STOCK MARKET LIVE: Sensex, Nifty higher, check experts analysis on shares and sectoral indices
Indian equity indices today covered some ground, after a fall sessions fall post Budget, following the global trends on hope of Federal Reserves rate cut later this month. Asian stocks gained and the dollar drooped on Thursday. On Wednesday, BSE Sensex and NSE's Nifty 50 closed lower. Here are experts advice on shares and sectoral indices.
Indian equity indices today covered some ground, after a fall sessions fall post Budget, following the global trends on hope of Federal Reserves rate cut later this month. Asian stocks gained and the dollar drooped on Thursday. On Wednesday, BSE Sensex and NSE's Nifty 50 closed lower. Here are experts advice on shares and sectoral indices.
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Crude oil (July) prices: Crude oil (July) prices are trading on positive note. The immediate support at 4,114, next support is at 4,070. The important resistance is at 4,200 levels. Until prices close below 4,070, buying on dip is advisable, said JM Financial daily report.
Silver (July) prices: Silver (July) prices are likely to trade on positive note with immediate support at ` 38,200, next support is at 37,850. The important resistance is at 38,900 levels. Until prices close below 37,850, buying is advisable, said a JM Financial report.
Gold (August) prices: Gold (August) prices are likely to trade on positive note. The immediate support at 34,940, next support is at 34,815. The important resistance is at 35,250 levels. Until prices are holding below 34,815, buying is advisable, said JM Financial daily report.
Nifty trends: "Most Asian markets have closed on a positive note though these have given up some of their morning gains. Technically, while the Nifty has bounced back smartly, the underlying short-term trend remains down. Further downsides are likely once the immediate support of 11,537 is broken. Any pullback rallies could find resistance in the 11,599-11,638 band," said Deepak Jasani, Head Retail Research, HDFC securities.
Shree Cement share: Brokerage JM Financial said bottom-up approach to find fundamentally strong companies with triggers in near term which are most likely to outperform in next 20-30 trading sessions. These are ad-hoc opportunity driven ideas targeted for positional traders.
Indigo share (SELL): The two promoters, Rahul Bhatia and Rakesh Gangwal, recently took legal help to settle some differences as widely covered by media. However, the matter has not been resolved yet. Rakesh Gangwal has now sought SEBI’s intervention on the matter. Indigo has to reply to SEBI by July 19th on the complaint lodged by Gangwal (as informed on exchanges).
Beyond just questionable RPTs, various fundamental governance norms and laws are not being adhered to, as alleged by Rakesh Gangwal in his letter to SEBI. Rakesh Gangwal has sought necessary changes to the unusual controlling rights available to the IGE Group, a minority shareholder with about 38% shareholding. These unusual rights survive even after this coming November when most of the provisions of the current shareholders agreement expire, since, these rights remain embedded in the articles of association of IndiGo and will continue to survive unless the articles are amended by a vote of shareholders holding more than 75% shares, brokerage JM Financial said.
"We believe the growing uncertainty on control of the company can lead to lower multiples ascribed for fair value determination. Impact of the feud on earnings as a function of possible change in business strategy is contingent on the outcome of the current dispute. We currently have a SELL rating on Indigo (lower fares, expensive valuations) with a fair value of Rs1,230/sh, valued at 7.5x EV/EBITDAR."
NMDC share (BUY): Karnataka High Court has allowed the writ petition of NMDC against the state government’s demand of 80% premium on iron ore sales from Donimalai mines. NMDC had halted operations at Donimalai since November 2018 and had appealed to the High Court to resume operations. Pursuant to the judgment in favour of NMDC, the company may be able to resume operations at Dominalai mines with EC limit of 7 mtpa and annual production of 6 mtpa without shelling out incremental royalty to the state, brokerage JM Financial said.
Net sales/EBITDA/EPS estimate for FY21E is likely to increase by 11%/15%/16% and fair value from Rs 115/share to Rs 130/share in case the judgement sustains at higher courts too, it said. NMDC has witnessed 28% YoY increase in sales volume for 1QFY20 and have kept the Chhattisgarh prices for iron ore unchanged in July’19. The termination of contract with BHEL is likely to delay steel plant commissioning further (3mtpa). "We currently have a BUY rating on the stock, given sustained ore price outlook."
UltraTech Cement (Cash flow improves; inorganic expansion key growth driver)
Brokerage JM Financial said in the Ultratech Annual report analysis it observed that the material operating cash flow improvement (+48% YoY) driven by EBITDA growth (+11% YoY) partially offset by working capital expansion of Rs 4.6 billion. FY19 witnessed a volume growth of 20% on the back of JP assets ramp up and demand improvement. EBITDA/t declined by 8.5% as higher raw material costs and power/fuel costs was partially offset by realisation improvement.
Ultratech completed the acquisition of Binani Cement Limited (Ultratech Nathdwara Cement Limited - UNCL) in FY19. UNCL touched a peak capacity utilisation of 72% in March’19. Additionally, the acquisition of Century Textiles’ cement business is likely to be completed in FY20, it said.
"We expect the inorganic expansion to fuel growth going forward. Sustenance of price hikes and improvement in demand are the key monitorable. We maintain a BUY with a TP of Rs 4,700 (March 2020)," the brokerage said.
Consumer goods sector stocks: Quarter 1 of FY20 could be a watershed moment for the sector. Tone of management commentaries do not augur too well, with most companies indicating that demand has been slowing, a JM Financial report said. Titan’s jewellery growth has slowed to just 13% in Q1 vs a situation in early-May when the management had sounded reasonably confident of clocking 22% growth for FY20E – it appears that things have suddenly gotten worse after that (end-May/June), similar to that seen in HUL where environment turned less favourable all of a sudden in Feb/Mar even as management viewed demand outlook to be mostly ‘stable’ in a conference call as late as mid-January, it said.
"We forecast 1QFY20 revenue growth for our consumer coverage group at 11.2% - 3ppt lower vs the average seen in the past 4 quarters and 1ppt lower vs Jan-Mar’19 quarter. We expect revenue of our HPC group to grow 7% and Discretionary group to grow 12%. Marico could be the result outperformer for the coming season, in our view. With Budget 2019 not having provided any incremental rural stimulus that many companies were hoping for, commentaries on near-term demand outlook could be interesting to watch."