COMMENT Abhijeet Dey, Senior Fund Manager – Equities, BNP Paribas Mutual Fund
In the absence of any strong cues, stock markets in India traded on a lacklustre note today. Risk appetite in the global markets abated after US President Donald Trump gave a fillip to trade tensions by imposing a 25% tariff on a list of 818 items of Chinese goods worth around $34 billion. Beijing immediately responded with its own set of tariffs on US goods, making this a game of one up-manship. Benchmark indices traded weak to finally close the day marginally in the red. Sectoral performance on the National Stock Exchange (NSE) was mixed. While the auto, healthcare and private banking indices eked out marginal gains, the metals and IT indices lost 1.78% and 0.77%, respectively
3:37 PM
Nifty Metal index falls nearly 2%: Top losers in the pack
The S&P BSE Sensex ended the day at 35,548, down 74 points while the broader Nifty50 index settled at 10,799 down 18 points
3:20 PM
Bata India nears record high; stock up 5%
Shares of Bata India have rallied 5% to Rs 817, hitting seven month high on the BSE, on back of heavy volumes. The stock of footwear firm trading close to its record high of Rs 833 touched on November 1, 2017 in intra-day trade.
Driven by various initiatives, Bata India reported a healthy performance in FY18. Revenues grew 7% year on year (YoY) to Rs 26.29 billion (adjusting for the GST impact, growth would be around 12%) in FY18. Furthermore, controlled fixed overheads led to EBITDA margin expansion to the tune of 220 bps YoY to 13.5%. READ MORE
3:15 PM
BofA on electical utility companies
In a move to prevent liquidation of stressed thermal power plants, the Finance Ministry has proposed the idea of an asset reconstruction company (ARC) or a ‘Bad Bank’ – that would take-over stressed assets from banks (after a haircut), manage the projects in the interim & sell it off when power cycle recovers. The idea of a ‘Bad Bank’ is not new & makes sense if it reduces the quantum of haircut that banks may have had to take in case the assets were liquidated/ referred to National Company Law Tribunal (NCLT).
The power ministry has identified 40-45GW of stressed projects vs. BofAMLe of 81GW in time, these projects may be transferred to ARC. Regardless of whether stressed assets go to NCLT or ARC, the current scenario is likely to consolidate the powergen sector & present inorganic growth opportunities for NTPC. Buy.
3:10 PM
Jubilant FoodWorks hits new high ahead of 1:1 bonus
Jubilant FoodWorks hit a new high of Rs 2,796, up 1%, extending its past two days 3% gain on the BSE, ahead of record date for 1:1 bonus issue. The stock will turn ex-bonus on Thursday, June 21, 2018.
The Capital Issue Committee has fixed Saturday, June 23, 2018 as the record date, for the purpose of determining the list of equity shareholders who will be entitled for issue and allotment of bonus equity shares in the proportion of 1 equity share of Rs 10 each for every 1 equity share of Rs 10 each of the Company. READ MORE
3:00 PM
MUST READRITES IPO opens for subscription on June 20. Should you invest?
The initial public offer (IPO) of RITES – a government-owned railway consultancy firm and a Miniratna (Category – I) Schedule ‘A’ Public Sector Enterprise – opens for subscription on June 20. The price band for the issue has been fixed at Rs 180-185 a share (discount of Rs 6 per share for retail shareholders and employees), and the government aims to raise up to Rs 460 crore via this sale. The issue closes on June 22.
So, should you subscribe to this IPO? Here's what leading brokerages across the country suggest. Click here to know
An arbitrator appointed by the Bombay High Court has directed the National Stock Exchange (NSE) to extend the agreement of Nifty-licensed products to the Singapore Exchange (SGX) until the arbitration concludes. The licensing agreement was to end in August 2018, which could now extend till early 2019.
In an interim order released on Thursday, Justice S J Vazifdar asked the SGX to abide by the high court’s injunction against the launch of new India derivative products. The injunction will remain in effect for four weeks from the date of the final order. READ MORE
2:28 PM
Anand Rathi on KEC International
Execution on the T&D front, both domestic and internationally, is expected to grow at a robust pace. Civil and Railways are expected to show strong growth. Margins are expected to remain at current levels due to lower profitability in railways and civil. However, we feel that most of the optimism has already been priced in.
We do not see much potential from current levels. Further, it will be difficult for the company to maintain order inflow growth due to relatively lower domestic T&D capex. Hence, we maintain a Hold and lower our rating to 15x FY20e earnings, resulting target price of Rs 414 (earlier Rs 432).
2:26 PM
Angel Broking on Bata India (BIL)
We expect BIL to report net revenue CAGR of ~16% to ~Rs 3,555 crore over FY2018-20E mainly due increasing brand consciousness amongst Indian consumers, new product launches, higher number of stores addition in tier – II and III cities and focus on women’s segment (high growth segment).
Further, on the bottom-line front, we expect CAGR of ~19% to Rs 311 crore over the same period on the back of margin improvement (increasing premium product sales). Thus, we initiate coverage on Bata India with BUY recommendation and target price of Rs 896.
2:23 PM
SECTOR WATCH Automobiles
Capital expenditure (capex) by automobile original equipment manufacturers (OEMs), comprising commercial vehicles (CVs), passenger vehicles (PVs) and two-wheelers, is set to increase by 30% to ~Rs 58,000 crore over fiscals 2019 and 2020, compared with the preceding two fiscals. A study of 18 OEMs (of which 10 are rated by CRISIL), covering ~90% of current industry volume indicates PV makers will account for almost 70% of this capex. This will be supplemented by CV manufacturers with 20% share and the balance by two-wheeler manufacturers
(Source: CRISIL report)
2:16 PM
COMMENT
Led by consumer-oriented sectors, the non-infra corporate sector has witnessed some revival in growth and profitability indicators over last 2-3 quarters of FY2018. As per an ICRA note on “Indian Corporate Sector, Credit Outlook for FY2019,” the sectors that have witnessed a pick-up in demand are Automobiles, FMCG, Consumer Durables and Retail - aided by low demonetisation base and improved consumer demand on back of the benefits of seventh pay commission, rural recovery and GST rate cuts. Further good tidings are expected to continue the back of improved rural sales coupled with favourable outlook driven by expectations of normal monsoons, hike in MSPs and overall thrust on agri-economy ahead of elections
Markets ended marginally lower on Monday amid weak global cues.
The Nifty Metal index, however, lost nearly 2 per cent in intra-day trade amid rising global trade war fears.
US President Donald Trump on Friday said he was pushing ahead with hefty tariffs on $50 billion of Chinese imports, and the smouldering trade war between the world's two largest economies showed signs of igniting as Beijing immediately vowed to respond in kind.
Back home, foreign investors have pulled out more than Rs 55 bn from capital markets this month so far due to global trade war worries coupled with hawkish commentary by the US Federal Reserve. This comes following a net outflow of over Rs 450 bn from capital markets (equity and debt) in the last two months. Prior to that, foreign portfolio investors (FPIs) had pumped in Rs 26 bn in March.
GLOBAL MARKETS
Asian shares retreated on Monday after US President Donald Trump cranked up trade tensions with China by going ahead with tariffs on Chinese imports, prompting Beijing to immediately respond in kind.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.2 per cent in early trade, near its lowest level since May 31. Financial markets in China and Hong Kong will be closed on Monday for Dragon Boat festival holiday. Japan's Nikkei slid 0.7 per cent as fears of growing protectionism overshadowed stronger-than-expected export data.
 "MARKET WRAP: Indices end marginally lower; Nifty tests 10,800; metals drag")
