Sensex, Nifty End Volatile Session Flat As Slump In Titan, IndusInd Counters Gains In Airtel, Adani, SBI Life

Indian equity benchmarks made a comeback to close little changed after falling 1.5% during the session.

The S&P BSE Sensex closed 0.13% lower at 48,718.52 while the NSE Nifty 50 Index was unchanged at 14,634.15. Titan Company Ltd. had the largest drop, falling 4.5%. Adani Ports & SEZ Ltd. and Bharti Airtel were the top gainers on the index.

Thirteen of the 19 sector sub-indices compiled by BSE Ltd. slipped, led by a gauge of telecom company stocks. On the flip side, the S&P BSE Consumer Durables Index was the worst performer, down nearly 2%.

The local stock market opened lower at the start of the week after Prime Minister Narendra Modi’s party lost elections in the key states of West Bengal, Tamil Nadu and Kerala.

The results add to growing signs of disappointment over Modi’s handling of the world’s worst Covid-19 outbreak, one that has overwhelmed India’s healthcare system as beds and oxygen supplies run out.

Bharat Heavy Electricals Ltd. rose 12%. Trading in the company's call options was eight times the average. Trading volume was triple the average for this time of day.

• The stock was the best performer among its peers.
• Trading volume was 120.2 million shares, triple the 20-day average of 46.9 million shares for this time of day.
• Trading in the company's call options totalled 21,453 contracts, compared with the average of 2,695 over the past 20 days. Trading in the company's put options totalled 3,929 contracts, compared with the average of 973 over the same period.
• Stock advanced 139% in the past 52 weeks, compared with a 251% increase for the company's Bloomberg peers.
• Analysts have three buy, nine hold, and 19 sell recommendations on the stock.

SBI Life reported net income for the fourth quarter that missed the average analyst estimate.

• Net income Rs 532 crore, +0.4% YoY, estimate Rs 624 crore (Bloomberg Consensus)
• Net premium income Rs 15,560 crore, +31% y/y
• Value of new business Rs 2330 crore

COMMENTARY AND CONTEXT

• FY21 value of new business increased 16% to Rs 2,330 crore
• FY21 VoNB margin increased by 170 bps to 20.4%

Sugar stocks rallied as rising prices of the commodity at home and abroad was seen as beneficial to the companies.

• Dwarikesh and Bajaj Hindusthan each rose by their daily limit of 20% to hit multi-year highs
• Dhampur Sugar Mills rises as much as 20%; Uttam Sugar Mills 21%; Avadh Sugar & Energy 18%, EID Parry India 13%
• Global raw sugar prices have gained about 15% in April: Bloomberg data

ICICI Direct view

• Domestic sugar prices have increased 7%-8% in last one month mainly due to high summer demand while cane crushing season ended without any major surprise on production, ICICI Direct’s Research Analyst Sanjay Manyal wrote in a note last week
• Manyal expects domestic sugar prices to remain above level of 34 rupees per kilogram given aggressive exports and diversion of sugarcane toward ethanol production
• Current prices are above cost of production for Indian millers
• “We believe global raw sugar prices can easily cross 20 cents/lb in the next six months given Brazil is expected to witness 20% production decline in 2021-22 season”

Kotak Mahindra reported net income for the fourth quarter that missed the average analyst estimate.

• Net income Rs 1,680 crore, +32% YoY, estimate Rs 1,870 crore (Bloomberg Consensus)
• Gross non-performing assets 3.25% vs. 2.26% QoQ
• Provisions Rs 1,180 crore vs. Rs 419 crore QoQ
• Interest income Rs 6,450 crore, -5.1% YoY
• Interest expense Rs 2,610 crore, -20% YoY
• Other income Rs 1,950 crore, +31% YoY
• Net interest margin 4.39%, estimate 4.34%
• Net interest income Rs 3843 crore, +7.9% YoY, estimate Rs 4,050 crore
• Dividend per share Rs 0.90

Read the full report here

Shares of IDBI Bank rose over 2.5% after it reported a healthy net income jump for the fourth quarter.

• Net income Rs 512 crore vs. Rs 135 crore YoY
• Gross non-performing assets 22.4% vs. 23.5% QoQ
• Provisions Rs 2,457 crore vs. Rs 796 crore QoQ
• Interest income Rs 5782 crore, +3.3% YoY
• Interest expense Rs 2,542 crore, -22% YoY
• Other income Rs 1,180 crore

COMMENTARY AND CONTEXT

• Provision Coverage Ratio at 96.9%
• Made additional Covid-19 provision of Rs 500 crore
• Bank is progressing on realising business synergies with LIC

The Indian rupee declines, mirroring a drop in stocks after Prime Minister Narendra Modi’s party lost a key state election as the Covid-19 crisis deepens. Sovereign bonds gain after an auction on Friday drew robust demand and goods and services tax receipts reached a record last month.

Rupee moving with stocks and investors fearing the possibility of a nationwide lockdown amid rising cases, says Amit Pabari, managing director at CR Forex. “USD/INR has support at 73.70-73.80 levels while 75-75.20 remains a strong resistance,” he said.

Two-wheeler maker, Bajaj Auto Ltd sold a total of 3,89,016 units in April, the company said in an exchange filing on Monday. Bajaj Auto's sales rose 5% over last month led by a surge in exports. Year-on-Year, the sales are not comparable.

Sales snapshot (Y-o-Y)

• Total domestic sales fell 30% over last month to 1,26,579 units in April.
• Total exports rose 48% to 2,21,603 units in April.
• Total commercial vehicle sales rose 1.3% to 39,843 units in April.

Shares of Varun Beverages jumped as much as 6.3% after it reported net income for the first quarter that beat the average analyst estimate.

• Net income Rs 129 crore vs. Rs 54.92 crore y/y, Bloomberg estimate Rs 119 crore
• Revenue Rs 2,270 crore, +34% YoY, Bloomberg estimate Rs 2,121 crore
• Q1 Ebitda Rs 382 crore vs Bloomberg estimate Rs 355 crore
• Total costs Rs 2,080 crore, +26% y/y
• Approves free share issue
• Approves one free share for 2 held

A gauge of activity across India’s manufacturing sector remained steady despite mounting cases of Covid-19 amid the second wave.

The IHS Markit India Manufacturing Purchasing Managers’ Index stood at 55.5 in April compared with 55.4 in March 2021, according to a media statement. That’s the eighth straight month of the index remaining in the expansion zone.

A reading above 50 indicates economic expansion.

Read more here

Shares of the lender fell as much as 8.2%, making it a third straight session of losses. Trading in the company's put options was triple the average while trading volume was five times the average for this time of day.

AU Small Finance reported net income for the fourth quarter that missed the average analyst estimate.

• Net income Rs 169 crore, +39% y/y, estimate Rs 214 crore (Bloomberg consensus)
• Gross non-performing assets 4.25% vs. 0.99% QoQ
• Net interest income Rs 656 crore, +18% YoY
• Provisions Rs 178 crore, -37% QoQ

Spark Capital Advisors analyst Abhinesh Vijayaraj cut the recommendation to sell from reduce.

• Price target set to Rs 850, implies an 8.6% decrease from the last price. AU Small Finance average price target is Rs 1,094.65.

Nirmal Bang Institutional Equities analyst Sonal Gandhi cut the recommendation to accumulate from buy.

• Price target set to Rs 990, implies a 6.8% increase from last price. AU Small Finance average Price target is Rs 1,070.28.

Coal India reported sales for April of 54.1 million tonnes, 38.4% higher YoY.

• April shipments were, however, 9.4% lower than March
• April production 41.9 million tonnes, +3.7% y/y, -48.4% MoM

KPR Mill Ltd. rose 12%. Trading volume was six times the average for this time of day.

• The stock was the best performer among its peers.
• Trading volume was 119,603 shares, six times the 20-day average of 18,771 shares for this time of day.
• The relative strength index on the stock was above 70, indicating it may be overbought.
• KPR Mill trades at 19 times its estimated earnings per share for the coming year. It trades at 21 times trailing EPS.
• Analysts have four buy, no hold, and no sell recommendations on the stock.
• The price target of 1,413.33 rupees represents an 8.8% decrease from the last price

Godrej Properties reported a net loss for the fourth quarter of Rs 192 crore vs. a profit Rs 102 crore YoY.

• Net loss Rs 192 crore vs. profit Rs 102 crore YoY
• Revenue Rs 433 crore, -63% YoY, estimate Rs 427 crore (Bloomberg Consensus)
• Ebitda loss Rs 79 crore vs. profit Rs 253 crore YoY
• Total costs Rs 633 crore, -41% y/y
• Other income Rs 143 crore, +14% y/y

Commentary

• FY21 total booking value Rs 6,730 crore and booking volume 10.81 million sq ft, up 14% and 23% respectively
• “Given our robust launch pipeline, strong balance sheet, and interesting new project acquisition opportunities, we expect a strong FY22,” Executive Chairman Pirojsha Godrej says
• Excluding one-off charges, Q4 Ebitda would be Rs 118 crore and net income Rs 37 crore

Reliance Industries Ltd. contributed the most to Sensex’s decline, falling as much as 2.6% after reporting a less-than-expected rise in profit for the fourth quarter hurt by the weaker performance of its oil-refining business.

Net income at the company controlled by Mukesh Ambani, Asia’s richest person rose to Rs 13,230 crore ($1.8 billion) in the three months ended March 31 from Rs 6,350 crore in the same period last year, according to an exchange filing Friday. It missed the average Rs 13,704 crore profit estimated by a Bloomberg survey of analysts.

Revenue at the refining-to-retail conglomerate rose 12% to Rs 1,55 lakh crore from the same period a year ago.

The company also said that outbreak of the pandemic is causing significant disturbance and slowdown of economic activity in the country. [Read more here]

Here is what analysts are saying

• Prabhudas Lilladher (buy, target price Rs 2,256):
  • Global economic recovery, expanding vaccination bodes well for business
  • Recovery continues in retail and telecom business, though recent restrictions to impact retail; Facebook tie-up to help Reliance connect with local grocers and small enterprises
  • Positive news flow on the global partnership, stake sale to keep stock pricey

• Morgan Stanley (overweight, target price 2,252):
  • Sees company as at the start of new upcycle as global fuel demand rises, supply growth slows in refining/petrochemicals, new telecom subscriber addition accelerate, retail sales bounce back
  • A faster ramp-up of gas production, high energy business margins to cushion retail/telecom challenges
  • Investor positioning in March shows domestic institutional ownership at a decade low

For more brokerage views, click here

Indian equity benchmarks opened lower at the start of the week after Prime Minister Narendra Modi’s party lost elections in the key states of West Bengal, Tamil Nadu and Kerala.

The results add to growing signs of disappointment over Modi’s handling of the world’s worst Covid-19 outbreak, one that has overwhelmed India’s healthcare system as beds and oxygen supplies run out.

The S&P BSE Sensex dropped as much as 1.5% to 48,028 while the NSE Nifty 50 Index lost 1.5% as well to 14,416. HDFC Bank Ltd. contributed the most to the index decline, decreasing 1.2%, Titan Co. had the largest drop, falling 2.7%.

Fifteen of the 19 sector sub-indices compiled by BSE Ltd. slipped, led by a gauge of consumer durables company stocks.

Good morning!

U.S. futures climbed and most stocks in Asia dropped Monday, with investors assessing inflation risks as economic activity ramps up.

The dollar held onto gains. Hong Kong fell, while Australia and South Korea fluctuated. Japan, China and the U.K. are among the markets closed for holidays.

India’s SGX Nifty 50 Index futures for May delivery fell 1.2% to 14,473, while MSCI Asia Pacific Index -0.5%.

Inflation risks are back in focus, though some data are skewed by last year’s pandemic shock. In his latest annual meeting, billionaire Warren Buffett warned of rising price pressures and a “buying frenzy” spurred by low-interest rates.

Back home, Reliance Industries, IndusInd Bank, Yes Bank, Ajanta Pharma, Indian Hotels may react as the companies reported quarterly results after the market closed Friday. Kotak Mahindra Bank, Tata Chemicals, L&T Technology, SBI Life are among the companies scheduled to report earnings Monday. Foreign investors bought net Rs 1,440 crore of stocks on April 29, according to the NSDL website.

Elsewhere, India’s virus crisis is worsening, with daily deaths hitting another record on Sunday. Prime Minister Narendra Modi has come under fire for his handling of the Covid-19 crisis and his party lost a key state election.