Closing bell: Sensex, Nifty tanks 0.4% on US-China trade stand-off; IT, Tech stock rally amid blood on Dalal Street
On account of continued Sino-US trade stand-off, the Indian indices extended its bear rally on Monday. The BSE Sensex corrected 151 points to 36,395 levels while the 50-stock Nifty went down by 54 points to 10,888 levels. Ater fresh buying in the IT and Tech stocks the indices pared some early losses as the sensitive index was once down by near 250 points. IT major MindTree went up by 2.6 per cent, NIIT Techs tock surged by 1.1 per cent, Oracle Financial Services shares went up by 1.6 per cent, Rolta India surged by 4.75 per cent, Subex stocks surged by near 5 per cent while `Xchanging Solutions counter registered gains of more than 4.5 per cent.
Speaking on the market outlook in near future Simi Bhaumik, SEBI registered technical equity analyst told Zee Business, "In my view the markets is range bound in 10,800 to 11,200 and bear or bull run can be decided when any of the bracket is broken." She said that for upward trend the Nifty needs to close above 11,000 levels for at least two successive trading sessions.
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Realty stocks follow blood bath at Dalal Street
Following the heavy sell off at the Indian indices, the real estate stocks too succumb to the heavy sell-off pressure. Shares of IndiaBulls Real Estate plunge by 3.4 per cent, DLF shares went down by 1.3 per cent, Shobha Developers went down by 2.1 per cent while Godrej Properties went southward by more than 3 per cent. Shares of Oberoi Realty and Phoenix Mills too corrected by more than half a per cent.
Buy Aurobindo Pharma for 22% gains, advises Elara Securities
Aurobindo Pharma reported strong revenue growth of 22% YoY across segments. Adjusted for one-offs of around Rs 500mn in gross margin, EBITDA was above our estimates. US sales stood at $339mn, up 6.6% QoQ, against our estimates of $325mn, led by new launches (gEtrapenem), new orders, gValsartan shortages and improved volume in the base business. EU sales grew 10.3% YoY while RoW and ARV sales grew by 36% YoY and 18% YoY, respectively. GM contracted 240bp QoQ to 54.6%, given the change in product mix (140bp) and the rest were one-time expenses (100bp) related to supply failure charges. R&D cost came in higher at Rs 2.5bn, up 56% YoY (4.7% of sales) on higher filing for injectables. The tax rate was lower at 22%. There was forex gain of Rs 505mn. As a result, reported PAT was at Rs 7.3bn vs our estimates of Rs 6.7bn.
On suggestion to the market investors in regard to Aurobindo Pharma counter Param Desai, Analyst at Elara Securities told, "the fundamentals of the scrip shows an upside potential for 22 per cent. We recommed market investors to buy the stock for the target of Rs 925 per stock levels." Curently, the scrip is oscillating in the vicinity of Rs 761/shares levels.
Power index bleeds heavily
Led by Suzlon Energy, power index at the BSE Sensex is bleeding heavily. Shares of Suzlon Energy have lsot over 7 per cent from its Friday close. Tata Power stock too has gone down by near 2.5 per cent, Siemens stocks have crashed by more than 3 per cent, shares of NTPC and NHPC have gone down by 2 per cent and 2.5 per cent respectively while GMR Infra and Adani Power have witnessed correction of more than 4 per cent.
Buy Majesco for 52% gains, advises HDFC Securities
Majesco delivered decent performance in third quarter both on revenue and margin front. Revenue grew 4.0% QoQ to $35.4mn (against our estimated $35.3mn) led by cloud traction (+51.5% QoQ, 42% of rev) and $1.4mn contribution from Exaxe (organic flat QoQ). Growth in cloud implementation (+17.1% QoQ, 30% of revenue) is offsetting the impact of legacy shrinkage (-16% YoY in 9M). EBITDA margin improved 648bps YoY to 11% (against our estimates of 11.7%) led by growth in higher margin cloud subscription revenue. The 12-month executable order book increased 15.7% QoQ CC to $87.2mn (against $75.4mn QoQ) led by cloud deal wins ( around80% of order book is cloud).
On suggestion in regard to the counter a combined report send by Amit Chandra & Apurva Prasad, Analyst at HDFC Securities conveys that the counter has an upside potential for around 52 per cent. The report suggests markeet investors to take buy position in the stock for the target of Rs 761. Currently, the stock is oscillating around Rs 498 per counter levels.
Buy Cadila Healthcare for 34% gains, advises IndiaNivesh Securities
Cadila reported Q3 results above our estimates, driven by strong growth in the US (up 47% QoQ), boosted by Androgel AG, Asacol HD, and other new launches, coupled with growth from emerging markets (up 14% QoQ). As per management guidance, the strong US pipeline would support its US generics business; management believes there is a lot of scope to improve cost rationalization, supply chain efficiency, and increased productivity. FY20 onward, the next growth driver in the US will be the specialty business. The company is restructuring its domestic business by focusing more on therapies like CVS and Gastro, as the other therapies are stable; it also expects MR efficiency to increase from next quarter onward. We project a margin compression of 100bps YoY to 23.5% for FY19E, mainly due to lower US sales and expect FY20 to be a better year.
On what should be her suggetion in regard to the counter for market investors Sapna Jhawar, Senior Research Analyst - Pharmaceuticals at IndiaNivesh Securities told, "The fundamentals of the stock gives indication of around 34 per cent upside potential. An investor can buy the stock for the target of Rs 433." The counter is currently oscillating around Rs 322 levels.
Buy ACC Limited for 15% gains, advises Narnolia Financial Advisors
ACC cement volumes are gradually growing in the past few quarters. In the last quarter, company posted volume growth of 8% YoY. Demand growth of cement is expected to remain in the range of 7-8% for upcoming quarters considering short term headwinds like general elections and slow pace of growth in urban housing sector. The management of the company is bullish on the recent budget which indicates further boost in infrastructure activities (railways, roads, highways and irrigation projects). On the margins front, company’s realization in cement has grown by 2% on YoY basis in the last quarter and lower crude oil price in month of December 2018, helps the company to marginally lower its power and fuel cost. Considering lower crude oil prices, power and freight cost is expected to go down further, which will help to company to control its cost in upcoming quarter. We expect revenue and PAT to grow at CAGR of 10% and 15% respectively over FY18-20e.
On suggstion for the building material counter Aditya gupta, Analyst at Narnolia Financial Advisors told, "Fundamentals of the counter sugggests an upside potential for 15 per cent. An investor can take a buy position in the stock for target of Rs 1638." The counter is hovering around Rs 1421 per counter levels.
Auto stock continue to bleed
Heavy sell-off in the auto stock continues on Monday. Tata Motors stock was down by around 2 per cent, TVS Motors was down near 1.5 per cent, Mahindra and Mahindra stock got hit by more than 2.5 per cent, Hero MotoCorp slide by more than 2 per cent, Eicher Motors is down by more than 1.5 per cent while stocks of Bharat Forge is down by near 1 per cent.
Buy Birla Corporation for 67% gains, advises Elara Securities
Birla Corporation reported a consolidated EBITDA of Rs 2.07bn against our and the Street’s expectations of Rs 2.20bn and INR 2.17bn, respectively. Revenue increased by 12% YoY to Rs 15.6bn. EBITDA margin expanded 380bp to 13.3% due to higher prices. The company posted an adjusted net profit of Rs 274mn vs a net loss of Rs 218mn in the past year. Consolidated sales volume was up 8% YoY and 5% QoQ at 3.2mn tonnes. In Q3, volume growth shrank because of kiln shutdown at all three integrated plants. Blended cement sales accounts for 89% total sales volumes vs 87% in the previous quarter and 85% in the past year. The company plans to undertake the following measures to bring down cost: 1) setup a 12.25-MW waste heat recovery plant at Maihar in Madhya Pradesh (MP). The plant is expected to come on stream by Q1FY20, 2) setup three solar power plants in three different locations: 11MW plant at Maihar, 3.6MW plant at Chanderia in Rajasthan & 1.2MW plant at Satna in MP, 3) ramp-up production at a captive coal mine at Sial Ghogri in MP, and 4) wagon loading platform at Kudanganj in Uttar Pradesh.
On suggestion for the investors in regard to this counter Ravi Sodah, Analyst at Elara Securities told, "Fundamentals of the counter suggests an upside potential of 67 per cent. An investor can buy the stock for the target of Rs 800 per stock." The counter is revolving around Rs 478 per stock levels.
Buy Minda Industries Limited for 19% gains, advises Narnolia Financial Advosors
Minda Industries has continued its growth streak and reported stellar quarterly performance with 39% YoY revenue growth. EBITDA margin remained flat on sequential basis as increasing premium products demand was offset by rising commodity cost pressure. he group restructuring is expected to complete by 4QFY19 and there will be organic growth only after then, which may also result in some softness in revenue growth and margin expansion. The debt has increased due to green field capacity and recent group consolidation activity. However, it will be a key focus area for the company and the management will continue to keep D/E under check.
On suggestion for the investors in regard to the auto counter Naveen Kumar Dubey, Research Analyst at the Narnolia Financial Advisors informed in a detailed research report that says, "The counter is fundamentally positive and shows an upside potential for 19 per cent. An investor can take a buy position in the stock and book profit at around Rs 348 per share levels." The counter is oscillating around Rs 292 per stock levels.
Asian markets on backfoot
Asian shares started the week on the backfoot as investors were unable to shake off worries about global growth, U.S. politics and the Sino-US trade war, keeping the safe-haven dollar well bid near a six-week top against major currencies.
Chinese shares see-sawed on Monday after they resumed trading following a week-long Lunar New Year holiday. The blue-chip index was last up 0.4 per cent, Australian stocks were down 0.6 per cent while South Korea eased 0.2 per cent.
That left MSCI`s broadest index of Asia-Pacific shares outside Japan off 0.1 per cent after it was toppled from a four-month top on Friday.
Trading volumes are expected to be light with Japan on public holiday.
Investors are now looking ahead to trade talks this week with a delegation of US officials travelling to China for the next round of negotiations.