MARKET WRAP: Indices slip as financials weigh; Rupee hits new low of 70.3/$

The Nifty Bank index ended lower, slipping 0.70 per cent lower weighed by Bank of Baroda and Yes Bank.

10:37 AM

Edelweiss on Prabhat Dairy

Prabhat Dairy (Prabhat) posted Q1FY19 revenue growth of 7.3% YoY led by a volume spurt of ~36% YoY. B2C sales spiked ~33% YoY, but B2B sales (~67% of sales) declined due to lower milk prices (being pass-through). EBITDA margin inched up 52bps as the benefit of ~194bps YoY gross margin expansion continues to be reinvested in branding-building and distribution network. This lifted EBIDTA just ~14% (~15% below estimate).

With management focusing on brand-building, we believe EBITDA margin is likely to be range-bound. Hence, we are cutting FY19E/20E EPS by 14%/9% and estimate EPS would grow 29% over FY18–20. Maintain “Buy” with a target price of Rs 192 at 22x FY20 EPS

10:30 AM

Sebi sets eyes on commodity index derivatives, works on guidelines

Securities and Exchange Board of India Chairman Ajay Tyagi has said in an annual report “there are plans to consider more commodity options contracts to be launched, besides working on guidelines for index products”. Sebi will have to first finalise guidelines, which, according to sources, will suggest common standards for preparing commodity indices and later there will be regulations regarding trading READ MORE

10:24 AM

COMMENT Nomura on trade data

India’s July trade data released after market close on Tuesday revealed a higher-than-expected trade deficit of USD18bn from an upwardly revised USD17.1bn in June. This widening was driven by both strong imports (led by gold and electronics) and weaker-than-expected exports (due to pharma, chemicals and oil).

 

We haven’t changed our current account deficit forecasts on the back on this. We expect the current account deficit to widen to USD76bn in FY19 (2.8% of GDP) in FY19 from USD49bn (1.9% of GDP) in FY18. Downside risks to export growth remain due to weaker global growth outlook and imports may stay elevated in the very near-term, but we expect imports to moderate in the coming quarters due to weak rupee, lower oil prices and our view of an impending domestic slowdown. However, the challenge continues to be funding as the basic BOP (current account + net FDI) is negative and portfolio flows also remain negative

10:15 AM

Bajaj group knocks out Aditya Birla from 3rd spot in m-cap battle

 

There has been a quiet change in the pecking order among the country’s top-three family-promoted business groups in terms of the market capitalisation of their listed companies. The Pune-based Rahul Bajaj group, thanks to an amazing stock market ride by Bajaj Finance and Bajaj Finserv, has grabbed third spot, pushing the Aditya Birla group down to fourth position.

 

On August 14, the market cap of the Bajaj group’s listed companies reached Rs 3.9 trillion compared to the Rs 3.02 trillion of the Aditya Birla group. READ MORE

10:00 AM

Market Check

Index	Current	Pt. Change	% Change
S&P BSE SENSEX	37,767.62	-84.38	-0.22
S&P BSE SENSEX 50	11,948.40	-16.66	-0.14
S&P BSE SENSEX Next 50	33,811.61	+2.97	+0.01
S&P BSE 100	11,686.84	-13.69	-0.12
S&P BSE Bharat 22 Index	3,602.23	+18.23	+0.51

9:50 AM

Edelweiss Securities on Sun Pharma

Sun Pharma (SUNP) reported in-line Q1FY19 numbers, despite Taro’s tepid performance, led by sales from launch of Welchol AG and lower R&D spends. However, management has guided for increase in R&D spends to 8-9% of sales versus 7% in Q1FY19 on the back of clinical trials for label expansion of Illumya. In the specialty pipeline, the company launched Yonsa and expects Illumya & Cequa to be launched in coming quarters.

Management reiterated its low double digit growth guidance for FY19; with 16% growth in Q1 on a weak base, 9M growth comes to 9%. Expect growth to taper and margins to come under pressure going forward. Maintain ‘HOLD’ with revised target price of Rs 560 (Rs 480 earlier)

9:49 AM

ICICI Securities on rupee outlook

The dollar-rupee August contract on the NSE was at 69.99 in the previous session. August contract open interest increased 8.71% in the previous day We expect the US$INR to find supports at lower levels. Utilise downsides in the pair to initiate long positions



 

9:47 AM

ICICI Securities on Grasim

Factoring better margin, we increase our FY19-FY20 EBITDA 7-10% and coupled with the recent stock price increase in Grasim’s various holdings, we increase our SoTP-based target price to Rs1,285/share (earlier Rs1,200/share), based on 8x FY20E EV/E and assuming 50% holdco discount on its various holdings on CMP basis. Post ~25% stock price correction over past one year, implied holdco discount have likely increased >70% assuming 8x one year forward EV/E for standalone entity which seems unjustified, in our view. Maintain BUY.

9:45 AM

ICICI Securities on Sun Pharma

We expect margin recovery to continue in FY19-20 with increasing revenue contribution of specialty portfolio. We remain positive on the stock considering i) ramp up in revenue from branded/specialty business in US ii) higher than industry growth in India, iii) potential to buy inorganic growth based on strong balance sheet and iv) 31% earnings CAGR over FY18-21.

9:45 AM

Q1 ANALYSIS Retail lenders spur consumer demand across industries in Q1

 

Revenue and profit growth rebounded across industries in the June 2018 quarter, thanks to the favourable base-effect and an uptick in consumer demand from a low base last financial year.

 

Consumer demand had taken a beating in the first half of 2017 calendar year due to the twin effects of demonetisation and de-stocking prior to the roll-out of the goods and services tax, beginning July 1, 2017. Private consumption-related sectors have done well during the quarter but discretionary spending (automobiles and consumer durable) had done better than non-discretionary spending. READ MORE HERE

9:30 AM

JUNE-QUARTER RESULTS Corporate India sees earnings rebound after sharp fall in March quarter

 

After a disastrous fourth quarter of 2017-18 (FY18), when corporate earnings declined by a fifth led by corporate banks, 2018-19 (FY19) has started on an optimistic note for Corporate India. The combined net profit of 2,271 companies, whose first quarter (Q1) results are available, was up 7.9 per cent year-on-year (YoY) during the April-June 2018 period, the best in past five quarters.

 

Top line growth was even better at 18.7 per cent YoY, growing at the fastest pace in at least three years. READ MORE

9:19 AM

Nifty sectoral trend

9:18 AM

BSE Sensex heatmap

9:16 AM

Market at open

 

At 9:15 AM, the S&P BSE Sensex was trading at 37,657, down 194 points while the broader Nifty50 was ruling at 11,379, down 56 points.

9:07 AM

NEWS ALERT Rupee slips to fresh low of 70.29 per US dollar