Sensex Finishes on a Firm Note; Nestle Stock Rallies 7%

Mon, 28 Aug Closing

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Indian share markets finished in green for fourth consecutive session amid buying in FMCG stocks, software stocks and consumer durables stocks.

At the closing bell, the BSE Sensex closed higher by 155 points and the NSE Nifty finished up 56 points. The S&P BSE Mid Cap finished up by 1% while & S&P BSE Small Cap too finished up by 1.1%.

Nestle share price surged 6.6% in today's trade and hit 52-week high as the company plans to focus on volume growth. As per an article in The Hindu Business Line, the company plans to focus aggressively on driving volume growth through new product launches and other initiatives.

Reportedly, the margins will drop in the turnaround phase due to higher spending on advertisements but are expected to pick up from 2018 and expects sustained intensity of new product launches over the next 2-3 years.

Infosys share price finished up by 3.1% as Nandan Nilekani returns to the company after he was unanimously named by the board as its non-executive chairman in a widely anticipated move.

Asian stock markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.93% and the Hang Seng rose 0.05%. The Nikkei 225 finished flat. Meanwhile, European markets are lower today as French and German shares fall. The French CAC 40 is off 0.20% while the German DAX is down 0.67%.

The rupee was trading at Rs 63.87 against the US$ in the afternoon session. Oil prices were trading at US$ 47.39 at the time of writing.

In news from the power sector, global research firm BMI Research in its latest report has said that coal, which powers around three-quarters of India's electricity, will remain the foremost fuel choice for country's power sector and is expected to account for nearly 68% of the total power mix by 2026.

It noted that the power sector is also likely to spur as a result of greater demand for fuel driven by underlying economic growth, electrification efforts and power sector reform implemented by the government.

The research arm of the Fitch Group has stated that the key mining sector reforms, over the previous two years has significantly improved the availability of coal for the power sector.

However, it also said that the volatility in feedstock will remain a downside risk to coal-fired power generation over the coming years. Adding further, the report said that in the month of August, Coal India announced that out of 120 ongoing projects, 62 coal mining projects were not running on schedule mostly due to postponement in land acquisition, issues related to rehabilitation and resettlement and forest clearances.

Power stocks finished on a firm note with Adani power share price and Cesc Ltd share price leading the gains.

Moving on to news from automobile sector. Eicher Motors share price finished on an encouraging note (up 1.5%) after it was reported that the company's subsidiary Royal Enfield has started commercial production from its new manufacturing facility at Vallam Vadagal near Chennai.

This plant will be Royal Enfield's third facility, and will manufacture Royal Enfield motorcycles for India and international markets.

The facility starts with an installed production capacity of 300,000 bikes per annum in the first phase. In FY18, the combined production capacity from all the three plants is planned to be 825,000 units.

In news from pharma sector, Dr Reddy's share price finished down by 2% in today's trade after an US lawsuit was filed against the company. A law firm representing an investor in Dr. Reddy's has filed a class action lawsuit in New Jersey against the company, its CEO and CFO.

Speaking of blips, the BSE Healthcare Index has been going through more than a blip. Domestic and export markets have both been challenging.

Price to Earnings Ratio (PE) of Top Pharma Companies

Government regulations on branded generics have proved a roadblock in domestic markets. In developed markets, stringent USFDA checks on manufacturing plants along with price erosion in generics have eroded profitability. It seems there is a structural change taking place in the sector overall as to how business is done and will be done in the future.

And here's a note from Profit Hunter:

Nestle India Ltd is one of the most active stocks in the market today - up 7%. Let's have a look at its chart.

The stock has been trading in an uptrend after it got listed on the exchange. It made a life high of Rs 7,505 in March 2015 and corrected sharply to 5000 levels in February 2016. It recovered smartly to retest its life high but fell short and reversed from Rs 7,369 in July 2016.

Thereafter, the stock traded dull and found resistance from 7,000 level on various occasions. Today, as the company announced that it will plan to focus on volume growth, it jumped 7% crossing the 7,000 hurdle with strong volumes.

So will the stock now hit a new life-time high after the positive announcement from the company?

Nestle Surged 7% for the Day

 

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