16 Aug 2016

Natural gas in India, time to boost

India has discovered large highly enriched accumulations of natural gas hydrates in the Bay of Bengal which are capable of being exploited. The GST constitutional amendment bill has been under intense negotiation between the states and central government since the Monsoon Session of parliament got under way, The Bill may be tabled in the Upper House this week if the government thinks it stands a good chance of passing. This would give sentiment a good boost and potentially sustain the surge of foreign interest in Indian equities.

15 Aug 2016

While central bankers sit on their hands

Equity markets have been stable while central bankers have sat on their hands. The US economy is showing new signs of strength, prompting the Fed to hint at the next interest rate move, while Japan and Europe are still in need of more policy stimulus. In India meanwhile, we had a flat week followed by a 98-point rise as a surge in foreign interest drove the Nifty up to 8639 for a gain of 1.1% after trading in a range of 2.4%. Foreign portfolio investors were net buyers of $822mil in cash equities as domestic investors sold a net $439mil. Market breadth was strong with advances outrunning declines b more than two to one and buying spread across the board. Volatility was stable with the India Vix trading down from its opening of 16 to a low under 12 before closing at 15 for a fall of a point. Strong buying drove the index futures to close at a premium of 1.6% to cash, the highest premium for some time.   

9 Aug 2016

No interest rate cut, RBI says


The outgoing RBI governor has ruled out an imminent interest rate cut due to inflationary pressures arising from food prices, which have been rising following a succession of weak harvests. The nomination of a successor to Raghuram Rajan has been pushed back until after his final review of monetary policy, due in the first week of August. This year’s kharif sowing is progressing strongly as the monsoon rains continue to match early optimism. Overall rainfall had reached 100% of the long-period average by July 28th. A slight deficit nationally in the latest week prevented the average being in excess to-date but the forecasts for geographic coverage and overall precipitation continue to be good through August. Reservoir capacity is now also recovering from drought conditions and has reached 34% after being in the teens only two weeks earlier.

1 Aug 2016

Torrent Pharma looks at Europe


Torrent Pharma is one of a group of bidders negotiating to acquire a portfolio of European products being offered for sale by TEVA. Lupin has launched two generic oral contraceptives in the US market on receipt of USFDA approval. The company has also received initial approval for a generic version of Lexiva tablets which have market sales of $76mil a year. Lupin is also in negotiations with two Japanese producers to acquire their portfolios of off-patent medicines.

26 Jul 2016

Mixed basket: ups and downs


Elsewhere, Heidelberg Cement reported sales ahead by 7.2% and profits ahead by 79%. Bajaj Auto, facing severe competitive headwinds at home and currency translation issues on exports, reported sales up by 3.5% but profits down 3.6%. Torrent Pharma reported a drop of 20% in sales as one of its big selling generics in the US market lost its exclusivity; profits were 53.9% lower as a result. Supreme Industries’ results reflected a change in its accounting period and policies which produced a drop of 6.7% in sales and 28% in profits. Finally, Firstsource Solutions reported a gain of 20.5% in revenues and 38.5% in profits as it displaced competitors to gain exclusive IT provider status with SKY.

25 Jul 2016

Corporaal results look good


In mid-season for first quarter results, we have quite a few which are of interest. Banks have proven to be as consistent as we expect. HDFC Bank reported net interest income growth of 21% and profits ahead by 20%. Kotak Mahindra reported NII growth of 22% and profits, after consolidation of its acquisition, ahead by 291% as it benefits from synergies. In the Consumer Sector, Agro Tech Foods reported an increase of 5.1% in sales and a gain of 32.9% in profits. Sales at Pidilite were 6.8% up and profits grew by 16%. Nestle India continued its recovery from the Maggi Instant Noodles controversy with sales ahead by 16.7%. Profit comparison is not meaningful on an annualized basis but was ahead by 14% on the quarter.

21 Jul 2016

India, all systems go!


Last week we thought the Nifty would be trading in a range in the mid 8,000s and it promptly move quite firmly above 8,500! The Monsoon Session of parliament starts next week and the Congress party, which has used its rump power in the Upper House to block the GST Bill, has announced that it will now support passage. Investor sentiment is only likely to improve on the back of favourable political winds and economic reform. 

20 Jul 2016

Optimistic monsoon forecasts


This year’s monsoon has continued to justify optimistic forecasts. Rainfall has now extended to cover the entire country and in the latest week reached 11% above the LPA. This brought the seasonal average for the ear-to-date to 102% of the LPA. Twenty-nine out of thirty-six regions have reported normal or excess rainfall this year to-date. July and August are the crucial months for kharif crop sowing and early reports indicate sowing is proceeding at a good pace, especially in grains and pulses.