WINNING STROKES

IT Sector was buoyant today

Key benchmark indices settled with modest losses led by decline in index pivotals Reliance Industries, ITC and HDFC. However, gains in Infosys, TCS and ICICI Bank cushioned steep losses on the bourses. The barometer index, the S&P BSE Sensex, fell 72.46 points or 0.21% to settle at 34,771.05. The Nifty 50 index fell 41.10 points or 0.38% to settle at 10,700.45.

Bank stocks edged lower. Metal and mining stocks dropped. Realty stocks declined.

Indices opened with small gains and hovered in the positive terrain near the flat line till morning trade. Stocks slipped into the red in mid-morning trade but soon pared losses. The market once again reclaimed positive terrain in early afternoon trade, however, once again drifted lower in afternoon trade. Indices slipped into the red again after staging recovery in mid-afternoon trade. Indices swung between gains and losses in late trade.

The Sensex lost 72.46 points or 0.21% to settle at 34,771.05, its lowest closing level since 12 January 2018. The Sensex rose 92.52 points or 0.27% at the day's high of 34,936.03 in morning trade. The index fell 107.96 points or 0.31% at the day's low of 34,735.55 in mid-afternoon trade.

The Nifty 50 index lost 41.10 points or 0.38% to settle at 10,700.45, its lowest closing level since 12 January 2018. The Nifty gained 20.80 points or 0.19% at the day's high of 10,762.35 in morning trade. The index declined 53.70 points or 0.5% at the day's low of 10,687.85 in mid-afternoon trade, its lowest level since 12 January 2018.

Among the secondary indices, the S&P BSE Mid-Cap index fell 1.74%. The S&P BSE Small-Cap index dropped 2.21%. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 7648.82 crore, higher than turnover of Rs 5271.95 crore registered during the previous trading session.

The broad market depicted weakness. There were more than three losers for every gainer on BSE. 2,223 shares declined and 749 shares rose. A total of 119 shares were unchanged.

Index heavyweight Reliance Industries lost 2.54% to Rs 923.50.

Index heavyweight and cigarette major ITC dropped 2.06% to Rs 261.75.

Index heavyweight and housing finance major HDFC fell 1.14% to Rs 1,848.70.

Bank stocks edged lower. Among PSU bank stocks, IDBI Bank (down 5.24%), Syndicate Bank (down 4.41%), Central Bank of India (down 1.67%), Andhra Bank (down 3.84%), State Bank of India (SBI) (down 2.02%), Punjab National Bank (down 4.03%), Bank of Baroda (down 4.27%), Canara Bank (down 4.39%), Bank of India (down 3.65%) and Union Bank of India (down 2.19%) fell.

Among private bank stocks, Axis Bank (down 0.35%), RBL Bank (down 1.46%), Yes Bank (down 0.61%), Kotak Mahindra Bank (down 0.63%) and IndusInd Bank (down 0.69%) fell. ICICI Bank (up 1.43%) and HDFC Bank (up 0.48%) rose.

Federal Bank lost 7.51%. The bank's net profit rose 26.43% to Rs 260.01 crore on 6.76% growth in total income to Rs 2729.83 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours yesterday, 15 January 2018.

The bank's ratio of gross non-performing assets (NPAs) to gross advances stood at 2.52% as on 31 December 2017 as against 2.39% as on 30 September 2017 and 2.77% as on 31 December 2016. The ratio of net NPAs to net advances stood at 1.36% as on 31 December 2017 as against 1.32% as on 30 September 2017 and 1.58% as on 31 December 2016.

The bank's provisions and contingencies rose 2.27% to Rs 162.43 crore in Q3 December 2017 over Q3 December 2016.

Metal and mining stocks dropped. Steel Authority of India (down 5.99%), Bhushan Steel (down 5.07%), Vedanta (down 2.7%), Tata Steel (down 2.16%), NMDC (down 3.82%), Hindalco Industries (down 2.4%), JSW Steel (down 1.32%), Hindustan Zinc (down 2.06%) and National Aluminium Company (down 8.37%) edged lower. Jindal Steel & Power gained 1.01%.

In the upcoming budget 2018-19, the metal industry is expecting a push for use of indigenous products, encouraging Make-in-India and increased spending on infra project including housing for all and roads.

Buying activity was witnessed in IT stocks. HCL Technologies (up 4.61%), Infosys (up 3.93%), and Wipro (up 4.88%) edged higher.

TCS gained 3.77% after the company announced the launch of TCS HOBS (Hosted OSS/BSS), a TM Forum certified platform for digital enterprises, on Microsoft Azure. The announcement was made during market hours today, 16 January 2018. The cloud ready TCS HOBS platform will enable customers to get to market quicker and benefit from a pay-as you-use commercial model.

Separately, TCS said that M&G Prudential, the UK and European savings and investments business of Prudential plc, entered into a new agreement with the company to digitally transform their business and deliver enhanced service for its UK savings and retirement customers. The value of the agreement exceeds 500 million pounds or $690 million over 10 years and covers the support of over 4 million customer policies. The announcement was made during market hours today, 16 January 2018.

Tech Mahindra rose 2.56% after the company said that it partnered with ContextSpace Solutions, a privacy research and development firm based in Israel, to develop the world's first global software privacy ecosystem, MyData Shield. Providing a comprehensive approach to data protection thereby delivering privacy by design and by default, the cloud-based software privacy ecosystem enables corporate software developers and start-ups to meet tough, global privacy and data protection regulations.

By 2020, over one-third of all data will live in or pass through the cloud, with data production in 2020 being estimated at 44 times greater than it was in 2009.Tech Mahindra issued the press release on its website yesterday, 15 January 2018.

Realty stocks declined. Indiabulls Real Estate (down 5.95%), Unitech (down 8.06%), Sobha (down 1.63%), Oberoi Realty (down 0.67%), DLF (down 3.67%), HDIL (down 2.67%) and Phoenix Mills (down 3.56%) edged lower.

Severely impacted by various reforms like RERA, GST and demonetisation, the realty sector is reportedly pinning its hopes on Budget 2018-19 for relief measures like lower taxes and infrastructure status. Industry players are expecting rationalisation of the GST rates from the current 12% to 6% and bringing stamp duty under the ambit of GST. Single window clearances for all approvals and additional tax incentives for first time home buyers are also expected.

ICICI Lombard General Insurance Company rose 3.81% after net profit rose 5.2% to Rs 231.76 crore on 9.60% increase in total income to Rs 2019.77 crore in Q3 December 2017 over Q3 December 2016. The result was announced during trading hours today, 16 January 2018.

Delta Corp surged 3.62% after consolidated net profit jumped 344.7% to Rs 44.74 crore on 62.6% growth in total income to Rs 170.10 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours yesterday, 15 January 2018.

Gujarat Narmada Valley Fertilizers & Chemicals lost 10.23% after the company said that it has indefinitely closed its TDI-II plant at Dahej following leakage. The announcement was made during market hours today, 16 January 2018.

GNFC said that in the morning on 15 January 2018, there has been a sudden leakage at TDI-II plant, Dahej, which called for plant shutdown at Dahej. Due to safety measures already put in place by the company over a period of time, neither there is any property damage nor any loss of life, GNFC said.

However, as a matter of abundant precaution, management has decided to close the plant indefinitely till the root cause is thoroughly analysed, reviewed and necessary further safety measures to be taken are fully evaluated in addition to current safety precautions, the company said.

Among macroeconomic data, exports rose 12.36% to $27.03 billion in December 2017 over December 2016. Imports rose 21.12% to $41.91 billion in December 2017 over December 2016. The trade deficit for December 2017 was estimated at $14.88 billion as against the deficit of $10.54 billion during December 2016.

Overseas, most European stocks edged higher as investors awaited the release of corporate earnings. On macro front, the trade surplus in the 19 countries sharing the euro expanded in November to its highest point in eight months. The European statistics office Eurostat said the euro zone's surplus in goods trade rose in unadjusted terms to 26.3 billion euros in November, up from 18.9 billion euros in October. It was also higher than the 23.8 billion surplus recorded a year earlier.

Asian stocks gained, erasing early losses amid announcements of corporate earnings. US stock markets remained shut yesterday, 15 January 2018, for the Martin Luther King Jr. holiday.

#Today, the stocks of 3i Infotech Ltd (CMP: Rs.8.15), inspite of coming out with decent set of numbers since the last few quarters, hit the lower circuit, due to some chartical (technical) adjustments and should not be a cause for worry. 

On the other hand most of the IT heavyweights reaped solid gains during the session after global brokerage firm Morgan Stanley upgraded ratings for Infosys, Tech Mahindra and HCL Technologies to overweight. The Nifty IT index jumped 3.65% to 12,430.95 with 9 out of 10 constituents ending in the green and 1 in the red. The share of 3i Infotech Ltd is expected to bounce from around Rs.7.9-8 levels and move northwards, for shot term targets of Rs.13-19.

#The shares of HDIL today touched Rs.66 intraday before closing at Rs.63.85. The real estate sector has been battling the triple shocks of demonetization, RERA and GST. The sector is yet to show significant signs of recovery, new figures from the capex-tracking database of the Centre for Monitoring Indian Economy (CMIE) show.. Project announcements in the December quarter plunged to their lowest since 2005, marking a fall of 91% from the year-ago period, the data shows. The property developers are hoping that in the ensuring budget, there would be  a revision in GST rate. A buyer of an under-constructed property faces an effective GST rate of 12% since it is considered as availing of services from the builder. But a sale of a completed property is not considered as rendering of services. 

Credit Suisse, in a December note, said the price arbitrage between under-construction and fully constructed houses has gone up significantly due to GST tax, slowing down of sales of under-construction houses and squeezing of developers' balancesheets. 

The demand for the sector remained sluggish, with seven top cities sitting on an unsold inventory of 6,85,000 housing units by the end of September quarter. As per Cushman & Wakefield, the housing sector witnessed a 35% fall in new supply across eight major cities to about 74,000 units in 2017. Launches of low-cost homes rose a modest 6% during the year. RERA requirements have pushed back launches by developers who are unable to meet the eligibility criteria, Credit Suisse said. 
Developers are also pushing for abolition of stamp duty, which continues to remain in force, even after implementation of GST. Granting of infrastructure status to the real estate sector for the affordable housing sector was the biggest highlight of the 2017 Budget.

On the positive side: Home loan rates have fallen by more than 250 basis points over the last two years and the race to acquire market share in affordable housing has only heated up more. This is all the more so given the government’s push to affordable housing. To make the housing market more inclusive, the NDA government has offered heavy subsidies on mortgage loans to buy what are now called affordable homes. And this has been the fastest growing slice of the mortgage loan pie since FY16. Under Pradhan Mantri Awas Yojana, the government offers interest subsidy of 6.5% to economically weaker sections on their home loans. These are individuals with income of up to Rs.3 lakh are the biggest beneficiaries of the interest subsidy.

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