Nifty ends above 11,600, Sensex up 1,075 points

23 Sep 2019

Buzzing: Extending their losing streak into the sixth consecutive session, shares of Zee Entertainment Enterprises closed at Rs 278.50, down 7.51 percent on BSE on September 23.

The stock cracked almost 11 percent intraday on BSE amid reports that a lender has sold part of pledged shares of the company in open market.

Market Close: The benchmark indices continued their upward momentum on the second day on September 23 post corporate tax cut by the Finance Minister on September 20.

At close, the Sensex was up 1,075.41 points at 39090.03, while Nifty was up 329.20 points at 11,603.40. About 1604 shares have advanced, 971 shares declined, and 182 shares are unchanged.

BPCL, Bajaj Finance, Eicher Motors, IOC and L&T were among major gainers on the Nifty, while losers were Zee Entertainment, Infosys, Tata Motors, Power Grid and Dr Reddy’s Labs.

On the sectoral front, except IT and pharma, all other indices are ended higher led by the FMCG, bank, infra, auto, metal and energy.

Rupee Update: The Indian rupee has recovered from the low and trading marginally higher at 70.91 per dollar. It opened lower by 10 paise at 71.04 per dollar versus Friday's close 70.94.

Market Update: Benchmark indices continue to trade high with Nifty holding above 11,600 level.

The Sensex is up 1,204.50 points or 3.17% at 39,219.12, while Nifty is up 346.80 points or 3.08% at 11,621. About 1567 shares have advanced, 872 shares declined, and 153 shares are unchanged.

HPCL, BPCL, IOC in focus: Shares of Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) rose 3-8 percent on September 23 after foreign brokerage house Credit Suisse raised the target price but maintained underperform rating.

Axis Bank gains 5% after raising Rs 12,000 crore

Axis Bank gained over 5 percent intraday on September 23, coming close to a two-month high, after it raised Rs 12,500 crore in qualified institutional placement from foreign and local investors.

Axis Bank launched the institutional share sale on September 19, setting a floor price of Rs 661.50 per share. The stock has gained over 11 percent in the last three days.

The stock witnessed spurt in volume by more than 2.29 times. It was trading with volumes of 845,620 shares, compared to its five-day average of 497,966 shares, an increase of 69.81 percent.

Buzzing: Shares of Vikas Ecotech added over 4 percent on September 23 after company received Rs 8.37 crore insurance claim filed with Oriental Insurance Company ou of total insurance claim of Rs 16.31 crore towards the losses incurred on account of fire in its Rajasthan factory.

Alembic Pharmaceuticals up 7%: Aleor Dermaceuticals, a 60:40 joint venture between Alembic Pharmaceuticals and Orbicular Pharmaceutical Technologies, has completed United States Food and Drug Administration (USFDA) inspection at its formulation manufacturing facility located at Karakhadi, Gujarat, India; with one observation.

Buzzing: Shares of Adani Ports and Special Economic Zone Ltd (APSEZ) surged over 8 percent on BSE on September 23 amid reports that the committee of creditors has backed the resolution plan offered by the company to buy the debt-laden Dighi Port under the bankruptcy and insolvency law.

Cipla gets EIR from USFDA: Share of Cipla fell more than 1 percent on September 23 after company received EIR from the USFDA post completion of inspection at company's API manufacturing facility in Virgonagar, Bengaluru, from July 15-19, 2019.

Ajit Mishra Vice President, Research, Religare Broking:

Markets will continue to react to the FM’s announcements in the coming week as well and the outcome of the GST Council meet will also be focus. We expect volatility to remain high in the coming week due to scheduled derivatives expiry on Thursday i.e. on September 26. Besides, global developments viz. US-China trade meet and geo-political tension between the US and Iran will further add to the choppiness.

Indications are in the favour of further surge in the index but the move could be gradual from hereon. We feel sustainability above 11,250 in Nifty would be critical to carry this momentum. On higher side, 11,450-11,600 zone would act as hurdle while 11,000-11,100 zone will be crucial in case of profit taking. We advise focusing on stock selection and trade management however it’s easier said than done after this vertical rise.

Market Opens: It is a strong start for the Indian indices on September 23 on the back of huge buying seen from FIIs as well as domestic investors post corporate tax cut by the Finance Minister on September 20.

At 09:17 hrs IST, the Sensex is up 909.18 points or 2.39% at 38923.80, and the Nifty up 276.60 points or 2.45% at 11550.80. About 836 shares have advanced, 135 shares declined, and 30 shares are unchanged.

Britannia Industries, ITC, L&T, IndusInd Bank and Eicher Motors are among major gainers on the Nifty, while losers on the indices are Reliance Capital, Cox & Kings and Ruchi Soya.

Except IT, all other indices are trading higher led by the FMCG, infra, auto, bank, metal and energy.

Rupee Opens: The Indian rupee slipped in the early trade on Monday. It opened lower by 10 paise at 71.04 per dollar versus Friday's close 70.94.

Market at pre-open: Benchmark indices are trading strong in the pre-opening session on September 23 with Nifty above 11,500.

At 09:03 hrs IST, the Sensex is up 450.11 points or 1.18% at 38464.73, and the Nifty up 240.30 points or 2.13% at 11514.50.

Market Headstart: Nifty likely to give a power-packed opening; VIP Ind, Deepak Nitrite top buys

Trends on SGX Nifty indicate a robust opening for the broader index in India, with a 133.5 points gain or 1.18 percent. Nifty futures were trading around 11,473-level on the Singaporean Exchange.

Kotak Equities on India Strategy

Corp tax rate cut is a huge boost to private sector investment

Tax rate cut boost to particularly domestic manufacturing

Autos, banks, cons staples & global commodity sectors to see large earnings upgrades

Electric Utilities, IT & Pharma Sectors will see little or no earnings changes

Our FY20 EPS estimate for Nifty 50 Index will increase by 10% from previous estimates

Push for fresh investment in manufacturing; land & labour reforms equally critical

Envisage acceleration in investment in manufacturing

Expect a rise in fiscal deficit as government has not indicated any expenditure cuts

Expect profits of Nifty 50 index to grow 25% for FY20

Macquarie on India Strategy

Government brings the economy back in clear focus with USD 20 billion in corporate tax cuts

70 bps of fiscal deficit slippage is tolerable

Measures are targeted at accelerating corporate spending

Would not rule out further reforms in areas like FDI, land, labour

Recommend adding domestic cyclicals like banks, industrials, autos

Remaining underweight on consumers

Top large cap picks will be HDFC Bank, L&T, Maruti

Nifty FY19 adjustment tax rate was 30% & hence there is 8% earnings benefit

Big boost to capex cycle by cutting tax on new companies to 17%

In the short term, insurers, IT & Utilities do not benefit from tax cuts

BofAML on India Strategy

Nifty 1 year forward EPS estimates for FY20 could see upgrades of 7%

Reduction in tax will likely increase cash flow for cos

Reduction in tax will improve IRR of new investments

Capex May only pick up with some lag depending on the need for new capacity

Government could look for expenditure reductions to fund this stimulus

An expansion of fiscal deficit seems likely

Prefer financials, which could benefit from improving corp investment cycle

Nomura

Raise March 2020 Nifty target to 12,545

UBS

Raise Nifty June 2020 target to 12,300

JPMorgan

Nifty March 2020 target at 12,200

Goldman Sachs

Raise Nifty 50 target to 13,000 From 12,500

Morgan Stanley on India Strategy

Green shoots in the offing, raise index target

Corporate tax cuts create room for improved earnings growth

Raise earnings growth estimates for Sensex to 25% in FY20 & 23% in FY21

Raise Sensex target to 45,000 by June 2020

Citi on India Strategy

Slashing of corporate tax could reset coverage earnings up by as much as 8-9%

Ambitious scope of the reforms could also act as a sentiment booster to equities

Markets will likely expect more big ticket announcements going forward

Raise March 2020 Sensex target to 40,500 from 39,000

Jefferies India Strategy

Biggest beneficiaries of corporate tax cut will be Asian Paints, Avenue Supermart, Britannia

Biggest beneficiaries of corporate tax cut will be Jubilant Food, United Spirits, Colgate

Potential earnings boost of 11-14% for cos like Asian paints, Britannia

Potential earnings boost of 11-14% for cos like Avenue Super & Colgate

Dabur, Marico & GCPL should see negligible impact given already lower tax rate

No increase in Cess in Cigarettes, a positive for ITC

Credit Suisse on India Strategy

Sharp cut to the corporate tax rate is aimed to make India globally competitive

Tax cut significantly boosts medium term investment potential

While it improves sentiment, it doesn't help revive near-term eco momentum

Markets to be choppy, as weak earnings meet structural changes

Sep 2019 results may have bleak commentary despite good earnings growth

Remain underweight on consumption & overweight financials

Lower taxes help ICICI, IndusInd, HDFC Bank & L&T

CLSA India strategy

Lower corporate tax rate imply a 7%-8% EPS upgrade for Nifty

Winners would be capex plays like ICICI, Axis, L&T & Adani Ports

Reduce IT to Underweight & add Adani Ports to model portfolio

Best way to play improved capex outlook is via ICICI, Axis, SBI, L&T & Adani Ports

Reduce our weight in IT by 3 pts & add to Adani Ports & ICICI

Cos with large tax benefits are HDFC Bank, Kotak Bank, ITC, Colgate, Britannia

Cos with large tax benefits are ONGC, BPCL, ICICI Lombard, L&T

Cos with large tax benefits are Bajaj Auto, Hero, Eicher, Zee

Cos with large tax benefits are Bharat Forge & Pidilite

Other top picks are RIL, HDFC, ICICI Pru, Bharti Airtel, Sun Pharma & HCL Tech

CLSA on Consumer

Tax cuts drive FY20 EPS estimates into the double digits

Colgate, Britannia, ITC & Jubilant Food are now our top 12-month picks.

Cos that benefit include Colgate, Britannia, Jubilant Food, USL, Asian Paints

Cos that benefit include Nestle, HUL & Kansai Nerolac

Lift our ratings on USL, Asian Paints, Britannia & Kansai

Downgrade Titan & Nestle post the recent run-up

Credit Suisse on Financials

Tax rate reductions will boost bank earnings by 8-12% in FY21

Tax rate cut raises RoEs by 100-200 bps & lead to multiple re-rating

Continue to prefer well-capitalised banks

Remain cautious on PSU banks & NBFCs

HFCs & insurance companies will see limited benefit

Credit Suisse on Consumer Sector

Effective tax for the highest slab including surcharges goes down from 35% to 25%

Upgrade earnings of most consumer stocks by 10-18%

Impact is much lower for companies such as Marico, Dabur, Emami, GCPL & Titan

Credit Suisse on BPCL

Maintain underperform, raise target to Rs 320 from Rs 300 per share

Beneficiary of corporate tax rate cut

High capex cycle still leading to debt increase

Current effective tax rate is 35%, which will reduce to 25%

Raise FY21 & FY22 EPS by 12% & increase in FY20 EPS higher at 32%

Credit Suisse on HPCL

Maintain underperform, target raised to Rs 260 from Rs 250 per share

Raise EPS estimates by 12-18% for FY20-22

Current effective tax rate is 35%, which will reduce to 25%

This will result in higher cash flows & partly reduce debt requirement

Credit Suisse on IOC

Maintain underperform, target raised to Rs 120 from Rs 115 per share

Increase EPS estimates by 11-16% for FY20-22

View is cautious on high supply pressure in refining & heavy capex cycle

Credit Suisse on Metropolis

Maintain neutral, target raised to Rs 1,150 from Rs 1,000 per share

FY20/ FY21/FY22 EPS increase by 10%/12%/12%

See 18% EBITDA CAGR over FY19-FY22

Neutral rating is due to low entry barrier in the diagnostic industry

Asian shares firm: Asian shares started higher on Monday on hopes of an interim Sino-US tariff deal after the two countries described their talks as “productive” and “constructive”, while oil gained more than 1% as Middle East tensions remained elevated.

SGX Nifty: Trends on SGX Nifty indicate a positive opening for the broader indices in India, a gain of 138.50 points or 1.22 percent. Nifty futures were trading around 11,478.50-level on the Singaporean Exchange.