MARKET WRAP: Sensex gains 142 pts, Nifty ends at 11,270; pharma stocks zoom

Nifty Pharma ended at 11,951.85, up around 5.5 per cent.
The benchmark indices slipped from day's high but still ended in the positive territory on Monday on the back of positive global cues, encouraging quarterly numbers by select pharma companies and the government's push for Atmanirbhar Bharat (Self-Reliant India), where the Ministry of Defence (MoD) announced a phased, year-wise embargo on the import of 101 items of defence equipment. 

The S&P BSE Sensex today ended at 38,182, up 141.5 points or 0.37 per cent, with L&T (up nearly 5 per cent) being the top gainer and Reliance Industries (RIL) the biggest loser. During the day, the index hit a high and low of 38,430.69, and 38,073.29, respectively. 

NSE's Nifty ended at 11,270, up 56 points, or 0.50 per cent. 

The broader market, however, outperformed the frontline indices. The S&P BSE MidCap index gained 1.42 per cent to 14,421 levels and the S&P BSE SmallCap ended at 13,869, up 1.47 per cent. 

Buzzing stocks

Shares of defence equipment manufacturers and suppliers rallied in the trade after the Ministry of Defence (MoD) announced on Sunday a phased, year-wise embargo on the import of 101 items of defence equipment, invoking the Prime Minister Narendra Modi’s Atmanirbhar Bharat (Self-Reliant India) initiative. Bharat Dynamics hit an all-time high of Rs 465.10 during the trade. The stock ended at Rs 437.30. Bharat Electronics gained over 9 per cent to Rs 108.30. READ MORE

 
Pharma stocks gained big following healthy quarterly numbers by Cipla, and Divi's Lab. Shares of Divi's Laboratories hit a record high of Rs 3,228.05 on the BSE after reporting 80.61 per cent year-on-year (YoY) rise in consolidated net profit for the June quarter of 2020-21 (Q1FY21). At the close, the share price of the company stood at Rs 3,117, up nearly 12 per cent. 

Cipla, too, hit a record high after the firm posted a 20 per cent growth in profit before tax (PBT) for the first quarter of the current financial year to Rs 799 crore, on a 9 per cent year-on-year (YoY) growth in revenues to Rs 4,346 crore. The stock ended at Rs 795.65, up over 9 per cent. READ MORE

Sectorally, all the sectoral indices on the NSE ended in the green. Nifty Pharma ended at 11,951.85, up around 5.5 per cent. 

Global markets

European shares rose on Monday as industrial activity in China gained strength, another sign of recovery from the coronavirus pandemic that added to hopes the global economy would also return to health.

The broader Euro STOXX 600 rose 0.6 per cent, with London’s FTSE buoyed 1 per cent and European oil and gas shares climbing 2 per cent on rising oil prices.

The MSCI world equity index, which tracks shares in 49 countries, gained 0.1 per cent. Wall Street futures gauges pointed to a positive start.

In commodities, oil rose, supported by an improvement in Chinese factory data and rising energy demand. Gold prices, on the other hand, fell as the dollar held onto gains made after better-than-expected US payrolls data, while investors kept a close eye on Sino-US relations ahead of scheduled trade talks.

(With inputs from Reuters)


4:15 PM IST Sectoral news flow boosted positivity in the Indian markets with the Pharma index leading the gains. The gains were news-driven, with earnings results and government actions accounting for sectoral gains. Earnings results of select pharma companies drove gains in the sector while government actions to boost domestic defence productions helped gains in defence stocks.  With valuations going high, investors are advised to remain cautious and nimble with their investments.

3:45 PM IST

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3:41 PM IST Sensex ends 142 points higher at 38,182, Nifty settles 56 points higher at 11,270

3:27 PM IST

3:20 PM IST >> Says, we want an understanding of their outstanding liabilities, urgency in pushing for insolvency

3:19 PM IST COMPANY PRICE(rs) 52 WK HIGH CHG(%) ABB POWER PRODUC 938.00 944.00 6.49 AJANTA PHARMA 1728.90 1759.35 2.20 AUROBINDO PHARMA 954.85 967.60 5.32 BHARAT DYNAMICS 438.00 465.10 4.52 BIRLASOFT LTD 147.60 151.00 3.33 » More on 52 Week High

3:13 PM IST COMPANY NAME LATEST HIGH LOW CHG (rs) CHG(%) VALUE (rs CR) VODAFONE IDEA 9.15 9.19 8.82 0.32 3.62 52.94 QUADRANT TELE. 0.19 0.20 0.19 0.00 0.00 0.02 RELIANCE COMMUNI 2.65 2.65 2.65 -0.13 -4.68 0.28 BHARTI AIRTEL 556.80 565.05 555.00 -3.80 -0.68 37.26

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LIVE UPDATES

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

Sectoral news flow boosted positivity in the Indian markets with the Pharma index leading the gains. The gains were news-driven, with earnings results and government actions accounting for sectoral gains. Earnings results of select pharma companies drove gains in the sector while government actions to boost domestic defence productions helped gains in defence stocks.  With valuations going high, investors are advised to remain cautious and nimble with their investments.

SECTOR WATCH:: Nifty Pharma rallies nearly 5.5%


Top gainers and losers on the S&P BSE Sensex at close


MARKET AT CLOSE


Markets at close

Sensex ends 142 points higher at 38,182, Nifty settles 56 points higher at 11,270

Amara Raja Batteries trading strong post Q1 nos


AGR Case :: Want to go into cause of initiation of insolvency for telcos under IBC, says Justice Arun Mishra

>> Says, we want an understanding of their outstanding liabilities, urgency in pushing for insolvency

Stocks that hit 52-week high on BSE today

COMPANY PRICE(rs) 52 WK HIGH CHG(%)
ABB POWER PRODUC 938.00 944.00 6.49
AJANTA PHARMA 1728.90 1759.35 2.20
AUROBINDO PHARMA 954.85 967.60 5.32
BHARAT DYNAMICS 438.00 465.10 4.52
BIRLASOFT LTD 147.60 151.00 3.33
» More on 52 Week High

AGR Case :: Telecom stocks trade mixed ahead of hearing

COMPANY NAME LATEST HIGH LOW CHG
(rs)
CHG(%) VALUE
(rs CR)
VODAFONE IDEA 9.15 9.19 8.82 0.32 3.62 52.94
QUADRANT TELE. 0.19 0.20 0.19 0.00 0.00 0.02
RELIANCE COMMUNI 2.65 2.65 2.65 -0.13 -4.68 0.28
BHARTI AIRTEL 556.80 565.05 555.00 -3.80 -0.68 37.26

Sector Watch :: All 10 constituents of the Nifty Pharma index trade higher


RIL top Sensex loser at this hour


BUZZING STOCK:: Mastek surges around 10%


M&M's tractor sales momentum crucial for uptick from current levels

While tractor sales have recovered, the company’s market share fell to 39.1 in the quarter as compared to 41.2 per cent in FY20. Its listed peer Escorts reported a 12 per cent fall amid a sharper recovery in May and June. M&M highlighted that supply side issues have been responsible for the fall in sales and loss of market share. READ MORE

NEWS ALERT :: China will sanction 11 US officials in retaliation for restrictions imposed by Trump on Hong Kong officials, reports Bloomberg

>> Those sanctioned include Senators Marco Rubio, Ted Cruz, Tom Cotton and Pat Toomey; Congressman Chris Smith; Human Rights Watch Executive Director Kenneth Roth; National Endowment for Democracy President Carl Gershman; and Michael Abramowitz, the president of Freedom House, Chinese Foreign Ministry spokesman Zhao Lijian told a briefing in Beijing on Monday.

Alert: The US said Friday that it was placing sanctions on 11 Chinese officials and their allies in Hong Kong, including Chief Executive Carrie Lam, over their roles in curtailing political freedoms in the former British colony

Insurance firms see surrenders decline in Q1, brace for trend to change

Life insurers, in order to avert surrenders, provide loans against policy, or bridge loans, to policyholders. Such loans come at a cheaper rate of interest than personal loans and they can be repaid whenever the policyholder wants. Typically, these loans are available against traditional policies, which generally attract high surrender charges. READ MORE

MARKET UPDATE:: Sensex off day's high but still in the green


Equity schemes clock largest outflows in 7 years as redemptions pick up

Equity schemes saw the largest net outflows in seven years, with outflows reaching Rs 2,480 crore in July. Industry analysts attributed the redemptions to high net worth investors (HNIs) booking profits amid market run-up. “This can be attributed to profit-booking by HNIs and also some investors waiting on sidelines,” said N S Venkatesh, chief executive of Association of Mutual Funds in India. READ MORE

Rupee Closing

Rupee ends at 74.90 per US dollar vs Friday's close of 74.93/$

Tea company McLeod Russel moves to settle debts as promoters reduce stake

Sources said most lenders have reached a consensus that debt restructuring is the right choice and not auction under the insolvency law. The resolution proposal before the lenders includes a combination of sale of tea gardens, infusion by promoter/investor and restructuring of balance debt.
 
McLeod's debt is at around Rs 2,000 crore. "Lenders have now realised that restructuring is the right choice as in the NCLT route, the haircut could be 50-60 per cent. With restructuring, it will be possible to recover the entire amount over a period of time," said sources, referring to the National Company Law Tribunal. READ MORE
 

AHEAD OF RESULTS:: Titan Co trades around 2% higher


Improving realisations may help steelmakers forget Covid-19 memories

Steel stocks, which continued to gain from their March-April lows, have now regained levels last seen in February this year. Tata Steel, JSW Steel, and SAIL have rebounded 57-84 per cent, while Jindal Steel & Power (JSPL) has been a strong outperformer, gaining more than 200 per cent. The trigger has been provided by improving steel realisations, after the beating taken during the April-May period following the lockdown. READ MORE 


'Quality' stocks come at a premium, valuations have crossed pre-Covid level

The valuation for most ‘quality’ stocks has surpassed their pre-Covid levels following a sharp run-up in stock prices. According to Kotak Institutional Equities’ analysis, one-year forward (FY22) price-to-earnings (P/E) multiple for 30 of 32 top companies across sectors is currently higher than the pre-Covid levels. READ MORE

Shipping Corporation jumps 9% on Rs 317 crore profit in June quarter

Crude tankers were increasingly sought after by refiners and traders during the quarter to store crude oil on the high seas due to a slump in global crude prices and lack of storage space on-land. The tanker fleet, SCI’s largest division, account for more than half of the total fleet but in terms of tonnage (capacity), it constitutes close to 80 per cent of the total dead weight tonnage (DWT). The tanker division was the only segment that registered a growth in revenue on a yearly basis, at Rs 861.46 crore compared to Rs 571.25 crore in Q1FY20. READ MORE

Reserve Bank's silence on record India bond sales leaves traders baffled

Their patience is running thin as the RBI refrained from taking steps to ease the market’s debt burden at a policy review last week, even as the government plans to sell Rs 12 trillion ($160 billion) of bonds this fiscal year. “The big question for the market is how this massive borrowing is going to be facilitated when banks are already full to the limit,” said Naveen Singh, head of fixed-income trading at ICICI Securities Primary Dealership Ltd. in Mumbai. “If the RBI doesn’t intervene, we could see yields resetting upwards at every auction,” he said. READ MORE 
 

BUZZING STOCK:: M&M surges over 5.7%


MARKET UPDATE:: Broader indices outperform benchmarks


Telecom stocks gain ahead of SC hearing on AGR

COMPANY LATEST(rs) CHG(%)
VODAFONE IDEA 9.18 3.96
BHARTI AIRTEL 563.00 0.43
TATA COMM 854.70 5.00
» More

BROKERAGE VIEW:: YES Securities on Birla Corporation

RATING: BUY | TARGET PRICE: Rs 943

We have upgraded EBITDA estimates by 5%/1.9% for FY21E/FY22E respectively due to better than anticipated demand and pricing in May‚ÄźJune combined with cost optimization measures. Accordingly, we expect peak net debt/EBITDA for BCORP at 3.3x in FY21E (despite factoring in that BCORP will not receive any subsidies in FY21E) vs the previous est. of 3.6x.

BROKERAGE VIEW:: Edelweiss Securities on Vodafone Idea

Vodafone Idea (IDEA) reported a plunge of 9.3% QoQ in Q1FY21 revenue with 11mn subscribers fleeing the network and ARPU eroding to Rs 114 from Rs 121. Strong cost control and a dip in churn, however, drove EBITDA outperformance, but sustaining revenue traction, in our view, is crucial for sustaining the business. The company’s low capex underpins the fall in 4G subscribers, thereby constraining the balance sheet that is further fettering its ability to invest. In our view, the only way out of this vicious cycle is upfront capex and tariff hikes. For that, an early resolution of the AGR matter, and subsequent monetisation of the Indus Towers stake and fibre assets is crucial. The supreme court has scheduled a hearing on the matter on 10 August, which should provide more clarity. Retain ‘REDUCE’ with a revised TP of Rs 8 (Rs 9 earlier) as we factor in a lower ARPU due to slowing 4G subscriber addition.

BROKERAGE VIEW:: Edelweiss Securities on Kajaria Ceramics

Kajaria Ceramics (KJC) posted weak Q1FY21 numbers, largely in line with estimates. While revenue declined 60% YoY to Rs 2.8bn, the company reported EBITDA and net losses of Rs 76mn and Rs 271mn, respectively. April was a complete washout with volumes plunging 61% YoY in Q1FY21; gradual recovery set in from July with 78% utilisation and a current run rate of 85-100% across plants. Management highlighted that demand in major cities like Mumbai, Bengaluru, Chennai, among others, was down 20-25%, which was partially offset by a pick-up in smaller cities. We believe growth visibility remains hazy as some part of the current volumes reflect pent-up demand and we expect the cost savings to reverse from H2FY21. Maintain ‘HOLD’ with TP of Rs 337 (19x FY22E EPS).

BROKERAGE VIEW:: Axis Securities on Britannia Industries

RATING: BUY | TARGET PRICE: Rs 4,300

The low ticket price of the product and consumers' preference for trusted brands will continue to drive in-home consumption and market share gains for BRIT in the near to medium term. Additionally, healthy growth in adjacencies business, sustained product launch momentum, distribution penetration (esp in rural areas), RM tailwinds in the near term to drive a healthy growth momentum. We believe, Britannia provides the most visibility on earnings front in FY21 vs  some of the other consumer stocks and thus remains one of our top picks in the FMCG-staples space.

BROKERAGE VIEW:: Anand Rathi Shares on Blue Star

RATING: BUY | TARGET PRICE: Rs 626

Considering the continuing challenging situation, after the Q1 FY21 results we lower our FY21e/FY22 PAT 60%/41%. However, we continue to recommend a Buy with a target of Rs 626 (25x FY23e EPS of Rs 25) as we roll over our target price based on FY23e earnings.

Risks: Unseasonal rainfall and an extended winter could impact demand for room ACs and other commercial products.

BROKERAGE VIEW:: Emkay Global on Cipla

RATING: BUY | TARGET PRICE: Rs 800
 
Cipla’s India business has recovered sharply from the lows of Q1FY20, and since then outperformed industry growth for fourth consecutive quarters. This momentum should continue on the back of strong growth in the trade Gx business and Covid-19-related drugs (Remdisivir/Toclizumab/Faripiravir). Additionally, gAlbuterol ramp-up and some opex cut should drive margin expansion. We upgrade FY21/22/23E EPS by 10%/9%/9% and retain Buy/OW in EAP, with a revised TP of Rs 800 (Rs 630 earlier), valuing the stock at 25xSept’22E EPS (23xFY22E EPS earlier). Any meaningful decline in the domestic business trajectory is a key risk to our call. Cipla is our top large-cap pick.

BROKERAGE VIEW:: ICICI Securities on JK Lakshmi Cement

JK Lakshmi’s Q1FY21 performance remained above estimates mainly on account of better-than-expected sales volume for the quarter. The B/S continues to remain healthy with debt-to-equity (D/E) ratio of 0.6 and return on invested capital (RoIC) expected to reach 20% by FY22E. Furthermore, current levels imply that JK Lakshmi Cement is trading at an EV/t of 43 and 5.2x FY22E EV/EBITDA, thus providing valuation comfort. Thus, we maintain BUY rating with a revised target price of Rs 330/share (valuing @ 6x FY22E EV/EBITDA and $49 EV/tonne).

Tejas Networks bags Rs 66 cr order from L&T Construction; stock surges 5%

The company, in its press release, said it has "received a purchase order of Rs 66 crore from L&T Construction, to supply its GPON based fiber-broadband products and high-performance Metro Ethernet switches for a prestigious Indian defence network project. The order was received during the last quarter and the first set of supplies have started this quarter." READ MORE 


Bharat Forge, HAL, BEL : Defence-related stocks poised for an upside

Bharat Forge Ltd (BHARATFORG): The stock has stabilised above the 200-days moving average (DMA), which in turn has strengthened the up move. Bharat Forge even managed to fill the gap down range it witnessed in March, 2020. The trend is likely to sustain and could see buying momentum. Support stays at Rs 412 on a closing basis, while intra-day support comes in at Rs 400 levels. Although, the Relative Strength Index (RSI) has entered overbought territory, the Moving Average Convergence Divergence (MACD) has remained unchanged with a positive crossover above the zero line. READ MORE

Cipla hits record high on strong Q1 result; Morgan Stanley sees 30% upside

Shares of Cipla advanced 9.5 per cent to Rs 798 -- also its record high -- on the BSE on Monday after the pharmaceutical firm reported healthy June quarter numbers on Friday post market hours. Mumbai headquartered pharma firm posted 20 per cent growth in profit before tax (PBT) for the first quarter of the current financial year to Rs 799 crore, on a 9 per cent year-on-year (YoY) growth in revenues to Rs 4,346 crore. READ MORE

Most active stocks by volume

COMPANY PRICE(rs) CHG(%)
VODAFONE IDEA 9.08 2.83
B H E L 36.90 4.68
BHARAT ELECTRON 111.75 12.65
TVS MOTOR CO. 422.70 0.34
TATA MOTORS 124.15 4.24
» More on Most Active Volume

Emami jumps 18% even as Q1 pre-tax profit drops 13.64% YoY to Rs 49 crore

Shares of Emami Ltd zoomed as much as 18 per cent to Rs 304.30 apiece on the BSE on Monday against Friday's close of Rs 257.65. The company on Friday reported a 13.64 per cent year-on-year (YoY) drop in profit before tax to Rs 49.06 crore for the June quarter (Q1FY21) while net profit or profit after tax (PAT), was up 1.1 per cent to Rs 39.58 crore. READ MORE

Concor shares plunge 18% after posting 76% drop in Q1 profit

Shares of state-owned Container Corporation of India Ltd (Concor) plunged 18.30 per cent to Rs 372.20 on the BSE on Monday after the company's consolidated profit nosedived 75.97 per cent to Rs 58.26 crore for the quarter ended June 30, 2020 (Q1FY21). The company had clocked a consolidated profit of Rs 242.51 crore during the corresponding quarter a year ago, the multi-modal logistics company said in a regulatory filing to the BSE. READ MORE

Affle India freezes at 10% upper circuit on 42% YoY jump in Q1 profit

"This growth has been broad-based coming from both CPCU business and Non-CPCU business. The CPCU business continued its positive momentum delivering a total of 1.7 crore of converted users in Q1 FY2021," the company said in a statement, adding, "The top-10 industry verticals for the Company have been Covid-19 resilient, helping it register a robust growth in this quarter on both year-on-year basis and sequential basis". READ MORE

'Market looks expensive as earnings are likely to dip in FY21'

Flood of global liquidity, expansion of central bank balance sheets, near-zero interest rates, and massive fiscal stimulus in the developed world have fueled the market recovery from the recent low. MIHIR VORA, director and chief investment officer at Max Life Insurance tells Puneet Wadhwa that he expects the core money flow in terms of insurance premiums, NPS flows, EPF flows, and mutual fund SIPs to continue. READ MORE 

Prestige Estates surges 7% amid report Blackstone may acquire group assets

Blackstone will acquire 100 per cent control of around 20 million square feet of commercial space, including 16 million sq ft of ready and completely leased assets. “The deal is somewhat similar to the DLF-GIC investment. Prestige is looking to deleverage its balance sheet with this transaction and prepare itself for the next phase of growth,” the report said, quoting unnamed sources. “Aided by its execution capability and funds, it is planning to build another commercial assets portfolio over the next five years," the report added. READ MORE

Global risk-on sentiment to support Indian markets: Nischal Maheshwari

The Indian markets have, so far, been moving in tandem with the global markets, and we expect this trend to continue. The risk-on sentiment has been fuelled by continuous liquidity injection provided by major central banks across the globe, especially the US Federal Reserve. The resumption of global economic activities due to easing lockdown norms has also driven this rally.  READ FULL INTERVIEW HERE

Defence stocks rally up to 11% as govt bans import of 101 defence items

At 09:23 AM, Bharat Dynamics was trading nearly 8 per cent higher at Rs 452 on the BSE. The stock hit an all-time high of Rs 465.10 during the session. Other stocks, too, were trading with decent gains. For instance, L&T was ruling over 3 per cent higher at Rs 946.40 while Bharat Electronics was up over 8 per cent at Rs 107.35. Bharat Forge was quoting nearly 4.5 per cent higher at Rs 426. Hindustan Aeronautics, the state-owned aerospace and defence company, on the other hand, hit a 52-week high of Rs 1,039.50 during the day. Another company Astra Microwave Products was also trading over 8 per cent higher at Rs 117.50 on the BSE. READ MORE

Divi's Lab surges 15%, hits fresh 52-week high on robust Q1 earnings

Shares of Divi's Laboratories on Monday zoomed 15 per cent to a fresh 52-week high of Rs 3,201.85 on the BSE after reporting 80.61 per cent year-on-year (YoY) rise in consolidated net profit for the June quarter of 2020-21 (Q1FY21). The drug firm reported a net profit of Rs 492.06 crore for the quarter on account of robust sales. In comparison, the company had logged a profit of Rs 272.44 crore in the year-ago same period, Divi's Laboratories said in a filing to BSE. READ MORE

Rupee Opening

Rupee opens at 74.96 per US dollar vs Friday's close of 74.93/$

Bank of Baroda to report Q1FY21 earnings today; here's what analysts expect

Analysts foresee the bank reporting sluggish business growth in Q1 on the back of Covid-19 induced nationwide lockdown. The bank's loan growth, they say, would remain flat on a sequential basis, rising only marginally courtesy loans extended under the Emergency Credit Line Guarantee Scheme (ECLGS). Besides, asset quality is seen stable due to the moratorium facility provided by the Reserve Bank of India. That apart, recovery trends and loan book under moratorium, which was 65 per cent untill March 31, would be watched. READ MORE

MARKET CHECK


SECTOR ALERT :: Nifty Bank index breaches 22,000-mark


Prestige Estates advances over 3% on report Blackstone mulls to acquire co

>> US private equity giant Blackstone Group is set to acquire property developer Prestige Group’s rental income assets for more than $1.7 billion (Rs 12,745 crore) in the largest real estate portfolio buyout in India


Result Impact | Cipla gains over 5%

>> Mumbai headquartered Cipla posted 20 per cent growth in profit before tax (PBT) for the first quarter of the current financial year to Rs 799 crore, on a 9 per cent year-on-year (YoY) growth in revenues to Rs 4,346 crore.


Vodafone Idea trades 1% higher ahead of AGR hearing


HAL leaps as MoD bans import of 101 defence equipment


Concor tanks over 8% post Q1 nos

>> State-owned Container Corporation of India Ltd (Concor) on Friday said its consolidated profit nosedived 75.97 per cent to Rs 58.26 crore for the quarter ended on June 30, 2020.

Result Impact | Affle India jumps 7%


Sectoral trends on NSE at Open


Top gainers and losers on the S&P BSE Sensex at Open


Opening Bell


Opening Bell


NEWS ALERT :: China's July consumer price index (CPI) up 2.7% YoY

>> China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed back towards pre-coronavirus levels, adding to signs of recovery in the world’s second-largest economy.

>> The producer price index (PPI) fell 2.4% from a year earlier in July, the National Bureau of Statistics (NBS) said in a statement on Monday, compared with a 2.5% decline tipped in a Reuters poll of analysts and a 3.0% drop in June.

(Source: Reuters)

NEWS ALERT :: Tejas Networks bags order worth Rs 66 cr for Indian Defence Network Project from L&T Construction

Source: BSE filing

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


Markets at Pre-open


Markets at Pre-open


Top stocks to watch out for today

Defence-related stocks: Shares of defence equipment manufacturers are expected to trade actively in today's session as the Ministry of Defence (MoD) announced on Sunday a phased, year-wise embargo on the import of 101 items of defence equipment. As an equipment type comes under the import embargo, the military will be required to buy it from Indian defence manufacturers.
 
Telecom, bank stocks: The Supreme Court (SC) is expected to give its final verdict in the adjusted gross revenue (AGR) case on Monday. This will decide whether the telecom companies — Bharti Airtel and Vodafone Idea – will be allowed a relaxed payment structure for clearing the dues they owe to the Union government.

Earnings today: Bank of Baroda, Ipca Lab, and Titan Company are among the 100 firms set to report their earnings today. READ MORE 


BROKERAGE VIEW :: Motilal Oswal Financial Services on Aditya Birla Capital

CMP: Rs 59 | TP: Rs 86 (+46%) | Reco: Buy

>> Aditya Birla Capital (ABCAP) reported 26% YoY decline in PAT to INR2.0b, largely driven by ~50% decline in PBT to INR2.2b for the lending businesses.

>> In the NBFC segment, the quarter was characterized by the continued rundown of loans (especially wholesale lending) and INR500m COVID-19- related provisions. In the AMC segment, PAT was largely stable sequentially despite 14% QoQ decline in AAUM. The Life Insurance segment reported 5% YoY growth in individual first-year premium (FYP), compared with 23% YoY decline for the industry.

>> We expect the company to focus on strengthening the balance sheet, liquidity, and cost cutting. While profits in the Lending segment would remain muted in FY21, they would be compensated by better performance in other segments. Maintain Buy, with TP of INR86 (FY22E SOTP-based)

BROKERAGE VIEW :: Motilal Oswal Financial Services on Alkem Labs

CMP: Rs 2,980 | TP: Rs 3,665 (+23%) | Reco: Buy

>> ALKEM exhibited strong traction in US generics and significant savings on opex in 1QFY21, which more than offset the YoY decline in domestic formulation (DF) sales, resulting in record high quarterly earnings. The pandemic has showcased strong brand recall for ALKEM’s products in the DF segment and superior execution in US generics.

>> We have raised our EPS estimates by 30%/15% for FY21/FY22E to factor in cost rationalization initiatives and improving profitability in the US generics segment. We value ALKEM at 23x (10% discount to its 3-year average) to arrive at price target of INR3,665 on 12M forward earnings basis. We remain positive on the outperformance of Chronic therapy in DF, trade generics segment and healthy ANDA pipeline for the US market. Re-iterate Buy

BROKERAGE VIEW :: Motilal Oswal Financial Services on Lupin

CMP: Rs 879 | TP: Rs 1,015 (+15%) | Reco: Buy

>> Lupin’s (LPC) 1QFY21 PAT was the lowest over the past four years. The significant cost savings benefit was offset by the sharp decline in US sales and higher employee cost. However, based on niche launches like galbuterol sulfate in the US, biosimilar Enbrel in the EU and gradually improving outlook for domestic formulation (DF), we expect better earnings prospects going forward.

>> We have cut our EPS estimate by 11.9%/10.5% for FY21/FY22E to factor in the Covid led impact on DF/ROW and gradual re-building of metformin sales (post recall). We value LPC at 24x (40% discount to its 3-year average) 12M forward earnings to arrive at a price target of INR1,015. We remain positive on LPC due to (a) limited competition product approvals, (b) increase in market share in existing products, and (c) completion of remediation measures at sites under regulatory issues over the near term. Maintain Buy

BROKERAGE VIEW :: Motilal Oswal Financial Services on Cipla

CMP: Rs 729 | TP: Rs 790 (+8%) | Reco: Neutral

>> Cipla’s sales for the quarter were largely in line with our estimates. However, it delivered a strong beat on earnings owing to significant reduction in opex. Covid-19-led disruption has enthused the company to reimagine the business, to sustain cost saving and enhance resource productivity.

>> We raise our EPS estimates by 19%/14% for FY21/FY22 to factor abovemarket growth in Trade Generics (Gx), ramp-up in Albuterol Sulfate sales, and cost saving benefits. We raise our price target to INR790 as we roll out our price target on a 22x 12M forward basis. Maintain Neutral, as the valuation factors potential upside in earnings over the medium term.
 

BROKERAGE VIEW :: Motilal Oswal Financial Services on Divi's Labs

CMP: Rs 2,784 | TP: Rs 3,350 (+20%) | Reco: Upgrade to Buy

>> Divi’s Lab (DIVI) delivered all-time high sales/EBITDA/PAT for the quarter. Overall performance was led by volumes and did not include any business opportunity related to COVID-19 treatment. The major capex program would be completed in FY21, and the commercial benefit would start accruing in FY22. This would further enhance the earnings trajectory going forward.

>> We raise our earnings estimate for FY21/FY22 by 16%/13% to factor robust demand for DIVI’s products, improving profitability owing to backward integration, and incremental business from new capex. We value DIVI at 35x (a 25% premium to its three-year average) considering: (a) renewed growth prospects for generic APIs, (b) its strong relationship with innovators, which is improving the scope of business in CRAMS (Contract Research And Manufacturing Services), and (c) capex support to meet the future requirements of customers. Accordingly, we arrive at TP of Rs 3,350 on a 12M forward earnings basis.

>> We upgrade to Buy, as we believe DIVI to be well-placed to benefit from renewed API as well as opportunity in CRAMS, supported by strong chemistry skill sets, manufacturing capacity/capabilities, and minimal compliance risk.

Vodafone-Idea's fate hinges on the Supreme Court's AGR verdict today

VIL’s future as a going concern, as it has admitted in its results for the June quarter of 2020-21, will be crucially dependent on today’s SC decision. In its call with analysts, too, the company had made it clear that it would decide on its funding requirement only after the court verdict. READ MORE


Stay light as Nifty nearing crucial hurdles: Sameet Chavan of Angel Broking

In our opinion, the way markets are placed, this week would be quite crucial and hence, one should keep a close eye on a few key levels. Although the market has managed to recover well, it would be a daunting task to surpass the sturdy wall of 11,300-11,350. Till the time it is not conquered successfully, we advocate some caution. Let’s understand, technically, why this should be considered an important junction. Firstly, the 78.6 per cent retracement of the entire fall from 12,430.50 to 7,511.10 comes around it. READ MORE

Trading ideas by Vaishali Parekh

BUY COCHIN SHIPYARD | CMP: Rs 331.85 | Target: Rs 375-385 | Stop Loss: Rs 320
 
The stock has maintained a strong bottom near 320 levels and has given a bullish positive candle to imply strength. It has the potential to carry on the momentum further in the coming days. The RSI also has indicated a trend reversal and is in a strong bias. We suggest to buy and accumulate this stock for an upside target of Rs 375-385 levels, keeping the stop loss of Rs 320. READ MORE

Bulk deals on NSE as on Friday

Bulk deals on BSE as on Friday

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


Rupee check

Source: Bloomberg


Oil prices back on the rise on US stimulus hopes, Iraq output cut

>> Oil prices climbed in early trade on Monday, clawing back over half of Friday’s losses, on hopes for a stimulus deal to shore up the US economic recovery and a pledge from Iraq to deepen its crude oil supply cuts.

>> US West Texas Intermediate (WTI) crude futures rose 49 cents, or 1.2%, to $41.71 a barrel, while Brent crude futures were up 40 cents, or 0.9%, at $44.80 a barrel.

(Source: Reuters)

SGX Nifty at 8:20 am

>> The index was trading around 25 points higher at 11,252 level, indicating a positive start for the domestic markets.

Wall Street on Friday :: Slowing job growth, stimulus worries weigh on Nasdaq

Source: Reuters


Asian shares shift focus to US stimulus, China tensions

>> South Korea's Kospi and Australia's S&P/ASX 200 indices were up 0.47 per cent and 0.89 per cent, respectively, in early deals today. China's Shanghai Composite, too, was up 0.25 per cent. Meanwhile, Japanese and Singaporean markets closed for public holidays.

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