MARKET WRAP: Sensex falls 216 pts, Nifty fails to hold 10650; banks drag

Benchmark indices

ended lower with the Sensex falling over  200 points on global correction and weaker rupee.

The S&P BSE Sensex ended at 34,949, down 216 points while the broader Nifty50 index settled at 10,633, down 55 points

Banking & financials stocks pulled the markets lower with the Nifty Bank Index slipping as much as 1.3% after three straight sessions of gain, with ICICI Bank and SBI shedding 3% each. 

Among indivisual stocks, M&M rose 3% after the company's March quarter earnings beat analyst expectations as profit grew by 50% year-on-year to Rs 11.55 billion and revenue increased 25.6% to Rs 131.89 billion during the quarter.


The rupee extended fall in afternoon, depreciating 50 paise to Rs 67.94 against the US dollar on fresh demand for the greenback from importers and banks.


A deepening political crisis in Italy provoked a second day of heavy selling on European financial markets, with the euro cut to a 6-1/2 month low, stocks punished and short-term borrowing costs surging for the government in Rome.

Asia flinched too. Japan’s Nikkei slipped 0.6%. Chinese shares were in the red, too, with the blue-chip index down 0.6% and Hong Kong’s Hang Seng index off 0.7%. 


Oil prices remained under pressure from expectations that Saudi Arabia and Russia would pump more crude to ease a potential shortfall in supply.

US crude futures tumbled to six-week lows and looked set for a fifth straight day of declines. The July contract was last down 1.6% at $66.81 a barrel.

(with Reuters inputs)


Nifty Bank index ends 1.35% lower. Top losers:

PUNJAB NATL.BANK 85.50 88.70 -3.20 -3.61
BANK OF BARODA 140.30 145.40 -5.10 -3.51
ICICI BANK 289.75 299.25 -9.50 -3.17
ST BK OF INDIA 263.65 272.05 -8.40 -3.09
IDFC BANK 40.95 42.10 -1.15 -2.73

Nifty sectoral gainers and losers

BSE Sensex gainers and losers of the day

Market at close
The S&P BSE Sensex ended at 34,949, down 216 points while the broader Nifty50 index settled at 10,633, down 55 points.
Sebi begins probe into technical glitches at MCX, NSE's NOW

Markets regulator Sebi has begun initial probe into technical problem with MCX's trading system and "disruption" in NSE's web-based tool NOW, senior officials said.
The National Stock Exchange (NSE) on May 24 witnessed a "disruption" in its web-based tool NOW, which allows traders to use their own software and hardware for trading on the bourse. READ MORE

D-Mart, Varun Beverages, Radico Khaitan, Edelweiss Financial hit new highs

Shares of Avenue Supermarts that runs the D-Mart retail stores, Radico Khaitan, Varun Beverages, Edelweiss Financial Services, Biocon, Hexaware Technologies, Kotak Mahindra Bank and MM Forgings were among 13 stocks from the S&P BSE 500 and Smallcap index that hit new high on the BSE in otherwise range-bound market. READ MORE

India seeks gold, diamond mining rights in Russia

India is seeking rights to mine for gold and diamonds in Russia's resource-rich Far East, Trade Minister Suresh Prabhu told Reuters on Tuesday. Prabhu last week led an Indian delegation to attend the St. Petersburg International Economic Forum. READ MORE

Caplin Point falls 11% on disappointing Q4 results
Shares of Caplin Point Laboratories have fallen 11% to Rs 532 per share on the BSE in intra-day trade after the company’s ebitda (earnings before interest, taxation, depreciation and amortization) margin in March quarter (Q4FY18) declined 400bps to 35% from 39% in previous year quarter.
The company’s consolidated net profit during the quarter under review increased by 5.9% at Rs 353 million against Rs 333 million in the corresponding quarter of previous fiscal. Gross revenue grew 19% to Rs 1,463 million over the previous year quarter. READ MORE
Sebi likely to allow futures trading in petrol and diesel
The Securities and Exchange Board of India (Sebi) is considering allowing futures trading in petrol and diesel, according to sources. The petroleum and natural gas ministry has already approved the proposal. Petrol and diesel are among the 90-plus commodities that have been approved by the government for derivatives trading.
Globally, petrol and diesel derivatives are traded on the Nymex and ICE exchanges. The proposal for trading in petrol and diesel derivatives was submitted by the Indian Commodity Exchange (ICEX) eight months ago. READ MORE
Market Check

S&P BSE Sensex 35,043.74 -0.35%
Nifty 50 10,662.15 -0.25%
S&P BSE 200 4,635.60 -0.29%
Nifty 500 9,289.75 -0.19%
S&P BSE Mid-Cap 16,083.25 -0.22%
S&P BSE Small-Cap 17,415.13 -0.06%

BHEL surges 9% as Q4 profit rises more than double
Shares of Bharat Heavy Electricals Limited (BHEL) have moved higher by 9% to Rs 86.45 per share on the BSE in noon deal after the state-owned company reported a more than double standalone net profit of Rs 4.57 billion in March quarter (Q4FY18). It had a profit of Rs 2.16 billion in the same quarter last fiscal. READ MORE

Top BSE500 losers

MANPASAND BEVER. 275.85 -68.95 -20.00 10850
CAPLIN POINT LAB 540.25 -55.05 -9.25 26925
COX & KINGS 203.45 -13.05 -6.03 46703
BALRAMPUR CHINI 70.95 -3.75 -5.02 711113
VAKRANGEE 36.10 -1.90 -5.00 61496
» More on Top Losers
Strides Shasun rebounds over 10% post clarification on auditor resignation

Strides Shasun rose 2% to Rs 432, bouncing back 13% from its early morning low on the BSE, after the company made clarification on rumor regarding resignation of statutory auditor. The stock hit a low of Rs 383 on the BSE in intra-day trade. READ MORE

UBS COMMENT June policy meeting preview: a close call
In its monetary policy review, scheduled for 5-6 June, we expect the Monetary Policy Committee (MPC) to maintain the repo rate at 6%. However, we assign a 40% probability that the MPC will pre-emptively hike rates by 25bps in the June policy meeting. We expect the tone of the policy statement to remain hawkish. The minutes of the April meeting suggest that two of the six MPC members have already decided to vote in favour of a 25bp hike.
Edelweiss on NMDC

NMDC’s Q4FY18 EBITDA of Rs 19 billion (up 2x YoY) surpassed consensus, despite stagnant sales volume, led by higher realisations. Going ahead, we expect the company to further improve its performance owing to: 1) higher realisation following the recent price hike; 2) volume uptick as steel plants in Chhattisgarh ramp up capacity; and 3) incremental earnings from the pellet plant coming on-stream. We retain our estimates and ‘BUY’ recommendation on the stock with an unchanged target price of Rs 195, implying an exit multiple of 7.0x.

Volatility returned to stock markets in Q1 2018. Based on our valuation implied returns for India, we favor large-cap equity over mid and small-cap equity due to valuation concerns on the latter. Indian fixed income markets also witnessed increased volatility during the quarter. With global interest rates and bond yields near all-time lows, it should be no surprise that bonds also continue to look broadly expensive in absolute terms. We believe that emerging market debt offers better prospective return expectations than developed market peers.

(Source: Morningstar market obverver)
RCom: Reliance Infratel, minority investors reach amicable settlement

Anil Ambani-run Reliance Communications' (RCom's) tower and fibre arm Reliance Infratel Limited (RITL) on Tuesday reached an amicable settlement with its minority investors.
Minority investors hold 4.26 per cent equity in RITL. The settlement paves the way for the vacation of the stay granted by the National Company Law Tribunal (NCLT) on the sale of RITL's tower and fibre assets. READ MORE

Edelweiss on Wonderla Holidays

Wonderla Holidays’ (Wonderla) 7.5% YoY revenue dip and 79.2% YoY EBITDA growth in Q4FY18 came in line with estimates. Like-to-like, revenue grew 2% YoY, factoring provision made for disputed taxes. Share of non-ticket revenue rose 10.6% YoY following introduction of F&B offerings and costume sales. EBITDA margin expanded (1,347bps YoY) for third consecutive quarter primarily led by cost rationalisation.

The company had cut ticket prices 10% post reduction in the GST rate from 28% to 18%. Management expects recovery in footfalls in FY19 led by new rides and rational ticket prices hike (2% price hikes thus far in FY19). We like Wonderla’s strategy of adding new rides and increasing non-ticketing revenue avenues to spur footfalls. However, the impact of sharp price hikes on footfalls remains a key monitorable. Maintain ‘BUY’.
Edelweiss on Zuari Agrochemicals

Zuari Agrochemicals (ZAC) reported below expectation Q4FY18 performance impacted by higher raw material (RM) costs. Standalone EBITDA fell 21% YoY to INR610mn, similarly, EBITDA of Paradeep Phosphate (PPL – 40% joint venture) contracted ~50% to INR960mn. However, EBITDA of Mangalore Chemicals & Fertilizers (MCFL) nearly doubled.

With management guiding for sustainable but lower EBITDA/MT of Rs 2,000 for ZAC (Rs 2,500 earlier estimate), we trim FY20E EBITDA by 7%. Factoring in further delays in subsidy receipts, we expect debt to remain high thereby exerting pressure on interest. Given high financial leverage, despite the marginal cut in EBITDA, we cut FY20E PAT by 32%. Subsidy receipts and company’s ability to fund its ongoing capex remain key monitorables. We value the stock at 15x FY20E EPS and arrive at a revised target price of Rs 579 (Rs 847 earlier). Maintain ‘BUY’.
Reliance Securities on Cadila

Expecting significant ramp-up in US sales owing to niche launches (injectables/trans-dermal) and strong growth in domestic business, we maintain our BUY recommendation on the stock with a revised target price of Rs490 (from Rs540 earlier).
PNC Infratech – All set for strong growth; retaining a Buy
With right-of-way (RoW) issues now largely behind, PNC closed FY18 on astrong note. As its pace of execution is set to gain further traction and witha comfortable debt position and huge order backlog, its industry-leading growthseems certain. Also, the under-levered balance sheet implies that it iswell-placed to meet the equity required for its range of hybrid annuityprojects. Besides, reasonable valuations and proven execution capabilitiessupport our Buy call

(Source: Anand Rathi Research)
Nomura on Sun Pharma

We reset target price at Rs 513/share (up from Rs 479/share), based on 22.5x FY20F EPS of INR22.8, implying an upside of 10%. Maintain Neutral. We have reduced our EPS estimates for FY19F and FY20F by 18% and 17%, respectively, as we factor in higher spend on specialty and lower US generic revenues to factor in competitive pressure.

We estimate the increase in upfront promotional investment for specialty launches adversely impacted the FY20F EPS by ~13%. Given this additional source of revenue cost mismatch, we think it is justified to raise the valuation multiple from 20x to 22.5x. Post the recent correction, we think downside risk may be limited. However, value accretion on a large market cap through specialty and generic launches remain a challenge, in our view.
Q4 results: High NPA recognition, growth visibility boost PFC sentiment

Despite deterioration in asset quality in the March 2018 quarter (Q4), shares of Power Finance Corporation (PFC), which were down over 40 per cent in the past one year, surged 6.5 per cent on Monday. The recognition of stressed loan assets has turned investors' sentiment after Q4 results. READ MORE

Aviation stock: Cost pressures continue to take a toll on profitability

Aviation stocks were among key gainers on Monday on expectations that falling crude oil prices and strengthening rupee will improve profitability. While SpiceJet gained nearly 20 per cent, Jet Airways and InterGlobe Aviation were up 7.7 per cent and 2.4 per cent, respectively. READ MORE

Market Check

S&P BSE Sensex 35,191.52 0.07%
Nifty 50 10,703.65 0.14%
S&P BSE 200 4,654.08 0.10%
Nifty 500 9,324.45 0.18%
S&P BSE Mid-Cap 16,131.39 0.08%
S&P BSE Small-Cap 17,477.51 0.30%

Manpasand Beverages tanks 20% second straight after auditor resigns

Manpasand Beverages is locked in lower circuit for the second straight day, down 20% at Rs 276 on the BSE. The sharp falls comes after the Deloitte Haskins and Sells resigned as auditor of the company with effect from May 26, 2018.
The stock hit a fresh 52-week low today, plunging 36% in past two trading sessions from Rs 431 on Friday. READ MORE

Volume Toppers

VARDHMAN TEXTILE 1247.00 -2.70 -0.22 85.32
SPICEJET 123.25 0.80 0.65 53.93
JUST DIAL 595.20 -13.85 -2.27 48.33
SHRIRAM TRANS. 1526.85 -16.20 -1.05 38.46
LARSEN & TOUBRO 1396.85 19.25 1.40 29.58
» More on Most Active Value
COMPANY NEWS Insolvency: Binani Cement lenders vote for UltraTech's Rs 79.60 bn offer
The Committee of Creditors (CoC) of Binani Cement on Monday voted in favour of UltraTech’s Rs 79.60 billion offer.
All 100 per cent votes were cast in UltraTech’s favour since the Aditya Birla Group firm, in its proposal, agreed to take care of all the legitimate claims of all stakeholders, said sources who attended the meeting. READ MORE
ReNew focusing on potential acquisitions after launching IPO in April
While ReNew Power is seeking to raise equity through an initial public offering, the company has seen its borrowing cost shooting up to Rs 8.3 billion during FY17, compared with Rs 5.3 billion during FY16. As on December 31, 2017, the total borrowings of ReNew stood at Rs 151 billion, which consisted of long-term borrowings, short-term borrowings and current maturities of long-term borrowings.
ReNew, which filed for IPO last month, aims to raise Rs 260 billion from the market. Of the total net proceeds, it will utilise Rs 19.5 billion for redemption or early redemption of certain debentures issued by the company or its subsidiaries. READ MORE
No major change in number of MF schemes post Sebi rationalisation

The Securities and Exchange Board of India's (Sebi's) move to categorise and rationalise mutual fund schemes has resulted in a reduction of less than three per cent in the number of schemes in the MF universe.

Between September 2017 and May this year, 38 schemes have been merged, the majority of which are in the debt domain, data collated from Value Research shows. READ MORE
Warship maker Garden Reach Shipbuilders gets Sebi's go ahead for IPO

State-owned Garden Reach Shipbuilders and Engineers has received markets regulator Sebi's go ahead to float an initial public offering. The warship maker had filed its draft red herring prospectus (DRHP) with Sebi on March 26 and obtained its "observations" on May 22, according to the latest update with the markets watchdog. READ MORE

Larsen & Toubro extends gains on strong Q4 operational performance

Shares of Larsen & Toubro (L&T) were trading 3% higher at Rs 1,421 per share on the BSE in early morning trade, extending their 5% gain in the past one week, after the company reported better than expected operational performance in March 2018 (Q4FY18). The stock was 4% away from its all-time high of Rs 1,470 touched on February 1, 2018 on the BSE in intra-day trade. READ MORE
Market Check

S&P BSE Sensex 35,185.07 0.06%
Nifty 50 10,690.45 0.02%
S&P BSE 200 4,652.60 0.07%
Nifty 500 9,314.30 0.07%
S&P BSE Mid-Cap 16,134.17 0.09%
S&P BSE Small-Cap 17,476.88 0.29%

Private placement of debt drops to Rs 6.5 trillion in FY18

The increasing reliance on private placement of debt seems to have reversed course. Private placements raised Rs 6.55 trillion in 2017-18 (FY18), or half a trillion lower than it raised the previous year, show numbers from market-tracker Prime Database.
This breaks a three-year trend which had seen the value of private placements more than double since FY14. Fewer issuers coming to the market, and rising interest rates are said to have contributed to the slowdown. READ MORE

Sebi likely to allow futures trading in petrol and diesel

The Securities and Exchange Board of India (Sebi) is considering allowing futures trading in petrol and diesel, according to sources. The petroleum and natural gas ministry has already approved the proposal. Petrol and diesel are among the 90-plus commodities that have been approved by the government for derivatives trading.
Globally, petrol and diesel derivatives are traded on the Nymex and ICE exchanges. The proposal for trading in petrol and diesel derivatives was submitted by the Indian Commodity Exchange (ICEX) eight months ago. READ MORE

EARNINGS L&T posts Rs 31.70 billion profit in Q4
Engineering conglomerate Larsen & Toubro (L&T) reported a 5 per cent year-on-year increase in its consolidated profit after tax (PAT) at Rs 31.70 billion for the quarter ended March 2018 on improved operational performance, surpassing the Bloomberg consensus estimate of Rs 29.95 billion. The company, which beat its revised guidance for order inflow in the last financial year, remains optimistic of a promising year ahead for new orders. READ MORE

Sectoral Trend

Top Sensex gainers and losers

Markets at Open

At 9:16 am, the S&P BSE Sensex was trading at 35,135, down 30 points while the broader Nifty50 index was ruling at 10,668, down 20 points

Considering the cheap valuation, opportunity for further consolidation in the OPSB space, we continue to recommend a BUY on the South Indian Bank with a target price of Rs.40 (which is 1.4x its FY2020E Adjusted Book Value of Rs.29.4) and Karnataka Bank with a target price of Rs.200 (which is 1.3x its FY2020E Adjusted Book Value of Rs.150).We believe that in the long-term (with around 3 years investment perspective), this stock can possibly become a multi-bagger if the anticipated consolidation in the OPSBs gathers momentum.

(Source: Equinomics Research)

For FY19, management has guided growth of 10-12% in order inflow and 12-15% in revenues, coupled with 25bps of margin expansion. The management expects infrastructure and hydrocarbon to drive growth, both in order inflow and execution. The company targets end-FY19 working capital as a % of sales to decline towards 18% from 19.2%. Divestment of Electrical & Automation segment to take 12-18 months for completion.

Recent transfer of road assets through the InvIT route would enable IDPL to explore new growth opportunities in BOT/HAM projects. LT plans to achieve its RoE target of 18% by FY21 on the back of higher execution, margin improvement and sale of non-core assets. We upgrade our rating to BUY with a revised target price of Rs.1,590.
Markets at pre-open

Index Current Pt. Change % Change
S&P BSE SENSEX 35,178.91 +13.43 +0.04
S&P BSE SENSEX 50 11,177.44 -7.61 -0.07
S&P BSE SENSEX Next 50 33,280.82 -0.01 0.00
S&P BSE 100 11,016.48 -6.36 -0.06
S&P BSE Bharat 22 Index 3,590.27 +8.73 +0.24

(Source: BSE)
Top stock ideas from Anand Rathi Research for today's trade

Target: Rs 920
Stop Loss: Rs 810
BSE has provided a breakout from the sideways channel/rectangle pattern with a buy crossover in its momentum indicator MACD from the zero reference line which is something positive for the bulls. The rise prior to this was a five waves rising structure, hence the probability of next impulse on the way up is quite high. So, we recommend to buy this for the target of 920 with a stop loss of 810. READ MORE

Today's picks: From L&T to BPCL, hot stocks to watch on Tuesday

L & T
Current price: Rs 1,376 
Target price: Rs 1,400
Keep a stop at Rs 449 and go short. Add to the position between Rs 438 and Rs 440. Book profits at Rs 436.

Current price: Rs 402 
Target price: Rs 410
Keep a stop at 396 and go long. Add to the position between 407-409. Book profits at 410. READ MORE
Nifty outlook from Prabhudas Lilladher for today

Nifty has crossed the hurdle of 10,650 levels decisively which gives a further upward potential target of 10,750-10,800 levels, however a one way move of around 270 points, we can see some profit booking to consolidation with volatility as we are approaching the expiry day. The support for the day is seen at 10,640 levels while the resistance would be at 10,740 levels. READ MORE
Markets on Monday

S&P BSE Sensex 35,165.48 0.69%
Nifty 50 10,688.65 0.79%
S&P BSE 200 4,649.31 0.94%
Nifty 500 9,307.55 1.00%
S&P BSE Mid-Cap 16,119.08 1.35%
S&P BSE Small-Cap 17,425.86 1.60%

SGX Nifty

The SGX Nifty was at 10,649, down 0.23 per cent from its previous close.
Asian Markets

Asian shares fell on Tuesday and the euro slipped back to six-and-half month lows as early elections loomed in Italy, but a revival in diplomatic talks with North Korea and a retreat in oil prices from recent highs supported sentiment.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.3 per cent after three consecutive sessions of gains. Japan's Nikkei skidded 0.8 per cent while South Korean shares slipped 0.5 per cent. Liquidity is expected to be relatively thin with market holidays in Singapore, Malaysia, Indonesia and Thailand.
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