The Sensex and the Nifty rose sharply by 5.34% and 5.25% respectively in the last week on various domestic and global cues. Global equity markets staged a comeback rally after they pared losses in the week previous to last due to fears of interest rate hike by the Fed. An upward revision in monsoon forecast by Skymet also helped support the indices in the last week.
Private weather forecaster Skymet has revised the forecast for the 2016 southwest monsoon to 109% of the long period average (LPA) from 105% of the LPA predicted earlier. According to Skymet conditions are favorable for the timely onset of the southwest monsoon in Kerala. This is in contrast with state-run weather office the India Meteorological Department (IMD) predicting a delay of 6 days for the onset of the monsoon rains in Kerala this year from the normal onset date which is 1 June.
The IMD also, last month, forecast good rains during the 2016 southwest monsoon season. Skymet has cut its forecast of the quantum of rains in June 2016 to 87% of LPA from its earlier prediction of 90% of LPA. It has raised its forecast of the quantum of rains in July 2016 to 108% of LPA from earlier 105%. For August 2016, Skymet has raised its forecast to 113% of LPA from earlier 108%. For September 2016, Skymet has raised its forecast to 123% of LPA from earlier 115%.
Coal India and Hindalco Industries will report their Q4 March 2016 results in the week ahead. Tata Motors, Mahindra & Mahindra, Sun Pharmaceutical Industries, Aurobindo Pharma and NTPC are scheduled to announce Q4 March 2016 results on Monday, 30 May 2016.
Eurozone finance ministers and the International Monetary Fund (IMF) reached a deal to unlock more bailout funds for debt-burdened Greece. The new payouts will save Greece from defaulting on big debt redemptions to the IMF and European Central Bank in July. Eurozone finance ministers also agreed on a road map on debt relief for Greece.
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On a weekly basis, Twelve stock portfolio has gained 4.47% in value and the Benchmark BSE Sensex has gained by 5.34%. The Portfolio underperformed the benchmark by 0.87%.
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On a weekly basis, Global Ten Stock Model Retirement Portfolio has gained 2.11% in value and the Benchmark S&P 500 has gained by 2.28%. The Portfolio underperformed the benchmark by 0.17%.
Industry and Stock Specific trends
The sectoral indices closed in positive territory last week. The S&P BSEBankex, Auto, IT, PSU and Oil and Gas indices gained 6.46%, 3.56%, 3.26%, 3.78% and 3.94% respectively in the last week.
Stock Gainers and Losers
The Stock price of Larsen and Toubro gained 17% in the last week. The company’s management expects L&T’s order inflow to rise 15% in the year ending 31 March 2017 (FY 2017). L&T expects 12-15% growth in revenue in the year ending 31 March 2017 (FY 2017). L&T reported 18.55% rise in consolidated net profit to Rs.24536.4 million on 17.88% rise in total income to Rs.333752.6 million in Q4 March 2016 over Q4 March 2015. L&T’s order book stood at Rs.2499490million as on 31 March 2016, higher by 7% on year-on-year basis. International order book constituted 28% of the total order book.
The Stock price of BHEL rose 8% in the last week on expectations of a strong quarter. The company’s netprofit however fell 59.52% to Rs.3595.8 million on 18.36% decline in total income to Rs.104186.4 million in Q4 March 2016 over Q4 March 2015. Bhel’s order backlog stood at about Rs 1.10 trillion as on 31 March 2016. The company removed orders amounting Rs.37830million from the order book in Q4 March 2016. It removed orders amounting Rs.74290million from the order book in the year ended 31 March 2016, which are not likely to commence.
The Stock price of SBI rose14% in the last week. The bank’s net profit fell 66.23% to Rs.12638.1 million on 10.10% increase in total income to Rs 535269.7 million in Q4 March 2016 over Q4 March 2015. The bank’s gross non-performing assets (NPAs) stood at Rs.981728 million as on 31 March 2016 as against Rs.727917.3 million as on 31 December 2015 and Rs.567253.4 million as on 31 March 2015.
The ratio of gross NPA to gross advances stood at 6.5% as on 31 March 2016 as against 5.1% as on 31 December 2015 and 4.25% as on 31 March 2015. The ratio of net NPA to net advances stood at 3.81% as on 31 March 2016 as against 2.89% as on 31 December 2015 and 2.12% as on 31 March 2015. The bank’s provisions and contingencies rose 89.74% to Rs.131740.5 million in Q4 March 2016 over Q4 March 2015. The provisions and contingencies include provisions for NPA.
SBI’s provisions for NPA jumped 143.47% to Rs.121391.7 million in Q4 March 2016 over Q4 March 2015. The provision coverage ratio of the bank stood at 60.69% as on 31 March 2016.
The Stock price of Cipla declined 7% in the last week The company’s consolidated net profit fell 68.9% to Rs.810million on 5.6% growth in income from operations to Rs.32670million in Q4 March 2016 over Q4 March 2015. The company’s earnings before interest, taxation, depreciation and amortization (EBITDA) declined 56.9% to Rs.2190million in Q4 March 2016 over Q4 March 2015.
The derivative market saw rise in open interest in Nifty futures by 34%. Nifty at the money call option volatility declined and put option volatility rose last week.
The Rupee marginally appreciated in the last week against the USD. FIIs were net equity buyers to the tune of USD 100 million in the fourth week of May 2016.