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Benchmark indices settle near the flat line

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Amid a divergent trend among various index constituents, the two key benchmark indices ended virtually unchanged for the day. The barometer index, the S&P BSE Sensex, rose 3.52 points or 0.01% to settle at 25,606.62. The Nifty rose 2.55 points or 0.03% to settle at 7,849.80. ICICI Bank edged lower in choppy trade on increase in sticky loans in Q4 March 2016. Shares of oil exploration and production companies rose as global crude oil prices rose. HCL Technologies tumbled, with the stock extending losses registered during the previous trading session triggered by disappointment from the company's earnings for the quarter ended 31 March 2016.

Idea Cellular slumped after the company reported a sharp fall in bottom line in Q4 March 2016. Bharti Airtel edged lower after the company said it will undertake buyback of shares only after the approval from Delhi High Court for the scheme of amalgamation of its wholly owned subsidiary with the company.

In overseas stock markets, Asian and European stocks edged lower in the wake of the Japanese central bank's decision against expanding monetary stimulus. Losses for US stocks overnight also weighed on Asian markets. After the conclusion of a two-day monetary policy, the Bank of Japan (BOJ) yesterday, 28 April 2016, voted to keep its current level of asset purchases unchanged and rates on hold while announcing a 300 billion ($2.69 billion) lending program to support banks in the region hit by this month's Kyushu earthquake. Speculation was rife that the Japanese central bank would announce a further easing of the monetary policy to stimulate Japan's economy. US stocks ended lower yesterday, 28 April 2016, under the combined weight of disappointing data and weak corporate earnings. US gross domestic product grew only 0.5% in the first quarter, its slowest pace of growth in two years.

The Sensex rose 3.52 points or 0.01% to settle at 25,606.62, its highest closing level since 27 April 2016. The index lost 179.07 points, or 0.7% at the day's low of 25,424.03. The index rose 152.33 points, or 0.59% at the day's high of 25,755.43.

The Nifty 50 index rose 2.55 points or 0.03% to settle at 7,849.80, its highest closing level since 27 April 2016. The index lost 58.55 points, or 0.75% at the day's low of 7,788.70. The index rose 41.80 points, or 0.53% at the day's high of 7,889.05.

The market breadth indicating the overall health of the market was negative. On BSE, 1,353 shares fell and 1,141 shares rose. A total of 166 shares were unchanged. The BSE Mid-Cap index rose 0.22%, outperforming the Sensex. The BSE Small-Cap index fell 0.05%, underperforming the Sensex.

Among the sectoral indices on BSE, the S&P BSE Realty index (up 1.18%), the S&P BSE Power index (up 0.93%), the S&P BSE Healthcare index (up 0.76%), the S&P BSE Utilities index (up 0.62%), the S&P BSE Metal index (up 0.51%), the S&P BSE Basic Materials index (up 0.46%), the S&P BSE Oil & Gas index (up 0.39%), the S&P BSE Bankex (up 0.33%), the S&P BSE Finance index (up 0.24%), the S&P BSE FMCG index (up 0.10%) and the S&P BSE Sensex index (up 0.01%), outperformed the Sensex. The S&P BSE Industrials index (down 0.11%), the S&P BSE Auto index (down 0.21%), the S&P BSE Consumer Discretionary Goods & Services index (down 0.21%), the S&P BSE Capital Goods index (down 0.24%), the S&P BSE Energy index (down 0.26%), the S&P BSE IT index (down 0.45%), the S&P BSE Teck index (down 0.62%), the S&P BSE Consumer Durables index (down 0.97%) and the S&P BSE Telecom index (down 2.15%), underperformed the Sensex.

The total turnover on BSE amounted to Rs 2797 crore, lower than turnover of Rs 2866.02 crore registered during the previous trading session.

Pharmaceutical stocks witnessed a mixed trend. Piramal Enterprises (up 4.92%), Cipla (up 1.89%), Sun Pharmaceutical Industries (up 1.09%), IPCA Laboratories (up 0.59%), Dr Reddy's Laboratories (up 0.25%) and Divi's Laboratories (up 0.04%), edged higher. Strides Shasun (down 0.06%), Wockhardt (down 0.3%), Cadila Healthcare (down 0.34%), Alkem Laboratories (down 0.36%) and GlaxoSmithKline Pharmaceuticals (down 0.99%) edged lower.

Lupin rose 1.94% after the company announcement that it has re-introduced Methergine (methylergonovine maleate) Oral Tablets 0.2mg in the US for the prevention and management of postpartum hemorrhage. Shares of Lupin had risen 0.44% to settle at Rs 1,577.15 yesterday, 28 April 2016. Methergine is the only FDA-approved oral uterotonic and is a preferred oral agent in the management of PPH, according to guidelines issued by the American Congress of Obstetricians and Gynecologists (ACOG).

Glenmark Pharmaceuticals rose 1.48% after the company said its US arm has been granted tentative approval by the United States Food & Drug Administration for a generic drug. Glenmark Pharmaceuticals Inc., USA has been granted tentative approval by the United States Food & Drug Administration (USFDA) for Adapalene and Benzoyl Peroxide Gel, 0.1%/2.5%, the generic version of Epiduo Gel of Galderma Laboratories L.P. According to IMS Health sales data for the 12 month period ended February 2016, the Epiduo Gel market achieved annual sales of approximately $351.8 million in the US.

Aurobindo Pharma fell 0.48%. The company has received final approval from the US Food & Drug Administration (USFDA) to manufacture and market Lacosamide Tablets, 50 mg, 100 mg, 150 mg and 200 mg. The product is bioequivalent and therapeutically equivalent to the reference listed drug product (RLD) Vimpat Tablets of UCB, Inc. The drug is indicated for adjunctive therapy in the treatment of partial-onset seizures. The drug had an estimated market size of $782 million in the US for the twelve months ended February 2016, according to IMS data. Aurobindo was one of the first applicants to submit a substantially complete Abbreviated New Drug Application (ANDA) ANDA with a paragraph IV certification and the company is eligible for 180 days of generic drug shared exclusivity. The launch of this product will be based on the outcome of the litigation in the United States Court with UCB, the company said in a statement. The announcement was made during trading hours today, 29 April 2016.

Shares of oil exploration and production companies rose as global crude oil prices rose. Cairn India (up 1.58%), Oil India (up 0.44%) and ONGC (up 0.44%), edged higher. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms.

Index heavyweight Reliance Industries (RIL) fell 1.48% to Rs 982.55. The stock hit a high of Rs 998.75 and a low of Rs 977.85 in intraday trade.

Brent for June settlement was currently up 31 cents at $48.45 a barrel. The contract had risen 96 cents or 2.03% to settle at $48.14 a barrel during the previous trading session. Brent June futures contract expires today, 29 April 2016. Brent for July settlement was currently up 39 cents at $48.16 a barrel.

Shares of public sector oil marketing companies also edged higher. Indian Oil Corporation (up 2.04%), BPCL (up 1.68%) and HPCL (up 0.33%) edged higher.

Shares of state-run banks edged lower. Bank of India (down 3.39%), Canara Bank (down 2.09%), Dena Bank (down 1.82%), State Bank of India (down 1.67%), Vijaya Bank (down 1.56%), UCO Bank (down 1.37%), Bank of Baroda (down 1.34%), Punjab National Bank (down 1.25%), Allahabad Bank (down 1.1%), Central Bank of India (down 1.1%), Andhra Bank (down 0.99%), Union Bank of India (down 0.86%), Punjab and Sind Bank (down 0.68%), Bank of Maharashtra (down 0.67%), IDBI Bank (down 0.65%), Corporation Bank (down 0.64%), United Bank of India (down 0.51%) and Indian Bank (down 0.31%), edged lower.

Shares of private sector banks were mixed. Kotak Mahindra Bank (up 1.92%), IndusInd Bank (up 1.47%) and Axis Bank (up 0.85%), edged higher. Yes Bank (down 0.14%), City Union Bank (down 0.96%) and Federal Bank (down 0.97%), edged lower.

Index heavyweight HDFC Bank rose 1.69% to Rs 1,133.45. The stock hit a high of Rs 1,136 and a low of Rs 1,106.80 in intraday trade.

ICICI Bank edged lower in choppy trade on increase in sticky loans in Q4 March 2016. The stock lost 1.48% to Rs 236.60. ICICI Bank's net profit declined 75.97% to Rs 701.89 crore on 14.51% growth in total income to Rs 18590.86 crore in Q4 March 2016 over Q4 March 2015. The result was announced during market hours today, 29 April 2016.

The bank's gross non-performing advances (net of write-off) stood at Rs 26221.25 crore as on 31 March 2016 compared with Rs 21149.19 crore as on 31 December 2015 and Rs 15094.69 crore as on 31 March 2015. The ratio of gross non-performing advances to gross advances stood at 5.82% as on 31 March 2016 compared with 4.72% as on 31 December 2015 and 3.78% as on 31 March 2015. The ratio of net non-performing advances to net advances stood at 2.98% as on 31 March 2016 as against 2.28% as on 31 December 2015 and 1.61% as on 31 March 2015.

ICICI Bank said that the increase in non-performing assets was primarily due to the continuing challenges in the operating and recovery environment and the Reserve Bank of India's (RBI) objective of early recognition of stress and provisioning for the banking sector. The RBI has directed India's banks to review certain loan accounts and their classification over a period of two quarters starting from Q3 December 2015. ICICI Bank said that it has now completed the exercise of review of classification of cases highlighted by RBI.

ICICI Bank has created a collective contingency and related reserve of Rs 3600 crore in Q4 March 2016 over and above provisions made for non-performing and restructured loans. This contingency provision is towards exposure to stressed assets in certain sectors, including iron and steel, mining, power, rigs and cement. The weak global economic environment, the sharp downturn in the commodity cycle and the gradual nature of the domestic economic recovery has adversely impacted the borrowers in these sectors. Given the weak operating and recovery environment, it may take some time for resolution of stress on borrowers in these sectors, ICICI Bank said.

The bank's provisions excluding collective contingency and related reserve jumped 147.28% to Rs 3326 crore in Q4 March 2016 over Q4 March 2015. The bank's provisioning coverage ratio, including cumulative prudential/technical write-offs was 61% as at 31 March 2016. The provisioning coverage ratio, excluding cumulative prudential/technical write-offs was 50.6%. The bank's current and savings account (CASA) deposits rose 17% in Q4 March 2016 over Q4 March 2015. CASA ratio improved to 45.8% as on 31 March 2016, from 45.2% as on 31 December 2015 and 45.5% as on 31 March 2015.

ICICI Bank's board of directors at its meeting held today, 29 April 2016, approved seeking consent of the shareholders to invite subscription for non-convertible debentures or bonds on a private placement basis for an amount of upto Rs 25000 crore. The board approved the sale of a part of its shareholding in its insurance subsidiary ICICI Prudential Life Insurance Company through an initial public offer by the bank, subject to market conditions and necessary approvals. The size and other details of the offer would be determined in due course, the bank said.

HCL Technologies tumbled, with the stock extending losses registered during the previous trading session triggered by disappointment from the company's earnings for the quarter ended 31 March 2016. The stock shed 6.19%. The stock had lost 4.51% to settle at Rs 799.95 yesterday, 28 April 2016. As per media reports, a total of three brokerages have cut their price target on the HCL Tech stock following disappointing earnings. The company declared its results for the quarter ended 31 March 2016 before market hours yesterday, 28 April 2016.

HCL Tech's consolidated net profit rose 0.3% to Rs 1926 crore on 3.4% growth in revenue to Rs 10698 crore in the quarter ended 31 March 2016 over the quarter ended 31 December 2015. Revenue in constant currency terms rose 1.7% on sequential basis in the quarter ended 31 March 2016. In dollar terms, HCL Tech's net profit declined 2% to $285 million on 1.3% growth in revenue to $1,587 million in the quarter ended 31 March 2016 over the quarter ended 31 December 2015. HCL Tech has changed its accounting year to the period from 1 April to 31 March from earlier 1 July to 30 June.

Bharti Airtel lost 2.32% after the company said it will undertake buyback of shares only after the approval from Delhi High Court for the scheme of amalgamation of its wholly owned subsidiary with the company. Bharti Airtel said that the scheme of amalgamation of Augere Wireless Broadband India (Augere), a wholly owned subsidiary with the company is under consideration for approval by the Delhi High Court. The announcement was made before market hours today, 29 April 2016.

Bharti Airtel's board of directors at its meeting held on 27 April 2016, approved the proposal to buyback the shares on a proportionate basis through a tender offer. The buyback shall be up to an aggregate amount not exceeding Rs 1434 crore at a price of Rs 400 per share translating into approximately 3.58 crore shares, representing 0.9% of the total paid up equity share capital of the company.

Meanwhile, according to reports, a foreign brokerage has maintained its underperform rating on Bharti Airtel stock citing expensive valuations considering the near-term risks.

Idea Cellular slumped 6.52% after consolidated net profit fell 38.87% to Rs 575.63 crore on 10.63% growth in total income to Rs 9524.09 crore in Q4 March 2016 over Q4 March 2015. Idea Cellular's earnings before interest, taxation, depreciation and amortization (EBITDA) margin improved to 38.1% in Q4 March 2016 from 36.4% in Q4 March 2015. EBITDA rose 18% to Rs 3616 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours yesterday, 28 April 2016.

Meanwhile, Idea Cellular announced during trading hours today, 29 April 2016, that its board has taken note of the approval of a draft Scheme of Amalgamation by the board of directors of Idea Mobile Commerce Services ('IMCSL'), a wholly-owned subsidiary of the company. The Scheme of Amalgamation contemplates the merger of IMCSL with Aditya Birla Idea Payments Bank ('ABIPBL'), an entity which has been recently incorporated, wherein Aditya Birla Nuvo (a promoter of the company) holds 51% equity and the balance 49% equity is held by the company. ABIPBL will be applying to the Reserve Bank of India for grant of Payments Bank license in due course.

For the year ended March 31, 2016, IMCSL had revenues of Rs. 72.10 million, contributing approximately 0.02% of the consolidated revenues of the company. The net worth of IMCSL as on 31 March 2016 is Rs 1.46 crore comprising miniscule percent of company's net-worth.

Upon completion of merger, ABIPBL will be issuing equity shares to the company in lieu of its existing shareholding in IMCSL. Following completion of the merger of IMCSL into ABIPBL, the company will continue to hold 49% equity in ABIPBL. The proposed amalgamation is expected to take around 6 to 9 months and shall be subject to all requisite approvals, the company said.

The Sensex clocked gains of 267.76 points or 1.06% in this month. The Sensex has fallen 506.92 points or 1.94% in calendar year 2016 so far (till 29 April 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 3,114.01 points or 13.84%. The Sensex is off 2,970.71 points or 10.39% from a 52-week high of 28578.33 hit on 23 July 2015. The Sensex is off 4,418.12 points or 14.71% from a record high of 30,024.74 hit on 4 March 2015.

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First Published: Fri, April 29 2016. 16:48 IST
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