THE UP­TREND HAS JUST BE­GUN

Financial Chronicle - - COMPANIES - ARUN KE­JRI­WAL

The In­dian mar­ket gained for the third con­sec­u­tive week and is seem to be on an up-move but for any knee-jerk re­ac­tion to the fir­ing of mis­siles in Syria. The Sen­sex gained 565.68 points, or 1.65 per cent, to close at 34,192.65 points while the Nifty gained 149 points, or 1.42 per cent, to close at 10,480.60 points. The broader mar­kets gained with the BSE 100, BSE 200 and BSE 500 go­ing up 1.21 per cent, 1.17 per cent and 1.08 per cent, re­spec­tively. The Dow Jones gained 427.39 points, or 1.75 per cent, to close at 24,360.14 points. While Dow fu­tures fell post-mar­ket clos­ing on Fri­day evening they are back to zero on Sun­day.

In the pri­mary mar­ket news, the shares of Lemon Tree Ho­tels listed on Mon­day, April 9, and had a great de­but, gain­ing over 27 per cent. The shares were is­sued at Rs 56 and had re­ceived in­sti­tu­tional sup­port but were un­der­sub­scribed both in HNI and Re­tail cat­e­gories. The share closed at Rs 71.60, a gain of Rs 15.60, or 27.86 per cent. The share lost some ground dur­ing the week and closed at Rs 67.65, still up 20.80 per cent.

There was no other news from the

pri­mary mar­ket other than the Lemon Tree de­but. It ap­pears the mar­ket con­di­tions have un­nerved mer­chant bankers and pro­mot­ers alike.

IT ma­jor In­fosys has de­clared re­sults for the quar­ter and the year ended March 2018. Its net profit for the year was at Rs 16,029 crore against Rs 14,353 crore in the pre­vi­ous year. This in­cludes a write back of Rs 1,432 crore on ac­count of a tax pro­vi­sion made in the US, on which it re­ceived an ad­vance rul­ing. The EPS for the year was Rs 71 against Rs 62.77 in the pre­vi­ous year. The write back re­sulted in an EPS ac­cre­tion of Rs 5.88 for the year. The com­pany had also done a buy­back dur­ing the year, which re­sulted in re­duc­tion of eq­uity, and hence, higher earn­ings. The com­pany has guided for rev­enue growth of 6 to 8 per cent for next year. It is im­por­tant to note that the com­pany has de­cided to sell Kal­lidus, Skava

and Panaya. Panaya was a con­tro­ver­sial ac­qui­si­tion dur­ing Vishal Sikka’s regime. In­fosys re­sults are av­er­age and one needs to see higher growth in the com­ing years if the com­pany has to re­gain its lost aura.

ICICI Bank and Axis Bank con­tin­ued to hog the lime­light and gained ground as well. While Shikha Sharma would be step­ping down by the end of the cal­en­dar year, the case is not cer­tain about Chanda Kochhar. The in­ter­ro­ga­tion of her brother-in-law and her hus­band has been on for quite some time and an­swers are not very clear. In such cir­cum­stances what prompted the in­de­pen­dent di­rec­tors on the board to give her a clean chit would re­main a mys­tery. One hopes that the di­rec­tors who are sup­posed to re­main the cus­to­di­ans of mi­nor­ity share­holder in­ter­ests are not found want­ing. Also, if a class ac­tion suit is filed in the US, a sim­i­lar ac­tion would be al­lowed for In­dian share­hold­ers as well.

On a more pos­i­tive note, the re­cently listed ICICI Se­cu­ri­ties, a sub­sidiary of

ICICI Bank, posted im­pres­sive re­sults. The EPS of the com­pany has im­proved from Rs 10.48 to Rs 17.18. This of course, does not tell the whole story as the com­pany had re­ported an EPS of Rs 12.46 for the nine months pe­riod ended De­cem­ber 2017. The shares which were is­sued at Rs 520 and fell to a low of Rs 400 have re­bounded to close at Rs 422.65. There could be some more im­prove­ment in prices in the com­ing days.

The mar­ket up­trend is likely to con­tinue con­sid­er­ing the im­prove­ment in sen­ti­ment and ex­pected re­sults. While Syria and the un­fold­ing trade war could act as pin­pricks, nei­ther coun­try can take se­ri­ous ac­tion in the cur­rent con­di­tions. The worry for In­dia would al­ways be ris­ing crude prices and this could act as a dou­ble whammy be­cause any ma­jor hit on crude would al­ways be ac­com­pa­nied by a de­pre­ci­at­ing ru­pee. Keep your longs go­ing and use any knee-jerk re­ac­tions to add to fun­da­men­tally solid com­pa­nies. The up­trend has just be­gun.

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