Indices end slightly lower ahead of GDP data; PSU banks, realty stocks fall

A share broker monitors market fluctuation
The benchmark indices ended marginally lower on Tuesday ahead of Gross Domestic Product (GDP) to be released on Wednesday.

The S&P BSE Sensex ended the day at 34346, down 99 points while the broader NIfty50 index settled at 10554 down 28 points.

Among sectoral indices, the Nifty PSU Bank index ended over 3% lower led by a sharp fall in shares of Punjab National Bank (PNB).

Shares of PNB hit a 20-month low, slipping over 9% on the BSE earlier in the day, after the government-owned bank said it has revealed an additional unauthorized transactions by around Rs 13 billion (USD 204 million). The stock was trading at its lowest level since June 24, 2016.

The market participants will look forward to key economic data such as  Nikkei Markit Manufacturing Purchasing Managers Index (PMI), Fiscal Deficit and GDP to be released on Wednesday.

In the global markets, Asian shares extended their recovery on Tuesday, hitting a three-week high as US borrowing costs eased ahead of Federal Reserve Chairman Jerome Powell’s highly-anticipated first congressional testimony later in the day.

Japan’s Nikkei rose 1.1 per cent to three-week highs while MSCI’s broadest index of Asia-Pacific shares outside Japan also hit a three-week high before giving up gains on profit-taking in Chinese shares.

 
On Wall Street, the S&P 500 advanced 1.18 per cent on Monday helped by fall in US bond yields.

(with Reuters inputs)


3:44 PM IST Market rundown by Nikhil Kamath, Co-Founder and Head of Trading, Zerodha "Markets opened the session slightly higher for the day on the back of positive global cues, this rally was sold into and the indices corrected throughout the session to close over a quarter percent lower for the day.   Cement and banking were the weakest sectors for the session, with both Orient Bank and PNB tanking in trade."

3:36 PM IST Top Sectoral loser: Nifty PSU Bank slips over 3%

3:34 PM IST Sectoral Trend

3:33 PM IST Sensex top gainers and losers

3:32 PM IST Markets at Close The S&P BSE Sensex ended the day at 34346, down 99 points while the broader NIfty50 index settled at 10554 down 28 points

3:24 PM IST PNB scam: Bank ignored warnings from Gitanjali Gems auditor in March 2017 The Indian lenders led by Punjab National Bank ignored warnings from the auditor of Gitanjali Gems in March 2017 that the latter has defaulted to loans of Life Insurance Corporation. CLICK HERE FOR FULL STORY

3:20 PM IST Event update: ACC - Ambuja merger deferred for now   ACC-Ambuja have called off their proposed merger plan (for now) announced in May last year highlighting certain constraints in relation to implementing the merger at present (possibly related to transfer of mineral concessions). Instead, the board has approved an arrangement within companies for swap of materials and services on mutually agreed terms - to realize synergies; the details of the arrangement would be disclosed to its shareholders when it seeks their nod via postal ballot.    The announcement is negative for the both companies, in our view. Although, we highlight that off late both companies have been indicating in their respective investor interactions that merger was only a bull case scenario and not a base case scenario. But the street still seems to factor in some kind of synergy benefits in the estimates. The outlook on fructification of these swap based synergies is hazy. Both companies have been amongst the less preferred names in the space for us. We currently have HOLD rating on both the stocks.   (Source: Antique Stock Broking)  

3:20 PM IST Gitanjali Gems, Vakrangee plunge 66% in one month Shares of Gitanjali Gems and Vakrangee continued to remainunder pressure, eroding two-third of their market valuation in the past one month. Gitanjali Gems hit a new low of Rs 22.45, down 5% on the BSE. The stock of jewellery maker was locked in lower circuit for the nine straight trading days. In past one month, it tanked 66% from Rs 66.30. READ MORE

3:13 PM IST Modi winning 2019 polls: Market has priced in 2nd term for BJP, says UBS The 2019 general elections are still about a year away, but markets seem to have already priced in a second term for the incumbent Narendra Modi-led National Democratic Alliance (NDA) government. In a recent client note, brokerage UBS said while most investors had assigned a ‘very high probability’ of Modi winning the 2019 elections, markets had already priced this in. READ MORE

3:00 PM IST ICICI Securities on ISGEC Heavy Engineering   The stock trades at 19x FY20E standalone EPS. We expect execution to improve in FY19 and FY20 leading to 22% and 26% revenue growth in the respective years. We expect EBITDA margins to improve gradually with reduction in working capital.    Driven by strong execution and margin improvement, earnings are expected to grow by 37%/33% in FY19/FY20 respectively. Improvement in RoCE with healthy cashflows will aid in valuation rerating. Strategic tie-ups have further strengthened the company’s competitive ability to enter new technology areas, which will fuel incremental growth. Maintain BUY.

2:50 PM IST Nifty PSU Bank index slips over 3%

2:40 PM IST Kotak Securities on Kansai Nerolac   KNPL has been experiencing double digit volume YoY growth across segments since the last 12 quarters surpassing the performance of Asian Paints and Berger. The strong out-performance is on the back of: 1) Strong volume growth witnessed by the paint sector;2) New and innovative product launches by the company; 3) Strong distribution network of the company (20000+ dealers and 102 depots);4) Heavy promotion through multiple media platforms and 5) Sales aggression exhibited by the company.    Management (and we agree) expect the growth momentum to continue in medium term as well with increasing disposable income, healthy GDP growth, strong automotive demand and private/public sector capex in the country. Maintain BUY with an unchanged target price of Rs 600 at 44x FY20E earnings.

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Market rundown by Nikhil Kamath, Co-Founder and Head of Trading, Zerodha

"Markets opened the session slightly higher for the day on the back of positive global cues, this rally was sold into and the indices corrected throughout the session to close over a quarter percent lower for the day.
 
Cement and banking were the weakest sectors for the session, with both Orient Bank and PNB tanking in trade."

Top Sectoral loser: Nifty PSU Bank slips over 3%

Sectoral Trend


Sensex top gainers and losers


Markets at Close

The S&P BSE Sensex ended the day at 34346, down 99 points while the broader NIfty50 index settled at 10554 down 28 points
PNB scam: Bank ignored warnings from Gitanjali Gems auditor in March 2017

The Indian lenders led by Punjab National Bank ignored warnings from the auditor of Gitanjali Gems in March 2017 that the latter has defaulted to loans of Life Insurance Corporation. CLICK HERE FOR FULL STORY
Event update: ACC - Ambuja merger deferred for now
 
ACC-Ambuja have called off their proposed merger plan (for now) announced in May last year highlighting certain constraints in relation to implementing the merger at present (possibly related to transfer of mineral concessions). Instead, the board has approved an arrangement within companies for swap of materials and services on mutually agreed terms - to realize synergies; the details of the arrangement would be disclosed to its shareholders when it seeks their nod via postal ballot. 
 
The announcement is negative for the both companies, in our view. Although, we highlight that off late both companies have been indicating in their respective investor interactions that merger was only a bull case scenario and not a base case scenario. But the street still seems to factor in some kind of synergy benefits in the estimates. The outlook on fructification of these swap based synergies is hazy. Both companies have been amongst the less preferred names in the space for us. We currently have HOLD rating on both the stocks.
 
(Source: Antique Stock Broking)
 
Gitanjali Gems, Vakrangee plunge 66% in one month

Shares of Gitanjali Gems and Vakrangee continued to remainunder pressure, eroding two-third of their market valuation in the past one month. Gitanjali Gems hit a new low of Rs 22.45, down 5% on the BSE. The stock of jewellery maker was locked in lower circuit for the nine straight trading days. In past one month, it tanked 66% from Rs 66.30. READ MORE
Modi winning 2019 polls: Market has priced in 2nd term for BJP, says UBS

The 2019 general elections are still about a year away, but markets seem to have already priced in a second term for the incumbent Narendra Modi-led National Democratic Alliance (NDA) government. In a recent client note, brokerage UBS said while most investors had assigned a ‘very high probability’ of Modi winning the 2019 elections, markets had already priced this in. READ MORE
ICICI Securities on ISGEC Heavy Engineering
 
The stock trades at 19x FY20E standalone EPS. We expect execution to improve in FY19 and FY20 leading to 22% and 26% revenue growth in the respective years. We expect EBITDA margins to improve gradually with reduction in working capital. 
 
Driven by strong execution and margin improvement, earnings are expected to grow by 37%/33% in FY19/FY20 respectively. Improvement in RoCE with healthy cashflows will aid in valuation rerating. Strategic tie-ups have further strengthened the company’s competitive ability to enter new technology areas, which will fuel incremental growth. Maintain BUY.
Nifty PSU Bank index slips over 3%


Kotak Securities on Kansai Nerolac
 
KNPL has been experiencing double digit volume YoY growth across segments since the last 12 quarters surpassing the performance of Asian Paints and Berger. The strong out-performance is on the back of: 1) Strong volume growth witnessed by the paint sector;2) New and innovative product launches by the company; 3) Strong distribution network of the company (20000+ dealers and 102 depots);4) Heavy promotion through multiple media platforms and 5) Sales aggression exhibited by the company. 
 
Management (and we agree) expect the growth momentum to continue in medium term as well with increasing disposable income, healthy GDP growth, strong automotive demand and private/public sector capex in the country. Maintain BUY with an unchanged target price of Rs 600 at 44x FY20E earnings.
Market check

 
S&P BSE Sensex 34,360.38 -0.25%
 
Nifty 50 10,556.35 -0.25%
 
S&P BSE 200 4,611.25 -0.34%
 
Nifty 500 9,302.85 -0.32%
 
S&P BSE Mid-Cap 16,588.27 -0.58%
 
S&P BSE Small-Cap 18,100.37 -0.30%

Korea Summit: Modi woos foreign investors, says India most open economy

Pitching for foreign investments, Prime Minister Narendra Modi on Tuesday said India is one of the most open economies in the world and is ready to do business with the world.
 
Speaking at the India-Korea Business Summit, he said his government has worked towards creating a stable business environment and removed arbitrariness in decision-making. READ MORE

Sensex top losers and gainers


Britannia Industries hits new high; crosses Rs 5,000-mark

Britannia Industries hit a new high of Rs 5,057, up 1% on the BSE in otherwise subdued market. The stock was trading higher for the fourth straight trading days, seen its market capitalization crossing Rs 600 billion mark in intra-day trade on Tuesday. Britannia Industries has outperformed the market by 5% in past one week, as compared to 2% rise in the S&P BSE Sensex. READ MORE
News Watch PNB fraud: FinMin sets 15-day deadline for banks to fix operational gaps

The finance ministry on Tuesday set a 15-day deadline for state banks to take pre-emptive action against operational and technical risks, following a $2 billon fraud at the country's second-biggest state lender. Rajeev Kumar, secretary in the department of financial services, said in a tweet that state-run banks have 15 days to "take pre-emptive action and identify gaps/weaknesses" to tackle rising operational and technical risks. CLICK HERE FOR FULL STORY
Sharekhan on Zydus Wellness
 
The stock price of Zydus Wellness has run-up by 19% since our last update (on 8th February 2018) limiting the upside from current levels. Downgrading it Hold with revised price target of Rs1,300. The company’s long term growth prospects are intact and we expect revenues and PAT to grow at CAGR of 14% and 16% respectively.
News watch Pricing woes force Cipla, Glenmark, Lupin to go slow on US drug pipeline

Faced with pricing pressure, large Indian pharmaceutical companies are focusing on selective product launches in the US market. The move comes amid increasing competition in the generic drug space and customer consolidation, which are impacting the companies' profits. CLICK HERE FOR FULL STORY

Market check

 
S&P BSE Sensex 34,368.39 -0.22%
 
Nifty 50 10,555.95 -0.25%
 
S&P BSE 200 4,615.37 -0.25%
 
Nifty 500 9,308.65 -0.26%
 
S&P BSE Mid-Cap 16,626.13 -0.35%
 
S&P BSE Small-Cap 18,128.92 -0.14%

Sectoral Trend


India Market Strategy: Will Modi win in 2019... or late 2018?
 
Our discussions with investors suggest Prime Minister Modi winning the next national election is being assigned a very high probability by most, if not all, investors. Modi's reform agenda has aided investors in ignoring earnings disappointments over the past four years. Thus, his re-election as Prime Minister with a single-party majority underpins the market's hopes, reflected in rich multiples. 
 
However, a change in such expectations by investors through 2018 could result in lower multiples. We are not trying to predict the election outcome and even opinion/exit polls have gone wrong in the past. Instead, we outline key pointers for investors to track this big event ahead for Indian markets.
 
(Source: UBS report)
BSE Sensex gainers and losers


UPI-based system mulled for retail investors in IPOs

The Securities and Exchange Board of India (Sebi) is considering introducing a UPI-based payment system for retail investors in initial public offerings (IPOs), a move that will help do away with cheque payments and reduce the time taken between the closing of an IPO and listing of the security to just three days. READ MORE
Motilal Oswal Research recommends RIL
 
With the completion of core projects and tapering of telecom capex, we expect free cash flow generation of Rs 678 billion during FY18-20 on a consolidated basis.
 
We value RIL using summ-of-the-parts (SOTP) methodology. Using 7.5x EV/EBITDA for refining & petchem, DCF for E&P, 0.7x EV/sales for Reliance Retail, and DCF for RJio. We roll over our target price to March 2019. With a revised target price of Rs 1,111, we reiterate our Buy recommendation for the stock.
Top sectoral loser: Nifty PSU Bank


Market check

S&P BSE Sensex 34,388.15 -0.17%
 
Nifty 50 10,564.45 -0.17%
 
S&P BSE 200 4,618.93 -0.17%
 
Nifty 500 9,318.50 -0.15%
 
S&P BSE Mid-Cap 16,628.18 -0.34%
 
S&P BSE Small-Cap 18,158.81 0.03%

Sectoral watch: Cement industry
 
All-India retail cement prices remained flat at Rs 311/bag M-o-M (Rs309/bag in January 2018). However, prices rose 5% Y-o-Y. The prices indicate a mixed trend with the central region showing weakness, western region witnessing a rise and other regions staying flat MoM. YTD cement demand in FY18 during nine months ended December 2017 was flat (1.0% up) at 217mt. However, MoM growth was 8.4% in December 2017, while because of a weak base YoY growth was robust at 19.6%. 
 
Our channel check indicates demand gaining momentum in certain pockets, but except for selected regions the overall picture shows limited activity because of various reasons. Demand pick-up is dominantly from the government-led infrastructure segment while the organised real estate sector still remains listless.
 
(Source: Nirmal Bang report)
Nelco hits 10-year high; surges 75% in 14 days post Q3 results

Nelco hit an over 10-year high of Rs 189, up 7% on the BSE, extending its rally after the company announced its October-December (Q3FY18) results. The stock was trading at its highest level since January 17, 2008. Since February 2, 2018, in past 14 trading days, it appreciated by 75%, as compared to 1% rise in the S&P BSE Sensex. READ MORE
Rise in govt bond yields to affect public sector banks' Q4 performance

Rajnish Kumar, chairman of India’s largest lender State Bank of India (SBI), in an interview with a news channel, said the rise in government bond yields might affect the bank’s March quarter (Q4) results and the mark-to-market provisions would hit most banks. So, there is little doubt that other public sector banks (PSBs) will not go unscathed. READ MORE
Ghosts of past frauds haunt $60 bn jewellery industry as banks raise alarm

In his 50 years as a jeweller, Pankaj Parekh has seen a few scams shake the credibility of India’s $60 billion gems and jewellery industry. The latest multibillion-dollar fraud will give banks the impetus to rein in credit for around 300,000 of his counterparts, he says. READ MORE
Market Check
S&P BSE Sensex 34,460.52 0.04%
 
Nifty 50 10,591.75 0.09%
 
S&P BSE 200 4,628.38 0.03%
 
Nifty 500 9,335.65 0.03%
 
S&P BSE Mid-Cap 16,655.66 -0.18%
 
S&P BSE Small-Cap 18,173.60 0.11%

Nomura on Banking sector
 
Corporate banks have underperformed by 5-20% in the past month, due to market correction/ RBI asset quality regulation changes and the recent troubles at PNB. The front-ending of NPA recognition/provisioning in the next 2-3 quarters is not negative for well capitalised corporate banks.
 
Valuations after the recent correction are at the lower end of fair value range considering FY20F normalised ROEs. We downgrade PNB to Neutral but retain our Buy calls on the other corporate banks under our coverage, including Bank of Baroda/ Axis Bank / ICICI Bank / SBI.
 
News Watch Rs 114-bn PNB fraud gets bigger: Bank says total dues can be Rs 13 bn more

Amid the multi-agency probe into the Punjab National Bank (PNB) scam, the state-run bank on Monday said the amount of fraudulent transactions could be Rs 13 billion more than the current estimate of about Rs 114 billion. READ MORE
 

ACC, Ambuja Cements trade weak as merger plans put on hold

Shares of ACC and Ambuja Cements were trading lower by upto 4% on the BSE, after these companies on Monday post market hours said they are not proceeding with the merger at this juncture. The Indian units of LafargeHolcim announced merger plan in May last year. READ MORE
Message from market to PNB, other PSBs: Bring in new credible leadership

Everyone is wringing their hands on the jeweller Nirav Modi fraud and the damage it has caused to Punjab National Bank (PNB) and the PSU banks in general. While we still do not have all the facts, the fraud seems to be of an astonishing scale (somewhere between Rs 110 billion and Rs 200 billion) and audacity. READ MORE
HPCL's outlook firm as refining, marketing prospects improve

Investors in Hindustan Petroleum Corporation (HPCL) could be in for a surprise after seeing months of declines in their holding values. HPCL has been in the limelight ever since Oil and Natural Gas Corporation (ONGC) was asked to acquire the government’s majority stake in the former. READ MORE
Intermediate trend looks negative; traders to brace for currency volatility

The market has seen a rebound since the settlement on the back of serious institutional buying. The Punjab National Bank scam and other bank scams that are now floating to the surface seem to have been discounted. The global trading pattern has also been less volatile this week. READ MORE
Market check

 
S&P BSE Sensex 34,468.67 0.07%
 
Nifty 50 10,591.75 0.09%
 
S&P BSE 200 4,629.92 0.06%
 
Nifty 500 9,336.85 0.05%
 
S&P BSE Mid-Cap 16,664.08 -0.12%
 
S&P BSE Small-Cap 18,178.04 0.13%

PNB hits 20-month low on discovery of additional unauthorized transactions

Shares of Punjab National Bank (PNB) hit a 20-month low of Rs 102, slipping 9% on the BSE in early morning trade, after the government-owned bank said it has revealed an additional unauthorized transactions by around Rs 13 billion (USD 204 million). The stock was trading at its lowest level since June 24, 2016. READ MORE
Stock market correction prompts equity fund managers to step up buying

A near 10 per cent fall in stock market prices this month has prompted equity fund managers to step up their buying.
 
Following their established strategy of 'buy on dips', they have put a little over Rs 100 billion in stocks, the most in three months and the second highest since April 2017. READ MORE
NSE sees IPO pipeline by start-ups, e-tailers

The country’s technology start-ups and e-commerce players may soon be the new entrants on the National Stock Exchange (NSE).
 
Taking on the Singapore Exchange and the Nasdaq, the NSE is looking to facilitate firms to raise about $50 billion, and in the process allow the private equity and venture capital funds to exit listed entities. READ MORE
BSE Smallcap: Alankit, Amtek Auto among top gainers, Gitanjali among top loser


Simbhaoli Sugars surges nearly 10% after yesterday's fall (image source: NSE)


BSE Midcap: IGL, Mphasis among top gainers, Vakrangee top loser


Punjab National Bank stock plunges nearly 7% (image source: NSE)


Sectoral trend


Sensex top gainers and losers


Market at open
 
At 9:17 am, the S&P BSE Sensex was trading at 34,523, up 77 points while the broader Nifty50 was ruling at 10,615, up 32 points.
Markets at pre-open

Index Current Pt. Change % Change
 
S&P BSE SENSEX 34,512.21 +66.46 +0.19
 
S&P BSE SENSEX 50 11,065.20 +17.14 +0.16
 
S&P BSE SENSEX Next 50 34,276.40 +29.99 +0.09
 
S&P BSE 100 10,972.86 +16.06 +0.15
 
S&P BSE Bharat 22 Index 3,626.38 -8.42 -0.23

(Source: BSE)
News Watch: SBI Chairman Rajnish Kumar expects PNB to clear Rs 13 billion dues

SBI Chairman Rajnish Kumar today said he expects PNB to clear the bank's $212 million (Rs 13 billion) dues in the Nirav Modi case. READ MORE
Economists expect GVA rise in December quarter, data due tomorrow

Economic activity is likely to have gained momentum in the third quarter of 2017-18, aided by higher industrial growth and central government spending.
 
Gross value added (GVA) is expected to grow 6.8% in the third quarter of 2017-18, up from 6.1% in the second quarter of 2017-18, say economists. It was 5.6% in the first quarter. Investment activity is also likely to see a pick-up in the quarter ended December. READ MORE

P-Note investments slip to 8-year low at Rs 1.19 lakh cr in Jan
 
Investments in the domestic capital market through participatory notes (P-notes) plunged to a nearly eight-and-a-half-year low of Rs 1.19 lakh crore in January-end amid stringent norms put in place by regulator SEBI to check misuse.
 
According to data by SEBI, the total value of P-note investments in Indian markets — equity, debt, and derivatives — slumped to Rs 1,19,556 crore at January-end from Rs 1,24,810 crore at the end of the preceding month. This is the lowest level since August 2009, when the cumulative value of such investments stood at Rs 1,10,355 crore.
News watch Bad news for Gitanjali, PNB, OBC: Few scam-related stocks regain lost glory

Nearly a dozen companies that have been named in various scams, frauds or price rigging at the bourses in over two decades have lost over 90 per cent of their market value from their all-time high levels, data show. CLICK HERE FOR FULL STORY
Today's picks: From Tata Motors to Vedanta, hot stocks to watch today

Nifty
Current: 10,583 (fut: 10,594) Target: NA
Stop-long positions at 10,525
Stop-short positions at 10,675
Big moves could go till 10,725, 10,475. CLICK HERE FOR MORE

Reserve Bank of India raises currency derivatives limit to $100 million

The Reserve Bank of India (RBI) on Monday allowed persons residing in India and foreign portfolio investors (FPIs) to take single-limit positions of up to $100 million in exchange-traded currency derivatives, without having to establish the underlying exposure. READ MORE
News Watch: BSE waives transaction fees for stocks in benchmark index

India's second-biggest stock exchange, BSE, said it would waive transaction fees on stocks in its flagship S&P BSE Sensex 30 index in an effort to encourage retail investors to participate in "financially sound companies". READ MORE


Top trading ideas by Prabhudas Lilladher for the day

BUY TATA MOTORS
CMP: Rs 372.05
TARGET: Rs 400
STOP LOSS: Rs 355
 
The stock has witnessed a deep correction from the peak of 443 to bottom out at 357 levels and is now currently indicating a decent revival with strength and positive bias. The indicators are showing a trend reversal with the RSI at its oversold zone has signalled a buy and also the MACD has indicated a positive trigger.
 
With good decent volume participation witnessed, we recommend a buy in this stock for an upside target of 400 keeping a stop loss of 355. CLICK HERE FOR MORE
Nifty View for the day

Nifty continues to bounce back from 10,300 levels having its near term resistance at 10,630, a decisive move past 10,630 would bring in further momentum for target 10,650-10,680 levels. The support for the day is seen at 10,520 while resistance is seen at 10,640. Auto & Capital goods look positive for now.
Markets on Monday Sensex gains over 300 points, markets at 3-week high as volatility eases

The Sensex gained over 300 points for a second straight session on Monday amid positive global cues and value buying by domestic investors. The benchmark index gained 303 points, up 0.9%, to close at 34,445, while the broader Niftly closed at 10,582, up 91.5 points or 0.87%. The broader markets followed a similar trend with the BSE mid- and small-cap indices gaining 0.74% and 0.88%, respectively. READ MORE
Wall Street

On Wall Street, the S&P 500 advanced 1.18% on Monday helped by fall in US bond yields.
SGX Nifty

The SGX Nifty was at 10,633, up 0.33% from the previous close.
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