Sensex Ends Near Record High On Earnings Optimism

Indian equity benchmarks rose for a third day in a row with the S&P BSE Sensex closing near record highs as investors expect earnings growth to continue in June quarter.

The S&P BSE Sensex rose 0.85 percent or 305 points to 36,240 and the NSE Nifty 50 index climbed 0.87 percent or 94 points to 10,947.

June quarter earnings are likely to improve on a low base in the comparable period when traders reduced stocks in the run up to implementation of the goods and services tax in July last year, AK Prabhakar, head of research at IDBI Capital, told BloombergQuint over phone. "We are expecting double-digit earnings growth, and this will improve investor sentiment," he said.

Good monsoon rains, increase in the minimum support prices of kharif crops and a cool-off in global trade tensions are also helping the market.

In today’s session, rally was led by Reliance Industries which rose over 3 percent after Bloomberg reported that India Gas Solutions, a JV between Reliance Industries and BP Plc, will bid for city gas distribution licenses in the current auction round.

All sector gauges barring the S&P BSE Healthcare index ended higher led by the S&P BSE Energy index's 2 percent gain.

The mid- and small-cap shares outperformed their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes rose over a percent each.

European stocks struggled for direction on Tuesday and U.S. equity futures pointed to a modest rise at the opening as a lull in the trade war let investors contemplate the beginning of earnings season. The pound reversed some of Monday’s decline as the U.K.’s Theresa May battled to reassert control over her government.

• Indiabulls Ventures has 1.73 crore shares change hands in two blocks. Stock down 0.5 percent at Rs 477.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the oil-to-telecom conglomerate were trading near intraday high at Rs 1,021, up 2.4 percent.

India Gas Solutions, a JV between Reliance Industries and BP Plc, will bid for city gas distribution licenses in the current auction round, Bloomberg reported citing unidentified people with knowledge of the matter.

The Mumbai-based private sector recovered from intraday lows after its net profit beat Bloomberg consensus estimates in June quarter.

Key earnings highlights:

• Net profit up 24 percent at Rs 1,036 crore versus estimate of Rs 1,030 crore.
• Net interest income up 20 percent at Rs 2,122 crore versus Rs 1,744 crore
• Net non-performing assets as a percentage of total advances unchanged at 0.51 percent (QoQ)
• Gross non-performing assets as a percentage of total advances dips marginally to 1.15 percent versus 1.17 percent (QoQ)
• Gross NPAs at Rs 1,740 crore versus Rs 1,705 crore (QoQ)

• Indian equity benchmarks held on to gains led by Reliance Industries, HDFC twins and Axis Bank.
• The S&P BSE Sensex rose 0.6 percent or 216 points to 36,152 and the NSE Nifty 50 index climbed 0.6 percent or 67 points to 10,921.
• All sector gauges barring the S&P BSE FMCG index were trading higher led by the S&P BSE Realty index's 2 percent gain.
• The overall market breadth was positive as 1,595 shares were advancing while 812 were declining on the BSE.

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• HSIL: The Gurugram-based sanitary ware maker rose as much as 13 percent to Rs 404.90. Trading volume was 38 times its 20-day average.
• Sadbhav Engineering: The Ahmedabad-based construction company rose as much as 11 percent to Rs 311. Trading volume was 13.8 times its 20-day average.
• Cochin Shipyard: The Cochin-based ship building company rose as much as 7 percent to Rs 458. Trading volume was 15 times its 20-day average.
• Trident: The Ludhiana-based textile manufacturer rose as much as 12.15 percent to Rs 61.40. Trading volume was 11.7 times its 20-day average.

• ICICI Bank has 10.90 lakh shares change hands in a block deal. Stock up 1.4 percent at Rs 275.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Ahmedabad-based PVC plumbing system maker rose as much as 3.2 percent to Rs 1,034 after it acquired 51 percent stake in Rex Polyextrusion for Rs 75.22 crore.

Nifty 11,000 strike price call option was among the most active Nifty option contracts on the National Stock Exchange.

Premium on the contract rose 43 percent to Rs 57. Over 13,500 shares were added to open interest which stood at over 37.48 lakh shares.

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Shares of the Delhi-based steel producer rose 3.6 percent to Rs 165 after its net profit surged 184 percent.

Key earnings highlights:

• Revenue up 51.5 percent at Rs 985 crore versus Rs 650.47 crore (YoY)
• Net profit up 2.8 times at Rs 169 crore versus Rs 59.41 crore (YoY)
• Standalone margin at 24.4 percent versus 16.6 percent (YoY)
• Standalone EBITDA up 1.2 times at Rs 240.3 crore versus Rs 108 crore (YoY)

Truck and bus sales rose 42 percent on a year-on-year basis to 80,624 units in June compared with 56,890 units during the same month last year, data compiled by Society of Indian Automobile Manufacturing Association showed.

Key highlights of June sales data:

• Domestic car sales up 34 percent at 183,885 units
• Passenger vehicle sales up 37 percent at Rs 273,759 units
• Two-wheeler sales up 22.3 percent at 1,867,884 units
• April-June passenger vehicle sales up 20 percent

Shares of the Chandigarh-based steel wheel rim maker rose as much as 4.3 percent to Rs 1,310.60 after it won its biggest steel truck wheel order from U.S.

The company will supply of 110,000 truck wheels to U.S. and expects revenue of $5 million from the order, Steel Strips Wheels said in an exchange filing.

• Reliance Communications has 12.3 lakh shares traded in a block. Stock up 1.8 percent at Rs 13.95.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Kolkata-based textile manufacturer rose as much as 6.3 percent to Rs 253.50 after bulk deals in the previous session.

• Aequitas Investment Consultancy bought 3.16 lakh shares or 1.4 percent equity at Rs 230.05 each.
• Camden Industries sold 6 lakh shares or 2.7 percent equity at Rs 230.02 each.
• Promoter Cygnet Industries sold 3.06 lakh shares or 1.4 percent equity at Rs 231.86 each.

Shares of the Delhi-based real estate developer rose as much as 4.1 percent to Rs 195.

JP Morgan has maintained its buy call on DLF for target price of Rs 280, indicating a potential upside of 50 percent.

JP Morgan in a note said:

• Near term investment thesis is predicated on pick up in residential sales.
• Monetisation for Phase 5 developments unsold inventory to be faster.
• Move towards completed accounting to aid net profits materially over the current and the next financial.

• IDFC Bank has 10 lakh shares change hands in a block deal. Stock up 1.7 percent at Rs 39.55.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mukesh Ambani-led oil-to-telecom conglomerate rose as much as 1.76 percent to Rs 1,014.60.

International brokerage firm Credit Suisse has initiated coverage on the stock with an 'outperform' for target price of Rs 1,180, indicating a potential upside of 18 percent from yesterday's close.

Credit Suisse in a note said:

• Reliance Jio Infocomm may be worth $10.4 billion.
• Jio’s revenue can double in three years and contribute 10-40 percent of operating income by March 2025.
• New refining and petrochemical projects will drive over 20 percent earnings per share growth in 2018-19.
• Current softness in gross refining margins may subside in medium term.
• Petcoke gasification can add $2.4 per barrel to refining margin.

Shares of the Noida-based IT company rose as much as 4 percent, the most in over two months, to Rs 1,000.05.

HCL Technologies aftermarket hours yesterday said that its board will meet on July 12 to consider a share buyback proposal.

Indian equity benchmarks moved higher led by Reliance Industries, HDFC Bank, Infosys and ICICI Bank.

The S&P BSE Sensex rose 0.37 percent or 130 points to 36,065 and the NSE Nifty 50 index advanced 0.37 percent or 40 points to 10,893.

All sector gauges barring the Nifty FMCG index were trading higher led by the Nifty realty index's 1.2 percent gain.

Mid- and small-cap shares were in line with their larger peers as the Nifty Midcap 100 Index rose 0.55 percent and the Nifty Smallcap 100 index climbed 0.9 percent.

• Rupee opened lower at 68.74 per dollar against yesterday's close of 68.72.

Credit Suisse on Reliance Industries

• Initiated ‘Outperform’ with a price target of Rs 1,180.
• Reliance Jio Infocomm may be worth $10.4 billion.
• Jio’s revenue can double in three years and contribute 10-40 percent of operating income by March 2025.
• New refining and petrochemical projects will drive over 20 percent earnings per share growth in 2018-19.
• Current softness in gross refining margins may subside in medium term.
• Petcoke gasification can add $2.4 per barrel to refining margin.

Macquarie on Indian Refiners

• IMO 2020 sulfur regulations a game-changer for oil industry.
• Expect middle distillate cracks doubling to $30 per barrel in 2020.
• Substantial demand from shipping industry to double the cracks.
• RIL: Upgrade to ‘Outperform’ from ‘Underperform’; hiked price target to Rs 1,240 from Rs 830.
• HPCL: Maintain ‘Outperform’; hiked price target to Rs 570 from Rs 500.
• BPCL: Maintain ‘Outperform’; hiked price target to Rs 555 from Rs 490.
• IOCL: Maintain ‘Outperform’ with a price target of Rs 270.

JP Morgan on DLF

• Maintained ‘Overweight’ with a price target of Rs 280.
• Near term investment thesis is predicated on pick up in residential sales.
• Monetisation for Phase 5 developments unsold inventory to be faster.
• Move towards completed accounting to aid net profits materially over the current and the next financial.

Morgan Stanley on HDFC Bank

• Maintained ‘Overweight’ with a price target of Rs 2,570.
• Initial updates is net positive.
• Updates highlight accelerating loan growth.
• Expect CASA ratio to improve in coming quarters.

BoA-ML on Dish TV

• Maintained ‘Buy’ with a price target of Rs 90.
• Strong results with revenue and operating income beating estimates after 3-4 quarters.
• Company well placed to deliver strong margins led by synergy benefits.
• Find valuations cheap in-context of growth.

Goldman Sachs on Dish TV

• Maintained ‘Neutral’ with a price target of Rs 76.
• Surprised by the magnitude of ARPU uptick; await more details.
• Despite strong ARPU, remain uncertain on sustainability of such ARPU.
• Availability of cheap data and launch of JioGigaFiber to put pressure on industry.

Goldman Sachs on Colgate

• Maintained ‘Buy’ with a price target of Rs 1,452.
• Lower prices indicate management's increased focus on re-gaining market share.
• Believe new products in natural segment will arrest its market share declines.
• Expect volume growth and market share performance to improve over the current financial year.

Kotak Securities on Oberoi Realty

• Upgraded to ‘Buy’ from ‘Reduce’; hiked price target to Rs 560 from Rs 535.
• Expect more promising 2018-19 on account of Thane launch and cash generation from Three Sixty West.
• Improving pace of execution and sales at Mulund will further bolster investor sentiment.
• Expect under-leveraged balance sheet to allow Oberoi secure new development prospects.

Deutsche Bank on Petronet LNG

• Maintained ‘Buy’ with a price target of Rs 310.
• Remain confident that there exists limited threat of competition for Dahej terminal.
• Regas margins at Dahej lowest due to lower capex costs.
• Expect demand growth from industrial sector, as industrial recovery picks up pace.
• Higher incremental LNG demand in FY19 to ensure high utilisation rate for Dahej terminal.

HSBC on Equitas and Ujjivan

• Risk/reward remains intact despite some encouraging signs.
• Continued focus on bank transition and loan book diversification to weigh on earnings.
• Ujjivan: Upgraded to ‘Hold’ from ‘Reduce’; hiked price target to Rs 370 from Rs 329.
• 2018-19 a crucial transition year from both asset diversification and liabilities base building perspective.
• Equitas: Maintained ‘Buy’; cut price target to Rs 152 from Rs 159.
• Equitas is positioned to accelerate its balance sheet growth from here on.

Who’s Meeting Whom

• All Cargo Logistics to meet Jeetey Investments Pvt and Ambit Capital on July 10.
• MIRC Electronics to meet Reliance PMS and other investors on July 10.
• Magma Fincorp to meet Ramesh Damani Finance, Credit Suisse and other investors on July 10.

Insider Trades

• Omaxe Ltd promoter Nakul Goel sold 2.50 lakh shares from July 4–5.
• Man Infra promoter Vatsal Shah acquired 69,000 shares on July 6.

(As reported on July 9)

Bulk Deals

Century Enka

• Aequitas Investment Consultancy bought 3.16 lakh shares or 1.4 percent equity at Rs 230.05 each.
• Camden Industries sold 6 lakh shares or 2.7 percent equity at Rs 230.02 each.
• Promoter Cygnet Industries sold 3.06 lakh shares or 1.4 percent equity at Rs 231.86 each.

Manappuram Finance

• Quinag Acquisition (FPI) Ltd bought 2.6 crore shares or 3.1 percent equity at Rs 105 each.
• WF Asian Reconnaissance Fund Limited sold 2.69 crore shares or 3.2 percent equity at Rs 105 each.

JBF Industries

• IFCI Ltd sold 4.60 lakh shares or 0.6 percent equity at Rs 39.86 each.

Trading Tweaks

• Talwalkars Better Value Fitness Ltd move out of ASM framework.
• Jagran Prakashan buyback period from July 10 to 23.
• City union Bank Limited ex-date for 1:1 bonus.
• Solara Active Pharma Sciences Ltd last trading day before shifting to B group.
• Minda Industries Limited last trading day before ex-date for 2:1 bonus.

F&O Cues

• Nifty July Futures ended at 10,859.8, with a premium of 6.9 points versus 5.8 points.
• July series: Nifty open interest up 5 percent and Bank Nifty open interest up 10 percent.
• India VIX ended at 12.3, down 0.4 percent.
• Max open interest for July series call at 11,000 strike price call option (open interest at 37.3 lakh, up 6 percent).
• Max open interest for July series put at 10,600 strike price put option (open interest at 52.3 lakh, up 2 percent).

• HCL Technologies to consider share buyback on July 12.
• GSFC says it expects to get Rs 693 crore subsidy from the Fertiliser Department.
• SRF plans to set up a BOPET manufacturing line and resin plant in Thailand for $60 million.
• Gayatri Projects declared lowest bidder for two packages of Purvanchal Expressway project worth Rs 2,759 crore.
• PNC Infratech declared lowest bidder for two packages of Purvanchal Expressway project worth Rs 2,520 crore.
• Sadbhav Infra said its first quarter toll revenue up 13.9 percent to Rs 275 crore.
• Bajaj Hindusthan to seek shareholders’ nod for sale of Lalitpur Power Generation to Bajaj Energy, a related party for Rs 1.097.53 crore.
• IVRCL appoints liquidator as NCLT orders start of liquidation process for subsidiary Hindustan Dorr Oliver.
• Rajshree Sugars says lenders declare the loan account of the company as NPA.
• Astral Polytechnik to acquire 51 percent stake in Rex Polyextrusion for Rs 75.22 crore.
• Shree Renuka said its Brazil unit’s lenders approved new recovery plan.
• PPAP Automotive started production at its Gujarat plant.

Earnings Reaction To Watch: Dish TV, Uttam Galva Steels

Dish TV India (Q1, YoY)

• Revenue at Rs 1,656 crore
• Net profit at Rs 28 crore
• Ebitda at Rs 557.5 crore
• Margins at 33.7 percent
• Videocon D2H merged with Dish TV on March 22, thus Q results are not comparable.

Uttam Galva Steels (Q1, YoY)

• Revenue down 90 percent at Rs 92 crore.
• Net loss of Rs 366 crore versus net loss of Rs 192.5 crore.
• Ebitda down 29 percent at Rs 6 crore.
• Margins at 6.5 percent versus 0.9 percent.

Earnings To Watch: TCS, IndusInd Bank

• TCS
• Indusind Bank
• Prakash Industries

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Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.3 percent to 10,902 as of 7:32 a.m.

Stocks in Asia extended recent gains from a nine-month low, and followed U.S. shares higher, amid optimism the upcoming earnings season will be sufficiently robust to overshadow a rise in trade tensions. The yen retreated and Treasury yields ticked higher.

Equities in Japan, Hong Kong and South Korea rose after the S&P 500 Index climbed for a third day toward the upper end of its trading range.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro added 0.1 percent to $1.1760.
• The pound held at $1.3259.
• The Japanese yen slid 0.2 percent to 111.01 per dollar.

Commodities

• The Bloomberg Commodity Index slid 0.1 percent Monday.
• West Texas Intermediate crude rose 0.2 percent to $74.02 a barrel.
• Gold futures rose 0.1 percent to $1,258.73 an ounce.

These are some events to look out for this week:

• Chinese trade data due at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said.
• The most noteworthy U.S. data is the June inflation report on Thursday, which consensus expects will show both headline and core price growth picking up. There’s another deluge of Treasury debt sales too, with a total $156 billion of notes and bills offered.
• Earnings season gets going with JPMorgan and Citigroup among the largest companies due to give results, as well as India’s Infosys Ltd.