Sensex, Nifty Rise For Third Straight Day, Oil Refiners Rally  

Indian equity benchmarks gained for third straight day to their highest level in over a week led by HDFC Bank, Larsen & Toubro, Sun Pharma and ITC.

The S&P BSE Sensex rose 0.7 percent or 241 points to 35,165 and the NSE Nifty 50 index climbed 0.8 percent or 83 points to 10,689.

The broader markets outperformed their larger peers as the S&P BSE MidCap index advanced 1.35 percent and the S&P BSE SmallCap index climbed 1.6 percent.

Seventeen out of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Oil & Gas index's 2.5 percent gain after crude fell for third straight day. On the flipside, the S&P BSE IT index fell 1.7 percent tracking rupee appreciation against the U.S. dollar.

• Manappuram Finance has 28.5 lakh shares change hands in a block deal on BSE.

Buyers and sellers were not immediately known

Source: Bloomberg

Gains in state-run oil retailers boosted the gauge of oil and gas companies — the S&P BSE Oil & Gas index to rise 2.6 percent after crude fell for third straight session in international markets.

Shares of the state-run power producer rose as much as 2.75 percent to Rs 169.85 after its profit beat Bloomberg consensus estimates in March quarter.

Key earnings highlights:

• Net profit up 40.69 percent at Rs 2,925.7 crore versus Rs 2,079.4 crore (YoY); Estimate of Rs 2,715 crore
• Revenue up 13 percent at Rs 23,100 crore versus Rs 20,416 crore (YoY); Estimate of Rs 21,604 crore
• Standalone EBITDA margin at 25.6 percent versus estimate of 28.4 percent
• Ebitda up 8.2 percent at Rs 5,910 crore versus 5,463 crore (YoY)

Shares of the Mumbai-based specialty pharma company rose as much as 4.2 percent to Rs 2,505 after it reported March quarter earnings.

Key earnings highlights:

• Net profit at Rs 3,944 crore versus Rs 310 crore (YoY); Tax credit at Rs 3,569.2 crore
• Revenue at Rs 2,991 crore versus Rs 2,451 crore (YoY)
• EBITDA up 33.7 percent at Rs 1,380.6 crore versus Rs 1,032.3 crore (YoY)
• Margin at 46.2 percent versus 41.2 percent (YoY)
• To transfer some assets, liabilities to unit PHFL by December
• To merge with Piramal Phytocare

Pradeep Khanna - managing director and head of trading at HSBC told BloombergQuint that RBI communication on raising rates should be right especially when the market rates have gone up.

Key conversation highlights:

• Currency houseview is at 66/$, but don't think there'll be substantial rupee appreciation sometime soon
• Not looking at substantial rupee appreciation at this point in time
• If oil continues to rise, rupee will continue to trade with a bit of the undertone
• Should be prepared to see more outflows for next 2-3 months

Singapore Exchange Ltd. and National Stock Exchange of India Ltd. have abandoned talks on a cross-border trading link, according to people familiar with the matter, amid a bitter court battle that’s soured an 18-year partnership.

Shares of the country's largest infrastructure developer rose 2.46 percent to Rs 1,375 ahead of its March quarter earnings.

Here's what to watch out for L&T in March quarter:

• Revenue seen at Rs 41,068 crore versus Rs 36,828 crore, up 11 percent
• Net profit seen at Rs 2,995 crore versus Rs 3,025 crore, down 1 percent
• EBITDA seen at Rs 5,011 crore versus Rs 4,335 crore, up 16 percent
• Margins seen at 12.2 percent versus 11.8 percent

Consolidated Bloomberg estimates

Shares of the aviation companies were trading higher tracking weakening crude.

Crude prices fell for third day in a row in international markets. Brent crude declined 1.2 percent to $75.54.

• SpiceJet surged 15 percent
• Jet Airways climbed 4.79 percent
• Interglobe Aviation up 2.41 percent

Shares of the Mumbai-based local search engine surged 20 percent, the most since Nov. 2017, to Rs 608 on the back of heavy volumes.

Trading volume was 5 times its 20-day average.

Indian equity benchmarks extended gains led by HDFC Bank, ITC, Sun Pharma and Larsen & Toubro.

The S&P BSE Sensex rose 0.71 percent or 250 points to 35,175 and the NSE Nifty 50 index climbed 0.85 percent or 89 points to 10,694.

The broader markets were outperforming their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes rose over 1.4 percent.

The overall market breadth was extremely positive as 1,736 shares were advancing while 717 were declining on the BSE.

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Shares of hotel companies were trading higher taking cues from strong March quarter earnings reported by the Indian Hotels.

Key earnings highlights:

• Consolidated revenues rose 8.7 percent to Rs 1,143.5 crore versus Rs 1,052.2 crore (YoY)
• EBITDA up 37.7 percent to Rs 244.7 crore versus Rs 177.7 crore (YoY)
• EBITDA margin up 21.4 percent versus 16.9 percent (YoY)
• Net profit up 88.9 percent to Rs 75.6 crore versus Rs 40 crore (YoY)

Shares of the Delhi-based hospital chain operator rose as much as 2.65 percent to Rs 148.90 after Hero and Burman Family consented to re-open bidding process.

• Consent for bidding to move ahead with fund raising
• Hero, Burman interested in participating in bidding

Shares of the debt-ridden telecom operator rose as much as 12.94 percent to Rs 16.15 after the National Companies Law Appellate Tribunal admitted Reliance Communications' plea against NCLT order and will hear on May 29.

• NCLT had ordered admitting Reliance Communications to the debt resolution process.
• Major lenders including China Development Bank, State Bank of India and Standard Charteredhave been formally impleaded to appeal proceedings before the NCLAT

• Shares of the companies promoted by Anil Dhirubhai Ambani were trading higher.

Shares of the Chennai-based auto parts maker rose as much as 6 percent, the most in over three months, to Rs 7,790 after its profit rose in March quarter.

Key earnings highlights:

• Net profit up 56 percent at Rs 77.21 crore versus Rs 49.57 crore (YoY)
• Revenue up 23 percent at rs 747.86 crore versus Rs 606.17 crore (YoY)

Shares of the Mumbai-based e-governance service provider hit a lower circuit for 25th straight trading session.

The stock has lost as much as 72 percent since it ended in the green on April 20, 2018.

Shares of the Mumbai-based advanced pharmaceutical ingredients maker rose as much as 9.86 percent, the most in over three months, to Rs 394.60 on the back of heavy volumes.

Trading volume was 6.7 times its 20-day average.

Shares of the sugar makers surged as government is mulling fixing minimum support price for sugar nine percent more than the current market price, Bloomberg reported citing people with knowledge of the matter said.

• The government has finalised a proposal for fixing minimum selling price of sugar at Rs 30 per kilogram
• Benchmark Mumbai sugar futures is at 2,748 rupees per 100 kg
• Move aimed at ensuring remunerative prices for mills and farmers, they said.
• Sugar companies will be paid Rs 1,200 crore in subsidy for storage
• Another Rs 1,300 crore to be earmarked as interest subsidy for sugar mills and distillery modernisation

Nifty 10,700 strike price call was among the most active option contracts on the National Stock Exchange.

The premium on the contract surged 87 percent to Rs 30. Over 5.4 lakh shares were added to the open interest which stood at 39.42 lakh share.

Is There Support Building At The 10,600 Mark? Find Out On The F&O Show

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Shares of the Delhi-based jewellery retailer fell as much as much as 10 percent to Rs 173 after reported March quarter earnings.

Key earnings highlights:

• Revenue down 2.4 percent to Rs 2,103 crore.
• Net profit up 7.4 percent to Rs 118.3 crore.
• Ebitda up 19.8 percent to Rs 212.1 crore.
• Margins at 10.2 percent versus 8.2 percent.

Shares of the Hyderabad-based shrimp feed maker fell as much as 7.2 percent to Rs 1,814 after its profit declined in March quarter.

Key earnings highlights:

• Net profit declined 7 percent to Rs 75.46 crore versus Rs 81.06 crore (YoY)
• Revenue rose 20 percent to Rs 726.76 crore versus Rs 606.80 crore (YoY)

Shares of the Mumbai-based logistics service provider rose for second day in a row after its promoters decided to acquire Blackstone's stake in arm Gateway Rail Freight for Rs 810 crore.

Gateway Distriparks rose as much as 9 percent in today’s session and in last two trading sessions it has jumped 29 percent.

Shares of the Vadodara-based fruit juice maker were locked in a 20 percent lower circuit at Rs 344.20 after it informed exchanges that Deloitte Haskins & Sells, chartered accountants resigned with effect from May 26.

Meanwhile, Kotak has suspended its rating on the stock saying the company's disclosure does not detail the reasons for the auditor's resignation.

We lack comfort on rating the company given the lack of disclosure. Shall review our stance post the publication of the annual results, Kotak said.

Kotak had a buy rating on the stock with a price target of Rs 450 per share.

Shares of the government-owned oil refiners — Bharat Petroleum, Indian Oil and Hindustan Petroleum surged after crude fell for third day in a row.

The Brent Crude has fallen over six percent in last three sessions to below $75 a barrel.

Shares of the Pune-based IT company erased early gains and fell as much as 7 percent, from day's high, to Rs 671 despite beating Bloomberg consensus estimates in March quarter.

Key earnings highlights:

• Revenue up 3.6 percent to Rs 8,054.5 crore.
• Net profit up 30 percent to Rs 1,222 crore versus estimate of Rs 931 crore.
• EBIT up 12.4 percent to Rs 1,113 crore.
• EBIT margins at 13.8 percent versus 12.7 percent.

Shares of the country's largest drugmaker rose as much as 7 percent, the most in over five months, to Rs 499.05 after its profit beat Bloomberg consensus estimates in the March quarter.

Key earnings highlights:

• Revenue down 2 percent to Rs 6,977 crore.
• Net profit up 7 percent to Rs 1,309 crore versus estimate of Rs 895 crore
• Ebitda up 9 percent to Rs 1,683 crore.
• Margin at 24.1 percent versus 21.7 percent.

Indian equity benchmarks moved higher led by oil marketing companies after crude declined for third day in a row. The country's largest drugmaker — Sun Pharma also added to gains after it beat Bloomberg consensus estimates in March quarter.

The S&P BSE Sensex rose 0.42 percent or 145 points to 35,070 and the NSE Nifty 50 index climbed 0.55 percent or 59 points to 10,664.

Seventeen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Oil & Gas index's 2.3 percent surge. On the flipside, the S&P BSE Information Technology index was the top loser, down 0.6 percent.

The broader markets were outperforming their larger peers as the S&P BSE MidCap index rose 0.8 percent and the S&P BSE SmallCap index advanced 0.7 percent.

After a correction of 5-10 percent, crude can bounce back and may remain higher for next 6-12 months on the back of cyclical growth in world economy, Dhananjay Sinha, head of research at Emkay Global Financial Services told BloombergQuint in an interview.

Key conversation highlights:

• Fall in crude will be an opportunity to buy OMCs for the short term
• After some amount of correction in crude there can be a 5-10 percent bounce back
• Looking at higher crude price from 6-12 months perspective on the back of cyclical growth in world economy
• PSU banks do not have growth capital due to losses and provisioning
• Expect rupee to be in the range of 68-70 against the dollar
• Important to watch out for banks which can grow despite rising rates

• Rupee opened higher at 67.48 per dollar against Friday's close of 67.77.

Implied opening from forwards suggest the rupee may open around 67.6540 a dollar. Traders expect the pair to trade in a range of 67.30-67.70 and garner some gains against the dollar.

Sovereign bonds too should see some buying coming in after a sharp decline in crude oil prices, a major source of imported inflation for the country.

However, the absence of another open market operation to buy debt is a dampener. This could slow down the momentum. Yield on the 10-year note may stay in a range of 7.72-7.80 percent in the day.

Kotak On Page Industries

• Maintained ‘Sell’; Raised price target to Rs 21,000 from Rs 18,200.
• Sharp improvement in product mix drove strong growth.
• Overall volume growth modest.
• Fundamentals strong, but valuations rich.

Kotak Securities On Cummins India

• Maintained ‘Reduce’; Cut price target to Rs 680 from Rs 715.
• Ended 2017-18 on a weak note; outlook suggest no respite.
• Competition expanding aggressively; full impact yet to play out.
• FY19-20 likely to be challenging years.

Credit Suisse On Cummins India

• Maintained ‘Outperform’; cut price target to Rs 850 from Rs 975.
• Lackluster Q4 results on spike in expenses.
• Target price cut to factor in lower revenues and margins.
• Retain rating on sharp underperformance in last two years and likely recovery.

Goldman Sachs On Tech Mahindra

• Maintained ‘Buy’; raised price target to Rs 880 from Rs 824.
• Q4 results above expectations on continued margin beat.
• Entire topline growth led by enterprise business in Q4.
• 5G remains key structural growth opportunity.

Macquarie On Tech Mahindra

• Maintained ‘Neutral’ with a price target of Rs 670.
• Q4 profit above estimates due to forex gains and profit on sale of land.
• Expect EBIT margin normalisation to continue.
• Outlook for telecom business remains muted; 5G spend at least a year away.

Deutsche Bank On Sun Pharma

• Maintained ‘Hold’; cut price target to Rs 431 from Rs 496.
• Q4 in line; U.S. revenue offset weak India business growth.
• Specialty launches to drive sentiment near term.
• Execution in U.S. business remains key monitorable.

HSBC On Sun Pharma

• Downgraded to ‘Hold’ from ‘Buy’; cut price target to Rs 510 from Rs 650.
• Q4 gross margins expand on better product mix and lower costs.
• Expect operating expenses to increase on account of speciality drugs.
• Headwinds continue for U.S. generic business.

Edelweiss On Cadila Healthcare

• Maintained ‘Buy’ with a price target of Rs 510.
• Strong Q4 led by robust U.S. performance.
• Generic Tamiflu and exclusive sales of generic Lialda drive U.S.
• Cadila to deliver strong earnings growth on the back best complex pipeline.

JPMorgan On Cadila Healthcare

• Maintained ‘Neutral’; cut price target to Rs 400 from Rs 425.
• Q4 in line; growth aided by U.S. as India was muted.
• Continued launch momentum crucial for maintaining U.S. revenue base.
• Gross margins to be at risk in FY19-20 due to erosion in key products.

Edelweiss On Bank of Baroda

• Maintained ‘Buy’ with a price target of Rs 180.
• Q4 marred by higher slippages.
• Loan growth strong with better rated corporate and retail segments.
• Expect quality growth to gain traction.

Morgan Stanley On Bank of Baroda

• Maintained ‘Equal-weight’ with a price target of Rs 170.
• Underlying trends in asset quality improved.
• Key negative was miss in core pre-provisioning operating profit owing to weak NII.
• Expect double-digit return on equity by FY20.

Insider Trades

• TTK Prestige promoter TT Jagannathan bought 2,450 shares on May 24.
• Take Solutions promoter Nadathur Srinivasan Shonbana bought 60,000 shares on May 25.

(As reported on May 25)

Who’s Meeting Whom

• Voltas to meet Morgan Stanley on May 28.
• Blue Star to meet Motilal Oswal, Kotak, HSBC, ICICI Securities, Emkay and many others on May 28.

Bulk Deals

Laurus Labs

• Promoter Satyanarayana Chava bought 6.3 lakh shares at Rs 453.99 each.

F&O Cues

• Nifty May Futures closed at 10,602; a discount of 2.6 points versus 8.6 points.
• May series-Nifty Open Interest down 2 percent and Bank Nifty Open Interest down 9 percent.
• India VIX ended at 12.6, down 3.8 percent.
• Maximum Open Interest for May series at 10,800, Open Interest at 52.9 lakh, Open Interest up 7 percent.
• Maximum Open Interest for May series at 10,500, Open Interest at 67.3 lakh, Open Interest up 22 percent.

Active Stock Futures

• Larsen & Toubro
• NTPC

Other Results

• Apex Frozen
• Aurobindo Pharma
• Bank of India
• Finolex Cables
• GNA Axles
• Mercator
• NLC India
• NMDC
• Oil India

Earnings Reactions To Watch

Sun Pharma (Q4, YoY)

• Revenue down 2 percent to Rs 6,977 crore.
• Net profit up 7 percent to Rs 1,309 crore.
• Ebitda up 9 percent to Rs 1,683 crore.
• Margin at 24.1 percent versus 21.7 percent.

Tech Mahindra (Q4, QoQ)

• Revenue up 3.6 percent to Rs 8,054.5 crore.
• Net profit up 30 percent to Rs 1,222 crore.
• EBIT up 12.4 percent to Rs 1,113 crore.
• EBIT margins at 13.8 percent versus 12.7 percent.

Eris Life Sciences (Q4, YoY)

• Revenue up 16.2 percent to Rs 194 crore.
• Net profit up 9.3 percent to Rs 57.4 crore.
• Ebitda up 30.1 percent to Rs 72 crore.
• Margins at 37.1 percent versus 33.2 percent.

Gujarat Fluorochemicals (Q4, YoY)

• Revenues down 46.8 percent at Rs 991.7 crore.
• Net profit of Rs 54.5 crore versus net loss of Rs 122.2 crore.
• Ebitda down 91.1 percent to Rs 33.3 crore.
• Margins at 3.4 percent versus 20.1 percent.

Power Mech (Q4, YoY)

• Revenues up 18.1 percent to Rs 407.8 crore.
• Net profit up 44 percent to Rs 22.9 crore.
• Ebitda up 28.8 percent to Rs 51.4 crore.
• Margins at 12.6 percent versus 11.6 percent.

Jindal Saw (Q4, YoY)

• Revenue up 35.6 percent to Rs 2,488.8 crore.
• Net profit up 45.1 percent to Rs 165.4 crore.
• Ebitda up 13.4 percent to Rs 436 crore.
• Margins at 17.5 percent versus 21 percent.

SH Kelkar (Q4, YoY)

• Revenue up 14.8 percent to Rs 282.7 crore.
• Net profit down 28.1 percent to Rs 19.7 crore.
• Ebitda up 85.7 percent to Rs 24.7 crore.
• Margins at 8.7 percent versus 5.4 percent.

NLACO (Q4, YoY)

• Revenue up 12.3 percent at Rs 2,863.2 crore.
• Net profit down 4 percent at Rs 257 crore.
• Ebitda up 14.5 percent at Rs 489.67 crore.
• Margin at 17.1 percent versus 16.7 percent.

TCI Express (Q4, YoY)

• Revenue up 23.1 percent to Rs 249.3 crore.
• Net profit up 49.6 percent to Rs 17.8 crore.
• Ebitda up 51.3 percent to Rs 28.3 crore.
• Margins at 11.4 percent versus 9.2 percent.

Amber Enterprises (Q4, YoY)

• Revenue up 12.1 percent to Rs 692 crore.
• Net profit up 46.9 percent to Rs 33.8 crore.
• Ebitda up 20.4 percent to Rs 67.9 crore.
• Margins at 9.8 percent versus 9.1 percent.

PC Jeweler (Q4, YoY)

• Revenue down 2.4 percent to Rs 2,103 crore.
• Net profit up 7.4 percent to Rs 118.3 crore.
• Ebitda up 19.8 percent to Rs 212.1 crore.
• Margins at 10.2 percent versus 8.2 percent.

Lakshmi Machine Work (Q4, YoY)

• Revenue up 10.1 percent to Rs 747.3 crore.
• Net profit down 10.4 percent to Rs 61.2 crore.
• Ebitda up 17.5 percent to Rs 67.5 crore.
• Margins at 9 percent versus 8.5 percent.

Bank of Baroda (Q4)

• Net interest income rose 11.7 percent to Rs 4,002.3 crore (YoY).
• Net loss of Rs 3,102 crore versus net profit of Rs 154.7 crore (YoY).
• Provisions at Rs 7,052.5 crore versus Rs 3,155.3 crore (QoQ).
• Gross NPA at 12.26 percent versus 11.31 percent (QoQ).
• Net NPA at 5.49 percent versus 4.97 percent (QoQ).

NBCC (Q4, YoY)

• Revenue dropped 3.4 percent to Rs 2,545.8 crore.
• Net profit down 16.1 percent to Rs 146 crore.
• Ebitda down 9 percent to Rs 191.5 crore.
• Margins at 7.5 percent versus 8 percent.

Saurashtra Cement (Q4, YoY)

• Revenue up 66.7 percent to Rs 178.5 crore.
• Net profit up 4.8 times to Rs 26.3 crore.
• Ebitda down 90.9 percent to Rs 0.7 crore.
• Margins at 0.4 percent versus 7.2 percent.

Lakshmi Vilas Bank (Q4)

• NII down 47.1 percent at Rs 120.4 crore (YoY).
• Net loss at Rs 622.3 crore versus net profit of Rs 52.2 crore (YoY).
• Provisions at Rs 921.4 crore versus Rs 85.3 crore (QoQ).
• Gross NPA at 9.98 percent versus 5.66 percent (QoQ).
• Net NPA at 5.66 percent versus 4.27 percent (QoQ).

Excel Crop Care (Q4, YoY)

• Revenue down 12 percent to Rs 207.3 crore.
• Net loss at Rs 0.5 crore versus net profit of Rs 6 crore.
• Ebitda down 44.2 percent to Rs 4.8 crore.
• Margins at 2.3 percent versus 3.7 percent.

• Cadila Healthcare to raise up to Rs 10,000 crore via QIP issue and up to Rs 5,000 crore via issue of FCCBs.
• Sundaram Finance Holdings to amalgamate Sundaram BPO India with Sundaram Business Services.
• GIC announced bonus issue in ratio of one share for every one share held.
• Himatsingka Seide subsidiary’s retail division to be demerged from self.
• DCM Foods approved modernisation of first extrusion line which will add 3,800 MT per annum to its capacity.
• Dilip Buildcon declared L1 bidder for NHAI project in Karnataka for Rs 1,027 crore.
• Lakshmi Vilas Bank in talks with banks, PE funds to sell up to 26 percent equity (Economic Times).

• PSU banks bleed as bad loan clean-up accelerates
• India’s correlation with global markets approaches 10-year low
• Prime Minister Modi inaugurates Rs 11,000 crore Eastern Peripheral Expressway
• OPEC and allies have already cleared oil surplus
• PNB fraud: ED to seek immediate confiscation of Nirav Modi’s assets under fugitive ordinance
• Emerging markets have an overlooked strength
• Trump says U.S.-North Korea talks start to salvage Kim summit
• Mann Ki Baat: PM Modi remembers Nehru & Savarkar, talks fitness
• Startup street: Mobike follows rival Ofo to India
• Four years of Modi: Digital India colonised by IAS!
• Indian millennials most optimistic as global peers fear automation
• IPL 2018 final | As it happened: Chennai Super Kings win by 8 wickets

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India was little changed at 10,637 as of 7:40 a.m.

Asian stocks drifted at the open, with energy shares tumbling after oil posted its biggest drop in about a year. The euro rallied after Italy’s president rejected a candidate for finance minister who’s been skeptical of the single currency.

Benchmarks nudged higher in Tokyo and dipped in Australia. South Korean stocks rose, as did U.S. futures, after President Donald Trump appeared to confirm that his June summit with North Korea’s Kim Jong Un was back on.

Bonds

• The yield on 10-year Treasuries was steady at 2.93 percent after falling five basis points Friday.

Commodities

• West Texas Intermediate crude fell 0.8 percent to $67.37 a barrel after tumbling 4 percent on Friday.
• Gold lost 0.3 percent to $1,298.90 an ounce.

Here are some key events to watch this week:

• U.S. markets are closed today for Memorial Day holiday. U.K. markets are closed for the spring bank holiday.
• European Union foreign ministers meet in Brussels today to discuss developments related to North Korea, Yemen, and the Iran nuclear deal.
• EU trade chief Cecilia Malmstrom and U.S. Commerce Secretary Wilbur Ross are scheduled to meet on Wednesday in an informal World Trade Organization ministerial in Paris.
• U.S. employment report for May due on Friday.
• On Saturday, U.S. Secretary of Commerce Wilbur Ross will travel to Beijing for more talks with Vice Premier Liu He on topics including ZTE Corp. and trade.