MARKET COMMENTARY 6 APRIL 2016

Equity Benchmarks ended flat after seeing a 2 percent fall in previous session. The Sensex rose 17.04 points to 24900.63 and the Nifty advanced 11.15 points to 7614.35. About two shares advanced for every share declining on Bombay Stock Exchange Auto, infra, metals, telecom and pharma stocks supported the market while banks stocks extended fall. Tata Steel and Hindalco rallied 5 percent followed by Tata Motors, L&T, Lupin, Sun Pharma and Bharti Airtel with 1-2 percent upside while Infosys, ICICI Bank, Axis Bank and Adani Ports fell over 1 percent.

And Expensive Valuations. The stock declined 3.6 percent intraday Wednesday. The brokerage expects muted 4 percent earnings CAGR (compound annual growth rate) over the next two years. It says the automobile battery manufacturer faces a weak demand outlook as 4W (four-wheeler) replacement and inverter segments, which together contribute 52 percent of its FY16 revenue and 66 percent of its EBITDA (earnings before interest, tax, depreciation and amortisation), should see slower growth over the next 2 years. Competition in higher-margin inverters will also rise with Amara Raja setting up new capacity, CLSA feels. After a lead-price-driven margin expansion in FY16, the brokerage sees headwinds from a weakening product mix and rising competition in inverter

A Day After the Reserve Bank cut policy rate by 0.25 percent, Deputy Governor S S Mundra today expressed hope that transmission of lower interest rate through banks will be more effective this time. RBI cut benchmark lending rate yesterday to 6.5 percent, lowest in the last 5 years. “There is a holistic view this time, there is a rate cut, there is liquidity framework, and Marginal Cost of Funds based Lending Rate (MCLR) has also become operational from April 1. We are quite confident that with combination of all these factors transmission would be much more effective,” he said on the sidelines of an Assocham event her
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