Sensex Ends Volatile Day Flat; Pharma Stocks Top Losers
Closing

After opening the day in green, share markets in India witnessed volatile trading activity throughout the day and ended the day flat. Sectoral indices ended the day mixed, with stocks in the and stocks in the leading the losses.

At the closing bell, the BSE Sensex stood lower by 22 points and the NSE Nifty closed down by 23 points. The BSE Mid Cap index ended the day down 0.6%, while the BSE Small Cap index ended the day down by 1%.

Asian stock markets finished in red. As of the most recent closing prices, the Hang Seng was down by 0.3% and the Shanghai Composite was down by 0.5%. The Nikkei 225 was down by 0.1%. Meanwhile, European markets were trading on a mixed note. The FTSE 100 was up by 0.1%, The DAX, was down by 0.5% while the CAC 40 was down by 0.5%.

The rupee was trading at Rs 68.98 against the US$ in the afternoon session. Oil prices were trading at US$ 72.15 at the time of writing.

In news from about the economy. The Indian rupee weakened past the 69-mark against the US dollar, tracking losses in its Asian peers after Chinese yuan fell to a one year low.

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So far this year, the rupee has weakened 7.4%, while foreign investors have sold US$964.3 million and US$6.3 billion in equity and debt markets, respectively.

The rupee fell amid rising crude oil prices and a strengthening US dollar.

Following the Fed Chairman's testimony, the US dollar rose to the highest level in a year. In his testimony, Jerome Powell, the Fed Chair said he believed the US economy was on course for years more of steady growth, and played down the risks to the US economy of the escalating trade conflict.

Change in the Rupee and Sensex in the Past 10 Years

While, BSE mid and Small cap indices have seen a healthy correction, large caps have remained almost intact during the same period.

The recent weakness in the rupee versus the US dollar indicates further trouble for the market ahead. As seen from the below chart, when the Sensex corrected to its multi-year lows in March 2009, the rupee had also weakened by 21% in the past 9 months. Similarly, when Sensex hit an all-time high in January 2018, the rupee had been gradually strengthening over the past year.

Post January, the rupee has been on a constant decline versus the dollar.

Increase in US bond yields has made it attractive for foreign investors. This has resulted in capital outflows from the Indian market. Past history has shown that any further weakening of the rupee will adversely impact the market.

But for investors, is it a matter of concern? If you have a horizon of 10 or more years, it shouldn't. As we can see from the chart, despite the rupee weakening by over 60% in the past decade, Sensex has also been up in the same period.

Moving on to news from the IPO space. The initial public offering (IPO) of Women's apparel maker TCNS Clothing Company which opened for offer yesterday, was subscribed by 2 times on day 2 of the bidding process. The firm sells its products under W, Aurelia and Wishful brands.

As on 30 September 2017, TCNS sold its products through 418 exclusive brand outlets, 1,305 large format store outlets and 1,361 multi-brand outlets in different parts of the country. It also sold products through six exclusive brand outlets in Nepal, Mauritius and Sri Lanka.

To know our view on the IPO of TCNS Clothing, you can read our entire IPO analysis here (subscription required).

Further, HDFC Asset Management Company, the country's second largest mutual fund firm, has fixed a price band of Rs 1,095-1,100 per share for its initial public offering. The IPO is estimated to garner Rs 28 billion.

The initial share sale offer will be open for public subscription from July 25 to 27.

HDFC AMC operates as a joint venture between Housing Development Finance Corporation (HDFC) and Standard Life Investments.

Reportedly, the proposed IPO will put up to 25.4 million equity shares of the fund house on sale, of which 8.6 million shares will be put up by HDFC and up to 16.8 million shares by Standard Life.

HDFC AMC is selling a 4.1% stake in the IPO, while Standard Life will offload 8%.

The IPO market is gearing up for a burst of activity, with at least 12 companies planning to raise more than Rs 170 billion over the next two months, after a quiet start to the June quarter.

Reportedly, the introduction of the new Indian accounting standards (IndAS) as one of the reasons why IPO-bound companies have not approached the market so far, this quarter.

All companies, including unlisted ones, having net worth of between Rs 2.5 billion and Rs 5 billion have to prepare their financial accounts for the year ended 31 March 2018 as per the IndAS accounting standards. Companies with net worth of Rs 5 billion or more had to implement the new standard a year earlier.

As per the reports, the pipeline in the June quarter will be very healthy. The market/IPO outlook. Companies that may launch their IPOs in the quarter include seafood exporters Devi Seafoods Ltd and Nekkanti Sea Foods Ltd. Both said they would decide on the timing of the launch after they get regulatory approval for their respective share sales.

With so many new IPOs hitting the market, it would be difficult to not get carried away.

A merit-based selection primarily including valuation, business, and management quality is the logical way to go about investing in IPOs. If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

To know more, download this FREE report now and discover How to Get Rich with IPOs. This guide will show you how to safely profit from the IPO rush.


Indian Indices Trade Marginally Higher; Metal Stocks Witness Buying
12:30 pm

Stock markets in India are presently trading marginally higher. Sectoral indices are trading on a mixed note with stocks in the consumer durables sector and metal sector witnessing maximum buying interest.

The BSE Sensex is trading up 49 points (up 0.1%) and the NSE Nifty is trading flat. The BSE Mid Cap index is trading down by 0.3%, while the BSE Small Cap index is trading down by 0.8%.

The rupee is trading at 68.88 to the US$.

In the news from macroeconomic space, the Asian Development Bank said in a report today that growth in Asia and the Pacific's developing economies for 2018 and 2019 will remain solid as it continues apace across the region, despite rising tensions between the US and its trading partners.

The report stated that led by India, South Asia will continue to be the fastest growing economic area despite new trade tensions in Asia and Pacific region.

The ADO published in April had said that India's economic growth will rise to 7.3% his fiscal and further to 7.6% in the next financial year, retaining the fastest-growing Asian economy tag on back of Goods and Services Tax (GST) and banking reforms.

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------------------------------

In the news from the IPO space, the initial public offering (IPO) of TCNS Clothing was subscribed 10% on Day 1 of the bidding process. As per the data available with NSE, the issue received bids for 10,75,300 shares till 5 pm yesterday.

The issue comprises of 15,714,038 shares which are being offered in the Rs 714-716 price band.

The company is engaged in the business of designing, manufacturing, marketing and retailing of branded apparels for women and offers top-wear, bottom-wear, drapes, combo-sets and accessories etc., catering to the varied wardrobe requirements of Indian women. The company's brand portfolio includes 3 brands as follows:

'W' - A premiere brand targeted at women's casual and workwear requirements.

Aurelia - A contemporary ethnic wear brand that grew in revenue at a CAGR of 70.8% during 2013-17.

Wishful - A premium occasion wears brand that grew in revenue at a CAGR of 66.7% during 2013-17.

To know more about the company, you can read our IPO analysis of TCNS Clothing Ltd (requires subscription).

Speaking of IPOs, eighteen initial public offerings (IPOs) in the first six months of 2018 raised Rs 236.7 billion. This compares to Rs 120 billion that thirteen companies raised via IPOs in the year-ago period.

Further, as per the news, the outlook is bullish for the rest of the year as well, with 50 companies including HDFC Mutual Fund, Lodha Developers and Rail Vikas Nigam expected to launch their initial share sales.

Of these, 28 companies are awaiting SEBI nod to launch their IPOs and 18 others have received the regulatory approval.

Note that the stock market is gearing up for a burst of IPO activity, with at least 12 companies planning to raise more than Rs 170 bn over the next two months, after a quiet start to the June quarter.

Also, according to EY India IPO Readiness Survey Report, globally, Indian exchanges recorded the highest IPO activity as the country saw 90 IPO launches that raised US$ 3.9 billion in the first half of this year.

Meanwhile, the amount raised by SME IPOs in 2017 stood at Rs 17.9 bn. This is more than three times the amount raised in 2016. The number of SME IPOs launched also doubled from 66 to 132. This is evident from the chart below:

SME IPO Boom in 2017

We believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs. If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

To know how to safely profit from the ongoing IPO rush, download this FREE report now and discover How to Get Rich with IPOs.


Sensex Opens in Green; ONGC & M&M Gain
09:30 am

Asian stock markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.3% while the Hang Seng is down 0.1%. The Shanghai Composite is trading down by 0.6%. Meanwhile, the S&P 500 rose to its highest in more than five months and the Dow climbed for a fifth session on Wednesday as solid earnings boosted financial and industrial stocks and reinforced expectations for a strong second-quarter reporting season.

Back home, India share markets opened the day on a positive note. The BSE Sensex is trading up by 94 points while the NSE Nifty is trading up by 7 points. The BSE Mid Cap index opened down by 0.3% while BSE Small Cap index opened down by 0.1%.

As the Sensex keeps soaring and the BSE Smallcap keeps bleeding, Our, Co-head of Research & Editor of StockSelect, Tanushree Banerjee, exhorts all our readers, to slightly shift their goal post. It's a small tweak that can allow you to buy stocks with the maximum upside at minimum risk.

Which Index Will Allow you to Stay 'In the Money'?

Her goal post is to recommend stocks that will stay in the money (consistently reasonably profitable) for a long period of time.

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------------------------------

Here's an excerpt of what she wrote in The 5 Minute WrapUp recently:

Moving on...The rupee is currently trading at 68.57 to the US$.

Sectoral indices have opened the day on a mixed note with consumer durables stocks and automobiles stocks witnessing maximum buying interest. While, healthcare stocks & realty stocks have opened the day in red.

Airline Stocks opened the day on a mixed note with SpiceJet & Jet Airways leading the gainers. As per a report by ICRA, the domestic airline industry is expected to post losses to the tune of Rs 36 billion in the current fiscal on rise in crude oil prices and falling rupee.

The losses would come despite around 15% expected average annual growth in passenger traffic over the medium-term due to conducive factors, support from regulatory environment and development of new airports.

Higher crude prices, due to which most airlines saw a decline in their yields during the second half of FY18, resulted in a higher than estimated aggregate loss for the domestic aviation industry to around Rs 24-25 billion in the previous fiscal.

According to Icra, the ATF price was 35.4% higher as on 31 March 2017, against the 31 March 2016 level, impacting the financial performance of the airlines during the year due to their inability to pass on the increased cost to the customers.

While the jet fuel prices declined by about 8% to Rs 51,640 per kilo litre (kl) as on September 2017, partly on account of the appreciation of the rupee, it witnessed a significant year-on-year increase of 12.6% to Rs 63,162 per kl as on March 2018.

Overall, the average ATF prices during FY18 were higher by 10.4%. This is evident from the increase in fuel cost per available seat per kilometre (ASKM) for the three listed airlines during FY18, Icra noted.

While the strong passenger traffic growth will allow airlines to improve yields to offset cost pressures to some extent, the increase may not be adequate, the agency said.

Therefore, the RASK (revenue per available seat kilometre) CASK (cost per available seat kilometre) spread is expected to get squeezed.

Furthermore, the aggregate industry debt level is expected to increase to about Rs 665 billion by March 2019 as some airlines have large capacity expansion plans, which may be either owned (through debt funding) or on operating lease.

The ASKM growth in this fiscal is estimated to be around 15-17%, Icra said adding the key driver for the industry capacity growth continues to be the sizeable order backlog of the industry.

In another development, JK Tyre & Industries Ltd reported a consolidated net profit of Rs 642.4 million for the first quarter ended 30 June, mainly driven by robust sales.

The company had posted a net loss of Rs 1172.1 million in the year-ago quarter.

Revenue from operations during the first quarter stood at Rs 24.4 billion. It was at Rs 19.3 billion in the same period last fiscal.

The two figures are not comparable as revenue from operations is net of taxes after GST implementation in July 2017, while in the year-ago quarter it was inclusive of excise duty, the company stated.

Reportedly, there was higher volume across categories, especially in truck/bus radial, passenger car and light truck radials.

Further, the company stated that, during the quarter, the company's subsidiaries namely, JK Tornel, Mexico and Cavendish Industries Ltd have performed well.

Moreover, labour restructuring completed at JK Tornel last year is reaping good dividend which has added to the over-all profitability.

JK Tyre & Industries share price opened the day up by 1.8%.

To get more updates on share market, click here.


Indian Indices Trade in Red; IPO Buzz, and Top Stocks in Action
Pre-Open

On Wednesday, share markets in India opened in green and went on to hit a new all-time high. However, selling during the day meant that the benchmark indices ended the day in red. The S&P BSE Midcap Index ended down by 1.3% while S&P BSE Small Cap Index ended down by 0.9%.

The BSE Sensex closed lower by 147 points to end the day at 36,373. While the NSE Nifty ended down by 28 points to end the day at 10,980.

Among BSE sectoral indices, metal stocks fell the most by 3.1% followed by stocks in the realty sector at 2.4.%. Tata Steel and Vedanta were among the top losers.

Top Stocks in Action

Zydus Cadila share price will be in focus today after the company received final approvals from the US Food and Drug Administrator (USFDA) to market four generic products in the United States.

The group now has 208 approvals and has so far filed over 330 abbreviated new drug applications (ANDAs) since the commencement of the filing process by the company.

Tata Motors share price is likely to be in focus today, after the company said it will hike prices of its passenger vehicles across models by up to 2.2% from August to offset increased input costs.

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Domestic Air Traffic Continues Stellar Growth

In news from stocks in the aviation sector. According to data from the Directorate General of Civil Aviation (DGCA), domestic air traffic was up by over 18.4% in June, compared to the same month last year.

Indian carriers flew 11.3 million passengers in the past month, up from 9.6 million in June 2017,

All key scheduled carriers flew their planes with more than 80% seats full. SpiceJet maintained its pole position in terms of load factor at 93.3%, followed by GoAir at 88.6% with IndiGo not far behind at 88.3%

IndiGo remained the market leader, flying 41.3% of the industry passenger traffic. Jet Airways came in next with 15%, followed by national carrier Air India with 12.5%.

Air travel has recorded double-digit growth for 47 consecutive months, thanks to low fares, the addition of new flights/destinations, and overall growth in the economy.

What's foreseeable for India's aviation traffic in 2018 is some pressure on the back of the consistent rise in crude oil prices. Earlier this month, Brent crude oil briefly breached US$80 per barrel and touched its highest level since December 2014. Crude prices have been driven up by production curbs in OPEC nations and Russia, as well as by robust demand on the back of healthy global economic growth.

Oil prices are closely monitored by the Indian air carriers, as aviation turbine fuel is their single largest input cost. A sharp rise in the cost of fuel puts pressure on margins, and consequently an increase in air fares.

Although air travel is becoming the new normal, investors need to understand the industry dynamics before buying up aviation stocks.

IPO Buzz

TCNS Clothing opened for subscription yesterday with a price band of Rs 714-716 per share.

Women's apparel maker TCNS Clothing Company raised over Rs 3.4 billion from the anchor investors, ahead of its IPO today. The firm sells its products under W, Aurelia and Wishful brands.

As on 30 September 2017, TCNS sold its products through 418 exclusive brand outlets, 1,305 large format store outlets and 1,361 multi-brand outlets in different parts of the country. It also sold products through six exclusive brand outlets in Nepal, Mauritius and Sri Lanka.

To know our view on the IPO of TCNS Clothing, you can read our entire IPO analysis here (subscription required).

Further, HDFC Asset Management Company, the country's second largest mutual fund firm, has fixed a price band of Rs 1,095-1,100 per share for its initial public offering. The IPO is estimated to garner Rs 28 billion.

The initial share sale offer will be open for public subscription from July 25 to 27.

HDFC AMC operates as a joint venture between Housing Development Finance Corporation (HDFC) and Standard Life Investments.

Reportedly, the proposed IPO will put up to 25.4 million equity shares of the fund house on sale, of which 8.6 million shares will be put up by HDFC and up to 16.8 million shares by Standard Life.

HDFC AMC is selling a 4.1% stake in the IPO, while Standard Life will offload 8%.

The IPO market is gearing up for a burst of activity, with at least 12 companies planning to raise more than Rs 170 billion over the next two months, after a quiet start to the June quarter.

Reportedly, the introduction of the new Indian accounting standards (IndAS) as one of the reasons why IPO-bound companies have not approached the market so far, this quarter.

All companies, including unlisted ones, having net worth of between Rs 2.5 billion and Rs 5 billion have to prepare their financial accounts for the year ended 31 March 2018 as per the IndAS accounting standards. Companies with net worth of Rs 5 billion or more had to implement the new standard a year earlier.

As per the reports, the pipeline in the June quarter will be very healthy. The market/IPO outlook continues to be strong and robust for the next two quarters if not the entire year.

Several major IPOs, including those of HDFC Asset Management Co. Ltd, microfinancier CreditAccess Grameen Ltd and women's apparel maker TCNS Clothing Co. Ltd, are set to hit the market this quarter.

Other companies that may launch their IPOs in the quarter include seafood exporters Devi Seafoods Ltd and Nekkanti Sea Foods Ltd. Both said they would decide on the timing of the launch after they get regulatory approval for their respective share sales.

With so many new IPOs hitting the market, it would be difficult to not get carried away.

A merit-based selection primarily including valuation, business, and management quality is the logical way to go about investing in IPOs. If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

To know more, download this FREE report now and discover How to Get Rich with IPOs. This guide will show you how to safely profit from the IPO rush.