RIL’s robust Q1 earnings take benchmarks higher

Extending their northward journey for fifth straight session, Indian equity benchmarks ended the session in the green amid encouraging first quarter earnings from index heavyweights Reliance Industries and HDFC. Some support also came after Finance Minister Arun Jaitley exuded confidence that tax collection during the current fiscal would exceed budget estimate of Rs 13.64 lakh crore.

After a gap-up opening, markets started drifting lower to end near intraday low as market-participants booked profits at higher levels. Nevertheless, it was a broadly positive session of trade, wherein broader indices outperformed the benchmark indices with the Small-cap index gaining nearly 1 percent on report that foreign institutional investors turned focus to the broader markets where valuations are seen reasonable at current levels. Foreign institutional investors (FIIs) who have pumped over $12 billion (Rs 70,276 crore) in Indian equities year-till-date (YTD), have increased their stake in more than 150 mid-and small-sized companies during the April - June 2014 quarter.

On the global front, European markets made a sluggish start and were trading in the red on Monday, concerned by an escalation in tensions between Russia and the West and reports the Ukrainian army was moving on a major rebel stronghold. However, most Asian stock markets edged higher as investors set aside geopolitical concerns for the moment to focus on the generally upbeat flow of US corporate earnings ahead of a host of results due this week.

Back home, RIL’s standalone net profit for the first quarter stood at Rs 5,649 crore, 5.5 per cent higher from the corresponding period a year ago, backed by lower interest and depreciation costs along with slightly better refining margins. The consolidated net profit rose 13.7 per cent to Rs 5,957 crore. While, HDFC reported 9.71% rise in its consolidated net profit at Rs 1872.90 crore for the quarter as compared to Rs 1707.10 crore for the same quarter in the previous year. Telecom stocks like Bharti Airtel, Idea Cellular and Reliance Communication too remained on buyers’ radar, on report that the telecom regulator is likely to propose allowing operators share all kinds of airwaves - including those administratively allotted. On the flip side, PSU oil marketing companies viz HPCL and IOC edged lower, as the Petroleum Minister Dharmendra Pradhan has once again said that cooking gas and kerosene prices will not be hiked, however he said that the petrol prices would move according to the prevalent market price mechanism.

The NSE’s 50-share broadly followed index Nifty ended higher by over twenty points to end above its psychological 7,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged higher by over seventy points to end above the psychological 25,700 mark. The broader markets too traded with traction and ended the session with a gain of over half a percent. The market breadth remained in favour of advances, as there were 1,720 shares on the gaining side against 1,245 shares on the losing side while 104 shares remain unchanged.

Finally, the BSE Sensex gained 73.61 points or 0.29%, to 25715.17, while the CNX Nifty added 20.30 points or 0.26%, to 7,684.20.

The BSE Sensex touched a high and a low of 25861.15 and 25677.71, respectively. The BSE Mid cap index was up by 0.51%, while Small cap index gained 0.79%.

The top gainers on the Sensex were HDFC up by 2.62%, RIL up by 2.00%, ITC up by 1.55%, Axis Bank up by 1.10% and Hindustan Unilever up by 0.84%. On the flip side, the key losers were Tata Power down by 1.94%, Gail India down by 1.86%, SBI down by 1.62%, BHEL down by 1.58% and SSLT down by 1.39%.

On the BSE sectoral front, FMCG up by 1.11%, Oil & Gas up by 0.55%, Consumer Durables up by 0.28% and Healthcare up by 0.21% were the only gainers, while Capital Goods down by 1.01%, Realty down by 0.97%, Power down by 0.81%, PSU down by 0.61% and Infrastructure down by 0.57% were the top losers in the space.

Meanwhile, India and China are likely to sign a memorandum of understanding (MoU) for cooperation in Railways during the forthcoming visit of Chinese President Xi Jinping in September 2014. China had already sent an advance team for cooperation in the construction and overhaul of the existing railway system across India.

The 22-member high-powered Chinese delegation headed by deputy administrator of National Railway Administration Zheng Jian also held a first round of consultations with the top brass of Central Railway. During the meeting, the issues like raising speed of trains on existing routes, training of heavy haul transportation and station development under strategic economic dialogue were discussed. China has built up a whole national network of bullet trains which run at a speed of 300 km per hour. If the MoU is signed between both countries, China will provide competitive equipment and technology to India for developing the bullet train network in the country.

The government during budget 2014-15 has announced an ambitious plan to have a Diamond Quadrilateral Network of high-speed rail connecting major metros and growth centres, besides setting up world-class stations among others. The Rail Budget also proposed to increase the speed of existing trains in select sectors up to 200 km per hour. Indian Railways is an important sector for India and has the potential to raise India's economic growth by over one percent. Therefore, it has become imperative to modernise, strengthen and expand the Indian railway network.

The CNX Nifty touched a high and low of 7,722.10 and 7,674.00 respectively.

The major gainers of the Nifty were IndusInd Bank up 3.44%, Asian Paints up by 2.51%, HDFC up by 2.21%, Reliance Industries up by 1.97% and ACC up by 1.78%. On the flip side, the key losers were DLF down by 2.94%, Tata Power Company down by 2.03%, GAIL (India) down by 1.99%, IDFC down by 1.98% and BHEL down by 1.86%.

European markets were trading in red; UK’s FTSE 100 down by 0.28%, Germany’s DAX down by 0.65% and France’s CAC 40 was down by 0.27%.

The Asian markets concluded Monday’s trade mostly in red, while Japan’s Stock Exchange was closed today on account of ‘Japan - Marine Day’ holiday. Chinese brokerages, undeterred by the worst performance among the world’s major stock markets, are seeking to raise more than $6.2 billion from initial public offerings as capital constraints squeeze their operations. The number of Chinese cities registering month-on-month decline in home prices rose to 55 in June from 35 in May as the country’s housing market continued to cool down. Prices were flat in seven cities last month and gained in eight. On a year-on-year basis, home prices rose in 69 of the 70 cities in June, the 14th consecutive month with one city’s housing price falling. In Hong Kong, the Quarterly Business Tendency Survey has found that 17% of the senior management of 560 prominent companies expect their business situation to improve this quarter over the second quarter. The Census & Statistics Department stated that 11% of respondents expect the business situation to worsen. The proportion of respondents expecting their business situation to remain unchanged increased from 69% to 72%.