Indian markets finish strong

Indian stock markets traded firm throughout the day and finally finished the day on a strong positive note. The BSE-Sensex ended higher by 240 points, while NSE-Nifty closed higher by 85 points. The BSE Mid Cap and BSE Small Cap indices also piled up the gains as they inched higher by 1.3% and 1.5% respectively. Gains were seen all across the board, with capital goods and power sectors leading the gains. However, FMCG stocks ended the day with minor losses.

Markets across Europe made their first tentative gains in days following the standoff over Greek crisis. Meanwhile, Asian markets finished on a mixed note. Chinese stocks tumbled again as Shanghai Composite lost 5.3%. The rupee was trading at Rs 63.59 against the US dollar at the time of writing.

According to a leading financial daily, Bharat Heavy Electricals (BHEL) has successfully commissioned the 500 MW Kosti Thermal Power Station (TPS) in Sudan. Significantly, Kosti TPS (4x125 MW) is now Sudan's largest Power Plant. The company has executed this project on Engineering, Procurement and Construction basis, having designed, manufactured, supplied and installed the complete power project (4 units of 125 MW each) including associated civil works. All the major equipment for the project viz. boilers, steam-turbines, generators, Controls & Instrumentation, transformers, etc., have been manufactured in-house. The company has also constructed a canal from the White Nile River to supply water for the project. The project is funded by Government of India's Line of Credit of US$ 350 m. It is to be noted that Kosti TPS is BHEL's largest oil-fired thermal power plant in the overseas market. It is also BHEL's first crude-oil fired thermal power plant in Africa and comes close on the heels of the successful completion of BHEL's 28 MW Nyaborango Hydro project in Rwanda which was recently inaugurated by the President of Rwanda.

Shares of Eicher Motors surged and ended the trading day on an optimistic note (up 3.9%) after the company's motorcycle division Royal Enfield reported a 48% jump in total sales in June at 37,341 units, as against 25,303 units in the same month last year. During June 2015, the number of motorcycle units exports declined by 5% to 744 units as against 784 units in June 2014. The company's sales of vehicles with engine capacity up to 350cc increased 50% at 33,048 units against 22,073 units in the same period a year ago, while the sales of its vehicles with engine capacity exceeding 350cc increased by 33% at 4,293 units as against 3,230 units in June last year.

Indian markets soar higher
01:30 pm

After opening the day in the green, Indian Indices continued to surge in the post noon trading session. Most of the sectoral indices are trading positive with stocks from the pharma and engineering sectors leading the gains.

The BSE-Sensex is trading up 237 points (up 0.9%) and the NSE-Nifty is trading up 76 points (up 0.9%). The BSE Mid Cap index is trading up 1.4% and the BSE Small Cap index is trading up 1.5%. In commodity markets, Gold prices, per 10 grams, are trading at Rs 26,473 levels. Silver price, per kilogram, is trading at Rs 35,450 levels. Crude oil is trading at Rs 3,730 per barrel. The rupee is trading at 63.60 to the US dollar.

Telecom stocks are trading on a mixed note with ITI Ltd and MTNL leading the gains. As per a leading financial daily, India's largest telecom operator Bharti Airtel has inked a 4-year deal with Nokia Networks for the rollout of its 3G services in five telecom circles and network expansion in three zones. Under the four year contract, Nokia Networks will provide its radio elements and services expertise to power Bharti Airtel's 3G infrastructure. Nokia will work on network planning and optimization, network implementation, network operations, project management and care services, including hardware and software maintenance as well as competence development. in the spectrum auction held in February this year, Bharti Airtel had bought 3G spectrums in seven telecom service areas for Rs 58.3 bn. The stock of Bharti Airtel is currently trading up by 1.4%.

As per a leading financial daily, money raised via the initial public offer (IPO) route during the current calendar year 2015 is set to touch its highest level in past five years. This is evident by number of draft red herring prospectus (DRHP) that companies have filed the with the market regulator, Securities and Exchange Board of India (Sebi). Till now, eight companies have collectively raised nearly Rs 38.5 bn through IPOs in first six months of the current calendar year. This is double as compared to Rs 12 bn raised during the calendar year 2014 by five companies. In the past six months, 19 companies have filed DRPH with the Sebi to collectively raise estimated amount of Rs 110 bn through IPOs.

Stock markets surge upwards
11:30 am

The Indian stock market indices have surged upwards on positive macroeconomic data. The core sector index - which measures the output of eight key infrastructure-related industries of coal, crude oil, electricity, natural gas, refinery products, fertilisers, steel and cement rose 4.4% in May. Buying interest is highest in capital goods stocks.

The BSE-Sensex is trading up by 207 points (0.75%) and the NSE-Nifty is trading up by 70 points (0.83%). The BSE Mid Cap index is trading up by 136 points (1.27%), while the BSE Small Cap index is trading up by 145 points (1.31%). The rupee is trading at 63.62 to the US dollar. Gold and Silver are trading at Rs 26,504 per 10 grams & Rs 35,550 per kilogram respectively.

Stocks in Automobiles sector are trading on a positive note with Eicher Motors and Ashok Leyland leading the winners. Hero MotoCorp on Tuesday launched a new version of its premium motorcycle 'Xtreme Sports'. The launch has been made to regain the market share in the premium segment. The volumes in the premium segment have declined by 9.23% in FY 15. The company has made efforts to improve the style quotient by modifying the headlamp with twin LED pilot lamps and winkers and has provided a new digital analog console which improves the instrument cluster visibility. It is also equipped with tubeless tyres which would enhance the safety of the rider. The company is set to roll out a big mutli-media campaign with actor Ranbir Kapoor as its brand ambassador to promote the product. Hero MotoCorp is trading down by 0.5%.

Stocks in FMCG sector are trading on a positive note with Emami and Pidilite industries leading the winners. The Bombay High Court in its order on Tuesday granted permission to Nestle to export its 'Maggi' brand of noodles. The Food Safety and Standard Authority of India (FSSAI) had banned the production, processing, import, distribution and sale of the 'Maggi' noodles in the country. The ban was imposed as excessive level of lead in the product. Nestle is trading up by 0.2%.

Indian Markets open firm
09:30 am

Asian stock markets have opened the day in the green with markets in Hong Kong (up 1.9%) and Taiwan (up 0.8%) leading the gainers. Stock markets in US ended their session on a positive note while markets in Europe closed their session in the red yesterday. Crude oil prices rose nearly 1.3%, at Rs 3,785 per barrel. Precious metal gold and silver are trading down by 0.8% and 0.7% respectively.

Indian stock markets have opened their day on an encouraging note. BSE-Sensex is trading up by 83 points (up 0.3%) and NSE-Nifty is trading up by 18 points (up 0.2%). S&P BSE Midcap and S&P BSE Smallcap index indices are also trading in the green, up by 0.6% and 0.8% respectively. Sectoral indices are trading mixed with stocks in aluminum and pharma witnessing buying interest. Rupee gained around 0.12% and is trading at 63.68 per US dollar.

As per a leading financial daily, fiscal deficit for April-May of current fiscal stands at Rs 2.08 lakh crore or 37.5% of the budget estimates for 2015-16. Fiscal situation during April-May, 2015-16 has showed some improvement over the corresponding period of last year as the deficit then was 45.3% of the budget estimates. On a YoY (year-on -year) basis, the deficit was narrower due to higher non-tax revenue and lower non-plan expenditure. Net tax revenue for the first two months of 2015-16 stood at Rs 198.9 bn or 2.2% of the full year budget estimate. The same stood at 2.9% in the year-ago period. Total receipts stood at Rs 523.6 bn or 4.6% of the 2015-16 budget estimate, compared with 3.2% for April-May 2014.

Most of the stocks in automobile sector are trading in green. As per financial times, exports of automobile components grew 10% to an all-time high of $11.2 bn in 2014-15. This growth was helped by demand from the US, Turkey and Italy. As per data released on Tuesday by the Automotive Component Manufacturers' Association (ACMA), it grew 11% to Rs 685 bn. Turnover for the industry grew 11% to Rs 2348 bn in 2014-15 as against a decline of 2% in 2013-14. However, India has remained a net importer of automobile components in 2014-15 with its imports growing by 6% to $13.5 bn as against a decline of 6.3% in 2013-14.

Is 2015 like 2007 in terms of M&A?

Many mega deals are being carried out these days that are fueling what market watchers call the "M&A Boom." A bang in mergers & acquisitions (M&A) is taking over from the prolonged trend of share buybacks. This seems to be the most dynamic force behind US equity markets as companies are hunting for growth amid continued low interest rates.

Globally, in the second quarter of 2015, M&A volumes rose by 34.6% YoY to US$ 1.33 trillion as of 26 June 2015. The same has been recorded as the highest since the 2007 peak. Some of these deals include Royal Dutch Shell Plc's US$ 70 bn acquisition of British rival BG Group Plc. Other is the cable operator Charter Communications Inc's US$ 78.7 bn merger with Time Warner Cable Inc. The motive behind this is simple- easy money, fat corporate wallets and hassle-free targets. Further, low interest rates and strong assurance among chief executives have supported the surge in such deals.

As stated in an article in the Financial Times, buyers have paid record valuations for takeover targets in the US this year. However there has been a major difference between the recent booms as compared with that seen in 2007. The latter was to a large extent fuelled by private equity-backed leveraged buyouts, as opposed to this year's strategic deals. Valuations are the centre of discussions for recent M&A's. Moreover what remains same is the investment banker's ability to push up valuations.

Companies spend years on studying a potential target. However, if somebody else ends up making a deal before they do, it results in a need for the buyer to come up with a more compelling offer. This leads to high valuations which do not match the underlying value of the business. Investors should be wary of such deals which may sound attractive. One should not jump into making decisions based on the ongoing trend that the market is witnessing. Just because two companies join hands does not mean the foundation will be much stronger now.

Investing in a company just because it has merged with or acquired some other company is no guarantee of returns. Also, it cannot make your portfolio risk proof. One should consider factors such like business fundamentals and the valuations of both the companies before making any decision. We would recommend you to invest wisely and not let the current market trend of M&A in various sectors alter your emotions. It reminds us of a quote by Blaise Pascal - "All of human unhappiness comes from one single thing: not knowing how to remain at rest in a room." So be patient, have an independent approach, practice value investing and enjoy the ride.