Indices recover from day's low to end flat, PSU Bank stocks gain over 1.5%

All that happened in the markets today.

10:45 AM

The Indian stockmarket and liquidity: Is the party over?

 

Since 2004, the Nifty’s trailing P/E has moved in the same direction as EPS growth. However, this trend was broken in the summer of 2014; since then the Nifty’s P/E has rocketed upwards even as earnings growth struggled to break out of single digits. 

 

We believe that rather than attributing this breakout to political developments, a more rational explanation lies in liquidity. Since mid-2014, system liquidity as measured by LAF (Liquidity Adjustment Facility), a measure of how much banks in India are borrowing from the RBI, has increased considerably. In fact, the period post August 2014 is the longest period of sustained positive LAF in India since the turn of the century. Other than liquidity, the other factor that the Nifty is sensitive to is GDP growth. 

 

In specific, healthy GDP growth and rising GDP growth helps drive Nifty returns. The ideal situation for Nifty returns is high GDP growth and high system liquidity alongside positive changes in both. However, history also shows that provided GDP growth is improving, Nifty returns are almost always positive even if system liquidity is decreasing PROVIDED the absolute level of system liquidity (as opposed to the delta in the metric) is healthy.

 

(Source: Saurabh Mukherjea, CEO, Ambit Capital)

Illustration by Ajay Mohanty

10:41 AM

Bank stocks trade weak

COMPANY	LATEST	CHG(RS)	CHG(%)	FREE FLOAT MKT CAP (RS CR)	WEIGHT IN INDEX (%)
HDFC BANK	1857.70	-2.20	-0.12	375835.93	30.31
INDUSIND BANK	1722.00	-9.00	-0.52	87854.20	6.84
KOTAK MAH. BANK	1078.85	-5.70	-0.53	135676.56	12.22
YES BANK	311.00	-2.10	-0.67	55864.96	3.39
ICICI BANK	300.40	-3.60	-1.18	193028.03	21.55
AXIS BANK	524.30	-6.50	-1.22	94180.27	10.52
BANK OF BARODA	139.40	-2.00	-1.41	13169.14	2.17
FEDERAL BANK	94.90	-1.40	-1.45	18702.42	1.39
ST BK OF INDIA	251.20	-3.70	-1.45	86735.34	10.29
PUNJAB NATL.BANK	94.90	-3.10	-3.16	8747.20	1.32

10:30 AM

ICICI Securities on Music Broadcast Limited (MBL)

We believe that with major capex (migration fees, acquisition of new licenses) over, the company is set to report robust revenue and EBITDA CAGR of 13.9% and 17%, respectively, in FY17-20E, driven by traction from new stations. The performance is expected to translate into strong RoCEs and RoEs of 21.5% and 13.8% in FY20E vs. 11.3% and 6.7%, respectively, in FY17. We initiate coverage on MBL with a BUY recommendation, valuing the stock at | 450/share.

10:28 AM

IIFL on Future Retail

Ebitda margin should benefit from operating leverage gains, GST-led productivity benefits, and turnaround of the Hypercity/loss-making Easyday formats driving 31% Ebitda Cagr over FY18-20. With store expansion capex funded by Future Enterprises, balance sheet improvement should continue, expanding ROCE from 17% in FY17 to 28% in FY20.

10:27 AM

Antique Stock Broking on ITC

ITC trades at a PER of 27x FY19E EPS and 24x FY20E EPS. The stock has traded at an average one forward PER of 30x and 29x and 26x during the last 5 and 10 years respectively. The stock is currently trading at 32% discount to the sector as against 23% and 14% discount to the sector during the last 5 and 10 years. We maintain our BUY recommendation on the stock with a target price of INR312, valuing the stock at PER 28x FY20E EPS.

10:22 AM

Commodity watch: Jeera (Image source: Geojit Financial Services)

10:12 AM

OMCs: Rising demand, profitability in fuel retailing to drive earnings

After lagging the leading indices in recent months, the shares of the three government-owned oil marketing companies or OMCs — Bharat Petroleum (BPC), Hindustan Petroleum (HPC) and Indian Oil (IOC) have started looking up. These rose by two to four per cent on Tuesday. READ MORE

10:02 AM

Market Check

 

S&P BSE Sensex	33,722.98		-0.40%
Nifty 50	10,381.70		-0.43%
S&P BSE 200	4,531.95		-0.26%
Nifty 500	9,126.70		-0.34%
S&P BSE Mid-Cap	16,270.43		0.01%
S&P BSE Small-Cap	17,607.21		0.03%

9:57 AM

PSU Banks trade weak; PNB, Canara Bank down over 3%

Shares of public sector undertaking (PSU) banks were trading lower by up to 4% on the National Stock Exchange (NSE) on Wednesday after a media report suggested that Punjab National Bank (PNB) told police that it has uncovered additional exposure of about Rs 9.42 billion in connection with a massive alleged fraud. READ MORE

9:42 AM

Yes Bank acquires 17.31% stake in Fortis Healthcare after credit default

 

Private sector Yes Bank on Tuesday said it owns over 17 per cent stake in Fortis Healthcare post invocation of pledge of equity shares after default by promoters group companies.

 

Yes Bank has acquired 89,781,906 equity shares, constituting 17.31 per cent of the paid up share capital of Fortis Healthcare Ltd.

9:33 AM

IPO WATCH Karda Constructions IPO opens on March 16, 2018

Nashik-headquartered real estate developer Karda Constructions Limited is all set to launch its maiden IPO. The IPO shall offer 43,00,000 equity shares at a price band of Rs. 175 to 180 making the issue size of around Rs. 77.40 crores (at the upper price band). The shares of the company will list on BSE and NSE. The sole lead manager to this issue is Aryaman Financial Services Limited and Registrars to the issue are Bigshare Services Private Limited.

(Source: Company release)

9:31 AM

BSE Smallcap: Mangalore Chemicals & Fertilizers, Waterbase among top gainers, Pincon Spirit top loser

9:31 AM

MARKET COMMENT: Kotak Securities

We believe that volatility may continue to remain throughout the year on concerns related to higher oil prices, impact of higher MSPs as well as impending elections in three big states, out of which two are BJP ruled. The focus would also remain on how government manages the fiscal deficit situation. Any shortfall in estimated GST collections or higher inflation is likely to have an impact on yields moving up further which would adversely impact market valuations. However, sharp earnings revival, pre-election spend, demand revival as well as infrastructure spending are likely to be positive triggers for the market.

Globally, stronger outlook for economic growth in US raises the likelihood that further gradual policy firming is on the way by US Fed while ECB and Bank of Japan may continue with their accommodative monetary policy stance for some more time now.

9:28 AM

CONTRIBUTION TO SENSEX

COMPANY	LATEST	CHG(RS)	CHG(%)	FREE FLOAT MKT CAP (RS CR)	CONTRIBUTION (POINTS)
TATA STEEL	622.40	-5.90	-0.94	17396.88	-5.73
HERO MOTOCORP	3670.00	-31.30	-0.85	34787.74	-5.89
RELIANCE INDS.	928.20	-2.40	-0.26	176731.30	-6.20
ADANI PORTS	380.05	-4.70	-1.22	23709.89	-6.21
COAL INDIA	291.35	-3.40	-1.15	40721.57	-6.23
ITC	267.90	-0.75	-0.28	261575.10	-8.73
AXIS BANK	525.30	-5.50	-1.04	73182.24	-13.27
ST BK OF INDIA	251.10	-3.80	-1.49	71541.97	-17.11
ICICI BANK	301.45	-2.55	-0.84	149832.07	-21.47
H D F C	1853.45	-9.80	-0.53	193778.42	-22.42

9:24 AM

BSE Midcap: Vakrangee top gainer, Bank of India, Canara Bank among top losers