Telecom, oil & gas stocks gain

Key benchmark indices held firm in mid-morning trade. At 11:25 IST, the barometer index, the S&P BSE Sensex, was up 211.83 points or 0.67% at 31,803.86. The Nifty 50 index was up 76.85 points or 0.78% at 9,965.55. Oil & gas stocks edged higher. Telecom stocks rose. Positive Asian stocks boosted sentiment on the domestic bourses.

Domestic stocks edged higher in early trade on positive Asian stocks. Key benchmark indices extended early gains and hit fresh intraday high in morning trade.

The S&P BSE Mid-Cap index was up 0.92%. The S&P BSE Small-Cap index was up 1.17%. Both these indices outperformed the Sensex.

The broad market depicted strength. There were more than three gainers against every loser on BSE. 1,743 shares rose and 575 shares fell. A total of 86 shares were unchanged.

Overseas, Asian stocks followed their US counterparts higher after a slew of data and comments from Federal Reserve officials helped ratchet up bets that the US economy is strong enough to withstand higher interest rates. China and South Korea markets remain closed.

US stock-market indexes posted solid gains and closed at all-time highs yesterday, 5 October 2017 fueled by gains in technology stocks including Netflix, Microsoft and Amazon.com. After a House vote, the Senate approved a budget bill yesterday, 5 October 2017. Republicans passed tax cuts through what is known as budget reconciliation, which requires just a simple majority in the Senate. Republicans currently control the Senate with 52 seats.

Meanwhile, economic data released yesterday, 5 October 2017 pointed to underlying strength in the economy despite weather-related disruptions, with the trade deficit narrowing in August and jobless claims falling more than expected last week. The US trade deficit dropped 2.7% in August to $42.4 billion from $43.6 billion in July. Separately, initial jobless claims, a tool to measure US layoffs, fell by 12,000 to 260,000 at the end of September. The number of people already collecting unemployment benefits, known as continuing claims, fell slightly to 1.94 million.

Back home, oil & gas stocks edged higher. Among shares of oil exploration and production (E&P) companies Reliance Industries (up 1%), ONGC (up 0.67%) and Oil India (up 0.26%) rose.

Among PSU OMCs, Indian Oil Corporation (up 2.11%), HPCL (up 0.52%) and BPCL (up 0.36%) gained.

Among gas utility stocks GAIL (India) (up 3.59%), Indraprastha Gas (up 0.41%), Gujarat State Petronet (up 0.26%) and Gujarat Gas (up 0.1%) rose.

Telecom stocks rose. Bharti Airtel (up 0.74%), Idea Cellular (up 0.41%), MTNL (up 1.03%) and Reliance Communications (up 1.46%) gained. Tata Teleservices (Maharashtra) (down 2%) fell.

Shares of Bharti Infratel rose 0.09%. Bharti Infratel is a provider of tower and related infrastructure and is a unit of Bharti Airtel.

Future Retail rose 2.49% after the company said that its board approved the acquisition of entire equity share capital of Hypercity Retail (India) (HRIL) from its existing shareholders (the sellers) for part cash and part share consideration aggregating up to Rs 655 crore. The announcement was made after market hours yesterday, 5 October 2017.

Accordingly, the board of directors has also approved to allot upto 93.10 lakh equity shares of Rs 2 each fully paid up, collectively to the sellers (in proportion to their existing shareholding in HRIL) at a premium of Rs 535 per equity share on a preferential basis, aggregating to Rs 500 crore and discharge part of the consideration by way of cash upto an amount of Rs 155 crore. Consequent to acquisition, HRIL will become a wholly-owned subsidiary of Future Retail.

Jubilant FoodWorks rose 4.11% to Rs 1,542.75 on reports a foreign brokerage upgraded its rating on the stock to 'overweight' from 'equalweight' and hiked its target price to Rs 1,780 from Rs 900.

According to reports, the brokerage said that Jubilant FoodWorks channel checks show still-favorable demand trends with same store sales growth (SSSG) to offset cost inflation. Combination of demand growth, moderate cost inflation, stringent cost control, and favorable base could drive earnings. Same store sales growth is expected to be 8%, 10% and 12% for FY 2018, FY 2019 and FY 2020 respectively.

The brokerage expects margin to expand by 610 basis points over FY 2017-2020. The brokerage hiked earnings per share (EPS) estimates by 19%, 28% and 28% for FY 2018, FY 2019 and FY 2020 respectively. The brokerage issued bull case target price of Rs 2,500 on strong same store sales growth over FY 2018-2020 and revenue CAGR of 30%.

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