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Rising Retail Inflation, Crude Oil Demand Outlook, and Top Cues in Focus Today
Fri, 14 Feb Pre-Open | Monish Vora, TM Team

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India share markets witnessed selling pressure during closing hours yesterday and ended their day marginally lower.

At the closing bell yesterday, the BSE Sensex stood lower by 106 points (down 0.3%) and the NSE Nifty stood down by 26 points (down 0.2%).

The BSE Mid Cap index ended the day down 0.2%, while the BSE Small Cap index stood flat.

Stocks in the banking sector and oil & gas sector witnessed huge selling pressure, while healthcare stocks were trading in the green.

IRCTC Q3FY20 Profit Rises 179% YoY

Indian Railway Catering & Tourism Corporation (IRCTC) on Wednesday posted a 179.7% year-on-year (YoY) rise in profit at Rs 2,058 million for the quarter ended December 31. The figure stood at Rs 735.9 million in the corresponding quarter last year.

Revenue from operation increased 64.6% to Rs 7,159.8 million in Q3FY20.

EBITDA margin expanded sharply to 37.1% in Q3FY20, from 22.7% in Q3FY19 and 27.8% in Q2FY20.

The company also declared an interim dividend of Rs 10 per equity share.

In other news, Indian railways is planning to offer as many as 500 trains to private operators over the next five years.

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As per reports, Indian railways is already in the process of finalizing the bidding document for 150 such trains that will be run by private operators in the first phase. This will be followed by 350 additional trains which will also be run by private operators.

In a first, as many as 150 modern trains will be run by private operators across 100 routes, offering world-class technology and services to passengers, along with improving punctuality.

A discussion paper issued last month by the government's policy think tank NITI Aayog and the railway ministry has forecast an investment of about Rs 225 billion to run these trains.

Last month, it was reported that the government's move attracted two dozen firms, including global majors Alstom Transport, Bombardier, Siemens AG and Macquarie and domestic companies such as Adani Ports and IRCTC.

Speaking of the railways sector, here's what Tanushree Banerjee wrote about Indian railways in one of the recent editions of The 5 Minute WrapUp...

  • Investment in Indian railways has always been lacking in the past. This has meant a stretched infrastructure with more than 60% of routes being over utilised.

    The poor image of Indian railways meant a price hike was never an option for the government.

    All this has changed in the recent years.

    Since 2014, investment in the Indian railways has increased at a rapid pace.

This is evident in the chart below...

Massive Reforms Underway in the Indian Railways

The government's aim to modernize more than 100 stations to world class standards and by provide amenities like wi-fi, quality food and beverage services will improve passenger experience.

Improved services will also help the government justify fare increases in the future.

Tanushree believes such reforms are the need of the hour for the Indian economy.

In one of her recent articles, she wrote about a safe stock for the next decade.

It's the StockSelect recommendation for this month and Tanushree believes it can be one of the best performers in the next decade.

If you've subscribed to StockSelect, here's the link to the report.

If you're aren't a member, sign up for StockSelect here.

OPEC Cuts Oil Demand Outlook

The Organization of the Petroleum Exporting Countries (OPEC) warned that uncertainties surrounding the coronavirus outbreak that started in China, the world's leading oil importer, will depress global oil demand growth this year.

In its monthly report, OPEC said that world oil demand is now expected to rise by 990,000 barrels per day (bpd) this year - roughly 19% less than previously forecast.

The report also noted that January saw a sharp decline in OPEC's output as producers implemented a new production-cut pact that the cartel's allies agreed to in December in order to buoy crude prices.

The revised forecast for global oil demand could bolster the case for even more production curbs. Last week, a technical panel advising OPEC and its allies, a grouping known as OPEC+, recommended an immediate additional output cut of 600,000 bpd.

OPEC and its allies led by Russia have implemented such curbs since 2017 to revive prices that had become depressed by a glut of crude.

According to the report, in January, OPEC members over-delivered on production cuts to which they had agreed, lowering supply by 509,000 bpd to 28.86 million bpd. Russian output, however, increased.

OPEC also trimmed its 2020 forecast for growth in non-OPEC supply to 2.25 million bpd, 100,000 bpd less than previously forecast.

While a slowdown in non-OPEC supply would help the cartel's efforts to manage the market, non-OPEC output is still expected to grow at over twice the rate of world oil demand in 2020.

How this development pans out remains to be seen. Meanwhile, we will keep you updated on all the news from this space.

Speaking of crude oil, where do you think are oil prices headed? And what does it mean for the Indian markets?

Well, India's no.1 trader, Vijay Bhambwani shares his insights and updates on his YouTube channel regularly.

In one of his videos, he talks about how you can hedge against the rising crude oil prices and also gives a perspective as to what's actually happening in this space.

Tune in to find out more...

Falling Factory Output and Rising Retail Inflation

Factory output shrank in December after a mild pickup in November while retail inflation accelerated to a 68-month high in January.

Data released by the statistics office showed industrial output contracted 0.3% in December compared with a 1.8% rise in November. April-November industrial growth was 0.5% against 4.7% in the year-earlier period.

The simultaneously released Consumer Price Index (CPI) showed retail inflation raced to 7.59% in January from 7.35% in December, strengthening the likelihood of a prolonged pause in interest rates by the Reserve Bank of India (RBI) despite muted growth.

At two-digit classification, 16 out of the 23 industry groups in the manufacturing sector showed negative growth during the month of December 2019.

Manufacturing output contracted 1.2% compared with 2.9% growth in the same month a year ago while electricity generation shrank for a fifth month in a row, declining 0.1% in December as against 4.5% growth in the year ago.

At the use-based level, the steepest contraction was in the capital goods sector at 18.2% followed by 6.7% in consumer durables and 3.7% in consumer non-durables. The only silver lining came from intermediate goods which has been showing a positive growth momentum and expanded in double digits at 12.5% for the third consecutive month.

The statistics office has lowered the FY19 GDP growth rate to 6.1% from the provisional estimate of 6.8% and has forecast 5% growth in FY20, its slowest pace in 11 years. The Economic Survey 2020 sees a recovery to 6-6.5% in FY21.

At 7.59%, January retail inflation was well above the RBI's medium-term target for the fourth straight month. The target is 4% with a margin of two percentage points on either side.

The previous high for retail inflation was 8.3% in May 2014.

Food inflation declined to 13.63% from 14.19% in December as that for vegetables slightly cooled to 50.2%, as against 60.5% in December 2019. Among protein-rich items, meat and fish inflation was 10.50% during the month, while that for eggs was 10.41%.

Driven by various services, core inflation, which excludes food and fuel, was 4.1% and is a cause for concern as per economists. Average inflation in the April-January period stood at 4.5%, which was highest in the past three years. It was higher than 3.6% inflation registered during the same months in FY19.

In its monetary policy review last week, the RBI had maintained status quo on rates, as it revised the consumer inflation target upward to 6.5% for the January-March quarter.

How these numbers pan out in the coming months remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

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Stock Market Updates

GRANULES INDIA at 52 Week High; BSE 500 Index Down 0.3 % (Today's Market)

Feb 18, 2020 03:34 PM

GRANULES INDIA share price has hit a 52-week high. It is presently trading at Rs 180. BSE 500 Index is down by 0.3% at 15,684. Within the BSE 500, GRANULES INDIA (up 2.3%) and TV18 BROADCAST (up 14.9%) are among the top gainers, while top losers are BHARTI INFRATEL and VODAFONE IDEA.

CARE RATING Plunges by 5%; BSE 500 Index Down 0.3% (Today's Market)

Feb 18, 2020 03:32 PM

CARE RATING share price has plunged by 5% and its current market price is Rs 515. The BSE 500 is down by 0.3%. The top gainers in the BSE 500 Index are TV18 BROADCAST (up 14.9%) and JAIPRAKASH ASSO. (up 9.9%). The top losers are CARE RATING (down 5.2%) and TORRENT POWER LTD (down 5.9%).

BEML LTD. Plunges by 5%; BSE CAPITAL GOODS Index Up 0.3% (Today's Market)

Feb 18, 2020 03:30 PM

BEML LTD. share price has plunged by 5% and its current market price is Rs 915. The BSE CAPITAL GOODS is up by 0.3%. The top gainers in the BSE CAPITAL GOODS Index are BHARAT ELECTRONICS (up 3.0%) and SCHAEFFLER INDIA LTD (up 2.9%). The top losers are BEML LTD. (down 5.1%) and SADBHAV ENGINEERING (down 7.9%).

ESCORTS LIMITED at 52 Week High; BSE 500 Index Down 0.4 % (Today's Market)

Feb 18, 2020 03:28 PM

ESCORTS LIMITED share price has hit a 52-week high. It is presently trading at Rs 896. BSE 500 Index is down by 0.4% at 15,684. Within the BSE 500, ESCORTS LIMITED (up 1.1%) and TV18 BROADCAST (up 14.5%) are among the top gainers, while top losers are VODAFONE IDEA and BHARTI INFRATEL.

ABBOTT INDIA Surges by 5%; BSE HEALTHCARE Index Down 0.0% (Today's Market)

Feb 18, 2020 03:18 PM

ABBOTT INDIA share price has surged by 5% and its current market price is Rs 15,441. The BSE HEALTHCARE is down by 0.0%. The top gainers in the BSE HEALTHCARE Index is ABBOTT INDIA (up 5.1%). The top losers are THYROCARE TECHNOLOGIES (down 0.5%) and BLISS GVS PHARMA (down 0.5%).

Sensex Slips 400 Points; IndusInd Bank & Tata Steel Top Losers (Today's Market)

Feb 18, 2020 12:30 pm

The BSE Sensex is trading down by 396 points, while the NSE Nifty is trading down by 122 points.

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Feb 18, 2020 03:37 PM