MARKETS ON WEDNESDAY: Sensex ends 352 pts lower as trade war fears escalate

Markets erased their morning gains to end lower taking cues from their key global counterparts that slipped on the back of increased fears of a full-scale global trade war.

The S&P BSE Sensex ended at 33,019, down 352 points while the broader Nifty50 index settled at 10,120, down 125 points.

On Wednesday, China condemned the United States as the Trump administration pushed ahead with plans to slap tariffs on about $50 billion of Chinese industrial and hi-tech products, and vowed imminent countermeasures in the escalating trade dispute.

The US government has unveiled a detailed breakdown of some 1,300 Chinese industrial, transport and medical goods that could be subject to 25 percent duties, ranging from light-emitting diodes to chemicals and machine parts.

Japan's Nikkei 225 closed higher by 0.13 per cent, or 27.26 points, at 21,319.55 amid choppy trade. The broader Topix edged up by 0.14 per cent. Automakers were higher on the back of strong US auto sales reported overnight, with Toyota edging up by 0.13 per cent, while bank stocks came under pressure.

Investors are also awaiting decision on monetary policy by Reserve Bank of India (RBI). The central bank is expected to keep monetary policy steady at its April meeting but shift to a hawkish stance by the end of this year and raise interest rates early in 2019 as inflation pressures build

in other news, Rainfall during the monsoon season is expected to be 100 per cent of the long-term average, a private weather forecasting agency Skymet said earlier in the day, raising prospects of higher farm and economic growth in the $2 trillion economy.

(with Reuters inputs)


Nifty Metal index falls 2.57%. Top losers:

JINDAL STEEL 219.60 229.40 -9.80 -4.27
S A I L 72.30 74.95 -2.65 -3.54
HINDALCO INDS. 200.80 207.95 -7.15 -3.44
TATA STEEL 560.55 579.70 -19.15 -3.30
VEDANTA 274.30 283.20 -8.90 -3.14

Sectoral Trend

BSE Sensex: Tata Motors gains 3.5% while Tata Steel loses 3.5%

Market at close
The S&P BSE Sensex ended at 33,019, down 352 points while the broader Nifty50 index settled at 10,120, down 125 points.
V-Mart Retail hits new high; stock zooms 60% in two months post Q3 results

V-Mart Retail hit a new high of Rs 2,325, up 20% on the BSE in intra-day trade, in otherwise weak market. In past two months, post October-December quarter (Q3FY18) results, the stock zoomed 60% from Rs 1,450 on February 2, as compared to 6% decline in the S&P BSE Sensex.
During Q3FY18, V-Mart reported an increase in revenue from operations by 13% to Rs 3,680 million, EBITDA by 30% to Rs 640 million, and net profit by 27% to Rs 367 million over the corresponding period last year. Same store sales growth (SSG) for the quarter remained flat over a high base of 17% in Q3FY17. READ MORE

Tata Motors jumps after strong JLR India sales
Tata Motors rose 4.35% to Rs 358.30 on BSE on reports Jaguar Land Rover India reported strong sales in the year ended March 2018.
On the BSE, 12.56 lakh shares were traded in the counter so far compared with average daily volumes of 5.08 lakh shares in the past two weeks. The stock had hit a high of Rs 363.45 and a low of Rs 346.10 so far during the day.
Market Snapshot (Image source: NSE)

Metal index slips; SAIL, JSPL, top losers

S A I L 72.85 74.90 -2.05 -2.74 1252657
JINDAL STEEL 224.20 229.65 -5.45 -2.37 613389
HINDALCO INDS. 203.10 207.75 -4.65 -2.24 634428
TATA STEEL 567.60 579.50 -11.90 -2.05 943479
NMDC 116.30 118.70 -2.40 -2.02 228956

BSE launches arbitrage rate index in a S&P Dow Jones Indices joint venture

Asia Index, a joint venture between S&P Dow Jones Indices and BSE, has launched arbitrage rate index.
The S&P BSE Arbitrage Rate Index will equally weigh long positions in the Sensex and equivalent short positions in the futures contracts, Asia Index CEO Alka Banerjee said in a statement. READ MORE

Market Check

S&P BSE Sensex 33,083.58 -0.86%
Nifty 50 10,143.15 -0.99%
S&P BSE 200 4,467.48 -0.84%
Nifty 500 8,989.75 -0.94%
S&P BSE Mid-Cap 16,245.05 -0.55%
S&P BSE Small-Cap 17,500.84 -0.72%

Vakrangee locked lower circuit for eight straight day; falls 34% in 8 days

Shares of Vakrangee locked in lower circuit for the eight straight trading days, down 5% at Rs 190 on the BSE with no buyers were seen on the counter. At 12:44 pm; there were pending sell orders for a combined 12.34 million shares representing 1.1% of total equity of Vakrangee on the National Stock Exchange (NSE) and BSE, the exchange data shows. READ MORE

HEG 2895.20 3191.65 -296.45 -9.29 211407
GRAPHITE INDIA 721.55 759.50 -37.95 -5.00 269934
PHILLIPS CARBON 1138.80 1198.70 -59.90 -5.00 73391
VAKRANGEE 189.65 199.60 -9.95 -4.98 15252
BOMBAY BURMAH 1229.95 1292.50 -62.55 -4.84 21338

China vows countermeasures as U.S. issues extensive tariff list

China condemned the United States on Wednesday as the Trump administration pushed ahead with plans to slap tariffs on about $50 billion of Chinese industrial and hi-tech products, and vowed imminent countermeasures in the escalating trade dispute. READ MORE
Stock: Kansai Nerolac

(Source: HDFC Securities)
Sector watch: Power

The thermal sector continued to witness severe coal shortage, with 28 plants facing sub-critical level of coal inventory (highest ever in past three years). The early onset of summer has further led to a spike in power demand, which is further increasing demand for coal and its high usage. With monsoon being below par in FY18, the water levels at key reservoirs are much lower on yoy basis, leading to lower hydro power generation. This is putting further pressure on the thermal segment, resulting in low coal inventory across stations and consequently rise in spot power prices (+22% yoy in Mar'18).

With the summer season yet to peak and insufficient rake availability for coal supply, we believe that the spot power prices will climb further, which would benefit idle and merchant players like JSW Energy, KSK Energy and Rattan India. Also, power traders like PTC India could benefit from this demand-supply mismatch in the coming quarters.‚Äč

(Source: Emkay Global)
Monetary Policy expectation by Madan Sabnavis, Chief Economist, CARE Ratings

The first bi-monthly monetary policy review for FY19 is to be announced by the RBI on 5th April 2018. We expect status quo in policy stance. The policy review is in the backdrop of higher economic growth, moderation in inflation, increase in bank credit growth, lower bank deposits growth, tight liquidity conditions and increasing GSec yields in FY18. Prospects of interest rate hikes by US Federal Reserve, European Central Bank and Bank of England will also limit the chances of RBI going in for a rate cut
Sebi's F&O restrictions likely to boost dabba trading in Indian markets

The decision of the Securities and Exchange Board of India (Sebi) to tighten the derivatives framework could provide an impetus to ‘dabba trading’ — an unofficial parallel market. READ MORE
Akzo Nobel India gains 6% on share buyback plan

Akzo Nobel India has rallied 6% to Rs 1,911 on the BSE in intra-day trade on Wednesday after the company said its board of directors are scheduled to meet on Friday, April 06, 2018, to consider proposal to buy-back its own shares.
The primary objective of a share buyback programme is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better P/E multiple. The other objective is to improve earnings per share (since the same dividend amount is now distributed among fewer shares). READ MORE

Mishra Dhatu Nigam lists 3% below issue price

Mishra Dhatu Nigam (MDNL) has made a weak debut by listing at Rs 87, a 3.3% lower against issue price of Rs 90 on the National Stock Exchange (NSE) and the BSE (Bombay Stock Exchange). However, the stock moved higher to Rs 90.90 after its listing. READ MORE
Experts see up to 15% growth in auto index in FY19; Maruti, M&M top picks

The automobile sector, which witnessed a healthy sales growth in the previous financial year (FY18) led by higher demand from rural markets and the fast growing SUV segment, should continue to do well in the new fiscal year (FY19) as well. READ MORE

NEWS ALERT Infosys Q4FY18 results

Infosys Limited (NSE, BSE, NYSE: INFY), a global leader in consulting, technology, outsourcing and next-generation services, will announce the results for its fourth quarter and year ended March 31, 2018 on Friday, April 13, 2018 around 4.00 p.m. Indian Standard Time (IST)
MARKET COMMENT Saurabh Mukherjea, CEO, Ambit Capital

Official estimates which suggest very low unemployment rate in India can often be misleading. An analysis of the labour force participation rate suggests that employment fell after demonetisation and GST. The average value for the labour participation rate in FY17 was 44.3% and this dropped to 41.6% in FY18 with the age groups of 15-19 and 20-24 being the most badly hit. A region-wise analysis also suggests that labour force participation fell sharply in areas where there were healthy participation rates prior to demonetisation. Our findings suggest that the NDA will aggressively promote spending on food subsidies between now and the General Elections. That makes FMCG companies which have a strong rural footprint much more likely to post superior FY19 results compared to FY18

Saurabh Mukherjea, Chief executive officer, Ambit Capital

Markets at Noon

Index Current Pt. Change % Change
S&P BSE SENSEX 33,413.46 +42.83 +0.13
S&P BSE SENSEX 50 10,722.82 +7.32 +0.07
S&P BSE SENSEX Next 50 33,820.08 +36.94 +0.11
S&P BSE 100 10,663.44 +7.98 +0.07
S&P BSE Bharat 22 Index 3,486.85 -8.75 -0.25

(Source: BSE)

Having seen a sign of earnings recovery in 3QFY18 after the transitory impacts of GST/DeMo, we believe 4QFY18 earnings to be crucial for sustaining market valuations. Based on our interactions with the industry and channel checks with different stakeholders, we believe that corporate earnings are unlikely to surprise negatively barring Banking sector, where risk of higher provisioning is there due to change in NPA recognition norms. Low base, improving capacity utilisations, pick-up in infrastructure development activities and improving rural consumption are likely to aid 4QFY18 earnings, in our view.

(Source: Reliance Securities)
Axis Direct on Infosys

Infosys is trading at discount to its historical average. We believe as the management team stabilises, with key focus on execution of strategic initiatives undertaken by the team along with continued focus on regaining market share, Infosys is in early stage of rerating cycle. We expect growth recovery to be led by BFSI, Energy, and Telecom verticals wherein large deal wins, client mining, and wallet share gain have improved revenue visibility.


Sharekhan on BEL

BEL is expected to witness cost pressures in FY2019E, attributed to the recent wage revision (completed for officer grade employees) and enhancement in gratuity
ceiling. The wage revision is pending for non-officer grade employees, which is likely to be done in FY2019. Further, the increase in civil contracts work to 17-18% in FY2019E from usual 12-13% would impact margins.

We have assumed operating margin of 19% in FY2019 and 20% in FY2020E. Further, reduction in cash balance owing to buyback programme (would lead to lower other income) and increased tax rate would impact overall profitability
HDFC Securities on Dabur

Dabur has witnessed many challenges in its business during the last two years, on account of slow rural demand (~45% of domestic), disruption owing to Patanjali, greater impact of demonetisation than other peers owing to high wholesale dependence and weak international business. As a result, Dabur’s consolidated revenue declined average ~2% during the eight quarters. Better revenue growth, stable inflation and a favourable product mix would expand the EBITDA margin by ~200bps over FY18E-20E.
Reliance Securities on NBCC

NBCC continues to be a robust growth story owing to its PWO status and niche presence in redevelopment of government’s old colonies. Notably, order book stands at Rs800bn (13.2x TTM revenue) and offers unmatched growth visibility, going ahead. Its key redevelopment projects i.e. Pragati Maidan (Rs25bn), Nauroji
Nagar (Rs30bn) and Maharashtra Irrigation (Rs10bn) projects were started, which will start contributing to revenue from current quarter. We maintain our fundamental BUY rating on the stock with a Target Price of Rs 295

India Ratings and Research (Ind-Ra) has revised its FY19 economic growth forecast to 7.4% from 7.1% earlier. From the production side, higher growth in agriculture (expectation of normal rainfall and assumption of even rainfall distribution over space and time) and industrial sectors is expected to push the overall economic growth. From the expenditure side, the boost is expected to come from both private and government expenditure coupled with green shoots emerging in investment spending.
However, the economy is facing a number of headwinds, ranging from the non-performing assets of the banking system and elevated bond yields to increased trade protectionism and tightening global financial conditions.
Global Indices

SWISS MARKET 03-04-2018 8630.93 8740.97 -110.04 -1.26
SHANGHAI COMPOSITE 03-04-2018 3136.63 3163.18 -26.55 -0.84
DAX 03-04-2018 12002.45 12096.73 -94.28 -0.78
ATX 03-04-2018 3402.44 3428.53 -26.09 -0.76
TAIWAN WEIGHTED 03-04-2018 10821.53 10888.27 -66.74 -0.61
STRAITS TIMES 03-04-2018 3412.15 3430.76 -18.61 -0.54


Mark-to-market provisioning relief to lift public sector banks' profits

The Reserve Bank of India (RBI) has lent a helping hand to the banking sector, especially public sector banks (PSBs), when it allowed them to spread the mark-to-market (MTM) provisioning burden for the October-December 2017 (Q3) and January-March 2018 (Q4) quarters equally over up to four quarters. READ MORE
Fertiliser, agrochemicals stocks in focus on forecast of normal monsoon

Shares of fertiliser and agrochemicals companies were trading higher by up to 10% on the BSE in intra-day trade after the private weather forecasting agency Skymet said this year monsoon could be ‘normal’ and expected to be 100% of the long period average. READ MORE
Monsoon Forecast
Private weather forecasting agency, Skymet on Wednesday in its first forecast said that southwest monsoon in 2018 is expected to be normal at 100 per cent of the Long Period Average (LPA) with a model error of plus and minus 5 per cent.
The Long Period Average for the June to September rains is around 887 millimetres.
The agency also said that there is nil possibility of a big nationwide drought or deficient rainfall when the total cumulative seasonal rainfall across the country falls below 90 per cent of LPA. READ MORE

(Photo: Shutterstock)

Stocks at 52-week high

APOLLO TYRES 286.60 289.15 288.80 03-APR-2018 44040
BAJAJ ELECTRICAL 641.40 663.55 638.80 03-APR-2018 137344
BHARAT FINANCIAL 1120.75 1125.00 1120.55 03-APR-2018 12836
CHOLAMAN.INV.&FN 1530.00 1548.00 1530.00 03-APR-2018 3647
FIRSTSOUR.SOLU. 56.95 57.75 57.50 03-APR-2018 734484

Zensar Technologies surges 7% on multi-year contract with City of San Diego
Shares of Zensar Technologies have surged 7% to Rs 968 per share on the BSE in early morning trade after the company announced that it has won a four year, multi-million dollar contract from the City of San Diego for network services.
The stock is trading close to its 52-week high of Rs 1,000 touched on January 24, 2018 on the BSE in intra-day trade. READ MORE
Sebi releases list of nearly 2,200 entities for not paying penalty
Nearly 2,200 entities failed to pay penalties imposed on them by markets regulator Sebi for various violations till last December.
The defaulters include individuals as well as companies which failed to pay penalties levied on them by Sebi for various offences related to the securities market. Some of these cases are nearly two decades old.
Certain amounts due are as small as Rs 15,000, while the majority of individual penalties are worth a few lakhs of rupees, and others amount to a few crores of rupees. READ MORE
ICICI Securities makes weak debut
ICICI Securities made a weak debut by listing at Rs 431, a 17% lower against its issue price of Rs 520 per share on the BSE. On the National Stock Exchange (NSE), the stock opened at Rs 435, a 16% below its offer price.
ICICI Securities had reduced the size of its initial public offer (IPO) to Rs 35.15 billion after the sale elicited a sluggish response, especially from high networth individuals. The IPO was subscribed 0.78 times, received bids for 34.68 million shares, against offer size of 44.22 million shares, data on the stock exchanges website showed. READ MORE
Market Check

S&P BSE Sensex 33,448.27 0.23%
Nifty 50 10,257.10 0.12%
S&P BSE 200 4,519.34 0.31%
Nifty 500 9,101.85 0.30%
S&P BSE Mid-Cap 16,442.47 0.66%
S&P BSE Small-Cap 17,808.01 1.02%

Motilal Oswal Research on Shilpa Medicare

Shilpa Medicare (SLPA) recently decided to end its joint venture (JV) with ICE S.P.A Italy (ICE) – a move that would help it garner proceeds of INR1.3b, as against its investment of INR800m toward the JV. Furthermore, the amount of annual business with ICE via CRAMS may be reduced by ~INR500m. The decision was premised on the increasing uncertainty over the profitability of the JV.
Accordingly, for FY19/FY20, we reduce our (i) sales estimate by 5% to Rs 10 billion /Rs 12 billion and (ii) earnings estimate by 8.5% to Rs 2.1 billion / Rs 2.7 billion. Consequently, our price target is lowered to Rs 686 (25x 12M forward earnings). We, however, remain positive on SLPA and re-iterate our Buy rating, given the promising outlook for the US formulations business (31 ANDAs pending for approval) and minimal medium-term regulatory risk.
Sector watch: Telecom

Since January 2018, telecom service providers have once again turned to market share gains at the cost of profitability. The sector might continue to see aggressive pricing for the next 12 months, leading to market share losses for the smaller players (15% currently) as well as Vodafone-Idea until the merger settles down.
Bharti’s acquisition of TTSL and Telenor should provide INR33.8b EBITDA in FY20, a much needed buffer to mitigate the impact of ARPU downtrading. Vodafone-Idea’s Rs 200 billion cash infusion should help take care of FY19 capex, but beyond that, net debt of Rs 1.2 trillion and net-debt-to-EBITDA of ~11x might necessitate further cash infusion.

We maintain Buy on both Bharti and Idea, but cut our target prices. Our target price is now Rs 581 (v/s Rs 680 earlier) for Bharti and Rs 91 (v/s Rs 120 earlier) for Idea. As recovery sets in in the next 3-4 quarters, strong FCF growth should re-rate the stocks.

(Source: MOSL)

Engineering & Capital Goods - Q4FY18 result preview

Post demonetisation and GST impacting growth in H1, we expect execution ramp up to continue in Q4FY18, after 11% YoY growth in Q3FY18. We estimate 15% YoY revenue spurt aiding 50bps margin expansion. Among public spending verticals, railways and infra continued to see significant order finalisation, followed by T&D. While the private sector has sustained its opex spending (focus on improving efficiencies), there have been signs of revival with brown field projects in selective segments viz., cement, metals, among a few.

Pick up in greenfield projects continues to remain a key monitorable as it is crucial to drive the next leg of growth of EPC companies, which we believe is ~12-15 months away. We prefer companies with improving growth visibility and scalable businesses—L&T, Cochin Shipyard, Kalpataru Power and KEC International—which we believe are likely to outperform over the next one-two years.

(Source: Edelweiss Research)
Volume Toppers

UNITECH 6.40 0.42 7.02 1777384
REL. COMM. 23.15 0.50 2.21 958678
IDBI BANK 73.15 1.00 1.39 940600
JP ASSOCIATES 20.55 0.20 0.98 849047
SUZLON ENERGY 11.80 0.05 0.43 698979

Nifty Auto index gains over 1% on strong auto sales numbers

Top gainers

TATA MOTORS 353.40 343.10 10.30 3.00 1610974
EICHER MOTORS 28617.70 27990.00 627.70 2.24 4845
TATA MOTORS-DVR 198.20 193.95 4.25 2.19 178274
BHARAT FORGE 730.40 717.50 12.90 1.80 124380
MOTHERSON SUMI 337.70 332.35 5.35 1.61 234768
EXIDE INDS. 235.25 232.95 2.30 0.99 213951

Sectoral Trend

BSE Sensex: gainers and losers

Market at open
At 9:17 AM, the S&P BSE Sensex was trading at 33,389, up 18 points while the broader Nifty50 was ruling at 10,252, up 7 points.
Markets at pre-open

Index Current Pt. Change % Change
S&P BSE SENSEX 33,406.19 +35.56 +0.11
S&P BSE SENSEX 50 10,725.38 +9.88 +0.09
S&P BSE SENSEX Next 50 33,810.99 +27.85 +0.08
S&P BSE 100 10,665.12 +9.66 +0.09
S&P BSE Bharat 22 Index 3,501.48 +5.88 +0.17

(Source: BSE)
Today's picks: From Adani Ports to Wipro, stocks to watch on Wednesday

Adani Ports
Current price: Rs 367
Target price: Rs 361

Keep a stop at Rs 370 and go short. Add to the position between Rs 362 and Rs 363. Book profits at Rs 361. READ MORE


The market is likely to trade on a cautious note today on the back of mixed global cues. Asian stocks traded mixed on Wednesday trade as the overnight bounce on Wall Street stalled. Recent concerns over trade tensions also persisted amid new China-U.S. trade developments. U.S. stocks closed higher Tuesday, following a volatile session that saw major indexes fluctuate widely as investors digested a sharp move lower in the previous session and gauged the likelihood of both trade risk and further weakness in technology names.

(Source: SMC Global)
Corporate News 
·         JSW Steel buys 26% stake in Numetal’s India arm to facilitate Essar Steel bid
·         Akzo Nobel to consider share buyback on April 6
·         Jubilant Foodworks says that it passed on full benefit of GST rate cut
·         Zensar Technologies wins multi-year contract with city of San Diego
·         AU Small Finance in pact with Future Generali India to act as corporate agent for life insurance business
·         Bigbloc Construction to issue 8 lakh convertible warrants to promoters
·         Tayo Rolls to issue 2 lakh preferential shares to promoter Tata Steel
·         Ferro Alloys says lenders’ panel have rejected the debt resolution plans and decided to liquidate firm
·         Infibeam enters into agreement with TV18 for advertising products, services and brands
·          Income Tax department issues notice to Deepak Kochhar, husband of ICICI Bank chief Chanda Kochhar, in connection with the Videocon bank loan
·         Jaguar Land Rover India lines up 10 new products for FY19
·         Reliance Jio Payments Bank commences operations


(Source: IIFL)
Nifty Outlook and top trading ideas by HDFC Securities

By closing above 10,208, Nifty has confirmed higher top and higher bottom formation for the first time in the recent correction from 11,171 to 9,951. Nifty has also formed small inverse head and shoulder pattern on the short term chart, indicting the target of 10,500. Nifty has managed to surpass the crucial resistance of 20 DMA, placed at 10,220. Support is now shifted upward to 10,090 from earlier level of 9,950. READ MORE
Top trading ideas by Prabhudas Lilladher: Buy JSPL, Century Textiles

CMP: Rs 229.40 
TARGET: Rs 265 
The stock has been consolidating for quite some time at around 220-225 levels and has currently is indicating a positive bias with the RSI on the rise reversing from the oversold zone. The MACD also has shown a trend reversal to improve the sentiment and with consistent volume activity seen, we recommend a buy in this stock for an upside target of 265 keeping a stop loss of 215. READ MORE

SGX Nifty

The SGX Nifty was at 10,285.50, up 0.09 per cent from the previous close.
Asian Markets

Asian shares were largely trading flat on Wednesday as investors took a cautious stance following the latest developments in US-China trade tensions. Japan's Nikkei slipped 0.1 per cent and the broader Topix edged down by 0.13 per cent.
Elsewhere, South Korea's benchmark Kospi index shed 0.31 per cent, weighed down by declines in the technology sector as index bellwether Samsung Electronics lost 0.96 per cent.
Wall Street

The three major US stock indexes ended higher after a choppy session on Tuesday as investors looked forward to earnings season while the S&P 500 pushed above a key support level and shares jumped on bets that criticism from President Donald Trump would not translate to policy changes.

The Dow Jones Industrial Average rose 389.17 points, or 1.65 per cent, to 24,033.36, the S&P 500 gained 32.57 points, or 1.26 per cent, to 2,614.45 and the Nasdaq Composite added 71.16 points, or 1.04 per cent, to 6,941.28.
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