Market Insight - Dow, Dow Futures, Hangseng, SGX Nifty & Nikkei 25 Jan 17

Markets always tend to be interesting with something or the other happening all the time. Our Morning Mantra is released before the opening bell and it includes the market commentary along with Corporate & Global news for the day.

US stocks were mixed after the close on Wednesday, as gains in the Telecoms, Basic Materials and Financials sectors led shares higher while losses in the Technology, Utilities and Oil & Gas sectors led shares lower.

Dow	Dow Futures	Hangseng	Nikkei	SGX Nifty
26252.1	26259.0	32746.5	23723.6	11091.5
+41.3	-11.0	-212.2	-217.2	+15.5
+0.16%	-0.04%	-0.64%	-0.91%	+0.14%

Asian indices are mostly lower on Thursday amid concerns over trade wars, while the U.S. dollar fell following Treasury Secretary Steven Mnuchin's comments that a weaker greenback would be good for U.S. trade. Meanwhile, higher commodity prices lifted resources stocks.

Market is expected to open on flattish note and likely to remain volatile ahead of the expiry.  

PTI has reported that government is likely to impose Anti-Dumping Duty on DMF, on of the key product of Balaji Amines. Positive

Bharat Electronics to consider buyback proposal on Jan. 30.

Wipro buys minority stake in Harte Hanks for $9.9 million.

IndiGo to be awarded routes on 20 proposals, highest among all carriers, under India’s regional connectivity scheme UDAN.

Phillips Carbon to consider raising funds on Jan. 31.

Majesco unit wins contract from Reliance Nippon Life Insurance.

Dr. Reddy’s says German regulator carried out re-inspection of its Bachupally plant. It can now start dispatching products to Europe.

PNB - Adj Book Value for FY 20 works out to Rs.121 and at 1.4 X P/Adj BV The target works out to Rs.170. In Govt Re cap PNB going to get  Notional Rs.5473cr where as in recent QIP PNB raised Rs.5000cr @ Rs.168. Post QIP price remain flat. So why it should move up now.

For SBI the capital additional is very small. Over all Positive impact of Rs.5. But for long term the target price for SBI based on FY20 is Rs.405.

Utkal Alumina International Ltd, a 100% subsidiary of Hindalco Industries, has sought environment clearance to double capacity of its alumina refinery in Odisha from 1.5 million tonnes per annum (mtpa) now to 3 mtpa.The expansion estimated to cost Rs 4000-5000 crore, would be effected in phases.

Bharat Financial Inclusion assigned a pool of receivables of an aggregative value of Rs 225.77 crore to a public sector bank on direct assignment basis as per the guidelines of the Reserve Bank of India

JFE Holdings, and JSW Steel, are likely to put in a joint bid for bankrupt Bhushan Steel reflecting competitive intensity for an asset that the Tatas and Arcelor Mittal may also seek to buy to benefit from an upswing in an industry overcoming four years of supply overhang. 

Bharti Airtel has received regulatory approval to acquire Millicom International Cellular's Rwanda unit, Tigo Rwanda, which will make the Indian telco a strong No. 2 carrier by revenue in the African country. 

Nirmal Bang Retail Research-United Spirits Concall Update-The company reported decline in Sales due to change in Route-to-market in Haryana and Punjab from private retail to government route. These markets are (and probably UP and West Bengal) are shifting the model hence as a precautionary measure the company focused on cash sales from credit sales to recover dues from the retail sellers who would be out of business from April 1. Apart from the states mentioned above, the company witnessed strong sales growth. However, there could be some spillover effect in Q4 as well. Nonetheless management sounded positive and reiterated its double digit sales growth with mid to high teens EBITDA margins.

Institution desk: Crompton Greaves Consumer Electricals- ACCUMULATE- 3QFY18 Result Update- Moderate Revenue Growth But Sustains Healthy Margin: Crompton Greaves Consumer Electricals (CGCEL) posted 3QFY18 revenues of Rs9.4bn, up 7% YoY, but excise adjusted growth was 12% YoY. Top-line was 9%/6% below our/consensus estimates, respectively. While premium fans grew 28% YoY, excise adjusted revenue growth of the consumer durable segment was tepid at 7.4% YoY because of headwinds faced in pump and geyser categories. The lighting segment’s sales surged 23% YoY (aided by 57% YoY growth in LED lights). Gross margin rose 250bps YoY and 280bps QoQ to 33.1% in 3QFY18 led by premiumisation of the portfolio (premium fans & LED lights) and cost reduction programme. EBITDA margin rose 130bps YoY to 12.4%, leading to 20% YoY growth in EBITDA to Rs1.2bn, partially aided by low base. EBIT margin of the lighting segment rose 290bps YoY to the highest-ever level of 13.8% while the consumer durable segment witnessed a 210bps YoY expansion to 18.2%. PAT grew 28% YoY to Rs695mn, in line with consensus but below our estimate of Rs792mn (on account of top-line miss).

IFB Industries- BUY- Initiating Coverage- Scalability Attained, Profitability To Follow: The home appliance industry in India offers highly promising growth prospects driven by its low penetration level as well as rising demand owing to improved affordability and easy availability of consumer durable finance. IFB Industries (IFB) is favourably placed to reap the benefits of this upturn owing to its marquee brand proposition, distribution network expansion, undisputed leadership in front-load washing machines, scaling up of other categories (top-load washing machines, microwave ovens, air-conditioners) as well as the impending launch of its refrigerators. While we expect IFB to post industry-leading 23.7% revenue CAGR over FY17-FY20E, the benefits of attaining scale (better absorption of fixed-cost overheads), operating leverage and achieving cost efficiency through import substitution in front-load washing machines will lead to substantial improvement in profitability. We expect IFB to post 500bps EBITDA margin expansion over FY17-FY20E, leading to 53.2% EBITDA CAGR and 65.4% earnings CAGR over FY17-FY20E. We initiate coverage on IFB with a target price of Rs1,900 and assign Buy rating to the stock.

India Macro Meter - Economy Update- Recovery Entrenched; Interest Rates Moving Up: Data for November and December 2017 indicates that the recovery is well entrenched, after a dip in activity in October. In November 2017, 33 out of 41 indicators (80.5%) were in the positive territory, up from 57% in October 2017. The recovery sustained well into December 2017, with 84% of available indicators in the positive territory. While a favourable base on account of demonetisation has a role to play in this, the sequential momentum is also encouraging. We believe that growth in 2HFY18 is likely to be above 7%, surpassing the Central Statistical Organisation’s or CSO’s estimate. Rural recovery will require the government’s push, which we expect in the forthcoming budget, with wage growth witnessing some tapering and rabi crop sowing lagging last years’ level. Manufacturing sector’s recovery appears to be on a firm footing with the PMI for December 2017 coming in at a five- year high of 54.7. Services sector activity is chugging along with services PMI recovering to 50.9 in December 2017, after slipping into the negative territory in the previous month. The pick-up in real economic activity along with an upturn in market interest rates supports the banking sector’s credit growth.