May 27

Daily Market Commentary : 26th May 2016

Indian equity market once again sky rocketed extending its winning streak to third consecutive trading session. Sentiment got a fillip after index heavyweight L&T announced quarterly earning which was better than expected. The BSE Sensex opened above the psychologically 26,000 mark and went on to hit its highest level in almost 21 weeks. Sensex galloped approximately 1,100 points in last 2 trading session. Nifty closed with again of 135 points at 8,070 while Sensex ended with again of 486 points at 26,367.

Shares of Larsen & Toubro (L&T) surged more than 13% in today’s trade after the company reported 18.5% increase in consolidated net profit for the March quarter. Consolidated net profit in the three months ended March was up 18.5% YoY. Net sales rose 18.5% YoY.

About 54% of the total revenue in the quarter came from its infrastructure business (Subscription Required), in which revenue rose about 19% YoY. L&T garnered fresh orders worth Rs 1.3 trillion at the group level during the quarter, which constituted 62% of domestic and 32% of international orders. The consolidated order book of the group rose 7% to Rs 2.5 trillion for the year ended 31 March, with international orders constituting 28% of the total. Reportedly, the company is expecting 12-15% increase in revenues and a 15% growth in its order inflows for 2016-17. The company is looking at countries like Mozambique, Tunisia, Kenya, Uganda, Tanzania, Algeria, Botswana and Zimbabwe for its international business .

The engineering industry in India has grown tremendously over the years. But that growth has been marked by extreme volatility. Over the last eight years, the sector has seen numbers ranging from an output growth of 48% YoY in one year, to a contraction of 6% YoY in another. In our recent edition of the The 5 Minute Wrap Up Premium, we explain what factors to look for when picking an engineering stock (Subscription Required).

Engineering stocks finished on a strong note with L&T and Bharat Bijlee leading the gains.

Moving on to news from mining sector. According to an article in The Economic Times, Coal India is in talks with power companies in Bangladesh to supply coal. This is the first time Coal India will be exporting the fossil fuel on a commercial basis.

Reportedly, Coal India subsidiaries, Bharat Coking Coal and North Eastern Coalfields, plan to supply coal to Bangladesh. It is likely to be transported to Haldia port in West Bengal from where it could be forwarded through sea route to ports in Bangladesh. Coal India could not afford to export coal till last year because the fossil fuel was in short supply. The scenario changed last year when the company managed to pull up production at a considerable pace. Surplus stocks at pit head and slow lifting by power companies have prompted the company to explore the international market.

Apart from local Bangladeshi companies Coal India has also initiated talks with NTPC’s joint venture in Bangladesh, the 1,320 mw Maitree Project at Rampal in Bagerhat district. The project is a 50:50 JV between NTPC and the Bangladesh Power Development Board. Coal India finished the trading on a flat note.

USDINR trade today trading up 16 paise at 67.17 per US dollar.

Out of 1,812 stocks traded on the NSE, 1046 declined and 503 advanced today.

Top 5 Nifty Gainers: Sun Pharma (4.13%), Lupin Ltd (2.58%), Adani Ports & Sez (2.22%), SBI (1.82%) and Reliance Ind. (1.59%).

Top 5 Nifty Losers: ITC Ltd (-1.26%), L&T (-0.66%), NTPC (-0.60%), Tata Motors (-0.44%) and Axis Bank (-0.13%)

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