Stock market updates: A stellar rally in Reliance Industries, State Bank of India, and Bharti Airtel lifted benchmark indices to fresh peaks for 12th straight session on Tuesday. The S&P BSE Sensex and Nifty touched 49,569 and 14,591 in the intra-day session today on the back of rally in the three heavyweights along with HDFC Bank, ITC, Bharti Airtel, and Axis Bank.
The S&P BSE Sensex settled 248 points, or 0.5 per cent, higher at 49,517.11 levels on the BSE. Bharti Airtel and SBI each surged 4 per cent on the Sensex today, followed by gains in RIL, HDFC Bank, ITC, and NTPC, up between 1.4 per cent and 3 per cent. On the downside, Asian Paints, Titan, HUL, and Nestle slipped up to 3 per cent, putting a lid on gains.
On the NSE, the Nifty50 closed above the 14,550-mark, at 14,563.45, up 79 points or 0.5 per cent.
In the broader market, the S&P BSE MidCap index ended the day at 19,208.6 level, up 0.4 per cent. It hit a fresh life-time high of 19,301.32 in the intra-day session. The S&P BSE SmallCap index, on the other hand, closed at 18,922.73 levels, up 0.25 per cent.
On the sectoral front, Nifty PSU Bank index leaped 6 per cent on the NSE, shrugging off NPA concerns highlighted by the Reserve Bank of India a day earlier. J&K Bank and Bank of Baroda each surged 10 per cent on the NSE today. Besides, Bank of India, Canara Bank, and Indian Ban gained up to 7 per cent.
That apart, Nifty Realty index, up 3 per cent, and Nifty Auto index, up 1.3 per cent, were other sectoral gainers.
European shares were mixed on Tuesday as investors paused to assess how much worse the Covid-19 pandemic could get while waiting for a new earnings season on Wall Street to inject fresh direction.
Consolidation was the theme in Asia as well, where MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 per cent after touching an all-time high on Monday, led by a 2.6 per cent drop in South Korea as investors took some profit from a soaring Kospi.
Drugmakers lifted Japan's Nikkei to a fresh three-decade high after reports of another effective COVID-19 treatment, though the index eased to be 0.16% lower in the afternoon.
Nifty continued its rally by closing by 0.5%. Top two gainers of the Nifty were Tata Motors due to strong sales reported by Jaguar Land Rover and GAIL as the company has announced a board meeting to consider buyback of the shares. Nifty PSU Bank closed up by 6% ignoring RBI concern of NPA in the banking sector, released in a letter a day ago. Defensive sectors such as Pharma, IT and FMCG closed in red. Global cues were supportive: Dow Futures and Nasdaq Futures were up by 0.2% and 0.4% respectively, while FTSE was down by 0.3%. As of now, the market is showing no sign of correction. Although after the sharp rally, we are concerned about the valuation of the market. So, we advise investors to book profit in a small portion of their portfolio.
TECH VIEW :: Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Nifty continued to show upside momentum on Tuesday and closed the day higher by 78 points. After opening on a slightly negative note, the market shifted into an upside recovery mode with range bound action till afternoon. The intraday upside momentum got strengthened in the mid to later part and Nifty closed the day near the high, amidst a range movement.
A long bull candle was formed at the new all time high of 14590, which signal an uptrend continuation pattern. Though, Nifty placed at the highs, there is no indication of any trend reversal in the market.
The short term trend of Nifty continues to be positive. Now, one needs to be cautious about the higher levels weakness in the next few sessions (2-3 sessions). The next upside levels to be watched around 14700-14800. Immediate support is placed at 14490.
It was a dull opening however with the passing of trading session, the benchmark index was making day high throughout both the session and closed near to day high at 14563 level with the gain of 78 points. Nifty has given a close above 14500 level with decent gains and all its large cap constituents performed very well and it seems that further upside movement would be there with the ongoing sentiments. Technically, the benchmark index has been trading in an uncharted territory with accentuated volume which shows further upside movement in the index. At present level, Nifty has strong support at 14400 while upside resistance comes at 14800.
MARKET CLOSING COMMENT :: Shrikant Chouhan, Executive VP, Equity Technical Research at Kotak Securities
Today, financial stocks, especially PSU banks, showed strong support in the market to move above the critical psychological barrier point of 14500. The Bank-Nifty is 215 points away from reaching an all-time high of 32613.10. The Nifty 50/Sensex index has closed above the peak point of the indecisive candlestick formation, suggesting further upside. Sectoral rotational activity clearly shows that the broader market trend is still very strong. In the short term, the trend would remain uncertain due to concerns over rising crude and dollar index prices, but traders should try to find buying opportunities in the market until a negative reversal appears on the daily chart. On Wednesday, the Nifty would take hold at the level of 14650/49800 or at 14700/50000. On the downside, the Nifty should find support between 14450 or at 14400. Our strategy should be to buy select stocks on dips or Index between 14460/14430 levels. The bullish reversal formation of Reliance Industries would help the Sensex to reach the milestone of 50,000 in the near term
MARKET CLOSING COMMENT :: Deepak Jasani, Head of Research, HDFC Securities
The Indian equity benchmark indices rose for the third consecutive day on Jan 12. Nifty opened almost flat and rose gradually between 1100 Hrs and 1430 Hrs. At close, the Nifty was up 78.70 points or 0.54% at 14,563.50.
Volumes on the NSE were the highest since Nov 27. Among sectors, PSU Bank, Bank, Realty, Auto, Infra and Energy were the main gainers while Pharma, IT and FMCG fell the most. Midcap and smallcap indices rose less than Nifty.
Nifty has risen for the third consecutive day with a better breadth. Action is now shifting to largecaps and large midcaps while the balance stocks are undergoing profit taking. Large volumes on a positive day is good for our markets and yet there is no immediate trigger for reversal.
Rupee ends higher at 73.25 per US dollar vs Monday's close of 73.38/$
TECH VIEW :: Ashis Biswas, Head of Technical Research, CapitalVia Global Research
Nifty Mild loss but managed to hold its bullish stream and decisively cross 14500 zone which was a good hurdle in nifty and managed to close a day at 14563 with gains of half a per cent. Going ahead 14500 will act as fantastic support in nifty and holding above said levels we may see some more decisive move in nifty towards 14600-14700 zone. The nifty bank has witnessed a bullish flag breakout on the two-hour chart which suggest nifty bank can outperform and see next move towards 32500-32700 zone"
TECH VIEW :: Rohit Singre, senior technical analyst at LKP Securities
Nifty Mild loss but managed to hold its bullish stream and decisively cross 14500 zone which was a good hurdle in nifty and managed to close a day at 14563 with gains of half a per cent. Going ahead 14500 will act as fantastic support in nifty and holding above said levels we may see some more decisive move in nifty towards 14600-14700 zone. The nifty bank has witnessed a bullish flag breakout on the two-hour chart which suggest nifty bank can outperform and see next move towards 32500-32700 zone
MARKET CLOSING COMMENT :: Vinod Nair, Head of Research at Geojit Financial Services
The pace of the market rally continued despite RBI’s caution over elevated NPA levels in 2021, supported by PSU Banks and Auto stocks. Majority of the sectors traded in the green in anticipation of good quarterly result while pharma and FMCG experienced some selling. US bond yield has changed its trajectory to a rising trend, which could impact EMs in the future. But FII inflows are strong and the dollar continues to be weak due to oversupply of USD led by the high amount of fiscal stimulus
MARKET CLOSING COMMENT :: S Ranganathan, Head of Research at LKP Securities
Markets begun the day on a sombre note post the stability report on banks released yesterday late evening but afternoon trade witnessed buying across the PSU basket with state-owned banks posting a smart rally pushing the NIFTY past the 14500 marks effortlessly. Reliance finally took centre stage after a long time giving Bulls the much-needed ammunition
The benchmark index NIFTY50 is on a stellar bull run backed by the buying interest seen in Auto and Realty stocks followed by Bank Nifty that has seen a resurgence from the day’s low to set new 52 weeks high. Meanwhile, on the derivative front, NIFTY has seen huge addition in 14500PE followed by 14400PE suggesting strong base formation, while 14600CE and 15000CE have the maximum OI concentration suggesting an extensive upward trend. Stock-specific action to be the prime focus as mid cap indices are in a continuous uptrend, followed by the IT sector as two major IT companies INFY and Wipro are set to announce their Q3 performance a day ahead
Market stats :: BSE m-cap hits record Rs 197-trillion mark
MidCap stocks resume uptrend; S&P BSE MidCap hits all-time high in intra-day session
>> MidCap index closed 0.44% higher
>> JSW Energy rallied 12%, Canara Bank 7%
SECTOR CHECK :: Pharma stocks failed to participate in today's rally
SECTOR OF THE DAY :: Realty shares buzzed in session; DLF rallies 10%
SECTOR OF THE DAY :: PSBs defy gravity; index jumps 6%
Sectoral trends on NSE at Close
Sensex Heatmap :: Bharti Airtel, SBI leap 4% on BSE
The S&P BSE Sensex settled 248 points, or 0.5 per cent, higher at 49,517.11 levels on the BSE.
On the NSE, the Nifty50 closed above the 14,550-mark, at 14,563.45, up 79 points or 0.5 per cent.
HDFC Bank hits new high as FPIs hike stake for third straight quarter
Shares of HDFC Bank rose for the third straight day and hit a fresh record high of Rs 1,488, up 2.5 per cent, on the BSE on Tuesday. The stock has risen 5 per cent in the past three trading sessions after foreign portfolio investors (FPIs) increased their stake in the private sector lender for the third quarter in a row. READ MORE
Tata Chemicals in advanced talks for Archean's industrial salt unit
Tata Chemicals Ltd. is in advanced talks to acquire the industrial salt unit of Archean Group that could value the business at 4.5 billion rupees ($61 million) at a minimum, according to people familiar with the matter.
The board of Tata Chemicals is set to discuss the potential offer as soon as this month, said the people, who asked not to be identified as the information is private. Negotiations are ongoing and could still fall apart, the people said. READ MORE
MARKET UPDATE:: RIL, HDFC Bank, and Bharti Airtel contribute the most to Sensex's rally today
RESULT REACTION:: Karnataka Bank zooms 5% post Q3 results announcement
State Bank of India jumps 3%, inches closer to Rs 300-mark
Nifty PSU Bank index surges over 5%
Rekha Jhunjhunwala ups stake in this Tata Grp stk amid 5x gain since March
Rekha Jhunjhunwala, wife of ace investor Rakesh Jhunjhunwala's name surfaced as a minority shareholder in another one of Tata Group firms. This time the stock is Tata Communications which has rallied 431 per cent from its 52-week low of Rs 200 hit on March 19, 2020. According to the latest shareholding pattern filed by the company, Rekha Jhunjhunwala, held 1.12 per cent stake or 3.2 million shares of Tata Communications at the end of December 2020 quarter. In September 2019, Rekha Jhunjhunwala had bought 1.97 million shares, or 0.7 per cent stake in the company, at Rs 370 apiece. READ MORE
SECTOR CHECK :: FMCG stocks slips in a strong market
Tata Steel, Vedanta: Tech charts signal more upside in metal stocks
The Nifty Metal index scaled its fresh 52-week high of 3,586.90 in Tuesday's session, thus extending its rally that has seen the index rise 19.6 per cent over the last one year (till January 11, 2021). In comparison, the benchmark Nifty50 index has gained 17.47 per cent in the same period, ACE Equity data show. Going forward, analysts at Phillip Capital expect metal companies to report further improvement in operating performance in Q3FY21 results as sharp imprvoement in realisation would outweigh marginally lower volumes. READ MORE
Embassy REIT board approves raising up to Rs 2,600 crore via NCDs
Embassy Office Parks REIT on Tuesday said its board approved raising up to Rs 2,600 crore through issuance of non-convertible debentures (NCDs) on a private place basis to fund its acquisition of commercial asset Embassy TechVillage in Bengaluru. The debenture committee of the board of directors of the Embassy Office Parks Management Services has approved the issuance of 26,000 listed, rated, secured, redeemable, transferable, rupee denominated NCDs of face value of Rs 10 lakh per debenture, aggregating up to Rs 2,600 crore by Embassy REIT on a private placement basis, it said in a regulatory filing. (Text Source: PTI)
Sector View: Nifty IT trades flat, up 0.04%
RIL biggest Sensex gainer at this hour, up 3%
Tata group shares rally; Tata Consumer, Tata Chemicals, Voltas at new highs
In the past one month, most of the frontline Tata group stocks have outperformed the market by surging up to 35 per cent on improved economy outlook. In comparison, the S&P BSE Sensex was up 7 per cent during the same period. Tata Motors and Tata Elxsi soared 35 per cent and 33 per cent, respectively while Tata Power Company, TCS, Voltas, Tata Steel and Tata Metaliks gained in the range of 13 per cent to 18 per cent. READ MORE
NEWS ALERT :: RITES bags order worth Rs 68 crore
RITES has secured a work from National High Speed Rail Corporation Limited for Establishment and Maintenance of Continuously Operating Reference Stations (CORS) along 487 km long Mumbai-Ahmedabad High Speed Rail Corridor, excluding 21 km undersea tunnel. This contract would be for a period of 6 years and RITES fees for the said work will be Rs. 67. 79 Crore.
RIL, HDFC Bank, Bharti Airtel among top Sensex contributors
MARKET NOW :: Sensex rises 150 points, trades at day's high
'Full-blown mania': US stock market jackpot bells just keep ringing
Throw a dart, hit a winner, so it has lately seemed. Emboldened by Federal Reserve stimulus, vaccines and the psychological conditioning that arises when no bad patch lasts, everyone from retail newbies to institutional managers is rushing to cash in on the 10-month-old meltup. Predicting exactly when such fevers will break is a near impossible task. But bubble warnings are starting to blare from every corner. READ MORE
Infosys Q3 preview: Large deals, acquisitions to drive PAT by up to 16% YoY
Lead by the ramp-up of Vanguard deal, incremental revenue contribution from acquisitions and strong growth momentum in key verticals, IT bellwether Infosys may post a 9-10 per cent year-on-year (YoY) growth in its revenue (in rupee terms) for the quarter ended December 2020 (Q3FY21). The revenue could rise between 2.5-3.5 per cent quarter-on-quarter (QoQ) in constant currency (cc) terms and 3-4 per cent in dollar revenue terms. READ MORE
Wipro Q3 preview: Net profit may rise up to 10% YoY; Q4FY21 guidance eyed
Following hopes of a solid earnings performance by most IT companies in an otherwise weak quarter, analysts expect Wipro to post decent revenue growth, minimum-to-no impact on EBIT (earnings before interest and tax) margins and a 5-10 per cent year-on-year (YoY) jump in its net profit for the October-December quarter (Q3FY21). Prabhudas Lilladher sees Wipro's guidance for the fourth quarter of FY21 to be in the range of 2-4 per cent. This guidance does not include recent signing of a large deal with Metro, the brokerage clarified. READ MORE
Bharti Airtel inches towards 52-week high on strong earnings outlook
Shares of Bharti Airtel hit an over 5-month high of Rs 565, up 3 per cent on the BSE on Tuesday, on strong earnings outlook, steady 4G subscriber additions -- which are likely to see 2-3 per cent quarter on quarter (QoQ) average revenue per user (ARPU) growth -- and strong EBITDA (earnings before interest, taxes, depreciation, and amortization) growth, analysts said. READ MORE
BUZZING STOCK:: JSW Energy surges as high as 13% in intra-day deals
NEWS ALERT :: Mahindra Lifespace Developers signs MoU with SBI
>> Mahindra Lifespaces, the real estate and infrastructure development arm of Mahindra Group, and State Bank of India (SBI), today signed a Memorandum of Understanding (MoU) to enable an improved and more seamless experience for homebuyers across India.
>> As part of the agreement, which includes various co-promotional activities and outreach initiatives, customers and employees of SBI and Mahindra Lifespaces will be able to avail the benefits of faster home loan processing and approvals, and special discounts and schemes.
ALERT :: Sensex erases losses, turns positive
Strong volumes seen leading Q3 revenues for domestic cement players
The domestic cement sector is expected to witness volume-led revenue growth in the quarter ended December with strong demand from semi-urban and rural regions, mainly for housing, likely to lend firm support. During Q3FY21, the demand for cement registered a 6-7 per cent year-on-year growth compared to the 5 per cent year-on-year growth seen in the preceding quarter, Antique Stock Broking said in its report. READ MORE
MARKET UPDATE:: Sensex trades with marginal cut in range-bound session
NEWS ALERT :: IndiGo plan to initiate flights from seven new cities February onwards
>> It’s planning to add Leh, Darbhanga to network in Feb; Kurnool, Agra in March; Bareilly, Durgapur in April; Rajkot in May
(Source: CNBC TV18)
FSL dips 6% in 2 days as Rakesh Jhunjhunwala cuts stake in December quarter
Shares of Firstsource Solutions (FSL) slid 4 per cent to Rs 95.10 on the BSE on Tuesday, falling 6 per cent in the past two trading days after ace investor Rakesh Jhunjhunwala more-than-halved his stake in the company during the October-December quarter (Q3FY21). With the past two days' decline, th stock has corrected 17 per cent from its record high level of Rs 115.45, touched on December 29, 2020. READ MORE
SBI, HDFC Bank: Trading strategies for bank stocks post RBI's GNPA warning
The index, however, pared losses marginally and was trading 0.3 per cent lower on the National Stock Exchange (NSE) at 10:10 am. Individually, SBI, HDFC Bank, IDFC First Bank, Punjab National Bank, and RBL Bank staged smart recovery from the day's low and were up between 0.2 per cent anb 2.5 per cent on the NSE. Nifty PSU Bank, on the other hand, was outperforming the benchmark Nifty, and was wuoting over 0.5 per cent higher with J&K Bank, Canara Bank, Bank of Baroda, and Indian Overseas Bank topping the charts. READ MORE
ALERT :: NIFTY HITS NEW RECORD PEAK OF 14,510
BUZZING STOCK:: RIL at day's high, up 2%
India maintains global market capitalisation ranking at number 8: Report
India delivered the third-highest return among key global markets in local currency terms, with returns of 9 per cent. In US dollar terms, India’s performance was more subdued with returns of 3 per cent compared with 12 per cent for the S&P 500, 8 per cent for Japan, and 5 per cent for Taiwan, a report from Motilal Oswal Financial Services observed. Indian markets, however, outperformed the MSCI EM (1 per cent) and beat other emerging markets such as China, Russia, and Brazil, which gave negative returns. READ MORE
NEWS ALERT :: Govt says anti-dumping duty on Dimethyl Formamide Imports From China & Saudi Arabia to continue
Alert: Balaji Amines had filed an application for levy of anti-dumping duty on Dimethyl Formamide imports
(Source: CNBC TV18)
Worried about valuations? Go for a balanced advantage fund, say experts
With the Sensex closing in on the 50,000-mark, the euphoria in the equity markets is palpable. However, as the monthly outflows from equity mutual funds (MFs) demonstrate, investors are also worried about high valuations.
Many fund managers and advisors are currently suggesting that investors take exposure to balanced advantage fund (BAF)/dynamic asset allocation fund (DAAF) to cope with this environment. READ MORE
Top 5 Nifty50 stocks contribute 42.4%, against 42.66% in November
The concentration of the top five Nifty50 stocks reduced slightly in December over the previous month, indicating a broad basing of the index.
Market pundits believe that the market rally this year is likely to be less concentrated and that polarisation — where a handful of stocks outperform the index — will become less pronounced in 2021. READ MORE
Indiamart Intermesh hits new high on fund raising plan, zooms 54% in a month
The board of directors of the Company is scheduled to meet on Monday, January 18, 2021, to consider raising of funds through issuance of equity shares through qualified institutional placements (QIPs) or through any other permissible mode, subject to applicable laws and necessary shareholder/ regulatory approvals, as applicable, Indiamart Intermesh said in exchange filing. READ MORE
NEWS ALERT :: RPP Infra bags order worth Rs 232 crore
>> Order for Chennai-Kanyakumari Industrial Corridor
>> Project awarded to RPP-RK Joint Venture
>> With this project, the firm's order book is nearing Rs 2,000 crore-mark
(Source: BSE filing)
Promoter pledging declines to a two-year low of 11% in December
The extent of pledged promoter holding fell to a two-year low of 11.2 per cent at the end of December 2020, according to data provided by primeinfobase.com. Analysts said rising markets drove the decline. “As stock prices have risen over the last few quarters, promoters have been able to release some of the shares out of pledge as the value of pledge has gone up. READ MORE
MARKET UPDATE:: Broader indices outperform benchmarks
Rupee opens lower at 73.42 per US dollar vs Monday's close of 73.38/$
Tata Motors extends gains into eighth day post JLR Q3 retail sales numbers
Shares of Tata Motors hit a fresh 52-week high of Rs 234, up 6.3 per cent on the BSE in early morning trade on Tuesday, extending its Monday's 11 per cent rally, after the company's subidiary Jaguar Land Rover (JLR) posted second successive quarter-on-quarter recovery in sales, despite the continuing impact of Covid-19. The stock of Tata group commercial vehicles company was trading higher for the eighth straight day and has rallied 25 per cent during the period. READ MORE
GAIL gains 4%, hits 52-week high as board set to mull buyback on Jan 15
As of September 30, 2020, the public shareholders held 47.89 per cent stake in GAIL, with foreign portfolio investors (15.09 per cent) and mutual funds (10.60 per cent) holding more than 10 per cent stake, shareholding pattern data shows. Oil and Natural Gas Corporation (4.86 per cent) and Indian Oil Corporation (2.43 per cent) collectively held 8.32 per cent of shares, data shows. READ MORE
Sunteck Realty Q3 sales bookings up 7% at Rs 349 crore; stock up 3%
-- Sunteck Realty Ltd on Tuesday said its sales bookings increased 7 per cent year-on-year to Rs 349 crore in the third quarter of this fiscal on better demand.
-- In a regulatory filing, the Mumbai-based developer said its sales bookings stood at Rs 349 crore during October-December quarter, as against Rs 325 crore in the same period of the previous fiscal.
Burger King India extends losses, down another 5% today
>> Eastspring Investments India Consumer Equity Open sold 27,55,323 equity shares of Burger Kind India at Rs 154.92 per share, bulk deal data on the NSE showed.
Metal space outperforms; Nifty Metal up over 2%
Nifty Bank off lows; SBI, HDFC Bank turn positive
BUZZING :: JSW Steel rises over 3% in a weak market
Laurus Labs trades in the green
>> The wholly-owned subsidiary of the company, Laurus Synthesis, has incorporated a wholly-owned subsidiary under name of Laurus Ingredients with effect from January 9, for undertaking Ingredients Business and also for setting up Greenfield projects for new Synthesis Business.
Q3 Biz Update :: Thyrocare Tech advances 3% on healthy quarterly biz
>> A media report stated, quoting agencies, that Thyrocare Technologies has seen significant business revival in Q3 and even non-Covid business is showing growth post festive season.
BUZZING :: Tinplate surges 7%
Adani Green gains over 1% on CCI nod to Total's acquisition
>> The Competition Commission of India (CCI) approved acquisition of share capital in Adani Green Energy by a subsidiary of Total SE. "Commission approves acquisition by Total SE through its subsidiary Total Renewables SAS in share capital of Adani Green Energy Limited," the regulator said in a tweet.
Tata Motors extend gains, hits fresh 52-week high
>> Jaguar Land Rover's retail sales fell 9 per cent YoY to 1,28,469 units in the October-December quarter, but increased by 13.1 percent QoQ.
GAIL surges over 4% on buyback plan
>> GAIL will consider buyback of shares on January 15 with a view to returning surplus cash to shareholders, the biggest being the Government of India. The board will also consider payment of interim dividend for FY21.
Sectoral trends on NSE at Open
Sensex Heatmap :: Financials, IT see profit booking
First Trade :: Nifty below 14,450
First Trade :: Sensex slips 100 pts at open
Top gainers and losers on S&P BSE Sensex at Pre-open
Markets at Pre-open
Markets at Pre-open
NEWS ALERT :: SpiceJet has carried India’s first consignment of Covid vaccine today, says Ajay Singh
>> The first consignment of Covishield consisting of 34 boxes and weighing 1088 kg was carried from Pune to Delhi on SpiceJet flight 8937.
>> The airline will be carrying multiple vaccine consignments to different Indian cities including Guwahati, Kolkata, Hyderabad, Bhubaneswar, Bengaluru, Patna and Vijayawada through the day today.
Alert: Ajay Singh is Chairman and Managing Director, SpiceJet.
BROKERAGE VIEW :: Kotak Institutional Equities on Financials
RBI’s FSR report suggests that its models on NPL ratios for banks remain unchanged from the previous report and that NPLs are likely to rise by ~700bps to 13-15% for banks and by 50-200 bps for NBFCs by 2QFY22 under various scenarios. The lack of data on SMA or 90+DPD for total loans, makes it difficult to understand the full impact of Covid to provide a different perspective but we note that these are not our current baseline estimates.
We would have liked the discussion paper to have given more details on: quality of the moratorium book (sector wise, duration of moratorium adopted by borrowers, or customer profile based ratings/CIBIL score) or perhaps more insights into the retail/SME portfolio that is likely to go under stress due to Covid.
It appears challenging to place a weight to these NPL ratios especially with NPL recognition behind on corporates and a repeat, in such a short period looks unlikely, especially with negligible credit consumption in each of the respective sectors. We believe that these estimates could be different from actual outcomes. Further, we note that RBI’s Systemic Risk Survey shows a change in view, (more positive than the previous survey) of the near term outlook on asset quality.
At this point, this contrasts with RBI which has been frequently emphasizing on strengthening capital position, including preventing banks from declaring dividends in FY2021. Overall, we see open debate on this topic and expect clarity by 4QFY21.
BROKERAGE VIEW :: MOFSL on Automobiles
Putting all negatives and positives together, we expect EBITDA margin to improve to 13.3% by FY23E (v/s 10.5% in FY20 and 12.7% in FY19) as the impact of commodity cost inflation is more than offset by benefits of price increases, lower discounts, cost cutting initiatives, and operating leverage.
With a likely pick-up in volumes (higher asset turns), margin improvement, and lower capex intensity, we expect a sharp improvement in FCF generation over FY21-23E. For our Auto OEM (excluding JLR) universe, FCF conversion (% of PAT) is estimated to be at 100-125% over FY21-23E (as against 20%/33% in FY20/FY19).
Analysis of past cycles suggests that valuations expand as the cyclical recovery sustains, laying the foundation for the next upcycle. Current valuations reflect an early to mid-cycle recovery, with scope for a further rise if the volume expansion sustains. MM is our top OEM pick. Among Auto Components, we prefer ENDU and MSS.
BROKERAGE VIEW :: MOFSL on Financials
The RBI released its financial stability report wherein it maintained a cautious stance on the asset quality of Banks and indicated that GNPA ratio for Scheduled Commercial Banks (SCBs) could escalate to 13.5% (v/s 7.5% in 1HFY21) under its baseline scenario. If the situation worsens, the GNPA ratio could deteriorate to 14.8% under its severe stress scenario.
The central bank indicated that SCBs have sufficient capital at the aggregate level. However, at the individual level, few Banks may fall below the regulatory minimum if stress aggravates to its severe scenario. CET-I could decline to 10.8% under its base case and to 9.7% under its severe stress scenario (v/s current CET-I of 12.4%)
We remain watchful on the asset quality of banks as they recognize NPLs from the moratorium/overdue loans, even as overall trends have fared better than earlier
expectations, aided by a sharp improvement in collection efficiency. Large Banks reported a collection efficiency of 95-97%, while the same for mid-size ones/MFIfocused players stood in the early 90s, enabling controlled restructuring guidance by lenders. Though slippages are likely to increase over 2HFY21, particularly after the SC order gets lifted, many banks have already provided for this and carry an additional provisions buffer, which should limit the impact on profitability, even as credit cost remains elevated. Our top Buys remain ICICIBC, HDFCB, SBIN, and
BROKERAGE VIEW :: MOFSL on Piramal Enterprises
CMP: Rs 1,507 | TP: Rs 1,750 (+16%) | Reco: Buy
Over the past year, the company has executed on all strategic priorities such as reducing Balance Sheet leverage, trimming large exposures, and curtailing loan
growth. Going forward, loan growth would accrue from the Retail Lending business. With the team, analytics, infrastructure, etc. well in place, PIEL is poised to grow this business significantly over the medium-to-long term.
Even on the Pharma side, we expect it to deliver 14% sales CAGR over FY20-23E on the back of 17%/25%/5% sales CAGR in the CDMO/ICP/CHG segment. We use SoTP to arrive at our TP of INR1,750 per share (FY22E-based). Maintain Buy.
Stocks to watch: GAIL, Tata Motors, Dishman Carbogen, DRL, Karnataka Bank
Karnatak Bank, Tata Elxsi: Karnataka Bank, Tata Elxsi, Steel Strips Wheels, Filatex India, Hathway Bhawani Cabletel, HPL Electric & Power are among the 13 firms slated to announce their quarterly earnings on January 12.
Tata Motors: Jaguar Land Rover's retail sales fell 9 per cent YoY to 1,28,469 units in the October-December quarter, but increased by 13.1 percent QoQ.
Dishman Carbogen: Promoter Adimans Technologies LLP will sell 3.87 per cent stake in the company via offer for sale on January 12-13, with an option to additionally sell up to 2.05 per cent shares. READ MORE
The stock is making a 'higher top and higher bottom' formation and is trading in a rising channel on the daily chart. It has provided a breakout from a rounding bottom formation and has scaled to a fresh new high. The volume was higher than average which supports the price action and we can expect the upside momentum to continue. The MACD has provided a fresh buy crossover on the daily chart above the zero line. The stock also witnessed a built-up of long positions with the addition of 15 per cent open interest. READ MORE
FII/FPI & DII trading activity on NSE, BSE and MSEI
Oil prices sapped by rising virus cases
Oil prices slipped on Tuesday as investors remained concerned about climbing coronavirus cases globally. After falling on Monday, Brent crude oil futures slipped 0.2 per cent to $55.57 a barrel while US West Texas Intermediate (WTI) fell by 0.2 per cent to $52.17 a barrel.
SGX Nifty suggests flat-to-negative start
>> At 8:23 am, the index was at 14,478.5 levels, down 14.5 points
Asian markets trade weak
In Asia, stocks were flat in Tuesday's early deals, with Japan's Nikkei, Hong Kong's Hang Seng, and Australia's ASX 200 indexes up 0.1 per cent, each. In commodities, Brent was at $55.61, down 0.68% on the day.
Wall Street check
Wall Street's main indexes declined overnight as political turmoil in Washington and rising coronavirus cases worldwide weighed on sentiment. Political uncertainty dominated trading as House Democrats introduced a resolution to impeach US President Donald Trump, accusing him of inciting insurrection following a violent attack on the Capitol last week.
Overall, the Dow fell 0.29 per cent, the S&P 500 lost 0.66 per cent and the Nasdaq dropped 1.25 per cent.
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