Share Markets Update: Modi 2.0 Rally Short-Lived; Sensex Ends Lower After Hitting 40,000

Dalmia Bharat

• Stock rose as much as 3.6 percent to Rs 1,125.
• Trading volume was almost 14 times its 20-day average.

Ashoka Buildcon

• Stock rose as much as 6 percent to Rs 126.90.
• Trading volume was more than 13 times its 20-day average.

Adani Transmission

• Stock rose as much as 7.1 percent to Rs 244.95.
• Trading volume was almost 10 times its 20-day average.

KEI Industries

• Stock rose as much as 7.3 percent to Rs 478.30.
• Trading volume was more than nine times its 20-day average.

Key highlights from the conversation:

• Continuity of the current regime is asserted with weight.
• Incomplete projects would likely see fruitification.
• Bold move to implement GST two years ahead of elections.
• Junk has been cleared from Banks balance sheet.
• It will be a different five years irrespective of the government.
• Earnings have becoming very polarized in the last five years.
• Commitment towards no tolerance to big ticket corruption is a positive for Modi.
• Markets will value companies which are more compliant.
• Short term opportunity is there for companies that are cleaning up their act.
• Long term investing is still prevalent in strong franchises.
• Mining presents a huge opportunity once the regulatory hurdles are overcome.
• Expecting a stronger NDA team to take charge of the second innings.
• Consolidation in the financial space will continue.
• Fresh confidence will be instilled in banks.
• High quality SMEs are suffering due to lack of fresh capital.
• Economic push has to be the first this on the government’s agenda.
• PSU Banks have a huge opportunity to become better rather than become bigger.
• India’s biggest asset is Entrepreneurship.
• Job creation is the biggest challenge of our economy.
• Journey to become a $5 trillion economy needs conducive policy measures and job creation.
• Growth in autos is a temporary hit. It is pent up demand which will translate once the economy is back on track.
• Government needs to standby and provide liquidity to quality companies.
• Infra will gather massive pace and more ambitious projects will come onstream.
• If IL&FS would not have happened we would have been a very different economy.

Nippon Life Insurance signed binding definitive agreement with Reliance Capital to increase stake in Reliance Nippon Life Asset Management to 75 percent.

• Nippon Life to acquire stake in Reliance Capital at Rs 230/share
• Nippon Life to make an open offer at same price
• Open offer price at 15.5% premium to 60-day average price
• Reliance Capital to completely exit RNAM to ensure minimum public shareholding of 25 percent.

B Gopkumar, ED and CEO, Reliance Securities Says:

"Markets were looking for stability, continuity and strong leadership rather than a fractured mandate. We believe India allocation by global funds will increase and there may be more ETF flows over the short-term that could drive the markets even higher."

Nifty’s 12,000 call option contract was among the most active Nifty option contracts on National Stock Exchange.

Premium on the contract fell 37.51 percent to Rs 66.80. Over 7.34 lakh shares were added to the open interest which stood at over 22.2 lakh shares.

The market is now pricing in that the new government will move decisively on key issues, according to Nilesh of Kotak Mutual Fund. He said inflation is now at a manageable level, which meant focus should be on growth and ease of doing business. “Our trade deficit has gone up with China. We think local manufacturing should be encouraged.”

Bank of Baroda (Q4, YoY)

• Stock rose as much as 14 percent to Rs 144.
• Net interest income up 26.6 percent to Rs 5,066.96.
• Net loss at Rs 991 crore versus net loss of Rs 3,102 crore.
• Gross NPAs 9.61 percent versus 11.01 percent. (QoQ)
• Net NPAs 3.33 percent versus 4.26 percent. (QoQ)
• Provisions at Rs 5,500 crore versus Rs 6,672 crore.

Thermax (Q4, YoY)

• Stock rose as much as 6.2 percent to Rs 1,024.
• Revenue up 43.7 percent to Rs 2,073.7 crore.
• Net profit up 67.6 percent to Rs 126.9 crore.
• Ebitda up 23.7 percent to Rs 170.8 crore.
• Margin at 8.2 percent versus 9.6 percent.
• Share of joint venture loss at Rs 17.2 crore in base quarter.
• Group CFO Amitabha Mukhopadhyay resigned from the post of CFO.

Cummins India (Q4, YoY)

• Stock rose as much as 2.3 percent to Rs 746.
• Revenue up 8.7 percent to Rs 1340.4 crore.
• Net profit down 12.6 percent to Rs 140.9 crore.
• Ebitda down 0.7 percent to Rs 171.8 crore.
• Margin at 12.8 percent versus 14 percent.
• Board declares dividend of Rs 10 per share.
• Employee expenses up 14 percent to Rs 134.6 crore.
• Other income up 4 percent to Rs 69.2 crore.

TCI Express (Q4, YoY)

• Stock rose as much as 3.5 percent to Rs 669.
• Revenue up 6.8 percent to Rs 267 crore.
• Net profit up 22.5 percent to Rs 21.8 crore.
• Ebitda up 20.7 percent to Rs 35 crore.
• Margin at 13.1 percent versus 11.6 percent.

TD Power Systems (Q4, YoY)

• Stock rose as much as 16.8 percent to Rs 143.
• Revenue up 25.7 percent to Rs 200.8 crore.
• Net profit up 4.2 times to Rs 15.4 crore.
• Ebitda up 2.1 times to Rs 28.5 crore.
• Margin at 14.2 percent versus 8.7 percent.
• Manufacturing segment revenue up 36 percent to Rs 188.9 crore.
• Project business segment revenue up 58 percent to Rs 49.5 crore.

JK Lakshmi Cement (Q4, YoY)

• Stock rose as much as 2.6 percent to 380.
• Revenue up 30.7 percent to Rs 1172.5 crore.
• Net profit up 28.1 percent to Rs 43.3 crore.
• Ebitda up 29.5 percent to Rs 131.2 crore.
• Margin at 11.2 percent versus 11.3 percent.

Gujarat State Fertilizers & Chemicals (Q4, YoY)

• Stock rose as much as 3.8 percent to Rs 101.70.
• Revenue up 4 percent to Rs 2138.4 crore.
• Net profit down 36.2 percent to Rs 99.8 crore.
• Ebitda down 28 percent to Rs 163.5 crore.
• Margin at 7.6 percent versus 11 percent.
• Employee benefit expenses up 20 percent to Rs 138.6 crore.
• Power and fuel expenses up 14 percent to Rs 180 crore.
• Inventory gain of Rs 266.6 crore.

Ashoka Buildcon (Q4, YoY)

• Stock rose as much as 5.6 percent to Rs 126.50.
• Revenue up 86.2 percent to Rs 1,307.4 crore.
• Net profit down 47.2 percent to Rs 98 crore.
• Ebitda up 2.3 times to Rs 181.6 crore.
• Margin at 13.9 percent versus 11.5 percent.
• Current tax expenses up 5.6 times to Rs 44.5 crore.
• Finance costs up 3.3 times to Rs 36.7 crore.
• Raw materials cost up 2.1 times to Rs 465.7 crore.
• Other income down 38 percent to Rs 38 crore.

Jindal Saw (Q4, YoY)

• Stock rose as much as 2.8 percent to Rs 84.50.
• Revenue up 15.8 percent to Rs 2,844.3 crore.
• Net profit down 7.7 percent to Rs 152.6 crore.
• Ebitda down 7.9 percent to Rs 372.5 crore.
• Margin at 13.1 percent versus 16.5 percent.
• Inventory loss at Rs 119 crore versus Rs 57.9 crore.

Man Infraconstruction (Q4, YoY)

• Stock rose as much as 3 percent to Rs 34.30.
• Revenue down 39.5 percent to Rs 134.5 crore.
• Net profit down 69 percent to Rs 13.8 crore.
• Ebitda down 78.3 percent to Rs 18.8 crore.
• Margin at 14 percent versus 39.1 percent.

SH Kelkar & Company (Q4, YoY)

• Stock rose as much as 3.3 percent to Rs 156.85.
• Revenue down 5.3 percent to Rs 268.9 crore.
• Net profit up 2.5 percent to Rs 20.2 crore.
• Ebitda down 6.9 percent to Rs 24.1 crore.
• Margin at 9 percent versus 9.1 percent.
• RM as percent of sales at 63 percent versus 49.6 percent.
• Inventory gain of Rs 13 crore.

Quess Corp (Q4, YoY)

• Stock rose as much as 7.2 percent to Rs 718.
• Revenue up 21.4 percent to Rs 2,294.8 crore.
• Net profit down 0.5 percent to Rs 76.1 crore.
• Ebitda up 20.4 percent to Rs 131.8 crore.
• Margin at 5.7 percent versus 5.8 percent.
• Other expenses up 32 percent to Rs 299.3 crore.

Munjal Auto Industries (Q4, YoY)

• Stock rose as much as 2.9 percent to Rs 50.55.
• Revenue up 0.6 percent to Rs 269.5 crore.
• Net profit down 7.5 percent to Rs 9.8 crore.
• Ebitda down 22.7 percent to Rs 15 crore.
• Margin at 5.6 percent versus 7.2 percent.
• RM as percent of sales at 88 percent versus 76 percent.
• Inventory gain of Rs 26.8 crore

Indo Count Industries (Q4, YoY)

• Stock rose as much as 3.7 ercent to Rs 41.80.
• Revenue down 2.2 percent to Rs 397 crore.
• Net profit down 93 percent to Rs 2 crore.
• Ebitda down 62.6 percent to Rs 15.6 crore.
• Margin at 3.9 percent versus 10.3 percent.
• Higher inventory cost led to fall in Ebitda.

Allcargo Logistics (Q4, YoY)

• Stock rose as much as 3.1 percent to Rs 108.95.
• Revenue up 12.4 percent to Rs 1,727.3 crore.
• Net profit up 6.8 times to Rs 79.4 crore.
• Ebitda up 43.6 percent to Rs 107.2 crore.
• Margin at 6.2 percent versus 4.9 percent.
• Net profit jumped due to tax refund in March quarter and exceptional loss in the base quarter.
• Lower other expenses aided Ebitda.

ITD Cementation (Q4, YoY)

• Stock fell as much as 11.8 percent to Rs 108.30.
• Revenue down 8.5 percent to Rs 599 crore.
• Net loss of Rs 35.3 crore versus net profit of Rs 28.4 crore.
• Ebitda down 86 percent to Rs 8.6 crore.
• Margin at 1.4 percent versus 9.3 percent.
• Higher subcontracting cost impacted financials.

IG Petrochemicals (Q4, YoY)

• Stock fell as much as 3.4 percent to Rs 268.30.
• Revenue flat at Rs 313 crore versus Rs 312.8 crore.
• Net profit down 45.5 percent to Rs 18.2 crore.
• Ebitda down 42.5 percent to Rs 36.7 crore.
• Margin at 11.7 percent versus 20.4 percent.
• Higher raw material cost impacted financials.

Ramco Systems (Q4, YoY)

• Stock rose as much as 3.1 percent to Rs 210.75.
• Revenue down 1.5 percent to Rs 141 crore.
• Net profit of Rs 8.7 crore versus net loss of Rs 3 crore.
• EBIT up six times to Rs 12.8 crore versus Rs 2.2 crore.
• EBIT Margins at 9.1 percent versus 1.5 percent.
• Lower employee cost and other expenses aided financials.

Sanjay Dutt, director of Quantum Securities says the rally should get widespread once the election event is out of the way. “We think A and B group good quality stocks will outperform their Nifty peers going forward,” he told BloombergQuint in an interview.

In Dutt’s view:

• There will be a substantial jump in GST collection once a stable government is formed.
• See a nominal rate cut of 25 basis points from the RBI to manage the ongoing liquidity issue.
• The new government should deal first with NBFCs related issues

Shares of Quess Corp rose as much as 7.2 percent to Rs 718.

The company acquired additional 30 percent stake in Golden Star Facilities and Services with an investment up to Rs 35 crore. With this action, the target company becomes wholly owned arm of the company.

Trading volume was more than eight times its 20-day average, Bloomberg data showed. The stock traded at 25 times its estimated earnings per share for the coming year.

Shares of the private sector lender gained as much as 7.31 percent to Rs 111 after categorising loans to the beleaguered IL&FS group as non-performing.

“We have good reasons to believe and there are indications in the market that there could be 90-100 percent recovery on this particular exposure,” Romesh Sobti, managing director and chief executive officer at IndusInd Bank, said in earnings press conference. The issues pertaining to the group will be “put behind” in the fourth quarter of 2019-20, he said.

The lender has now provided for 55 percent of its total IL&FS exposure worth Rs 3,000 crore.

The stock has gained over 12 percent in two trading sessions, its best performance since Sept. 20, 2013. The scrip is set for is longest losing streak in over two months.

Here’s what analysts had to say after the lender announced its fourth quarter results:

CLSA

• Maintained ‘Buy’; hiked price target to Rs 2,160 from Rs 2,120.
• Slippages high due to IL&FS but manageable exposure to stressed groups.
• Casa growth key to support core loan growth.
• Clarity on succession is key.

UBS

• Maintained ‘Neutral’; cut price target to Rs 1,700 from Rs 1,800.
• Clean up quarter.
• Weak earnings; GNPL increases sharply.
• Expect increase of 100 bps in credit cost vs guidance of 60 basis points.

Shares of the country’s largest lender extended gains for the second consecutive trading session and rose as much as 1.42 percent to Rs 2,439.90.

The bank’s board approved share split of each share into two, according to its statement on the exchanges.

The expected time of completion is within three-four months from shareholder’s approval in AGM, which is scheduled on July 12, the statement said. The Bank said that the move was undertaken to augment the affordability of the bank’s equity shares and participation of the retail investors.

Of the shares traded, 40 percent were at the ask price and 36 percent were at the bid, Bloomberg data showed. The stock advanced 24 percent in the past 12 months compared to a gain of 8.3 percent in the Sensex.

Here's a lineup of all the major corporate meetings today.

Read: https://t.co/lYejpequOo pic.twitter.com/xWXZCX9785

— BloombergQuint (@BloombergQuint) May 23, 2019

Futures –May series

Nifty

• Nifty futures closed trading at 11,781.6, premium of 43 points versus 6 points
• Nifty open interest up 6 percent, adds 9.8 lakh shares in open interest.

Bank Nifty

• Bank Nifty futures closed trading at 30,606, premium of 79 points versus 80 points.
• Bank Nifty open interest up 3 percent adds 40,000 shares in open interest.

Options

• Nifty PCR at 1.12 versus 1.19 (across all series).

Nifty Weekly Expiry 23 May

• Max open interest on call side at 12,500 (16.8 lakh shares) followed by 12,000 (14.8 lakh shares).
• Max open interest at Put side at 11,000 (10.6 lakh shares).
• Max open interest addition seen at 12,500 (+5.5 lakh shares), 12,400C (+4 lakh shares).

Nifty Monthly Expiry 30 May

• Max open interest on call side at 12,500 (38.3 lakh shares) followed by 12,000 (37.8 lakh shares).
• Max open interest on Put side at 11,000 (39.2 lakh shares).
• Max open interest addition seen at 12,500C (+8.9 lakh shares), 10,800P (+5.3 lakh shares).

Stocks In F&O Ban

• In Ban: Adani Power, IDBI Bank and Reliance Capital
• Out of Ban: Jet Airways

On IndusInd Bank

CLSA

• Maintained ‘Buy’; hiked price target to Rs 2,160 from Rs 2,120.
• Slippages high due to IL&FS but manageable exposure to stressed groups.
• Casa growth key to support core loan growth.
• Clarity on succession is key.

UBS

• Maintained ‘Neutral’; cut price target to Rs 1,700 from Rs 1,800.
• Clean up quarter.
• Weak earnings; GNPL increases sharply.
• Expect increase of 100 bps in credit cost vs guidance of 60 basis points.

On Cipla

CLSA

• Maintained ‘Outperform’; hiked price target to Rs 600 from Rs 560.
• March quarter review: Results boosted by one-off U.S. sales
• Core business getting back on track.
• Double digit growth guidance for 2019-20.

Citi

• Maintained ‘Neutral’; hiked price target to Rs 600 from Rs 550
• Good quarter; supply constraints resolved.
• Steady guidance for 2019-20.
• Management commentary provide comfort that factors behind the weakness in H2 are behind

More Calls

Citi on Jindal Steel & Power

• Maintained ‘Buy’; cut price target to Rs 250 from Rs 254
• Finishes a strong year on weak note; Expect recovery in 2019-20.
• Cash flows have improved; see there is ample scope for volume, Ebitda and cash flows to improve.
• Valuations remain attractive.

CLSA on Bank of Baroda

• Maintained ‘Buy’; hiked price target to Rs 150 from Rs 140.
• Slippage remain elevated but high coverage will ease credit costs.
• Retail lending is growing well but uptick in CASA will be key.
• Expect synergy from the Dena-Vijaya merger over the next two years.

• Dish TV: T. Rowe Price International Discovery Fund sold 1.2 crore shares or 0.73 percent equity at Rs 28.73 each.
• Cox & Kings Financial Services: Abu Dhabi Investment Investment Authority sold 4.92 lakh shares at Rs 16.75 each (No ownership details given).

Vishal Fabrics

• Veena Investments acquired 4.74 lakh shares or 1.08 percent equity at Rs 286 each.
• Asia Investment Corporation Mauritius sold 4.44 lakh shares or 1.01 percent equity at Rs 286 each.

• HDFC Bank: Board approved share split of each share into two. Expected time of completion within three-four months from shareholder’s approval in AGM (to be held on July 12). The Bank said the move was undertaken to augment the affordability of the bank’s equity shares and participation of the retail investors.
• Quess Corp acquired additional 30 percent stake in Golden Star Facilities and Services with an investment up to Rs 35 crore. With this action, the target company becomes wholly owned arm of the company.
• Adani Power: Mundra Unit reported profit of Rs 820 crore for the six months ended March 31 compared to a loss of Rs 1440 crore a year earlier. Revenue from operations more than doubled to Rs 8130 crore. Mundra Plant’s turnaround follows regulator’s tariff relief on imported coal. (Bloomberg News)
• Tata Motors Group’s business remained well capitalized and consolidated net automotive debt-to-equity is at 0.47 times, Tata Sons said in a clarification sent via emailed statement. It is also stated that maturities of debt have been spread out till 2027 and has Rs 19,000 crore of undrawn revolving credit facilities, with generating operating cash flows of Rs 21,500 crore after interest. In the press release it was also mentioned that net automotive debt, which is gross debt less cash on hand without considering the group’s financing arm, remains at comfortable levels. (Tata Sons Press Release)
• Emami: SEBI approved Emami Cement’s IPO which could hit the market in the next six months. The company is looking to raise Rs 1,000 crore through the IPO, which comprises fresh issuance of shares worth Rs 500 crore, and the rest as offer for sale from existing promoters. (Press Trust of India)
• SH Kelkar & Company: Board to consider acquiring remaining 49 percent stake in Creative Flavours & Fragrances S.P.A and share buyback on June 10
• Bodal Chemicals plans to acquire 80 percent stake in Turkey based Sener Boya Kimya for Rs 32 crore. The target company deals in the marketing and sale of dyestuff and chemicals. Acquisition to be completed within the next five months.
• Fairchem Speciality: Board approved demerger of specialty oleo chemicals and nutraceuticals business segments into a new wholly owned subsidiary company. The resulting company Fairchem Organics will issue one share for every three shares held by the demerged company.
• ITI inked an MoU with Department of Telecommunications for financial year 2020 for manufacturing of telecom equipment and digital products.
• Biocon: Health Canada approved company’s and Mylan’s biosimilar product Ogivro. Mylan plans to launch the product this quarter in Canada. The product is used to treat breast and gastric cancer.
• Wipro developed a block-chain based payment solution for Travacoin in the airline industry.
• Vaibhav Global to consider share buyback on May 30.
• Can Fin Homes: Board sought to raise Rs 6000 crore via issue of NCDs and Rs 1000 crore vie further issue of equity on July 17.
• Eclerx Services: Share buy-back opens on May 31 and closes on June 14.
• Adani Ports & SEZ: To consider raising Rs 1,500 crore via NCDS and $1 billion by issuance of dollar-denominated foreign currency bonds on May 27.

DGCA April Update

• IndiGo’s passenger growth stood at 20 percent.
• SpiceJet’s passenger growth stood at 1 percent - lowest in last 42 months.
• IndiGo’s market share increased to 50 percent.
• SpiceJet’s market share declined to 13.1 percent.

Here’s How Markets Have Performed During Elections

London Metal Exchange

• Copper ended down 1.13 percent.
• Aluminium down 0.95 percent.
• Nickel closed 0.75 percent lower.
• Lead closed 0.39 percent lower.
• Tin ended 0.77 percent lower.
• Zinc ended 1.36 percent lower.

Stocks in Asia declined with U.S. equity futures as ongoing trade-war tensions weighed on risk appetite and dragged down sovereign bond yields.

Hong Kong shares led losses, with equities also lower in South Korea, Japan and China. S&P 500 futures slid following weakness in U.S. shares Wednesday.

Source: Bloomberg