MARKETS ON MONDAY: Sensex ends 232 pts lower; Realty, pharma, metals drag

The markets ended lower for the fifth straight session on Monday, following the resignation of the Bharatiya Janata Party's (BJP's) B S Yeddyurappa in the Karnataka Assembly despite positive global cues.

The S&P BSE Sensex ended at 34,616, down 232 points while the broader Nifty50 index settled at 10,517, down 80 points.

B S Yeddyurappa’s third chief ministerial stint lasted all of 55 hours, and his resignation on Saturday evening came as a shot in the arm for an Opposition struggling to mount a united challenge to the Narendra Modi-led Bharatiya Janata Party (BJP) in the 2019 Lok Sabha elections.

Among sectoral indices, the Nifty PSU Bank index ended 2.66% higher led by a rise in the shares of Bank of India, Union Bank of India and Punjab National Bank. However, the Nifty Realty index fell 3.29%, Nifty Pharma slipped 2.78% and Nifty Metal ended 1.68% lower.

GLOBAL MARKETS

Asian markets closed mostly higher. Japan's Nikkei 225 rose 0.3 per cent to 23,002.37. Hong Kong's Hang Seng gained 0.6 per cent to 31,234.35, while the Shanghai Composite Index advanced 0.6 per cent to 3,213.84. South Korea's Kospi added 0.2 per cent to 2,465.57. Australia's S&P/ASX 200 inched down 0.1 per cent to 6,084.50. Stocks in Southeast Asia were mixed.

OIL PRICES

il rose on Monday, lifted by a rally across stocks and other commodities, after the United States said it had put a possible trade war with China "on hold". Brent crude futures were up 35 cents at $78.86 a barrel, having hit a high above $80 last week, while U.S. West Texas Intermediate (WTI) crude futures rose 29 cents to $71.57 a barrel.

A possible U.S. trade war with China is "on hold" after the world's largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said on Sunday, giving global markets a lift in early trading on Monday.

(with Reuters inputs)


3:48 PM IST Nifty Realty index cracks 3.29%. Top losers: COMPANY LATEST PREV CLOSE LOSS() LOSS(%) INDBULL.REALEST. 185.20 205.70 -20.50 -9.97 H D I L 26.25 28.30 -2.05 -7.24 UNITECH 4.40 4.60 -0.20 -4.35 BRIGADE ENTERPR. 240.85 251.25 -10.40 -4.14 GODREJ PROPERT. 747.55 776.90 -29.35 -3.78

3:45 PM IST Nifty PSU Bank index ends 2.66% up. Top gainers: COMPANY LATEST PREV CLOSE GAIN() GAIN(%) BANK OF INDIA 97.95 93.45 4.50 4.82 PUNJAB NATL.BANK 78.15 74.75 3.40 4.55 UNION BANK (I) 86.95 83.25 3.70 4.44 CANARA BANK 245.65 235.70 9.95 4.22 SYNDICATE BANK 44.55 43.30 1.25 2.89

3:40 PM IST Nifty sectoral performers of the day

3:37 PM IST BSE Sensex: SBI, ICICI Bank among top gainers, Dr. Reddy top loser of the day

3:32 PM IST Market at close   The S&P BSE Sensex ended at 34,616, down 232 points while the broader Nifty50 index settled at 10,517, down 80 points.

3:20 PM IST Midcap, Smallcap shares under pressure; 111 stocks hit 52-week low Shares of midcap and smallcap companies were under pressure with 111 stocks hitting their respective 52-week lows as these indices have fallen more than 1% on Monday. Adani Power, Ajanta Pharma, Castrol India, CRISIL, Federal Bank, Glenmark Pharmaceuticals, IDFC Bank, LIC Housing Finance and Vakrangee from the midcap index hit 52-week lows today. READ MORE  

3:19 PM IST Emkay Global on Untratech Cement - Century Textiles deal There could be synergies from: a) common procurement of raw material (RM), b) brand building as UTCEM’s brand commands a premium of Rs10-15/bag over CTIL in most markets and c) reduction in overheads - marketing, finance etc. Ultratech (UTCEM) expects the cost of acquired assets to be almost similar to UTCEM within one year of the acquisition. In the near term, we are cautious on the cement sector due to fight for capacity share and deterioration in pricing power. UTCEM remains one of our preferred picks in the sector. We retain ACCUMULATE rating with a target price of Rs4,279 

3:03 PM IST D-Mart falls 11% in two days on promoter R K Damani upto 1% stake sale plan Shares of Avenue Supermarts - the operators of retail chain D-Mart, have fallen 6% to Rs 1,338 per share, extending their 5% drop on the BSE on Friday after the company announced that promoter R K Damani would pare his stake to comply with the shareholding norms.   D-Mart lost Rs 93.21 billion market-cap in past two days from Rs 933.10 billion on Thursday, May 17, 2018 to Rs 839.89 billion at 12:26 pm; the BSE data shows. READ MORE  

2:49 PM IST Amara Raja Batteries slips 8% post Q4 results Shares of Amara Raja Batteries have declined 8% to Rs 760 per share, extending their 5% fall on Friday on the BSE after the company reported a lower than expected 10.7% growth in standalone net profit at Rs 1.1 billion in March quarter (Q4FY18). Analysts on an average had expected profit of Rs 1.26 billion for the quarter. READ MORE  

2:45 PM IST Market check Index Current Pt. Change % Change   S&P BSE SENSEX 34,638.77 -209.53 -0.60   S&P BSE SENSEX 50 11,015.52 -75.32 -0.68   S&P BSE SENSEX Next 50 31,911.39 -529.43 -1.63   S&P BSE 100 10,812.50 -89.40 -0.82   S&P BSE Bharat 22 Index 3,504.74 +10.84 +0.31

2:43 PM IST ICRA on GDP forecast The domestic GDP growth rate is expected to improve to 7.4% in Q4 FY2018 from 7.2% in Q3 FY2018, exceeding the implicit forecast of 7.1% embedded in the Central Statistics Office’s (CSO’s) Second Advance Estimate of National Income for 2017-18. As per ICRA, the growth of the Indian gross value added (GVA) at basic prices in year-on-year (YoY) terms is likely to record a considerable recovery to 7.3% in Q4 FY2018 from 6.7% in Q3 FY2018, thereby rebounding above 7.0% after a gap of five quarters. This revival in Q4 FY2018, relative to Q3 FY2018, is expected to be broad-based, supported by an uptick in industry (to +7.7% from +6.8%), agriculture, forestry and fishing (to +4.5% from +4.1%), and services (to +7.8% from +7.7%)

2:41 PM IST Centrum on Vardhman Textiles Limited (VTL) At the CMP, VTL trades at 9.4x its FY20E EPS. Post the capex in the fabric division, the processing capacity would increase from 140 million metres (mm) to 180 mm, which is likely to come on stream by Mar’19. With ramp up in utilization, the share of fabric division is likely to increase from the current level of 35% (of sales), thereby aiding operational performance. We maintain our Accumulate rating and value the stock at 11x FY20E EPS giving a target price of Rs1,440.

LIVE UPDATES

Nifty Realty index cracks 3.29%. Top losers:

COMPANY LATEST PREV CLOSE LOSS() LOSS(%)
INDBULL.REALEST. 185.20 205.70 -20.50 -9.97
H D I L 26.25 28.30 -2.05 -7.24
UNITECH 4.40 4.60 -0.20 -4.35
BRIGADE ENTERPR. 240.85 251.25 -10.40 -4.14
GODREJ PROPERT. 747.55 776.90 -29.35 -3.78

Nifty PSU Bank index ends 2.66% up. Top gainers:

COMPANY LATEST PREV CLOSE GAIN() GAIN(%)
BANK OF INDIA 97.95 93.45 4.50 4.82
PUNJAB NATL.BANK 78.15 74.75 3.40 4.55
UNION BANK (I) 86.95 83.25 3.70 4.44
CANARA BANK 245.65 235.70 9.95 4.22
SYNDICATE BANK 44.55 43.30 1.25 2.89

Nifty sectoral performers of the day


BSE Sensex: SBI, ICICI Bank among top gainers, Dr. Reddy top loser of the day


Market at close
 
The S&P BSE Sensex ended at 34,616, down 232 points while the broader Nifty50 index settled at 10,517, down 80 points.
Midcap, Smallcap shares under pressure; 111 stocks hit 52-week low

Shares of midcap and smallcap companies were under pressure with 111 stocks hitting their respective 52-week lows as these indices have fallen more than 1% on Monday.

Adani Power, Ajanta Pharma, Castrol India, CRISIL, Federal Bank, Glenmark Pharmaceuticals, IDFC Bank, LIC Housing Finance and Vakrangee from the midcap index hit 52-week lows today. READ MORE
 
Emkay Global on Untratech Cement - Century Textiles deal

There could be synergies from: a) common procurement of raw material (RM), b) brand building as UTCEM’s brand commands a premium of Rs10-15/bag over CTIL in most markets and c) reduction in overheads - marketing, finance etc. Ultratech (UTCEM) expects the cost of acquired assets to be almost similar to UTCEM within one year of the acquisition.

In the near term, we are cautious on the cement sector due to fight for capacity share and deterioration in pricing power. UTCEM remains one of our preferred picks in the sector. We retain ACCUMULATE rating with a target price of Rs4,279 
D-Mart falls 11% in two days on promoter R K Damani upto 1% stake sale plan

Shares of Avenue Supermarts - the operators of retail chain D-Mart, have fallen 6% to Rs 1,338 per share, extending their 5% drop on the BSE on Friday after the company announced that promoter R K Damani would pare his stake to comply with the shareholding norms.
 
D-Mart lost Rs 93.21 billion market-cap in past two days from Rs 933.10 billion on Thursday, May 17, 2018 to Rs 839.89 billion at 12:26 pm; the BSE data shows. READ MORE
 

Amara Raja Batteries slips 8% post Q4 results

Shares of Amara Raja Batteries have declined 8% to Rs 760 per share, extending their 5% fall on Friday on the BSE after the company reported a lower than expected 10.7% growth in standalone net profit at Rs 1.1 billion in March quarter (Q4FY18). Analysts on an average had expected profit of Rs 1.26 billion for the quarter. READ MORE
 
Market check

Index Current Pt. Change % Change
 
S&P BSE SENSEX 34,638.77 -209.53 -0.60
 
S&P BSE SENSEX 50 11,015.52 -75.32 -0.68
 
S&P BSE SENSEX Next 50 31,911.39 -529.43 -1.63
 
S&P BSE 100 10,812.50 -89.40 -0.82
 
S&P BSE Bharat 22 Index 3,504.74 +10.84 +0.31

ICRA on GDP forecast

The domestic GDP growth rate is expected to improve to 7.4% in Q4 FY2018 from 7.2% in Q3 FY2018, exceeding the implicit forecast of 7.1% embedded in the Central Statistics Office’s (CSO’s) Second Advance Estimate of National Income for 2017-18.

As per ICRA, the growth of the Indian gross value added (GVA) at basic prices in year-on-year (YoY) terms is likely to record a considerable recovery to 7.3% in Q4 FY2018 from 6.7% in Q3 FY2018, thereby rebounding above 7.0% after a gap of five quarters. This revival in Q4 FY2018, relative to Q3 FY2018, is expected to be broad-based, supported by an uptick in industry (to +7.7% from +6.8%), agriculture, forestry and fishing (to +4.5% from +4.1%), and services (to +7.8% from +7.7%)
Centrum on Vardhman Textiles Limited (VTL)

At the CMP, VTL trades at 9.4x its FY20E EPS. Post the capex in the fabric division, the processing capacity would increase from 140 million metres (mm) to 180 mm, which is likely to come on stream by Mar’19. With ramp up in utilization, the share of fabric division is likely to increase from the current level of 35% (of sales), thereby aiding operational performance. We maintain our Accumulate rating and value the stock at 11x FY20E EPS giving a target price of Rs1,440.
Equirus Securities on Lupin

On a relatively high US base in FY18 which includes one-off sales from gMethergene and gTamiflu and the impending warning letter at Goa and Indore plants, we expect Lupin’s US business to decline in FY19, further pressurizing EBITDA. Key launches – gRanexa, gLevothyroxin and gMinocycline – are all back- ended and unlikely to compensate. We cut our FY19/20 estimates by 2%/10% and maintain Reduce with a Mar’19 target price of Rs. 759, valuing the stock at 22x P/E.
TOP SENSEX LOSERS

COMPANY LATEST CHG(RS) CHG(%) WEIGHT IN
INDEX (%)
WIPRO 265.75 -3.70 -1.37 1.52
HERO MOTOCORP 3503.30 -58.45 -1.64 1.42
BAJAJ AUTO 2725.30 -52.20 -1.88 1.50
H D F C 1821.00 -36.25 -1.95 7.92
NTPC 163.00 -3.35 -2.01 1.15
CIPLA 522.90 -11.05 -2.07 1.34
TATA STEEL 576.55 -14.95 -2.53 0.71
TATA MOTORS 297.10 -8.15 -2.67 2.99
SUN PHARMA.INDS. 450.60 -14.10 -3.03 3.30
DR REDDY'S LABS 1897.25 -80.80 -4.08 1.56

INTERVIEW OF THE DAY Risk-reward is unfavourable for investing at current levels: Gautam Chhaochharia of UBS

How do you see the markets play out for the rest of 2018?
 
Our end-2018 Nifty base, upside and downside scenarios of 10,500,  11,900 and 8,800 (respectively) imply unattractive risk-reward from current levels for rest of the year. Karnataka assembly election results may add to expectations of a Modi win in 2019. Our discussions with investors suggest that they presume Narendra Modi will win 2019 national elections. Market's recent performance and valuation multiples also suggest that this is priced in. Any opinion poll in the next few months would drive market sentiment. Towards end-2018, results of three big state elections will also be a key

READ THE FULL TEXT HERE

 

SPECIAL REPORT Midcap, Smallcap shares under pressure; 111 stocks hit 52-week low

Shares of midcap and smallcap companies were under pressure with 111 stocks hitting their respective 52-week lows as these indices have fallen more than 1% on Monday. Adani Power, Ajanta Pharma, Castrol India, CRISIL, Federal Bank, Glenmark Pharmaceuticals, IDFC Bank, LIC Housing Finance and Vakrangee from the midcap index hit 52-week lows today READ MORE

Photo: Shutterstock.com

COMMENT Nomura on RBI policy

In our base case (55% probability), we expect the Reserve Bank of India (RBI) to leave the policy rate unchanged but change its stance from ‘neutral’ to ‘withdrawal of accommodation’ on 6 June, followed by 25bp rate hike in each of August and October. June remains a close call; we assign a 40% probability to the RBI pre-emptively hiking by 25bp in June, followed by another 25bp hike in August
Market Check

 
S&P BSE Sensex 34,685.82 -0.47%
 
Nifty 50 10,533.20 -0.60%
 
S&P BSE 200 4,562.46 -0.75%
 
Nifty 500 9,127.30 -0.89%
 
S&P BSE Mid-Cap 15,700.12 -1.23%
 
S&P BSE Small-Cap 16,984.66 -1.97%

Century Textiles falls 12% on demerger of cement biz into UltraTech Cement

Shares of Century Textiles have declined 12% to Rs 935 per share, also their 52-week low on the BSE in intra-day trade, after the company said its board approved demerger of cement biz into UltraTech Cement through a share-swap deal. READ MORE
 
Ashok Leyland extends fall on concerns of volume growth

Shares of Ashok Leyland have declined 8% to Rs 136, extending their 4% fall on the BSE on Friday, on concerns of truck volume growth in current fiscal on account of a partial overloading ban relaxation in Uttar Pradesh (UP) from last month.
 
In past two weeks, Ashok Leyland has underperformed the market by falling 18% as compared to 1.2% decline in the S&P BSE Sensex. The stock hit a record high of Rs 168 on May 8, 2018 in intra-day trade. READ MORE

Dividend yield hits 10-year low of 1.1%; equity payouts down 3% in 2017-18

Dividends of listed companies which have announced their results are lagging behind the rally in their stock prices in the last one year. As a result, the dividend yield has now hit a 10-year low of 1.1 per cent against 1.44 per cent at the end of 2016-17 and 1.5 per cent two years ago.
 
This is the first time in the past three years when the dividend payout of listed companies has failed to keep pace with the movement in their share prices. READ MORE
 

Equirus on Navneet Education
 
FY18 growth was affected by one-offs such as delayed text-book launches, higher paper prices and INR appreciation. We expect growth to return from FY19 onwards on higher-standard syllabus changes in both Gujarat and Maharashtra boards and a strong stationery order pipeline for FY19. We roll over to Sep’19 target price of Rs 160 (from target price of Rs 162 earlier) set at a 19x Sep’19 EPS of Rs 8.3.
What's the true value of a stock?

What's common to Hyundai, Johnson & Johnson, Samsung and Patanjali? All of them are big players in their respective sectors. All are unlisted in India. The lack of listing is frustrating.
 
It eliminates the Peter Lynch type of investment where a consumer buys both the brand and the company. For example, a consumer may compare equivalent Hyundai and Maruti models before buying a car. A Lynch follower would like to buy shares in the company from which she bought the car. READ MORE

Ahmedabad-based cryptocurrency firm may challenge RBI circular in SC

Ahmedabad-based crypto firm Kali Digital Ecosystems may approach the Supreme Court to bring forward its next hearing on the Reserve Bank of India’s (RBI’s) circular prohibiting banks from dealing with cryptocurrencies.
 
This is because the central bank has asked all the lenders to wind up dealings by July 6. The hearing is slated for July 20. Alternatively, the company is also exploring a strategy of going to the RBI to put off its diktat to lenders unless the apex court comes out with its order. READ MORE

MUTUAL FUNDS How you should bet on FMCG funds to tap into the last defensive sector

If you look at the trailing returns of sector funds belonging to the fast-moving consumer goods (FMCG) sector, they are remarkably attractive (see table). Turn to the year-wise performance and they are equally eye-catching: These funds have given positive returns every year except 2008. With the information technology and pharma sectors faltering in recent times, FMCG remains the last defensive in which investors can seek refuge when the markets turn turbulent READ MORE
Indostar Capital Finance lists at 5% premium over issue price

Indostar Capital Finance has been listed at Rs 600, a 5% premium against its issue price of Rs 572 on the National Stock Exchange (NSE) and the BSE (Bombay Stock Exchange).
 
At 10:01 am; the stock was trading at Rs 596, a 4% higher against its issue price. It touched high of Rs 606 and a low of Rs 594 so far. A combined 5.85 million shares changed hands on the counter on the BSE and NSE. READ MORE
 
IDBI Capital on Amara Raja Batteries

We believe Amara Raja holds durable competitive advantages over peers, with strong brand, technical expertise (via parent JCI – global brand) and its lower cost structure (compared to its peers). We expect margins to improve in FY19 (despite weak Q4FY18 margins) on price hikes and cost improvement measures taken by the company. The company foresees opportunities in the energy storage and electric vehicles space. We maintain our BUY rating on the stock with a revised target price of Rs955 (Earlier Rs986).
Markets at noon

 
S&P BSE Sensex 34,712.63 -0.39%
 
Nifty 50 10,546.15 -0.47%
 
S&P BSE 200 4,567.65 -0.64%
 
Nifty 500 9,136.60 -0.79%
 
S&P BSE Mid-Cap 15,707.34 -1.18%
 
S&P BSE Small-Cap 17,011.15 -1.82%

Edelweiss on Bajaj Finserv

In Q4FY18, Bajaj Finserv’s lending business (BFL) posted a strong performance and general insurance (BAGIC) sustained momentum. BFL clocked yet another robust performance—AUM (consolidated) jumped ~40% and PAT grew >60% YoY. Qualitatively, BAGIC reported a steady quarter—combined ratio at 93.4% (lowest among peers). However, PAT missed marginally on lower investment income.

Life insurance’s (BALIC) operating metrics (individual growth, persistency) continued to improve; sustainability is key. EV of INR118bn missed estimate on negative investment variance and higher cost overruns—key monitorables. While we are enthused by Q4FY18 performance, we perceive limited upside due to: 1) BFL’s steep valuations (>5x FY20E P/BV, post equity raising) pricing in near-term growth potential; 2) BAGIC’s 25x FY20E EPS valuation; and 3) BALIC’s valuation at 1.9x P/EV. Hence, maintain ‘HOLD’
HDFC Securities on JBM Auto

We believe, JBM Auto's core sheet metal business (body-in-white and chassis) will continue to deliver strong earing growth helped by: 1) Accelerated growth in PV's segment, 2) Increasing revenue from Ford, Tata Motors, M&M, RE, HMSI and VECV, 3) benefits of oplev. Also, strong order book of tooling division business will boost margin and profitability.

Moreover, proposed amalgamation of its subsidiary JBMAS and JV JBMMA into a single entity will be synergetic and EPS accretive. We reckon 35% PAT CAGR over FY18-FY20E; fuelled by improving operating leverage, richer product mix and acquisition of new clients. We value stock at Rs. 560 (18x FY20E EPS) and maintain BUY
TOP LOSERS TODAY: BSE 500

COMPANY LATEST PREV CLOSE LOSS() LOSS(%) VOLUME
JP ASSOCIATES 14.60 17.50 -2.90 -16.57 15071776
CENTURY TEXTILES 970.40 1066.45 -96.05 -9.01 274883
8K MILES 549.35 596.60 -47.25 -7.92 21521
ASHOK LEYLAND 137.50 148.40 -10.90 -7.35 6412972
VENKY'S (INDIA) 3038.80 3262.25 -223.45 -6.85 8659

Reliance Securities on JK Lakshmi Cement

Considering the further initiatives undertaken to improve operations in Eastern markets by means of CPPs and SGU in Orisha, we expect JKLC’s operating performance to witness meaningful improvement from FY19E onwards.

Current valuations of 7.7x EBITDA / US$63 EV per tonne for FY20E look attractive after recent correction. We maintain BUY recommendation on the stock with a revised Target Price of Rs460 (9x FY20 EBITDA).
Kotak Securities on Escorts

Given normal monsoon forecast, tractor outlook demand looks positive for FY19. Management has given a guidance of 9-11% domestic tractor industry volume growth in FY19. Strong investment in infrastructure activities is expected to keep construction equipment volume growth robust over the next few years. Railway equipment division will benefit from expected new product launches.

We expect EBITDA margin to improve further in FY19 on account operating leverage and cost reduction program. We increase our estimates to factor in our tractor volume assumption. We retain BUY on the stock with revised price target of Rs1,074 (earlier Rs1,051)
Stock an unlikely hedge against turmoils in debt, dollar, emerging markets

US bond yields are the highest in seven years, the dollar is strengthening, emerging markets are wobbling, and oil is up to $80 a barrel. Yet there is an unlikely oasis of calm out there: stocks.
 
There are many possible reasons for this, including: US tax cuts boosting earnings expectations and share buybacks, exchange rate moves, a sense a 3 per cent Treasury yield was already priced in, and a belief that the turmoil in the emerging world is and will remain isolated to certain countries. READ MORE

Anand Rathi on Birla Corp

Withsynergies from the Reliance Cement acquisition and the good pick-up in demandin its core markets, the resolution of the sand-mining ban in UP augurs wellfor Birla Corp. The greater proportion of its premium products is likely to addto profitability, although we see the balance sheet as stretched. We retain our Buy rating on the stock, with a revised target of Rs 1,279
Andy Mukherjee Fortis: Why are four directors installed by Singhs still hanging around?

Fortis Healthcare Ltd. has to admit a new owner to keep the lights on. Before it does, though, India’s second-largest hospital chain must write four of its board members a discharge slip READ MORE

Fortis has called an Extraordinary General Meeting on May 22 to vote on the resolution

BS SPECIAL Good show by Modi govt in four years; private sector now needs to pitch in

Evaluating the performance of any government on economic grounds is challenging. This is so because direct linkages are at best by chance as phenomena like oil prices, monsoons, global forces etc. affect inflation and exchange rates which are beyond the purview of any government. Further, it would also be disingenuous to say that the NPAs are high during a particular regime due to the ruling government as these things build up over time and mere recognition cannot be attributed to a government READ MORE
Street signs: Jhunjhunwala stocks, analysts bullish on MPS, and more

Key Jhunjhunwala stocks see sell-off Aptech and Escorts, key stocks in billionaire investor Rakesh Jhunjhunwala’s portfolio, came under heavy selling pressure last week. Shares of Aptech dropped eight per cent, and those of Escorts declined seven per cent on Friday.
 
Jhunjhunwala holds more than 12.6 per cent stake in Aptech and 9.2 per cent in Escorts. Besides these two stocks, other key holdings of Jhunjhunwala’s such as Lupin, Crisil, Tata Motors and Aurobindo Pharma have also come under selling pressure in recent months. READ MORE

Long-term investors' share in equity mutual funds on the decline

The proportion assets held by long-term investors in equity mutual funds (MFs) has been on the decline. Equity assets worth Rs 5.03 trillion (50.6 per cent of the total equity assets) have been held for no longer than 12 months.
 
Also, equity assets, worth Rs 3.17 trillion (31.9 per cent of the total), are six months old, reveal the March-end data from the industry body Association of Mutual Funds in India (AMFI) The share of equity assets held for over 24 months in the total equity asset under management (AUM) stood at 30.4 per cent at the end of March 2018. READ MORE

TCS hits record high after fixing record date for 1:1 bonus issue

Tata Consultancy Services (TCS) hit a record high of Rs 3,585, up 2.4% on the BSE in otherwise subdued market, after information technology company fixed Saturday, June 2, 2018 as the record date for determining the entitlement of members to receive bonus shares in the ratio of 1:1.
 
The board of directors of TCS at its meeting held on April 19, 2018 had recommended bonus issue of equity shares in the ratio of 1 equity share of Re 1 each for every 1 equity shares of Re 1 each held by the shareholders of the company as on the record date. READ MORE

Edelweiss on Century Plyboards

Century Plyboards (CPBI) reported a dismal Q4FY18. Muted volume growth in plywood (8% YoY) and margin pressure in non-plywood categories, primarily due to forex loss, led to EBITDA and PAT missing estimates 16% and 33%, respectively. The quarter’s numbers were dented by forex loss (Rs 70mn) and the unorganised sector gaining market share in the absence of E-way bill.

Poor surveillance post GST and lack of E-way bill implementation have led to lower-than-expected growth for home décor companies, including CPBI. Hence, we revise down FY19/20E EPS 24%/23%, respectively. However, we believe, with increase in surveillance, organised players will benefit and clock higher than industry growth. Reiterate ’BUY’ with revised target price of Rs 341 (Rs 442 earlier) based on 27x FY20E EPS
ICICI Securities on Godrej Agrovet

Post meeting with management of Godrej Agrovet (GAVL), we remain positive on GAVL as 1) animal feed segment is expected to report strong volume-led growth ahead with revival in volumes of broiler feed, 2) steady flow of new product launches and entry in combinations to drive growth of crop protection, 3) import duty increase on palm oil will support domestic manufacturers like GAVL, and 4) lower milk procurement prices will drive dairy segment margins north.

With strong tailwinds in all four segments, we expect GAVL to report earnings CAGR of 32.9% over FY18-20. We reiterate BUY on the stock with a target price of Rs710 (35x FY20E).
Dollar strength, rising US Treasury yields hurts emerging markets

The Indian markets fell 2 per cent last week in what was their worst weekly setback in two months. But, India was not the only market that came under selling pressure.
 
In fact, the entire emerging markets (EM) pack saw turbulence as a stronger dollar and rising US Treasury yields prompted investors to exit risky assets and move into safe havens. The Dollar index, a measure for the performance of the US dollar against six key currencies, climbed to its highest level in 2018 on Friday. READ MORE

Market Check

 
S&P BSE Sensex 34,900.70 0.15%
 
Nifty 50 10,608.10 0.11%
 
S&P BSE 200 4,598.64 0.03%
 
Nifty 500 9,205.20 -0.04%
 
S&P BSE Mid-Cap 15,834.73 -0.38%
 
S&P BSE Small-Cap 17,263.14 -0.37%

Bhushan Steel resolution effect: PSBs gain, Nifty PSU Bank index up 2%

Shares of public sector banks (PSBs) were trading higher by up to 4% on the National Stock Exchange (NSE) in early morning trade on Monday after Tata Group acquired controlling stake of 72.65% in the debt-ridden Bhushan Steel for around Rs 352 billion last week, which will help in cleansing the banking system as well as boost lenders profitability. READ MORE
 

Nomura on Britannia

Britannia is trading at 43.7x FY20F P/E (EPS: Rs 126.9). The stock trades at 2SD of its long-term valuation average. While we believe that a steady 21% growth trajectory over the next three years should be easily attainable, we also believe valuations are now in their fair zone. Therefore, we retain our Neutral rating, with a higher target price of Rs 5,539, and value the stock at 42x 1QFY21F earnings. Our target multiple is around the mid-point of the 40-45x multiple band assigned to other food companies. We prefer ITC for its cheap valuations.
Kotak Securities on DB Corp

Our earnings outlook for the company is changed drastically as several of our assumptions (advertising environment, print order growth, newsprint prices) face significant challenges. We cut FY19/20 estimates by ~28% each, and now expect a significantly lower earnings growth over the period. Valuations are unlikely to support even after significant declines, unless earnings downgrades halt. We cut our target valuation to 11X FY20E PER, or Rs 262. Downgrade to REDUCE
Emkay Global on Voltas

Due to unseasonal rains in various regions, we believe that the room air-conditioner (RAC) industry could report lower growth rates of 5-10% in FY19 v/s 20% as anticipated earlier. Therefore, we cut FY19/20E EPS estimates by 36%/22% on lower revenue and margin assumptions. We recommend REDUCE with a Target Price of Rs543 (SoTP)
IIFL recommends KEI Industries

The company has guided for 18-20% yoy volume growth in FY19 led by addition of new capacities in LT and HT cable and strong growth in EHV and EPC segment. EHV revenue is expected to double led by rampup of capacity setup last year and strong order book. Margins expansion would be led by higher share of EHV and retail sales. The company is also increasing its presence in the affordable housing segment.

The management has also mentioned that margins in institutional sales segment has been expanding due to strong demand. We have upgraded our estimates as we expect demand from the power sector to be very strong and the company would continue to boost its retail sales through higher penetration and focus on brand improvement.  We maintain our Buy rating and revised our target price to Rs.505 (earlier Rs.470)
MARKET COMMENT G Chokkalingam, founder and MD, Equinomics Research

In our view, what matters to the stock market at this juncture is people’s mandate in a state, not the verdict of the MLAs. After the present party came to power at the Centre, the market cap of entire BSE-listed stocks went up by more than 75% since 2014. This would mean that the market has liked the present government. Hence, it is concerned whether this state election would indicate any possible instability at the Centre after 2019 election.

The ruling party at the Centre has actually more than doubled its tally in the Karnataka state assembly – this indicates improving prospects for the ruling party for the Lok Sabha elections from this state. State governments do not decide major economic reforms. While the Karnataka people mandate has addressed the limited concern of the markets, there is no need for the markets to worry about who ultimately rules the state – actual ruling of a state is a political issue which lacks any significance for the markets. Hence, we suggest investors not to worry on the final outcome of this election.
INTERVIEW OF THE DAY Risk-reward is unfavourable for investing at current levels: Chhaochharia

The Karnataka election outcome, crude oil prices and the rupee kept investors on the edge last week. GAUTAM CHHAOCHHARIA, head of India research, UBS Securities, tells Puneet Wadhwa that foreign investors’ concerns now revolve around the banking sector’s non-performing loans and fraud cases, inflation and rising oil prices. CLICK HERE TO READ MORE
GAUTAM CHHAOCHHARIA


Sectoral Trend


BSE Sensex heatmap


Market at open
 
At 9:16 AM, the S&P BSE Sensex was trading at 34,836, down 12 points while the broader Nifty50 was ruling at 10,597, up 1 point.
Crude Oil update

Oil prices rose on Monday as markets reacted to news that China and the United States have put a looming trade war between the world’s two biggest economies “on hold”.

Brent crude futures were at $79.13 per barrel, up 62 cents, or 0.8 per cent, from their last close, while US West Texas Intermediate (WTI) crude futures were at $71.83 a barrel, up 55 cents, or 0.8 per cent, from their last settlement.
Markets at pre-open

Index Current Pt. Change % Change
 
S&P BSE SENSEX 34,768.77 -79.53 -0.23
 
S&P BSE SENSEX 50 11,099.40 +8.56 +0.08
 
S&P BSE SENSEX Next 50 32,354.93 -85.89 -0.26
 
S&P BSE 100 10,903.91 +2.01 +0.02
 
S&P BSE Bharat 22 Index 3,492.75 -1.15 -0.03

(Source: BSE)
Commodity picks: May 21, 2018

Mustard seed
 
Mustard seed is trading at Rs 3,987 per quintal at the benchmark Jaipur market. In the coming days, prices are expected to head towards Rs 4,030. Considering the robust procurement by the government, availability in free market has reduced and this would continue to support further rise in prices in the near term. READ MORE

Stock picks by Devang Shah

DHFL- BUY
CLOSE- Rs 613.70
TARGET- Rs 680
 
DHFL closed weekly in negative territory. It’s consolidating in a range in short term. It’s outperforming in short term. It’s trading above 40 DMA. Its weekly momentum indicators are in BUY. One can BUY with a stop loss of 585 for the target of 680 levels in short term. READ MORE
 
Nifty outlook from Prabhudas Lilladher for today

The trend of all periodicities has turned down in Nifty with the weekly trend turning down after 6 weeks bringing in a lot of erosion in the stocks. The lower top formation continues to confirm a weak trend having further room for correction. The support for the week is seen at 10400 while resistance is seen at 10760. FMCG sector continues to show strength while other sectors have got in a corrective move. The bias still continues to be corrective. READ MORE
Markets on Friday

 
S&P BSE Sensex 34,848.30 -0.86%
 
Nifty 50 10,596.40 -0.81%
 
S&P BSE 200 4,597.10 -1.01%
 
Nifty 500 9,209.20 -1.02%
 
S&P BSE Mid-Cap 15,895.68 -1.47%
 
S&P BSE Small-Cap 17,326.78 -1.62%

SGX Nifty

The SGX Nifty was at 10,622.50, up 0.07 per cent from the previous close.
Asian Markets

Stocks rose on Monday as US Treasury Secretary Steven Mnuchin declared the US trade war with China "on hold" following an agreement to drop their tariff threats that had roiled global markets this year.
 
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.55 per cent in early trade, led by strong gains in greater China. Hong Kong's Hang Seng was up 1.0 per cent, Taiwanese shares 1.1 per cent and mainland shares 0.4 per cent. Japan's Nikkei gained 0.4 per cent.
Wall Street

On Wall Street, The S&P 500 ended lower on Friday after a choppy trading session as bank and chipmaker stocks weighed on the index and investors grappled with US-China trade talks.
 
The Dow Jones Industrial Average was essentially flat, ending the session at 24,715.09, the S&P 500 lost 7.16 points, or 0.26 per cent, to 2,712.97 and the Nasdaq Composite dropped 28.13 points, or 0.38 per cent, to 7,354.34.
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