Sensex, Nifty Gain For A Second Session On Vaccine Optimism

Indian equity benchmarks rose for a second session on optimism the U.S. decision to offer vaccine support will aid the nation’s effort to control the world’s largest surge in coronavirus infections.

The S&P BSE Sensex climbed 1.17% to 48,954.16 while the NSE Nifty 50 index gained 1.16% to 14,653.05. All 19 sector sub-indices compiled by BSE Ltd. advanced, led by a gauge of metal companies.

Overseas investors have sold $1.1 billion of local stocks through April 23, the biggest outflow since March last year, when the nation imposed one of the strictest nationwide lockdown in the world to curb the spread of the pandemic. With 17.6 million cases in total, the nation is now the second-worst affected country globally.

With gains of just about 2%, Sensex is among the worst performers in Asia this year.

The U.S. announced Monday it would share its entire supply of AstraZeneca Plc’s Covid-19 vaccine with other countries and readied an aid package for India, as President Joe Biden pivots to ramp up U.S. pandemic assistance to the rest of the world.

A panel of the bank’s central board will meet April 28 to examine the status and decide on fundraising of as much as $2 billion via bonds, the State Bank of India said in a stock exchange filing.

The fund raising in 2021-22 can be in a single or multiple tranches and via a public or private placement of senior notes in U.S. dollar or any other convertible currency

Hindustan Zinc reported net income for the fourth quarter that missed the average analyst estimate.

• Net income Rs 2,480 crore, up 85% y/y, estimate Rs 2,520 crore (Bloomberg Consensus)
• Revenue Rs 6,730 crore, up 56% y/y, estimate Rs 6,460 crore
• Total costs Rs 3,900 crore, up 30% y/y
• Other income Rs 295 crore, down 37% y/y
• Ebitda Rs 3,875 crore, up 98% y/y, estimate Rs 3,690 crore

Commentary

• Sees FY22 metal output higher than a year ago
• Sees FY22 project capex at $100 million
• FY22 mined, finished metal output seen at 1.03 million-1.05 million tonnes each
• FY22 saleable silver output seen at 720 tonnes
• FY22 zinc cost of production seen below $1,000 per tonne

Maruti Suzuki India Ltd.’s profit narrowed and earnings trailed estimates as a resurgent Covid-19 outbreak hit consumer demand in Asia’s third-largest economy.

Net income fell 9.3% to Rs 1,166 crore ($157 million) in the three months ended March 31, the unit of Japan’s Suzuki Motor Corp. said in a statement Tuesday. That’s less than the average analyst estimate of Rs 1,699 crore, according to data compiled by Bloomberg.

Revenue at Maruti Suzuki for the fourth quarter rose 32% year-on-year to Rs 24,113 crore.

Info Edge India Ltd. is higher for the eighth straight day, on track for the longest winning streak since the period ended Feb. 2, 2012.

The stock has gained a total of 8.3% during the streak while the Sensex increased 0.6%.

• Trading volume was 53% below the 20-day average for this time of day.
• The consensus price target is 9.6% lower than the current stock price, vs 31.6% higher for comparable companies.

• HDFC Life options volume 4.1x the 20-day average, with 19,351 calls changing hands vs 7,638 puts
  • Stock down 3.4%, volume 2.6x the 20-day average for this time of day
• Tech Mahindra options volume 3.5x the average, with 18,266 calls vs 9,522 puts
  • Stock was little changed, volume 1.8x the average
• Hindalco options volume 2.7x the average, with 31,444 calls vs 9,795 puts
  • Stock up 4.7%, volume 1.8x the average
• Axis Bank options volume 2.2x the average, with 47,194 calls vs 27,165 puts
  • Stock up 0.1%, volume 2.4x the average
• Reliance Industries options volume 1.7x the average, with 139,979 calls vs 60,215 puts
  • Stock up 2.1%, volume 0.7x the average
• Larsen options volume 1.7x the average, with 13,460 calls vs 9,744 puts
  • Stock up 2.7%, volume 0.8x the average

Shares of Kotak Mahindra Bank Ltd. were the most hit among peers after the Reserve Bank of India capped founder’s tenure as chief executive officer of a bank to 15 years.

That gives the world’s wealthiest banker Uday Kotak less than three years to find a successor, according to a note by Suresh Ganapathy, an analyst at Macquarie Capital Securities Ltd. Kotak’s current tenure as CEO of India’s fourth-largest private lender ends on Jan. 1, 2024.

Once Kotak’s tenure ends he is not eligible for reappointment as the banker has already completed 15 years as the managing director and chief executive officer of the lender, Ganapathy wrote in the note. Also, joint managing director Dipak Gupta, the second in line, “may not be eligible to succeed Kotak as the CEO as the 15-year cap applies for all whole-time directors on the board” as well, according to the note.

Read the full report here

Indian bonds are set to decline by the most in more than a week as traders assess demand for the benchmark 10-year note ahead of an auction on Friday. The rupee gained in line with other emerging Asian currencies.

• 10-year yields rise 2bps, most since April 15, to 6.06%
• Traders expecting that RBI will conduct Operation Twist in which it sells treasury bills and buys government securities after speculation that the central bank recently bought T-bills at an auction

Source: Bloomberg

Shares of the railway company gained for a fifth straight session. The stock has been fluctuating between gains and losses, rising as much as 3.4% and falling as much as 2.6%.

IIFL Securities initiated coverage on the stock with a 'Buy' rating and a target price of Rs 2,174 last month. The broking firm said IRCTC is a play on the normalisation of activity post-Covid.

It estimates 24% EPS CAGR in FY20-23ii, driven by:

1. accelerated adoption of online ticketing;
2. conversion of unreserved coaches to 2S class;
3. increase in capacity in the PDW (packaged drinking water) segment; and
4. resumption of private trains.

Optionalities exist in the form of monetisation of the 60 million+ customer base and operation of more private trains.

The key near-term risk is the rising Covid cases and a delay in recovery. However, IIFL adds, IRCTC’s low fixed-cost model and healthy net-cash position lend comfort.

Shares of the private life insurer swung between gains and losses even as brokerages gave a thumbs-up to its fourth-quarter performance.

HDFC Life's profit grew 2% to Rs 318 crore in the quarter ended March from Rs 312 crore a year earlier led by a 45% growth in new premiums collected even as a Rs 165 crore hit on Covid related provisions muted profits.

Brokerages’ Take

ICICI Securities

• Upgrades to ‘buy’ from ‘add’, revises target price from Rs 767 to Rs 841
• Strong FY21 performance validates execution capability
• Multiple growth levers remain in place -- recovery of credit protect (NBP basis), higher growth in agency/direct business and better enablement of medical underwriting
• Total protection remained flat in Q4 as retail protection decline got offset with growth in group protection
• Operating performance has improved with better persistency in four out of five cohorts

Jefferies

• Maintains ‘Buy’ rating, revises price target to Rs 880 from Rs 850
• Saw 52% growth in value of new business to Rs 780 crore, ahead of our estimate, with a 36% rise in premiums & an expansion in margin to 27%
• While low base helped, a broad-based pick-up in savings is encouraging
• Retail protection lagged & may continue to be soft for the first half of the next fiscal
• Persistency has improved and impact of Covid on mortality has been manageable
• Interesting to see that most channels have done well in mobilising premiums.
• Combination of improvement in product mix and scale efficiencies/ better persistencies helped improve VNB margin

CLSA

• Maintains ‘outperform’ rating, raises target price from Rs 765 to Rs780.
• HDFC Life has demonstrated industry-leading growth with a 17 % CAGR during FY19-21 vs private peers' growth of 9% CAGR, driven by margin-accretive product innovations in its long-term savings business
• Expect HDFC Life to deliver a 19 % VNB CAGR in FY21-23 and while valuations are not cheap, it remains a steady compounder.
• The company balanced its product mix, with the share of non-annuity non-PAR savings book down and a share of PAR up.
• Protection book continues to be impacted by supply-side challenges

Shares of Jindal Steel & Power Ltd. rallied to the highest level since 2013, fueled by the mill’s $405 million stake sale in a power unit.

India’s third-biggest steelmaker by market value plans to sell its entire stake in Jindal Power Ltd. to Worldone Pvt., owned by JSPL’s parent group, for Rs 3,020 crore in cash, the company said in an exchange filing. The proposed sale is expected to be completed in 12 months, it said.

Read the full report here

Overseas investors have sold $1.1 billion of local stocks through April 23, the biggest outflow since March last year, when the nation imposed one of the strictest nationwide lockdown in the world to curb the spread of the pandemic. With 17.6 million cases in total, the nation is now the second-worst affected country globally.

Read the full report here

Shares of the textile firm dropped as much as 16.7% after reporting a Rs 500 crore net loss for the fourth quarter. The company had reported a net profit of Rs 1,790.87 crore of the corresponding quarter a year ago.

Total income during the quarter under review stood at Rs 1,478.63 crore, up 95.04%, as against Rs 758.11 crore reported in the same quarter a year ago, Alok Industries said in a regulatory filing.

• Trading volume was almost eight times the 20-day average for this time of day.

Shares of SBI Cards rose as much as 2.1% after reporting a 110% rise in net profit at Rs 175 crore for the fourth quarter.

The credit card company, promoted by the country's largest lender SBI, reported a decline in revenue to Rs 2,309 crore as against Rs 2,433 crore in the same period a year ago, it said in a regulatory filing.

Brokerages’ Take

ICICI Securities

• Moderation in spend is not a big concern in an uncertain environment.
• NIM has been supported by lower cost of debt, but lower yield was driven by lower revolver mix and RBI RE book with 15-16% interest rate
• Incremental credit cost in Q4 was largely inline
• Maintain 'Buy' with a target price of Rs 1,205

Motilal Oswal

• Expect spends to pick up as retail spends have exceeded pre-Covid levels and corporate spends are also back at pre-Covid levels.
• Estimate a loan book/earnings CAGR of 24%/60% over FY21-23E -- as a strong PCR of around 78%, coupled with additional management overlay provisions of Rs 297 crore, should keep credit costs in check
• Maintain ‘Buy’ rating with a target price of Rs 1,200

• Axis Bank down 2.8%
• Bajaj Finance up 0.9%
• Britannia down 0.5%
• Maruti Suzuki down 0.3%
• TVS Motor down 0.3%
• HDFC AMC up 0.7%

India stocks rose on optimism the U.S. decision to offer vaccine support will aid the nation’s effort to control the world’s largest surge in coronavirus infections.

The S&P BSE Sensex rose as much as 0.5% to 48,614.65 while the NSE Nifty 50 index gained 0.48% to 14,554.25. Reliance Industries Ltd. contributed the most to the index gain, increasing 1.8%. Hindalco Industries Ltd. had the largest increase, rising 3.7%.

All but one of 19 sector sub-indices compiled by BSE Ltd. climbed, led by a gauge of metal companies. The S&P BSE BankEx was the lone loser led by a 2% drop in Axis Bank.

“The recent news of various countries extending help to India in the Covid fight is further boosting the sentiment,” Ajit Mishra, vice president of research at Religare Broking Ltd. wrote in a note. “We remain cautiously optimistic as volatility is likely to remain high on the back of derivative expiry and upcoming earnings announcements.”

The U.S. announced Monday it would share its entire supply of AstraZeneca Plc’s Covid-19 vaccine with other countries and readied an aid package for India, as President Joe Biden pivots to ramp up U.S. pandemic assistance to the rest of the world.

Good morning!

Asian stocks slipped in early trading Tuesday as traders considered the mounting risks to growth in the region from spiking Covid-19 cases, and the implications of a broadening antitrust crackdown in China.

Indices opened in the red in Hong Kong and China. Japan underperformed ahead of the Bank of Japan’s policy statement, with the latest state of emergency and associated restrictions on activity posing deeper risks to the economy. U.S. contracts edged higher after solid corporate earnings helped the S&P 500 Index notch another record.

India’s SGX Nifty 50 Index futures for April delivery little changed at 14,483.50, while MSCI Asia Pacific Index -0.4%. The NSE Nifty 50 Index added 1% Monday to 14,485.

Tech Mahindra, HDFC Life, SBI Cards may react as the companies reported quarterly results after the market closed. Axis Bank, Maruti Suzuki, Bajaj Finance, Britannia, TVS Motor, Hindustan Zinc are among the companies scheduled to report earnings Tuesday. Foreign investors sold net Rs 1,180 crore of stocks on April 23, according to the NSDL website.

Meanwhile, oil steadied as traders consider the risks to demand from India after the nation reported a million new coronavirus cases in three days.