Benchmark indices ended flat on Tuesday, tracking their Asian counterparts.
The S&P BSE Sensex ended the day at 35,216 up 8 points while the broader Nifty50 index settled at 10,718 , up 2 points
Meanwhile, stock-specific actions continued on Tuesday as we are in the middle of March 2018 quarter earnings season.
Among individual stocks, ICICI Bank rose 7 per cent and was the biggest gainer on the broader NSE index. Brokerages have retained their ‘buy’ rating on the stock citing a significant decline in the “drilldown” list of potential troubled loans. The bank’s net profit almost halved to Rs 10.20 billion for the quarter ended March 31.
ASIAN MARKETS & OIL
Globally, oil prices eased slightly on Tuesday, a day after hitting 3-1/2 year highs, as investors braced for President Donald Trump’s decision on whether to withdraw the United States from the Iran nuclear deal, a move that could disrupt global oil supply.
While caution on Trump’s statement kept investors edgy in early trade, technology firms helped to generate gains for Asian equities.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.6 per cent, with information technology shares rising 1.3 per cent. Japan’s Nikkei was 0.2 per cent higher.
Market rundown by Vinod Nair, Head of Research, Geojit Financial Services
"Market turned volatile as investors’ are concerned on the movement of rupee and surge in oil price which could eventually lead to tight monetary policy. Albeit, banks outperformed as sentiment improved on account of early recognition of stressed assets. Continued outflow of foreign money will keep rupee on tenterhook while increasing GST collection and RBIs open market operation may soften the volatility. "
Nifty Bank index up nearly 1%: Top gainers from the pack
The S&P BSE Sensex ended the day at 35,216 up 8 points while the broader Nifty50 index settled at 10,718 , up 2 points
India's April gold imports plunge 39 per cent on weak demand: GFMS
India's gold imports fell for a fourth straight month in April from a year ago to 57 tonnes on subdued demand after local prices jumped to the highest level in nearly 21 months, provisional data from precious metals consultancy GFMS and bank dealers showed.
The drop in purchases by India, though, could weigh on global prices, which are still up nearly 6 percent from a mid-December trough, despite dropping back from a 17-month high hit at the end of January. READ MORE
Global gold jewellery demand was 685.6 tonnes during the September quarter
Jubilant FoodWorks hits new high on good Q4 results; 1:1 bonus
Shares of Jubilant FoodWorks hit new high of Rs 2,668 per share, up 2% on the BSE, bouncing back 5% from their intra-day low after the company reported more than 10-fold jump in net profit at Rs 681 million in March 2018 quarter (Q4FY18). It had profit of Rs 67 million in a year ago quarter.
Revenue from operations during the quarter under review grew 27% year on year (y-o-y) at Rs 7,798 million against Rs 6,128 million in the corresponding quarter of previous fiscal. EBITDA (earnings before interest, tax, depreciation and amortization) margin improved 650 bps to 16.4% in Q4FY18 from 9.9% in Q4FY17. READ MORE
Investors pricing in Modi win in 2019; oil, rupee among key concerns: UBS
Investors have priced in a “Modi win in 2019” as the base case and expect India’s economic growth to gain momentum in financial year 2018 – 19 (FY19), albeit with widening macro stability risks (inflation, current account deficit and fiscal deficit), suggests a recent report by UBS.
The report, authored by Tanvee Gupta Jain, UBS’ economist, also highlights the key near-term risks investors are concerned about. Investors, it says, have also questioned the trends in household savings and the local flows in the backdrop of demonetisation. READ MORE
Buffett slams bitcoin as thriving on mystique, favours US stocks over cypto
Billionaire investor Warren Buffett on Monday said buyers of bitcoin, which he has characterized as "rat poison squared," thrive on the hope they'll find other people who will pay more for it.
Likening bitcoin demand to the tulip bulb mania in 17th century Holland, Buffett, the chairman and chief executive of Berkshire Hathaway Inc, said the mystique behind the cryptocurrency has caused its price to surge. READ MORE
MCX to launch crude oil, metals options; also gets nod for diamond futures
Multi Commodity Exchange (MCX) got permission, late last week, to launch options trading in crude oil, silver, copper and zinc. The exchange announced on Monday that crude oil (100 barrels) option and trading will start from May 15 and expire on June 15.
This follows its recent launch of options contracts in gold. After that successfully took off, the Securities and Exchange Board of India (Sebi) has allowed MCX, the country’s largest in commodities, to do so in zinc (5 tonnes), silver (30 kg) and copper (1 tonne), apart from crude oil. READ MORE
NEWS WATCH Fed to communicate clearly to avoid market disruptions - Powell
The Federal Reserve's interest rate hikes may not pose as big a risk for global financial markets and emerging market economies as many have thought, the US central bank's chairman said on Tuesday.
Still, Jerome Powell said global risk sentiment bears watching as the Fed carries out its well-telegraphed gradual policy-rate increases. READ MORE
Sebi writes to govt urging tax parity between cash and derivatives
The Securities and Exchange Board of India (Sebi) intends to have tax parity in the futures and options (F&O) segment. Sebi is of the view that the differentiating tax structure, particularly the securities transaction tax (STT), is incentivising participation in the derivatives segment.
The market regulator has written to the government—which sets the tax rate for the capital market—on bringing tax parity between the cash and the derivatives segment. READ MORE
PSBs extend gains; Indian Bank, Bank of India up over 3%
Shares of public sector banks (PSBs) were trading higher for the second straight day in a row amid softening of the yield on the 10-year gilt, following the Reserve Bank of India (RBI’s) open market operation announcement on Friday.
Indian Bank surged 7% to Rs 344, extending its previous day’s 3.5% gain on the National Stock Exchange (NSE). Bank of India up 4%, while IDBI Bank, Andhra Bank, Union Bank of India, Bank of Baroda, Canara Bank, Syndicate Bank, Oriental Bank of Commerce and State Bank of India (SBI) were up 2% to 3% on the NSE. READ MORE
Godrej Properties extends rally on robust Q4 results; stock hits new high
Godrej Properties hit a new high of Rs 917, up 8%, extending past two days' gain of 8% on the BSE, after the realty firm on Friday reported an over two-fold jump in its consolidated net profit at Rs 1.41 billion for the quarter ended March 2018 (Q4FY18) on higher sales. Its net profit stood at Rs 626 million in the year-ago period.
Total income also rose sharply by 84% to Rs 8.48 billion from in the fourth quarter of the last financial year from Rs 4.62 billion in the corresponding period of the previous year. READ MORE
Binani Cement lenders to meet on Wednesday to mull UltraTech revised offer
The Committee of Creditors (CoC) of Binani Cement is likely to meet on Wednesday this week to consider the revised offer of Rs 79.60 billion from UltraTech Cement for acquisition of the stressed assets of Binani Cement. The company is currently undergoing insolvency proceedings in the Kolkata bench of NCLT.
This follows the NCLT’s order which directed the CoC to consider the Aditya Birla Group company’s proposal despite it being termed as the “unsuccessful bidder” by the CoC. The Tribunal had ordered Binani Cement’s resolution professional (RP) to submit the revised proposal from UltraTech to the CoC and also accommodated any modifications to the proposal if necessary. READ MORE
Devangshu Datta: Most signals positive, but VIX indicates nervousness
The Nifty looks set to push North, but it could run into heavy resistance above 10,750-10,800. The index is well above the 200-day moving average (200-DMA), which is now between 10,250 and 10,300. There is a possible short-term target of 10,900.
The index will have to cross the all-time high of 11,170 to confirm the big bull market remains alive. There are successive supports between 10,600 and 10,700, and then at 10,300-10,400. The 10,600 support held during a brief sell-off last week. READ MORE
PNB Housing Finance falls 7% after huge block deals
Shares of PNB Housing Finance have fallen 7% to Rs 1,271 per share on the BSE in intra-day trade after nearly nine per cent of total equity of the housing finance company changed hands through multiple block deals.
On the BSE around 8 million shares changed hands, while on the NSE 6.52 million shares were traded so far. Currently, the stock was trading 6.5% lower at Rs 1,284 on the BSE, as compared to 0.23% rise in the S&P BSE Sensex. READ MORE
Brokers urge Sebi to review 'harsh' 100% penalty on margin reporting
Brokers have urged Securities and Exchange board of India (Sebi) to review the penalty structure on margin reporting. The market regulator has directed exchanges to levy stringent penalty of up to 100 per cent, along with suspension of trading, on false reporting of client margins by brokers.
The industry body Association of National Exchanges Members of India (Anmi) has written to the regulator asking for leeway. READ MORE
DSP parts ways with BlackRock, to buy 40% stake in MF venture
US-based BlackRock and Hemendra Kothari-led DSP group have ended their mutual fund (MF) joint venture DSP BlackRock Investment Managers. Under an agreement announced on Monday, the DSP Group will buy the 40 per cent stake held by BlackRock in the venture, which manages and markets a range of co-branded MFs in India.
“The sale is expected to complete, subject to regulatory approval, once naming transfers and investment scheme unit holder communications are finalised,” BlackRock said in a release. READ MORE
Tata Coffee down 7% on disappointing Q4 results
Tata Coffee dipped 7% to Rs 124 on the BSE after the company reported a sharp 63% year on year (y-o-y) decline in its consolidated net profit at Rs 224 million in March quarter. It had profit of Rs 598 million in a year ago quarter.
Revenue from operations during the quarter grew 9% to Rs 4.4 billion against Rs 4.03 billion in the corresponding quarter of previous fiscal. READ MORE
No sluggishness in realty, suggest Godrej Properties' Q4 results
The Godrej Properties stock is showing an uptick of 5.2 per cent in trade riding on strong sales in the March quarter, as the company plans to raise additional funds for expansion. While the company reported a strong revenue growth of 21 per cent year-on-year in the March quarter, new booking value in the quarter crossed the Rs 10 billion-mark for the fourth consecutive quarter.
New sales in FY18 more than doubled to hit Rs 50 billion - the highest annual sales so far. However, barring the top line, operating performance was impacted by a number of one-offs. READ MORE
Motilal Oswal Securities on March 2018 quarter results
The 4QFY18 earnings season has so far been broadly in line with expectations in terms of revenue. However, profits have missed estimates, largely dragged by Axis Bank, which reported a significant jump in slippages and provisions. We expect the performance of corporate-focused private banks and PSU Banks to drag the aggregates in 4QFY18.
Of the 20 Nifty companies that have declared their earnings results, 13 have either met or exceeded our estimates. The earnings upgrade/downgrade ratio stands > 1, with 22 MOSL Universe companies witnessing upgrades of 3% and 17 witnessing downgrades of 3%.
ICICI Securities on Adani Power
Downgrade to REDUCE with a revised SoTP-based target price of Rs24/share given the following concerns: i) Mundra PPAs have become unviable post Supreme
Court’s adverse ruling, ii) the company’s balance sheet is stretched post CT write-off, and iii) APL’s aggressive inorganic expansion plans. Risks of INR depreciation, lower merchant utilisation, and increasing coal prices could impact financials. However, resolution or demerger of Mundra could be a potential rerating catalyst.
COMMENT ICICI Securities on March 2018 quarter results
Although we have limited Q4FY18 corporate results (197 Cos.) for the manufacturing sector so far, early birds from companies in sectors such as Cement, Auto, Oil & Gas, Metals etc. indicate robust sales growth of ~ 17% and stable capacity utilisation.
Flipkart campus on a Walmart high; employees await stock option riches
The Flipkart board last week gave its approval to Walmart’s proposal to acquire around 75 per cent in the company for around $15 billion, sources said. The term sheet is expected to be signed in the next few days, giving a closure to the much talked about deal in the Indian e-commerce sector.
‘’Walmart will bring its years of experience to Flipkart and that will help us hone our skills and bring us closer to the global best practices,’’ said one of the techies at the campus. READ MORE
ICICI Bank surges 7% post Q4 results
ICICI Bank surged 7% to Rs 309 on the BSE after the private sector lender reported better than expected core operating performance. The net profit of the bank almost halved to Rs 10.2 billion for the quarter ended March 2018, as it set aside cash to cover a surge in bad loans, a fallout of the central bank’s revised scheme on resolution of stressed assets. It had profit of Rs 20.2 billion a year ago quarter. READ MORE
Emkay Global on ICICI Bank
ICICI Bank comfortably beat our estimates reporting Rs10.2bn net profit in an operationally challenging Q4FY18. We expected Rs1.9bn net profit. While we have not been surprised on core income (NII marginally higher), the entire profit beat has been on account of softer NPL provisioning requirement due to a strong recovery performance. NPL reductions were c.50% of slippages (Rs157bn) in Q4FY18.
The Q4FY18 performance was an indicator of the bank's ability to absorb asset quality shocks. We reiterate our 'BUY' recommendation with a price target of Rs392
NEWS WATCHPromoters submit Rs 10 bn revival plan for Jaypee Infratech
Jaypee group chairman Manoj Gaur made a fresh effort to gain back control of Jaypee Infratech — a real estate company for which another firm has already been named the highest bidder under the ongoing insolvency proceedings.
In its resolution plan, submitted to the committee of creditors (CoC) and the resolution professional, Gaur promised a marginal haircut to Jaypee Infratech lenders and minority shareholders and possession of homes by 2021. Lakshadweep Pvt Ltd — the firm CoC has chosen as the highest bidder — has offered to give possession to the homebuyers by 2024. Lakshadweep a joint venture of Suraksha Asset Reconstruction Company and Mumbai-based Dosti Realty. READ MORE
Edelweiss on Carborundum Universal
Carborundum Universal’s (CUMI) Q4FY18 consolidated sales grew 16% YoY, led by strong double-digit sales growth across its three segments - abrasives’ posted 12% YoY growth, electrominerals 23% and ceramics 18%. Management has guided for 16% sales CAGR over FY18-20 with sales of ~ Rs 27bn by FY19 and ~Rs 32bn by FY20, with higher margins led by price hikes.
On strong R&D and scaling up the value chain with advanced products, we believe CUMI is well positioned to leverage industrial growth across segments, both in India and globally. We estimate PAT CAGR of 25% over FY18-20. Maintain “BUY” with target price of Rs 427 (24x FY20E EPS)
Edelweiss Research on ICICI Bank
Upfront stress recognition, as anticipated, took the sheen off ICICI Bank’s otherwise operationally steady Q4FY18. GNPLs rose 1ppt to 8.8% due to elevated slippages (>12% run rate) primarily flowing from the drill down list and RBI’s restructuring schemes. On the positive front, stress pool (ex-GNPLs) came off to <3% (>5% in Q3FY18). Moreover, core operating performance surpassed expectation—domestic loan growth of >15% with NIM improvement (despite higher stress) led to NII beat.
The bank has been cautiously de-risking its balance sheet and aims to step this up further by FY20 (unveiled new strategy). Pick up in growth, robust retail segment and moderation in credit cost (major stress recognition done) will enable ICICI Bank clock >15% RoE by FY20E. Maintain ‘BUY’ with target price of Rs 370. The overhang pertaining to clarity on management change is a key monitorable.
IndoStar Capital Finance Ltd. (ICFL) aspires to become a diversified, granular NBFC given its focus on nurturing scalable retail lines of business. Incepted as a wholesale financier in 2011, ICFL today offers well-structured real estate (RE) financing, SME loans, vehicle loans and retail mortgages. The share of retail lending, currently 23%, is expected to rise substantially over the next three years.
While SME lending is on a high growth trajectory, the operational platform for vehicle finance and housing loans is geared towards making a sizable future contribution in loans assets. To ensure success in retail lending, ICFL has onboarded Mr. R Sridhar as the Vice Chairman & CEO, a veteran of 30 years’ experience that includes a pivotal stint as the MD of Shriram Transport. The rebalancing of asset mix is unlikely to hamper loan asset growth which has averaged 30% pa over FY13-17.
Proceeds from the fresh equity issuance would augment growth capacity and help absorb unforeseen risks. Regional concentration in RE financing and slow ramp-up of vehicle and housing finance constitute the key risks.
Interview of the day
High valuations will cap the upside: Gautam Duggad of Motilal Oswal
High valuations, particularly in the mid-cap space, will limit the upside for the markets, says Gautam Duggad, head of research, Motilal Oswal Institutional Equities. In an interview, Duggad also says rural-focused stocks can be a good play in an election year. Click here for full interview
ICICI Bank gains 4% even ad Q4 net profit halves to Rs 10.2 bn due to bad loan provisions surge
BSE Sensex Heatmap
Market at open
At 9:16 AM, the S&P BSE Sensex was trading at 35,302, up 93 points while the broader Nifty50 was ruling at 10,735, up 19 points.
The stock has indicated a breakout above the previous peak of 107 levels and looks attractive for further more rise in the coming days with strength and potential. The stock has made a higher bottom formation pattern recently taking support at the significant 34WMA moving average and currently with the RSI on the rise and other indicators supporting for an upward bounce, the bias is quite positive. We recommend a buy in this stock for an upside target of 125 keeping a stop loss of 105. Click here for more
Rupee plunges to 67 per dollar as crude oil spikes
The rupee breached the 67 to a dollar mark on Monday as crude oil prices rose to their highest since Narendra Modi was sworn in as Prime Minister in May 2014. The currency closed at 67.14 to a dollar, down 0.40 per cent from Friday’s close. READ MORE
Rupee, Indian currency
Today's picks: From Dr Reddy's to M&M hot stocks to watch on Tuesday
Current price: Rs 2,069
Target price: Rs 2,030
Keep a stop at Rs 2,090 and go short. Add to the position between Rs 2,035 and Rs 2,045. Book profits at Rs 2,030. READ MORE
Nifty outlook by Prabhudas Lilladher
After making the low of 10600, Nifty gave a decent bounce back to close above 10700 indicating a good recovery with positive bias and is not ready to slide down easily. The chances of retesting the previous high of 10785 levels cannot be ruled out and thereafter can reach up to 10850 levels. All eyes would be waiting for the result of ICICI Bank which would decide the forecast for the day. However, the support for the day is seen at 10650 while resistance is seen at 10770. READ MORE