The Sensex and the Nifty declined 1.47% and 1.39% respectively in the last week as slowdown in earnings for most of the index stocks added to the worries about their valuations. Quarterly results for most of the large cap stocks disappointed on the revenue as well as net profit growth front. Stocks such as Mahindra and Mahindra, BHEL, GAIL and Sun Pharma declared their results in the last week. A detailed analysis on the earnings and revenue growth is given below.
Stock Gainers and Losers
Mahindra and Mahindra stock rose 6% in the last week. The Company’s net profit fell 2.44% to Rs.9235.6 million with a 1.67% decline in total income to Rs 97309.2 million in Q2 September 2015 over Q2 September 2014.
Dr Reddy’s Laboratories stock fell sharply by 15% in the last week. The Company has received a warning letter by the United States Food and Drug Administration (USFDA) relating to the company’s active pharmaceutical ingredients (API) manufacturing facilities at Srikakulam in Andhra Pradesh and Miryalaguda in Telangana, as well as oncology formulation manufacturing facility at Duvvada in Visakhapatnam, Andhra Pradesh. This action follows the earlier inspections of these sites by USFDA in November 2014, January 2015 and February 2015 respectively.
Sun Pharma stock declined 10% in the last week. US subsidiary Taro Pharmaceutical Industries posted weak Q2 September 2015 earnings. Taro’s consolidated net profit declined 7.04% to USD 133.30 million on 15.5% fall in net sales to USD 212.1 million in Q2 September 2015 over Q2 September 2014.
Tata Steel stock declined 11% in the last week. Tata Steel reported 21.87% rise in net profit to Rs 15287.1 million with an 18.09% fall in total income from operations to Rs.293046.9 million in Q2 September 2015 over Q2 September 2014. The company’s bottom line in Q2 September 2015 was boosted by a surge in non-operational income. Non-operational income jumped 814% to Rs.29381.9 million in Q2 September 2015 over Q2 September 2014. Tata Steel reported a net exceptional loss of Rs.5637.4 million in Q2 September 2015 compared with net exceptional gains of Rs.11450.1 million in Q2 September 2014.
BHEL stock declined 4% in the last week. The company reported net loss of Rs.2049 million in Q2 September 2015 compared with net profit of Rs.1248.4 million in Q2 September 2014. Total income declined 0.45% to Rs.631.123 billion in Q2 September 2015 over Q2 September 2014. Company’s outstanding order book position as on 30 September 2015 stood at Rs.1.12 trillion.
GAIL stock declined 6% in the last week. GAIL (India)’s net profit dropped 66.19% to Rs.4405.1 million with a 0.33% growth in total income to Rs.144666.8 million in Q2 September 2015 over Q2 September 2014. There was no subsidy sharing burden for GAIL (India) in Q2 September 2015. There was no subsidy sharing burden for the company during the corresponding quarter of the previous year as well.
The government is scheduled to unveil the consumer price index (CPI) data for the month of October 2015 in the next week. The CPI inflation had increased to 4.4% in the month of September 2015 as compared to 3.7% reported for the month of August 2015.
The industrial production data for the month of September 2015 is scheduled to be reported in the next week. India’s Index of Industrial Production (IIP) accelerated to 34-months high of 6.4% in August 2015 over a year ago compared with the revised growth of 4.1% in July 2015.
Portfolio and Sector Performance
Our model Twelve Stock Retirement Portfolio has given one-year returns of 15.93% and has outperformed the benchmark Sensex by 21.92%.
On a weekly basis, twelve stock portfolio has declined 1.65% in value and the Benchmark BSE Sensex has declined by 1.47%. The Portfolio has underperformed the benchmark by 0.18%.
The Nineteen Stock Portfolio has given one-year returns of 11.98% and has outperformed the benchmark BSE 500 by 13.16%.
On a weekly basis, nineteen stock portfolio has declined 0.89% in value and the Benchmark BSE 500 has declined 1.51%. The Portfolio has outperformed the benchmark by 0.62%.
The Global Ten Stock Model Retirement Portfolio has given a return of 22.45% and has outperformed the benchmark S&P 500 index by 21.62% since inception on 8th April 2015.
On a weekly basis, Global Ten Stock Model Retirement Portfolio has gained 4.06% in value and the Benchmark S&P 500 has gained by 0.95%. The Portfolio has outperformed the benchmark by 3.11%.
Industry and Stock Specific trends
The sectoral indices closed in marginally positive territory last week. The S&P BSE Auto, IT, PSU and Oil and Gas indices gained 0.54%, 0.14%, 1% and 0.47% respectively in the last week. S&P BSE Bankex declined 1.4% in the last week.
The derivative market saw fall in open interest in Nifty futures by 0.57%. Nifty at the money call and put option volatility rose last week.
The Rupee depreciated in the last week against the USD. FIIs were net equity sellers to the tune of USD 225 million in the first week of November 2015.