Sensex, Nifty Extend Losses Amid Weak Global Cues

Indian equity benchmarks extended losses dragged by ICICI Bank, Larsen & Toubro and HDFC amid weak global cues.

The S&P BSE Sensex fell 0.12 percent or 43 points to 34,906 and the NSE Nifty 50 index 0.18 percent declined 19 points to 10,614.

Fourteen out of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Healthcare index's 0.8 percent drop. On the other hand, the S&P BSE Power index was the top gainer, up 0.2 percent.

Indoco Remedies: The Mumbai-based drugmaker rose as much as 13 percent, the most in over a month, to Rs 216.85 after it reported March quarter earnings.

• Revenue down 2.5 percent at Rs 270 crore versus Rs 277 crore
• Net profit up 14 percent at Rs 20.5 crore versus Rs 18 crore
• Ebitda up 53 percent at Rs 49 crore versus Rs 32 crore
• Margin at 18.1 percent versus 11.6 percent

CDSL: The Mumbai-based depository service provider rose as much as 11.31 percent to Rs 301.65 as government plans to dematerialise shares of unlisted companies, The Times of India reported.

ADF Foods: The Mumbai-based packaged food maker rose as much as 4.6 percent to Rs 276.10 ahead of a board meet on June 5 to consider share buyback proposal.

Astral Poly Technik: The Ahmedabad-based PVC plumbing system maker rose as much as 6 percent to record high of (Rs) 1,019 (apiece) on the back of heavy volumes. Trading volume was 4.1 times its 20-day average.

Shares of the Mumbai-based hotel chain operator erased gains after it reported loss in March quarter.

Key earnings highlights:

• Net loss at Rs 15.8 crore versus profit of Rs 52.14 crore
• Revenue up 5 percent at Rs 206 crore versus Rs 196 crore

Italy is going through a political crisis and chances of it going out of Eurozone are slim, Johan Jooste, CIO of Bank of Singapore told BloombergQuint.

Key highlights from the conversation:

• Italian situation is different than Turkey and Argentina
• Italy is going through a political crisis
• Odds of Italy going out of Eurozone are slim as they do not have their own currency
• Not on the verge of something like Lehman Brothers crisis
• Markets are punishing those economies where external debt is high

• The Indian economy is in cyclical recovery led by both investment and consumption
• Higher oil prices and tighter financial conditions will weigh on the pace of acceleration
• Eexpect GDP growth of about 7.3 percent in 2018, down from our previous forecast of 7.5 percent
• Growth expectation for 2019 remains unchanged at 7.5 percent

• NCLAT reserves verdict on plea against Electrosteel-Vedanta
• NCLAT allows resolution proceedings subject to final order

KPR Mill: The Coimbatore-based apparel maker fell 1.14 percent to Rs 613. Trading volume was 8.1 times its 20-day average.

Dilip Buildcon: The Bhopal-based road construction company fell 6 percent to Rs 992. Trading volume was 13.1 times its 20-day average. Meanwhile, the company has clarified that rumors in the market relating to the resignation of statutory auditors of the company are false and baseless.

CDSL: The Mumbai-based depository service provider rose 7 percent to Rs 290.85. Trading volume was 13.8 times its 20-day average.

Merck Ltd: The Mumbai-based drugmaker surged 20 percent to record high of Rs 2,418. Trading volume was 12 times its 20-day average.

• Indian equity benchmarks recovered from intraday lows led by HDFC Bank, Mahindra & Mahindra, Kotak Mahindra Bank and Reliance Industries.
• The S&P BSE Sensex rose 0.1 percent or 40 points to 34,989 and the NSE Nifty 50 index advanced 0.06 percent or 6 points to 10,639.
• twelve out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Power index's 0.8 percent gain.
• The recovery was broad-based as the S&P BSE MidCap index rose 0.1 percent and the S&P BSE SmallCap index gained 0.17 percent.
• The overall breadth was neutral as 1,229 shares were advancing while 1,302 were declining.

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Shares of the Mumbai-based pharma company rose as much as 8.65 percent to Rs 33.30 after it reported profit in March quarter.

Key earnings highlights:

• Net profit at Rs 4.3 crore versus loss of Rs 2.42 crore (YoY)
• Revenue at Rs 86.8 crore versus Rs 53.95 crore (YoY)

Shares of the Mumbai-based drugmaker rose 3 percent to Rs 198 after it reported March quarter earnings.

Key earnings highlights:

• Net profit at Rs 20.5 crore versus Rs 17.94 crore
• Revenue at Rs 258.86 crore versus Rs 265.55 crore

• Welspun India has about 63 lakh shares change hands in three blocks. Stock up 2.44 percent at Rs 62.95.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of Manpasand Beverages and Vakrangee have plunged after their auditors resigned midway through quarterly review. In an interview to BloombergQuint, Amarjit Chopra, former president of ICAI and Gautam Nayak, partner at CNK & Associates discuss its ramifications of the companies and India Inc. in general.

Gautam Nayak:

• Regulators need to get into the act and find out what exactly is going on in such companies
• There is no question of coincidence when auditors resign, company has tried to avoid the question
• Material areas triggering resignation should have been stated by Deloitte
• Deloitte has left information vague by not telling the proper reason to resign
• One liner statements suggest company/auditor is trying to hide more than to reveal
• Manpasand saying timing of resignation being co-incidental is 'trying to avoid the question'
• Only way to save shareholder interest is by regulators intervening in cases like Manpasand
• Company may disclose withheld information to new auditors due to public pressure
• Highly likely that audit reports from new auditors would be full of caveats

Amarjit Chopra:

• Concerned about Deloitte as they have been auditing Manpasand for a long time
• Not concerned about Vakrangee auditors as they audited only 2 quarters and decided to quit on time
• Shareholders are bound to be perturbed with what is happening in the companies
• Board is sleeping in such cases and in denial mode
• Such cases are major issues of the corporate governance
• Confidentiality law does not deter auditor/company to not disclose key reasons
• Growing level of NPAs and forensic audits resulting in auditors taking higher safeguards
• SEBI's order on PWC will ensure that auditors will play safe for the foreseeable future

Shares of the Mumbai-based real estate developer fell 0.3 percent to Rs 67 after it reported loss in March quarter.

Key earnings highlights:

• Revenue fell 70 percent to Rs 79.16 crore from Rs 266.39 crore
• Net loss at Rs 23.62 crore versus profit of Rs 6.41 crore

Shares of Mumbai-based foreign exchange solutions provider fell as much as 20 percent, the most in nearly seven years, to Rs 679.10 after its profit declined in March quarter.

Key earnings highlights:

• Revenue declined 25 percent to Rs 1,766 crore versus Rs 1,408 crore (YoY)
• Net profit fell 85 percent to Rs 1.5 crore from Rs 10.48 crore (YoY)

Shares of the Domino’s pizza chain operator fell as much as 2.39 percent to Rs 2,515 after a block deal.

As many as 2.93 lakh shares or 0.44 percent equity changed hands in a single block.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Anil Ambani-led telecom operator extended gains for second day and rose as much as 8.78 percent to Rs 17.35.

Reliance Communications has offered an upfront payment of Rs 500 crore to its operational creditor Ericsson, which has got an insolvency order against the Anil Ambani group firm.

Shares of the Mumbai-based computer-network equipment maker rose as much as 5.72 percent, the most in over a month, to Rs 96.15 after it reported profit in March quarter.

Key earnings highlights:

• Net profit at Rs 5.31 crore versus loss of Rs 1.51 crore
• Revenue up 20 percent at Rs 182.79 crore versus Rs 151.82 crore (YoY)

Shares of the Gurugram-based government-owned central transmission utility of India rose as much as 2.4 percent to Rs 211.95 after it reported March quarter earnings post market hours yesterday.

Key earnings highlights:

• Revenue up 2.3 percent at Rs 7,811 crore versus Rs 6,705.6 crore (YoY); Bloomberg estimate of Rs 7,720 crore
• Net profit up 10.4 percent at Rs 2,004.7 crore versus Rs 1,916.4 crore (YoY); Bloomberg estimate of Rs 2,260 crore
• Ebitda up 16.2 percent at Rs 6,524 crore versus Rs 5,616.8 crore
• Margin at 83.5 percent versus 83.8 percent

Shares of the Kolkata-based chemical manufacturer rose 2 percent to Rs 141 after its profit more than doubled in March quarter.

Key earnings highlights:

• Revenue up 47 percent at Rs 551 crore versus Rs 375 crore
• Net profit up 137 percent at Rs 71 crore versus Rs 30 crore
• Ebitda up 76 percent at Rs 127 crore versus Rs 72 crore
• Margin at 23 percent versus 19.2 percent

Shares of the Vadodara-based fruit juice maker were locked in a 10 percent lower circuit for third day in a row at Rs 247.90.

The stock has been falling since last three sessions and has plunged as much as 42 percent after it informed the stock exchanges that its auditor — Deloitte Haskins & Sells resigned just four days before the board was to approve its quarterly results.

Deloitte Haskins & Sells said in a letter filed with the Registrar of Companies that the management didn’t provide “significant information” despite repeated requests. A company statement had called its resignation “coincidental and a minor hiccup”.

Nifty 10,600 strike price call option was among the most active option contracts on the National Stock Exchange.

Premium on the contract fell 11 percent to Rs 43.70. Over 14.29 lakh shares were added to the open interest which stood at 36.41 lakh shares.

The F&O Show: Find Out About Positions To Take In A Weak Market Ahead Of Expiry

Indian equity benchmarks staged a gap down start tracking weak global cues as political turmoil in Italy and renewal of trade tensions between U.S. and China gripped financial markets.

The S&P BSE Sensex fell 0.5 percent or 174 points to 34,776 and the NSE Nifty 50 index tumbled 0.5 percent or 54 points to 10,578.

Seventeen out of 19 sector gauges were trading lower led by the S&P BSE Bankex index's 1 percent decline. On the other hand, the S&P BSE Information Technology index was the top gainer, up 0.2 percent.

The mid- and small-cap shares were also facing selling pressure as the S&P BSE MidCap index fell 0.3 percent and the S&P BSE SmallCap index declined 0.2 percent.

• Rupee opened higher at 67.89 per U.S. dollar against yesterday's close of 67.87.

The rupee is likely to extend losses of the last session as a wave of risk aversion led by Italy's political crisis impacts most Asian currencies.

The unit had dropped 0.7 percent against the dollar in the previous session to 67.87. The near-term resistance for the pair is at 68.45 a dollar, a level touched on May 23. For today, traders see it in a range of 67.80-68.20 a dollar.

The global risk aversion is also likely to overshadow the positives like a drop in crude oil prices and the timely onset of the monsoon rainfall.

Yield on the 10-year note climbed 2 basis points in last session to 7.76 percent. Further hurting the sentiment is the view that RBI is set to tighten policy as early as next week to keep inflation in check and stem the decline in the rupee. Dealers see the benchmark bond yield moving in a range of 7.72-7.80 percent.

State-run Indian Oil Corporation Ltd. rolled back most of the fuel price cut within hours after halting a sixteen-day hiking spree.

The country’s largest oil retailer cut prices of petrol and diesel by 1 paisa, according to information available on its website. This after IOC had reduced petrol prices by 60 paise a litre cut and diesel by 56 paise earlier in the day.

IDBI Capital On Multiplexes

• Inox Leisure: Initiated ‘Buy’ with a price target of Rs 367; implying a potential upside of 37 percent from the last regular trade.
• PVR: Initiated ‘Buy’ with a price target of Rs 1,700; implying a potential upside of 27 percent from the last regular trade.
• India’s demographics and low penetration of screens provide huge growth opportunity.
• With surge in discretionary spend, expect multiplex sector to benefit.
• Multiplex sector to leverage the momentum in non-ticketing revenue.
• With improved outlook for movies for FY19, expect the momentum to sustain.

Macquarie On Prestige Estates

• Maintained ‘Outperform’ with a price target of Rs 396.
• March quarter net profit in line with estimates.
• Presales pick-up aided by new launches.
• Targets to launch at least one project in affordable housing.
• Remains one of the preferred picks in real estate space.

Deutsche Bank On BHEL

• Maintained ‘Neutral’ with a price target of Rs 90.
• Ebitda margin adjusted for forex gains fall down to 1.6 percent.
• Wages could further increase in 2018-19 post final negotiation.
• Rising commodity prices could put pressure on raw material cost.
• Order wins strong in 2017-18; Favourably placed in orders.

Investec On BHEL

• Maintained ‘Sell’; cut price target to Rs 70 from Rs 75.
• Ebitda margin benefited from lower than expected wage hike and forex gains.
• Yet to see pick-up in execution pace; MoU targets do not inspire confidence.
• Debtors continued to balloon and risk of write-off should not be overlooked.
• Business environment is likely to remain challenging.

Motilal Oswal On BPCL

• Maintained ‘Buy’ with a price target of Rs 568.
• EBITDA above estimates led by core operating performance.
• Net profit benefitted by higher other income and lower tax rate.
• Stabilisation of Kochi expansion to expand Kochi refinery GRM.
• Sharp correction offers an attractive opportunity to add.

CLSA On BPCL

• Maintained ‘Sell’; raised price target to Rs 390 from Rs 375.
• Strong marketing performance and higher inventory gains boost March quarter.
• Weakness in marketing and refining margins to put pressure on Q1 results.
• Concern about marketing margin to continue through election-heavy year.

CLSA On Power Grid

• Downgraded to ‘Outperform’ from ‘Buy’; cut price target to Rs 237 from Rs 250.
• Lower treasury & higher finance cost led the drag.
• Capitalisation peaked in 2017-18, slowdown ahead.
• Generation capex pick-up – key items to monitor.
• Expect 30 percent compounded growth rate of regulated equity over FY18-21.

Credit Suisse On M&M

• Maintained ‘Outperform’; raised price target to Rs 1,030 from Rs 970.
• Q4 auto profitability continues to improve.
• Operational performance surpassed estimates, led by operating leverage, product-mix and cost-control.
• Strong 2018-19 outlook across segments.
• Stock trades at attractive valuation.

Morgan Stanley on Coal India

• Maintained ‘Underweight’ with a price target of Rs 245.
• March Quarter key takeaway: Realisation surprise offset by higher overburden expenses.
• Ebitda adjusted for wage hike below estimates.
• Realisations improve on price hike and better e-auction prices.

Who’s Meeting Whom

• MAS Financial to meet several investors including IIFL, Ambit Capital, Haitong Securities etc from May 30 – 31.
• Dr. Lal Path Labs to meet Alchemy Investment Mgmt and Equirus Securities on June 5 & 6.
• M&M to meet East Capital, Hong Kong on May 30.

Insider Trades

• Shree Renuka Sugars promoters sold 48 lakh shares from May 24 – 25.
• Laurus Labs promoters acquired 2.05 lakh shares on May 23.

(As reported on May 29)

Bulk Deals

Tata Motors DVR

• ICICI Prudential MF bought 27.50 lakh shares or 0.5 percent stake at Rs 170.97 each

Vardhman Textiles

• HDFC MF bought 5.73 lakh shares or 1 percent stake at Rs 1,245 each

Trading Tweaks

• Manpasand Beverages circuit filter revised to 10 percent
• TCS last trading day before going ex-bonus
• Hatsun Agro Product last trading day before going ex-rights

F&O Cues

• Nifty May Futures closed at 10,615.5, at a discount of 17.4 points versus 9.7 points
• Nifty June Futures trading at 10,628, at a discount of 5 points versus premium of 2.4 points
• Nifty Rollover at 30 percent, Bank Nifty Rollover at 29 percent
• All series- Nifty open interest (OI) up 7 percent and Bank Nifty OI down 9 percent
• India Volatility Index ended at 13.07, up 0.1 percent
• Max OI for May series call at 10,800 strike price call option, OI at 56 lakh, up 11.5 percent
• Max OI for May series put at 10,500 strike price put option, OI at 49.9 lakh, down 19 percent

Stock Futures OI Change

• ONGC

Other Results

• 8K Miles Software
• Alkem Labs
• Apollo Hospitals
• Berger Paints
• CG Power
• Hudco
• McLeod Russel
• SAIL
• Suzlon
• Torrent Pharma

Earnings Reaction To Watch

BPCL (Q4 YoY)

• Revenues up 8 percent at Rs 65,239 crore versus Rs 60,616 crore
• Net profit up 25 percent at Rs 2,674 crore versus Rs 2,144 crore
• EBITDA up 17 percent at Rs 3,721 crore versus Rs 3,187 crore
• Margins at 5.7 percent versus 5.3 percent

Max India Standalone (Q4 YoY)

• Revenue up 137.5 percent at Rs 19 crore versus Rs 8 crore
• Net profit at Rs 2 crore versus loss of Rs 4 crore
• Ebitda at Rs 4 crore versus EBITDA loss of Rs 6 crore
• Margin at 21.1 percent versus -75 percent

Himadri Speciality Chemical Ltd (Q4 YoY)

• Revenue up 47 percent at Rs 551 crore versus Rs 375 crore
• Net profit up 137 percent at Rs 71 crore versus Rs 30 crore
• Ebitda up 76 percent at Rs 127 crore versus Rs 72 crore
• Margin at 23 percent versus 19.2 percent

Torrent Power (Q4 YoY)

• Revenue up 15.5 percent at Rs 2,810 crore versus Rs 2,433 crore
• Net profit up 60 percent at Rs 217 crore versus Rs 136 crore
• Ebitda down 1 percent at Rs 689.5 crore versus Rs 696.5 crore
• Margin at 24.5 percent versus 28.6 percent

Balmer Lawrie & Co (Q4 YoY)

• Revenue up 2.3 percent at Rs 478 crore versus Rs 467.3 crore
• Net profit up 10.4 percent at Rs 88 crore versus Rs 79.7 crore
• Ebitda up 6.9 percent at Rs 85.4 crore versus Rs 79.9 crore
• Margin at 17.9 percent versus 17.1 percent

Power Grid (Q4 YoY)

• Standalone revenue up 16.5 percent at Rs 7,811.3 crore versus Rs 6,705.6 crore
• Standalone net profit up 4.6 percent at Rs 2,004.7 crore versus Rs 1,916.4 crore
• Ebitda up 16.2 percent at Rs 6,524 crore versus Rs 5,616.8 crore
• Margin at 83.5 percent versus 83.8 percent

Dish TV (Q4 YoY)

• Revenue up 116 percent at Rs 1,532 crore versus Rs 709 crore
• Net profit at Rs 121 crore versus loss of Rs 24.5 crore
• Deferred tax credit of Rs 147 crore in current quarter
• Ebitda up 102 percent at Rs 400 crore versus Rs 198 crore
• Margin at 26.1 percent versus 27.9 percent

Glenmark Pharma (Q4 YoY)

• Revenue down 7 percent at Rs 2,280 crore versus Rs 2,457 crore
• Net profit down 17 percent at Rs 152 crore versus Rs 184 crore
• Ebitda down 26.5 percent at Rs 326.5 crore versus Rs 444 crore
• Margin at 14.3 percent versus 18.1 percent

Asahi Songwon Colors (Q4 YoY)

• Revenue up 47 percent at Rs 91 crore versus Rs 62 crore
• Net profit down 82 percent at Rs 2 crore versus Rs 11 crore
• Other income of Rs 6 crore in base quarter
• Ebitda down 21 percent at Rs 9.5 crore versus Rs 12 crore
• Margin at 10.4 percent versus 19.4 percent

Narayana Hrudayalaya Ltd (Q4 YoY)

• Revenue up 34 percent at Rs 647 crore versus Rs 483.5 crore
• Net profit down 54.5 percent at Rs 10 crore versus Rs 22 crore
• Ebitda down 13 percent at Rs 52.5 crore versus Rs 60.5 crore
• Margin at 8.1 percent versus 12.5 percent

Eveready Industries (Q4 YoY)

• Revenue up 14.8 percent at Rs 349.7 crore versus Rs 304.6 crore
• Net loss at Rs 16.1 crore versus net profit at Rs 10.5 crore
• Ebitda loss at Rs 3.9 crore versus EBIDTA of Rs 17.7 crore
• Margin loss at 1.1 percent versus profit margin of 5.8 percent

Greenply Industries (Q4 YoY)

• Revenue down 2.6 percent at Rs 437.1 crore versus Rs 448.6 crore
• Net profit down 22.2 percent at Rs 32.6 crore versus Rs 41.9 crore
• Ebitda down 22.3 percent at Rs 57 crore versus Rs 73.4 crore
• Margin at 13 percent versus 16.4 percent

Bharat Electronics (Q4 YoY)

• Revenue down 9.5 percent at Rs 3,608.5 crore versus Rs 3,987.7 crore
• Net profit down 29.4 percent at Rs 558.7 crore versus Rs 791.7 crore
• Ebitda down 18.7 percent at Rs 796.3 crore versus Rs 979.7 crore
• Margin at 22.1 percent versus 24.6 percent

Thomas Cook India (Q4 YoY)

• Revenue up 20.2 percent at Rs 2,662 crore versus Rs 2,213.9 crore
• Net profit at Rs 5,860.7 crore versus loss of Rs 13.1 crore
• Ebitda up 1 percent at Rs 95 crore versus Rs 94.1 crore
• Margin at 3.6 percent versus 4.3 percent
• Exceptional gain of Rs 5,825 crore

• Jubilant FoodWorks denies news report regarding stake sale by the promoters in the company
• Fortis Healthcare board decides to initiate fresh bidding process. New bids to be submitted by June 14
• IndiGo announces fuel surcharges to counter the recent surge in oil prices
• Rushil Decor to issue shares on preferential basis at a price of Rs 865 each
• RSWM to close manufacturing unit located at Tamil Nadu
• Uflex to consider issue of Compulsory Convertible Preference Shares (CCPS) to promoters on June 1
• Glenmark pharma sets up committee to assess feasibility of housing API and consumer care business in separate business entity
• Gujrat Narmada Valley Fertilizers and Chemicals clarify that they had a minor gas leak at their TDI Plant in Dahej

• Tata’s man at AirAsia named in CBI corruption probe
• IndiGo announces fuel surcharge to counter rising oil prices
• Manpasand Beverages is turning out to be an investor’s nightmare
• High Court bars SGX’s new India contracts till arbitration is complete
• India, Pakistan agree to fully implement 2003 ceasefire pact
• Fortis initiates fresh bidding process after board revamp
• Hawks take hold in India as monetary policy looks set to tighten
• The bad days have been really bad in 2018’s stock market
• WhatsApp payment service may come to India next week
• As liquidation looms in four large cases, banks prepare for long haul
• ‘One nation, one election’: Will it mean pain or gain?
• From surging yields to Euro-exit bets, an Italy rout cheat sheet

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.76 percent to 10,530 as of 7:50 a.m.

Asian equities slid Wednesday as concerns about the repercussions of Italy’s political turmoil and the renewal of trade tensions between the U.S. and China gripped financial markets. U.S. stocks tumbled the most in a month, Treasuries surged, oil slumped and the yen rallied.

Stocks fell in Tokyo, Sydney and Seoul, and futures tipped losses in the rest of Asia after European shares chalked their worst drop in two months, accelerating a slide in American equities.

Commodities

• West Texas Intermediate crude was steady at $66.73 a barrel.
• Gold rose 0.1 percent to $1,300.62 an ounce.

Here are some key events to watch this week:

• Bank Indonesia is expected to raise its benchmark rate by 25 basis points to 4.75 percent at a special meeting on Wednesday, about a month ahead of its next regular gathering. It would be the second in two weeks.
• Bank of Japan Governor Haruhiko Kuroda speaks at an annual BOJ conference in Tokyo.
• EU trade chief Cecilia Malmstrom and U.S. Commerce Secretary Wilbur Ross are scheduled to meet Wednesday in an informal World
• Trade Organization ministerial in Paris.
• The U.S. employment report for May is due Friday. It’s the last before the June Fed meeting.
• Automakers report May U.S. sales the same day.
• Also Friday: China’s stock market joins MSCI Inc.’s global indexes.
• 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.