Friday, January 19, 2018

Market Pulse
Key indices extended initial gains and hit fresh intraday high in morning trade. At 11.26 am IST, the Sensex was seen trading at 35,392.81 up 132.52 points, while Nifty is seen at 10,841.80 up 24.80 points  or 0.23%. Firmness in most Asian stocks and GST council in its latest meet slashing the tax rate on 54 services and 29 items and also simplifying return filing process for businesses boosted sentiment.

The S&P BSE Mid-Cap index was up 0.43%, underperforming the sentiment. The S&P BSE Small-Cap index was up 0.7% outperforming the sentiment.

The market breadth, indicating the overall health of the market, was positive. On the BSE, 1,388 shares rose and 976 shares fell. A total of 82 shares were unchanged.

Telecom stocks declined. Reliance Communications (down 2.89%), Tata Teleservices (Maharashtra) (down 3.77%), MTNL (down 0.57%) and Idea Cellular (down 0.79%) declined.

Bharti Airtel fell 0.91% after consolidated net profit fell 16.50% to Rs 560.70 crore on 12.93% decline in net sales to Rs 20318.60 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours yesterday, 18 January 2018.

Bharti Airtel's consolidated earnings before interest taxes depreciation and amortization (EBITDA) fell 11.5% to Rs 7587 crore in Q3 December 2017 over Q3 December 2016.

Shares of Bharti Infratel dropped 0.29%. Bharti Infratel is a provider of tower and related infrastructure and is a unit of Bharti Airtel.

Cement stocks were mixed. Shree Cement rose 0.42%. ACC (down 1.14%), Ambuja Cements (down 1.25%), and UltraTech Cement (down 1.62%) declined.

Grasim Industries advanced 0.2%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.

Healthcare Global Enterprises jumped 6.08% after the Reserve Bank of India (RBI) yesterday, 18 January 2018, notified that the foreign investment limit for investment by Foreign Portfolios Investors (FPIs) in the company has increased from 24% to 100% of its paid up capital. HealthCare Global Enterprises has passed necessary resolutions of its board of directors and general body.

Further, owing to the above increase in the investment limit, it is notified that the aggregate shareholding by FPIs in HealthCare Global Enterprises has gone below the prescribed FPIs investment limit for the company. Hence, the restrictions placed on the purchase of shares of the above company by FPIs are withdrawn with immediate effect.

Meanwhile, the Union Finance Minister Arun Jaitley Chaired the 25th meeting of the GST Council in New Delhi yesterday, 18 January 2018. The Council has recommended certain changes in GST/IGST rate and clarifications in respect of GST rate on certain goods as per discussions in the 25thGST Council meeting. It slashed the tax rate on 54 services and 29 items, including old and used motor vehicles bio-diesel, while also simplifying return filing process for businesses. Certain policy changes have also been recommended by the GST Council.

Overseas, most Asian stocks gained although losses on Wall Street slowed the advance. Investors continue to watch the latest US budget battle on Capitol Hill, where uncertainly over a possible partial government shutdown this weekend continues. Legislation to avoid a US government shutdown at midnight on Friday advanced in Congress as the House of Representatives on Thursday night approved an extension of federal funds through 16 February, although the bill faced uncertain prospects in the Senate.

US stock benchmarks finished lower yesterday, 18 January 2018, pressured by worries over the possibility of a partial government shutdown, as investors sorted through a fresh batch of quarterly earnings results.

First-time weekly jobless claims fell to a 45-year low, dropping by 41,000 to 220,000. Meanwhile, construction of new houses fell 8.2% in December to a 1.19 million annual rate. Permits for future construction were basically flat at 1.30 million. Still, permits, housing starts and the number of new homes completed all hit the highest levels since 2007. A gauge of Philadelphia-area manufacturing fell to five-month low of 22.2 in January, the Philadelphia Fed said.

Today's Calls: 
#Intraday Sell Hindalco Industries Ltd at around Rs,255-254, T: Rs.249, SL: Rs.256.6. Alternatively those who have entered the stock around Rs.79-81, on my recommendation couple of years back should book profit and exit the counter. You can again enter around Rs.228-229. The point is though global copper consumption is likely to be higher by about 3% and the capacities have been shut down in China because of environmental reasons while fundamentally demand is picking up; but in India we are also having imports into India from the ASEAN countries with whom India is having an FTA. This is putting a big challenge because of two-three reasons; one is that for the FTA countries, the duty has become zero on copper imports. The second, smelting business is a huge working capital intensive business and for example, the size of its Indian operations need about Rs.10,000 to Rs.15,000 crore of working capital. The cost of working capital in India is relatively higher compared to the developed or the ASEAN countries. For example, in Japan, it is almost zero and that really poses a big challenge for the Indian producers. This is likely to put pressure on Indian copper producers in the short term. Hence, book profits now and enter later when the things look a little from here.

#The shares of 3i Infotech Ltd (Rs.7.05) should get the final support in the range of Rs.6.75-7. In this global IT company who's who of the Indian Corporate world and big shots hold around 52.11% stake. The company came  out with good set of numbers for Q3FY18.
In absence of any negative news it seems those who entered earlier, at around Rs.5 is offloading their holdings, leading to the stock hitting the lower boundaries set by the exchanges. Fundamentals of a company cannot change so fast that it warrants, repeated LCs.  This is an investment grade scrip as it has large institutional investors, whose list is giving below, holding stakes:
Financial Institutions/Banks hold 31.61%,
Insurance Companies hold 1.63%,
Foreign banks hold 14.65%,
Reliance Capital holds 1.85%,
SREI Equipment Finance Ltd holds 1.01%,
Tata Capital Financial Services Ltd holds 1.75%,
MACSF Epargne Retraite hold 3% and
Energy Management hold 3%.
The Company recently announced that it has allotted 26,39,09,361 equity shares of Rs.10 each and 44,49,82,211 0.10% Cumulative Non-Convertible Redeemable Preference Shares of face value Rs.5 each ('Class B Preference Shares') at par on a preferential basis to Srei Multiple Asset Investment Trust, a category II alternative investment fund within the meaning of the Securities and Exchange Board of India (Alternative I.nvestment Funds) Regulations, 2012 (on behalf of or for appropriation to its scheme, Vision India Fund) on January 15, 2018. It is a board managed company like ITC Ltd, Subex Ltd, etc and doing fine under the current leadership. The stock would soon start hitting the upper circuits -- accumulate on declines. I am looking for targets of Rs.50-plus in the coming days. Start accumulating when the share price stabilizes, which I strongly feel will be around Rs.7.

#The stock of Federal Bank Ltd (Rs.102.40) is consolidating around the support of Rs.102-103. The company came out with good set of numbers for the Q3FY18, though there were some concerns regarding its asset quality. I am looking for a short term target of Rs.115-117. Federal Bank  Ltd is a private bank like ICICI Bank or HDFC Bank. Therefore, Stay Invested.

#The stock of Housing Development Infrastructure Ltd (Rs.60.60) is likely to find support around Rs.59-60 ranges. The company is in final stages of  negatiation with Union Bank of India. We can again look for targets of Rs.65-66, before the January,  '18 expiry. Those who have not exited at the stop  loss or have booked profit earlier, can accumulate around Rs.60.

#Investors can buy the stock of Jain Irrigation Systems Ltd at around Rs.132.5, for a short term targets of Rs.137-141. The Finance Minister is like to give a thrust on the agriculture sector in the upcoming union budget; the said recommendation is based on that premise.

~~ with inputs from Capital Market - Live New
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