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Sensex Finishes Strong; Tata Steel Surges 4%
Wed, 11 Jan Closing

Indian share markets continued to trade higher in the afternoon session and finished on a strong note amid firm international markets. At the closing bell, the BSE Sensex ended higher by 241 points, while the NSE Nifty finished up by 92 points. The S&P BSE Mid Cap & the S&P BSE Small Cap finished up by 1.4% and 1% respectively. Gains were largely seen in metal, banking and PSU stocks.

Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.84% and the Nikkei 225 rose 0.33%. The Shanghai Composite lost 0.77%. European markets are mixed today. The FTSE 100 is up 0.19% while the DAX gains 0.25%. The CAC 40 is up 0.20%.

The rupee was trading at 68.31 against the US$ in the afternoon session. Oil prices were trading at US$ 51.25 at the time of writing.

Steel stocks and lenders with significant exposure to steel industry such as ICICI Bank, Axis Bank and SBI surged after it was reported that China will completely stop production of highly polluting low-end steel by June-end to tackle smog.

According to Xu Shaoshi, chairman of the National Development and Reform Commission, China had reached targets for cutting production capacity in 2016 and hundreds of thousands of steel and coal workers were transferred to other jobs. Other industries such as cement and glass too were "actively" cutting capacity.

Meanwhile, Chinese leaders have also reportedly stated that they are planning to close down debt-laden producers that are a drag on China's economy.

This comes at a time when the Indian steel sector remains in the woods, accounting for 28% of the banking sector's stressed loans. While government steps such as duties and quality controls on cheap imports from top producer China have helped Indian steelmakers raise prices.

Steel Demand has Outpaced Supply Over the Last 5 Years

In another development, Tata Steel share price surged 4% in today's trade after the company reported a 27% increase in Q3FY17 sales to 2.9 million tonne (MT) compared to 2.3 MT in Q3 FY16. On a sequential basis, the company saw sales jump 14% in the third quarter this year over Q2FY17 due to ramp up in capacity at Kalinganagar.

The company's quarterly sales performance was boosted by a 20% increase YoY in auto grade steel, a 13% rise in branded products sales and a 37% jump in value added products.

The company has posted a 13% rise in sales in April-December 2016 to 7.7 MT up from 6.8 MT in the same period in 2015 led by a surge in automotive steels and branded products in its portfolio and contribution from its new Greenfield steel plant at Kalinganagar in Odisha.

Moving on to news about FDI. According to a leading financial daily, Prime Minister Narendra Modi has said that the country received US$ 130 billion FDI in the last two-and-a-half years with the government taking various initiatives to improve the ease of doing business. He also said that in the last two financial years the FDI equity inflow was higher by 66% as compared to previous two financial years and added that in the last year the total FDI inflow in India have been the highest ever. PM noted that Make in India has become the biggest brand that India has ever had.

Stating that highest emphasis has been on ease of doing business, Modi said that decisive steps have been taken to ease licensing processes and rationalize provisions and procedures relating to clearances, returns and inspections.

The number of countries from where FDI is coming in and the sectors in which they are being routed have also expanded. They have liberalized FDI regime in many sectors and in various ways and observed that India is today among the most open economies. He further said that India is now a leading recipient of capital goods in Asia Pacific and has left every country behind in terms of providing returns on investment.

Listing out initiatives taken by his government in last two-and-a- half years to improve business climate in the country, the Prime Minister said that Goods and Services Tax (GST) is in offing while Insolvency and Bankruptcy Code, a National Company Law Tribunal. This will serve as a new arbitration center for dispute resolution and a new IPR regime are all in place. They are also monitoring implementation of hundreds of action points across various sectors which aimed at improving the regulatory framework.

And here's a note from Profit Hunter:

After the demonetisation drive by the Modi government, the Nifty-50 index slipped sharply from 8,550 level to test its Brexit day low of 7,927. The index recovered some of its losses and faced resistance from 8,250 - 8,300 levels. It again slipped to test its previous low of 7,915 in November. The index bounced strongly from there and encountered multiple resistance from Horizontal resistance line, 200 Day Moving Average and down sloping resistance line near 8,250 - 8,300 levels.

In today's session, the Nifty-50 Index broke out this resistance zone with an upside gap. The RSI also broke above its resistance level of 53.

Based on the above it could be inferred that the stock markets appear to be on solid ground. However, on the flip side, if the index is unable to sustain above this resistance level, it could experience some selling pressure.

Let's see where the stock markets are headed in the days ahead...

Nifty-50 Index Breaks above its Stiff Resistance zone
Nifty-50 Index Breaks above its Stiff Resistance zone 


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Jul 25, 2017 03:36 PM

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