Shares of state-run banks and pharma stocks led rally as key benchmark indices surged on the last trading session of the week. The rally materialized after the Department of Industrial Policy & Promotion (DIPP) issued a notification yesterday, 30 July 2015, introducing composite caps for simplification of the foreign direct investment (FDI) policy for attracting foreign investments in the country. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, attained their highest closing level in more than a week. The Sensex moved past the psychological 28,000 level. The market breadth indicating the overall health of the market was positive. The Sensex garnered 409.21 points or 1.48% to settle at 28,114.56. Key benchmark indices hovered in positive zone throughout the trading session today, 31 July 2015. The BSE Mid-Cap index rose 1.03%.
The notification from DIPP follows a decision by the Union Cabinet on 16 July 2015 allowing clubbing of foreign direct investment, foreign portfolio investment and investments by non-resident Indians in companies into a composite cap. However, DIPP has clarified that foreign portfolio investment by FIIs/FPIs/QFIs will remain at 49% of the total paid up capital for private sector banks. In the defence sector, foreign portfolio investment will remain at 24% of total paid up capital of the company. Portfolio investment in the defence sector will be under automatic route.
PSU bank stocks surged on reports that the government has sought approval for an additional allotment of Rs 12110 crore from the Parliament to be used for the recapitalization of public sector banks. Most private sector banks rose. Titan Company tumbled after weak Q1 outcome. Shares of Dr Reddy's Laboratories edged higher, with the stock extending gains registered yesterday, 30 July 2015, triggered by good Q1 earnings.
Key benchmark indices edged higher for the third straight trading session today, 31 July 2015.
Foreign portfolio investors offloaded shares worth a net Rs 125.44 crore into the secondary equity markets yesterday, 30 July 2015, as per data released by the depositories. Domestic institutional investors (DIIs) bought shares worth a net Rs 499.65 crore yesterday, 30 July 2015, as per provisional data released by the stock exchanges.
The S&P BSE Sensex rose 409.21 points or 1.48% to settle at 28,114.56, its highest level since 23 July 2015. The index jumped 455.82 points at the day's high of 28,161.17 in late trade. The index gained 109.16 points at the day's low of 27,814.51 in opening trade.
The CNX Nifty rose 111.05 points or 1.32% to settle at 8,532.85, its highest level since 23 July 2015. The index hit a high of 8,548.95 in intraday trade. The index hit a low of 8,448 in intraday trade.
The BSE Mid-Cap index rose 114.62 points or 1.03% to settle at 11,273.02. The BSE Small-Cap index rose 106.92 points or 0.91% to settle at 11,830.80. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,658 shares rose and 1,214 shares fell. A total of 129 shares were unchanged.
The total turnover on BSE amounted to Rs 3886 crore, higher than turnover of Rs 3359.07 crore registered during the previous trading session.
Among sectoral indices on BSE, the S&P BSE Realty index (up 2.89%), the S&P BSE Healthcare index (up 1.99%), the S&P BSE Auto index (up 1.80%), the S&P BSE FMCG index (up 1.78%), the S&P BSE Metal index (up 1.71%) and the S&P BSE Bankex (up 1.68%), outperformed the Sensex. The S&P BSE IT index (up 1.33%), the S&P BSE Teck index (up 1.26%), the S&P BSE Consumer Durables index (up 0.53%), the S&P BSE Capital Goods index (up 0.39%), the S&P BSE Oil & Gas index (down 0.27%) and the S&P BSE Power index (down 0.60%), underperformed the Sensex.
Larsen a Toubro (L&T) rose 0.75% to Rs 1,789.55. The company's consolidated net profit fell 37.3% to Rs 606.19 crore on 6.53% increase in total income to Rs 20509.53 crore in Q1 June 2015 over Q1 June 2014. The result was announced after market hours today, 31 July 2015. L&T said that its net profit for the corresponding quarter of the previous year included divestment gains of Rs 1383 crore.
L&T's gross revenue rose 7% to Rs 20460 crore in Q1 June 2015 over Q1 June 2014. International revenue during the quarter at Rs 6609 crore constituted 32% of the total revenue. The company successfully won new orders worth Rs 26376 crore at the group level during the quarter ended 30 June 2015. International orders during the quarter at Rs 8110 crore constituted 31% of the total order inflow. Major orders during the quarter were secured by infrastructure and hydrocarbon segments. The consolidated order book of the group stood at Rs 2.38 lakh crore as on 30 June 2015, higher by 22% on a year-on-year basis. International order book constituted 26% of the total order book.
L&T said in a statement that the business environment stays challenging in the short term while the prospects in urban infra, transportation infra, power transmission, water, renewable energy and defence manufacturing remain promising in the medium term. The management is hopeful of the company benefitting from the growth opportunities as they emerge. The domestic infrastructure sector awaits the translation of various policy and budgetary initiatives into a definitive capital expenditure programme. While visibility of outlay by public sector/government undertakings has improved, private sector investment in the industrial sector is constrained by weak demand, low commodity prices and under utilisation of the existing capacities, L&T said.
PSU bank stocks surged on reports that the government has sought approval for an additional allotment of Rs 12110 crore from the Parliament to be used for the recapitalization of public sector banks. Union Bank of India (up 8.06%), IDBI Bank (up 6.47%), Bank of Baroda (up 5.34%), United Bank of India (up 5.32%), Canara Bank (up 5.16%), Allahabad Bank (up 4.37%), Punjab and Sind Bank (up 4.35%), Bank of India (up 4.09%), Andhra Bank (up 3.71%), Indian Bank (up 3.68%), Syndicate Bank (up 3.43%), UCO Bank (up 3.33%), Corporation Bank (up 3.11%), Central Bank of India (up 2.09%), Vijaya Bank (up 1.74%), Dena Bank (up 1.70%), Bank of Maharashtra (up 1.32%) and Punjab National Bank (up 0.67%), edged higher.
State Bank of India rose 5.25% at Rs 270.40. The stock hit a high of Rs 273.30 and a low of Rs 257.80 so far during the day.
Finance Minister Arun Jaitley has reportedly sought parliamentary approval today, 31 July 2015, to spend a net additional Rs 25500 crore in the current fiscal year, with almost half of it earmarked to inject capital into state-run banks struggling with bad debts. In the annual budget in February, Jaitley provided Rs 7940 crore to bolster capital reserves of the state-banks.
Most private sector banks rose. Yes Bank (up 2%), Axis Bank (up 1.38%), IndusInd Bank (up 0.45%) and HDFC Bank (up 0.30%), edged higher. City Union Bank (down 0.3%), Federal Bank (down 0.88%) and Kotak Mahindra Bank (down 2.86%), edged lower.
ICICI Bank rose 3.97% to Rs 302.50. The bank's net profit rose 12.08% to Rs 2976.16 crore on 8.11% increase in total income to Rs 15802.45 crore in Q1 June 2015 over Q1 June 2015. The result was announced during trading hours today, 31 July 2015.
ICICI Bank's net interest income (NII) rose 14% to Rs 5115 crore in Q1 June 2015 over Q1 June 2014. The bank's net interest margin (NIM) improved to 3.54% in Q1 June 2015, from 3.4% in Q1 June 2014. Non interest income rose 5% to Rs 2990 crore in Q1 June 2015 over Q1 June 2014.
ICICI Bank's cost-to-income ratio stood at 37.8% in Q1 June 2015 as against 38.4% in Q1 June 2014.
The bank's current and savings account (CASA) ratio stood at 44.1% as on 30 June 2015, lower than 45.5% as on 31 March 2015 and higher than 43% as on 30 June 2014. The average CASA ratio improved to 41.1% in Q1 June 2015 from 39.9% in Q4 March 2015 and 39.5% in Q1 June 2014.
Provisions and contingencies rose 31.58% to Rs 955.39 crore in Q1 June 2015 over Q1 June 2014. The bank's provision coverage ratio, computed in accordance with RBI guidelines, was 58.2% as on 30 June 2015. Including cumulative prudential/technical write-offs, the provisioning coverage ratio was 69.7%.
ICICI Bank's net non-performing assets stood at Rs 6402 crore as on 30 June 2015, which was higher than Rs 6325 crore as on 31 March 2015. The net non-performing asset ratio was 1.4% as on 30 June 2015, unchanged from the level as on 31 March 2015. Net loans to companies whose facilities have been restructured stood at Rs 12604 crore as on 30 June 2015, higher than Rs 11017 crore as on 31 March 2015.
The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 16.37% as on 30 June 2015 and Tier-1 capital adequacy was 12.26%, well above regulatory requirements.
Titan Company declined 4.65% to Rs 323.85 after net profit dropped 14.78% to Rs 151.06 crore on 6.6% drop in total income to Rs 2724.13 crore in Q1 June 2015 over Q1 June 2014. The result was announced during trading hours today.
Titan Company said sales dropped in Q1 June 2015 largely on account of an extremely weak consumer sentiment and absence of the Golden Harvest scheme in jewellery this year. The company's profit before tax (PBT) dropped 15.3% to Rs 203.61 crore in Q1 June 2015 over Q1 June 2014. The company has put together plans to stimulate demand for all of its product categories through innovative advertising campaigns and new product launches in the coming quarters.
The income of watches business rose 9.1% to Rs 484.54 crore in Q1 June 2015 over Q1 June 2014. The jewellery business income witnessed a decline of 10.9% to Rs 2072.03 crore in Q1 June 2015 over Q1 June 2014. The jewellery business continues to face regulatory pressures that have an adverse impact on sales. Eyewear business grew 19.7% to Rs 106.77 crore in Q1 June 2015 over Q1 June 2014.
Phama stocks edged higher. Glenmark Pharmaceuticals (up 5.59%), Wockhardt (up 5.06%), Aurobindo Pharma (up 4.84%), Lupin (up 4.26%), Piramal Enterprises (up 2.38%), Divi's Laboratories (up 1.79%), Strides Arcolab (up 1.09%) and Sun Pharmaceutical Industries (up 1.04%), edged higher. Cipla (down 0.13%), Cadila Healthcare (down 0.34%) and IPCA Laboratories (down 2.53%), edged lower.
Shares of Dr Reddy's Laboratories edged higher, with the stock extending gains registered yesterday, 30 July 2015, triggered by good Q1 earnings. The stock jumped 4.05% at Rs 4,065.70. The stock hit a record high of Rs 4,084.95 in intraday trade. The stock had jumped 5.23% to settle at Rs 3,907.55 yesterday, 30 July 2015. On a consolidated basis, the company's net profit rose 14% to Rs 630 crore on 7% increase in revenue to Rs 3760 crore in Q1 June 2015 over Q1 June 2014. The result was announced during trading hours yesterday, 30 July 2015.
GlaxoSmithKline Pharmaceuticals fell 0.48% to Rs 3,507.75 after net profit dropped 5.09% to Rs 93.28 crore on 4.8% drop in total income to Rs 668.19 crore in Q1 June 2015 over Q1 June 2014. GlaxoSmithKline Pharmaceuticals said there was a decline in net sales of the pharmaceutical business by 5.6% in Q1 June 2015 over Q1 June 2014. The quarterly performance was impacted by supply constraints. The result was announced during market hours today, 31 July 2015.
Key indices edged higher for the third straight trading session today, 31 July 2015. The Sensex has risen 655.33 points or 2.39% in preceding three trading sessions from a recent low of 27,459.23 on 28 July 2015. The Sensex clocked gains of 333.73 points or 1.2% in this month. The Sensex has risen 615.14 points or 2.24% in this calendar year so far (till 31 July 2015). From a 52-week low of 25,232.82 on 8 August 2014, the Sensex has risen 2,881.74 points or 11.42%. The Sensex is off 1,910.18 points or 6.36% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, in the global commodities markets, Brent crude oil futures edged lower amid concerns over global oil supply glut. Brent for September settlement was currently off 64 cents at $52.67 a barrel. The contract had fallen 7 cents or 0.13% to settle at $53.31 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was currently hovering at 64.1250, compared with its close of 64.04 during the previous trading session.
Meanwhile, India's weather office, the India Meteorological Department (IMD), said in a weekly report issued yesterday, 30 July 2015, that the rainfall was above normal by 21% over the country as a whole during the period from 23 to 29 July 2015. A deep depression caused extremely heavy rainfall over Gujarat and south Rajasthan during the second half of the week. Region wise, the rainfall was 68% above the Long Period Average (LPA) in Central India, 33% above LPA in Northwest India, 50% below LPA in South Peninsula and 22% below LPA in East & Northeast India during the period from 23 to 29 July 2015.
As per IMD's extended range forecast till 19 August 2015, rainfall activity is likely to be normal to above normal over Central and Northwest India till 9 August 2015. Rainfall activity is likely to be normal to above normal over northeast and adjoining east India from 5 to 14 August 2015.
For the country as a whole, cumulative rainfall during the period from 1 to 29 July 2015 was 15% below LPA. Region wise, the rainfall was 46% below the LPA in South Peninsula, 16% below the LPA in East & Northeast India, 13% below the LPA in Central India and 5% above the LPA in Northwest India during the period 1 to 29 July 2015. July accounts for about 33% of precipitation during the June-September monsoon season and is critical for crops.
The IMD in its separate daily monsoon update issued yesterday, 30 July 2015, said that the southwest monsoon was vigorous over West Rajasthan and was active over Gangetic West Bengal and East Rajasthan during past 24 hours until 8:30 IST. For the country as a whole, cumulative rainfall during this year's monsoon season was 4% below the Long Period Average (LPA) until 30 July 2015. Region wise, the rainfall was 19% below the LPA in South Peninsula, 9% below the LPA in East & Northeast India, 2% below the LPA in Central India and 12% above the LPA in Northwest India until 30 July 2015.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
In overseas markets, European stocks edged higher in volatile trade today, 31 July 2015. Key benchmark indices in Germany and France were up 0.07% to 0.31%. In UK, the FTSE 100 index was off 0.22%.
German retail sales in June dropped 2.3% from May, adjusted for inflation and seasonal swings, but rose 5.1% from the year earlier-period, Destatis said in a statement today, 31 July 2015.
Asian stocks edged higher after data overnight showed the US economy picked up its pace in the second quarter. Key benchmark indices in Taiwan, South Korea, Hong Kong, Indonesia and Japan were up 0.16% to 1.91%. In China, the Shanghai Composite was off 1.13%. Singapore's Straits Times was down 1.45%.
China recorded a service trade deficit of $14.9 billion in June, down from $18.3 billion in May, official data showed today, 31 July 2015. For the first six months of the year, the country saw a service trade deficit of $91.6 billion, the State Administration of Foreign Exchange said in a statement on its website. China had a merchandise trade surplus of $47.6 billion in June and a surplus of $255.4 billion in the January-June period, according to the foreign-exchange regulator's data.
Consumer prices in Japan gained 0.4% on year in June, the Ministry of Internal Affairs and Communications said today, 31 July 2015. The price rise was lower from 0.5% in May. Meanwhile, the unemployment rate in Japan came in at a seasonally adjusted 3.4% in June.
US stocks ended little changed after witnessing high intraday volatility yesterday, 30 July 2015, after the latest data showed the US economy picked up its pace in the second quarter, leaving the Federal Reserve on track to raise interest rates as soon as September. Solid consumer spending offset a drag from weak business investment in the June quarter, resulting in the United States' gross domestic product (GDP) rising by an annualised rate of 2.3%. A separate report by the US Labor Department revealed fewer Americans than expected filed claims for jobless benefits last week. Applications for unemployment payments rose by 12,000 to 267,000 in the week up to 25 July 2015. The prior week's figure of 255,000 jobless claims marked a 40-year low.
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