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Sensex Closes Marginally Higher; Reliance Communications Falls Over 20%
Mon, 29 May Closing

Share markets in India continued to trade above the dotted line in the afternoon session. At the closing bell, the BSE Sensex closed higher by 81 points. While, the NSE Nifty finished higher by 10 points. Meanwhile, the S&P BSE Midcap finished down by 1% while the S&P BSE Small Cap Index ended down by 1.5%.

Among BSE sectoral indices, realty stocks fell the most by 4.4%, followed by healthcare sector and information technology sector. While, FMCG stocks and automobile stocks witnessed maximum buying interest.

Asian equity markets finished flat after the latest ballistic missile test by North Korea. The Hang Seng gained 0.24% and the Shanghai Composite rose 0.07%. The Nikkei 225 lost 0.02%. European stocks were subdued today as oil extended last week's drop.

The rupee was trading at Rs 64.56 against the US$ in the afternoon session. Oil prices were trading at US$ 49.65 at the time of writing.

Sun Pharma share price plummeted 11.6% after it reported a 13.6% year-on-year fall in net profit in the quarter ended March 31 due to decline in US sales, its worst performance in several years.

Tech Mahindra share price lost 11.7% as investors reacted negatively to the company's results. The IT services major posted a consolidated net profit for the March quarter at Rs 5.90 billion, a fall of 30.2% against Rs 8.45 billion quarter on quarter.

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DLF share price plunged 9.4% after its net sales bookings fell sharply by 63% to Rs 11.60 billion during the last fiscal due to demand slowdown in the property market.

There was gross sales booking of Rs 21 billion; cancellation/ up-gradation of Rs 9.40 billion resulting in net sales booking of Rs 11.60 billion booked in FY17. This is in comparison to net sales booking of Rs 31.50 billion in FY16.

Reliance Communications share price crashed 20.5% after the telecom major posted its first-year loss since its inception of Rs 12.85 billion for fiscal gone by compared to a net profit of Rs 6.60 billion in FY16.

Shares of gems and jewelry stocks surged after news report said that the goods and services tax council may impose lesser tax then currently proposed. As per news reports, GST Council may settle for a 5% tax on gold, a keenly awaited item for discussion in the June 3 meeting, which perhaps will be the last for fitment of rates.

At present, Gold attracts 12% tax, including 10% import duty. If gold is kept under the 5% bracket, then the total tax incidence on gold will be 15%.

Meanwhile, a leading financial daily reported that finance Minister Arun Jaitley has once again listed the poor performance by private investors and banks to be a big challenge for the Indian economy. He said that even though India has emerged as most attractive investment destination for foreign investors, investment cycle of domestic industry is not at satisfactory level, mainly owing to banking sector performance.

Jaitley noted that increasing investment cycle of domestic industry still remains a big challenge when two other major challenges, the rollout of upcoming Goods and Services Tax (GST) from July 1 and signs of positive trends in global growth have been overcome.

Finance minister had earlier said that the banks must recover their bad loans to boost private investment, as domestic private investment needs to pick up. Further, he said that a number of steps will be taken to revitalize public sector banks, including those relating to sale of assets, closure of non-profitable branches and reduction of overheads when memorandums of understanding (MoUs) are signed with them for recapitalization.

Soaring Stocks...Eroding Balance Sheets

He further said that a defaulting litigant hurts the lending environment in India, adding that the ordinance promulgated by the government on bad loans will empower the Reserve Bank of India to issue directions to banks for resolution of stressed assets.

Moving on to news from the stocks in engineering sector. Larsen & Toubro share price ended the day marginally higher after it was reported that L&T has been selected by the Mumbai Metropolitan Regional Development Authority (MMRDA) to develop Rs 13.29 billion water supply scheme in the city.

Reportedly, the EPC major is likely to develop a water treatment plant, a chlorination plant, pumping stations, sub-stations, and a laboratory near Surya River Dam.

The scheme has already received multiple permissions including that from Coastal Regulation Zone (CRZ) permission from Ministry of Environment, and NHAI, to lay water pipeline along NH-8, Central Railways, the Maharashtra State Electricity Transmission Co for electricity supply, and the Maharashtra Maritime Board to take the pipeline over the river and creek.

Meanwhile, L&T is in talks to sell its switchgear business. The company has started the process to sell the business for approximately Rs 25 billion.

L&T is likely to carve out switchgear's assets from various subsidiaries to initiate the sale process. Revenues from manufacturing and trading of switchgear for the company, was Rs 24.34 billion in FY16.

To know more about the company's financial performance, subscribers can access to L&T's latest result analysis and L&T stock analysis on our website.

And here's a note from Profit Hunter:

Realty stocks have been out of favour for about a decade. But for the past one year, the sector has seen a spark. From the February 2016 lows, the realty sector has hugely outperformed Nifty 50 Index. It rallied 84% while the nifty rallied only 38%.

But it seems the bears are now back in action. Today, the sector index is down 4.31%, with DLF Ltd the top loser - down 10%.

The stock bottomed out in February 2016 at Rs 72. It rallied strongly to a high of Rs 170 in August 2016. It corrected for a while to find support near the 100 level and then resumed its up move to hit a new 52-week high of Rs 216 just a few day back.

But the stock is now down 20% from this high.

So will the bulls able to resume the up move or will the bears take control?

DLF down 10% for the Day
DLF down 10% for the Day 

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Feb 21, 2018 (Close)