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Friday, 4 August 2017

4 August 2017 - Views & News

MARKET UPDATE

Nifty is likely to open on a flattish to negative note based on the global cues. Support for the day is placed at 9985 levels and if breaks then further downside expected.

Nifty Spot Levels

Support 9985 – 9944
Resistance  10050 - 10106
GLOBAL MARKET

• Asian stocks struggled on Friday after a technology-led drop on Wall Street, while US Treasury yields and the dollar remained under pressure on signs that probes into possible Russian interference in the 2016 US elections are gathering pace.
• While the number of Americans filing for unemployment benefits fell last week, and U.S.-based employers announced the fewest job cuts in eight months last month, services sector activity moderated to a 11-month low in July.
• Nonfarm payrolls probably increased by 183,000 jobs last month after surging by 222,000 in June, according to a Reuters survey of economists. The unemployment rate is seen falling one-tenth of a percentage point to 4.3 percent.

MARKET UPDATE

Sgx Nifty  -18 pts Dow +9.86 pts ,Nsdq -22.30 pts , S&P -5.41 pts‎, Bovespa -358 pts , Ftse +63 pts , Dax -26 pts , Cac +23 pts , Nikkei  -62 pts now , Crude @ $48.98 brl (-0.05), Brent @ $51.97 brl (+0.06) , Gold @ 1268.65 (-3.15), Silver @ $16.675 (+0.04), Euro @ $1.1885, JPY @ $109.9100, INR @ $63.707

Today's Corporate Action 4th Aug  Ex Date

AIAENG Final Dividend - Rs. - 4.0000
AKZOINDIA Dividend - Rs. - 22.0000
BALKRISIND Interim Dividend - Rs. - 2.5000
NESCO Final Dividend - Rs. - 11.0000
TATA GLOBAL Dividend - Rs. - 2.3500
TATAINVEST Dividend - Rs. - 18.0000
TATATEA Dividend - Rs. - 2.3500
VFL Bonus issue 1:10
VOLTAS Dividend - Rs. - 3.5000
ZWELCAST Dividend - Rs. - 2.0000

Today's Key Result 4th Aug

ABAN, ALKALI, ALPHAGEO, ANDHRABANK, APOLLOTYRE, AGLSL, ARVIND, BERGEPAINT, BIOFILCHEM, CHENNPETRO, DABUR, DEEPIND, EIDPARRY, EIHAHOTELS, FORTIS, GRAPHITE, GNFC, GSFC, HINDPETRO, JIKIND, KIRLOSENG, M&M, MANGALAM, MONSANTO, MRF, REPCOHOME, RICOAUTO, ROSSELLIND, RPGLIFE, SAREGAMA, SFL, SHRIPISTON, SHYAMTEL, SOBHA, STINDIA, SUNDRMBRAK, INDHOTEL, TRIGYN, TTKHLTCARE, VRLLOG, WELCORP

TOP NEWS

IT: Cognizant Q2CY17 results: Good results; raises lower-end of CY2017 revenue guidance – sentimentally positive read-thru for Indian IT sector
View: Cognizant has delivered a broad based performance across its segments especially Financial (strong growth in mid-tier accounts and insurance clients) and Healthcare segments. It acknowledged that it foresees pent up demand from the healthcare players involved in M&A activity last year. Further, the company is consistently investing to enhance its capabilities in the digital technologies and realigning its business to get benefit from the ongoing digital transition. In the Q1FY18, management commentary of the leading Indian IT companies has also indicated better demand outlook in financial segment (except TCS) and increased capital allocation towards digital technologies. We view this is a positive-read thru for the sector, however in the near to medium we continue to expect earnings volatility for the incumbents and we do expect a material re-rating in the stocks. We maintain our Neutral stance on the sector, with sole buy in HCL Technologies.    

Star Cement: The company’s consolidated net earnings increases 3x to Rs107 crore for Q1FY2018 on the back of robust operating margins.

Biocon: Form 483 for Bangalore injectable facility; Negative read thru
Biocon’s Bangalore injectable  manufacturing facility (inspected between May 25 and June 3, 2017 by the USFDA as regular periodic audit) is  issued form 483 with ten observations. The company has responded to the regulator with a Corrective and Preventive Action Plan (CAPA) and is on track to implement them. USFDA inspections are more rigorous when it comes to injectable plants.

OTHER NEWS

Banking sector: The Lok Sabha has passed the Banking Regulation Act. This amendment will replace The Banking Regulation Act 1949, giving the government power to authorise the Reserve Bank of India to issue directions to banks in order to initiate insolvency resolution in case of a default. The bill empowers the RBI to issue directives for resolution and appoint authorities or committees to advise the banking companies on stressed asset resolution – Positive read thru as this is expected to help in faster resolution of NPA.

Power: Anti-dumping authority recommends import duty on solar and wind energy equipment from China. The Directorate General of Anti-Dumping and Allied Duties (DGAD) has recommended imposing anti-dumping duty on castings imported from China for use in the construction of wind turbines.  The duty suggested varies between 6.57 per cent and 32.95 per cent for different Chinese companies, six of which are specifically named. We believe the impose of such duty to be beneficial for local domestic manufacturer.

IT: Cognizant Q2CY17 results: Good results; raises lower-end of CY2017 revenue guidance – sentimentally positive read-thru for Indian IT sector
Earning beat:  For Q2CY17, Cognizant delivered higher-than-expected revenue growth of 3.5% QoQ at $3.67bn (at the high-end of its revenue guidance), driven by primarily 2.2%QoQ growth in BFSI (largely driven by insurance) and 4.7% QoQ growth in Healthcare. Further, digital revenues grew above the company average. OPM improved 40BPS QoQ to 16.5%. Consequently, EPS during the quarter increased by 10.7% to 0.93 cents, ahead of its EPS forecast of 0.89 cents; Revised guidance: Cognizant has increased its lower-end of CY2017 revenue growth guidance to 9% (9-10% YoY) from 8% (8-10% YoY) earlier. Maintains CY2017 operating margin is at 19.5%. The company expects Q3CY17 revenue would be in the range of $3.73 - $3.78 billion, reflecting a growth of 1.6%-3.0%.
View: Cognizant has delivered a broad based performance across its segments especially Financial (strong growth in mid-tier accounts and insurance clients) and Healthcare segments. It acknowledged that it foresees pent up demand from the healthcare players involved in M&A activity last year. Further, the company is consistently investing to enhance its capabilities in the digital technologies and realigning its business to get benefit from the ongoing digital transition. In the Q1FY18, management commentary of the leading Indian IT companies has also indicated better demand outlook in financial segment (except TCS) and increased capital allocation towards digital technologies. We view this is a positive-read thru for the sector, however in the near to medium we continue to expect earnings volatility for the incumbents and we do expect a material re-rating in the stocks. We maintain our Neutral stance on the sector, with sole buy in HCL Technologies.     

M&M: M&M has approved to offer up to 96,66,173 Equity Shares of Rs.10 each held by the Company in Mahindra Logistics Ltd representing up to 13.74% of the existing issued and paid-up equity share capital of MLL, as part of the proposed IPO. The selling price per Equity Share will be fixed through the book building process. Positive read thru for M&M

Bharat Forge: Kalyani Strategic Systems opens missile making unit with Israel’s Rafael Advanced Defence System; sees USD 1 Bn revenue potential; positive
Kalyani Strategic Systems and Israel’s state- run Rafael Advanced Defence Systems commissioned a Rs 70 crore anti-tank guided missile production to supply the missile, Spike, to the Army with 90% of its components sourced locally. Kalyani-Rafael JV sees $1 billion worth business opportunity with this business vertical. The facility will enable production of high-end technology systems for the Armed forces and will be engaged in developing a wide range of advanced capabilities like command control and guidance, electro-optics, remote weapon systems, precision guided munitions and system engineering for system integration. JV is likely to procure supply from Bharat Forge.  Positve read thru 

Maruti offers auto gear shift option in top-end Alpha trim of Ignis; likely to enhance sales; positive
Maruti Suzuki India (MSIL) launched the Auto Gear Shift (AGS) option in the top-end Alpha trim of its premium urban compact vehicle -- Ignis -- priced at Rs 7,01,143 (petrol) and Rs 8,08,050 (diesel). AGS accounts for 27% of Ignis sales and is so far offered in the Delta and Zeta trims.  MSIl is now offering AGS in the top trim and is likely to enhance sales further

Infrastructure: Toll-operate-transfer model to initiate shortly with keen interest from investors - positive read thru for the road sector as a whole and for MEP Infrastructure specifically which is looking to bid for ToT projects.
Transport minister Nitin Gadkari said in its written reply to Lok Shabha that 75 public funded NH projects with aggregate length of 4500km and annual toll collection of around Rs2700 crore have been identified under Toll-operate-transfer (ToT) model. The ToT model has seen interest with at least dozen investors showing interest. The preparatory activities including finalization of model concession agreement and request for proposal document have been completed and the transaction advisor has been identified. The first round of bidding for ToT projects is to be held shortly. The development is positive read thru for the road sector as a whole and for MEP Infrastructure specifically which is looking at bid for ToT projects.

Reliance Industries (RIL): Reliance JIO (RJIO), subsidiary of RIL, is likely to soon launch a portal for companies for bulk purchase JIO phone as per the media reports. Positive read through for RIL.

Bharti Infratel: Bharti Infratel, Indus object to RCom-Aircel merger
Bharti Infratel and Indus Towers are the latest to object to a proposal to merge Reliance Communications’ wireless business with Aircel, being heard in National Company Law Tribunal (NCLT).  Both Bharti Infratel and Indus Towers said they needed clarity on how their dues will be paid off by RCom if the merger goes through.

Infosys:  To buy customer experience studio for 7.5 million pounds
Infosys said it would buy London-based customer experience studio Brilliant Basics for 7.5 million pounds to boost its digital capabilities. The company said the deal price included earn-out and employee retention amounts. 

MORE NEWS

After Essar, banks now set eye on Videocon’s Rs 43k cr debt default
Bad loan: RBI to take up more cases, says Jaitley
Infy to buy customer experience studio for £7.5 mn
Lok Sabha passes 2 bills extending CGST, IGST to J&K
No NOC to old vehicles if states don't comply: NGT
Oil majors gushing in cash despite cheap crude
Amazon, Grofers get govt nod for Rs 3,700 cr FDI in food retail
NSE meets shareholders, looks to list by March 2018
IOC Q1 net down 45% to Rs 4,549 cr, GRM more than halves to $4.32
Govt raises Rs 327 cr from Hindustan Copper share sale
Chocolate mithais to attract 5% GST, govt clarifies
Cochin Shipyard IPO subscribed 76 times
SEBI panel to study use of fintech solutions for securities market
Lok Sabha passes Bill to replace NPA Ordinance
Lupin gets USFDA nod for cholesterol-lowering drug
Businesses can start filing July returns on GSTN from Aug 5
Interest rates to gradually become reasonable: Jaitley 
 'Banks may need 20% incremental provisioning for 50 large NPAs' 
Oil companies hike fuel pump dealers’ commissions
SBI to mobilise Rs2,000 crore via Basel-III bonds
Cognizant profit rises 86% to $470 million, revises annual revenue guidance
Jio interconnection: Delhi HC seeks DoT view on Trai suggestion to penalise Idea Cellular
RCom-Aircel merger needs Supreme Court nod: Telecom dept
FDI in textiles doubled to $619 million in 2016-17
Kalyani Group opens missile making unit with Israel's Rafael Advanced Defence System
Services sector contracts by most in 4 years on GST woes: PMI
Central bank flags poor transmission of past rate cuts through MCLRs
Indian Oil Corporation steps up crude oil import from US
Govt drafting central law to deal with chit fund schemes: FM
FM defends SBI decision to cut saving account interest rate
RBI to set up task force on public credit registry

STOCK IN NEWS

1. JSW Steel, Piramal Enterprises eye joint bid for stressed assets
2. Reliance Jio does it again, tops Trai June test as fastest 4G operator
3. Foreign pharma firms hunt for patients in India's remote corners
4. Infosys to buy London's Brilliant Basics for Rs 63 crore
5. Kalyani Group, Rafael start unit for making missiles
6. Steel firms paying high price for captive iron ore mines to ensure supply
7. Kochi Refinery final commissioning by August-end, says BPCL Chairman
8. Lupin receives USFDA approval to market cholesterol-lowering drug

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