12 November 2018
Expect market to open on a flat note on account of global cues. Asian markets recovered from the intra-day low after a weak opening. Nikkei, Hong Kong, China Index bounced back into positive territory. Hong Kong Index is up by half percent. SGX Nifty currently declined by 17 points. US Future gained 0.2%.
US market declined in the last two consecutive days, concern of slowdown China economy. In India, It will be a big positive after a fall in oil price to 7-month low at $71/bbl which is a backbone of our economy. India import over 80% oil. However, oil price recovered over 1% to $71/bbl after Saudi announced to cut 5lakh barrel oil exports. Brent Crude declined from $87/bbl to $71/bbl in the last few sessions
Ahead of state election, it will be benefit to common man on account of continued declined petrol and diesel price in the last few days. Traders always keep in mind that Indian economy more depended of oil price and also political/ election menu. Opposition parties one of the key agenda to highlights of increase Petrol and diesel price. So recent fall likely to benefit to the ruling party and may positive for state election outcome.
Oil marketing companies and Aviation stocks expected to be momentum – Brent Crude fell to 7-month low at below $71/bbl will be positive for the oil marketing companies and aviation stocks. OMCs fell 40-50% from the recent peak and current fall expected to big opportunity to buy OMCs (HPCL, BPCL and IOC) and Aviation stocks – IndiGo. Moreover, USDINR fell to 73.49 against the previous close which also added more benefit to OMCs. It is expected that the slowdown OF China economy may further weakness in the oil price.
State election is knocking the door. Chhattisgarh first phase of state election will be held tomorrow. MP, Mizoram, Rajasthan will held next few months and results outcome will be announce next month. It is important for the market because next year will Loak Sobha election. Expectation of tractors stocks (Escorts, M&M) may benefit after both parties announced benefit to the farmers ahead of state elction.
This week is important for the market. Indian important economy data and quarterly results will be derive the market trend. Among the economy data like CPI and IIP data (12th Nov), WPI (14th Nov) and Trade Balance (15th Nov). Sun Pharma, Coal India, Aurobindo Pharma and Eicher Motor will be announced today.
Titan reported lower than expected Q2 results on account of higher operating cost while Income inline with expectation. We have a buy rating on the stock. Company reported Q2 bet profit Rs3.14bn (up 13% YoY) and income Rs43.5bn (up 24% YoY) – expectation Rs41.9bn.
Watch on Jet Airways – Company’s Q2 results and board meeting today. Market expectation that the company may sale its stake to cut debt.
Himadri Chemical, Union Bank Q2 results and board meeting today for requirement of additional capital.
BEML has Rs20.99bn of FY19 executable order book as of September 30, Rs40.38bn order book to be executed after end of order.
India Cement reported inline with expected Q2 result, higher fuel and raw materials cost impacted bottomeline. Company reported Q2 net profit Rs14.3mn vs Rs237mn – expectation Rs117mn and income Rs13.9bn (up 9.4% YoY) – Expectation Rs13.9bn.
Tata Motors Says Jaguar Land Rover Sales Fall in October – Jaguar Land Rover reported retail sales of 44,282 vehicles in Oct., down 4.6% y/y. Retail sales rose 46.9% in the U.K. and 24.1% in North America. Sales in China decreased by 49% as market conditions remain challenging amid tariff changes and continued trade tensions with the U.S. Europe sales declined 13.5% due to ongoing diesel uncertainty and fell 4% in overseas markets – China sales declined is a concern. However, domestic volumes continued improved. We are long term positive on Tata Motor.
Sobha Ltd better than street estimates of Q2 results. Company reported Q2 net profit Rs614mn, up 22% YoY, EBITDA Rs1.4bn (up 12% YoY), EBITDA margin 21.3% (up 198bps) and Income Rs6.59bn (up 2% YoY).
Mphasis acquires Stelligent Systems for Rs1.75bn in all-cash deal – Stelligent provides DevOps and DevSecOps solutions on Amazon Web Services (AWS) and is headquartered at Reston, Virginia.- Positive for Mphasis.
NHPC board to consider buyback of equity shares proposals on November 14 – Positive.
Indian Bank reported poor Q2 results. Higher NPA is a concern. However, current valuation is attractive buy. Company reported Q2 net profit Rs1.5bn (down 67% YoY) – Expectation Rs2.93bn, GNPA 7.16% (Expectation 7.2%) vs 7.20% (QoQ), NPA 4.23% vs 3.8% (QoQ) – expectation 3.7% and NII Rs17.3bn – expectation Rs16.7bn, provision Rs10bn vs Rs10.30bn- expectation Rs8.05bn.
Amara Raja Batteries reported better than expected Q2 results and marginally ahead of EBITDA margin. We have a buy rating on the stocks. Company reported Q2 net profit Rs1.2bn (down 5.4% YoY) – Expectation Rs1.03bn, other income Rs142mn vs Rs122mn (YoY) , EBITDA margin at 13.5% while expectation 13.2% sales Rs17.5bn (up 22.8% YoY) – expectation Rs16.1bn.
Hindustan Aeronautics Ltd (HAL) reported good quarterly results (not our coverage). Company reported Q2 net profit Rs2.89bn (up 326% YoY) , EBITDA margin 20% vs 5.3%, EBITDA Rs5.23bn (up 317% YoY) and income Rs26.1bn (up 10% YoY).
WPIL Q2 net profit Rs206.5mn (down 24% YoY) – Avoid poor Q2 result.
Dividends – HEG, Monsanto India.
Results – Aurobindo Pharma, Balmer Lawrie, Bank of India, Britannia, Coal India, Eicher Motor, Godrej Industries, Greenply Industries, Gulf Oil, Himadri Specialty, HCC, IOB, Jain Irrigation, Jamna Auto, Jet Airways, Jindal Saw, KNR Construction, La Opala, MMTC, National Aluminum, New India Assurance, Oil India, OBC, PTC India, RCF, Shree Cement, SJVN, Star Cement, TN Newsprint, UCO Bank, Union Bank, Va Tech and Vardhaman Textiles.