MARKET WRAP: Sensex hits new high; Nifty at highest level since February 01

A share broker monitors market fluctuation
Benchmark indices ended higher on Monday lifted by consumer stocks such as index heavyweight ITC, after the Goods and Services Tax (GST) Council cut tax rates on scores of items while keeping the cess on cigarettes unchanged during its weekend meeting.

The S&P BSE Sensex ended at a record high of 36,719, up 222 points. The index had hit an intra-day high of 36,749.69. The broader Nifty50 index settled at 11,085, up 75 points.

Among sectoral indices, the Nifty FMCG index gained nearly 2.5%, led by a rise in the share prices of Godrej Consumer Products and ITC. The Nifty PSU Bank index also ended 2.4% higher led by Bank of Baroda and Punjab National Bank.

GST RATE CUT IMPACT

Shares of paint, consumer durables and footwear companies have rallied by up to 10 per cent on the BSE, after the GST Council on Saturday reduced tax rates from 28 per cent to 18 per cent on a range of daily use products and appliances.

Among items on which GST was reduced include footwear, small televisions, water heater, electric ironing machines, refrigerators, lithium ion batteries, hair dryers, vacuum cleaners, food appliances and ethanol.

RESULTS CALENDAR

 
Among key results, Asian Paints, Bharti Infratel, Hero MotoCorp, Larsen & Toubro, Maruti Suzuki, Bharti Airtel, ITC, HCL Technologies and Reliance Industries are likely to announce their June 2018 quarter earnings later this week.

GLOBAL MARKETS

Asian shares dipped on Monday while the dollar fell after US President Donald Trump criticised the Federal Reserve's monetary policy and amid reports Japan's central bank could wind back its massive fund purchases.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent on Monday. Japan's Nikkei stumbled 1.3 per cent while South Korea's Kospi index slipped 0.8 per cent.

OIL PRICES

Oil prices fell on Monday because of increasing concerns about fuel demand after finance ministers and central bank governors from the G20 warned that global economic growth risks have increased amid rising trade and geopolitical tensions.

Brent crude dropped 10 cents, or 0.1 per cent, to $72.97 a barrel. US West Texas Intermediate (WTI) futures declined 8 cents, or 0.1 per cent, to $68.18 a barrel.

(with wire inputs)


4:24 PM IST MARKET COMMENT Jayant Manglik, President, Religare Broking Nifty settled with decent gains today and inched closer to its record high. The news of GST Council reduced on list of over 100 items and simplification of return filing brings in some cheer. Selective index majors from FMCG, auto, realty and metal fuelled the rally which further supported by rebound in banking pack. Besides, some relief was also witnessed on broader front.   Both Nifty and Bank Nifty have reached closer to their immediate and crucial hurdle of 11100 and 27100 respectively and a decisive breakout will trigger fresh surge ahead. But, we're in expiry week so volatility tends to remain high. We suggest maintaining positive yet cautious approach in the key indices, considering the mixed sentiment. Traders should focus more on the money management aspects and avoid taking unnecessary risk

3:45 PM IST Nifty FMCG index ends 2.46% higher. Top gainers: COMPANY LATEST PREV CLOSE GAIN() GAIN(%) GODREJ CONSUMER 1344.75 1287.05 57.70 4.48 ITC 284.15 274.00 10.15 3.70 GODREJ INDS. 605.00 591.85 13.15 2.22 HIND. UNILEVER 1690.90 1655.85 35.05 2.12 TATA GLOBAL 243.00 238.60 4.40 1.84

3:41 PM IST Nifty sectoral gainers of the day

3:39 PM IST BSE Sensex: ITC, Vedanta, Maruti Suzuki, Adani Ports among top gainers of the day

3:32 PM IST Market at close The S&P BSE Sensex ended at 36,719, up 222 points while the broader Nifty50 index settled at 11,085, up 75 points.

3:11 PM IST Tobacco / Cigarette-related stocks surge COMPANY NAME LATEST HIGH LOW CHG () CHG(%) VALUE ( CR) VOLUME ITC 283.80 286.50 276.00 10.35 3.78 37.09 1307010 GODFREY PHILLIPS 756.40 759.70 695.30 58.70 8.41 2.97 39290 VST INDS. 2817.00 2992.85 2616.15 319.10 12.77 5.89 20925 INDIAN WOOD PROD 705.00 705.00 695.00 5.00 0.71 0.05 646 NTC INDS. 32.50 32.50 30.50 0.65 2.04 0.00 216 GOLDEN TOBACCO 43.40 43.40 43.40 -2.25 -4.93 0.00 209

3:07 PM IST LKP Securities on Bandhan Bank Despite micro-loans being unsecured in nature, bank has maintained sound asset quality with the gross NPAs and net NPAs at 1.3% & 0.6% respectively (Q1FY19). Strong NPA position is largely driven by its group-based lending model, focus on income generating loans, strong systems to track loan utilization, monitoring credit & ensuring collection, extensive risk management practices (such as lending progressively higher amounts only to members who have built up a track record of good repayment) which taken together have led to low rates of default. Going forward, with the strong growth in the assets we assume marginal increase in NPAs – gross NPAs to surge to 2.3% in FY20E from 1.3% in FY18

3:06 PM IST Wall Street braces for tariff fallout as S&P 500 companies report Tariffs are starting to bite big manufacturers and Wall Street could get another bout of caution and uncertainty from major industrial companies when a swath of reports comes in over the next week. READ MORE

3:05 PM IST Motilal Oswal on Havell's India (HAVL) We believe HAVL has built a strong business franchise, given its (a) successful development of brand, distribution and product portfolio, (b) demonstrated track record of accelerating growth via new launches, (c) healthy dividend payout and (d) robust return ratios. Maintain Buy and target price of Rs 645, with exit multiple of 38x Mar’20E EPS (10% premium to five-year average).

2:50 PM IST RIL-ONGC dispute: Krishna-Godavari basin order likely in next 10 days An international arbitration tribunal is likely to come out with its final award in the next 10 days on the dispute relating to production of migrated gas by Reliance Industries (RIL). RIL is in an arbitration dispute with the government over a penalty for allegedly drawing gas from ONGC's block in the Krishna-Godavari (K-G) basin. READ MORE

2:34 PM IST Gold prices steady as U.S. dollar softens on Trump interest rate comments Gold prices were steady on Monday near their highest since July 17 as the dollar eased to its lowest in nearly two weeks after US President Donald Trump criticised the Federal Reserve's interest rate tightening policy.   Spot gold was at $1,231.87 an ounce, up 0.03 per cent. The yellow metal gained 0.7 per cent in the previous session. READ MORE

2:18 PM IST PSU banks rebound from day's low post Vijaya Bank's Q1 results Shares of public sector undertaking (PSU) banks have moved by up to 6% on the National Stock Exchange (NSE) after Vijay Bank said its assets quality improved in June 2018 (Q1FY19) quarter.   State Bank of India (SBI), Bank of Baroda, Vijaya Bank, Bank of India, Canara Bank, Union Bank of India, Oriental Bank of Commerce, Punjab National Bank (PNB), Indian Bank, Syndicate Bank and Allahabad Bank were up more than 1% on the NSE. READ MORE

LIVE UPDATES

MARKET COMMENT Jayant Manglik, President, Religare Broking

Nifty settled with decent gains today and inched closer to its record high. The news of GST Council reduced on list of over 100 items and simplification of return filing brings in some cheer. Selective index majors from FMCG, auto, realty and metal fuelled the rally which further supported by rebound in banking pack. Besides, some relief was also witnessed on broader front.
 
Both Nifty and Bank Nifty have reached closer to their immediate and crucial hurdle of 11100 and 27100 respectively and a decisive breakout will trigger fresh surge ahead. But, we're in expiry week so volatility tends to remain high. We suggest maintaining positive yet cautious approach in the key indices, considering the mixed sentiment. Traders should focus more on the money management aspects and avoid taking unnecessary risk
Nifty FMCG index ends 2.46% higher. Top gainers:

COMPANY LATEST PREV CLOSE GAIN() GAIN(%)
GODREJ CONSUMER 1344.75 1287.05 57.70 4.48
ITC 284.15 274.00 10.15 3.70
GODREJ INDS. 605.00 591.85 13.15 2.22
HIND. UNILEVER 1690.90 1655.85 35.05 2.12
TATA GLOBAL 243.00 238.60 4.40 1.84

Nifty sectoral gainers of the day


BSE Sensex: ITC, Vedanta, Maruti Suzuki, Adani Ports among top gainers of the day


Market at close

The S&P BSE Sensex ended at 36,719, up 222 points while the broader Nifty50 index settled at 11,085, up 75 points.
Tobacco / Cigarette-related stocks surge

COMPANY NAME LATEST HIGH LOW CHG
()
CHG(%) VALUE
( CR)
VOLUME
ITC 283.80 286.50 276.00 10.35 3.78 37.09 1307010
GODFREY PHILLIPS 756.40 759.70 695.30 58.70 8.41 2.97 39290
VST INDS. 2817.00 2992.85 2616.15 319.10 12.77 5.89 20925
INDIAN WOOD PROD 705.00 705.00 695.00 5.00 0.71 0.05 646
NTC INDS. 32.50 32.50 30.50 0.65 2.04 0.00 216
GOLDEN TOBACCO 43.40 43.40 43.40 -2.25 -4.93 0.00 209

LKP Securities on Bandhan Bank

Despite micro-loans being unsecured in nature, bank has maintained sound asset quality with the gross NPAs and net NPAs at 1.3% & 0.6% respectively (Q1FY19).

Strong NPA position is largely driven by its group-based lending model, focus on income generating loans, strong systems to track loan utilization, monitoring credit & ensuring collection, extensive risk management practices (such as lending progressively higher amounts only to members who have built up a track record of good repayment) which taken together have led to low rates of default. Going forward, with the strong growth in the assets we assume marginal increase in NPAs – gross NPAs to surge to 2.3% in FY20E from 1.3% in FY18
Wall Street braces for tariff fallout as S&P 500 companies report

Tariffs are starting to bite big manufacturers and Wall Street could get another bout of caution and uncertainty from major industrial companies when a swath of reports comes in over the next week. READ MORE
Motilal Oswal on Havell's India (HAVL)

We believe HAVL has built a strong business franchise, given its (a) successful development of brand, distribution and product portfolio, (b) demonstrated track record of accelerating growth via new launches, (c) healthy dividend payout and (d) robust return ratios. Maintain Buy and target price of Rs 645, with exit multiple of 38x Mar’20E EPS (10% premium to five-year average).
RIL-ONGC dispute: Krishna-Godavari basin order likely in next 10 days

An international arbitration tribunal is likely to come out with its final award in the next 10 days on the dispute relating to production of migrated gas by Reliance Industries (RIL). RIL is in an arbitration dispute with the government over a penalty for allegedly drawing gas from ONGC's block in the Krishna-Godavari (K-G) basin. READ MORE

Gold prices steady as U.S. dollar softens on Trump interest rate comments

Gold prices were steady on Monday near their highest since July 17 as the dollar eased to its lowest in nearly two weeks after US President Donald Trump criticised the Federal Reserve's interest rate tightening policy.
 
Spot gold was at $1,231.87 an ounce, up 0.03 per cent. The yellow metal gained 0.7 per cent in the previous session. READ MORE

PSU banks rebound from day's low post Vijaya Bank's Q1 results

Shares of public sector undertaking (PSU) banks have moved by up to 6% on the National Stock Exchange (NSE) after Vijay Bank said its assets quality improved in June 2018 (Q1FY19) quarter.
 
State Bank of India (SBI), Bank of Baroda, Vijaya Bank, Bank of India, Canara Bank, Union Bank of India, Oriental Bank of Commerce, Punjab National Bank (PNB), Indian Bank, Syndicate Bank and Allahabad Bank were up more than 1% on the NSE. READ MORE

Market Check

 
S&P BSE Sensex 36,600.50 0.29%
 
Nifty 50 11,052.95 0.39%
 
S&P BSE 200 4,712.49 0.43%
 
Nifty 500 9,332.10 0.50%
 
S&P BSE Mid-Cap 15,317.76 0.80%
 
S&P BSE Small-Cap 15,807.54 0.55%

Top gainers in BSE 500:

COMPANY LATEST PREV CLOSE GAIN() GAIN(%)
PC JEWELLER 96.10 81.90 14.20 17.34
BAJAJ ELECTRICAL 620.85 543.60 77.25 14.21
VST INDS. 2850.00 2497.90 352.10 14.10
UPL 621.50 550.25 71.25 12.95
L&T FIN.HOLDINGS 169.00 155.30 13.70 8.82

Havells: Good beginning to FY19 should excite investors

Havells has started the financial year on a strong note clocking 40 per cent revenue growth during the June quarter. This was primarily led by its electrical consumer durables (ECD) segment while the Lloyd's air-conditioners (AC) business also surprised positively and other segments too supported. READ MORE

Asian Paints, Havells India, Bata India, Bajaj Finance, HEG hit new high

Shares of Asian Paints, Havells India, Bata India, Bajaj Finance and HEG were among 10 stocks from the S&P BSE 500 index hitting their respective new highs on the BSE on Monday. Bajaj Finserv, Berger Paints, Graphite India, Relaxo Footwear and Procter & Gamble Hygiene & Healthcare too hit record highs today. READ MORE

UPL surges 15% after Arysta deal; analysts see more upside for the stock

UPL has surged 15% to Rs 631 on the BSE on heavy volumes in noon deals, after the company announced the acquisition of Arysta LifeScience – the agrochemical business of US-based Platform Chemicals – for a consideration of $4.2 billion.
 
UPL, on Friday, said that its wholly-owned subsidiary, UPL Corporation, has signed a definitive agreement with Platform Specialty Products Corporation to acquire Arysta LifeScience Inc. and its subsidiaries for a cash consideration of about $4.2 billion. READ MORE

GST rate cut triggers rally in footwear, paint, consumer durable stocks

Shares of paint, consumer durables and footwear companies rallied by up to 10 per cent on the BSE on Monday after the GST Council reduced tax rates from 28 per cent to 18 per cent on a range of daily use products and appliances.
 
Among items on which GST was reduced on Saturday include footwear, small televisions, water heater, electric ironing machines, refrigerators, lithium-ion batteries, hair dryers, vacuum cleaners, food appliances and ethanol. READ MORE

HDFC Bank slips after Q1 earnings

HDFC Bank fell 1.02% to Rs 2167.85 on BSE after net profit rose 18.17% to Rs 4601.44 crore on 18.85% increase in total income to Rs 26367.04 crore in Q1 June 2018 over Q1 June 2017. READ MORE

Sebi norms: Infosys, TCS among 291 listed firms asked to split CMD post

Reliance Industries, Infosys, TCS and Bharti Airtel are among the 291 listed companies that will have to appoint a non-executive chairperson on their boards by April 1, 2020, to comply with regulator Sebi's directive and most of these firms will need to split the roles of chairman and managing director for compliance. READ MORE

Kotak Securities on Asian Paints

GST rate cuts should be a meaningful earnings kicker for the paints companies in our view, anti-profiteering guidelines notwithstanding. Earnings upside would flow from the indirect benefits of these rate cuts in the form of accelerated (a) share gains from the unorganized players, and (b) premiumization. Prima facie, we believe this rate cut would drive a 10-15% earnings upside for the paints companies on an annualized basis; FY2019 impact would be lower, given part-year benefits accrual
Markets at Noon

 
S&P BSE Sensex 36,592.93 0.26%
 
Nifty 50 11,042.55 0.29%
 
S&P BSE 200 4,708.16 0.34%
 
Nifty 500 9,313.00 0.29%
 
S&P BSE Mid-Cap 15,260.84 0.42%
 
S&P BSE Small-Cap 15,772.26 0.32%

South Indian Bank tanks 18% on weak Q1 results

Shares of South Indian Bank have tanked 18% to Rs 18.45 per share, also their 52-week low on the BSE, after the private sector lender reported a sharp 77% year on year decline in its net profit at Rs 230 million in June quarter (Q1FY19). The bank had profit of Rs 1.01 billion in the corresponding quarter in the previous fiscal. READ MORE

Equirus Securities on DCB Bank

We expect DCBB to attain 14% RoE on a sustainable basis by FY21E assuming no further dilution. We cut FY19/FY20 PAT estimates by 5.5%/7.9% and roll over to a Sep’19 target price of Rs 185 (Mar’19 target price : Rs 205) at 2.1x/1.9x Sep’19/Sep’20 ABV of Rs 88/98. Retain ADD.
TOP CONTRIBUTORS TO SENSEX'S GAIN

COMPANY LATEST CHG(RS) CHG(%) FREE FLOAT
MKT CAP
(RS CR)
WEIGHT IN
INDEX (%)
ITC 284.65 11.20 4.10 347813.84 10.69
BHARTI AIRTEL 354.10 8.55 2.47 49541.78 1.83
ASIAN PAINTS 1428.00 31.10 2.23 64377.67 1.61
NTPC 158.50 3.20 2.06 32672.63 1.15
ADANI PORTS 377.45 7.55 2.04 34393.92 0.97
HIND. UNILEVER 1682.60 26.40 1.59 120191.15 2.49

CLICK HERE FOR MORE
Market check

Index Current Pt. Change % Change
 
S&P BSE SENSEX 36,553.21 +56.84 +0.16
 
S&P BSE SENSEX 50 11,546.06 +16.61 +0.14
 
S&P BSE SENSEX Next 50 31,503.73 +127.17 +0.41
 
S&P BSE 100 11,233.73 +20.42 +0.18
 
S&P BSE Bharat 22 Index 3,351.81 +23.46 +0.70

Motilal Oswal on Bajaj Auto



Angel Broking on YES Bank

We expect YES Bank to grow its advances at CAGR of 32% over FY2018-20E. Improvement in CASA, rating up-gradation and in-house priority sector lending would support NIM going forward. At CMP, YES trades at 2.4x FY20E P/ABV, which we believe is attractive considering growth prospects, hence, we recommend BUY with a target price of Rs 435 over the next 12 months
CHART CHECK Voltas

On a monthly chart, the stock has formed a Hammer Candlestick with the support of 490 level which is a 38.20% Fibonacci retracement level of its previous rally from 287.15 levels to 675.30 levels which is a classic reversal setup and shows a bullish reversal movement in the counter.
 
Apart from this, after giving a healthy correction from its 664.70 level, the stock has paused its downside movement near to its previous bottom from where the stock had witnessed a good upside movement.
Prabhudas Lilladher on HDFC Bank

HDFC Bank saw a marginal blip in earnings growing at only 18% YoY to Rs46.0bn (PLe: Rs47.1bn) mainly on back of margin pressure which fell by 20bps QoQ and MTM loss on investments. It has already raised capital of Rs85.0bn from its promoter bank HDFC Ltd and will shortly do Rs150bn preferential allotments, which help further augment capital for loan growth of 20-22% and improve liquidity for the bank.

We have factored the capital raise of Rs250.0bn in our estimates for FY19E, which has led to increase in ABV by 18/15% for FY19/FY20E. Retain BUY with increased target price of Rs2,492 (from Rs2,251) based on 4.2x Mar-20 ABV.
Two wheeler stocks trade weak; Hero MotoCorp, TVS Motor hit 52-week low

Shares of two wheeler companies were under pressure with Hero MotoCorp and TVS Motor Company hitting their respective 52-week lows and Bajaj Auto trading close to its 52-week low, falling up to 7% on the BSE in early morning trade on Monday. READ MORE

Emami's high dependence on rural sales may prove to be a boon this year

Considered as Emami’s bane last year, the company’s high dependence on rural sales may prove to be a boon this year. Rural sales of the fast-moving consumer goods (FMCG) major count for more than 50 per cent of its top line, the highest compared to its peers like HUL, Dabur and Marico, among others. READ MORE

Strong start to the Q1 earnings season: Net profit of 113 companies up 20%

The earnings season for the first quarter (Q1) of 2018-19 has started on a strong note for Corporate India. The combined net profit of 113 companies that have declared their results for the April-June 2018 quarter was up 20.3 per cent on a year-on-year (YoY) basis, growing at the fastest pace in the last nine quarters. READ MORE

Market Check

 
S&P BSE Sensex 36,607.68 0.31%
 
Nifty 50 11,042.95 0.30%
 
S&P BSE 200 4,711.71 0.41%
 
Nifty 500 9,317.95 0.34%
 
S&P BSE Mid-Cap 15,300.08 0.68%
 
S&P BSE Small-Cap 15,795.90 0.47%

17 of the 30 Sensex stocks are now below their 200-day moving average

The benchmark Sensex is hovering around its lifetime high, but more than half of its components are trading below their long-term average prices. According to data, 17 of the 30 Sensex stocks are now below their 200-day moving average (200-DMA). This indicates that the index gains are driven by few stocks, while most others reel under pain. READ MORE

MUST READ Is pharma sector worth the bet?

The pharma sector has been depressed for several years. One key reason for this is more stringent inspections by the US Food & Drug Administration (FDA) that has led to many Indian export facilities being debarred from exporting to the US. The FDA has a huge team doing Indian inspections and almost every pharma exporter has had problems passing the test. READ MORE
 

Edelweiss on Wipro

Management’s commentary, yet again, bolsters our Most bullish demand environment stance. However, client-specific concerns, weakness in India and headwinds in HPS, utilities & communications will continue to weigh on growth. While we raise the sector’s multiple in light of the robust demand environment, we will wait for these issues to ebb before raising Wipro’s multiple. Maintain ‘HOLD’ with target price of Rs 330
Nifty sectoral trend


BSE Sensex gainers and losers


Market at open
 
At 9:15 AM, the S&P BSE Sensex was trading at 36,541, up 45 points while the broader Nifty50 was ruling at 11,028, up 18 points.
IDBI Capital on HDFC Bank

Loan growth is healthy at 22%, driven by retail segment. NII and PAT growth of 15% and 18% respectively is almost in line with our expectations. Fee income has grown by 23%. Bank did not avail RBI dispensation and made entire MTM depreciation of Rs3.9bn during the quarter.

Core PBT growth (excluding treasury) is 29%. Asset quality has been stable and has been one of the best in the sector. Given all regulatory approvals in place, we have factored equity issuance of Rs240bn. We retain our BUY rating with a target price of Rs2,600 valuing the stock at 4.25x (25% premium to mean) P/ABV FY20
Stocks in news

·         UPL Ltd. to acquire Arysta Lifescience in an all cash deal worth $4.2 billion
 
·         Wipro guided for IT services revenues to be in range of $2,009 mn to $2,049 mn in the second quarter; will acquire U.S.-based Alight Solutions' India operations for $117 mn
 
·         Just Dial approved buyback of 27.5 lakh shares, or 24.26% equity, at Rs 800 each. The buyback amount to not exceed Rs 220 cr
 
·         Havells to merge all India-based subsidiaries with self
 
·         Hathway Cable to raise Rs 100 cr via preferential allotment of equity shares to promoter
 
·         Muthoot Finance received primary SEBI nod for AMC business
 
·         IMP Powers started production of Kinetic Energy Turbine in Silvassa
 
·         Sintex Plastics clarified that change in auditors has been effected only post audit and not abruptly
 
·         Lyka Labs board accepted in-principle approval received from Dena Bank for compromise settlement of their account
 
·         Alok Industries said that their liquidation application has been withdrawn
 
·         Cadila Healthcare’s Zydus received final approval from the U.S. FDA for Acetylcysteine Injection
 
·         BPCL’s board approved transfer of Gas Business Division to subsidiary Bharat Gas Resources Limited. The transaction is likely to be completed in three-four months
 
 
(Source: IIFL report)
MARKET COMMENT Amar Ambani, head of research, IIFL

An eventful week saw the market clocking gains last week.  Seven of 10 most valued companies added over Rs 53,799 cr in market capitalisation last week.  IT, pharma, infra, banks and energy sectors boosted market sentiment. The outlook is a flat start. Select stocks will react to the GST Council's decision of rationalising tax rates on few items.

The F&O expiry later this week will keep market volatility high. The rupee is likely to remain under pressure. A host of companies will announce their quarterly results during the week. ACC and Hindustan Zinc numbers are slated today. US President Donald Trump's remarks about being ready to act on tariffs on USD 500 billion of Chinese imports will be closely watched. US shares closed flat on Friday. Asian markets are trading lower
Markets at pre-open

Index Current Pt. Change % Change
 
S&P BSE SENSEX 36,517.68 +21.31 +0.06
 
S&P BSE SENSEX 50 11,537.04 +7.59 +0.07
 
S&P BSE SENSEX Next 50 31,506.70 +130.14 +0.41
 
S&P BSE 100 11,226.26 +12.95 +0.12
 
S&P BSE Bharat 22 Index 3,338.30 +9.95 +0.30

(Source: BSE)
Elara Capital on Havell's India

We marginally raise our EPS by 1% in FY19E on higher revenue in switchgears partly offset by the decline in revenue from EESL. Accordingly, we raise our target price by 3% to Rs 630 on 40x (unchanged) P/E as we roll forward by a quarter to June 2020E. We reiterate Accumulate as we expect an earnings CAGR of 19% over FY18-21E with an average ROE of 21% and ROCE of 20% over FY19-21E
GST meeting update

1. Quarterly Returns approved for taxpayers with turnover less than Rs 5cr ( tax payments to continue on monthly basis)

2. Sanitary Napkins exempted from GST going forward

3. No decision on 1% sugar cess

4. GST on bamboo flooring reduced to 12%

5. GST on hotels would now be on actual tariff & not declares tariff

6. Ethanol for Oil Marketing Companies now at 5% vs 18% earlier

7. 5% GST ceiling on footwear raised from Rs 500 to Rs 1000

8. GST on paints & varnishes, wall putty cut from 28% to 18%

9. GST on all leather items cut from 28% to 18%

10. GST on consumer electronics - TV (up to 27"), Washing Machine, Refrigerator, mixer, juicer, grinder cut from 28% to 18%

11. GST on special purpose vehicles, work truck, trailer cut from 28% to 18%

(Source: Nirmal Bang report)
EVENT UPDATE UPL to acquire US-based Arysta Life Science Inc

We expect the deal to be EPS accretive from FY20E even though we do not consider any synergy benefits in that year. We raise our FY20E EPS by marginally 3% to Rs 52.8. However, due to high leverage and deterioration in return ratios, we reduce our P/E multiple to 14x from 18x earlier and revise our target price to Rs 739 from Rs 923. Retain BUY

(Source: Emkay Global report)
SECTOR WATCH Is pharma sector worth the bet?

The pharma sector has been depressed for several years. One key reason for this is more stringent inspections by the US Food & Drug Administration (FDA) that has led to many Indian export facilities being debarred from exporting to the US. The FDA has a huge team doing Indian inspections and almost every pharma exporter has had problems passing the test READ MORE
TRADING IDEA

Top trading ideas from Prabhudas Lilladher: Buy IndusInd Bank


BUY INDUSINDBANK 
CMP: Rs 1,902.55 
TARGET: Rs 2,000 
STOP LOSS: Rs 1,860
 
The stock has given a correction from the peak of 1990 to show signs of bottoming out at around 1880 levels and has currently indicated a positive candle pattern in the daily chart to signify strength for further upside movement in the coming days. The RSI also has shown a trend reversal from the oversold zone and has signaled a buy in this stock. With consistent decent volume participation witnessed, we recommend a buy in this stock for an upside target of 2000 keeping a stop loss of 1860. READ MORE
Nifty outlook from Prabhudas Lilladher for today

Nifty has been moving a very range bound zone between the 10920 and 11070 levels while Bank Nifty also has been moving between 26650 and 27150 levels. A fresh development can only trigger a breach on either side of the indices. However, the support for the week is seen at 10820 while resistance is seen at 11160. Pharma sector looks attractive and is in a positive bias with stocks like Sun Pharma, Cipla and Auro Pharma looks promising for further upside.

INTERVIEW OF THE DAY Profit of Nifty companies can double over next 5 yrs: Jyotivardhan Jaipuria

The Indian benchmark indices have rallied around 5 per cent thus far in CY18. Jyotivardhan Jaipuria, founder and managing director at Valentis Advisors, tells Puneet Wadhwa that he expects India to continue outperforming other emerging markets (EMs). READ MORE

Jyotivardhan Jaipuria, Founder and managing director, Valentis Advisors

Commodity picks: Cardamom
 
Cardamom prices in Vandanmedu market are hovering at Rs1,080 per kg. Prices are expected to trade higher towards Rs1,120 per kg following reports over crop loss due to excess rainfall. There are reports over fungal infestation to the plants, which is expected to impact the yield READ MORE HERE
STOCK IDEA

L&T- BUY
CLOSE– Rs 1,270
TARGET– Rs 1,315-1,350
L&T closed the weekly in negative territory. Its still trading near 20 DMA. Risk Reward is favorable to BUY at current levels. One can BUY with a stop loss of Rs-1205 for the target of Rs-1315-1350 levels in short-term. READ MORE
Emkay on Havell's India

Management sounded optimistic about continued healthy revenue growth trend for FY19E. We believe that Lloyd's integration is progressing well. We are projecting revenue growth of 19%/15% for FY19/20E.
 
In our view, Havells is the good play on rising penetration and premiumisation in durables and electrical segments backed by strong management team. Consistency on delivery and integration of Lloyds would continue to command premium valuations. We reinstate coverage with ACCUMULATE rating and price target of Rs620 (38x FY20E EPS)
Elara Capital on ABB

We cut our EPS by 5% in CY19E and 4% in CY20E on lower order inflows and other income. We reduce our target price by 2% to Rs 1,365 as we roll forward by a quarter to 40x (unchanged) June 2020E P/E. We reiterateAccumulate as the stock has underperformed the BSE Sensex by 31% in the past six months. We estimate an earnings CAGR of 22% over CY17-20E (vs 23% over CY13-17) and ROE and RoCE of 15% each over CY18-20E
SGX Nifty

The SGX nifty was at 11,023, a tad up by 0.02 per cent from the previous close.
Emkay Global on Wipro

Wipro provided a lower than expected guidance (0.3-2.3% for Q2 vs. expectations of 3.0-5.0% CC qoq growth) which will result into sustained underperformance in the near term.
 
While modest outlook for Q2 suggests low confidence over immediate-term business momentum, we are confident that right-sizing initiatives will help it revive its growth prospects in medium term. Given its slow-but-steady business mix improvement and attractive FCF/EV of ~6x on FY18 nos, we maintain our HOLD rating with target price of Rs 290
IPO WATCH A leader at reasonable price: HDFC AMC IPO to hit market on Wednesday

HDFC Asset Management Company (HDFC AMC), India’s second-largest by assets under management (AUM), will hit the market on Wednesday, making it the fifth listed entity from HDFC group.
 
With all group companies — HDFC, HDFC Bank, Gruh Finance and HDFC Standard Life Insurance — having delivered a good performance as well as stock returns to investors over time, experts believe that HDFC AMC will also be an interesting case going ahead. READ MORE HERE
MARKET COMMENT Rahul Sharma, senior research analyst, Equity99

After two consecutive weeks of gains Nifty formed a Doji kind of candlestick pattern on the weekly chart. This indicates that uncertainty seems to have set in around the 11100, which is also proved to act as a solid resistance. The Doji pattern does not augur well for the current momentum and markets are likely to consolidate going further before any upmove resumes.

On the downside, 10900-10920 zone will act as a crucial support zone. Highest O.I for Nifty in the current series is placed at 11100CE and in 11000PE, while for Bank Nifty Futures the highest open interest is placed at 27000CE and 26500PE (27th July Expiry)‚Äč
MARKETS ON FRIDAY

Index Current Pt. Change % Change
 
S&P BSE SENSEX 36,496.37 +145.14 +0.40
 
S&P BSE SENSEX 50 11,529.45 +49.01 +0.43
 
S&P BSE SENSEX Next 50 31,376.56 +287.04 +0.92
 
S&P BSE 100 11,213.31 +55.52 +0.50
 
S&P BSE Bharat 22 Index 3,328.35 +3.62 +0.11

ASIAN MARKETS ROUND-UP

Asian shares declined on Monday, with Japanese stocks pressured by strength in the yen after the dollar broadly dropped on U.S. President Donald Trump's criticism of the Federal Reserve. The Nikkei 225 dropped 1.09 per cent as the dollar extended its losses against the Japanese currency. Against the yen, the dollar traded at 111, after dipping as low as 110.84 earlier in the session. The U.S. currency was 0.35 per cent weaker than the 111.4 handle seen at the end of Friday trade in New York


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