Indian markets slumped over 3 per cent on Monday as stimulus measures announced over the weekend, as part of the government's Rs 20 trillion economic package, failed to cheer investors who were expecting huge fresh liquidity infusion into the system to improve the aggregate demand. Moreover, the government's decision to extend teh nationwide lockdown, albeit with some relaxations, till May 31, also dented sentiment.
The benchmark S&P BSE Sensex tumbled over 1,069 points or 3.44 per cent but managed to close above the crucial 30,000-mark at 30,028.98 levels. NSE's Nifty50, meanwhile, ended the session at 8,823 level, down 314 points or 3.43 per cent. Meanwhile, volatility index, India VIX, rose 7.58 per cent and crossed the 40-mark.
IndusInd Bank (down 10%), HDFC, Maruti, and Axis Bank (all down 7% each) were the top Sensex laggards while TCS, up 2 per cent, gained the most. The HDFC twins and ICICI Bank contributed the most to the Sensex's fall today.
The Nifty sectoral trend remained negative, led by Nifty Bank which crashed 6.7 per cent. On the other hand, Nifty IT index gained 0.9 per cent.
In the broader market, the S&P BSE MidCap index settled 3.75 per cent lower and the S&P BSE SmallCap index shed 2.9 per cent.
Aviation stocks InterGlobe Aviation and SpiceJet tumbled as much as 9.5 per cent on the BSE on Monday after the government's Rs 20 trillion economic package failed to deliver immediate liquidity support to the bleeding airlines.
Shares of companies that provide financial services, including banks, non-banking financial companies (NBFCs) and housing finance companies (HFCs), tumbled up to 12 per cent on the BSE on Monday amid concerns that asset quality metrics may come under pressure due to the extended nation-wide lockdown and challenging economic environment.
European shares bounced on Monday after their worst week in two months, as investors hoped for a gradual economic recovery with many countries easing coronavirus-led lockdowns.
In commodities, Gold rose 1 per cent to its highest in more than seven years as data released on Friday showed US retail sales and industrial production both plunged in April, putting the economy on track for its deepest contraction since the Great Depression.
Brent crude climbed 5.7 per cent higher to $34.35 a barrel, supported by output cuts and signs of a gradual recovery in demand amid easing coronavirus curbs.
India Cements rebounds 14% from day's low on heavy volume; hits 20-mth high
Shares of India Cements surged 8 per cent to Rs 123.50, bouncing back 14 per cent from day’s low on the back of heavy volumes, on the BSE on Monday. The stock of the cement and related products company declined 5 per cent to Rs 108 in the intra-day trade but recovered and hit a 20-month high in the intra-day trade -- its highest level since September 4, 2018. READ MORE
NEWS ALERT | Wabco India up 10% at Rs 6,837 on the BSE in an otherwise weak market
-- Stock gains after Wabco Holdings Inc and ZF Friedrichshafen AG announced that they have received the regulatory clearance from Chinese State Administration for Market Regulation for the merger.
-- Wabco India, which is part of Wabco Holdings and a supplier for commercial vehicle industry, said that all required regulatory approvals have now been received and Wabco and ZF expect to close the merger
Fiscal stimulus 2.0: Consumption boost for agri, auto and FMCG companies
The slew of measures announced by the finance minister, coupled with a robust rabi crop and lower impact of the Covid-19 pandemic on rural India, is expected to improve rural incomes. The focus on agriculture is evident as 65-70 per cent of the outlay in the second and third tranches of the stimulus package was aimed at the farm sector. READ MORE
Higher borrowing can see FY21 combined fiscal deficit hit 12%: Economists
The net borrowing ceiling for 2020-21 was earlier pegged at Rs 6.41 trillion (3 per cent of gross state domestic product), and the states have thus far borrowed merely 14 per cent of this authorised limit. Despite this, they have been urging the Centre for a special hike to 5 per cent in order to fight the economic stress triggered by the Covid-19 pandemic. READ MORE
MARKET CHECK | Top 5 losers on the BSE at this hour
Earnings Alert | Dr Lal Path Labs Q4
>> Consolidated Profit at Rs 32.5 crore
>> Consolidated revenue Rs 302 crore
>> EBITDA margin at 19%
BROKERAGE VIEW :: Nomura on fiscal stimulus
The government has aimed for maximum bang for minimum buck, with most of the relief either regulatory in nature or reflecting in its contingent liabilities rather than explicit budgetary support. Meanwhile it has used the cover of the COVID-19 crisis to plough through long pending, politically sensitive structural reforms. As a result, the package may fall short of mitigating the near-term existential crisis for businesses and workers, but is better designed to improve India’s medium-term growth potential and attract long-term risk capital. As a consequence, we maintain our GDP growth projection for 2020 at -5% YoY
BROKERAGE VIEW:: ICICI Securities on Cipla
We continue to focus on the management’s long-drawn strategy of targeting four verticals viz. One-India, South Africa & EMs, US generics & specialty and lung leadership. Recent first generic approval by USFDA for Albuterol sulphate (Proventil HFA) amid rise in demand for Albuterol products in the ongoing Covid-19 pandemic are a vindication for its lung leadership quest. While US focus will be on specialty including hospitals, value accretive generics, India focus will be on branded (Bx), trade generics (Tx). On the Africa front, Cipla continues to rebase its business model towards private business in the backdrop of shrinking tender opportunities. Another key aspect to watch would be R&D recalibration. Across the board transformation from tenderised model to private model in exports market and towards rapid consumerisation of important Tx, Bx in India bode well to change the investors’ perspective. Our revised target price is Rs 670 based on 22x FY22E EPS Rs 30.2. We upgrade the stock from HOLD to BUY.
Rupee ends lower at 75.91/$ vs Friday's close of 75.56 against the US dollar
Bharat Forge, HAL, Coal India: Bet on these 5 stocks on stimulus package
Coal India Ltd (COALINDIA): The stock has always been seen as a “risky trade” and continues to trade with the same sentiment. As this counter has breached the significant support of Rs 150, the momentum has turned bearish. One can witness the negative reversal of Moving Average Convergence Divergence (MACD) from the zero line, when the counter made an effort to cross Rs 150 mark recently. All this shows weakness if the stock tries to move up. There is clear selling pressure evident on the charts at higher levels. It is better to wait for Rs 150 to get conquered and then take a trading position. READ MORE
Nifty Realty index hits lowest level since December 2016; DLF dips 5%
DLF, Prestige Estates Projects, Indiabulls Real Estate, Oberoi Realty, Mahindra Lifespace Developers, Brigade Enterprises and Sobha from the Nifty Realty index slipped in the range of 5 per cent to 10 per cent in intra-day trade on the National Stock Exchange (NSE). Of these, Mahindra Lifespace Developers, Brigade Enterprises and Prestige Estates Projects touched their respective 52-week lows. READ MORE
The stimulus and beyond: is a stronger demand support called for?
Structural reforms: features of the new normal
A number of major structural reforms were also introduced. These include repositioning of the public sector, decriminalization of certain corporate lapses, privatization of coal and other mineral mining, increased FDI limit in defence, ban on imports on specified defence weapons/platforms, and privatization of discoms in union territories. Direct listing of Indian companies abroad will enable them to raise capital overseas. In the case of agriculture, a genuine barrier-free all-India market for agricultural produce is a key feature of India’s new normal. These are far-reaching efficiency augmenting supply side reforms. READ MORE
BROKERAGE VIEW:: Centrum Broking on Nippon Life India
Nippon Life India Asset Management (NAM-India) reported Q4FY20 revenue from operations of Rs2.75bn, lower to estimates, led by a fall in equity in the overall AUM. Opex saw a decline during the quarter led by lower employee cost/ other opex. Core operating profit grew 11.0% QoQ. Opex rationalisation in terms of variable pay (25% of EBE is variable) might protect profitability in FY21E. We like NAM-India given its pan-India distribution network and focus on sourcing granular retail AUM from B-30 cities. Also, it has added 290 corporate/HNI clients in H2FY20 (170 in Q3FY20) and it has partly regained lost market share lost in debt and liquid funds in the past year. We maintain our P/E multiple at 30.6x to arrive at a target price of Rs 284. BUY.
NEWS ALERT :: Gold jumps to highest since October 2012
>> Gold rose over 1% on Monday to its highest in more than seven years as dismal US data underscored how badly the COVID-19 pandemic has damaged the world’s top economy, while palladium soared over 9% on better-than-expected demand outlook.
>> Spot gold was up 1.1% at $1,760.85 per ounce by 9:32 am, after rising to its highest since Oct. 12, 2012 at $1,763.51. U.S. gold futures gained 0.8% to $1,770.50.
India VIX jumps 7%, crosses 40-mark
FM's economic vaccine: Final tranche is high on reforms, low on stimulus
State-owned units will remain only in strategic areas, which, however, are yet to be defined, while those in other areas will be privatised, according to public sector enterprise policy, which the government will detail later.
Union Finance Minister (FM) Nirmala Sitharaman also gave leeway to states in terms of market borrowing, but much of it is conditional on reforms, such as the one-nation-one-ration card. READ MORE
BROKERAGE VIEW:: Edelweiss Securities on L&T Technology Services
L&T Technology Services (LTTS) reported USD revenue decline of 2% QoQ in Q4FY20. EBITDA margin came in at ~ 19.8% (ex-one-off), in line with our estimate. Revenue contraction is attributable to a 9% QoQ dip in Plant Engineering (PE), overwhelming the robust 7% QoQ growth in the medical devices business. Industrial products and Telecom & Hi-Tech were marginally down QoQ. Management refrained from guiding for FY21, but mentioned they expect revenue to slide in Q1FY21 and the recovery to take place thereafter. While we remain bullish on the long-term prospects of the fast-growing ER&D and believe LTTS is in a pole position to benefit thereof, the near-term pain from COVID-19 forces our hand to cut LTTS’s EPS by 15% each for FY21E and FY22E. We are also slashing its target multiple from 20x to 17x in line with our sectoral adjustment. Maintain ‘BUY’ with a revised TP of Rs1,394 (Rs1,885 earlier) at 17x Q2FY22E EPS.
Stimulus package to boost growth, but need sector-wise bailout: CEO poll
In a nationwide poll of 25 industry leaders on Sunday, 64 per cent said the package announced by Finance Minister Nirmala Sitharaman over the past five days will boost a sluggish economy, but 88 per cent of CEOs said they had been expecting sector-specific packages.
Some sectors like aviation, hospitality, travel and tourism, and automobile have witnessed zero cash flow since the lockdown began. Several companies from these sectors are either laying off people or have announced steep salary cuts. READ MORE
BROKERAGE VIEW:: YES Securities on M&M Fin Services
Rating: ADD | Target Price: Rs 200
VIEW: Our FY21/22 earnings undergo severe cuts due to adverse adjustments to loan growth, NIM and credit cost. Retain ADD rating with a 12m TP of Rs200. While there is high uncertainty and a substantial near-term pain, the pro-cyclicality of franchise could drive a significant RoA/RoE bounce in FY22.
VALUATION: On a stand-alone basis, MMFS trades at 1.2x/5x FY22 ABV/EPS. Valuation is most sensitive to emerging asset quality picture.
Risk to our call: Prolonged Covid episode causing deeper impact on growth and AQ
NEWS ALERT :: Zen Technologies looks to commercially manufacture ventilators
(Via BSE filing)
NEWS ALERT :: Swiggy lays off 1,100 employees spanning across grades & functions, reports CNBC TV 18
Coal India under pressure, declines 6% as govt ends monopoly in coal mining
Finance Minister Nirmala Sitharaman on Saturday said the government would end its monopoly in coal mining by allowing private companies. "Commercial mining will be on a revenue-sharing mechanism instead of the regime of fixed rupee/tonne. Nearly 50 blocks will be up for bidding, and the government will invest Rs 50,000 crore for building evacuation infrastructure," the minister said. READ MORE
Stimulus 2.0 good for markets in long run, hitches in short term: Experts
Jyotivardhan Jaipuria, Founder, Valentis Advisors
Markets will be disappointed in the short term as there is not much to stimulate the demand. A lot of these measures are good in the long term. The worry now is more on how do we revive the economy in the short term. And, that has been the missing element in this package. The market would have preferred some more fiscal spending from the Centre. The extra borrowing cushion given to the states is a good measure READ MORE
Govt allows Indian public companies to directly list shares overseas
“Necessary regulations allowing direct overseas listing by the Indian entity is expected soon after amendments to the Company Act and Foreign Exchange Management Act (Fema) regulations are passed,” said Finance Minister Nirmala Sitharaman, while announcing the fifth tranche of the stimulus package. This, even as the Cabinet okayed the move in February.READ MORE
India GDP to fall 45 per cent in June quarter, predicts Goldman Sachs
The financial services firm pegged fall in the GDP to 45 per cent in the first quarter of the current financial year over the fourth quarter of the previous financial year (annualised) compared to 20 per cent decline projected earlier. READ MORE
Nifty IT index trades higher in a weak market
We don't see a lot of upside in equities from current levels: Venkataraman
As the government unveils a series of policy-related measures to stem the economic fallout of the Covid-19 pandemic, R VENKATARAMAN, managing director, IIFL Securities, tells Puneet Wadhwa that though the benchmark indices are significantly lower from the peak, they continue to price in a fairly optimistic scenario READ FULL INTERVIEW HERE
R Venkataraman,Managing Director, IIFL Securities
MARKET CHECK :: Indices near one-month low
Market experts back RIL's rights issue, ask shareholder to participate
Analysts at CLSA recently said that investments by tech-focused funds like Vista and Silver Lake, along with Facebook, will reposition Jio (Platforms) as a tech major rather than just a telcom operator. The deals will help RIL’s debt reduction initiative that remains an important trigger for the stock. READ MORE
Multiplex, hotel stocks hit 52-week lows on extension of lockdown
Chalet Hotels, EIH, Indian Hotels, Lemon Tree Hotels and Wonderla Holidays from the hotel sector and the multiplex operators - PVR and Inox Leisure – touched their respective 52-week lows on the BSE today. These stocks were down between 5 per cent and 10 per cent in the intra-day trade. In comparison, the S&P BSE Sensex was down 2.5 per cent at 30,326 points at 10:36 am. READ MORE
Bharti Airtel will announce its results for March quarter of FY20 (Q4FY20) today. Analysts expect the company's losses to narrow while revenue and margins are likely to tick up, helped by the impact of tariff hikes initiated last December, increase in average revenue per user (ARPU), and rupee depreciation. Analysts expect the Covid-19 outbreak to have a limited impact on telecommunications companies (telcos) as compared to other sectors. READ MORE
IndiGo, SpiceJet dip up to 9.5% on no liquidity support, lockdown extension
Individually, InterGlobe Aviation, parent firm of India's largest airline (by market share) IndiGo, tanked 9.5 per cent to Rs 890 on the BSE, while SpiceJet was locked in the 5 per cent lower circuit band at Rs 43.45 apiece. In comparison, the benchmark S&P BSE Sensex was trading 725 points, or 2.33 per cent, lower at 30,372.86 level at 10:17 am. READ MORE
Financial shares tumble; M&M Financial down 12% on weak Q4 results
Mahindra & Mahindra (M&M) Financial Services, Cholamandalam Investment and Finance Company, Indiabulls Housing Finance, ICICI Bank, Bajaj Finance, Shriram Transport Finance Company, Axis Bank and SBI Life Insurance from the Nifty Financial Services index were all down over 5 per cent on the NSE. Non-index stocks like IndusInd Bank, Bandhan Bank, L&T Finance Holdings, GIC Housing Finance, Ujjivan Financial Services and LIC Housing Finance slipped more than 6 per cent each. READ MORE
HDFC twins, ICICI Bank top contributors to Sensex's 700-point fall today
Govt measures consist of reforms that need not have waited for Covid-19
The impact of government stimulus on corporate earnings may not be felt immediately. Defence-related stocks could remain in focus for a few days, while banks and NBFCs could come under pressure. Overall, markets have run out of one more positive trigger and now we have to look forward to the balance corporate results / commentary and onset of monsoon. The extension of lockdown with relaxations for non-red zones is welcome, but as long as the main business centres (metros) remain locked down, the impact of relaxations can be limited in terms of reviving overall growth. Safe and swift reopening of the entire economy, more than anything else, will be key to alleviation of distress of various sections of society. READ MORE
Deepak Jasani - HDFC Securities
Govt should have acted like a driver to pull the economy out of the mess
Among notable announcements on Sunday – the fifth and final tranche – was to hike the borrowing limit for the states from 3 per cent to 5 per cent, which thankfully comes with performance riders. MNREGA scheme has been allocated an additional Rs 40,000 crore to facilitate migrants who have returned to their home states to secure livelihood. Though it’s beneficial to the migrants, most of whom would have been reduced to penury in their efforts of reverse migration, it will also delay their return resulting in labour shortage at various industrial hubs and construction sites. READ MORE
Lockdown extension will disappoint markets; Nifty may re-test 7,500 levels
The markets were expecting the lockdown to enter the fourth phase, but were hoping for more relaxations. However, the onus is now on the state governments, who will decide on the red, orange and green zones. That said, major production centres are outside major metros. As far as manufacturing is concerned, will are still not back at the pre-Covid-19 levels. So, the index of industrial production (IIP) will continue to suffer if only parts of India are open for business/manufacturing. The gauge for services production will also continue to suffer. READ MORE
Defence manufacturers' stocks surge as Centre hikes FDI limit to 74%
Hindustan Aeronautics, BEML, Bharat Dynamics and Bharat Electronics were among the state-owned companies that rallied up to 10 per cent on the BSE. On the other hand, Bharat Forge, Astra Microwave Products and Walchandnagar Industries from the private sector were up in the range of 3 per cent to 5 per cent, as compared to a 1.1 per cent decline in the S&P BSE Sensex at 09:34 am. The increase in the FDI limit in defence sector is a big long-term positive for these companies. READ MORE
MARKET CHECK :: Sensex extends slide; down over 600 pts
RIL gains 1% on General Atlantic deal; rights issue to open on Wednesday
Shares of Reliance Industries (RIL) were trading 1 per cent higher at Rs 1,475 on the BSE in the early morning trade on Monday in an otherwise subdued market after Mukesh Ambani-controlled firm on Sunday announced selling 1.34 per cent stake in its digital services subsidiary, Jio Platforms, to private equity (PE) firm General Atlantic for Rs 6,598.38 crore to accelerate consumer business and cut debt. READ MORE
Cipla gains 2% post March quarter nos
Coal India slips over 4.5%
BUZZING STOCK | RIL trades over 1% higher
SECTOR WATCH | Losers and gainers on the NSE
At 09:17 am, the S&P BSE Sensex was trading 146 points or 0.47 per cent lower at 30,952.08 while NSE's Nifty was trading 29 points or 0.3 per cent lower at 9,108.25.
MARKET VOICE :: Stimulus measures are a disappointment
The government’s recent stimulus measures, however, may disappoint the market. That’s because they were expecting huge fresh liquidity infusion into the system to improve the aggregate demand. Job losses and pay cuts have wreaked havoc and the morale of people is quite low. When Prime Minister Narendra Modi announced that the government will unveil Rs 20 trillion (10 per cent of GDP) package to revive the economy against the Covid-19 outbreak, there was an expectation of liquidity infusion and money in the hands of people. The package contains everything – right from reforms in select sectors and options for loans – but has not addressed the immediate problem. READ MORE
Top gainers and losers on S&P BSE Sensex at Pre-open
Market at Pre-open
Market at Pre-open
Stocks to watch: RIL, Cipla, Coal India, Bharti Airtel, KNR Constructions
Here's a look at the top stocks that may remain in focus today -
Coal India: The Union government has opened up the mining sector in a big push for privatisation. Though non-coal minerals were available to the private sector, including foreign players, for bidding, private companies could take up coal blocks only if they had defined downstream projects where the mined coal could be used.
RIL: Reliance Industries (RIL) on Sunday announced selling 1.34 per cent stake in its digital services subsidiary, Jio Platforms, to private equity (PE) firm General Atlantic for Rs 6,598.38 crore to accelerate consumer business and cut debt. That apart, its rights issue will open on May 20. READ MORE
Commodity picks: May 18, 2020
Maize is trading at Rs 1,179 per quintal in Gulabbagh. Prices are expected to trade lower towards Rs 1,150 - Rs 1,100 per quintal in a couple of weeks following new crop arrival pressure in Bihar and weak demand from poultry industry. READ MORE
Nifty outlook and stock picks by Sameet Chavan of Angel Broking
Stimulus fails to excite, 9,000 a key support to watch
It was clearly a week of consolidation despite PM Modi announcing a gargantuan stimulus package of Rs 20 lakh crore. There was initial reaction seen at the opening on Wednesday; but did not have enough strength to buck the global trend. We kept sliding gradually throughout the remaining part of the week to eventually close with a cut of a per cent as compared to the previous weekly close. READ MORE
Top stock picks by CapitalVia: Buy Adani Ports, Mannapuram Finance
Indices traded in range on Friday; Nifty finds critical support 9,050
Market opened gap-up on Friday but remained range bound, however, it did manage to cut majority of the intraday loss by the end of the day. Nifty managed to close at 9136.85, slashing 5.90 points. Media, PSU banks, and realty sector were among sector trading with negative sentiments, whereas Metal and FMCG sector closed in green mark. Nifty bank closed at 18,833.95, slashing 234.55 points from the previous day’s closing. READ MORE
Two stocks that Vaishali Parekh of Prabhudas Lilladher is bullish on
The stock has corrected from the peak of 1,600 and is currently showing signs of reversal bottoming our near 1,415 levels and we anticipate a bounce back from hereon for further upward move in the coming days. With the RSI also improving, we suggest to buy and accumulate this stock for an upside positional target of 1,700-1,750, keeping the stop loss near 1,300. READ MORE