MARKET WRAP: Global cues, K'taka result drag Sensex 156 pts; PNB down 12%
Benchmark indices fell on Wednesday on doubts over the composition of the next government in Karnataka
 "Markets, Stocks, BSE, NSE")
Markets, Stocks, BSE, NSE
Benchmark indices fell on Wednesday as doubts over the composition of the next government in Karnataka dampened investor risk appetite. However, recovery in rupee and fall in crude oil prices help cut losses.
The S&P BSE Sensex ended at 35,388, down 156 points while the broader Nifty50 index settled at 10,741, down 61 points.
The S&P BSE Sensex ended at 35,388, down 156 points while the broader Nifty50 index settled at 10,741, down 61 points.
Among sectoral indices, shares of public sector banks (PSBs) were under pressure, falling upto 12% on NSE after most these banks reported weak set of numbers for the quarter ended March 2018 (Q4FY18). Punjab National Bank (PNB) fell 12% after the state-owned bank posted record losses at Rs 134 billion in Q4FY18.
Shares of fast moving consumer goods (FMCG) companies were trading higher with Hindustan Unilever (HUL), Britannia Industries and Colgate-Palmolive (India) hitting their respective new highs on the BSE in intra-day.
RUPEE AND CRUDE OIL
The rupee recovered smartly on Wednesday from the 15-month low reached a day before, as the Reserve Bank of India (RBI) stepped in with heavy dollar sales. Rupee had weakened to a 16-month closing low of 68.15 per dollar on Tuesday, but after the latest round of suspected central bank support it had bounced back to 67.80, despite the dollar's strength on international markets.
Oil prices fell on Wednesday, weighed down by ample supplies despite ongoing output cuts by producer cartel OPEC and looming US sanctions against major crude exporter Iran.
Brent crude futures were at $78.22 per barrel, down 21 cents, or 0.3 per cent, from their last close while US West Texas Intermediate (WTI) crude futures were at $71.03 a barrel, down 28 cents, or 0.4 per cent, from their last settlement.
KARNATAKA ASSEMBLY ELECTION OUTCOME
A day after the Karnataka Assembly election results threw up a fractured mandate, the Janata Dal (Secular) has alleged that Bharatiya Janata Party (BJP) is offering its MLAs Rs 1-billion each to abstain from voting during the floor test so that the BJP could prove a majority in the House and form the next government.
On Tuesday, the BJP had emerged as the single largest party in Karnataka with 104 seats, even as it fell short of the majority mark of 112. The Congress stood second with 78 seats and former prime minister H D Deve Gowda’s Janata Dal (Secular) third with 37 seats.
GLOBAL MARKETS
Asian markets fell in early trade on Wednesday after Pyongyang called off talks with Seoul, throwing a major US-North Korean summit into question, and a spike in the US 10-year Treasury yield to a seven-year high knocked sentiment on Wall Street.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.1 per cent. South Korea's KOSPI was 0.4 per cent lower and Japan's Nikkei was down 0.3 per cent.
(with Reuters inputs)
Asian markets fell in early trade on Wednesday after Pyongyang called off talks with Seoul, throwing a major US-North Korean summit into question, and a spike in the US 10-year Treasury yield to a seven-year high knocked sentiment on Wall Street.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.1 per cent. South Korea's KOSPI was 0.4 per cent lower and Japan's Nikkei was down 0.3 per cent.
(with Reuters inputs)
4:02 PM
MARKET COMMENT Jayant Manglik, President, Religare Broking
The Indian equity benchmark indices ended Wednesday’s session on a weak note, led by muted global cues and weak domestic sentiments. The Nifty index fell by 61 points or 0.6% to close at 10,741. The broader markets outperformed, with BSE Smallcap reporting marginal gains. The sectoral indices ended on a mix note. Realty, FMCG & IT ended the session with healthy gains, while Oil & Gas & Banks were the top losers. Amongst the global markets, most of the Asian indices ended lower, while European markets were trading flat to marginally in the green.
With lack of any fresh positive triggers globally and on the domestic bourses, we expect the markets to consolidate in the near term. Corporate earnings, global developments, behaviour of crude oil prices and movement of INR vs USD will dictate the market trend in the coming sessions. Stock specific volatility will remain high. Investors should continue to focus on quality stocks on dips
3:41 PM
Nifty PSU Bank index ends 3.05% lower. Top losers:
| COMPANY | LATEST | PREV CLOSE | LOSS() | LOSS(%) |
| SYNDICATE BANK | 43.95 | 50.20 | -6.25 | -12.45 |
| PUNJAB NATL.BANK | 75.60 | 85.95 | -10.35 | -12.04 |
| BANK OF BARODA | 132.05 | 139.65 | -7.60 | -5.44 |
| ALLAHABAD BANK | 38.95 | 40.35 | -1.40 | -3.47 |
| ORIENTAL BANK | 78.90 | 81.70 | -2.80 | -3.43 |
3:41 PM
Nifty FMCG index gains nearly 2%: Top gainers in the pack
| COMPANY | LATEST | PREV CLOSE | GAIN() | GAIN(%) | VOLUME |
|---|---|---|---|---|---|
| HIND. UNILEVER | 1574.10 | 1515.50 | 58.60 | 3.87 | 2420398 |
| P & G HYGIENE | 9396.55 | 9131.20 | 265.35 | 2.91 | 7029 |
| JUBILANT FOOD. | 2457.25 | 2400.45 | 56.80 | 2.37 | 812235 |
| COLGATE-PALM. | 1178.20 | 1151.50 | 26.70 | 2.32 | 981591 |
| MARICO | 318.20 | 312.35 | 5.85 | 1.87 | 3139526 |
3:39 PM
PNB falls 12% on poor Q4 results
3:38 PM
Sectoral Trend
3:35 PM
BSE Sensex: gainers and losers of the day
3:32 PM
Market at close
The S&P BSE Sensex ended at 35,388, down 156 points while the broader Nifty50 index settled at 10,741, down 61 points.
3:27 PM
Shares of Jyothy Laboratories have moved higher by 7% to Rs 398 per share on the BSE after the company said the board has recommended issue of bonus shares in the ratio of 1:1 i.e. one bonus share for every one share held on the record date. READ MORE
Jyothy Laboratories gains 7% as board approves 1:1 bonus issue
Shares of Jyothy Laboratories have moved higher by 7% to Rs 398 per share on the BSE after the company said the board has recommended issue of bonus shares in the ratio of 1:1 i.e. one bonus share for every one share held on the record date. READ MORE
3:20 PM
RCom's insolvency jeopardises $3.7 bn deal
Shares and bonds of Reliance Communications Ltd. tumbled after an Indian tribunal ordered that the wireless carrier be placed in insolvency proceedings, jeopardizing its proposed $3.7 billion asset sale to Reliance Jio Infocomm Ltd.
The Mumbai bench of the National Company Law Tribunal on Tuesday accepted a petition from the Indian unit of network-equipment maker Ericsson AB, which is seeking to recover 11.6 billion rupees ($170 million) in unpaid dues from the telco controlled by billionaire Anil Ambani. READ MORE
3:10 PM
Rupee bounces back from 15-month low of 68.11 a dollar on RBI intervention
The rupee recovered smartly on Wednesday from the 15-month low reached a day before, as the Reserve Bank of India (RBI) stepped in with heavy dollar sales.
Besides, trade data for April, released after market hours on Tuesday, showed that non-oil imports fell and exports made a robust recovery, despite rising global crude oil prices. READ MORE
3:00 PM
FMCG shares in focus; HUL hits new high, ITC up 2% post Q4 results
Shares of fast moving consumer goods (FMCG) companies were trading higher with Nifty FMCG and the S&P BSE FMCG index gaining 2% in otherwise weak market.
Hindustan Unilever (HUL), Britannia Industries and Colgate-Palmolive (India) hit their respective new highs on the BSE. READ MORE
2:50 PM
ITC fourth-quarter profit rises 10%; beats estimates
India's biggest cigarette maker ITC posted a better-than-expected quarterly profit on Wednesday, helped by a fall in excise duty.
Profit for the quarter ended March 31 came in at Rs 29.33 billion ($432.44 million) from Rs 26.69 billion reported last year, the company, which also makes biscuits and noodles under the Sunfeast brand, said.
Earnings Impact
Earnings Impact
2:38 PM
Edelweiss on Tata Steel
The NCLT has approved Tata Steel’s (TSL) Resolution Plan (RP) for Bhushan Steel (BSL). While certain uncertainties remain, particularly w.r.t. lenders’ share in the equity, we believe the deal is better than what Street had estimated earlier: 1) EV/t pegged at USD1,060/t compared to our ~USD1,225/t initial estimate; 2) no additional equity infusion of INR90bn as previously estimated; and 3) financial creditors to release pledge on promoters’ shares (36.2% of BSL’s equity).
On the valuation front, assuming BSL’s steady-state EBITDA/t of INR11,500 and 95% capacity utilisation, TSL is likely to trade at 5.6x FY20E EBITDA, similar to the current level. Maintain ‘BUY’ with target price of Rs 903
The NCLT has approved Tata Steel’s (TSL) Resolution Plan (RP) for Bhushan Steel (BSL). While certain uncertainties remain, particularly w.r.t. lenders’ share in the equity, we believe the deal is better than what Street had estimated earlier: 1) EV/t pegged at USD1,060/t compared to our ~USD1,225/t initial estimate; 2) no additional equity infusion of INR90bn as previously estimated; and 3) financial creditors to release pledge on promoters’ shares (36.2% of BSL’s equity).
On the valuation front, assuming BSL’s steady-state EBITDA/t of INR11,500 and 95% capacity utilisation, TSL is likely to trade at 5.6x FY20E EBITDA, similar to the current level. Maintain ‘BUY’ with target price of Rs 903
2:37 PM
Sector watch: Air conditioners
The air-conditioner industry has witnessed several headwinds during FY18, led by GST transition and the change in energy efficiency ratings. Additionally, the summer of 2018 started on a weak note, despite IMD predicting a harsh summer. Consumer offtake has thus been weak, as evident in Lloyd (Havells) and Blue Star’s Room Air Conditioner (RAC) volume growth in 4QFY18. However, value growth (19% for Blue Star) was boosted by a richer mix (inverter share rising and rating change in Jan-18) and a commodity-led price hike of 3-4%. Nevertheless, we stick to our longer term constructive view on RAC volume growth, which will drive up value growth even higher in future.
Meanwhile, Voltas is down ~10% over the last month as the street is expecting a weak 4QFY18 show. However, given Blue Star’s show, Voltas can post double digit value growth (despite possibly muted volumes). The mix improvement is possibly being ignored by Voltas’ sellers. This throws open an opportunity to buy Voltas on dips. At 25x Mar-20E EPS, our target price of Rs 710 offers an entry point
2:17 PM
Volume Toppers
| COMPANY | PRICE() | CHG() | CHG(%) | VOLUME |
|---|---|---|---|---|
| SH.RENUKA SUGAR | 15.50 | 0.10 | 0.65 | 25136271 |
| REL. COMM. | 10.30 | -2.15 | -17.27 | 19593299 |
| PUNJAB NATL.BANK | 76.00 | -10.00 | -11.63 | 8166188 |
| SUZLON ENERGY | 9.08 | 0.30 | 3.42 | 4516688 |
| JP ASSOCIATES | 17.05 | 0.00 | 0.00 |
2990465 |
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First Published: May 16 2018 | 3:30 PM IST
