Asian stock markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.3% while the Hang Seng is down 0.1%. The Shanghai Composite is trading down by 0.6%. Meanwhile, the S&P 500 rose to its highest in more than five months and the Dow climbed for a fifth session on Wednesday as solid earnings boosted financial and industrial stocks and reinforced expectations for a strong second-quarter reporting season.
Back home, India share markets opened the day on a positive note. The BSE Sensex is trading up by 94 points while the NSE Nifty is trading up by 7 points. The BSE Mid Cap index opened down by 0.3% while BSE Small Cap index opened down by 0.1%.
As the Sensex keeps soaring and the BSE Smallcap keeps bleeding, Our, Co-head of Research & Editor of StockSelect, Tanushree Banerjee, exhorts all our readers, to slightly shift their goal post. It's a small tweak that can allow you to buy stocks with the maximum upside at minimum risk.
Which Index Will Allow you to Stay 'In the Money'?
Her goal post is to recommend stocks that will stay in the money (consistently reasonably profitable) for a long period of time.
- So, you have to focus on increasing the size of your capital a wee bit every year. And you have to be very careful not to lose big. If both are done well, you won't need headline grabbing stocks to create a lot of wealth.
I've never considered it a legitimate goal to recommend stocks at the bottom. You can't really know where the bottom is, other than in retrospect. That means the only way to grow your capital a bit, without losing a lot, is to keep your margin of safety in valuations intact.
Fortunately, several safe stocks, in which I sought more margin of safety in valuations, until a few months back, are a buy a now. And I'm sure, StockSelect subscribers who received several special alerts over the past few days, aren't complaining.
Moving on...The rupee is currently trading at 68.57 to the US$.
Sectoral indices have opened the day on a mixed note with consumer durables stocks and automobiles stockswitnessing maximum buying interest. While, healthcare stocks & realty stocks have opened the day in red.
Airline Stocks opened the day on a mixed note with SpiceJet & Jet Airways leading the gainers. As per a report by ICRA, the domestic airline industry is expected to post losses to the tune of Rs 36 billion in the current fiscal on rise in crude oil prices and falling rupee.
The losses would come despite around 15% expected average annual growth in passenger traffic over the medium-term due to conducive factors, support from regulatory environment and development of new airports.
Higher crude prices, due to which most airlines saw a decline in their yields during the second half of FY18, resulted in a higher than estimated aggregate loss for the domestic aviation industry to around Rs 24-25 billion in the previous fiscal.
According to Icra, the ATF price was 35.4% higher as on 31 March 2017, against the 31 March 2016 level, impacting the financial performance of the airlines during the year due to their inability to pass on the increased cost to the customers.
While the jet fuel prices declined by about 8% to Rs 51,640 per kilo litre (kl) as on September 2017, partly on account of the appreciation of the rupee, it witnessed a significant year-on-year increase of 12.6% to Rs 63,162 per kl as on March 2018.
Overall, the average ATF prices during FY18 were higher by 10.4%. This is evident from the increase in fuel cost per available seat per kilometre (ASKM) for the three listed airlines during FY18, Icra noted.
While the strong passenger traffic growth will allow airlines to improve yields to offset cost pressures to some extent, the increase may not be adequate, the agency said.
Therefore, the RASK (revenue per available seat kilometre) CASK (cost per available seat kilometre) spread is expected to get squeezed.
Furthermore, the aggregate industry debt level is expected to increase to about Rs 665 billion by March 2019 as some airlines have large capacity expansion plans, which may be either owned (through debt funding) or on operating lease.
The ASKM growth in this fiscal is estimated to be around 15-17%, Icra said adding the key driver for the industry capacity growth continues to be the sizeable order backlog of the industry.
In another development, JK Tyre & Industries Ltd reported a consolidated net profit of Rs 642.4 million for the first quarter ended 30 June, mainly driven by robust sales.
The company had posted a net loss of Rs 1172.1 million in the year-ago quarter.
Revenue from operations during the first quarter stood at Rs 24.4 billion. It was at Rs 19.3 billion in the same period last fiscal.
The two figures are not comparable as revenue from operations is net of taxes after GST implementation in July 2017, while in the year-ago quarter it was inclusive of excise duty, the company stated.
Reportedly, there was higher volume across categories, especially in truck/bus radial, passenger car and light truck radials.
Further, the company stated that, during the quarter, the company's subsidiaries namely, JK Tornel, Mexico and Cavendish Industries Ltd have performed well.
Moreover, labour restructuring completed at JK Tornel last year is reaping good dividend which has added to the over-all profitability.
JK Tyre & Industries share price opened the day up by 1.8%.
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This article was originally published in English at www.equitymaster.com
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