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

3:48 PM

Nifty Realty index cracks 3.29%. Top losers:

COMPANY	LATEST	PREV CLOSE	LOSS( )	LOSS(%)
INDBULL.REALEST.	185.20	205.70	-20.50	-9.97
H D I L	26.25	28.30	-2.05	-7.24
UNITECH	4.40	4.60	-0.20	-4.35
BRIGADE ENTERPR.	240.85	251.25	-10.40	-4.14
GODREJ PROPERT.	747.55	776.90	-29.35	-3.78

3:45 PM

Nifty PSU Bank index ends 2.66% up. Top gainers:

COMPANY	LATEST	PREV CLOSE	GAIN( )	GAIN(%)
BANK OF INDIA	97.95	93.45	4.50	4.82
PUNJAB NATL.BANK	78.15	74.75	3.40	4.55
UNION BANK (I)	86.95	83.25	3.70	4.44
CANARA BANK	245.65	235.70	9.95	4.22
SYNDICATE BANK	44.55	43.30	1.25	2.89

3:40 PM

Nifty sectoral performers of the day

3:37 PM

BSE Sensex: SBI, ICICI Bank among top gainers, Dr. Reddy top loser of the day

3:32 PM

Market at close

 

The S&P BSE Sensex ended at 34,616, down 232 points while the broader Nifty50 index settled at 10,517, down 80 points.

3:20 PM

Midcap, Smallcap shares under pressure; 111 stocks hit 52-week low

Shares of midcap and smallcap companies were under pressure with 111 stocks hitting their respective 52-week lows as these indices have fallen more than 1% on Monday.

Adani Power, Ajanta Pharma, Castrol India, CRISIL, Federal Bank, Glenmark Pharmaceuticals, IDFC Bank, LIC Housing Finance and Vakrangee from the midcap index hit 52-week lows today. READ MORE
 

3:19 PM

Emkay Global on Untratech Cement - Century Textiles deal

There could be synergies from: a) common procurement of raw material (RM), b) brand building as UTCEM’s brand commands a premium of Rs10-15/bag over CTIL in most markets and c) reduction in overheads - marketing, finance etc. Ultratech (UTCEM) expects the cost of acquired assets to be almost similar to UTCEM within one year of the acquisition.

In the near term, we are cautious on the cement sector due to fight for capacity share and deterioration in pricing power. UTCEM remains one of our preferred picks in the sector. We retain ACCUMULATE rating with a target price of Rs4,279 

3:03 PM

D-Mart falls 11% in two days on promoter R K Damani upto 1% stake sale plan

Shares of Avenue Supermarts - the operators of retail chain D-Mart, have fallen 6% to Rs 1,338 per share, extending their 5% drop on the BSE on Friday after the company announced that promoter R K Damani would pare his stake to comply with the shareholding norms.
 

D-Mart lost Rs 93.21 billion market-cap in past two days from Rs 933.10 billion on Thursday, May 17, 2018 to Rs 839.89 billion at 12:26 pm; the BSE data shows. READ MORE
 

2:49 PM

Amara Raja Batteries slips 8% post Q4 results

Shares of Amara Raja Batteries have declined 8% to Rs 760 per share, extending their 5% fall on Friday on the BSE after the company reported a lower than expected 10.7% growth in standalone net profit at Rs 1.1 billion in March quarter (Q4FY18). Analysts on an average had expected profit of Rs 1.26 billion for the quarter. READ MORE
 

2:45 PM

Market check

Index	Current	Pt. Change	% Change
S&P BSE SENSEX	34,638.77	-209.53	-0.60
S&P BSE SENSEX 50	11,015.52	-75.32	-0.68
S&P BSE SENSEX Next 50	31,911.39	-529.43	-1.63
S&P BSE 100	10,812.50	-89.40	-0.82
S&P BSE Bharat 22 Index	3,504.74	+10.84	+0.31

2:43 PM

ICRA on GDP forecast

The domestic GDP growth rate is expected to improve to 7.4% in Q4 FY2018 from 7.2% in Q3 FY2018, exceeding the implicit forecast of 7.1% embedded in the Central Statistics Office’s (CSO’s) Second Advance Estimate of National Income for 2017-18.

As per ICRA, the growth of the Indian gross value added (GVA) at basic prices in year-on-year (YoY) terms is likely to record a considerable recovery to 7.3% in Q4 FY2018 from 6.7% in Q3 FY2018, thereby rebounding above 7.0% after a gap of five quarters. This revival in Q4 FY2018, relative to Q3 FY2018, is expected to be broad-based, supported by an uptick in industry (to +7.7% from +6.8%), agriculture, forestry and fishing (to +4.5% from +4.1%), and services (to +7.8% from +7.7%)

2:41 PM

Centrum on Vardhman Textiles Limited (VTL)

At the CMP, VTL trades at 9.4x its FY20E EPS. Post the capex in the fabric division, the processing capacity would increase from 140 million metres (mm) to 180 mm, which is likely to come on stream by Mar’19. With ramp up in utilization, the share of fabric division is likely to increase from the current level of 35% (of sales), thereby aiding operational performance. We maintain our Accumulate rating and value the stock at 11x FY20E EPS giving a target price of Rs1,440.

2:19 PM

Equirus Securities on Lupin

On a relatively high US base in FY18 which includes one-off sales from gMethergene and gTamiflu and the impending warning letter at Goa and Indore plants, we expect Lupin’s US business to decline in FY19, further pressurizing EBITDA. Key launches – gRanexa, gLevothyroxin and gMinocycline – are all back- ended and unlikely to compensate. We cut our FY19/20 estimates by 2%/10% and maintain Reduce with a Mar’19 target price of Rs. 759, valuing the stock at 22x P/E.

2:17 PM

TOP SENSEX LOSERS

COMPANY	LATEST	CHG(RS)	CHG(%)	WEIGHT IN INDEX (%)
WIPRO	265.75	-3.70	-1.37	1.52
HERO MOTOCORP	3503.30	-58.45	-1.64	1.42
BAJAJ AUTO	2725.30	-52.20	-1.88	1.50
H D F C	1821.00	-36.25	-1.95	7.92
NTPC	163.00	-3.35	-2.01	1.15
CIPLA	522.90	-11.05	-2.07	1.34
TATA STEEL	576.55	-14.95	-2.53	0.71
TATA MOTORS	297.10	-8.15	-2.67	2.99
SUN PHARMA.INDS.	450.60	-14.10	-3.03	3.30
DR REDDY'S LABS	1897.25	-80.80	-4.08	1.56

2:09 PM

INTERVIEW OF THE DAY Risk-reward is unfavourable for investing at current levels: Gautam Chhaochharia of UBS

How do you see the markets play out for the rest of 2018?

 

Our end-2018 Nifty base, upside and downside scenarios of 10,500,  11,900 and 8,800 (respectively) imply unattractive risk-reward from current levels for rest of the year. Karnataka assembly election results may add to expectations of a Modi win in 2019. Our discussions with investors suggest that they presume Narendra Modi will win 2019 national elections. Market's recent performance and valuation multiples also suggest that this is priced in. Any opinion poll in the next few months would drive market sentiment. Towards end-2018, results of three big state elections will also be a key

READ THE FULL TEXT HERE

 

2:06 PM

SPECIAL REPORT Midcap, Smallcap shares under pressure; 111 stocks hit 52-week low

Shares of midcap and smallcap companies were under pressure with 111 stocks hitting their respective 52-week lows as these indices have fallen more than 1% on Monday. Adani Power, Ajanta Pharma, Castrol India, CRISIL, Federal Bank, Glenmark Pharmaceuticals, IDFC Bank, LIC Housing Finance and Vakrangee from the midcap index hit 52-week lows today READ MORE

Photo: Shutterstock.com

2:04 PM

COMMENT Nomura on RBI policy

In our base case (55% probability), we expect the Reserve Bank of India (RBI) to leave the policy rate unchanged but change its stance from ‘neutral’ to ‘withdrawal of accommodation’ on 6 June, followed by 25bp rate hike in each of August and October. June remains a close call; we assign a 40% probability to the RBI pre-emptively hiking by 25bp in June, followed by another 25bp hike in August

2:00 PM

Market Check

 

S&P BSE Sensex	34,685.82		-0.47%
Nifty 50	10,533.20		-0.60%
S&P BSE 200	4,562.46		-0.75%
Nifty 500	9,127.30		-0.89%
S&P BSE Mid-Cap	15,700.12		-1.23%
S&P BSE Small-Cap	16,984.66		-1.97%

1:46 PM

Century Textiles falls 12% on demerger of cement biz into UltraTech Cement

Shares of Century Textiles have declined 12% to Rs 935 per share, also their 52-week low on the BSE in intra-day trade, after the company said its board approved demerger of cement biz into UltraTech Cement through a share-swap deal. READ MORE
 

1:30 PM

Ashok Leyland extends fall on concerns of volume growth

Shares of Ashok Leyland have declined 8% to Rs 136, extending their 4% fall on the BSE on Friday, on concerns of truck volume growth in current fiscal on account of a partial overloading ban relaxation in Uttar Pradesh (UP) from last month.
 

In past two weeks, Ashok Leyland has underperformed the market by falling 18% as compared to 1.2% decline in the S&P BSE Sensex. The stock hit a record high of Rs 168 on May 8, 2018 in intra-day trade. READ MORE

1:15 PM

Dividend yield hits 10-year low of 1.1%; equity payouts down 3% in 2017-18

Dividends of listed companies which have announced their results are lagging behind the rally in their stock prices in the last one year. As a result, the dividend yield has now hit a 10-year low of 1.1 per cent against 1.44 per cent at the end of 2016-17 and 1.5 per cent two years ago.

 

This is the first time in the past three years when the dividend payout of listed companies has failed to keep pace with the movement in their share prices. READ MORE
 

1:03 PM

Equirus on Navneet Education

 

FY18 growth was affected by one-offs such as delayed text-book launches, higher paper prices and INR appreciation. We expect growth to return from FY19 onwards on higher-standard syllabus changes in both Gujarat and Maharashtra boards and a strong stationery order pipeline for FY19. We roll over to Sep’19 target price of Rs 160 (from target price of Rs 162 earlier) set at a 19x Sep’19 EPS of Rs 8.3.

12:47 PM

What's the true value of a stock?

What's common to Hyundai, Johnson & Johnson, Samsung and Patanjali? All of them are big players in their respective sectors. All are unlisted in India. The lack of listing is frustrating.

 

It eliminates the Peter Lynch type of investment where a consumer buys both the brand and the company. For example, a consumer may compare equivalent Hyundai and Maruti models before buying a car. A Lynch follower would like to buy shares in the company from which she bought the car. READ MORE

12:35 PM

Ahmedabad-based cryptocurrency firm may challenge RBI circular in SC

Ahmedabad-based crypto firm Kali Digital Ecosystems may approach the Supreme Court to bring forward its next hearing on the Reserve Bank of India’s (RBI’s) circular prohibiting banks from dealing with cryptocurrencies.

 

This is because the central bank has asked all the lenders to wind up dealings by July 6. The hearing is slated for July 20. Alternatively, the company is also exploring a strategy of going to the RBI to put off its diktat to lenders unless the apex court comes out with its order. READ MORE

12:24 PM

MUTUAL FUNDS How you should bet on FMCG funds to tap into the last defensive sector

If you look at the trailing returns of sector funds belonging to the fast-moving consumer goods (FMCG) sector, they are remarkably attractive (see table). Turn to the year-wise performance and they are equally eye-catching: These funds have given positive returns every year except 2008. With the information technology and pharma sectors faltering in recent times, FMCG remains the last defensive in which investors can seek refuge when the markets turn turbulent READ MORE

12:10 PM

Indostar Capital Finance lists at 5% premium over issue price

Indostar Capital Finance has been listed at Rs 600, a 5% premium against its issue price of Rs 572 on the National Stock Exchange (NSE) and the BSE (Bombay Stock Exchange).
 

At 10:01 am; the stock was trading at Rs 596, a 4% higher against its issue price. It touched high of Rs 606 and a low of Rs 594 so far. A combined 5.85 million shares changed hands on the counter on the BSE and NSE. READ MORE
 

12:02 PM

IDBI Capital on Amara Raja Batteries

We believe Amara Raja holds durable competitive advantages over peers, with strong brand, technical expertise (via parent JCI – global brand) and its lower cost structure (compared to its peers). We expect margins to improve in FY19 (despite weak Q4FY18 margins) on price hikes and cost improvement measures taken by the company. The company foresees opportunities in the energy storage and electric vehicles space. We maintain our BUY rating on the stock with a revised target price of Rs955 (Earlier Rs986).

12:01 PM

Markets at noon

 

S&P BSE Sensex	34,712.63		-0.39%
Nifty 50	10,546.15		-0.47%
S&P BSE 200	4,567.65		-0.64%
Nifty 500	9,136.60		-0.79%
S&P BSE Mid-Cap	15,707.34		-1.18%
S&P BSE Small-Cap	17,011.15		-1.82%

11:51 AM

Edelweiss on Bajaj Finserv

In Q4FY18, Bajaj Finserv’s lending business (BFL) posted a strong performance and general insurance (BAGIC) sustained momentum. BFL clocked yet another robust performance—AUM (consolidated) jumped ~40% and PAT grew >60% YoY. Qualitatively, BAGIC reported a steady quarter—combined ratio at 93.4% (lowest among peers). However, PAT missed marginally on lower investment income.

Life insurance’s (BALIC) operating metrics (individual growth, persistency) continued to improve; sustainability is key. EV of INR118bn missed estimate on negative investment variance and higher cost overruns—key monitorables. While we are enthused by Q4FY18 performance, we perceive limited upside due to: 1) BFL’s steep valuations (>5x FY20E P/BV, post equity raising) pricing in near-term growth potential; 2) BAGIC’s 25x FY20E EPS valuation; and 3) BALIC’s valuation at 1.9x P/EV. Hence, maintain ‘HOLD’

11:50 AM

HDFC Securities on JBM Auto

We believe, JBM Auto's core sheet metal business (body-in-white and chassis) will continue to deliver strong earing growth helped by: 1) Accelerated growth in PV's segment, 2) Increasing revenue from Ford, Tata Motors, M&M, RE, HMSI and VECV, 3) benefits of oplev. Also, strong order book of tooling division business will boost margin and profitability.

Moreover, proposed amalgamation of its subsidiary JBMAS and JV JBMMA into a single entity will be synergetic and EPS accretive. We reckon 35% PAT CAGR over FY18-FY20E; fuelled by improving operating leverage, richer product mix and acquisition of new clients. We value stock at Rs. 560 (18x FY20E EPS) and maintain BUY