MARKETS ON MONDAY: Sensex ends 232 pts lower; Realty, pharma, metals drag
This was the fifth consecutive session of losses for the markets. PSU bank stocks, however, bucked the trend
 "Stock market")
9:39 AM
Nomura on Britannia
Britannia is trading at 43.7x FY20F P/E (EPS: Rs 126.9). The stock trades at 2SD of its long-term valuation average. While we believe that a steady 21% growth trajectory over the next three years should be easily attainable, we also believe valuations are now in their fair zone. Therefore, we retain our Neutral rating, with a higher target price of Rs 5,539, and value the stock at 42x 1QFY21F earnings. Our target multiple is around the mid-point of the 40-45x multiple band assigned to other food companies. We prefer ITC for its cheap valuations.
9:37 AM
Kotak Securities on DB Corp
Our earnings outlook for the company is changed drastically as several of our assumptions (advertising environment, print order growth, newsprint prices) face significant challenges. We cut FY19/20 estimates by ~28% each, and now expect a significantly lower earnings growth over the period. Valuations are unlikely to support even after significant declines, unless earnings downgrades halt. We cut our target valuation to 11X FY20E PER, or Rs 262. Downgrade to REDUCE
9:37 AM
Emkay Global on Voltas
Due to unseasonal rains in various regions, we believe that the room air-conditioner (RAC) industry could report lower growth rates of 5-10% in FY19 v/s 20% as anticipated earlier. Therefore, we cut FY19/20E EPS estimates by 36%/22% on lower revenue and margin assumptions. We recommend REDUCE with a Target Price of Rs543 (SoTP)
Due to unseasonal rains in various regions, we believe that the room air-conditioner (RAC) industry could report lower growth rates of 5-10% in FY19 v/s 20% as anticipated earlier. Therefore, we cut FY19/20E EPS estimates by 36%/22% on lower revenue and margin assumptions. We recommend REDUCE with a Target Price of Rs543 (SoTP)
9:36 AM
IIFL recommends KEI Industries
The company has guided for 18-20% yoy volume growth in FY19 led by addition of new capacities in LT and HT cable and strong growth in EHV and EPC segment. EHV revenue is expected to double led by rampup of capacity setup last year and strong order book. Margins expansion would be led by higher share of EHV and retail sales. The company is also increasing its presence in the affordable housing segment.
The management has also mentioned that margins in institutional sales segment has been expanding due to strong demand. We have upgraded our estimates as we expect demand from the power sector to be very strong and the company would continue to boost its retail sales through higher penetration and focus on brand improvement. We maintain our Buy rating and revised our target price to Rs.505 (earlier Rs.470)
The company has guided for 18-20% yoy volume growth in FY19 led by addition of new capacities in LT and HT cable and strong growth in EHV and EPC segment. EHV revenue is expected to double led by rampup of capacity setup last year and strong order book. Margins expansion would be led by higher share of EHV and retail sales. The company is also increasing its presence in the affordable housing segment.
The management has also mentioned that margins in institutional sales segment has been expanding due to strong demand. We have upgraded our estimates as we expect demand from the power sector to be very strong and the company would continue to boost its retail sales through higher penetration and focus on brand improvement. We maintain our Buy rating and revised our target price to Rs.505 (earlier Rs.470)
9:35 AM
MARKET COMMENT G Chokkalingam, founder and MD, Equinomics Research
In our view, what matters to the stock market at this juncture is people’s mandate in a state, not the verdict of the MLAs. After the present party came to power at the Centre, the market cap of entire BSE-listed stocks went up by more than 75% since 2014. This would mean that the market has liked the present government. Hence, it is concerned whether this state election would indicate any possible instability at the Centre after 2019 election.
The ruling party at the Centre has actually more than doubled its tally in the Karnataka state assembly – this indicates improving prospects for the ruling party for the Lok Sabha elections from this state. State governments do not decide major economic reforms. While the Karnataka people mandate has addressed the limited concern of the markets, there is no need for the markets to worry about who ultimately rules the state – actual ruling of a state is a political issue which lacks any significance for the markets. Hence, we suggest investors not to worry on the final outcome of this election.
In our view, what matters to the stock market at this juncture is people’s mandate in a state, not the verdict of the MLAs. After the present party came to power at the Centre, the market cap of entire BSE-listed stocks went up by more than 75% since 2014. This would mean that the market has liked the present government. Hence, it is concerned whether this state election would indicate any possible instability at the Centre after 2019 election.
The ruling party at the Centre has actually more than doubled its tally in the Karnataka state assembly – this indicates improving prospects for the ruling party for the Lok Sabha elections from this state. State governments do not decide major economic reforms. While the Karnataka people mandate has addressed the limited concern of the markets, there is no need for the markets to worry about who ultimately rules the state – actual ruling of a state is a political issue which lacks any significance for the markets. Hence, we suggest investors not to worry on the final outcome of this election.
9:30 AM
INTERVIEW OF THE DAY Risk-reward is unfavourable for investing at current levels: Chhaochharia
The Karnataka election outcome, crude oil prices and the rupee kept investors on the edge last week. GAUTAM CHHAOCHHARIA, head of India research, UBS Securities, tells Puneet Wadhwa that foreign investors’ concerns now revolve around the banking sector’s non-performing loans and fraud cases, inflation and rising oil prices. CLICK HERE TO READ MORE
The Karnataka election outcome, crude oil prices and the rupee kept investors on the edge last week. GAUTAM CHHAOCHHARIA, head of India research, UBS Securities, tells Puneet Wadhwa that foreign investors’ concerns now revolve around the banking sector’s non-performing loans and fraud cases, inflation and rising oil prices. CLICK HERE TO READ MORE
GAUTAM CHHAOCHHARIA
9:23 AM
Sectoral Trend
9:20 AM
BSE Sensex heatmap
9:18 AM
Market at open
At 9:16 AM, the S&P BSE Sensex was trading at 34,836, down 12 points while the broader Nifty50 was ruling at 10,597, up 1 point.
9:07 AM
Oil prices rose on Monday as markets reacted to news that China and the United States have put a looming trade war between the world’s two biggest economies “on hold”.
Crude Oil update
Oil prices rose on Monday as markets reacted to news that China and the United States have put a looming trade war between the world’s two biggest economies “on hold”.
Brent crude futures were at $79.13 per barrel, up 62 cents, or 0.8 per cent, from their last close, while US West Texas Intermediate (WTI) crude futures were at $71.83 a barrel, up 55 cents, or 0.8 per cent, from their last settlement.
9:00 AM
Markets at pre-open
(Source: BSE)
| Index | Current | Pt. Change | % Change |
| S&P BSE SENSEX | 34,768.77 | -79.53 | -0.23 |
| S&P BSE SENSEX 50 | 11,099.40 | +8.56 | +0.08 |
| S&P BSE SENSEX Next 50 | 32,354.93 | -85.89 | -0.26 |
| S&P BSE 100 | 10,903.91 | +2.01 | +0.02 |
| S&P BSE Bharat 22 Index | 3,492.75 | -1.15 | -0.03 |
(Source: BSE)
8:50 AM
Commodity picks: May 21, 2018
Mustard seed
Mustard seed is trading at Rs 3,987 per quintal at the benchmark Jaipur market. In the coming days, prices are expected to head towards Rs 4,030. Considering the robust procurement by the government, availability in free market has reduced and this would continue to support further rise in prices in the near term. READ MORE
8:47 AM
Stock picks by Devang Shah
DHFL- BUY
DHFL- BUY
CLOSE- Rs 613.70
TARGET- Rs 680
DHFL closed weekly in negative territory. It’s consolidating in a range in short term. It’s outperforming in short term. It’s trading above 40 DMA. Its weekly momentum indicators are in BUY. One can BUY with a stop loss of 585 for the target of 680 levels in short term. READ MORE
8:43 AM
The trend of all periodicities has turned down in Nifty with the weekly trend turning down after 6 weeks bringing in a lot of erosion in the stocks. The lower top formation continues to confirm a weak trend having further room for correction. The support for the week is seen at 10400 while resistance is seen at 10760. FMCG sector continues to show strength while other sectors have got in a corrective move. The bias still continues to be corrective. READ MORE
Nifty outlook from Prabhudas Lilladher for today
The trend of all periodicities has turned down in Nifty with the weekly trend turning down after 6 weeks bringing in a lot of erosion in the stocks. The lower top formation continues to confirm a weak trend having further room for correction. The support for the week is seen at 10400 while resistance is seen at 10760. FMCG sector continues to show strength while other sectors have got in a corrective move. The bias still continues to be corrective. READ MORE
8:41 AM
Markets on Friday
| S&P BSE Sensex | 34,848.30 | -0.86% | |
| Nifty 50 | 10,596.40 | -0.81% | |
| S&P BSE 200 | 4,597.10 | -1.01% | |
| Nifty 500 | 9,209.20 | -1.02% | |
| S&P BSE Mid-Cap | 15,895.68 | -1.47% | |
| S&P BSE Small-Cap | 17,326.78 | -1.62% | |
Topics :
Don't miss the most important news and views of the day. Get them on our Telegram channel
First Published: May 21 2018 | 3:30 PM IST
