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Sensex Ends 107 Points Higher; Coal India & Adani Ports Top Gainers
Tue, 5 Sep Closing

Share markets in India ended the day higher having recouped more than half of previous day's losses, driven by short covering and positive European cues.

At the closing bell, the BSE Sensex closed higher by 107 points. While, the NSE Nifty finished higher by 39 points. Meanwhile, the S&P BSE Midcap Index finished up by 0.6% while the S&P BSE Small Cap Index ended up by 1%.

Except Telecom sector, all BSE sectoral indices ended the day in positive zone. Among them, consumer durables index gained the most by 2.3%, followed by realty sector 1.6%, oil & gas sector 1% and metal sector 0.8%.

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Overseas, Asian equity markets finished mixed amid lingering concerns about the escalating North Korea crisis. The Shanghai Composite gained 0.14%, while Japan's Nikkei 225 was off 0.63%. Shares in Hong Kong were unchanged with the Hang Seng at 27,741.35. European markets are higher today with shares in Germany leading the region. The DAX is up 0.83% while France's CAC 40 is up 0.35% and London's FTSE 100 is up 0.23%.

The rupee was trading at Rs 64.12 against the US$ in the afternoon session. Oil prices were trading at US$ 47.77 at the time of writing.

Bharti Airtel share price hit nearly 2-month low and was the top Sensex loser today. The company shares dropped by2.3% as the Delhi High Court dismissed Vodafone India's plea asking for more clarity on how the telecom regulator would decide whether to lower the interconnect usage charge (IUC).

Cement stocks were buzzing on the bourses today as the companies have raised the cement prices by up to Rs 27 per 50 kg bag in Mumbai, as per the reports.

The Ramco Cements was the top gainer among these stocks and was trading up by over 4.6%. Among other cement stocks, ACC was up 1.3%, India Cements was up 5.1% while Ultratech Cement was up 2.8%.

Cement prices have been showing a declining trend since the beginning of the current financial year after the average prices peaked during April at Rs 307 a bag, rising by over 4%, but then began to decline steadily, falling by 3.5% in June i.e. the month just before the GST implementation.

However, prices dropped by 6% at Rs 289 a bag during July-August as compared to the April prices.

Meanwhile, speaking of the cement companies in India, if one were to go by the numbers as reported by Business Standard, the valuations of the Indian cement companies are obscenely expensive.

Cement Companies Increasing Leverage

Globally, cement makers are valued at 26x their latest annual earnings and 1.6x times their latest book value. The corresponding ratio for Chinese players is 23x and 0.95x respectively. On the other hand, Indian cement makers are valued at 48 times their net profit in the last financial year.

Here's what Tanushree Banerjee, Co-head of Research has to say about the sector:

  • "There is no denying the performance of the cement companies have shown improvement off late. However, the current valuations certainly warrant a caution. For readers who are looking forward to commit their money in cement stocks should factor in realistic growth expectations.

    One would do better to look into long term growth for every cement company. And then judge whether the valuations are reasonable enough. If not, then it is best to stay away from the sector."

Moving on to the news from the economy. Amid the government's quest to keep the deficit within the budgeted target, despite sluggish domestic demand, India's gold imports in August nearly tripled from a year ago.

This comes on the back of a recent tax change that allowed importers to ship in the yellow metal from South Korea without paying customs duty saw some traders purchasing heavily from the country.

Reportedly, August gold imports climbed to an estimated 60 tonnes from 22.3 tonnes a year ago. In the first eight months of 2017, the imports rose to 617.5 tonnes, up 158% from a year ago. Trade houses imported nearly 20 tonnes from South Korea as they were not required to pay import duty.

Notably, India imposes a 10% import duty on gold, but this was not applicable to countries with which it has Free Trade Agreements (FTAs), like South Korea. To avoid duty-free imports from those countries, the government had previously imposed a 12.5% excise duty.

This was scrapped along with other local taxes when the GST was introduced on 1 July, allowing buyers to import gold from South Korea without paying import tax.

However, after realising the loophole the government on 25 August restricted imports of gold from South Korea.

And here's a note from Profit Hunter:

We have seen a lot of drama in the Indian telecom sector over the past one year - most of it because of Reliance Jio's entry into the space. The largest telecom player, Bharti Airtel, suffered due to the price wars in the sector.

But so far in 2017, the stock has outperformed the Nifty 50 Index. It is up 34% while the Nifty Index is up only 22%. It looked like things were improving for the telecom operators.

But for the last six days, Bharti Airtel has been witnessing selling pressure. It is down more than 7% from its recent high of Rs 438. More importantly, the stock found strong resistance from 450 levels. This level acted as resistance several times in the past ten years. Every time the stock found resistance from this level, it dragged down to trade between 250-280 level.

So it will be interesting to see if the stock falls again to the 250-280 level or if this time it's different.

Bharti Airtel Resisted from Crucial Level
 Cutting Losses Short in Bosch

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Mar 16, 2018 (Close)