Stock markets updates: With largely all the positives priced-in the markets, equity indices continued to consolidate at current levels on Monday with bouts of volatility keeping investors on the edge. Volatility index, India VIX, jumped over 4 per cent in the intra-day trade today before cooling-off to settle 1.2 per cent higher at 24 levels.
That apart, expectations that the Reserve Bank of India may set out proposals in a discussion paper this week, recommending that bigger shadow banks hold a share of deposits in cash, gold or government securities, weighed on financial counters. Shares of HDFC fell 2.4 per cent, while Bajaj Finance and Bajaj Finserv dropped over 3 per cent, dragging down the Nifty 50 index.
Amid up to 2 per cent gains in Reliance Industries and HDFC Bank, the benchmark S&P BSE Sensex and Nifty50 managed to contain losses but still closed around 1 per cent per cent lower. The Sensex index ended at 48,564 levels, down 470 points or 0.96 per cent, on the BSE with RIL, Titan, HDFC Bank, and ITC ending the day as the only gainers. On the downside, ONGC (down 5 per cent), Sun Pharmaceuticals, Bajaj Finance, and PowerGrid remained as top drags. The index hit an intra-day low of 48,404 today.
Nifty50, meanwhile, gave up 14,300 and ended at 14,281 levels, erasing 152 points or 1 per cent. 44 of the 50 constituents ended the day in the red.
In the broader market, the S&P BSE MidCap index underperformed the frontline indices and ended 2 per cent lower. The S&P BSE SmallCap index closed with a 1.89 per cent cut.
Market breadth remained in the favour of bears as 2,089 stocks declined on the BSE today, as against 938 stocks that rose.
On the sectoral front, all the indices ended the day in the red with Nifty Metal index sliding over 4 per cent. Nifty Realty, Pharma, and Auto index each slipped 2 per cent on the NSE.
Global stock markets sank on Monday as soaring Covid-19 cases offset investor hopes of a quick economic recovery, while the Chinese economy posted a better-than-expected rebound in the fourth quarter of 2020.
European stocks as measured by the STOXX 600 index opened 0.3 per cent weaker, after failed merger talks between French retailer Carrefour and Alimentation Couche-Tard. Germany's DAX fell 0.2 per cent, France's CAC 40 index fell 0.3 per cent, and Italy's FTSE MIB index slipped 0.3 per cent. Britain's FTSE 100 index fell 0.1 per cent.
In Asia, Chinese blue chips gained 0.8 per cent after the economy was reported to have grown 6.5 per cent in the fourth quarter, on a year earlier, topping forecasts of 6.1 per cent.
Elsewhere in Asian markets, Japan's Nikkei slipped 0.8 per cent. MSCI’S All Country World Index, which tracks stocks across 49 countries, fell 0.1 per cent, down for a second session after hitting record highs only last week.
MARKET CLOSING COMMENT :: Shrikant Chouhan, Executive VP, Equity Technical Research at Kotak Securities
Unusual strength in the dollar index and sustained run up in the commodities have battered the sentiment of the equity market. Nifty/Sensex fell more than one percent during the day and made a low of 14222/48460. It has triggered selling in commodities and the Nifty Metal index closed 4.57% lower. Reliance Industries and HDFC Bank have supported the market otherwise it could have closed below the levels of 14200/48400. On a daily chart, Nifty/Sensex has formed bearish continuation formation following to a Doji star of formation on a weekly chart. As the market closed below the crucial support 14350/48800, Nifty could fall to 14100/48100 or 14000/47900 in next couple of days. On the higher side, 14350/48800 and 14460/49150 would be major hurdles. The strategy should be to trade on bounces and keep a final stop loss at 14470/49200 levels. Select buying is advisable between 14100 and 14000 (48100/47900) levels, strictly with a medium term view.
MARKET CLOSING COMMENT :: Deepak Jasani, Head of Research, HDFC Securities
Indian equity benchmark indices witnessed profit taking for the second consecutive day on January 18 on the back of soft global markets. A second round of fall post 1410 Hrs took the Nifty down to close almost at its intra-day lows – the average value of the last half hour however was higher. At close, the Nifty was down 152.40 points or 1.06% at 14,281.30.
Volumes on the Nifty were in line with those of the previous two days. Among sectors, Metals, Pharma, PSU Bank, Media, Auto and Realty fell the most. Broader markets performed worse than the Nifty with smallcap and midcap indices down almost 1.8-2.1%.
The near term downtrend in the Nifty has gained momentum on Jan 18 even as the stocks (more so in small and midcap categories) seemed to have run out of steam. In the process the upgap made on Jan 11 has been filled. US markets are closed for Martin Luther King holiday on Monday. Hence our markets may not get any overnight cues from there. On the Nifty 14040-14215 band is the next support area. On rises 14358 could act as a resistance.
TECH VIEW :: Ashis Biswas, Head of Technical Research, CapitalVia Global Research
The market manages to hold above the Nifty 50 Index support zone of 14170-14230. The technical factors are aligned to support a range-bound market movement in the coming week. Therefore, the short-term traders to use the rally to exit while buying any dip towards the support level around 14170-14230 (considered best practice in a volatile market). The market breadth to deteriorate, indicating a likelihood of higher volatility.
MARKET CLOSING COMMENT :: Vinod Nair, Head of Research at Geojit Financial Services
The market has gotten choppy ahead of the upcoming Union Budget and due to weakness in an expensive global market. A good part of the economic gains is well factored in by the upside of the last 11 weeks. A short-term correction was being anticipated for some time, it will be welcome for the market on a long-term basis
Market stats :: BSE m-cap slips to Rs 192.6 trillion after soaring as high as Rs 197 trillion
Nifty Bank index declines over 400 pts
BUZZING STOCK OF THE DAY :: ITC hits 11-month high
>> The stock hit an over 11-month high of Rs 221, up 1.4 per cent, in the intra-day trade
>> It settled flat on the NSE at Rs 218 apiece
STOCK OF THE DAY :: HDFC Bank hits record high post Q3 result
SAVER OF THE DAY :: Gains in RIL support markets
Sectoral trends on NSE :: Metals index underperforms on NSE
Sensex Heatmap at Close :: Only 4 constituents end the day in the green
Amid around 2 per cent gains in Reliance Industries and HDFC Bank, the benchmark S&P BSE Sensex and Nifty50 managed to contain losses but still closed 0.96 per cent lower.
The Sensex index ended at 48,564 levels, down 470 points or 0.96 per cent, on the BSE with RIL, Titan , HDFC Bankm and ITC ending the day as the only gainers. On the downside, ONGC (down 5 per cent), Sun Pharmaceuticals, Bajaj Finance, and PowerGrid remained as top drags. The index hit an intra-day low of 48,404 today.
Nifty50, meanwhile, gave up 14,300 and ended at 14,281 levels, erasing 152 points or 1 per cent. 44 of the 50 constituents ended the day in the red.
Harsh winter in key markets drives spot LNG prices in Asia to record levels
“The spot LNG price in Asia is highly sensitive to marginal demand in Japan, Korea and China. Since these places are experiencing harsh winter, the heating load has gone up significantly. Emergency (unplanned) buying by Japanese power companies is the driving factor for pushing up prices,” Debasish Mishra, Partner at Deloitte told Business Standard. READ MORE
Bears tighten grip; Sensex slumps over 550 pts
Metal stocks crack; Nifty Metal index tanks 4%
MARKET UPDATE:: Sensex down over 300 points
UPL rallies 7% on heavy volumes; stock surges 34% from December low
Shares of UPL hit an over 11-month high of Rs 558, up 7 per cent, on the back of heavy volumes in an otherwise subdued market on the National Stock Exchange (NSE). With today's gain, it has bounced back 34 per cent from its recent low of Rs 416, hit on December 21, 2020, in the intra-day trade. READ MORE
Snowman Logistics Q3 results: Firm posts profit of Rs 1.42 cr vs loss of Rs 3.44 cr YoY
>> Revenue of Rs 60.18 cr against Rs 58.76 crore YoY
>> EBITDA at Rs Rs 17.45 cr vs Rs 14.32 cr YoY
>> PAT at Rs 1.42 cr vs loss of Rs 3.44 cr YoY
>> Stock jumps over 4% post Q3 numbers
Underperformers on the BSE
Dec Quarter Result :: Rallis India's PAT jumps 20.2% YoY
>> PAT stands at Rs 45.6 cr vs Rs 38 cr YoY
>> Revenue at Rs 570.5 cr vs Rs 533.6 cr YoY
>> EBITDA at Rs 60.1 cr vs Rs 55.7 cr YoY
>> EBIT margin at 10.5% vs 10.4% YoY
Open to opportunities of paring stake in IDBI Bank: LIC's Vipin Anand
After recovering from the lows in the initial months of the pandemic, life insurance sector’s growth has dipped again. Vipin Anand, managing director, Life Insurance Corporation (LIC), in an interview with Subrata Panda, says he is optimistic about achieving a double digit-growth by the end of this fiscal year. READ MORE
MARKET UPDATE:: Sensex pares majority of the day's losses, turns flat
Market Update :: Sensex erases over 200 pts loss, still down 0.42%
MARKET STATS :: Advance-decline ratio at nearly 2:5 on the BSE
ITC hits over 11-month high in muted market; stock up 10% in a week
Shares of ITC were trading higher for the sixth straight day on Monday, up 1.4 per cent on the BSE in an otherwise weak market. The stock also hit over 11-month high of Rs 221. In comparison, the S&P BSE Sensex was down 0.67 per cent at 48,705 points, at 12:52 pm. In the past one week, ITC' stock has outperformed the market by gaining 10 per cent as compared to a 1 per cent decline in the benchmark index. It was trading at its highest level since February 1, 2020. ITC hit a 52-week high of Rs 243 on January 20, 2020. READ MORE
Heatmap: S&P BSE Sensex gainers and losers
IRFC IPO subscribed 37% so far on Day 1 of bidding process
Total Issue Size
Total Bids Received
Total Bids Received at Cut-off Price
No. of times issue is subscribed
Corporate Action :: Prakash Tulsiani resigns as CEO of Allcargo Logistics effective January 16
Mindtree shares slip marginally ahead of Q3 results
Despite Q3 loss, analysts still bullish on this multiplex stock & why!
After a 107 per cent surge from its 52-week lows of Rs 712, touched on May 7, 2020, analysts believe there is further upside left in the stock of multiplex owner PVR even as the firm posted a Q3 net loss of Rs 49 crore. Most brokerages maintained their bullish view on the company post its December quarter numbers, projecting an upside of up to 25 per cent in the stock from its current market price of around Rs 1,475, led by good management of costs and liquidity, and expectations of strong bounceback in footfalls. The rollout of Covid-19 vaccine also bodes well for the company, analysts believe. READ MORE
Stocks that hit 52-week high on BSE today in an otherwise feeble market
Q&A | Large-caps will continue to lead rally: Avendus Capital's Andrew Holland
Valuations appear high in some sectors as a small number of stocks dominated the index last year. Asia, led by India and China, could be the growth engines of the world in the next four-five years, says Andrew Holland, chief executive officer, Avendus Capital Public Markets Alternate Strategies. READ FULL INTERVIEW HERE
JBM Auto soars 9%, hits 52-week high on order win from Delhi Transport Corp
JBM Auto informed the stock exchanges that the Company has received orders for supply of 700 units of JBM 'CITYLIFE' fully air conditioned BS-VI CNG low-floor buses from Delhi Transport Corporation vide its Letter of award dated 15-01-2021. These orders will be executed in the coming months, it said. READ MORE
Nifty Metal index slips 4%; SAIL, Tata Steel, Hindustan Copper dip up to 6%
Shares of metal companies were under pressure at the bourses on Monday with the Nifty Metal index plunging more than 4 per cent on media reports that China is considering allowing some stranded Australian coal cargoes amid ban on coal imports from Australia. At 11:29 am, Nifty Metal index, the top loser among sectoral indices, was down 4.2 per cent, as compared to 0.93 per cent decline in the Nifty50 index. Steel Authority of India (SAIL) and Hindustan Copper slipped 6 per cent each, while Tata Steel, Jindal Steel and Power, Hindalco and JSW Steel were down in the range of 4 per cent to 5 per cent on the National Stock Exchange (NSE). READ MORE
IRCTC, Texrail, RITES: IRFC IPO may spark rally in railway-related stocks
Texmaco Rail & Engineering (TEXRAIL): With a "Golden Cross" formation, the stock is aiming to conquer the breakout level of Rs 37, as per the daily chart. Once this resistance is crossed firmly on a closing basis, the upside may see a rise towards Rs 45 and Rs 50 levels. The current support falls at Rs 31 levels. READ MORE
MARKET UPDATE:: Sensex remains subdued
Broking industry in bitter-sweet spot with yields sliding, revenues rising
The broking industry is in a bitter-sweet spot with yields sliding but revenues managing to grow. The decline in yields for the industry is because of the advent of discount brokerages, which typically charge a flat fee of as low as Rs 10 per transaction. Revenues, on the other hand, have gone up as the trading volumes have surged, partly because of the new fee structure and more due to the buoyancy in the market. A look at ICICI Securities blended yield and revenue for the broking business since 2014-15 throws a good light on this trend. READ MORE
BUZZING STOCK:: Reliance Industries defies broad trend, rises to day's high
NEWS ALERT :: UFlex Chemicals Business Secures India Patent for New Process to Derive Epoxy Ester Resin
Indian Energy Exchange rallies 8%, hits new high ahead of Q3 results
IEX, on Friday, announced that the company's board of directors, in its meeting scheduled to be held on Thursday, January 21, 2021, will also, inter alia, consider declaration of interim dividend to the members of the Company for the Financial Year 2020-2021. The purpose of determining the entitlement of the shareholders for the interim dividend, if any, approved by the board will be Saturday, January 30, 2021, it said. READ MORE
Sensex contributors :: Infy, HDFC, Maruti drag index lower
MARKET UPDATE:: Broader indices underperform benchmarks
Bright outlook but valuation high for Indigo Paints, say analysts
Set up in March 2000, Indigo Paints has quickly grown into India’s fifth-largest decorative paint company, aided by its focus on differentiated products and increasing its presence in tier-2/3/4 cities and rural areas.
According to analysts, the company’s revenues (ex-acquisitions) have grown at a compound annual growth rate of 29 per cent in the past five years, making it the fastest growing paint company in that period. READ MORE
NEWS FLASH :: Total announces acquisition of 20% minority interest in Adani Green from Adani Group
- Adani Green stock down over 1%
Market Update | Sensex tanks over 350 points, trades at day's low
Tata Elxsi jumps 7% as FPIs hike stake in Q3; stock surges 177% in 6 months
Shares of Tata Elxsi rallied 7 per cent to Rs 2,534 on the BSE on Monday, in an otherwise weak market, after foreign portfolio investors (FPIs) increased their stake in the company by nearly one percentage points during the October-December quarter (Q3FY21). In the past two quarters, FPIs have increased their stake in Tata group information technology (IT) software products company by 2.08 percentage points. In comparison, the S&P BSE Sensex was down 0.51 per cent at 48,783 points at 10:02 am. READ MORE
Gold steadies as prospects of major US stimulus offsets firm dollar
Gold prices steadied after dropping to their lowest in 1-1/2 months on Monday, as prospects of a massive U.S. coronavirus relief aid outweighed a stronger dollar and lifted bullion's appeal as an inflation hedge. Spot gold was steady at $1,826.79 per ounce by 0349 GMT, after having dropped to their lowest since Dec. 2, 2020 at $1,809.90 earlier in the session. READ MORE
SECTOR WATCH:: Metal stocks under pressure
MARKET VIEW | V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
Coming days are likely to be volatile on budget expectations and, more importantly, on actual budget proposals. One major factor supporting the markets even at high valuations is the sustained FII inflows. When FII inflows start to taper, there will be renewed selling in the market. Meanwhile data on credit and imports growth show recovery in the economy. If growth recovery sustains, that will support the market. Very good numbers from HDFC Bank is another positive. But investors may remain cautious.
HDFC Bank gains 2%, hits new high on steady December quarter performance
Shares of HDFC Bank hit a new high of Rs 1,500, up 2 per cent on the BSE in Monday's early morning trade after the private sector reported steady performance for the October-December quarter (Q3FY21) with net profit increasing by 18 per cent year on year (YoY) to Rs 8,758 crore, driven by robust growth in net interest income and other income. READ MORE
ALERT :: India VIX gains 4.6%
>> Index now trades above 25 levels
NEWS FLASH :: L&T's construction arm wins large order from RVNL
>> The construction arm of L&T has secured a Large order for its Heavy Civil Infrastructure business from Rail Vikas Nigam Limited (RVNL) for Package 4 of the New Broad-Gauge Line between Rishikesh and Karanprayag in the State of Uttarakhand.
>> Large orders are between Rs 2,500-5,000 crore
MARKET UPDATE:: Sensex extends losses
Vedanta declines around 2.5%
>> The voluntary open offer by Vedanta for acquisition of over 37.17 crore shares will open on March 4 and close on March 18, 2021.
Result Reaction :: HDFC Bank hits record high of Rs 1,500
L&T Finance slides 4% post Q3 result
>> L&T Finance Holdings reported a 51 per cent decline in consolidated net profit at Rs 287.75 crore during the third quarter ended December 31, 2020. The company's net profit stood at Rs 591.47 crore during the same period in the previous fiscal
InterGlobe Aviation dips post December aviation data
>> IndiGo's market share in December was unchanged at 53.9 per cent compared to November 2020.
Happiest Minds rallies over 2.5%
>> BNP Paribas Arbitrage acquired 9,25,250 equity shares in the company at Rs 368.55 per share on the NSE.
Resolution in sight? DHFL jumps 5%
>> The debt-ridden mortgage lender said, on Sunday, that the Committee of Creditors (CoC) has approved resolution plan submitted by Piramal Capital and Housing Finance Limited, a Piramal Group company.
Wipro trades marginally higher
>> The company has been selected as a strategic technology services partner by Fiat Chrysler Automobiles to establish the latter's first Global Digital Hub in Hyderabad. Meanwhile, the company said it has completed its Rs 9,500-crore share buyback programme. The buyback saw Azim Premji-affiliated entities tendering 22.89 crore shares worth about Rs 9,156 crore during the process.
Metropolis Healthcare rises 4% in a weak market
>> Diagnostic chain Metropolis Healthcare said it will acquire Dr Ganesan's Hitech Diagnostic Centre to strengthen its leadership position in southern India. The company's board has approved the acquisition partly by way of cash consideration of Rs 511 crore and partly by issuance of up to 4,95,000 equity shares to the promoter group of Hitech.
HDFC Bank advances over 1.5% post Q3 result
>> The private lender, on Saturday, reported an 18.1 per cent year-on-year increase in net profit to Rs 8,758.3 crore for the quarter ended in December 2020. That apart, the bank said it has imposed a penalty of Rs 10.20 lakh on its senior executive Jimmy Tata for selling his shares in violation of insider trading regulations.
Sectoral trends on NSE :: Metals, auto stocks decline
Sensex Heatmap :: Only 8 of 30 constituents trade in the green
Opening Bell :: Sensex slips over 100 pts
Top gainers and losers on S&P BSE Sensex at Pre-open
Markets at Pre-open
Markets at Pre-open
BROKERAGE VIEW :: Prabhudas Lilladher on PVR
CMP: Rs 1,475 | TP: Rs 1,673 | Reco: Buy
>> PVR’s Ind-AS adjusted EBITDA loss of Rs1,268mn (excluding other income) was broadly in-line with our estimate of Rs1,296mn as rigorous cost cutting initiatives resulted in fixed opex burn of Rs527mn per month in 3QFY21. Given prevailing occupancy caps & dearth of fresh content we expect next quarter to be more or less a replica of 3QFY21 where the focus will be on cost management/liquidity. Consequently, we expect Ind-AS adjusted EBITDA loss of Rs4.3bn in FY21E. However, we expect normalcy to resume from FY22 onwards amid strong content pipe-line (pent-up demand due to bunching up of releases) and gradual relaxation in occupancy caps. Further, current trends on ATP (higher/similar to pre-COVID levels for fresh content released in 3QFY21) and SPH (down only 5.0% YoY from pre-COVID base) indicate no structural change in consumer behavior post-COVID. As a result, we keep our EBITDA estimates broadly intact (marginal decline of 1.9%/3.3% for FY22/FY23 respectively).
>> We maintain BUY with a revised TP of Rs1,673 (Rs1,704 earlier) valuing the stock at an EV/EBITDA multiple of 11x (earlier 12x) our FY23 estimates. (PVR trades at EV/EBITDA multiple of 12.5x/9.9x our FY22/FY23 estimates; LPA is closer to ~12x).
BROKERAGE VIEW :: Elara Capital on HCL Tech
CMP: Rs 990 | TP: Rs 1,170 | Reco: Buy
>> HCL Technologies (HCLT IN) Q3 revenue at USD 2,617mn, up 4.4% QoQ & 2.9% YoY, was above Consensus and 0.9% head of our estimates, led by Mode 2 & 3 businesses. EBITM was 207bp higher than our estimates, led by margin improvement in Mode 1 of 50bp QoQ, Mode 2, up 350bp and 100bp QoQ in Mode 3. However, Q4 revenue guidance of 2-3% QoQ CC, including DWS, and implied EBITM guidance could have been better given strong deal commentary.
BROKERAGE VIEW :: Elara Capital on HDFC Bank
CMP: Rs 1,467 | TP: Rs 1,860 | Reco: Buy
HDFC Bank reported strong PAT growth of 18% YoY and 17% QoQ in Q3FY21. Slippages of INR 49bn were significantly lower than street estimates of INR 85-120bn. Slippage ratio stood at 1.86% for Q3FY21 and 1.67% for 9MFY21. Restructuring was also low at 0.5%. New stress formation including slippage plus restructuring stood at 2.36% in Q3FY21 versus street estimates of 4.3-5.0 %. QoQ NIM expansion, strong traction in savings deposits, a strong beat on fees and lower than expected stress loan formation are the key positives. There was no negative surprise in any line item.
Stocks to watch: HDFC Bank, Metropolis Healthcare, Wipro, Airtel, DHFL
HDFC Bank: The private lender, on Saturday, reported an 18.1 per cent year-on-year increase in net profit to Rs 8,758.3 crore for the quarter ended in December 2020. That apart, the bank said it has imposed a penalty of Rs 10.20 lakh on its senior executive Jimmy Tata for selling his shares in violation of insider trading regulations.
Q3 earnings: Mindtree, Rallis India, Indiabulls Real Estate, IndiaMart, Trident and Snowman Logistics are among 21 companies that will release their December quarter numbers today.
Metropolis Healthcare: Diagnostic chain Metropolis Healthcare said it will acquire Dr Ganesan's Hitech Diagnostic Centre to strengthen its leadership position in southern India. The company's board has approved the acquisition partly by way of cash consideration of Rs 511 crore and partly by issuance of up to 4,95,000 equity shares to the promoter group of Hitech. READ MORE
BROKERAGE VIEW :: Edelweiss Securities on PVR
CMP: Rs 1,475 | TP: Rs 1,815 | Reco: Buy
>> Though cinema screens opened for business on October 15, 2020, lack of strong content pipeline led to weak admits: 1mn against 26mn in Q3FY20. PVR reported a 95% plunge in revenue leading to EBITDA and PAT losses of INR781mn and INR48mn, respectively. While ATP slid 22% YoY owing to promotions, a 95% recovery in SPH is encouraging.
>> To reiterate, we expect cinemas to recover in line with new content–a new Tamil movie (Master) has opened to a massive response, and we expect improving consumer sentiment and positive developments on Covid-19 vaccine to instil confidence in Bollywood producers as well. We remain positive on PVR’s long-term picture and maintain ‘BUY’.
BROKERAGE VIEW :: Edelweiss Securities on HCL Tech
CMP: Rs 990 | TP: Rs 1,616 | Reco: Buy
After an impressive set of results from other large IT companies, HCLT too turned in strong numbers for Q3FY21. Revenue grew 3.5% QoQ (in cc), in line with our estimate but outclassed Street’s estimate of 2.7%. Margins sprung a positive surprise, up 130bps QoQ to 22.9%—beating our and Street’s estimates of 22.2% and 21.1%, respectively. HCLT also raised the guidance: for revenue to 2–3% and for margins to 21–21.5%.
Management is sanguine about demand sustaining ahead. High contributions by Digital, Cloud and Product & Platforms are helping HCLT ride this upcycle. All in all, we are raising the TP from INR1,481 to INR1,616 (28x Q1 FY23E) factoring in heightened demand and spot- on execution while rolling forward the valuation to Q1FY23E.
BROKERAGE VIEW :: YES Securities on HDFC Bank
Retain BUY | Raise TP to Rs 1,870
We are revising FY21/22/23 earnings estimates by 10%/3%/4% respectively and ABV estimates by 1.5-2% for these years, after having upgraded these numbers even towards the end of November in our collection feedback report. Earnings revisions thus could be sharper for the consensus. The stand-alone bank trades at 2.8x P/ABV and 16x P/E on FY23 estimates, adjusted for the valuation of its holdings in HDB Financial and HDFC Securities. Valuation is palatable and can move higher as it stands just above the long-term mean on 1-yr rolling fwd. basis and the probability of 20% earnings CAGR over FY20-23 has improved substantially.
BROKERAGE VIEW :: MOFSL on Piramal Enterprises
CMP: Rs 1,625 | TP: Rs 1,960 (+20%) | Reco: Buy
>> After much delay, the first IBC resolution for financial services company DHFL is complete. As per media reports, Piramal Enterprises (PIEL) has emerged as the
winner in the bid for Dewan Housing Finance (DHFL).
>> PIEL, reportedly, bid ~INR373b as a part of its settlement toward DHFL’s creditors for the entire loan book. This includes INR127b in upfront cash, INR30b in interest income (already on DHFL’s books), and ~INR196b worth of non-convertible debentures (to be repaid over 10 years). Based on media reports, this works out to ~43% recovery on the total admitted debt of ~INR872b. The amount claimed by creditors stood at ~INR1t.
>> As no formal announcement has been made and intricate details are still unknown, we have not made any changes to our estimates. Structurally, we see this development as a positive for Piramal Enterprises, resulting in a) much needed diversification in the portfolio, b) effective use of capital, c) a possible improvement in the credit rating, d) a reduction in cost of funds, and e) an increase in granularity on the balance sheet. Maintain BUY and rollover SOTP to FY23 – to INR1,960.
>> EBITDA loss increased 34% QoQ to INR1.1b (v/s our estimate of a loss of INR537m), despite reopening to cinemas as 50% capacity restrictions and lack of fresh content, led to meager (~1%) occupancy.
>> We roll forward our estimates to FY23E and revise down our FY22E EBITDA/PAT estimates by 3%/12% on the back of slower recovery, thriving OTT market, and changing consumer behavior that could pose a risk to long term occupancies and business economics. We downgrade to Neutral.
BROKERAGE VIEW :: MOFSL on RIL
CMP: Rs 989 | TP: Rs 1,300 (+31%) | Reco: Buy
>> HCL Technologies (HCLT) delivered strong revenue growth (3.5% QoQ CC) in 3QFY21, above our expectation and its guidance, led by stronger than expected seasonality in the Products and Platforms vertical (P&P, +8.3% QoQ in CC) and continued traction in Mode 2 services (+10.9% QoQ in CC).
>> We expect HCLT to return to mid-teens growth in FY22 (14% YoY in CC USD) as continued strength in P&P – due to improving deal wins and new client additions – complements improving demand environment in IT Services and R&D verticals. The P&P business should deliver low teen USD revenue growth over the next two years.
>> HCLT is our preferred pick in IT Services space, and also a part of our model portfolio. We upgrade our EPS estimate for FY21E/FY22E/FY23E by 4%/4%/7%. Maintain Buy as we expect HCLT to re-energize its Products business, while keeping positive traction in the Services business, driven by higher IMS/Cloud focused deals. Our TP of INR1,300 per share implies 20x FY23E EPS (~20% discount to TCS)
BROKERAGE VIEW :: MOFSL on HDFC Bank
CMP: Rs 1,466 | TP: Rs 1,720 (+17%) | Reco: Buy
>> HDFC Bank (HDFCB) reported a strong performance, with advances growth driven by both corporate and revival in the Retail segment. Operating performance remained steady, led by healthy business growth, sequential margin improvement, and cost control. The bank further shored up provisions, providing INR24b toward potential NPAs (not declared due to the SC order) and other contingent provisions.
>> Asset quality remained stable, while total restructuring stood at 0.5% of loans. Proforma slippages stood at INR49b; the bank holds a sufficient additional contingent provision buffer to manage the COVID impact.
>> We marginally increase our estimates for FY22/FY23 and expect an earnings CAGR of 20% over FY20–23E. Maintain Buy
IRFC IPO: Six reasons why you should subscribe to the issue
The three-day initial public offer (IPO) of Indian Railway Finance Corporation (IRFC) will open today, and will culminate on Wednesday, January 20. With an aim to raise approximately Rs 4,633.4 crore, at the upper end of the price band of Rs 25-26 apiece, the state-owned entity wishes to deploy the funds towards augmenting the company’s equity capital base to meet business future growth requirements; and towards meeting general corporate purposes. READ MORE
Two stocks that Vaishali Parekh of Prabhudas Lilladher is bullish on
The stock has formed a 'higher bottom' formation on the daily chart, taking support near 190 levels. It has also reversed eralier trend and has picked up momentum with decent volume to improve the bias. The chart looks attractive for further upside movement with the RSI indicator also showing a trend reversal. It is well placed and we, therefore, suggest to buy this stock for the target of Rs 218-225, keeping the stop loss of Rs 180. READ MORE
FII/FPI & DII trading activity on NSE, BSE and MSEI
Oil drops 1% as rising coronavirus cases end supply-led rally
Oil prices fell on Monday, extending losses that last week ended a rally driven by production cuts and strong Chinese demand, with the market’s recovery outlook being called into question as coronavirus infections rise.
Brent crude fell 45 cents, or nearly 1%, to $54.65 a barrel, after dropping 2.3% on Friday. U.S. oil was down by 43 cents, also nearly 1%, at $51.93 a barrel, having declined 2.3% in the previous trading session.
NEWS ALERT :: China's Q4 GDP grows 6.5% YoY
The gross domestic product (GDP) growth was faster than the 6.1% forecast by economists in a Reuters poll, and followed 4.9% growth in the third quarter.GDP grew 2.3% in 2020, the data showed, making China the only major economy in the world to avoid a contraction last year as many nations struggled to contain the COVID-19 pandemic. READ MORE
SGX Nifty Update
The SGX Nifty was trading at 14,421 levels, down 38 points, at 8:12 AM, indicating a subdued start for the domestic benchmark indices today amid weak global cues.
Asian market check
Asian share markets inched lower on Monday, with the MSCI’s broadest index of Asia-Pacific shares outside Japan dipping 0.3 per cent. Japan’s Nikkei and Australia's ASX200 slipped 0.7 per cent each while South Korea's Kospi was down 0.6 per cent.
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