Sensex Finishes in the Red yet Again; Oil & Gas Stocks Slump

Tue, 8 Aug Closing

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Indian share markets continued to witness selling pressure in the afternoon session to finish lower for a second consecutive session. At the closing bell, the BSE Sensex closed lower by 260 points and the NSE Nifty finished down 79 points. The S&P BSE Mid Cap finished down by 1.2% while & S&P BSE Small Cap finished down by 1.3%. Losses were largely seen in PSU stocks, energy stocks and realty stocks.

Hindalco share price surged 3.3% after the company announced that its board will consider raising up to Rs 44 billion via debt. The company said it was considering fund raising through the way of commercial papers and unsecured debentures for its aluminum business.

The sentiments were also boosted after the company's Canadian arm Novelis reported net income of US$101 million for the first quarter of fiscal 2018, compared to US$24 million in the year-ago period. Excluding tax-affected special items, its net income stood at US$103 million (US$33 million).

Asian stock markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.59% and the Shanghai Composite rose 0.07%. The Nikkei 225 lost 0.30%. European markets are mixed. The FTSE 100 off by 0.08%. The FTSE 100 and CAC 40 are unchanged.

The rupee was trading at Rs 63.73 against the US$ in the afternoon session. Oil prices were trading at US$ 49.69 at the time of writing.

In news from steel sector, Tata Steel Ltd swung to a first-quarter (April- June) profit from a loss a year ago, as sales volumes were boosted by the ramp-up of its Kalinganagar plant.

The steelmaker's net profit came in at Rs 9.21 billion (US$144.37 million) in the quarter ended June 30, compared to a loss of Rs 31.83 billion a year earlier. The total income for the June quarter was at Rs 311.29 billion as against Rs 261.07 billion in the same quarter last year.

Tata Steel share price finished up by 2.6% in today's trade.

Pharma stocks finished in red today. The pharma sector, once considered a safe haven for investors has been on a steady decline over the past two years.

Facing pricing pressures in the domestic and export markets, currency fluctuations, as well as manufacturing issues related to their plant, there is a transformation happening in the overall sector as to how business is done and will be done in the future.

Recent disclosure of shareholding pattern at the end of March 2017 indicates the pessimism towards the sector. FII's have reduced their stake in giants like Sun Pharma, Lupin, Dr Reddy's and Cipla. These behemoths have seen a combined market cap erosion of around Rs 9,815.2 billion over the last one year.

Peformance of Pharma Companies Since the Start of the Year

Moving on to news from automobile sector. Bajaj Auto share price finished the trading day on an encouraging note (up 0.9%) after it was reported that the company and Triumph motorcycles have entered into global partnership pact. The objective of this non-equity partnership is to deliver a range of outstanding mid-capacity motorcycles benefiting from the collective strengths of both companies.

The partnership will bring to bear upon global markets the individual strengths of the partners including brand position & perception, design & development technology, quality & cost competitiveness & worldwide distribution.

This new global partnership will enable Triumph to significantly expand its global reach by entering new higher volume market segments, especially within the emerging markets across the world. Bajaj will gain access to the iconic Triumph brand, and its best motorcycles, enabling it to offer a wider range of motorcycles within its domestic market and other international markets.

Oil & gas stocks slumped in today's trade with BPCL share price and IOC share price leading the losses.

As per a leading financial daily, ONGC's overseas arm - ONGC Videsh, is reportedly planning to invest US$150 million in exploration this fiscal year to drill more wells in Colombia, where it just made a commercial discovery, as well as in Kazakhstan and Bangladesh.

ONGC Videsh plans to make a total capital spending of US$1 billion in 2017-18 in exploration, development and production across all its projects.

ONGC Videsh's production jumped 40% in 2016-17 mainly on 26% stake acquisition in Russia's prolific Vankor fields. The output is expected to rise further 15% in the current fiscal year to 14.35 million tonnes of oil equivalent.

ONGC share price finished the day down by 1.3%

In news from economic sector, NITI Aayog Member has stated that it is not reasonable to connect the Goods and Services Tax (GST) regime with slowdown in manufacturing output as the issues that the sector is facing goes beyond the tax reform.

He also said that these are very temporary things which they don't need to worry about because it is a blip that will go away once the transition is complete.

Reportedly, there is a long list of problems that are ailing the sector such as physical infrastructure, including power and transport, procedures, tax issues -- direct as well indirect -- and credit-related issues. He noted that these problems were not new and had been ailing the sector for a long time.

The NITI Aayog Member further mentioned that there are several significant measures taken by current government to improve the sector's performance but it would take some time for them to bear results.

And here's a note from Profit Hunter:

Dr Reddy's Laboratory was the top losers today in the Nifty 50 Index - down 5%. Let's have a look at its chart.

Last time we reviewed the stock, it was trading at the important resistance level of 2,750. And we mentioned the possibility of it hitting a new 52-week low. The stock reversed exactly from the 2,750 level and hit a new 52-week low in a matter of days.

The stock continued to trade down. It plunged 23% from the 2,750 level, nearly hitting a four-year low. The RSI indicator, which tells us about the strength of the trend, is currently at a ten-year low. The volumes have been heavy during this down move. This indicates immense weakness in the stock.

But now the stock is approaching its next centurion mark and a support level of 2,000.

It will be interesting to if the stock can find some ground at the 2,000 level or if it will continue to slip even further.

Dr Reddy's Near its Four-Year Low

 

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