RIL up 4% on 1:1 bonus issue; Nifty ends above 9,900, but flat for the week

The Bombay Stock Exchange (BSE) logo is seen at the BSE building in Mumbai (Photo: Reuters)
Benchmark indices ended higher after Reliance Industries rallied nearly 4% on the BSE. Earlier in the day, RIL chairman Mukesh Ambani, announced a 1:1 bonus issue at the company's 40th annual general meeting (AGM) in Mumbai. A day earlier, the company reported its highest quarterly consolidated net profit of Rs 9,108 crore in three-months to 30 June on the back of higher petrochemical margins and one-time gain from sale of African asset. Net profit in the April-June quarter at Rs 9,108 crore (Rs 30.8 per share) was 28% higher than Rs 7,113 crore (Rs 24.1 a share) in the same period of the last financial year, RIL said in a statement. 

In other global markets, the euro's surge to an almost two-year high dominated financial markets on Friday, with most major stock exchanges consolidating after a second strong week of gains while those in mainland Europe dipped.

Investors seem largely to have got over a period of jitters spurred by concerns over the pace of US economic growth and signs that several of the world's major central banks were determined to tighten monetary policy soon.


Vinod Nair, Head of Research, Geojit Financial Services
Market was enthused by Jio's rapid expansion and innovative plan. The market capitalisation of RIL increased by Rs 19,000 crore today, whereas rivals failed to find their bandwidth. Additionally, continued buying interest in IT and private banks lifted the market from the volatile zone to settle in positive terrain. 
Sectoral performance 

Weekly Sensex gainers and losers

Top Sensex gainers and losers 

RIL ended at Rs 1,586, up 3.76%. The stock hit in intraday high of Rs 1,592, up 4% on the BSE.

The market breadth, indicating the overall health of the market, remained negative. On BSE, 1,423 shares declined and 1,256 shares rose. A total of 139 shares were unchanged.  
In the broader market, BSE Midcap and the BSE Smallcap indices ended little changed. For the week, BSE Midcap settled flat, while BSE Smallcap added 0.5%.

The Sensex settled at 32,028, up 124 points, while the broader Nifty50 ended at 9,915, up 41 points. For the week, both indices closed flat. 
Oil update

Oil prices edged higher on a weaker dollar and diplomatic tensions in the Gulf, but Brent held below the $50 per barrel level that was breached for the first time in six weeks on Thursday. Benchmark Brent crude futures were up 24 cents at $49.54 a barrel, while US West Texas Intermediate (WTI) crude futures traded at 47.09 a barrel, up 17 cents.
Nifty IT (up 2%) continues to lead among sectoral indices. Wipro, HCL Tech, TCS and Infosys gain the most, up between 2% and 6%.
Sterlite Technologies WAS UP 8% AFTER hitting a new high of Rs 248, up 20% on the National Stock Exchange (NSE), extending its two-session long rally of over 30% after  the company said it reported its highest ever quarterly revenues driven by strong order book and export sales in June quarter (Q1FY18). CLICK HERE FOR FULL REPORT
At 3:10 pm, volatility index VIX was down nearly 2% to 11 mark. 
Top Sensex gainers and losers


Markets recover after RIL (up 4%) extends gains; Sensex up over 100 points, Nifty back above 9,900
At 2:30 pm, the Sensex was trading at 31,940, up 36 points, while The Nifty50 was ruling at 9,880, up 7 points. 
GVK Power & Infrastructure, Jaiprakash Associates, Welspun Corp and HEG hit their respective 52-week highs, trading higher by up to 20% on BSE in an otherwise subdued market. CLICK HERE FOR FULL REPORT
European markets open mixed 

FTSE 100 added 0.2%, while CAC 40 and Euro STOXX 50 were trading flat with positive bias. 
Earnings impact

Ashok Leyland slipped over 5% to hit its lowest in four months after the truck maker missed Street expectations on earnings front as profit came in at Rs 111.2 crore for the June quarter against Rs 290.78 crore reported in the corresponding quarter of the last year. Revenue during the quarter fell moderately by 0.4% to Rs 4,514.4 crore from Rs 4,531.3 crore in same quarter last year.

The market breadth, indicating the overall health of the market, turned negative in the noon trade. On BSE, 1,481 shares declined and 1,041 shares rose. A total of 132 shares were unchanged. 
Cable stocks fell after Jio announces Jio phone TV-cable, which is priced at Rs 309/month. Dish TV tumbled over 6%, Hathway Cable & Datacom slipped 3%, Sun TV Netwrok shed 3.8% and Siti Network fell 1.3%.

Photo: Shutterstock

All sectoral indices except Nifty IT were trading in red

Top gainers and losers on BSE Sensex

RIL announces 1:1 bonus issue in its 40th AGM; launches Jio Phone. The last time RIL gave a bonus was in 2009. READ ABOUT IT HERE
Shares of telecom services provider Idea Cellular (down 7% to Rs 88.40) and Bharti Airtel (down 4% at Rs 404) have dipped up to 6% on BSE in intra-day trade after Reliance Jio, a telecom subsidiary of Reliance Industries (RIL), launched a feature phone. Click here for full report

Reliance JioPhone

Dish TV fell over 5% after Jio announces Jio phone cable TV, which is priced at Rs 309/month for the big screen. 
We largely maintain our FY2018E EPS estimates, as higher GRM and petrochemical EBIT margin assumption is largely offset by losses in telecom business. We have increased our FY2019E EPS to Rs.125.9 to factor in higher GRM estimates of $12/bbl. We maintain our Buy rating on RIL. Any positive surprise in terms of better-than-expected financials of the telecom business would be an important re-rating trigger for RIL going forward
RIL reported strong results, though they were largely in line with our expectations. It reported record stand-alone EBITDA and PAT despite nearly 4% q-o-q currency appreciation. Including R-Jio, we expect RIL’s consolidated EBITDA/PAT to record 19%/15% CAGR over FY16-20F (vs a mere 1%/3% CAGR in FY11-16).
Importantly, as past capex delivers and current capex pipeline is lighter, RIL will soon start generating high free cash flows, and could surprise with higher dividends and/or buy-backs.
Reliance Industries (RIL) delivered robust operational performance in Q1FY18 driven by robust petchem margin and surprisingly strong GRM. The stock is inexpensive at 1.2x FY19E P/BV. We reiterate ‘BUY/SO’ with price target of Rs 1,782
At 12:00 noon, RIL was trading 2% higher at Rs 1,562. It hit an intraday high of Rs 1,587 on the BSE
Mukesh Ambani: The main aim is for feature phone users to migrate to Jio Phone
Mukesh Ambani: Jio Phone will be availabe for testing from August 15 and pre-booking starts from August 24.
Markets pare morning gains: At 12:00 pm, the S&P BSE Sensex was trading at 31,965, up 60 points while the broader Nifty50 index was ruling at 9,890, up 17 points.

In broader markets, the BSE Midcap and BSE Smallcap indices gained 0.2% each
Idea falls over 4% after Reliance Jio launches Jio Phone for free
Mukesh Ambani: To avoid potential misuse of the Jio Phone, the comapny will collect a fully refundable deposit of Rs 1,500, which will be refunded after 3 years
Mukesh Ambani: The Jio Phone will available to all Indians for free
Jio effect: Bharti Airtel slips over 3% in intraday trade 

Mukesh Ambani: Putting an end to unaffordable data in India. Dhan Dhana Dhan plan will be available on Jio Phone at Rs 153/month
Mukesh Ambani: Voice calls will always be free on the JIO PHONE
Jio effect: Idea Cellular falls over 2%

Jio phone fulfills PM Narendra Modi's Digital India and Make in India wishes
Mukesh Ambani: Jio Phone is 100% 4G LTE phone
Mukesh Ambani introduces the intelligent feature smartphone - JIO PHONE
Mukesh Ambani: India's 4G coverage is more than India's 2G coverage due to Jio
Mukesh Ambani: Aim to have 10,000 offices in every city/town in India
Mukesh Ambani: Jio will cover 99% of India's population in the coming months
Mukesh Ambani: Shareholder money has doubled every 2.5 years over the last 40 years.
Mukesh Ambani: Jio has over 125 million subscribers, as of today
Mukesh Ambani: India on its way to becoming number 1 in broadband connections in the coming months
Market check
Sensex was trading at 32,036, up 134 points, while the Nifty50 was ruling at 9,9909, up 36 points.
Mukesh Ambani: India has overtaken US and China in mobile data usage
Mukesh Ambani: In just 6 mnths of Jio's launch, the data usage in India went from 20 cr GB per month to 120 cr GB per month
Bharti Airtel, Idea Cellular shed 2% each after the Reliance AGM kicked off. At 11:20 am, Bharti Airtel was at Rs 411, while the Idea quoted at Rs 92. Reliance Communications was trading flat at Rs 24. 
Mukesh Ambani: Jio had grown faster than Whatsapp, Facebook and Skype
Mukesh Ambani: Had 3,500 employees in 1977; now we employ 2,50,000 people
BSE Telecom index falls 0.8% with Bharti Airtel, Idea Cellular dragging, down 2% each
Mukesh Ambani: In less than 170 days, over 100 million customers added to Jio network
Mukesh Ambani: Jio added 7 customers per second every single day
Mukesh Ambani on Reliance Jio: Jio has broken many world record in just 10 months
Mukesh Ambani: Rs 1000 cr investment in RIL shares in 1977 have turned to be Rs 16.7 lk crore today
Mukesh Ambani: Market cap has grown at a  CAGR Of 32% in the last 40 years
Mukesh Ambani at RIL AGM: Turnover has grown to over Rs 3.3 lakh crore, up 4700 times in 40 years
Bharti Airtel, Idea Cellular falls 2% ahead of 40th RIL AGM. RIL up over 3%
At 10:40 am, the S&P BSE Sensex was trading at 32,040 up 135 points while the broader Nifty50 was ruling at 9,911, up 38 points.
In broader markets, the BSE Midcap and BSE Smallcap indices were trading in line with the frontline indices, were up 0.2% and 0.3% respectively.
Views on Wipro Buyback:

Angel Broking: The proposed buyback has been done at an attractive price. It will see the stock rally in the immediate term. I think investors can tender their shares,” said Sarabjit Kour Nangra, VP Research- IT.
HDFC Securities also suggests investors tender their shares. Going ahead, the brokerage feels organic growth for the company will remain a challenge and investors will be better off utilising the current opportunity to exit the stock .

Click here for full report
Market Check

Nifty IT index gained 1.8% in today's trade led mainly by Wipro (up 7%). HCL Tech, Tech Mahindra, Infosys also gained between 1-2.5%
At 9:32 am, the S&P BSE Sensex was trading at 31,965, up 60 points while the broader Nifty50 was ruling at 9,890, up 17 points.

In broader markets, the BSE Midcap and BSE Smallcap indices were trading in line with the frontline indices, were up 0.3% each.
In spotlight: Wipro

Reliance Industries in focus post strong Q1

Top gainers and losers on BSE Sensex

Benchmark indices opened marginally higher with Nifty near 9,900-mark as investors concentrated more on individual stocks amid the Q1 results season.
RIL gained 2% after stellar Q1 results reported on Tuesday after market hours while Wipro gained over 5%, becoming the top gainer on BSE Sensex after the company announced a Rs 11,000-crore buyback plan.
Wipro ADR closed 5.7% higher by 5.7% at $5.75 on buyback plan
Derivative strategy on Engineers India by HDFC Securities:

Option Strategy: Bull call spread (Time frame 4-5 trading sessions)
Buy 1 lot Engineers India 165 CE 27 July 2017 @ 3.90
Sell 1 lot Engineers India 175 CE 27 July 2017 @ 0.90

Click here for full report
We maintain our BUY rating on HT Media and revise our target price to Rs 102. The implementation of cost saving initiatives across the board, over the last few quarters, resulted in margin expansion. Not only did the company reduce employee cost, but it also curtailed raw material cost as well as other expenses, unlike previous years. The steady growth in its radio business and diminishing losses in the digital business are also positives. We believe any uptick in the company’s ad revenue will further drive growth and profitability given the tight control on costs
Technical calls by Prabhudas Lilladher:

CMP: Rs 127.50        
TARGET: Rs  142         

2. BUY THERMAX       
CMP: Rs 941         
TARGET: Rs 1030          
CMP: Rs 164.70        
TARGET: Rs 180          
Pre-open trade: Markets open higher in pre open trade with Sensex gaining 100 points and Nifty firmly above 9,900
A December Fed rate hike certainly looks less likely based on the June data. As for the Fed’s seeming commitment to balance sheet contraction, there is clearly an institutional desire on the part of the American central bank to commence this process well before the potential change in Fed leadership. Still, if the Fed does start such contraction, it is taking a big risk, given its deflation obsession, since balance sheet contraction is another form of monetary tightening, says CLSA's Christopher Wood in his weekly note, GREED & fear
Wipro announces buyback offer of Rs 11,000 crore

India's third largest IT firm announced a mega buyback offer of Rs 11,000 crore, joining the growing roaster of IT firms returning surplus cash to their shareholders.
The buyback price will be Rs 320 per equity share payable in cash which translates into a premium of 18 percent from Thursday’s closing price of Rs 269.
It reported 1.12 percent year-on-year (YoY) growth in net profit to Rs 2082.6 crore for the quarter ended June 30 compared to Rs2059 crore reported in the corresponding quarter of last fiscal.

Logo of Wipro

Sebi might cut listing time to 3 days from IPO, against 6 days at present CLICK HERE FOR THE FULL STORY
RIL to be in focus on above-estimate results

RIL reported 28% YoY growth in net profit to Rs 9,108 crore as against Rs 7,113 crore in the corresponding quarter of last fiscal. 

While the June quarter revenue from operations stood at Rs 70,434 crore versus Rs 59,493 crore last year, the consolidated revenue from operations for the quarter under review stood at Rs 90,537 crore versus Rs 71,451 crore last year. 
The June quarter gross refining margin stood at $11.9 per bbl. 

We continue to like the stock, given the bank's strong loan growth and improving profitability. However, valuation (P/E) at ~24xF19e fully prices this in, we believe.
The stock at the current market price trades at 13.8x its FY2018E EPS of Rs.69.9 and at 13x its FY2019E EPS of Rs.75 which is quite attractive compared to many mid-sized IT companies. Hence, we reiterate a BUY on the stock with a target price of Rs 1,150
Technical check on the markets
Nifty closed in the negative territory in the last trading session. On the lower side, 9850 and 9820 are two immediate supports, whereas on the upside, 9930 is an immediate resistance and above those 9950 is the next resistance. So, the short term range for the Index is 9820-9950 levels. It is essential for Nifty to break above 9950 level to move towards 10,150 levels: Anand Rathi Research
21 companies to report Q1 results today
Ashok Leyland, Can Fin Homes, Dewan Housing, Indian Bank, Persistent Systems are among others 21 companies that whill declare their Q1 earnings today
Asian Markets

MSCI's broadest index of Asia-Pacific shares outside Japan, which has gained about 5% in the past two weeks, eased 0.2% on Friday.
Japan's Nikkei dropped 0.3% as the yen rose against the dollar.
MSCI's gauge of stocks across the globe was little changed after rising for a 10th straight session on Thursday, its longest such streak since February 2015. It has advanced 3.1% in the latest rally.
Wall Street

The US stock ended mixed on Thursday as a deal between Sears and Amazon weighed on home improvement retailers. While Nasdaq closed in green helped by gains in Microsoft.
The Dow Jones Industrial Average fell 28.97 points, or 0.13% , to close at 21,611.78, the S&P 500 lost 0.38 point, or 0.02%, to 2,473.45 and the Nasdaq Composite added 4.96 points, or 0.08%, to 6,390.
SGX Nifty

The Nifty50 futures on the Singapore Stock Exchange were trading 5 points higher at 9,901 indicating a flat opening for the domestic market.

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