F&O expiry: Sensex surges 413 points, Nifty ends at 11,570; PSU banks rally

All that happened in markets today

11:25 AM

Reliance Securities on Escorts

We reduce our tractor volume growth forecast for ESC for FY20E and FY21E. In view of expected down-cycle, we also lower our target P/E valuation multiple on ESC from 14x to 13x 1-Year forward. Moreover, recent price run-up makes the stock’s valuation higher than its fair value.Thus, we downgrade our recommendation on the stock to REDUCE from BUY with a revised Target Price of Rs760 (from Rs875 earlier)

11:21 AM

Jefferies on consumer sector

We met ~40 investors across US/Europe over last fortnight to discuss India consumer sector. Overall investors are concerned with high valuations in the space especially relative to global sector valuations. Investor preference seems to be higher for low and mid-ticket consumer discretionary segments, albeit, valuations remain a concern there as well thus limiting appetite for fresh buying. Consensus is to wait on sidelines for an opportune time to add exposure

11:20 AM

MARKET COMMENT :: Emkay Global

The sudden inversion of the US yield curve (10Y-3Mo or 10Y-1Y) yesterday, following a weak Euro area manufacturing sector data, has deepened fears of a recession in the US. Using evidences from long-term cycles, we argue that extrapolating curve inversion into a definite case of a recession in the US may be misplaced; the accompanying characters of recession are acutely absent, in our view.

Bond market fears possibly reflects our earlier worry emanating from global trade conflicts. In our base case, if the US-China trade conflict gets resolved, the narrative on the US economic data can change to the positive side. This will have implications of a stronger USD and rebound in the US rates. The unknown factor is the time it will take for the resolution to emerge

11:18 AM

NEWS ALERT | Deepak Parekh resigns as GSK Pharma chairman: TV

11:18 AM

Edelweiss is bullish on Vedanta, HIndalco

We expect cost support to LME aluminium (Al) price receding given: 1) a balanced alumina market in CY19 compared with the deficit in CY18; 2) an oversupplied global bauxite market; and 3) lower prices of thermal coal and other raw materials. In Rest of World ex-China (RoW), the average cost of production (CoP) dipped 5% to USD1,628 in February 2019 vis-a-vis Q2CY18. We continue to keep close tabs on Alunorte’s return to full capacity and China’s alumina exports. In our view, the lower alumina cost would help non-integrated players such as Vedanta improve their profit margins. Maintain ‘BUY’ on Vedanta and Hindalco

11:17 AM

SECTOR WATCH :: CEMENT

Cement prices in South were up by Rs5/bag mom in March 2019—prices in South have increased by Rs45/bag since January 2019, per our channel checks. Prices declined marginally by Rs1-11/bag in North, Central and West—thus, all-India prices were flat at Rs334/bag.

We note that after recent increase, prices in South are at Rs30-50/bag premium to other regions despite lowest plant utilizations among all regions. Higher prices will aid near-term earnings for companies with large South and West presence—ACC, Ultratech (among pan-India) and Dalmia Bharat, India Cement and Orient Cement (regional names) will gain more. We maintain our cautious stance on the sector on expensive valuations

(Source: Kotak Securities)

11:16 AM

Edelweiss on GMR Infrastructure

GMR Infrastructure (GMR) has raked in INR80bn by offloading a stake in its airport subsidiary, GMR Airports (GAL). The company intends to utilise this entire consideration to pay down debt. The deal ascribes GAL a base valuation of INR180bn, which could go up to ~INR225bn subject to the company achieving certain milestones over the next five years.

While the valuation undershoots our estimates, the deal is greatly positive for GMR as it would: a) help cut debt, particularly corporate debt worth about INR64bn; and b) simplify its corporate structure via a de-merger of the airport and non-airport businesses. We broadly maintain the valuation for the airport business, but now factor in the new shareholding structure and deleveraging, which yields our revised SoTP-based target price of Rs 24/share (Rs 23 earlier). Maintain ‘BUY’.

11:15 AM

Prabhudas Lilladher maintains BUY on Indigo

We upgrade IndiGo and SpiceJet’s FY21 EPS by 13% and 24% respectively on increase in air fares due to capacity constraints which will benefit LCC’s like Indigo and SpiceJet. Domestic passenger (pax) traffic growth slowed down for the second consecutive month to 5.6% for Feb’19. Domestic capacity addition (ASK) grew by 10.5% while the industry reported PLFs of 89%.

IndiGo, the market leader, reported pax/ASK growth of 15%/21% YoY as it further consolidated its market share to 43.6% (up 90bps MoM). SpiceJet clocked in Pax/ASK growth of 17%/25% and improved its market share by ~40bps MoM to 13.8%. We retain BUY on IndiGo and SpiceJet with a target price of Rs1,552 and Rs 123 respectively.

11:09 AM

NEWS ALERT | SC refuses to stay amalgamation of BoB, Vijay Bank, and Dena Bank: TV

11:09 AM

No. of new independent financial advisors see sharp fall in February

Independent financial advisors (IFAs), who are seen as critical for penetration of mutual funds (MFs), are showing signs of losing interest in MFs as scrapping of upfront commission and change in expense structure has raised doubts on their earning potential. READ MORE

10:56 AM

DHFL gains 11.5% on reports of Piramal acquiring majority stake in the company

10:43 AM

HCL Technologies nears all-time high; stock surges 4%

HCL Technologies shares rose 4 per cent to Rs 1,081 on the BSE in early morning trade. The stock is trading close to its all-time high of Rs 1,125 on September 25, 2018, in intra-day trade. At 10:18 am, HCL Technologies was up 3 per cent at Rs 1,073 and was the top gainer among S&P BSE Sensex and Nifty 50 index. READ MORE

10:32 AM

Godfrey Phillips India gains 2%

10:22 AM

Ashok Leyland climbs over 2%

10:12 AM

Higher overseas investor flows boost share sale activity in listed firms

The surge in overseas investor flows has boosted share sale activity by listed firms. In the last one month, equity stake sales worth nearly Rs 23,000 crore have taken place in listed companies. The jump in deal activity has come after many months of lull, providing the much-needed relief to India Inc, say investment bankers. The nature of share sales includes partial or full exits by existing investors and divestment by promoters. READ MORE