MARKETS ON FRIDAY: Indices end flat, Nifty holds 10,550; TCS gains 7%

Markets ended flat on Friday with losses in financials and metals overshadowing gains in information technology stock

12:30 PM

Oil stocks face crucial earnings test as investors venture back in

 

Formerly skeptical investors are buying back into oil majors in the hope that upcoming results will mark a turning point for energy stocks which have failed to keep pace with a surge in crude prices.

 

Oil stocks could begin to close that gap if results live up to lofty expectations, with Goldman Sachs predicting the strongest free cash flow figures in a decade for the sector.

 

Oil is the best-performing global asset this year, with Brent crude up 11.4 percent since January, but energy stocks have continued to lag the commodity. While Europe’s oil and gas sector is the best-performing year-to-date, it still has a way to go to catch up with crude.

12:16 PM

Fate almost sealed for ABG Shipyard, Alok Industries, Lanco Infratech

 

They were once seen as among India’s most promising growth stories. Now, however, the fate of ABG Shipyard, Alok Industries and Lanco Infratech is seen as near-certain but in the opposite direction.

 

With huge debt, few takers for their assets and the whopping write-offs (‘haircuts’) that banks are likely to take on the loans given to these companies, industry experts believe liquidation of the trio are among the few options. All three have defaulted on their huge payment obligations. READ MORE

12:12 PM

COMMENT Kotak Securities on MPC minutes

We see 1HFY19 inflation in the range of 4.4-5.2% (RBI: 4.7-5.1%) and 4.1-4.8% in 2HFY19 (RBI: 4.4%), averaging around 4.5% for FY2019. Adjusting for the statistical impact of center’s 7CPC HRA, the average inflation is likely to be around 4.2%, ranging 3.9-4.7% in 1HFY19 (RBI: 4.4-4.7%) and 4-4.6% in 2HFY19 (RBI: 4.4%). CPI inflation outturn amid various uncertainties will be crucial in assessing the RBI’s next move. While we continue to expect the MPC to maintain a status quo in FY2019, the probability of rate hike has increased after the minutes suggested that more members are inclined towards withdrawal of accommodation

12:10 PM

COMMENT Morgan Stanley on MPM minutes

The release of the minutes revive the risk of an earlier-than-expected rate hike. Despite Dr. Acharya's signal of a change in his vote at the next meeting, we think that this might not be enough to tilt the MPC into a rate hike just yet (given most members' wait-and-watch approach). Hence, unless GDP growth and high-frequency indicators surprise strongly on the upside and hint at a stronger - than - expected recovery between now and the next MPC meeting, we think that

our base-case view of a rate hike in 4Q remains largely intact.

12:01 PM

Market Check

S&P BSE Sensex	34,353.96		-0.21%
Nifty 50	10,535.55		-0.28%
S&P BSE 200	4,632.22		-0.40%
Nifty 500	9,322.50		-0.36%
S&P BSE Mid-Cap	16,743.74		-0.77%
S&P BSE Small-Cap	18,130.80		-0.24%

11:51 AM

India bond yields spike, rupee falls after RBI meeting minutes

 

Indian bond yields spiked while the rupee dropped to its lowest in more than a year on Friday after the minutes of the monetary policy panel meeting suggested that they were likely to take a more hawkish tone starting as early as June.

 

The Reserve Bank of India's (RBI) MPC members flagged several concerns, including an increase in minimum support prices for farmers and high and volatile crude oil prices, the minutes released post market hours on Thursday showed. READ MORE

 

11:39 AM

Phillip Capital on Cyient

Cyient reported decent set of results for this quarter – solid revenue growth, better than expected margins and improvement in DLM financials. Europe & Middle East market segments reported strong growth of 7.5% qoq for the fifth consecutive quarter, while Communications reported stellar growth of 11%. TCV win, however, disappointed with decline of -20% yoy.

The growth guidance for next year remains upbeat (double digit), along with DLM to remain strong. We continue to maintain our positive view on Cyient, as we continue to like the ERD space. Maintain BUY.

11:38 AM

Kotak Securities on Dilip Buildcon

We revise our estimates upwards to factor in better than expected order inflows for FY18 and expected improvement in order inflows in FY19/20 also. We now expect revenues/PAT to grow at a CAGR of 34%/37% respectively between FY17-20. We arrive at a revised price target of Rs 1400 on FY20 estimates (Rs 1217 earlier) and continue to maintain BUY recommendation on the stock.

11:37 AM

Kotak Securities on Cyient

Growth in FY19 is expected to be broad based across a more diverse set of clients within each industry segment. Our earnings estimate stand at Rs.45.4 and Rs.52.1 for FY19E and FY20E respectively. With business momentum back on track we expect a CAGR of 12% in USD revenue and 17% in earnings over FY18-20.  We believe Cyient’s performance in FY19 will be better than that its peers, and execution of its strategy of design plus manufacturing should be reflected in financials from FY19E onwards We value stock at 14x(same as earlier) on FY20E earnings. Upgrade to BUY with a price target of Rs.729 (Rs.689 earlier)

11:36 AM

Elara Capital on IndusInd Bank

High credit growth, stable low-cost deposit franchise, likely uptick in margin on the back of Bharat Financial Inclusion (BFIL) profitability and lesser credit cost would lead to expansion in return ratios. We raise our earnings estimates considering uptick in profitability and upgrade the stock rating to Buy (from Accumulate) with a revised target price of INR 2,339 at 4.3x P/ABV FY20E (from 1,944 at 3.7x FY20E)

11:15 AM

Is RBI leaning towards an interest rate hike? Minutes of meeting suggest so

The most hawkish member of India’s monetary policy panel is likely to get support from an influential colleague, signaling an interest rate increase is more probable than a cut.

 

At the April 4-5 policy meeting, Deputy Governor Viral Acharya said there was a revival in investment activity and an improvement in capacity utilization, which boded well for the economy. As a result, he was switching from a neutral stance to shift “decisively to vote for a beginning of ‘withdrawal of accommodation’ in the next monetary policy meeting in June.” READ MORE

11:01 AM

TCS Q4FY18 results review: What leading brokerages say

Tata Consultancy Services (TCS) hit its 52-week high of Rs 3,304 on Friday at the NSE, after the company announced an impressive numbers for the March 2018 quarter (Q4FY18). The Mumbai-headquartered company posted double-digit revenue growth in dollar terms in Q4 for the first time in the last 12 quarters. READ MORE

10:47 AM

Fortis gets unsolicited offer from KKR-backed Radiant Life Care

The takeover battle for India's Fortis Healthcare Ltd intensified after KKR-backed Radiant Life Care Private Ltd entered the fray on Thursday with an offer to buy more than a quarter of the cash-strapped company's hospital business.

 

In its non-binding offer, Radiant has proposed to make an investment and/or re-structure Fortis Healthcare, Fortis said in a statement. READ MORE

10:35 AM

Mapping insolvency: UltraTech open to raising Binani Cement offer

UltraTech Cement has indicated it would increase its offer yet again for acquiring bankrupt Binani Cement if the Dalmia Bharat-led consortium matched its last offer. UltraTech Cement recently upped its offer to Rs 79.6 billion after a second round of revision, outbidding Dalmia Bharat’s offer by Rs 11 billion. READ MORE

10:20 AM

SPECIAL REPORT Capex cycle revival, Modi re-election key for rally: CLSA's Chris Wood

The ‘Indian story’ will be badly damaged if the formidable Narendra Modi government was not re-elected for another term, writes Christopher Wood, managing director, equity strategist at CLSA in his weekly note, GREED & fear.

 

A key trigger for the markets, according to him, is kick-starting the investment cycle, which Wood feels will be more likely if the non-performing loan (NPL) overhang in the banking system is resolved. The key question here, however, will be whether the deadlines will be enforced since the whole point of the deadline is to force decision-making and faster resolution READ MORE

CLSA Managing Director & Equity Strategist Christopher Wood