Sensex, Nifty Clock Best Weekly Gain In A Month Ahead Of Karnataka Polls

Indian equity benchmarks resumed upmove after taking a breather in the previous session ahead of Karnataka assembly elections led by HDFC twins, Asian Paints, ITC and Infosys.

The S&P BSE Sensex rose 0.82 percent or 289.52 points to 35,535.79 and the NSE Nifty 50 index climbed 0.84 percent or 89.95 points to 10,806.50.

“The way market is reacting, it is factoring in a BJP victory. But if it does not win, there can be a correction of 100-200 points in Nifty,” Gaurang Shah of Geojit Financial Services told BloombergQuint over phone.

On weekly basis, the benchmarks clocked their best gain in a month. Both the Sensex and the Nifty advanced 1.7 percent.

Twelve out of 19 sector gauges compiled by the BSE Ltd. ended higher led by the S&P BSE Metal index's 1.56 percent gain. On the other hand, the S&P BSE Telecom index was the top loser, down 4.25 percent. (Here’s why)

• Sheela Foams: The Ghaziabad-based mattress maker fell 0.4 percent to Rs 1,454. Trading volume was 10.8 times its 20-day average.
• Akzo Nobel: The Gurugram-based paint maker rose 1.25 percent to Rs 1,944. Trading volume was 9.4 times its 20-day average.
• Astral Polytechnik: The Ahmedabad-based PVC plumbing system maker fell 0.14 percent to Rs 959. Trading volume was 7.77 times its 20-day average.
• Berger Paints: The Kolkata-based paint maker rose 4.6 percent to Rs 279. Trading volume was 9.5 times its 20-day average.

Shares of the Mumbai-based McDonald’s restaurant operator in west and south India rose as much as 3.76 percent to Rs 425 after its net profit rose 59 percent in March quarter.

Key earnings highlights:

• Other income up 64.4 percent at Rs 9.7 crore versus Rs 5.6 crore (YoY)
• Margin at 6 percent versus 4.3 percent (YoY)
• EBITDA up 87.6 percent at Rs 18.2 crore versus Rs 9.7 crore (YoY)
• Revenue at Rs 302.7 crore versus Rs 224.8 crore (YoY)
• Net profit up 59 percent at Rs 6.6 crore versus Rs 4.15 crore loss (YoY)

Shares of the Noida-based electrical switch gear, cable and wire maker rose as much as 3.2 percent to Rs 554.80 after it met Bloomberg consensus estimates in March quarter.

Key earnings highlights:

• Net profit at Rs 226 crore versus estimate of Rs 222 crore
• Net profit up 137 percent at Rs 226 crore versus Rs 95 crore (YoY)
• Revenue up 38 percent at Rs 2,535 crore versus Rs 1,831.51 crore (YoY)

Shares of the Gurugram-based budget carrier swung after it reported March quarter earnings.

Key earnings highlights:

• Net profit up 5 percent at Rs 40.5 crore versus 38.59 crore (YoY)
• Revenue up 24 percent at Rs 2,004.78 crore versus Rs 1,613.93 crore (YoY)
• Q4 fuel cost at Rs 720 crore versus Rs 550 crore (YoY)
• Average domestic load factor at 95.4 percent in Q4
• Spicejet to induct 19 737 Max planes in FY19
• Spicejet to induct 8 New-Gen Q400 planes in FY19
• Spicejet inked $12.5 billion agreement with CFM International for the purchase of LEAP-1B engines to power its 155 Boeing 737 MAX fleet
• Reappoints Ajay Singh as MD for five year term

• South Indian Bank has 1.19 crore change hands in three block deals. Stock swung between gains and losses after the block deal.

Buyers and sellers were not immediately known

Source: Bloomberg

• Healthy process was carried out to determine right suitor for Fortis
• We believe we have had a healthy process to determine who would be the right fit
• We looked at different binding views from the perspective of certainty
• Looked at all bids from point of view of liquidity and continuity
• Hero - Dabur Group got the maximum votes from the Board
• Liquidity, certainty and risk were taken into consideration for selecting winner
• Manipal deal was not the favourite among the Board
• Requested resignation of Singh brothers form SRL board
• Certainty required that funds flow straight into company
• Shareholder meeting will be in 30 days
• Two shareholders, who have over 10 percent equity, have requested EGM on May 22
• Five out of eight members are relatively new to join board
• Three oldest members of the board voted for Hero Manipal Group
• Board meeting went on for 15 hours.
• We expect the forensic audit report before the end of May

Shares of the Mumbai-based infrastructure construction company rose as much as 4.56 percent to Rs 290.

J Kumar Infraprojects has won an order from NBCC for construction of South Delhi Municipal Corporation’s headquarter near Pragati Maidan in Delhi, the company said in an exchange filing.

• IndoStar Capital Finance's Rs 1,844 crore initial public offering was fully subscribed as of 11:30 am on final day of subscription.

Source: NSE website

• Global commercial vehicle wholesales up 119 percent at 39,678 units
• Global wholesales passenger vehicles up 14 percent at 62,619 units
• Global Jaguar wholesales at 14,874 vehicles
• Global Land Rover wholesales at 30,410 vehicles

Shares of the Bengaluru-based non-banking finance company rose as much as 7.72 percent to Rs 434.75 after its profit rose nearly three times in March quarter.

Key earnings highlights:

• NII up 64.5 percent at Rs 211 crore
• Net profit grew 235 percent to Rs 64.9 crore versus Rs 19.35 crore (YoY)
• Provisions at Rs 34.7 crore
• GNPA at 3.60 percent from 4.24 percent (QoQ)
• NNPA at 0.7 percent from 1.0 percent (QoQ)

Shares of the Delhi-based jeweller rose as much as 19.9 percent, most since the start of this week, to Rs 250.7.

The board of PC Jeweller approved a buyback of 1.2 crore shares not exceeding Rs 424 crore at a price of Rs 350 each, the company said in an exchange filing.

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

Premium on the contract fell 16.5 percent to Rs 108.30. Over 10 lakh shares were added to the open interest which stood at 41.44 lakh shares.

Click here to see the complete options chain

How To Make Market Volatility Your Friend? Find Out On The F&O Show

Shares of the Mumbai-based paint maker rose 5 percent, the most in over 10 months, to record high of Rs 1,280 after it reported March quarter earnings.

Key earnings highlights:

• Revenues up 14.7 percent at Rs 4,483 crore versus Rs 3,908 crore
• Net profit up 4.1 percent at Rs 481 crore versus Rs 462 crore
• EBITDA up 18.5 percent at Rs 839 crore versus Rs 708 crore
• Margins at 18.7 percent versus 18.1 percent

Sunil Munjal said:

• Will be able to share plans for Fortis only post CCI and shareholder approvals
• Hopeful that the shareholders will accept our offer
• Opportunity in Fortis has come because of liabilities in the company
• Hope shareholders will see reason and appreciate the offer
• Rs 1,050 crore will be paid upfront to Fortis Healthcare; Rs 750 crore investment to follow later

Anand Burman said:

• Hope to receive CCI nod shortly as Fortis requires urgent fund infusion
• Will share further plans after receiving regulatory approvals
• Waiting for shareholders' nod; Have crustal clear plans for first 30 days, first 100 days and 365 days
• Current management is expected to continue post deal

Shares of the Mumbai-based public-sector lender fell as much as 4.97 percent to Rs 83.20 after it reported a loss for the third straight quarter as asset quality deteriorated and provisions against bad loans surged.

Union Bank of India incurred a wider-than-expected loss of Rs 2,583.4 crore in the quarter ended March as compared to a profit of Rs 108.2 crore in the same period last year, according to its filing with the stock exchanges.

• Loan book grew 0.8 percent, while deposits advanced 8.7 percent.
• Gross bad loans in absolute terms rose 20 percent sequentially to Rs 49,370 crore.
• Capital adequacy ratio stood at 11.5 percent.

Shares of the Bengaluru-based IT company rose as much as 12.8 percent, the most in over a month, to record high of Rs 1,123.80 after its March quarter net profit beat average analyst estimate tracked by Bloomberg.

Key earnings highlights:

• Net profit at Rs 238 crore versus estimate of Rs 220 crore
• Revenue at Rs 1,740 crore versus estimate of Rs 1,693 crore
• Ebit up 14 percent at Rs 292.5 crore
• Margin at 16.8 percent

Morgan Stanley has maintained its 'Overweight' stance on the stock for target price of Rs 920 per share.

Morgan Stanley said:

• Strong Q4FY18 results and constructive outlook for FY19.
• Strong growth was led by the HP/DXC channel and Direct Core.
• Direct core, HP/DXC channel are expected to grow above the industry average.
• The company raised its margin outlook to 15-17 percent from 14-16 percent.

Shares of the dairy products to baby food maker rose as much as 6 percent to record high of Rs 9,527 after it reported strong earnings in quarter ended March 2018.

Key earnings highlights:

• Net sales up 10.6 percent at Rs 2757 crore
• Ebitda up 34.6 percent at Rs 697 crore
• Ebitda margin at 25.3 percent
• Net profit up 38 percent at Rs 424 crore

International brokerage CLSA maintains its 'Outperform' call on the stock and had raised its target price to Rs 10,200 from Rs 9,750.

CLSA said:

• Nestle India started 2018 on strong footing with notable margin gains
• Margin uptick on low commodity prices, particularly milk and milk solids
• 53 times one-year forward PE should sustain in the context of over 20 percent EPS CAGR

Shares of the country's second largest hospital chain operator fell as much as 3.2 percent to Rs 148 after its board said it will recommend the offer proposed by the Munjal and the Burman family offices for the healthcare chain’s hospital and diagnostics businesses.

Sunil Munjal’s Hero Enterprise Investment Office and the Burman Family Office, which jointly own a minority stake in Fortis, has committed to invest Rs 1,800 crore in the Indian healthcare chain.

• Of this, Rs 800 crore will be infused through a preferential issue at Rs 167 a share
• The rest will be invested through warrants at Rs 176 a share, with Rs 250 crore of that coming up front.
• Including the warrant subscription amount, their upfront investment would be Rs 1,050 crore without any due diligence.

Speaking to BloombergQuint, Amit Tandon of proxy advisory firm IiAS said, all the offers are close and financially this is not the best offer.

Key conversation highlights:

• Look forward for more clarity on basis of selecting this offer from Fortis board before taking a final view
• Don't think decision will see any change as of now
• Board must come out with the rationale of choosing this offer
• Was definitely not the most obvious offer at first
• Offer approval on majority and not consensus

Shares of Bharti Airtel and Idea Cellular fell as much as 6 percent and 8.4 percent each respectively after Reliance Jio launched post-paid plan with monthly rental of Rs 199, and an ISD calling service at a starting price of 50 paise per minute.

The company also announced international roaming service with outgoing calls at Rs 2 per minute onwards.

The new plan launched by Jio will lead to further decline in average revenue per user (ARPU) for incumbent players, international brokerage firm Jefferies said in a note.

"This is at 50 percent discount to comparable packs by incumbents and 60 percent discount to postpaid ARPUs. We have been concerned on postpaid as it contributes 20 percent plus of revenues. With the sharp discount launch by Jio we expect incumbents to also respond and thus expect further decline in ARPU for Bharti and Idea," Jefferies analysts Piyush Nahar, Somshankar Sinha and Pratik Chaudhuri wrote in a note.

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

The S&P BSE Sensex rose 0.3 percent or 120 points to 35,366 and the NSE Nifty 50 index advanced 0.26 percent or 25 points to 10,742.

Nine out of 11 sector gauges compiled by the National Stock Exchange were trading higher led by the Nifty IT index's 0.6 percent gain. On the other hand, the Nifty PSU Bank index was the top loser, down 0.4 percent.

The rupee showed some strength to quote 21 paise higher at 67.11 against the dollar in early trade today on fresh selling of the US currency by exporters and banks amidst higher opening in the domestic equity market.

Forex dealers said besides selling of the American currency by exporters and banks, weakness in the dollar against other currencies overseas after tepid inflation data supported the rupee.

Source: Press Trust of India

Investor appetite for sovereign debt will be tested again as the government plans to sell Rs 12,000 crore of debt today. It is important to recall here that underwriters had to rescue the short bond on offer in the last three auctions.

Edelweiss Securities expects a weak demand after the underwriting commissions for the auction came in higher. For today, yield may stay in a tight range of 7.70-7.76 percent. The selloff of last two days has almost entirely wiped out the gains from RBI's debt purchase announcement.

For the rupee, implied opening from forwards suggest a stronger opening around 67.16 a dollar as most Asian markets are trading strong. The closely tracked South Korean won is up 0.3 percent. However, higher crude oil prices are likely to keep the gains in the rupee in check. The pair may trade in a range of 67-67.50 a dollar in the session.

Who’s Meeting Whom

• UPL to meet Macquarie Capital Securities on May 11
• Info Edge to meet IIFL from May 14 - 16

IPO Watch

• IndoStar Capital Finance IPO continues on day 3. Issue subscribed 0.69 times on day 2.

Credit Suisse on Asian Paints

• Upgrade to Neutral from Underperform raise target price to Rs 1,220 from Rs 1,100.
• On a high base of around 14 percent volume growth in Q4FY17, the company grew around 10 percent in Q4.
• Upgrade stock on improved visibility on both volumes and margins.

Morgan Stanley on Asian Paints

• Maintain Overweight, target price Rs 1.400.
• Volume growth for the domestic business was around 10 percent.
• Earnings missed estimates but recovery in domestic volume growth positive.
• Well placed to benefit from ongoing acceleration in discretionary consumption growth.
• Industrial paints, home improvement, and international business did well.

Credit Suisse on Titan

• Maintain Neutral, raise target price to Rs 930 from Rs 850.
• Strong margin expansion, but revenue growth is now normalising.
• Like Titan for potential for market share gains in jewellery and high quality management.
• Valuations are stretched and leave no room for upside.

CLSA on Titan

• Maintain Outperform, raise target price to Rs 1,050 from Rs 950.
• Jewellery Ebit growth of 60 percent marks a great finish to FY18.
• Management reiterated its commitment to grow jewellery revenues 2.5 times in five years.
• Performance of watches and eyewear was muted.

CLSA on Nestle

• Maintain Outperform, raise target price to Rs 10,200 from Rs 9,750
• Nestle India started 2018 on strong footing with notable margin gains
• Margin uptick on low commodity prices, particularly milk and milk solids
• 53 times one-year forward PE should sustain in the context of over 20 percent EPS CAGR

CLSA on Union Bank

• Maintain Buy, target price at Rs 125
• Results worse than expectations due to higher provisions and weaker topline
• Downgrade of stressed loans push-up NPLs
• Topline weak but moderation in loan growth a needed strategy

CLSA on Zee Entertainment

• Maintain Buy, raise target price to Rs 705 from Rs 696.
• Management highlighted that revival in ad revenues is sustaining and broad-based.
• Forecast Zee to deliver a 22 percent earnings CAGR over FY18 - 21.

BofAML on Zee Entertainment

• Maintain Underperform, target price of Rs 545.
• Tax was higher due to demerger and foreign subsidiaries paying dividend.
• Management sees faster than industry growth rate which is 11-12 percent.
• Management is looking to maintain over 30 percent EBITDA margin going forward.
• Maintain our Underperform rating as we find valuations high.

Morgan Stanley on Mphasis

• Maintain Overweight, target price Rs 920.
• Strong Q4FY18 results and constructive outlook for FY19.
• Strong growth was led by the HP/DXC channel and Direct Core.
• Direct core, HP/DXC channel are expected to grow above the industry average.
• The company raised its margin outlook to 15-17 percent from 14-16 percent.

Credit Suisse on Sun Pharma

• Maintain Outperform, target price of Rs 640.
• Sun's partner Cipher reported a sharp decline in Absorica royalty.
• Absorica sales expected to be muted this quarter.
• Absorica sales decline should be partly offset by Sumatriptan and Coreg CR.

• Aarti Industries
• Aditya Birla Fashion
• Allahabad Bank
• Canara Bank
• Dena Bank
• Graphite India
• Havells India
• Oracle Financial Services Software
• Puravankara
• Rain Industries
• Sun TV Network
• SpiceJet
• Tata Global Beverages

Earnings Reaction To Watch

Titan Co (Q4, YoY)

• Net sales up 11.7 percent at Rs 3916 crore
• Ebitda up 67 percent at Rs 454 crore
• Ebitda margin at 11.6 percent
• Net profit up 40.5 percent at Rs 282 crore
• Exceptional loss of Rs 80.7 crore

Nestle India (Q1, YoY)

• Net sales up 10.6 percent at Rs 2757 crore
• Ebitda up 34.6 percent at Rs 697 crore
• Ebitda margin at 25.3 percent
• Net profit up 38 percent at Rs 424 crore

Ingersoll-Rand India (Q4, YoY)

• Revenue down 4 percent at Rs 136 crore
• Net profit down 2 percent at Rs 26.5 crore
• Ebitda up 60 percent at Rs 24 crore
• Margin at 17.6 percent
• Raw material cost down 20 percent at Rs 68 crore
• Tax expenses up 150 percent at Rs 15 crore

Mphasis Q4 (QoQ)

• Revenue up 5 percent at Rs 1744.5 crore
• Net profit up 11 percent at Rs 238 crore
• Ebit up 14 percent at Rs 292.5 crore
• Margin at 16.8 percent

Ujjivan Financial (Q4, YoY)

• NII up 64.5 percent at Rs 211 crore
• Net profit grew 235 percent to Rs 64.9 crore
• Proisions at Rs 34.7 crore
• GNPA at 3.60 percent from 4.24 percent (QoQ)
• NNPA at 0.7 percent from 1.0 percent (QoQ)

Shankara Building (Q4, YoY)

• Revenue up 27 percent at Rs 761 crore
• Net profit up 16 percent at Rs 22 crore
• Ebitda up 20 percent at Rs 54 crore
• Margin at 7.1 percent

Apollo Tyres (Q4, YoY)

• Revenue up 21 percent at Rs 4031 crore
• Net profit up 10 percent at Rs 250 crore
• EBITDA up 39 percent at Rs 515 crore
• Margin at 12.8 percent

Bharat Bijlee (Q4, YoY)

• Revenue down 2 percent at Rs 223 crore
• Net profit up 600 percent at Rs 49 crore
• Ebitda up 26 percent at Rs 12 crore
• Margin at 5.4 percent
• Exceptional gain of Rs 47 crore in current quarter

Asian Paints (Q4, YoY)

• Revenue up 14.7 percent at Rs 4483 crore
• Net profit up 4.1 percent at Rs 481 crore
• Ebitda up 18.5 percent at Rs 839 crore
• Margin at 18.7 percent

Zee Entertainment (Q4, YoY)

• Revenue up 13 percent at Rs 1725 crore
• Net profit down 85 percent at Rs 231 crore
• Ebitda up 8 percent at Rs 505 crore
• Margin at 29.3 percent

Chennai Petroleum (Q4, YoY)

• Revenue up 43 percent at Rs 9788 crore
• Net profit up 4 percent at Rs 178 crore
• Other income of Rs 81 crore in base quarter
• Ebitda up 41 percent at Rs 355 crore
• Margin at 3.6 percent

Akzo Nobel (Q4, YoY)

• Revenue up 10 percent at Rs 700 crore
• Net profit up 226 percent at Rs 238 crore
• Ebitda down 6 percent at Rs 70 crore
• Margin at 10 percent
• One-time profit from sale of chemicals business worth Rs 186 crore in current quarter

Union Bank of India (Q4, YoY)

• NII down 8.1 percent at Rs 2,193 crore
• Net loss of Rs 2,583 crore
• Provisions at Rs 5638 crore from Rs 2521 crore (QoQ)
• GNPA at 15.73 percent
• NNPA at 8.42 percent

Adani Enterprises (Q4, YoY)

• Revenue down 13.5 percent at Rs 10234 crore
• Net profit down 15 percent at Rs Rs 188 crore
• EBITDA flat at Rs 656 crore
• Margin at 6.4 percent vs 5.5 percent

Laurus Labs (Q4, YoY)

• Revenue up 18.5 percent at Rs 560 crore
• Net profit down 37 percent at Rs 45 crore
• Ebitda up 1.5 percent at Rs 117 crore
• Margin at 20.8 percent

RSWM (Q4, YoY)

• Revenue down 7.5 percent at Rs 761 crore
• Net profit down 52 percent at Rs 14 crore
• EBITDA unchanged at Rs 70.5 crore
• Margin at 9.3 percent

• Nifty May Futures closed trading at 10,725 with premium of 8 points versus 27.6 points.
• All series-Nifty open interest down 1 percent and Bank Nifty open interest down 7 percent.
• India VIX ended at 14.4, up 1 percent.
• Max open interest for May series at 11,000, open interest at 58.2 lakh, open interest up 8 percent.
• Max open interest for May series at 10,500, open interest at 54.6 lakh, open interest down 4 percent.

Bulk Deals

Infibeam

• Nomura Singapore bought 30 lakh shares (0.6 percent) at Rs 167.75 each

Magma Fincorp

• Amansa Holdings bought 32.75 lakh shares (1.4 percent) at Rs 166 each
• GS Asia Growth Fund bought 20.14 lakh shares (0.8 percent) at Rs 166 each
• HDFC Standard Life Insurance bought 15.26 lakh shares (0.6 percent) at Rs 166.48 each
• Reliance Capital MF bought 39.15 lakh shares (1.7 percent) at Rs 166 each
• KKR Mauritius Direct Investments sold 36.74 lakh shares (1.6 percent) at Rs 166.04 each
• Zend Mauritius VC Investments sold 92.76 lakh shares (3.9 percent) at Rs 166 each

• PC Jeweller board approves buyback of 1.2 crore shares not exceeding Rs 424 crore at a price of Rs 350 each.
• Reliance Jio announces new postpaid plan starting Rs 199 per month.
• Pennar Industries receives multiple orders worth Rs 492 crore.
• Shree Pushkar Chemicals and Fertilizers board approves preferential allotment of equity to promoter group.
• Sharon Bio-Medicine gets Maharashtra Pollution Control Board approval to operate Taloja API plant.
• Siemens India: CEO says getting many orders for captive power projects.

Must-Read

• Fortis board backs Munjals and Burmans in takeover battle
• Union Bank posts a loss as asset quality worsens in March quarter
• Jaypee group offers 2,000 shares for free to each homebuyer
• PC Jeweller to buy back shares worth Rs 424 crore

• Supreme Court collegium likely to meet today on Justice Joseph’s elevation issue
• Panel interviews nine for RBI deputy governor’s post
• Bank credit growth at its highest since July 2014
• Kotak’s Nilesh Shah favours contrarian bet in India poll season
• Aadhaar hearing concludes in Supreme Court: Here’s what was argued over 38 days
• In charts: Has Karnataka done enough on the socio-economic front?
• In charts: Here’s how Mumbai will develop in the next two decades
• Tax hoops the Walmart-Flipkart deal will have to jump through
• Mahathir reassures business, aims to boost Malaysia stock market
• Bad loans of top six private banks exceed Rs 1 lakh crore

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.47 percent to 10,782 as of 7:43 a.m.

Asian stocks opened higher after their U.S. counterparts rallied amid relief the latest reading on American inflation suggested less need for the Federal Reserve to accelerate monetary tightening. The dollar steadied after dropping the most since March.

Commodities

• West Texas Intermediate crude was at $71.50 a barrel, up 2.5 percent for the week.
• Gold was flat Friday at $1,321.18 an ounce.
• LME copper traded at $6,919.00 per metric ton.

Here key things to watch out for:

• 5:30 pm: India March factory output date, estimate 6.1 percent , prior 7.1 percent.
• Hong Kong releases GDP data Friday.
• The University of Michigan gauge of consumer sentiment is due.