Wednesday, March 14, 2018

Market Pulse
Key benchmark indices made a partial recovery in afternoon trade after hitting intraday lows in early afternoon trade. At  2.18 IST, the BSE Sensex was trading at 33,706.76 down 150.02 points or 0.44%, while the Nifty was seen at 10,367.30 down 59.55 points or 0.57%.

The market sentiment was impacted after the Reserve Bank of India (RBI) banned letters of undertaking (LoUs) for seeking overseas loans. Negative Asian stocks also weighed on the sentiment on the domestic bourses.

Domestic stocks began trading on a subdued note on negative Asian stocks. Key benchmark indices hovered in negative zone in morning trade. Indices extended fall and hit fresh intraday lows in early afternoon trade.

The S&P BSE Mid-Cap index was up 0.04%. The S&P BSE Small-Cap index declined 0.15%. Both these indices outperformed the Sensex.

The breadth, indicating the overall health of the market, was negative. On the BSE, 1,464 shares declined and 1,038 shares advanced. A total of 139 shares were unchanged.

IT stocks were mixed. Wipro (down 0.46%), Persistent Systems (down 0.37%) and Infosys (down 0.3%) edged lower. Tech Mahindra (up 2.24%) and Oracle Financial Services Software (up 0.43%) edged higher.

IT major TCS lost 0.26%. Tata Sons sold 3.12 crore shares, or 1.63% equity, of TCS in two separate bulk deals on NSE yesterday, 13 March 2018. Tata Sons offloaded 2.05 crore shares at Rs 2,876.46 each. Another 1.06 crore shares were sold at Rs 2,872.19 each. As on 31 December 2017, Tata Sons held 73.52% stake in TCS.

HCL Technologies was up 0.51% after the company announced the opening of its dedicated state-of-the-art technology development center, Lab 21, showcasing the deep collaboration, investments, and advocacy on Microsoft AI platform/Cortana Analytics in the Azure Cloud. The announcement was made during market hours today, 14 March 2018.

Capital goods stocks were mixed. Suzlon Energy (down 1.04%), ABB India (down 0.44%), Bharat Electronics (down 0.36%) and Bhel (down 0.35%) edged lower. Thermax (up 0.78%), Siemens (up 0.16%) and Havells India (up 0.98%) edged higher.

L&T fell 0.31%. The company announced that its wholly owned subsidiary viz. L&T Hydrocarbon Engineering, has won orders worth above Rs 1600 crore across various business segments. The announcement was made during market hours today, 14 March 2018.

Meanwhile, the Reserve Bank of India (RBI) in a press release issued yesterday, 13 March 2018 said that on a review of the extant guidelines, it has been decided to discontinue the practice of issuance of Letters of Undertaking (LoUs)/Letters of Comfort (LoCs) for Trade Credits for imports into India by Authorised Dealer Category - I banks with immediate effect. Letters of Credit and Bank Guarantees for Trade Credits for imports into India may continue to be issued.

Overseas, Asian stocks declined following an overnight slide in US equities after fresh personnel shakeup in the US President Donald Trump's administration spurred concerns about a unilateral approach to trade, national security and foreign affairs.

Among economic data, Chinese industrial-production, fixed-asset investment and retail sales data showed the economy grew much faster than expected in the first two months of 2018. China releases combined data for January and February to limit distortions caused by the Lunar New Year holiday, which was in January last year but February this year.

Value-added industrial output, a rough proxy for economic growth, expanded by 7.2% in January and February from a year earlier, compared with a 6.2% on-year increase in December, the National Bureau of Statistics said today, 14 March 2018. Industrial production rose 0.57% on-month in February, compared with December's 0.52% growth.

Fixed-asset investment outside rural households climbed 7.9% in the first two months of 2018 from a year earlier, quickening from a 7.2% increase in 2017. Retail sales grew 9.7% on-year in January and February, accelerating from a 9.4% rise in December.

Minutes from the Bank of Japan's January meeting, released today, 14 March 2018 showed that some board members warned the central bank should keep a close eye on unexpected side effects from the current monetary policy.

US equities fell in choppy trade yesterday, 13 March 2018 after tech shares pulled back amid concerns trade tensions between the US and China could increase. The sudden firing of US Secretary of State Rex Tillerson took some by surprise less than a week after top economic adviser Gary Cohn resigned from the White House. US President Donald Trump has nominated CIA director Mike Pompeo, an ex-congressman, to replace Tillerson.

The consumer-price index rose a mild 0.2% in February after a 0.5% increase in January. The year-over-year rate for CPI edged up to 2.2% in February from 2.1% in January.

Today's Calls:
#Videocon Industries Ltd hit another buyer freeze at Rs.15.40. The stock has been hitting the UCs since it was recommended to the Premium Group members at around Rs.12.75. 

#Tomorrow at 9.15 am be ready with cash -- I will recommend a Small Cap Company. If the circuit is open, then buy it immediately -- this information is for all the Premium Group Members.

#The stock of Hindustan Oil Exploration Company Ltd made an intraday high of Rs.111.70. Book some profits and wait for dips to enter, for the next target of Rs.117. 

#The shares of my STRONGLY recommended Sri Adhikari Brothers Television Network Ltd  has hit the buyer freeze at Rs.19.25. Those who could not buy the shares of TV Vision Ltd (Rs.17.25), should look to enter the scrip now, when it is out of the upper circuits. This is a sure shot call, which will give you at least some returns over a period. 

#Positional BUY: Biocon Ltd at around Rs.603-604, SL: Rs.582; T: Rs.640.  India Infoline Wrote on 25 January, '18
For Q3FY18, Biocon’s revenue and EBITDA were ahead of our expectations due to 15% and 22% sequential growth in Syngene and Biologics business. Consolidated revenue of Biocon grew by 2% yoy to Rs1,058cr, EBITDA declined by 19.7% yoy to Rs221.7cr. EBITDA margins were at 21% vs. 26.6% in Q3FY17. PAT declined by 46.4% yoy to Rs91.9cr. The revenue and profitability was impacted due to headwinds in its small molecules business, pricing pressure in the US market and lower licensing and other income. The conference call highlighted that exciting times are ahead, as biologics and research businesses have continued to see improved outlook. Over next 12 month period, Biocon along with its partner Mylan, expects approval for 4-5 biosimilar assets, while research business is expected to come back to sustainable doubled digit growth trajectory. Biocon, by launch of its biosimilar assets, is best placed to see multifold PAT growth over next five years.   
Concall Highlights:
1. Biocon’s statins business continues to face headwinds due to channel consolidation, immune-suppressants continue to see sustained demand.
2. Biologics business revenue was impacted due to the lower licensing income, adjusted for which, biologics revenue grew by 16% yoy.
3. Biosimilars space remains most attractive due to (a) signing of partnership agreement with Sandoz to develop and manufacture next generation biosimilars in immunology and oncology, (b) approval to 4-5 biosimilars co-developed under Biocon-Mylan partnership in 2018 across US and EU, (c) approval to Pegfilgrastim in US expected in H1FY19 with launch expected by late 2018 or early 2019, (d) expected pick up in biosimilar revenue in EMs due to requalification activities at its Bangalore facility, (e) Trastuzumab approval by USFDA and ANVISA and acceptance of resubmission of Marketing Authorization Application Trastuzumab and Pegfilgrastim by European agency. 
4. Insulin business has also seen several positives like (a) approval to recombinant human insulin by Brazilian drug regulator (current market size of $100mn), (b) approval to Insulin Glargine in Russia and three Ems, launch is expected later in 2018, (c) Insulin Glargine approval in the US should take some time due to the 30-month regulatory, which ends in March 2020, (d) stage II/III clinical trials have commenced for Insulin Tregopil in India post the DGCI approval. 
5. Branded formulations business in India/UAE clocked 27% yoy growth. Krabeva (oncology biosimilar in India) has received encouraging response. UAE business continues to remain strong.
6. Research business has continued to recover in the quarter with 17% yoy growth, Bristol-Myers Squibb (BMS) research agreement expanded until 2026 with additional R&D set up opportunity for Syngene.
7. Biocon has consolidated all its biosimilar assets under new entity Biocon Biologics Limited, management has indicated of possible listing of this business for value unlocking and raising funds to develop new biosimilars, the timeline remains uncertain.
8. Next year company expects to spend Rs100cr as maintenance capex and has announced a fresh capex of $150-170mn to construct a new antibody plant over FY19-20E.  
 #Those who are holding the shares of RattanIndia Power Ltd (Rs.6.80) should continue to add on declines. It is worth mentioning here that RattanIndia Infrastructure Ltd (Rs.5.85) has been hitting upper circuits since some days.

#Positional Buy ALUMINUM at around Rs.137, SL below Rs.134, Targets: Rs.142 -145 (TILL EXPIRY)....

#Join the Premium  Service or trade through my recommended brokerage house with a minimum portfolio size of Rs.3 lakhs to stay ahead of other. This blog only gives an outline of what is sent to Premium Members and hence if you want a complete guidance, then you need to look for Paid Subscription based Service. Tomorrow, I will recommend a small cap momentum counter, to the Premium Group members and also to those who trade through my associate brokerage house.  Keep watch!!

~~ With inputs from Capital Market - Live News....

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