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Sensex Crosses 31,000 Mark; Metal & Energy Stocks Rally
Fri, 26 May Closing

Indian share markets hit record highs, with ITC share price and Tata Steel share price Ltd leading the gains, as June derivatives series took off on a strong footing on encouraging earnings and sustained foreign capital inflows. Firmness in the rupee against the US$ and fall in global crude oil prices also influenced trading sentiment.

At the closing bell, the BSE Sensex stood higher by 278 points, while the NSE Nifty finished up by 85 points. Meanwhile, the S&P BSE Mid Cap and the S&P BSE Small Cap finished up by 2.1% and 1.6% respectively. Gains were largely seen in metal stocks, oil & gas stocks and FMCG stocks.

Time to Be Fearful?

The markets are touching new highs. Markets are awash with funds. Experts are justifying high valuations. The reasons are far-fetched - from GST to Make in India to a cashless economy. And retail investors seem to be falling for it.

One must note that currently, in most of the cases, it is liquidity driving the valuations, and not fundamentals. And this is exactly the time when one must allow fear to substitute greed. Also, this is precisely the time when it is most difficult to overpower greed and stay disciplined.

Asian stock markets mostly closed mixed, tracking the overnight plunge in crude oil prices. The Shanghai Composite gained 0.07% and the Hang Seng rose 0.03%. The Nikkei 225 lost 0.64%. European markets are mixed. The FTSE 100 is higher by 0.09%, while the CAC 40 is leading the DAX lower. They are down 0.65% and 0.48% respectively.

The rupee was trading at Rs 64.59 against the US$ in the afternoon session. Oil prices were trading at US$ 49.19 at the time of writing.

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Shares of Aviation stocks were trading higher after international crude oil price fell. Jet Airways India Ltd share price rose 3%, and InterGlobe Aviation Ltd share price finished up 1.6%.

Indian Oil Corp. (IOC) reported a net profit growth of 85% in the fourth quarter of 2016-17, amid intense competition from private players due to the deregulation of fuel pricing. The company's profit came in at Rs 37.21 billion rupees (US$ 576.45 million) in the quarter ended March 31, compared with Rs 20.06 billion a year earlier.

Revenue from operations jumped 24% to Rs 1.22 trillion. The company stated that it saved Rs 10 billion after the government allowed them freedom to formulate their own crude import rules. IOC is now looking to focus on overseas expansion to shore up revenues.

IOC share price finished the day down by 2.8% on the BSE.

Oil marketing companies finished the trading session on a firm note with BPCL share price finished the day up by 3.4% and HPCL share price finished up by 11.4% on the BSE.

In news from economic sector, as per a leading financial daily, the Union Road Transport and Highways Minister Nitin Gadkari will soon be urging Finance Minister Arun Jaitley to bring down Goods and Services Tax (GST) rates on hybrid vehicles and other automobiles that run on alternative fuels.

As per the GST Council's fourteenth meeting hybrid cars, which are considered eco-friendly will attract a 15% cess over and above peak rate of 28%, same as those of large luxury cars and SUVs. Currently, hybrid vehicles attract excise duty of 12.5% with an effective overall tax rate of 30.3%.

The Minister plans to request Arun Jaitley that the tax slabs for vehicles run on ethanol, bio diesel, bio CNG should be reduced. The minister said that the government's policy is to promote electric mobility in the country and GST rate on electric vehicles has been kept at 12%.

Gadkari further said that in order to reduce India's import of crude oil, electric and hybrid vehicles along with alternate fuels like ethanol should be encouraged, and added that India import crude worth Rs 7 lakh crore. Electric, ethanol, bio diesel, bio CNG these are import substitutes and are cost effective, pollution free and indigenous too.

He also said that if such vehicles are encouraged on a large scale, the cost will also come down. Besides, the automobiles sector has also expressed concern on the high rate on hybrids stating it would put a spanner in the wheels of government plans to promote green vehicles.

Moving on to news from telecom sector. As per an article in The Economic Times, Bharti Airtel, Vodafone India and Idea Cellular are likely to launch voice over LTE or VoLTE services by the end of September as part of their efforts to upgrade technology and compete better with the new entrant Reliance Jio Infocomm.

Reportedly, this could enable these incumbent telecom operators to keep their low-end subscribers from switching to Mukesh Ambani-led Jio, which runs an all-VoLTE network and offers voice calls for free.

Meanwhile, Bharti Airtel's Nigeria unit said a partnership with China's ZTE to provide 4G high-speed broadband will see it add subscribers and narrow the gap with market leader MTN in Africa's most populous country.

Airtel was Nigeria's third-largest wireless operator with 34.7-million customers at the end of March 2017. Airtel has invested more than US$ 1.5bn in its Nigerian network in the past five years, seeking to tap rising demand for mobile and data services in a country with 180-million inhabitants.

Bharti Airtel share price finished the day up by 1.1% and Idea Cellular share price finished the day up by 0.3% on the BSE.

Meanwhile, Cipla share price fell 2.5% in today's trade after the company reported consolidated net loss of Rs 61.79 crore for the March quarter. The company had posted a net loss of Rs 928.3 million for the corresponding period of the previous fiscal.

Consolidated total income of the company rose to Rs 36.04 billion for the quarter under consideration as against Rs 33.73 billion for the same period a year ago.

Lupin share price continued to fall and fell 2.3% in today's trade to a two year low after the company yesterday reported over 49% dip in consolidated net profit for the fourth quarter ended March.

And here's a note from Profit Hunter:

The metal sector is in the limelight today. Tata steel (+5.49%), Vedanta (+4.15%), and Hindalco (+4.04%) are the top contributors to the Nifty 50 Index rally for the day.

Hindalco is currently trading at an interesting point. Let's have a look...

In our earlier note, we mentioned Rs 200 as strong resistance for the stock. The 200 level acted as a resistance six times in the past four month.

Today, the stock again encountered the 200 level. It made a high of Rs 203, but finally ended the session at Rs 198.5, again the level is proving to be a major hurdle for the stock.

We also mentioned in the earlier note that Tata steel was facing strong resistance from the 500 level. Today, the stock broke out of this resistance decisively.

So will Hindalco follow suit? Will the strong momentum in the metals help Hindalco overcome its major resistance level? Keep the stock on your radar. A big trend is underway...

Hindalco Near a Crucial Level
Nifty 50 Index Reclaims 9,500 

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Feb 22, 2018 (Close)