Sensex up 241 points, Nifty fails to hold 10,700; IT stocks correct on rupee gain

28 May 2018

Market Update: Benchmark indices closed higher for third consecutive session, following sharp fall in crude oil prices and recovery in rupee.

The 30-share BSE Sensex rose 240.61 points to 35,165.48 and the 50-share NSE Nifty gained 83.50 points at 10,688.70.

BPCL, HPCL, GAIL, Sun Pharma, Lupin, Indiabulls Housing Finance, L&T, Maruti and SBI gained 2-6 percent.

Tech Mahindra plunged 4 percent despite strong earnings. TCS, HCL Technologies and Infosys were down 1-2 percent.

Just Dial rallied 20 percent.

OBC, Jet Airways, GVK Power, PNB, GNA Axles and Subros rose up to 8 percent while PC Jeweller, Power Grid and IFCI fell up to 7 percent.

Earnings: Veto Switchgears has reported 21.6 percent growth in its Q4 net profit at Rs 7.1 crore against Rs 5.8 crore.

Revenue of the company was up 2.8 percent at Rs 70.4 crore versus Rs 68.5 crore.

EBITDA or the operating profit was up 46.6 percent at Rs 10.9 crore and margin was up at 15.5 percent.

Manpasand Beverages in focus: The management in its clarification note said everything related to financial results announcement and the timing of this event is purely coincidental and has no direct correlation. The board meeting has been postponed and the new date will be announced shortly.

"This is just a minor hiccup and doesn't represent any long term business impact. Manpasand Beverages has always focussed on maintaining a sustained business growth. We still have a long way to go to achieve our high ambitions and we are well on our way. We hope for the continued support of our shareholders and stakeholders in this process," it added.

The share price is locked at 20 percent lower circuit.

Buzzing: Auto air conditioning manufacturing company? Subros has reported healthy earnings for the quarter ended March 2018 as profit more than doubled to Rs 18.6 crore compared to Rs 9.1 crore in same period last year.

Revenue from operations during the quarter increased sharply 34.4 percent to Rs 552.2 crore from Rs 411 crore in corresponding period last fiscal.

EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 22.8 percent to Rs 63.7 crore but margin contracted 110 basis points to 11.5 percent compared to year-ago.

Earnings Reaction: GSS Infotech has posted a profit at Rs 4.1 crore for the quarter ended March 2018 against loss of Rs 6 crore in corresponding period last fiscal.

Revenue from operations grew by 3.6 percent year-on-year to Rs 35.4 crore while EBITDA profit stood at Rs 2.9 crore against EBITDA loss of Rs 2.4 crore YoY.

Earnings: Country's largest power generation company has reported a 41 percent growth year-on-year in profit at Rs 2,926 crore for the quarter ended March 2018.

Profit in corresponding period last fiscal stood at Rs 2,079.4 crore, the company said.

Revenue from operations grew by 13.1 percent year-on-year to Rs 23,100 crore from Rs 20,417 crore while EBITDA (earnings before interest, tax, depreciation and amortisation) increased 8.2 percent to Rs 5,910 crore with margin contraction of 120 basis points YoY.

Market Update: The market is trading at day's high, with the Sensex rising around 300 points, backed by infra, banking & financials, pharma and oil retailers.

All sectoral indices are in the green barring Nifty IT that fell 2 percent due to recovery in the rupee. TCS, Infosys, Tech Mahindra and HCL Technologies are down 1-4 percent.

Nifty Midcap index continued to trade higher with more than a percent gain on strong market breadth.

The 30-share BSE Sensex rose 298.02 points to 35,222.89 and the 50-share NSE Nifty gained 99.40 points at 10,704.60.

Buzzing: HBL Power Systems' March quarter profit fell 57.1 percent to Rs 4.6 crore from Rs 10.7 crore in year-ago on weak operational performance and slow revenue growth.

Revenue from operations grew by 3.8 percent to Rs 414.5 crore while EBITDA (earnings before interest, tax, depreciation and amortisation) dropped 23.7 percent year-on-year to Rs 21.9 crore and margin fell 190 basis points to 5.3 percent YoY.

Results Reaction: Vascon Engineers share price rallied sharply after its March quarter profit more than doubled to Rs 5.9 crore from Rs 2.6 crore in year-ago period.

Revenue from operations grew by 64.1 percent to Rs 106 crore from Rs 64.5 crore while EBITDA loss narrowed to Rs 2.7 crore from Rs 9.9 crore YoY.

Buzzing: SpiceJet is locked at 20 percent upper circuit following correction in oil prices and after brokerage house Stewart & Mackertich Research initiated coverage on the airline with a strong Buy rating.

The brokerage house has set a target of Rs 154 on the stock, which implies an upside of over 50 percent compared to closing price of May 25, 2018.

The brokerage house said that demand in aviation space is currently outpacing the supply and this trend is likely to stay the next few years.

“The capacity addition will not be able to keep up pace with the passenger growth as there will be lags in developing the infrastructures. We expect the industry to grow at double digits backed by rising disposable income, dual income earing households, expanding middle income group, strong growth in tourism,” the research firm said in a report.

Therefore, a combination of the factors mentioned above, along with other macro and micro factors makes it confident of the fact that the airline could reap benefits from the industry dynamics. This shall be backed by their leadership in PLF, colossal order for fuel-efficient aircraft, GST cut on MRO (maintenance, repair and overhaul), among others.

Earnings Reaction : Burnpur Cement share price is locked at 5 percent upper circuit after the company narrowed its losses for the March quarter to Rs 3.9 crore from Rs 23.3 crore in same period last year.

Revenue shot up significantly to Rs 18.6 crore from Rs 3.5 crore on year-on-year basis.

NESCO in focus: East India Securities has initiated coverage with Buy rating on NESCO and set a target price at Rs 745.

The company is a 79-year old company which started as New Standard Engineering Company - an engineering workshop.

"As luck would have it, a huge 70 acre land parcel acquired in 1960 in Goregaon, for setting up a manufacturing unit, has now become the crown jewel of the company. As Bombay became Mumbai, NESCO started tapping opportunity to sweat the land bank and is all set to replicate premier business districts like BKC in Mumbai & DLF Cybercity in Gurgaon," the research house said.

Currently, NESCO has 0.63 mn sq ft of Exhibition & Convention and 0.78 m n sq ft of leased IT Park - which will be expanded to 1.87 mn sq ft by December 2018. NESCO has started harnessing the business opportunities surrounding its rental & exhibition business by getting into hospitality services viz. Food Courts, Catering and day care centres. Next in the pipeline is Fine Dining, Resto Bars and Hotel in the next few years.

East India Securities believes that the revenue potential of NESCO's land bank and allied businesses will create immense value for the shareholders.

Buzzing: Capacit’e Infraprojects share price rallied nearly 4 percent after Edelweiss Securities has initiated coverage with Buy rating on the stock and target price of Rs 397.

Capacit'e has etched a name for itself as a quality contractor in the buildings space since its inception in August 2012; today, it is working with almost all major real estate developers in the country.

"We believe it is in a sweet spot, due to: (1) RERA driven consolidation in the realty space; (2) improving work profile; (3) ability to bag repeat orders; and (4) better balance sheet (negative net debt) & leaner working capital cycle (around 75 days) versus peers," Edelweiss said.

The research house expects robust order book (book-to-bill at 4.3x) and likely diversification into public sector space to translate into 31 percent EPS CAGR over FY18-20, along with improvement in return ratios.

Buzzing: Shares of Torrent Pharmaceuticals added 3.8 percent intraday as company issues commercial paper worth Rs 300 crore on May 25, 2018

A meeting of the board of directors will be held on May 30, 2018, to consider and approve the audited financial results for the year ended March 31, 2018.

The board would also consider the recommendation of final dividend for the year ended March 31, 2018.

Market Update: The market continued to trade near day's high, with the Nifty reclaiming 10,700 levels on strong support from banks, FMCG, infra, pharma and oil retailers stocks.

The Sensex is up around 250 points while the Nifty Midcap index continues to outperform frontlines, rising over a percent.

The Nifty IT is the only loser among sectoral indices, falling 2 percent on appreciation in the rupee while Sun Pharma retains its top position in the buying list among Nifty50 stocks, rising 7 percent following March quarter earnings.

Earnings: Astra Microwave share price gained nearly a percent despite dismal performance in March quarter earnings.

Profit during the quarter fell by 23.5 percent year-on-year to Rs 29.7 crore on weak operational performance.

Revenue from operations increased 5.8 percent to Rs 169.2 crore from Rs 160 crore in same period last year.

EBITDA (earnings before interest, tax, depreciation and amortisation) slipped 18.7 percent to Rs 43.9 crore and margin contracted 790 basis points to 25.9 percent in Q4.

Buzzing: Indian Hotels share price gained 5 percent after global brokerage firm HSBC retained its Buy rating on the stock with increased target price to Rs 165 (from Rs 155).

The research house expects 2019 growth to be better than 2018. "Occupancy is already near record-high levels in major cities."

Rating Downgrade: Jet Airways trimmed gains a bit after ICRA downgraded the long term rating (assigned to long term loans and non-convertible debentures) to BB+ (negative outlook) from BBB- (negative outlook).

It also downgraded short term rating to A4+ from A3.

"The downward revision considers weakened financial performance of the Company, primarily arising out of increased jet fuel prices which could not be passed on to the customers due to weak pricing power caused by excess competition," CARE said.

Market Update: The market is trading at day's high, with the Nifty inching towards 10,700 levels following sharp correction in crude oil prices and appreciation in the rupee.

The Sensex is up over 250 points, backed by banking & financials, oil retailers, pharma and FMCG stocks. However, the consistent selling pressure in technology stocks capped market gains.

L&T share gained 2 percent ahead of March quarter earnings due later in the day. According to Reuters poll estimates, profit is seen falling 9% but revenue may grow nearly 12 percent and EBITDA is likely to grow 17.5 percent compared to year-ago.

Earnings Estimates: Engineering and construction major Larsen & Toubro is likely to report profit at Rs 2,994.4 crore for the quarter ended March 2018, degrowth of 9.4 percent compared to Rs 3,305.6 crore in year-ago.

According to Reuters poll estimates, revenue from operations may grow 11.61 percent year-on-year to Rs 41,104.6 crore from Rs 36,828 crore in same period last year.

EBITDA (earnings before interest, tax, depreciation and amortisation) is expected to increase 17.47 percent to Rs 5,029.3 crore and margin may expand 46 basis points to 12.23 percent compared to corresponding quarter last fiscal.

Glenmark in focus: Glenmark Pharmaceuticals announced the presentation of data from two assets in its immuno-oncology portfolio at the 2018 Annual Meeting of the American Society of Clinical Oncology (ASCO).

These presentations include preclinical and translational data on GBR 1302, a HER2xCD3 bispecific antibody, and a Trials in Progress (TIP) poster on GBR 1342, a CD38xCD3 bispecific antibody, the company said.

GBR 1302 is Glenmark’s lead immuno-oncology candidate, currently in a first-in-human trial to determine maximum tolerated dose (MTD) in an all-comers population of patients with a variety of HER2 positive cancers. This Phase 1 trial is being expanded to explore higher doses of GBR1302 and to examine potential clinical benefit of a once-weekly dosing regimen. Enrollment for the GBR 1302 clinical trial is currently ongoing in the US and Germany.

Earnings Reaction: WABCO India has reported healthy growth of 55.8 percent year-on-year in profit at Rs 77.2 crore for the quarter ended March 2018.

Profit in same quarter last year stood at Rs 49.6 crore, the company said in its filing.

Revenue from operations grew by 36.1 percent to Rs 785 crore compared to Rs 577 crore in year-ago.

EBITDA (earnings before interest, tax, depreciation and amortisation) increased 44.6 percent to Rs 112.2 crore and margin expanded 90 basis points to 14.3 percent compared to same period last year.

Market Update: The market continued to trade strong for the third consecutive day today, with the Sensex rising more than 150 points. Steep fall in crude oil prices and recovery in the rupee from 18-month low boosted investors sentiment.

The 30-share BSE Sensex gained 174.47 points at 35,099.34 and the 50-share NSE Nifty rose 64.70 points to 10,669.90.

The broader markets outperformed frontliners, with the Nifty Midcap index rising over a percent while all sectoral indices remain in the green barring IT that lost 2%.

About three shares advanced for every share falling on the BSE.

Sun Pharma retains its top position in the buying list among Nifty50 stocks, rising 7 percent after March quarter earnings.

Buzzing : Bafna Pharma informed exchanges that pursuant to the audit conducted by Medicines and Healthcare products Regulatory Agency (MHRA), the facility has got renewal approval as per the guidelines of European Good Manufacturing Practices (EUGMP).

Crude Update: Crude oil futures fell 2.73 percent to Rs 4,485 per barrel, in line with a weak trend overseas as speculators cut bets.

Crude oil for delivery in July was trading lower by Rs 126, or 2.73 percent, at Rs 4,485 per barrel with a business volume of 153 lots at the Multi Commodity Exchange (MCX).

Also, oil prices for June delivery were trading lower by Rs 125, or 2.72 percent, at Rs 4,472 per barrel with a business volume of 3,214 lots.

Analysts said a steep fall in crude oil futures is mostly in tune with a weak trend in global market as the market eyed an increase in output from the world's three top crude producers, Russia, the US and Saudi Arabia, and profit-booking by speculators.

Meanwhile, West Texas Intermediate was down USD 1.65 or 2.43 percent, at USD 66.23 per barrel, while global benchmark Brent was down USD 1.44, or 1.88 per cent, at USD 75 a barrel. reports PTI.

Buzzing: Manpasand Beverages was locked in 20 percent lower circuit as investors reacted to two corporate developments—resignation of its auditor and Board meeting on May 30 being cancelled.

The company on Monday informed the NSE that a Board meeting, scheduled on May 30, 2018, which was supposed to consider results as well as dividend issue, was cancelled.

Additionally, the company also told BSE on Sunday that its auditor Deloitte Haskins and Sells had resigned from the firm with immediate effect. It subsequently appointed M/s Mehra Goel and Co as the auditor of the firm.

Dr Reddy's Laboratories files lawsuit in US District Court: Shares of Dr Reddy's Laboratories rose 1.3 percent as company filed lawsuit in the United States District Court.

The company’s wholly-owned subsidiary Promius Pharma LLC has filed a lawsuit for patent infringement in the United States District Court for Eastern District of Texas against Perrigo UK FINCO Limited Partnership, Perrigo Israel Pharmaceuticals and Taro Pharmaceuticals Inc, in response to two paragraph-IV notice letters received for its twice daily topical spray Sernivo product.

Promius anticipates this lawsuit will trigger a 30 month stay of FDA approval of Perrigo's and Taro's ANDAs.

Market Update: Benchmark indices rallied further, continuing uptrend for the third consecutive day following steep fall in crude oil prices and recovery in the rupee.

The Sensex is up 200 points and the Nifty is marching towards 10,700 levels while the Nifty Midcap outperforms frontliners, rising nearly a percent.

Nifty Pharma index hogs limelight, rising 3 percent driven by Sun Pharma that jumped 8 percent following March quarter earnings.

Nifty Bank index gains more than 250 points while the IT index falls over 1.5 percent on appreciation in the rupee.

Manpasand Beverages is locked at 20 percent upper circuit after its statutory Auditor Deloitte Haskins & Sells resigns last week.

Drug Approval: Zydus Cadila has received the final approval from the USFDA to market Nystatin Ointment USP, 100,000 units per gram.

It is used as an adjunct to treat fungal skin infections and will be manufactured at the group's Topical manufacturing facility at Ahmedabad.

The group also received the final approval to market Omeprazoleand Sodium Bicarbonate Capsules, 20 mg/1100 mg and 40 mg/1100 mg. is used to treat It certain stomach and esophagus problems (such as acid reflux, ulcers).

It will be manufactured at the group's formulations manufacturing facility at Moraiya, Ahmedabad.

L&T in focus: Water & effluent treatment business of L&T Construction has bagged orders valued Rs 5,704 crore.

"Two major turnkey orders have been secured from the Narmada Valley Development Authority, government of Madhya Pradesh, for the execution of Indira Sagar Project - Parwati Phases I & II and Kalisindh Phase I Micro Lift irrigation schemes. These are repeat orders from NVDA," the company said in its filing.

Rupee Update: The rupee strengthened by 39 paise to 67.39 against the dollar at the interbank forex market today on fresh selling of the greenback by exporters and banks.

Dealers said dollar's weakness against some other currencies overseas, on cooling global crude prices, and early gains in domestic equity markets supported the rupee.

On Friday, the rupee had clocked its biggest single-session rally since March 14, 2017, surging by a whopping 56 paise to close at 67.78 against the US dollar.

Market Update: The market extended opening gains, with the Sensex reclaiming 35,000 levels following sharp fall in oil prices and recovery in the rupee.

The 30-share BSE Sensex rose 172.37 points to 35,097.24 and the 50-share NSE Nifty gained 63.40 points at 10,668.60 while the broader markets also traded in line with frontliners.

All sectoral indices are in the green barring IT index that lost nearly a percent following appreciation in rupee.

Oil retailers IOC, BPCL and HPCL gained 5-7 percent after crude corrected to $75 from the 2018 high of $80.50 a barrel

Sun Pharma is the biggest gainer among Nifty50 stocks, rising nearly 7 percent after March quarter earnings.

About three shares advanced for every share falling on the BSE.

IPOs: The IPO lane seems to get busier as three dozen companies have lined up initial share sale plans worth Rs 35,000 crore in the coming months, largely to fund their expansion projects and working capital requirement.

These include six state-run entities - Indian Renewable Energy Development Agency, Rail Vikas Nigam, IRCON International, RITES, Garden Reach Shipbuilders and Engineers and Mazagon Dock -- as the government intends to unlock the real value of such PSUs and bring in greater accountability.

Of these three dozen firms, most of these companies plan to utilise initial public offer (IPO) proceeds for business expansion as well as working capital requirements, as per the draft papers filed with the Securities and Exchange Board of India.

RBI CFO: National Securities Depository Limited (NSDL) executive Sudha Balakrishnan has been appointed the first chief financial officer (CFO) of the Reserve Bank of India (RBI) effective May 15, according to a news report.

This is the biggest organisational change since Urjit Patel took over as RBI Governor in September 2016.

Balakrishnan, a chartered accountant, was until recently a vice-president at the NSDL, India’s first and largest depository. She will be the 12th executive director at RBI, and will serve a three-year term.

RBI has been on the look out for a CFO since May 2017 when it first advertised for the post. A foreign bank executive was reportedly selected for the post, but declined to join due to differences in remuneration.

In October 2017, RBI again advertised for the CFO's position and after a lengthy process selected Balakrishnan.

Market Opening: Benchmark indices started off trade on a positive note on Monday, following sharp correction in oil prices and recovery in rupee.

The 30-share BSE Sensex gained 107.70 points at 35,032.57 and the 50-share NSE Nifty rose 44.50 points to 10,649.70.

Bank of Baroda, IOC, HPCL, BPCL and Sun Pharma jumped up to 7 percent while Tech Mahindra and Vedanta are under pressure.

Nifty Midcap index gained 110 points.

Jet Airways, InterGlobe Aviation, Excel Industries, Indian Bank, Waterbase, Meghmani Organics, RCF, FACT, Balrampur Chini, Praj Industries, Triveni Engineering, Nalco, NBCC, Divis Labs, Dixon Tech and Himatsingka Seide rallied up to 6 percent.

PC Jeweller and IDBI Bank are under pressure.

Rupee Update: The Indian rupee traded 27 paise higher at 67.49 against the US dollar in early trade after opening at 67.52.

Rupee after weakening for six consecutive weeks rose against the US dollar following ease in global crude prices and suspected RBI intervention at higher levels, as per Motilal Oswal report.

In the past few sessions RBI has been actively intervening to curb the volatility for the rupee. RBI data released, on Friday, showed reserves dropped by USD 2.6 billion for the week ended May 26 and in this month reserves have dropped by USD 11 billion. Currently India’s FX reserves stands at USD 415 billion after hitting a high of USD 424 billion earlier this year.

This week, on the domestic front, market participants will be keeping an eye on fiscal deficit and GDP numbers to gauge a view for the rupee. For the day, the USD-INR pair is expected to quote in the range of 67.30 and 67.80, it added.

Crude Oil Update: Oil prices dropped on signs that output from the three top crude producers, Russia, the United States and Saudi Arabia, would climb to meet concerns about supply amid strong demand.

Brent crude futures were at $74.93 per barrel, down 2.04 percent, from their last close.

US West Texas Intermediate (WTI) crude futures were at $66.22 a barrel, down 2.45 percent, from their last settlement.

Brent and WTI have respectively fallen by 5.5 percent and 7.5 percent from peaks reached earlier in May, reports CNBC.

Market Pre-opening: Benchmark indices traded higher in pre-opening despite mixed Asian cues.

The 30-share BSE Sensex was up 229.67 points at 35,154.54 and the 50-share NSE Nifty gained 44.20 points at 10,649.40.

Market Outlook: Dinesh Rohira,Founder & CEO, 5nance.com

Going ahead into a week with F&O expiry and overhang pressure from rising crude oil price along with weakening rupee, the index is likely to witness volatile trade setup in the coming session.

With index retracing upward in the last two sessions, it might continue on upward momentum for a couple of sessions.

However, a profit-booking regime at higher level can't be ruled out, and thus we advise to trade with caution and strict stoploss. We maintain a rangebound trade on weekly basis with 10,750 levels on upside and 10,510 levels on the downside.