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Sensex Finishes on a Flat Note; Coal India Stock Rallies 4.2%
Thu, 17 Aug Closing

Indian share markets witnessed some selling pressure in the final hour of trade to finish flat amid weak European markets.

At the closing bell, the BSE Sensex closed higher by 25 points and the NSE Nifty finished up 7 points. The S&P BSE Mid Cap finished down by 0.3% while & S&P BSE Small Cap too finished up by 0.5%. Auto sector, bank sector and healthcare sector finished in red.

Software stocks finished the day on a firm note Infosys share price and Tech Mahindra share price leading the gains.

As per an article in The Economic Times, Infosys will consider a proposal for buyback of its equity shares at its meeting to be held on 19 August.

The announcement comes close on the heels of the completion of a Rs 160 billion share buyback by rival Tata Consultancy Services (TCS). One must note that, Infosys, which has cash reserves of about US$ 6 billion on its books, has been under pressure from investors to utilize the amount either through share buyback or generous dividend.

In April, the company had announced that it will pay up to Rs 130 billion to shareholders during the current financial year through dividend and/or share buyback.

Metal stocks gained amid better-than-expected demand in China and a weakening dollar. China is stepping up efforts to shut illegal aluminum and steel plants to cut emissions and excess capacity.

Zinc surged above US$3,000 a metric ton for the first time in almost a decade, while aluminum approached a three-year high.

Is the Recovery in Commodity Businesses Just Getting Started

Meanwhile, one of our Super Investor, Kenneth Andrade expects organised players in the commodity sector to benefit from this trend. In one of his interviews with Quint, this is what he had to say:

One of the things that has been talked about is the transfer of market share from the informal, unorganized business to the organized business. You see a disproportionate amount of that coming through in commodity businesses where you have a lot of MSMEs or small-scale businesses, as they struggle to deal with compliance. So, a lot of these companies may not grow capacities to address the market in the near term and that's the opportunity left for the organised business.This is one segment of the market where you will see high growth in volumes relative to industry. You will also see profitability surpassing historical trends.

Now, if we look at the BSE Metal Index after a decline in 2016 it has recovered and majority of the participants have given exceptional returns from their lows.

Asian stock markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.68%, while the Hang Seng & the Nikkei 225 fell 0.24% and 0.14% respectively. European markets are lower today with shares in London off the most. The FTSE 100 is down 0.27% while Germany's DAX is off 0.21% and France's CAC 40 is lower by 0.13%.

The rupee was trading at Rs 64.24 against the US$ in the afternoon session. Oil prices were trading at US$ 46.66 at the time of writing.

As per a leading financial daily, ITC has decided to further increase its investment in the integrated food park at Kapurthala in Punjab to Rs 17 billion. The food park would generate around 5,000 jobs for the people of the state.

The food park, for which the MoU was originally signed in 2013 will mark further expansion in the investments of ITC, which is already running three hotels in the state. The initial investment planned in the project was Rs 6.8 billion, which was subsequently, in 2015, enhanced to Rs 14 billion, which the company now plans to increase further to Rs 17 billion.

ITC share price finished the trading day up by 0.1% on the BSE.

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In news from economic sector, the minutes of the Monetary Policy Committee (MPC) Meeting has revealed that RBI Governor Urjit Patel had chosen for a 25 basis points cut in the key policy rate (repo), arguing that the present low level of food prices was rare and vulnerable to upward pressures.

On lower lending rates, he said that effective transmission of a policy rate cut is the key to achieving the goal of supporting the non-inflationary growth. He also pointed out that while the transmission has improved, there is still some space for banks to cut their lending rates, especially on the existing loan portfolios.

RBI Governor further said that credit growth has also been low partly because of risk aversion among banks on account of stressed assets position. Therefore, he stressed that resolution of stressed balance sheets of banks will remain important for reviving credit demand and the investment cycle.

Based on the majority view at the MPC meet, the central bank cut the rate by 25 basis points to 6%, whereas the industry and other stakeholders were expecting more than that.

Moving on to news from oil & gas stocks. Bharat Petroleum Corporation (BPCL) share price finished on an encouraging note (up 1.9%) after the company signed a Memorandum of Understanding (MoU) with Energy Efficiency Services (EESL), under the Ministry of Power, for distribution of energy efficient appliances under the flagship UJALA scheme.

According to the agreement, the company will take up distribution of LED Bulbs, LED Tubelights and energy efficient Fans from select retail outlets across the country.

In another development, Coal India share price surged 4.2% after it was reported that the company plans to invest Rs 85 billion as capital expenditure in 2017-18.

The company has further planned to invest Rs 65 billion in various projects -- Super Critical Thermal Power Plant (STPP), solar power, revival of fertiliser plants, coal gasification, acquisition of coal blocks in India and abroad, and CBM (coal bed methane) etc during 2017-18.

In the current fiscal, the target of coal production has been pegged at 600 million tonnes (mt) with an annual growth of about 8.3% over the achievement of last year. In 2018-19, the envisaged coal production projection is 773.70 mt with a growth of about 28.95%.

And here's a note from Profit Hunter:

Infosys said it will consider a share buyback proposal at its meeting on 19 August. The stock is up 5% for the day after the announcement.

After Infosys hit a high of Rs 1,279 in June 2016, the stock traded in a downtrend until it hit a low of Rs 901 in November 2016. The stock made a pullback rally to 1,020 level. But it again slipped to the 900 level in a month's time. It found strong support there and rallied back towards 1,020. But the stock again found resistance at this level from the horizontal resistance line and slipped to 900 level.

The stock found support at 900 for the third time. This formed a triple bottom pattern on the daily chart.

Today, the stock rallied 5% with heavy volumes, and it is now trading at 1,020 resistance level (triple bottom breakout level).

If it gives a sustained break above this level, it will open up higher levels for the stock. On the flip side, if it finds resistance here it might continue trading in the range of 900-1,020.

INFY at a Crucial Level
INFY at a Crucial Level

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