Dull end to the week

After hovering around the dotted line for most part of the day, the Indian equity markets witnessed some pressure in the final hour of trade. While the BSE-Sensex closed lower by 62 points, the NSE-Nifty closed lower by 18 points. The S&P BSE Midcap and S&P BSE Smallcap too closed the day in the red and were down by 0.3% and 0.2% respectively. oil and gas and consumer durables stocks observed buying interest, while stocks from power and metal space witnessed selling pressure.

Asian stock markets finished broadly higher today with shares in China leading the region. The Shanghai Composite is up 2.26% while Hong Kong's Hang Seng is up 0.73% and Japan's Nikkei 225 is up 0.29%. European shares fell in early trade weighed down by Germany's top share index. The rupee was trading at 63.80 against the US$ in the post noon session.

Shares of Vedanta surged after it was reported that the company is all set to start iron ore mining operations at the Codli mines in Goa from August 10. The mining conglomerate will restart iron ore business in Goa after a closure for nearly 3 years. The actual operations will begin post monsoon around the second half of September. The company has permission to mine 5.5 million tonnes per annum (MTPA) of the total permitted 20 million tonnes (MT) capacity for iron ore production in Goa by the Supreme Court. The company will commence operations at a time when iron ore prices are at their lowest. Since the closure of mining operations in September 2012, prices have crashed to USD 32-33 per tonne for Goa grade of iron ore (average grade 58% FE) from a peak of about USD 140 per tonne in 2012.

Automobile stocks ended the trading day with moderate gains. Cummins India and Tata Motors were the leading gainers. According to a leading economic daily, TVS Motor has entered into strategic partnership with Pollachi based Mahalingam College of Engineering and Technology (MCET) to develop industry supported BE Programme and offer it to students. TVS-MCET Collaborative Educational Program was aimed at bridging the gap between the quality of engineers expected by the industry and the graduating engineers. The program nurtured technical education by bringing industry practices into education system and improving the skills of instructors and students. TVS Motor ended the trading day up by 1% on the BSE.

Banking stocks decline
01:30 pm

Indian Indices are trading on a flat note in the post noon trading session. Sectoral indices are trading mixed with stocks from the mining and auto sectors leading the gainers. However, banking stocks are witnessing maximum selling pressure.

The BSE-Sensex is trading up 14 points (up 0.05%) and the NSE-Nifty is trading down 0.8 points (down 0.01%). The S&P BSE Midcap index and the S&P BSE Smallcap index are trading marginally, up by 0.2% and 0.4% respectively. Commodity prices are trading on a positive note. Gold prices, per 10 grams, are trading at Rs 24,882 levels. Silver price, per kilogram is trading at Rs 33,880 levels. Crude oil is trading at Rs 2,884 per barrel. The rupee is trading at 63.77 to the US dollar.

Textile stocks are trading on a mixed note with Vardhman Textiles and Vardhman Holdings witnessing maximum buying interest. According to Financial Times, SRF, the domestic leader in refrigerants, engineering plastic and industrial yarns, has received an approval for three investment proposals worth Rs 3940 m from its board of directors. The first investment proposal is for setting up of a new Greenfield packaging film line in the Domestic Tariff Area, Indore with an estimated cost of Rs 3,560 m. the second approval is for the setting up of R-134a Pharma Grade Manufacturing and Filling facility at Dahej, Gujarat for Rs 260 m. The third investment approval is for converting the HFC 134a plant at Bhiwadi into a swing plant to produce both HFC 134a and HFC 32 at an estimated cost of Rs 120 m. the company has its presence in Dubai, South Africa and Thailand. Stock of SRF is trading down by 0.5%.

As per an article in Business Standard, Bajaj Electricals has posted a threefold rise in its standalone net profit for the quarter ended June 2015. This was on account of turnaround in engineering and projects division and better product mix in consumer durable and lighting segments. Net income witnessed a YoY rise of 13.7% during the concerned period. The engineering, procurement and construction (EPC) segment registered a growth of 54.2% in its total revenue. Currently the stock of Bajaj Electricals is trading up by 2.7%.

Indian markets dip lower
11:30 am

After opening the day with marginal losses, the Indian Indices have dived lower. Sectoral indices are trading on a mixed note with auto, FMCG and telecom sectors leading the losses. However, energy and mining stocks are trading in the green.

The BSE-Sensex is trading lower 50 points (down 0.2%) and the NSE-Nifty is trading down 20 points (down 0.2%). The BSE Mid Cap index is trading flat while the BSE Small Cap index is trading marginally up by 0.3%. The rupee is trading at 63.82 to the US dollar.

Engineering stocks are trading on a mixed note with BGR Energy and Opto Circuits witnessing maximum buying interest. As per an article in business standard, diesel engine manufacturer Cummins India has posted its numbers for the quarter ended June 30, 2015. The company, for the quarter, has posted a marginal decline of 0.59% in its net profit on a YoY basis. However, the total income of the company witnessed a surge of 25.8% YoY. The exports for the company have grown 40% which includes small generators. On a separate note, the company is planning to expand its Phaltan plant in the next two years depending upon its market conditions. Presently the scrip of the company is trading up by 2.2%.

Stocks in the mining sector are also trading mixed with MMTC Ltd and Coal India leading the losses. According to financial times, Coal India has prepared a roadmap for achieving a coal production level of about 908 MT (million tonnes) in 2019-20 as against the current production level of 494.23 MT. For the purpose, the company is going to invest Rs 625.9 bn in five years by 2019-20. As reported, the planned investment would be met from internal resources of the company. Coal India accounts for over 80% of the domestic coal production. Currently the stock of company is trading down by 1%.

Indian Markets open flat
09:30 am

The major Asian stock markets have opened the day strong with Hong Kong market (up 0.96%) and China market (up 1.90%). This is inspite, the European and US stock markets closed their session on a negative note yesterday. The rupee is trading at 63.78 per US dollar.

Indian stock markets have opened marginally lower and are hovering around the dotted line. BSE Sensex is trading up by 7 points (up 0.02%) and Nifty is trading up by 2 points (up 0.02%). BSE Mid-Cap is trading higher by 0.32% and BSE Small Cap index is trading higher by 0.27%. Sectoral indices are trading mixed with stocks in Information Technology (IT) & Metal being the leading winners. However stocks in Telecommunication and Banking sector are the top losers in the pack.

Stocks in the telecom space are have opened on a weak note today. As per an article in business standard Bharti Airtel has taken an early mover advantage by launching its fourth generation (4G) services in 296 towns. Airtel is offering its 4G services on all smart devices including mobile phone, dongles, 4G hotspots and Wi-Fi dongles. The company stated that it will launch 4G services at 3G prices. The company has launched a 'Infinity Plan' starting at Rs 999 for postpaid users. Under the scheme the customer will get free calls within Airtles network and unlimited music with 3GB data free. Stock of Bharti Airtel is trading down by 0.14%.

Stocks in the power sector are trading on a mixed note. National Thermal Power Company (NTPC) is exploring options to manufacture solar equipment as part of the state owned power producer strategy. It is planning to set up a 1000 MW per annum manufacturing capacity which may require an investment of Rs 50bn. The company has also given its commitment to reduce the dependence on fossil fuel to 56% by 2032. The government has pushed renewable energy to the top of its energy security agenda and is looking to provide green power at Rs 4.5 crore per Mw. For achieving the target of 100GW renewable energy by 2022, India would need an investment of approximately $ 200bn. Stock of NTPC is trading down by 0.07%.

Should the govt revive the economy?

The Indian economic recovery is still at a nascent stage. Growth across various sectors has still not picked up. A lot of economic reforms were expected from the government when it came to power last year. Unfortunately, we have not seen too many. A few big projects and programs have been launched. But corporate India is not impressed. Without sustained private sector investments, we believe India will not achieve high growth.

However, the government seems to have a different view. As per an article in the Economic Times, the government is planning to step in to the private sector's shoes! The Finance Minister has stated that the government would spend as much as possible out of budgeted funds on infra projects. The government has already asked Parliament to approve an additional Rs 255 bn in spending this year. While nearly half of this amount will go towards re-capitalising PSU banks; the rest has been earmarked for additional infra investments.

We believe private investment is far more productive than investments made by the government. If India's GDP has to grow at a rate above 8% on a sustainable basis, the government will have to enable huge private sector investment in the economy. Only this can lead to a broad based, sustainable economic recovery. So far this has not happened. In the first three months of FY16, capex growth in the PSU sector has been 16.5% while the same for the private sector has been just 1.1%. The government believes that green shoots are already visible in the economy. However, we will gain confidence about the recovery only when private capex growth moves up significantly.

This won't happen without key issues getting resolved like land acquisition, GST, PSU bank NPAs, disinvestment, bureaucratic red-tape and labour problems. The government has so far been successful in sorting out environmental issues, providing speedy approvals at the ministry level and quickly sanctioning large amounts of money. However, this won't be enough. A lot more needs to be done. Attempting to replace the private sector as the main engine of the economy with public funds, will do more harm than good in the long term we believe. One needs to look only back at the UPA years for proof.