News and Impact
Expect market to open on a flat note on account of global cues. Bargain hunting may not be a ruled out after the Indian market declined 4% post budget. TCS reported inline with expected Q1 EBIT margin, Finance Minister statement today on Budget in the Parliament, US Fed Chairman Testimony ahead of any change of interest rates, US President Donald Trump reiterated US-India trade issue and concern of IndiGo corporate governance.
US market ended flat (Recovered half percent from intra-day low) with choppy trade ahead of key testimony this week from Federal Reserve Chair Jerome Powell as observers assess prospects for easing following conflicting signals on the global economy.
European market declined half percent ahead of important events like US minutes of meeting today, ECB minutes on Thursday. Asian markets open on a flat note. Hong Kong, Nikkei and China Index are trading flat. SGX Nifty is up by 2 points. US Future gained 0.1%
Nifty declined 400 points in the last three trading sessions. Quarterly results, monsoon progress and global market trend will be drive the market trend. Traders buy on dips in the market only for a small bounce after the recent sharp decline
TCS reported dollar revenue at Rs5485mn below the street expectation. Net profit reported Rs81.30bn including other income Rs16.80. EBIT margin inline 24.2% while street expectation 25.1%
Sector watch – Tech, PSU Banks, Pharma and Metal
Brokers Radar – TCS – CLSA neutral TGT 2570, UBS TGT 2400, Morgan Stanley TGT 1980. Goldman Sachs – IndiGo TGT 1830, Spice JET TGT 161.
Stock BUY – SBI, Reliance and Infosys
Momentum play – India Bull Housing, Yes Bank
Nifty continued its decline for 3rd session post Budget as disappointment with the nation’s budget spending pledges exacerbated a regional selloff. Sentiment have been dampen on account of uncertainty over tax on foreign institutional investors along with slowdown economy after the CEO of Bajaj Finance warned of slowing consumer credit demand. Nifty fell 50-DMA and touched intra-day low of 100-DMA.
UPL, SRF, Aarti Industries stocks declined yesterday after BASF issues profit warning - German based, BASF on Monday has cut its full-year forecast and also warned that profits may fall by as much as 47% in the second quarter of the calendar year 2019, citing the US-China trade war and weakness in the automobile sector, as per media reports – Any decline on UPL will be buying opportunity – Positive on UPL and SRF
US President Donald Trump on Tuesday reiterated his complaints against India, saying New Delhi's tariffs on US products were unacceptable but not giving other details about any possible action amid the two nations' ongoing trade row – Dont expect any major impact in the market.
Watch on REC – Company’s board meeting will be held today on bond issue worth Rs750bn
Dr Reddy’s US FDA issue on its Andhra Pradesh Plant – Negative for Dr Reddy
Government is expected to raise debt worth $10bn from interest-soft international markets, moving out of the high-interest rate domestic market - Positive for the economy. Expects Yield will be cool down and PSU Banks will be beneficiary - Positive for SBI, BoB.
Watch on ADAG stocks - SBI ordered investigation; lender suspects diversion of funds, ever greening of loans, preferential transactions worth Rs5.5k cr among Anil Ambani Companies –Negative for ADAG stocks – Avoid.
The govt says the surcharge has been increased for all super-rich individuals, non-corporate entities regardless of whether they are domestic investors or foreigner, FPI, FII. The govt says foreign investors have an option to convert into a corporate entity to avail of lower rates available. – Surcharge on Super rich and FPI, FII may impact negative in the market.
The government has identified the biggest energy companies such as ONGC, IOC, NTPC and GAIL as probable candidates for cutting its direct holding to below 51 per cent – Positive for ONGC, NTPC, IOC and GAIL if the government reduce stake to below 51%.
The government might roll back the hike in Customs duty on ACs and TVs as pressure from companies grows – according by media news – Positive for Voltas and Havells’ if roll back customs on AC and TV.
Interglobe Aviation promoter Rakesh Gangwal has alleged “questionable” related-party transactions between the IndiGo’s parent and private entities of the other promoter Rahul Bhatia in a letter to the SEBI. Apart from the related party transactions, Gangwal also alleged that various governance norms and laws are not being adhered to which will lead to “unfortunate events”. – Expect IndiGo will be volatile today.
Bajaj Finance - The company acquired 2.5 million new customers during June quarter. New loans booked during the first quarter was at 7.3 million versus 5.6 million YoY. AUMs at 1.29 lakh crore versus Rs 91,287 crore YoY, up 41 percent - Strong fundamental and solid AUM growth will be positive for Bajaj Auto.
Delta Corp reported better than expected EBITDA margin. We have a buy rating on the stock. Both Net profit and EBITDA inline with expectation but revenue lower than expectation. Company reported revenues at Rs,865m in 1QFY20 (estimates Rs1,925mn). EBITDA margins expanded by 72 bps to 36.3% YoY (estimates.34.9%). 1QFY20. EBIDTA stood at Rs677m (up 1.6% YoY - estimates. Rs672m). Adjusted PAT stood came-in flat at Rs425m in 1QFY20 (in line with our estimates) YoY growth of 3%.
PNB CEO sees recovery of Rs18bn from Bhushan Power: The fraud in Bhushan Power & Steel loanswill not impact Punjab National Bank’s profit and loss account - CNBC-TV18 reports - Avoid on PNB, We are positive on BoB and SBI.
Manpasand Beverage Auditors Mehra & Goal resigned - Negative for Manpasand
CERC grants NTPC permit for inter-state trading in Electricity - Positive for NTPC, Strong balance sheet and attractive dividend yield.
Sintex Prefeb pays interest on Rs2.5bn bonds on due date - News is positive on Sintex Prefeb - Avoid on the stock on account of poor fundamental.
Quess Corp to consider preference share allotment worth Rs510mn on July 12 - Avoid on the stock
Jet Airways Founder Grounded as India Probes $2.6 Billion Fraud - An Indian court denied Naresh Goyal, founder of India’s once largest airline by market value, permission to fly overseas after the government told the court a $2.6 billion fraud investigation involving Jet Airways India is underway.
REC nosedived 16% after the index maintenance sub-committee of NSE Indexes decided to exclude the stock from the Nifty CPSE Index of state-run companies. Exclusion of the stock from the index will be effective from July 15 - Stock declined sharply, no change in its fundamental - Buy (Not our coverage)
Government aims to raise up to 150 billion rupees ($2.18 billion) by reducing its stake in 18 state firms to 75%, a finance ministry official involved in the matter said on Monday, as it looks to boost revenues and rein in the fiscal deficit - Positive for economy - It may reduce fiscal burden.
Hero Motocorp to offer to buy Reliance General Insurance this month - Reliance Capital may seek Rs55b-60b rupees for selling entire stake in Reliance General Insurance - CNBC - Avoid to buy ADAG stocks on account of poor fundamental.
Surya Roshni wins orders worth Rs58.39cr for LED batteries from EESL - Positive for Surya Roshni
Max Financial says report on Axis Bank buying life insurance unit stake incorrect - We are positive on Axis Bank
Larsen & Toubro to merge L&T Shipbuilding with itself – L&T board has given approval for the Scheme of Amalgamation of LTSB with the company - We are positive on L&T, Strong fundamental and balance sheet.
Zee Media - MD Ashok Venkatramani resigns, Rating agency CARE revises term loan rating to BBB from A - Negative for Zee Media - Negative for Zee Media
Dilip Buildcon gets completion certificate for UP Projects, Dilip entitled for Rs370mn bonus for Lucknow - Positive for Dilip Buildcon
ABB India approval for sale of solar inverter business, to sell inverter business to Italy's Fimer SPA - Positive for ABB - to sell on core business. However, rich valuation is a concern - Avoid
Lupin introduces Imatinib Mesylate tablets - Positive for Lupin, current valuation is attractive - Buy
Dividends – Bayer Cropscience, Coromandel International, Rites and UltraTech, Board Meetings – REC and Himachal Futuristic, AGM - Indian Overseas Bank.