Thursday, January 18, 2018

Market Pulse
Firmness persisted on the bourses in mid-morning trade on sustained buying demand in index pivotals. At 12.21 IST, the Sensex is seen at 35,450.27  up 368.45 points or 1.05%, while the NSE was trading at 10,870.70 up 82.15 points or 0.76%.

Gains were triggered on reports indicating that the government is mulling a proposal to hike foreign direct investment (FDI) limit in the banking sector. Positive Asian stocks also underpinned sentiment.

Domestic stocks saw gap-up opening following positive Asian cues. Stocks held firm in morning trade after the Sensex and the Nifty hit fresh record high levels in morning trade.

The S&P BSE Mid-Cap index was off 0.17%. The S&P BSE Small-Cap index was up 0.36%. Both these indices undeperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On the BSE, 1,382 shares rose and 1,244 shares fell. A total of 124 shares were unchanged.

Overseas, Asian stocks extended this year's stellar run, following their US counterparts higher amid optimism for global growth. US stocks rose to fresh highs yesterday, 17 January 2018 as companies continued to indicate the tax overhaul will boost earnings this year. The Dow Jones Industrial Average staged a late rally to end above 26,000 for the first time ever.

The Fed's Beige Book indicted that the outlook for 2018 remains optimistic for a majority of contacts across the country. As for the much vaunted tax cuts, only businesses in Chicago and Dallas were excited over the Republican tax plan, while districts along the East Coast were worried about higher taxes from the new limits on deductions for mortgage interest and property and state income taxes, reports indicated.

Back home, private bank stocks led gains among banking stocks on reports the government is mulling a proposal to allow 100% (foreign direct investment) FDI in private banks. Increasing the permissible limit for FDI in public sector banks to 49% from the current 20% is also being considered, reports indicated. Raising the permissible limit for FDI in the banking sector could reportedly improve services and help meet minimum capital requirements. At present, FDI of up to 49% is allowed in private banks without the permission of the government, and upto 74% can be invested with the government's approval.

Among private bank stocks, HDFC Bank (up 2.85%), Kotak Mahindra Bank (up 0.96%), RBL Bank (up 1.16%), ICICI Bank (up 1.02%) and IndusInd Bank (up 2.92%) gained.

Yes Bank advanced 3.15% ahead of its Q3 December 2017 result today, 18 January 2018.

Axis Bank rose 1.54% after the bank hiked its lending rates based on marginal cost of funds based lending rate (MCLR) by 5 basis points across all tenors with effect from 18 January 2018. The announcement was made after market hours yesterday, 17 January 2018.

Axis Bank said that the bank's MCLR for overnight loans will be 7.85%, for one month will be 7.85% and for three months will be 8.05%. The MCLR on 6-month loans will be 8.2% and for one-year loans the rate would be 8.3%, the bank said. MCLR for two-year loans would be at 8.35% and loans with three-year maturity would carry an MCLR of 8.4%, the bank said.

Among PSU bank stocks, Dena Bank (up 3.52%), UCO Bank (up 1.75%), Punjab National Bank (up 0.71%), Bank of Baroda (up 0.52%), IDBI Bank (up 1.4%) and Union Bank of India (up 0.14%) rose. Canara Bank (down 0.8%) and Bank of India (down 1.48%) fell.

State Bank of India (SBI) rose 1.22% after the bank said that the executive committee of central board (ECCB) approved the proposal for issuance of long term bonds of Rs 20000 crore for financing of infrastructure and affordable housing in domestic and overseas market in FY 2017-18 and FY 2018-19. The announcement was made after market hours yesterday, 17 January 2018.

Most FMCG stocks rose. Dabur India (up 1.17%), Godrej Consumer Products (up 3.1%), Marico (up 0.71%), Nestle India (up 0.44%), Britannia Industries (up 0.44%), GlaxoSmithkline Consumer Healthcare (up 0.57%), Colgate-Palmolive (India) (up 0.32%) and Jyothy Laboratories (up 3.13%) rose. Tata Global Beverages (down 0.1%), Procter & Gamble Hygiene and Health Care (down 0.31%) and Bajaj Corp (down 0.5%) fell.

Hindustan Unilever (HUL) slipped 0.19% to Rs 1,369.20. The stock was volatile. It hit high of Rs 1,405 so far during the day, which is also a record high for the counter. The stock had hit a low of Rs 1,366.60 so far during the day. HUL's net profit rose 27.7% to Rs 1326 crore on 10.8% increase in net sales to Rs 8323 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours yesterday, 17 January 2018.

HUL's earnings before interest, tax, depreciation and amortization (EBITDA) rose 24% to Rs 1680 crore in Q3 December 2017 over Q3 December 2016.

HUL's chairman Harish Manwani said that the company delivered another strong performance in the quarter, with broad based growth across categories and further improvement in margins. HUL remains positive about the mid-term outlook of the industry and will continue to invest strongly in its core brands and developing categories of the future. There are early signs of commodity cost inflation and the company will further sharpen its focus on cost effectiveness programs and manage its business dynamically for competitiveness and sustained profitability.

Varun Beverages rose 1.26% after the company said that its board approved to acquire franchisee rights for PepsiCo India's previously franchised sub-territory in Bihar. Upon completion of this acquisition, Varun Beverages will be a franchisee for PepsiCo products across 20 states and 2 Union Territories of India. The announcement was made after market hours yesterday, 17 January 2018.

Thirumalai Chemicals rose 6.53% after consolidated net profit rose 241.02% to Rs 51.46 crore on 39.27% increase in net sales to Rs 345.62 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours yesterday, 17 January 2018.

Today's Call
#Buy 25th January, Expiry option of Rs.110 of Federal Bank Ltd at Rs.1, for a target of Rs.1.5. As mentioned above, the government is mulling a proposal to allow 100% (foreign direct investment) FDI in private banks. Increasing the permissible limit for FDI in public sector banks to 49% from the current 20% is also being considered, reports indicated. Raising the permissible limit for FDI in the banking sector could reportedly improve services and help meet minimum capital requirements. At present, FDI of up to 49% is allowed in private banks without the permission of the government, and upto 74% can be invested with the government's approval.
Brokerage firm Sharekhan said, "Performance of Federal Bank was a mixed bag with strong net interest income (NII) growth of 20 per cent y-o-y in Q3 FY2018, but high slippages. Federal Bank's results were impacted by weak asset-quality performance which eclipsed an otherwise reasonable operating performance. Going forward, we expect the growth trajectory and higher asset utilisation to aid the bank's return ratios. As overall demand improves in the Indian economy, credit offtake (aided by low interest rates) would be conducive to well-managed players such as Federal Bank. We maintain our Buy rating on the stock with a revised price target of Rs 135." 
Money Control writesThe knee jerk reaction in the stock post results and the near-term weakness is an opportunity to accumulate as the bank seems to be doing a decent job on most other parameters.
If you are buying the shares of Federal Bank, then you can do the same at around Rs.104, for a short term target of Rs.115. SL: Rs.101.

#Accumulate the shares of 3i Infotech Ltd at Rs.7.45 for targets of above Rs.50. The company offlate has been doing excellently well.

#Intraday BUY ZINC at around Rs.217.70, SL below Rs.217.00, T: Rs.219.00. Zinc prices edged up to their highest in more than a decade, supported by potential shortages and low inventories, but some investors voiced concern about the lofty levels. Three-month zinc on the London Metal Exchange was up 1.3% at $3,426 a metric ton in official midday trading on Monday, having earlier touched a peak of $3,440 a ton — its highest since August 2007, Reuters reports.

~~with inputs from Capital Market - Live....
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