Indices close at record highs; Sensex ends above 40k-mark for first time

Representative image
Benchmark indices Sensex and Nifty hit new closing highs on Monday, lifted by gains in heavyweights such as the HDFC twins and Reliance Industries, as fall in crude oil prices and hope of rate cut by the RBI's Monetary Policy Committee (MPC) to arrest growth slowdown lifted investor sentiment.

The fourth-quarter growth numbers have forced many analysts to weigh in on a definite rate cut at Thursday’s monetary policy review, a Business Standard report said. READ THE FULL REPORT HERE

The indices also hit their respective fresh all-time highs in intra-day trading, with Sensex touching the 40,308.90 level and Nifty at 12,103.05.

 
The benchmark S&P BSE Sensex closed 553 points higher at 40,268 levels, with Hero MotoCorp, Bajaj Auto, IndusInd Bank, Asian Paints, and Hindustan Unilever leading the list of gainers. Out of the 30 BSE constituents, only ITC, NTPC, and ICICI Bank ended the day in the red. The market breadth, however, was in declines, as out of the 2,769 companies traded on the BSE, 1,193 advanced, 1,416 declined, and 160 remained unchaged.

The broader Nifty50 index ended the day 166 points, or 1.39 per cent, higher at 12,089 levels.

Among sectoral indices, only Nifty Media ended Monday's session with losses, with Nifty Auto, Nfity Fin Service, Nifty FMCG, Nifty IT, and Nifty Metal, all gaining over 1 per cent.

In the broader market, the S&P BSE MidCap index rose 136 points, or 0.9 per cent, to end the day around 15,232 levels, while the S&P BSE SmallCap index gained 71 points, or 0.48 per cent, to settle at 14,938 levels.

 
BUZZING STOCKS

Shares of Hero MotoCorp (HMCL) rose 6.01 per cent to Rs 2842.5 on the BSE on Monday after the company reported a 13.5 per cent rise in sales to 652,028 units in May over the previous month. The company had sold 574,366 units in April 2019, it said in a BSE filing. READ MORE

Shares of aviation companies were in focus after they rallied up to nearly 8 per cent on the BSE during the early morning trade on Monday. Heavy volumes of shares were being traded at the bourses after Indian Oil Corporation slashed Aviation Turbine Fuel (ATF) price, which makes up 40 per cent of an airline's cost structure, for the first time in the past five months. READ MORE

Shares of Apollo Hospitals Enterprises surged 9.71 per cent to Rs 1,360 on the BSE on Monday, after the company reported a more-than-doubled consolidated net profit at Rs 84.4 crore in March quarter (Q4FY19). The Chennai-based hospital chain had posted a profit of Rs 23.8 crore in the year-ago quarter. READ MORE


4:00 PM IST COMPANY PRICE(rs) 52 WK HIGH CHG(rs) CHG(%) ASTRAL POLY 1330.00 1349.00 8.40 0.64 ATUL 3996.20 4090.00 -50.85 -1.26 BAJAJ FINSERV 8335.00 8350.00 155.15 1.90 BLUE STAR 798.00 812.00 -8.30 -1.03 CENTURY TEXTILES 1065.95 1066.55 42.55 4.16 » More on 52 Week High

3:59 PM IST COMPANY PRICE(rs) CHG(rs) CHG(%) VOLUME INFO EDG.(INDIA) 2283.00 243.50 11.94 48462 APOLLO HOSPITALS 1356.20 116.60 9.41 265387 PAGE INDUSTRIES 20950.00 1262.40 6.41 5776 CAPLIN POINT LAB 430.35 25.70 6.35 12402 INDIABULLS VENT. 313.00 18.05 6.12 213451 » More on Top Gainers

3:58 PM IST

3:58 PM IST

3:57 PM IST

3:37 PM IST The S&P BSE Sensex ended at 40,268, up 553 points while the broader Nifty50 index settled at 12,089, up 166 points.

3:17 PM IST

2:58 PM IST

2:58 PM IST - Spot gold was up 0.7% at $1,314.11 per ounce at 1:15 pm, after touching its highest since March 27 at $1,314.33.   - US gold futures rose 0.6% to $1,319.40 an ounce. - Gold prices rose on Monday to their highest in more than two months as heightened Sino-U.S. trade tensions and Washington’s threat of tariffs on Mexico stoked worries of a global recession.

2:56 PM IST

2:54 PM IST - Price of each share at Rs 100

2:45 PM IST - Will start trial within 100 days. - Also plan to start 1 lakh digital villages (As reported by CNBC TV18)

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Stocks that hit 52-week high on S&P BSE Sensex

COMPANY PRICE(rs) 52 WK HIGH CHG(rs) CHG(%)
ASTRAL POLY 1330.00 1349.00 8.40 0.64
ATUL 3996.20 4090.00 -50.85 -1.26
BAJAJ FINSERV 8335.00 8350.00 155.15 1.90
BLUE STAR 798.00 812.00 -8.30 -1.03
CENTURY TEXTILES 1065.95 1066.55 42.55 4.16
» More on 52 Week High

Top gainers on BSE500

COMPANY PRICE(rs) CHG(rs) CHG(%) VOLUME
INFO EDG.(INDIA) 2283.00 243.50 11.94 48462
APOLLO HOSPITALS 1356.20 116.60 9.41 265387
PAGE INDUSTRIES 20950.00 1262.40 6.41 5776
CAPLIN POINT LAB 430.35 25.70 6.35 12402
INDIABULLS VENT. 313.00 18.05 6.12 213451
» More on Top Gainers

Heatmap: S&P BSE Sensex


Nifty sectoral indices at close


Market at close


Market at close

The S&P BSE Sensex ended at 40,268, up 553 points while the broader Nifty50 index settled at 12,089, up 166 points.

Info Edge zooms 13%


Page Industries gains over 6%


NEWS ALERT | Gold prices hit two-month high on recession concerns: Reuters

- Spot gold was up 0.7% at $1,314.11 per ounce at 1:15 pm, after touching its highest since March 27 at $1,314.33.
 
- US gold futures rose 0.6% to $1,319.40 an ounce.

- Gold prices rose on Monday to their highest in more than two months as heightened Sino-U.S. trade tensions and Washington’s threat of tariffs on Mexico stoked worries of a global recession.

Triveni Engineering & Industries is trading over 9% higher


NEWS ALERT | Triveni Engg board approves share buyback for up to 1 cr shares: CNBC TV18

- Price of each share at Rs 100

NEWS ALERT | Look to start India-specific index for Broadband: Ravi Shankar Prasad

- Will start trial within 100 days.

- Also plan to start 1 lakh digital villages

(As reported by CNBC TV18)

Adani Gas, Gujarat Gas, IGL ride strong Q4 earnings to hit record highs

Shares of gas distribution companies – Adani Gas, Gujarat Gas Company and Indraprastha Gas (IGL) – hit their respective record highs on the BSE on Monday, after reporting strong earnings in March quarter (Q4FY19). Adani Gas rallied 9 per cent intra-day to quote Rs 180 apiece during the afternoon session, extending its previous week’s gaining streak of 21 per cent. The Gautam Adani-led city gas distribution (CGD) company logged a 91 per cent year-on-year (Y-o-Y) growth in consolidated net profit at Rs 75.75 crore in Q4FY19 from Rs 39.65 crore in previous year quarter. READ MORE



Over 6,800 cases of bank fraud involving Rs 71,500 crore in 2018-19: RBI

As many as 6,801 cases of fraud were reported by scheduled commercial banks and select financial institutions involving an amount of Rs 71,542.93 crore in the last fiscal (increase of over 73 per cent in the fraud amount), the Reserve Bank of India (RBI) said in reply to an RTI query filed by this PTI journalist.
 
In the last 11 fiscal years, a total of 53,334 cases of fraud were reported by banks involving a massive amount of Rs 2.05 lakh crore, the central bank's data said. READ MORE

Market breadth in favour of advance


Market check | Sensex surges 500 pts


Reliance Industries rises 1.6%


Crude extends losses; WTI drops over 1%

Image credit: oilprice.com



HDFC Securities on Lemon Tree Hotels

CMP: Rs 74
 
Target Price: Rs 72
 
Rating: Neutral
 
Healthy room growth, geographic diversion and improving mix of keys in demand dense higher ARR markets to drive strong growth. Led by the above factors, EBITDA is set to triple over FY19-23E from Rs 1.7bn to ~Rs 5bn. That said LTHL’s rich valuation at 30/24 x FY20/21E EV/EBITDA leaves limited margin of safety. Valuation would look more expensive on proportionate ownership basis in subsidiaries (~75%).

Anand Rathi on Ahluwalia Contracts (India)

Factoring in the delays in timelines for the Charbagh railway re-development and the Kolkata-seater-extension projects, we lower our estimates. We also factor in the real-estate-inventory liquidation at below book value. Consequently, our FY20e earnings are down ~12% (and ~3% for FY21). At the CMP, the stock trades at PER (excl. the Kota asset) at 15.7x FY20e and 12.8x FY21e. Risk: Any slower-than-expected project execution.

With enough cash in hand, SpiceJet may evaluate 'several offers' for stake

“SpiceJet has enough cash,” Ajay Singh said in an interview, while attending an industry conference in Seoul. “We have to see if this serves SpiceJet’s long-term interests, and when we come to that determination, we’ll do something. These are typical in a situation when an airline is doing well and the market is as promising as India.” READ MORE

Hero MotoCorp gains over 5%


Modi's victory in Lok Sabha polls makes rupee double-edged sword for RBI

The rupee could be set to gain as Prime Minister Narendra Modi’s sweeping election victory boosts foreign inflows. That may present a dilemma for India’s central bank, analysts said.
 
The rupee is emerging Asia’s top performer in the past three months, thanks to the gush of foreign cash. With inflows poised to accelerate after the election result, the Reserve Bank of India may have to rein in the currency or risk making the nation’s exports less competitive as rival currencies weaken. READ MORE

TTML zooms 71% in one week on Q4 profit, fundraising plan of Rs 35K crore

Shares of Tata Teleservices (Maharashtra) (TTML) were locked in the upper circuit for second straight session on Monday, having jumped 10 per cent intra-day to hit Rs 4.57 apiece. It has surged 71 per cent in the past one week on the BSE after the company reported net profit of Rs 580 crore in March quarter (Q4FY19) against a net loss of Rs 680 crore last year.
 
The company also reported an exceptional gain of Rs 510 crores on partial reversal of impairment, recorded during the previous year. READ MORE

Bank of Baroda falls over 2.5%


NEWS ALERT | ILC expected to suggest amendments to strengthen IBC: CNBC TV18

- Also suggest enforcement provision in IBC

Anand Rathi Financial Services on Ahluwalia Contracts

Rating: Buy
 
Target Price: Rs 392
 
Share Price: Rs 334

Ahluwalia’s constrained FY19 revenue growth seems more a result of systemic/project-specific issues. Consequently, no change in sound fundamentals and a significantly augmented order backlog (owing to strong FY19 accretion) make us believe that revenues missed in FY19 would come true sooner than later. Besides, its continuing net-cash status speaks of its capacity to fund working capital and capex needs from internal accruals. On the appealing return ratios, net-cash status
and ample revenue assurance, we are positive about Ahluwalia and, thus, maintain our Buy on the stock.

Stocks that hit 52-week high on S&P BSE Sensex

COMPANY PRICE(rs) 52 WK HIGH CHG(rs) CHG(%)
ASTRAL POLY 1344.90 1349.00 23.30 1.76
ATUL 4004.00 4090.00 -43.05 -1.06
BLUE STAR 802.15 812.00 -4.15 -0.51
GUJARAT GAS 188.10 195.00 4.05 2.20
H D F C 2217.45 2217.50 35.25 1.62
» More on 52 Week High

HDFC Securities on ONGC

Recommendation:  BUY
 
Target Price: Rs 191,

CMP:  Rs 172
 
Concerns over lack of crude oil production growth still persist. However, we expect re-rating of ONGC as fears of subsidy burden have allayed. Adjusting for its investments (OVL+ other) the stock is trading at 6.8x FY21E standalone EPS. This indicates strong pessimism and we expect re-rating of upstream companies. 

Upstream companies were out of flavour despite realizing market price for crude oil, mainly on account of lower provisioning of budgetary support in FY19 (Rs 248bn). The subsidy sharing concern allayed when the Govt. committed to settle Rs 430bn of subsidy from its own pocket. We do not foresee any subsidy sharing burden on upstream companies if crude oil prices remain below USD80/bbl. In the absence of overhang of subsidy sharing, upstream companies should be re-rated. Our TP is Rs 191/sh (8x Mar-21E standalone core EPS (adj. for dividend income), + OVL EPS and Rs 39 from other investments).

Cesc Limited gains over 4%


Heritage Foods hits 30-month low; stock down 5%

Shares of Heritage Foods hit a 30-month low of Rs 390, down 5 per cent in intra-day trade on the BSE on Monday, in an otherwise firm market. The stock was trading at its lowest level since November 11, 2016. In comparison, the S&P BSE Sensex was up 0.70 per cent at 39,991 points at 11:28 am. In the past seven trading days, the stock has tanked 19 per cent, as compared to a 3 per cent rise in the benchmark index. The market price of the packaged foods company nearly halved from its 52-week high level of Rs 720, touched on June 1, 2018. READ MORE



MARKET CHECK | Top gainers on BSE

APOLLOHOSP 1,346.70 +107.10 +8.64
 
PAGEIND 20,790.00 +1,102.40 +5.60
 
HEROMOTOCO 2,826.55 +145.15 +5.41
 
SPICEJET 153.55 +7.60 +5.21
 
TRENT 410.50 +19.05 +4.87

Nifty Metal index gains over 1%


ICICI Securities on Trent

CMP: Rs 360 
 
Target: Rs 415 (15%) 
 
Target Period: 12 months
 
We expect the revenue growth momentum to sustain and expect consolidated revenues to grow at a CAGR of 20% in FY19-21E with EBITDA margin expansion of 150 bps to 10.1% by FY21E. Accelerated store addition in the Westside format, rightsizing of Star Bazaar stores coupled with consistent growth in Zara are further expected to accelerate Trent’s financial performance. Hence we maintain our BUY recommendation on the stock with SOTP based TP of Rs 415/share.

Elara Capital on Bharti Airtel

Rating: BUY
 
Target Price: Rs 530
 
Upside: 52%
 
CMP: Rs 349 (as on 31 May 2019)
 
Management confirmed a bulk of capex over FY18-19 was toward optic fiber rollout to connect towers, and peak capex is behind it. We continue to expect elevated access charges, with the new minimum tariff strategy encouraging correction of traffic asymmetry, the positive effects of which will be visible only in FY21. We expect debt reduction to be pushed out, as monetization of Bharti Africa and Bharti Infratel is likely only toward 2HFY20 or later. We reiterate Buy with a new TP of Rs 530 from Rs 510 based on 6.5x (unchanged) FY21E EV/EBITDA adjusted for minority holding in Bharti Infratel.

RBI Monetary Policy Preview | Lakshmi Iyer, Kotak Mahindra Asset Management

“Liquidity woes in banking system are far from over. The silver lining in this the expectation of government spending, this is likely to reduce the liquidity deficit in the system. Also, the currency in circulation which had shown sharp spikes due to elections, is also likely to gradually recede, impacting liquidity favourably. Given the global as also domestic scenario, the MPC may well choose to gratify the markets with a benchmark rate cut. What is more important for markets is the MPC guidance than the actual rate action.”

May Auto Sales | TVS Motors

- Total sales at 3.07 lakh units


Contribution to Sensex

COMPANY LATEST CHG(RS) CHG(%) FREE FLOAT
MKT CAP
(RS CR)
CONTRIBUTION
(POINTS)
HDFC BANK 2449.70 24.80 1.02 522029.94 54.04
H D F C 2211.05 28.85 1.32 375774.83 50.30
INFOSYS 744.00 7.15 0.97 280075.05 27.48
TCS 2221.00 24.15 1.10 230816.87 25.70
RELIANCE INDS. 1337.15 7.40 0.56 455184.28 25.65

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Jefferies on ONGC

ONGC's 4QFY19 earnings halved q/q to Rs40.45bn missing JEFe by 19% on higher exploration write-offs. EBITDA was inline with full year standalone EBITDA up 37% y/y driving up EPS 34% y/y. With subs & JVs also doing better, esp. OVL where prod. is near all time highs, consol. EPS rose 38% y/y to a new record too. We expect this to broadly sustain in FY20E, even with subsidies, leaving valuations undemanding at 7.2x P/E. We keep our BUY with a higher price target of Rs 205

Emkay Global on ONGC

ONGC Q4FY19 Result Update; Earnings below estimates on higher expenses; Buy; Target: Rs 190
ONGC reported Q4FY19 EBITDA/ PAT of Rs87.5bn/40.4bn, up 5%/down 32% yoy and down 37%/51% qoq, which was 20%/31% below our est. due to higher opex, royalty, survey-dry well cost and impairments. Rajasthan JV royalty directive led to higher levies

INTERVIEW OF THE DAY :: JAN DEHN, head of research at Ashmore Investment Management

Do you see the government revising the fiscal deficit target going ahead?
 
The government engaged in election-related fiscal slippage ahead of the election. The splurge was not excessive. However, it happened and it is now important that the fiscal accounts are brought back into line. If the big lesson from Modi’s first term was the early reforms pay off, the big lesson from Congress’s time in office was that big fiscal does not pay off. I hope that Modi realises that the single largest threat to the Indian economy is bad fiscal policy. If fiscal gets out of line, then monetary policy also soon becomes ineffective. And that is the road to ruin. READ THE FULL INTERVIEW HERE

Jan Dehn
 

Market watch

S&P BSE Bharat 22 Index 3,772.41 -0.30 -0.01
S&P BSE 100 12,132.20 +88.13 +0.73
 
S&P BSE SENSEX Next 50 33,288.99 +270.50 +0.82
 
S&P BSE SENSEX 50 12,505.53 +89.16 +0.72
 
Index Current Pt. Change % Change
 
S&P BSE SENSEX 39,996.21 +282.01 +0.71
 

Apollo Hospitals rallies 12% in two days on strong Q4 results

Shares of Apollo Hospitals Enterprises surged 9 per cent to Rs 1,351 in intra-day trade on Monday, rallying 12 per cent in past two trading days on the BSE, after the company reported a more-than-doubled consolidated net profit at Rs 84.4 crore in March quarter (Q4FY19). The Chennai-based hospital chain had posted a profit of Rs 23.8 crore in the year-ago quarter. Total revenues during the quarter grew 19 per cent year-on-year (YoY) at Rs 2,521 crore in Q4FY19, against Rs 2,112 crore in the corresponding quarter of previous fiscal. READ MORE



Two stock recos by Nirmal Bang Securities

HG INFRA ENGG.
 
CMP: Rs 297
 
Target: Rs 400
 
HG has consistently delivered best in class return ratios with lowest working capital requirement within the infra pack. Proven execution track record and comparatively smaller base provide a long runway for growth for HG. We expect the company to grow at over 20% CAGR for next 3-4 years. We value HG at 15.0x FY20E EPS (at a 20% discount to our target multiple for KNR of 18.0x) and arrive at a target price of Rs 400.
 
FEDERAL BANK
 
CMP: Rs 107
 
Target: Rs 150
 
Strong performance on cost/income (at 50% - declined 670bps since FY16) and credit cost (at 0.5% in Q4FY19 vs 1.3% in FY18) has led to return on assets (ROA) crossing the 1.0% mark after a gap of 16 quarters. We estimate FB to deliver 22%/39% CAGR in advances/earnings over FY19-21E and project return on equity (RoE) to improve to 13.3% from 9.8% in FY19. We arrive at a target price of Rs 150 at 1.8x FY21E adjusted book value (ABV), which is 33% discount to City Union Bank.

Sensex reclaims 40,000-mark


Nifty reclaims 12,000 mark


Apollo Hospitals rises 8%


Nifty Auto index off day's low


India manufacturing PMI grows at fastest pace in three months in May

India's manufacturing sector expanded at its quickest pace in three months in May on improved output and new orders, according to a private business survey which also showed a pick up in hiring. The survey found increased optimism about manufacturing activity over the coming year, probably helped as Prime Minister Narendra Modi scored a dramatic election victory on a mandate of business-friendly policies and a tough stand on national security. READ MORE



Most active stocks by volume

COMPANY PRICE(rs) CHG(rs) CHG(%) VOLUME
M & M 637.60 -9.50 -1.47 22074192
SPICEJET 152.90 6.95 4.76 4033083
RELIANCE POWER 7.65 0.20 2.68 2511094
REL. COMM. 2.02 -0.02 -0.98 1693628
NCC 99.80 1.95 1.99 1639081
» More on Most Active Volume

ICICI Securities on Entertainment Network India

The fact that overall growth expectations of radio industry has tapered down to 8-10% CAGR vs. erstwhile expectations of 14-15% growth coupled with consistent lower growth trajectory of ENIL in core radio segment is concerning. The scaling up of non-FCT business, though is a positive move but is exposed to risks of losses in events. We would wait before the said segment expands on profitability on consistent front. Hence, we downgrade our rating to HOLD with a revised DCF based target price of Rs 545, (implying ~10x FY21E EV/EBITDA).

Aurobindo Pharma slides over 4%


Metals, chemicals: Sectors that stand to benefit from US - China trade war

The unanticipated trade tensions that cropped up between two major economies in the world—the US and China— and spilled over other countires thereafter have since spooked the global capital markets.

Between May 5 and May 15, since the day Trump tweeted about his views on China till exit poll outcomes in India, the benchmark S&P BSE Sensex and the broader Nifty50 had lost 4 per cent with the indices seeing their worst ever selling streak of nine consecutive days. READ MORE

Hero MotoCorp gains 4% on May auto sales numbers

Shares of Hero MotoCorp (HMCL) rose 4 per cent to Rs 2,790 on the BSE on Monday in early morning trade after the company reported a 13.5 per cent rise in sales to 652,028 units in May over the previous month. The company had sold 574,366 units in April 2019, it said in a BSE filing. At 09:59 am, HMCL was the largest gainer among the constituents of S&P BSE Sensex, which up 0.38 per cent at 39,865 points. READ MORE



JM Financial Services on ONGC

RECO: HOLD
 
TARGET: Rs 185
 
ONGC debt has been increasing (mainly due to OVL) and current consolidated debt stands at Rs 1 trillion. We use sum of the part method and value core business with DCF (discounted cash flow) method to arrive at TP of Rs 185. We base our estimates on Brent crude price of USD 70 / bbl and forex of Rs 70 / USD. Key risk to the valuation is the lower crude oil production and increasing debt.

Motilal Oswal Financial Services' top picks from large cap and mid-cap space

Large-Caps: SBI, ICICI Bank, Maruti, L&T, Infosys, Bharti Airtel, Coal India, Titan, Ultratech, HDFC Life
 
Mid-caps: Federal Bank, Indian Hotels, Siemens, ABFRL, Crompton Consumer, Ashoka Buildcon, JK Cement, Godrej Agrovet, Oberoi Realty.

Motilal Oswal Financial Services on GDP growth

The headline growth of sub-6% in 4QFY19 will increase the pressure on the RBI to cut rates next week. However, the details suggest that base effect and a decline in farm sector account for the majority of slowdown in 4QFY19. Adjusting for the base effect, real GDP/GVA growth stood at 7%/6.8% and non-farm real GVA growth was also at 6.8% in 4QFY19. High base effect (of 8% growth in 1QFY19) will keep growth subdued in 1QFY20 as well with probable revival from 2QFY20, and thus, we expect real GDP growth to weaken further to ~6.6% in FY20.

M&M dips after promoter's partial stake sale


Momentum Picks by ICICI Securities


Bajaj Auto gains after KTM and co agree on new electric vehicle alliance


Jefferies' India strategy

The government juggled to a fiscal deficit of 3.4% of GDP in FY19 but a more daunting task awaits in FY20 with a Rs1tn or 50bps slippage likely even if GST collections rebound. The tight fiscal leaves monetary policy as key, therefore, to revive economic growth which also fell to a 5-yr low in 4QFY19 with most leading indicators still soft. We remain cautious, therefore, recognizing that stimulus may boost NT sentiment for Industrials (OW) & Discretionary (EW).

YES Securities on KNR Constructions

RECO: BUY
 
TARGET: Rs 321
 
Earnings growth would likely remain healthy backed by high margin order book in hand. Also, Share Purchase Agreement (SPA) with Cube Highways to sell its entire stake in 3 HAM projects in a phased manner will allow KNR to focus on its core expertise of EPC. The stock is currently trading at 16x FY21E P/E. We remain bullish on the stock and maintain BUY with target price of Rs.321 (based on SOTP valuation).

HSBC on GDP data

The softness in growth data is likely to continue into the next quarter (April-June 2019). 70% of the 40-odd activity indicators we track are slowing. Thereafter, we expect growth to pick up again to the 7% ballpark in 2H2019. There are three good reasons for this. One, a pick-up in activity as election-related uncertainties fade. Two, an improvement in banking sector liquidity. We find that the liquidity situation generally improves over the months of June-August. 
 
Three, we expect the RBI to remain supportive. We expect a 25bp rate cut in the June meeting, which would take the repo rate to 5.75%. Thereafter, we expect the RBI to maintain liquidity at a slight surplus.
 
If the intention is to raise the growth rate above 7%, capital and labour enhancing reforms will be necessary, in our view (for a more involved discussion, see: India: Reform and grow: The roads that will lead to 8%, 15 May 2019).

 
 

YES Securities on Sadbhav Engineering

RECO: BUY
 
TARGET: Rs 305
 
With start of new projects and expected receipt of appointed dates by September 2019, we expect revenues to witness decent growth in FY20. Also, margin is likely to hover at ~12% given current mix of order book. Debt is likely to decline gradually from the current levels of ~Rs.14.7bn. At CMP, the EPC business trades at
valuation of 14x FY21 EPS. We recommend a BUY on the stock for target price of Rs 305.

HDFC Securities: Maintain BUY on Sadbhav Engineering

After a muted 1HFY19 (2% degrowth YoY), SEL had started to show signs of recovery in 3QFY19, but 4QFY19 execution was exceptionally weak. We believe the SIPL deal will culminate in a complete strategic shift at SEL, with more focus towards an asset light EPC play in addition to the availability of a ready platform for offering HAM projects in future.

Around Rs 5.4bn (vs. 4.6bn QoQ) of SIPL loans could be returned back leading to a further debt reduction (Rs 14.9bn currently, +0.3bn QoQ) and free its hands for additional projects once NHAI bidding picks up (~Rs 60-80bn targeted in FY20E). We maintain BUY. Key risks (1) Delay in SIPL stake sale; (2) Slow order inflows; and (3) Further delay in appointed dates

HDFC Securities on KNR Constructions

KNR delivered strong 4Q/FY19 financial performance beating its own guidance of FY19 muted Revenue growth. Owing to delay in ADs, we have cut our FY20E Revenue/EBIDTA/APAT estimates by 8/8/14%. For FY21E we have cut Revenue estimate by 3.5%, but due to an increase in EBIDTA margin estimate and lower depreciation, our EPS has gone up by 9.6%. Kerala/Muzaffarpur BOT collection per day stood at Rs 1.8/2.4mn vs. Rs 1.6/2mn QOQ. We maintain BUY. Key risks (1) Slowdown in government ordering (2) Higher crude and cement prices (3) Increase in interest rates and (4) Tightening liquidity in the financial sector.

YES Securities on Repco Home Finance

RECO: ADD
 
Target: Rs 455
 
Considering the current low growth visibility in the home state of Tamil Nadu, we estimate Repco to deliver a moderate loan growth CAGR of 15% pa over FY19-21. It looks unlikely that spread will improve from existing level of 3-3.1% as the portfolio mix will keep gradually shifting towards salaried customers and funding environment may remain tough in the remaining period of FY20. With moderate revenue growth, the company would find it difficult to improve its cost/income ratio. The management has guided for a credit cost of under 40bps in FY20, which is higher than FY19.

Edelweiss on Tejas Networks

We attended Tejas Networks’ (Tejas) analyst day. Key takeaways: 1) Revenue growth is driven by demand from the India private sector and international customers as capex is shifting towards transport network from radio. 2) With the US-China trade war impairing Chinese players’ ability to compete, Tejas is well placed to cater to demand due to its wider product portfolio and attractive value proposition. 3) The company has identified southeast Asia, Africa, the Middle East, and North America as the key international growth areas. 4) The company is investing heavily in R&D and developing products to cater to the 5G market. Although a surge in the international and India private sector businesses is encouraging, we remain cautious on the stock given challenges in the India government business (55% of revenue). Maintain ‘HOLD’ with a target price of Rs 205 (14x Q1FY21E EPS).

Edelweiss on Bharti Airtel

Bharti Airtel (Bharti) released operating matrix on May 30, post release of Q4FY19 result on May 6. Key highlights: 1) India wireless revenue rose 4.3% QoQ largely due to introduction on minimum ARPU plans; 2) EBITDA margin jumped 500bps QoQ to 24.1% riding operating leverage and SG&A cost reversal; 3) mobile broadband/ 4G subscriber addition and data & voice volume growth remained strong; and 4) with majority of 4G capex behind, we expect capex to taper going forward.

Management has also indicated that it has increased prices in certain plans. We believe, Bharti is well placed to follow RJIO’s anticipated price hikes along with strong 4G subscriber addition along with 11GB data usage per subscriber. Maintain BUY with target price of Rs 406.


RBI policy review: Rate cut a certainty after weak GDP data, say Experts

The fourth-quarter growth numbers have forced many analysts to weigh in on a definite rate cut at Thursday’s monetary policy review. Although an overwhelming majority of Reserve Bank of India (RBI) watchers were pencilling in a rate cut on June 6, it seems the 5.8 per cent growth in gross domestic product (GDP) for the fourth quarter has now solidified that view even among those who advised caution. Now there is a near consensus that at least a 25 basis points cut, if not 50, can be expected in the June policy READ MORE HERE


SpiceJet gains 5% on report that it plans to hire up to 2,000 staff of the defunct Jet Airways


Apollo Hospitals gains over 6%


Market picking up, Sensex up over 170 pts


Nifty FMCG index is trading 1% higher, led by gains in Godrej and Dabur


Bajaj Auto climbs 2% on strong auto sales' figures


Nifty Auto index turns green after a negative opening


May Auto Sales | Bajaj Auto

- Total May sales at 4.19 lakh units 

- Total exports at 1.83 lakh units, up 1% YoY


Rupee opens 20 paise higher against US dollar as crude oil tumbles

The rupee on Monday opened 20 paise higher at 69.50 against the US dollar as crude oil prices slipped to multi-month lows on global recession fears. The domestic unit on Friday snapped its three-session losing streak to settle 17 paise higher at 69.70. On Friday, data showed India’s economy grew at a slowest pace in more than four years at 5.8 per cent in the last quarter thereby raising prospects of a rate cut in the RBI scheduled this week. For the fiscal year that ended March 31st showed the economy grew at 6.8 per cent compared to estimates of 7 per cent. READ MORE



NEWS ALERT | Oriental Bank of Commerce appoints Ashwani Kumar as CFO: CNBC TV18

Godrej Consumer gains over 2%


Motherson Sumi slides nearly 3% on weak auto sales


Hindustan Unilever gains over 1%


Broader markets slide


Tata Motors slips over 1%


Pharma index is the biggest loser among Nifty indices


Aurobindo Pharma slips over 3%


Asian paint gains over 2%


OMCs gain on falling crude oil prices


Top gainers and losers on S&P BSE Sensex


Sectoral trends on NSE


Market at open


Market at open


Top gainers and losers on S&P BSE Sensex during Pre-open trade


Market at pre-open


Rupee opening

Rupee opens stronger at 69.50/$ vs Friday's close of 69.67 against the US dollar

Market at pre-open


Indian pharma firms compliance with USFDA norms improving of late

While the recent book by investigative journalist Katherine Eban's Bottle of Lies has raked up a dated controversy surrounding drug-manufacturing practices in India, the largest supplier of generic medicines to the US, the local industry here feels that they have been unfairly targeted. Even recent statements by the US Food and Drug Administration (US FDA) support the generic manufacturers in India and China. READ MORE

Sitharaman takes stock of economic policy, to hold talks with RBI guv soon

Sitharaman was briefed on the major policy work that the finance ministry is dealing with, including the upcoming Union Budget 2018-19, the Centre’s fiscal road map and borrowing programme, the government’s bank consolidation plans, efforts to recover black money, the liquidity concerns in non-banking financial sector, central flagship schemes and expenditure, capital expenditure, and direct tax and goods and service tax projections. READ MORE

Explained: Why Asia doesn't want US to kneecap China in Trump's trade war

Smoking cigarettes at Singapore’s Shangri-La Hotel, the site of Asia’s most prominent annual defense forum, members of China’s military found themselves surprisingly upbeat this weekend.
 
They expected the event to follow a typical routine: The US and its friends gang up on China, leaving it alone to push back against a host of complaints. But this year, with an escalating trade war threatening global growth, the People’s Liberation Army officers saw other Asian leaders critiquing key aspects of the Trump administration’s attacks on China. READ MORE

Liquor companies dizzy as prohibition looms large in Andhra Pradesh

Liquor companies may have to contend with significant loss of revenue if Andhra Pradesh’s (AP’s) new Chief Minister (CM) Y S Jagan Mohan Reddy fulfills his poll promise of implementing prohibition in the state. The ball was set rolling on Saturday, when state government officials cracked down on illegal liquor shops as a first step towards prohibition. READ MORE

Stocks to watch

Auto stocks: Auto companies reported another subdued sales figures for May owing to high finance cost and liquidity constraints. Maruti Suzuki India said its overall sales including that to original equipment manufacturer (OEM) for May declined by 22 per cent to 134,641 units YoY while Tata Motors reported a drop of 26 per cent in its domestic sales at 40,155 units as against 54,290 units sold in May 2018.
 
 
OMCs, paint stocks: Oil marketing companies (OMCs) HPCL, IOC Aand BPCL and paint firms are likely to be in focus today as oil prices slipped to multi-month lows on Monday as trade tensions stoked fears of global recession. US crude futures dropped 1.6 per cent in early trade to $52.64, touching their weakest levels since mid-February. READ MORE



Infra firms face uncertainty in Andhra as Jagan cancels several projects

The new Andhra Pradesh government’s move to cancel projects awarded before April and where work is yet to start is likely to impact orders worth Rs 30,000 crore.
 
South-based infrastructure developer NCC, GMR Infrastructure and engineering conglomerate Larsen & Toubro (L&T) are among those with exposure to projects in the state. READ MORE

As JV talks with ArcelorMittal face delay, SAIL starts looking for options

As the talks with ArcelorMittal to form auto-grade JV firm is getting delayed, state-owned SAIL has started talking to other global players, a top company official said.
 
SAIL is already in talks with a few global companies which are into auto-grade steel making, Steel Authority of India Ltd (SAIL) Chairman Anil Kumar Chaudhary said. READ MORE

Market outlook by HDFC Securities | Deepak Jasani, head of retail research

Markets ended lower on Friday after a sharply volatile session. Key indices ended with small losses on Friday as investors booked profits after the Narendra Modi government announced the allocation of the Cabinet portfolios. Sentiment was also impacted by negative global cues.

Technically, while the markets have corrected from the highs, the underlying trend remains up. Traders will need to watch if the index can now hold above the immediate support of 11829 in the coming week for the uptrend to sustain.

RBI policy review: Rate cut a certainty after weak GDP data, say Experts

Although an overwhelming majority of Reserve Bank of India (RBI) watchers were pencilling in a rate cut on June 6, it seems the 5.8 per cent growth in gross domestic product (GDP) for the fourth quarter has now solidified that view even among those who advised caution. READ MORE

NEWS ALERT | Aion Capital enters fray to buy majority stake in DHFL : CNBC TV18

- Aion Capital may sign a term sheet soon to explore DHFL transaction

- Lone Star, Piramal Enterprises, Oak Tree also in talks with DHFL

No fiscal space: Officials advise FM Sitharaman against Budget sops

Government officials have advised Finance Minister Nirmala Sitharaman that there is no fiscal space for any giveaways in the forthcoming Budget. This was the grim verdict of each presentation made by the departments of the finance ministry in marathon meetings that extended till late in the evening on Saturday. READ MORE

Probe reveals how IL&FS bosses showed fictitious profits for salary hikes

The Serious Fraud Investigation Office’s (SFIO’s) first charge sheet in the Infrastructure Leasing & Financial Services (IL&FS) case has accused the former directors of the company and subsidiaries IL&FS Financial Services (IFIN) and IL&FS Transport Network (ITNL) of devising illegal strategies to overstate profits and, thereby, pay higher dividend to the holding company. READ MORE

Economists caution govt over fiscal stimulus, call for RBI rate cut

Economists have cautioned the government about a fiscal stimulus to revive the economy, whose growth had plunged to a five-year low of 5.8 per cent in the fourth quarter of 2018-19.
 
They have said if a stimulus is needed it should be different from what was provided in 2008-09, when the economy faced the ripple effects of a global meltdown following the Lehman Brothers collapse. READ MORE

L&T picks up Mindtree shares worth Rs 70 crore between May 27-30

Infrastructure major Larsen and Toubro (L&T) picked up 7.11 lakh shares of IT firm Mindtree between May 27-30 for about Rs 70 crore, according to regulatory data.
 
The development assumes significance as L&T has been steadily increasing its holding in the Bengaluru-based tech firm where it acquired around 20 per cent stake of V G Siddhartha and Cafe Coffee Day last month. READ MORE

Crude tumbles towards worst May performance in 7 years on trade-war anxiety

Oil slid towards its worst May performance in seven years, as global trade tensions escalated, undermining the outlook for energy demand growth.
 
West Texas Intermediate crude for July fell $1.65 to $54.94 a barrel at 10:06 pm (IST) on the New York Mercantile Exchange. For the month, the futures were down 14 per cent and on track for the worst May since 2012. Brent for July settlement retreated $2.22 to $64.65 on London’s ICE Futures Europe exchange. READ MORE

Corporate earnings down 0.1% YoY in March quarter due to slowdown in demand

After reporting positive earnings growth for five consecutive quarters, corporate earnings were flat in the January-March 2019 quarter. The combined net profit of 1,869 companies, excluding financials and energy, was down 0.1 per cent year-on-year (YoY) during the January-March 2019 quarter — their worst showing in the last six quarters. READ MORE

Hard lessons to learn from five stocks that crumbled in 2018

The Nifty may not have been substantially impacted in the last 1 year and may have actually given positive returns. However, the pain has been a lot more pronounced in the mid caps and small caps. Over the last one year, while the Nifty was mildly positive, the real correction was in the mid caps and the large caps. While reasons touted ranged from the tax on LTCG to the mutual fund reclassification to the additional special margins, the actual reason was a return to reality. Here are five stocks that saw a return to reality and the lessons underlying the same. READ MORE

Dalal Street hopes for market-friendly measures from new Modi govt

The capital market has given a thumbs up to Narendra Modi’s re-election as prime minister. Benchmark indices ended at new highs on four of the last six trading sessions. During the first tenure, the Modi government made a couple of key policy changes targeting stock market investors. READ MORE

NEWS ALERT | Nikkei Japan Manufacturing PMI at 49.8 for May: Reuters

- Japanese manufacturing activity swung back into contraction in May as export orders tumbled at the fastest pace in four months. 

- It was 50.2 for April.

NEWS ALERT | China May factory activity grows at 50.2: Reuters

- China’s factory activity expanded at a steady but modest pace in May, as export orders bounced from a contraction.

- The overall economic picture was mixed as output growth slipped and factory prices stalled.

Outlook for Indian equities is positive, policy credibility high: Jan Dehn

The markets have been consolidating after a sharp post-election outcome rally that took the frontline benchmarks to a record high. London–based JAN DEHN, head of research at Ashmore Investment Management, tells Puneet Wadhwa he expects some profit-booking to set in and that investors should buy into such dips. READ THE FULL INTERVIEW HERE

Top trading ideas by Devang Shah: Buy L&T Finance, Tata Global, Cummins

Stock Picks:
 
L&T Finance Holdings – BUY
 
CLOSE – Rs 134
 
TARGET – Rs 139/144
 
L&T Finance Holdings closed the week in positive territory. It looks like an end of short-term correction. Its daily momentum indicators are in BUY. It managed to close above 20-DMA. Risk reward is favorable to BUY at current levels. One can buy with a stop loss of Rs 124 for the target of Rs 139 – Rs 144 levels in short term. READ MORE

Commodity picks: June 3, 2019

Maize
 
Maize in Gulabbagh is trading at Rs 1,808 per quintal. Prices are expected to trade higher towards Rs 1,900 per quintal following supportive demand and lower supplies across India. However, arrivals pressure in Bihar would cap the aggressive price gains. READ MORE

Trading ideas by Prabhudas Lilladher: Buy Godrej Consumer Products, Havells

NIFTY VIEW
 
Nifty once again retested near the peak level of 12,040 but failed to maintain the momentum and succumbed to profit-booking. On the upper side, only a breach above 12,080 levels can bring about fresh upward progress else we shall find a rangebound movement for the index. However, support for the week is seen at 39,000/11,700 for Sensex and Nifty, respectively while resistance is seen at 40,400/12,150. Bank Nifty would have a range of 30,680-32,080. We suggest to go for select stocks till further clarification. READ MORE

Weekly market outlook and top two trading ideas by Angel Broking

During the week, we clearly witnessed a consolidation and this is quite evident as the overall uncertainty is behind us post the favourable election verdict. In fact, it’s a typical characteristic of a market, which never gives easy money when the trade becomes obvious and is known for giving sharper moves when they are least expected. READ MORE

Bulk deal on NSE as on Friday

FII/FPI & DII trading activity on NSE, BSE and MSEI


Rupee check

Source: Bloomberg


Oil check

At 7:40 am, Brent Crude Futures were trading at $61 per barrel.

SGX Nifty

At 7:40 am, SGX Nifty was trading 49 points higher at 11,974 levels.

Asian Markets check

Source: Reuters


US Market check

Source: Reuters

 

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