MARKET WRAP: Indices gain for 3rd straight session; IT stocks underperform

Photo: Shutterstock.com
Benchmark indices gained for a third straight session on Monday as a sharp drop in crude prices and a recovery in the rupee boosted sentiment.

The S&P BSE Sensex ended at 35,165, up 241 points while the broader Nifty50 index settled at 10,689, up 84 points

Oil prices fell on Monday, extending even steeper declines from Friday, as Saudi Arabia and Russia said they may increase supplies and as US production gains showed no signs of abating.

Among individual stocks, shares of Sun Pharmaceutical Industries saw their best day in over three years, up over 6% on strong fourth-quarter results.

The rupee firmed up against the dollar on Monday to its strongest level in two weeks. Shares of information technology companies fell, on worries that a stronger rupee could hit returns from the US market

Tata Consultancy Services fell 2.5% while Tech Mahindra shares posted their biggest intraday drop since May 29, 2017.

GLOBAL MARKETS

Japan’s Nikkei gained 0.3 per cent in early trade, while South Korea’s Kospi rose 0.5 per cent, buoyed by stocks which are seen as benefiting from a further thawing in tensions with Pyongyang. MSCI’s broadest index of Asia-Pacific shares outside Japan was flat.

CRUDE OIL PRICES

 
Oil prices extended losses on Monday as Saudi Arabia and Russia said they may increase supplies while US production gains show no signs of slowing.

Brent crude futures stood at $75.35 a barrel, down $1.09 from the previous close and after touching a three-week low of $74.49 earlier in the session.

(with Reuters inputs)

3:45 PM IST Sun Pharma ends 6.55% up on NSE

3:42 PM IST Nifty IT index ends 1.92% lower. Top losers: COMPANY LATEST PREV CLOSE LOSS() LOSS(%) TECH MAHINDRA 675.25 702.75 -27.50 -3.91 HCL TECHNOLOGIES 894.50 916.00 -21.50 -2.35 TCS 3502.05 3585.80 -83.75 -2.34 TATA ELXSI 1208.30 1232.70 -24.40 -1.98 MINDTREE 1011.45 1023.60 -12.15 -1.19

3:38 PM IST Nifty sectoral performers

3:36 PM IST BSE Sensex: Sun Pharma gains 6.42% during the day, Power Grid, TCS among top losers

3:32 PM IST Market at close   The S&P BSE Sensex ended at 35,165, up 241 points while the broader Nifty50 index settled at 10,689, up 84 points.

3:28 PM IST Nandan Denim, Lovable Lingerie fall over 10% on weak Q4 result Shares of Nandan Denim and Lovable Lingerie have plunged over 10% in otherwise strong market after these companies reported a weak set of numbers for the quarter ended March 2018 (Q4FY18). READ MORE  

3:12 PM IST EARNINGS NTPC Q4 profit jumps 46%, beats estimates   NTPC reported a 46% jump in fourth-quarter profit on Monday, marginally beating analysts’ estimates.   Profit after tax from continuing operations was Rs 26.26 billion ($389.59 million) in the three months ended March 31, compared with Rs 17.95 billion a year earlier, the state-controlled company said.

3:00 PM IST Fortis Healthcare gets approval from Hero-Burman to re-open bidding   Fortis Healthcare rose 1% on Monday after it said the consortium of Hero Enterprise Investment Office and Burman Family Office, which won a five-way bidding war for the Indian firm, has permitted re-opening the bidding process, amid shareholder concerns over the board’s choice of the underdog. READ MORE

2:46 PM IST PSBs extend rally; Nifty PSU bank surges 13% in six days Shares of public sector banks (PSBs) were trading higher for the sixth straight trading days with Nifty PSU Bank gaining more than 10% during the period on the back of expectations of an improvement in the asset quality going ahead. READ MORE  

2:32 PM IST So far so bad: Vedanta slid 25% this year, and then Thoothukudi hit A troubled 2018 so far for billionaire Anil Agarwal’s Vedanta Ltd. may get worse amid concern that its key copper smelter in southern India could remain shut until 2019, further pressuring a stock that’s down 25 percent since the start of the year. READ MORE

2:16 PM IST Just Dial zooms over 50% in one week post stellar Q4 results Just Dial has rallied 23% to Rs 625, extending its past four day’s gain of over 20% on the BSE, after the company reported 53.6% year on year growth in its net profit at Rs 390 million in March 2018 quarter (Q4FY18). The operational revenue during the quarter under review grew 10% at Rs 2,005 million over the previous year quarter. READ MORE  

2:02 PM IST Market Check S&P BSE Sensex 35,181.14 0.73%   Nifty 50 10,692.85 0.83%   S&P BSE 200 4,648.50 0.92%   Nifty 500 9,305.55 0.98%   S&P BSE Mid-Cap 16,107.24 1.28%   S&P BSE Small-Cap 17,397.57 1.44%

LIVE UPDATES

Sun Pharma ends 6.55% up on NSE


Nifty IT index ends 1.92% lower. Top losers:

COMPANY LATEST PREV CLOSE LOSS() LOSS(%)
TECH MAHINDRA 675.25 702.75 -27.50 -3.91
HCL TECHNOLOGIES 894.50 916.00 -21.50 -2.35
TCS 3502.05 3585.80 -83.75 -2.34
TATA ELXSI 1208.30 1232.70 -24.40 -1.98
MINDTREE 1011.45 1023.60 -12.15 -1.19

Nifty sectoral performers


BSE Sensex: Sun Pharma gains 6.42% during the day, Power Grid, TCS among top losers


Market at close
 
The S&P BSE Sensex ended at 35,165, up 241 points while the broader Nifty50 index settled at 10,689, up 84 points.
Nandan Denim, Lovable Lingerie fall over 10% on weak Q4 result

Shares of Nandan Denim and Lovable Lingerie have plunged over 10% in otherwise strong market after these companies reported a weak set of numbers for the quarter ended March 2018 (Q4FY18). READ MORE
 
EARNINGS NTPC Q4 profit jumps 46%, beats estimates
 
NTPC reported a 46% jump in fourth-quarter profit on Monday, marginally beating analysts’ estimates.
 
Profit after tax from continuing operations was Rs 26.26 billion ($389.59 million) in the three months ended March 31, compared with Rs 17.95 billion a year earlier, the state-controlled company said.
Fortis Healthcare gets approval from Hero-Burman to re-open bidding
 
Fortis Healthcare rose 1% on Monday after it said the consortium of Hero Enterprise Investment Office and Burman Family Office, which won a five-way bidding war for the Indian firm, has permitted re-opening the bidding process, amid shareholder concerns over the board’s choice of the underdog. READ MORE
PSBs extend rally; Nifty PSU bank surges 13% in six days

Shares of public sector banks (PSBs) were trading higher for the sixth straight trading days with Nifty PSU Bank gaining more than 10% during the period on the back of expectations of an improvement in the asset quality going ahead. READ MORE
 
So far so bad: Vedanta slid 25% this year, and then Thoothukudi hit

A troubled 2018 so far for billionaire Anil Agarwal’s Vedanta Ltd. may get worse amid concern that its key copper smelter in southern India could remain shut until 2019, further pressuring a stock that’s down 25 percent since the start of the year. READ MORE

Just Dial zooms over 50% in one week post stellar Q4 results

Just Dial has rallied 23% to Rs 625, extending its past four day’s gain of over 20% on the BSE, after the company reported 53.6% year on year growth in its net profit at Rs 390 million in March 2018 quarter (Q4FY18). The operational revenue during the quarter under review grew 10% at Rs 2,005 million over the previous year quarter. READ MORE
 
Market Check

S&P BSE Sensex 35,181.14 0.73%
 
Nifty 50 10,692.85 0.83%
 
S&P BSE 200 4,648.50 0.92%
 
Nifty 500 9,305.55 0.98%
 
S&P BSE Mid-Cap 16,107.24 1.28%
 
S&P BSE Small-Cap 17,397.57 1.44%

Equirus on Triveni Turbine

Triveni Turbine (TRIV) delivered flat sales growth (+1%) yoy for FY18 while margins remained under pressure due to a higher share of domestic revenues. Order inflows rose 17% in FY18 to Rs 8.3bn, leading to a strong closing order book of Rs 7.1bn with a higher share of exports at ~48%. Domestic market declined by ~2% in FY18 even as enquiries improved. We expect the domestic market to remain under pressure in the near term while growth to be led by exports in FY19E/FY20E. With a healthy FY18 closing order book and a strong enquiries pipeline, we upgrade the stock to LONG
(from ADD) with a Mar’19 TP of Rs 129 (Rs 134 earlier) set at 35x TTM EPS.
Edelweiss on Capacit’e Infraprojects

Capacit’e Infraprojects (Capacit’e) has etched a name for itself as a quality contractor in the buildings space since its inception in August 2012; today, it is working with almost all major real estate developers in the country. We believe it is in a sweet spot, due to: (1) RERA driven consolidation in the realty space; (2) improving work profile; (3) ability to bag repeat orders; and (4) better balance sheet (negative net debt) & leaner working capital cycle (~75 days) versus peers.

We expect robust order book (book-to-bill at 4.3x) and likely diversification into public sector space to translate into 31% EPS CAGR over FY18-20, along with improvement in return ratios. Initiate coverage with ‘BUY’ and target price of Rs 397.
Rating action

ICRA has downgraded the long-term rating outstanding on the Rs. 2000.0 crore  NCD programme and Rs.490 crore term loans of IL&FS Transportation Networks Limited (ITNL)  to [ICRA]A- (pronounced ICRA A minus) from [ICRA]A. The rating is placed on watch with developing implications. 
 
ICRA has also downgraded the short-term rating outstanding on the Rs. 320.0 crore fund-based bank facilities and Rs.1000 crore commercial paper programme of ITNL to [ICRA]A2+ (pronounced ICRA A two plus) from [ICRA]A1. The rating is placed on watch with developing implications.
 
Equirus Securities on Cipla
 
Cipla’s Q4FY18 earnings disappointed with a 27% EBITDA miss on below-expected domestic and US sales. While Q4 — which sees most yearly adjustments — is usually weak, we note the miss was sharp, even more on adjusting for one-offs (Rs 300 mn on net basis). While structural drivers remain intact, we feel margin expansion can be slower than expected, and accordingly cut FY19/FY20 EPS by 30%/22%. Assign ADD (Long earlier); Sep’19 target price (TP) of Rs 547 (vs. Mar’19 TP of Rs. 662) set at 22x.
IPO market hots up as 3 dozen companies line up listings worth Rs 350 bn
 
The IPO lane seems to get busier as three dozen companies have lined up initial share sale plans worth Rs 350 billion in the coming months, largely to fund their expansion projects and working capital requirement.
 
These include six state-run entities -- Indian Renewable Energy Development Agency, Rail Vikas Nigam, IRCON International, RITES, Garden Reach Shipbuilders and Engineers and Mazagon Dock -- as the government intends to unlock the real value of such PSUs and bring in greater accountability. READ MORE


RCom surges 11% after NCLAT fixes hearing against NCLT order for Tuesday

Shares of Reliance Communications (RCom) have moved higher by 11% to Rs 15.85 per share on the BSE in noon deal after the company said that the National Company Law Appellate Tribunal (NCLAT) fixed the appeals against the National Company Law Tribunal (NCLT) orders for hearing tomorrow i.e. Tuesday, May 29, 2018. READ MORE
 
Airlines, tyre, OMC stocks gain as global oil prices ease

Shares of airlines, tyre and oil marketing companies (OMCs) have rallied by up to 15% on the BSE in intra-day trade after the global oil prices fell on Monday, extending a steep decline in Friday, on expectations major producers may ease output curbs.
 
SpiceJet, Jet Airways (India) and InterGlobe Aviation, the company that operates IndiGo, from the airlines were up in the range of 3% to 15% on the BSE. Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOCL) from the OMCs were up 5% each. READ MORE

India's correlation with global markets goes down; reaches nearly 10-yr low

A shrinking correlation between financial markets in India and those in the rest of the world is one reason to buy its assets.
 
The weighted average correlation of India’s currency, bonds and stocks with those in other global economies fell to 0.32 last month, approaching a more than 10-year low of 0.29 set in November. The reading was as high as 0.68 in 2010, data compiled by Bloomberg show. Global investment managers say this divergence provides them with an asset class that can smooth out returns in their portfolios. READ MORE

Manpasand Beverages tanks 20% after Deloitte resigns as auditor

Manpasand Beverages is locked in lower circuit of 20% at Rs 345, also its 52-week low on the BSE, after the company announced the resignation of statutory auditor Deloitte Haskins & Sells with effect from May 26, 2018.
 
The company said the board has appointed Mehra Goel & Co as statutory auditor of the Company with effect from May 27, 2018 to fill the casual vacancy. READ MORE

Markets at noon

S&P BSE Sensex 35,108.21 0.53%
 
Nifty 50 10,672.20 0.63%
 
S&P BSE 200 4,642.23 0.78%
 
Nifty 500 9,290.20 0.81%
 
S&P BSE Mid-Cap 16,088.01 1.15%
 
S&P BSE Small-Cap 17,378.33 1.32%

Cadila Healthcare launch pipeline points to healthy outlook, stock gains
 
The stock of Cadila Healthcare gained 7 per cent after the company reported better-than-expected March quarter (Q4) results. This was on the back of strong generic sales of limited-competition ulcerative colitis drug Lialda and anti-infective Tamiflu in the US market.
 
The 29 per cent jump in overall sales was largely on account of its performance in the US market, where sales were up 66 per cent over the year-ago quarter. READ MORE
We will double our businesses in less than three years: Nirmal Jain
 
Over the years, IIFL (formerly India Infoline Limited), founded by NIRMAL JAIN, has spread its wings to include diverse businesses, such as wealth and asset management, broking, institutional equities etc. At a time when the group is planning to reorganise and restructure its businesses, Jain shares vision, challenges and opportunities. READ FULL INETERVIEW HERE


Tech Mahindra falls 5% on profit booking post Q4 results

Shares of Tech Mahindra have dipped 5% to Rs 668 per share on the BSE in early morning trade on profit booking after the company reported a better than expected 29.6% quarter-on-quarter growth in its consolidated net profit at Rs 12.22 billion in March 2018 quarter (Q4FY18). READ MORE
 
Street signs: PSU banks in demand, dip in Symphony stocks and more

PSU banks in demand
 
The Nifty PSU Bank index rose 11 per cent last week, its biggest weekly gain since October 2017 after the Centre had announced recapitalisation. The latest surge comes after the leader of the pack - State Bank of India (SBI) - suggested that the worst of bad loan could be over. The bank’s chairman said this fiscal will be the year of hope and the next fiscal could be one of happiness. The Nifty PSU index had dropped 60 per cent from its 2018 peak following the fraud at Punjab National Bank (PNB). The index has retraced 40 per cent of the losses, but is still down more than 40 per cent. Experts say the SBI commentary was the trigger investors were looking for to bring life back in the moribund sector. READ MORE

Sun Pharma rallies 6% post Q4 results

Shares of Sun Pharmaceutical Industries have rallied 6% to Rs 496 per share on the BSE in early morning trade after the drug maker reported a net profit of Rs 13.08 billion in March 2018 quarter (Q4FY18) as against Rs 12.23 billion in the same quarter last year aided by one-time tax gain of Rs 2.59 billion. READ MORE
 

Top gainers in BSE Oil & Gas:

COMPANY LATEST PREV CLOSE GAIN() GAIN(%)
I O C L 171.70 163.60 8.10 4.95
B P C L 400.05 381.25 18.80 4.93
H P C L 309.15 295.10 14.05 4.76
OIL INDIA 223.85 218.30 5.55 2.54
GAIL (INDIA) 326.90 319.60 7.30 2.28

How easing overloading restriction will affect Tata Motors and Volvo Eicher

The medium and heavy commercial vehicle (M&HCVs) segment, which saw volumes grow 25 per cent year-on-year in the March quarter and 20 per cent in FY18, could face a roadblock in the form of easing overloading restrictions.
 
Over the last few weeks, analysts say that overloading restrictions in states of Uttar Pradesh (UP) and Rajasthan have significantly eased. READ MORE

ICICI Securities on Tech Mahindra

We raise FY19/FY20 EPS estimates by 5%/10% respectively given better than expected execution in Q4FY18 and USD/INR assumption of 67.5 vs 65 earlier. We expect revenue growth in FY19 to remain modest at 6.7% given an expectation of gradual improvement in telecom fundamentals and recent cross currency headwinds. Our target price of Rs786 is based on 15x FY20E EPS of Rs52.4.
Market Check

 
S&P BSE Sensex 35,059.50 0.39%
 
Nifty 50 10,665.90 0.57%
 
S&P BSE 200 4,627.47 0.46%
 
Nifty 500 9,268.00 0.57%
 
S&P BSE Mid-Cap 15,988.99 0.53%
 
S&P BSE Small-Cap 17,282.07 0.76%

Motilal Oswal on Sun Pharma

Ramp-up of specialty products and resolution of the Halol plant will be the key growth drivers of SUNP. Maintain Buy with a target price of Rs 560 at 22x FY20E
(v/s Rs 675 at 24x FY20E). We cut our FY19/20E by 11/9% on the back of slower margin improvement. We cut our target multiple to 22x from 24x due to the challenging US business.
Stocks in news

·         Cadila Healthcare to raise up to Rs 10,000 crore via QIP issue and up to Rs 5,000 crore via issue of FCCBs
 
·         Sundaram Finance Holdings to amalgamate Sundaram BPO India with Sundaram Business Services
 
·         GIC announced 1:1 bonus issue
 
·         Himatsingka Seide subsidiary’s retail division to be demerged from self
 
·         DCM Foods approved modernisation of first extrusion line which will add 3,800 MT per annum to its capacity
 
·         Dilip Buildcon declared L1 bidder for NHAI project in Karnataka for Rs 1,027 crore
 
·         Lakshmi Vilas Bank in talks with banks, PE funds to sell up to 26 percent equity

(Source: IIFL report)
IIFL on PNC Infratech

While the order book is strong, considering the massive bid pipeline the Company is targeting additional Rs.50bn worth of projects during the remaining part of FY19.  Considering the robust order book and bid pipeline we expect PNC to clock a topline growth 42% in FY19.

We also expect earnings growth to remain healthy on the back of high margin order book under execution. We have revised our FY19 and FY20 estimates to incorporate the strong performance. PNC’s EPC business is currently trading at valuation of 10.5x FY19E P/E. We maintain our BUY rating for target of Rs.207 (based on SOTP valuation).
Emkay Global on Tech Mahindra

Taking into consideration the hazy growth outlook for its communication business, we keep our lower growth estimates intact but increase margin estimates slightly on good execution in FY18. However, the valuation is already capturing the growth prospects and thus maintain our REDUCE rating stock with TP of Rs640, valuing it at 13x FY20E EPS
MARKET VIEW Equinomics Research

Oil price has corrected steeply by 6% from its recent record high level. This is likely to give a big trigger for the markets in terms of rupee recovering some values and FIIs showing some interest. Election result of Karnataka is also likely to be forgotten by the markets. Overall market cap of BSE has fallen by about Rs.11 lakh crore, mainly due to steep erosion in values of small and mid-cap stocks.

We believe that many high quality stocks in the mid cap space have been beaten down very badly. We expect some recovery in them in the short term. Therefore, we continue to suggest accumulating good quality stocks. Among our coverage, based on results and price points, we consider Karnataka Bank, South Indian Bank, Vindhya Telelinks, Jay Bharat Maruti, NESCO, Engineers India, Sharda Motors and Cochin Shipyard as the most high-conviction stocks. (We haven’t changed the view on other coverage stocks)
FPIs press sell button on Indian stocks, bonds worth $7 bn since April
 
Foreign portfolio investors (FPIs) have dumped domestic bonds and equities worth nearly $7 billion ( Rs 441 billion) since April. The pullback comes amid the greenback’s ascendance against most global currencies and the 10-year US Treasury hitting the dreaded 3 per cent mark.
 
The sell-off has roiled the Indian financial markets, with the 10-year government security inching towards 8 per cent, the rupee dropping to a 16-month low of 68 against the dollar, and stocks seeing across-the-board correction. READ MORE
INTERVIEW OF THE DAY 'Fund managers may wait for poll outcome to raise India exposure' says Cameron Brandt from EPFR Global

Rising oil prices and bond markets have unnerved global markets. Cameron Brandt, director of research, EPFR Global, tells Puneet Wadhwa investors have been focusing on China and Japan this year as they try to benefit from the synchronised global growth story without exposing themselves to uncertain political and regulatory climates in the US and Europe. CLICK HERE TO READ MORE
Cameron Brandt

EARNINGS: SUN PHARMA

Drug major Sun Pharma on Friday posted around 7 per cent increase in consolidated net profit at Rs 13.08 billion for the quarter ended March on the back of revenue growth in India and emerging markets even as the US sales took a hit.
 
The company had reported a net profit of Rs 12.23 billion in the same period of the previous financial year. READ MORE

EARNINGS IMPACT
 

Sectoral Trend


Top Sensex gainers and losers


Markets at Open

At 9:16 am, the S&P BSE Sensex was trading at 35,031, up 106 points, while the broader Nifty50 index was ruling at 10,651, up 46 points
Markets at pre-open

Index Current Pt. Change % Change
 
S&P BSE SENSEX 35,125.68 +200.81 +0.57
 
S&P BSE SENSEX 50 11,160.44 +58.20 +0.52
 
S&P BSE SENSEX Next 50 32,890.57 +101.86 +0.31
 
S&P BSE 100 10,982.72 +53.82 +0.49
 
S&P BSE Bharat 22 Index 3,532.18 +12.29 +0.35

(Source: BSE)
Short-term outlook for the market remains positive: Devang Shah

Short-term outlook for the market remains positive till Nifty trades above 10279 levels and expecting targets in the range of 10900-11000 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 8,968 levels and expecting targets in the range of 12000-12200 levels in medium term. READ MORE
 
Commodity picks: May 28, 2018

Cotton
 
Cotton (29mm Gujarat) is trading at Rs 42,700 per candy (356 kg). Lack of timely canal water in Punjab and Haryana could impact the final cotton acreage in the region. A weak rupee, good exports of raw cotton as well as cotton yarn, and bullish global cues could result in higher prices in the Indian market. Expect prices to rise to around Rs 43,200 per candy in the next couple of weeks. READ MORE

Nifty outlook ideas from Prabhudas Lilladher for today

Nifty has bounced back from the low of 10,420 making a higher bottom formation pattern in the daily chart but needs to confirm the continuation of the rally only after it breach the levels of 10,650 decisively. Similarly, BankNifty has outperformed the Nifty index with the weekly trend still intact, we may see still some upside in the coming days. The support for the week is seen at 10,425 levels while the resistance would be at 10,800 levels. READ MORE
 
Crude Oil

Oil prices fell on Monday, extending a steep decline in the previous session, as the market eyed an increase in output from the world’s three top crude producers, Russia, the United States and Saudi Arabia.

Brent crude futures were at $75.34 per barrel, down $1.10, or 1.4 per cent, from their last close. US West Texas Intermediate (WTI) crude futures were at $66.31 a barrel, down $1.57, or 2.3 per cent.
Markets on Friday

 
S&P BSE Sensex 34,924.87 0.76%
 
Nifty 50 10,605.15 0.87%
 
S&P BSE 200 4,606.18 1.13%
 
Nifty 500 9,215.55 1.10%
 
S&P BSE Mid-Cap 15,904.41 1.55%
 
S&P BSE Small-Cap 17,151.43 1.17%

SGX Nifty

The SGX Nifty was at 10,633.50, up 19 points from the previous close.
Asian Markets

Japan’s Nikkei gained 0.3 per cent in early trade, while South Korea’s Kospi rose 0.5 per cent, buoyed by stocks which are seen as benefiting from a further thawing in tensions with Pyongyang.
 
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat.
 
Wall Street

On Wall Street, the S&P 500 and the Dow eased on Friday after a steep drop in oil prices pressured energy stocks, but losses were limited by gains in chipmakers and retail stocks.
 
The Dow Jones Industrial Average fell 58.67 points, or 0.24 per cent, to 24,753.09, the S&P 500 lost 6.43 points, or 0.24 per cent, to 2,721.33 and the Nasdaq Composite added 9.43 points, or 0.13 per cent, to 7,433.85.
Good Morning!

Welcome to Business Standard's live blog on markets.