Sensex, Nifty Recoup Losses; Consumer Durables & Energy Stocks Shine
Closing

After trading in negative territory during the noon session, Indian share markets bounced back in the afternoon session to finish marginally higher.

At the closing bell, the BSE Sensex closed higher by 88 points and the NSE Nifty finished up 53 points. The S&P BSE Mid Cap finished up by 0.7% while & S&P BSE Small Cap finished up by 0.1%.

Gains were largely seen in consumer durables stocks, energy stocks and metal stocks. Pharma stocks finished in red.

Biocon share price fell 4.9% after the US FDA issued 10 observations pointing at aseptic practices following an inspection at the company's plant in Bengaluru. Almost all constituents of the Nifty pharma index finished in red with its third straight session of decline.

Sun Pharmaceutical Industries share price dropped 1.6%, while Dr. Reddy's Laboratories Ltd share price fell 3.8%.

Asian stock markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.12%, while the Nikkei 225 & the Shanghai Composite fell 0.38% and 0.33% respectively. European markets are mixed today. The DAX is up 0.23% while the FTSE 100 gains 0.09%. The CAC 40 is off 0.01%.

The rupee was trading at Rs 63.71 against the US$ in the afternoon session. Oil prices were trading at US$ 48.7 at the time of writing.

In news from economy, after the RBI cut the interest rates by 25 basis points, Finance Minister Arun Jaitley has said that lending rate of 14-15% will make India uncompetitive in the global market and industry cannot invest at such higher interest rates.

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Jaitley added that Interest rates will 'slowly' become 'reasonable' and the government has taken steps to offer stable interest rates to investors so that they are not lured into chit fund schemes, which attract investors by offering a meagre 1-1.5% interest rate higher than what is given by banks.

The finance minister defended the largest public-sector lender State Bank of India's decision to cut interest rate on saving accounts of less than Rs 10 million, saying the move was in sync with reduction in lending rate.

Further adding that high interest rate on savings and fixed deposits was during a time when inflation was 10-11% and sluggishness was setting in the economy. So, when the lending rate came down, so did savings account.

India's Policy Rates Compared to Asian Economies

The chart above shows how India's inflation and policy rates stand in comparison with other Asian economies. However, the central bank in its monetary policy statement expects inflation to rebound soon.

The RBI's monetary statement in June had projected quarterly average inflation in the range of 2-3.5% in the first half of fiscal 2018, and 3.5-4.5% in the second half. Now it expects inflation to be about 4% by the year end. As long as inflation follows this track, the possibilities of rate cuts during this fiscal year remain slim.

Moving on to news from oil & gas sector. Indian oil corporation (IOC) reported a 45% fall in profit for the first quarter against the same quarter a year-ago owing to drop in refining margin and inventory loss.

Net profit was Rs 45.49 billion against Rs 82.69 billion a year-ago. Revenue stood at Rs 1.29 trillion in the June FY18 quarter against Rs 1.07 trillion in the year-ago period.

The company suffered an inventory loss of Rs 20.33 billion compared with a gain of Rs 37.85 billion during the two quarters, respectively. The company also suffered a product loss of Rs 20 billion during the quarter compared with a gain of Rs 36.95 billion during the comparable period a year-ago.

Meanwhile, IOC is stepping up purchase of crude oil from the US and will tender for a second cargo this month as it looks at cheaper alternatives that have emerged due to a global supply glut. After IOC, Bharat Petroleum Corp. Ltd (BPCL) too has bought 1 million barrels of sour crude from the US for its Kochi refinery.

Buying US crude has become attractive for Indian refiners after the differential between Brent and Dubai has narrowed.

IOC share price surged 8% in today's trade.

In another development, BPCL announced diversification plans with a focus on venturing into gas business.

The company also announced plans to diversify resources for sourcing fuels as a part of its five-year plan. BPCL has set a target of a capital expenditure of Rs 1 trillion to be spent on all expansion activities including marketing and refining over the next five years.

BPCL share price finished the day up by 5.9% on the BSE.

Titan Ltd share price rose 9.3% to Rs 609 after its first quarter net profit almost doubled, helped by a significant jump in jewellery demand that more than offset subdued sales of the company's watches and eye wear segments. Net profit increased to Rs 2.37 billion in the 3 months ending 30 June 2017, from Rs 1.20 billion a year ago

And here's a note from Profit Hunter:

Indian Oil Corporation (IOC) is the top gainer in the Nifty 50 Index. Let's have a look at its chart.

The stock bottomed out with the broader market index in February 2016. It traded in a strong uptrend to hit a life high of Rs 450 in May 2017. It corrected 19% from this high to hit a low of Rs 364 last week.

Yesterday, the stock rallied 5% with healthy volumes on expectations of good Q1FY18 results. Demand was also seen as the stock found support from the horizontal support line at 365 level. The company announced its quarterly results yesterday after market hours. And today, the stock surged 8% with good volumes. The stock has now rallied 13% in just two days.

So will the quarterly result help it hit a new life high? Let's wait and watch.

IOC Surged 13% in Two Days
IOC Surged 13% in Two Days 


Sensex Trades on a Dull Note; Pharma Stocks Biggest Losers
01:30 pm

After opening the day flat, share markets in India had a tepid session of trading and are currently trading in the red. Sectoral indices are trading on a mixed note with stocks in the consumer durables sector and the metals sector trading in green, while stocks in the pharma sector are leading the losses.

The BSE Sensex is trading down by 90 points (down 0.3%), and the NSE Nifty is trading lower by 5 points (down 0.1%). Meanwhile, the BSE Mid Cap index is trading up by 0.1%, while the BSE Small Cap index is trading down by 0.1% The rupee is trading at 63.66 to the US$.

In news from the pharma sector, Glenmark Pharma is in focus.

Glenmark Pharma announced that it had received final ANDA (abbreviated new drug application) approval from the US Food and Drug Administration (USFDA) for its Acyclovir Ointment.

Acyclovir Ointment, the generic version of Zovirax Ointment, of Valeant International Bermuda, is used for treatment of herpes virus.

As per IMS Health sales data for the 12 months to June 2017, Zovirax Ointment achieved annual sales of approximately US$ 110.3 million.The company's current portfolio consists of 121 products authorised for distribution in the US marketplace and 64 ANDAs pending approval with the USFDA.

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At the time of writing, Glenmark Pharma was trading down by 1.5%.

The Indian pharmaceutical industry has come under a lot of regulatory pressure in the past few years.

We had written about the current predicament of Indian pharma companies in one of the premium editions of the 5 Minute WrapUp:

  • Over the past few years, risk in the US markets has increased. The US Food and Drug Administration has become stricter on products entering US borders. Surprise inspections have increased and companies are being issued warning letters. This has impacted the business and earnings of Indian pharma players, causing major volatility for the sector.

The list of pharma sector woes is long. So, is there light at the end of the tunnel? Girish Shetty, our research analyst thinks there is.

Is the Worst Over for all the Pharma Stocks?

As per him, it doesn't make sense to paint all pharma stocks with the same brush. The leaders of the industry will certainly survive this phase. There are interesting, niche pharma stocks that are worth your attention.

Facing pricing pressures in the domestic and export markets, currency fluctuations, as well as manufacturing issues related to their plants, there is a transformation happening in the overall sector as to how business is done and will be done in the future.

Moving on to news from the oil and gas sector. Petroleum major Bharat Petroleum Corporation Ltd (BPCL) announced diversification plans with a focus on venturing into gas business.

The company also announced plans to diversify resources for sourcing fuels as a part of its five-year plan.

BPCL has set a target of a capital expenditure of Rs 1 trillion to be spent on all expansion activities including marketing and refining over the next five years.

As a part of the plan to diversify its procurement and sourcing and to reduce geopolitical risk, the company bought one million barrels each of oil from the US - in two consignments. In a first, the company which is largely dependent on OPEC nations for oil imports, purchased crude from the US.

At the time of writing, BPCL share price was trading up by 1.8%.


Indian Indices Extend Losses; Telecom Sector Down 1.9%
11:30 am

After opening the day marginally lower, Indian share markets witnessed further losses. Sectoral indices are trading on a mixed note with stocks from the telecom sector and the healthcare sector witnessing maximum selling pressure. Consumer durables sector is witnessing buying interest.

The BSE Sensex is trading down 93 points (down 0.3%) and the NSE Nifty is trading down 12 points (down 0.1%). Meanwhile, the BSE Mid Cap index is trading down by 0.3%, while the BSE Small Cap index is trading down 0.2%. The rupee is trading at 63.69 to the US$.

The Bank of England (BoE) left interest rates unchanged at its monetary policy meet with only two of its monetary policy committee (MPC) members voting in favor of a hike this month.

The central bank also left its asset purchase programme unchanged.

The bank rate now remains at 0.25%, along with the asset purchase target at 435 billion pounds and the corporate bond target at 10 billion pounds.

In other news, US services sector data fell more than expected in July. As per the Institute for Supply Management (ISM), non-manufacturing index fell to 53.9 last month from 57.4 in June.

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The data stoked doubts over whether the Federal Reserve would raise interest rates again in 2017. The stock markets now believe that its more likely the Fed won't raise rates again this year. Many reasons are put forward for this. US inflation is lower than expected. While the economic conditions could be better, the political situation remains tenuous.

However, with the recent measures at major central banks, it seems that the end of easy money is near. But it would take long before the central banks come to their senses and end this trend. As Asad Dossani, editor at Profit Hunter, writes in one of his recent articles...

  • For the Fed and other central banks, it's tough to end easy money. Very tough. You'll read plenty of reasons why rates should go down or stay the same. You won't read much arguing for rate increases. And this is because rate increases create short-term pain, in exchange for long-term gain.

    In the short term, markets will fall. Volatility will go up. Economic activity may slow down too. But the most important long-term benefit is never mentioned. And this is the incentive to save more and borrow less. Higher interest rates encourage people to spend and invest out of their savings, rather than by borrowing. And this is extremely important for long-term economic prosperity.

In the news from commodity markets, crude oil is witnessing selling pressure today. Losses are on account of data that shows rising output from the US as well as producer club Organisation of the Petroleum Exporting Countries (OPEC).

According to a report by Thompson Reuters Oil Research, crude oil exports by the OPEC rose to record high levels in July. This was driven largely by soaring exports from the group's African members.

For the US, oil production has hit 9.43 million bpd, the highest level since August 2015 and up 12% from its most recent low in June last year.

Crude oil has been witnessing losses lately on concerns regarding the rising output from OPEC. Owing to the supply glut, crude oil prices have been remarkably silent over the last two years. Prices have remained within a tight range, rarely dropping below US$40 or rising above US$60. Volatility has crashed.

Crude Oil Trades on a Flat Note This Week

To keep a tab on the movements in crude oil and other commodities, you can read the stock market commentary from the Daily Profit Hunter team. Their commentary tracks the developments in the global economy as well as stock, currency and commodity markets.

On the domestic front, falling oil prices bode well for the Indian economy. This we say is because India is hugely dependent on petroleum imports. India is the world's third-largest oil consumer.


Sensex Opens Marginally Lower; Ceat Tyre Plunges 6% on Weak Q1
09:30 am

Asian stocks markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.35%, while the Hang Seng is down 0.04%. The Shanghai Composite is trading up by 0.24%. US markets closed mixed. S&P 500 lost 0.22% to 2,472 points, weighed down by Amazon.com, Apple and other technology stocks.

Meanwhile, Indian share markets too have opened the day marginally lower. The BSE Sensex is trading lower by 45 points and the NSE Nifty is trading lower by 15 points. S&P BSE Mid Cap and S&P BSE Small Cap are trading up by 0.4% and 0.2% respectively.

Software stocks have opened the trading day on a firm note with Wipro share price and TCS share price leading the gains.

As per a leading financial daily, Infosys will acquire Brilliant Basics, a London-based product design and customer experience (CX) company, for an undisclosed amount. The acquisition is expected to close during the July- September 2018 quarter.

Infosys has digital studios across Bengaluru, Pune, New York, London and Melbourne. The addition of Brilliant Basics will enhance the company's expertise in the financial services, retail and telecom sectors across Europe and the Middle East.

Since Vishal Sikka has taken over as CEO, Infosys has made four acquisitions in an effort to kick-start its foray into new technology areas such as Cloud computing and use of automation, as well as increase its margins in traditional outsourcing services through the use of modern technologies.

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Sikka refers to this as 'Renew and New' strategy, with an aim to hit US$20 billion by 2020-21.

Infosys share price opened the trading day up by 0.4% on the BSE.

In another development, Tyre maker Ceat Ltd reported a 98.6% decline in its consolidated net profit at Rs 13.8 million for the June quarter due to destocking by trade partners ahead of the goods and services tax (GST) rollout and higher expenses.

The company had posted a net profit of Rs 1.03 billion during the corresponding period of the previous fiscal. Total income during the period also declined to Rs 16.38 billion compared to Rs 16.51 billion in the corresponding quarter of last fiscal.

As per the reports, sales had dropped due to lower offtake by dealers since May in the run-up to the GST rollout. The impact had been felt particularly in the medium and heavy vehicles in the commercial vehicle segments.

As per Hindu Business Line, the company has planned Rs 28 billion expansion plan in multiple locations over the next five years.

Ceat share price plunged 6% in morning trade.

Moving on to news from airline stocks. As per an article in The Livemint, India led global markets with a domestic air traffic growth of about 20.3% in June.

However, the very strong upward trend in traffic has slowed since the country's unexpected 'demonetization' in November 2016. India's streak of year-on-year double-digit traffic growth may have ended in June as per International Air Transport Association.

For the first six months of 2017, the industry experienced a 12-year high in traffic growth (7.9%) and a record first half load factor of 80.7%.

Domestic Airlines Fly High in Foreign Skies

Meanwhile, India's aviation industry is on a high-growth trajectory. India's domestic air passenger traffic has almost doubled in the past six years. This is on the back of strong economic growth and emergence of low-fare airlines. Indian carriers have now set their sights on International traffic. Indian carriers have been slowly increasing their market share. It is important to note that foreign carriers still dominate international traffic to and from India.

As per the report by rating agency ICRA, the share of domestic airlines in India's international traffic increased from 30.1% in FY14 to 35.1% in FY17.

Airline stocks opened the trading day on a firm note with Jet airways share price and Spicejet share price leading the gains.


GST Impact on Service Sector, NPA Resolution and Top Stocks in Action
Pre-Open

On Thursday, the share markets in India traded down throughout the day as the banking sector continued to reel under selling pressure following RBI's decision to cut key interest rates.

The BSE Sensex closed lower by 239 points to end at 32,237 while the broader NSE Nifty ended the day lower by 68 points to close at 10,013.

Oil and gas stocks were the sole gainers on Thursday as Hindustan Petroleum (HPCL), Indian Oil Corp. (IOC), Bharat Petroleum (BPCL) ended the day in green, while Coal India, Lupin and SBI were the major losers.

Top Stocks in Action Today

Pharma stocks are likely to be in focus today after the government announced plans to do away with clinical trials for drugs already approved in the overseas markets. The move is expected to reduce the time taken by a company to introduce new drugs in the market from 5-6 years to as few as 45 days. According to the drug regulator, the move will also lower the cost of drugs.

These new rules will make it easier for pharma companies to introduce drugs in India, which are already in use in regulated countries, without going through the lengthy clinical trial process

Banking sector stocks are likely to be in focus today as the Lok Sabha gave its nod for a bill to replace the NPA (Non-Performing Assets) ordinance promulgated on May 7 this year. he Bill --The Banking Regulation (Amendment) Bill 2017 -- sought to amend the Banking Regulation Act, 1949, for this purpose. This would be a major step in helping resolve the NPA menace currently facing the country's banking sector.

Indian Oil Corporation (IOC) will be in focus today after the oil major declared its quarterly results today. The company reported a 45% fall in net profits at Rs 45.5 billion for the quarter under review as compared to Rs 82.7 billion for the same quarter in the previous year.

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Company Earnings That Will Drive Indian Markets Today

Companies which will be reporting June quarter earnings today include Dabur, Apollo Tyres, Hindustan Petroleum (HPCL), Indian Hotels, Mahindra & Mahindra among others.

Services Sector Activity Lowest in Four Years

The introduction of the Goods and Service Tax (GST) has pushed down activity in the services sector to a nearly four-year low in July even as manufacturing activity reels at an eight-and-a half-year low.

The widely-tracked Nikkei Purchasing Managers' Index (PMI) on Thursday showed that PMI for the dominating sector of the Indian economy plunged to 45.9, its lowest level since September 2013.

In June, PMI was at an eight-month high of 53.1.

The Services PMI is the reading of the country's services sector output and is updated monthly. A reading above 50 indicates expansion, while any score below the mark denotes contraction.

According to the survey participants confusion over GST caused a contraction in new work, leading to lower activity. This is in stark contrast to improving demand conditions and marketing efforts leading to a higher share of new work over the past four months.

But despite this slowdown, many expect GST to boost business activity in the long-run.

In our view, GST is a complicated topic, the exact implications of which will be obvious over next few years. Our colleague Vivek Kaul has studied the finer aspects of the GST and predicted what could go right and wrong.

To know more, download his special report - The Good, the Sad and the Terrible (GST)

Cochin Shipyard IPO Oversubscribed 76 Times on Final Day

The initial share sale offer of Cochin Shipyard was oversubscribed by over 76 times on the final day of bidding yesterday.

The IPO received bids for 2.5 billion shares against the total issue size of 33.9 million shares, data available with the NSE showed.

IPOs are all the rage in the share markets these days. With new companies listing by the day, all with promises of superior returns.

However, we don't need thousands of IPOs to get rich. That's not how super investors make their fortunes. But a few good IPOs could certainly become the multibaggers in your portfolio in a few years.

We have reviewed each of them and have released their recommendation notes. You can check the same on their IPO page.

Download this FREE report now and discover How to Get Rich with IPOs. This guide will show you how to safely profit from the 2017 IPO rush.