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Sensex Finishes Firm; Ashok Leyland Rallies 5%
Fri, 1 Sep Closing

Indian share markets continued to trade firm in the afternoon session and finished in the green for third consecutive session after much weaker-than-expected economic growth data raised hopes the central bank would cut interest rates at its next policy meeting in October.

At the closing bell, the BSE Sensex closed higher by 162 points and the NSE Nifty finished up 57 points. The S&P BSE Mid Cap finished up by 0.9% while & S&P BSE Small Cap too finished up by 0.8%. Gains were largely seen in realty stocks, auto stocks and metal stocks.

Asian stock markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.23% and the Shanghai Composite rose 0.19%. The Hang Seng lost 0.06%. European markets are higher today with shares in France leading the region. The CAC 40 is up 0.73% while Germany's DAX is up 0.65% and London's FTSE 100 is up 0.20%.

The rupee was trading at Rs 63.98 against the US$ in the afternoon session. Oil prices were trading at US$ 46.70 at the time of writing.

In news from economic sector, after the government expressed confidence of meeting 3.2% fiscal deficit target for 2017-18, the data of Controller General of Accounts (CGA) has revealed that India's fiscal deficit at July- end touched 92.4% of the budget target, as compared to 73.7% in the same period of the target of financial year 2016-17. This was despite the low dividends from the Reserve Bank of India and muted proceeds from stake sales in public sector enterprises till now.

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This was mainly because of front loading of expenditure by various government departments. In April-July this year, the Centre released about Rs 1.5 trillion in food, fertiliser and fuel subsidies, a rise of 42% YoY. The April-July period of this year also saw a 33% YoY rise in capex at Rs 951.26 billion, nearly 40% of which was defence-related.

As per the CGA data, government's revenue receipts improved at Rs 2.91 trillion during April-July period, which works out to be 19.2% of the target of Rs 15.15 trillion for the whole year, compared to revenue reciepits comprising taxes and other items of 18.6% of the target in the same period last year.

It further stated that government's expenditure had been increasing on sequential basis and totaled Rs 8.08 trillion at July-end or 37.7% of the budget estimates.

Fiscal Deficit target of 3% of GDP

In last one decade India is making serious efforts to reduce the fiscal deficit level. Ever since, the new government came in it has been in favor of fiscal consolidation and meet the long term fiscal deficit target of 3% by FY17-18.

Mind you, the recent demonetisation has resulted in a slowdown. Further, government has announced flurry of projects but execution is still pending. This means the government needs to relax its spending to spurt the growth again.

Automobile stocks surged in today's trade on strong car sales with Ashok Leyland share price and Tata Motors share price leading the gains.

Ashok Leyland has reported a jump of 25% in August 2017 sales to 13,634 units, as against 10,897 units sold in the same month of last year. The company reported a rise of 29% in its medium and heavy commercial vehicle (M&HCV) products segment to 10,567 units in August 2017, as compared to 8,201 units in August 2016.

The light commercial vehicle (LCV) segment of the company registered sales of 3,067 units in August 2017, a rise of 14%, as compared to 2,696 units sold in August 2016.

Ashok Leyland share price finished the day up by 5.4% on the BSE.

In news from pharma sector, Dr Reddy's Laboratories Ltd share price rose 10% after Nasdaq-listed Vivus Inc entered into a settlement agreement with the company to resolve a long-pending patent litigation related to weight management capsules Qsymia.

According to a statement issued by the US-based drug maker, the litigation, pending since 2015, resulted from the submission of an abbreviated new drug application (Anda) by Dr Reddy's seeking approval to market generic versions of Qsymia.

Other pharma stocks too finished on a strong note with Panacea biotech share price and Aurobindo Pharma share price closing above 4%.

Coal India share price finished just above the dotted line (up 0.2%) after the company received an approval for revision in sizing charges and Rapid Loading Silo charges and revision in additional charges and for supply of Slack and Steam coal.

Due to this revision, the company will generate approximate additional annual revenue of Rs 5.27 billion. Board of the company at its meeting held on August 31, 2017 has approved the same.

Meanwhile, the company also approved technology development projects worth around Rs 600 million. These projects were taken up by the IIT Indian School of Mines in association with Australian institutes.

And here's a note from Profit Hunter:

Dr Reddy's Laboratory soared 10% for the day, hitting the upper circuit limit after the company got a favourable verdict in patent litigation in the US.

Last time we reviewed the stock, it had sold off 23% after resisting from the important resistance level of 2,750 to hit a four-year low. The RSI indicator also hit its ten-year low. The stock was trading extremely weak.

But we've mentioned before how the stock was approaching the centurion mark and the strong support level of 2,000. The stock slipped below this level, but it couldn't sustain down for long. It recovered immediately and today the stock is up 10% with strong volumes. The stock is now showing immense strength.

However, it's still not clear if the stock has actually bottomed out or if today's rally is only a pullback before it resumes its downtrend.

Dr Reddy's Soared 10% for the Day
Dr Reddy's Soared 10% for the Day 

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Mar 16, 2018 (Close)