Stock News for Week April 21st to April 25th …


Corporate News during the week

Reliance Industries(RIL) posts good Q4 numbers; Positive for RIL in short to medium term.

RIL Q4 PAT grew by 2.3% QoQ to Rs.56.3bn above street estimates while its sales were down 7.6% QoQ to Rs.951.9bn slightly lower than street estimates.The Gross Refining Margins (GRMs) came in at $9.3/bbl versus $7.6/bbl QoQ. The Q4 refining margins stood at 4.5% versus 3.3% QoQ. The Oil & Gas margins were reported at 26.7% versus 31.2% QoQ.

RIL’s retail business has turned around and reported a cash profit of Rs 3.6bn. RIL’s shale gas business in the US continued to grow in 2013-14, with revenue jumping 45% to $893.3 million and EBITDA rose by 37 % to $659.4 million. Overall the company has posted good set of results and the management commentary for FY15 was very positive. The stock is likely to be positive in the short to medium term.

RBI increases FII limit in South Indian Bank (SIB). Positive in short term for SIB

The Reserve Bank of India (RBI) has allowed foreign investors to buy further shares in South Indian Bank as the holding by FIIs has gone below the limit. FIIs, held 41.69 % shares in South Indian Bank as of quarter ended March 31, 2014. As per the RBI statement the aggregate shareholding by Foreign Institutional Investors (FIIs)/Non-Resident Indians (NRIs)/Persons of Indian Origin (PIOs)/Foreign Direct Investment (FDI)/American Depository Receipt (ADR)/Global Depository Receipts (GDRs) under the Portfolio Investment Scheme (PIS) in The South Indian Bank Limited have gone below the prescribed threshold caution limit. Hence the restrictions placed on the purchase of shares of the above company are withdrawn with immediate effect. The stock is likely to react positively in the short term

National Economy

Meteorological Department warns of 5% deficit in rainfall, predicts 60% chance of El Nino this year

The weather office has forecast a 5% deficit in the June- September southwest monsoon this year but signaled the disruptive El Nino phenomenon could make things much worse for India’s largely rain-fed farms, raising the risk of higher inflation and likely making the task of the new government difficult as it seeks to get the economy moving again.

“The monsoon rainfall is likely to be 95% of long period average for=the period June to September,” the India Meteorological Department (IMD) said. Average rainfall over India for June to September would be 89 cm.

Restriction on account of ongoing elections likely to lower India’s gold imports.

India’s gold imports in April and May could be less than half of arrivals in March, as restrictions on the movement of cash during general elections dent the buying power of consumers, jewellery industry officials said. To guard against bribes or vote buying during the ongoing elections, the Election Commission has made it mandatory for individuals carrying more than Rs.50,000 ($830) to provide documentation, such as a proof of identity and an explanation for the source of funds.

For jewellers, the cap is rs.200,000 in cash. This has hit jewellery sales, which have already been squeezed by a 10% gold import duty imposed last year to reign in India’s ballooning current account deficit.

World Economy

China factory activity shrinks for fourth month, but pace of decline slows.

China’s factory activity shrank for the fourth straight month in April, signaling economic weakness into the second quarter, a preliminary survey showed. Although the pace of decline eased helped by policy steps to arrest the slowdown. The HSBC/Markit flash Purchasing Managers Index (PMI) for April rose to 48.3 from March’s final reading of 48.0, still below the 50 line separating expansion from contraction.

Euro zone consumer confidence improves more than expected in April

Euro zone consumer confidence rose 0.6 points month-on-month to -8.7 in April, beating market expectations, the European Commission said in its first estimate. For the whole of the 28- nation European Union, consumer confidence improved by 0.8 points to -5.8 in April against March, the Commission said.

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