Sensex, Nifty Post Worst Week In Nearly Two Months

Indian equity benchmarks fell for fourth straight day as Indian companies reported weaker-than-estimated earnings for the January-March quarter.

The S&P BSE Sensex fell 0.86 percent or 300.82 points to 34,848 and the NSE Nifty 50 index declined 0.81 percent or 86.30 points to 10,596.

On weekly basis, the benchmarks posted their worst performance in nearly two months. The Sensex plunged 1.93 percent and Nifty tumbled 1.94 percent.

Earnings so far have been below expectations and that’s hurting sentiment, market expert Anand Tandon told BloombergQuint in an interview. He expects tougher times for market if earnings growth does not sustain.

“Autos and consumption companies have done well but valuation comfort is not there in consumption focused companies as they are expensive,” he said.

All sector gauges barring the S&P BSE Fast Moving Consumer Durables index ended lower led by the S&P BSE Capital Goods index's 3 percent drop.

Mid- and small-cap shares underperformed their larger peers as the S&P BSE MidCap index fell 1.47 percent and the S&P BSE SmallCap index plunged 1.62 percent.

Shares of the Chennai-based commercial vehicle maker fell 3.9 percent to Rs 148.30 after it reported March quarter earnings.

Key earnings highlights:

• Net profit up 40 percent at Rs 667 crore versus Bloomberg estimate of Rs 638 crore
• Revenue up 24 percent at Rs 8,772 crore versus Bloomberg estimate of Rs 8,850 crore

Shares of the Ghaziabad-based FMCG company held on to gains after a block deal. Dabur had 18 lakh shares change hands in a block on BSE.

Buyers and sellers were not immediately known

Source: Bloomberg

• JK Tyre: The Delhi-based tyre maker rose as much as 7.83 percent, the most in over three months, to Rs 155.70 after its net profit beat Bloomberg consensus estimates in March quarter.
• Britannia Industries: The Bengaluru-based packaged food maker rose as much as 3 percent to record high of Rs 5,640 after brokerage firm Edelweiss maintained buy on the stock and raised its target price to Rs 6,360 from Rs 5,600. New product launches, entry in new categories and geographies and enhancing distribution network will help Britannia outperform the industry, Edelweiss said in a note.
• Himatsingka Seide: The Bangalore-based home textile products maker rose as much as 8 percent, the most in over five months, to Rs 383 after acquired exclusive licensing rights for Tommy Hilfiger Home.
• Intellect Design Arena: The Chennai-based financial technology firm rose as much as 5.51 percent to Rs 225 on the back of heavy volumes. Trading volume was 2.5 times 20-day average.

Stocks in Europe slipped, failing to follow Asian peers higher amid conflicting reports over progress on trade talks between the world’s largest economies. The dollar pared some of its gains for the week and the U.S. 10-year Treasury yield edged lower after reaching the highest level since 2011.

Shares of the Anil Ambani-led telecom company rebounded after it informed exchanges that it is in talks with Ericsson to allow the company to exit NCLT process.

Reliance Communications in an exchange notification said:

• Confident to proceed with monetisation plan with Reliance Jio
• Talks with Ericsson at an advanced stage
• Talks to expeditiously resolve commercial issues

Shares of the Pune-based two-wheeler maker fell 0.4 percent to Rs 2,804 after it reported March quarter earnings.

Key earning highlights:

• Standalone net profit up 34.7 percent at Rs 1,080 crore versus Bloomberg estimate of Rs 1,047 crore
• Standalone revenue up 38 percent at Rs 6,773 crore versus Bloomberg estimate of Rs 6,643 crore
• Standalone EBITDA up 45 percent at Rs 1,315 crore versus Bloomberg estimate of Rs 1,205 crore
• Standalone margin at 19.4 percent versus Bloomberg estimate of 18.1 percent
• Domestic motorcycle market share at 16 percent
• FY18 cash, equivalents at Rs 15,542 crore versus Rs 12,368 crore (YoY)
• To pay Rs 60/share dividend

Shares of the Bengaluru-based drugmaker fell as much as 13.48 percent, the most in in nearly three years, to Rs 435.25 after it reported loss in March quarter.

Key earnings highlights:

• Margin at 13 percent versus 19.1 percent (YoY)
• Consolidated EBITDA down 33.2 percent at Rs 86.5 crore versus Rs 129.5 crore (YoY)
• Consolidated revenue down 2 percent at Rs 664 crore versus Rs 677 crore (YoY)
• Consolidated net loss from continuing operations at Rs 4.4 crore versus Rs 91.6 crore profit (YoY)

Shares of the parent of D-Mart stores operator fell as much as 6.65 percent to Rs 1,395.65 after its founder Radhakishan Damani announced a plan to sell 62 lakh shares to meet shareholding rule.

Shares of the Anil Ambani-led telecom company erased gains and fell as much as 20 percent to Rs 13.15 after a report stated that its settlement with Ericsson over dues is unlikely for now.

Reliance Communications is in talks with Ericsson to reach a settlement outside of bankruptcy court over unpaid service dues, but a deal is unlikely for now, Reuters reported citing two sources familiar with the matter.

• Indian equity benchmarks extended losses dragged by banking and pharma shares.
• The S&P BSE Sensex fell 0.48 percent or 170 points to 34,980 and the NSE Nifty 50 index declined 0.45 percent or 48 points to 110,635.
• The mid- and small-cap shares were underperforming their larger peers as the S&P BSE MidCap index fell 0.7 percent and the S&P BSE SmallCap index tumbled 0.65 percent.
• The overall market breadth was negative as 1,385 shares were declining while 922 were advancing on the BSE.

• Shares of sugar makers were trading higher in an otherwise weak session.

Shares of paint makers fell after Brent crude continued to hover above the $80-mark after crossing the level for the first time since 2014 yesterday.

• Berger Paints down 2.2 percent
• Kansai Nerolac falls 0.14 percent
• Akzo Nobel India declines 0.13 percent
• Shalimar Paints down 0.1 percent

Hearing Congress-JD(S) plea against Karnataka Governor inviting BJP to form the government, the Supreme Court ordered for a floor test to be conducted tomorrow in Karanataka assembly at 4:00 pm.

• Yeddyurappa government not to take any major policy decisions until the floor test is done, says Supreme Court
• Supreme Court says, 'It is just a number game, one who enjoys the majority should be invited to form the Government.'
• Justice Arjan Kumar Sikri said, 'floor test seems to be the best option.'
• Abhishek Manu Singhvi argues, 'Yeddyurappa claimed support, but he does not have letters of support from these MLAs or it is only his oral submissions.'
• BJP's lawyer Mukul Rohatgi opposes the floor test tomorrow, says, ‘need time’, reports ANI.
• Lawyer for Congress-JD(S), Abhishek Manu Singhvi, submits to Supreme Court that Congress-JD(S) are ready for floor test tomorrow, reports ANI.

Catch all the live updates here

With the rising crude oil and falling rupee, India’s macro picture has deteriorated, Pramod Gubbi, managing director & head of institutional equities at Ambit Capital told BloombergQuint in an interview.

Key conversation highlights:

• Commodity prices have impacted company margins
• Would want to look at companies with strong pricing power ability
• Rural consumption, private sector banks and IT theme should be watched closely
• Like auto financiers from the NBFC space

Shares of the Bengaluru-based drug maker declined for the second day and fell as much as 1.87 percent to Rs 630 after the U.S. drug regulator published the inspection report of Biocon’s Bengaluru unit on its website.

The pharmaceutical company had received Form 483 with seven observations from U.S. health regulator after an inspection in the first week of this month. Form 483 is used by the FDA to document and communicate concerns discovered during plant inspections.

Shares of the Delhi-based steel maker were locked in a 5 percent upper circuit at Rs 27.65.

Tata Steel is preparing a Rs 11,500 crore loan to help fund its purchase of assets from Bhushan Steel, Bloomberg reported citing unidentified people familiar with the matter.

Shares of the Mumbai-based animal feed maker rose as much as 1.5 percent to Rs 638.65.

The company’s unit plans to invest Rs 400 crore in three greenfield milk processing plants in different states over the next three years, according to its stock exchange filing.

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

The premium on the contract fell 23 percent to Rs 71.75. Over 6.5 lakh shares were added to open interest which stood at 32.97 lakh shares.

Find Out What Strategies To Use When Markets Are Indecisive On The F&O Show

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Hindustan Unilever surpassed ITC in terms of market capitalisation for the first time in over a decade.

Hindustan Unilever's market cap stood at Rs 3.39 lakh crore while ITC's market cap stood at Rs 3.38 lakh crore.

Shares of the Gurugram-based textile maker fell as much as 9.30 percent, the most in over three months, to Rs 2,020.50 after its profit missed Bloomberg consensus estimates in March quarter.

Key earnings highlights:

• Revenue rose 22 percent to Rs 1,612 crore versus estimate of Rs 1,550 crore
• Net profit advanced 4 percent to Rs 124 crore versus estimate of Rs 147 crore
• Ebitda up 19 percent at Rs 278.5 crore
• Margin at 17.3 percent versus 17.7 percent

Shares of the Delhi-based tyre maker rose as much as 7.83 percent, the most in over three months, to Rs 155.70 after its net profit beat Bloomberg consensus estimates in March quarter.

Key earnings highlights:

• Net profit up 63 percent at Rs 145 crore versus estimate of Rs 52.7 crore
• Revenue up 6 percent at Rs 2,284 crore versus estimate of Rs 2,262 crore
• Ebitda up 65 percent at Rs 329.5 crore.
• Margin at 14.4 percent versus 9.3 percent.

Shares of the Mumbai-based refrigerator and air-conditioner maker fell as much as 7.66 percent, the most in over 18 months, to Rs 538.50 after its net profit declined in the March quarter.

Key earnings highlights:

Revenue up 1 percent at Rs 2,048 crore.

Net profit down 3 percent at Rs 193 crore.

Ebitda up 14 percent at Rs 252 crore.

Margin at 12.3 percent versus 10.9 percent.

Meanwhile, after it reported March quarter earnings, brokerages have cut their target price on the stock while one of them has a 'sell' rating on the stock.

Brokerages on Voltas:

Deutsche Bank

• Maintained ‘Sell’ with a price target Rs 470.
• Weak volume growth in cooling likely to continue.
• Key disappointment was flat March quarter revenues.
• Miss on revenues partly compensated by strong margins.

Edelweiss

• Maintained ‘Buy’; cut price target to Rs 685 from Rs 745.
• Poor season plays spoilsport while growth profile intact.
• Inverter ACs gaining momentum; maintaining the balance act.
• Roll out of white goods range and branding/marketing remain vital for Voltas.

Goldman Sachs

• Maintained ‘Buy’; slashed price target to Rs 700 from Rs 760.
• Below expectation but just a hiatus in a positive long-term structural trend.
• See the risk-reward as favourable as trades at discount to peers.

Shares of the Anil Ambani-led telecom operator extended its yesterday's rally after 12.1 lakh shares changed hands in a single block.

The stock in the last two sessions has surged 103 percent to Rs 21.30 after a report that the indebted company is in settlement talks with the Indian unit of Ericsson AB, which this week won a petition to place the wireless carrier in insolvency proceedings.

BTVI in a Twitter post said that both companies are said to have informed India’s bankruptcy court, the National Company Law Tribunal, about their talks. They have requested that the court hold off on its insolvency order, BTVI reported, citing unidentified people.

Indian equity benchmarks edged lower owing to weakness in heavyweights like HDFC Bank, Larsen & Toubro, Infosys and ITC.

The S&P BSE Sensex fell 0.22 percent or 80 points to 35,068 and the NSE Nifty 50 index declined 0.15 percent or 15 points to 10,665.

Eleven out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Capital Goods index's 0.7 percent fall. On the other hand, the S&P BSE Telecom index was the top gainer, up 0.47 percent.

The mid- and small-cap shares were trading on a muted note as both the indices on the BSE were little changed.

• Shares of the Anil Ambani-led telecom operator rose 11 percent to Rs 18.20 after 12.1 lakh shares changed hands in a block.

Buyer and sellers were not immediately known

Source: Bloomberg

• Rupee opened lower at 67.81 per U.S. dollar against yesterday's close of 67.70.

Bonds are likely to draw relief from the Reserve Bank of India's move to buy Rs 10,000 crore of securities -- a move that is expected to pump in liquidity in the banking system and cool down rising yields.

The yield on the benchmark 10-year bond has climbed 15 basis points this week, with a bulk of that rise coming after data on Monday showed consumer prices accelerating faster than estimated last month. Several banks are now bringing forward their rate hike expectations with some expecting Bank Indonesia's move to raise rates yesterday also likely to play out in India.

Meanwhile, the rupee is expected to be on the backfoot amid a rising dollar which hit a four-month high. Besides slowing foreign inflows are also likely to weigh on sentiment. The rupee ended slightly firmer at 67.6975 per dollar on Thursday, but that is mainly on the back of RBI intervention. It had hit a 15-month low earlier this week.

Axis Capital on Bajaj Finance

• Maintained ‘Hold’ with a price target of Rs 2,050.
• Asset quality strong; growth stronger.
• Management believes its portfolio quality is strong and poised to remain pristine.
• Expect the management to continue on the current path of market share gains.

Morgan Stanley on Biocon

• Maintained ‘Overweight’ with a target of Rs 785.
• Observations appear benign with no data integrity issues.
• Observations pertain largely to quality and controls, largely procedural in nature.

Kotak on Escorts

• Maintained ‘Buy’; elevated price target to Rs 1,170 from Rs 1,140.
• Company is benefitting from upcycle in its core segments.
• Increased our earnings estimates by 3-5 percent on the construction equipment division.
• Stock trades at 14 times, which we believe is inexpensive due to strong earnings growth.

Brokerages On Voltas

Deutsche Bank

• Maintained ‘Sell’ with a price target Rs 470.
• Weak volume growth in cooling likely to continue.
• Key disappointment was flat March quarter revenues.
• Miss on revenues partly compensated by strong margins.

Edelweiss

• Maintained ‘Buy’; cut price target to Rs 685 from Rs 745.
• Poor season plays spoilsport while growth profile intact.
• Inverter ACs gaining momentum; maintaining the balance act.
• Roll out of white goods range and branding/marketing remain vital for Voltas.

Goldman Sachs

• Maintained ‘Buy’; slashed price target to Rs 700 from Rs 760.
• Below expectation but just a hiatus in a positive long-term structural trend.
• See the risk-reward as favourable as trades at discount to peers.

• Chambal Fertilizers promoter acquired 5,000 shares on May 15.
• Donear Industries promoters acquired 22,500 shares on May 16.
• Bodal Chemicals promoter Suresh Patel acquired 89,208 shares on May 16.
• Sarla performance fibers promoter Madhusudan Jhunjhunwala (HUF) sold 3,285 shares on May 14.
• Rajesh Exports promoter Rajesh Mehta acquired 8,260 shares on May 16.
• Archidply Industries promoters acquired 95,400 shares on May 16.
• Ashoka Buildcon promoter Ashok Katariya acquired 3,523 shares on May 16.
• PSP Projects promoter acquired 10,000 shares on May 16.
• MAS Financial promoter Dhvanil Gandhi acquired 1450 shares on May 16.

(As Reported on May 17)

Future Enterprises

• Promoter Central Departmental Stores Private Limited bought 2.22 crore shares or 4.9 percent equity at Rs 39.2 each.
• Bennett, Coleman and Company Limited bought 3.85 crore shares or 8.5 percent equity at Rs 39.2 each.
• Cedar Support Services Limited sold 6.19 crore shares or 13.6 percent equity at Rs 39.2 each..

Future Enterprises DVR

• Angela Mercantiles Pvt Ltd sold 2.29 lakh shares or 0.6 percent equity at Rs 44.03 each.

Shree Renuka Sugars

• Rajasthan Global Securities Pvt Ltd bought 1.70 crore shares or 0.9 percent equity at Rs 15.6 each.
• Promoter Murkumbi Investments Pvt Ltd sold 6.51 crore shares or 3.4 percent equity at Rs 15.6 each.
• Promoter Agri Venture Trading & Investment Pvt Ltd sold 2.85 crore shares or 1.5 percent equity at Rs 15.6 each.

Sinner Energy India Ltd

• Aspire Emerging Fund bought 3 lakh shares or 1.5 percent equity at Rs 13.97 each.

Electrosteel Steels

• SCIIL Steel Cast Iron Investments (Cyprus) ltd sold 2.50 crore shares or 1 percent equity at Rs 1.09 each.

F&O Cues

• Nifty May Futures closed trading at 10,696.2 with premium of 13.5 points versus 20 points.
• All series-Nifty open interest down 0.3 percent and Bank Nifty open interest up 1 percent.
• India VIX ended at 13.4, down 0.2 open interest.
• Max open interest for May series call at 11,000 strike price call option, open interest at 57 lakh, open interest down 6 percent
• Max open interest for May series put at 10,500 strike price put option, open interest at 53.3 lakh, open interest down 4 percent.

• Bajaj Auto

Other Earnings To Watch

• Amara Raja Batteries
• Ashok Leyland
• Bajaj Holdings & Investment
• Dalmia Bharat
• Inox Wind
• Manappuram Finance
• Prabhat Dairy
• Tata Chemicals
• Thermax

Earnings Reaction To Watch

Taro Pharma (Sun Pharma's subsidiary) Q4 (YoY):

• Net sales down 11 percent at $175 million.
• Net profit up 4 percent at at $86.3 million.
• Ebitda down 26 percent at $74.8 million.
• Margin at 42.7 percent versus 51.2 percent.

Bajaj Finserv (Q4, YoY)

• Net interest income up 42.5 percent at Rs 2,465 crore.
• Net profit up 28 percent at Rs 685.5 crore.

Coffee Day Enterprises (Q4, YoY)

• Revenue up 26 percent at Rs 1,130 crore.
• Net profit up 92 percent at Rs 25 crore.
• Ebitda up 18 percent at Rs 179 crore.
• Margin at 15.8 percent versus 16.9 percent.

Voltas (Q4, YoY)

• Revenue up 1 percent at Rs 2,048 crore.
• Net profit down 3 percent at Rs 193 crore.
• Ebitda up 14 percent at Rs 252 crore.
• Margin at 12.3 percent versus 10.9 percent.

Man Infraconstruction (Q4, YoY)

• Revenue up 35 percent at Rs 222 crore.
• Net profit up 21 percent at Rs 23 crore.
• Ebitda at Rs 87 crore versus Rs 51.5 crore.
• Margin at 39.2 percent versus 31.4 percent.

Max Ventures and Industries (Q4, YoY)

• Revenue down 8 percent at Rs 171 crore.
• Net loss of Rs 3 crore versus net loss of Rs 6 crore.

Balkrishna Industries (Q4, YoY)

• Revenue up 23 percent at Rs 1232 crore.
• Net profit up 41 percent at Rs 194 crore.
• Ebitda up 16 percent at Rs 295 crore.
• Margin at 23.9 percent versus 25.5 percent.

Central Bank of India (Q4, YoY)

• Net Interest Income down 13 percent at Rs 1,500 crore.
• Net loss of Rs 2,113.5 crore versus net loss of Rs 592 crore.
• Provisions up 16 percent at Rs 3971 crore (QoQ).
• GNPA at 21.48 percent versus 18.08 percent (QoQ).
• NPA at 11.10 percent versus 9.45 percent (QoQ).

JK Tyre & Industries (Q4, YoY)

• Revenue up 6 percent at Rs 2,284 crore.
• Net profit at Rs 145 crore versus Rs 89 crore.
• Ebitda up 65 percent at Rs 329.5 crore.
• Margin at 14.4 percent versus 9.3 percent.

KEI Industries (Q4, YoY)

• Revenue up 39.4 percent at Rs 1,030.41 crore.
• Net profit up 40.2 percent at Rs 49.5 crore.
• Ebitda up 38.6 percent at Rs 101.02 crore.
• Margin flat at 9.80 percent.

SRF Ltd (Q4, YoY)

• Revenue up 22 percent at Rs 1,612 crore.
• Net profit down 4 percent at Rs 124 crore.
• Ebitda up 19 percent at Rs 278.5 crore.
• Margin at 17.3 percent versus 17.7 percent.

Lux Industries (Q4, YoY)

• Revenue up 27 percent at Rs 354.5 crore.
• Net profit at Rs 32 crore versus Rs 19 crore.
• Ebitda at Rs 57.5 crore versus Rs 37.5 crore.
• Margin at 16.2 percent versus 13.5 percent.

Mirc Electronics (Q4, YoY)

• Revenue down 10 percent at Rs 188 crore.
• Net profit at Rs 4 crore versus Rs 14 crore.
• Ebitda at Rs 4.5 crore versus Rs 19 crore.
• Margin at 2.4 percent versus 9.1 percent.

• Sun Pharma begins sale of generic Welchol tablets in U.S.
• GSFC signed memorandum of understanding with Centrex Metals, Australia for buying three lakh tonnes per annum of rock phosphate for 10 years.
• RBI revised rule for minimum capital held by IFSC banking units: Bloomberg.
• Jio announced exclusive partnership with Screenz.
• Reliance Communications board meet deferred to May 30 from May 19.
• ED seized jewellery worth Rs 85 crore of Gitanjali group brought from Dubai (Bloomberg)
• Godrej Agrovet unit to invest Rs 400 crore over the next three years.
• Vijaya Bank to consider raising funds under Basel III for 2018-19 on May 20 meet.
• KEI industries approved phase two expansion of MV cable plant for Rs 30-35 crore.
• ITDC signed agreement for transfer of 51 percent stake in DPAHCL.
• Minda Corp QIP closed yesterday at Rs 173.47 per share.

• India’s record sugar crop is creating risk 9,000 miles away
• Rs 4 per litre hike in petrol, diesel prices in the offing
• Congress stakes claim in Goa, Manipur and Meghalaya, RJD in Bihar
• Can Bihar, Goa governors be asked to follow Vala’s playbook?
• Numetal offers Rs 37,000 crore for Essar Steel, seeks second round of bids
• IHH Healthcare extends acceptance period of revised offer for Fortis
• China offered Trump $200 billion cut in U.S. trade deficit, official says
• Is India creating jobs or not?
• A warning signal for global stock markets is flashing in Japan
• Tata Steel seeks loan for Bhushan Steel asset purchase
• Oil’s rally above $80 stokes fears that demand will suffer
• Why is the Indian rupee looking nervous?
• Investors ignore this, but it’s eroding their wealth

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.32 percent to 10,668 as of 7:45 a.m.

Asian shares traded mixed Friday, remaining on track for a weekly loss as investors mulled the implications of a jump in benchmark U.S. 10-year Treasury yields to their highest level since 2011. The dollar steadied near its strongest for the year.

News that China has offered President Donald Trump a $200 billion reduction in the bilateral trade gap with the U.S. had little immediate reaction early Friday. Japanese and Korean shares rose, Chinese and Hong Kong equities fluctuated while Australian stocks declined.

These are some key events to watch this week:

• Chinese Vice Premier Liu He is in Washington for more trade talks.

Commodities

• West Texas Intermediate crude rose 0.1 percent to $71.59 a barrel.
• Gold fell 0.2 percent to $1,288.61 an ounce.
• LME copper steady at $6,859.50 per metric ton.