Clutched by US Rate hike fears, Sensex turns Red

Market showed certain signs of restraint since the Sensex settled in the red on Friday post RIL earnings failed to impress investors and on heightened prospects of a US rate hike amid mixed Asian cues. Nonetheless, for the week, the Sensex and the Nifty noted gains by rising 403.58 points, or 1.45 per cent, and 109.65 points, or 1.27 per cent, respectively. Foreign investors held themselves back because of the hike in US dollar index led by increasing certainty of higher US borrowing costs.

FIIs were not active in the market since the surge in US dollar index backed by growing certainty of Fed rate hike. As anticipated, ECB retained status quo and ruled out possibility of sudden end in QE which provided breather to the market. With nothing much in the European Central Bank latest debate to rock the boat, stock markets could end the day in positive territory, even as the euro was put under pressure. The banking sector was upgraded by this week’s positive results from US financial businesses, with BNY Mellon being the latest to report better than expected figures.

The 30-share index remained in the negative zone for the most part. But some fag-end value buying implied that it recovered a bit before settling at 28,077.18, down 52.66 points, or 0.19 per cent.

The broader Nifty also gave in to the pressure before recovering to close lower by 6.35 points, or 0.07 per cent at 8,693.05.

A mixed trend dominated in rest of Asia following an earthquake in western Japan, which weighed on equities. Hong Kong markets were shut because of a typhoon. In contrast, broader markets were in a better position, with the mid-cap and small-cap indices closing higher by 0.31 per cent and 0.10 per cent, respectively.

Funds as well as retailers accumulated momentum post Reliance Industries’ yesterday Q2 numbers. It reported a 23 per cent drop in its second quarter consolidated net profit, which had a bearing on stock movement. RIL shares rallied down 2.21 per cent to Rs 1,064.40 post the consolidated net profit in July-September came in at Rs 7,206 crore, 22.9 per cent lower than Rs 9,345 crore in the corresponding period a year ago.

ACC share price jumped 3.10 per cent to Rs 1,562.05 post the company said its consolidated net profit fell 29 per cent to Rs 81.97 crore for the September quarter.

Taking a glance at the sectors, the BSE consumer durables index slipped 1.70 per cent and metal index shed 0.62 per cent. On the other hand, Realty gained the most by rising 0.86 per cent followed by IT 0.69 per cent.

Yesterday, Foreign portfolio investors (FPIs) bought shares worth a net Rs 7.30 crore, as per provisional data released by the stock exchanges. On a global basis, a mixed trend popped up in other Asian bourses, aiding key indices on the domestic bourses trim their losses.
Japan’s Nikkei came off six-month highs by dipping 0.30 per cent after the quake while Shanghai Composite rose 0.21 per cent. In Europe, most indices increased in their early deals after the European Central Bank quashed talks regarding its future monetary policy. Key indices in France, Germany and London grew between 0.04 per cent and 0.12 per cent.

Clutched by US Rate hike fears, Sensex turns Red

Market showed certain signs of restraint since the Sensex settled in the red on Friday post RIL earnings failed to impress investors and on heightened prospects of a US rate hike amid mixed Asian cues. Nonetheless, for the week, the Sensex and the Nifty noted gains by rising 403.58 points, or 1.45 per cent, and 109.65 points, or 1.27 per cent, respectively. Foreign investors held themselves back because of the hike in US dollar index led by increasing certainty of higher US borrowing costs.

FIIs were not active in the market since the surge in US dollar index backed by growing certainty of Fed rate hike. As anticipated, ECB retained status quo and ruled out possibility of sudden end in QE which provided breather to the market. With nothing much in the European Central Bank latest debate to rock the boat, stock markets could end the day in positive territory, even as the euro was put under pressure. The banking sector was upgraded by this week’s positive results from US financial businesses, with BNY Mellon being the latest to report better than expected figures.

The 30-share index remained in the negative zone for the most part. But some fag-end value buying implied that it recovered a bit before settling at 28,077.18, down 52.66 points, or 0.19 per cent.

The broader Nifty also gave in to the pressure before recovering to close lower by 6.35 points, or 0.07 per cent at 8,693.05.

A mixed trend dominated in rest of Asia following an earthquake in western Japan, which weighed on equities. Hong Kong markets were shut because of a typhoon. In contrast, broader markets were in a better position, with the mid-cap and small-cap indices closing higher by 0.31 per cent and 0.10 per cent, respectively.

Funds as well as retailers accumulated momentum post Reliance Industries’ yesterday Q2 numbers. It reported a 23 per cent drop in its second quarter consolidated net profit, which had a bearing on stock movement. RIL shares rallied down 2.21 per cent to Rs 1,064.40 post the consolidated net profit in July-September came in at Rs 7,206 crore, 22.9 per cent lower than Rs 9,345 crore in the corresponding period a year ago.

ACC share price jumped 3.10 per cent to Rs 1,562.05 post the company said its consolidated net profit fell 29 per cent to Rs 81.97 crore for the September quarter.

Taking a glance at the sectors, the BSE consumer durables index slipped 1.70 per cent and metal index shed 0.62 per cent. On the other hand, Realty gained the most by rising 0.86 per cent followed by IT 0.69 per cent.

Yesterday, Foreign portfolio investors (FPIs) bought shares worth a net Rs 7.30 crore, as per provisional data released by the stock exchanges. On a global basis, a mixed trend popped up in other Asian bourses, aiding key indices on the domestic bourses trim their losses.
Japan’s Nikkei came off six-month highs by dipping 0.30 per cent after the quake while Shanghai Composite rose 0.21 per cent. In Europe, most indices increased in their early deals after the European Central Bank quashed talks regarding its future monetary policy. Key indices in France, Germany and London grew between 0.04 per cent and 0.12 per cent.

ACC profit is Likely to be up by 46% in Q2

ACC, Cement maker, second quarter (July-September) profit is seen increasing 46 per cent at Rs 168 crore on the back of better operational performance and lower depreciation expenses.

Today, ACC share price opened at Rs. 1,612, a tad higher than its previous close of Rs. 1,609.45.

Total income from operations in Q2 decline 5 per cent to Rs 2,639 crore on yearly basis due to weak volumes and weak realizations. ACC has Pan-India presence. The company may see lower volumes due to monsoon and a decline in market share. Cement sales Volumes are likely fall 3.6 per cent at 5.4 million tons as compared to 5.61 million tons Year on Year.

At 12:13 PM, Acc share price was trading at Rs. 1,600.10 with a decline of 0.58% as compared to 0.39% decline in the Benchmark Index Nifty and 0.48% decline in the BSE S&P Sensex. So far, 97 thousand shares have changed hands over the NSE trading counter.

All India cement prices were marginally up on a Year on Year basis and increased 3 per cent Quarter on Quarter. Central & north prices surged 7 percent to 10 percent Year on Year while East, South and West India prices were down. Operating profit during the quarter is anticipated to rise 12 per cent to Rs 350 crore and margin may increase 210 basis points to 13.3 percent Year on Year due to low base.

Key issues to watch out for: Cement pricing recovery, Volume growth and demand revival, Update on cost-saving measures, Update on progress of the East capacity Additions, and Updates on merger synergies with Ambuja Cements.

ACC is the top 500 share for the quarter, picked from among 1700 stocks by Dynamic Levels. This means ACC has strong fundamentals ans has has not made any losses in last 2 quarters. The company’s debt equity is less than 2 (not applicable for NBFC and banks) and pledge is less than 25%. ACC is safe for investment. For the levels of support and resistance on ACC, visitACC share price forecast page of Dynamic Levels website.

CCI fines 11 cement companies amounting to Rs.6700 cr

The Competition Commission of India well known as CCI has imposed over Rs.6,700 cr penalty on 11 cement companies - UltraTech, Ramco, Binani, JK Cement, Jaiprakash Associates, Lafarge, India Cements, ACL, Century, ACC, Shree Cement, besides CMA – Cement Manufacturers’ Association for cartelisation. 

CCI has passed the final order, followed by the directions issued by the CAT - Competition Appellate Tribunal remanding the matter back, while keeping aside the original order of the fair trade regulator, that had also imposed fine on cement companies. The CCI stated that the cement companies utilized the platform offered by the CMA and shared details in relation to prices, capacity utilization, production and dispatch, thus confining both production and supplies in the market. Further, the CCI also discovered the cement companies to be acting in concert in fixing cement prices.

Penalties of Rs.1,147.59 cr on ACC, Rs.1,163.91 cr on ACL, Rs.167.32 cr on Binani, Rs.274.02 cr on Century, Rs.187.48 cr on India Cements, Rs.128.54 cr on JK Cement, Rs.490.01 cr on Lafarge, Rs.258.63 cr on Ramco, Rs.1,175.49 cr on UltraTech and Rs.1,323.60 cr on Jaiprakash Associates were imposed by CCI. To add to this, a penalty of Rs.73 lac was slapped on the CMA. 

Grilling the companies, the CCI mentioned that the actions of the companies and the CMA were not only detrimental to consumer interest but also left a negative impact on the whole economy, as cement was a vital input in construction and infrastructure industry, and also critical to economic development. 

The regulator has slapped Rs.397.51 cr fine on Shree Cement, for carrying out unfair businesses practices via a separate order. 

In late 2015, the CAT had revoked CCI’s order, slapping a combined penalty of Rs.6,316 cr on cement companies for allegedly formulating a price cartel.

The tribunal repressed the commission’s order after observing that then CCI chairperson – Ashok Chawla was party to the order, in spite of not being present during the hearings. The tribunal also permitted the cement companies to withdraw the Rs.630-cr deposited by them in accordance to its interim order. In May 2013, the interim order had stayed the penalty but directed the companies to deposit 10 per cent of its pending disposal of their appeal.

In June 2012, the commission had fined ACC,  UltraTech Cement, Ambuja Cements and Jaiprakash Associates a little over Rs.1,000 cr each for forming a cartel. The other companies that were fined included Century Cement, Madras Cements, Binani Cement, JK Cement, Lafarge India, India Cements and Grasim Cements (now merged with UltraTech). The CMA was a party in the above case and it was also fined a token amount.

Dynamic Levels research team has identified two best stocks Heidelberg Cement and Visaka Industries  in the Cement sector while all other stocks are struggling. Heidelberg Cements has 31 Mutual Fund Holding and has registered a growth of 8% in its EPS trading at a PE ratio of 47. It has been a top performer with percentage change of 29 per cent after Brexit i.e since 24th June. 

Visaka Industries is trading at the lowest PE of 9 and has registered 86 per cent growth along with a price movement of 34 per cent after Brexit.