MARKET WRAP: Infy ends 2% higher ahead of Q1 results; Sensex ends flat

Among sectoral indices, the Nifty PSU Bank index fell over 2% weighed by a decline in Canara Bank and Indian Bank.

9:34 AM

INTERVIEW OF THE DAY We are moderating our investments in India: Temasek's Ghosh and Lambah

At $11.5 billion, Singapore government-owned Temasek’s India exposure stands at four per cent of its global portfolio. The private equity, which has pumped in $1.5 billion in the past three months, plans to moderate its India investments due to the emerging global scenario. In an interview with Jash Kriplani, Temasek’s Promeet Ghosh and Ravi Lambah share their views and talk about their recent investments. READ MORE

Ravi Lambah, joint head (left), and Promeet Ghosh, MD, Temasek India

9:21 AM

Result review Cyient

Cyient’s Q1FY19 result missed our forecast. While 2.3% QoQ decline US$ revenue was slightly higher than our forecast of a 1.2% decline, the QoQ decline in EBIT margin and EPS was a big miss. However, Cyient has allayed concerns on the same. It is confident of the pick-up in revenue growth and thus improvement in profitability from Q2FY19 onwards and has maintained its FY19 outlook.

 

We factor Q1FY19 miss but increase FX assumption for rest of FY19 and FY20 to Rs68 vs. Rs65.5 earlier. As a result, we cut our FY19 EPS by 3% and largely maintain FY20 EPS. We now forecast FY18-20E revenue (US$)/EPS CAGR of 15.8%/14.4%. We maintain our TP of Rs889 based on 18x FY20E and believe that weakness in the stock in reaction to Q1FY19 result would provide opportunity to BUY

(Source: IDBI Capital)

9:20 AM

Nifty sectoral trend

9:19 AM

BSE Sensex heatmap

9:17 AM

Market at open

 

At 9:15 AM, the S&P BSE Sensex was trading at 36,614, up 66 points while the broader Nifty50 was ruling at 11,043, up 19 points.

9:02 AM

Market at pre-open

Index	Current	Pt. Change	% Change
S&P BSE SENSEX	36,631.43	+83.02	+0.23
S&P BSE SENSEX 50	11,574.20	+26.34	+0.23
S&P BSE SENSEX Next 50	32,170.54	+76.47	+0.24
S&P BSE 100	11,291.20	+25.90	+0.23
S&P BSE Bharat 22 Index	3,369.01	+3.57	+0.11

(Source: BSE)

9:00 AM

Today's picks: From UPL to Sun Pharma, hot stocks to watch today

UPL

Current price: Rs 582

Target price: Rs 572

 

Keep a stop at Rs 588 and go short. Add to the position between Rs 575 and Rs 577. Book profits at Rs 572.

 

Sun Pharma

Current price: Rs 565

Target price: Rs 575

 

Keep a stop at Rs 560 and go long. Add to the position between Rs 572 and Rs 574. Book profits at Rs 575. READ MORE

8:58 AM

MARKET COMMENT Chris Wood of CLSA

The Fed remains on course for more “gradual tightening”. Still GREED & fear remains of the view that it will be important to see if Jerome Powell makes any further reference to the flattening yield curve in his next FOMC statement due on 1 August.
 

The trade issue can come back and hit stock markets at any time. One obvious trigger would be Trump’s threat, if followed through on, to impose a 20-25% tariff on global auto imports. Such a move would almost certainly trigger retaliation in the auto industry and cause renewed focus on the peaking out of globalisation and the retreat from Pax Americana. Such “big picture” issues are hard to discount or “price”. But they are not bullish.

Any perceived further retreat from Pax Americana by America, in line with Donald Trump’s rhetoric, will continue to be viewed by China as an opportunity to expand its role as the champion of free trade.

(Source: Wood's weekly newsletter to investors, GREED & fear)

Christopher Wood, Managing Director & Equity Strategist, CLSA

8:57 AM

Commodity outlook and top trading ideas by Tradebulls

Base metals are witnessing fire sale thanks to trade war instigated by the US. The additional 10 percent on $200 billion goods from China broke the camel’s back. Base metals were already reeling under pressure and now even any short covering is getting quickly sold into. Market is trading on sentiment rather than fundamental and disregarding every technical level. We advice investors not to catch a falling knife at this time as Beijing will respond against the additional tariffs and will again put pressure on base metals. READ MORE

8:56 AM

COMMENT Deepak Jasani, Head Retail Research at HDFC Securities on RIL

Rallying 14.5% over the past five days, Reliance Industries became the second Indian company (after TCS) to touch $100 bn marketcap on July 12, 2018. The stock price began moving up immediately after its latest AGM on July 05. 

 

Investors seemed to be enthused by the vision pronounced by the Chairman at the AGM of a strategic move to a technology platform company with three key verticals of mobile connectivity, fiber connectivity and new commerce platform for the retail business, even as the traditional businesses of energy and petrochem continue to perform quite well. This may result in scaling up consumer profits at parity level to energy and petrochemicals business over the next decade. 

 

These announcements pushed investors out of the inaction mode on the stock at a time when the Nifty kept rising helped by other largecaps. Cheap relative valuation in terms of P/E also enticed investors to look afresh at the stock when P/Es of other stocks have risen sharply over the last few months. Investors now look forward to better financial parameters from the company including return ratios, capital sweating and payouts. They also look forward to value unlocking by demerger of its various businesses over the medium term going by the past track record of the group

8:55 AM

Derivatives strategy on Arvind Limited by HDFC Securities

Buy ARVIND July Future at Rs 418

Stop loss of Rs 408

Target Rs 432

 

Rationale: Long build up is seen in Arvind futures’ yesterday, where We have seen sharp Rise in Open Interest with Price rise of 3.5%

 

Stock Price has given breakout on the daily chart where it managed to close above 200 day SMA with surge in volumes

 

Stock price has already given bullish breakout from the downward sloping trend line, adjoining high of 9th May and 15th -June 2018.

 

Momentum Indicators and Oscillators like RSI and MACD are Indicating strength in the stock for the short to medium term.

8:54 AM

RESULT PREVIEW Infosys Q1FY19 earnings preview: Here's what to expect today

TCS surprised the Street by reporting better-than-expected numbers in the first quarter of financial year 2018-19 (Q1FY19), while showing a double-digit rise in dollar revenue for the second quarter. Will Infosys follow suit? The IT major is scheduled to announce its results for the June quarter post market hours today.

 

In the previous quarter, the Bengaluru-based company had lowered its EBIT margin guidance for FY19 to 22-24 per cent from 23-25 per cent in the previous financial year. It had reported a 28.2 per cent drop in sequential net profit at Rs 3,690 crore for the March quarter READ MORE

8:53 AM

Edelweiss on aviation sector

We expect the aviation sector to clock another subdued quarter with combined EBITDAR/PAT falling 8%/71% YoY on rising oil prices and subdued yield expansion. Moderate increase in fares in the face of rising costs has ensured robust domestic pax growth of 21%. Load factors continue to remain healthy at >85%. While airlines have raised prices a tad in Q1 to pass on higher costs, we envisage muted yield expansion for our coverage universe.

In the near term, we envisage fuel prices to remain elevated and we revise up FY19/20 Brent forecast to USD70/68 (USD65/66 earlier). Consequently, we lower FY20E earnings for our coverage factoring higher jet fuel prices. Spicejet (SJET), with renewed focus on profitable growth, will continue to relatively outperform. Indigo, with a strong balance sheet and higher proportion of fuel-efficient aircrafts is better placed to ride the near-term turbulence. Jet Airways (JAL) is likely to face near-term pressures till benefits of cost savings kick in. Top pick: SpiceJet

8:53 AM

Top trading ideas by Anand Rathi Research

 

SBI: BUY

TARGET: 275

STOP LOSS: 257

 

SBIN seems to have completed its retracement of the five wave and now it seems to be starting another five waves rising structure. The momentum has reversed from an oversold territory as well. Click here for more

8:52 AM

Market outlook by Angel Broking

The recent optimism has been very much on expected lines and importantly, the kind of profit booking that we saw from Thursday's high; it’s an indication that we may not have a smoother ride going ahead. Also, we indicated that all stocks may not give unidirectional move. There were handful of stocks who corrected by a fair margin and hence, we reiterate that one needs to be very selective while picking up a stock.

Although, Thursday's profit booking slightly damaged the sturdy structure of daily candle, there is no conclusive sign of weakness yet. For the coming session, 11078 followed by 11100 would be seen as immediate resistances; whereas on the downside, today’s gap area of 11000 – 10976 is likely to act as intraday support zone