Indian stocks end marginally lower

Indian markets ended the day with moderate losses. Markets hovered between small gains and declines throughout the day, before ending the day on a dull note. The BSE-Sensex lost about 53 points while NSE-Nifty lost about 13 points. BSE Mid Cap and BSE Small Cap indices opposed the trend and finished the day higher by 1% each. Among sectoral indices, IT and Consumer Durables stocks lost the maximum while PSU and Realty stocks balanced the losses with some gains.

Barring Japan's Nikkei (down 1%), Asian stocks were broadly flat following weak data from China. European markets were seen falling at the open with concerns over volatility and tightening of financial conditions from the rise in bond prices.

The Indian Rupee advanced further by 15 paise to Rs 63.85 against the US dollar at the time of writing.

According to a leading daily, India's wholesale price inflation contracted further in April by 2.65% after shrinking 2.33% in the previous month. The country's factory output growth touched a five-month low in March at 2.1% and retail inflation eased to a four-month low in April at 4.87%. Among the major items tracked by the gauge, only food prices rose by 5.73% in April compared with 6.31% a month ago. Reportedly, the deflationary trend has encouraged the case for a rate cut by the Reserve Bank.

Steel stocks ended the day on an optimistic note with JSW Steel and Jindal Steel being the pick of the gainers. According to a leading financial daily, state-run Steel Authority of India Limited has completed the current phase of the modernization and expansion of the Bokaro Steel Plant with an investment of Rs 63.25 bn. The planned expansion by the SAIL has raised the plant's crude steel production capacity to 4.61 million tonnes per annum (MTPA) from 4.36 MTPA. SAIL, India's largest steelmaker, has charted investment of Rs 1,500 bn till 2025 to ramp up its steel production from 24 million tonnes to 50 million tonnes. The script of SAIL ended the day on a flattish note.

Indian stock markets remain flat
01:30 pm

The Indian markets continued to trade weak in the post-noon trading session. Sectoral indices are trading mixed with mining and software witnessing the maximum selling activity. However, buying activity was witnessed in aluminum and auto sectors.

The BSE-Sensex is trading lower by 187 points (0.7%) and NSE-Nifty trading lower by 52 points (0.6%). BSE Mid Cap is trading up by 0.4% while the BSE Small Cap is trading up by 0.3%. In commodity markets, Gold and Silver are trading at 27,488 and 39,525 price levels respectively. At the time of writing, the rupee was trading at Rs 63.97 to the US$.

Pharma stocks are trading mixed today with Ranbaxy Lab and Wockhardt Ltd being the leading gainers. Indian pharmaceutical company Lupin Ltd has reported a 1% YoY (year-on-year) decline in net profit at Rs 5.47 bn for the quarter ended March 2015. The decline was due to fall in revenue from its US business which accounts for 45% of total sales. The revenues of the company remained flat at Rs 30.5 bn YoY. Demand for its products declined in three key markets- the US, Japan and the rest of the world by 6%, 9% and 3% respectively. Currently the stock of Lupin Ltd. is trading down by 3.8% at Rs 1,627.

Automobile stocks are also trading mixed with Bajaj Auto and Hero Motocorp being the top gainers. As per a leading financial daily, commercial vehicles and components manufacturer Ashok Leyland has reported a 46% growth in revenue at Rs 45 bn in the March 2015 quarter. The growth was driven by a strong 33% YoY growth in volume and 10% improvement in realizations. For the year FY15, company's M&HCV (medium and heavy commercial vehicles) volumes grew 28% as compared to industry growth of 16%, helping Leyland gain market share. The stock of Ashok Leyland is trading up by 0.9%.

Markets open on a weak note
09:30 am

Following the global cues, the Indian Indices have opened the morning trade in the red. The Sensex is down 220 points (down 0.81%) and the NSE-Nifty is down 73 points (down 0.88%) at 8,162. BSE Mid Cap and BSE Small Cap have also opened on a negative note with both the indices down by 0.4%. Barring Power stocks, profit booking is witnessed across majority of the sectoral indices. Banking and Auto sector witnessed the most selling activity.

Asian markets are lower today led by the decline in Chinese and Hong Kong shares The Shanghai Composite is down 0.06% while the Hang Seng is down 0.20%. Overnight, US major indexes gave up early gains to close narrowly mixed as investors remained wary of climbing bond yields. Indian rupee opens flat at Rs 64.17 per dollar.

According to a leading financial daily, Tata Steel will create a new research and development hub in the UK focused on low-carbon technology, after signing an agreement with the University of Warwick in the UK. A research facility at the university's Warwick Manufacturing Group will open at the university later this year, with 40 Tata Steel scientists based there. Tata Steel will gradually shift its research and development activities to this site. Research will focus on developing new materials for Tata Steel's customer base, including those used in renewable energy generation and more fuel-efficient cars and planes. Other areas of research include programmes to improve steel production, and research into emerging and breakthrough technologies.

According to a business daily, Indian Oil and GAIL Ltd have signed MoU with Dharma LNG Terminal (DLTPL), a company owned by Adani Enterprises. DLTPL's project shall be an onshore LNG regasification terminal having initial capacity of 5.0 MTPA, at Dharma Port in Bhadrak district of Odisha. Dhamra is an all-weather deep water port. Reportedly, Indian Oil and GAIL would reserve regasification capacity in the terminal to supply regasified LNG in the emerging markets in the eastern part of the country. Indian Oil and GAIL would have the option to hold equity in DLTPL at a later date.

Sharebuybacks - Don't miss the bigger picture!

As proponents of value and long term investing, we give special importance to fundamentals and management efficiency and quality. Now there are certain ratios such as steady dividends, returns on equity and returns on invested capital that help us assess the companies on these parameters. However, there are certain factors that seem to have undue influence over investors as far as the management's image is concerned - share buybacks being one of the the most notable of them.

The usual market sentiments associated with share buyback are positive. And in some cases it could be one of the best ways to reward the shareholders. Investors often associate buybacks with the view that the management is confident about the business and the value in the stock. And at times, they even buy the shares just to participate in the buyback offer.

The case for a buyback can hold merit when there are no better ways to invest the company's cash at a rate that is higher than the cost of capital. Further, a share buyback only makes sense if it is carried out when the stock price is lower than the intrinsic value.

However, there have been cases when the managements have announced buybacks just to support the share prices and cash in on the positive sentiments associated with the buybacks. That share buyback announcements are hardly an indication of management quality and fundamentals is a point well reflected by stocks like Cairn Energy and Jindal Steel and Power - that have only eroded shareholders' wealth since such announcements. And that too when the general market sentiments have been bullish. Hence, investors should not give buyback announcements undue importance and should remain objective while taking investing decisions.