Nifty ends Sept series above 11,550, Sensex up 396 points; metal stocks shine

26 Sep 2019

Nagaraj Shetti, Technical Research Analyst, HDFC Securities:

After showing one day downward reversal in the last session, the Nifty witnessed a sharp upside bounce today and erased the loss of the last session. A long bull candle was formed today, that has engulfed the negative candle of the last session. Technically, this pattern indicates a strength of a recent uptrend and a smart comeback of bulls from a lower levels.

The crucial opening upside gap (event gap of 23rd Sept) remains partially filled as of last session. The Nifty showing upmove today, without violating this upside gap at the lows could be a positive indication. The next upside resistance to be watched at 11,700 levels.

Market Close: Nifty bounced back from the previous session fall and ended the September F&O series above 11,550 level.

At close, the Sensex was up 396.22 points at 38,989.74, while Nifty was up 131 points at 11,571.20. About 1260 shares have advanced, 1236 shares declined, and 161 shares are unchanged.

Vedanta, Coal India, M&M, Zee Entertainment and IOC were among major gainers on the indices, while losers were Yes Bank, Infosys, HUL, HCL Tech and Wipro.

Among sectors, except IT all other indices ended higher led by the metal, auto, bank, energy, infra, pharma and energy. BSE Midcap and smallcap ended with 0.5 percent gain.

Dharmesh Kant, Head- Retail Research, IndiaNivesh Securities:

IRCTC enjoys monopoly business in online rail ticket booking and food catering on running trains. Mobile application-based food ordering is gaining fast traction among travellers. It provides multiple caterers in tune with today’s taste and preferences of commuters.

Strong fundamentals and debt free balance sheet along with decent return ratios; ROE being 26%, operating margins of 20% and PAT margin at 15% augurs well. We expect revenue and PAT CAGR of 20% plus for next couple of years. IPO looks conservatively priced at a PER of around 19x based on FY19 earnings. We recommend subscribe.

The government is likely to target Rs 50,000 crore from asset monetisation in current fiscal 2019-20, reports CNBC-TV18 quoting unnamed sources.

Sources said government has set up a panel under cabinet secretary for asset monetisation sale.

Buzzing: MOIL jumped over 4 percent on September 26 after HSBC upgraded the stock to buy from hold but has kept the target unchanged at Rs 180 per share. The firm believes that the company is supported by healthy margins from low-cost operations.

Market Update:

Benchmark indices has extended the morning gains on the back of possible US-China trade deal.

The Sensex is up 367.44 points at 38,960.96, while Nifty is up 116.80 points or 1.02% at 11,557. About 1042 shares have advanced, 460 shares declined, and 56 shares are unchanged.

Buzzing: Shares of Sterlite Technologies (STL) rose nearly 4 percent on September 26 after company entered into an agreements to acquire a 100 percent stake in European firm.

Market Opens: It is positive start for the Indian indices on the back of firm global cues.

The Sensex is up 147.33 points at 38740.85, while Nifty up 50.80 points at 11491. About 413 shares have advanced, 136 shares declined, and 25 shares are unchanged.

Maruti Suzuki, ICICI Bank, Eicher Motors, Asian Paints, InterGlobe Aviation, Sterlite Tech, Indiabulls Housing, M&M, Cipla, IOC, ONGC, BPCL, IndusInd Bank, IndusInd Bank are among major gainers on the Indices, while losers are Axis Bank, HCL Tech and Infosys.

Rupee Opens: The Indian rupee opened flat at 71.02 per dollar on Thursday versus previous close 71.03.

Market at pre-open: Benchmark indices are trading higher in the pre-opening session on September 26.

At 09:03 hrs IST, the Sensex is up 160.48 points or 0.42% at 38754.00, and the Nifty up 36.20 points or 0.32% at 11476.40.

HSBC on MOIL

Upgrade to buy from hold, target unchanged at Rs 180 per share

Co supported by healthy margins from the low-cost operations

Valuation at current levels looks attractive

Cut FY20-22 EBIT estimates by 13-21% on an increase in unit cost

Negative impact largely offset at profit level by corporate tax cut

CLSA on Cements

Pick-up only after festival season

Limited benefit from lower income tax

Demand growth continues to be weak

Demand may pick up only from Nov/Dec

Prices in September down mildly across most markets

Stocks may stay rangebound in the near term

Our top 12-month picks are Ambuja, Ramco & UltraTech

CLSA on Telecoms

4G ramp-up key to market share gains

Over the past two years, mobile’s active subscriber base has declined 5 crore

3G/4G subscribers have doubled to 58.6 crore to 50% penetration

An increase in 4G subscribers is the key metric to track

In last 6 months, Bharti Airtel has stepped up its 4G rollout

Positive on Reliance Jio & Bharti Airtel

For Vodafone Idea, out-of-control gearing is our key concern

CLSA on Zee Entertainment

Slash FY20-22 ad revenue forecast by 5%

Domestic subscriptions are surging with the new tariff regime

Corporate tax rate cut driving upgrades to our FY20-22 earnings

Risk to share pledging crisis remains despite extension for loan repayment

Positive on stocks due to growing business & compelling valuation

Buy rating, target cut to Rs 450 from Rs 515 per share

Citi on Autos

Sep 2019 retails could be ahead of Aug but don’t start festivities yet

For the first 24 days, Sep PV new registrations up 17% vs similar period in Aug

On a YoY Basis, we have seen a 20% growth

For 2-wheeler, trends are even better

2-wheeler new registrations for Sep 1- 24 up 30% vs 27% in Aug

Maintain Maruti as top sector pick

Citi on L&T Infotech

Buy rating, target cut to Rs 1,800 from Rs 1,825 per share

Q3FY20 could see a pick-up in revenue growth

PAT margins will likely be in the range of 14-15%

In medium term, expect co to deliver better growth Vs Peers

Co is the only buy in IT midcap space

Goldman Sachs on OMCs

Upgrade HPCL, IOC to buy & neutral on BPCL

See higher refining margin & range-bound crude prices in medium term

Morgan Stanley On IndiGo

Overweight call, target at Rs 2,261 per share

Rising intl mix, share of NEOs & healthy fare environment keep us OW

Keep Core earnings estimates largely unchanged

Reported EPS goes down 16% in FY20 due to Ind-AS 116

MTM of balance sheet liabilities will add one-off non-cash FX losses in FY20

P&L, BS now reflect the new accounting standard

Credit Suisse on Jubilant Food

Cut SSSG estimate for FY20 To 4.5%

Expect 100 bps drop in EBITDA Margin

Cut earnings by 8-11%

Downgrade to underperform from neutral, tgt cut to Rs 1,200 per share

Credit Suisse on L&T

Maintain outperform, target at Rs 1,750 per share

There’s strong execution & order inflow momentum in domestic mkt

Middle East biz stable with strong inflows from hydrocarbon sector

There is upside to margins from strong traction & benign commodities

Co trades at 16x FY21e core business earnings

Cycle momentum needs to build up more for stronger upside

Morgan Stanley on OMCs

OMCs remain steadfast in maintaining margin despite crude rise

Even digital payment related discounts have been removed recently

With government looking to divest assets & fuel regulations, margin may remain high

Top pick is HPCL amongst oil marketing companies

Nomura on Dr Reddy’s

Maintain buy call, target at Rs 3,284 per share

Big opportunity for co is Clopidogrel

Believe co may participate in the tender bids in FY20

Co is conducting biostudies to qualify for the tenders

Clopidogrel market is more than USD 1 billion in size

Citi on HDFC Bank

Maintain buy call, target at Rs 1,400 per share

Adjusting our numbers to reflect stock split of 1:1

Its relative value is most obvious in challenging times

Valuations justified on continued high growth, quality & returns

Citi on CONCOR

Buy rating on the stock, target at Rs 621 per share

Economic slowdown is likely to impact near-term volume growth & results

Reiterate buy due to its potential to benefit from DFC commissioning

Positive on the stock due to large market share & net cash balance sheet

Will be an attractive candidate for acquisition

Morgan Stanley on Eicher Motors

Equal-weight call, target at Rs 17,052 per share

Believe the share price will fall relative to index over the next 30 days

Lower-priced variants, competition will put pressure on margin that RE enjoys

Recent rally in stock price also makes valuations less attractive

Wall Street gains: The S&P 500 notched its biggest daily gain in two weeks on Wednesday as investors shrugged off the news of an impeachment inquiry into President Donald Trump, while Nike shares jumped on upbeat quarterly results.

Asian stocks edge higher : Asian stocks edged up on Thursday as hopes the United States and China may soon end their year-long trade war boosted demand for riskier assets while worries about a US presidential impeachment bid ebbed.

SGX Nifty: Trends on SGX Nifty indicate a positive opening for the broader indices in India, a gain of 30 points or 0.26 percent. Nifty futures were trading around 11,505-level on the Singaporean Exchange.