15 Aug 2016
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.
Posted by #richardneve at 8/15/2016
9 Aug 2016
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.
Posted by #richardneve at 8/09/2016
1 Aug 2016
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.
Posted by #richardneve at 8/01/2016
26 Jul 2016
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.
Posted by #richardneve at 7/26/2016
25 Jul 2016
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.
Posted by #richardneve at 7/25/2016
21 Jul 2016
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.
Posted by #richardneve at 7/21/2016
20 Jul 2016
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.
Posted by #richardneve at 7/20/2016