FMCG, IT lift Sensex 220 pts; Adani Ent, Adani Ports keep Nifty flat

Indian shares continued to remain volatile on Thursday as the week-long rout in Adani Group stocks persisted, erasing $100 billion in market value, while insurers fell on a budget tax proposal that would dent the appeal of high-value life insurance policies.

The negative sentiment was offset by a jump in IT and FCMG stocks which managed to keep the Sensex in the green, but due to more exposure to Adani stocks, the Nifty 50 ended with a marginal loss.

The Nifty 50 index shed 6 points to close at 17,610, while the S&P BSE Sensex jumped 225 points to close above 59,900, at 59,932.

Adani Enterprises sank more than 25% and Adani Ports more than 7%. UPL shed around 6% and HDFC Life more than 4%. ITC and Britannia shined in today's session as they climbed close to 5% each. IndusInd Bank also gained 3%.

Among sectors, Metal and Oil & Gas shed 4% and 2%, respectively. FMCG sector managed to jump 2% and IT gained around 1.8% in today's session.

Asian indices mostly gained on Thursday as they tracked Wall Street's overnight rally after the Federal Reserve said it had turned a key corner in the fight against inflation.

Japan's Nikkei share average ended slightly higher on Thursday led by technology heavyweights after the Nasdaq jumped overnight, while a stronger yen weighed on exporters and limited the index's advance. The Nikkei index edged up 0.2%. Of the Nikkei components, 51 stocks rose, 171 fell and three traded flat.

China and Hong Kong stocks retraced gains seen in the early trading hours of Thursday and finished lower, as investors stayed on the sideline and awaited further signs of recovery in the pandemic-hit Chinese economy.

China's blue-chip CSI 300 Index lost 0.35% by the end of the morning session, while the Shanghai Composite Index climbed 0.02%. Hang Seng Index lost 0.52% and Hang Seng China Enterprises Index slipped 0.72%.

European shares climbed led by technology and real-estate stocks, with focus squarely on the European Central Bank's interest rate decision a day after the Federal Reserve acknowledged its progress on curbing stubborn price pressures. The pan-European STOXX 600 was up in the morning session.

UK's main stock indexes rose in the morning session on Thursday led by optimism while all eyes turned to the Bank of England for its verdict on interest rates. The blue-chip FTSE 100 rose in the morning after slipping for the past two sessions.

Indian rupee erased its early gains as the equities market remained nervous over the free fall in Adani stocks after the ₹20,000 crore follow-on-public offer (FPO) was called off. The local unit gained as much as nearly 81.8 against the US dollar, however, the upside was capped. Currently, the rupee has traced back to over 82 mark.

At the time of writing, the rupee traded at 82.1800 against the US dollar on Thursday compared to the previous session's closing of 81.92 per dollar. (Read More)

FMCG major Dabur on Thursday reported a 5.49 per cent decline in consolidated net profit to ₹476.65 crore for the December 2022 quarter. This is against a net profit of ₹504.35 crore in the year-ago period, Dabur said in a regulatory filing. The consolidated revenue of Dabur grew by 3.44 per cent to ₹3,043.17 crore in the quarter under review from ₹2,941.75 crore a year ago. The company's order book stood at $8.2 billion. (Read More)

State Bank of India, the country’s largest financier, has given loans of as much as $2.6 billion to companies in the Adani conglomerate, or about half of what is allowed under rules, according to a person familiar with the matter.

SBI’s exposure includes $200 million from its overseas units, the person said, asking not to be identified discussing private information. Dinesh Kumar Khara, chairman of SBI, said earlier on Thursday the Adani Group companies were servicing the loans and he doesn’t see an “immediate challenge” to whatever the bank has lent so far.

The Reserve Bank of India, the nation’s banking regulator, had asked lenders for details of their exposure to the conglomerate following a rout in group companies’ stock prices, Bloomberg News reported earlier Thursday. (Read More)

Tata Group-owned Titan Co Ltd reported a 3.7% fall in third-quarter profit on Thursday as tepid demand for jewellery and higher expenses hurt margins.

Titan, which sells watches, eyewear and owns the Tanishq jewellery brand, said its profit fell to 9.51 billion rupees ($115.8 million) in the three months ended Dec. 31, from 9.87 billion rupees a year earlier.

Analysts, on average, were expecting Titan's profit to rise to 10.35 billion rupees, according to Refinitiv IBES data. ($1 = 82.1280 Indian rupees) (Reuters)

Mr. Navneet Munot - MD & CEO, HDFC Asset Management Co Ltd: Balancing the expectations of an aspirational country like ours with fiscal prudence is no mean task. The first budget of ‘Amritkaal’ did a fine job of balancing the two, especially against a challenging global backdrop. This budget builds up on the reforms initiated over the past few years with a focus on improving India’s growth potential and quality of life. Continued focus on capex, job creation and special mention of financial sector reforms are encouraging. Now with the event behind us, markets’ focus shifts back to global cues, monetary policy and incoming data points

KEC International (KECI IN): Rating: ACCUMULATE | CMP: Rs457 | TP: Rs500

Q3FY23 Result Update - Healthy execution; disappointing margins

Quick Pointers:

§ Order prospects remains healthy at Rs1.1trn.

§ Margins impacted (down 259bps YoY) due to execution of legacy projects (TBCB order) and continued losses in SAE Brazil.

We revise our EPS estimates by -55.1%/-6.4%/+1.1% for FY23/24/25, factoring in near term challenges on margins front, despite decent revenue visibility given healthy order inflow outlook. However, picking out of legacy orders to lead gradual improvement in margins, sequentially. KEC International (KEC) reported mixed quarterly performance with revenue growing 31% YoY, while EBITDA margin contracted by 259bps YoY (due to execution of legacy order and SAE performance). Margins are likely to revive from Q4FY24 (75-100bps) with completion of SAE projects and execution of newer orders. Net debt and working capital are expected to improve, led by better cash collections and expected breakeven in SAE. Management is confident to achieve ~20% revenue growth with order inflows of ~Rs200bn for FY23.

We remain positive on KEC for long term given its 1) strong OB, 2) healthy execution momentum, 3) strong T&D outlook and 4) strong revenue visibility from non-T&D segments like Civil, Railways, Oil & Gas etc., once margins normalize. The stock is trading at PE of 16.7x/11.4x FY24/25E. Maintain ‘Accumulate’ rating with TP of Rs500 (Rs495 earlier).

Cholamandalam Investment and Finance Company (CIFC IN): Rating: BUY | CMP: Rs750 | TP: Rs820

Q3FY23 Result Update - Strong operational performance, asset quality sees improvement

Quick Pointers:

§ Stage-3 Assets at 3.5% vs 3.8% in Q2FY23; as per RBI norms GNPA at 5.37%.

§ Highest ever disbursement of ₹175 bn in a quarter up 19.8% QoQ

We maintain ‘BUY’ rating and increase our TP to Rs820 (4.4x on Sep’24E PABV) from Rs792 (earlier:4.2x Sep’24E PABV). We have increased our multiple as company is scaling up its new business verticals very strongly and vehicle demand is also strong. Our other estimates remains unchanged. AUM growth was very strong at 8.9%QoQ/31.3% YoY led by strong momentum in new business verticals - up 45% on a QoQ basis. Asset quality improved with Stage-3 at 3.51% vs 3.8% in Q2’23 and Stage-3 as per RBI norms stood at 5.37% vs 5.84% in Q2’23. Re-rating can happen once asset quality holds up when the book of new business verticals mature. Maintain ‘BUY’.

ITC share price continued its uptrend for the third straight session and extended its post-budget gains further. While deepening its Wednesday gains, ITC share price today climbed to a new lifetime high of ₹384.70 apiece levels, logging more than a 6 per cent rise intraday rise in the early morning session.

According to stock market experts, ITC shares are rising as finance minister Nirmala Sitharaman announced to increase in agriculture credit target by more than 11 per cent on a year-on-year basis in budget 2023. This is expected to benefit agriculture-driven stocks like ITC. They said that the stock is in overbought zone on chart pattern and profit booking may trigger any time. So, one should book profit in the scrip and wait for the stock to retrace from current highs as fundamentals of the stock is still strong. (Read More)

India's benchmark bond yield could break the key 7.25% handle due to the high likelihood of the central bank changing its policy stance to neutral after hiking interest rates once last time next week, the top official of PNB Gilts said on Thursday.

However, the Reserve Bank of India will have to resume its bond purchases next financial year to ensure a smooth completion of the government's borrowing programme, said Vikas Goel, managing director and chief executive officer of PNB Gilts.

"There is a very high probability of the central bank hiking rates and changing its stance to neutral. And, if this happens, the benchmark bond yield may test 7.10%-7.15% levels," he said.

The RBI has raised the repo rate by 225 basis points since May 2022, to fight inflation, which finally came within its tolerance range in the last two months of 2022.

The central bank is expected to hike rates by 25 basis points (bps) at its next meeting on Feb. 6-8, but the key for the market will be officials' stance on the terminal rate.

"Till then, the technical level of 7.25% is unlikely to be broken," said Goel. (Reuters)

Housing Development Finance Corporation Ltd (HDFC) on Thursday reported a 13% rise in its net profit for the third quarter ended December 2022 of the current fiscal (Q3 FY23) at ₹3,691 crore as compared to ₹3,260 crore in the year-ago quarter. Meanwhile, its revenue from operations rose 29% year-on-year (YoY) to ₹15,230 crore.

Shares of HDFC were trading over 2% lower at ₹2,605 apiece on the BSE in afternoon deals. The mortgage lender's stock has risen more than 4% in a year's period. (Read More)

We witnessed a better January than December for PVs. As expected, the fourth and the last quarter of the year looks strong for the PV segment as the chip shortage issue eases further and new launches on both ICE and EV sides shall take place. Seasonally too, Q4 is a good quarter. 2Ws shall gain strength on low base of last year, EV launches and better rural demand on the back of anticipated solid Rabi crop output. CVs are going good, however they witnessed a speed breaker in January. The growth shall get moderated as we go further on high base of Q4 FY 22 and H1 of FY 23. Tractors shall report a decent growth this year on good monsoon, Rabi sowing and improvement in the rural economy.

We remain positive on the sector. However, our choice is in the following order - PVs , CVs and 2Ws. Stocks specifically, within the 2Ws, we like Bajaj Auto as we expect solid recovery in domestic sales hereon and bounce back of exports 3-4 months down the line as $ scenario improves in Africa. We also like Hero Motocorp as we believe it is almost free from the exports weakness and is also led by strong monsoons barring a few eastern states, improvement in rural economy and upcoming EV launches. While on the PV side, we like M&M because of its thrust on rural markets through its leadership in tractors business, prudent capital allocation and a robust growth strategy in UVs, EVs and CVs. We also like MSIL on the PV side. We like Ashok Leyland within CVs as it has a diversified revenue base deriving from LCVs, Defense, MHCVs, exports and spares. Every dip in the stocks mentioned above, shall provide good opportunities for investors to enter into them from medium to long term perspective.

State-owned Food Corporation of India (FCI) has sold 8.88 lakh tonne of wheat to bulk consumers like flour millers on the first day of e-auction conducted in 22 states, the food ministry said on Thursday.

FCI commenced e-auction of wheat on February 1 under Open Market Sale Scheme (OMSS) for bulk users in order to improve domestic availability and check wheat prices.

On the first day, it offered for sale about 22 lakh tonne of wheat against the earmarked 25 lakh tonne under OMSS.

"More than 1,100 bidders came forward for participation in the first e-auction. A quantity of 8.88 lakh tonne was sold on the first day of e-auction in 22 states," the ministry said in a statement.

In Rajasthan, bidding would be conducted on Thursday, it said.

Further sale of wheat through e-auction will continue throughout the country on every Wednesday till March 15, it added.

Wheat is being offered at a reserve price of ₹2,350 per quintal plus freight charges. A single buyer can quote for a maximum of 3,000 tonne and a minimum of 10 tonne.

Last month, the government announced plans to sell 30 lakh tonne of wheat in the open market from its buffer stock under OMSS in order to check wheat and wheat flour prices. (PTI)

Britannia Industries Ltd maintained strong margin performance in the December quarter (Q3FY23), surpassing expectations. This brightened investor sentiment and shares of the fast-moving consumer goods company hit a new 52-week high of ₹4,595 apiece on early deals on Thursday.

Going ahead, it remains to be seen if margins sustain in the backdrop of a gradually recovering demand environment. An increase in competitive intensity would lead to rise in advertising and promotion expenses, which would weigh on Ebitda margins

India's COVID-19 tally rose by 128 in a day while active cases have declined to 1,763, according to the Union Health Ministry data updated on Thursday.

The death toll stands at 5,30,741 with one death reported from Uttar Pradesh, the data updated at 8 am stated.

The total tally of Covid cases was recorded at 4.46 crore (4,46,83,023).

The daily positivity was recorded at 0.09 per cent while the weekly positivity was pegged at 0.08 per cent.

Active cases now comprise 0.01 per cent of the total infections, while the national COVID-19 recovery rate has increased to 98.81 per cent, according to the health ministry website.

The number of people who have recuperated from the disease surged to 4,41,50,519, while the case fatality rate was recorded at 1.19 per cent. (PTI)

Japan's Sony Group Corp posted a 7.8% fall in quarterly operating profit on Thursday as its film division fared worse than a year ago, when a blockbuster "Spider-Man: No Way Home" movie drove its profit.

The electronics and entertainment giant's operating profit came to 428.7 billion yen ($3.33 billion) in October-December, down from a 465.2 billion yen profit a year earlier. The result exceeded analysts' average estimate of a 380.4 billion yen profit, according to Refinitiv data. (Reuters)