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Wednesday, 27 April 2016

27 April 2016 - Today's View & News

Market View

Nifty likely to open on flatish note, but the short-term trend in Nifty and Bank Nifty remains positive and dips can be utilised as a buying opportunity  for the target of 8080, major Support at 7870.

Nifty Spot Levels 

Support  7923 – 7870 – 7820
Resistance  8025 – 8080 – 8140

Global Market Update

Energy shares dragged Wall Street slightly lower on Monday, tracking a decline in oil prices, while earnings and guidance from companies including Perrigo and Xerox also weighed on US stocks.
The Federal Reserve is expected to hold interest rates steady after a two-day meeting set to begin on Tuesday, but policymakers may be more upbeat on the economic outlook, leaving the path open for future rate hikes.
The Dow Jones industrial average fell 26.51 points, or 0.15 percent, to 17,977.24

 Derivatives Update

NIFTY PCR:
1.13
India  VIX:
16.58
MARKET WIDE OPEN INTEREST:
Rs. 244303 cr and Rs.5422 cr were Added in OI
NIFTY CALL:
Added 22.34 lakh shares in OI
NIFTY PUT:
Added 21.57 lakh shares in OI
MAJOR OI GAINERS
CESC (28%), Ceat (25%), UBI (17%), JSW Energy (17%) and ICICI Bank (17%)
MAJOR OI LOSERS
RCom (-7%), BoI (-4%), Jindal Steel (-4%), Tata Steel (-3%) and Hind Zinc (-3%)


TOP NEWS

 Bharti Infratel: Strong earnings, Board approves buyback of upto Rs 2,000 crore at Rs 450 per share
For Q4FY16, consolidated net profit up 17%  at Rs 662 crore vs Rs 566 crore (Q-o-Q) and 18.7% yoy,  consolidated total income up 2.2% qoq and 7% yoy  at Rs 3,162 crore, consolidated EBITDA margin at 45%  vs 43.6 percent (Q-o-Q) and 45.1% yoy.  Board approves buyback of upto Rs 2,000 crore at Rs 450 per share (CMP at Rs363)

MRPL has initiated a partial shutdown of some of its units and is also running some units on reduced capacity. The step was taken due to water shortage in dakshin kannada district of Karnataka and restrictions imposed by the district administration in pumping river water for industrial use. This will impact the crude processing volume of MRPL, consequently leading to lower profits – Negative for MRPL

Apple: World largest tech company reported decline of 13% in revenues, a fall in revenues first time in last 13 years, led to 7.8% drop in its share price – Sentimentally negative for redington India


Dalmia Bharat showed interest in buying Electrosteel casting: Positive for Electrosteel casting

OTHERS NEWS

Rallis India Ltd (Consolidated) Q4FY16 results; Lower deprecation cost and higher other income supported earnings growth
Revenue for the quarter increase by 8% YoY to Rs348.3 crore, however high input cost impacted the operating margins. Hence operating margins for the quarter 177 basis point to 12% YoY. Higher other income and low deprecation cost fuel earnings for the quarter, earnings for the quarter grew by 51% YoY to 32.3 crore.

Dalmia Bharat showed interest in buying Electrosteel casting: Positive for Electrosteel casting
The Dalmia Bharat Group has expressed an interest in buying a stake in Electrosteel Steels, after First International Group (FIG) withdrawn its offer.  The Dalmia Group’s interest stems from its presence in refractories housed in OCL India whose main customers are steel companies. Meanwhile, it has also come to light that the promoters of the Dalmia Group and Electrosteel are related.  The Dalmia Group’s proposal is similar to that made by the London-based FIG, which had sought a loan waiver of Rs 2,500 crore and conversion of close to Rs 5,000 crore into cumulative redeemable preference shares. 

M&M regains ground in the utility vehicle segment on back of new launches; to focus on petrol variants and compact segment to further consolidate market share
M&M has regained ground in the utility vehicle segment gaining 10% market share in the last three quarters on back of new launches in the compact utility vehicle segment. M&M has rolled out TUV300, KUV100 and NuvoSport which enabled it to take its market share to 40% in UV category. Further, the company is working on a new compact crossover and also plans gasoline variants of Scorpio and XUV 500, using the 2.2 litre gasoline engine that it uses for export markets by the end of FY17. Also as per the media sources all M&M vehicles will have a gasoline option by mid-FY19. The option of the gasoline option will insulate the company from the diesel issues as well as widen its product offerings, which could help the company consolidate its position in the UV space    

More News

World Bank raises crude price forecast to $41 for '16
NPAs a huge threat to India's credit profile: Moody's
Maruti Q4 net falls 12%; dividend at Rs 35/share 
RIL may launch 4G services in 3 months; net $1 bn revenue: MS
Indian pvt defence industry divided over partnership
Cash crunch easing: RBI to conduct open market operation
Govt to sell 11.36% stake in NHPC tomorrow at Rs 21.75 a share
Wheat procurement sees 3-fold jump to 14.58 mn tonnes so far
Patanjali aims to beat Nestle, P&G & Colgate
SC asks govt to set up a panel to probe bad loan issue
IT dept to pay interest on delayed TDS refund
701 bad loan accounts owe PSU banks Rs 1.63 lakh crore
Axis Bank Q4 net dips after 46 quarters
Sebi ropes in HDFC Realty, SBI Capital for sale of Sahara assets
60% water cut for distilleries and breweries in drought-hit Marathwada
Hindalco to sell Australian unit to Metals X
 Apex Court orders Mallya to furnish overseas asset details of family
Onus on banks, insurers to deliver on crop insurance  
Maharashtra Cabinet approves draft Bill regulating pulse prices 
Service tax returns filing date extended to April 29
Oil prices edge up but concerns over Saudi output cap gains
SC dismisses plea challenging reappointment of Sebi chief
RBI to conduct OMOs on Thursday to infuse Rs 15,000 crore
India is the biggest virtual exporter of water
Maharashtra to seek World Bank loan for drought mitigation
State Bank of Mysore Q4 profit down 23% to Rs105 crore
Alipay raises record $4.5 billion to fund global expansion            
Sensex settles above 26K on firm global cues, corp earnings
Blackmoney: SC asks SIT to look into Bank of Baroda scam
Realtors say no scope for further cut in housing prices
Bharti Infratel Q4 Net jumps 19%; to buy back shares of Rs 2K cr
Govt owes over Rs 43,000 cr subsidy to fertiliser industry
Oil, energy sector PSUs marked for stake sale: Govt
India narrowing gap with China on FDI inflows: Nomura
Despite mkt volatility, MFs add 59 lakh folios in FY16
Govt invites bids to sell 10% stake in Oil India
Centre sets up IMG to speed up state mines auction

Stock in News 

  • Patanjali Ayurved is targeting Rs 10,000-crore revenue in 2016-17, after sales grew 150 % in the previous financial year to Rs 5,000 crore.
  • India now among top 6 markets for Renault
  • Govt to sell 11.36% stake in NHPC, may raise Rs 2,700 crore
  • Bharti Infratel net profit up 19% in March quarter; board approves share buyback
  • Supreme Court orders Vijay Mallya to disclose overseas assets to banks
  • Sebi ropes in HDFC Realty, SBI Capital for sale of Sahara assets
  • Boeing selects Bharat Forge for supply of titanium forgings
  • Parag Milk plans to raise Rs 300 cr
  • Apple: World largest tech company reported decline of 13% in revenues, a fall in revenues first time in last 13 years, led to 7.8% drop in its share price – Sentimentally negative for redington India
Sharekhan Stock Update

Axis Bank - Q4FY16 result update: Business growth remains healthy; Asset quality stable; PT revised to Rs 590
NII up 19.8%; Margins expand: Axis bank reported a strong 19.8% growth in Net interest for Q4FY16 owing to 20.5% jump in the advances and expansion in Net Interest Margins (up 16 BPS Yo and 18 BPS QoQ). Non-interest income growth was flat as treasury profit declined by 65.4% YoY, however retail fee income showed a growth of 15.1% YoY. Provisions for Q4FY16 surged by 64.6% YoY owing to Rs 300 crore contingent provisions made during the quarter.
Loan book growth remains healthy, asset quality remains stable: For Q4FY16 advances grew by 20.5% YoY owing to, strong growth of 23.8% YoY in the retail advances and 21.7% growth in the corporate advances.  Growth in retail advances was mainly driven by higher growth in personal loans and credit card segment. Asset quality remained largely stable as GNPA was stable (down 1 BPS QoQ to 1.67%). Slippages during the quarter were lower on sequential basis (Rs 1474 crore versus Rs 2082 crore QoQ) The Bank invoked SDR in 4 accounts worth Rs 205 crores and undertook 5:25 refinancing in 1 account amounting to Rs 130 crore. Accounts worth 400 crore slipped from restructured category to NPA during Q4FY16. The Bank has created a watchlist of stressed accounts amounting to Rs 22600 crore which it feels could slip into NPA over next two years.
Valuation and Outlook: Axis bank has delivered better than expected performance during the quarter and has all the ingredients to grasp opportunities during an economic revival. Liability franchisee of the Bank remains strong (CASA at 47%) while it is well capitalized to sustain healthy loan book growth. Though the management has guided for some stress in the corporate portfolio we feel retail segment would continue to drive growth and corporate loan growth would be tilted towards better rated category. We have rolled over our valuations to FY18E leading to a revised price target of Rs590 by valuing the bank at 2.0x FY18E BV. We maintain a buy rating on the stock

Maruti Suzuki India: Margins surprise positively; maintain Buy with revised PT of 4,700
Maruti springs margin surprise in Q4 FY16: Maruti Suzuki surprised the street by reporting strong operating performance in Q4FY2016. Contrary to the street expectations of a sequentially similar margins due to impact of the Yen appreciation and subdued volumes; Maruti surprised positively reporting 100 bp sequential expansion in the margins. The operating margins were 60-80 bp above the consensus estimates. Discount reduction on back of a strong demand for new products coupled with cost control measures the company posted better than anticipated margins. 
Maruti to continue outgrowing industry growth in FY2017: Maruti is aiming to outpace the industry growth in FY2017 on back of strong demand for the recent launches (Baleno and Vitara Brezza which have strong orderbacklogs), launches in the new segment (Ignis in the compact utility vehicle space) and further expansion of the distribution network particularly in the rural areas. Maruti would also be beneficiary of the consumer shift towards the petrol segment (Maruti 70% volumes are petrol driven as against industry average of 55%).
Increasing estimates; maintain Buy: Maruti has demonstrated robust margin performance despite challenging passenger vehicle industry and currency woes. We expect MSIL to outpace the passenger vehicle industry in FY2017 on back of sustained strong demand for recent launches and strong product pipeline. Also, Maruti Suzuki’s Yen exposure is likely to reduce given the increased localization initiatives and royalty on future models which would be INR denominated. Also, we expect the discounting/vehicle to tread down given the increased proportion of new launches (recent launches have order backlog of about five to six months) and new launches in the festive season which would have no discounting. Further, MSIL has guided for a lower tax rate going ahead (tax rate estimated at 26-27% as against the current rate of 30%) due to higher other income recognition under the new IFRS rules. We have marginally raised our estimates by about 6% for both FY2017 and FY2018, given the robust operating performance. We maintain Buy rating on the stock with a revised price target of Rs 4,700.

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