Weak End to the Week

Fri, 1 Apr Closing

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Indian equity markets finished the day on a weak note, despite markets correcting from their lows in the second half. At the closing bell, the BSE Sensex closed lower by about 72 points, while the NSE Nifty finished lower by 25 points.

The S&P BSE Midcap and the S&P BSE Small Cap indices however closed higher by 0.2% and 0.9% respectively.

Losses were largely seen in Bharti Airtel and TCS.

Market volatility largely seems to be on account of participants keeping an eye out for the Reserve Bank of India's (RBI) decision on rate cut in next monetary policy which is scheduled for April 5, 2016. While the market seems to be expecting a 25 basis points rate cut, Ajit Dayal, in a recent article in The Honest Truth is willing to challenge the consensus. If you want to know more about why he thinks 1% rate cut is possible, click here.

However, this is just a part of the picture. In a recent article in Vivek Kaul's diary, Vivek Kaul makes a point exactly the opposite of what Mr Dayal is making, i.e., RBI should not cut the repo rate by 1%; or at least not all at once. His reasons are equally sound - the strongest being that banks have not passed the cut in deposit rates to the lenders and that the entire thing needs to be viewed from the point of view of savers as well. To know more about Vivek's views on interest rates, please click here.

Who do you think is right - Ajit or Vivek? Click here to vote.

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.19%, while the Nikkei 225 & the Hang Seng fell 3.55% and 1.34% respectively. European markets are sharply lower today with shares in France off the most. The CAC 40 is down 1.64% while Germany's DAX is off 1.28% and London's FTSE 100 is lower by 1.01%.

Oil prices were trading at US$38.05 a barrel at the time of writing. The rupee was trading at 66.33 against the US$ in the afternoon session.

Selling activity was witnessed across majority of the IT stocks with Tech Mahinda and Mphasis ltd leading the losses. Shares of HCL Technologies finished on an optimistic note (up 1%) after it was reported that the company has agreed to acquire engineering solutions company Geometric in a share swap deal valued at US$150-200 million. HCL will acquire the 31.09% stake held by Godrej Investments and Godrej & Boyce Manufacturing Company.

For HCL, the deal will strengthen its engineering services capability, a segment that reportedly earned the company over US$1 billion revenue in 2014-15. Geometric provides services in product lifecycle management, global engineering services and offshore software development solutions. Geometric has customers like Dassault, Volvo and Aerolia, a part of the Airbus group.

HCL Technologies reported a 2.4% QoQ increase in sales and an 11.2% QoQ rise in net profits (Subscription Required) during the December 2015 quarter.

Ashok Leyland has reported an increase of 31% in March 2016 sales to 16,702 units as against 12,754 units sold in the same period of last year. The company has experienced a jump of 32% in its medium and heavy commercial vehicle (M&HCV) products' segment to 13,240 units in March 2016. The company's light commercial vehicle (LCV) segment witnessed a rise of 27% to 3,462 units during the month.

The company also recently bagged orders worth Rs 8 billion from the Indian armed forces. It will supply advanced-technology products-450 units of Field Artillery Tractor (FAT) 6x6 and other similar Super Stallion vehicles; and 825 units of Ambulance 4x4.

The orders for Field Artillery Tractor (FAT) 6x6 and Ambulance 4x4 are in keeping with the momentum witnessed recently in the area of up gradation of technology and resources by the defense forces. The company's products also include buses, trucks, engines & special vehicles.

Ashok Leyland finished up by 1.5%. The stock has moved up by 30% in the past one year. Ashok Leyland is a strong player in the medium and heavy commercial vehicles (MHCV) space. In a recent edition of The 5 Minute Wrap Up Premium, we have discussed the performance of Ashok Leyland (Subscription Required) in recent times.