MARKETS ON MONDAY: Sensex ends 162 pts up, Nifty at 10,379 on Asian cues

All that happened in the markets today.

2:28 PM

MARKET COMMENT Motilal Oswal Research

As we step into FY19, the clamor for an earnings recovery has become louder. This is particularly because the last three years were characterized by a muted earnings performance due to macro disruptions and several policy changes pertaining to asset quality in the banking sector. Although we expect Nifty earnings to grow by a decent 11% in FY18, it is much below our FY18-beginning estimate of +17% – this can be mainly attributed to the drag from corporate banks (ICICI Bank, Axis Bank and SBI, which together accounted for 62% of the cut in Nifty PAT estimate in a span of a year). 

 

Overall, we expect FY19 to kick-start earnings recovery for India, although the market is likely to be distracted by several macro factors along the way, such as the ongoing global trade conflict, the US Fed rate increase cycle, domestic equity flows and, last but not the least, the domestic political developments in an election-heavy year. Although the path to earning revival is more like a game of snakes-and-ladders than a straight line, we expect more encouraging ladders than slippery snakes in FY19. Also, after the recent correction in the markets and the softening of bond yields, we believe valuations offer enough bottom-up stock-picking opportunities.

2:26 PM

Sharekhan on Pharmaceuticals

We anticipate a weak quarter for pharma companies owing to continuing regulatory and pricing challenges in the US and 4% rupee appreciation. US business will continue to remain under pressure as increased competition and sustained pricing challenges will impact growth. Within our coverage universe, we prefer Aurobindo Pharma, Cadila, Cipla, and Biocon as investment options

2:24 PM

MARKET COMMENT (Sharekhan)

The consensus earnings estimates are factoring a 20% plus annual growth rate in Sensex earnings over FY2018 to FY2020. Though the revision in earnings of some banks and other adjustment could lead to some downward revision in estimates going forward, the healthy growth in earnings would definitely support equity markets.
 

More importantly from an investor’s perspective, the year ahead would be more of a stock picker’s market rather than an all out rally as seen in 2017. Thus, one needs to carefully select quality companies with specific growth stories. We, at Sharekhan, have a track record of giving quality research ideas along with outperforming research-based investment products designed for investors with varied risk profiles and needs.

2:21 PM

Global IT Spending to Grow 6.2% in 2018: Gartner

Worldwide IT Spending Forecast (USD billion)

	2017 Spending	2017 Growth (%)	2018 Spending	2018 Growth (%)	2019 Spending	2019 Growth (%)
Data Center Systems	181	6.3	188	3.7	190	1.1
Enterprise Software	352	8.8	391	11.1	424	8.4
Devices	663	5.1	706	6.6	715	1.3
IT Services	933	4.4	1,003	7.4	1,048	4.6
Communications Services	1,392	1.3	1,452	4.3	1,468	1.1
Overall IT	3,521	3.8	3,740	6.2	3,846	2.8

Source: Gartner (April 2018)

2:18 PM

CALL SUCCESS & UPDATE: Dilip Buildcon Ltd

 

Reco Price (Rs) 983, Previous Target (Rs) 1,193, Return Achieved 21%, New Target (Rs) 1,294, Expected Return 10%

 

We had reiterated a BUY on Dilip Buildcon Ltd (DBL) and upgraded our target to Rs.1,193 in our sector report dated November 29, 2017. The target has been achieved in Friday’s trading session with the stock delivering a return of ~21% from our sector report and generating a cumulative return of ~91% from our initiating coverage report dated October 05, 2017.

The outlook continues to remain bright as the company has received massive orders of ~Rs.190 bn in the past two months, and has more than doubled its order book to ~Rs.320 bn as of FY18 end. The order pipeline continues to remain strong with large number of projects likely to be awarded by the Government under the recently announced Bharatmala programme. We remain bullish on DBL’s growth prospects and recommend investors to HOLD the stock for revised target of Rs.1,294

(Source: IIFL)

2:17 PM

Sector watch Cement

Even as demand for cement  has picked up from Q3 FY2018 and the trend is expected to continue in Q4 FY2018, with the  growth  expected at around 5% in FY2018 and FY2019, expectation of higher petcoke, coal and diesel prices are likely to put pressure on the profitability margins and debt metrics of the cement companies in the coming quarters.

(Source: ICRA)

2:12 PM

NEWS IMPACT

State-run Bharat Petroleum Corporation Ltd (BPCL) is planning to hive off its gas business into a separate wholly-owned subsidiary, reports Mint. By hiving off this business as a separate subsidiary, the company intends to sharpen its focus and bring all natural gas-related businesses into one fold, the report says.

BPCL stock quote:

2:00 PM

Market Check

 

S&P BSE Sensex	33,813.15		0.55%
Nifty 50	10,383.35		0.50%
S&P BSE 200	4,572.85		0.48%
Nifty 500	9,206.15		0.37%
S&P BSE Mid-Cap	16,630.96		0.21%
S&P BSE Small-Cap	17,948.58		0.37%

1:44 PM

Nitesh Estates advances after dispute settlement

Nitesh Estates rose 1.38% to Rs 12.50 on BSE after the company said that it has settled the dispute in respect of the lease rights of land situated at Chennai. The announcement was made after market hours on Friday, 6 April 2018. READ MORE

1:30 PM

IndusInd Bank, Escorts, Shakti Pumps among 18 stocks that hit new highs

The private sector lenders, IndusInd Bank, Kotak Mahindra Bank and Shiram Transport Finance, the consumer discretionary goods & services sector companies such as Avenue Supermarts (owner of D-Mart), Jubilant FoodWorks, Titan Company and Britannia Industries were among 18 stocks that hit their respective new highs on the BSE on Monday. Century Plyboards, Dilip Buildcon, Apollo Tyres, Escorts, Excel Industries, HIL, KEI Industries, Pidilite Industries, Power Mech Projects, Shakti Pumps (India) and SRF too hit record highs in intra-day trade today. READ MORE

1:15 PM

Geojit on NATCO Pharma

NATCO Pharma (NATCO) is a R&D focussed, vertically integrated pharmaceutical company with an experienced management team and presence across multiple speciality therapeutic segments. We expect EBITDA margin to remain stable at 40% over FY18-20E led by new launches in US & India and improvement in operational efficiency.
 

Consolidated Revenue/PAT to grow at 17%/13% CAGR over FY18 - 20E led by prime molecules such as Tamiflu, Copaxone, Doxorubicin and Lanthanum and better growth in domestic market. We value Natco at 19x on FY20E EPS and arrive at a target price of Rs 908 and recommend ‘Buy’ rating.

1:00 PM

Infosys Q4FY18 results: Here's what leading brokerages expect

Infosys is set to announce its fourth-quarter numbers on April 13. On a year-to-date basis, the stock has rallied around 10 per cent and has outperformed the Nifty IT index that gained around 9 per cent during this period. By comparison, the Nifty50 index slipped around 2 per cent YTD.

 

Analysts expect information technology (IT) firms to report an improvement in earnings before interest and taxes (EBIT) margins in Q4FY18, aided by currency, operational efficiency and automation. Key monitorables for the Street include FY19E revenue guidance/outlook, along with sustainable margin trends. For Infosys, analysts are also keeping a tab on the strategy roadmap by the new chief executive (CEO), Salil Parekh. READ MORE

12:47 PM

Dubai-based firm issues gold-backed cryptocurrency to draw Muslim investors

In Dubai's decades-old Gold Souk, customers from around the world haggle over bangles and necklaces. Elsewhere in the emirate, the region's top centre for gold trade, bullion is playing a new role in financial engineering.

 

A local start-up company founded last year, OneGram, is issuing a gold-backed cryptocurrency - part of efforts to convince Muslims that investing in cryptocurrencies complies with their faith. READ MORE

12:32 PM

Apollo Tyres stock: Higher volume, steady raw material prices are positives

Apollo Tyres has hit fresh 52-week highs over the last week, gaining six per cent on expectations of improvement in profitability in the coming quarters, led by steady rubber prices, improving volume growth and anti-dumping duty on the truck and bus radial (TBR) segment tyres.

 

Further, stabilisation in its Hungarian operations and gradual increase in contribution from the OEM (original equipment manufacturer) segment would likely to push its profitability further. READ MORE

12:19 PM

COMMODITY WATCH: Gold

The underlying commodity repeatedly tagging upper Bollinger band signals a possibility of a sharp upside momentum in coming months (possible widening of bands by resumption of spurt in upside volatility). Hence, there is a higher possibility of upside breakout in the Gold prices.

MCX Gold Fut is moving within an upward sloping channel (orange parallel trend lines), and also facing resistance at down sloping intermediate trend line ~31,000-31,100 levels (blue dashed down trend line, connecting previous tops)

(Source: HDFC Securities)