MARKET WRAP: Sensex ends 399 pts up; Nifty reclaims 11K; IT stocks surge

Stock brokers react to the movement share prices on BSE Sensex in Mumbai. Photo: Kamlesh Pednekar
Indian stock markets continued their gaining streak and ended over 1 per cent higher on Monday, led by buying in financial and IT counters. The S&P BSE Sensex gained 399 points over 1.08 per cent to settle at 37,418.99 levels while NSE's Nifty breached the crucial 11,000 level to end the session at 11,022, up 120.50 points or 1.11 per cent. 

Telecom stocks were in focus amid the Adjusted Gross Revenue (AGR) hearing in the Supreme Court in the last hour of the trade. Vodafone Idea witnessed a highly volatile session and ended flat at Rs 8.95, up 0.79 per cent following the observations by the Supreme Court in the case. The Counsel for Vodafone Idea said in the apex court that the total revenues over 10 years were Rs 6.27 trillion, of which Rs 4.95 trillion was spent on expenses. Besides, the entire net worth of the company has been wiped out over the last 15 years.

Bharti Airtel ended nearly 2 per cent higher at Rs 578.50 on the BSE while Tata Teleservices was up 5 per cent at Rs 3.66. 

Besides, HDFC Bank ended 3 per cent higher at Rs 1,132.80 on the BSE after the private sector lender reported a 20 per cent year-on-year (YoY) growth in net profit at Rs 6,659 crore for the April-June quarter (Q1FY21), supported by operational income. The stock was the biggest contributor to the Sensex's gains, followed by Infosys, ICICI Bank, Bajaj Finance, and HCL Tech. 

Mahindra & Mahindra Financial Services (MMFSL) ended over 10 per cent higher at Rs 229.60 after the company said its board approved a 1:1 rights issue at Rs 50 per share, amounting to Rs 3,089 crore.

Among sectoral indices on the NSE, barring Nifty Pharma, all the other indices ended in the green. Nifty IT rallied the most - up 2.6 per cent to 17,258 levels. Nifty Bank gained 1.6 per cent to 22,321.85 levels. Nifty Pharma, on the other hand, slipped 1.6 per cent to 10,304.60 levels. 

Broader markets, too, participated in the rally. The S&P BSE MidCap index rose 0.9 per cent to 13,654 points while the S&P BSE SmallCap index gained 1 per cent to 12,915 levels. 

 

Global market

Asian markets rose on Monday. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.14 per cent, reversing loses earlier in the day. Chinese markets rose more than 2 per cent after regulators raised the equity investment cap for insurers and encouraged mergers and acquisitions among brokerages and mutual fund houses.

South Korea’s KOSPI pared gains to fall 0.1 per cent. Japan’s Nikkei was also down 0.1 per cent after data showed the country’s exports suffered a double-digit decline for the fourth month in a row in June.

In Europe, stocks markets were cautious with the pan-European STOXX 600 index falling 0.6 per cent in the early deals.

In commodities, oil prices fell as coronavirus cases increased in many countries across the globe, but investors remained cautiously optimistic about ongoing talks over a European Union-wide recovery fund to revive economies affected by the pandemic.

(With inputs from Reuters)

4:35 PM IST >> Telcos should be reasonable in seeking time

4:27 PM IST >> Revenue of the country needs to be saved, observes SC

4:26 PM IST >> 20 years, sought by DoT, is too long a period, doesn't seem reasonable

4:26 PM IST >> Says, 4 companies are in insolvency, almost Rs 40,000 cr of dues are sought from them >> Says, Telcos are behaving dishonestly 

4:23 PM IST  >> Says, We will not consider any plea for financial difficulty

4:14 PM IST >> Will decide on limited issue of time to be provided >> We will impose more costs on telcos than any other court before.    >> Telcos are trying to seek recalculation, trying to dilute the judgment.

4:12 PM IST The Indian benchmark indices exhibited volatility, tracking earnings results and the SC AGR hearing. Nifty continued its momentum and closed above the 11,000 mark. This was in spite of increasing virus infections, both in India and abroad. The earnings results declared so far have been positive, as the sectoral leaders, especially  in the IT and Banking sector, have emerged better than expected in a quarter that was considered to be a washout, in terms of business. These 2 indices were also the main gainers in today’s trade. Uptrend may continue but it will be stock specific and investors seem to be looking at the earnings commentary for further direction

4:11 PM IST >> Airtel, Tata seek lower due payable, argue that SUC dues should not be included in the DoT demand

4:01 PM IST >> If we permit you to recalculate, it would be violation of our orders >> AGR definition has been clarrified by SC, don't try to review the issue.

3:58 PM IST >> DoT has clubbed SUC dues to amounts claimed. >> AGR judgment of SC was only w.r.t to license fee dues, not SUC. Alert: SUC is spectrum usage charge

LIVE UPDATES

AGR Case :: Telcos are dragging us to a corner where we have no options, observes SC

>> Telcos should be reasonable in seeking time

AGR Case :: Telcos should share responsibility to secure the amount payable.

>> Revenue of the country needs to be saved, observes SC

AGR Case :: Telcos should seek a reasonable period for payout

>> 20 years, sought by DoT, is too long a period, doesn't seem reasonable

AGR Case :: If telcos don't secure the dues payable, how can we allow installment wise payments? SC observes

>> Says, 4 companies are in insolvency, almost Rs 40,000 cr of dues are sought from them

>> Says, Telcos are behaving dishonestly 

AGR Case :: Just tell us how will you pay and what security are you giving for the payment?, asks SC from Tata

 >> Says, We will not consider any plea for financial difficulty

AGR Case :: This is a waste of our time, we will impose very heavy costs, observes SC

>> Will decide on limited issue of time to be provided

>> We will impose more costs on telcos than any other court before. 
 
>> Telcos are trying to seek recalculation, trying to dilute the judgment.

Market Closing Comment :: Vinod Nair, Head of Research at Geojit Financial Services

The Indian benchmark indices exhibited volatility, tracking earnings results and the SC AGR hearing. Nifty continued its momentum and closed above the 11,000 mark. This was in spite of increasing virus infections, both in India and abroad. The earnings results declared so far have been positive, as the sectoral leaders, especially  in the IT and Banking sector, have emerged better than expected in a quarter that was considered to be a washout, in terms of business. These 2 indices were also the main gainers in today’s trade. Uptrend may continue but it will be stock specific and investors seem to be looking at the earnings commentary for further direction

AGR Case :: Bharti Airtel, Tata argue that dues payable should be limited to only license fee dues

>> Airtel, Tata seek lower due payable, argue that SUC dues should not be included in the DoT demand

AGR Case :: Bharti Airtel is looking to reopen the issue, will not permit this at this stage, observes SC

>> If we permit you to recalculate, it would be violation of our orders

>> AGR definition has been clarrified by SC, don't try to review the issue.

AGR Case :: Dues payable by us should be Rs 21,000 cr, not Rs 43,989 cr as claimed by DoT, says AM Singhvi for Bharti Airtel

>> DoT has clubbed SUC dues to amounts claimed.

>> AGR judgment of SC was only w.r.t to license fee dues, not SUC.

Alert: SUC is spectrum usage charge

AGR Case :: Solicitor General presents information on dues received so far

>> Bharti Airtel has paid Rs 18,004 cr, Balance is Rs 25,976 cr 
 
>> Voda Idea has paid Rs 7,854 cr, Balance is Rs 50,399 cr
 
>> Tata has paid Rs 4,197 cr, Balance is Rs 1,2601 cr.

COMPANY LATEST(rs) CHG(rs) CHG(%)
VODAFONE IDEA 9.04 0.16 1.80
BHARTI AIRTEL 575.75 8.40 1.48
TATA COMM 701.55 33.40 5.00
» More
(Telecom stocks at close)

AGR Case :: Don't try to re-open the case, all dues are included in the AGR judgment, says SC to Bharti Airtel

>> No room availible for adjustment of dues payable by Airtel.

>> Solicitor General says, As per DOT, Bharti Airtel owes a sum of Rs 43,780 cr

AGR Case :: Have paid Rs 18,000 cr after SC order, 60% of total dues paid by all telcos combined so far, says Abhishek Manu Singhvi for Bharti Airtel

>> Have Rs 21,000 cr of dues still payable towards license fee dues.
 
>> Govt has wrongly sought Rs 43,000 cr of total AGR dues, demand includes SUC dues as well.

Sectoral trends on NSE at Close


Sensex Heatmap at Close


Closing Bell

>> Benchmark S&P BSE Sensex ends at 37,418.99 level, up 398.85 points or 1.08 per cent

>> Broader Nifty50 closes above crucial 11,000-mark at 11,022.2, up 122 points or 1.11 per cent.
 

AGR Case :: Have no assets left with us except Spectrum, says Mukul Rohatgi for Voda Idea

>> GST refunds of Rs 8,000 cr accruing to us can be retained by Govt.

AGR Case :: Voda Idea has conceded that no bank is prepared to lend it money, observes SC

>> SC asks, with so many losses, how are we to rely on you? 
 
>> How should we secure AGR dues payable by Voda? 
 
 
 

AGR CASE :: Did Vodafone Idea ensure provisioning for AGR liabilities, observes SC

>> Rohatgi points out that the Co had not made provided earlier because it had won earlier in TDSAT;
>> Made provisions in the previous fiscal for about Rs 38,000 crore, says Rohatgi;
>> SC observes demands had been raised by the DoT; why was it not provided for by the Company?

(as reported by CNBC-TV18)

AGR Case :: Total revenues over 10 yrs were Rs 6.27 trn, of which Rs 4.95 trn was spent on expenses, says Rohatgi

>> Bulk of revenues have been committed to expenses such as tax, levies, costs. 

>> Accounting for other expenses, losses come to over Rs 1 trillion

(Source: CNBC TV18)

AGR Case :: Entire net worth of co has been wiped out over the last 15 yrs, says Mukul Rohatgi for Voda Idea

>> Have submitted financial documents like income tax returns.
 
>> All revenue has been spent on liabilities, tax, dues. 
 
>> Over 1 lakh cr of equity brought in by promoters has been eroded.

(Source: CNBC TV18)
 

STOCK ALERT :: Rakesh Jhunjhunwala buys 1.12 million shares in June qtr


Internet speed, traffic show pick up in economic activity continues

Business Standard tracks weekly indicators to get an updated picture of economic activity in the country. Other indicators, like gross domestic product (GDP) or trade data, appear with a lag and they often capture only monthly or quarterly figures. Higher-frequency indicators show what’s happening on the ground as the country struggles with lockdowns to control the coronavirus. These indicators include internet speeds, power generation numbers, pollution, Google data on mobility, and freight and traffic numbers. Most indicators are for the week ending either Saturday or Sunday. Others, like Google’s mobility report and internet speed data, appear with a lag. READ MORE

MARKET CHECK:: BSE Healthcare index falls 0.8%


NEWS ALERT :: Infosys announces strategic long-term partnership with Lanxess for digital services


MARKET CHECK:: Sterlite Tech up over 2%


Rupee Closing

Rupee ends near day's high at 74.92 per US dollar vs Friday's close of 75.02/$

NEWS ALERT

>> The Board  of Sagar Cements at their meeting held today has allotted 12,25,000 equity shares of Rs.10/- at an issue price of Rs.730/- per share to the entities belonging to promoter group and others, against conversion of similar number of warrants, earlier allotted to them.

(Source: BSE filing)


AGR Case | Telecom stocks hold gains ahead of hearing; SC to hear case shortly

COMPANY LATEST(rs) CHG(rs) CHG(%)
VODAFONE IDEA 9.47 0.59 6.64
BHARTI AIRTEL 575.00 7.65 1.35
TATA COMM 701.55 33.40 5.00
» More

Asset quality, provisions key monitorables in Axis Bank's Q1 nos: Analysts

Axis Bank is scheduled to report its June quarter earnings for financial year 2020-21 (Q1FY21) on Tuesday, July 21. Owing to the Rs 7,730.02 crore provisions set aside in the March quarter of FY20, analysts expect lower sequential provisioning in the quarter under review. Besides, loan growth may be tepid due to loss of business amid Covid-19 induced nationwide lockdown. READ MORE

Britain signs deals with Pfizer, BioNTech, Valneva for Covid-19 vaccines

Britain had secured 30 million doses of the experimental BioNTech/Pfizer vaccine, and a deal in principle for 60 million doses of the Valneva vaccine, with an option of 40 million more doses if it was proven to be safe, effective and suitable, the ministry said.
 
Financial terms of the deals were not confirmed. READ MORE
 

Airline industry disruption due to Covid has far-reaching effects: Moody's

The global airline industry has been disproportionately affected by Covid-19 and is one of just a few industries that saw more than 90 per cent of demand fall within weeks of the global spread of the pandemic in March, Moody's Investors Service said on Monday. The strain on the industry's previous fundamentals is (and will continue to be) felt across a broad swath of the global economy well into 2022 and beyond, it said. READ MORE 


M&M Financial gains 12% on 1:1 rights issues at Rs 50 per share

Shares of Mahindra & Mahindra Financial Services (MMFSL) were up 12 per cent to Rs 234 in the intra-day trade on the BSE on Monday after the company said its board approved a 1:1 rights issue at Rs 50 per share, amounting to Rs 3,089 crore. The record date for the same is July 23, 2020. The rights issue will open on July 28 and close on August 11, 2020. The full amount of the issue price will be payable on application. READ MORE 


MARKET CHECK:: Top 5 losers on the BSE at this hour


NEWS ALERT:: LIC ups stake in Tata Steel to 10.26% in June quarter from 9.11% in March qtr

(as reported by CNBC-TV18)

BROKERAGE VIEW:: Axis Securities on Polycab India

RATING: BUY | TARGET PRICE: Rs 898

Investment Rationale
 
C&W demand to normalize post moderation in FY21: During FY14-FY20 Polycab’s C&W revenues grew at ~12%  CAGR led by ability to cater to client specific needs and focus on high growth areas like infrastructure, power,  construction, power, telecom and automotive sectors. The C&W industry was expected to grow at CAGR of 14.5% from  Rs 525 bn in FY18 to Rs 1033 bn by FY2023. However slowdown in infrastructure growth and uncertainty in real estate  will lead to moderation in growth for C&W segment. Gradual resumption of normal economic activity and infrastructure  projects will push recovery to H2FY21.
 
FMEG growth to continue led by strong distribution network: Polycab manufactures and sells electric fans, lighting,  switches, switchgears, solar products and conduits and accessories. It forayed into the FMEG segment in FY14 and in  a short span of time its revenues have grown from Rs 6.4 cr in FY14 to Rs 836 cr in FY20(up 29% y-o-y), led by  successful launches across its product categories and strong dealer network. The segment margins are likely to remain  low due to high competitive intensity, however the management remains confident of 100-150bps improvement in the  medium term.
 
Manufacturing facilities with high degree of backward integration: The Company has set up large scale vertically  integrated plants for manufacturing raw material for its products. Decades of experience and In-house R&D has led to  differentiated offerings while In house manufacturing a) reduces dependence on third party vendors, b) lowers  operational cost thus improving competitiveness and c) maintaining quality of its products.
 
Export Opportunities: Polycab plans to further expand its presence overseas and has recently set up units in US and  Australia to procure orders on its behalf. The company expects exports to contribute ~10% to the revenues in the  medium term.

MARKET CHECK:: Top 5 gainers on the BSE at this hour


INDEX LOSER:: Sun Pharma slips over 3%


BROKERAGE VIEW:: Emkay Global on HCL Tech

TARGET PRICE: Rs 690 | RATING: BUY 
  • HCLT’s Jun’20 quarter performance was overall strong except for the higher-than-expected revenue decline QoQ. The company defended margins well despite the pressure on revenue front. OCF generation was solid during the quarter.
  • The company reported 11 large transformational deals in the quarter and said that the pipeline remains solid (+40% QoQ), lending visibility to revenue recovery as indicated by the formal revenue outlook.
  • HCLT expects 1.5-2.5% CQGR through rest of FY21, and appears confident of defending/improving EBIT margins in FY21 as suggested by the 19.5-20.5% outlook. This compares with 0.9-2.2% CQGR implied by Infosys’s revenue outlook and 2.4% by TCS’s intent to achieve flat YoY cc growth by Mar’21.
     
  • We raise FY21-23E EPS by 3-7%, driven primarily by higher margin assumptions. Maintain Buy with a TP of Rs690 (14x Jun’22E EPS vs. 13x earlier). Improved FCF generation going forward should lead to better cash return and allay investor concerns prevailing over the past few quarters. Our order of Tier I preference remains unchanged: HCLT>Infosys>TechM (all Buy)>Wipro (Hold)>TCS (Sell).

BUZZING STOCK:: M&M Financial Services zooms over 8%


India's debt to hit 87.6% of GDP in FY21; FRBM target only by FY30: Report

Covid-19 pandemic and the subsequent nationwide lockdown starting March 2020-end cast its shadow on the economy with most experts projecting a contraction. Increased borrowing by the government given these developments is likely to push up India’s debt further to around Rs 170 trillion, or 87.6 per cent of the gross domestic product (GDP) in the current financial year 2020-21 (FY21), suggests the July 20 ‘Ecowrap’ report by State Bank of India (SBI), authored by Dr. Soumya Kanti Ghosh, their group chief economic adviser. READ MORE

HUL Q1 preview: GSK acquisition, the lower tax rate to support profit

HUL is likely to witness a revenue decline of 2.4 per cent year-on-year (YoY) at Rs 9,872.8 crore, including acquired company's sales. Though the company was able to start manufacturing in mid-April, it only reached the previous year’s levels by June 2020. On the demand front, we believe personal care (cosmetics) and ice-creams would have been severely impacted with a near washout quarter for both categories. However, soaps, sanitisers would have seen strong growth induced by increased consumer awareness about hygiene, says ICICI Securities. READ MORE 



Sector Preview :: Tractor, two-wheeler companies may buck the slowdown trend

Analysts at Sharekhan foresee automotive original equipment manufacturers (OEM’s) bearing larger impact in Q1FY21 and expect the revenues to decline about 70 per cent YoY for the firms under its coverage, which includes Maruti Suzuki, Bajaj Auto, TVS Motor Company, M&M, and Ashok Leyland. “Auto ancillary companies, with revenues from the replacement segment (which saw faster pick up in May and June 2020), would witness lesser impact with revenues declining 55 per cent YoY” they said in their results preview report. READ MORE

EXPERT COMMENT:: Gold outlook by Hareesh V, Head Commodity Research at Geojit Financial Services

The bullish outlook on gold will remain intact as new pandemic cases across the globe continue to lift the demand for safe-haven assets. A weak US dollar and simmering tensions between the US and China will also offer downside support to the metal. Meanwhile, weak physical demand from top consuming countries is likely to limit major upside in the commodity.
 
Technical Outlook (London spot): As long as prices stay above $1770 bullish sentiments are likely to continue with resistance seen at $1830 followed by $1882 levels. The immediate downside reversal point is $1735.

MARKET CHECK :: S&P BSE SmallCap index outperforming benchmarks


Rallis India surges 5% after Rakesh Jhunjhunwala ups stake in June quarter

Rakesh Jhunjhunwala bought an additional 725,000 equity shares of the company in the June quarter. He owns stake through his two accounts -- Rakesh Radheshyam Jhunjhunwala (7.64 per cent) and Rakesh Jhunjhunwala (2.67 per cent). His combined holding in the Tata Group Company has increased to 10.31 per cent in June quarter, and is at the highest level since March 2016 quarter. At the end of March 2020 quarter, he held 9.93 per cent stake in the agrochemicals company. READ MORE

After April fiasco, MCX to allow negative price trading from July 27

The issue became sensitive after crude oil futures settled at a negative price on April 20, causing huge losses to many players.
 
While that incident was a one-off, and there was no other case of negative price trading in any of the Indian bourses, none of the Indian bourses at that time was equipped with software to accommodate negative quotes. They could, at best, display a price of one rupee on their trading platforms. READ MORE

Info Edge advances 4%, hits record high on report Policybazaar mulls IPO

Shares of Info Edge (India) hit a record high of Rs 3,238, up 4 per cent on the BSE, on Monday on reports that the Policybazaar plans to raise $150 million (around Rs 1,100 crore) as buffer capital in Q3 of this fiscal. In separate news Policybazaar is planning to have an initial public offering (IPO) with valuation worth $3.5 billion. READ MORE

Lifeline for MFs: PMO suggests steps for resolution of stressed assets

The Prime Minister’s Office (PMO) has suggested regulatory steps and liquidity to help mutual funds (MFs) that have exposure to stressed companies. These include setting up a Covid-19 Support Fund for closed-ended debt schemes.
 
Such schemes do not permit entry and exit for investors till the end of tenure. The move could throw a lifeline to asset management companies (AMCs) that have been plagued by a liquidity crisis, mostly on the debt side, for the past two years, starting with the Infrastructure Leasing & Financial Services fiasco.  READ MORE

STOCK ALERT :: Alembic Pharma hits record high


NEWS ALERT :: Axis Bank cuts lending rates by 10 bps across tenors

NEWS ALERT :: Alembic Pharma receives US FDA tentative nod for Empagliflozin & Metformin Hydrochloride tablets

>> Alembic Pharmaceuticals Limited today announced that the Company has received tentative approval from the US Food & Drug Administration (USFDA) for its
Abbreviated New Drug Application (ANDA) Empagliflozin and Metformin Hydrochloride Tablets, 5 mg/500 mg, 5 mg/1000 mg, 12.5 mg/500 mg, and 12.5 mg/1000 mg.

>> The tentatively approved ANDA is therapeutically equivalent to the reference listed drug product (RLD), Synjardy Tablets, 5 mg/500 mg, 5 mg/1000 mg, 12.5 mg/500 mg, and 12.5 mg/1000 mg, of Boehringer lngelheim Pharmaceuticals, Inc. (Boehringer lngelheim). 

(Via BSE filing)
 

Rupee Opening

Rupee opens at nearly 2-week high of 74.94 per US dollar vs Friday's close of 75.02/$

HDFC Bank extends gains post June quarter result; stock surges 9.5% in 4 days

Shares of HDFC Bank soared 5 per cent to Rs 1,153 on the BSE on Monday after the lender reported 20 per cent year on year (YoY) growth in net profit at Rs 6,659 crore for the April-June quarter (Q1FY21), supported by operational income. The stock of the private sector bank has rallied 9.5 per cent in the past four trading days. Net interest income (interest earned less interest expended) for Q1FY21 grew by 17.8 per cent YoY to Rs 15,665 crore from Rs 13,294 crore logged in the quarter ended June 30, 2019, driven by growth in advances and deposits. READ MORE 


BROKERAGE VIEW:: Prabhudas Lilladher on city gas distribution companies

Stocks of IGL and MGL have corrected as Open access norms for new entrants are likely to be finalised by the regulator (PNGRB), soon. IGL and MGL, with over 95% of FY20 revenues accruing from lucrative government authorised Geographical Area’s (GA’s), we expect minimal earnings hit from volume loss as they would be compensated by new entrants, in our view. Our sensitivity analysis shows earnings hit of 1-3% for IGL/MGL for 10% volume loss in FY25, after factoring in Rs10.5/kg (~6% earnings hit for Rs5/kg fixed tariff) , which MNGL gets in Pune. Competition is likely to be highest for GA’s with low network charges of Rs0.01/kg (especially for Round 4-8 of CGD bidding) and where five years marketing exclusivity is likely to expire, in our view. IGL’s Rewari and Karnal CGD and MGL’s Raigarh CGDs qualify under this, but only 15 of IGL’s 555 CNG stations and 14 of MGL’s 256 outlets are there. Also, IGL has challenged PNGRB’s writ to end marketing exclusivity. Reiterate BUY on IGL and MGL.

BROKERAGE VIEW:: Edelweiss Securities on HDFC Bank

HDFC Bank’s Q1FY21 earnings sustained 20% YoY growth momentum, though core operating profit growth (ex-treasury) softened to sub-10% on modest fee traction. Higher slippages (proactive recognition) and build-up of contingency buffer (INR10bn) kept credit cost high (>100bps). Operationally, steady NIM at 4.3% and continued traction in loan growth, drove NII growth of >17% YoY. Furthermore, a strong tier-1 at 18.9%, fortification of deposit franchise (up 25% YoY) and softer competition; augur better visibility vis-à-vis rest of the system. Management commentary suggests green shoots in various parts of the economy and a marked positive shift in its internal outlook on asset quality since April 2020. Our prognosis of systemic asset quality remains rather bleak. But, in terms of the gap between reported net worth and ‘true residual equity’, HDFC Bank is top quartile in our banking coverage universe. The bank continues to be among our top two sectoral picks; we reiterate ‘BUY’ with a TP of Rs 1,335. The key risk remains uncertainty from reshuffle in top management.

BROKERAGE VIEW:: Edelweiss Securities on ICICI Lombard

We believe ICICI Lombard can grow at 20% for the next 20 years while maintaining a 20% RoE. Under-penetration should keep its high-growth phase extended while an altered sector landscape and improved economics catalyse acceleration. High float levels, scale-led cost/pricing edge, distribution investment, and technology leadership are the key moats to sustaining a 20% RoE. High granularity of risk exposure and diversification benefits of a nation-wide scale lend comfort. Maintain ‘BUY/SO’ with a revised 12-month TP of Rs1,600 (40x FY22E PE). The stock is trading at 7.9x FY21E P/BVPS and 41.3x FY21E PE.

BROKERAGE VIEW:: ICICI Securities on HCL Technologies

In the long-term, considering opportunities in cloud consumption, cyber security, automation, app modernisation, we remain optimistic on HCL Tech’s revenue trajectory. Additionally, easing of seasonality pressure in the products & platforms business within IBM driven by renewals would ensure growth. In addition, HCL Tech is also looking at captives, acquisition and vendor consolidation as revenue drivers, going forward. Further, we expect various cost rationalisation measures of the company to drive margin improvement in coming quarters. However, recent run up in price factors in most of the positives. Hence, we downgrade the stock from BUY to HOLD with a revised target price of Rs 680/share (~14x FY22E EPS).

MARKET CHECK | BSE Midcap index underperforms Sensex; up 0.5%


Dhanuka Agritech gains 4%, hits 52-week high on share buyback proposal

Shares of Dhanuka Agritech hit a 52-week high of Rs 849, up 4 per cent in early morning trade, on the BSE on Monday after the company said its board will consider share buyback proposal on Wednesday, July 22, 2020. Earlier the company had said that the board of directors of the Company is scheduled to be held on July 22, 2020, to consider and approve Un-audited financial results of the Company for the quarter ended June 30, 2020. READ MORE 


Q1 Preview:: Pharma firms likely to report mixed performance in Q1 on Covid-19, lockdown

The domestic pharma companies are expected to put up a muted performance for the first quarter of the fiscal year 2020-21 (Q1FY21) on account of weak domestic business, which was adversely affected by the Covid-19-induced lockdown. The nationwide lockdown, according to analysts, led to facilities running at a lower capacity and disruption in logistics. Further, the slower pace of prescription generation in acute therapies on account of patient-doctor disconnect and delay in surgeries also impacted the overall growth in the sector. READ MORE 


Asset quality, provisions key monitorables in Axis Bank's Q1 nos: Analysts

Axis Bank is scheduled to report its June quarter earnings for financial year 2020-21 (Q1FY21) on Tuesday, July 21. Owing to the Rs 7,730.02 crore provisions set aside in the March quarter of FY20, analysts expect lower sequential provisioning in the quarter under review. Besides, loan growth may be tepid due to loss of business amid Covid-19 induced nationwide lockdown. READ MORE  

Axis Bank | Photo: Shutterstock

AHEAD OF RESULTS:: SBI Cards up 0.6%


BUZZING STOCK:: Vodafone Idea surges over 7.5% after it pays Rs 1K cr to the govt towards the statutory dues


Glenmark Pharma slips over 3.7% as it comes under DCGI scanner

>> The Drug Controller General of India (DCGI) has sent a letter to the Mumbai-based drugmaker seeking clarifications on pricing as well as claims of the drug's therapeutic efficacy.

INDEX GAINER:: HDFC Bank up nearly 3% post Q1 nos


SECTOR WATCH:: Nifty FMCG, Nifty Auto in the red


FIRST TRADE:: Gainers and losers on the S&P BSE Sensex


OPENING BELL

At 09:15 am, the S&P BSE Sensex was trading 246 points or 0.67 per cent higher at 37,266.38 levels while NSE's Nifty was 66 points or 0.61 per cent higher at 10,968 levels.

PRE-OPEN SESSION:: HDFC Bank jumps over 9%


Stocks to watch: HDFC Bank, Vodafone Idea, Glenmark Pharma, ACC, SBI Cards

HDFC Bank: Shareholders of HDFC Bank have given the approval to raise up to Rs 50,000 crore through bonds to enhance capital base to fund its business growth. The decision to this effect was taken in the Annual General Meeting concluded on Saturday. That apart, the private sector lender has posted a 5.15 per cent rise in profit before tax (PBT) at Rs 8,973.8 crore for the first quarter ended June 2020 (Q1FY21). 
 
Glenmark Pharma: Glenmark, which markets favipiravir under brand Fabiflu for treatment of mild-to-moderate Covid-19 patients, has come under the scanner of ‘the country’s drug regulator over pricing of the drug and claims of its therapeutic efficacy.
 
Earnings today: As many as 40 companies are scheduled to report their results today. The list includes names such as ACC, Den Networks, and SBI Cards. READ MORE 


It's a great market for stock pickers and one is spoilt for choice: Khemani

Stock picking is always important in all kinds of markets. Currently, it’s a great market for stock pickers and one is spoilt for choice. We are fully convinced about India’s recovery, a boom in manufacturing, and significant scale-up in services. India will see a widespread recovery. READ MORE

IT sector share in Nifty 50 at five-year high with overall weight of 15%

The combined weight of IT companies in the benchmark Nifty 50 index is now at a five-year high of 15 per cent as these companies continue to outperform the broader market. In comparison, they accounted for 12.3 per cent of the index at the end of 2019 and 12.8 per cent in December 2018.
 
The combined market capitalisation of five IT companies, which are part of the index, is up 6.5 per cent since the beginning of 2020 against a 6.6 per cent decline in market capitalisation of the index. READ MORE

Stock picks by Vaishali Parekh, Prabhudas Lilladher

BUY ICICI BANK | CMP: Rs 353.80 | Target: Rs 370-380 | Stop Loss: Rs 337
 
The stock has made a good support base near Rs 340 levels and is currently indicating a trend reversal after a short consolidation has made the bias positive. Also the relative strength index (RSI) has shown a trend reversal to signal a buy. We suggest to buy and accumulate the stock for an upside positional target of Rs 370 - Rs 380 keeping the stop loss near Rs 337. READ MORE

Bulk deals on BSE as on Friday

Bulk deals on NSE as on Friday

Rupee check

Source: Bloomberg


SGX Nifty hints at lower opening

>> At 8:28 am, the index was at 10,908 level, down 21 points

Phillip Capital on L&T Technology Services

Overall, the fact remains that L&T Technology Services (LTTS’s) business is highly dependent on discretionary spends by clients – which is likely to be reduced significantly, in these uncertain times. It’s diversified profile enables it to mitigate weakness in any segment, through growth in others – but that can carry it only so far. We continue to like the LTTS story, from a long term perspective – but remain uncertain of the impact of near-term headwinds from cut in discretionary spend. Maintain NEUTRAL, as valuations remain inexpensive (relatively)

Aarti Drugs to Tata Comm: Earnings rise for 15 firms in Covid-19 economy

The pandemic-led disruption has taken a toll on the business and financials of almost all companies, large or small, and across industries. This could be gauged from the sample data of over 2,100 companies which showed a 6 per cent fall in net sales/revenue. Their combined profit before tax plunged 85.5 per cent year-on-year (YoY) and net profit slipped 88 per cent in the March 2020 quarter. READ THE FULL STORY HERE

Angel Broking on SBI Cards

SBI CARDS
View: Bullish
Last Close: Rs. 755.95
 
This was one of the most popular and hyped IPOs in recent years and due to its unfortunate timing at the coronavirus outbreak, the listing was very disappointing for investors. In fact due to massive sell off thereafter, the stock prices plunged more than 30% in following weeks. However, after forming a strong base around 500, the stock has given a stellar move over the past couple of months along with the broader market recovery. Now, with Friday’s smart move, the stock has managed to give a highest ever close above the 750 mark. Although, the historical price data is not sufficient, the chart structure and volume activity looks encouraging. Hence, one can look to buy for a target of Rs.825 in coming weeks. The stop loss can be placed at Rs.712.

READ MORE HERE

Anand Rathi on Cyient

While the weak outlook on Aerospace persists, Cyient expects recovery in other verticals from Q2 and talked of normal margins by H2. We raise our FY21e/22e sales ~2%, and EBITDA 14/8% due to currency and better DLM. Our new target is Rs 250, 9x FY22e EPS.

Fundamental view :: Prataap Snacks

We hosted the Prataap Snacks management for a non-deal roadshow. In normal circumstances Prataap Snacks sells ~11m packets a day. Despite the challenging environment now, it expects consistent ~15% y/y revenue growth for the next three years, with 9-10% EBITDA margins. The margin expansion would be supported by the increasing contribution from sweet snacks, which enjoys higher gross margins than salty snacks.

(Source: Anand Rathi Research)

AGR case update

The Supreme Court is expected to hear the Adjusted Gross Revenue (AGR) case later today. Over the weekend, Vodafone Idea said it has paid another Rs 1,000 crore to the government towards the statutory dues, taking its total payment to an aggregate Rs 7,854 crore


Global cues

Asian shares began warily on Monday as investors eyed efforts to stitch together more fiscal stimulus in the eurozone and United States. South Korea's Kospi was down 0.55 per cent, Japan's Nikkei eased 0.26 per cent, and Australia's S&P/AUX 200 dipped 0.52 per cent

Emkay Global on Mahindra Finance (MMFS)

MMFS has announced the right issue ratio as 1:1 at a price of Rs50. The issue price is at a discount of 76% to the market price. The dilution would result in a drop in our RoE estimate to 6.5%/9% for FY22E/23 vs. 8%/11% previously. The issue at a steep discount to the current price makes the stock extremely expensive (post dilution) to 2.4x P/Adjusted FY22E book against 1.3x P/Adjusted FY22E book earlier. Hence, we expect a strong negative reaction in the stock price in the near term. The issue opens on 28 July 2020 and closes on 11 August 2020

Prabhudas Lilladher maintains BUY on Britannia (BRIT)

We believe BRIT will maintain strong momentum led by 1) increased in-house consumption 2) focus on hygiene resulting in consumers gravitating to strong brands and 3) higher growth in low competition adjacencies like Bread, Cake, Rusk, Cream wafers etc. (~20% of sales).  Mgt guidance of 4-5 new units and Rs7bn capex in Bakery business over next 2/3 shows optimism in BRIT sustaining double digit topline growth and sustained market share gains. We estimate 25.8% PAT growth in FY1 and 16.9% CAGR over FY2023. We value the stock at 46xSep-22 EPS and arrive at SOTP based target price of Rs4316. Retain Buy

PREVIEW :: Auto sector Q1FY21 numbers by Jefferies

Indian auto companies are likely to report dismal Q1FY21 results given the big decline in volumes amid Covid. Margins should also weaken sharply for most companies due to the adverse operating leverage effect of lower top line. We expect Bajaj, Hero and Mahindra to remain profitable in 1Q, but see Maruti, Eicher, Ashok, TVS, Bharat Forge and Motherson Sumi slipping into losses in the quarter.



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