MARKET WRAP: Sensex ends 261 pts up, Nifty at 10,772; Banks, RIL rally

Nifty Bank index ended over 1% higher led by a rise in the shares of IDFC Bank and IndusInd Bank. Reliance Industries rose 2.3% on the National Stock Exchange.

11:02 AM

MARKET CHECK Top gainers

COMPANY	PRICE()	CHG()	CHG(%)	VOLUME
VAKRANGEE	47.65	2.25	4.96	2313388
ABBOTT INDIA	7200.00	286.25	4.14	747
GREAVES COTTON	134.95	5.35	4.13	41938
MAHINDRA LIFE.	666.85	24.45	3.81	46192
REL. COMM.	15.15	0.55	3.77	3505607

11:00 AM

Edelweiss on Indiabulls Housing Finance

We hosted an “Investors Day” with top management of Indiabulls Housing Finance (IHFL) to get insight into the company’s business dynamics and strategic plans. The interaction with management reinforced our conviction on the strong credit framework and risk management practices at IHFL.

Moreover, the thrust on digitisation and productivity improvement coupled with emerging opportunities indicates that IHFL is making strides towards its FY20 targets (loan CAGR of >25%, cost/income <10%, and credit cost of <50bps). Given rising demand for housing finance and the company’s stringent risk mitigants and strong track record, execution risks are minimal in our view. Maintain ‘BUY’

11:00 AM

Jefferies on SBI Life

SBI Life stands on a strong foothold for superior to industry growth, driven by a geographically diverse retail-dominated business mix and exclusive access to SBI's >22k branches. Its best-in-class cost ratios are driven by the lower costs of SBIN-sourced business (~10%, v/s >20% for IPRU & HDFCLIFE). Our calculation suggests that a tax-assumption change (similar to what IPRU & HDFCLIFE follow) would boost VNB margins by ~150bp over reported. Buy, price target Rs 804.

10:59 AM

Rising interest rates threaten Blackstone's first-of-a-kind IPO in India

About two years after Blackstone Group LP registered India’s first real estate investment trust, the private equity giant is close to taking it public. Rising interest rates threaten to get in the way.
 

Blackstone and local partner Embassy Group plan to file a prospectus for an initial public offering of the REIT as early as next month, a deal that may raise as much as $1 billion, people with knowledge of the matter said. Even so, the listing could be delayed should investors demand a higher-than-expected yield, according to the people, who asked not to be identified as the information is private READ MORE

10:48 AM

This stock doubled your money in 2018

Shares of Merck continued their northward movement, hitting new high of Rs 2,666 per share, up 8% on the BSE in early morning trade. Thus far in the calendar year 2018, the stock of the pharmaceutical company has zoomed 107% from Rs 1,289, as compared to 4% rise in the S&P BSE Sensex. READ MORE

10:40 AM

Cipla gains 3% post USFDA approval for its generic HIV drug

Shares of Cipla were up 3% at Rs 622 per share on the BSE in early morning trade after the company said that it has received approval from the US Food and Drug Administration (USFDA) to market Efavirenz tablets, used to treat HIV-1 infections in adults. READ MORE

10:30 AM

SECTOR WATCH Dairy

Analysing the dairy industry in South India over the period FY02-FY17, we note: 1) milk production in the region has grown at a CAGR of 4.1% compared to India’s milk production CAGR of 4.6%, 2) milk production in Andhra Pradesh has increased at a CAGR of 7.4% and its volume share in the regional market has expanded from 31.7% to 50.3%, 3) per capita availability of milk has grown at a CAGR of just 1% in Karnataka and 2% in Tamil Nadu while it declined at 1.4% CAGR in Kerala, and 4) subsidy culture is reducing investments in some states in the region. We prefer companies focusing on milk and fresh milk based value-added products. Accordingly, we rate Heritage Foods (Heritage) as our top BUY.

(Source: ICICI Securities report)

10:29 AM

ICICI Securities on Crompton

From an FY19-FY20 perspective, there are multiple positive levers available to the company. Some of them include the longer term structural benefits of Go to Market (GTM) program which should yield results from FY20, the strong margin outlook of FY19/20 as already achieved in FY18, the business potential from new product categories of air cooler/water heater and overall possibility of demand scenario improvement.

The stock is trading at the 29x FY20E EPS, lowest multiple among consumer electrical diversified plays and as such offers favorable risk reward. Maintain BUY with a target price of Rs260 based on 35x FY20E EPS (unchanged). The FCF yield for Crompton at our target price is 3% based on FY20 estimates.

10:11 AM

F&O Strategies
 

MOTHERSUMI JUNE FUT: Buy above 313 placing a stop loss below 304 for an upside target of 330 (spot levels)

 

NMDC JUNE FUT: Sell around 108-109 with a stop loss placed above 113 for a downside target of 102 (spot levels)

 

SHORT STRADDLE STRATEGY IN LUPIN : Sell one lot of LUPIN JUNE 900 CE @ 22-23 & Sell one lot of LUPIN JUNE 900 PE @ 18-19 | Max Profit: 24000 | Max Loss: Unlimited ABOVE UBEP AND BELOW LBEP | LBEP: 860 & UBEP: 940

(Source: Karvy)

9:59 AM

Market Check

 

S&P BSE Sensex	35,383.49		0.27%
Nifty 50	10,735.75		0.24%
S&P BSE 200	4,640.47		0.18%
Nifty 500	9,256.80		0.24%
S&P BSE Mid-Cap	15,820.12		0.03%
S&P BSE Small-Cap	16,656.64		0.26%

9:58 AM

Edelweiss on Shoppers Stop

We recently met Mr. Rajiv Suri, new Managing Director and CEO of Shoppers Stop (SSL). SSL’s operating performance has been soft over the past two years, and our interaction with the CEO makes us believe that SSL can turn around in light of the proposed structural changes.

Key takeaways are: 1) sharper focus on private labels via greater investments (e.g. hiring a new team) and adoption of differentiated marketing strategies; 2) plans afoot to integrate SSL operations with Amazon to generate more footfalls; 3) new discount vouchers helping stay ahead of competition; and (iv) scale up of beauty portfolio, wherein SSL already has a pole position. Besides, the company is targeting to be debt-free, which will be an added boost. Maintain ‘BUY

9:57 AM

Edelweiss on Tejas Networks

We recently attended Tejas Networks’ (Tejas) analyst day. Key takeaways: 1) strong demand for the company’s products spearheaded by private operators’ sharpening focus on fiberisation & network capacity upgrades and government’s investments in the Bharatnet project; 2) Tejas is gaining good traction in targeted geographies—South East Asia, Africa & MENA and North America; 3) it is developing products to ride the demand from 5G upgrade; and 4) the company is targeting specific applications leveraging its strength in converged products. We believe, Tejas’ business model is well suited to benefit from strong order flow led by burgeoning fiber investments. Maintain ‘BUY’ with target price of Rs 396

9:46 AM

Top brokerages continue to dominate: Largest 25 contribute 54% of volumes

Large entities are increasingly dominating the domestic broking scene. The data shows that the top 25 brokers now account for 54 per cent of trading volume, from 41 per cent only five years earlier. The share of the top 10 brokerages rose from 24 per cent in 2013-14 to 32 per cent in 2017-18. READ MORE

9:32 AM

Retail NBFCs outdo private banks in profits as lending picks up pace

Non-banking finance companies (NBFCs) have for the first time reported a higher combined net profit than that of private sector banks. With retail lending picking up pace, NBFCs have emerged as the fastest-growing and the most profitable segment for lenders.

 

In the March quarter, retail NBFCs, such as Housing Development Finance Corporation, Indiabulls Housing Finance, Bajaj Finance and Mahindra & Mahindra Financial were more profitable than some of the private sector banks. READ MORE

9:23 AM

Nifty sectoral trend