Benchmark indices ended flat on Thursday with losses in IT and pharma stocks such as TCS, Mindtree offsetting gains in PSU Banks like SBI, Bank of Baroda, a day ahead of a no-confidence motion against the government.
On Friday, the parliament will debate a no-confidence motion tabled by opposition parties against the Prime Minister Narendra Modi’s government on Wednesday, the first day of the monsoon session.
The S&P BSE Sensex ended at 36,351, down 22 points while the broader Nifty50 index settled at 10,957, down 23 points.
Mid-cap IT stock Mindtree lost 12.2 per cent, its biggest intraday fall since September 2011. Larsen & Toubro Infotech and Hexaware Technologies were also trading lower. The stock ended over 8% lower
FMCG stocks, however, gained with the Nifty FMCG index gaining 0.7 per cent with ITC, Colgate Palmolive up over 1.5 per cent each.
Globally, Asian shares on Thursday struggled to hold earlier gains made after upbeat Wall Street earnings, as trade war jitters rattled China’s stock and currency markets, with the yuan hitting fresh one-year lows.
MSCI’s broadest index of Asia-Pacific shares outside Japan last stood up less than 0.1 per cent, giving up much of its earlier gains of 0.56 per cent. Japan’s Nikkei lost 0.13 per cent.
BSE Sensex: Vedanta, Yes Bank, RIL among top gainers of the day
Market at close
The S&P BSE Sensex ended at 36,351, down 22 points while the broader Nifty50 index settled at 10,957, down 23 points.
RIL hits new high
Hindalco records sharpest intra-day fall in 11 months; stock slips 8%
Hindalco Industries hit 52-week low of Rs 195, falling 8% in intra-day deal, its sharpest intra-day decline in past 11 months after the media report suggested that the company is likely to acquire Aleris for $ 2.5 billion.
Earlier on August 11, 2017, the stock of metal company slipped 8.2% during intra-day trade. The company and its Canadian arm, Novelis, is in process of raising debt for the said deal, the CNBC-TV18 reported quoting sources. READ MORE
PC Jeweller tanks 43% in one week on withdrawal of buyback offer
Shares of PC Jeweller hit nearly four-year low of Rs 68 per share, falling 13% on the BSE in intra-day trade. In past one week, the stock tanked 43% from Rs 122 on July 12, as the company announced the withdrawal of proposed buyback offer due to the non-receipt of the NOC from the its bankers. The stock was trading at its lowest level since August 18, 2014.
The stock plunged 89% from its 52-week high level of Rs 457 recorded on January 16, 2018 in intra-day trade. Investors have seen their market cap erosion of Rs 204 billion to Rs 27.73 billion during the period. READ MORE
UK watchdog tells banks to prepare for hard Brexit
Britain's banks and insurers must plan for a "hard" Brexit in case a transition period is not in place next March, a senior British regulator said on Thursday.
"With eight months until we exit the European Union in March 2019, it is important we all -- regulators and industry -- continue to plan for a range of scenarios," said Nausicaa Delfas, head of international strategy at the Financial Conduct Authority. READ MORE
India a 'good place to hide' from trade war for this $10 billion fund
Ashburton Investments Ltd., which oversees $10 billion in global assets, is steadily acquiring stocks in medium-sized Indian companies that have been overlooked as investors targeted better-known companies.
India is a “good place to hide” as it’s not at “the heart of” the global trade-war volatility and exposed to the strengthening dollar, Jonathan Schiessl, the fund’s investment director, said in an interview. The country is relatively safer with “beta at multi-year lows,” and is still an outperformer among emerging markets with relatively better international flows, he said. READ MORE
Prakash Ind down 5% on report of ED filing chargesheet in coal scam cases
Prakash Industries has locked in lower circuit of 5% at Rs 125 on the BSE with only sellers were seen on the counter after the media report suggested that Enforcement Directorate (ED) filed charge sheet in seven coal scam cases.
“We categorically state that we are unaware of any charge sheet having seen filed by the Enforcement Directorate as described in the news item published in the Economic Times referred to by you. That being so, the question of disseminating any information to the exchange does not arise,” Prakash Industries said on clarification on news report to BSE. READ MORE
LIC-IDBI Bank deal: Large exposure to PSUs hurts insurer returns
Life Insurance Corporation (LIC) has bailed out several public sector companies — the acquisition of a majority stake in loss-making IDBI Bank being the latest — but these investments have resulted in the underperformance of the insurer’s equity portfolio.
The country’s largest insurer, which has large shareholdings in public sector undertakings (PSUs) and public sector banks (PSBs), has not been able to beat the benchmark BSE Sensex index. READ MORE
Oil prices fall amid record US output, stockpile build
Oil prices dropped on Thursday after official data showed an unexpected rise in US crude stockpiles and as US output scaled record levels. Brent crude futures had fallen 21 cents, or 0.3 percent, to $72.69 a barrel. West Texas Intermediate (WTI) crude futures declined 7 cents, or 0.1 per cent, to $68.69.
Bajaj Finance slips 5% on profit booking post Q1 results
Bajaj Finance dipped 5% to Rs 2,378 on the BSE in noon deal trade on profit booking after the company reported a consolidated net profit of Rs 8.36 billion for the quarter ended June 2018 (Q1FY19). It had a profit of Rs 4.61 billion in the same quarter year ago.
Net interest income (NII) during the quarter review increased 46% at Rs 25.78 billion against Rs 17.61 billion over the previous year quarter. READ MORE
HDFC Mutual Fund's market debut to bring a windfall for key employees
The debut on the bourses of HDFC Mutual Fund, the country’s second-largest asset management company (AMC), will be a windfall for employees. Two of them are chief executive officer Milind Barve and fund manager Prashant Jain.
The value of employee stock option plans (ESOPs) held by eight key staffers would amount to Rs 4.32 billion at the upper end of the price band of Rs 1,100. These employees together hold nearly four million shares. READ MORE
RESULT HIGHLIGHTS RBL Bank
· Q1 FY19 Net Profit up by 35% to Rs. 190.04 crore
· Advances (Net) at Rs. 42,198.09 and Deposits at Rs. 44,949.59 up by 36% and 27% on Year on Year (YoY) basis
· Net Interest Income (NII) up by 46% to Rs. 552.70 crore
· Other Income up by 27% to Rs. 325.97 crore
· Core fee income up 58% to Rs. 288.96 crore
· NIM improves to 4.04 % up from 3.54% in Q1 FY18. Cost to income ratio is at 50.80%
· Gross NPA ratio at 1.40% (1.46% in Q1 FY18); Net NPA ratio at 0.75% (0.81% in Q1 FY18); Provision coverage ratio increases to 60.41%
· Return on Assets at 1.26% up from 1.19% in Q1 FY18
(Source: Company release)
Mid-cap IT stocks down
Shares of MindTree, Larsen & Toubro Infotech and Hexaware Technologies fell between 4.3% and 11.5%. MindTree’s stock posted biggest daily percentage loss since Nov 9, 2016
India to grow at 7.3% this fiscal, is fastest growing economy in Asia: ADB
Led by India, South Asia will continue to be the fastest growing economic area despite new trade tensions in Asia and Pacific region, Asian Development Bank (ADB) said in a new report today.
Growth in Asia and the Pacific's developing economies for 2018 and 2019 will remain solid as it continues apace across the region, despite rising tensions between the US and its trading partners, said a supplement to the Asian Development Outlook (ADO). READ MORE
WEB EXCLUSIVEQ1 earnings preview: Banking sector will take some more time to revive
After a tough FY18, the beginning of the financial year 2018-19 (FY19) was expected to be a better one for the banking industry. However, with the Reserve Bank of India (RBI) starting to tighten policy rates, the sector might take some more time to revive.
The credit growth, according to the RBI, has improved for the system at 12.3 per cent for the first two months of FY19 compared to 9.8 per cent growth seen in Q4FY18. While the system-wide growth has picked up, a number of PSU banks have had constraints in lending. The space vacated by state-owned banks is likely to be filled by private banks. Hence, growth for this quarter will also be driven by private lenders. READ MORE
The proposed IPO of Hinduja Leyland Finance, a non-banking finance company, is expected to raise around Rs 10-15 billion. The company plans to go public this year, said senior officials from Ashok Leyland, which owns a major chunk of Hinduja Leyland Finance. READ MORE
MindTree slips 9% on profit booking after Q1 results
Shares of MindTree have slipped by 9% to Rs 971 on the BSE in intra-day trade on Thursday after the management said that expected revenue growth rate in September quarter (Q2FY19) to be less than that of June quarter (Q1) on reported basis; however, margins are expected to be better in constant currency (CC). Mid-sized IT firm MindTree posted a 30% rise in consolidated net profit at Rs 1.58 billion for Q1FY19. It had profit of Rs 1.22 billion in the year-ago quarter. READ MORE
Cost pressures weigh on UltraTech Cement in Q1; net profit down 33%
As expected, the impact of cost was evident on UltraTech’s performance in the India business for the quarter ended June (Q1). While volumes grew on almost expected lines by 34 per cent year-on-year to 16.8 million tonnes (mt), leading to 30 per cent growth in revenue, operating performance was a bit disappointing. READ MORE
Bandhan's operating metrics justify valuation; Q1 net profit up 48%
The Bandhan Bank's stock hit a new high of Rs 607.5 on the BSE after the bank reported strong June quarter results on Wednesday. The stock closed with a gain of 6.8 per cent at Rs 600.1.
With this, the bank's current valuation is 5.3 times its FY20 estimated book value, highest in the banking industry. Yet, analysts believe it deserves such valuations. READ MORE
Nifty Metal index enters bear phase; analysts see more downside
Metal stocks have entered a bear phase (typically described as a fall of 20 per cent or more from peak levels), given the ongoing trade war concerns.
The Nifty Metal index hit a 52-week low of 3,116.8 in intra-day deals on Wednesday but recovered marginally to end 3.15 per cent lower at 3,121. On a year-to-date (YTD) basis, the index has already lost 21 per cent, compared to a 4.2 per cent rally in the benchmark Nifty 50 index, data shows. READ MORE
Nifty Smallcap index hits 52-week low; Jet Airways falls 66% since January
Shares of smallcap companies continued to be under pressure with the Nifty Smallcap 100 index hitting a 52-week low of 6,926.80 on Thursday after a sharp decline in market values of Jet Airways (India), PVR and Manpasand Beverages.
The index fallen below its previous low of 6938.50 recorded on August 11, 2017 in intra-day trade on the National Stock Exchange (NSE). READ MORE
Stay with sector leaders, realign portfolios in favour of large caps
V K Sharma is quite taken aback by the current movement in the stock market. Sharma, who is head, private client group and capital market strategy, HDFC Securities, says that he has never seen the Bombay Stock Exchange Sensitive Index, or Sensex, hitting a lifetime high in one trading session, and the mid-cap and small-cap indices hitting their 52-week lows in the next trading session. “Never has the disparity been so high and so visible,” says Sharma. READ MORE
Long trading hours fail to enthuse brokers
While the Securities and Exchange Board of India (Sebi) has allowed stock exchanges to keep the equity derivatives market open for 15 hours, this might not entirely happen. According to sources, the exchanges might initially opt for a 12-hour trading window, based on the feedback from market participants, particularly brokers.
Both the National Stock Exchange (NSE) and BSE plan to give their plan on extension of trading hours in the next few weeks. Sebi had in May allowed the exchanges to keep the derivatives market open till 11:55 pm. READ MORE
Additional Surveillance Measures continue to weigh heavy on scrips
Companies in the Additional Surveillance Measure (ASM) list have significantly underperformed the market. An analysis of a number of stocks on the list showed they lost around a fifth of their value even as markets hit new highs. READ MORE
With rising share of FMCG biz, ITC presents a bottom-fishing opportunity
Challenges such as a 13 per cent surge in tax under the goods and services tax (GST), intense competition from the tobacco-chewing segment and the illicit cigarette trade impacted ITC's flagship business — cigarettes — last financial year.
As a result, its stock has been a laggard, down 16 per cent in the past year, compared to a six per cent gain in the BSE FMCG index and a 13 per cent rise in the benchmark Sensex. However, ITC's effort to scale up its non-cigarette businesses, especially fast-moving consumer goods (FMCG), is likely to provide impetus to the performance. READ MORE
Top Sensex gainers and losers
Markets at Open
At 9:17 am, the S&P BSE Sensex was trading at 36,480, up 106 points while the Nifty50 index was ruling at 10,998, up 19 points
While we expect 1HFY19 to be challenging for the industry, the recent stock correction (-43% in 2 months) seems overdone. AFL is trading at 17x/12x our FY19E/FY20E EPS — attractive given its market leadership, improved net cash balance and a core ROIC of >50%. We pare FY19/FY20 PAT estimates by 4%/1% while retaining LONG on the stock with a rolled over Sep’19 target price of Rs 800 (Jun’19 target price of Rs 820 earlier) set at a TTM PE multiple of 25x.
INTERVIEW OF THE DAY HDFC will keep its stake above 50% in HDFC MF, says MD Milind Barve
Just ahead of HDFC Mutual Fund's Rs 28-billion initial public offer (IPO), Milind Barve, managing director of the fund house, talks to Business Standard's Jash Kriplani. READ MORE HERE
Today's picks: From Hindalco to HDFC, hot stocks to watch on Thursday
Current price: Rs 212.5
Target price: Rs 208
Keep a stop at Rs 215 and go short. Add to the position between Rs 209 and Rs 210. Book profits at Rs 208.
Current price: Rs 2,009
Target price: Rs 2,040
Keep a stop at Rs 1,990 and go long. Add to the position between Rs 2,030 and Rs 2,035. Book profits at Rs 2,040. READ MORE
Kotak Securities on Blue Star
The blue star stock has corrected since our previous recommendation ("Reduce" CMP Rs 756 and Target Rs 759). In view of this, we upgrade rating to "Accumulate" with revised target price of Rs 701 (Rs 759 earlier). Given modest upside from current levels, we recommend "Accumulate". In terms of valuation, the stock is trading at 40x and 28x FY19 and FY20 earnings, which is at a premium to sector leader – Voltas
MUST READ Govt faces no-trust vote; BJP confident of punching holes in Oppn's efforts
Lok Sabha Speaker Sumitra Mahajan surprised the Opposition on Wednesday, the first day of the monsoon session of Parliament, when she not only accepted their notices for a no-confidence motion against the Narendra Modi government but also announced that the debate and voting on the motion would be held as early as Friday.
During the Budget session in March, Mahajan had pointed to disruptions in the House for not taking up a discussion on the notices of no-confidence motion, drawing criticism from opposition parties READ MORE HERE
Prime Minister Narendra Modi arrives to address the media ahead of the Monsoon Session of Parliament, in New Delhi ,Parliamentary Affairs Minister Ananth Kumar, Union Minister for Development of North Eastern Region (DoNER) Jitendra Singh, MoS Arju
Anand Rathi on Mastek
In step with our estimates, Mastek reported revenue of $36.1m, up 4% q/q (~6.7% in CC dollars). The EBITDA margin at 12.7% was a little lower than anticipated due to the higher onshore cost structure (70%). The tax rate has moved toward 22% (tax rates are lower in all three regions: the US, UK and India).
This and currency movements lead to further increase in FY19e/20e earnings by 9%/12%. We maintain our target PE at 15x to derive a target of Rs 730 (from Rs 650). The Majesco stake now contributes Rs 90 a share
Edelweiss on Jindal Stainless
Jindal Stainless’ (JSL) Q1FY19 standalone EBITDA at Rs 3.8bn (up 50% YoY) was primarily driven by volume jumping 51% YoY to 217kt. Key highlights: 1) realisation rose 3% YoY to Rs 145K due to higher stainless steel prices; and 2) raw material cost jumped 19% YoY to Rs 102K/t owing to higher scrap prices. As a result, JSL reported profit at net level for sixth successive quarter.
Going ahead, management expects robust domestic stainless steel demand led by: 1) spurt in Indian Railways’ stainless steel coach production and; 2) newly introduced BIS-IV norms for automobiles. We believe that JSL will benefit from the focus on value-added products and ensuing capacity/production ramp up. At CMP, the stock is trading at 3.7x FY20E EBITDA. Maintain ‘BUY’ with target price of Rs 100, implying an exit multiple of 5x FY20E EBITDA
Nomura on Ashok Leyland
Given the higher risks to the CV cycle, we cut our EV/EBITDA multiple for AL’s stand-alone business to 8x (from 11x) FY21F (discounted back to Sep-20F) leading to valuation of INR106. We value the LCV subsidiary at Rs 10/sh and other investments at Rs 8/sh. We downgrade AL to Neutral as the current valuation at ~7.7x FY20F EV/EBITDA (adjusted for subsidiaries) is near our target range. We prefer Maruti Suzuki (MSIL IN) in the auto sector
The SGX Nifty was at 11,010, up 0.25 per cent from the previous close.
Asian shares made early gains on Thursday as upbeat Wall Street earnings supported global investor sentiment, although trade war jitters pushed China’s offshore yuan to a fresh one-year low.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.53 per cent, while Japan’s Nikkei and the Australian benchmark advanced 0.42 per cent and 0.38 per cent, respectively.
The S&P 500 rose to its highest in more than five months and the Dow climbed for a fifth session on Wednesday as solid earnings boosted financial and industrial stocks and reinforced expectations for a strong second-quarter reporting season.
The Dow Jones Industrial Average rose 79.4 points, or 0.32 per cent, to 25,199.29, the S&P 500 gained 6.07 points, or 0.22 per cent, to 2,815.62 and the Nasdaq Composite dropped 0.67 point, or 0.01 per cent, to 7,854.44.
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