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Monday, 24 April 2017

24 April 2017 - Views & News

MARKET INSIGHT

 Markets are likely to open flat to positive. Structurally, Nifty is forming a base near the support zone of 9100- 9040, which can continue for a couple of sessions before it starts the next leg on the upside. On the weekly chart, the Nifty is maintaining the higher top, higher bottom formation, which means that the larger trend is still in favor of the bulls.

Nifty Spot Levels

Support 9075 – 9020 – 8980
Resistance 9200 – 9274 - 9310

GLOBAL MARKET

 • US stocks dipped on Friday as investors were cautious ahead of the first round of the closely contested French presidential election, but the S&P 500 managed to notch its first weekly gain in three.
• US President Donald Trump said he would have a major tax reform announcement on Wednesday. 
• The Dow Jones Industrial Average fell 30.95 points, or 0.15 percent, to 20,547.76

Market Update:

‎Dow -30.95 pts ,Nsdq -6.25 pts , S&P -7.15 pts , Bovespa Clsd , Ftse -4 pts , Dax +21 pts , Cac -18 pts , Nikkei +243 pts now , Crude @ $49.73 brl (+0.11), Brent @ $52.58 brl (+0.14) , Gold @ 1274.50 (-14.60), Silver @ $17.890 (-0.047), Euro @ $1.0858, JPY @ $109.9500, INR @ $64.649

Today's Corporate Action 24th Apr  Ex Date

AVANCE - Consolidation of Shares

Today's Key Result 24th Apr

Reliance Ultratech Cemco Hexaware,India bulls Finance,Jswhl,Persistence,Rallis,Sanwaria,Wendt 

TOP NEWS

ALERT: L&T Finance plans to sell MF arm  for consideration of close to Rs2000 crore – Positive; would unlock capital for its core lending business. We expect the company to exit other non core equity investments also which is re-rating trigger for the stock. 

IRB Infra files offer document for its Infra Investment Trust (InvIT) to raise Rs4300 crore – Positive, the stock has already moved up by close to 8-10% on anticipation of the move

Sun Pharma: As per media reports, Sun Pharma’s Dadra facility (second important facility after Halol) had received 11 observations, no data integrity issues in the form but some observations look serious in nature – sentimentally negative for Sun; clarification from management awaited.

Divi’s Lab: USFDA has issued warning letter for Divi’s labs Vizag unit II, to which, company will respond with a detailed plan – Neutral for Divis; Unit II has already got an Import alert with certain product exempted.

Dr Reddy launches progesterone capsules in US; annual market size of drug is $153 mn (Rs 995 crores) – Positive for Dr Reddy

Alkem Labs gets USFDA approval for Cefuroxime Axetil oral tablet, used to treat a wide variety of bacterial infections – Positive for Alkem

Ashok Leyland outlines a Capex of Rs 600 crore for Fy2018 to set up new assembly units in Kenya, Ivory Coast; expects domestic CV industry to grow by 10-15% in FY2018; Positive read thru…..(detail in other news). Also Ashok Leyland sees multifold rise in defence business on expanded offerings; to commence export of Neptune engines to US market; positive read thru….(detail in other news)

OMCs (IOCL, BPCL and HPCL): The government has levied 6% excise duty on biodiesel (vs 0% previously) and thus the price of biodiesel is likely to increase by Rs9/litre as per media reports. The OMCs are mandated to blend biodiesel with regular diesel at 20% (vs 5% blending currently) and thus increase in price of biodiesel would be negative for OMCs as price of biodiesel may become higher than regular diesel price of Rs62.55/litre in Mumbai. We believe that government would exempt OMCs from bearing excise duty on biodiesel or compensate OMCs for any kind of loss on diesel given the auto fuel has been de-regulated. 

RIL commences commercial CBM gas production in Sohagpur – marginally positive for RIL as initial production as per media reports is estimated to be only 0.4mmscmd (only 4.4% of RIL’s KG D-6 gas production)
Reliance Industries Limited (RIL) has commenced CBM (coal bed Methane) gas production from its SP (west)-CBM-2011/1 block in Madhya Pradesh from 24-March-2017. The production from Sohagpur (SP) CBM fields would be ramp-up gradually over next 15-18 months. RIL owns two adjacent CBM blocks - SP (west) and SP (East) with a total area of 995sq.km in Madhya Pradesh. We have earlier (13-April-2017) highlighted the commencement of CBM production by RIL and media reports expects initial CBM gas production of around 0.4mmscmd (only 4.4% of RIL’s current gas production from KG D-6 fields) – marginally positive for RIL.      

 OTHER NEWS

FMCG - Defence's CSD suspends sale of Patanjali's Amla Juice - The canteen stores department (CSD), the retailing platform for India's defence forces, has suspended the sale of Patanjali Ayurved's amla juice after receiving an adverse state-laboratory test report on the product that had helped establish the company's credentials in the consumer business. Patanjali Amla juice was the first product to be launched in the market and was one of the key revenue driver for Patanjali – positive for Dabur and Emami’s Ayurvedic Health products segment

Oil and Natural Gas Corporation (ONGC) aims to increase its gas production by 30% to 30bcm (from 23bcm currently) in next 3-4 years at a total investment of $11billion as per media reports. ONGC expects its Daman offshore fields to be fully ramped in 2018 while Krishna Godavari basin blocks, Ratna and R-Series fields are expected to commence production by 2019. The company targets to start production from its CBM blocks in Jharkhand in 2020. We highlight here that this news in media from quite some time – Long term positive for ONGC. 

FMCG - Milk prices are likely to remain stable this summer on the back of adequate supplies; expectation of normal monsoon provides visibility of stable prices ahead – positive read through for milk/milk products procuring companies such as GSK Consumers, Britannia Industries and Nestle India
Top domestic dairy brands Amul and Mother Dairy expect milk and milk product prices to remain stable this summer on the back of adequate supplies. Over the next couple of weeks, milk procurement is seen increasing in south India, aided by an expected normal rainfall this year. Also most of the large players have taken price hike and hence price hikes in near term is unlikely. This is positive for milk/milk products procuring companies such as GSK Consumers, Britannia Industries and Nestle India

Future Retail - Future Group has decided to demerge its home business under Future Retail and list it as a separate company under Praxis Home Retail (PHRPL). Under the scheme of arrangement, PHRPL will issue one share (of Rs 5 each) to FRL shareholders for every 20 shares (of Rs 2 each) of the latter. Future group has also plans to list PHRPL on the stock exchanges – positive read throughfor Future Retail as it will focus on core business of fashion and food.

Ashok Leyland outlines a Capex of Rs 600 crore for Fy2018 to set up new assembly units in Kenya, Ivory Coast; expects domestic CV industry to grow by 10-15% in FY2018; Positive read thru
Ashok Leyland has lined up a capex of Rs. 600 crore for Fy2018, towards enhancement in cabin and engine capacity, setting up new assembly units in Kenya and Ivory Coast, and for developing future technologies like modular vehicles and BS—VI emission norms. The incremental capacities will help the Ashok Leyland to cater to the incremental demand from the African countries. Also the capacity at the existing Ras-Al-KHaimah plant will be enhanced to beyond 400 units a month, primarily to meet the increasing demand from the  GCC countries. On the domestic front the company expects the industry to grow by 10-15% for FY2018 on the back of better GDP growth expected and expectation of a good demand from the infrastructure and mining activities.

Tata Motors-owned Jaguar Land Rover (JLR) has slashed prices of two models in India by up to Rs 4.08 lakh in a bid to compete with Audi, Mercedes and BMW. The company has cut the price of the diesel-powered Land Rover Discovery Sport by Rs 4.08 lakh to Rs 43.8 lakh from the earlier price of Rs 47.88 lakh (ex-showroom Delhi) and has also reduced the price of the Range Rover Evoque diesel by Rs 3.25 lakh to Rs 45.85 lakh from Rs 49.10 lakh earlier. The move would help the company make its products competitive.

Eicher Motors 2 wheeler division (Royal Enfield) has forayed in to the Brazilian markets and has launched its 3 models – Bullet 500, Classic 500 and Continental GT. The company has set up a distribution  subsidiary, Which will sell bikes to dealers, as well as conduct all front-end development and support activities such as marketing and after-sales in the country. The entry in the new markets would boost the topline of the company. Positive  

Maruti Suzuki has launched the 2017 DZire Tour at a starting price of Rs 5.24 lakh, ex-showroom Delhi. The company will sell the new DZire Tour only for the fleet market. Earlier, the Maruti Suzuki DZire Tour was sold in a diesel version, however, the new car will now also be offered with a 1.2-litre K-Series petrol engine that produces 84 hp of power and 114 Nm of torque.

Ashok Leyland sees multifold rise in defence business on expanded offerings; to commence export of Neptune engines to US market; positive read thru
Ashok Leyand has made significant progress in defence business and sees opportunities to grow the revenues from about Rs 500 crore currently to Rs 5,000 crore over a period of time. It has expanded the addressable market with its expanding product offerings. As per the company it was competing less than 2% of the defence budget and with new products it is available to compete in 25% of the defence budget for mobility solutions whether on wheels or tracks. Ashok Leyland has also  won 12 out of the last 13 tenders and aims to acheive at least three-fold increase in defence revenues in the next three years. Further, Ashok Leyland has signed a deal with a US-based automotive manufacturer for engine supply. The engines to be exported are branded Neptune, ranging between 160 and 380 HP, and can be fitted and both trucks and buses. 

Agrochemical Sector: Prices of agrochemicals like pesticides and herbicides in the Indian market are expected  to go up by at least 20% with rising global crude prices and shut down of many raw material factories in China. An increasingly stringent environmental norms in China is causing several factories to shut down creating a shortage of technicals in the Indian market, thereby resulting in increase in prices….positive for Agro- chemical companies like Insecticides India as it has its own technical plant, PI Industries, Dhanuka Agritech among others.

ITC is learnt to be evaluating options for making a bid for Taj Mansingh hotel following the Supreme Court's decision to allow the NDMC to e-auction the iconic property – positive read thru for ITC’s hotel business

Retail - Ikea to double local sourcing by 2020,open store in Navi Mumbai – positive for Indian retail space as it will help the industry to expand and increase competitive intensity
Ikea is sharpening India focus as it plans to double sourcing from the Indian market to 600 million euro by 2020 (up from its existing base of €318 million) and will start work on its second store in the country in Navi Mumbai next month with an investment of about Rs 700 crore. With a built-up space of about 4.3 lakh sq ft, the Navi Mumbai store will have over 9,500 home furnishing products as well as an in-store restaurant and is expected to be operational by the middle of 2018. Ikea's first store will come up in Hyderabad later this year, and it is in the process of identifying sites in Delhi- NCR, Bengaluru, Tamil Nadu and Gujarat. Ikea has a target of opening 25 stores in India by 2025 at an investment of Rs 10,500 crore. Ikea has about 50 suppliers from India in product segments such as textiles, mattresses, and kitchen accessories. It is now exploring the prospects of bamboo plantations in the North East, and adding new categories from among the existing suppliers. The company also plans to set up its first distribution centre in Pune.

Zee Entertainment to enter Poland, launch Zee One - positive read thru
ZEEL announced its foray into Poland as part of the strategy to strengthen its position in Central Europe. The channel will soon launch a customised version of Zee One, its Bollywood film and entertainment channel, for the Polish audience.

Petroleum Ministry is considering a plan for home delivery of petrol and diesel to consumers if they make pre booking – neutral for OMCs.

The government has disapproved the decision of few petroleum dealers' associations to keep fuel outlets shut on Sundays from 14-May-2017 – sentimentally positive for OMCs.

IRB Infrastructure: The company plans to launch Rs4,300 InvIT in the first week of May as per media reports. Positive read thru for the stock.

Dilip Buildcon: Airport Authority of India has declared Dilip Buildcon as Lowest -1 (L-1) bidder for Rs125 crore construction of Parallel Taxi Track and associated civil & electrical works at Dabolim Airport, Goa. Positive read thru for the stock.

Great Eastern Shipping:  The Company has signed a contract to buy a Medium Range Product Tanker of about 51,000 dwt. The 2008 built vessel is expected to join the Company's fleet in Q1 FY18. Positive read thru for the stock.

Brigade Enterprises: Brigade Group Announces the Twin Launches of Brigade Seven Gardens & Senior Friendly Homes at Brigade Meadows in South Bengaluru. Positive read thru for the stock.

IT Sector:  US accuses TCS, Infosys of violating H-1B Visa Norms - neutral read thru
The US has accused TCS and Infosys of unfairly cornering the lion's share of H-1B visas by putting extra tickets in the lottery system, which the Trump administration wants to replace with a more merit-based immigration policy. At a White House briefing last week, an official said a small number of giant outsourcing firms flood the system with applications which naturally ups their chances of success in the lottery draw.

  MORE NEWS

FPI net inflow at Rs 18,890 crore in April so far
US accuses Infosys and TCS of cheating in H-1B visa lottery
IMF drops its last year's anti-protectionism pledge
Sebi lines up reforms for deeper markets
India's steel output likely to rise 6% to 89 million tonnes 
FM Jaitley flags H-1B concerns with US Treasury Secy
L&T Fin plans to sell MF arm, seeks Rs 2Kcr valuation
Mazagon Dock, Goa Shipyard likely to merge
IMF members set aside trade split as French vote rattles nerves
India Post Payments Bank to start selling MF, insurance products by Mar '18
IT dept to challenge ITAT relief to Cairn Energy in HC
NSE to delist Deccan Chronicle, Koutons Retail, 17 others
Mega defence deals in the pipeline during PM’s visit to Israel 
Financial institutions feeling fintech heat, says PwC study
NCDEX to launch rapeseed mustard oil cake futures on April 24
USFDA issues 11 observations for Sun Pharma’s Dadra facility
USFDA issues warning letter to Divis Labs’ Vizag unit  
Sovereign gold bonds priced at Rs 2,901 per gm, issue opens on Monday
Remittances to India dropped by nearly 9% in 2016: World Bank
Niti Aayog suggests 300 action points to accelerate the Indian Economy
Finance ministry in talks with PSBs to get a fix on growth plans, funding
Oil prices fall over supply fears, stocks slip before French election
Economy to grow over 3-fold to $7.25 trillion by 2030: Niti Aayog
PMO ask departments to provide enabling framework to attract FDI
TCS hired 11,500 people in offshore markets in FY17
GST to boost growth by 4.2%, make products cheaper: US Fed paper

STOCK IN NEWS 

 1. FreeCharge, MobiKwik in merger talks
2. Govt's generic push will dent Rs 90,000-cr branded pharma market
3. Arun Jaitley flags H-1B concerns with US Treasury Secretary
4. Tata Motors completes 1st commercial pilot of electric bus in Shimla
5. TCS, Infosys, Cognizant violated H-1B visa norms: US
6. Lodha Developers to invest Rs 4300 cr in construction to boost deliveries
7. Ikea to double local sourcing by 2020, open store in Navi Mumbai
8. Ashok Leyland expects to increase defence business to Rs 5,000 cr
9. Divi's Labs' Vizag unit gets warning letter from USFDA
10. Sun Pharma's Dadra facility receives 11 USFDA observations after inspection
11. RIL starts commercial production from its Madhya Pradesh CBM field
12. HDFC Bank board approves Rs 50,000-cr fund-raising 

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