Sensex crashes over 300 pts, Nifty below 7250; IT plunges

The Sensex is down 323.88 points or 1.32 percent at 24232.21 and the Nifty is down 98.35 points or 1.34 percent at 7231.30. About 1329 shares have advanced, 1583 shares declined, and 115 shares are unchanged. Infosys, Wipro, BHEL, ONGC and Cipla are top losers in the Sensex. Among the gainers are Hindalco, M&M, Dr Reddy's Labs, TCS and Sun Pharma.

Wonderla Holidays expects margins to be stable from hereon, says Arun K Chittilapilly, MD of the company. The company reported margins of around 41 percent and a net profit of around 60 percent at Rs 7.2 crore year-on-year. In the near-term, the company hopes to continue with its growth momentum due to reduction in cost from mature projects. The amusement park operator does not foresee any margin pressure for another couple of years, says Chittilapilly. Chittilapilly also says that the annual ticket price hike of around 10 percent for the amusement parks is unlikely to impact the business of the company given the base fare of the tickets is low. "If our ticket prices were Rs 1,000-1,500 then 10 percent hike would have made it a lot more expensive. However, as it stands now, we feel our ticket prices are pretty reasonable. So a 10 percent hike will not affect footfalls and that is at least what we have seen," he adds. Currently, the company has a debt of around Rs 15 crore.

Ever since Narendra Modi took charge as the Prime Minister of India on Monday, market has been consolidating, indicating caution ahead of a couple of big events lined-up in the next few weeks. The Reserve Bank of India policy on June 3 and the Union Budget are the key events to watchout. Sanjay Sachdev, chairman, Zyfin Capital believes market has not fizzled out as the Sensex has moved from 21000 to 24000, gaining almost 15 percent. However, he says foreign investors haven’t participated fully and are still waiting for a very big opportunity like resolving of the Vodafone tax issue, which may restore some confidence among them.

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Parliament session to be held from June 4 to June 12

The Narendra Modi Cabinet met for the second time in 48 hours on Thursday and decided on Parliament session dates. The Parliament session will take place from June 4 to June 12.

Sources say former Parliamentary Affairs Minister Kamal Nath is likely to be the protem Speaker and will give oath to the new members of the Lok Sabha.

The Modi government is also expected to outline the government's top ten priorities on Thursday. Prime Minister Modi is also expected to address the nation on his policies. Modi has asked his ministers to be careful in terms of appointing people in their staff especially to ensure that no relatives are appointed. Sources say that Modi is keen to give out a message that he doesn't believe in dynasty or promoting relatives.

Modi has also directed his ministers to be careful while addressing the media. They have been asked to stick only to issues which are related to their respective ministries.

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HPCL jumps 4%: Will subsidy burden become nil in FY15?

Shares of HPCL jumped over 4 percent intraday on Thursday as rise in refining profitability and marketing profit improved March quarter earnings. It reported net profit of Rs 4609 crore as against loss of Rs 1734 crore sequentially. During the period, its margins jumped 9.2 percent from negative 1.9 percent in last quarter. Brokerages are upbeat about the company. Deutsche Bank has a buy rating on the stock with a target of Rs 470 per share. It feels that there will be nil oil subsidy burden on HPCL from FY15 onward and hence refining segment performance will improve. In FY14, HPCL had to bare oil subsidies of Rs 480 crore. Its refinery volumes improved 13 percent Q-o-Q to 4.3 MMT (flat Y-o-Y) with inventory gain of Rs 450 crore and forex gain at Rs 500 crore.

Bank of America Merill Lynch retains buy on it with a target of Rs 455 per share. It says that FY14 witnessed decline in loss of refining subsidiary and there was a rise in EPS despite 108 percent Y-o-Y jump in net subsidy bearing of Rs 480 crore. Its gross refining margin (GRM) was strongest in fourth quarter at USD 4.7/bbl. However, Barclays is underweight on the stock with a price target of Rs 250. “Consolidated EPS was 38 percent lower, likely hurt by losses in Bhatinda and Biofuels. HPCL’s investments and organic capex have yielded little over the last decade even as it looks to expand further – it announced USD 3 billion in additional refining expansions- weighing on returns further,” it said in a note.

At 11:40 hrs, the stock was quoting at Rs 416.80, up Rs 8.30, or 2.03 percent on the BSE.

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Five-fold rise in Q4 profit lift Essar Oil shares 19%.

Investors continued to buy shares of  Essar Oil on Wednesday after the India's second largest private refiner reported five-fold growth in net profit at Rs 1,008 crore in the quarter ended January-March, driven by higher forex gain, better operational performance and lower finance cost. The stock rallied as much as 19 percent intraday to touch a 52-week high of Rs 92.15.

Total income grew nearly 7 percent to Rs 25,274 crore in March quarter from Rs 23,650 crore in the quarter gone by. Gross refining margin improved to USD 10.12 a barrel as against USD 9.06 a barrel year-on-year. "Operationally we continue to do well with the refinery further optimising on its crude diet and product slate, which has resulted in the company delivering healthy GRMs," says LK Gupta, managing director and CEO. Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 32 percent to Rs 2,053 crore from Rs 1,556 crore year-on-year. Essar Oil reported a foreign exchange gain of Rs 314 crore during January-March quarter. During the same period, finance cost declined significantly to Rs 694 crore from Rs 920 crore. At 12:50 hours IST, the stock was quoting at Rs 88, up 13.40 percent amid high volumes on the BSE. Posted by Sunil Shankar Matkar 

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Gati surges; Macquarie buys stake from open market

hares in Gati Ltd , logistics solutions company, surge after Macquarie Bank buys stocks in the company on Tuesday in a transaction estimated at about Rs 99.5 million (USD 1.7 million). Macquarie Bank purchased more than 1 million shares of the company at an average price of Rs 97.02 per share in a block deal on Tuesday, NSE data shows.

Gati was trading up 7.2 percent as of 11:11 a.m.

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Sun Pharma's Karkhadi unit gets warning letter from USFDA

The US health regulator has warned  Sun Pharma it may withhold approval of new drug applications and extend an import ban at its Karkhadi unit in Gujarat if violations of manufacturing norms at the facility are not corrected. The US Food and Drug Administration said there were reasons to suggest a general lack of reliability and accuracy of data, including missing fundamental raw data, unacceptable data handling practice and inadequate investigation into 'the pervasive practice of deleting (raw) files'. "Until all corrections have been completed and FDA has confirmed corrections of the violations and deviations and your firm's compliance with CGMP (current good manufacturing practice), FDA may withhold approval of any new applications or supplements listing your firm as a drug product or an API manufacturer," USFDA said. In addition, failure to correct the violations and deviations may result in FDA continuing to refuse admission of articles manufactured at Karkhadi into the US, it said.

The warning letter was shot off after the USFDA conducted a review of Sun Pharma's initial response to the issues raised during inspection of the facility in November last year. "...it lacks sufficient corrective actions. We also acknowledge receipt of your firm's additional correspondence dated January 28, 2014, and March 11, 2014," the USFDA said. In March this year, the health regulator had banned the import of drugs from the Karkhadi facility for violation of manufacturing norms. USFDA said its investigators observed specific deviations during the inspection of the API manufacturing facility, including "failure to ensure that laboratory records included complete data derived from all tests necessary to ensure compliance with established specifications and standards."

The health regulator pointed out "failure to assign and identify raw materials with a distinctive code, batch, or receipt number, and to identify the disposition of materials" at the Kharkhadi facility. Mumbai-based Sun Pharma's Karkhadi facility manufactures antibiotics and active pharmaceutical ingredients (APIs). The company, which is acquiring Ranbaxy Laboratories, has 10 manufacturing sites in India. Sun Pharma shares closed at Rs 587.30 on the BSE, up 0.63 per cent.

Sun Pharma stock price On May 20, 2014, Sun Pharmaceutical Industries closed at Rs 587.30, up Rs 3.70, or 0.63 percent. The 52-week high of the share was Rs 653.10 and the 52-week low was Rs 458.00. The company's trailing 12-month (TTM) EPS was at Rs 0.95 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 618.21. The latest book value of the company is Rs 41.64 per share. At current value, the price-to-book value of the company is 14.10.

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How much juice is left in India's market rally?

The historic mandate won by India's pro-business Bharatiya Janata Party (BJP) has amped up investors' enthusiasm for Indian equities, with several banks raising their targets for the benchmark Sensex index. The market, which has rallied 15 percent so far this year, still has double-digit gains ahead, according to the revised targets. Nomura on Friday upped its year-end Sensex target to 27,200 from 24,700 – representing almost 12 percent upside from current levels. The index last traded at 24,363. 

"The historic mandate received by the BJP-led NDA [National Democratic Alliance] translates to a stable government at the center. The timing of this majority government could not have been more opportune as India has moved past key macro hurdles it has faced in the last three years," said Nomura strategists led by Prabhat Awasthi. "A Modi-led government's key comparative advantage lies in its superior managerial and execution ability, which will help considerably in reversing a debilitating policy paralysis and improving coordination between government departments, in addition jumpstarting the weak investment cycle," he said. The BJP captured 282 of 543 parliamentary seats in the world's biggest elections that concluded Friday, well above the 272 needed for a majority. It is the first time since 1984 that a single party has won an absolute majority. The NDA garnered a total of 336 seats in the lower house of parliament.

Short-term catalysts for the market include the formation of a new cabinet over the coming weeks, the presentation of the final budget for 2014-2015 by July and potential policy announcements and "feel good" initiatives by the new government, said Nomura. Nomura is not alone in its bullish outlook for the market. Citi too raised its year-end target for the Sensex to 26,300 – or an 8 percent rise from current levels. "The market run has more legs. The Modi-led NDA has won decisively, and India's equity markets could well have struck gold," Aditya Narain, equity strategist at Citi wrote in report on Friday. "The new prime minister's record, its economy/jobs focused campaign all suggest an aggressive growth and economic gains ahead. Do however remember the economy's still bottoming: and earnings will likely remain stable. This market should generate steady, surer and a long run ahead… but the (market's) big sprint's probably done," he added. 

The best way to play the market is to overweight banks, IT, energy and cement – which represents "a mix of growth, revival, reform and valuations," Narain said. Mark Matthews, head of research Asia, Bank Julius Baer expects domestic investors will be a key driving force for the market's gains going forward. "What I find compelling is that so few retail investors own the Indian market – they only have about USD 300 billion in equity out of a total market cap of USD 1.2 trillion. The Indian household generates about USD 400 billion in savings every year," Matthews explained. "I think the momentum for the market here will come more from the domestic side than the foreign side…If the majority of [Indian] people are voting for BJP than I think they've got to like the market, it's just intuitive," he said.

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