Sensex disappoints in FY 16 as many of the 30 constituents lose big value

FY 16 has been a mixed year for Stocks with Markets on a downward drift  with  Sensex closing 9.4% lower  at 25341

Sensex disappoints in FY 16 as many of the 30 constituents lose big value 

Interesting & Heartening to it’s Shareholders ,Reliance has been the biggest constituent gainer at @ 27% while at the other end BHEL has lost half it’s value at 51% !  ~ another 11 companies have lost between @ 19% to 30 % values

Domestic Concerns revolved around  second consecutive failure of monsoon in 2015 &  slow pace of Reforms  & Corporate Earnings Lethargy with growth in single digits despite boasts of GDP Growth of over 7% and lower Inflation and Oil Price falling 40%

Global Concerns revolved around  China’s Growth slowing down considerably & It’s Stock Markets losing a lot of it’s froth in panic falls, continuing recession in Europe & expectations of the US Fed raising rate

Consequently FPI Inflows which were a record US $ 17 b in FY 2015, reversed to outflows of US 2.1 b in FY 16.These outflows would have been higher if last month March 2016  had not seen a reversal back to FPI Inflows of US $ 3.2 b 

In the first three months of this Calendar Year 2016 , January &  February 2016 witnessed significant outflows of US 1.67 b & US $0.8 b respectively that dropped Sensex to 23000 levels.On the back of many countries like Japan,Switzerland and Sweden embarking on Negative Interest Rate Policy,the  US Fed send out dovish signals and has delayed Rate hikes.This saw FPI Equity Inflows smartly cross US $ 3 b in  March 2016  getting them back into the Green in 2016 & revive the Sensex back up @ 10% to 25500 levels or else FY 16 would have seen a Sensex drop of nearly 5000 points & @ 18%,double than what it actually did in the end

Here are some FY 16 Trend observations :

  • Sensex closed down 9.4%.It was down @ 18 % just around a month ago but smartly pulled back on record US $ 3b FPI Inflows in March 2016
  • Of the 30 Sensex Constituents,amusingly after a seven year itch perhaps 🙂  Reliance is the biggest gainer  at 27% taking it’s Market Cap to US $ 49 b,next only to top TCS  which  despite a flat year retains Top Market Cap of US $ 73b !
  • Six Scrips,including all weather favourite TCS (Market Cap US $ 73b) have remained flat
  • Of the Four Banks,only HDFC Bank stays in the Green just about,the rest have lost lot of value from one third to one fifth
  • India Growth Proxy Larsen & Toubro has lost 26% Value
  • Four Pharma Majors have also dropped significantly from 13% to 28%
  •  Three IT Bellweathers saw Wipro down 10%,Infy up 10% and TCS  in between remaining flat
  • Of the Five Auto Majors,the two 2-wheelers are both in the green,two ,Maruti & M & M are flat while Tata Motors has lost 30% value
  •  Three eternal FMCG Favorites,ITC,Asian Paints & HUL have held up
  •    After a Steel Sector Battering past few years,Tata Steel is now catching it’s breath
  • All  Five  Non Bank PSUs continue to flounder ~ BHEL has lost half it’s Value follwed by ONGC down 30% ,Coal India down 19%,NTPC down 13% & Gail down 8%
  • Housing Finance Leader HDFC too has taken a beating of @ 16%
  • Controversial Adani Group’s Adani Ports is down 20%
  • Telecom Leader Bharti Airtel is down 11% despite getting a 4G breather as Reliance’s Jio ,expected to be a sector disruptive force,launch continues to be delayed but should be fully operative by FY 17 year end
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    Adani Group Demerging and the Australian Mine Controversy continues

    An interesting and absorbing and explosive article on the Adani Group by Lisa Cox has appeared  on February 7,2015 in  The Sydney Morning Herald    

    Tax Havens,Criminal Investigation,Secret Ownership,Murky Money Trails…..the article does state that the Indian Media has reported that Company Officials counter these allegations as being “politically motivated” and a bid to resurrect old cases

    Wonder if any Indian Media will have the courage to follow up on this SMH post and whether the BSE & NSE will, at least for the record because they simply accept any clarification and post it on their websites and file it and think their job is done for investor awareness and protection!, seek clarification from the Adani Group for all of this …..the article covers quotes from Australian relevant experts of  deliberate Non Disclosures and Dubious Accounting in Annual Reports of AEL and the role and pedigree and emergence of Gautam Adani’s brother,Vinod Shantilal Adani as the pivotal shareholder and sole director in newly created Singapore & Cayman Island Companies that control the Australian Coal Developments  of the Adani Group

    The AEL Auditor,Ahmedabad based Dharmesh Parikh & Co has given a clean Limited Review Report of the latest standalone AEL Results 

    Just over a week ago  on January 30,2015 the flagship Adani Enterprises Ltd (AEL) announced that the Board has approved the demerger of diversified businesses of the Company  and the merger of one unlisted mining company into AEL 

    AEL has been recording 52 Week Highs and closed the week at Rs 627 (FV Rs 1)

    Adani Ports & Special Economic Zone Ltd (APSEZL) closed at Rs 300(FV Rs 2)

    Adani Power Ltd(APL) closed at Rs 47 (FV Rs 10)

    You can observe that the Face Value of  the Equity Share of each listed Adani Company is different which sure comes in handy to obscure valuations efforts by many !

    Scheme of Arrangement  to be effective April 1,2015 and process completed by December 31,2015 and approved by all the relevant Adani Group Companies Boards is as below :

    1. Demergers ~ There will be three of them 
    • AEL transferring Belekeri Port Operations and it’s Investment in APSEZL to APSEZL and the latter issuing 14123 Shares to AEL Shareholders for every 10000 shares owned by them and the shares allotted to AEL for it’s 74.99% holding in APSEZL be subsequently cancelled
    • AEL transferring 40MW Solar Power Project at Bitta Village in the Kutch District of Gujarat and it’s Investment in APL to APL and the latter issuing 18596 shares to AEL  Shareholders for every 10000 shares owned by them and the shares allotted to AEL for it’s 68.99% holding in APL be subsequently cancelled
    • AEL transferring Mundra-Zedra transmission line and the investment of AEL in  wholly owned subsidiary Adani Transmissions Ltd(ATL) to ATL with the latter issuing 1 share to Equity Shareholders of AEL for every 1 shares held by them in AEL.The Equity shares held by AEL in ATL will be cancelled.ATL will be listed on BSE & NSE 
            2. Merger ~ AEL’s Wholly Owned  Subsidiary Adani Mining Private Ltd (AMPL) will be merged into it

    As far as Coal Mine Operations the viability of  developing the Carmichael Coal Mine in the Galilee Basin in Queensland is being questioned as Coal prices have dropped and there are Environmental & Real Employment Issues being raised.State Bank of India has controversially announced that it would lend support of US $ One Billion to the Adani Group to develop the Australian Mine

    Also with India now reallocating Coal Mines in a transparent manner  after the Scandal on the allocation under the UPA Government had set back Coal Mine Development in India for several years there would not be a scenario of India having to import Coal in the years ahead read more