How companies have braved slowdown so far, Cummins India again in defensive mode; all this and more onMoneycontrol Pro

India Inc on the whole has reported a subdued top line performance mimicking the much-talked about demand slowdown.

Moneycontrol.com October 30, 2019 12:47:50 IST
How companies have braved slowdown so far, Cummins India again in defensive mode; all this and more onMoneycontrol Pro
  • Pledged shares as a mode of raising finance have acquired a bad name in the recent past

  • Cummins India is once again in the defensive mode as both the international and domestic business declined in the September quarter

  • Vedanta is in a sideways trend for some time and is trading in the range of Rs 140 Ã��Ã�¢Ã�¯Ã�¿Ã�½Ã�¯Ã�¿Ã�½ 170

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How companies have braved slowdown so far Cummins India again in defensive mode all this and more onMoneycontrol Pro

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Did the market jump the gun in celebrating the reduction in pledged shares?

Pledged shares as a mode of raising finance have acquired a bad name in the recent past, with lenders selling promoters’ shares in the open market on non-payment of dues. The market started punishing stocks where the promoters’ pledged share percentage was high, discounting the worst-case scenario. However, now the exact opposite is happening. Reports say that promoters of nearly 50 listed companies have reduced the percentage of their pledged shares. Naturally, the market has taken notice of this development and taken the price of those stocks higher. However, in many cases, pledged shares have been reduced because of compulsion, not due to improved company fundamentals. Read more.

India Inc’s Q2: How companies have braved the slowdown so far

We are almost halfway into the September-quarter earnings season. While only a handful -- 440 companies -- have reported earnings so far, nearly 50 percent (24 out of 50) Nifty firms have declared their results. So, early trends could provide some insights. India Inc on the whole has reported a subdued top line performance mimicking the much-talked about demand slowdown. For the aggregate universe that has reported numbers, the year-on-year growth in net sales stood at 5 percent, a sharp deceleration from the previous quarters. For Nifty companies too, the growth in net sales declined sharply to 4 percent. What pointers do we get from the trends in operating profits and margins? Read more.

Cummins India: What should investors do?

Cummins India, which was showing some signs of revival and recovery, is once again in the defensive mode as both the international and domestic business declined in the September quarter. The decline in the domestic business, which forms close to 70 percent of its total revenues, was particularly abysmal. Three months earlier, the management had expressed concerns about the slowing economy and capex because of the general elections and funding issues because of the financial crisis. Clearly, the situation has not improved. Click here for our in-house research team’s take on this capex major.

Picks from our technical analysts

Vedanta: Vedanta is in a sideways trend for some time and is trading in the range of Rs 140 – 170. Our chartist assumes that it will remain sideways. Click here for an options trade idea.

Zee: While the Nifty continued its upswing on 29 October, the media sector and Zee have continued to underperform. Click here for a futures trade idea.

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