Markets gained ground on Monday taking cues from their Asian counterparts. The S&P BSE Sensex and the Nifty50 moved up around 0.5 per cent each in intraday deals led by gains in public sector banks (PSBs).
Asian shares edged higher on Monday as a bounce in US stock futures soothed sentiment even as US President Donald Trump kept up his twitter war with China over trade just a couple of days before Chinese President Xi Jinping gives a keynote speech.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.1 per cent. Japan’s Nikkei wavered either side of flat, and South Korea edged ahead by 0.2 per cent.
Back home, upcoming quarterly results season, along with the release of macroeconomic data points on industrial production (IIP) and inflation, are expected to determine the trajectory of key equity indices this week.
According to market observers, global cues such as concerns over trade protectionist measures between the US and China, combined with the direction of foreign fund flows and crude oil prices, will also impact investors’ risk-taking appetite.
(with Reuters inputs)
CATCH ALL THE LIVE UPDATES
MORGAN STANLEY ON ECONOMIC DATA
At a headline level, export growth will likely decline by 5.6% YoY in March, though this is largely on account of a significant base effect (export growth was 27% YoY in March-17). Hence, we expect underlying export growth to have held up reasonably well.
Trade growth in other economies has held up well, and we do not expect a significant impact on trade credit and export growth due to the move to ban letters of undertaking and letters of comfort. Industrial production should accelerate to 8.7%, even as sequential momentum is likely to have moderated slightly in February. We expect CPI inflation to moderate further in March due to deceleration in food prices before favourable base effects lift it higher in subsequent months.The corporate logo of financial firm Morgan Stanley is pictured on the company’s world headquarters in New York, New York January 20, 2015. REUTERS
10:45 AMNEW LISTING Lemon Tree Hotels makes decent debut; lists 10% premium over issue priceLemon Tree Hotels has made a decent debut by listing at Rs 61.60, a 10% premium against issue price of Rs 56 on the BSE and the National Stock Exchange (NSE). At 10:01 am; the stock was trading 9% higher at Rs 60.80 on the BSE. Post listing, it hit an intra-day of Rs 65. A combined 1.23 million shares changed hands on the counter on the BSE and NSE so far. READ MORE
MARKET COMMENT BY NOMURA RBI increases limit on FPI investments in bondsGiven that the increase in FPI limits was largely expected, the announcement should broadly be neutral to markets, in our view. Assuming the utilisation of these limits remain at current levels (i.e. 93% for general category investors and 82% for long-term investors, as of end-March), this increase in limits should help FPIs absorb ~12% of net supply for the year FY19 (Figure 2). In FY18, FPIs absorbed 15% of net supply. We believe the increase in FPI limits is a step in the right direction, helping to resolve supply/demand issues for bonds.
10:30 AMBond yields expected to remain benign, may dip to 7% in the near termThe first Government of India bond auction for 2018-19 sailed through on Friday, and indications are investor appetite is likely to remain healthy. Bond yields are expected to remain benign, and could slide close to 7 per cent in the near term. READ MORE
10:15 AML&T Technology gains on multi-million dollar contract from ExxonMobilL&T Technology Services (LTTS) was up 4% to Rs 1,270 on the BSE in early morning trade after the company announced that it has signed an agreement with ExxonMobil Exploration Company, valued at more than $20 million (Rs 1,297 million) in the first year.LTTS’ geospatial and digital expertise will enable rapid conversion of historical Geoscience content into the digital domain by leveraging sophisticated automation utilities. READ MORE
S&P BSE Sensex 33,756.11 0.38% Nifty 50 10,371.25 0.38% S&P BSE 200 4,572.40 0.47% Nifty 500 9,205.75 0.37% S&P BSE Mid-Cap 16,666.01 0.42% S&P BSE Small-Cap 18,003.09 0.67%
09:55 AMForeign bond investors get access to $16 bn of additional debt in IndiaIndia’s central bank raised limits for overseas investors that could lure $16 billion of additional funds into the nation’s sovereign as well as corporate debt. Foreign investors will be allowed to increase holdings of a sovereign, state and corporate bonds by Rs 1.04 trillion ($16 billion) in the fiscal year to March 2019. Overseas investors can boost holding of central government securities by 0.5 percentage points a year, taking the limit to 5.5 per cent in fiscal year to March 2019 and to 6 per cent in the following 12 month period, the Reserve Bank of India said in a statement on Friday. The central bank set 9 per cent as the limit for foreign investors to own in debt sold by Indian companies. READ MORE
Nifty 500 top gainers
COMPANY LATEST PREV CLOSE GAIN() GAIN(%) VOLUME JBF INDS. 95.30 90.80 4.50 4.96 47988 KESORAM INDS. 130.75 124.70 6.05 4.85 308826 BALLARPUR INDS. 15.35 14.65 0.70 4.78 522871 HINDALCO INDS. 221.85 214.00 7.85 3.67 2861054 BOMBAY RAYON 38.80 37.55 1.25 3.33 19376
BSE 500 top gainers
COMPANY PRICE() CHG() CHG(%) VOLUME JBF INDS. 95.30 4.50 4.96 7964 KESORAM INDS. 130.55 5.85 4.69 33051 HINDALCO INDS. 222.80 8.70 4.06 169045 MAX INDIA 86.75 3.15 3.77 3575 PAGE INDUSTRIES 24780.00 853.35 3.57 6
RESULT PREVIEW Auto and Auto Ancillaries
Revenue growth is expected to be robust, primarily due to strong rural demand, higher realizations and a low base. Most automotive manufacturers are likely to report double-digit revenue growth, with best performers being Escorts (+45% yoy), TVS Motor (+41% yoy), Bajaj Auto (+38% yoy), Ashok Leyland (+36% yoy) and Eicher Motors (+33% yoy). Even Auto Ancillary companies would report strong revenue performance, with top performers being Motherson Sumi (+40% yoy) and Exide Industries (+29% yoy). Overall, we forecast revenue for companies under our coverage to grow by 20% yoy in Q4FY18.
FY19 would be a good year for companies that are direct or indirect beneficiaries of the impending revival in rural demand, such as Hero MotoCorp, M&M and Escorts. Tata Motors is our dark horse, as currency worries subside and momentum in volume growth persists. Among the Auto Ancillaries, we like Motherson Sumi and Exide Industries.
(Source: Emkay Global)
MARKET COMMENT: Teena Virmani, Vice President – Research at Kotak Securities
Markets witnessed gains during last week as RBI kept status quo on interest rates and also revised the CPI inflation forecast downwards. Going ahead, the focus of the markets will shift back to earnings which are likely to kick start from next week as well as future growth outlook by the various management. Earnings growth is also likely to be supported by a low base of Q4FY17. Globally, concerns over global growth owing to trade war triggered by Trump tariff threat continue to remain. Escalating trade standoff between US and China may continue to impact financial markets negatively. Monthly US jobs data is also to be eyed for clues on US monetary policy
Bank stocks gain
COMPANY LATEST CHG(RS) CHG(%) WEIGHT IN
PUNJAB NATL.BANK 104.30 2.30 2.25 1.32 KOTAK MAH. BANK 1134.40 15.30 1.37 12.22 BANK OF BARODA 152.25 1.95 1.30 2.17 YES BANK 317.85 3.65 1.16 3.39 AXIS BANK 505.50 4.80 0.96 10.52 ST BK OF INDIA 262.25 2.45 0.94 10.29
Angel Broking’s Fundamental Picks
Stocks In NewsNMDC has kept the prices of Iron Ore and Lumps unchanged Month-on-Month. Price of Lump Ore is Rs. 3000 per tons and price of Fine remained at Rs. 2660 per tons.Tesaro’s competitor Clovis’s Rubraca has won “expanded FDA approval”, arguably becoming “the safest/cleanest PARPi” compared to peers. Due to this, Tesaro tanked 5% on Friday. This could be negative for Dishman as it supplies APIs to TesaroState Bank of India: Bank has put 15 NPAs worth Rs 1,063 crore for sale.Dewan Housing Finance: Company plans to raise up to Rs 1,000 crpre via debentures on private placement basisBinani Industries: Company to move Supreme Court with Rs 7,618 cr offer.Tata Chemicals to acquire Allied Silica for Rs 123 crWipro sold 63% of its stake in Wipro Airport IT to Antariksh Softtech.The sale consideration is Rs 3.15 crore.Inox Wind won 100MW in the SECI-4 auction at a fixed price of Rs2.51/unit for 25 yearsAPSEZ doubles Dhamra Port capacity to 50 million toneNitesh Estates awarded a claim of Rs 15 crore in a land dispute.Century Plyboard unit writes off its entire investment in Indonesian subsidiary.ICICI Bank: Some board directors are likely to meet soon to discuss the way ahead for CEO Chanda KochharDalmia Bharat’s refractories unit teams up with European company to develop and supply a range of advanced monolithic refractory material.Lemon Tree Hotels to list today. The issue price was Rs 56 per share.
(Source: Nirmal Bang report)
Sensex gainers and losers
09:18 AMMarkets at OpenAt 9:17 am, the S&P BSE Sensex was trading at 33,660, up 33 points while the broader Nifty50 index was ruling at 10,342, up 10 points
Image Source: SMC Global report
Markets at pre-open
Index Current Pt. Change % Change S&P BSE SENSEX 33,742.32 +115.35 +0.34 S&P BSE SENSEX 50 10,844.57 +40.57 +0.38 S&P BSE SENSEX Next 50 34,375.07 +79.69 +0.23 S&P BSE 100 10,792.18 +37.00 +0.34 S&P BSE Bharat 22 Index 3,551.15 +42.90 +1.22
08:55 AMInflows into Indian equity funds slowest in March as shares tumble globallyInflows into Indian equity funds in March were the smallest in 13 months as some investors sold before a tax on stock holdings took effect from April 1 and volatility returned to markets worldwide. Equity funds took in a net Rs 66.57 billion ($1 billion), the least since last February, data from the Association of Mutual Funds in India show. READ MORE
Technology: Earnings preview from Motilal Oswal ResearchGuidance for FY19 will understandably supersede the performance of 4Q, and all eyes will be on INFO come 13th April. We expect Infosys to start the year by guiding for 6-8% growth in constant currency (which will be higher in reported dollar), and are currently pegging our estimate at the higher end of that band.Traditional pain points of 1Q seasonality no longer hold for Wipro, and with weaker areas such as Healthcare and Communications having seen their bottom, there is a good reason to expect better 1Q guidance than earlier years. However, there is a risk of offset from client-specific factors like the Energy account in 3Q. We expect 1QFY19 guidance of 1-3% QoQ CC.Apart from quantitative guidance, TCS’ commentary on BFSI and margins will be crucial, as softness in both is a downside risk to current valuations.
Global trade war fears battering all equity marketsGlobal equity markets are seeing heightened volatility due to the risk of a global trade war. Benchmark indices of almost all the countries have come off since February-end when US President Donald Trump first threatened to impose sanctions on imports of steel and aluminium.Even markets such as India, despite low exposure to the US economy and their stock markets, has seen high turbulence due to the risk-off sentiment among overseas investors created by the trade war fears. READ MORE HERE
08:48 AMStreet signs: Fund managers bet on UPL, mutual fund industry, and moreThe mutual fund industry saw a sharp drop – 60 per cent month-on-month – in equity inflows in March. This has raised doubts on whether this is an aberration or a trend reversal. Sector executives are quick to point out that the low inflow tally is on account of churning of portfolios by investors ahead of long-term capital gains implementation. Meanwhile, some believe investor flows could be tapering amid spike in the volatility. However, high gross sales figure suggest that the drop in inflows could be just an aberration. Gross inflows stood at Rs 391 billion in March compared to Rs 323 billion in February. And large part of Rs 361-billion redemptions in March are due to technical factors, say executives. If they are to be believed, the party continues for now. READ MORE
08:47 AMTECHNICAL INSIGHTS: Focus on outperformers
With index boundaries defined for the near term (10100-10600), we expect momentum to continue in broader markets as seen in last week’s trade. Notably, NBFCs & Housing Finance companies have been the prime movers of the recent comeback. As our detailed technical study reveals, select stocks from the given space have bottomed out, and have relatively outperformed. With wild swings back to haunt global markets, corrections would be the new normal for 2018. This note throws light on those stocks (LIC Housing Finance, L&T FH, Chola Finance & Bajaj Finserve) with structural strength that, given the volatile environment, could present ample buying opportunities on every decline.
MARKET COMMENT Amar Ambani, head of Research at IIFLGains of around 2% last week for the main Indian indices have kept sentiment in Indian equities market positive. TCS and Reliance led the gains as eight of the Top 10 stocks added close to Rs.86,000 crore to their market mcap. The outlook is a quiet start. US indices closed lower and Asian markets are a bit jittery. Trade worries remain a concern. China has threatened a ‘fierce counter attack’ to what it describes as US ‘waywardness.’
The earnings season kicks in this week with Infosys announcing its numbers on Friday. Bond yields will be in focus after the RBI on Friday announced an increase in limits for foreign portfolio investors to buy Indian government and corporate bonds. Lemon Tree Hotels will list on the bourses today.
08:45 AMEarnings expectations from JM Financial
In 3QFY18, earnings surprised positively with c.14%YoY (ex-SBI, TTMT and vs. estimate of 9%) jump for companies in our coverage. For 4QFY18E, we expect 12%YoY growth in earnings for Nifty and 16% (ex-SBI, TTMT) for 160 of our wider coverage primarily led by margin expansion. Sectors leading the growth are metals, NBFC, and energy and the sectors likely to disappoint are telecom, utilities, and media.
Q4FY18 Results Preview
The positive impact of demand recovery and a favorable base effect in Q3FY18, when the profit growth of our coverage universe stood at 14.6% yoy, is seen fading in Q4FY18 despite continued strength in demand conditions. This is largely because of higher tax burden, up 33% yoy. Improved demand is seen sustaining owing to better rural demand and recovery in global trade scenario.
Further evidence of recovery is seen in the recovery of credit demand and higher government spending. Growth in non-food credit has recovered to 11% by mid-Mar’18 from 5% a year back. The Consumer space, including Staples and Discretionary (like Autos) are expected to witness a fairly healthy performance. The Agriculture side of the rural sector is still facing headwinds in the form of weak farm produce realizations and feeble net cash flows, resulting in weak demand for agri-inputs. There also appears to be a modest pick-up in the Capital Goods sector, largely propelled by government spending.business-standard