Weakness continues on the bourses

Weakness continued on the bourses in early afternoon trade. At 12:20 IST, the barometer index, the S&P BSE Sensex, was down 221.62 points or 0.79% at 27,863.54. The losses for the Nifty 50 index were higher in percentage terms than those for the Sensex. The Nifty 50 index was currently down 76.30 points or 0.88% at 8,601.95. The Sensex was trading below the psychological 28,000 level after falling below that level in in morning trade.

The Sensex lost 268.51 points or 0.96% at the day's low of 27,816.65 in early afternoon trade, its lowest level since 5 August 2016. The barometer index rose 58.12 points or 0.21% at the day's high of 28,143.28 at onset of trading session. The Nifty lost 93 points or 1.07% at the day's low of 8,585.25 in early afternoon trade, its lowest level since 4 August 2016. The index rose 11.85 points or 0.14% at the day's high of 8,690.10 at onset of trading session.

The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,709 shares fell and 720 shares rose. A total of 130 shares were unchanged. The BSE Mid-Cap index was currently off 0.85%. The BSE Small-Cap index was currently off 0.81%. The fall in both these indices was higher than the Sensex's decline in percentage terms.

In overseas stock markets, most Asian stocks witnessed a mixed trend as investors assess the timing of the next interest rate hike by the US Federal Reserve as well as the outlook for oil prices. US stocks eked out small gains yesterday, 9 August 2016, with the Nasdaq Composite index posting a fresh record close, as investors kept an eye on falling oil prices.

Cement stocks dropped. Ambuja Cements (down 2.05%), ACC (down 1.59%), UltraTech Cement (down 0.65%) and Shree Cement (down 1.13%) dropped.

Grasim Industries and Aditya Birla Nuvo edged lower on reports that Aditya Birla Group is contemplating a merger of Grasim Industries and parts of Aditya Birla Nuvo. Grasim Industries dropped 4.85%. The company is set to announce Q1 June 2016 results tomorrow, 11 August 2016. Aditya Birla Nuvo lost 5.98%. The company is set to announce Q1 June 2016 results tomorrow, 11 August 2016.

According to reports, as part of another round of corporate reorganisation, Aditya Birla Group is contemplating a two-step restructuring which involves the merger of Grasim Industries and parts of Aditya Birla Nuvo (ABNL), which is likely to be followed by the hiving-off of the financial services business of ABNL viz. Aditya Birla Financial Services (ABFS) into a separate company. ABFS is currently a 100% subsidiary of ABNL. The merger and the complete reorganisation could involve a number of steps. A direct merger of ABNL and Grasim Industries and the simultaneous spinning-off of financial services business into a separate company is among the options, reports suggested. A final announcement could be expected as early as this week, reports added.

Grasim Industries' two main businesses are viscose staple fibre (VSF) and cement. ABNL is a business conglomerate. It commands leadership position across its financial services, telecom, linen and manufacturing businesses.

Adani Ports and Special Economic Zone surged 8.31% to Rs 259.45, with the stock surging on renewed buying after the company reported strong Q1 June 2016 results. Shares of Adani Ports and Special Economic Zone (APSEZ) fell 0.35% to settle at Rs 239.55 yesterday, 9 August 2016 after the company announced Q1 June 2016 results during trading hours. APSEZ's consolidated net profit rose 30.8% to Rs 835.71 crore on 6.3% growth in net sales to Rs 1817.23 crore in Q1 June 2016 over Q1 June 2015. The company's consolidated cargo volumes increased by 7% to 42.33 million metric tonne (MMT) in Q1 June 2016 over Q1 June 2015.

Meanwhile, a domestic brokerage has reportedly maintained its "add" rating on APSEZ stock in the wake of the company's strong Q1 earnings. The brokerage said that positives from APSEZ's results include diversification of cargo mix away from coal volumes and strong uptick in contribution from new ports among others.

Pharma stocks declined. Cadila Healthcare (down 0.49%), Cipla (down 1.21%), Dr Reddy's Laboratories (down 1.31%), Glenmark Pharmaceuticals (down 1.52%), Sun Pharmaceutical Industries (down 0.94%), Alkem Laboratories (down 1%), GlaxoSmithKline Pharmaceuticals (down 1.52%), Aurobindo Pharma (down 1.71%) and Wockhardt (down 2.48%) declined.

Lupin lost 2.93% on reports that a foreign brokerage downgraded shares of the Indian drug maker to sell after the announcement of the first quarter results. Shares of Lupin had declined 5.03% to settle at Rs 1,607.60 yesterday, 9 August 2016, after the company's announcement of the results during trading hours. The brokerage reportedly said that the competition in top US products will weigh on the company's growth. Lupin's key complex products lack visibility of launch. Lupin is likely to post single digit earnings per share growth in the year ending March 2018, it added. Meanwhile, another foreign brokerage reportedly maintained underperform rating on Lupin. It reportedly said that risk-reward ratio is unfavourable for the stock. Q1 has been a peak profit quarter for Lupin. The brokerage cut its estimates on Lupin's earnings per share for the year ending March 2017 (FY 2017).

Lupin's consolidated net profit rose 55.1% to Rs 882 crore on 40% growth in net sales to Rs 4313.60 crore in Q1 June 2016 over Q1 June 2015.

Nitesh Estates rose 7.8% after the company said it has decided to sell 4 acres of the land parcel at Kakanad village in Kochi for a total consideration Rs 26.50 crore. In view of the sluggish market conditions, the company has decided to sell off the land to a third party. The proceeds of the sale will be utilized to reduce the debts of the company. This transaction is expected to be completed by 30 September 2016. The announcement was made during trading hours today, 10 August 2016.

JK Tyre & Industries fell 5.09% after consolidated net profit declined 14.35% to Rs 100.26 crore on 0.88% growth in total income to Rs 1786.77 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 9 August 2016. JK Tyre & Industries' consolidated operating profit rose 19.02% to Rs 363 crore in Q1 June 2016 over Q1 June 2015.

The results for Q1 June 2016 includes working of Cavendish Industries acquired on 13 April 2016 which restarted its operations in mid May 2016. Therefore, results for the quarter are not comparable with previous period.

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