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Greek concerns pull down global markets
Sat, 18 Apr RoundUp

Rising concerns over Greece debt negotiations resulted in a selloff in global stock markets in the week gone by. The Eurozone finance ministers are due to meet on 24th April in order to discuss economic and political reforms to be made by Greece in return for aid. However, there was some skepticism over whether the meeting will yield results. The German index bore the biggest brunt and was down by 5.5% whereas the French index declined by 1.9%. In UK, the jobless rate hit the lowest level since July 2008 and its stock index was down by 1.3%. The US markets were down by 1.3% for the week. Crude oil prices rallied to 2015 peak, at above $60 a barrel, on account of conflict in Yemen and the prospect of cutback in US shale output.

Asian indices witnessed a mixed performance during the week. The Chinese index spurted to its highest level since March 2008 on expectations of further stimulus measures from the People's Bank of China. China's gross domestic product for the first three months of 2015 fell to a multi-year low. Even Singapore and Hong Kong indices were up by around 1.5% each. However markets in Japan and India ended in red.

Key world markets during the week
Source: Yahoo Finance

The Indian markets were down by 1.5% during the week on growing concerns over fourth quarter earnings. Largest IT services exporter, TCS reported a lower than expected March 2015 quarterly performance. Realty, pharma and IT were the biggest losers for the week. Only oil & gas, metal and FMCG managed to post gains during the week.

BSE indices during the week
Source: BSE

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

The Government of India reduced petrol and diesel prices for the second time in the month of April on the back of the softened price of crude. Petrol prices were slashed by Rs 0.80 per litre while diesel prices were reduced by Rs 1.30. Earlier, the petrol prices were slashed by Rs 0.49 per litre while diesel prices were slashed by Rs 1.21 per litre.Another positive development has been the cooling in inflation rates. The CPI index fell down to 5.17% in March 2015 compared to February's figure of 5.37%. Falling crude oil prices and better weather has ensured the prices of food articles to remain under the target of 6% inflation.Large banks such as State Bank of India, ICICI Bank, HDFC Bank and Axis Bank cut lending rates by 20-25 basis points after RBI's tough talk with bankers on the issue. RBI has in its first bi-monthly monetary policy in the first week of April had maintained status quo in key rates and reprimanded banks for not passing on the two repo rate cuts made earlier.The government recently concluded the auction for 20-year spectrum license across four bands and 22 circles. Large telecom companies such as Bharti Airtel, Vodafone and Idea Cellular succeeded in holding on to their spectrum license in the 900 MHz band and also expanded their 3G network. Reliance Jio won six new circles in the 1800/800 MHz bands paving way for its 4G foray. Small players like Tata Teleservices and Aircel managed to win some spectrum in these bands.

Movers and shakers during the week
Company6-Apr-1517-Apr-15Change52-wk High/Low
Top gainers during the week (BSE-A Group)
Bayer Cropscience3,3263,88616.8%4234/1385
Oil India Ltd46851911.0%669/450
IDBI Bank76827.6%117/59
Tata Communication4514755.2%505/269
Top losers during the week (BSE-A Group)
Bharat Electronics3,6243,220-11.2%4140/1180
Bharat Forge1,3321,197-10.2%1363/401
Lupin Ltd1,9651,769-10.0%2112/904
Shriram Transport Finance1,1361,024-9.8%1286/697
Berger Paints229208-9.0%253/116
Source: Equitymaster

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

Tata Consultancy Services (TCS) announced results for the quarter ended March 2015. The company's earnings were impacted by the one-time bonus payment, currency fluctuations and sluggishness in verticals such as telecom, energy and insurance. Its consolidated net profits for the quarter were down by 30% on a QoQ basis at Rs 37 bn. The total bonus paid to the employees stood at Rs 26.3 bn for the quarter. The total income earned, at Rs 242 bn in March 2015 quarter, was down 1.1% sequentially. The company has declared a final dividend of Rs 24 per share of the face value of rupee one.

Tata Motors reported 9% YoY increase in global sales, including Jaguar Land Rover, in the month of March 2015. Sales figure for the month stood at 103,952 compared to 95,668 last year. Sales of passenger vehicles increased 16% YoY in March 2015 to 65,466 units. The monthly sales of Jaguar Land Rover too increased 16% YoY to 50,093 units. However sales of commercial vehicles were down by 1.9% YoY to 38,486 units. The cumulative sales for FY15 were down by 3% YoY to 9.8 lakh units.

As part of the initiative to enhance its specialty pipeline, Sun Pharmaceuticals has entered into collaboration with Technion - Israel Institute of Technology. The collaboration is for an exclusive worldwide research and license agreement for some pre-clinical molecules. This agreement aims at the development of novel anti-cancer drugs.

Eicher Motors has been given a go-ahead by Reserve Bank of India to hike its foreign investment limit to up to 49% of the paid up share capital of the company. As per BSE data, Foreign Institutional Investors (FIIs) hold 19.5% stake in the company as of quarter ended December 2014.

Reliance Industries announced the commissioning of Purified Terephthalic (PTA) and Polyethylene Terephthalate (PET) plants at Dahej, Gujarat. The installation of PTA plants with a capacity of 1,150 kilo tonnes per annum (KTA) will result in increase of RIL's aggregate capacity to 3.2 million metric tonnes per annum. The PET resin plant of RIL has two lines with a combined manufacturing capacity of 650 KTA. This is the largest installation by any company at a single location.

Larsen & Toubro signed an agreement with a French firm AREVA to capitalize on localization for EPR nuclear reactor that will be constructed at Jaitapur, Maharashtra. Areva's EPR nuclear reactor is a third generation advanced water reactor. In addition to this, Larsen & Toubro will also receive assistance from Areva in forging capabilities for special steels and heavy forgings.

Domestic equity markets will chart its future course on the basis of the corporate earnings performance as well as cues on recovery in global recession. Foreign Institutional Investors have so far invested $6.34 bn in the Indian equity markets which is the highest amount invested in any emerging country. However recovery in the US markets and hike in interest rates by Fed can result in foreign investors pulling out of the country. The best approach for investors would be to stick to the bottom-up strategy while investing in the stock markets.

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