Sensex, Nifty snap 4-day rally; Pharma, metal stocks decline16 min read . Updated: 12 Aug 2020, 03:40 PM IST Devansh Sharma
- Indian equities snapped four straight sessions of gains on Wednesday, led by decline in pharma, metal stocks amid economic growth concerns
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Indian equities snapped four straight sessions of gains on Wednesday, led by decline in pharma, metal stocks amid economic growth concerns.
After touching an intraday low of 38,125.81 in the early trade, Sensex pared some of the losses and settled at 38,369.63, down 37.38 points or 0.10%. Nifty ended 14.10 points or 0.12% to 11,308.40.
Shares of PSU banks gained in an otherwise weak market, with Nifty PSU Bank index closing 2.7% higher. The government is considering extending the 'ratna' title to state-owned lenders like State Bank of India (SBI) and Bank of Baroda.
India’s factory output slid for a fourth month in June as the economy struggled to reopen amid the still-spreading pandemic, according to government data released after market hours Tuesday.
HCL Tech, closing nearly 5% higher was the top Sensex gainer followed by SBI, TechM, Maruti and Power Grid. Kotak Bank, Sun Pharma and Bajaj Finserv were among the laggards. Of 30 Sensex shares, 17 closed in the red.
Top laggards on Nifty
Top gainers on Nifty
Bharat Forge Q1 earnings update
Company's total revenue in Q1FY21 declined 68.3% y-o-y to ₹ ₹4,270 million from ₹13,465 million posted in year ago period. The company posted a loss of ₹563 million in the period under review against a profit of ₹1,740 million during the quarter ended 30 June 2019.
“The quarter gone by was impacted by the Covid19 pandemic and the stringent measures adopted by countries to control the spread. The government imposed economic lockdown coupled with lower underlying demand had an adverse impact on Sales. This has resulted in the company posting a loss of ₹563 million for the quarter," said B.N. Kalyani, Chairman & Managing Director at Bharat Forge.
Hong Kong stocks hit near 3-week high as financials rebound
Hong Kong shares touched a near three-week high on Wednesday, led by a rebound in heavyweight financial stocks, and as a regional sell-off in equities ran out of steam towards the end of the trading session.
The Hang Seng index closed up 1.4% at 25,244.02, near its highest level since July 23 hit earlier in the session. The Hang Seng China Enterprises index rose 0.6%.
The rupee slipped 5 paise to close at 74.83 against the US dollar on Wednesday tracking muted domestic equities.
The local unit opened at 74.78 at the interbank forex market, then lost ground and finally settled at 74.83 against the US dollar, down 5 paise over its last close of 74.78.
Motilal Oswal puts 'buy' on Ipca Laboratories
Motilal Oswal has put 'buy' rating on Ipca Laboratories with a target price of ₹2,420. "We value IPCA on a 25x 12M forward earnings basis to arrive at TP of INR2,420 (from INR1,955 earlier). We remain positive on IPCA on the back of: a) superior performance in the DF segment, b) the addition of new APIs as well as increased traction in existing API molecules, c) product launches under its own label in the UK, and d) increased backward integration to derive further benefit by improving manufacturing efficiency. Reiterate Buy," the brokerage said.
Container Corporation of India extends losses, down 4%
Company's consolidated profit nosedived 75.97% to ₹58.26 crore for the quarter ended on June 30, 2020. The company had clocked a consolidated profit of ₹242.51 crore during the corresponding quarter a year ago, the multi-modal logistics company said in a regulatory filing to the BSE.
Top Sensex gainers
Geojit Financial Services on KEC International
Geojit Financial Services has maintained 'buy' rating on KEC International with a target price of ₹362. "We believe near term headwinds has been factored in stock prices and execution to pick up from H2FY21. We maintain our Buy rating owing to healthy order book & recovery in execution and value KEC at a P/E of 14x on FY22E EPS," the brokerage said.
Indian equities declined on Wednesday after rising for four straight sessions, tracking negative cues from global peers and economic growth concerns.
After touching an intraday low of 38,125.81 in the early trade, Sensex pared some of the losses. At 1:47 pm, the 30-share barometer was at 38,280.93, down 126.08 points or 0.33%, while Nifty declined 39.70 points or 0.35% to 11,282.80.
India’s factory output slid for a fourth month in June as the economy struggled to reopen amid the still-spreading pandemic, according to government data released after market hours Tuesday.
PSU Banks rallied most, with Nifty PSU Bank index rising 4% on reports that government is considering extending the 'ratna' title to state-owned lenders like State Bank of India (SBI) and Bank of Baroda.
SBI, rising nearly 4%, was the top Sensex gainer followed by HCL Tech, TechM, Mahindra & Mahindra and Maruti Suzuki. Of 30 Sensex shares, 17 were in the red.
Motilal Oswal on Motherson Summi
Motilal Oswal has put 'buy' rating on Motherson Sumi with a target price of ₹135. "We tweak our estimates to factor EUR–INR changes, resulting in minor modifications to our FY21/FY22 consol. EPS by -3%/+3%. Our positive view on MSS remains intact (stabilization of greenfield plants + execution of SMRPBV’s strong order book + India recovery). Maintain Buy, with TP of INR135 (Sep’22 SOTP)," the brokerage said.
Yes Securities on AIA Engineering
Yes Securities has put 'buy' rating on AIA Engineering with a target price of ₹1,948. "We believe AIAE is better poised for long term growth with a successful diversification move to address product adjacencies through value added offerings like EEMS product solutions with increased throughput & power saving benefits for customers. We are building in ~70bps margin expansion over FY20-22 led by benefits of INR depreciation (~75% exports), launch of value added mill lining solutions & operating leverage play. We remain optimistic on the business prospects with strong adjusted ROE (ex-cash) of 28%, healthy FCF generation, prudent capital allocation & strong balance sheet. Retain ‘BUY’ with TP of Rs1948 at 28x FY22 EPS," the brokerage said.
Emami stock finally gets investor love; sustaining recovery momentum key
Shares of Emami Ltd have risen as much as 38% since it announced its June quarter results on Friday. Remember, the Emami stock has not received much love in a long time from investors in the consumer space.
The stock has declined about 45% over the last five years, sharply underperforming the Nifty 200 index. And there are enough reasons for the low investor confidence. For one, over the past few years, growth has eluded the company, which offers Zandu balm and BoroPlus, among other products. Over FY2016-2020, consolidated operating revenues have remained painfully constant at around ₹2,600 crore. Plus, high pledges of promoter shareholding--90% as on June end--have also been a cause of worry for investors over the past few quarters. (Full report)
Nifty PSU Bank gains 4% on report govt may extend 'ratna' title to some lenders
The Nifty PSU Bank index surged 4% on Wednesday as against a 0.24% decline in the benchmark share index. Shares of public sector banks rose 1-5% on the National Stock Exchange (NSE).
According to media reports, the government is considering extending the 'ratna' title to state-owned lenders like State Bank of India (SBI) and Bank of Baroda. As per government rules, a public sector enterprise can be awarded 'ratna' title to give them financial autonomy. Currently, there are four categories of 'PSU ratna' in India-- miniratna-II, miniratna-I, navratna and maharatna. (Full report)
ICICI, HDFC, Axis Bank raise nearly ₹35,000 crore via QIP
Private sector lenders ICICI Bank, Axis Bank and Housing Development Finance Corp Ltd (HDFC) have raised nearly ₹35,000 crore from institutional investors using the qualified institutional placement (QIP) route over the past one week, indicating that investors continue to be bullish on financial services majors.
On Monday, ICICI Bank launched its QIP to raise $2 billion ( ₹15,000 crore). “The deal received strong interest from both domestic and foreign investors. The $2 billion deal saw a demand of almost $5 billion," according to a Mint report.
Motilal Oswal on Dabur
Motilal Oswal has put 'buy' rating on Dabur with a target price of ₹600. "As pointed out in our upgrade note, the structural and medium-term narrative on topline growth is turning highly attractive, led by strong traction in the profitable Healthcare business and an attractive rural growth outlook, with ~48% of Dabur's domestic sales coming from rural. Additionally, the investment case is being strengthened further, supported by: (a) focus on the core, (b) Power Brand strategy, (c) a spate of new launches, (d) an increasing direct distribution reach, (e) the narrowing gap on analytics v/s domestic peers, and (f) cost savings, which would be plowed back into the business. High near-term valuations appear justified at this initial stage of structural turnaround, which could potentially result in ~20% EPS growth following the investment phase for the current year. Maintain BUY, with TP of INR600 (50x Sept'22 EPS)," the brokerage said.
ICICI Bank shares, the most favored by world’s analysts, has lagged behind
India’s ICICI Bank Ltd. is the world’s highest rated banking stock, but its performance hasn’t exactly been stellar.
The $32 billion lender has 56 buy recommendations, and its consensus rating of 4.95 on a scale of 5 is the highest among the 50 largest banks globally, data compiled by Bloomberg show. Meanwhile its share price is down 32% this year, ranking it in the bottom four of that same group. (Full report)
Motilal Oswal 'neutral' on Bosch
Motilal Oswal has maintained 'neutral' rating on Bosch with a target price of ₹14,400. "We have upgraded our FY21/FY22E EPS by 15.4%/7.2% to reflect demand recovery for the underlying industry and its cost cutting initiatives. Valuations at ~35.5x/28.8x FY21/FY22E EPS largely factor in the potential market share loss during the BS6 transition. Maintain Neutral with TP of INR14,400 (~30x Sep’22E EPS)," the brokerage said.
Geojit Financial Services on PI Industries
"PI Industries recorded standalone revenue of Rs. 968cr in Q1FY21, up 28.4% YoY, driven by strong growth in both domestic (42.1% of total sales) and export revenue (57.9% of total revenue). The strong pipeline, new launches, Isagro acquisition, and strong demand of branded products should upkeep the growth momentum over the medium term. Also, we remain positive on the stock on robust export order book and controlled cost measures. Therefore, we reiterate our ACCUMULATE rating on the stock with a revised target price of Rs. 2,210 based on 42x FY22E adj. EPS."
Siemens’ Q3 sees covid-19 disruption; near-term outlook could be dull
Covid-19 has disrupted Siemens Ltd’s Q3 numbers quite severely. Revenues tumbled sharply. But the near-term pace of recovery could be hit as private capital expenditure is at a standstill. Shares of Siemens tumbled 23% in 2020 and fell marginally on Wednesday. (Full report)
Troubled India shadow lenders show signs of revival on stimulus measures
The fortunes of India’s shadow lenders are showing signs of turning, suggesting stimulus measures from policy makers will help the troubled sector weather some of the fallout from the pandemic.
Premiums that investors seek to buy AAA rated five-year bonds of non-bank lenders over similar-maturity government notes narrowed the most last month since at least 2012, helping a gauge measuring bond spreads to strengthen. A custom index of shares of 20 financial firms and other companies also improved. (Full report)
Cadila Healthcare, Lupin top laggards on Nifty Pharma
HAL up 8%
The Defence Acquisition Council (DAC) on Tuesday approved proposals of about ₹8,772.38 crore for capital acquisition of various equipment and platforms, including 106 Basic Trainer Aircraft from Hindustan Aeronautics Ltd (HAL) for IAF.
Lemon Tree Hotels opens new property in Gujarat
Hospitality firm Lemon Tree Hotels on Wednesday said it has opened its new property in Dwarka, Gujarat.
The hotel, with 109 rooms and suites, will be managed by Carnation Hotels which is a subsidiary and hotel management arm of Lemon Tree Hotels and is situated near the Dwarkadhish Temple in Gujarat.
Yes Securities on Siemens
Yes Securities has put 'add' rating on Siemens Ltd. "We are cutting FY20E/FY21E estimates by 8%/5% respectively to factor in ordering & execution slowdown especially in next 2-3 quarters. SIEM is trading at 44x/36x to FY21E/FY22E EPS. We believe companies with a future-ready business model, backed by structural tailwinds that are positive cash, will revive faster than peers. We roll forward to Sep’22E and retain ADD rating with revised TP of Rs1,280 at 40x Sep’22E EPS," the brokerage said.
Add rating suggests a potential return +5% to +15% over 12 months.
Petronet LNG up 4%
The country's biggest gas importer, Petronet LNG, on Tuesday said it invoked the force majeure on nine cargoes after covid-19 lockdown cut offtake by consumers.
INOX Leisure up 8%
Inox Benefit Trust on Tuesday sold 4.32% stake in multiplex chain operator INOX Leisure for ₹101 crore, through open market transactions. The shares were sold at an average price of ₹233 apiece.
Wipro down 1.25%
The company has completed the acquisition of Belgium-based 4C for 68 million euros. The acquisition would strengthen Wipro’s position as a leading provider of Salesforce solutions in various markets, it said in a regulatory filing.
Better focus on cash flow to help Quess Corp bridge valuation gap with Teamlease
Quess Corp Ltd is taking corrective measures to allay investors’ concerns about its debt position and cash flows.
The stock, first of its kind to be listed in the temporary staffing sector, caught investors’ attention when it hit the bourses in 2017. However, the company’s debt-funded inorganic growth strategy started making investors uncomfortable. Analysts pointed out that from a net cash of ₹70 crore at the end of fiscal year 2018, Quess Corp became a company with a net debt of ₹350 crore by end of fiscal year 2020. This was due to its aggressive acquisitions of loss-making entities and in-turn higher working capital needs, they said. (Full report)
Gold prices today collapse, down ₹4,500 in 2 days; silver rates crash
Gold and silver prices in India fell today, extending the previous session's slump. On MCX, October gold futures were down 3% or ₹1,500 to ₹50,441 per 10 gram. Silver futures on MCX tumbled 5% or ₹5,000 per kg to ₹61972. In the previous session, gold prices collapsed nearly 6% or ₹3,200 per 10 gram while silver crashed 12% or ₹9,000 per kg. Last week, gold prices in India had jumped over ₹56,000 while silver had almost touched ₹78,000. (Full report)
Gold Outlook by Hareesh V, Head Commodity Research at Geojit Financial Services
Gold lost some ground after Russia announced the world’s first Covid vaccine and profit booking was seen at higher levels. A recovering US dollar and gains in equities too pressured the safe haven asset. However, hopes of fresh economic stimulus measures and rising US-China tensions continue to offer lower level support to the metal.
Lenders seek better offers for CG Power under Swiss Challenge
Led by State Bank of India (SBI), lenders to CG Power and Industrial Solutions Ltd on Wednesday sought resolution plans from bidders under the Swiss Challenge method.
This was after Murugappa Group-led Tube Investments of India Ltd agreed to invest ₹700 crore in the company for a 56% stake. Under the Swiss Challenge method, a prospective buyer offers a bid to the lender, which then publicly calls for counter bids from other potential buyers. The new bidders are expected to put in higher bids than the original bidder, making the process more competitive.
Muthoot Finance down 3.3%
The board of directors of the company has sought shareholders nod to raise its borrowing powers from existing ₹50,000 crore to ₹75,000 crore.
Rupee opens flat
Indian rupee opened flat at 74.77 against the US dollar on Wednesday.
Bank of Baroda, PNB top gainers of Nifty PSU Bank
Eicher Motors up 1.6%
The shareholders of the company have approved sub-division of each existing equity share of face value of ₹10/- each into 10 equity shares of face value of ₹1/- each. The record date for the purpose of sub-division of equity shares will be intimated in due course. The move is aimed at facilitating larger shareholder base and aid liquidity, Eicher Motors said in a regulatory filing.
Adani Ports up 2.4%, shrugs weak Q1 performance
Adani Ports and Special Economic Zone Limited (APSEZ) reported 26.33% decline in consolidated profit to ₹757.83 crore for the first quarter ended June 30, impacted by covid-19-induced lockdowns. Also, the company’s board has approved a proposal to raise up to ₹3,000 crore through issuance of non-convertible debentures.
IndusInd Bank down 0.24%
The private sector lender has sold a portion of the invoked pledged shares of Eveready Industries and McLeod Russel India. "We wish to inform that the bank had yesterday, August 10, 2020 sold 32,71,608 equity shares of Eveready Industries India Ltd and 55,00,000 equity shares of McLeod Russel India," IndusInd Bank said in a regulatory filing on Tuesday.
ICICI Bank drops 0.5%
ICICI Bank Ltd. is the world’s highest rated banking stock, but its performance hasn’t exactly been stellar.
The $32 billion lender has 56 buy recommendations, and its consensus rating of 4.95 on a scale of 5 is the highest among the 50 largest banks globally, data compiled by Bloomberg show. Meanwhile its share price is down 32% this year, ranking it in the bottom four of that same group. (Bloomberg)
HDFC down 0.26%
The country's largest mortgage lender HDFC Ltd on Tuesday announced raising more than ₹14,000 crore through a qualified institutional placement (QIP) issue of equity shares, warrants and bonds.
Most sectoral indices on NSE in the red. PSU banks rally
Indian benchmark share indices opened lower on Wednesday tracking weak cues from global peers. Sensex opened at 38,321.13, down 86 points, while Nifty slipped 33 points to open at 11,289.00. Ultratech Cement was the top Sensex gainer followed by Titan, TCS, Tech Mahindra and SBI. Axis Bank, Bajaj Finance, IndusInd Bank and Tata Steel were among the laggards on the other hand. Of 30 Sensex shares, 25 were in the red at open.
Indian stocks traded flat during the pre-opening session on Wednesday. At 9:05 am, Sensex rose 13.57 points or 0.04% to 38,420.58 while Nifty was at 11,324.10, up 1.6 points or 0.01%.
Stocks to Watch
HDFC, IndusInd Bank, Adani Ports, Eicher Motors and Wipro are among the top stocks that may be in news on Wednesday.
Market at close on Tuesday
Indian benchmark share index notched up gains for fourth straight session, buoyed by banks and metal stocks amid positive cues from global peers.
Sensex settled at 38,407.01, up 224.93 points or 0.59%, while Nifty closed 52.35 points or 0.46% higher at 11,332.20.
Asian shares decline
Most Asian stocks retreated Wednesday amid doubts over the timing of a spending package from Washington and some position-trimming in high-flying sectors. The gold selloff entered a second day after it tumbled the most in seven years Tuesday.
Hong Kong’s Hang Seng lost 0.6%.
Korea’s Kospi Index fell 0.3%.
Shanghai Composite Index fell 1.5%.
Australia’s S&P/ASX 200 Index dipped 0.5%.
Singapore's SGX Nifty declined nearly 1%, indicating a weak opening for Indian benchmark indices.
Wall Street ends in the red
US stocks reversed course on Tuesday to end in the red, with all three major indices dropping and the broad S&P 500 closing lower for the first time in eight days.
At the closing bell, the Dow Jones Industrial Average was down 0.4 percent to 27,686.91 and the S&P 500 fell 0.8 percent to 3,333.69.
The Nasdaq continued its recent slide to close with a loss of 1.7 percent to finish at 10,782.82.