Union Bank Shares Tumble After Q1 Profit Fall

Mumbai: Shares in Union Bank of India fell as much as 7.3 per cent on Monday in their biggest single-day fall in nearly seven months, after the state-run lender reported its first-quarter profit plunged 68 per cent on higher bad loans.

Union Bank said on Saturday net profit fell to Rs 167 crore for the three months to June 30, from Rs 519 crore a year earlier.

Gross bad loans as a percentage of total loans rose to 10.16 per cent as of end-June from 8.7 per cent at end-March, and compared with 5.53 per cent as of June 2015.
As of 10.02 a.m., Union Bank shares were trading at Rs 129, down 5.91 per cent as against a 0.2 per cent gain in the broader NSE Nifty.

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InterGlobe Aviation Shares Slump On Q1 Profit Drop

Shares of InterGlobe Aviation, the company that runs low-cost carrier IndiGo Airlines, slumped 7 per cent on Tuesday. Traders attributed the selloff in the stock to weak quarterly numbers.

InterGlobe had on Monday reported a 7 per cent fall in net profit for the fiscal first quarter on account of competitive air fares. InterGlobe's average yield (measure of average fare paid per mile, per passenger) dropped 8 per cent during the quarter because of fall in average ticket prices.

"We have posted yet another profitable quarter. However, profitability was lower than last year primarily because of competitive fare pressures," said InterGlobe president Aditya Ghosh.

Net profit for the April-June quarter fell to Rs 592 crore, from Rs 639 crore a year ago, while total income from operations rose 8.7 per cent to Rs 4,579 crore.

Market expert Hemindra Hazari said InterGlobe Aviation had run ahead of its fundamentals, so the correction was around the corner.

Technical analyst Ashish Chaturmohta said IndiGo has corrected sharply from Rs 1,150 - Rs 1,100 levels to around Rs 900, so a big fall in unlikely.

"Some amount of base is being formed in this stock and buying interest could emerge around Rs 880 to Rs 900 in IndiGo," he added.

IndiGo is India's largest airline, flying about one in three passengers in the country's booming air travel market, and it increased its fleet size to 109 during the quarter.

The airline said it is slowing down deliveries of Airbus' A320neo narrow-body planes to allow engine  supplier Pratt & Whitney to catch up on the production of upgraded engines.

"The A320neo operations continue to be a challenge," InterGlobe said in its statement.

Pratt & Whitney, a unit of United Technologies Corp, has encountered problems with slow engine start-up times and erroneous engine software messages in the new engine, already causing a delay in the delivery of planes to Indigo.

IndiGo has ordered a total of 430 A320neo aircraft, making it one of the European plane maker Airbus' largest customers.

The company also reduced its debt by Rs 459 crore to Rs 2,786 crore by retiring debt related to three aircraft taken on a finance lease.

As of 09.45 a.m., InterGlobe Aviation shares traded 5 per cent lower at Rs 924, underperforming the broader Nifty that was up 0.4 per cent.

Shares of other carriers - Jet Airways and SpiceJet - also fell 1-3 per cent, reflecting bearish sentiments around the aviation sector, post IndiGo's weak numbers.

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Oil Prices Fall To New April Lows As Oversupply Bites

Singapore: Oil prices fell to fresh April lows on Friday as slowing economic growth threatened to worsen ongoing oversupply of crude and refined products.

International Brent crude oil futures were trading at $42.51 at 0617 GMT (11:47 a.m. in India), down 19 cents, or 0.4 per cent, from their previous close, the lowest since April.

US West Texas Intermediate (WTI) crude fell 26 cents, or 0.6 per cent, to $40.88 a barrel, slipping below $41 for the first time since April.

Both crude benchmarks are now down around 20 per cent since their last peak in June.

Because refiners produced too much fuel from cheap crude, margins in the Americas, Europe and Asia have fallen sharply this year, eroding revenues for oil producers and refiners like Royal Dutch Shell, which this week reported poor results.

"Margins remain on a negative trajectory... This seems a clear signal that Atlantic Basin refined product markets are currently oversupplied," Jason Gammel of US investment bank Jefferies said on Friday.

Benchmark Singapore refinery margins are down 60 per cent from their January highs to $4.28 per barrel, with stocks of product brimming near historic highs.

"We expect that the upcoming maintenance season combined with economic run cuts will correct the refined product markets... (and) the corresponding reduction in crude oil demand could weigh on Brent prices in the near term," he added.

On the supply side, Iranian exports to Asia's main buyers - China, India, Japan and South Korea - jumped 47.1 per cent in June from a year ago to 1.72 million barrels per day - the highest levels in over four years.

The sales jump is the latest sign that Tehran's aggressive moves to recoup market share, lost under international sanctions, are paying off.

Because of ongoing oversupply, US bank Goldman Sachs said this week that it did not expect a big recovery in prices any time soon.

"We continue to expect that oil prices will remain in a $45 per barrel to $50 per barrel trading range through mid-2017 with near-term risks skewed to the downside," the bank said.

Despite this, some analysts said recent price falls in oil had been overdone, especially as demand remains strong despite concerns over future economic growth.

"Investors have become overly bearish on oil as US production and gasoline inventories continue to rise. We think those concerns are unwarranted. Underlying demand in the US remains robust," ANZ bank said.

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GST Hopes Send Nifty To 15-Month High: 10 Updates

India stock markets surged today with Nifty hitting a 15-month high of 8,665 as hopes of the passage of GST Bill during the current monsoon session of Parliament lifted sentiments. The Sensex also rose over 200 points to an 11-month high of 28,210. A rally in global equity markets also lifted the sentiment in domestic markets.



Here Are 10 Updates: 

1) In a big boost for the passage of the key GST Bill, a majority of states on Tuesday backed the government on key issues which have been stalling the Bill. This has raised hopes that with greater numbers backing the bill, it could be taken up in the Rajya Sabha or upper house in the current monsoon session of Parliament.

2) Asian markets climbed to fresh near one-year highs today as with Japan's Nikkei surging 2 per cent amid reports that Japan has unveiled more than $266 billion economic stimulus.

3)  Back in the domestic markets, gains in today's session were led by strong buying interest in rate-sensitive banking, auto and auto stocks. The banking sub-index or Bank Nifty on the NSE also rose close to its highest level in a year.

4) Traders are betting that with good monsoon rains, the inflation will edge lower in coming months, giving room to the Reserve Bank to lower rates.  The RBI's next policy review is scheduled on August 9.

5) The Reserve Bank is expected to cut key interest rates by 25 basis points in its policy review meet on August 9, if good rains damp pulse price inflation, says a Bank of America Merrill Lynch (BofA-ML) report.

6) Indian markets have rallied 27 per cent from the Budget day (February 29) low. This has led some analysts to adopt a cautious stance. The market at the current juncture looks a touch expensive from the perspective of six months to one year, says Sunil Subramaniam, CEO of Sundaram Mutual Fund. But from the horizon of two to three years, it is reasonably priced because the earnings growth in coming quarters will justify the valuations, he added.

7) Analysts expect earnings growth to pick up in the coming quarters on the back of good monsoon and the award of Seventh Pay Commission recommendations. With the government notifying the hike, employees may get revised pay from August which will further spur consumption demand.

8) Sumeet Bagadia, associate director at Choice Broking, says Nifty has strong support at 8,550-8,540 and a move above 8,650 could extend the rally by another 100-150 points.

9) The global uncertainty caused by Brexit has bolstered expectations that the US Fed will delay its rate hikes. The Fed's two-day policy meet ends today and it is widely expected that the US central bank will stay put on its rates.

10) The cautious stance from the global central banks has led to strong inflows into emerging markets, including India.  Foreign investors have bought $1.2 billion worth of Indian shares this month, according to Bloomberg. Global investors have been buyers of Indian shares for five months, the longest stretch since November 2014, Bloomberg added. The rupee has remained stable around 67 dollar, further boosting the sentiment in Indian equity markets.

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Nifty Surges To 15-Month High, Sensex Up Over 200 Points

10:15 a.m.: Nifty rose to its highest level in 15 months on the back of strong gains in banking, auto and capital goods stocks.

10:02 a.m.: Banking stocks were witnessing good buying interest. The Bank Nifty jumps 1.14 per cent or 214 points to 19,075; ICICI Bank was the top gainer from this space, up 2.9 per cent to Rs 269.25. Punjab National Bank, State Bank of India, Bank of Baroda, Federal Bank, Canara Bank, Kotak Mahindra Bank and IndusInd Bank were also among the gainers.

9:56 a.m.: Stock markets continue to trade on a strong note on the back of gains in banking, oil & gas, power, capital goods and auto stocks. Sensex rises 206 points to 28,182 and Nifty advances 69 points to 8,659.

9:33 a.m.: Buying was visible across the sectors barring a few pharma stocks. Banking, metal, oil & gas, power and auto stocks were witnessing good buying interest in the opening deals.

From the Nifty basket of stocks, 46 were advancing while 5 were declining.

Zee Entertainment was the top Nifty gainer, up 3.3 per cent to Rs 490 after the company post the market hours on Tuesday reported that its net profit in June quarter rose 22 per cent to Rs 217 crore.

Ambuja Cements, Maruti Suzuki, Hindalco, ICICI Bank, Tata Motors, Bank of Baroda and Power Grid were also among the gainers.

On the other hand, Dr Reddy's Labs, Bajaj Auto, Lupin, Cipla, Reliance Industries and Sun Pharma were among the notable laggards.

The broader markets were outperforming the benchmark indices. The BSE mid-cap and small-cap indices were up 0.7 per cent each.

9.15 a.m.: The BSE Sensex and Nifty opened higher tracking gains in banking and auto shares. Dr Reddy's Lab extended selloff and fell as much as 10 per cent following its weak Q1 earnings yesterday. 

8.35 a.m.: The BSE Sensex and the broader Nifty are likely to open with a positive bias tracking positive trade in Asian stock markets. The Nifty futures trading on the Singapore Exchange (SGX) were up 0.14 per cent or 12 points at 8,603 as of 8.30 a.m., indicating a higher start for the Sensex and Nifty.

Foreign investors bought cash shares worth Rs 671 crore on Tuesday, while domestic investors were net sellers to the tune of Rs 418 crore.

Investors would be eyeing developments around the Goods and Services Tax or GST bill after states cleared the way for the central government to present it for approval of the Rajya Sabha or upper house of Parliament. State finance ministers agreed that a cap on the rate of GST will not be mentioned in the main bill.   

 

Earnings season will continue to dominate sentiments. Dr Reddy's Lab, which missed Q1 profit estimate by a wide mark, is likely to remain under pressure. Bharti Infratel and Ambuja Cements, which reported Q1 earnings after market hours yesterday, will also be in focus.

Meanwhile, Asian Paints, Bajaj Auto, Bharti Airtel, HDFC, JSW Steel and Yes Bank will report their Q1 numbers today.

In Asia, markets in Japan and Hong Kong edge up on Wednesday following a relatively upbeat session overnight for US and European stocks. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 per cent, while Japan's Nikkei climbed over 1 per cent.

Global investors are eyeing the Fed, which concludes its two-day policy meeting later on Wednesday. The US central bank is widely expected to stand pat on monetary policy and the markets will sift through its statements - a post-meeting press conference will not be held - for any hints of a future interest rate hike.

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Sovereign Gold Bond: NSE Gets Bids Worth Rs 106 Crore

New Delhi: Leading bourse National Stock Exchange (NSE) on Monday said it has received about 341 kg worth of subscription bids valuing over Rs 106 crore for the fourth tranche of the sovereign gold bond scheme.

Bids for the bonds issued by RBI on behalf of the central government were received during the 5-day window that ended on July 22.

"An initial estimate shows that the total collection stands at 341.6 kg and is worth Rs 106.5 crore. The numbers are subject to verification by RBI and other authorities," NSE said in a statement.

Earlier, the central bank appointed NSE the 'Receiving Office' for collecting subscription bids from investors. The exchange has received some 8,000 applications.

It organised nearly 100 programmes across India last one month to popularise the product.

The first three tranches had attracted an investment of Rs 1,318 crore, equivalent to 4.9 tonnes of gold, at prices prevailing at those times.

SGB -- the government securities denominated in grams of gold -- offers an alternative to keeping gold in physical form. The scheme was announced by the government on October 30, 2015.

The scheme offers an interest of 2.75 per cent per annum, payable every six months on initial investment minus the risk of theft/loss or impurities associated with physical gold.

The bond can be converted into demat form and used as collateral for availing loans. It will be repayable after eight years from the date of issue and premature redemption is permitted after 5th, 6th and 7th years from the date of issuance.

Funds raised through the bonds will form part of the government's market borrowing programme.

Redemption of sovereign gold bonds by an individual is exempt from capital gains tax. It also provides that long-term capital gains accruing to any person on transfer of sovereign gold bonds shall be eligible for indexation benefits.

India imports about 1,000 tonnes of gold every year, which is the second-biggest constituent of the import bill after crude oil.

Gold imports showed a decline of about 8 per cent to $31.72 billion in 2015-16 due to weak global prices and are expected to keep a lid on the country's current account deficit. The print read $34.38 billion in 2014-15.

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Merger With Cairn India To Be Earnings Dilutive For Vedanta: Analysts

Cairn India and Vedanta shares traded flat on Monday after posting a strong rally on Friday, when billionaire Anil Agarwal-controlled Vedanta offered to sweeten the terms for taking over subsidiary Cairn India.

Under the new offer, Vedanta will give one share and four redeemable preference shares for each share in Cairn India. The additional three preference shares are worth Rs 30 and would carry a coupon (interest rate) of 7.5 per cent.

Earlier Vedanta was offering one share and one redeemable preference share for each Cairn share. Vedanta shareholders will vote on the new offer on September 8, while Cairn India shareholders will vote on September 12.

Some analysts said the new deal is attractive for Vedanta, which will get Cairn India's Rs 20,000 crore of cash on books, helping the company to reduce its debt liability.

"The revised terms seem definitely more attractive and conducive than (the offer) in the past," said Jigar Shah, chief executive at Maybank Kimeng Securities.

However, brokerages added that the deal will be earnings dilutive for Vedanta, which means earnings of Vedanta are likely to fall post the merger with Cairn India.

According to CLSA, Vedanta's FY18 earnings per share (EPS) may fall to Rs 17.6, compared to its earlier estimate of Rs 20. However, CLSA has upped target price on Vedanta to Rs 205 saying that the merger will drive re-rating of Vedanta shares as it will get better access to cash. CLSA has a "buy" call on Vedanta.

Duetsche Bank also said that the deal will be earnings dilutive for Vedanta in the near term. The brokerage has a "hold" rating on Vedanta with a target price of Rs 163 per share.

As of 10.41 a.m., Vedanta shares traded 1.3 per cent higher at Rs 171.1 apiece and Cairn India shares were up 1 per cent at Rs 193.80 compared to a flat Nifty.

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