MARKETS ON FRIDAY: Sensex ends 289 points higher ahead of Karnataka polls

The markets ended higher on Friday ahead of the Karnataka Assembly elections

9:44 AM

Emkay on Titan

Titan reported a strong 67% growth in EBITDA and 61% growth in PBT (bei), in line with our expectations, led by strong profitability in the Jewellery division. Overall revenue growth at 12% was below our expectation by 4% due to lower reported sales in Jewellery and other divisions.

Factoring in the margin beat in Jewellery and the management’s positive outlook on margins, we increase our FY19/20E earnings by 5-8%. However, current valuations at 47x FY20E earnings captures most of the positives. We maintain HOLD with revised target price of Rs 990, valuing Titan at 45x June’20E EPS

9:43 AM

Nomura on Tejas Networks

We cut our FY19/20F fully diluted EPS forecast by 9%/5%; implied FY18-20F fully diluted EPS CAGR is 32%. Our FY19F/20F EPS is 9%/8% below consensus. Maintain Buy on favourable risk-reward – earnings growth prospects appear healthy and the stock is not expensive (FY20F P/E of 15.6x on EPS of INR20.5).

9:42 AM

Edelweiss on Arvind Ltd

Arvind's Q4FY18 numbers surpassed our expectation driven by improved performance in all major segments—textile, brand & retail (B&R) and engineering. Key quarter highlight was the sustained surge in B&R’s margin—up ~260bps for Q4FY18 and ~190bps for FY18—driven by operating leverage and turnaround in emerging brands. In FY18, only three (of the 27 brands) reported EBITDA loss.

Though the spurt in debtors in Q4FY18 was surprising, we expect it to reverse as wholesale channel’s cash situation normalises. We retain our positive view on the stock on account of traction in B&R segment’s margin. We value Arvind on SOTP (textiles: 7.5x FY20E EV/EBITDA, B&R: 18.0x FY20E EV/EBITDA) leading to revised target price of Rs 515 (Rs 525 earlier) as we factor in higher net debt.

9:41 AM

Edelweiss on Redington India

Redington India (Redington), a leading technology distributor with a track record of tackling technology as well as economic cycles, is fundamentally well poised to ride business tailwinds and investments in sunrise segments. We expect the company to reap benefits of: 1) higher commodity prices driving strong demand in MEA region; 2) GST-led bounce back in India business; and 3) strong traction in third party logistics (3PL) business.

We see value in the stock owing to improving return ratios (170bps jump in RoE), earnings growth (15% plus CAGR) over FY18-20E and attractive valuations. Initiate coverage with ‘BUY’ and target price of Rs 166 (10x FY20E EPS)

9:35 AM

MARKET COMMENT Chris Wood of CLSA

World stock markets have been remarkably calm over the past week. In GREED & fear’s view this is a lull before the next storm because two developments during this period have raised global risks. First, the American demands, or “ultimatum”, as regards trade issues with China are more aggressive, and therefore more inflammatory, than GREED & fear would have supposed.
 

The reason markets are not reacting more to the leaked American demands presented to China late last week is probably because the base case is that all this is a negotiation strategy and The Donald will “turn on a dime” at the 11th hour. Clearly, this remains quite possible.

The other development this week which has raised global risks is Trump following through on his talk of exiting the Iran deal. Apart from the near-term impact of a higher oil price, and equity investors should remain overweight the energy sector, this raises a much bigger and more important issue. This is the precedent of the US walking out on an international agreement.

(Excerpted from Wood's weekly newsletter, GREED & fear)

CLSA Managing Director & Equity Strategist Christopher Wood

 

9:35 AM

BS Special Rupee at 15-month low: As it crosses the 67 mark, where is it headed?

After a protracted period of carry dominated low volatility, USD/INR sprang to life in the last fortnight, breaking through the crucial resistance of 65.35. The depreciation since has been steep, making Rupee one of the worst performing currencies amongst emerging markets (EMs).

 

Much of this up move was on the back of domestic factors. With broad based USD turnaround also looking likely, macros and technicals are stacked against the Rupee. Oil prices, too, will remain upbeat on Iran sanctions putting pressure on the Indian unit. READ MORE

9:21 AM

Top loser: Bharti Airtel slips over 3%

9:19 AM

Sectoral Trend

9:18 AM

Top Sensex gainers and losers

9:17 AM

Markets at Open

At 9:17 am, the S&P BSE Sensex was trading at 35,383, up 138 points while the broader Nifty50 index was ruling at 10,759, up 42 points

9:01 AM

Markets at pre-open

Index	Current	Pt. Change	% Change
S&P BSE SENSEX	35,285.41	+39.14	+0.11
S&P BSE SENSEX 50	11,271.14	+54.32	+0.48
S&P BSE SENSEX Next 50	33,261.80	-8.04	-0.02
S&P BSE 100	11,094.09	+45.24	+0.41
S&P BSE Bharat 22 Index	3,594.03	+11.90	+0.33

(Source: BSE)

9:01 AM

Reliance Securities on Adani Power

 

We believe recent sharp up-tick in international coal prices will negatively impact the comapny's profitability, as it is dependent on imported coal for most of its power plants.

 

Considering the apex court’s adverse ruling on compensatory tariff and stretched balance sheet post compensatory write-off, we maintain our reduce recommendation on the stock. We factor in lower PLF and lower merchant realization, Consequently, we reduce our target Price from Rs 26 to Rs 24.

8:55 AM

Lost money investing in OMCs? You can make some by betting on oil producers

Investors worried over losses in their investments in oil marketing companies (OMCs) can save some of the pain by investing in oil producers instead. Worries that rising oil prices will hurt the profitability and financials of OMCs have led to their share prices falling by 15-26 per cent in the past three months, versus a 2.5 per cent rise in the S&P BSE Sensex. READ MORE

8:49 AM

Nifty futures volumes on SGX decline 14% to 1.65 million in April

The Indian derivatives contracts traded on the Singapore Exchange (SGX) reported a drop in volumes for second straight month in April. The SGX Nifty 50 Index Futures volume was 1.65 million in April, 14 per cent lower compared to 1.92 million in March.

 

Volumes are down 25 per cent since February, when Indian exchanges announced they were ending commercial licensing to overseas exchanges to curb offshore trading of domestic products. READ MORE

8:41 AM

Derivatives strategy on Divis's Lab futures by HDFC Securities

Buy NMDC May 115 Put at Rs 2.40

Stop loss of Rs 1.60

Target Rs 4

 

Rationale: We have seen Short positions being built in NMDC futures today where we have seen 7% Rise in Open Interest with Price rise of 2%. Stock price is on the verge of giving Breakdown below strong support of 115 on the daily chart. Stock Price is making lower top lower bottom formation on the daily chart since the stating for the year, indicating bearish trend. Momentum Indicators and oscillators are Indicating weakness in the stock for the short to medium term. READ MORE