MARKET WRAP: Sensex ends 159 pts down, Nifty at 10,657; metals, realty slip

The benchmark indices pared most of their day's losses to end slightly lower tracking the global markets, even as rupee recovered and oil prices dropped after Trump tweeted that Saudi Arabia had agreed to lift oil production by “maybe up to 2,000,000 barrels”.

The S&P BSE Sensex ended at 35,264, down 159 points while the broader Nifty50 index settled at 10,657, down 57 points.

Among sectoral indices, the Nifty Metal index ended 1.8 per cent lower led by a fall in the shares of Jindal Steel & Power and National Aluminium Company. The Nifty Realty index also ended 1.4 per cent lower as stocks of Indiabulls Real Estate and Housing Development and Infrastructure declined.

GLOBAL MARKETS

A renewed slide in Chinese shares and a sobering set of factory surveys sucked Asian markets lower on Monday, while the euro and the Mexican peso were both jolted by political developments at home. Shanghai blue chips resumed their slide with a fall of 2.3 percent that soured sentiment across the region.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6 percent, adding to a 2 percent drop last week. Japan's Nikkei shed 2.2 percent to an 11-week low, with a survey of manufacturers showing sentiment had darkened a shade in the face of trade war threats.
 

OIL PRICES

Oil prices fell on Monday as supplies from Saudi Arabia and Russia rose while economic growth stumbled in Asia amid an escalating trade dispute with the United States.

Benchmark Brent crude oil fell $1.24 a barrel to a low of $77.99 before recovering to around $78.50, down 73 cents. US light crude was down 40 cents at $73.75.

ECONOMIC DATA

On macro front, India’s manufacturing conditions improved in June at the strongest pace since December 2017, supported by the sharpest gains in output and new orders in 2018 so far. Reflecting greater production requirements, firms were encouraged to engage in purchasing activity and raise their staffing levels. On the price front, input cost inflation was the sharpest since July 2014, whilst output charges rose at a stronger pace. Business confidence eased to the weakest since last October.

The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose from 51.2 in May to 53.1 in June. This was consistent with the fastest improvement in the health of India’s manufacturing economy in 2018 so far

(With input from agencies)

3:47 PM

Nifty Metal index ends 1.79% lower. Top losers:

COMPANY	LATEST	PREV CLOSE	LOSS( )	LOSS(%)
JINDAL STEEL	206.95	223.05	-16.10	-7.22
JSW STEEL	313.40	326.80	-13.40	-4.10
NATL. ALUMINIUM	62.05	64.70	-2.65	-4.10
JINDAL STAIN .HI	129.35	134.25	-4.90	-3.65
S A I L	80.20	83.00	-2.80	-3.37

3:45 PM

Nifty sectoral losers of the day

3:43 PM

BSE Sensex: Bharti Airtel, NTPC among top losers of the day, Asian Paints top gainer

3:33 PM

Market at close

 

The S&P BSE Sensex ended at 35,264, down 159 points while the broader Nifty50 index settled at 10,657, down 57 points.

3:08 PM

Gold extends losses on global cues, low demand

Gold prices shed Rs 20 to Rs 31,400 per ten grams at the bullion market today amid a weak trend overseas and easing demand from local jewellers.

 

Silver also remained under selling pressure and lost Rs 250 at Rs 40,350 per kg owing to reduced offtake by industrial units and coin makers. READ MORE

3:01 PM

Bharat Hotels files Rs 1,200-cr IPO papers

Bharat Hotels, which runs five-star properties under 'The LaLiT' brand, has filed draft prospectus with capital markets regulator to garner Rs 1,200 crore through its initial share-sale.

 

The initial public offer (IPO) comprises sale of fresh equity shares to the tune of Rs 1,200 crore, according to the draft papers filed with the Securities and Exchange Board of India (Sebi). READ MORE

2:46 PM

Why Trump, Saudi bonhomie may not help oil prices stay down in long term

US President Donald Trump’s weekend of oil diplomacy offered mixed messages on supply, and conflicting responses from traders after prices fell even as analysts predicted any drop may be short-lived.

 

Crude fell in New York late Sunday after a Trump tweet over the weekend suggested that Saudi Arabia had agreed to pump 2 million more barrels a day. READ MORE

2:33 PM

Morgan Stanley upgrades Titan to overweight

Titan stock is down 16% from the recent peak and has underperformed the Sensex by 18% over the past three months). We think this offers a compelling entry point for long-term investors.

 

Risk reward now appears favorable at current valuations. We upgrade Titan to overweight (OW). We roll forward our residual income model to June 2019 to derive our revised target price of Rs1,080, implying an 29% upside from the current levels. Currently,F2020e P/E would be 37x for Titan. This should be viewed in the context of 29% F2018-20e earnings CAGRs, implyingF20e PEG of ~1.3x.

2:31 PM

25 years of MF: Despite shocks due to bad decisions, industry has done well

 

In the early 1990s, you wouldn't identify an Indian fund manager with a Leonardo DiCaprio in The Wolf of Wall Street. Mutual fund professionals of the time were mostly unknown bankers who ran the show with a handful of equity analysts.

 

More often than not, one landed the job because the bank had no other openings. As a leading mutual fund (MF) manager of the 1990s says: “I took a late decision to join a bank instead of the civil services. READ MORE

2:30 PM

COMMENT Arafat Saiyed, AVP-Research, Reliance Securities

After a flat debut of 3%, the stock price of RITES rose to Rs 218 per share in the morning trades. At 11:55 am, the stock was up 18% from its IPO price of Rs 185. Assuming moderate revenue CAGR of ~10% and PAT CAGR ~8% through FY17-20E, the stock at current price is valued at 10x FY20E earnings, which appears to be justified considering its unique business model, steady growth and healthy return ratios. Hence we continue to remain positive on the stock

2:29 PM

Index watch

INDEX	LATEST	PREVIOUS	CHANGE	CHANGE(%)
	35199.09	35423.48	-224.39	-0.63
	14421.69	14528.54	-106.85	-0.74
	15297.73	15450.90	-153.17	-0.99
	15882.88	16032.15	-149.27	-0.93
	4131.12	4158.60	-27.48	-0.66

2:28 PM

Stocks near 52-week high

COMPANY	LATEST	52 WK HIGH	PREV HIGH	PREV DATE	VOLUME
BRITANNIA INDS.	6220.00	6237.05	6196.40	29-JUN-2018	2795
HIND. UNILEVER	1645.00	1655.00	1641.85	27-JUN-2018	30848
TATA ELXSI	1341.10	1357.50	1335.50	26-JUN-2018	46573
MONSANTO INDIA	2856.00	2899.00	2863.65	07-JUN-2018	95
TCS	1858.00	1886.20	1847.20	27-JUN-2018	109825

 

 

 

 

 

 

2:23 PM

HDFC Securities on Take Solutions

Take Solutions (TAKE) is a niche technology-led service provider for the Life Sciences industry (91% of revenue). The company provides IP-based solutions in clinical, regulatory, safety and consulting processes to global Life science companies across multiple therapeutic areas. TAKE will benefit from (1) Large addressable market (favourable global trends), (2) Broad and high-growth portfolio (therapeutic segments) within Life science, (3) Strong growth visibility (order book, pipeline), and (4) Marquee clients (9 of top 10 global pharma giants) with low client concentration risk.  

 

We expect TAKE’s USD revenue/EPS CAGR at 20/22% over FY18-20E, factoring 24/30% CAGR in Life Sciences revenues/order book (37/53% CAGR in the trailing three years). TAKE trades at 15.7/13x FY19/20E EPS. Based on 16x FY20E EPS, TAKE’s fair value is Rs 280, supported by (1) ~15% RoIC and 22% EPS CAGR, (2) Likely value unlocking (SCM business divestment), (3) Midcap-IT valuations at 16.5x FY20E and global Life science tech/CRO valuations at 16x. Working capital intensity (an industry phenomenon) is a concern.

2:21 PM

JM Financial on Havell's India

In its FY18 Annual Report, Havells has strongly focused on the role IT has played across the company (250-member team working on 200+ projects in sales and R&D) to boost not only its strategy to penetrate the home segment deeper but also its engagement with dealers and channel partners.

In FY18, it forayed into the white goods segment by acquiring the consumer durables business of Lloyd (reported strong margin performance) and expanded its existing consumer durables basket by launching water purifiers and personal grooming products. Havells continues to generate significant free cash flows (INR 10bn in FY18 vs. INR 5.8bn in FY17, adjusted for the Lloyd acquisition). We continue to remain bullish with a Mar’19 target price of Rs 650 (40x FY20E EPS). We maintain BUY

2:20 PM

Equirus Securities on Sterlite

We have highlighted earlier that China has been the main growth driver over the last decade and their big 3 telcos have deployed OFC of ~1bn fkm to increase the penetration of 4G and FTTH. With 4G and FTTH penetration largely done in China, these telcos have now started preparing to launch 5G network.

Though, 5G launch may continue to drive OF demand in the medium term, telcos may try to manage their capex at a gradual pace. Meanwhile, as ~2,750 tons of preform capacity is expected to come on stream by end of CY18, OF realisations may have peaked out, in our view. We tweak our FY19/FY20 EPS estimates by +1%/-4% to factor in pressure on margins in FY20 and roll over to Jun’19 target price of Rs 380 (from June’19 target price of Rs. 410) set at TTM P/E of 30x. Maintain LONG.