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M&M Misses Streets Estimates, Upbeat Global Markets & Cues to Watch Out Today
Mon, 7 Aug Pre-Open

Indian stocks snapped a two-day losing run on Friday after a late surge aided by short-covering in auto stocks and bank stocks. The Sensex closed gained 87.53 points to close at 32,325.41 while the Nifty rose 52.75 points to close at 10,066.40. The rebound helped stock indices extend gains to the fifth straight week and Nifty close above the psychological 10,000-mark.

The markets are touching record highs every day. It makes sense to sit back and evaluate if the fundamentals are in place for such heady growth. When one looks at corporate earnings over the past 5 years, it paints a different picture.

Top Stocks in Focus

M&M share price is expected to witness a lot of activity after the company posted a bigger-than-estimated 20% decline in June quarter net profit on lower sales of its automobiles, mainly utility vehicles and one-time Goods & Services Tax (GST) transition impact of Rs 1.44 billion.

For the first quarter ended June 30, 2017, M&M reported a net profit of Rs 7.66 billion against Rs 9.55 billion in the year-earlier period. During the quarter, automobile sales declined by 3.8% while tractor sales rose 13.2%.

In news from energy sector, ONGC has completed the Rs 77.38 billion acquisition of 80% stake in Gujarat State Petroleum Corp's (GSPC) KG basin gas block. The company had also agreed to pay part consideration of US$ 200 million (Rs 12.95 billion) to GSPC towards acquisition rights for discoveries other than DDW field in the block.

Meanwhile, Indian oil corporation share price has surged 13% in last two trading sessions and is expected to be again in news today after the company's board approved Rs 150.34 billion investment to expand its Gujarat refinery by 2022. IOC plans to raise the combined capacity of its 11 group refineries from 80.7 million tons a year currently to over 100 million tons in the next five years through brownfield expansions.

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Vedanta share price is expected to be in news today after the company sold US$1 billion of 7-year bonds at 6.125% and said the proceeds will be used to refinance US$1.8 billion of its higher priced existing debt. Vedanta will refinance part of its 2019 and 2021 bond maturities and is expected to have no significant bank loan repayments due over the next 18 months on completion of the bond sale.

Meanwhile, within days of State of Bank of India (SBI) slashing interest rate on savings bank account, another public-sector unit bank, Bank of Baroda, has followed suit, cutting it to 3.5% on deposits of up to Rs 5 million.

In another development, as per an article in The Economic Times, JSW steel floated by by Piramal Enterprises and Bain Capital Credit to bid for Bhushan Steel, which has recently been admitted to bankruptcy courts for possible revival. JSW Steel has been eyeing Bhushan Steel for more than a year now as it strives to ramp up output to 40 million tonnes in the next decade through capacity addition as well as acquisitions.

Jindal has a proven track record of turning around stressed businesses. It had earlier acquired Ispat Steel and Southern Iron & Steel Company, and revived both.

IPO Buzz

As per an article in The Liveimint, Mahindra Logistics Ltd, the logistics arm of the Mahindra and Mahindra Ltd (M&M), filed the draft red herring prospectus for its proposed initial public offering (IPO). The initial share sale, a pure secondary sale of shares, will see the Mahindra Logistics shareholders sell a total of 19.33 million shares. M&M plans to sell 9.66 million shares.

Mahindra Logistics provides services such as warehousing, transport, in-factory logistics, people logistics and freight forwarding for clients.

So far in 2017, the Indian primary market has witnessed 15 initial public offerings that have seen companies raising Rs 125.84 billion.

It makes sense for an investor to look at valuations closely for these companies. A careful evaluation of each IPO on its merits - its fundamentals, and most importantly, valuations - is the only way to spot future multibaggers. To learn how to navigate the tricky world of IPOs, do read our special report on finding money-spinning IPOs.

Rupee at Two Year High

The rupee resumed its record-setting spree after a brief pause and closed at a fresh two-year high of 63.58, strengthening 11 paise. The current rupee rally has been spurred by sustained foreign fund inflows on expectations of more aggressive reform measures that will boost long-term economic growth against the backdrop of an improving macro environment.

Upbeat Global Markets

U.S. equities rose on last trading session on better-than-expected employment data. U.S. equity indexes have been on a sprint lately, especially the Dow. The 30-stock index has notched seven straight record closes and broke above 22,000 for the first-time last week. European markets too finished strong in previous session.

Oil Prices Gain

Oil prices rose after a strong U.S. jobs report bolstered hopes for growing energy demand.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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Feb 22, 2018 (Close)