International Market Update

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What makes this smallcap a good value buy?

Himatsingka Seide (HSL), one of India’s largest home textile majors and exporters, draws our attention on account of improving business fundamentals. Conclusion of capex cycle by H1 FY20, higher contribution from branded products, an uptick in utilisation rates and undemanding valuations make us bullish on the stock.

Q3 review

Positives

- Sales grew on the back of higher contribution from branded products (84 percent of Q3 sales)

- Gross and operating margins expanded noticeably because of a good product mix and full benefits of captive consumption (ie. yarn being utilised to manufacture bed sheets)

Negatives

- Forex losses resulted in other income declining sharply year-on-year (YoY)

- Depreciation and interest costs rose significantly YoY due to investments in the terry towel plant

- Tax rate increased marginally YoY

- The above factors led to a marginal reduction in PAT (profit after tax) margins

Why consider investing?

Capex intensity is waning

By September 2019, HSL’s terry towel facility is likely to be set up. Post this, barring regular maintenance capital expenditure, there is no big expansion plan.

Depreciation and financing charges, that rose noticeably in the past 4 quarters due to investments in the terry towel project, are likely to reduce from H2 FY20 onwards. This is because impetus will be laid on debt repayment. Consequently, bottom-line margins, working capital cycle and cash flows should improve.

Utilisation rates are likely to go up

In Q3 FY17, HSL expanded its bed sheet manufacturing capacity from 23 mmpa (million metres per annum) to 46 mmpa. Utilisation levels in respect of both (ie. original and new capacity) are stable at the moment. As the company’s order book (particularly for branded products) grows, there will be a corresponding uptick in manufacturing activities. This, in turn, should help achieve operating leverage.

Debottlenecking of bed sheet manufacturing capacity has been concluded in Q3 FY19, thereby resulting in an increase in capacity to the tune of 15 mmpa. This new capacity will be utilised for manufacturing products that yield lower realisations, implying that sales growth, to this extent, will be volume-driven.

Once the terry towel facility becomes operational, utilisation levels should start moving up too.

Sale of branded products on an uptrend

In 9M FY19, brands constituted about 85.6 percent of the top-line as against 71 percent in FY18. HSL’s own brands are making their presence felt in the financials.

HSL will complete integration of manufacturing processes of the Tommy Hilfiger brand by Q4 FY19-end.

Rights to sell ‘Calvin Klein Home’ products globally have been acquired. Previously, HSL could sell products only in North America.

Since branded products, especially own brands and fashion bedding variants, command better realisations vis-a-vis their unbranded counterparts, HSL’s margins should start moving up gradually.

Risks

To mitigate risks associated with regional concentration, HSL is exploring markets in Europe and Asia. Nevertheless, at the moment, the US market alone comprises nearly 85-90 percent of HSL’s annual top-line. Therefore, Trump’s actions of withdrawing the preferential trade treatment granted to Indian exporters may affect the company’s future revenue visibility.

Indian Rupee’s appreciation vis-à-vis the US dollar would impact product realisations to the extent of unhedged cash flows. Raw material (cotton) costs are not showing any signs of moderation as of now.

Competitive pressure from nations such as Pakistan, Vietnam and Bangladesh continues to persist.

Signs of consumption slowdown in international markets can hit the order book.

Outlook

HSL’s stock price has been on a downward spiral during the course of the last 12 months. This is primarily on account of market volatility and YoY dip in PAT (profit after tax) margins since the last 3 quarters.

After a sharp 47 percent correction from its 52-week high, the stock trades at an undemanding 6.7 times its FY21 projected earnings. This makes it a good value buy.

However, it is pertinent to note that any meaningful re-rating in HSL’s valuation multiples may be seen only from H2 FY20.

Source:https://www.moneycontrol.com/news/business/moneycontrol-research/ideas-for-profit-what-makes-this-smallcap-a-good-value-buy-3724171.html

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Nifty around 11,500, Sensex up over 100 points; IT stocks lead

Market Opens: It is good start for the Indian indices on Thursday with Nifty above 11,450 level.

At 09:17 hrs IST, the Sensex is up 36.12 points or 0.09% at 38169, and the Nifty up 10.50 points or 0.09% at 11455.50. About 510 shares have advanced, 281 shares declined, and 31 shares are unchanged. 

Zee Ent, HCL Tech, Tech Mahindra, Infosys, Indiabulls Housing, Yes Bank, HPCL, BPCL, IOC, GAIL, Eicher Motors are among major gainers, while losers are Tata Motors, ONGC, JSW Steel, IndusInd Bank, Power Grid, Cipla, HDFC Bank and Tata Steel.

Except metal, auto and pharma, all other sectoral indices are trading with marginal gain.

Rupee Opens: The Indian rupee opened lower by  24 paise at 69.11 per dollar on Thursday versus previous close 68.87.

Source: https://www.moneycontrol.com/news/business/markets/stock-market-live-updates-bse-nse-nifty-around-11500-sensex-up-over-100-points-it-stocks-lead-3714661.html

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These 30 stocks made most of the bull run, rallied 30-99% in a month

With D-Street riding a crest, stocks across sectors posted handsome gains.In the BSE 500 index, which gained 9 percent in 1 month, 30 stocks rallied in the range of 30 percent to 99 percent, which also include stocks that singed in September and October due to factors such as corporate governance issues, liquidity crisis and mixed earnings.

Suzlon Energy, Manpasand Beverages, Dilip Buildcon, Edelweiss Financial, CG Power, Bombay Dyeing, Adani Power, Allahabad Bank, Mahindra Holidays, NBCC, IRB Infrastructure, Just Dial, ICICI Securities, Kalpataru Power Transmission and Can Fin Homes were among the top 30 stocks.

On hopes of Modi government returning to power, FIIs are also in a bullish mood.

"After the clarity on the election results and earnings pickup, we feel, FIIs will do historic investments this year," Foram Parekh, Fundamental Analyst – Equity, Indiabulls Ventures, told Moneycontrol.

The most favoured stocks in this run were among midcaps and smallcaps.

In Nifty50, top four stocks were from PSU segment. They were HPCL (up 35 percent), IOC (up 29 percent), BPCL (21 percent) and NTPC (21 percent) while the rest five among top 10 stocks were from banking and financial segment. Yes Bank, Bajaj Finserv, IndusInd Bank, ICICI Bank and SBI gained 15-17 percent.

Source:https://www.moneycontrol.com/news/business/markets/these-30-stocks-made-most-of-the-bull-run-rallied-30-99-in-a-month-3683761.html

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Opening Bell

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US oil retreats from 2019 high on soaring production

US crude futures eased slightly on March 15 after hitting a 2019 high, as worries about the global economy and robust US production put a brake on prices.

West Texas Intermediate (WTI) crude oil futures settled down 9 cents at $58.52 a barrel, having hit their highest so far this year at $58.95.

Brent crude futures settled down 7 cents at $67.16 a barrel, below their 2019 peak of $68.14 reached on March 14.

US crude ended the week 4.1 percent higher, and Brent was up 1.9 percent.

"The market is taking a pause as it tries to digest mixed reports that give us different ideas of future supply and demand," said Phil Flynn, an analyst at Price Futures group in Chicago. "The OPEC-plus meeting could give us a little direction," he said.

The Organization of the Petroleum Exporting Countries and its allies including Russia, an alliance known as OPEC+, agreed last year to cut production, partly in response to increased U.S. shale output.

OPEC+ ministers will meet on April 17-18 to decide production policy.

"If OPEC+ decide to extend (cuts) ... we expect that inventories will continue to draw through at least Q3," US investment bank Jefferies said.

The International Energy Agency said on March 15 that the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 0.5 million barrels per day (bpd).

It said a comfortable supply cushion by OPEC could prevent any price rally in case of possible disruptions and that non-OPEC oil output growth led by the United States should ensure demand is met.

US energy firms this week reduced the number of oil rigs operating for a fourth week in a row, with drilling slowing to its lowest in nearly a year, prompting the government to cut crude output growth forecasts.

Drillers cut one oil rig in the week to March 15, bringing the total count down to 833, the lowest since April 2018, General Electric Co's Baker Hughes energy services firm said in its closely-followed report on Friday.

Oil price gains have been limited by concerns that an economic slowdown that has gripped large parts of Asia and Europe will dent growth in fuel demand.

But oil consumption has held up so far.

Crude oil use in China, the world's biggest importer, in the first two months of 2019 rose 6.1 percent from a year earlier to a record 12.68 million bpd, official data showed this week.

Goldman Sachs said growth in global demand for crude in January was "nearly 2.0 million barrels per day, with strength visible in both emerging markets and developed economies."

Source:https://www.moneycontrol.com/news/business/commodities/us-oil-retreats-from-2019-high-on-soaring-production-3653221.html

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MCX Support and Resistance Level

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Sensex opens more than 100 pts higher, Nifty around 11,400; Coal India falls

Market Opens: It is a strong start for the Indian indices on the last day of the week with Nifty around 11,400 level.

The Sensex is up 165.79 points at 37920.68, while Nifty is up 51.10 points at 11394.40. About 528 shares have advanced, 171 shares declined, and 33 shares are unchanged. 

Tech Mahindra, Indiabulls Housing, Gail, Eicher Motors, Dr Reddy's Lab, Kotak Mahindra, JSW Steel are the gainers on the indices, while losers led by Coal India, Bajaj Auro and UltraTEch Cement.

Rupee Opens: The Indian rupee opened flat at 69.33 per dollar on Friday versus 69.35 yesterday.

Source:https://www.moneycontrol.com/news/business/markets/stock-market-live-updates-bse-nse-sensex-opens-more-than-100-pts-higher-nifty-crosses-11400-coal-india-falls-3649211.html

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Nifty forms bullish candle for second day in a row, profit booking likely

The Nifty50 after strong opening continued its run throughout the session and closed at highest levels in last six months on Tuesday. Strong global cues and FII flow lifted sentiment.

The index closed above 11,300 levels and formed bullish candle on the daily charts for second consecutive session.

The index has managed to cross 11,118 and 11,180 zones in last two sessions and supports are gradually shifting higher with the higher pace of buying momentum, but as it entered into overbought zone, there could be some profit booking in coming sessions, experts said.

The Nifty50 after opening sharply higher at 11,231.35 gained more strength as the day progressed and hit an intraday high of 11,320.40. The index closed 133.20 points or 1.19 percent higher at 11,301.20, the highest level since September 17, 2018.

"Nifty50 registered yet another day of gap up opening with strong bullish candle for second session in a row to continue its march towards northern direction as it cleared near term critical hurdles one after the other. Once a consolidation breakout happens it becomes quite natural to register this kind of sustainable upswings for couple of sessions," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

He said, however, as Nifty50 is nearing its logical resistance levels on the back of strong rally it may undergo some profit booking as it nears 11,400 levels.

Besides, this sharp upmove appears to have brought the indices into overbought zone on lower time frame charts making a case for some cooling off in the near term, he added.

On the down sides, Tuesday's gap zone of 11,227–11,180 can be considered as critical support going forward below which short term trend shall come under pressure, according to Mazhar.

For the time being, he advised traders to consider booking profits as Nifty heads towards 11,400 levels.

India VIX closed higher after the declines of last seven trading sessions. It was moved up by 1.33 percent to 15.09 levels.

On Option front, maximum Put open interest (OI) is at 11,000 followed by 10,700 strike while maximum Call OI is at 11,400 followed by 11,500 strike.

Meaningful Put writing is at 11,200 followed by 11,300 strike while Call unwinding is at all the immediate strikes with minor Call writing at 11,350 strike.

Experts said Option band signifies a shift in higher trading range in between 11,150 to 11,450 zones.

"Nifty index surpassed its resistance trend line of the sideways channel and closed above the same with the formation of bullish candle on daily scale which indicates bullish bias. Now it has to continue to hold above 11,200 zone to extend its gains towards 11,400-11,450 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Overall setup and momentum is positive and a follow up could continue its extended momentum while immediate support exists at 11,200 then 11,118 zones, he added.

Bank Nifty rallied by more than 450 points and made a new life-time high towards 28,488 mark by crossing previous high of 28,388 zones.

It closed at 28,443.70, up 477.05 points and formed a bullish candle on daily scale which indicates that bulls are holding tight grip in the market with fresh breakout.

"Now it has to continue to hold above 28,150 zones to extend its momentum towards new life time high of 28,750-28,800 zones while on the downside major support exists at 28,000 then 27,750 levels," Chandan said.

Source:https://www.moneycontrol.com/news/business/markets/technical-view-nifty-forms-bullish-candle-for-second-day-in-a-row-profit-booking-likely-3637471.html


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Nifty above 11,250, Sensex gains 300 pts; HDFC Life falls 4%

Market Opens: Indian indices continued its upward momentum on the second day on Tuesday with Nifty opened above 11,200 level.

The Sensex is up 291.67 points at 37345.77, while Nifty is up 80.50 points at 11248.50. About 759 shares have advanced, 129 shares declined, and 24 shares are unchanged. 

RIL, Tata Motors, IOC, Bajaj Finserv, HDFC, Dabur, Ashok Leyland, Union Bank, IOB, Coal India, HDFC Bank, Gail, Grasim Industries are among major gainers on the indices, while losers are Bharti Airtel, Bharti Infratel and HDFC Standard Life.

All the sectoral indices are trading higher led by energy, infra and metal.

Rupee Opens: The Indian rupee opened higher by 13 paise at 69.75 per dollar on Tuesday versus Monday's close 69.88.

Source: https://www.moneycontrol.com/news/business/markets/stock-market-live-updates-bse-nse-nifty-above-11250-sensex-gains-300-pts-hdfc-life-falls-4-3634311.html


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Maruti Suzuki dips 1% after Kotak downgrades, cuts price target

Maruti Suzuki India shares fell a percent intraday on Friday after Kotak Institutional Equities downgraded its rating on the stock to add from buy earlier.

The research house also slashed price target to Rs 7,500 from Rs 7,600 apiece after cut in earnings per share estimates.

The stock was quoting at Rs 6,978.50, down Rs 52.15, or 0.74 percent on the BSE, at 15:10 hours IST.

The brokerage house said the domestic passenger vehicle (PV) industry is likely to grow in low single digit (6 percent CAGR over the next two years) due to increase in costs related to stricter safety and emission regulations.

"While Maruti is better-placed and will gain market share, we cut EPS estimates by 4-9 percent for FY2019-21 mainly driven by cut in volume estimates (lower industry growth assumptions) and EBITDA margin forecasts (factoring in lower operating leverage and higher costs related to safety regulations in entry-level models), it added.

The brokerage expects Maruti Suzuki to increase its market share in the passenger vehicle industry in India by 290 bps over FY2019-23 led by a shift in consumer preference towards petrol vehicles against diesel, especially in compact SUV and compact car segments.

Source:https://www.moneycontrol.com/news/business/markets/maruti-suzuki-dips-1-after-kotak-downgrades-cuts-price-target-3624881.html

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Sensex gains 150 pts, Nifty around 11,050; Wipro, ITC in focus

Market Opens: It is strong start for the benchmark indices on Wednesday with Nifty opens above 11,000 level.

The Sensex is up 158.64 points at 36601.18, while Nifty is up 47.10 points at 11034.60. About 777 shares have advanced, 146 shares declined, and 43 shares are unchanged 

Wipro, Indiabulls Housing, L&T, HPCL, BPCL, ITC, Vedanta, Grasim, DHFL, are the top gainers on the indices, while losers are Bharat Forge, Reliance Capital 

All the sectoral indices are trading green, while midcap and smallcap also up 0.6 percent.

Source:https://www.moneycontrol.com/news/business/markets/stock-market-live-updates-bse-nse-sensex-gains-150-pts-nifty-around-11050-wipro-itc-in-focus-3612041.html

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Closing Bell: Nifty ends 124 pts higher, Sensex up 378 pts; auto stocks biggest gainers

Market at close: It is a strong close for benchmark indices on first day of the week as market was shut on Monday on account of Mahashivratri. 

The Sensex was up 378.73 points at 36442.54, while Nifty was up 124.00 points at 10987.50. About 2118 shares have advanced, 568 shares declined, and 152 shares are unchanged. 

Indiabulls Housing, Eicher Motors, Tata Motors, HPCL and BPCL were the top gainers on the Nifty, while losers were Wipro, Tech Mahindra, Infosys, HUL and Cipla.

Midcap and smallcap gained 2-3 percent, respectively. Among the sectors, auto, metal and PSU bank indices led with 2-3 percent gain followed by energy, infra and pharma, while IT index lost over 1 percent.

Rupee gains further: The Indian rupee is trading higher by 43 paise at 70.48 per dollar versus Friday's close 70.91.

Source:https://www.moneycontrol.com/news/business/markets/closing-bell-nifty-ends-124-pts-higher-sensex-up-378-pts-auto-stocks-biggest-gainers-3607341.html

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International Market Updates 28 Feb 2019

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MCX Support and Resistance Levels

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Closing Bell: Sensex, Nifty end flat on policy day; Sun Pharma, Zee Ent gain 4% each

Market at close: Benchmark indices ended flat on Thursday with Nifty ended above 11,000 level.

RBI in its MPC meeting has cut repo rate by 25 bps at 6.25 percent.

The Sensex was down 4.14 points at 36971.09, while Nifty was up 6.90 points at 11069.40. About 1377 shares have advanced, 1145 shares declined, and 164 shares are unchanged. 

Zee Entertainment, Sun Pharma, Eicher Motors, Bharti Infratel and Bajaj Auto are the top gainers on the Nifty, while losers include JSW Steel, Reliance Industries, L&T, Hindalco and Power Grid. 

Among the sectors, auto, FMCG, IT and pharma index saw some buying interest, while energy and infra index remain under pressure.

Source:https://www.moneycontrol.com/news/business/markets/closing-bell-sensex-nifty-end-flat-on-policy-day-sun-pharma-zee-ent-gain-4-each-3494811.html

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Berger Paints Q3FY19 review: Volume drives topline, but crude prices hurt margins

Highlights:

- Q3 volume growth was strong at nearly 14-15 percent
- Festive demand aided topline growth
- Management expects margins to recover in Q4
- Competitive intensity to increase going forward

- Valuations offer little upside from current levels

India’s second-largest decorative paints company reported better-than-expected Q3FY19 topline. Volume growth was in high teens, at par with its larger peer Asian Paints. Operating margins, however, contracted as high crude oil prices expanded the cost base. The company appears to be on a secular growth path as it continues to grow faster than the industry, gaining market share from smaller and unorganised players.

Key Q3 positives

- Topline growth of 21 percent was driven by strong volume growth. The decorative volume growth estimates for the quarter stood at nearly 14 percent as strong consumer demand during the festive season along with a favourable base (timing of Diwali) aided the sales growth in October-December period.

- Operating profit margins recovered sequentially with successive price hikes partially alleviating the crude-oil and currency-related pressures. However, high-cost inventory kept margins under pressure on YoY basis.

- Apart from strong demand in the decorative business, there was decent traction in industrials, Nepal decorative business, and Saboo Coatings.

- The management expects a recovery in Q4 margins from softening crude prices and rupee stabilisation against the dollar.

Source: https://www.moneycontrol.com/news/business/moneycontrol-research/berger-paints-q3fy19-review-volume-drives-topline-but-crude-prices-hurt-margins-3491201.html

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Opening Bell

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Volatile trade continues on D-St; Nifty below 10,650; metal stocks outshine

Market Update: Benchmark indices are trading flat with Sensex up 11.97 points or 0.03% at 35604.47, and the Nifty down 7.40 points or 0.07% at 10644.80.
About 1127 shares have advanced, 929 shares declined, and 106 shares are unchanged. 

Market Opens: It is a strong start for the Indian indices on Wednesday with Nifty is trading around 10,700.

At 09:17 hrs IST, the Sensex is up 148.83 points at 35741.33, while Nifty is up 41.10 points at 10693.30. About 472 shares have advanced, 299 shares declined, and 35 shares are unchanged. 

Axis Bank, HCL Tech, Bank of Baroda, Bajaj Finserv, Indiabulls Housing, Yes Bank, ICICI Bank are among major gainers on the indices, while losers include Adani Ports, BPCL, HDFC Bank, Hero Moto, Dr Reddy's Lab.

Rupee Opens: The Indian rupee opened lower by 25 paise at 71.36 per dollar on Wednesday against Tuesday's close 71.11.

Source:https://www.moneycontrol.com/news/business/markets/stock-market-live-updates-bse-nse-volatile-trade-continues-on-d-st-nifty-below-10650-metal-stocks-outshine-3453021.html

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