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Global Markets Tumble
Sat, 1 Oct RoundUp

Majority of the world indices slipped in the negative territory in the week gone by. Barring Singapore and US, all the other global indices registered negative returns on weak cues.

Meanwhile, there were mixed signals from the US economy. The US consumer spending, that accounts for more than two-thirds of the economy, fell 0.1% in August for the first time in seven months. Even inflation showed signs of accelerating. These developments could keep the Federal Reserve cautious about raising interest rates. The Fed Chairman Janet Yellen had said last week that she expects a rate-hike later this year to keep the economy from overheating.

On a positive note, China's manufacturing sector picked up pace in September. The official Purchasing Manager's index stood at 50.4 in September, similar to the previous month's level. A reading of over 50 shows growth on a monthly basis. However, profits remained uneven as heavy industries with surplus capacity such as steel struggled to grow. Crude prices gained on the back of planned output cuts by the Organisation of Petroleum Exporting Countries (OPEC). But profit-taking led to crude settling almost flat at USD$ 48 a barrel during the week.

Back home, the Indian indices fell sharply towards the fag end of the week after escalating tension saw surgical attacks being conducted on select terrorist camps in Pakistan. The BSE Sensex was down by 2.8% for the week.

Key World Markets During the Week

On the sectoral indices front, all the indices fell in the week gone by. Power, realty and capital goods witnessed the maximum selling pressure.

BSE Indices During the Week

Now let us discuss some key economic and industry developments during the week gone by.

India has moved up 16 positions to rank 55th on a global index of the world's most competitive economies that lists 138 countries. This is the second year in a row that India has jumped 16 spots. The WEF ranking may also come in as a boost for the ruling government's business friendly image.

As per reports, the rankings consider factors and institutions that determine long-term economic growth and prosperity. The areas where India ranks better were gross national savings, quality of education system, venture capital availability, hiring and firing practices, GDP and domestic market size, public trust in politicians and burden of government regulation.

For macro-economic environment, India is ranked 91st, helped by a reduction in commodity prices and improvement in the government's budget deficit. In terms of competitiveness of its institutions, India is ranked 60th (out of total 140 countries and up 10 positions from last year), while for infrastructure it has gained six places to 81st.

But even as India's overall performance looks excellent, it is ranked low on some parameters such as health and primary education (rank 85). This doesn't bode well for a country whose working-age population is estimated to be the largest in Asia-Pacific by 2050.

Finally, there was some good news that would prop up weak crude prices. The Organization of the Petroleum Countries (OPEC) has agreed to modest price cuts. Countries under OPEC would reduce output to a range of 32.5-33 million barrels per day (bpd) from the current output at 33.24 million bpd.

This deal to cut oil output is the first such deal since the year 2008. Iran too has decided to decrease the production by around 0.7 million bpd.

Post this decision, oil prices jumped by more than 5% to trade above US$ 48 per barrel. Despite the production cuts being modest, this move could possibly help in the recovery of oil prices.

Movers and Shakers During the Week
Company23-Sep-1630-Sep-16Change52-wk High/Low
Top Gainers During the Week (BSE Group A)
Tata Steel371.9374.40.7%409/210
Note: There are are only two gainers for this week
Top Losers During the Week (BSE Group A)
ICICI Bank271.8252.3-7.2%293/181
Adani Ports & SEZ275.3256.8-6.7%331/170
Source: Equitymaster

And here are some of the key corporate developments in the week gone by.

Tata Steel is gearing itself up to recover from poor financial performance. The company plans to produce 11.3 million tonnes (mt) of steel this fiscal year FY17. The company produced 10.3 million tonnes of steel last year. It is expecting to produce 9.8 mt of crude steel from its 10 mt plant at Jamshedpur. Tata Steel has committed to production of 1 mt at the 3 mt plant commissioned this May at the new steel plant commissioned at Kalinganagar in Odisha.

After a subdued first quarter, Tata Steel is reportedly taking solace in positive demand it is seeing from areas such as railways and power transmission. Demand is also improving in the rural areas as sales of tractors and motorcycles have been on the rise for the last three months. Indian steel consumption is expected to increase 5-6% this financial year.

While iron ore prices have fallen significantly, those of met coal, another key raw material, have doubled in the last few weeks. Tata Steel imports about two-thirds of its coal requirements, while the rest being met by its coalmines at Jharia in Jharkhand.

The country's largest power producer, NTPC is reportedly on course in implementing the biggest 1 GW (1000 MW) solar photo-voltaic power generation park at Kadiri in Anantapur district of Andhra Pradesh (AP). Phase one of the project of 250 MW has been completed and has commenced power generation. The balance 750 MW will be completed by next fiscal, once all the clearances are secured and power purchase agreements inked.

NTPC has an installed capacity of 265 MW of solar photo-voltaic power generation in the south, which includes a 250 MW solar PV unit at Anantapur, a 5 MW unit at Port Blair in the Andaman & Nicobar Islands and a 10 MW solar PV plant in Ramagundam.

When completed, the Anantapur solar power park will be the largest single location solar unit in the country with an installed capacity of 1 GW. Another mega solar park of 1 GW is also being co-developed near Kurnool in Andhra Pradesh, where NTPC will be engaged with the state government and its utilities.

The company is also at an advanced stage of evaluating potential in setting up wind power projects with the southern states offering immense scope in wind energy. The company soon expects to finalize the plans.

Lupin Ltd has received final approval from United States Food and Drug Administration (USFDA) for selling Memantine Hydrochloride extended-release capsules. It is a generic version of Allergan's Namenda XR capsules used for the treatment of moderate to severe dementia of the Alzheimer's disease.

Further, Lupin got approval for 7 milligram (mg), 14mg, 21mg and 28mg capsules. One must note that, Actavis Inc. bought Namenda from Forest Laboratories in July 2014. Last year, Actavis acquired Allergan and it changed its name to Allergan Plc. According to IMS data, Namenda XR capsules had US sales of US$ 1.22 billion.

Larsen & Tubro Ltd's (L&T)construction arm announced that it has won orders worth Rs 20.5 billion across its power, civil infrastructure and construction verticals. Reportedly, its power transmission & distribution business has won engineering, procurement and construction orders worth Rs 8.3 billion. This includes construction of projects for rural electrification under the Integrated Power Development Scheme, extra high voltage substations and overhead transmission lines across various locations in India.

In Heavy Civil Infrastructure Business, it has secured an order worth Rs 6.75 billion in the metro sector. The scope of the work includes the construction of elevated viaducts and elevated stations.

Meanwhile, its Building & Factories Business has bagged a residential project worth Rs 4.3 billion and under Transportation Infrastructure Business, it has secured additional orders worth Rs 1.1 billion in its various ongoing projects. Such a diversification continues to help L&T (Subscription Required) negotiate and get better terms and margins for projects.

The primary markets have been abuzz with a spate of Initial Public Offerings (IPOs). Confused as to which one's to apply and which ones to avoid?

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And here's an update from our friends at Daily Profit Hunter...

Markets started the week on a bearish note with a knock of more than 100 points on Monday. They held on to the support level of 8,700 for the following two days. And just when it seemed like they were ready to head higher, the news of surgical strikes in Pakistan created panic among investors and the Nifty tumbled about 250 points within minutes. The index ended the week at 8,620, down with a loss of 2.38%. Markets have breached the rising channel that was running for the last seven months. It seems the bears will control the index for the near term, and 8,800 will act as solid resistance while support will be around 8,500. You can read the detailed market update here...

Indian Indices Log Around 2.5% Losses for the Week

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Mar 23, 2018 (Close)