The going seemed to be good as the market got into the Budget week but suddenly a slight bolt came from the blue.
The going seemed to be good as the market got into the Budget week but suddenly a slight bolt came from the blue. This time it was the S&P which said that the country's low income levels and weak fiscal and debt indicators constrain the country's credit profile. In a report titled 'Meeting Reforms Expectations Is Key To Maintaining Investment-Grade Ratings On India', S&P says, "The average income in India (unsolicited rating BBB-/Stable/A-3) is significantly below that of its peers and the government is also more heavily indebted."
The silver lining of course which India is banking on is that political stability following the general elections last year has created a conducive environment for reforms, which could address these weaknesses. We will get a big hint of this in the budget. Meanwhile, the Budget session started on Monday with President Pranab Mukherjee saying that inclusive growth was a top priority of the government and it was committed to expand the job market.
The outlook is a flat start. We expect the usual volatility ahead of the F&O expiry. Global markets are subdued. US indices closed lower following a cooling in Oil prices; WTI crude fell 2.7% to sub-$50 a barrel levels. Investors also turned apprehensive ahead of Greece’s economic reform plans scheduled today. The Dow, S&P 500 and Nasdaq were all down marginally. Asian markets are trading mixed, with Japan's Nikkei 225 higher and Hong Kong's Hang Seng trading lower.
Earnings and valuations continue to cause some worries and it is nothing unknown. Among the 360 of the NSE CNX 500 stocks for which estimated EPS estimates are available, 240 have seen downgrades in the past three months after companies' sales and profits hit multi-year lows in the 3-month period ended December 31, 2014, says a report. The top 30 companies, whose stocks constitute the benchmark Sensex, reported a 1% fall in revenue in the December quarter from the same period a year ago, its weakest revenue growth since the March quarter 2009, a report in ET added.
Moody's Investors Service says that the majority of Asian oil & gas companies, with their ample liquidity, remain well-positioned in the face of lower oil prices, but their standalone credit quality will deterioriate."The steep drop in crude oil prices since mid-2014 will materially reduce the earnings and cash flows of these companies and weaken their credit metrics in 2015," says Vikas Halan, a Moody's Vice President and Senior Credit Officer.
Monnet Ispat & Energy zoomed 12.3% to a high of Rs. 63 on reports of the company winning one coal block in Chhattisgarh.
Shares of Crompton Greaves Ltd ended 2% lower at Rs. 176 after company has bagged an order worth $20 million from PT PLN Indonesia for setting up 36 transformer bays around Indonesia.
Shares of Technofab Engineering Ltd hit 20% upper circuit at Rs. 160.
Shares of Ashiana Housing Ltd ended 13% higher at Rs. 306.The company has announced the launch of residential project "Ashiana Anmol" located in Sohna (Gurgaon). The entire project is spread across 13.337 acres of land with total saleable area of approximately 11.50 lakhs sq. ft.
Shares of Hindalco Industries ended 1% lower at Rs. 154 after the company reportedly said that it has bagged one more mine in the ongoing coal auction.
Shares of Lupin ended 2.71% lower at Rs. 1,645. Lupin said that it has received the approval for its product, a generic version of Allergan Inc's Lumigan Ophthalmic Solution, from the US Food and Drug Administration (USFDA).
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