PremiumSensex, Nifty extended the winning streak of the last two days, rising over 0.5% on Friday. Stocks in Asia closed higher on easing recession woes fears, while US stock-index futures and European equities fell as a pall of gloom descended on global markets after former Japanese Prime Minister Shinzo Abe was shot to death.
Markets ended higher for the third day in a row as inflationary concerns eased amid weak oil prices. The Sensex gained 303.38 points or 0.56% at 54,481.84, while the Nifty rose 0.54% to 16,220.60.
While most Nifty sectoral indices ended in the green, metals and realty were the laggards. Larsen and Toubro, Power Grid Corporation, and NTPC were among the top gainers., Tata Steel, and Maruti Suzuki lagged.
Meanwhile, a pall of gloom descended on global markets as former Japanese Prime Minister Shinzo Abe was shot to death. The news was a further blow to investors already reeling under the worst economic challenges since the 2008 financial crisis.
Chairman N Chandrasekaran said the firm aims to have an electricity generation capacity of 30 GW during the same period with more than half coming from clean energy sources.
IDBI Mutual Fund, Canara Robeco Mutual Fund, and Axis Mutual fund have announced a revision in the risk-o-meter for some of their schemes. In all the cases, the assessed risk level of the schemes has gone down from what it was earlier. This was done to reflect the change in the risk levels of these schemes subsequent to an evaluation.
The demand conditions for Kalyan Jewellers India Ltd seem to be encouraging. So far, there has been no considerable impact on demand post the government’s recent move to raise import duty on gold, said Ramesh Kalyanaraman, executive director, Kalyan Jewellers. Even so, how demand pans out in the coming days would be a crucial factor to watch out for in the short-run.
The company remains one of the key beneficiaries of the shift in demand from the unorganized to the organized segment.
We expect life insurers to report robust NBP/APE growth YoY with the base effect playing out. The focus on higher-margin products (non-par, protection and annuity products) and subsequent improvement in the product mix are likely to improve the margins for life insurers. With rising rates, we could witness near-term headwinds, as an increase in discount rates could potentially impact the Embedded Value (EV) of life insurers. Broking revenues are likely to take a hit owing to weak cash segment volumes. However, F&O volumes have held up well. A sharp drop in capital market activity (IPO market) will dent issuer and advisory services revenues. While distribution income is likely to improve YoY, it will witness moderation QoQ (seasonal phenomena). New customer sourcing is likely to slow down with a focus on acquiring better quality customers.
Positive result plays: ICICI Bank, SBI, SBI Cards, AU Small Finance Bank, Bajaj Finance
The government on Friday clarified that the export duty on air turbine fuel introduced last week will not apply if it is supplied as fuel to “foreign going aircraft".
The clarification comes amid reports that one of the three oil marketing companies (OMCs) started charging 11% basic excise duty on ATF from domestic airlines for international flights. It caused unrest among airlines as they feared that will make international operations expensive and put them at a disadvantage viz a viz foreign airlines, which are exempt from the duty.
European shares were muted on Friday, weighed down by miners as copper prices retreated on concerns over latest Covid-19 curbs and infection flare-ups in China, while investors also maintained a cautious stance ahead of monthly U.S. jobs data.
The continent-wide STOXX 600 index was down 0.1%, after climbing 3.6% in the previous two sessions.
Consumer demand remained mixed during 1Q23 showing twin impacts of 1) price hikes and inflation in staples and 2) positive impact of fading Covid waves, low base and pent up demand across QSR, Apparel and retail segments. We expect staple margins to show pressure, however expect margin expansion post 2Q due to price hikes being absorbed and likely softening of commodity prices. QSR, Retail and discretionary segments are expected to report strong revenue growth of 33.5% and outlook remains good over next 2-3 years. We expect EBITDA margins to weaken QoQ by 15bp. Adj PAT is expected to grow by 34.5% YoY. We expect a wide range of volume growth from mid-single digit decline to low double digit growth across companies under our coverage universe barring Jewellery/QSRs segments.
We remain structurally positive on Westlife, Britannia, HUL, D’Mart, Titan, APNT and Moldtek given sustainable competitive advantage and business moats. Valuations have corrected from peak; however, they are still higher than last 10-year average. We rate D’Mart, Dabur & Westlife as top picks. ITC is a tactical pick given solid performance and favorable valuations, any potential excise duty changes remains a key risk for the stock.
TOP PICKS
-Dabur: We expect Inflationary pressures to keep margins volatile in the near term even as long term story remains intact led by 1) sustained increase in direct rural reach from 55000 villages to 88000 villages 2) GTM initiatives in ecommerce and modern trade and 3) sustained innovation across portfolio including regional customization. We estimate EPS growth of 13.1% and 19.7% in FY23 & FY24 respectively. We estimate 16% EPS CAGR over FY23-24 and assign DCF based target price of ₹603. Retain Accumulate.
-Westlife Development: Accelerated store expansion from 20-25 stores to 40-50 stores/year (200 stores over 3-4 years). WDL is piloting fried chicken in western markets to gauge the response, as it looks set to launch Gourmet Burgers in south India. With no major capex within existing stores, chicken sales can offer Rs500mn incremental revenues with high gross margins of 65-70% which will be margin accretive. Despite opening up of economy, convenience channel contribution continues to remain strong. We expect AUV to increase led by convenience channel sales, new product innovations like Gourmet Burgers, Fried chicken and sustained scale up of McCafe which shall enable profitable growth in the coming years. We estimate Sales CAGR of 25.0% over FY22-24 with an EPS of Rs6.4/ Rs9.2 in FY23/24. We assign DCF based target price of Rs653. (Rs645 earlier). ‘BUY’ for long term gains.
-Avenue Supermart: D’Mart remains a structural pick given 1) strong entry barriers in brick and mortar modern trade 2) Long growth path as it has scope to increase stores by 3.5x in catchments where it has entered 3) Strong growth prospects, as it is yet to fully sweat 80 stores opened during Covid 3) Expected margin expansion, as general merchandise and apparel category has suffered during Covid and 5) Rising city coverage and strong traction in D’Mart Ready. With Bill cuts/store/day 33% lower than FY20 and gains from inflationary environment, we estimate 42% PAT CAGR over FY22-24. Retain ‘BUY’
-Over the past 2 weeks, HUVR/BRIT have rallied sharply by 20%/13% led by tailwinds in commodity prices. Key input materials such as crude oil & palm oil have corrected by 20.8%/55.0% from peak levels. Crude oil prices have fallen due to recession fears in western markets, while Palm oil prices have fallen due to increased exports from Indonesia & Malaysia. We place our BUY rating on the stocks ‘UNDER REVIEW’ given change in business environment and would revise our rating/ Target Price post 1Q23 earnings.
The Food and Agriculture Organization's (FAO) food price index, which tracks the most globally traded food commodities, averaged 154.2 points last month versus a revised 157.9 for May.
Celsius Network, the crypto lender that froze assets last month, used customer funds to manipulate the price of its proprietary token and lost hundreds of millions of dollars by failing to hedge risk, a former money manager for the company said in a lawsuit.
Asian markets rose Friday on easing recession fears with optimism boosted by hopes that Joe Biden will remove some Trump-era tariffs from Chinese goods.
The safe-haven yen also picked up following news of Japan's former prime minister Shinzo Abe being shot during a campaign rally. He is still fighting for his life.
Tokyo - Nikkei 225 rose 0.1 percent at 26,517.19,
Hong Kong - Hang Seng Index rose 0.2 percent at 21,680.96
Shanghai - Composite fell 0.4 percent at 3,356.08
Multiplexes are expected to outperform in the first quarter of FY23 as compared to all earlier quarters in the post-pandemic era led by the successful run of films like RRR, KGF: Chapter 2 and Bhool Bhulaiyaa 2. Chains like PVR and INOX Leisure Ltd are likely to post revenues of Rs. 9.25 billion and Rs. 5.5 billion respectively, according to estimates by brokerages like Edelweiss and Elara.
The GST Council has set up a Group of Ministers, chaired by Haryana Deputy Chief Minister Dushyant Chautala, to suggest required changes in the law for setting up the GST Appellate Tribunal (GSTAT).
The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, had last week decided to constitute a Group of Ministers (GoM) to address various concerns raised by states in relation to constitution of the GSTAT. (PTI)
-Aggregate Revenue/EBIDTA expected to decline by ~1%/3% QoQ.
-Aggregate EBITDA margins (excl JLR) expected to largely remain flat QoQ, with RM cost pressures partly offset by price hikes and cost controls.
In 1QFY23 two-wheeler (2W) segment topped charts with ~8% QoQ growth, supported by marriage season demand (especially in entry-level segment Hero’s volume grew 17% QoQ), while Passenger vehicle (PV) segment remained largely muted (2% decline). PV retail enquiries and bookings are currently healthy. With semiconductor supply now normalizing, PV OEMs are serving their already healthy order book and mitigating longer waiting periods. Commercial vehicle (CV) segment witnessed ~9% decline QoQ, led by seasonality factor. However, on-ground situation is much better as fleet utilization levels are healthy, led by increased economic and infrastructural activities. Tractor segment volumes witnessed an uptick with onset of monsoon season. For our OEM coverage universe, we expect aggregate revenue decline of ~1% QoQ. Gross margins to contract by ~60bps for most OEMs, due to lag impact of higher commodity prices in 4QFY22. From 2QFY23 onwards, we expect margin expansion for auto OEMs driven by softening of commodity prices, price hikes and upcoming festive season.
We remain structurally positive on CV play and expect Ashok Leyland and Tata Motors to benefit from CV recovery. Tata Motors will further benefit from strong PV volumes supported by new models, EV and recovery at JLR. Our top picks are Ashok Leyland and Tata Motors.
The CBI has registered a fresh case against former National Stock Exchange (NSE) chiefs Chitra Ramkrishna, Ravi Narain and ex-Mumbai police commissioner Sanjay Pandey, on the directions of Ministry of Home Affairs (MHA), for allegedly tapping phones of NSE employees between 2009 and 2017. Since early morning CBI has conducted raids at 19 locations.
-Hybrid fund outflow at ₹2,279.4 cr June vs ₹5,123.2 cr inflow May
-Credit risk outflow at ₹482 cr vs ₹730 cr outflow
-T otal debt scheme outflow at ₹92,248 cr vs ₹32,722 cr outflow
For the first time in twenty years, the valuation multiple of India's key benchmark index, the Sensex, has declined twice than its price, or the value of the index in points.
An analysis by Edelweiss Securities Ltd showed that since the year 2000, price and valuation correction in the Sensex have always been in sync. The maximum variance has been 6-7%. (Read more)
COMEX gold trades mixed near $1740/oz after a 0.2% gain yesterday. Gold has steadied after testing 9-month low as US dollar index paused after lack of surprise form FOMC minutes and amid positioning for US non-farm payrolls data which is expected to show slower jobs growth. However, weighing on price is monetary tightening stance of Fed and other central banks and weaker investor interest as is evident from ETF outflows. Gold has fallen sharply and may see some recovery however a sharp rise is unlikely unless US dollar corrects.
Shares of Mahindra & Mahindra rose 5.4% in early trade on Friday on NSE taking the stock to a new 52-week high of Rs1194.90 apiece. This comes on the back of the company’s announcement of executing an agreement with British International Investment, UK’s development finance institution, to invest up to Rs1,925 crore or $250 million each into a new wholly owned EV subsidiary of M&M.
“Net value accretion to M&M shareholders will depend on its ability to leverage the electrification trend and expand its market share in the SUV segment. Currently, we are not valuing the EV business separately as it doesn’t have any material presence in the electric PV segment," said Motilal Oswal in a report.
Nifty's 16000-16045 odd level should act as the demand zone and cushion any minor blips. The 16200 sub-level is likely to be seen as the immediate resistance, breaching which the next potential hurdle could be seen around the 16325-16400 zone.
Going forward, our market is likely to remain upbeat in the near term, wherein any minor dip could be seen as an opportunity for the bulls to add long positions. From here on, we may expect gradual moves in key indices, but individual pockets are now likely to outshine. Hence, it’s advisable to keep focusing on such potential movers, which are likely to provide better trading opportunities. Also, we would like to reiterate not being complacent with the gains and staying abreast with daily developments across the globe.
The move comes after the central bank had returned a large number of payment aggregator licence applications earlier this year, that it had received from many firms. The RBI is now expected to release a complete list of the players who have been approved to operate as payment aggregators in the country shortly, the report added.
We expect companies in our retail coverage universe to deliver a strong show in Q1FY23 (the only non-disrupted quarter in the last two years). As per our channel checks, fashion retailers, on a per store basis, have registered a recovery rate in the range of 110%+ of pre-Covid levels. The optimism was driven by improved consumer sentiments, wardrobe refresh and increased spend on discretionary purchases as consumer wallet share on non-essentials had remained subdued in the last two years. Also, fashion lifestyle retailers had built up healthy inventory for spring summer season in Q4FY22 after curtailing purchases for nearly two years (on an average, absolute inventory increased 1.5x YoY). On a favourable base of Q1FY22, we expect revenues to more than double (2.4x YoY) for our companies in our coverage universe (impressive three-year CAGR: 17%). In a bid to negate inflationary pressure, apparel retailers have taken price hikes in the range of 15-20%. Expect EBITDA margins to improve 80 bps QoQ (down 70 bps vs. Q1FY20 levels) to 12.3% in Q1FY23E. During the quarter, retailers continued calibrated expansion of their store network with opening of 10 D-Mart stores, 19 Tanishq stores, 56 Titan EyeCare stores, eight Zudio stores, three Westside stores and 11 V-Mart stores (including four Unlimited stores). Companies have restructured their existing store networks and aggressively enhanced footprint on a pan-India basis with emphasis on penetrating deeper in Tier III-V cities to capture potential demand pockets.
Positivity rate at 4.95%, recovery rate is 98.52% & mortality rate is 1.21%
Global gold exchange-traded funds (ETFs) registered 28 tonnes or $1.7 billion of outflows in June, which the second straight month of selloff, according to a report by the World Gold Council. In India, minor net inflows continued in June, primarily driven by market volatility and a depreciating rupee attracting investment into Indian gold ETFs
Multiple Indian funds have urgently petitioned the Securities and Exchange Board of India (Sebi) to ease the overseas investment cap for Alternative Investment Funds (AIF) to avoid missing out on deals but are facing a steep battle amid the sharp fall in the rupee in recent months, three people aware of the development said.
Overseas investments by Alternative Investment Funds (AIF) cumulatively hit the $1.5 billion threshold just last week, one of the people cited above said. Sebi allows 25% of an AIF’s investible corpus to be invested overseas at an individual level with a $1.5 billion cap at an aggregate level for all AIFs.
Days after IndiGo suffered major flight delays due to cabin crew unavailability, the airline reinstated pilot salaries by 8% that will be effective from 1 August. “On 31st March, we were able to reinstate 8% effective 1st April, 2022 and had committed to you that an additional reinstatement of 6.5% would be implemented from 1st November 2022 based on the environment," read an internal letter sent to the pilots
Gold firmed on Friday as the dollar came slightly off two-decade highs, but bullion was set to post its biggest weekly drop in more than a month as the elevated greenback hit demand. Spot gold firmed 0.3% to $1,744.07 per ounce by 0106 GMT. U.S. gold futures rose 0.2% to $1,742.50. The dollar edged down from 20-year highs, taking some weight off greenback-priced gold.
Oil prices were down in morning trading after having rebounded overnight. Brent crude futures fell 34 cents to $104.33 a barrel, while U.S. WTI crude was down 39 cents to $102.34.
The pandemic-era overseas borrowing boom by Indian companies has started to slow as interest rates rise, the currency weakens, and the appetite for emerging market bonds diminishes.
Measures announced by the Reserve Bank of India easing overseas borrowings by companies, including doubling the annual limit under the automatic route to $1.5 billion and raising the all-in cost cap for foreign debt, though welcome, will do little to spur the market in the near term, experts said. (Full report)
Here's is the list of top 10 stocks that will be in focus today.
Indian stocks indices are likely to trade firm on Friday on firm global cues. continued its northward journey for second straight session on Thursday. The SGX Nifty is aslo trading higher, indicating a positive start for domestic equities. IT stocks will be in focus as TCS reports its first quarter earniing today.
On Thurday, the BSE Sensex surged 427 points to end at 54,178, while the Nifty rose 143 points to 16,133.
Stocks in Asia climbed on Friday, bolstered by the possibility of major stimulus in China as well as hopes that policy makers can get inflation under control without causing a global economic downturn.
Japan, Hong Kong and China helped the Asian share index to add about 1%. US and European equity futures fluctuated.
US stocks rallied for the fourth straight day on optimism that the Federal Reserve will be able to curb inflation without tipping the economy into a recession.
The S&P 500 rose 1.5%. The Dow Jones Industrial Average rose 1.1%, while the Nasdaq closed 2.3% higher.
Download the App to get 14 days of unlimited access to Mint Premium absolutely free!
