Market Week Ahead: 10 factors that will keep traders busy next week

The market is expected to consolidate for next few sessions before resuming its northward journey, but the long term trend remains positive.

  

Bulls continued to dominate Dalal Street for the third consecutive week as the Nifty and Sensex hit fresh intraday record highs of 11,495.20 and 38,076.23, respectively, in the week-ended August 10.

Inflow from foreign institutional investors, continued buying in banking and financials and in-line better-than-expected Q1 earnings boosted investor sentiment, though there is a caution in global peers due to trade tensions.

The Sensex gained 0.83 percent to close the week at 37,869.23. The Nifty rose 0.60 percent to end Friday at 11,429.50. Both benchmark indices have rallied 3.8 percent in the last three weeks.

The broader market underperformed frontliners with the BSE Midcap and Smallcap indices gaining 0.02 percent and 0.29 percent, respectively, in the passing week but outperformed in three consecutive weeks, rising 6.7 percent each.

After such an upmove and given that we are at the fag end of the June quarter earnings season, which seems to have been priced in, and continued uncertainty over US-China trade war, experts expect the market to consolidate for the next few sessions before resuming its northward journey. However, they were quick to add that the long term trend remains intact.

Experts don't see any major risk on the domestic front, adding that any sharp correction if it occurs will only be because of global reasons.

"With the index trading at a record high, some consolidation cannot be ruled out. We expect stock-specific volatility to continue with more corporate earnings scheduled in the next few sessions.

Experts said market participants would keep an eye on global developments especially the US-China trade war, progress of the monsoon, macroeconomic data, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs), movement of the rupee against the dollar and crude oil price trajectory.

"We continue to remain positive on market. We feel a sufficient monsoon, hike in the minimum support price and government infrastructure spending will be positive for the consumption theme," Hemang Jani, Head - Advisory, Sharekhan by BNP Paribas said.

Indian stock market will remain shut on Wednesday, August 15, on account of Independence Day.

Here are 10 key factors that will keep traders busy next week:

Earnings

As we enter the final week of June quarter earnings season, nearly 1,800 companies will declare their quarterly earnings. Most of these will be out in the first two sessions of the week itself.

Tata Steel, Tata Chemicals, Cadila Healthcare, CARE Ratings, Godrej Industries, DHFL, Oil India, Ashoka Buildcon and Hotel Leela Venture will announce their numbers on Monday, while Sun Pharmaceutical Industries, IDBI Bank, Allahabad Bank, Grasim Industries, Indiabulls Real Estate, HDIL and Dilip Buildcon will declare results on Tuesday.

Trade war

Globally investors will continue to closely watch trade tensions between the world's largest economies: US and China. In the week gone by, both governments announced the possibility of imposing tit-for-tat tariffs on an additional $16 billion worth of goods.

Dollar-rupee and crude movements

The rupee ended the week at 68.83 against the dollar, falling 22 paise compared to closing value of 68.61 a dollar on August 3 due to appreciation in the American currency. On Friday, it did hit 69 a dollar intraday.

The fall in currency was after upside seen in previous two consecutive weeks, as renewed global currency turmoil (hit by the sudden wave of risk-off on mounting fears over a political crisis in Turkey) and worsening trade war fears worldwide rattled the forex market in a big way.

Further depreciation in the rupee may act as a dampener in the near term for equities.

Crude oil prices corrected for the week-ended August 10 as investors worried that global trade disputes could slowdown economic growth and hurt demand for energy.

US crude futures fell more than a percent during the week, posting its sixth straight weekly loss for its worst losing streak since August 2015. Brent was down around half a percent.

Macro data

Consumer price index (CPI) inflation will be released on Monday while Wholesale price index (WPI) Inflation and trade data for July will be announced on Tuesday.

India's Foreign Exchange Reserves for the week ended August 10 and deposit & bank loan growth for the week ended August 3 will be declared on Friday.

Money flow

Foreign institutional investors and domestic institutional investors' flow will be closely watch in the coming week after they were net buyers in the passing week.

FIIs inflow remained supportive factor during the week ended August 10 as they were net buyers to the tune of around Rs 1,300 crore while DIIs (as per provisional data) were also net buyers to the tune of Rs 301 crore.

Technical outlook

The Nifty opened the week above 11,400 levels and managed to hold the same level at close on Friday. It remained rangebound for major part of the week, though it touched intraday record high of 11,495.20 amid stable to better-than-expected earnings.

The index formed Spinning Top candle on the weekly candlestick charts. Spinning Top is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears. It can be formed in an uptrend as well as in a downtrend.

After positive close for five consecutive sessions, the Nifty ended Friday on a negative note, which indicated that there could be consolidation before moving northward.

The Nifty ended the week with a spinning top candle while negative divergence in daily RSI is clearly visible. It broke out the higher end of the range 11,180-11,440 and touched the high of 11,495. However, sell-off on the last session of the week led the benchmark index back below 11,440.

Hence, staying cautious on rise is advised and the Nifty getting into a sideways movement with negative bias in coming few sessions is likely, it feels. "A short-term retracement against the broader uptrend is likely. Hence, intraday bulls may find difficulty breaking out 11,500 as of now. However, breaking out 11,500 may again initiate a rise up to 11,550 and 11,650. But, that looks unlikely at this juncture analyzing the overall chart pattern."

The research house said further, thorough technical study of the weekly as well as the daily chart patterns suggests, Nifty broader trading range for the coming week is expected to be 11,320-11,550.

Futures & Options

Maximum call open interest (OI) of 41.51 lakh contracts was seen at the 11,500 strike price. This will act as a crucial resistance level for August series. This was followed by the 11,600 strike price, which now holds 27.57 lakh contracts in open interest, and 11,700, which has accumulated 24.34 lakh contracts in open interest.

Maximum put open interest of 50.70 lakh contracts was seen at the 11,000 strike price. This will act as a crucial support level for August series. This was followed by the 11,200 strike price, which now holds 43.32 lakh contracts in open interest, and the 11,300 strike price, which has now accumulated 41.12 lakh contracts in open interest.

The Call base of 11,500 remained almost unchanged despite the Nifty testing these levels. At the same time, significant additions were seen at Put strikes of 11,200 and 11,300 during the week.

It believes 11,300 is likely to act as immediate support for the Nifty in the ongoing momentum. "Any extended profit booking should be seen only if the Nifty moves below 11,300."

The PCR OI for the Nifty continued to rise in the current uptrend where no major profit booking took place as traders are getting more comfortable in writing Put options. At the same time, current Nifty futures open interest is highest since January 2018.

With high PCR OI and high Nifty open interest, we believe consolidation is more likely than continued momentum. However, positive bias should be maintained till we see some sharp closure of positions.

Stocks in Focus

Coal India: Q1 consolidated profit up 61.1 percent at Rs 3,786.4 crore versus Rs 2,350.8 crore; revenue up 26.6 percent at Rs 24,260.9 crore versus Rs 19,161.7 crore (YoY)

Power Mech: Q1 profit up 42.5 percent at Rs 30.5 crore versus Rs 21.4 crore; revenue up 28.9 percent at Rs 461.9 crore versus Rs 358.4 crore (YoY).

NBCC: Q1 consolidated profit up 23.9 percent at Rs 73.2 crore versus Rs 59.1 crore; revenue up 19.1 percent at Rs 1,844 crore versus Rs 1,548.9 crore (YoY).

VRL Logistics: Q1 profit down 28.3 percent at Rs 24.2 crore versus Rs 33.7 crore; revenue up 7.4 percent at Rs 528.5 crore versus Rs 491.9 crore (YoY).

Rushil Decor: Q1 profit down 19.5 percent at Rs 5.2 crore versus Rs 6.4 crore; revenue up 9.8 percent at Rs 86.6 crore versus Rs 78.9 crore (YoY).

India Cements: Q1 profit down 20.6 percent at Rs 21 crore versus Rs 26.4 crore; revenue down 6.9 percent at Rs 1,360.7 crore versus Rs 1,461.6 crore (YoY).

Glenmark Pharma: Q1 profit down 30 percent at Rs 233 crore versus Rs 333.4 crore; revenue down 8.4 percent at Rs 2,165.6 crore versus Rs 2,363 crore (YoY).

Adani Green: Q1 consolidated loss at Rs 74.3 crore versus loss of Rs 17 crore; revenue jumps to Rs 472.2 crore versus Rs 190 crore (YoY).

Corporation Bank: Q1 profit up 41.1 percent at Rs 85 crore versus Rs 60.1 crore; NII up 51.1 percent at Rs 1,564.2 crore versus Rs 1,035 crore (YoY).

Finolex Industries: Q1 net profit up 29.5 percent at Rs 103.3 crore versus Rs 79.8 crore; revenue up 13.3 percent at Rs 827.8 crore versus Rs 730.7 crore (YoY).

Advanced Enzyme: Q1 consolidated net profit up 92 percent at Rs 31.2 crore versus 16.3 crore; revenue up 38.2 percent at Rs 104.3 crore versus Rs 75.5 crore (YoY).

DLF: Q1 profit up 58.2 percent at Rs 172.4 crore versus Rs 109 crore; revenue down 26.4 percent at Rs 1507.4 crore versus Rs 2047.7 crore (YoY).

Union Bank of India: Q1 profit up 11.2 percent at Rs 129.5 crore versus Rs 116.5 crore; NII rises to Rs 2,626.2 crore versus Rs 2,242.6 crore (YoY).

NHPC: Q1 profit down 14.5 percent at Rs 737.6 crore versus Rs 862.7 crore; revenue down 8.5 percent at Rs 2,129 crore versus Rs 2,327.5 crore (YoY).

Sun TV Network: Q1 profit up 62.6 percent at Rs 409.1 crore versus Rs 251.6 crore; revenue up 42.5 percent at Rs 1,120.4 crore versus Rs 786.3 crore (YoY).

Godfrey Phillips: Q1 profit at Rs 56.7 crore versus loss of Rs 3.1 crore; revenue up 6.6 percent at Rs 574.9 crore versus Rs 539.4 crore (YoY).

MRPL: Q1 profit down 33.2 percent at Rs 362 crore versus Rs 542.1 crore; revenue down 9.6 percent at Rs 13,557.8 crore versus Rs 14,990.7 crore (QoQ).

Nile: Q1 profit down 45.2 percent at Rs 2.9 crore versus Rs 5.3 crore; revenue up 6.1 percent at Rs 153 crore versus Rs 144.2 crore (YoY).

Rajshree Sugars: Q1 loss at Rs 25.3 crore versus profit of Rs 18.2 crore; revenue down 53.7 percent at Rs 93.4 crore versus Rs 201.6 crore (YoY).

TVS Srichakra: Q1 profit up 95.6 percent at Rs 48.5 crore versus Rs 24.8 crore; revenue up 9 percent at Rs 587.8 crore versus Rs 539.3 crore (YoY).

Thyrocare: Q1 profit up 6.4 percent at Rs 23.4 crore versus Rs 22 crore; revenue up 10.7 percent at Rs 97.2 crore versus Rs 87.8 crore (YoY).

Timken India: Q1 profit up 44.3 percent at Rs 31.6 crore versus Rs 21.9 crore; revenue up 27.9 percent at Rs 383.4 crore versus Rs 299.8 crore (YoY).

Vakrangee: Q1 profit down 92.2 percent at Rs 13.1 crore versus Rs 168 crore; revenue down 22.6 percent at Rs 1,011.5 crore versus Rs 1,301.8 crore (YoY).

Sheela Foam: Q1 profit up 23.7 percent at Rs 33.4 crore versus Rs 27 crore; revenue up 22.5 percent at Rs 425.6 crore versus Rs 347.3 crore (YoY).

Indian Hotels: Q1 loss at Rs 16.7 crore versus profit of Rs 7.7 crore; revenue up 7 percent at Rs 564.6 crore versus Rs 527.7 crore (YoY).

PC Jeweller: Q1 profit up 4.5 percent at Rs 141.9 crore versus Rs 135.8 crore; revenue up 14.6 percent at Rs 2423.2 crore versus Rs 2115 crore (YoY).

CG Power: Q1 profit up 18.7 percent at Rs 36.8 crore versus Rs 31 crore; revenue up 0.1 percent at Rs 1,179.8 crore versus Rs 1,178.5 crore (YoY).

Andhra Bank: Q1 loss at Rs 539.8 crore versus profit of Rs 40.4 crore; NII up 1.3 percent at Rs 1,460 crore versus Rs 1,441 crore (YoY).

JB Chemicals: Q1 profit at Rs 42 crore versus Rs 20.36 crore; revenue up 28.9 percent at Rs 366 crore versus Rs 283.2 crore (YoY).

Puravankara: Q1 profit up 29.7 percent at Rs 27 crore versus Rs 20.7 crore; revenue up 12.9 percent at Rs 382 crore versus Rs 338.5 crore (YoY).

Gujarat Mineral: Q1 profit up 30.7 percent at Rs 187 crore versus Rs 143 crore; revenue up 10.5 percent at Rs 672 crore versus Rs 608.4 crore (YoY).

Aditya Birla Capital: Q1 profit increases at Rs 216 crore versus Rs 172 crore; revenue rises to Rs 2,978 crore versus Rs 2,253 crore (YoY).

Surya Roshni: Q1 profit up 24.2 percent at Rs 20.5 crore versus Rs 16.5 crore; revenue up 11.8 percent at Rs 1270.5 crore versus Rs 1136.9 crore (YoY).

Uflex: Q1 profit up 0.6 percent at Rs 94.4 crore versus Rs 93.8 crore; revenue up 11.2 percent at Rs 1,904.8 crore versus Rs 1,713.3 crore (YoY).

TNPL: Q1 profit down 32.6 percent at Rs 38.8 crore versus Rs 57.6 crore; revenue down 11.9 percent at Rs 925.3 crore versus Rs 1,050 crore (YoY).

Rupa: Q1 profit up 10.8 percent at Rs 10.3 crore versus Rs 9.3 crore; revenue up 12.2 percent at Rs 183.5 crore versus Rs 163.5 crore (YoY).

Alkem Labs: US FDA issues no Form 483 to company's manufacturing unit in California.

XPro India: Board gets shareholder nod for reappointment of C Bhaskar as MD & CEO.

APT Packaging: Board approves re-appointment of Arvind Machhar as MD.

Jindal Poly Films: Jindal Poly Films: Board approved expansion plans for company's India operation by way of investment of approximately Rs 400 crore in 2nd Nonwoven Spunmelt Fabric line; also approved expansion plans for India operation by way of investment of Rs 350 crore in Biaxially-Oriented Poly Propylene (BOPP)-Line No.8 and Cast Poly Propylene (C PP) Line No. 2.

Jet Airways: S Vishwanathan did not quit the audit committee; his term came to an end.

7NR Retail: Board approved issue of bonus shares in the ratio 1:2.

Arihant Superstructures: Board has constituted a committee on insider trading and board was informed of non-compliance of SEBI provisions by independent director, Dinesh Babel.

HDFC Bank: Deputy MD Paresh Sukthankar resigns.

Tata Motors: July total group global wholesales down 5 percent at 92,639 units (YoY).

Adani Gas: Wins 7 more geographical areas, Bharat Gas wins 5 geographical areas and Torrent Gas wins 3 geographical areas under 9th round of City Gas Distribution bid - Reports CNBC-TV18.

Global cues

US consumer inflation expectations for July, and China's FDI year-to-date and outstanding loan growth for July will be released on Monday.

China's Industrial Production and Retail Sales for July; Japan's capacity utilisation and Industrial Production for June; and Euro Area's GDP growth for Q2CY18 and Industrial production for June will be announced on Tuesday.

China's House Price Index for July; and US' Retail Sales & Industrial Production for July, MBA Mortgage Application for the week ended August 10 and API & EIA Crude Oil Stocks Change for the week ended August 10 will be declared on Wednesday.

Japan's Balance of Trade for July; Euro Area's Balance of Trade for June; US' Initial Jobless Claims for the week ended August 11 and Housing Starts for July will be released on Thursday.

Euro Area's Inflation for July, Current Account Balance for June and Core inflation rate for July will be announced on Friday.

MORE WILL UPDATE SOON!!

Hold on to equities! It is time for a pause, but buy the dip for a target of 12,200

In the worst case scenario, correction may get extended up to 11,200 kinds of levels on the downside before resuming its up move.

 

New sustainable life-time highs on Indian bourses in the midst of global jitters caught many by surprise reinstating the fact that Indian indices are in a long-term bull market as it continued to climb the wall of worries.

However, as the relentless up move on Nifty50 from the recent lows of 10,557 added almost around 1,000 points in the last 6 weeks taking the index towards long-term resistance levels placed around 11,500 from where a fresh breakout is required on long-term charts which shall further facilitate a multi-month up move.

Besides, this vertical up move after a pause of two months led the technical oscillators into overbought zones warranting a correction in the near term which appears to have unfolded from the highs of 11,495 last Friday.

In the worst case scenario, this correction may get extended up to 11,200 kinds of levels on the downside before resuming its up move. In case of a fresh breakout above 11,500 levels, the next logical target can be projected up to 12,200 for the indices.

What can lead the indices?

In line with major indices, Bank Nifty also registered a fresh breakout beyond its February 2018 highs of 27,652 levels. This breakout is projecting a bigger target placed around 29,300 levels.

Hence, private banks may still play a critical role in pushing the indices to much higher levels. However, PSU Banks are still lagging behind and they may continue to remain so but at lower levels, they are attracting fresh buying interest.

Hence, on sharp corrections one can selectively look into this space for better trading opportunities. Interestingly, FMCG index remained positive with new life-time highs even in Friday’s session when broader markets were correcting.

Hence, traders shall focus on outperformers from this space which are continuously hitting new highs. Similarly, IT is looking very promising whereas Autos which are almost 10% away from their life highs may become catch-up plays.

What has changed for the Indian market?

a) Boost in political sentiment?

Apart from earnings growth and the tag of the fastest growing economy in the world from IMF, recent political developments also appear to have positively impacted market sentiment.

One of the main concerns among market participants was about forthcoming general elections in 2019 and the unity of the opposition parties which may create uncertain political environment going forward.

But, the recent no-confidence motion against the existing government appears to have proved to be a blessing in disguise to ruling NDA and market at large.

Some of its allies who looked to be drifting away from it through their bitter criticism have chosen not to vote in favour of the motion but to abstain from voting which is nothing but lending indirect support to the ruling NDA.

It smashed the myth of opposition unity thereby hinting at a stable government formation in 2019 as there is no major shift in political alliances.

b. Emerging Markets on the verge of a rally?

India seems to be the sole outperformer among the Emerging Markets as measured by the MSCI Emerging Market Index which is a gauge of 23 economies.

MSCI Emerging Market Index appears to be positioning itself for a relief rally after taking a hit of 18 percent since January 2018 highs of 1,278 to recent June low of 1,038.

After this vertical fall for almost 6 months, this index is moving in an extremely narrow range of 51 points in the last 45 days suggesting a dramatic reduction in the selling pressure which may lead to at least a relief rally.

Besides, the larger trends in this index are suggesting that recent fall from January 2018 highs is only a correction inside the bull market as the last 6 months correction is looking pretty much like a part of the 4th wave.

Correction in terms of Elliot Wave Theory points out that one more leg of up move is pending for this index which should take it beyond January 2018 highs which again shall be positive for Indian markets.

Is INR on the verge of a breakdown?

With Dollar Index trading above its resistance point of 95, INR may come under pressure if the Dollar Index continues to strengthen further and sustains above 96 which may not be good news for Indian markets in the near term.

Technically speaking, if INR trades above 69 levels then it can extend its weakness between 70 and 71 kind of levels which may not go down well with equity markets.

Here are short-term trading ideas which could give 5-8% return:

Mahindra & Mahindra: Buy| Target: Rs 1020| Stop Loss: Rs 927| Return 8%

With new lifetime highs of 953 in last Friday’s session, this counter appears to be on the verge of a fresh breakout from its contracting structure in which it was moving since May 2018 after registering highs of 933.

Hence, momentum shall pick up the pace once it registers a sustainable close above 950 levels. In such a scenario we can project a target of Rs 1,020.

Hence, positional traders are advised to buy into this counter for the said targets with a stop below 927 on a closing basis.

Bharat Petroleum: Buy| Target: Rs 429| Stop Loss: Rs 380| Return 7%

For the last couple of sessions, this counter appears to be moving in a range of 404 – 384 levels and looks ripe for a breakout from this range. Hence,

positional traders in anticipation of such a breakout shall go long for a target of 429 and a stop of 380.

Asian Paints: Buy| Target: Rs 1490| Stop Loss: Rs 1390| Return 5%

After the recent correction from the highs of Rs 1490, this counter appears to have posted bottom around recent lows of Rs 1394.

As price patterns are slowly shaping up in a positive fashion one can buy into this counter for a test of lifetime highs placed around Rs 1490. A stop suggested for this trade is 1390.

MORE WILL UPDATE SOON!!

11,435 Nifty crucial for bulls; positive momentum likely for these top 5 stocks

The index has to hold above 11,435 to extend its move towards 11,500-11,600 levels.

 

The Nifty failed to surpass Thursday’s high of 11,495 and witnessed a decline in profit-booking. It negated the formation of higher highs of the last five trading sessions and formed a Bearish Belt Hold candle and a Spinning Top candle on the daily and weekly charts, respectively.

The daily chart suggests a pause in positive momentum while the index has been forming higher tops-higher bottoms on the weekly scale. It has been respecting its rising support trend line or a rising channel for the last 32 trading sessions by connecting all the recent swing highs and lows.

It has to hold above 11,435 to extend its move towards 11,500-11,600 levels. On the downside, a drift below 11,350-11,333 could see it decline to 11,250–11,171 levels.

The Nifty rallied 328 points from its July settlement of 11,167 and is facing hurdle near the upper band of the open interest (OI) concentration at 11,500. It has been making higher lows for the last six consecutive weeks. If the previous week’s low (around 11,350) is broken, only then we will see an immediate change in trend.

India VIX moved up 6.37 percent from 12.08 to 12.85, while aggregate put call ratio is hovering near 1.75 levels. Maximum put OI is seen at 11,000 strike, followed by 11,200 strike. Maximum call OI is intact at 11,500 strike, followed by 11,600 strike. We have seen fresh call writing at 11,500 strike, whereas marginal put writing is seen at 11,350 and 11,200 strikes.

Bank Nifty formed a Bearish Engulfing pattern on the daily scale as it corrected from its record high of 28,377 to 28,100 zones. It has negated its higher top-higher bottom formation on the daily scale after six trading sessions.

If it sustains below the 28,000 zone, then weakness could see it trending lower to 27,750-27,660 levels. On the upside, resistance is seen at 28,333. Once this levels is decisively taken out, it can head towards 28,500 and 28,700 levels.

We expect positive momentum in Voltas, Tata Consultancy Services, Jubilant FoodWorks, ITC, M&M, while select state-run, pharmaceuticals and metal stocks could see some volatility.

MORE WILL UPDATE SOON!!

India’s high growth trajectory could help these 3 stocks give better short term returns

Looking at IIP and GDP numbers, one thing is quite clear that India is on high growth trajectory.

 

The Nifty has made a new life high in the week gone by and it has been making a higher top and higher bottom formation. Every small decline is being bought into by the market as supports are gradually shifting higher.

The index trades at 28x times the trailing earnings, which is the highest level in a long time. It means the market has discounted a lot of positive earnings very early while companies still need to deliver on the expectations.

Our view is that Nifty will consolidate at this level, and quality midcaps and smallcaps that have been left behind by the biggies will also rally.

On the macro fronts, the Index of Industrial Production (IIP) for June expanded at a robust 7 percent led by strong growth in manufacturing and capital goods sector, which contributes 78 percent to the index. The IIP had risen by 3.2 percent in May which was dragged down by sluggish growth in manufacturing and power sector.

Looking at the monsoon and favourable input prices compared to previous month, we believe these numbers are quite sustainable. It is also necessary to consider the impact of inflation in this season. We are expecting a slight rise in the Wholesale Price Index (WPI) but it will be in the higher range of the Reserve Bank of India (RBI).

Looking at IIP and GDP numbers, one thing is quite clear that India is on a high growth trajectory.

From the earnings point of view, there are a bunch of companies which are going to announce their results include Cadila Healthcare, Tata Steel, Tata Chemicals, Grasim and Sun Pharma.

Here is the list of stocks that could give better returns in short term:

L&T Technology Services

L&T Technology Services (LTTS) is the third-largest pure play ER&D services provider globally. Its broad-based services portfolio, presence in underpenetrated market segments and deep-rooted client footprint, 43 of the top 100 global ER&D spenders, places it well to address the opportunity emerging from the shifts in global ER&D spend.

During Q1FY19, the company had more than double net profit while it’s revenue increased by 40 percent. On a sequential basis, revenue and net profit increased by 9.2 percent and 24 percent, respectively.

In US dollar terms, revenue stood at $169 million; growth of 5.6 percent QoQ in constant currency, 32 percent YoY. EBITDA margin improved 170 bps at 17 percent from 15.3 percent in previous year quarter.

LTTS has won five multi-million dollar deals across process industry, telecom & hi-tech, industrial products and transportation.

We believe LTTS is well set to tap the shift in ER&D spending from products to software and services, and a rising preference for third-party players.

Suven Life Sciences

Suven Life Sciences is a pharmaceutical research company that leverages its innovation capability to undertake NCE-based CRAMS projects involving discovery and development of molecules for innovator companies.

During Q4FY18, its net profit increased by 56 percent to Rs 62.51 crore from Rs 40.07 crore on YoY basis on 19 percent higher income of Rs 208.29 crore.

It is continuous dividend paying company. It has paid 100 percent dividend in FY17 & paid 150 percent dividend in FY18.

Suven Life Science is on a path to strengthen its core revenue from CRAMS business. The successful completion of trials for SUVN502 would lead to monetisation of this molecule and ultimately boosting its earnings.

SUVN502 which is a lead molecule for patients with moderate Alzheimer’s, SUVN-502, is in phase-2A. Management expects enrollment to be completed soon and results is expected to be out in Q2FY20. We are recommending a Buy on Suven Life Sciences.

BPCL

BPCL is one of the fastest growing state run oil marketing companies. It is created its own niche by being first among peers. Recently it has acquired a 21.1 percent stake in payment bank Fino Paytech Limited, the largest Business Correspondent in Asia.

BPCL will reap huge benefits from this investment as the bank will start expanding its operations. BPCL has posted a quite healthy growth in Q1FY19. Its profit came in at Rs 2,293.26 crore against Rs 744.56 crore on YoY basis while income increased by 23 percent at Rs 82,978.96 crore against Rs 67,422.95 crore.

GRM (gross refining margin) which indicates the difference between the cost of crude oil processed and the prices of refined products, came in at $7.49 per barrel, up from $4.88 per barrel a year ago, which clearly shows that BPCL is on a fast track of achieving better operational efficiency. On back of this numbers and reduce crude oil prices we are recommending BPCL.

MORE WILL UPDATE SOON!!

Health of corporate lenders key Nifty performance in the next 4-5 months

corporate lenders have shown some sign of positive trend this quarter. The pre-provisioning profit (PPP) for PSU as well as private lenders have grown well.

 

The Nifty is trading at an all-time high. At the current level, Nifty is trading at 21 times its expected FY19 EPS. Considering strong domestic inflows, Nifty is expected to trade between 18x and 22x of its expected one year forward earnings.

Inside this broad range of 18x-22x, where Nifty would exactly be, will depend basically on macros, global issues and how corporate facing banks perform. Monitoring corporate lenders performance is also important as it will have a big impact on how ultimately FY19 earning shapes up.

At the beginning of the current financial year, Nifty was expected to witness 23 percent EPS growth in FY19. Out of this 23 percent, the three large corporate lenders: SBI, ICICI Bank and Axis Bank contribution was 7.6 percent. It means if these corporate lenders do not show a profit in FY19 then for Nifty, EPS growth will be 15.4 percent only.

Corporate lenders have shown some sign of positive trend this quarter. The pre-provisioning profit (PPP) for PSU as well as private lenders have grown well.

Advances too have grown at a healthy rate and amongst advances; retail book mix for most banks is improving. Amongst the corporate advances, A-rated books have grown at a healthy pace.

The growth in PPP has not yet translated into healthy Profit After tax but, the management commentary of most of the lenders with high corporate exposure has been rather encouraging. Fresh slippages have been mostly from the watchlist and the high provision coverage ratio of companies gives confidence that by the end of FY19, banks will start reporting growth in net profit.

Below are key takeaways on watch list and slippage from quarterly results of corporate lenders:

SBI: Out of Rs 14,856 crore of gross slippages, Rs 9,984 crore were fresh slippages and rest was Non fund based slippages from NPA accounts. Out of Rs 9,984 crore slippages, corporate slippages were Rs 3,704 crore during the quarter and 91 percent of this was from the watch-list.

The bank maintained guidance of 2 percent fresh slippages for FY19. Watch-list now stands at Rs 24,633 crore against Rs 28,989 crore a quarter back.

ICICI Bank: Total corporate and SME slippages were Rs 2,916 crore. Bank has disclosed BB and below rated portfolio of Rs 24,629 crore which is a potential stress going forward.

Management expects the additions to non-performing loans to be significantly lower in FY19 as compared to FY18 and NPA should decline going forward.

Axis Bank: Slippage was Rs 4,337 crore out of which Rs 2,218 crore of slippage was from corporate portfolio of which 88 percent was from BB and below rated watchlist.

The pool of BB and below rated portfolio increased to Rs 10,400 crore (2.1 percent of total customer assets) against Rs 9,000 crore last quarter. After this downgrade in Q1FY19, management believes that rating downgrade cycle has now normalized.

Bank of Baroda: Total slippages were Rs 4,733 crore out of this fresh slippages were Rs 2,869 crore. 85 percent of fresh slippages was from watchlist.

Watchlist declined from Rs 10,000 crore to Rs 8,600 crore in Q1FY19.

MORE WILL UPDATE SOON!!