The markets have been closing at higher levels consecutively for six trading sessions. It is the first time to achieve this record post-November 2017. On a weekly basis too, the indices registered higher-closing levels for three weeks in a row. In the last six days, the 30-scrip Sensex gained 565 points to close the week at 34,192 while Nifty-50 index added 149 points to close at 10,480 level. Since the market reattained the psychological level, the investor-sentiment improved. India volatility index declined 2.9% points to 14.14 level. The impressive industrial production was the chief cause for this positive trend.
The Manufacturing Index that accounts for 77% weight in the Index for Industrial Production registered 8.7% growth in February 2018 compared to 1.4% in February 2017. Similarly, electricity index in the same period under review recorded 4.5% from 1.2% in the year-ago period. Out of the 23 industrial segments, 15 segments registered positive growth.
Then the Inflation. The retail inflation came down to 4.28 % in March 2018, which is its five-month low. It is also less than the 4.44% registered in the previous month February 22018. The exports grew 9.8% in 2017-18. The foreign exchange reserves reached the new lifetime high at 424.86 billion dollars. In the previous one week itself, they climbed 503.6 million dollars. Markets reacted positively to these encouraging statistical figures.
The industrial growth in January, February is an indication of impressive corporate results to be announced for the fourth quarter and full year fo 2017-18. IT bellwether Infosys already released good results. Its comprehensive net profit in the fourth quarter increased to Rs 3,920 crore from the earlier year's Rs 3,422 crore. Similarly, the comprehensive yearly net profit also grew to Rs 16,372 crore from the earlier year's Rs 14,075 crore. The company declared a special dividend of Rs 10 per share in addition to the final dividend of Rs 20.50. The total dividend would be Rs 43.50 including the interim dividend of Rs 13.
Gruh Finance, Jai Bharat Maruti, Schaeffler, Tata Sponge, ACC, Bharat Seats, IndusInd Bank, India Bulls Housing, HDFC Bank and others are going to declare attractive financial results like Infosys. The stocks of these companies may move upwardly.
Alembic Ltd's buyback offer will begin this week. The company is offering Rs 80 per share, a premium of 24% to the current market price of Rs 58.30. It will purchase a total of 1.02 crores of shares under this offer. Even though the record date is already over, the stock would appreciate decently after the buyback period.
Brent crude is trading at 72 dollars per barrel, which is the three-month high. The raising price is beneficial to Hindustan Oil Exploration whose sale proceeds depend on international prices. The stock is going to spurt. The group of lenders under the SBI has agreed to the restructuring of MBL infrastructure Ltd, it is learned. The promoters of the company are preparing to bring Rs 100 crore as their contribution. It is the right time for the investors who bought the share at higher prices to average their acquisition cost.
Midhani is going to be another Kudremukh Iron Ore (KIOCL). The same situation is repeating in this counter. Though both the Public Sector Units have large equity, floating stock in circulation is very low. On 13 April 2018, a large chunk of shares gets harboured at the long-term strategic investors, leading to a further paucity of the float. Russia in retaliation to the US trade sanctions is set to restrict the titanium metal to the American company Boing. This development is positive for the Midhani that produces titanium.
The Supreme Court clarified in its order that any settlement beyond the frame of Insolvency & Bankruptcy Code while hearing the Binani Cements case. With this order, things turned in favour of Dalmia Cement. However, it may face pressure from lenders to pare its bidding price to that of the Ultratech offer of Rs 7,600 crore. The stock of Binani may move northwardly after April 19.
The share broking company F-6 Finserve Pvt Ltd that broke in the F&O segment sold the promoters shares of Quality Ltd without their approval to set off the losses and later disappeared. The BSE Exchange debarred the broking firm. On the other hand, the shares of Quality Ltd were crashed because of the oversupply in the market. With the promoters being helpless, the share may not come out from the current crisis.
As the US imposed trade restrictions on U.C.Rusal along with other firms are coming into force from April 17, the aluminium markets face a supply crisis since the Russian company is the second largest company with 10% share of the world aluminium production. The US sanctions are over above its already imposed anti-dumping duty on Chinese aluminium imports. In this backdrop, the Indian company National Aluminium Company Ltd (Nalco) that makes the metal with low cost of production would benefit largely in the supply-stricken international aluminium market. The stock price may appreciate 100% from the current level.
Sanwaria's net profit rose 100% in fourth-quarter and in full year. At the same time, its equity also swelled 100% and the EPS improved marginally to Rs 1.36 from Rs 1.19. In this scenario, the doubling of equity to Rs 73.61 crore is good for the promoters and not for the retail investors. When a company is earning hefty profits, any increase in equity will diminish the intrinsic value of the share. The stock of Sanwaria will move into red zone pos the price range Rs 27-28. It would be prudent to be cautious towards the Sanwaria share at these price levels.
Bhansali Engineering & Polymers Ltd has surpassed the Q4FY17 net profit of Rs 15.28 crore and reported a much higher Rs 28.35 crore earnings in Q4FY18. The yearly net profit also surged to Rs 99.41 crore in FY18 from Rs 35.63 crore earned in the earlier year. The company achieved an EPS of Rs 6.00 per share of Rs 1.00. However, the stock is very expensive at the current 34 PE multiple. This could be the full price of the stock.
The US and its allies the UK, and France, in a joint operation, conducted the air-strikes on the Syrian chemical-weapon bases. Since Russia is supporting the Syrian ruler King Assad, the situation has become alarming. Because of the air-strikes, the oil supplies from neighbouring Saudi Arabia are facing the risk of disruption. By the time the magazine goes for printing, the US has fired more than 100 missiles, the agencies reported. On the other hand, Russia is demanding for an emergency meeting of UN Security Council. It seems the situation may turn stormy.
The capital markets when opened on Monday may severely react to the Syria Crisis.
Doradla Siva Nageswara Rao
This article was originally published on 14th April 2018 in telugu language.