MARKET WRAP: Sensex ends 173 pts lower after choppy session; banks slip

Topics Markets | MARKET WRAP

Brokers trade at their computer terminals at a stock brokerage firm in Mumbai. Photo: Reuters
Equity market ended Wednesday's volatile session in the negative territory as coronavirus (Covid-19) cases continued to rise in India and the government gave the hint that the nationwide lockdown may get extended. Weak global cues, too, dented the sentiment. 

The S&P BSE Sensex shed 173 points or 0.58 per cent to 29,894 levels with TCS (down around 4 per cent) being the biggest loser, followed by Titan, ICICI Bank, and SBI. Drug major Sun Pharma (up nearly 5 per cent), on the other hand, was the top gainer on the index. 

On the NSE, benchmark index Nifty ended at 8,749, down 43 points or 0.49 per cent. 

Broader market, however, outperformed the benchmark indices. The  S&P BSE MidCap gained around 2 per cent to 10,976 levels and the S&P BSE SmallCap index rallied 1.86 per cent to 9,980. 

On the sectoral indices, Nifty Realty index slipped the most - over 1 per cent to 180.50 levels. Nifty Metal and Nifty IT indices were next on the list. Nifty Bank shed 0.6 per cent to 18,946.45-mark. 

In the forex market, rupee ended at a record low of 76.34 against the US dollar. 

Buzzing stocks

Shares of Cadila Healthcare (Zydus Cadila) surged 17 per cent to Rs 367 on the BSE in the intra-day trade. The company today said that it has initiated an accelerated research programme with multiple teams in India and Europe developing a vaccine for the novel coronavirus, 2019-nCoV (COVID-19) based on two approaches. The stock ended at Rs 350, up 12 per cent. READ MORE 

Shares of Balrampur Chini Mills (BCML) were locked at the 5 per cent upper circuit for the nine straight day, at Rs 126.40, on the NSE after the credit rating agency Icra re-affirmed the credit ratings for both long-term and short-term. The outlook on the long term rating remained stable. READ MORE

Among auto stocks, Ashok Leyland jumped 10 per cent to Rs 43.80 apiece on the BSE while Maruti gained over 3 per cent to Rs 4,697 even as the company informed that it had lowered production by 32.05 per cent in March. READ MORE

Global Markets

World stocks turned negative on Wednesday as the coronavirus death toll mounted and euro zone finance minister failed to agree a rescue package to help economies recover from the impact of the outbreak. The pan-European STOXX 600 index dipped 0.7per cent. London’s FTSE 100 fell 0.9 per cent, as the country’s coronavirus death toll crossed 6,100. Germany’s DAX shed 0.8 per cent after rallying more than 8 per cent in the past two days, as the number of confirmed cases rose for a second straight day.

Japanese shares were boosted by Prime Minister Shinzo Abe’s ending market uncertainty by declaring an emergency, helping the Nikkei share average close 2.13 per cent higher.

E-Mini futures for the S&P 500 rose 0.5 per cent.

In commodity markets, oil steadied near $32 a barrel, supported by hopes that a meeting between OPEC members and allied producers on Thursday will trigger output cuts to shore up prices that have collapsed due to the coronavirus pandemic.

(With inputs from Reuters)


4:18 PM IST Markets gave up gains, following a negative opening in the European Markets and uncertainty regarding the spread of Covid-19 infections. Markets are also uncertain as to the government response after the official 21 day lockdown expires on April 14. Some states are looking to extend the lockdown and some are for withdrawing it in a phased manner. The longer the lockdown stays, more the impact on the economy and companies.

4:15 PM IST

4:15 PM IST

3:39 PM IST The S&P BSE Sensex ended 173 points lower at 29,894 levels while NSE's Nifty50 lost 43 points or 0.49 per cent to settle at 8,749

3:29 PM IST Rupee continued its weakness trend after some respite yesterday, USD/INR pair in offshore market traded higher on Wednesday tracking the spike in spot pair due to rising case of coronavirus in India amid a strong greenback which is now trading again above $100 mark. The spot pair ended at record high Wednesday on likely overseas outflows from local stocks amid oil importers buying and a strong greenback along with likely overseas funds outflow from local stocks. 75.50 shall keep acting as a strong support for USD/INR with upside potential of 77

3:27 PM IST

3:14 PM IST (As reported by CNBC TV18) PM Modi during his interaction with opposition leaders. ANI

3:06 PM IST For India, the global research house has lowered its real GDP forecast to 1.6 per cent in financial year 2020-21 (FY21) from 3.3 per cent earlier. This, however, is still higher than United States, which it now sees contracting to -6.2 per cent in 2020 (from -3.7 per cent earlier). READ MORE

3:03 PM IST

3:01 PM IST In a letter addressed to three government-owned OMCs — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL), the apex industry body, Indian Sugar Mills Association (ISMA), urged to float a fresh ethanol procurement tender to help sugar mills/distilleries supply more green fuel for blending with petrol and reducing the oil import bill proportionately. READ MORE

2:56 PM IST

2:54 PM IST COMPANY PRICE(rs) 52 WK LOW   CHG(%) ARVIND FASHIONS. 132.70 130.15   -5.18 CAPRI GLOBAL 130.20 127.50   -2.65 CUMMINS INDIA 325.60 281.60   13.06 FUTURE CONSUMER 5.72 5.72   -4.98 FUTURE LIFESTYLE 96.20 96.20   -4.99 » More on 52 Week Low

LIVE UPDATES

MARKET COMMENT | Vinod Nair, Head of Research at Geojit Financial Services

Markets gave up gains, following a negative opening in the European Markets and uncertainty regarding the spread of Covid-19 infections. Markets are also uncertain as to the government response after the official 21 day lockdown expires on April 14. Some states are looking to extend the lockdown and some are for withdrawing it in a phased manner. The longer the lockdown stays, more the impact on the economy and companies.

SECTOR WATCH | Here's how sectoral indices on NSE performed today


MARKET AT CLOSE | Top losers and gainers on the S&P BSE Sensex


CLOSING BELL

The S&P BSE Sensex ended 173 points lower at 29,894 levels while NSE's Nifty50 lost 43 points or 0.49 per cent to settle at 8,749

EXPERT COMMENT | Jateen Trivedi, Senior Research Analyst, LKP Securities on Rupee

Rupee continued its weakness trend after some respite yesterday, USD/INR pair in offshore market traded higher on Wednesday tracking the spike in spot pair due to rising case of coronavirus in India amid a strong greenback which is now trading again above $100 mark. The spot pair ended at record high Wednesday on likely overseas outflows from local stocks amid oil importers buying and a strong greenback along with likely overseas funds outflow from local stocks. 75.50 shall keep acting as a strong support for USD/INR with upside potential of 77

MARKET UPDATE


NEWS ALERT :: Looking at options to extend lockdown: PM Modi to leaders

(As reported by CNBC TV18)
PM Modi during his interaction with opposition leaders. ANI



CORONAVIRUS IMPACT :: Goldman Sachs slashes India's FY21 real GDP growth forecast to 1.6%

For India, the global research house has lowered its real GDP forecast to 1.6 per cent in financial year 2020-21 (FY21) from 3.3 per cent earlier. This, however, is still higher than United States, which it now sees contracting to -6.2 per cent in 2020 (from -3.7 per cent earlier). READ MORE

Nifty sectoral indices at this hour


Sugar mills seek third ethanol supply tender from govt-owned OMCs

In a letter addressed to three government-owned OMCs — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL), the apex industry body, Indian Sugar Mills Association (ISMA), urged to float a fresh ethanol procurement tender to help sugar mills/distilleries supply more green fuel for blending with petrol and reducing the oil import bill proportionately. READ MORE

NEWS ALERT :: Adani Gas reduces prices of CNG, domestic PNG w.e.f April 9


Stocks that hit 52-week low on BSE today

COMPANY PRICE(rs) 52 WK LOW   CHG(%)
ARVIND FASHIONS. 132.70 130.15   -5.18
CAPRI GLOBAL 130.20 127.50   -2.65
CUMMINS INDIA 325.60 281.60   13.06
FUTURE CONSUMER 5.72 5.72   -4.98
FUTURE LIFESTYLE 96.20 96.20   -4.99
» More on 52 Week Low

Coronavirus impact: Investor outreach programmes see spike in March

Investors might reach out for information on issues including any shutdown in operations, how many days it may last and supply chain issues among other things, suggested Amit Tandon, founder and managing director of Institutional Investor Advisory Services India (IiAS), which advises on corporate governance issues and helps investors vote on company decisions. "A number of questions come up because of the novelty of the situation which has struck across geographies at the same time," said Tandon READ MORE

MARKET LIVE: Sensex back in green


NEWS ALERT :: TVS Motor likely considering to bid for classic UK motorcycle brand Norton: Bloomberg


European markets lower

(Source: Reuters)

STOCK PICKS BY ANGEL BROKING


NEWS ALERT :: Adani Group is in talks with MFs, NBFCs to release promoter pledged shares over the next 6-8 week

(As reported by CNBC TV 18 quoting unnamed sources)

Nifty Bank index falls 1,500 pts off day's high


Rupee closing

Rupee ends at 76.37/$ against Tuesday's close of 75.63 against the US dollar

Fall from intra-day high today in BSE500 stocks

COMPANY DAY'S HIGH(RS) LATEST(RS) FALL(%)
INDUSIND BANK 441.65 372.00 -15.77
INFIBEAM AVENUES 41.55 35.65 -14.20
CHALET HOTELS 202.00 174.00 -13.86
JINDAL STEEL 93.90 82.80 -11.82
MOTHERSON SUMI 61.45 54.50 -11.31
See the full list here

NEWS ALERT | Aviation Minister tweets on flight restrictions due to Covid-19 outbreak

Balrampur Chini extends gain as Icra reaffirms rating; soars 74% in 9 days

Shares of Balrampur Chini Mills (BCML) were locked at the 5 per cent upper circuit for the nine straight day, at Rs 126.40, on the National Stock Exchange (NSE) on Wednesday after the credit rating agency Icra re-affirmed the credit ratings for both long-term and short-term. The outlook on the long term rating remained stable. READ MORE

NEWS ALERT | German economy likely shrank by record 9.8% in second-quarter due to coronavirus, reports Reuters

Europe’s largest economy probably shrank by 9.8% in the second quarter, its biggest decline since records began in 1970 and more than double the decline seen during the global financial crisis in 2009, Germany’s leading institutes said on Wednesday.
 
The top economic research institutes said that was due to the lockdown measures introduced to help slow the spread of the coroanvirus. They said the economy probably shrank by 1.9% between January and March.

MARKET UPDATE | Top 5 losers on the BSE at this hour



NEWS ALERT :: West Coast Paper Mills partially begins production at Paper and Duplex Board Division, Dandeli: BSE filing


Maruti Suzuki lowers production by 32% in March as slowdown bites

The company produced a total of 92,540 units in March as against 136,201 units in the year-ago period, the auto major said.
 
Passenger vehicle production last month stood at 91,602 units as against 135,236 units in March 2019, a dip of 32.26 per cent, it added. READ MORE

Q&A | Investors opting to sit back till things get clearer: Kenneth Andrade

The market sell-off has already captured a lot of bad news in the price. Businesses now trade at book value (BV) or significantly lower, which limits their downside. The risk-reward ratio is very favorably balanced in favor of the former, time is the only element one cannot quantify. At this point there is little value at looking at the immediate future, as the first half of this year remains a washout. One needs to push the investment horizon to 2022 and beyond to watch how corporates recover from the lockdown. READ MORE  

Kenneth Andrade, founder and chief investment officer, Old Bridge Capital Management

BROKERAGE VIEW:: ICICI Securities on Retail sector

Given the high fixed cost nature of the retail business (rental & employee expense: 10-15% each), a steep decline in footfalls would result in a more than proportionate decline in profitability for players owing to negative operating leverage. Various retailers are in negotiations with mall owners for exemption or rebate in rentals to overcome the decline in revenues (invoke Force Majeure). Generally in Q4, EBITDA margins tend to be lower than the full year average owing to end of season sale for companies such as Trent and Bata (lower gross margins owing to higher discounts). Hence, the impact on margins would be more profound. We expect EBITDA margins of our universe companies to contract 220 bps YoY in Q4FY20 (excluding Ind-AS 116 impact).

NEWS ALERT :: Emami Paper Mills obtains permission to start partial operation of manufacturing facilities at Balasore (Odisha) unit



MARKET VOICE :: Shankar Sharma on diversification

MARKET UPDATE:: Sensex pares all gains, slips into the red


MARKET INSIGHT

BROKERAGE VIEW:: Stock picks from real estate sector by HDFC Securities


TVS Motor on a weak footing in two-wheeler space as rivals get preference

While all the two-wheeler stocks were up, gains for Hero MotoCorp and Bajaj Auto at 12 per cent each were more than twice that for TVS Motor.
 
Given the uncertain near-term outlook, brokerages prefer market leaders with financial muscle, such as Hero MotoCorp and Bajaj Auto, over TVS Motor. READ MORE

NEWS ALERT | Banks seek relief on additional provisioning under June 7 circular from RBI: CNBC TV18

-- June 7 circular mandates additional 20 per cent provisioning if account not resolved in 180 days
 
-- Banks seek deferment of additional provisioning to Q1FY21 from Q4FY20

NEWS ALERT :: Telcos seek additional spectrum till July 2020: sources to CNBC TV18

>> Seek 5 MHz per operator additional spectrum in 4G band 

>> DoT to decide on the matter early next week
.

Coronavirus impact: Dip in valuation prompts IT firms to bet on buyouts

Analysts are of the opinion that with enough cash reserves at hand, most IT firms are better placed to overcome the Covid-19 crisis. However, as revenue growth is likely to take a hit, a good acquisition could offset some losses in topline. “Global flight of capital to safety in a strengthening dollar environment would generally make investment in IT, KPO (knowledge process outsourcing) and BPM (business process management) firms an even more attractive proposition,” wrote Amit Singh, executive director (Enterprise Technology & Services) of Avendus Capital, in a recent note to investors. READ MORE

MARKET UPDATE:: Broader indices hold onto their gains even though benchmarks remain volatile


Deepak Nitrite starts production of 2 Ethyl Hexyl Nitrate; stock up 7%

Shares of Deepak Nitrite climbed 7 per cent to Rs 465 on Wednesday, thus surging 22 per cent in the past two trading days after the company commenced the production of 2 Ethyl Hexyl Nitrate (2EHN) at its Nandesari facility in Gujarat with effective Monday, April 6, 2020. 2EHN finds application and is one of the essential raw materials / additives used in refining process of diesel oil produced by various refineries. READ MORE

Markets may be ignoring potential headwinds in Jubilant FoodWorks

Some analysts now believe that the recent correction adequately factors in the near-term pain for Jubilant. And, a fast recovery in topline post lockdown with support from online delivery and raw material tailwinds would support the stock. However, there are factors that could play spoilsport, which investors should be cognisant of. READ MORE

BROKERAGE VIEW:: ICICI Securities on Symphony

Symphony has maintained balance sheet prudence with stringent control on the working capital cycle. With substantial free cash on the book, we believe the company will navigate through a tough macro environment. We lower revenue and earnings growth to factor in the negative outcome owing to Covid-19. We change our rating on the stock from HOLD to BUY with a revised target price of Rs 840 (21x FY22E EPS).

Top gainers on BSE today

COMPANY PRICE(rs) CHG(%)
BANDHAN BANK 194.90 16.50
ALKEM LAB 2659.00 14.52
BHARAT FORGE 245.70 12.37
BHARAT DYNAMICS 214.00 11.87
CADILA HEALTH. 348.50 11.52
» More on Top Gainers

PM Modi to discuss Covid-19 shutdown with Parliament floor leaders today

The primary point on the agenda will be whether to end the shutdown or extend it and if the government wishes to withdraw it, what should be the approach. The current shutdown is slated to end on April 14.
 
Another point of discussion will be the economic impact of the shutdown on India and how to deal with it. READ MORE

CORONAVIRUS UPDATE :: Rapid random tests to be done across India soon: sources to CNBC TV18

>> RRT to be done across areas reporting significant cases; identification of hotspots soon

>> RRT to depend on allotment of kits by Centre

>> Maharashtra cabinet approved RRT yesterday

Beaten-down financials in focus; RBL, Bandhan, IndusInd Bank gain up to 20%

hares of beaten down financial companies including banks, microfinance institutions and non-banking financial companies (NBFCs) rallied up to 20 per cent on Wednesday on the back of heavy volumes. Bandhan Bank, RBL Bank, IndusInd Bank, Axis Bank, Muthoot Finance, Shriram Transport Finance Company, Equitas Holdings and Cholamandalam Investment and Finance Company were up in the range of 10 per cent to 20 per cent on the BSE. READ MORE

PE sum invested in Q1 dips 39% to $3.6 bn; internet firms remain favourites

Investments in the internet space shot up by 60 per cent to $2.03 billion year on year but the total number of deals remained the same at 62. Computer software (up 50 per cent yoy), medical/health (22 per cent) and biotechnology (up 14 per cent) were among the sectors that witnessed an increase in sum invested as compared to last year. READ MORE

NEWS ALERT :: PE funds looking to pick stake in pharma, healthcare stocks: sources to CNBC TV18

>> PE Funds looking to buy at cheap valuations

>> Pharma, healthcare, NBFCs, consumption sectors on radar

>> PE Funds eyeing minority stake via block deals

>> Seeking relaxation in Sebi's pricing formula for fund infusion in companies

Q&A :: Investors opting to sit back till things get clearer: Kenneth Andrade

The first quarter of the financial year (April – June period) accounts for 15 per cent – 20 per cent of corporate India’s turnover. If the problem does get resolved and the pandemic risks ease, it will give India corporates reasonable time to gear up for the second half of the year. Earnings will fall for sure, but there is little sense in trying to predict 2021. READ FULL INTERVIEW HERE

Larsen & Toubro gains for second straight day on winning two large orders

Shares of Larsen & Toubro (L&T) rose 3 per cent to Rs 832 on Wednesday, extending their previous day’s 3.5 per cent gain on the BSE, after the engineering and construction giant won two large orders from state-owned companies. L&T, today, announced that L&T Hydrocarbon Engineering, a wholly owned subsidiary of the company has been awarded a large project by Indian Oil Corporation Limited (IOCL). READ MORE

BROKERAGE VIEW:: JM Financial on Consumer Duarbles sector

Havells India | BUY |  Rs 600
 
V-Guard Industries | BUY | Rs 220
 
Crompton Greaves Consumer Electricals | BUY | Rs 270
 
TTK Prestige Limited | BUY | Rs 5,760
 
Bajaj Electricals | BUY | Rs 440
 
While it is impossible to envisage duration/intensity of India’s lockdown and consequent demand/supply disruptions due to the Covid-19 outbreak, we assume a significant impact in 1QFY21, normalisation through 2QFY21 and a modest pick-up thereafter. However, the pace would vary by product category (real estate-dependent products such as cables/wires and switchgears could see modest improvement). While there could be transport-related hiccups (availability/timeliness/pricings), we believe demand headwinds could be more significant and might see a prolonged recovery. While we cut FY20-22E numbers for our Electrical Consumer Durables coverage universe companies, we believe this is expected to be a relatively short-term pain of 2-3 quarters, before growth resumes. We believe the recent sharp fall in share prices across companies should be used as an opportunity to enter/add. Havells, Crompton and V-Guard are our top picks.

BROKERAGE RADAR | Edelweiss Securities on Sobha

Sobha’s Q4FY20 new sales volume decreased to 0.9msf (down 20% YoY, 15% QoQ) affected by the COVID-19 outbreak. Nevertheless, the company clocked its highest-ever annual sales—4.1msf in FY20 (up 1% YoY). By value, it clocked Q4FY20 sales of Rs 5.5bn (down 22% YoY, 9% QoQ) even as FY20 bookings declined 6% YoY to INR23.8bn. Average realisation improved 13% sequentially to ~Rs 7,670/sft, aided by traction in luxury and super luxury projects. During the quarter, Sobha launched Sterling Infinia (towers 1 and 2) aggregating 0.23msf (total launches of ~1.6msf in FY20). All in all, the COVID-19 crisis is likely to keep realty demand subdued in the near term; how Sobha manages its balance sheet and cash flows would determine the stock’s trajectory in our view. Maintain ‘BUY’ with an SoTP-based TP of Rs 212.

MARKET UPDATE:: Nifty reclaims 9,000


IndusInd Bank recovers 15% off lows


SBI dips 3% post deposit rate cut, Uttam Galva loan default; recovers later

Shares of State Bank of India (SBI) slipped 3.2 per cent to Rs 180.45 on the National Stock Exchange (NSE) on Wednesday after the bank slashed its marginal cost-based lending rate (MCLR) by 35 basis points across all tenors. On Tuesday, India's largest public lender cut its marginal cost of funds-based lending rate (MCLR) for the 11th consecutive time in FY 2019-20, following rate cut announced by the Reserve Bank of India to tackle the economic fallout from the coronavirus pandemic. The one year MCLR will be 7.40 per cent per annum with effect from April 10, 2020. READ MORE

BUZZING STOCK:: Ashok Leyland surges 15%


CORONAVIRUS UPDATE:: Total cases in India rise to 5,194

Cadila Healthcare soars 31% in 2 days on USFDA nod for Perphenazine tablets

Shares of Cadila Healthcare surged 15 per cent to Rs 359 on the BSE on Wednesday. The stock has rallied 31 per cent in the past two trading days after the company received final approval from the US health regulator to market Perphenazine tablets. The pharmaceutical company's stock has now surpassed its previous 52-week high of Rs 349, touched on April 10, 2019. READ MORE

Rupee opening

Rupee opens weaker at 75.81/$ vs Tuesday's close of 75.63 against the US dollar

VA Tech Wabag hits 5% upper circuit on Rs 90 crore order win from Bahrain

VA Tech Wabag shares were locked in the 5 per cent upper circuit band of Rs 81.90 apiece on the BSE on Wednesday, a day after the company secured a five-year Operation & Maintenance (O&M) contract in Al Madina Al Shamaliya (AMAS) Sewage Treatment Plant in Kingdom of Bahrain. The company in its press release said that it secured 4.5 Million Bahraini Dinar (approx. Rs 900 million) order from Ministry of Works, Municipalities Affairs and Urban Planning (‘MoW’) in Kingdom of Bahrain towards Operation, Maintenance and Management of the Madinat Salman Sewage Treatment Plant (‘STP’) and Long Sea Outfall for a period of 5 years. READ MORE

Most active stocks by volume

COMPANY PRICE(rs) CHG(%)
VODAFONE IDEA 3.17 -1.55
JINDAL STEEL 87.50 7.56
DELTA CORP 71.95 -4.95
RAIL VIKAS 17.70 4.86
TATA MOTORS 66.35 -1.48
» More on Most Active Volume

Contribution to the S&P BSE Sensex's recovery


MARKET UPDATE:: Sensex stages smart recovery; index up over 400 pts now


SECTOR WATCH:: Nifty Pharma index continues its uptrend, zooms another 4%


MARKET UPDATE:: Sensex erases majority of the opening losses


VA Tech Wabag advances 5%

>> The company has secured five-year 4.5 Million Bahraini Dinar (approx. 900 Million INR) order from Ministry of Works, Municipalities Affairs and Urban Planning (‘MoW’) in Kingdom of Bahrain towards Operation, Maintenance and Management of the Madinat Salman Sewage Treatment Plant (‘STP’) and Long Sea Outfall for a period of 5 years.


Deepak Nitrite surges over 5%

>> The company commenced production of 2 Ethyl Hexyl Nitrate (2EHN) at its Nandesari, Vadodara, Gujarat facility effective 6 April 2020.


Hero MotoCorp dips over 1%

>> Co has extended the duration of all its warranty and free services in view of the nationwide COVID-19 lockdown.


Aurobindo Pharma trades 1% higher despite class action suit being filed against co

>> A class action suit has been filed against Aurobindo Pharma and Emcure Pharmaceuticals in a Florida court for allegedly concealing information about cancer-causing agent, N- nitrosodimethylamine (NDMA) presence in metformin medicine.


Sectoral trends at NSE during Opening Trade


Sensex Heatmap at Open | Financials top losers on the index


FIRST TRADE | Nifty50 tests 8,700-mark


FIRST TRADE | Sensex starts with a negative tick


China's recovery from coronavirus outbreak, drug demand lift pharma funds

Fund managers say pharma funds face near-term challenges, but there are positive triggers, with Covid-19 cases in China coming under control.
 
“Worries remain in terms of transporting products from ports to plants. Further, labour issues at plants continue to impact, but companies are trying out things to keep production going with limited manpower,” said Meeta Shetty, fund manager at Tata Mutual Fund (MF), who is part of the fund management team of Tata India Pharma and Healthcare Fund. READ MORE

Top gainers and losers at S&P BSE Sensex during Pre-Open


Market at Pre-Open


Market at Pre-Open


Motilal Oswal Financial Services on Consumer Goods sector

>> Consumer companies are expected to witness subdued sales growth due to an uncertain demand environment, disruption in the supply chain on account of COVID-19-related lockdown, channel liquidity issues, and rural slowdown, among other factors.

>> However, we believe lower input costs would offer some relief to companies, providing room for spending on promotions/price-offs and other offers to drive up category volumes once the lockdown impact ends.

>> Top Picks:

HUL: HUVR is witnessing inflation in palm oil, but has undertaken adequate  price increases. Packaging costs are declining significantly, which would support gross margins. Moreover, the company’s cost-saving measures, along with premiumization across the portfolio, should aid margin improvement going forward.

MARICO: Copra costs still remain flat YoY, while other costs continue to decline, filliping overall margin growth. 

Motilal Oswal Financial Services on IT sector

>> Second half of 4QFY20 witnessed varying levels of COVID-19 disruption across most of the core markets of IT companies like the US, Europe and even India. We expect MOFSL IT coverage universe to post revenue (USD) / EBIT (INR) / PAT to grow 6%/4%/-2% YoY in 4Q.

>> Given the unprecedented level of uncertainty around the global macro and the multiple moving parts, visibility on near-term growth/profitability is challenged. 

>> We expect companies to delay their guidance on FY21 outlook or provide a wide guidance band, subject to sharp revisions later on as clients relook at their IT budgets. Commentary around deal closures and ramp ups, expected pressure on pricing, sharing INR depreciation benefit will be important areas of investor focus.

>> Despite the near-term uncertainty, we continue to prefer Infosys and HCLT among large caps, and LTI among Tier II.
 

Edelweiss on OEMs

While COVID-19 will obviously take a toll on near-term demand for automotive batteries, replacement nature of the business (43% of sales) will ensure the sector’s speedy recovery post end of lockdown. Moreover, strong balance sheets (net cash) will help organised players sustain market share gains versus unorganised players. However, OEM sales (~11-13%) are likely to be hit by the cyclical downturn and slower recovery ahead.

We are revising down FY21/22E EPS (~12/9% range) to reflect lower auto OE and industrial sales. Post a sharp volume decline in FY20, we are being conservative and assume contraction in FY21 sales also. However, hit of auto OE sales will impact replacement sales in FY23.Hence, we cut multiples to long-term valuations, leading to ~30% cut in target prices of our coverage universe. Maintain ‘BUY’ on Exide Industries (Exide) and ‘HOLD’ on Amara Raja Batteries (AMRJ).


Stocks to watch today

SBI: India's largest lender, State Bank of India, on Tuesday slashed the marginal cost-based lending rate (MCLR) by 35 basis points across all tenors, a move that followed on the heels of RBI rate cut to tackle the economic fallout from the coronavirus pandemic.
 
Aurobindo Pharma: A class action suit has been filed against Aurobindo Pharma and Emcure Pharmaceuticals in a Florida court for allegedly concealing information about cancer-causing agent, N- nitrosodimethylamine (NDMA) presence in metformin medicine. READ MORE

Elara Capital on autos

We are impressed by MSIL’s market share resilience in the current challenging environment, down a mere 20bp YoY in FY20. MSIL’s strong balance sheet would help it emerge even stronger in the downturn. We note ex-MSIL and ex-Hyundai, the PV industry capacity utilization stood at a weak ~40-50% in FY20. Another year of downturn is likely to put further stress on competition balance sheet. We expect the weak to become weaker, thereby benefitting MSIL.

Rural India is expected to be hit to a lesser extent by COVID-19 and strong Rabi sowing would aid in improving rural income, thereby benefitting HMCL, which derives ~50% of sales from rural India. We recommend Buy on MSIL with a lower target price of Rs 5,625 and Buy on HMCL with a lower targeet price of Rs 2,275. Owing to recent correction we upgrade BJAUT and EIM to Accumulate from Sell with a lower target price of Rs 2,361 and 14,009, respectively.

Kotak Institutional Equites on auto sector

One of the most significant impacts of SARS was substantial decline in usage of public transport and cab aggregator services in China. Chinese passenger car sales increased by 79% yoy in CY2003 led by (1) consumer preference towards private ownership of vehicles and (2) steep cut in prices due to increase in the competitive intensity. We believe there could be similar shift in consumer preference once the coronavirus situation subsides in India over the medium-term and once economic growth normalises.

Stocks that drove Nifty off coronavirus lows

The markets have rebounded nearly 15 per cent from their coronavirus lows logged on March 23, when the Nifty had posted its biggest single-day loss to end at a four-year low of 7,610. The index jumped 9 per cent jump on Tuesday to end at 8,792, gain of 1,182 points in two weeks. Barring three stocks — Eicher Motors, Shree Cement and Bajaj Finance — all the Nifty components have gained during this two-week period. However, the share prices of only 23 Nifty companies have bettered the benchmark. Read more

Systematix on Vardhman Textiles

The manufacturing facilities are temporarily closed. The Punjab government has permitted the start of production at manufacturing units in the state on condition that labourers stay at the facility and follow safety measures. Other states are likely to follow similar guidelines in the coming weeks. 75% of VTEX’s labourers are staying in the facility. It plans to resume production after the logistics services return to some normalcy.

The management expects a slower ramp up initially with utilisations of 40-60% for 1QFY21. We estimate yarn utilisation of 93%/75% in FY20/21E vs 98% in FY19 due to domestic and export slowdown; we expect a sharp demand uptick FY22 onwards. We maintain our BUY rating on the stock with a target price of Rs 860 based on 9x FY22E earnings.

Ambit on Navin Flourine

NFIL’s fluorination expertise and pharma innovator relationships differentiate it from peers. Business rapidly evolved from commodity (77% in FY11) to specialty (FY20E: 51%, FY24E: 81%), driving margins and RoCE. Promoter ownership changes and appointment of go-getter CEO are aiding the transition.

There is likelihood of non-linear growth with upsides from molecule commercialization in CRAMS, potential portfolio expansion in refrigerants, and more innovator contracts like recent one with European MNC.

The target price of Rs 1,800 builds in relatively linear 33% EPS CAGR over FY20-FY24E and RoCE improvement. Target multiple (20x FY23E P/E) is expensive but should be seen in light of unique capabilities and credible management in a high growth space.

BROKERAGE VIEW :: CLSA ON BHARTI AIRTEL

>> Forecasts a 13/26% revenue/EBITDA compounded growth by FY22

>> Maintains buy with a target price of Rs 590

>> Growth will be led by tariff hikes


Jefferies on Infosys

We expect Infosys' revenue to grow at 0.5% QoQ cc (0% QoQ USD) and EBIT margin to be largely stable. We do not expect Infosys to suspend its revenue growth guidance altogether but the range is likely to be wider than the usual 200bps as it was in FY10 & FY14. We expect margin guidance to be cut by 100bps to 20-22% given weaker revenue growth & more conservative ccy assumptions

Jefferies on TCS

We estimate TCS to grow 0.5% QoQ cc (-0.1% QoQ USD) in 4QFY20E as we build in 100bps impact on QoQ growth due to last 2 weeks of March. This would mean 5% YoY cc growth in 4Q and sub-8% YoY cc growth in FY20E, sharp deceleration vs. 11.4% YoY cc growth in FY19. We expect margin to remain largely stable QoQ at 24.9% as benefit of INR-USD depreciation, lower travel costs, greater cost controls is offset by lower utilization, lower growth & cross ccy movements. Deal TCV should be supported by Walgreen & Phoenix deals

BROKERAGE VIEW :: MORGAN STANLEY ON RIL

>> Maintains overweight on Reliance Industries

>> Says, net debt will fall even if energy or retail demand struggle over the next 6 months

>> Post Covid-19, company to emerge stronger than peers

Technical calls from HDFC Securities

Nifty has taken out crucial resistance of 8,600; next targets seen at 9,000 & 9,390
 
Nifty has decisively surpassed the resistance of 8,600 and confirmed the bullish inverse head and shoulder pattern on the daily line charts. Support for the Nifty has now shifted up to 8,360. Next upside target for the Nifty is seen at 9,000 and 9,390.
 
BUY MARUTI (Rs 4,536): | Target: Rs 5,000 | Stop-loss: Rs 4,300
 
The stock price has risen more than 10 per cent with significant rise in volumes. RSI Oscillator has exited oversold zone with positive divergence on the daily charts. The stock price has closed above 5 DMA. READ MORE

Bulk deals on NSE as on Tuesday


Bulk deals on BSE as on Tuesday


FII/FPI & DII trading activity on NSE, BSE and MSEI


Rupee check

Source: Bloomberg


Oil prices jump as focus swivels to OPEC, Russia meeting on output cuts

>> Oil climbed on Wednesday, reversing most of the prior session’s losses, as investors pinned hopes on a Thursday meeting where OPEC members and allied producers will discuss output cuts to shore up prices that have tumbled amid the coronavirus pandemic.
 
>> Brent crude was up by 72 cents, or 2.3%, at $32.59 per barrel, after falling 3.6% on Tuesday. US West Texas Intermediate (WTI) crude, on the other hand, rose $1.30, or 5.5%, to $24.93 a barrel after dropping 9.4% in the previous session.

(Via Reuters)

SGX Nifty indicates tepid start to the indices

>> At 8:03 am, the index was tradign at 8,733 level, down 1.5 per cent.

Asian shares step back, oil rebounds in volatile trade

Source: Reuters


Oil drop saps gains as Wall Street fades late

Source: Reuters


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