Expect market to open on a positive note on account of global cues. US market surged over 1% on last Friday after investors got some relief over concerns about the growth and rates outlook from US economic data and central bankers. Moreover, reduce trade war tension between US-China have a positive sentiment in the Asian markets. Impressive US Economy data and hope of pause by US Fed to hike interest rate may boost the market sentiment.
Asian Markets like Nikkei, Hong Kong and South Korea Index gained half percent. China Q4 GDP number will be announced today. US Market shut today on account of Martin Luther King Holiday. European market gained 2% each on Friday. SGX NIFTY is up by 21 points.
Nifty closed on a flat despite a global market rally on last Friday. Sentiment has been dampen after the media news of Sun Pharma corporate governance issue. Sun Pharma took a nosedive, plummeting ~9% on account of whistleblower complaint. However, market may relief after Sun Pharma clarification of corporate governance issue – according by media news.
Most positive factor in the markets that the strong quarterly results reported by heavyweights like Infosys, Wipro and Reliance Industries (Reliance posted a stellar show, gaining ~5% on Friday, with the highest single-day volume since February 28, 2018 on Friday). Only concern in the market that the Brent Crude spiked to 2-month high above $62/bbl.
Major events to be watch – Kotak Bank, Hindustan Zinc, L&T Finance and Just Dial reults. China Q4 GDP data will be announced today.
Major stocks /sectors to be watch – HDFC Bank, L&T, PSU Banks (SBI), Sun Pharma, Wipro (ADR gained 2%), OMC (HPCL, BPCL, IOC as oil price 2-month high) and Aviation stocks.
Watch on NTPC – Company’s board meeting on 30th Jan to consider bonus.
Brokers Radar – HDFC Bank CLSA BUY TGT 2730, JP Morgan BUY 2400. CLSA BUY ON L&T TGT 1700, CLSA BUY ICICI Lombard – BUY TGT 1040.
Lok Shabha election likely to be held on April and election outcome may announce next month (May) according by media news. In that prospect, market may wait watch of final outcome of Lok Shabha election. Traders buy on stock specific with strong fundamental like Reliance, Infosys, HDFC Bank, SBI, ICICI Bank, Dabur India etc.
Market trend will determine by Corporate results, Global market trend, movement of USDINR and oil price. This week major corporate results announcement – Kotak Bank (Monday), TVS Motors (Tuesday), Bharti Infratel, ITC, Pidilite (Wednesday), Biocon, Colgate, PNB Housing, PVR, UltraTech and Ye Bank (Thursday), Dewan Housing, Gruh Finance, L&T, m&m Fin, Maruti (Friday).
HDFC Bank reported inline with expected Q3 result and healthy loan growth. We have a buy rating on the stock. Healthy loan growth and improved other income helped HDFCB to report strong 3QFY19 PAT of INR55.9b (20% YoY) in line with our estimates. NII grew by 22% YoY to INR125.7b (in line) while margins were stable at 4.3%. PAT grew by 19.7%. Slippages stood at INR40b (2.04% annualized. GNPA/NNPA ratio increased by 5bp/2bp at 1.4%/0.4%.
Wipro reported better than expected Q3 results and improved EBIT which is margin highest in 13 quarters. Company announced bonus 1:3. We have a neutral rating on the stock. WPRO’s 3QFY19 CC revenue growth of 2.4% QoQ (+7% YoY) was in line with our estimate of +2.2%. Overall EBIT margin expanded 170bp QoQ/YoY to 18.4%, the highest in 13 quarters. PAT grew 11.3% QoQ (+12.9% YoY) to INR25.4b (3% beat).
L&T Infotech reported impressive Q3 results and better than expected EBITDA margin. We have a neutral on stocks. Company reported robust 3QFY19 results with revenues up 20.6% YoY constant currency (CC) (estimate of 18.1%). EBITDA jumped 58.3% YoY (estimate of 52%) and PAT grew 32.7% YoY (estimate of 23.4%).
Kajaria Ceramics reported better than street expectation of net profit and EBITDA margin. Highly beaten down stocks. Current valuation attractive. Company reported Q3 Revenue Rs7.59bn, up 15% yoy. EBITDA for the quarter grew by 9.9% yoy to Rs1.21bn. EBITDA margin better that expectation of (QoQ) at 15.9%. Net profit for the quarter grew by 19.3% yoy to Rs648mn.
NIIT Tech announced inline with expected Dollar term revenue growth and EBITDA margin. We have a neutral on the stock. 3QFY19 USD revenues grew 16% YoY to USD135m (in line), EBITDA grew 39% YoY to INR1,805m (estimate of 37% growth) and PAT grew 32% YoY to INR1,002m (estimate of 46% growth). PAT miss was mainly due to higher impact from forex and higher tax rate emanating from dividend paid by a subsidiary.
SBI Life reported lower than expected street estimates of Q3 results. Company reported gross premium income for Q3FY19 stood at Rs91.69bn, an increase of 34.5%. The net commission for Q3FY19 was Rs3.79bn, a rise of 21.4% yoy. Net profit after tax (PAT) for Q3FY19 lower than street estimates at Rs2.64bn, an increase of 15% yoy.
ICICI Lombard announced lower than street expected of Q3 results. Company reported gross written premium for the quarter came in at Rs37.69bn, up 25.6% yoy. The net profit of the company increased marginally by 3.2% yoy to Rs2.39bn in Q3FY19 on account of a significant increase in upfront expenses (acquisition cost) and increase in effective tax rate of the company during the quarter. The net profit reported below street estimates of Rs2.bn by 13%.
Market regulator rejected Larsen & Toubro’s Rs90bn share buyback on Friday. The construction and capital goods firm had proposed to buy back 6.1 crore shares at Rs 1,475 apiece comprising 18.72 percent of the company’s net worth and filed an application with SEBI on October 10, last year. The market regulator rejected the proposal citing a sharp rise in the debt-to-equity ratio if the buyback went through, according to L&T’s exchange filing –Not any impact its fundamental. We are positive on L&T.
Block deal – Philips Carbon (Sell) – FID FDS Mauritius Ltd F/IDE – Sell 1027k share at Rs187 a share. Tourism Finance (BUY) Third Edge Advisors LLP of 494k shares at Rs134 a share.
JSW Steel’s the U.S.-based diversified Harsco Corporation entered into a 10-year agreement to provide a range of mill services. Under the contract, Harsco will provide on site slag handling services to JSW plant in Maharashtra’s Dovili. – Positive for JSE Steel
Welspun Enterprises said that it has achieved financial closure for a four-lane road project in Maharashtra for bid cost of Rs 1,048 crore. – Positive for Welspun Enterprises
MOIL signed a memorandum of understanding with the Gujarat Mineral Development to take up joint exploration of manganese bearing area and to conduct mining operations in Gujarat – Positive
Vascon Engineers board approved to raise Rs 110 crore via non-convertible debentures which will be used to retire existing loan of Rs 83 crore with ECL Finance.- Positive
MPS approved investment of Rs 40 crore in its wholly owned arm MPS Interactive Systems.- – Positive
IDFC First Bank: the Reserve Bank of India approved V.Vaidyanathan as managing director, chief executive officer of the bank for three years with effect from Dec. 19 2018 – Positive
Hari Mundra resigned as the non-executive director of Ceat with effect from Jan. 29.- We are long term positive on Ceat
Shilpa Medicare (SLPA) has received the USFDA’s final approval for Imatinib Mesylate (g-Gleevec) used in Leukemia in the form of tablets. g-Gleevec is expected to open business opportunity of USD10-12m for SLPA in the US generics segment – Positive for Shilpa Medicare.
Lupin, Sun Pharmaceutical and Glenmark Pharmaceuticals are recalling various drugs from the U.S. market for a variety of reasons. As per the latest Enforcement Report published by the U.SFDA, Lupin is voluntarily recalling 55,000 vials and over 1.6 lakh boxes of anti-bacterial drug Ceftriaxone for injection in various strengths – Not a major impact on Lupin, Sun and Glenmark.
Indoco Remedies US FDA inspecting Goa plant -1 facility since day – Avoid
Surya Roshni wins orders of LED Street light for Rs456.7mn – Positive
Telecom stocks expected to pressure after a major threat from Reliance Jio. Supreme Court notice to tax department on Vodafone plea – Negative
Dhanlakshmi Bank reported poor Q3 results on account higher NPA. Company reported Q3 net profit Rs169mn (down 22% YoY), GNPA 8.11% vs 7.81% (QoQ) and NII 912mn (up 8.9% YoY)
EGM – Bank of India
Results – Coromandel International, GHCL, Hindustan Zinc, HUDCO, Just Dial, Kotak Bank, L&T Finance, NHPC, Supreme Petrochem, Union Bank and Zensar Tech.