Money Market–Raunaq Singh

images-1-4-1-300x134Expect market to open on a flat note on account of global cues. US market gained over 1% while Asian markets open on a soft note like Nikkei, Hong Kong and China Index declined 1% each. US Future declined 0.3%. However, domestic cues is encouraging like fall in USDINR, 10-Year G-Sec Yield and oil price may boosted the market sentiment. USDINR declined over 100 paisa in the last few sessions and G-Sec Yield fell to below 8% from recent high of 8.21%. Brent Crude also fell to $81/bbl from 4-year high of $86/bbl.

Partial recovery may not be a ruled out as Nifty declined over 10% in the last few sessions among the sharpest fall compare to the other Global pares (except China). .

It is fact that the USDINR and Oil price trend will be important driver for the Indian markets trend. Moreover, outcome of Q2 will be important for the market. As of now, TCS, Hindustan Unilever, Bandhan Bank, Zee reported strong quarterly results. Traders to accumulate stock for long term prospects after a sharp declined – Large Cap : HDFC, ICICI Bank , Axis Bank, Maruti, Hindalco, Ashok Leyland, L&T and Titan. Among the Mid-Caps : RBL, Shriram Transport and Exide.

Traders watch for results today on IndusInd Bank and India Bull Housin .Quarterly results seasons commence from this week. Expect stock specific action in the market ahead of quarterly results. India Bull Housing, IndusInd Bank (Monday), Hero Motocorp, Infosys (Tuesday), ACC, Havell’s, MindTree, NIIT Tech and Reliance Ind (Wednesday), SBI Life, UltraTech (Friday) and HDFC Bank (Saturday) will be announce Q2 results this week.

Watch on National Aluminum – Company announced share buy-back of Rs5.04bn at buy-back price of Rs75 a share – it was much below the market on buy-back price. However, we are long term positive on the stock due to strong domestic demand and increased LME price.

Watch on PVT – Company added 10 new multiplex – positive for PVR

Info Edge subsidiary sold partially stake to Singapore Fund worth $21mn – Positive for Info Edge.

Bandhan Bank gets SEBI exemption on founder shares lock in, exemption on eligibility norm of 1 year listing (Listing on 26th March) – Bandhan Bank likely to get five months more time to reduce promoters stake – Expect positive on Bandhan Bank.

Last Friday, India economy data reported better than street expectation both CPI and IIP number. CPI for the month of September at 3.77% against 3.69% previous month while Bloomberg expectation was 4.02%. IIP for the month of August reported at 4.30% against 6.6% previous month while Bloomberg expectation was 3.8%. Better than expected economy data means Indian economy is doing well.

Expect oil marketing and Airlines stocks will be positive after a fall in USDINR and Government reduced ATF duty. IndiGo, HPCL, IOC and BPCL may Positive.

Hindustan Unilever reported better than expected EBITDA margin and strong volume growth by 10% (Street expectation 8%) . We have a buy rating on Hindustan Unilever. Expects others FMCG stocks like Marico, Britannia, Dabur India may positive after Hindustan Unilever Q2 result. Company reported Q2 Net sales Rs92.3bn (up 11% YoY expectation Rs 95.6bn, EBIDTA Rs20.2bn (up 20.1% YoY) – expectation Rs20.8bn, Margins 21.9% while expectation 21.7%, PAT Rs15.3bn (up 9.5% YoY) expectation Rs15.1bn and Domestic Volume growth 10% [expectation 10%].

D-Market reported impressive Q2 income but EBITDA margin declined over 100bps. Company reported sales income Rs47.73bn (up 39% YoY), PAT reported Rs2.26bn, up 18.25% YoY. EBITDA reported Rs3.9bn, up 22.6% while EBITDA margin declined by 110bps at 8.1% – Any sharp decline will be a buying opportunity.

AU-Bank reported inline with expected Q2 RESULT. Company reported net profit Rs914mn, up 34% while expectation Rs922mn, NII grew 12% QoQ Rs3.2bn, loan growth surged by 112%. GNPA and NPA 2% and 1.3%, up 11% and 10% YoY – We have a buy rating on the stock.

US private equity firm KKR & Co Inc is looking to buy assets from Indian non-banking finance firms on the belief that current market conditions provide attractive opportunities, expected to invest Rs20bn in the NBFC sectors according by media news. Few days before SBI announced to invest Rs200bn – 300bn investment after a recent incident on IL&FS. It will be positive for NBFC stocks like Shriram Transport, India Bull Housing, Muthoot Finance etc.

Central Bank of India to allot up to 354.4mn shares to government worth Rs23.5bn – It will be positive for Central Bank for re-captilisation from the government. However, traders avoid on the stocks on account of poor asset quality.

Tata Sponge Q2 net profit Rs89mn (up 53% QoQ) and sales Rs2.73bn (up 13% QoQ) – Good number (Not our coverage).

Metal stocks expected to momentum ahead of strong China economy data and media news that the Jindal Steel to hike prices by Rs2000 a ton. Metal stocks like JSW Steel, Jindal Steel, Vedanta and Hindalco may positive on account of impressive China economy data (better than China exports, import data and Trade balance). It may positive on metal stocks. Moreover, media news that the Jindal Steel to hike prices by Rs2000 a ton.

Bajaj Finance acquired 2.04 percent stake in Max India, the holding company for Max Healthcare, Max Bupa Health Insurance and Antara Senior Living – Moneycontrol News – We are positive on Bajaj Finance. Stock declined 40% from the recent high – Current valuation is attractive – BUY.

SBI chairman says clear trend of declining NPAs this quarter. SBI says IL&FS unable to meet payment obligation as of now – Market expectation that the NPA likely to fall on SBI in the next two quarters – Positive for SBI.ICICI Securities appoints Anup Bagchi as non-executive director – Positive for ICICI Securities.

Cadila gets tentative approval for Linagliptin & Metformin Tabs – Positive.

Inox starts 5-screen multiplex at Yelahanka in Bengaluru – News is positive, stock gained 8% after the news yesterday

ITI to implement Rs3.34bn Rajasthan Rajnetorder projects – Positive

Career Point win worth Rs44.2mn from MP government – Positive

Government on Thursday extended the tenure of Bank of Baroda (BoB) MD-CEO PS Jayakumar by one year. Jayakumar’s term was to end on October 12, 2018 – Avoid on BoB.

Mahindra Agri solution forms JV with Sumitomo for corp care, Mahindra to hold 60% in corp care JV, Sumitomo to own rest – We are positive on M&M, stocks corrected 30% from the peak. Current valuation is attractive. JV with Sumitomo will be positive.

Emami Cement seeks SEBI approval for Rs10bn IPO – Emami declined sharply – Long term buying opportunity.

IGL to tie up with Japan’s Osaka Gas for overseas foray. IGL eyes City gas distribution projects in Myanmar, Sri Lanka. – Positive for IGL to expand its business in the overseas as tie-up with Japan’s Osaka Gas.

Karnataka Bank Q2 net profit Rs1.12bn (up 20% YoY), GNPA 4.66% vs 4.72% (QoQ), NPA 3% vs 2.92% (QoQ) and NII Rs4.67bn (up 6.2% YoY ) – Company reported higher NPA but fall in GNPA, Traders avoid on the stock – Buy top quality stocks like ICICI, Axis Bank, HDFC Bank.

Board Meetings – Delta Corp, Indiabull Housing, IndusInd Bank, Network 18 Media, South India Bank, Trident, TV 18 Boardcast.

Results Monday – Delta Corp, Indiabull Housing, IndusInd Bank, Network 18, South India Bank, Trident, TV 18 Boardcast.

Raunak Singh 9830774198

Raunak Singh

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