Markets this month: Tata Motors, M&M top Sensex gainers

August 28, 2014

By Ankush Arora and Sankalp Phartiyal

The BSE Sensex jumped 2.9 percent in August, the seventh consecutive monthly gain for the benchmark index in 2014. The broader Nifty closed 3 percent higher, its fourth straight month of gains.

A man looks at a screen across the road displaying the election results on the facade of the BSE building in MumbaiThe Indian stock market hit multiple record highs in August, helped by relentless foreign buying, easing of geopolitical tensions and continued optimism about the domestic economy’s revival.

On Friday, India will release GDP growth data for the April-June period. Asia’s third-largest economy likely grew at its fastest in two years in the first quarter of the current fiscal year, a Reuters poll predicted.

But many Indian CEOs say there are no signs yet of economic improvement, even as they are optimistic that Prime Minister Narendra Modi will spur economic growth, according to a poll conducted by the Economic Times newspaper. The survey coincides with 100 days of Modi as India’s premier.

On Sept. 1, the Supreme Court will seal the fate of over 200 coal blocks it declared illegal on Monday.

Data on the current account deficit and balance of payments could be released next week.

Here are the top five Sensex gainers and losers of the month:

GAINERS

TATA MOTORS: Shares in the automaker surged 17.3 percent, making it the best Sensex performer in August. Rising sales of its Jaguar Land Rover unit helped Tata Motors, India’s biggest automaker by revenue, triple its net profit for the quarter ending June. The company began selling its new sedan Zest this month hoping to regain its footing and plug losses in the Indian market.

In other news, the Competition Commission of India fined Tata Motors 13.46 billion rupees for engaging in anti-competitive practices.

In an Aug. 12 note, Centrum Broking said it retained its ‘buy’ rating on the stock with a revised target price of 600 rupees.

M&M: Shares in India’s top utility vehicle maker rose nearly 17 percent this month, contributing to the near 50 percent gain in 2014 so far.

On Aug. 8, the tractor maker slashed its India demand outlook to 5 percent in FY15 from the previous forecast of 8 percent, partly due to delayed monsoon rains. The company’s tractor sales grew by 1 percent in the April-June period and reported a drop of 6 percent in its quarterly profit.

The current financial year is likely to be lacklustre for M&M as utility vehicle and tractor demand is expected to remain weak, wrote Emkay Global in a research report on Aug. 20.

FY16 will be more exciting for the company as it has planned the launch of two compact cars and one large SUV, with demand seen reviving in large SUVs, the brokerage added.

M&M was among more than a dozen global and domestic carmakers to pay a hefty fine for anti-competitive practices in India, the world’s sixth largest auto market.


CIPLA: The drugmaker’s stock rose nearly 13 percent this month, taking gains for 2014 to 28.4 percent. While Cipla missed street estimates in its June-quarter earnings, its shares touched a record high of 517 rupees on Tuesday.

In an Aug. 18 note, Karvy Stock Broking said it had a ‘sell’ rating on Cipla with a price target of 435 rupees.

Ratings agency Moody’s expects India’s pharma sector to consolidate further, especially among the manufacturers of generic drugs, according to an Aug. 25 report in the Economic Times.

On Aug. 18, CIMB raised Cipla’s target price to 530 rupees from 440 rupees with an ‘add’ rating.

MARUTI SUZUKI: Shares of India’s top car maker rose 10.3 percent this week, the third auto stock among the best Sensex performers of the month.

Last month, Maruti reported higher-than-expected sales in the June quarter, which were mostly driven by improving sentiment, discounts and government tax breaks.

The company, controlled by Japan’s Suzuki Motor Corp, expects to report double-digit car sales growth in the current fiscal year that ends on March 31.

New product launches, an expanding rural network and export opportunities will ensure a strong growth trajectory for Maruti, wrote Emkay Global in a research report on Aug. 21.

The brokerage says the company is the preferred pick to play cyclical recovery. Maruti was also fined by India’s pricing regulator.

ONGC: Shares in the state-run explorer rose 10.1 percent this month. ONGC’s first-quarter profit surged 19 percent but missed street expectations, hurt by higher exploration related write-offs and increased subsidy payment.

“Press reports suggest that the oil ministry may propose a revised subsidy formula under which government and upstream players ONGC and Oil India (OIL) equally share subsidy… Under the 50%:50% subsidy sharing formula ONGC-OIL’s subsidy would be lower and net oil price realization higher than assumed. Until more clarity emerges we retain Buy on OIL and Neutral on ONGC,” Bank of America-Merrill Lynch said in a note on Aug. 26.

LOSERS

Tata Power slumped 11.3 percent, followed by Hindalco, which fell 11.2 percent. Tata Steel ended the month with losses of 7.3 percent while NTPC lost 5 percent. Sesa Sterlite shed 4.5 percent.

(Editing by Tony Tharakan; Follow Tony on Twitter @TonyTharakan, Ankush @Ankush_patrakar and Sankalp @sankalp_sp | Disclaimer: This article is website-exclusive and cannot be reproduced in any form without permission)

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