MARKET WRAP: Sensex down 306 pts, Nifty fails to hold 10,450; OMCs drag
Benchmark indices fell on Wednesday pulled down by oil companies
 "Markets, Up, Down, BSE, NSE, Stocks")
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12:45 PM
India Inc foreign borrowing jumps over two-fold to $3.92 bn in April
India Inc raised $3.92 billion from overseas markets in the first month of the current financial year, up more than two-times from a year-ago period.
Among major companies which tapped the overseas market to raise capital included - Reliance Jio ($747.03 million), Aditya Birla Finance ($152.35 million), Vayu Urja Bharat Private Ltd ($155 million) and JSW Steel Ltd ($100 million). READ MORE
12:30 PM
Vedanta hits over 10-month low as protests against copper plant in Tamil Nadu turn violent
Shares of Vedanta Ltd fell to their lowest since July 5, 2017, after at least nine people were killed in the southern state of Tamil Nadu when police fired at violent protesters calling for the closure of a copper smelter run by parent Vedanta Resources Plc.
Shares were down 3.2 percent as of 0500 GMT, after falling as much as 5.50 percent earlier in the session. READ MORE
12:17 PM
Shares of L&T Technology Services (LTTS) have rallied 7% to Rs 1,367 per share on the BSE in otherwise subdued market after the L&T Group company reported a higher than expected quarter-on-quarter (QoQ) revenue growth of 8% at $162 million in March 2018 quarter (Q4FY18). READ MORE
L&T Technology gains 7% on healthy Q4 results
Shares of L&T Technology Services (LTTS) have rallied 7% to Rs 1,367 per share on the BSE in otherwise subdued market after the L&T Group company reported a higher than expected quarter-on-quarter (QoQ) revenue growth of 8% at $162 million in March 2018 quarter (Q4FY18). READ MORE
11:59 AM
Market Check
| S&P BSE Sensex | 34,595.70 | -0.16% | |
| Nifty 50 | 10,502.90 | -0.32% | |
| S&P BSE 200 | 4,560.89 | -0.22% | |
| Nifty 500 | 9,131.70 | -0.15% | |
| S&P BSE Mid-Cap | 15,765.07 | 0.17% | |
| S&P BSE Small-Cap | 17,124.63 | 0.40% | |
11:46 AM
Volume Toppers
» More on Most Active Volume
| COMPANY | PRICE() | CHG() | CHG(%) | VOLUME |
|---|---|---|---|---|
| REL. COMM. | 14.45 | 0.05 | 0.35 | 4619087 |
| ST BK OF INDIA | 266.60 | 12.45 | 4.90 | 3310471 |
| PC JEWELLER | 197.25 | 6.30 | 3.30 | 2709509 |
| ZEE ENTERTAINMEN | 555.50 | -9.85 | -1.74 | 2018315 |
| JP ASSOCIATES | 15.55 | 0.05 | 0.32 | 1825630 |
11:33 AM
OMCs under pressure
Shares of oil marketing companies (OMCs) were under pressure with the Indian Oil Corporation (IOC) hitting its 52-week low, while Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) falling 6% each on the BSE on reports that the government may ask these companies to freeze prices as a temporary arrangement. READ MORE
11:15 AM
Minda Industries soars 10% on 2:1 bonus issue; strong Q4 results
Minda Industries soared 10% to Rs 1,223 on the BSE after the auto ancillary company said its board recommended bonus shares in the ratio of 2:1.
“The board of directors at their meeting held on Tuesday i.e. 22 May, 2018 has recommended the issue of bonus shares to the shareholders of the company in the ratio of 2 bonus equity shares of Rs 2 each fully paid up for every 1 existing equity share of Rs 2 each fully paid up (in the ratio of 2:1) held by the shareholders as on the record date to be fixed separately,” Minda Industries said in a BSE filing. READ MORE
11:00 AM
Dr Reddy’s Laboratories reported a 3 per cent decline in net profit at Rs 3.02 billion on the back of a marginal decline in revenues for the March quarter (Q4). The company attributed its subdued financial performance to continued price erosion in the US market besides a decline in sales revenues across other major markets except for India where it registered a 7 per cent revenue growth in Q4. READ MORE
US price erosion weighs on Dr Reddy's; Q4 net down 3% to Rs 3 billion
Dr Reddy’s Laboratories reported a 3 per cent decline in net profit at Rs 3.02 billion on the back of a marginal decline in revenues for the March quarter (Q4). The company attributed its subdued financial performance to continued price erosion in the US market besides a decline in sales revenues across other major markets except for India where it registered a 7 per cent revenue growth in Q4. READ MORE
10:45 AM
Shares of State Bank of India (SBI) have rallied 6% to Rs 269 per share, extending their 4% gain on the BSE on Tuesday, on expectations of improvement in asset quality of the state-owned bank. READ MORE
SBI rallies 10% in two days on expectation of improvement in asset quality
Shares of State Bank of India (SBI) have rallied 6% to Rs 269 per share, extending their 4% gain on the BSE on Tuesday, on expectations of improvement in asset quality of the state-owned bank. READ MORE
SBI
10:37 AM
ICICI Securities on DLF
Key positive for the quarter were fresh gross sales bookings of Rs9.5bn and net bookings of Rs7.5bn (Rs4.8bn of net sales in Q3FY18) led by strong sales in Phase-V, Gurugram projects.
With a QIP fund raise and balance promoter fund infusion of Rs22.5bn (estimated cumulative fund infusion of Rs55-60bn) on the cards, we expect DLF’s balance sheet (ex-DCCDL) to become debt free in FY19E and enable the company to refocus on its residential business. We retain our BUY rating with a revised target price of Rs306/share (earlier Rs315) based on 1x FY19E NAV, factoring in balance sheet adjustments.
With a QIP fund raise and balance promoter fund infusion of Rs22.5bn (estimated cumulative fund infusion of Rs55-60bn) on the cards, we expect DLF’s balance sheet (ex-DCCDL) to become debt free in FY19E and enable the company to refocus on its residential business. We retain our BUY rating with a revised target price of Rs306/share (earlier Rs315) based on 1x FY19E NAV, factoring in balance sheet adjustments.
10:35 AM
MARKET COMMENT
Midcap outperformance over large caps peaked at 22% since the beginning of CY17 driven by high optimism around the midcap growth story fuelled by huge interest by retail as well as institutional investors resulting in an all-time high valuation gap between midcaps and large caps. Post the rise in volatility in global capital markets in Feb’18, the performance gap between large caps and midcaps has shrunk to zero since the beginning of CY17.
The correction in midcaps has also brought down the valuation gap between midcaps and large caps to within +1 s.d. of long term average. In fact, midcap and small cap stocks were getting into bubble territory during Jan’18 and a correction was warranted. We do not expect mid and small caps to start outperforming in a range-bound market environment which remains our base case for the near term.
(Source: ICICI Securities)
The correction in midcaps has also brought down the valuation gap between midcaps and large caps to within +1 s.d. of long term average. In fact, midcap and small cap stocks were getting into bubble territory during Jan’18 and a correction was warranted. We do not expect mid and small caps to start outperforming in a range-bound market environment which remains our base case for the near term.
(Source: ICICI Securities)
10:31 AM
Edelweiss on State Bank of India
Upfront stress recognition, as anticipated, took the sheen off State Bank of India’s (SBI) otherwise operationally steady Q4FY18 (INR77bn loss despite NII beat due to 6.9% slippage run rate). Having said that, the bank is relatively better positioned among peers—CET-1 at 9.7%, NNPLs <6%, CASA at >45% and SLR >25%.
With 36% of the industry under potential PCA framework (refer, PCA banks: Significant stake at risk) and stress recognition done (NNPL + watch list of <6.5%, coverage of >66%), we believe SBI will see strong earnings momentum henceforth with major delta coming from reduced credit cost. Furthermore, we believe, focus on creating value in its non-banking subsidiaries can be a more stable and scalable vector for overall value (>30% of CMP). The stock trades at 0.7x FY20E P/BV, which renders risk-reward favourable. Hence, maintain ‘BUY’
Upfront stress recognition, as anticipated, took the sheen off State Bank of India’s (SBI) otherwise operationally steady Q4FY18 (INR77bn loss despite NII beat due to 6.9% slippage run rate). Having said that, the bank is relatively better positioned among peers—CET-1 at 9.7%, NNPLs <6%, CASA at >45% and SLR >25%.
With 36% of the industry under potential PCA framework (refer, PCA banks: Significant stake at risk) and stress recognition done (NNPL + watch list of <6.5%, coverage of >66%), we believe SBI will see strong earnings momentum henceforth with major delta coming from reduced credit cost. Furthermore, we believe, focus on creating value in its non-banking subsidiaries can be a more stable and scalable vector for overall value (>30% of CMP). The stock trades at 0.7x FY20E P/BV, which renders risk-reward favourable. Hence, maintain ‘BUY’
10:29 AM
CD equisearch on Bajaj Corp
The stock currently trades at 28.8x FY19e EPS of Rs 15.73 and 26.9x FY20e EPS of Rs 16.83. Bajaj Corp is undertaking measures like sales force automation in order to improve its area coverage and control of distribution and thereby enhance its operational efficiency through uninterrupted backend integration of data.
Nevertheless, the rising crude oil prices and the consequent soaring of raw material cost would impact margins. Additionally, the cut throat competition in the FMCG space cannot be neglected. Weighing all odds, we assign ‘accumulate’ recommendation on the stock with target price of Rs 505 (previous target Rs 463) based on 30x FY20e earnings over a period of 9-12 months.
The stock currently trades at 28.8x FY19e EPS of Rs 15.73 and 26.9x FY20e EPS of Rs 16.83. Bajaj Corp is undertaking measures like sales force automation in order to improve its area coverage and control of distribution and thereby enhance its operational efficiency through uninterrupted backend integration of data.
Nevertheless, the rising crude oil prices and the consequent soaring of raw material cost would impact margins. Additionally, the cut throat competition in the FMCG space cannot be neglected. Weighing all odds, we assign ‘accumulate’ recommendation on the stock with target price of Rs 505 (previous target Rs 463) based on 30x FY20e earnings over a period of 9-12 months.
10:28 AM
Edelweiss on Bharat Forge
Bharat Forge (BHFC) ended FY18 with 50% jump in standalone bottom line (adjusted) riding US Class 8 buoyancy and strong industrial exports. Overall utilisation stood at ~80%, with several plants clocking 90% plus. What’s encouraging is the 2x revenue target by FY21 in oil & gas (largely for exports business) from current USD100mn and $100mn defence top line (already crossed ~$50mn).
Capex of Rs 5bn at three locations— Andhra Pradesh, Baramati and Mundhra—will largely cater to export opportunities, apart from defence components, improving non-cyclical visibility (non-commercial) significantly. We retain our conviction on BHFC on account of: a) improved growth outlook on exports business, which is getting stronger/broad based; b) improving performance of subsidiaries as volumes ramp up; and c) visible traction in defence business. Maintain ‘BUY’.
Bharat Forge (BHFC) ended FY18 with 50% jump in standalone bottom line (adjusted) riding US Class 8 buoyancy and strong industrial exports. Overall utilisation stood at ~80%, with several plants clocking 90% plus. What’s encouraging is the 2x revenue target by FY21 in oil & gas (largely for exports business) from current USD100mn and $100mn defence top line (already crossed ~$50mn).
Capex of Rs 5bn at three locations— Andhra Pradesh, Baramati and Mundhra—will largely cater to export opportunities, apart from defence components, improving non-cyclical visibility (non-commercial) significantly. We retain our conviction on BHFC on account of: a) improved growth outlook on exports business, which is getting stronger/broad based; b) improving performance of subsidiaries as volumes ramp up; and c) visible traction in defence business. Maintain ‘BUY’.
10:15 AM
Shares of Cipla have surged 7% to Rs 563 per share, bouncing back 8% from their early morning low of Rs 520 per share on the BSE, after the pharmaceutical company reported a consolidated net profit of Rs 1.79 billion in March quarter (Q4FY18) against a net loss of Rs 620 million in the same quarter last year. READ MORE
Cipla surges 7% post March quarter results
Shares of Cipla have surged 7% to Rs 563 per share, bouncing back 8% from their early morning low of Rs 520 per share on the BSE, after the pharmaceutical company reported a consolidated net profit of Rs 1.79 billion in March quarter (Q4FY18) against a net loss of Rs 620 million in the same quarter last year. READ MORE
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First Published: May 23 2018 | 3:30 PM IST
