Sensex ends 110 pts lower ahead of Q2 GDP data; BSE Smallcap index up 2.4%

Topics Markets | Sensex | Nifty 50

Nifty Auto gained 1.41 per cent while Nifty Realty surged 2.65 per cent.
The benchmark indices ended Friday's volatile session in the negative territory ahead of the release of gross domestic product (GDP) numbers for the second quarter (July-September period) of the current fiscal, due later in the day. 

The S&P BSE Sensex slipped 110 points, or 0.25 per cent to 44,150 levels and the Nifty50 index ended at 12,969, down 18 points, or 0.14 per cent. Power Grid, HCL Tech, and ONGC (all down around 2 per cent) were the top Sensex laggards. 

On a weekly basis, Sensex gained 0.6 per cent while Nifty added 0.85 per cent. 

The broader market, however, outperformed the benchmark indices today. While the S&P BSE MidCap index surged 1.91 per cent to 16,915, the S&P BSE SmallCap index rallied an impressive 2.4 per cent to 16,875 levels. 

Among sectoral indices, barring Nifty IT, all other indices ended in the green. Nifty Auto gained 1.41 per cent while Nifty Realty surged 2.65 per cent. 

Shares of gas transmission companies rallied up to 19 per cent on the BSE during the day after oil regulator Petroleum and Natural Gas Regulatory Board (PNGRB) notified regulations for unified gas transmission tariff structure. READ MORE

The domestic equity and currency markets will remain shut on Monday, November 30, on account of Gurunanak Jayanti.

Global stocks

Asian shares stalled near record highs on Friday as investors weighed renewed doubts about a highly-anticipated coronavirus vaccine against hopes that some of the region’s economies will recovery quicker than their Western peers.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.04 per cent. Japan’s Nikkei rose 0.33 per cent while shares in China rose 0.13 per cent after data showed Chinese industrial profits surged at the fastest pace since early 2017.

In commodities, oil prices traded lower in quiet trade due to the US Thanksgiving holiday, dropping amid concerns about oversupply and doubts about a vaccine to end the coronavirus pandemic.

(With inputs from Reuters)

4:20 PM IST "Today’s market momentum was driven by uncertainty related to the efficacy of Covid vaccine and expectation of Q2 GDP data. Although GDP is expected to improve compared to the previous quarter, the recovery in the Indian economy is likely to be lower in comparison to its global peers. Lately, broader markets have started to outperform the benchmarks, showing a shift in demand to mid and small-caps. From these high levels, for the market to stay resilient and midcaps to outperform, the economy has to normalise and more stimulus has to be announced, which will take some more time based on the government’s plan and availability of vaccine."   Weekly Outlook   "The market showcased a positive momentum and touched an all-time high level during the week mainly driven by reports of vaccine development and FII inflow. The volatility throughout the week was at elevated levels and witnessed weakness in the latter half leading to profit booking. The US markets inched to new highs during the week on hopes of vaccine development and ease in US political risks. However, European markets snailed through the week owing to the extension of coronavirus restrictions. Market is awaiting the outcome of major events like RBI policy, the release of Manufacturing and Service PMI and banking business data which will be decisive factors driving the market in the upcoming week."

3:43 PM IST

3:42 PM IST

3:36 PM IST The S&P BSE Sensex slipped 110 points, or 0.25 per cent to settle at 44,150 while NSE's Nifty ended at 12,969, down 18 points, or 0.14 per cent.

3:27 PM IST

3:22 PM IST Amid a challenging environment, Timken has managed to sustain its operating margins albeit on a lower topline. MNC status, debt free balance sheet & high return ratios bode well for the company amid uncertain times. However, the recent run up in Timken’s stock price has made valuations too expensive for our comfort. Thus, taking into consideration all the above factors, we roll over and introduce FY23E. We pencil in revenue, EBIDTA and PAT CAGR of 5%, 5% & 2.6%, respectively, in FY20E-23E. We value Timken at 35x FY23EPS to arrive at a target price of Rs1,235/share. We revise our rating on the stock from BUY to HOLD.

3:15 PM IST Godrej Properties Ltd (GPL) is a sectoral bell-weather with an innate capacity to build homes. Over the years, it has metamorphosed into a seamless home manufacturing machine with the shortest production time from land acquisition to approvals to launches and sales. In this journey, it has gained market share and emerged a crucial challenger in the respective micro-markets; it is on its way to becoming a leader. Given strong brand, robust financial capacity and strong execution capabilities, landowners/Tier 2 developers have been partnering with GPL for JV opportunities. The growth journey is expected to crystallise further with the regulatory landscape changing over the years, in favour of organised developers. We believe GPL only constrains itself, and that is its biggest strength or weakness. Given the recent run-up we initiate coverage on the stock with an ADD recommendation and SOTP of Rs 1,164/sh (40% NAV premium).

3:03 PM IST Among individual stocks, PNB was the top gainer among PSU banks, up 7 per cent to Rs 34.15 in intra-day trade today. In the past one week, the stock has gained 15 per cent after the bank said ICRA Ratings has upgraded the ratings of Bonds issued by the Bank and reaffirmed the rating of Certificate of Deposits. READ MORE 

2:54 PM IST Hitachi ABB Power Grids in India, listed on the stock exchanges as ‘ABB Power Products and Systems India Ltd.’, has signed a Memorandum of Understanding (MoU) with Ashok Leyland and the Indian Institute of Technology Madras (IITM) for an e-mobility pilot. The triumvirate will run an electric bus (e-bus) pilot for in-campus commuting by IITM’s students and staff.   The e-bus, which will incorporate Hitachi ABB Power Grids’ innovative flash-charging technology – Grid-eMotionTM Flash, will be provided by Ashok Leyland. IITM will host the infrastructure required to operate the flash-charging system for the e-bus. READ MORE  

2:48 PM IST >> Says, Banks are rendered helpless against defaulting borrowers Govt counsel to SC: Issues should be allowed to be ironed out as per mechanisms in place Alert: IBA is Indian Banks; Association

2:45 PM IST

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

"Today’s market momentum was driven by uncertainty related to the efficacy of Covid vaccine and expectation of Q2 GDP data. Although GDP is expected to improve compared to the previous quarter, the recovery in the Indian economy is likely to be lower in comparison to its global peers. Lately, broader markets have started to outperform the benchmarks, showing a shift in demand to mid and small-caps. From these high levels, for the market to stay resilient and midcaps to outperform, the economy has to normalise and more stimulus has to be announced, which will take some more time based on the government’s plan and availability of vaccine."
 
Weekly Outlook
 
"The market showcased a positive momentum and touched an all-time high level during the week mainly driven by reports of vaccine development and FII inflow. The volatility throughout the week was at elevated levels and witnessed weakness in the latter half leading to profit booking. The US markets inched to new highs during the week on hopes of vaccine development and ease in US political risks. However, European markets snailed through the week owing to the extension of coronavirus restrictions. Market is awaiting the outcome of major events like RBI policy, the release of Manufacturing and Service PMI and banking business data which will be decisive factors driving the market in the upcoming week."

Except Nifty IT, all sectoral indices on the NSE end in the green


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


CLOSING BELL

The S&P BSE Sensex slipped 110 points, or 0.25 per cent to settle at 44,150 while NSE's Nifty ended at 12,969, down 18 points, or 0.14 per cent.

MARKET CHECK


BROKERAGE VIEW | ICICI Securities on Timken India

Amid a challenging environment, Timken has managed to sustain its operating margins albeit on a lower topline. MNC status, debt free balance sheet & high return ratios bode well for the company amid uncertain times. However, the recent run up in Timken’s stock price has made valuations too expensive for our comfort. Thus, taking into consideration all the above factors, we roll over and introduce FY23E. We pencil in revenue, EBIDTA and PAT CAGR of 5%, 5% & 2.6%, respectively, in FY20E-23E. We value Timken at 35x FY23EPS to arrive at a target price of Rs1,235/share. We revise our rating on the stock from BUY to HOLD.

BROKERAGE VIEW | HDFC Securities on Godrej Properties

Godrej Properties Ltd (GPL) is a sectoral bell-weather with an innate capacity to build homes. Over the years, it has metamorphosed into a seamless home manufacturing machine with the shortest production time from land acquisition to approvals to launches and sales. In this journey, it has gained market share and emerged a crucial challenger in the respective micro-markets; it is on its way to becoming a leader. Given strong brand, robust financial capacity and strong execution capabilities, landowners/Tier 2 developers have been partnering with GPL for JV opportunities. The growth journey is expected to crystallise further with the regulatory landscape changing over the years, in favour of organised developers. We believe GPL only constrains itself, and that is its biggest strength or weakness. Given the recent run-up we initiate coverage on the stock with an ADD recommendation and SOTP of Rs 1,164/sh (40% NAV premium).

Public sector banks extend gain; PNB, Canara Bank up over 5%

Among individual stocks, PNB was the top gainer among PSU banks, up 7 per cent to Rs 34.15 in intra-day trade today. In the past one week, the stock has gained 15 per cent after the bank said ICRA Ratings has upgraded the ratings of Bonds issued by the Bank and reaffirmed the rating of Certificate of Deposits. READ MORE 


Hitachi ABB Power Grids teams up with Ashok Leyland in e-bus pilot

Hitachi ABB Power Grids in India, listed on the stock exchanges as ‘ABB Power Products and Systems India Ltd.’, has signed a Memorandum of Understanding (MoU) with Ashok Leyland and the Indian Institute of Technology Madras (IITM) for an e-mobility pilot. The triumvirate will run an electric bus (e-bus) pilot for in-campus commuting by IITM’s students and staff.
 
The e-bus, which will incorporate Hitachi ABB Power Grids’ innovative flash-charging technology – Grid-eMotionTM Flash, will be provided by Ashok Leyland. IITM will host the infrastructure required to operate the flash-charging system for the e-bus. READ MORE
 

Interest Waiver Case :: Restraining order on banks w.r.t classifying accounts as NPA should be vacated, says Harish Salve for IBA

>> Says, Banks are rendered helpless against defaulting borrowers

Govt counsel to SC: Issues should be allowed to be ironed out as per mechanisms in place

Alert: IBA is Indian Banks; Association

Index contributors at this hour


Nifty Bank Index trades flat amid on-going Interest waiver case hearing


Siemens India: Hopes hinge on sustained manufacturing sector revival

A stock like Siemens India dramatically reacting to its quarterly results was pretty much unheard of till Thursday. Even as the global engineering major’s net profit for the September quarter (Q4; the company follows October to September accounting year) declined by 4.7 per cent year-on-year (YoY) and revenue at Rs 3,422 crore fell short of previous year’s number by nine per cent, the Siemens India stock soared by 11.6 per cent on Thursday. READ MORE

BSE SmallCap index trades 1.76% higher


Vakrangee gains 28% in 2 days after rolling back amalgamation scheme

Shares of Vakrangee moved higher by 14 per cent to Rs 39.70 on the BSE in the intra-day trade on Friday, surging 28 per cent in the past two trading days, after its board approved the withdrew amalgamation scheme for two wholly-owned subsidiaries due to "substantial changes in the business environment". READ MORE

Coal India, PNB: How to trade stocks that underperformed amid market rally

The stock market has witnessed a stellar rebound as the benchmark indices have zoomed over 70 per cent from their respective March lows. At 01:44 PM, the S&P BSE Sensex was trading at 44,251 levels while NSE's Nifty was just shy of the crucial level of 13,000. However, amid this market rally, there have been few counters which have underperformed the market. READ MORE

European indices trade flat in early deals

(Source: Reuters)

Burger King IPO to open on December 2; here is all you need to know

Burger King aims to raise Rs 810 crore through the issue which comprises a fresh issue of shares worth Rs 450 crore, and an offer for sale of up to 60 million shares by promoter entity QSR Asia Pte Ltd worth Rs 360 crore, at the upper end of the price band.
 
The company intends to utilise the fresh proceeds to finance the roll-out of new company-owned Burger King Restaurants and to meet the general corporate purposes. READ MORE

Divi's Labs: New capex, margin expansion to support earnings growth

With gains of 51 per cent, Divi’s Laboratories has been the best-performing large-cap pharma stock in the past six months. The stock hit its all-time high earlier this week and is within a touching distance of the Rs 1-trillion market-cap mark.
 
If it tops that, it would be only the second pharma company to cross that mark after Sun Pharma. The recent trigger for the stock has been earnings upgrades led by strong margin performance and a revenue visibility on the back of additional capex. READ MORE
 

MARKET CHECK :: Sensex at this hour


Commodity Corner :: Copper zooms near 7-year high

The metal, widely used in power and construction industries, has rallied 77 per cent since its March lows.
 
"Copper's rise is generally macro driven because of the vaccine and risk sentiment remains upbeat .... We are seeing synchronised gains across all metals," said ING analyst Wenyu Yao. READ MORE

Top 5 stock picks by Ashish Biswas, Head of Technical Research, CapitalVia Global Research

>> GMR INFRA above 26.25 with a TGT of 27.20 and SL of 25.35. It has a support of 8 DMA.

>> Adani Ports above 401.60 with a TGT of 408 and SL of 395.50. It has support of 21 and 55 MA in short time period.

>> HDFC AMC above 2545 with a TGT of 2615 and SL of 2480. It is trading in an upward moving channel.

>> JSW ENERGY above 62 with a TGT of 64 and SL of 60. It is on the support levels currently and we can expect a reversal from here.

>> SRT TRANSFIN above 1076 with a TGT of 1100 and SL of 10554. It is trading in an upward moving channel.
 

Bitcoin and millennials :: How Indian crypto entrepreneurs beat the system

Having the world’s largest diaspora — and more than $100 billion in two-way money flows last year — isn’t the only thing. Prime Minister Narendra Modi’s disastrous ban on 86 per cent of the country’s currency in November 2016 shook Indians’ faith in fiat money. Add the fear of leaving spare cash in banks when three major deposit-taking institutions have crumbled in the past 15 months. No wonder Arcane expects Indian crypto volumes to overtake China’s. READ MORE

IPO Alert :: Burger King IPO to open on Dec 2

Issue Type: Book building

Issue size: 135 million shares (75 million fresh issue, 60 million OFS shares)

Amount: Rs 810 crore

Bid closes: Dec 4

Expected listing: Dec 14



Greaves Cotton advances 17% in two days as promoter increases stake in Co

On Wednesday, November 25, 2020, D B H International Private Limited, the promoter group Greaves Cotton has acquired 207,500 equity shares of company at an average price of Rs 73.82 per share, according to disclosure made by company to the stock exchange. READ MORE

Q&A | IT and telecom will do well in the medium term: Vinay Paharia of Union AMC

We expect sectors such as IT and telecom to do well in the medium term. IT has seen a meaningful rise in demand, given the pande­m­ic. Firms are accelerating IT spends, which is happening for survival and not growth. Telecom is expected to witness benefits of consolidation and rise in demand, given the increased data consumption by both consumers and enterprises. READ FULL INTERVIEW HERE
Vinay Paharia, Chief Investment Officer, Union Asset Management Company

Q2FY21 GDP :: Expectation by Jyoti Roy- DVP- Equity Strategist at Angel Broking

>> GDP growth numbers are expected to show an improvement sequentially. Post the Q2FY21 numbers most economists have revised their GDP growth numbers for Q2. The contraction in Q2 is expected anywhere between 7-10% as compared to earlier expectations of low double digit contraction.  As long as the GDP print is not significantly below consensus estimates we do not expect markets will react too negatively to it. 

>> However in case the Q2FY21GDP contraction is less than consensus estimates of ~8% then markets will react positively to it. However, we believe that markets will focus more on high frequency indicators like PMI, Auto sales and power demand which point to significant acceleration in the economy from October due to festive demand and opening up of the economy. PMI and Auto sales numbers for the month of November are expected in the first week of December which we believe will be more crucial for the markets.”
 
 
 

MARKET UPDATE:: Broader indices outperform benchmarks


BUZZING STOCK :: Greaves Cotton leaps 11.5%


Small lenders to pay the price as RBI writes off debt of Lakshmi Vilas Bank

“Financing costs may inch up and the appetite shall be lower especially for the lower-rated private and small finance banks,” said Ajay Manglunia, managing director and head at JM Financial Products Ltd. “Such lenders will have to rely more on equity raise as investors shall be a bit more skeptical to take risk now.” READ MORE

Rollover Analysis :: November series

>> Market-wide rollovers at the end of November series is on a higher side at 92% (vs. 91% average rollovers seen in last three series)

>> Market-wide futures open interest at the start of December series stands at Rs 1.32 trillion as compared to Rs 1.14 trillion at the start of November series.

>> Stock futures rollovers stands at 94% which is in line with the average rollovers of last three series at 94%. Average roll levels across stock futures were ~40-45bps (cost to long rollers).

>> Nifty futures rollover stands at 79% which is in line compared to average rollovers of 79% (last three series). Nifty futures will start the December series with an OI of Rs 156 billion (~12.05mn shares) compared to an OI of Rs 123 billion (~10.5mn shares) seen at the start of November series.

(Source: Edelweiss Securities)

IGL, Gail, MGL: Trading strategies for CGD stocks post new gas tariff order

PNGRB on Thursday simplified the country's gas pipeline tariff structure to make the fuel more affordable for distant users and to attract investment for building gas infrastructure. The regulatory board has notified regulations for a 'unified' tariff structure for over a dozen pipelines that form the National Gas Grid which will lead to a 20-30 per cent rise in transportation charges paid by users near the source but a reduction for consumers in the hinterland. READ MORE

Auto shares in focus ahead of November sales; Tata Motors, TVS Motor up 5%

Shares of automobiles companies were in focus at the bourses on Friday ahead of the November month sales numbers, which release next week. The stock market will remain closed on account of Gurunanak Jayanti on Monday, November 30. At 11:00 am, the S&P BSE Auto index, the top gainer among sectoral indices, was up nearly 2 per cent, as compared to 0.19 per cent decline in the S&P BSE Sensex. The auto index hit an intra-day high of 20,218, is trading close to its 52-week high level of 20,282 hit on Wednesday, November 25. READ MORE

MARKET UPDATE:: Sensex at day's low


Q2 GDP data to be released today: India may still enter technical recession

Every rating agency, barring Barclays, has projected either less contraction in India's economy in the second quarter or the same as it was earlier. ALSO READ: Q2 GDP data today: India may see worst contraction among other economies The predictions differ widely as BofA Securities expected the fall in GDP at 7.8 per cent and NCAER at 12.7 per cent. READ MORE

Top losers on BSE at this hour

COMPANY PRICE(rs) CHG(%)
FUTURE CONSUMER 8.23 -4.97
FUTURE RETAIL 82.35 -4.96
I T D C 268.50 -4.91
V-MART RETAIL 2247.00 -2.50
DCM SHRIRAM 377.40 -2.27
» More on Top Losers

Laurus Labs gains 7% in two days on acquisition of Richcore Lifesciences

Shares of Laurus Labs rose 4 per cent at Rs 305 on the BSE on Friday, gaining 7 per cent in the past two trading days after the company said it has signed a definitive agreement to acquire a majority stake in Richcore Lifesciences Pvt Ltd (Richcore). The stock of the pharmaceutical company was trading at its highest level since November 2, 2020. READ MORE

Buy-the-dip mantra keeps market resilient, experts say bullish grip to stay

With equity markets witnessing record foreign inflows and US dollar expected to remain weak, buy-the-dip is the mantra being advised by experts. On Wednesday, the benchmark indices dropped 1.5 per cent—their biggest single-day decline since October 15. READ MORE

Rupee Opening

Rupee opens higher at 73.78 per US dollar vs Thursday's close of 73.88/$

BUZZING STOCK:: Varun Beverages gains 5%


Tube Investments to raise funds from Azim Premji Trust, SBI MF; stock up 5%

"The company has executed the share subscription agreement on Thursday, November 26, 2020 with Azim Premji Trust for issue and allotment of 2.73 million equity shares for an aggregate consideration up to approximately Rs 200 crore and with SBI Mutual Fund for issue and allotment of 2.05 million equity shares of the company for an aggregate up to approximately Rs 150 crore," the company said in a regulatory filing. READ HERE

Most active stocks by volume

COMPANY PRICE(rs) CHG(%)
VODAFONE IDEA 9.87 -0.80
JSW ENERGY 62.20 2.30
B H E L 32.75 4.13
TATA MOTORS 180.70 4.00
ENGINEERS INDIA 73.45 0.62
» More on Most Active Volume

MARKET CHECK :: Sensex choppy in morning trade


Gas distribution stocks rally after PNGRB simplifies gas pipeline tariff

Shares of gas transmission companies rallied up to 19 per cent on the BSE in the early morning trade on Friday after oil regulator Petroleum and Natural Gas Regulatory Board (PNGRB) notified regulations for unified gas transmission tariff structure. The tariffs will be applicable based on two zone structure related to distance from source of gas. READ MORE

Nifty Auto index advances 1%


Tata Motors gains 4%


Venky's advances over 5%


Mirza International jumps 12%


Consumption sector in focus; Khadim India up over 5%


AstraZeneca Pharma trades in the red

>> Developers of the Sputnik V Covid-19 vaccine said on Thursday that AstraZeneca should try combining its experimental shot with the Russian one to boost efficacy. In a separate development, AstraZeneca Plc and the University of Oxford face mounting questions about their Covid-19 vaccine trial results after acknowledging a manufacturing error.


DHFL hits 52-week high

>> DHFL has reported a net loss of Rs 2,123 crore for the quarter ended September as compared to a net loss of Rs 6,750 crore reported for the same period last financial year.


M&M up 1%

>> Mahindra & Mahindra Ltd (M&M) on Thursday said it has agreed to sell its entire stake aggregating 100 per cent of the paid-up equity share capital in Mahindra First Choice Services Limited (“MFCS”) and its entire stake aggregating 100 per cent of optionally convertible redeemable preference shares in Auto Digitech Private Limited (“ADPL”), a wholly-owned subsidiary of MFCS, to TVS Automobile Solutions Private Limited (“TASL”)


Sectoral trends on NSE at Open


Sensex Heatmap at Open


Opening Bell


Opening Bell


Commodity Heatmap


Top gainers and losers on the S&P BSE Sensex at Pre-open


Markets at Pre-open


Markets at Pre-open


BROKERAGE VIEW :: Emkay Global on Oil and Gas Sector

>> PNGRB has sweetened CGD open access by not considering the incumbent’s existing OMC/dealer CNG stations as shipper for allowing access. As per our channel checks, this implies that an OMC/dealer outlet cannot terminate the trade agreement with an incumbent and seek access to start CNG retailing on its own. PNGRB has also removed draft provisions challenging infra exclusivity such as allowing shipper to set up compressor facilities, cascade supplies and even pipelines in the event incumbent is not able to do so.

>> Protection from the existing OMC CNG volume threat is a relief and near-term positive for CNG-heavy CGD players, though incoming competition would weigh on long-term growth and pricing power. Infra exclusivity protection is positive but technical disputes may crop up ahead. The unified tariff is mostly neutral. Hence, we retain our estimates, recommendation and TP for players under our coverage, though taking an EW stance on IGL vs. UW earlier.

BROKERAGE VIEW :: Antique Broking on NMDC

CMP: Rs 96 | TP: Rs 127 | Reco: Buy

>> Higher domestic steel production, Odisha supply squeeze and firm international ore prices would support the pricing outlook. Potential levy of additional premium would be offset by the contribution from incremental volumes at Donimalai and pricing power provided by the sharp discount to international ore prices. Commissioning/ divestment of the steel plant would improve return ratios and lead to a higher valuation of the asset. We maintain our target price of INR127 per share, valuing the stock at 5x FY23E EV/EBITDA and adding the FY23E CWIP @0.2x book value and maintain our BUY on the stock.

BROKERAGE VIEW :: Antique Broking on Real Estate

>> Liquidity in the market going down as only very few lending in real estate. In addition, gap between Tier I developers and small developers increasing in terms of lending rates and easy access of funding. Thus, weaker developers will find it difficult to raise funds to continue construction, impacting incremental sales and internal accruals. NPAs expected to go up. Big players would continue to sell, grab market share and have low cost of capital as well.

>> We expect the momentum of 2QFY21 to spill over in 3QFY21 and expect better numbers. Big developers with large inventory would report robust numbers with better traction from ready inventory and non-premium segments. Although, the drag of job and income losses may shrink the overall demand, reputed developers expected to do well and increase market share due to consolidation across markets. Most of the listed real estate companies expected to do better YoY numbers. Our top picks in residential continue to be DLF and Brigade.

BROKERAGE VIEW :: JM Financial on Building Material

>> Wood Panel companies 2QFY21 performance was better than our estimates on account of higher than expected volumes and margins. Ply/Laminates volumes remained weak (declined 7%-27% YoY), though players hope to report positive growth in 2HFY21. MDF, on the other hand, recovered smartly (19%-31% YoY) and are expected to remain strong given robust demand from OEMs. Operating margins surprised positively on account of higher gross margins (lower RM cost, especially lower chemical costs). We believe the momentum continues to improve in the wood panel space and we maintain our positive stance on the sector.

>> We have a BUY rating on all the wood panel companies under coverage, namely, Century Ply, Greenply, Greenpanel and Greenlam. Our top picks are Greenpanel Industries (Biggest beneficiary of MDF industry tailwinds) and Greenlam Industries (consistent performance with healthy return ratios).

BROKERAGE VIEW :: IDBI Capital on Hotel sector

>> We believe the pace of recovery is albeit slower than anticipated and the meaningful revival in key operational parameters may be seen in CY22E. Though recovery may be faster for selected organized players owing to strong brand recall and scale operations, leveraged balance sheet remains an overhang on profitability.

>> The domestic hospitality industry is taking measures to survive and revive in current crisis. To fill the void created by international travel segment, the industry is promoting domestic leisure travel through various initiatives at state and national level. The industry has opted for stringent cost cutting on key verticals like employee cost, operational expenses, power and fuel as well as food and beverages. Rental contracts are being re-negotiated. The cost cutting initiatives will remain part of the hotels’ operations even after business normalizes and drive healthy improvement in EBITDA margin in future.

>> We maintain HOLD on Indian Hotels (TP Rs95) and Lemon Tree Hotels (TP Rs29).

BROKERAGE VIEW :: MOFSL on M&M

 CMP: Rs 729 | TP: Rs 830 (+14%) | Reco: Buy

>> MM has divested its entire stake in vehicle servicing business - Mahindra First Choice Services (MFCS) - to TVS Automobile Solutions (TVS-AS) for INR350m. It would then invest the INR350m proceeds for a 2.76% stake on a fully-diluted basis (via Compulsorily Convertible Preference Shares).

>> While MM's core business would recover faster, the focus on tightening capital allocation could act as a re-rating catalyst. Hence, we see twin levers of EPS growth and a re-rating. The stock trades at a core FY22E/FY23E P/E of 14.1x/12.3x, which is at a 5/10- year discount to its LPA. Maintain Buy with a TP of INR830/share (Dec-22E SoTP), implying a core P/E of ~15x at the TP.

Stocks to watch today

Astrazeneca Pharma India: Developers of the Sputnik V Covid-19 vaccine said on Thursday that AstraZeneca should try combining its experimental shot with the Russian one to boost efficacy. In a separate development, AstraZeneca Plc and the University of Oxford face mounting questions about their Covid-19 vaccine trial results after acknowledging a manufacturing error.
 
AU Small Finance Bank: As per news reports, AU Small Finance Bank has made a strategic investment of Rs 7.70 crore in NPCI, wherein 61,320 equity shares at a book value of Rs 1,256 per share are allocated to the bank, constituting around 0.44 per cent shareholding of NPCI.
 
Gillette India said it has been directed by National Anti-Profiteering Authority (NAA) to deposit Rs 57.99 crore in Consumer Welfare Funds. READ MORE   



 

BROKERAGE VIEW :: MOFSL on Automobiles

>> While the festive season has augured well, with no major negative surprise, current demand and low inventory sentiment suggests higher wholesales in Dec’20. Valuations are reflecting a recovery during 2HFY21, leaving a limited margin for safety for any negative surprises. We prefer companies with: a) higher visibility in terms of demand recovery, b) strong competitive positioning, c) margin drivers, and d) balance sheet strength. MM and HMCL are our top OEM picks. Among auto component stocks, we prefer ENDU and MSS

BROKERAGE VIEW :: MOFSL on Laurus Labs

CMP: Rs 292 | TP: Rs 410 (+40%) | Reco: Buy

>> Laurus Labs’ (LAURUS) has acquired 73% stake in Richcore Lifesciences (RICH) for a cash consideration of INR2.5b. The acquisition is a step towards building a vertically integrated biotech segment and adds a new lever to growth.

>> It particularly provides capabilities in high growth areas of Recombinant (Rh) Proteins, Enzymes and Biological Contract Development and Manufacturing Organization (CDMO).

>> We raise our FY22E/FY23E EPS estimates by 3% to arrive at our target price of Rs 410/share, on 18x 12M forward earnings, to reflect benefits of this deal accruing to LAURUS. Considering the addition of technology-based high entry barriers/superior RoCE business, we expect the RICH-led CDMO business to result
in a re-rating of LAURUS once it starts contributing meaningfully to earnings over the next 4-5 years. Maintain Buy

BROKERAGE VIEW :: MOFSL on Oil and Gas sector

>> GUJGA has more volume growth drivers than IGL and could potentially receive a huge volume boost from NGT’s directive to curb air pollution (five GAs classified as severely/critically polluted).

>> Also, IGL aims to facilitate competition as this would aid gas market expansion. We believe IGL has the most lucrative market for a competitor in the form of well-balanced volumes and margin mix.

>> GUJGA trades at 19.6x FY22E EPS of INR17.6, a discount of ~25% to IGL (which trades at 26.3x FY22E EPS of INR17.0) despite having a similar volume growth potential of 10-12% in the medium term.

>> We reiterate our Buy rating on GUJGA and maintain Neutral on IG

BROKERAGE VIEW :: MOFSL on Metals

>> Indian steel spreads have risen ~25% in 3QFY21 and are at a three-year high. We expect spreads to stay strong on the back of a domestic demand recovery and higher regional prices. The improvement in EBITDA/t should be even higher on an improving sales mix (lower exports and higher value-added sales). We raise our coverage EBITDA estimates by 3-12%/5-13% for FY21E/FY22E to factor in higher spreads.

>> Domestic steel prices are at a two-year high Domestic HRC prices have increased by INR4,500/t in Nov’20 to INR47,000/t on a strong recovery in the demand for flat steel, backed by a demand recovery in enduse sectors like Auto, White Goods, etc. The price hikes have been well supported by higher regional steel prices. Domestic HRC prices are trading at par to the landed cost of imports from Korea. With monsoon subsiding and expected recovery in infra and construction demand after the festive season, rebar prices too have increased by INR5,000/t in Nov’20.

>> Despite domestic iron ore prices rising to a five-year high, spot steel spreads are at a multi-year high due to higher steel prices and subdued coking coal prices. While iron ore prices from NMDC have increased by 30% YTD in FY21, imported coking coal prices have declined by ~35% YTD, keeping total raw material cost in check. As a result, domestic steel spreads are strong at INR33,000/t for flats (HRC) and INR30,000/t for longs (rebar). On an average, spot spreads are ~INR6,000/t higher than 2QFY21. Assuming spot prices sustain, spreads in 3QFY21 are expected to be higher by ~INR5,000/t for flats and ~INR3,500/t for longs, which should largely flow through to EBITDA as conversion costs have been largely unchanged.

Here's a Bull Spread Strategy on Bajaj Auto

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Top stock picks by Nilesh Jain of Anand Rathi:

BUY HCL TECH | TARGET: Rs 880 | STOP LOSS: Rs 810
 
The stock is trading in a falling channel and is on the verge of a breakout from the same. It has also formed a bullish engulfing candlestick pattern on the daily chart which indicates a bullish reversal. Further, the stock is trading above its short-term and long-term moving averages. A fresh buy crossover can be seen on MACD indicators and RSI has reversed from the oversold territory which hints at a strong pullback in the short term. READ MORE

Bulk deals on BSE as on Thursday

Bulk deals on NSE as on Thursday

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


Rupee check

Source: Bloomberg


Oil check


SGX Nifty update

>> At 8:19 am, the index was at 12,062 levels, up 17 points

Asian markets mixed

Source: Reuters


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