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Wednesday, 29 March 2017

29 March 2017 - Views & News

MARKET INSIGHT

Markets are likely to open on positive note backed by strong global clues, Bias for nifty remains positive, short term & medium term targets on the upside are 9230 & 9500 respectively. On the flip side, the range of 8980-9000, will act as a strong support area. For the intraday traders strategy will be to buy above 9134 with stoploss of 9094 for targets of 9180-9215.

Nifty Spot Levels

Support 9019 – 8975 – 8903
Resistance 9133 – 9167 - 9218

GLOBAL MARKET

 • US stocks ended sharply higher on Tuesday, with financial and energy shares surging as data showed US consumer confidence soaring to a more than 16-year high.
• US consumer confidence surged to a more than 16-year high in March amid growing labour market optimism, while the trade deficit in goods narrowed sharply in February. 
• The economy's strengthening fundamentals were bolstered by other data showing further increases in house prices in January.
• The Dow Jones Industrial Average rose 150.52 points, or 0.73 percent, to 20,701.5.

 Market Update:

Dow +150.52 pts ,Nsdq +34.77 pts , S&P +16.98 pts , Bovespa +332 pts , Ftse +49 pts , Dax +153 pts  , Cac +28 pts , Crude @ $48.54 brl (+0.17), Brent @ $51.53 brl (+0.08) , Gold @ 1250.00 (-5.60), Silver @ $18.163 (-0.08), Euro @ $1.0819, JPY @ $111.1100, INR @ $65.125

Today's Corporate Action 29th Mar  Ex Date

BEL Interim Dividend - Rs. - 0.9000
HINDZINC Special Dividend - Rs. - 27.5000

TOP NEWS

ALERT: Kotak Mahindra Bank: As per media reports, Kotak bank is planning to raise capital by selling shares for a possible buyout of a non-banking finance company, which may be Mahindra & Mahindra Financial Services Ltd. – Sentimentally positive for M&M Fin though it would finally depend upon valuations and structure of the deal; Avoid buying Kotak Bank before the deal as it has already seen speculative run up recently.
Ashok Leyland to invest Rs 400 Cr on new LCV development; eyes to triple sales in next three years; positive read thru… (Details in other news)

Britannia forms joint venture with Chipita of Greece for producing and selling ready-to-eat croissants in India (already highlighted the news in 21st February 2017 FNA) – positive read through for the stock as more products in bakery space could launch in near future……(Details in other news)

Alkem laboratories Baddi unit (recently inspected by the USFDA) gets 3 procedural 483 observations from the USFDA – Sentimentally negative for Alkem.

Power Sector- Mega Power Policy to be announced today; stock in focus- NTPC, JSW Energy, CESC, Adani Power etc
·         To allow extension of 5 Yrs for Power Projects
·         To sign PPAs extension
·         To allow power companies to enjoy customs & import duty benefits
·         Power Purchase Agreement & bank guarantee to be in proportion for power projects

As per media news, Asian Paints has taken price hike of 2.5%, effective from May 1st 2017, positive for the stocks

Lupin expects muted growth in the US despite new launches. Growing competition in the sale of the anti diabetes drugs, Glumetza and Fortamet, with the launch of an authorised version of Glumetza by Valeant; and an expectant launch by Sun Pharma and Teva, is likely to slacken Lupin's hold in the market – Negative for Lupin.

 OTHER NEWS

Sundram Fastners has hiked its stake in Subsidiary company Sundram Precision Components Limited to 100% from the exisiting 76% stake. The company has bought 16.8 lakh shares  at a price of Rs 31.45 per share. The subsidiary company is engaged in the manufacture of parts for motor vehicle, sintered  parts such as valve guide and valve seats. The revenue of the subsidiary was at RS 25.4 Cr.  The subsidiary had reported a profit of Rs 1.2 crore in FY16. The acquisition of stake is unlikely to have material impact on earnings of Sundram Fasteners. Neutral read thru.

Britannia forms joint venture with Chipita of Greece for producing and selling ready-to-eat croissants in India (already highlighted the news in 21st February 2017 FNA) – positive read through for the stock
Britannia Industries has entered into a joint venture with Greek firm Chipita SA for producing and selling ready-to-eat croissants in India. The estimated investment in the joint venture company -- Britchip Foods Ltd -- in Phase I is Rs 100 crore. As per the agreement, Britannia Industries will hold 60 per cent of total share capital of the joint venture company, while Chipita SA would hold the rest. As per the JV agreement, Britannia has the right of first refusal in case Chipita intends to sell its stake after the expiry of lock in period of ten years.

ITC - the Competition Commission has approved the proposed acquisition of Johnson & Johnson's two brands, 'Savlon' and 'Shower to Shower', by the company with certain attendant inventories, know how, molds and promotional materials – sentimentally positive for ITC’s non-cigarette FMCG business

Pincon Spirits continued its retail expansion; acquire 100 goods transport vehicles from Tata Motors for increasing its captive logistics infrastructure
The West Bengal Government has decided to issue On-shop licenses to all existing Liquor Off-shop vends situated within 500 meters of all National and State Highways in the State of West Bengal w.e.f. 1st April, 2017. This positive decision will enable Pincon Spirits to grow its presence in West Bengal and capture opportunities which will drive overall business growth. The company has signed an MOU for takeover of five additional liquor retail outlets in West Bengal. Further, Pincon Spirits has acquired 100 goods vehicles from Tata Motors for increasing its captive logistics infrastructure for catering to transportation of much greater volumes of goods and also for cost curtailment in transportation (add-on to margins).
View: We believe all these initiatives should help the company to see good revenue performance along with improvement in the profitability in the coming years.

Ashok Leyland to invest Rs 400 Cr on new LCV development; eyes to triple sales in next three years; positive read thru 
Ashok Leyland will invest Rs 400 crore to develop new light commercial vehicles (LCVs) within the next two years and plans to triple its sales in the segment by 2019-20. The company will rollout new models to be developed on two new platforms and is also eyeing export markets When Ashok Leyland was in partnership with Nissan, their joint venture agreement prevented it from developing its own LCV nor was it allowed to export. Ashok Leyland is targeting to triple LCV sales (annual sales of one lakh units by 2019-20 as against current rate of 35,000-36,000 units a year. As per the company it already has the dealer network and needs new products to ramp up volumes. Positive  

IL&FS Transportation: The company plans to refinance Rs9000 crore; to help reduce interest cost by 200BPS – Positive read thru for the stock.
The company is expected to refinance loans amounting to Rs6000 crore on a project level and about Rs3000 crore on a corporate level by issuing non convertible debentures. The timing of the NCD is not confirmed. Post NCD and refinancing, the average interest rate is expected to drop by 200 basis points from 11.5-12.75% to 8.5-10%. The interest saved should be between Rs300-400 crore on account of both project and corporate level refinancing and NCD issue respectively. The development is positive read thru for the stock.

Tata Motors will launch its sub four meter compact sedan “Tigor” tomorrow. Tigor will be based on the Tiagio platform and will replace the Indigo e CS. The car is expected to be priced at about Rs 5.5 lakh (ex showroom) and will revamp the Tata domestic passenger vehicle portfolio. Positive

Infosys joins Open Invention Network Community
Open Invention Network (OIN) announced that Infosys has joined OIN as a community member. Infosys believes that open source software (OSS) is a necessary enabler as enterprises worldwide use the Internet to build new consumer-centric and connected applications.

Sanofi India gets US FDA Nod For Dupilumab Injection, used for treatment of moderate-to-severe Atopic Dermatitis, positive read-thru

CV industry sees slower growth due to limited prebuying before emission norm change, uncertainty on GST and low cargo availability; FY17 to end with 5-6% growth; CV stocks (Ashok Leyland, Tata Motors and Eicher Motors) already factoring growth slowdown
Commercial Vehicle sales growth on account of pre buying ahead of the new emission norms are likely to be limited given the slow business environment and uncertainty due to GST,  and low availability of cargo from the industrial sectors. Also uncertainty relating to sale of BS-III compliant vehicles post April 2017 has led to spike in industry-wide inventory levels  which is estimated at about 74,000 units (1.3x of average monthly sales).  The CV industry growth for FY2017 is expected to slow down to 5-6% (11MFY17 growth stood at about 5%). CV stocks viz Ashok Leyland, Tata Motors and Eicher Motors are already factoring lower growth.

PVR aims to build organically, expand network to tier III, IV cities
PVR is looking at around 90% jump in revenue to around Rs 4,000 crore in four to five years driven by expansion across the country. The company has set a target of 1,000 screens in next four to five years with presence in 100 cities by then. It has 570 screens in around 50 cities at present. F&B strategy is to get the customers spending on F&B to at least 50% (currently 40%) of what he spending on the ticket.

Persistent Systems to provide integration and implementation services to support customers using Amazon Connect
Persistent Systems announced it is among the first AWS Partner Network (APN) Partners to create a support practice around Amazon Connect. Persistent Systems plans to initially focus on key verticals including Finance and Healthcare.

Music Broadcast rebrands 8 Radio Mantra FM stations as Radio City
Music Broadcast is rebranding its eight Radio Mantra FM stations as Radio City, the company’s larger brand with 31 stations. MBL operates eight Radio Mantra stations in Agra, Bareilly, Gorakhpur, Varanasi, Jalandhar, Ranchi, Hissar and Karnal. The company plans to expand into tier II and tier III cities and build new intellectual properties (on and off-ground) to strengthen “Radio City” brand

Wadias to buy out Solvay’s 25% stake in National Peroxide….Positive read through for the stock
Wadia Group, has agreed to acquire a 25% stake held by Belgium’s Solvay Chemicals in National Peroxide. Wadias, who currently control 45.4% in National Peroxide will increase its holding to 70% post the transaction. National Peroxide is the largest domestic producer of hydrogen peroxide, with a current capacity of 95,000 MTPA and has a domestic market share of 45%.

MORE NEWS

Modi govt targets 25 bn digital transactions in FY18
NITI Aayog may seek closure of 7 more sick CPSEs
US consumer confidence hits 16-year high
Banks looking for lower savings a/c interest rates
'Excess Rs 3L cr in economy, need for digital push'
Kotak Bank likely to buyout M&M Financial Services
Prime gets lukewarm response; Jio may extend offer
GST to be levied on renting, EMI on under-construction property from July 1
India imposes import duty on wheat, tur dal
Sebi gets back discretionary powers on penalties
Indian Oil to supply fuel to Nepal for the next five years
Cairn-Vedanta merger gets all approvals except from RBI
SBI spent Rs 775 crore in maintaining Jan Dhan accounts, says govt
Govt to borrow Rs. 3.72 lakh crore in H1 FY18
SEBI order based on untenable reasoning, says Reliance Ind
Airtel sells 10.3% stake in Bharti Infratel to KKR, Canada pension board for Rs. 6,194 cr
Levy for non-maintenance of minimum balance should be reasonable: Govt
Suven Life gets product patent for neuro-degenerative molecule 
Revised GST legislation may pinch working capital of industries
Irdai wants insurance policies issued in demat format
NHB to revamp its residential housing index
Tencent buys 5% stake in Elon Musk-led Tesla for $1.8 billion
Sharepro scam: Sebi plans new rules for share transfer agents, registrars
Monsanto termination of sub-licence with Indian co illegal: HC
I-T identifies 1,155 shell cos used to launder Rs 13,300 cr
High court bans mining in Uttarakhand for four months
India now top global source of affordable medicines to Unicef
Sensex bounces 172 pts on positive global cues, funds inflow
Anil Ambani gets a seat on Atlantic Council advisory board
Toyota wants govt to frame policy to phase out BSI,II vehicles
Qatar Airways confident of clearing FDI hurdles in India
Lux Industries is merchandise partner of KKR

STOCK IN NEWS

 • Sluggish export growth may hit apparel industry
• Airtel sells 10.3% stake in Bharti Infratel to KKR, CPPIB for Rs 6,194 cr
• As Unilever reviews business, HUL eyes recovery
• L&T in race against time to meet FY17 revised order inflow guidance
• Tractor maker Escorts plans cost cutting, to launch VRS for staff
• Ranbaxy's Singh brothers known for lucky timing find time in short supply
• Lupin expects muted growth in the US despite new launches
• Cairn-Vedanta merger gets all approvals except from RBI
• Infosys joins open source community to share intellectual property with cos
• ED attaches Rs 263 crore assets of Deccan Chronicle group
• Tesco to pay $269 million to settle false accounting charges
• USFDA gives final nod for Aurobindo's Meropenem anti-bacterial injection
• ICICI Bank partners Truecaller for UPI-based mobile payment solution

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