Sensex Ends the Week on a Flat Note; Tata Stocks Surge

Indian share markets finished below the dotted line for the third consecutive session amid mixed global markets. At the closing bell, the BSE Sensex stood lower by 45 points, while the NSE Nifty finished down by 12 points. Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished flat. Stocks from the oil & gas and IT sectors witnessed maximum selling activity.

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.21%, while the Hang Seng led the Nikkei 225 lower. They fell 0.42% and 0.23% respectively. European markets are trading mixed today. The FTSE 100 is up 1.08%, while the CAC 40 gains 0.04%. The DAX is off 0.19%.

The rupee was trading at 66.79 against the US$ in the afternoon session. Oil prices were trading at US$ 50.08 at the time of writing.

Shares of Tata Steel surged 4.4% in today's trade after the company reported 12% rise in sales to 2.62 million tonne (mt) in the second quarter ended September 30, 2016 as compared to 2.33 mt sold in previous corresponding period. During April to September period of the current fiscal, the company's sales increased by 6% to 4.77 MT from 4.48 MT during the same period last year.

Furthermore, crude steel production rose by 12% to 2.81 MT in the September quarter from 2.51 MT during the same period in 2015-16. In the first six months, output was up by 10% to 5.34 MT from 4.85 MT in the year-ago period. Saleable steel production was higher by 13% to 2.73 MT in the July-September quarter of 2016-17 from 2.41 MT during the same quarter in 2015-16. In the first six months of this fiscal, saleable steel production rose by 9% to 5.06 MT from 4.64 MT during the same period in 2015-16.

In another development, Steel Authority of India (SAIL) is reportedly planning to invest Rs 2.55 billion in order to expand capacity of its flagship Bolani iron ore mines in Odisha. The company will augment the capacity of Bolani mines to 10 million tonne per annum (mtpa) by 2020 from five mtpa. This is part of the company's larger plan to secure raw material supplies from its captive mines to cater to its steel capacity expansion.

The current iron ore requirement of SAIL owned steel units is 29.15 mtpa but this is expected to shoot up (Subscription Required) to 39 mtpa as the steel maker eyes hot metal output of 23.46 mtpa. Bolani mines form the crucial captive operations of SAIL as it feeds iron ore to the plants at Rourkela, Durgapur, Bokaro and Burnpur.

Share price of SAIL finished the day up 4.4% on the BSE.

Moving on to news from stocks in automobile sector. Tata Motors' subsidiary -- Jaguar Land Rover (JLR) has reported its best ever September retail sales of 61,047 vehicles, up 28% compared to September 2015. The month's performance has been driven by strong sales of the Land Rover Discovery, Discovery Sport, the Range Rover Evoque and the Jaguar F-PACE, as well as solid sales in China.

Jaguar Land Rover delivered solid retail sales growth across all key regions year on year, with China up 50%, Europe up 32%, UK up 30%, North America up 23% and other overseas markets up by 3%. Jaguar Land Rover sold 434,025 vehicles in the first nine months of 2016, 24% up on the same period in the prior year.

Jaguar recorded its best September ever, with retail sales reaching 17,640 vehicles, up 70% on the previous year, reflecting the strong launch of the F-PACE as well as continued solid sales of the XE. Calendar year-to-date sales for Jaguar were 103,366, up 72% year-on-year.

Land Rover strengthened its position as a world-leading manufacturer of all-terrain SUVs, with its strongest ever September sales of 43,407 vehicles, up 17% year-on-year.

Meanwhile, JLR is all set to launch the first SUV from Jaguar stable -- Jaguar F-PACE -- on October 20. The Jaguar F-PACE will be available in India in two options of 2-litre and 3-litre diesel engines. It comes in four derivatives which are priced at Rs 6.8 million, Rs 7.4 million, Rs 10.2 million and Rs 11.3 million.

Stock price of Tata Motors finished up 2.6% on the BSE.

Automobile stocks finished on a positive note with Escorts Ltd and Tata Motors DVR leading the gains.

Sensex Trades Lower; Cipla & Asian Paints Hit the Most
01:30 pm

Indian share markets are trading lower during the post-noon trading session amid subdued Asian markets. Barring stocks from auto & metal sector, major sectoral indices are trading in the red with stocks from IT, oil & gas sector leading the losses.

The BSE Sensex is trading lower by 95 points (down 0.3%) while the NSE Nifty is trading lower by 31 points (down 0.4%). The BSE Mid Cap index and BSE Small Cap index are both trading flat. Gold prices, per 10 grams, are trading at Rs 29,657 levels. Silver price, per kilogram is trading at Rs 41,532 levels. Crude oil is trading at Rs 3,390 per barrel. The rupee is trading at 66.78 to the US$.

Stocks from pharma sector are trading on a positive note with Elder Pharma and Panacea Biotech trading in the green. As per an article in a leading financial daily, Lupin's US subsidiary, Lupin Pharmaceutical Inc., has agreed to license technology from Monosol Rx to develop multiple pediatric products. MonoSol Rx is a global leader in film based drug delivery applications.

Reportedly, Lupin would develop the pediatric products utilizing MonoSol Rx's proprietary PharmFilm drug delivery technology. PharmFilm technology will be used to treat patients who may have difficulty swallowing pills or tolerating medication in traditional delivery forms.

The agreement would be in line with the company's focus on expanding into the specialty pharmaceutical market and specifically, pediatric needs, the company stated. Other Indian generic drug makers are increasingly investing in new drug delivery mechanisms in a bid to differentiate from competition.

In another development, it was reported that, the Indian Biosimilar market is expected to grow to US$40 billion by 2030. This segment offers US$240 billion global opportunity for Indian drug industry by 2030. Biosimilars are biotech-based medicines mainly for treating life-threatening diseases such as cancer and are follow-on biologics. These are therapeutic proteins manufactured from natural sources.

Indian biosimilars industry stood at US$300 million in 2015 out of which the domestic sales were close to US$250 million. However, the need of the hour is a collaborative effort from industry players as compared to the current strategy of going solo to the market, the reports noted.

Further, Indian pharma companies such as Dr Reddy's, Biocon, and Cadila derive some revenues from the sale of biosimilars, largely from the Indian markets and a smaller portion coming from the emerging markets. But given the complexity of biologics, will Indian companies be able to break some ground in this space? (Subscription Required) One of our premium edition of The 5 Minute Wrap up offers a view on the same.

Currently, shares of Lupin are trading up by 0.8%.

Moving on to news from stocks in telecom sector. As per an article in Livemint, Idea Cellular has bought spectrum worth 128 billion rupees in recent auction. It bought a total of 349.2 MHz across circles.

Reportedly, Idea has acquired additional 2x74.6 MHz spectrum in FDD technology on 1800 and 2100 bands, and 200 MHz of capacity spectrum in Time Division Duplex (TDD) technology on 2300 and 2500 bands. This marks Idea's entry into the world of TDD LTE with its first ever acquisition of unpaired spectrum in the 2016 auctions. Unlike paired band (half of upload and half for download), unpaired spectrum delivers more download speeds due to its fungibility and flexibility.

Idea is now well equipped to offer 4G services on its own spectrum across 20 service areas. Additionally, Idea has also procured 3G spectrum in Bihar & Rajasthan extending its capability to offer 3G services to 15 service areas.

Notably, Idea in this auction has expanded its spectrum portfolio by over 64%. Idea now owns 64 broadband carriers. It further intends to use 47 of these carriers on 4G LTE technology covering 94% of its revenue base and 17 carriers for 3G services.

Moreover, with Bharti Airtel and Reliance Jio's existing edge in the matter of 4G speeds, Idea through this spectrum auction has strengthened its position.

Shares of Idea Cellular are trading flat.

Sensex Flat; Pound Takes a Hit in Currency Markets
11:30 am

After opening the day flat, the Indian share markets registered losses and went on to trade marginally lower. Sectoral indices are trading on a mixed note with information technology (IT) sector stocks and telecom sector stocks witnessing maximum selling pressure.

The BSE Sensex is trading down 80 points (down 0.3%) and the NSE Nifty is trading down 27 points (down 0.3%). The BSE Mid Cap index is trading flat, while the BSE Small Cap index is trading down 0.1%. The rupee is trading at 66.78 to the US$.

In an update from the currency markets, the pound witnessed one of its worst times in history in early Asian trades today. It plunged to hit a new 13-year low against the US dollar. Some suggest it's a flash crash triggered in thin liquidity. Further, French President Francois Hollande's comments that United Kingdom had to suffer the repercussions of its decision to leave the European Union to maintain the fundamental principles of the institution could also have led to the crash.

His comments followed British prime minister Theresa May's speech during the Conservative party's annual conference earlier this week. Theresa May had stated that the U.K. would leave the EU by 2019. May also said that the U.K. would become a "fully independent, sovereign" country, suggesting that a "hard" Brexit was to be expected.

The currency tanked as much as 6% as traders scrambled to assess the cause of the heavy selling. As per the news, it fell to US$1.1819 in early Asian hours, hitting its lowest level since 1985 - a year when it hit US$1.0520. This above fall was also noted as the most aggressive since results of the Brexit vote emerged on June 24. To keep a tab on the movements in the pound and other currencies, 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.

The above comments have added to the ongoing volatility in the global markets. One can expect further losses on any fresh triggers on these topics.

Asad Dossani, editor, Daily Profit Hunter, is of the opinion that Brexit will never happen. He's written that British politicians are employing standard delay tactics and their aim is to prevent the Brexit from ever taking place. He's also written on how one can successfully trade political events such as Brexit.

In another news update from the global markets, filings for US unemployment benefits fell last week to the second-lowest since 1973. This was seen as employers showed scant willingness to fire workers amid a tightening labor market.

As per the data, jobless claims dropped by 5,000 to 249,000 in the week ended October 1. Also, the continuing claims declined to the lowest level since 2000. Filings were just a hair above the four-decade low of 248,000 from April. All eyes are now set on the US Labor Department's employment report that may encourage the Fed to raise the benchmark rate before the end of the year.

Last month, the US Federal Reserve left interest rates unchanged. However, citing labour market improvements, it strongly signalled that it could still tighten monetary policy by the end of this year. Fed Chair Janet Yellen said she expected one rate increase this year if the job market continued to improve and major new risks did not arise.

Indian Share Market Opens Flat
09:30 am

Major Asian stock markets have opened the day on a negative note with stock market in Singapore and Hong Kong are trading lower by 0.4% each. Stock markets in Europe and the US too ended their previous session on a negative note with benchmark indices in UK ending their previous session trading lower by 0.5%.

The rupee is currently trading at 66.69 per US$.

Indian stock markets have opened the day on a flattish note. The BSE Sensex is trading marginally higher by 23 points (up 0.1%) and NSE Nifty is trading higher by 12 points (up 0.1%). Both, BSE Mid Cap and BSE Small Cap are trading higher by 0.3% and 0.2% respectively.

Major sectoral indices have opened the day in green with stocks from oil & gas sector are witnessing maximum buying interest.

As per an article in Livemint, branded apparel makers have seen no signs of recovery in the topline in the second quarter of this financial year.

The sales have remained subdued on the back of hefty competition from the e-commerce players coupled with poor consumer sentiments.

Companies such as Aditya Birla Fashion and Retail, Shoppers Stop, Future Lifestyle Fashion Ltd have been facing the heat of this downtrend in shift of consumer preferences to buy products through e-commerce sites which offer huge discounts.

However, these players are positive of a recovery in the topline in the second half of this fiscal. They are bullish on the back of an upcoming festive season, favourable monsoon and an improvement in the consumer income.

Nevertheless, if the sales do not pick-up as expected, the market participants may well step up their promotion which in-turn may dent their operating margins.

Secondly, companies are still in the painful readjustment processes of expanding stores, production revamps and brand expansions. This means costs and business investments can remain high and potentially suppress earnings for some time. The share price of Aditya Birla Fashion and Retail and Shoppers Stop is trading up by 1.2% and 0.7% respectively.

In another news update, Indian companies have raised US$ 2.87 billion through an initial public offering (IPO) in the nine months ended September this year. Reportedly, in the preceding three years the cumulative fundraising through IPOs stood at US$ 2.7 billion.

Further, a long list of IPOs is scheduled to hit the markets in the coming months, including the likes of Continental Warehousing, Avenue Supermarts, Genesis Colors, GR Infraprojects, Shankara BuildPro. So the all-important question is-should one invest in them?

Well, we just made choosing the right IPO stock simpler for you.

While our general pessimism towards IPOs is well known, we do think a select few IPOs are fundamentally strong and leave some money on the table for investors.

Do check out our special report, The Handbook of IPO investing. Besides providing a checklist to help you identify the right IPOs, it has a special focus on insurance IPOs and how to value them.

Will Rising Debt Lead us to Another 2008-like Crisis?

The International Monetary Fund (IMF) recently published a Fiscal Monitor report titled- Debt: Use it Wisely. In the report, it examined the extent and makeup of global debt. The results were alarming. As per the report, the global debt has reached a record high in history. Here's a snip from the report-

  • At 225 percent of world GDP, the global debt of the nonfinancial sector-comprising the general government, households, and nonfinancial firms-is currently at an all-time high. Two-thirds, amounting to about $100 trillion, consists of liabilities of the private sector which, as documented in an extensive literature, can carry great risks when they reach excessive levels.

Yes, you read that right. 225% the size of the world economy. That's the level of debt in the world which is rising by the day. Also, the pace of growth in debt levels is something worth noting. Public and private debt rose from less than 200% of global GDP to 225% over the 15 years to 2015.

The chief problem driving this debt binge is the work of central banks and their credit policies. The central banks have been at it since 2008. In order to recover from the global financial crisis of 2008, centrals banks started framing unconventional monetary policies. They went on printing money and lowering interest rates. If you're interested in knowing what's really happening in the world of man and money, you can claim your free copy of Bill Bonner's latest book Hormegeddon

What were the result of these policies? As central banks went on to prod growth through stimulus measures and low interest rates, companies and individuals went on borrowing more. And the end result, as is seen today, the looming debt pile.

The moot question is what can this rising debt levels mean for the global economy going ahead?

Rising debt can be a substantial impediment for the global growth, which already is tepid. Moreover, it also heightens the risk of financial crises ahead.

Slow economic growth has meant a rise in the debt burdens for companies across the globe. The debt here can be lowered by deleveraging. However, that too comes with its own risk. This we say is because deleveraging slows spending and investments by companies and in turn the economic growth. A catch-22 situation indeed.

That said, inaction surely may be costlier. Some steps can be initiated to revive the present situation before it gets too late. As the IMF suggests, there should be well-designed and well-targeted fiscal interventions. Also, fiscal policy cannot do the job alone. It has to be supported by complementary policies.

All in all, to really stimulate growth in the economy and lessen the debt overhang, what is needed is an actual increase in productivity rather than an artificial boost through monetary policy measures.

As for investors, the message is this- Don't fight easy money and play by the fundamentals to ride over the market volatility.