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Sensex Finishes Marginally Lower; Aurobindo Pharma Surges 6.9%
Thu, 15 Jun Closing

Indian share markets witnessed selling pressure in the afternoon session as investors booked profits in recent outperformers, due to soft US economic data, a relatively hawkish Federal Reserve and worries of political turmoil in America.

At the closing bell, the BSE Sensex stood lower by 80 points, while the NSE Nifty finished down by 40 points. Meanwhile, the S&P BSE Mid Cap finished down by 0.1% and the S&P BSE Small Cap finished up by 0.4%. Gains were largely seen in realty stocks, and pharma stocks. Oil & gas stocks, PSU stocks and software stocks witnessed selling pressure.

Retail Inflation on a Downward Trajectory

Retail inflation, measured by the Consumer Price Index (CPI), slowed to 2.18% in May from 2.99% in April. Food prices entered a deflationary zone in May, with the consumer food price index at negative 1.05% as against an increase of 0.61% in April and 7.47% in May last year.

It is important to note that May's retail inflation is the lowest since the government began issuing data based on the CPI in 2012.

Aurobindo pharma share price surged 6.9% in today's trade after the company received USFDA nod to make oral suspension used for controlling serum phosphorus in patients with chronic kidney disease on dialysis.

According to IMS April 2017 data, the approved product has an estimated market size of US$ 140 million.

Asian stock markets finished most lower as of the most recent closing prices. The Shanghai Composite gained 0.1%, while the Hang Seng & the Nikkei 225 fell 1.20% and 0.26% respectively. European markets are lower today with shares in France off the most. The CAC 40 is down 0.86% while London's FTSE 100 is off 0.74% and Germany's DAX is lower by 0.73%.

The rupee was trading at Rs 64.28 against the US$ in the afternoon session. Oil prices were trading at US$ 45.81 at the time of writing.

In news from economic sector, in an attempt to fight against rising global protectionism, India and Republic of Korea have agreed upon the need to stimulate investments flows to push infrastructure development and bilateral trade among others.

The two nations also signed agreements to establish US$9 billion in concessional credit and US$1 billion in Official Development Assistance funding for infrastructure development projects in India.

With this, South Korea became one of the first non G-7 countries to become an ODA contributor in India. In addition, both the countries agreed to consider deploying part of this fund towards the Smart City projects in India. They also agreed to establish a mechanism at senior official levels, to identify good infrastructure projects in India, to draw upon these funds.

As the world's fastest growing major economy, India offers Korea important opportunities to deploy its capital and technologies in India. South Korea's interest in finding new openings to diversify its economic partnerships offers India great opportunities.

In news from banking sector, Central bank of India share price finished down by 1.4% after The Reserve Bank of India (RBI) has put the Central Bank of India under Prompt Corrective Action (PCA) in view of high net NPA and negative return on assets. The bank expects that corrective measures arising out of the PCA will help in improving its overall performance.

PCA is a framework devised by RBI that monitors key areas like capital, asset quality, and profitability of banks.

As part of the PCA framework, among others, there are a few threshold levels regarding a bank's common equity tier-I (CET 1) capital, and upon breach of a certain level, a bank may become a likely candidate for resolution via different methods like amalgamation, reconstruction and winding up.

If there is a default on part of a bank to meet depositors' obligation, a possible resolution process can even by resorted without any reference to the PCA module. Earlier in April, RBI revised PCA framework with a clause that if the bank does not show improvement, then it could be either merged or taken over by another bank.

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In another development, as per an article in The Economic Times, four major lenders, including SBI and HDFC Bank voiced concerns over 'stress' in the telecom sector and flagged possibility of defaults by debt-laden operators. Reportedly, SBI's exposure to telecom companies is in the range of Rs 800 billion.

The stress in the sector has reached highly unsustainable levels after the entry of Reliance Jio and its launch of free services which led to erosion of topline and EBITDA of the incumbent telecom service providers.

Moving on to news from paints sector. Berger Paints India is planning to diversify into new home decor business beside its core product paints. The company will be seeking shareholders nod to pave the way to venture into new businesses.

The company is considering the business opportunities available in various areas relating to home decor, construction industry and adhesive and will leverage its manufacturing and marketing strength.

Berger paints share price finished the trading day up by 1.3% on the BSE.

And here's a note from Profit Hunter:

The Oil and gas sector is the worst performing sector in the stock market today - down 1.15%. The major oil marketing companies (OMCs) were hit particularly hard - BPCL (-3%), IOC (-3%), and HPCL (-5%).

Among the OMCs, BPCL is trading at an interesting point. Let's have a look at its chart.

The stock has been trading in a strong uptrend since February 2016. The uptrend slowed a bit after July 2016, tracking the uptrend support line (green line in the chart).

A few days back, the stock made a high of Rs 769 but then slipped. Today, it is down 3% with heavy volumes. The RSI indicator, which shows the strength of the trend, is at its 52-week low, indicating weakness.

But now the stock is trading just above its uptrend support line.

It will be interesting to see is the stock is able to find support here or if it will break below the support line. If it does, it will open up further downside in the counter.

BPCL at Crucial Level
BPCL at Crucial Level

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Nov 24, 2017 03:37 PM