Sensex Ends Above 37,000 For First Time; Nifty At Record

Indian equity benchmarks rose to record highs as positive earnings boosted investor sentiment.

The S&P BSE Sensex surged 0.95 percent or 352 points to 37,337 and the NSE Nifty 50 index climbed 1 percent or 111 points to 11,278 led by rally in ITC after its profit met estimates in June quarter.

The benchmarks have surged over 5 percent so far this month and are headed for the best monthly gain since April as strong corporate earnings overshadowed concerns regarding global trade conflict.

Fifteen out of 21 Nifty companies, that have reported June quarter earnings, have either met or beaten estimates, data compiled by Bloomberg showed.

All sector gauges compiled by BSE ended higher led by the S&P BSE FMCG index’s 2 percent gain.

• Hindalco: The Kumar Mangalam Birla-led aluminium producer rose as much as 6.9 percent to Rs 220.80 after its U.S. subsidiary Novelis agreed to buy U.S.-based aluminium producer Aleris Corporation.
• Westlife Development: The McDonald's operator in south and west India rose as much as 17.26 percent, the most in over two years, to Rs 408 after it swung to profit in June quarter.
• Ajanta Pharma: The Mumbai-based drugmaker rose as much as 6.5 percent to Rs 1,112 after the U.S. FDA completed inspection of Dahej Facility with zero observations.
• Mahindra CIE Automotive: The Mumbai-based auto components maker rose as much as 9.2 percent to Rs 268.50 after 44 lakh shares changed hands in a block deal.

Shares of the Noida-based pharmaceutical company held on to gains after its net profit met Bloomberg consensus estimates in June quarter.

Key earnings highlights:

• Net profit up 39 percent at Rs 200 crore versus estimate of Rs 224 crore
• Revenue up 30 percent at Rs 2,046 crore versus estimate of Rs 2,216 crore
• Ebitda up 29.7 percent at Rs 437.6 crore versus Rs 337.5 crore (YoY)
• Margin at 21.1 percent versus 21.7 percent (YoY)

HDFC AMC's initial public offering was subscribed 40.94 times on the final day of offer.

• Portion reserved for qualified institutional buyers (QIB) was subscribed 98.67 times
• Portion reserved for non-institutional bidders was subscribed 85.26 times
• Retail portion subscribed 5.44 times
• Employee portion subscribed 1.33 times

Source: Company's PR

• Indian equity benchmarks continue the record-breaking run led by ITC, Reliance Industries, ICICI Bank and HDFC twins.
• The S&P BSE Sensex rose 1 percent or 373 points to 37,357 and the NSE Nifty 50 index surged 1.01 percent or 112 points to 11,279.
• All sector gauges compiled by BSE were trading higher led by the S&P BSE FMCG index's 2.1 percent gain.
• The mid- and small-cap shares were in line with their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes advanced over 1 percent.
• The overall market breadth was positive as 1,620 shares were advancing while 921 were declining on the BSE.

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Today, the 28 percent category is being phased out. Bulk of these items remaining in this category are only luxury items or sin goods. The other items outside the luxury–sin goods category are cement, air-conditioners, large screen televisions and a handful of others. Hopefully, with further expansion of revenues, these few items may also witness a change of category, Union Cabinet Minister Arun Jaitley posted on his official Facebook page.

Shares of the McDonald's operator in south and west India rose as much as 17.26 percent, the most in over two years, to Rs 408 after it swung to profit in June quarter.

Key earnings highlights:

• Net profit at Rs 11.62 crore versus loss of Rs 2.71 crore (YoY)
• Revenue up 30 percent at Rs 341.67 crore versus Rs 262.45 crore (YoY)
• Margin at 9.9 percent versus 5.5 percent (YoY)
• Same-store-sales growth at 24.1 percent
• Ebitda at Rs 33.8 crore versus Rs 14.5 crore (YoY)

Shares of the Mumbai-based textile maker rose as much as 4.1 percent to Rs 54.35 after it reported June quarter earnings.

Key earnings highlights:

• Net profit rose 2.36 percent to Rs 127 crore versus Rs 124 crore (YoY)
• Revenue rose 0.6 percent to Rs 1,549 crore versus Rs 1,539 crore (YoY)
• Ebitda at Rs 325.1 crore versus Rs 337.4 crore (YoY)
• Margin at 20.6 percent versus 21.7 percent (YoY)

Shares of the Mumbai-based department store operator rose as much as 2.7 percent to Rs 561.95 after its net profit beat Bloomberg consensus estimates in June quarter.

Key earnings highlights:

• Net profit came in at Rs 9.77 crore versus loss of Rs 37.16 crore (YoY); estimate of Rs 59.7 crore.
• Revenue declined 12 percent to Rs 827 crore versus estimate of Rs 870 crore.

• Max India has 20 lakh shares change hands two blocks. Stock up 0.5 percent at Rs 82.15.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Hyderabad-based packaged food company rose as much as 7 percent to Rs 648 after it reported June quarter earnings.

Key earnings highlights:

• Revenue up 4 percent at Rs 641.60 crore versus Rs 616.77 crore (YoY)
• Net profit up 12 percent at Rs 20.78 crore versus Rs 18.54 crore (YoY)

Shares of the Bengaluru-based bio-pharmaceutical company rose as much as 10 percent, the most since Dec. 2017, to Rs 614.45 after it met Bloomberg consensus estimates in June quarter.

Key earnings highlights:

• Net profit up 47.2 percent at Rs 119.7 crore versus estimate of Rs 114 crore.
• Revenue up 21.2 percent at Rs 1,123.8 crore versus estimate of Rs 1,180 crore.
• Ebitda up 23.8 percent at Rs 237.8 crore.
• Margin at 21.2 percent versus 20.7 percent.

Nifty 11,200 strike price put option was among the most active option contracts on the National Stock Exchange.

The premium on the contract fell 16 percent to Rs 124.45. Over 9.22 lakh shares were added to the open interest which stood at 20.49 lakh shares.

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Shares of the Mumbai-based private sector lender fell for a second day in a row on higher provisioning for bad loans.

Yes Bank's provisions for bad loans rose 56.5 percent to Rs 625.65 crore versus Rs 399.64 crore during the previous quarter.

Shares of ICICI Bank, Reliance Industries and HCL Technologies rose ahead of their June quarter earnings due later in the day.

Below are Bloomberg consensus estimates for these companies in April-June quarter:

Reliance Industries:

• Revenue seen up 5 percent to Rs 88,503 crore versus Rs 84,037 crore.
• Ebitda seen up 2.5 percent to Rs 13,763 crore versus Rs 13,425 crore.
• Ebitda margin seen at 15.55 percent versus 15.98 percent.
• Net profit seen down 2 percent to Rs 8,525 crore versus Rs 8,697 crore
• Gross refining margins (GRMs) seen down 6.4 percent at $10.3/barrel versus $11/barrel

ICICI Bank

• Net interest income (NII) seen 8.7 percent higher at Rs 6,078 crore versus Rs 5,590 crore.
• Net profit seen 36 percent lower at Rs 1,306 crore versus Rs 2,049 crore.
• Net interest margin (NIM) seen at 3.10 percent versus 3.24 percent (QoQ).

HCL Technologies

• Dollar revenues seen up 1.6 percent at $2,070 million versus $2,038 million.
• Income from operations seen up 5.6 percent at Rs 13,921 crore versus Rs 13,179 crore.
• Ebit seen up 7 percent at Rs 2,764 crore versus Rs 2,583 crore.
• Ebit margins seen at 19.9 percent versus 19.6 percent (QoQ).
• Net profit seen up 3 percent at Rs 2,294 crore versus Rs 2,227 crore.

Shares of the Noida-based chemical maker fell as much as 2.5 percent to Rs 130 after it reported loss in June Quarter.

Key earnings highlights:

• Revenue up 17 percent at Rs 133 crore.
• Net loss of Rs 1 crore versus net loss of Rs 2 crore.
• Ebitda unchanged at Rs 7 crore.
• Margin at 5.3 percent versus 6.1 percent.

Shares of the country's largest telecom operator rose as much as 2 percent to Rs 365 after it posted a surprise profit aided by a deferred tax gain of Rs 1,844.3 crore.

Bharti Airtel's net profit rose 17 percent quarter-on-quarter to Rs 97.3 crore, according to its stock exchange filing. Analysts polled by BloombergQuint had forecast a loss of Rs 277 crore.

Key earnings highlights:

• Revenue rose 2.3 percent over the previous quarter to Rs 20,080 crore.
• Operating profit fell 2.9 percent to Rs 6,725.8 crore.
• Operating margin contracted 180 basis points to 33.5 percent.

Shares of the country's largest cigarette maker rose as much as 5.45 percent, the most in over five months, to Rs 302.85 after it met Bloomberg consensus estimates in June quarter as its margins improved.

ITC's net profit rose 7.6 percent to Rs 10,707 crore, compared with the Rs 10,941-crore estimate. Earnings before interest, tax, depreciation, and amortisation rose 12.2 percent to Rs 4,203 crore, while the operating margin rose to 39.3 percent from 37.6 percent. Analysts had expected the margins to come in at 37.2 percent.

Shares of the Kumar Mangalam Birla-led aluminium producer rose as much as 6.9 percent to Rs 220.80 after its U.S. subsidiary Novelis agreed to buy U.S.-based aluminium producer Aleris Corporation.

Novelis signed a definitive agreement to acquire Aleris Corporation, a global supplier of rolled aluminum products, for about $2.6 billion including debt, Birla, chairman of the Aditya Birla Group, said at a press conference yesterday.

The acquisition will give Novelis capacity in high-end aerospace and automotive segments. It will acquire Aleris’ 13 manufacturing facilities across North America, Asia and Europe. This marks Hindalco’s second big overseas acquisition after the Kumar Mangalam Birla-promoted company first bought Novelis for $6 billion twelve years ago.

• Mahindra CIE Automotive has 44 lakh shares change hands in a block deal. Stock up as much as 9.2 percent at Rs 268.50.

Buyers and sellers were not immediately known

Source: Bloomberg

Indian equity benchmarks extended their record-breaking run led by ITC after it met Bloomberg consensus estimates in June quarter.

The S&P BSE Sensex rose as much as 0.78 percent or 288 points to 37,272.86 and the NSE Nifty 50 index climbed 0.63 percent or 70 points to 11,237.45.

All sector gauges compiled by BSE were trading higher led by the S&P BSE FMCG index's 1.5 percent gain.

The mid- and small-cap shares were in line with their larger peers as the S&P BSE MidCap index rose 0.7 percent and the S&P BSE SmallCap index advanced 0.5 percent.

• Rupee edged higher to 68.59 per dollar against yesterday’s close of 68.66.

BoFAML

• Maintained ‘Buy’ with target price of Rs 480.
• Q1FY19: Inline Ebitda; Small profit due to tax credits.
• Steady improvement in Africa continues.
• Company continue to focus on cost-control and gain market share.

UBS

• Maintained ‘Buy’ with target price of Rs 520.
• Q1FY19: Respectable performance amidst a tough environment.
• Africa momentum remains strong with revenue growth and margin improvement.
• Bharti Airtel has managed to hold its market share better than peers.

Brokerages On ITC

JPMorgan

• Maintained ‘Overweight’ with target price of Rs 335.
• 1QFY19 earnings were ahead of our estimates; Good start to FY19.
• Cigarette: Good performance; volume growth surprises positively.
• Other FMCG: Impressive revenue growth and profitability gains.
• Paper division: Good margin delivery.
• Agri division: Adverse mix weighs on Ebit.
• Hotel division: Good Q1.

UBS

• Maintained ‘Buy’ with target price of Rs 350.
• Overall performance creditable as it comes on a normalised base.
• Delivered positive cigarette volume of 2 percent (YoY).
• Positive volume growth is sustainable and could improve from here on.
• Other FMCG business grew despite a high base.

Credit Suisse

• Maintained ‘Outperform’; target price raised to Rs 360 from Rs 350.
• Cigarette business seeing a revival, potential re-rating could start playing out.
• Cigarette volumes likely to have grown 1-2 percent which is a significant improvement.
• Q1 net profit ahead of estimates; Ebitda growth highest in nine quarters.

Brokerages On Colgate-Palmolive

Credit Suisse

• Maintained ‘Neutral’; target price cut to Rs 1,150 from Rs 1,225.
• Volume and market share trends weaken further.
• Delivered very strong Ebitda margin driven by gross margins.
• Since GST rate cuts, there has been steep jump in margins.
• Colgate is still struggling in naturals.

JPMorgan

• Maintained ‘Overweight’ with target price of Rs 1,400.
• Q1 a mixed bag: Revenue growth remains unexciting, earnings beat led by margins.
• Market share trends were soft.
• Expect gradual volume growth revival in coming quarters.
• Healthy FCF generation, return ratios and an improved dividend payout to support stock.

UBS on Petronet LNG

• Maintained ‘Buy’ with target price of Rs 245.
• Q1 net profit ahead of estimates driven by higher than expected re-gas margins.
• Higher re-gas tariffs and operational efficiencies from higher volumes drove margins.
• Positive sentiments should be driven by delay in commissioning of Mundra re-gas terminal.
• Expect stock to react positively.

UBS on Quess Corp

• Maintained ‘Buy’; target price cut to Rs 1,345 from Rs 1,360.
• Revenue growth remained strong.
• Margins impacted by mix of factors.
• Positive on strategic investments.
• Near term profitability to be adversely impacted due to investments.

JPMorgan on Shriram Transport

• Maintained ‘Overweight’ with target price of Rs 1,700.
• Net profit driven by loan growth and sharply reduced credit cost.
• IND-AS accounting shift beneficial to both EPS & BPS.
• Loan growth at 22 percent running above forecast.
• Increase in axle load norms to improve earnings of core customers.

JPMorgan On Container Corporation

• Maintained ‘Overweight’ with target price of Rs 875.
• Operating performance continues to improve in Q1.
• Margin improvement continues as rail freight expense remained flat.
• Lead distance continues to weigh on top-line performance.
• Expect 14 percent earnings CAGR over FY18-20 driven by margin improvement.

JPMorgan On Crompton Consumer

• Maintained ‘Overweight’ with target price of Rs 300.
• Q1 numbers ahead of estimates, good start to the year.
• Good delivery by ECD segment; Lighting hits a blip on negligible government business.
• Go-To-Market roll-out, fast LED replacement and scale-up of new categories to drive healthy revenue growth over the next 2-3 years.
• Success of new product launches and market share gains key positives.

Brokerages On Dr. Reddy’s Labs

Citi

• Maintained ‘Neutral’ with target price of Rs 2,270.
• Strong headline number but likely to normalise.
• Slight delay in expected launch timelines of gNuvaring & gCopaxone.
• Near term prospects dependent on gSuboxone, gNuvaring, gCopaxone.

Credit Suisse

• Maintained ‘Underperform’ with target price of Rs 1,865.
• Suboxone, lower R&D, low tax lead to beat in results.
• Nuvaring further delayed; more competition expected in key products in FY19.
• Suboxone sales was $17-18 million while base business U.S. sales declined 2 percent (QoQ).

Goldman Sachs

• Maintained ‘Neutral’ target price cut to Rs 2,200 from Rs 2,270.
• Pushback the expected launch time of Suboxone by another quarter to 4QFY19.

UBS

• Maintained ‘Neutral’ with target price of Rs 2,480.
• Delays to key launches likely to drive consensus downgrades.
• First quarter aided by gSuboxone and a lower tax expense.
• See reduced opportunities for niche products in pipeline.
• Base business continued to saw pricing erosion led by gDacogen and gToprol XL.

Who’s Meeting Whom

• Inox Leisure to meet Infina Finance on July 27.
• Tata Metaliks to meet Centrum Broking on July 27.
• Crompton Greaves Consumer Electrics to meet Amansa Holdings Pvt on July 27.

Insider Trades

• Indo Rama Synthetics promoter Om Prakash Lohia acquired 80,180 shares on July 25.
• Ruchi Soya promoters sold 7 lakh shares from July 24–25.
• Vian Industries promoter Ripu Kundra acquired 10,000 shares on July 25.

(As reported on July 26)

Bulk Deals

GMR Infra: Albula Investment Fund sold 3.02crore shares or 0.5 percent equity at Rs 18.01 each.

Shriram Transport Finance: Association De Bienfaisance bought 12.14 lakh shares or 0.5 percent equity at Rs 1,379.36 each.

Just Dial: Acadian Emerging Markets Small Cap Equity Fund Llc bought 3.47 lakh shares or 0.5 percent equity at Rs 565.52 each.

Welspun Corp: Insight Solutions sold 2.15 crore shares or 8.1 percent equity at an average of Rs 112 each.

F&O Cues

• Nifty August futures ended at 11,201.3, with a premium of 34 points versus 31points.
• Across series: Nifty open interest up 2 percent; Bank Nifty open interest up 31 percent.
• Rollover: Nifty at 74 percent, Bank Nifty at 78 percent.
• India VIX ended at 12.02, down 1.5 percent.
• Max open interest for August series call at 11,500 strike price call option (open interest at 23.9 lakh shares, up 20 percent)
• Max open interest for August series put at 11,000 strike price put option (open interest at 32.4 lakh shares, up 29 percent)

Nifty Earnings To Watch

• HCL Technologies
• ICICI Bank
• Reliance Industries

Other Earnings To Watch

• Alembic Pharmaceuticals
• Bank of Baroda
• Coromandel International
• Equitas Holdings
• Heritage Foods
• IL&FS Transportation
• Indian Overseas Bank
• Johnson Controls-Hitachi
• JSW Energy
• Jubilant Life
• Mahindra & Mahindra Financial Services
• Phillips Carbon
• Prestige Estates Projects
• Prism Johnson
• Shoppers Stop
• Welspun India

Earnings Reaction To Watch

Petronet LNG (Q1, QoQ)

• Revenue up 6.2 percent at Rs 9,169 crore.
• Net profit up 12.2 percent at Rs 587 crore.
• Ebitda up 13.6 percent at Rs 934 crore.
• Margin at 10.2 percent versus 9.5 percent.

Essel Propack (Q1, YoY)

• Revenue up 13.3 percent at Rs 635.4 crore versus Rs 560.8 crore.
• Net profit up 20.4 percent at Rs 41.3 crore versus Rs 34.3 crore.
• Ebitda up 9.5 percent at Rs 111.6 crore versus Rs 101.9 crore.
• Margin at 17.6 percent versus 18.2 percent.

Tata Metaliks (Q1, YoY)

• Revenue up 21.8 percent at Rs 467.5 crore.
• Net profit down 1 percent at Rs 30.6 crore.
• Ebitda up 32.8 percent at Rs 66 crore.
• Margin at 14.1 percent versus 12.9 percent.

Quess Corp (Q1, YoY)

• Revenue up 51.7 percent at Rs 1,968.4 crore.
• Net profit up 19 percent at Rs 54.4 crore.
• Ebitda up 36.1 percent at Rs 102.5 crore.
• Margin at 5.2 percent versus 5.8 percent.

WABCO India (Q1, YoY)

• Revenue up 42.2 percent at Rs 747.3 crore.
• Net profit up 38 percent at Rs 74.8 crore.
• Ebitda up 26.2 percent at Rs 99.7 crore.
• Margin at 13.3 percent versus 15 percent.

ITC (Q1, YoY)

• Revenue up 8 percent at Rs 10,707 crore.
• Net profit up 10 percent at Rs 2,819 crore.
• Ebitda up 12 percent at Rs 4,202.5 crore.
• Margin at 39.3 percent versus 37.6 percent.

Container Corporation of India (Q1, YoY)

• Revenue up 7 percent at Rs 1,568 crore.
• Net profit up 2 percent at Rs 252 crore.
• Ebitda up 16 percent at Rs 390 crore.
• Margin at 24.9 percent versus 23 percent.

Jubilant Industries (Q1, YoY)

• Revenue up 17 percent at Rs 133 crore.
• Net loss of Rs 1 crore versus net loss of Rs 2 crore.
• Ebitda unchanged at Rs 7 crore.
• Margin at 5.3 percent versus 6.1 percent.

Biocon (Q1, YoY)

• Revenue up 21.2 percent at Rs 1,123.8 crore.
• Net profit up 47.2 percent at Rs 119.7 crore.
• Ebitda up 23.8 percent at Rs 237.8 crore.
• Margin at 21.2 percent versus 20.7 percent.

Bharti Airtel (Q1, QoQ)

• Revenue up 2.3 percent at Rs 20,080 crore.
• Net profit up 17 percent at Rs 97 crore.
• Ebitda down 3 percent at Rs 6,726 crore.
• Margin at 33.5 percent versus 35.3 percent.
• ARPU at Rs 105 versus Rs 116.

Cholamandalam Investment (Q1, YoY)

• Net interest income up 20 percent at Rs 795 crore.
• Net profit up 36 percent at Rs 285 crore.
• AUM up 30 percent at Rs 46,663 crore.

Lakshmi Vilas Bank (Q1, YoY)

• Net interest income down 40 percent at Rs 130 crore.
• Net loss of Rs 124 crore versus net Profit of Rs 66 crore.
• Provision down 82 percent at Rs 161.5 crore (QoQ)
• GNPA at 10.73 percent versus 9.98 percent.
• NPA at 5.96 percent versus 5.66 percent.

Tata Coffee (Q1, YoY)

• Revenue up 14.9 percent at Rs 422.2 crore.
• Net profit down 37.4 percent at Rs 21.6 crore.
• Ebitda down 16.81 percent at Rs 66.3 crore.
• Margin at 15.7 percent versus 21.7 percent.

Tinplate Company of India (Q1, YoY)

• Revenue at Rs 568.6 crore versus Rs 236.5 crore.
• Net profit at Rs 9.5 crore versus Rs 14.1 crore.
• Ebitda at Rs 25.5 crore versus Rs 32 crore.
• Margin at 4.4 percent versus 13.5 percent.

HDFC Asset Management Company's initial public offering continues on final day. Issue subscribed 5.5 times on second day.

• Hindalco’s Novelis to buy Aleris in $2.6 billion deal with assumption of debt.
• HDFC Bank set to launch up to $2 billion QIP soon.
• Adani Ports signs a long-term regasification pact with GAIL for Dhamra LNG terminal.
• IFB Industries to acquire industrial laundry equipment biz of Ramsons Garment for Rs 35 crore.
• HPCL unlikely to buy Iran oil until India gets waiver from U.S. (Bloomberg)
• Petronet LNG CEO expects BPCL Kochi plant to boost gas purchase. (Bloomberg)

• Kidnappers, angry workers plague a $210 billion debt cleanup
• Facebook’s plunge wipes $120 billion from its market cap
• India’s top portfolio managers lost money in the small- and mid-cap rout
• SBI writes to department of telecom seeking relief for RCom
• Government extends income tax returns filing deadline till August 31
• What bond fund managers in India are buying amid uncertainties
• An economic crisis awaits Pakistan’s new leader Imran Khan
• Pakistan’s incoming captain must steady the ship
• Amazon’s new businesses push profit to a record

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.25 percent to 11,250 as of 8:18 a.m.

Asian stock markets were mixed on Friday, though the regional share gauge still headed to cap the strongest week since early June, following a series of steps by China shifting to stimulus mode.

Japanese equities climbed for a fourth day, despite a drop of more than 5 percent in Nomura Holdings Inc. following a profit slide. While, equity indexes in China and Hong Kong retreated, with the offshore yuan trading near its weakest in more than a year.

Currencies

• The yen gained 0.2 percent to 111.07 per dollar.
• The offshore yuan was steady at 6.8179 per dollar, after sliding 1 percent Thursday.
• The Bloomberg Dollar Spot Index rose 0.5 percent Thursday, the largest advance in two weeks. It edged down 0.1 percent Friday.
• The euro bought $1.1648.

Commodities

• West Texas Intermediate crude held on to this week’s advance, trading at $69.56 a barrel.
• Gold rose 0.1 percent to $1,224.34 an ounce.

Here are some key events still to come during the remainder of this week:

• Earnings season continues with Twitter on Friday.
• U.S. gross domestic product probably increased by about 4.2 percent at an annualized rate in the second quarter, the most since 2014, economists forecast ahead of Friday’s data.