Benchmark indices fell on Wednesday pulled down by oil companies, while mining and energy conglomerate Vedanta Ltd hit an over 10-month low as protests against its copper plant in south India turned violent.
State-owned oil refiners as well as marketing companies, such as Indian Oil and Hindustan Petroleum, took a hit on worries that the government may ask them to share the burden of higher petrol and diesel prices.
Retail fuel prices have surged on the back of a rally in crude oil, now hovering around $80 per barrel amid production cuts led by the Organization of the Petroleum Exporting Countries (OPEC).
Meanwhile, investors cheered earnings from Cipla and the stock gained as much as 7.8%, its biggest percentage gain in over three months after the drugmaker posted a fourth-quarter profit against a loss last year.
Asian shares were mostly weaker on Wednesday with investors cautious after US President Donald Trump tempered optimism over progress made in trade talks between the world's two largest economic powers.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent, while Japan's Nikkei lost 1.2 per cent to end at a one-and-half week low and the Shanghai Composite Index retreated 1.1 per cent.
Beyond geopolitics, the Federal Reserve will release minutes of its latest policy meeting later today.
In commodities, oil prices held firm near three-and-half year highs on potential supply concerns surrounding Venezuela and Iran.
US West Texas Intermediate (WTI) crude futures traded little changed at $71.95 a barrel, a 0.4 per cent loss. They touched $72.83 a barrel, the highest since November 2014, on Tuesday. Brent futures were 0.6 per cent lower at $79.11 a barrel. Last week, the global benchmark topped $80 for the first time since November 2014.
BSE Sensex: SBI top gainer of the day; Tata Steel, ONGC among top losers
Market at close
The S&P BSE Sensex ended at 34,345, down 306 points while the broader Nifty50 index settled at 10,430, down 106 points.
Metal shares under pressure; Tata Steel, JSPL, Vedanta down over 5%
Shares of metal companies were under pressure with Tata Steel, Jindal Steel and Power (JSPL) and Vedanta slipping more than 5% on the National Stock Exchange (NSE).
Steel Authority of India (SAIL), National Aluminium Company (Nalco), Hindustan Zinc, JSW Steel, Hindalco Industries and NMDC were down in the range of 1% to 4%. READ MORE
Earnings Grasim Industries gained 1% after the company reported 18.3% jump in its Q4FY18 net profit at Rs 3.73 billion on the bank of strong revenue growth and operating performance. The profit included one-time loss of Rs 2.18 billion.
Revenue of the company was up 47.8% at Rs 46.05 billion versus Rs 31.16 billion.
Shares of L&T Technology Services (LTTS) have rallied 7% to Rs 1,367 per share on the BSE in otherwise subdued market after the L&T Group company reported a higher than expected quarter-on-quarter (QoQ) revenue growth of 8% at $162 million in March 2018 quarter (Q4FY18).
“During the fourth quarter, growth was broad-based with healthy traction across all segments on sequential basis. LTTS won five multi-million dollar deals across process industry, telecom & hi-tech and transportation. On YoY basis, LTTS has increased its USD 40 million + annual billing clients by two, and its USD 10 million+ clients by three,” the company said in a press release. READ MORE
Vedanta slips as protest against Sterlite turns violent in Tamil Nadu
Sugar price, shares surge on fresh revival package buzz
Sugar rates as well as the share prices of its makers have started firming up on a buzz that the government is toying with the idea of coming up with a fresh package to support the ailing sugar industry.
This ‘incentive’ may be given so that sugar companies can pay their dues to the farmers. READ MORE
EARNINGS REVIEW Brokerages bullish on SBI despite Rs 77 billion loss in Q4FY18
State Bank of India (SBI) gained over five per cent on Wednesday to Rs 267 levels on the NSE despite the bank positing a huge Rs 77 billion loss in the March 2018 quarter. The rally, over the past two sessions, comes on the back of expectations of an improvement in the asset quality going ahead.
Most brokerages have revised their rating on the stock post the results in a hope that the non-performing asset (NPA) cycle may be turning around. This is the second consecutive quarter that SBI has reported a loss.
Click here for a quick compilation of how brokerages have interpreted the numbers.
MM Forgings hits record high on bonus issue plan; stock soars 12%
MM Forgings hit a record high of Rs 1,244, up 12% on the BSE in noon deal on Wednesday after the company said that it board will meet on Monday, May 28, 2018 to consider bonus issue.
The stock surpassed its previous high of Rs 1,229 recorded on January 1, 2018 during intra-day deal on the BSE. READ MORE
NSE issues show-cause notice to UB Holdings, 15 others for delisting of shares
Leading stock exchange NSE has issued a show-cause notice to defaulter businessman Vijay Mallya-led UB (Holdings) for delisting of its shares as trading has been suspended for a long time due to regulatory non-compliance.
Similar notice was issued to 15 other companies, including NEPC India, Net 4 India, Orbit Corp, REI Six Ten Retail, Shree Ganesh Jewellery House and REI Agro. READ MORE
India Inc foreign borrowing jumps over two-fold to $3.92 bn in April
India Inc raised $3.92 billion from overseas markets in the first month of the current financial year, up more than two-times from a year-ago period.
Among major companies which tapped the overseas market to raise capital included - Reliance Jio ($747.03 million), Aditya Birla Finance ($152.35 million), Vayu Urja Bharat Private Ltd ($155 million) and JSW Steel Ltd ($100 million). READ MORE
Vedanta hits over 10-month low as protests against copper plant in Tamil Nadu turn violent
Shares of Vedanta Ltd fell to their lowest since July 5, 2017, after at least nine people were killed in the southern state of Tamil Nadu when police fired at violent protesters calling for the closure of a copper smelter run by parent Vedanta Resources Plc.
Shares were down 3.2 percent as of 0500 GMT, after falling as much as 5.50 percent earlier in the session. READ MORE
L&T Technology gains 7% on healthy Q4 results
Shares of L&T Technology Services (LTTS) have rallied 7% to Rs 1,367 per share on the BSE in otherwise subdued market after the L&T Group company reported a higher than expected quarter-on-quarter (QoQ) revenue growth of 8% at $162 million in March 2018 quarter (Q4FY18). READ MORE
Shares of oil marketing companies (OMCs) were under pressure with the Indian Oil Corporation (IOC) hitting its 52-week low, while Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) falling 6% each on the BSE on reports that the government may ask these companies to freeze prices as a temporary arrangement. READ MORE
Minda Industries soared 10% to Rs 1,223 on the BSE after the auto ancillary company said its board recommended bonus shares in the ratio of 2:1.
“The board of directors at their meeting held on Tuesday i.e. 22 May, 2018 has recommended the issue of bonus shares to the shareholders of the company in the ratio of 2 bonus equity shares of Rs 2 each fully paid up for every 1 existing equity share of Rs 2 each fully paid up (in the ratio of 2:1) held by the shareholders as on the record date to be fixed separately,” Minda Industries said in a BSE filing. READ MORE
US price erosion weighs on Dr Reddy's; Q4 net down 3% to Rs 3 billion
Dr Reddy’s Laboratories reported a 3 per cent decline in net profit at Rs 3.02 billion on the back of a marginal decline in revenues for the March quarter (Q4). The company attributed its subdued financial performance to continued price erosion in the US market besides a decline in sales revenues across other major markets except for India where it registered a 7 per cent revenue growth in Q4. READ MORE
SBI rallies 10% in two days on expectation of improvement in asset quality
Shares of State Bank of India (SBI) have rallied 6% to Rs 269 per share, extending their 4% gain on the BSE on Tuesday, on expectations of improvement in asset quality of the state-owned bank. READ MORE
ICICI Securities on DLF
Key positive for the quarter were fresh gross sales bookings of Rs9.5bn and net bookings of Rs7.5bn (Rs4.8bn of net sales in Q3FY18) led by strong sales in Phase-V, Gurugram projects.
With a QIP fund raise and balance promoter fund infusion of Rs22.5bn (estimated cumulative fund infusion of Rs55-60bn) on the cards, we expect DLF’s balance sheet (ex-DCCDL) to become debt free in FY19E and enable the company to refocus on its residential business. We retain our BUY rating with a revised target price of Rs306/share (earlier Rs315) based on 1x FY19E NAV, factoring in balance sheet adjustments.
Midcap outperformance over large caps peaked at 22% since the beginning of CY17 driven by high optimism around the midcap growth story fuelled by huge interest by retail as well as institutional investors resulting in an all-time high valuation gap between midcaps and large caps. Post the rise in volatility in global capital markets in Feb’18, the performance gap between large caps and midcaps has shrunk to zero since the beginning of CY17.
The correction in midcaps has also brought down the valuation gap between midcaps and large caps to within +1 s.d. of long term average. In fact, midcap and small cap stocks were getting into bubble territory during Jan’18 and a correction was warranted. We do not expect mid and small caps to start outperforming in a range-bound market environment which remains our base case for the near term.
(Source: ICICI Securities)
Edelweiss on State Bank of India
Upfront stress recognition, as anticipated, took the sheen off State Bank of India’s (SBI) otherwise operationally steady Q4FY18 (INR77bn loss despite NII beat due to 6.9% slippage run rate). Having said that, the bank is relatively better positioned among peers—CET-1 at 9.7%, NNPLs <6%, CASA at >45% and SLR >25%.
With 36% of the industry under potential PCA framework (refer, PCA banks: Significant stake at risk) and stress recognition done (NNPL + watch list of <6.5%, coverage of >66%), we believe SBI will see strong earnings momentum henceforth with major delta coming from reduced credit cost. Furthermore, we believe, focus on creating value in its non-banking subsidiaries can be a more stable and scalable vector for overall value (>30% of CMP). The stock trades at 0.7x FY20E P/BV, which renders risk-reward favourable. Hence, maintain ‘BUY’
CD equisearch on Bajaj Corp
The stock currently trades at 28.8x FY19e EPS of Rs 15.73 and 26.9x FY20e EPS of Rs 16.83. Bajaj Corp is undertaking measures like sales force automation in order to improve its area coverage and control of distribution and thereby enhance its operational efficiency through uninterrupted backend integration of data.
Nevertheless, the rising crude oil prices and the consequent soaring of raw material cost would impact margins. Additionally, the cut throat competition in the FMCG space cannot be neglected. Weighing all odds, we assign ‘accumulate’ recommendation on the stock with target price of Rs 505 (previous target Rs 463) based on 30x FY20e earnings over a period of 9-12 months.
Edelweiss on Bharat Forge
Bharat Forge (BHFC) ended FY18 with 50% jump in standalone bottom line (adjusted) riding US Class 8 buoyancy and strong industrial exports. Overall utilisation stood at ~80%, with several plants clocking 90% plus. What’s encouraging is the 2x revenue target by FY21 in oil & gas (largely for exports business) from current USD100mn and $100mn defence top line (already crossed ~$50mn).
Capex of Rs 5bn at three locations— Andhra Pradesh, Baramati and Mundhra—will largely cater to export opportunities, apart from defence components, improving non-cyclical visibility (non-commercial) significantly. We retain our conviction on BHFC on account of: a) improved growth outlook on exports business, which is getting stronger/broad based; b) improving performance of subsidiaries as volumes ramp up; and c) visible traction in defence business. Maintain ‘BUY’.
Cipla surges 7% post March quarter results
Shares of Cipla have surged 7% to Rs 563 per share, bouncing back 8% from their early morning low of Rs 520 per share on the BSE, after the pharmaceutical company reported a consolidated net profit of Rs 1.79 billion in March quarter (Q4FY18) against a net loss of Rs 620 million in the same quarter last year. READ MORE
Most large-cap mutual fund schemes in red; Nifty small-cap index falls 14%
The start of 2018 hasn’t been so good for mutual fund (MF) investors. With returns of two-thirds of large-cap MF schemes in the red, it seems that the fabulous run investors had could be coming to an end. Of the 204 large-cap schemes, including direct plans and exchange-traded funds, returns of 138 are in the negative, according to Value Research. The category average returns of the large-cap funds is -2 per cent. In comparison, the BSE Sensitive Index, or Sensex, for the same period, is up 1.7 per cent. The Nifty 50 is marginally up at 0.1 per cent. Large-cap funds usually form the core part of an investor’s portfolio. READ MORE
FMCG stocks outperform in CY18; ITC, HUL among top analyst picks
Shares of fast moving consumer goods companies (FMCG) companies have outperformed the market thus far in the calendar year 2018 (CY18), after reporting better-than-expected volume growth while reporting their March 2018 quarter (Q4FY18) results.
Thus far in CY18, the Nifty FMCG index has rallied 6.8 per cent as compared to 0.13 per cent decline in the Nifty 50, while the S&P BSE FMCG index has gained 5.1 per cent against 1.6 per cent rally in the S&P BSE Sensex. READ MORE
Drug major Cipla on Tuesday reported a consolidated net profit of Rs 1.5325 billion for the quarter ended March 31, 2018 mainly on account of robust sales in key markets and reduction in expenses. The company had posted a net loss of Rs 627.9 million during January-March, 2016-17, Cipla said in a BSE filing. READ MORE
Top Sensex gainers and losers
Markets at open
At 9:16 am, the S&P BSE Sensex was trading at 34,643, down 6 points while the broader Nifty50 index was ruling at 10,527, down 8 points
It is on the verge of pole & flag breakout. RSI witnessed positive crossover with rise in volume.
Last Close: 1169.45
Stop Loss : 1135
Target : 1240
On the verge to triangle breakout It is on the verge of pole & flag breakout. RSI moving north ways in all timeframe. READ MORE
Top trading ideas from Prabhudas Lilladher for today
BUY CROMPTON GREAVES CONSUMER
CMP : Rs 243.90
TARGET : Rs 260
STOP L OSS : Rs 230
The stock has been in consolidation for quite some time at around 240 levels and currently has maintained above the 34WMA moving averages to indicate a positive bias and is poised for an up move in the coming days. Also it has moved above the 200 DMA and has made the chart look attractive for a bounce up to 255-260 levels. With decent volume participation witnessed, we recommend a buy in this stock for an upside target of 260 keeping a stop loss of 230. READ MORE
Today's picks: From Infosys to IOC, hot stocks to watch on Wednesday
Current price: Rs 1,194
Target price: Rs 1,215
Keep a stop at Rs 1,185 and go long. Add to the position between Rs 1,205 and Rs 1,210. Book profits at Rs 1,215. READ MORE
Nifty outlook by HDFC Securities
Nifty breaks the 5 session’s losing streak by rising 20 points, to close at 10536. Midcaps and smallcaps have been hammered down significantly recently. We are in fag end of the result season and considering the oversold conditions, we expect midcaps to recoup some of their losses in the coming days. However, considering the overall trend, Nifty should be sold in the pullbacks. Range of 10600-10650 should be utilized to initiate fresh shorts with a stop loss of 10700. Support for the Nifty is seen at 10325. READ MORE
Oil dips after rally, OPEC may ease supply curbs
Oil prices edged lower on Wednesday as the market took a breather on expectations OPEC may raise supplies as early as June, although geopolitical risks kept a floor under the market.
Brent futures dipped 4 cents to $79.53 a barrel, after climbing 35 cents on Tuesday. Last week, the global benchmark hit $80.50 a barrel, the highest since November 2014. US West Texas Intermediate (WTI) crude futures eased 2 cents to $72.18 a barrel, having climbed on Tuesday to $72.83 a barrel, the highest since November 2014. READ MORE
The SGX Nifty was at 10,525.50, down 0.23 per cent from its previous settlement.
Asian stocks slipped Wednesday after US President Donald Trump's said he was "not satisfied" with the latest round of trade talks with China, with Japan leading losses in the region.
Japan's Nikkei 225 fell 1.29 per cent amid the move higher in the yen and the broader Topix was off by 0.98 per cent. MSCI's index of shares in Asia Pacific excluding Japan slipped 0.11 per cent in morning trade and equity benchmarks from Hong Kong to Sydney fell.
US stocks ended lower on Tuesday, weighed down by lingering uncertainty over the outcome of trade talks between the US and China and declines in energy and industrial shares.
The Dow Jones Industrial Average fell 178.88 points, or 0.72 per cent, at 24,834.41, the S&P 500 lost 8.57 points, or 0.31 per cent, to 2,724.44 and the Nasdaq Composite dropped 15.58 points, or 0.21 per cent, to 7,378.46.
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