Indices end at record high for 2nd day, Sensex gains 680 pts, tops 43K

Topics Markets | TCS | Inox Leisure

NSE's Nifty added 170 points, or 1.36 per cent to end the session at 12,631 levels.
Extending their gaining streak into the seventh session in a row, the benchmark indices gained over 1 per cent to settle at record high levels for the second consecutive session on Tuesday. Investor sentiment got a major boost after Pfizer said its experimental Covid-19 vaccine was more than 90 per cent effective based on initial trial results.

The S&P BSE Sensex topped the crucial 43,000 level to settle at 43,278, up 680 points, or 1.6 per cent while NSE's Nifty added 170 points, or 1.36 per cent to end the session at 12,631 levels. India VIX today gained over 7 per cent to 21.57 levels. 

HDFC, HDFC Bank, ICICI Bank, and Reliance Industries (RIL) were the major contributors to the Sensex's gain today. 

The broader market, however, continued to underperform. The S&P BSE MidCap index ended 0.10 per cent lower at 15,544 levels while the S&P BSE SmallCap index settled at 15,232, down 0.48 per cent.

On the sectoral front, technology and pharma stocks slipped in the trade. The Nifty IT fell nearly 4 per cent to 20,978.50 levels while Nifty Pharma declined over 4 per cent to 11,168.90 levels. 

Global markets

Most Asian share markets rose on Tuesday as global investors applauded successful trial data for a coronavirus vaccine, although expected delays to any mass roll-out took the gloss off early gains.

Japan's Nikkei 225 ended up nearly 0.3 per cent after being 1.1 per cent higher in early trading, touching a 29-year high.

In Europe, shares hovered at eight-month highs. 

In commodities, oil prices rose as high hopes that a Covid-19 vaccine could be on the horizon were enough to cancel out fears that fuel demand is set to weaken in the near term. Gold jumped more than 1 per cent, following a sharp slide in the last session.

(With inputs from Reuters)

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

"The global financial markets experienced a wave of euphoria over the potential breakthrough in coronavirus vaccine development. Indian indices moved in sync with global peers touching fresh highs with continued support from banking stocks while IT and Pharma sectors witnessed heavy sell-offs. An uptick in beaten-down stocks and sectors were visible today viewing hopes of recovery in the business. The existing momentum can sustain on vaccine development, the domestic stimulus package, consistent FII inflows, and bounce in globalisation post the Biden victory. However, temporary correction due to profit-booking cannot be ruled out because the market is highly optimistic that the vaccine development will rapidly improve the ground reality."  

SECTOR WATCH | Nifty IT and Nifty Pharma end in the red


MARKET AT CLOSE | Gainers and losers on S&P BSE Sensex


CLOSING BELL

The S&P BSE Sensex rallied 68 points, or 1.6 per cent to end at 43,278 levels while NSE's Nifty ended at 12,631, up 170 points, or 1.36 per cent. 

MARKET CHECK


M&M Q2 net plunges 88% to Rs 162 cr on sharp contraction in auto segment

Net profit at Mahindra and Mahindra plunged 88 per cent in the quarter ended September 30, from the corresponding period, as a sharp contraction in the automotive segment weighed on the earnings, Mahindra and Mahindra said in a stock exchange notification. READ MORE 


YES Bank hits 5% upper circuit as CARE upgrades debt instrument rating

Shares of YES Bank were locked in 5 per cent upper circuit for second straight day at Rs 13.54 on the BSE on Tuesday after rating agency CARE upgraded the ratings, with stable outlook, assigned to the bank's debt instruments on the back of heavy volumes. Till 02:48 pm, a combined 88 million shares had changed hands and there were pending buy orders for around 47 million shares on the NSE and BSE, exchanges' data show. In comparison, the S&P BSE Sensex was up 1.4 per cent at 43,191 points. READ MORE

Sensex trades over 600 pts higher


Gold ETFs post seventh straight month of inflows in October

Gold ETFs saw inflows for the seventh straight month in October, taking total flows this year to Rs 6,341 crore. Flows in October moderated to Rs 384 crore from Rs 597 crore seen in previous month. According to experts, gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier, and alleviate losses during tough market conditions and economic downturns. READ MORE

BUZZING STOCK | UBL trades over 9% higher


Larsen & Toubro shares advance 6%, hit over seven-month high

In the past four trading days, the stock has risen 9 per cent after L&T said the ordering activity in Infra relatively strong despite pandemic concerns, power generation and hydrocarbon muted. The company saw sequential improvement in ordering momentum in infrastructure segment in September quarter (Q2FY21); encouraging prospect pipeline. The execution picks up in Q2 on the back of higher work force availability and supply chain normalization, it said. READ MORE 


Azim Premji tops EdelGive Hurun India Philanthropy list 2020

Azim Premji, the 75-year-old former chairman of Wipro has been the most generous philanthropist in India for 2020 with a donation of Rs 7,904 crore, as per EdelGive Hurun India Philanthropy List 2020 unveiled Tuesday. READ MORE 


European indices mixed in early deals


Oaktree revises its bid for DHFL upwards, now offers Rs 33,000 cr

In its earlier bid, Oaktree had offered to pay Rs 15,800 crore for the entire company, payable after seven years. The new offer will also include deferred payments linked to the milestones achieved by the company. Unlike other bidders – Piramal Enterprises, Adani group and SC Lowy, Oaktree has offered to take over the entire company while the others have bid only for particular assets. READ MORE

Sept Quarter Result | GAIL clocks profit of Rs 1,240 crore

>> Revenue at Rs13,644 crore

>> EBITDA at Rs 1,338.2 crore

BSE Midcap index underperforms Sensex


European Union announces new tariffs as countermeasures against US exports

The European Union (EU) has put in place countermeasures against the US exports by slapping tariffs on American products worth $4 billion, the European Commission said in an official statement.
 
The measures will take effect on Tuesday, Xinhua news agency quoted European Commission Executive Vice-President Valdis Dombrovskis as saying at a press conference here on Monday. READ MORE

MARKET CHECK


HDFC regains Rs 4 trillion m-cap; stock surges 6%, hits over 8-month high

Housing Development Finance Corporation (HDFC) regained the Rs 4 trillion-market capitalisation after the stock of the housing finance company rallied 6 per cent, hitting an over eight-month high of Rs 2,285 on the BSE on Tuesday. It was trading at its highest level since February 27, 2020. It had hit a 52-week high of Rs 2,500 on January 14, 2020. READ MORE 


Covid-19 vaccine :: China vaccine trial halted in Brazil

The final-stage trial of a Chinese frontrunner vaccine candidate has been halted in Brazil due to a serious adverse event, the first time that any of the Asian nation’s rapidly developed Covid-19 shots have met with such a setback.
 
Testing of Sinovac Biotech Ltd.’s vaccine, called Coronavac, has been halted in Brazil after an event that occurred on Oct. 29, said the Brazil Health Agency on Tuesday, without giving any further detail on what happened. The study is interrupted in accordance with regulations while the agency analyses if the study should continue, it said. READ MORE

Bihar Election Results :: Counting to continue till late evening, says Bihar chief electoral officer

Sept Quarter Result | M&M reports profit of Rs 162 crore

>> Revenue at Rs 11,590 crore

>> EBITDA at Rs 2,057 crore

>> EBITDA margin at 17.7%


BUZZING STOCK | IndusInd Bank climbs 10%


Caution prevails over loan to parent despite Vedanta's strong Q2 show

The Street has become increasingly cautious about high promoter debt and Vedanta's inter-corporate lending. Despite being positive on Vedanta's near-term earnings outlook, analysts have lowered their target prices. Inter-corporate deposits (ICDs given to parent Vedanta Resources) and near-term debt repayments keep analysts at PhillipCapital cautious about the stock. They have discounted the oil and gas business cash-flow entirely on the risks of further ICD support, and have lowered their target price to Rs 126, from Rs 150. READ MORE

ALERT :: Nifty tops 12,600 for the first time


ALERT :: Sensex at day's high


Ashok Leyland hits 52-wk high on demand recovery hope; stk up 73% in 3 mths

Shares of Ashok Leyland hit a 52-week high of Rs 89.45, surging 6 per cent on the BSE on Tuesday, on expectation that the domestic truck and light commercial vehicle (LCV) sector recovery may continue to gather pace over the second half (October-March) of the current fiscal. The stock of the commercial vehicle company has outperformed the market in the past three months by surging 73 per cent, as against 13 per cent rise in the S&P BSE Sensex. READ MORE

BUZZING STOCK | Lemon Tree Hotels zooms 10%


Voltas impresses street, scores over peers with strong show in Sept quarter

Voltas’ strength in the retail room AC segment continues to help in the current environment. Blue Star, though a formidable player, however, has a higher component of commercial sales (offices, projects and others). It is seeing recovery, however, and expects the momentum to continue in the upcoming festive season. It expects the market to reach 100 per cent of last year’s level by December. While Blue Star has maintained market share in room ACs at 12.7 per cent in Q2'FY21, analysts at Anand Rathi say the company’s ability to expand its market share is the key monitorable in FY21. READ MORE 


BROKERAGE VIEW | IDBI Capital on Ashok Leyland

RATING: HOLD | TARGET PRICE: Rs 86 

We increase our volume/revenue estimates for FY21E/FY22E factoring strong beat and steady demand recovery. We introduce our FY23 estimates and anticipate volume growth of 25% each factoring higher demand for tippers as infrastructure activities picks up, recovery in export markets and availability of financers for fleet operators. We anticipate revenue growth of 27%/24% respectively for FY22E/FY23E with EBITDA margin of ~10.8%. We revise our rating to HOLD (earlier REDUCE) and change our TP to Rs 86 (earlier Rs 53) based on PER of 20x FY23E EPS.

BROKERAGE VIEW | HDFC Securities on Aditya Birla Fashion and Retail

RATING: REDUCE | TARGET PRICE: Rs 140 

ABFRL’s 2Q performance recovery lagged that of peers (ex-department chains) as both anchors – Madura and Pantaloons – limped their way back to recovery. Margin delivery improved and was better than expected (0.2% vs HSIE: -14%) but still in the red (pre-IND-AS116) as management continued its tight leash on costs. Net debt/equity has remained elevated since Mar-20 as the retailer had to soothe vendor nerves (reduction in payables). We have built in the recent Rs 15 bn fundraise from Flipkart + Rights issue proceeds in our forecasts and maintain our REDUCE recommendation with a DCF-based target price of Rs 140/sh, implying 12x Sept-22 EV/EBITDA (Post IND-AS).

Equity scheme investors to breathe easy as banking, financial firms rally

Equity mutual fund (MF) investors can expect better performance from their schemes as banks and financial companies are back to being rally leaders from being laggards for the better part of the current calendar year. Top stocks in the financials space are the No. 1 bet for MF managers. READ MORE

BUZZING STOCK:: Bajaj Finance at day's high, up 7%


Dr Lal PathLabs, Thyrocare slip on profit booking on Covid vaccine optimism

Shares of diagnostics companies like Dr Lal PathLabs and Thyrocare Technologies slipped 8 per cent on the BSE on Tuesday on Covid-19 vaccine optimism.
The stock of Dr Lal PathLabs plunged 8 per cent to Rs 2,096, while Thyrocare Technologies dipped 7 per cent to Rs 1,052 on the BSE today. In comparison, the S&P BSE Sensex was up 1 per cent at 43,059 points, at 11:17 am. READ MORE

Amazon vs Future Retail :: How can we injunct regulators from deciding?, Delhi HC observes

>> Regulator will decide as per their own consideration

Amazon vs Future Retail :: Harish Salve seeks ad-interim injunction at this stage against Amazon from writing to regulators

>> These transactions are time sensitive, if banks are not paid as per timelines, transaction would be dead, he adds.

>> Says the emergency arbitrator order is persuasive at best, not binding. 
 
>> Amazon is indulging in writing to CCI, SEBI to withhold clearance. My applications are pending for approval, Salve argues

Consistent revenue recovery key for Bosch to be seen as decent investment

A weak September quarter showing weighed on the share price of Bosch, the country’s largest auto component player. The stock shed 1 per cent even as the benchmark indices rose 1.68 per cent and hit their all-time highs, owing to higher costs and lower margins. Though revenues have recovered from the dip during the June quarter, the overhang for the stock was the weak margin performance. READ MORE

Adani Gas, SRF: 44 stocks in Nifty500 can see profit booking, RSI show

Markets have been on a roll over the past few sessions, buoyed by the outcome of the US presidential polls and then fuelled by Pfizer's announcement that its experimental Covid-19 vaccine was more than 90 per cent effective based on initial trial results. The S&P BSE Sensex gained 400 points in intraday trade and breached the 43,000 level for the first time.
 
The broader Nifty50 index also topped the 12,550-mark.  As the Sensex and Nifty scaled record peak levels, a number of stocks have entered an overbought condition as per the Relative Strength Index (RSI). READ MORE

Amazon vs Future Retail :: Amazon is indulging in falsehood by claiming that they were unaware of the deal until Sep, says Salve

>> Biyani agreed to consolidate the retail biz & sell to RIL for cash. Resolution was passed in Aug in which a scheme was proposed for transfer of assets, Salve says

Amazon vs Future Retail :: Amazon admitted before the CCI that they have no control over FRL, says Harish Salve

>> Salve says Amazon is not a Future Retail shareholder

>> Amazon never revealed that they invested in FCPL to acquire control over FRL.

>> Salve argues that Amazon India came to invest in India & that FDI in multiband retail is not allowed under Indian law.
 
>> Amazon invested in Future Coupons. Future Coupons entered into Shareholders agreement with FRL, Amazon not a party to this agreement.

>> Amazon knew, as early as June 2020, that Future was in conversation with Reliance Ind, Salve says. 
 
>> There were also informal communications between Amazon, Rel Ind. Rel Ind would not proceed with sounding off Amazon on a deal this size.

Alert: Harish Salve is representing Future Retail

Equitas SFB hits highest level since listing on healthy Q2 numbers

Net interest income (NII) grew 32 per cent year-on-year (YoY) to Rs 461 crore against Rs 351 crore in Q2FY20. The asset quality of the bank also improved with gross non-performing assets (NPAs) falling to 2.48 per cent of the gross advances at the end of Q2FY21 from 2.88 per cent a year ago. Net NPA declined to 1 per cent from 1.62 per cent in the previous year quarter. Gross and net NPA stood at 2.64 per cent and 1.39 per cent in the June quarter. READ MORE

Bihar Election Results :: Tally at 11:00 am


ALERT :: Nifty hits a high of 12,584


ALERT :: SENSEX SURPASSES 43,000-MARK FOR THE FIRST TIME


NEWS ALERT :: Delhi HC to shortly hear Future Retail (FRL) Suit against Amazon.

>> FRL likely to argue that Emergency Arbitrator Order is not applicable to it. 
 
Alert: Emergency Arbitrator had stayed the Rs 24,700 cr-Future Retail deal. 

Four lessons for investors from Samvat 2076 and the road ahead for markets

India still is not out of woods as far as the Covid-19 pandemic is concerned. That said, the latest macro and micro data are encouraging. However, some key worrying points remain – asset quality at lenders, stress in micro, medium and small enterprises (MSMEs), fiscal deficit, inflation, job creation etc. A bull market, though, never requires all worrying points to be eliminated. Outcome of the US Presidential elections was a short-term worry, but all concerns have been put to rest now. READ MORE

Market-capitalisation of India, world touches a new peak

Global markets have added $7 trillion in m-cap this month amid polling in the US. Meanwhile, India has added $177 billion (Rs 13 trillion) in just eight trading sessions. India surpassed its previous high of $2.22 trillion made on January 15, show Bloomberg data. READ MORE

IndiGo, IRCTC: Covid-19 vaccine hope sends travel-related stocks soaring

Individually, InterGlobe Aviation-run IndiGo leaped 7.3 per cent to hit an intra-day high of Rs 1,600 on the BSE. With today's gains, the stock is up 58.2 per cent on the BSE, as against 50.6 per cent rise in the S&P BSE Sensex since March 25, ACE Equity data show. READ MORE

MARKET CHECK


Rupee opening

Rupee opens higher at 74.06/$ vs previous close of 74.14 against the US dollar

Pfizer surges 19% as parent claims Covid-19 vaccine 90% effective

Shares of Pfizer rallied 19 per cent to its record high of Rs 5,875 on the BSE on Tuesday after its parent company Pfizer Inc said that its Covid-19 vaccine was more than 90 per cent effective, based on initial trial results. The pharmaceutical company's stock surpassed its previous high of Rs 5,273.55, touched on October 27, 2020. At 09:51 am, the stock erases its gain and was trading 7 per cent higher at Rs 5,275, against 0.7 per cent rise in the S&P BSE Sensex. The stock rallied 63 per cent from its March low of Rs 3,588. READ MORE 


BROKERAGE VIEW | Centrum Broking on Emami

RATING: BUY | TARGET PRICE: Rs 444

Reduction in promoter’s pledge (40%) to zero combined with inexpensive valuation could trigger stock re-rating. Considering success of new launches and faster than expected recovery we increase FY21E/FY22E revenue and PAT estimates by 6.1%/7.7% and 22.3%/20.5%. Moreover, capturing reduction in uncertainty, we decrease WACC by 100bps to 11.5% and retain our Buy rating with DCF-based revised TP of Rs 444 (implying 28x FY22E EPS).

Key risks: amplification of Covid-19, erratic seasonality and delay in reduction of promoter pledge.

BROKERAGE VIEW | Prabhudas Lilladher on Hindalco Industries

RATING: BUY | TARGET PRICE: Rs 230 

The company witnessed a strong recovery across the segments except Aerospace. All plants are operating at near full capacity with margins in guided range. Strong margins and stable volumes would help reduce debt by nearly 10% every year with Net debt/EBITDA falling below 3x by FY23. However, divestment of Aleris’ Lewisport facility came as a negative due to low valuations at US$330mn (PLe:US$600mn), ~30% below the estimated investment of ~US$500mn on the facility. While, strong margins trajectory would help in offsetting the impact of lower valuations realised on divestment of assets. Driven by strong margin outlook and comfortable B/S, we reiterate BUY with TP of Rs 230 (earlier Rs 218), EV/EBITDA of 5.5x FY22e. 

BROKERAGE VIEW | Edelweiss Securities on Berger Paints

RATING: BUY | TARGET PRICE: Rs 715 

We expect Berger to sustain double-digit volume growth as things are normalising aided by market share gains from unorganised segment (~30%) and distribution
expansion, among others. We maintain ‘BUY/SN’ with revised TP of Rs 715 (Rs 625 Earlier). The stock is trading at 68.1x FY22E EPS.

BROKERAGE VIEW | ICICI Securities on Amber Enterprises

RATING: BUY | TARGET PRICE: Rs 2,600 

We believe Amber is more of a long term play on major business opportunities for contract manufacturers due to ban on import of RACs and increase local sourcing of components. We tweak our revenue, earnings estimate for FY21 considering current quarter performance and model revenue, earning CAGR of 19%, 23% for FY20-23E led by improvement in EBITDA margin. We continue to like Amber for its focus on acquiring new business opportunities either through government’s Atmanirbhar scheme or shift in focus on China+1 strategy by key clients post Covid-19. We reiterate our BUY rating on the stock with an unchanged target price of | 2600 valuing the company at 35xFY22 earnings.

BROKERAGE VIEW | Nirmal Bang Securities on Glenmark Pharma

RATING: BUY | TARGET PRICE: Rs 578 

We retain our earnings estimates on Glenmark and recommend a Buy with a target price of Rs 578. The key triggers for the stock going forward will be ramp-up in the US business, capital raise for its NCE subsidiary Ichnos Sciences and the launch of gSpiriva in Europe, potential partnership deal for ISB 830 and Xolair biosimilars.

BROKERAGE VIEW | Nirmal Bang Securities on Ashok Leyland

RATING: BUY | TARGET PRICE: Rs 103 

New launches have been received very well in the market and going forward, the focus on ‘Project Reset’ is expected to aid the margins as the volume recovers. We have maintained our volume/revenue/EBITDA/PAT estimates and expect the same to grow at CAGR of 12.4%/18%/39.1%/68.8% over FY20-23E, driven by BS-VI cost increase and better margin outlook. We expect a revival in the CV cycle from FY22, led by economic recovery and a favorable base. We maintain our target price at Rs 103 and have valued the Auto business at 10x EV/EBITDA and HLFL at 1x P/BV. We maintain our rating as BUY.

Hotel stocks gain on positive data for Covid vaccine

COMPANY NAME LATEST HIGH LOW CHG(%)
LEMON TREE HOTEL 29.75 30.30 29.35 5.68
INDIAN HOTELS CO 107.00 109.00 105.00 7.75
EIH 81.00 82.50 78.60 5.26
SINCLAIRS HOTELS 39.80 40.50 38.00 5.15
Click here for the full list

Samvat 2077: Here are the sectors that are expected to do well

As the markets are on the cusp of entering Samvat 2077, both the indices hit their respective all-time high, in-line with the improving data points and positive corporate commentary. More importantly, Covid-19 cases have seen a meaningful decline. That apart, better-than-expected results and comforting commentary / guidance from India Inc have allayed investor concerns, analysts say. READ MORE 


IT stocks tumble post vaccine update


RECORD HIGH TALLY

>> S&P BSE Sensex hits lifetime high of 42,959.25, surpassing previous high of 42,645.33 touched on November 9.

>> Nifty50 hits lifetime high of 12,557.05 , surpassing previous high of 12,474.05, hit on November 9.

JK Cement hits 52-week high post Q2 nos

>> JK Cement Ltd on Monday reported an almost three-fold jump in consolidated net profit at Rs 221.55 crore for the second quarter ended September 2020. The company had posted a net profit of Rs 79.50 crore in the July-September period a year ago, JK Cement said.


Inox Leisure rallies 4% post QIP launch

>> Inox Leisure has launched QIP at Rs 263.1 per share. The floor price is a 1.42 per cent discount to Monday's closing.


Result Reaction | IndiaMART InterMESH declines 4%


Large Trade :: Around 5.5 cr shares exchanged

>> Amalfiaco and Macritchie Investments -- two of the biggest shareholders of Crompton Greaves Consumer Electricals -- plan to sell close to 3.83 crore shares in a placement, Bloomberg reported.

IndiGo soars 5.5%


Vaccine shot :: SpiceJet up over 3%


Pfizer zooms 16% on vaccine boost


Sectoral trends :: Banks surge; tech stocks drop


Sensex Heatmap at Open


Nifty scales fresh peak


Fireworks on D-Street :: Sensex hits record high


Deepak Jasani :: Four lessons for investors from Samvat 2076 and the road ahead for markets

Samvat 2076 has been a rollercoaster ride for markets, which has taught investors some lessons. First, being a contrarian helps. Take profits when the markets rise and start buying on extreme pessimism. Second, it pays to stick to better-known and better governed stocks rather than spreading the portfolio among several stocks that are difficult to monitor. Third, one can take time to buy (by way of SIP or staggered buying), but exit ideally should not be too staggered. Lastly, don’t try to find multi-baggers every now and then. Stocks turn multi-baggers over time and every stock simply cannot be bought with that sole objective. There will be winners and losers in every portfolio. READ MORE
Deepak Jasani - HDFC Securities

Commodity Heatmap


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


Markets at Pre-open


Markets at Pre-open


Nifty Outlook :: Sumeet Bagadia, executive director, Choice Broking

The benchmark index has breached its record of 12,430.50 levels and set a new benchmark at 12,474.05 levels on Monday. It also sustained above its 50 days Moving Average, which indicates more upside move in the counter. At the moment, the Nifty has an immediate support at 12,130 levels, while on the higher side it may find resistance around 12,600-12,650 levels.
 
 

Nifty Outlook :: Nagaraj Shetti, technical research analyst, HDFC Securities

The near term trend of Nifty continues to be positive and more upside could be in store in the coming sessions. The overall chart pattern (intraday/daily/weekly) indicate more new highs in the coming sessions. The upside targets to be watched around 12,750-12,800 levels in the next 1-2 weeks

Top stocks to watch

Pfizer: Pfizer Inc's experimental Covid-19 vaccine was more than 90% effective based on initial trial results, the company said on Monday, a major victory in the fight against a pandemic that has killed over a million people and battered the world's economy. READ MORE

Aviation, hotels: Investors are likely to pile on the sectors that have underperformed in the current year owing to the Covid restrictions. As such, aviation, hotels and cinema related stocks are set to rally in today's trade.
 
TCS: India's largest IT services firm Tata Consultancy Services (TCS) on Monday said it will acquire 100 per cent shares of Postbank Systems AG (PBS) from Deutsche Bank AG. READ MORE 


BROKERAGE VIEW :: MOFSL on SAIL

CMP: Rs 38 | TP: Rs 39 (+3%) | Reco: Neutral

>> SAIL’s 2QFY21 result highlights the benefits of higher operating leverage (volumes up 34% YoY/88% QoQ) on account of its high-fixed-cost structure. However, results were weaker than expected due to a miss on realization. While SAIL’s peers reported QoQ increase of Rs 1,500–3,500/t, SAIL’s blended realization declined ~INR300/t QoQ, leading to a miss of 31% in EBITDA to Rs 19.0b (up 64% YoY).

>> We expect better volumes and pricing to drive a 29% CAGR in EBITDA over FY20–22E. Net debt, however, is expected to remain elevated at INR458b in FY22, implying 4.8x net debt/EBITDA. The stock also trades at 6.4x EV/EBITDA, implying limited upside. Thus, we maintain Neutral, with TP of Rs 39.
 
 

BROKERAGE VIEW :: MOFSL on Ashok Leyland

CMP: Rs 84 | TP: Rs 100 (+19%) | Reco: Buy

>> Ashok Leyland (AL) reported largely in-line results for 2QFY21. While M&HCV has started showing some signs of initial recovery, LCV is back at pre-COVID levels. The normalization of working capital has enabled QoQ reduction in net debt by INR12b. M&HCV is expected to make a strong recovery in 2HFY21. Moreover, continued traction for LCV would enable strong recovery at the company level.

>> We maintain our estimates for FY22/FY23 as the market is recovering in line with expectations. Maintain Buy, with TP of INR100 (~10x Dec’22 EV/EBITDA + INR9/sh HLFL).

BROKERAGE VIEW :: MOFSL on United Breweries

CMP: Rs 975 | TP: Rs 820 (-16% ) | Reco: Sell

>> United Breweries (UBBL)’s 2Q results were weak – with 48%/42.9% YoY volume/sales decline and 79%/96.5% YoY EBITDA/PAT decline – although better than our expectations. These numbers are also starkly below the ~3%/6% volume/sales decline reported by Alcobev peer United Spirits (UNSP) last week. This once again highlights that the more in-home consumption dominates, spirits consumption would do better. This trend is likely to continue over the next few quarters as well.
 
>> Recovery in FY22 could be sharper for UBBL v/s UNSP. This is particularly attributable to the company losing out on crucial summer season demand in 1QFY21 and a far weaker performance in 2QFY21 as well. However, this heavily relies on the premise that there may be no second wave of the pandemic, which is by no means a certainty. Unprecedented sharp increases in excise are already significantly affecting profitability. Furthermore, another round of increases over the next few months cannot be ruled out given weak state finances, in turn leading to weak cost absorption. Despite underperformance over the last six months, valuations appear rich on both P/E (84.1x FY22 EPS) and EV/EBITDA (32.2x FY22 EBITDA) basis. Maintain Sell.
 

BROKERAGE VIEW :: MOFSL on Ipca Labs

CMP: Rs 2,265 | TP: Rs 2,680 (+18%) | Reco: Buy

>> Ipca Laboratories (IPCA) delivered a better-than-expected quarter, led by a superior product mix and lower opex. A growing connect between patient, doctor, and marketing representative (MR) with the easing of the lockdown presents a better outlook in Domestic Formulation (DF) segment. Favorable demand for APIs and healthy traction in the EU/Institutional segment is further strengthening the earnings growth momentum for IPCA.

>> We raise our EPS estimate by 5%/7% for FY21/FY22, factoring in a) an extended cost savings benefit in DF, b) improving demand in the Cough-Cold and Dermatology therapies, c) revival in the UK business, and d) debottlenecking in the API segment. We also introduce FY23 estimates. We value IPCA at 25x 12M forward earnings to arrive at Target Price of INR2,680. We remain positive on IPCA on the back of steady outperformance in the DF segment, cost efficiency in API, and launches under its own label in the UK segment. Reiterate Buy.

BROKERAGE VIEW :: MOFSL on Hindalco

CMP: Rs 195 | TP: Rs 267 (+37%) | Reco: Buy

>> Hindalco (HNDL)’s subsidiary Novelis’ 2QFY21 EBITDA surprised with 20% YoY growth to USD455m (est. USD348m). This was led by 11% YoY volume growth (Aleris acquisition) and adj. EBITDA/t of USD493 (est. USD396).

>> Management has raised the sustainable EBITDA margin guidance for Novelis to USD480–500/t (from USD450–475/t).

>> We raise our FY21E EBITDA by 7%, factoring in strong margins for Novelis. Deleveraging is also playing out well, with strong FCF and asset divestitures – while the sale of Duffel has been completed, the sale of Lewisport has been finalized for a cash consideration of USD171m (EV of USD330m). Reiterate Buy.

Market Strategy by Motilal Oswal

>> Markets up 3.5% in Oct’20: After consolidating in Sep’20 (down 1.2% MoM), the Nifty headed north in Oct’20 (up 3.5% MoM) and touched the 12k mark to later close at 11,642. After trudging to a low of 7,610 on 23rd Mar’20, the Nifty bounced back more than 53% from its lows. Strong momentum in Oct’20 was despite the global concerns related to the pandemic – many countries in Europe imposed restrictions to curb the spread of the virus. FII inflows were back in Oct’20 and stood at USD2.5b. DIIs remained net sellers with outflows of USD2.4b – highest monthly outflows since Mar’16. The Nifty Mid-cap 100 index underperformed the Nifty by 3% in Oct’20. The Nifty Mid-cap 100 P/E ratio now trades at 4% premium to large-caps at 20.5x (v/s 11.9x in Mar’20.

>> Demand recovery and cost optimization key themes: Increase in economic activity, continued demand improvement coupled with cost rationalization were the key highlights of 2QFY21 earnings season, which has seen decent beat and consequent upward earnings revision. Economic recovery continues, with high-frequency data for Oct’20 coming in quite strong (GST collections, Manufacturing PMI index, rail freight and power demand). Our in-house Economic Activity Index (EAI) for India’s GVA (called EAI-GVA) posted growth of 2.2% YoY for the first time in seven months in Sep’20, following decline of 2.2% YoY in Aug’20.

>> Covid-19: More importantly, Covid-19 cases have seen meaningful decline to 510k active cases currently from the peak of 1.02m active cases in mid-Sep’20. However, valuations at 17.4x FY22E earnings for Nifty, while not very expensive, do not offer as much margin for safety as a few months ago.

>> Outlook: We stay Overweight on IT, BFSI, Healthcare, Telecom and Auto, and maintain Neutral on Consumer in our model portfolio. Another round of fiscal stimulus could help elevate sentiment further, in our view.

>> Top Ideas: Large-caps: ICICI Bank, SBI, Infosys, Divis Labs, Titan, Hero, HUL, Bharti Airtel, Muthoot Finance, UltraTech.
 Mid-caps: AU Finance, IEX, IPCA, Motherson Sumi, ICICI Securities, Crompton Consumer, ABFRL, Mphasis, Emami, LIC HF.

Bihar Election Results :: Tally at 8:35 am


Eli Lilly's Covid-19 antibody drug treatment gets emergency USFDA clearance

The Food and Drug Administration authorised the experimental treatment, called bamlanivimab, for use against mild-to-moderate Covid-19 in adults, including those who are 65 and older, and pediatric patients, the agency said on its website. READ MORE

Stock picks by Nilesh Jain of Anand Rathi

BUY WIPRO | TARGET: Rs 365 | STOP LOSS: Rs 342
 
The stock has provided a fresh breakout from its one-month consolidation. It has also surpassed the centerline of the Bollinger band which is called the exponential moving average and is now heading towards the upper end of the band which is placed at 365 levels. The momentum indicator RSI has also reversed from its oversold territory and is showing signs of reversal which hints at further positive momentum in the counter. It is also trading well above its short-term and long-term moving averages. Based on the above rationale, we can expect a fresh momentum in the counter. READ MORE

Bulk deals on BSE as on Monday

Bulk deals on NSE as on Monday

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


Rupee check

Source: Bloomberg


Oil falls as near-term demand worries overshadow COVID-19 vaccine relief

>> Oil prices dropped on Tuesday as concerns over fuel demand in the near term in coronavirus-hit Europe and the United States returned to haunt the market after an overnight surge on progress towards a Covid-19 vaccine.

>> U.S. West Texas Intermediate (WTI) crude futures fell 60 cents, or 1.5%, to $39.69 a barrel, while Brent crude futures fell 54 cents, or 1.3%, to $41.86 a barrel.
 
>> Both benchmark contracts jumped 8 per cent on Monday in their biggest daily gains in more than five months after drugmakers Pfizer and BioNTech said an experimental Covid-19 treatment was more than 90 per cent effective based on initial trial results.

(Source: Reuters)

SGX Nifty update

>> At 8:15 am, the index was at 12,652, up 155 points.

Asian stocks rally as investors applaud vaccine development

Source: Reuters


Wall Street rallies on coronavirus vaccine trial results

Source: Reuters


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