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Tuesday, 29 March 2016

29 March 2016 - Today's View & News

Markets are likely to open flat to negative. The index has provided a breakdown from the uptrending support line, hence short-term bias is down for the target of 7405. 

Nifty Spot Levels 

Support  7585 – 7500 – 7520
Resistance  7645 – 7677 - 7710

Market Update

Sgx Nifty -3 pts ‎Dow +19.66 pts ,Nsdq -6.72 pts , S&P +1.11 pts ‎, Bovine  +1180 pts , Ftse Clsd , Dax Clsd , Cac Clsd , Nikkei  -105 pts , now, Crude @ $39.34 brl (-0.05), Brent @ $40.24 brl (-0.03) , Gold @ $1233.40 (+1.40), Silver @ $15.23 (+0.04), Euro @ $1.1200, JPY @ $113.3000, INR @ $66.5700

TOP NEWS

Cadila Healthcare acquires the gastro therapy 'Actibile’ from Albert David for Rs 55 Cr – Long term positive.
Zydus Healthcare, a subsidiary of Cadila Healthcare, has acquired gastrointestinal brand 'Actibile' from drug firm Albert David. The brand falls in the gastroenterology segment and is used for dissolving gall bladder stones. The deal will be financed through internal accruals.

Ashok Leyland sold 0.55% stake in Indusind Bank for Rs 300 cr. The proceeds are likely to be utilized to reduce debt.

Steel companies: Government likely to extend safeguard duty on some steel products till March 2018, positive for domestic steel companies
As per media news, The government is likely to extend safeguard duty of up to 20 per cent on certain steel products till March 2018, to protect the domestic industry from cheap imports from nations like China. The Board of Safeguards (BoS) in its meeting last week has recommended to the Finance Ministry for the restrictive duty. Earlier this month, the Directorate General of Safeguards (DGS) has recommended continuing restrictive duties of up to 20 per cent till March 31, 2018 

Defense orders worth Rs.2.8 trillion to be placed by year end, positive BEL, L&T among others
As per media reports, defence orders worth Rs.2.8 trillion by 2016 even as the ministry of defense is pushing for at least 40% indigenous content in the defence products. The ministry has already finalized defence procurement orders worth Rs.1,57,000 crore and orders worth Rs.1,38,000 crore will be finalized shortly

OTHER NEWS

Government unveiled Defence Procurement Procedure, which will ensure transparency and speed in acquisition process and boost the 'Make in India' initiative to reduce dependence on imports.
1.     The Defence Procurement Procedure (DPP) can push the agenda of 'Make in India' and India's target of achieving defence industry network
2.    DPP, it will be ensured that there is greater transparency and faster clearances. The new DPP mandates that all AONs (Acceptance of Necessity) of a particular platform will be valid only for six months as against the 12 months deadline now.
3.     The new policy has introduced an Indian Designed, Developed and Manufactured (IDDM)category which will benefit the local units. IDDM will be the first category of preference under new DPP.
4.   Increased the Foreign Direct Investment (in Defence sector) to 49 per cent which will be through automatic route.
5.     New blacklisting policy will also be issued separately next month and made it clear that there will be "no relaxation" for those who have already been blacklisted and "bribe givers" will be punished

UCO Bank has considered the proposal for issue of equity shares to Government of India on preferential basis relating to capital infusion of Rs. 935 crore in the bank.

Biocon gets nod from Japanese authority to sell its biosimilar product insulin Glargine – Positive for Biocon.
Biocon has received approval from the Japanese health authority to sell its biosimilar product 'Insulin Glargine' in Japan. The Insulin Glargine approval in the highly regulated market like Japan, marks a huge credibility milestone for Biocon. It is a significant achievement in making global impact in diabetes management through its affordable biosimilar insulin’s. Biocon's product is a ready-to-use prefilled disposable pen and is expected to be launched in first quarter of next fiscal.

Inox Wind- Inox Wind infrastructure services, a wholly owned subsidiary of Inox Wind has acquired Sarayu Wind Power (Kondapuram) Private Limited, with effect from March 25, 2016. This is in line with its strategy to expand its presence in southern states of India. Positive read thru for Inox Wind

Dalmia Bharat to amalgamate OCL and Bokaro with Odisha Cement and Adhunik Cement and Power with itself: Positive read thru as it will simply the cross holding and will also give synegy benefits to the company
Dalmia Bharat has announced the amalgamation of OCL India Limited and Dalmia Cement East Limited ‘Bokaro’ with Odisha Cement Limited (shall be renamed as OCL India Limited), amalgamation of Adhunik Cement with Dalmia Cement (Bharat) Limited (DCBL) and transfer of power assets  from Dalmia Cement Bharat Power Ventures Limited to DCBL.

Torrent Power – The company has entered into a contract with a leading WTG manufacturing group for development of the 197.40 MW Wind Power Project across three sites in Kutch and Bhavnagar, Gujarat. This Project is expected to be commissioned progressively by March 2017 and shall have off take arrangements for fulfilment of Renewable Power Purchase Obligations (RPO).

Plastiblends India starts commercial  production at new mfg unit in Surat

Tech Mahindra to work as member in GE Digital Alliance Program
Tech Mahindra, will work as a member in the GE Digital Alliance Program and devote over 1,000 developers for it over next few months. The company said it has been an early adopted of the Predix platform, GE’s cloud platform-as-a-service for the industrial Internet, and has over 100 experts trained in it.As part of the alliance, it will work with GE to jointly create solutions for the power, oil and gas, and transportation sectors.

NBCC Ltd: sought shareholders' approval for stock split as the company is likely to launch follow-on public offer ( FPO) under the government's disinvestment programme

M&M to launch compact Bolero and larger version of TUV3OO to broaden product portfolio
In order to widen the product offerings, M&M is developing a compact Bolero that will stretch less than four metres and sport a 1.5-litre engine. The compact Bolero will attract lower levies than the current model, which is 4.17-meter long and is powered by a 2.5-litre diesel engine. Internally codenamed U108, the new Bolero will expand the compact utility vehicle range at M&M to four: Bolero, TUV 300, KUV 100 and Nuvo Sport, which will be launched shortly. U108 is likely to be launched in the second half of 2016 and the company is working on a volume potential of 25,000 units a year (the current Bolero volumes stand at about 85,000 units per year). Apart from U108, Mahindra is also working on a 7-seat version of the TUV 300, called U302.The new launches would enable M&M to regain market share in the utility vehicle space. 

LIC ups stake in IDBI Bank to 14.3%
IDBI Bank has allotted 15.8 crore equity shares, equivalent to 7.16% stake for Rs 850 crore, on preferential basis to Life Insurance Corporation of India (LIC), which now holds over 14.3% stake in IDBI Bank. The allotment of shares is part of IDBI Bank's plan to offload government shareholding as part of its privatization move.

Government to infuse Rs 5,050 cr in PSU banks
As a part of Rs 25000 cr capital infusion plan for the current fiscal the Government will infuse additional capital of about Rs 5,050 crore in some public sector banks by this week. UCO Bank will raise Rs 935 crore ,while Syndicate Bank will raise up to Rs 740 crore via preferential allotment. Other lenders which are contenders for the fresh round of infusion are Central Bank of India, Indian Bank, Oriental Bank of Commerce, Vijaya Bank and United Bank of India.

Today's Corporate Action 29th Mar Ex Date

BALAJITELE Interim Dividend - Rs. - 0.8000BALAJITELE Special Dividend - Rs. - 0.4000
ORICON Interim Dividend - Rs. - 0.5000
POWERMECH Interim Dividend - Rs. - 1.0000RADIXIND Interim Dividend - Rs. - 1.0000RAJESHEXPO Interim Dividend - Rs. - 0.9000


More News

Global financial safety net fails many emerging markets: IMF
Disney in talks with DLF brands for India retail foray
Govt, RBI taking tough action to recover dues: PM
Rajan for guidelines on monetary policy behaviour
Govt reconstitutes Board of Trade, first meet on Apr 6
Tata Sons to hold 49% stake in AirAsia India
Pay dues honourably or face coercive action: FM to Mallya
Prem Watsa picks up GVK's 33% stake in Bengaluru airport for Rs 2,149 cr
Govt to infuse Rs 5,050 crore in PSU banks
Lloyd's India syndicates to retain minimum reinsurance business: IRDAI
BSE to suspend trading in 31 companies effective March 31
Dr Reddy's inks Rs 3,266-cr pact with XenoPort
3-year insurance after job cessation on cards for EPFO members
Weak economy spurs demand for low-priced coffees
JetLite merger: Jet to seek shareholders’ nod on April 22
ADB, USAID join hands to support India's clean energy expansion plan
Steel Strips bags €15-mn order from PSA Peugeot Citroen
ARSS Infra Proj wins Rs. 109 cr contract in Odisha
Coal scam: JIPL and its directors convicted of criminal conspiracy and cheating
Tata Power SED targets nearly Rs7 trillion in defence opportunities, says CEO
Dell sells IT services unit to Japan’s NTT Data for $3 billion
Regulator defers decision on importing genetically modified animal feed         
Sensex plunges 371 points on profit booking, Nifty settles at 7,615; Metal stocks tumble
'Inflation seen at 5 pct in March; RBI to cut rates by 25 bps'
India internet speed lowest at 2.8 mbps, Korea tops at 26.7 mbps
State govts likely to run wider fiscal deficit in FY17: HSBC
Grading of monetary policies needed: RBI paper
Fertiliser subsidy may come down by Rs 10k cr in FY17
Jewellery demand set to go down by 40-50 tonnes
Subsidy scheme to rescue shipbuilding firms
Earnings season may define FPI enthusiasm for India
Fairfax buys 33% stake in Bengaluru airport from GVK 
Hyundai to invest $200 mn yearly, to launch 2 models
Natco says addressing US FDA concerns
Dr Reddy's inks Rs 3,266-cr pact with XenoPort
Drug ban: Govt tells courts Pharma firms' licence to sell is irrelevant
HDFC Bank to raise up to Rs 5,000 cr infra bonds
Odisha to lose Rs 2,174 cr in FY17 on VAT deferment to IOCL
ONGC approves $5 billion investment to boost production
HCC bags orders worth Rs 623 crore for hydro power, tunnel
BHEL commissions 40 Mw hydro electric generating unit in West Bengal
Zydus acquires gastro drug 'Actibile' from Kolkata-based Albert David
L&T Infra Finance plans to raise Rs 200 crore through bonds
Shriram Transport Finance to raise Rs 250 crore via NCDs

Derivatives Updates

NIFTY PCR:
0.96
NIFTY IMPLIED VOLATILITY:
17.49
MARKET WIDE OPEN INTEREST:
Rs.2,51893 Cr. and Rs.2,423 Cr. Added in OI
NIFTY CALL:
Added 38.28 Lac shares
NIFTY PUT:
Sheded 29.66 Lac shares
MAJOR OI GAINERS
KPIT (24%), Bajaj-Auto (21%), M&M Finance (19%), Ambuja Cement (16%) and L&T Finance holding (15%)
MAJOR OI LOSERS
Reliance Infra (-9%), Siemens (-8%), Ceat Limited (-7%), Godrej Consumer (-6%) and Bank of India (-6%)

Global Update

Wall Street was mixed on Monday as weaker-than-expected US economic data reduced concerns about potential interest rate hikes and a dip in oil prices pushed down energy shares.

US consumer spending barely rose in February and inflation retreated, suggesting the Federal Reserve could remain cautious about raising interest rates this year even as the labour market rapidly tightens. 

Investors will pay close attention to Fed Chair Janet Yellen's speech in New York on Tuesday for clues about when the central bank might raise interest rates. 

The Dow Jones industrial average rose 0.11 percent to finish at 17,535.39 points

Stock Update:

PI Industries
Reco: Buy 
Change in licensing regime, marginal impact on PI CMP: Rs562

Key points

CIB to relook at framework for deemed registration regime: As per the order of the Gujarat High Court, the Central Insecticide Board (CIB) has decided to relook at the guidelines of the deemed registration (exclusivity and also started registration of exiting generic products, which are out of exclusivity period; stricter norms to follow three-year exclusivity). As per the earlier guidelines, deemed registration
does not require technical registration for three years. Due to non-availability of the technical registration (formula of active ingredients) competitors were unable to launch this type of products which resulted in high-profit margins for incumbent companies.

New regime to affect players with exclusivity licensing; will intensify competition: Uncertainty of time period under deemed registration has restricted competition, which has resulted in high margins for existing players in exclusive products. However, after transparency in policy framework (for time-bound registration) it will result in increased competition and there can be price erosion (exclusive products) of around 20-30% over three to five years (as per our interaction with industrial players). Also, the definition of the new molecule will be shortened which will reduce the benefits derived from in-licensing model going forward. However, there is ample of opportunity available for in-licencing companies in India due to lower penetration of agrochemicals.

PI Industries to face competition, but impact will be marginal: The domestic model of the PI Industries is depended on in-licenced products which the company acquires from global innovators. Nominee Gold (one of the company’s blockbuster products) is under deemed registration hence the High Court order may have marginal effect on the revenue and profitability (around 4-5% respectively in FY2018) of the company. However, looking at the brand advantage of Nominee Gold coupled with huge demography of India and the company’s presence in terms of geographical reach (strong distribution network), it’s unlikely to lose market share to a great extent. Apart from this very strong brand name, the company will also restrict the migration of farmers towards same product by competitors (it will take time for competitors to motivate farmer to buy their products) and over a period of time introduction of other innovative products will reduce the dependency on single products.

Retain Buy with price target of Rs800: We continue to like PI Industries in the agrochemicals space due to its strong brand, ability to introduce new innovative products, sooner or later revival in exports business and limited impact of the High Court order. Hence, we reiterate our Buy rating on the stock with a price target of Rs800.

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