsoon season. This could help revive rural demand which has remained subdued since long.

Further, the agency stated that the monsoon rainfall will be 106% of the long period average and there is a 94% probability that monsoon will be normal to excess. Reportedly, the monsoon is considered normal when the rainfall is 96 to 104% of the Long Period Average (LPA) and is considered above normal when it is 105% to 110% of LPA.

A normal monsoon will lead to higher disposable income in the hands of farmers, which in-turn will boost the rural consumption. To add to this, a normal monsoon will also help to keep the inflation at low levels. The possibility of a good monsoon would also increase the chances of the country's central bank retaining its easy money policy. However, there have been many instances in the past wherein the forecasts have gone wrong. Provided, they are accurate it will help to revive rural sentiments.

The news comes as a relief considering that the country has faced a deficit rainfall in the preceding two years. Eleven states declared a drought in the country after last year's failed rains which have also led to depleting water levels in reservoirs. And Vivek Kaul, editor of Vivek Kaul's Diary has written an interesting article on water scarcity and reasons for the same.

Movers and Shakers During the Week
Company6-Apr-1613-Apr-16Change52-wk High/Low
Top Gainers During the Week (BSE A Group)
Mahindra Finance23327216.6%294/173
Coromandel International19322013.7%265/146
Gitanjali Gems333711.8%49/30
Tata Chemicals36440210.4%526/310
Top Losers During the Week (BSE A Group)
Jaypee Infratech88-4.9%19/7
Ipca Labs545494-9.3%888/480
Jaiprakash Associates880.0%27/6
Torrent Power Ltd2272270.0%253/137
United Breweries7947940.0%1225/756

Source: Equitymaster

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

Tata Steel has entered into agreement to sell one of its main steelwork to investment firm Greybull Capital Llp. This is expected to reduce the company's large debt just marginally. Reportedly, the deal did not include a transfer of debt associated with the division which is estimated to be in the range of Rs 120-150 billion. As of September 2015, Tata Steel had a consolidated debt of Rs 717 billion-most of it associated with the global operations. However, the company will not be under immediate repayment pressure as a majority of the debt has been restructured. Restructuring has led to a stretch in the repayment period. As reported in Livemint, the refinancing ensures that there is no repayment of principal due from Tata Steel UK Holdings Ltd until 2019.

Coal India has announced reducing prices of top grades of coal by up to 40% on account of more than adequate coal production as well as about 58 million tonnes of stock pile. The company's decision to cut prices of high energy content coal for the first time in three years comes on the back of a rapid fall in international coal and commodity prices. At present, the company has a total stock of 58 mt while another 39 mt of coal is piled up at power plants. Prices have been slashed for high energy coal produced mainly from Eastern Coalfields, South Eastern Coalfields and North Eastern Coalfields for volumes supplied over 90%. Reportedly, if the move prompts the consumers to lift more coal, then the company may even consider introducing discounts for cheaper category of coal used by power companies.

Blue Star is planning to set up two units at an investment of Rs 2 billion in Jammu and Andhra Pradesh. With the help of these two units, the company is looking to manufacture air conditioners, deep freezers and water coolers.

The development comes in line with the company's plan to increase its capacity levels and expand its presence in related new product categories. Earlier, the company had announced that it is setting up green-field plants for AC (air conditioners) and commercial freezers in Jammu and Sri City in Andhra Pradesh. The new facilities will add about 10 lakh units of capacity by 2020 to the company's existing 3.5 lakh units capacity per annum. The company had sold 3.1 lakh room ACs last fiscal. The company is targeting 12% growth in room AC sales in the current fiscal. Blue Star's cooling products segment continues to perform well owing to the company's growing range of products, enhanced distribution and strong brand. The company is further planning to broaden its product line in related areas such as air coolers and air purifiers.

Larsen & Toubro's (L&T) wholly owned subsidiary - L&T Hydrocarbon Engineering (LTHE), has won two orders from Petroleum Development Oman LLC (PDO). The orders are valued approximately at US$370 million. The new order wins include Engineering, Procurement & Construction (EPC) of Saih Nihaydah Depletion Compression Phase 2 (SNDC2) and Kauther Depletion Compression Phase 2 (KDC2) Project. These projects are being implemented to overcome pressure depletion and maintain potential in order to sustain production. It shall be noted that LTHE has already executed three projects for PDO viz., the Lekhwair Gas Field Development Project (US$150 million); the Saih Rawl Depletion Compression Project (US$235 million), and the Yibal 3rd Stage Depletion Compression (US$240 million). Larsen & Toubro is a major technology, engineering, construction, manufacturing and financial services conglomerate, with global operations. The company addresses critical needs in key sectors - Hydrocarbon, Infrastructure, Power, Process Industries and Defense - for customers in over 30 countries around the world.

Going forward, India Inc's earnings for the quarter ending March 2016 will be the key factors influencing investors' sentiments, unless there are some major triggers from the global markets. However, investors would be best served if they focus on the long term and invest only in fundamentally strong companies trading at attractive valuations.

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

The bulls snapped back into the ring and have pushed the bears in a corner after almost a 300-point rally in the Nifty in just 3 days. The index finally closed above the 7,800 levels with good volumes and are looking very strong at this point of time. It seems that the trading range will shift upwards to 7,700 to 8,000 in the coming week. You can read the detailed market update here...

Indian Markets Surge

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