Investors look beyond Covid cases' surge; Sensex zooms 790 pts; banks rally

CLSA opines that the surge in Covid cases in Maharashtra may taper in May as the state is in its fourth-month of the second wave. This, it believes, will be positive for the markets

8:57 AM

BROKERAGE VIEW :: Emkay Global on Axis Bank

We expect the bank’s RoA/RoE to improve from a low of 0.7%/7% in FY21 to 1.5-1.6%/15% by FY23-24E, mainly driven by better growth/moderate credit cost. Valuations after the recent correction look attractive at 1.4x FY23E ABV, post stripping-off subs valuation. We retain Buy with a TP of Rs850, valuing the core bank at 1.9x FY23E ABV and subs at Rs56. Key risks to our call include slower growth/higher NPA formation due to Covid-induced disruption and returning of management instability, which has moderated a bit recently.

8:54 AM

BROKERAGE VIEW :: Elara Capital on Axis Bank

With high PCR of 76% on standard stress, collection efficiency of 98% which is higher than 97% pre-Covid, and lower than expected stress formation for FY21, we reiterate Buy. AXIS Bank continues to have the highest contingency cover of 1.9% of loans / 85% of standard stress loan. The bank has tightened both accounting and provisioning policies in FY21 and the cost associated with the tightening will not recur in FY22.

Lending policies have also been tightened resulting in lower incremental risk. The bank continues to invest aggressively in digital data and technology. With a stronger and cleaner balance sheet, AXIS is in a comfortable position to deliver higher growth and PPOP in FY22E. Slower than sector growth has been a key negative for AXIS. With sequential loan growth of 7%, which is higher than HDFC Bank’s and ICICI’s, AXIS has made a beginning towards catching up with other large banks. We revise our TP to INR 830 from INR 800 based on 2.2x PBV FY22E.

8:51 AM

BROKERAGE VIEW :: Edelweiss Securities on Axis Bank

Axis Bank’s(Axis) Q4FY21 PAT of Rs 26.8bn surpassed our estimate on higher treasury income and lower credit cost. The bank continues to tighten its provisioning policy (marginally lagging ICICI Bank, but significantly ahead of others). The second covid wave has caused uncertainties, but we expect high buffers (>1.9% of loans) and a defined superset of potential problems to contain its fallout.

Business momentum improved with strong loan growth across segments. With crucial comfort on equity sanctity, franchise strength and likely medium-term credit cost unwind, the bank remains amongst our top banking picks representing ‘smart beta’.

Axis’s performance has been volatile on the asset front despite significant liability gains. Overdue retail/SME accounts and performance of corporate assets will, therefore, be keenly monitored. However, excess provisioning and strong capital base goes a long way in increasing perceived equity sanctity. We maintain ‘BUY/SO’ with revised TP of Rs 805 (earlier INR770)

8:49 AM

BROKERAGE VIEW :: Edelweiss Securities on Maruti Suzuki

Maruti Suzuki’s Q4FY21 EBITDA (INR22.2bn) yet again missed our estimate sharply due to the company’s inability to counter cost pressure. Hence, margin declined 120bps QoQ despite flattish volumes and lower discounts. This either reflects a weak product cycle or MSIL’s preference for volumes over margin.

As highlighted in Commodities Spike, pricing power is key for the stock’s outperformance, for which a strong product cycle is imperative. Our key concern stems from MSIL’s inability to hold on to margin despite strong demand outlook and low inventory. Hence, we revise down FY22/23E EPS 17%/13%.

At current valuations, we find a balance between strong franchise tailwind and weak product cycle headwind. Hence, we maintain ‘HOLD/SU’ with revised TP of INR7,125 valuing it at 36x Sept 2022E core EPS of INR147 plus cash per share of INR1,854. The stock is trading at FY22/23E PE of 29.6x/23.9x.

8:45 AM

Nifty outlook by HDFC Securities

Nifty has been trading in the downward sloping channel on the daily charts. Close above 14750 would result in to fresh breakout on short term charts. Support has shifted up to 14500 odd levels and traders should remain long with that stop loss. Above 14750, Nifty could extend the rally towards 14980. BankNifty looks strong and is expected to outperform the Nifty in the coming days. READ MORE

8:41 AM

Trading ideas by Ajit Mishra of Religare Broking

Divi's Laboratories

 

Recommendation: Buy

 

Target: Rs 4,100

Stop loss: Rs 3,790

 

We are seeing consistent buying in the pharma space, and Divi's Lab witnessed a fresh breakout from a consolidation range on April 27. The chart pattern and positioning of indicators are pointing towards a strong surge ahead. Traders shouldn’t miss this opportunity and must create fresh longs in the mentioned zone. READ MORE

8:36 AM

Bulk deals on the BSE as on Tuesday

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8:33 AM

Bulk deals on the NSE as on Tuesday

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8:28 AM

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

8:23 AM

Rupee check

Source: Bloomberg

8:19 AM

Oil check

8:15 AM

SGX Nifty alert

At 8:14 AM, the index quoted at 14,678, up 18 points

8:13 AM

Wall Street ends mostly flat ahead of earnings wave

Tepid results from Tesla and 3M weighed on Wall Street on Tuesday, with the S&P 500 and Dow ending near flat as investors focused on the wave of earnings reports from Microsoft, Alphabet and other corporate heavyweights.

 

The Dow Jones Industrial Average rose 0.01% while the S&P 500 lost 0.02% and the Nasdaq Composite dropped 0.34%.

 

8:12 AM

Asian markets start mixed

Asian stocks were steady in early trade following a renewed rise in Treasury yields to above 1.6% and a jump in commodity prices, with investors also cautious ahead of the Federal Reserve’s policy decision.

 

Japan’s Topix Index rose 0.2%, South Korea’s Kospi Index was down 0.9% and China’s Shanghai Composite Index was steady.

8:08 AM

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