MARKET WRAP: Sensex ends at new closing high of 37,337; ITC up 5% post Q1

The benchmark indices are trading at record high on Friday on strong quarterly results

4:06 PM

Market rundown by Vinod Nair, Head of Research, Geojit Financial Services:

 

Growth and earnings outlook is showing signs of pickup which elevated the market to a new high. On the global front, ECB kept the key rates on hold while signs of ease in trade tensions between US and EU added some confidence. Notably, mid cap also participated in the rally as worst of earnings seems to be over. However valuation remain on higher side as compared to large caps.

3:42 PM

Nifty FMCG index ends 2.37% higher. Top gainers:

COMPANY	LATEST	PREV CLOSE	GAIN( )	GAIN(%)
ITC	300.70	287.20	13.50	4.70
GODREJ INDS.	635.50	611.10	24.40	3.99
DABUR INDIA	385.25	373.30	11.95	3.20
UNITED SPIRITS	595.40	578.40	17.00	2.94
UNITED BREWERIES	1119.60	1094.80	24.80	2.27

3:38 PM

Nifty sectoral gainers of the day

3:36 PM

BSE Sensex: ITC, Tata Motors, Tata Steel among top gainers of the day, HUL top loser

3:32 PM

Market at close

 

The S&P BSE Sensex settled at a record high of 37,337, up 352 points, while the broader Nifty 50 index settled at a record of 11,278, up 111 points.

3:27 PM

RITES hits highest level since listing; stock zooms 20%

 

Shares of railways consultancy firm RITES has zoomed 20% to Rs 267, its highest level since listing on July 2, 2018. Thus far in the current week, the stock rallied 38% from Rs 194, as compared to 2.3% rise in the S&P BSE Sensex.

 

RITES, the first state-owned firm to hit the initial public offering (IPO) market in the current fiscal, was trading 44% higher against its issue price of Rs 185 a share. It touched a low of Rs 190 during intra-day deal on July 2. READ MORE

3:15 PM

KM Birla eyes US' Aleris, but he might have to climb the Trump wall first

 

Last year, the Trump administration blocked a Chinese company from buying an Ohio-based aluminum maker, Aleris, citing concerns about national security. Will President Trump and his advisers feel differently about an Indian company purchasing Aleris instead?

 

On Thursday, one of India’s biggest industrial conglomerates, the Aditya Birla Group, announced that its aluminum and copper subsidiary had struck a deal to buy Aleris for $2.6 billion, including the assumption of existing debt. READ MORE

3:01 PM

Westlife Development soars 17% on robust Q1 results

 

Westlife Development, owner of the Master Franchisee of McDonald’s restaurants in west and south India, rose 17% to Rs 408 on the BSE in the noon deal after the company reported a consolidated net profit of Rs 116 million in June quarter (Q1FY19). It had posted a net loss of Rs 27 million in the same quarter year ago.

 

Total operational revenues during the quarter under review grew 30% at Rs 3,417 million against Rs 2,625 million in the corresponding quarter of previous fiscal. READ MORE

2:45 PM

Zuckerberg faces new risks as scandal-hit Facebook nears a saturation point

 

After all the controversy Facebook Inc. has generated in recent months, it seemed almost inevitable that at some point, the social media giant would get what it had coming. A reckoning. Wednesday’s disappointing earnings report and Thursday’s historic 19 per cent stock drop appeared to be a fitting conclusion to an easy narrative.

 

But the story isn’t that simple. Yes, the privacy protections the company put in place after a series of scandals played a role in the dismal earnings. But the company’s bigger problem is that the main social network— the invention that made it a corporate behemoth—simply can’t grow much more. READ MORE

2:30 PM

Reporting intra-day trading losses could reduce your tax liability

 

The stock market has been an attractive investment option for the masses. Carrying out a one-off investment in stocks or trading in the stock market is preferred over other investments or trading options as it helps earn phenomenal returns. In fact, intra-day trading has gained much popularity of late -- not only among those who have taken this up full time, but also among small businessmen, salaried professionals, and retirees, among others. And one-off losses made in such trade do not deter them from moving on. In this article, we will discuss all about intra-day trading in stocks, their tax implications and reporting requirements. READ MORE

2:25 PM

MARKET COMMENT Lakshmi Iyer, CIO (Debt) & Head - Products, Kotak Mutual Fund on RBI policy

The August MPC decision could be a close call. The CPI for June was  lower than expected. Crude oil prices have been largely range-bound. There also seems uncertainty on how the global trade war could potentially unfold. In such a scenario, the MPC could afford to do a  'wait and watch’ at this juncture and consider more data points before a rate action.

There might not be much urgency in delivering back to back rate hikes when the policy stance is still neutral. From a market perspective, bond yields already seem to have discounted another rate hike and hence yields are already at elevated levels

2:16 PM

Steel makers uneasy over iron ore price surge as steel prices soften

 

The domestic prices of iron ore, excluding the rates prevailing in Karnataka, have jumped by 17 per cent for fines and 11 per cent for lumps up to July in the current fiscal in contrast to 5 per cent slide in steel (TMT bar) prices in the same period.

 

With the ongoing monsoon impacting construction activities and global trade war threatening to create a glut in the domestic market, the steel industry is keeping its fingers crossed on further increase in the domestic iron ore prices which may impact their margins. READ MORE

2:02 PM

Market Check

INDEX	LATEST	PREVIOUS	CHANGE	CHANGE(%)
	37256.70	36984.64	272.06	0.74
	15175.32	15059.90	115.42	0.77
	15923.99	15763.22	160.77	1.02
	16456.97	16306.02	150.95	0.93
	4361.33	4330.95	30.38	0.70

1:42 PM

Market outlook: Nifty50 index may be on course for the 11,400 level

 

The markets opened in positive territory on Thursday, with the Sensex breaching the 37,000 mark for the first time ever in early trade. On the National Stock Exchange (NSE), the Nifty50 index, too crossed its previous record high to scale a fresh high of 11,179.60 levels in intra-day trade.

 

We had stuck our neck out at the beginning of the month and said that the markets will reach a new high before the Independence Day. READ MORE

1:36 PM

INDEX WATCH

INDEX	LATEST	PREVIOUS	CHANGE	CHANGE(%)
	37255.53	36984.64	270.89	0.73
	15173.39	15059.90	113.49	0.75
	15920.95	15763.22	157.73	1.00
	16450.34	16306.02	144.32	0.89
	4361.04	4330.95	30.09	0.69

1:36 PM

Emkay Global on Colgate

At current valuation, Colgate is trading at 33x FY20E EPS (25% discount to peers). We have cut our earnings estimates marginally and expect Colgate to deliver Sales/EPS CAGR of 11%/14% over FY18-21E. We revise our Target Price (TP) to Rs1,200 (Rs1,230 earlier), valuing it at 35x June'20E EPS. Maintain HOLD

1:35 PM

HDFC Securities expects ITC to touch Rs 367

ITC’s  cigarette  biz  has  registered ~10/9% revenue CAGR in the last 10/5 years,  despite  punitive taxes. Our 9% revenue CAGR estimate over FY18-21E looks achievable owing to improving consumption dynamics and favorable base of  FY18.  Non-cigarette  businesses (esp. FMCG), are value accretive, with improving franchise. We expect ~14% revenue CAGR here over FY18-21E

Our long term  positive  stance on ITC derives from its status of being the cheapest consumer  large-cap  stock  in  India.  At  26x FY20E EPS, ITC trades at an unfair  discount of ~35% to the sector. Reiterate BUY. Our target price is Rs 367, at 32x Jun-20E EPS.

1:31 PM

Edelweiss on Quess Corp

Adjusted for a one-time non-cash charge of INR160mn, Quess Corp (Quess) reported Q1FY19 earnings largely in line with expectations. Sales/EBITDA/PAT grew 52%/36%/20%. Key highlights of Q1FY19 results are: 1) Organic sales growth of 28% YoY. 2) Sequential margin contraction took place due to seasonality in the Global Technology segment, and this is likely to normalize over the next few quarters. 3) Addition of ~5k associates in Q1 shows continued rapid growth in the general staffing business.

We reiterate our thesis that Quess is a play on all the key growth segments in the Indian business services sector. Retain ‘BUY’ with a revised target price of Rs 1,300 (INR1,315 earlier) based on ~4% reduction in our FY19/20 earnings estimates factoring in Q1FY19 numbers and seasonality pertaining to the new acquisitions.\

1:30 PM

COMMENT Morgan Stanley on banks

One of the drivers of weak performance has been newsflow around management (CEO hunt at Axis and investigation into ICICI's CEO for alleged conflict of interest). This will still move the stocks, depending on the conclusion of investigations for ICICI Bank and clarity around the new CEO at Axis. But the key variable from a longer-term perspective – especially for ICICI and SBI, given low multiples – is asset quality progression

1:15 PM

As RBI tries to revive rupee, India's forex reserves may go below $400 bn

 

India’s foreign exchange reserves may soon drop below the $400 billion mark for the first time since November as the central bank steps up action to shore up one of Asia’s worst-performing currencies.

 

Reserves have steadily declined by $21 billion from a record peak of $426 billion in mid-April, and official data on Friday may show a further slide. With the rupee set to remain under pressure in the face of an emerging-market sell-off, trade war jitters and a stronger dollar, there’s little sign the central bank will ease up on its currency intervention. READ MORE

12:58 PM

AHEAD OF EARNINGS Reliance Industries nears record high

 

Reliance Industries (RIL) was trading 2% higher at Rs 1,133 on the BSE at 12:32 pm ahead of its June quarter (Q1FY19) results today (July 27, 2018) evening. The stock was quoting close to its record high of Rs 1,138 touched on last Friday, July 20, in intra-day trade.

 

Oil to telecom major RIL is expected to report a steady performance for Q1FY19. This would be on the back of higher petrochemical volumes, expected to partly offset a softening in the refining segment. In the new-age businesses of retailing and telecom (digital services), analysts expect earnings to slow down as compared to the March quarter (Q4FY18). READ MORE

12:45 PM

Colgate-Palmolive woes deepen with market share decay

 

Shares of Colgate-Palmolive (Colgate), which were down 10.5 per cent in the past two months until Wednesday, slid another 3.6 per cent to Rs 1,083.90 on Thursday, despite the company posting better-than-expected profit for the June 2018 quarter (Q1). Investors are worried about the persistent decline in Colgate’s toothpaste market share, which may keep the stock under pressure. READ MORE

12:31 PM

Biocon rallies 10% post Q1 results

 

Shares of Biocon have rallied 10% to Rs 613 per share on the BSE after the company reported 48% growth in consolidated net profit at Rs 1.2 billion in June quarter (Q1FY19). The biopharmaceuticals company had profit of Rs 0.81 billion in the same quarter year ago.

 

The company’s revenue from operations grew 20% at Rs 11.24 billion against Rs 9.34 billion in the corresponding quarter of previous fiscal. EBITDA (earnings before interest, taxes, depreciation and amortization) margin improved to 26% from 25% during the quarter. READ MORE

12:16 PM

RESULT PREVIEW Petchem to support RIL earnings; analysts expect refining margins to soften

 

Oil to telecom major Reliance Industries (RIL) is expected to report a steady performance for the quarter ended June 30. This would be on the back of higher petrochemical volumes, expected to partly offset a softening in the refining segment.

 

In the new-age businesses of retailing and telecom (digital services), analysts expect earnings to slow down as compared to the March quarter. RIL will announce its financial performance for Q1 on Friday. READ MORE

12:02 PM

Markets at Noon

INDEX	LATEST	PREVIOUS	CHANGE	CHANGE(%)
	37264.22	36984.64	279.58	0.76
	15166.08	15059.90	106.18	0.71
	15897.26	15763.22	134.04	0.85
	16429.05	16306.02	123.03	0.75
	4360.19	4330.95	29.24	0.68

11:47 AM

Top gainers in BSE 500:

COMPANY	PRICE( )	CHG( )	CHG(%)
BIOCON	611.25	52.15	9.33
MOTIL.OSWAL.FIN.	915.00	75.90	9.05
IL&FS TRANSPORT	39.55	2.95	8.06
NAVIN FLUO.INTL.	690.25	40.95	6.31
DILIP BUILDCON	765.70	36.45	5.00

11:35 AM

Facebook's biggest one-day stock wipe-out leaves Zuckerberg $15 bn poorer

Facebook Inc Chief Executive Mark Zuckerberg's fortune took a more than $15 billion hit on Thursday, as the social media company suffered the biggest one-day wipeout in US stock market history a day after executives forecast years of lower profit margins. READ MORE

11:17 AM

Global steel output up 4.6% in H1 as strong margins tempt mills to ramp up

Global crude steel output, a gauge of economic health, rose 4.6 per cent in the first half (H1) of this year versus the same period last year, as strong margins prompted mills in major producing countries to ramp up, industry data showed on Thursday. READ MORE

11:07 AM

IDBI Capital on PVR

PVR’s Q1FY19 result was a beat to our forecast as regards EBITDA and EPS. This was mainly driven by higher growth in footfalls and advertisement revenue vs. our forecast and a YoY decline in repairs & maintenance cost. 

 

Outcome of the PIL as regards allowing outside F&B and news of risks from government interfering with pricing of F&B weighs on the valuation of PVR in the near term. We believe that in case of a court process is followed multiplex players are on a strong footing. However, the timeliness of the outcome remains uncertain. 

 

While we fine tune our EBITDA and EPS forecast for FY19/20E, given the uncertainty over the F&B issue we reduce our target EV/EBITDA multiple to 13x FY20E vs. 15x earlier. We maintain BUY with a new target price of Rs1,406

 

11:01 AM

Life insurance products with high upfront commission not the best choice

A working committee set up by the Insurance Regulatory and Development Authority of India (Irdai) is currently examining the issue of ushering in level commissions throughout the tenure of life insurance policies, instead of the current practice of offering high upfront commissions to distributors prevalent in some policies. READ MORE