Market Live: Sensex rises 200 pts, Nifty eyes 9,800; Midcap outperforms
10:05 am Buzzing: PSU banking major State Bank of India extended losses in morning, falling over 1 percent as brokerage houses slashed target price after disappointing earnings and bad asset quality performance in April-June quarter.
“SBI surprised negatively on asset quality in Q1 while loan growth was much weaker than expected. We expect return on equity to remain muted for the rest of FY18 in line with other corporate banks, turning the corner only in FY19,” Jefferies said while retaining buy rating on the stock but lower target price to Rs 325 (from Rs 355 earlier).
The research house has cut its earnings estimates sharply on lower growth expectations, resulting in weaker growth in NII and fee income and consequently higher expense ratio.
For the merged bank, it has increased credit cost assumption in FY18. The weakness is somewhat moderated owing to the savings rate cut announced by the bank resulting in marginal net interest margin expansion, Jefferies said while estimating FY17-20 adjusted book value CAGR of 19 percent (consolidated basis) and 18 percent (standalone).
However, in view of elevated provisioning pressure, Motilal Oswal also cut its FY18 earnings estimates by 37 percent and recommended buy rating with reduced target price at Rs 341 (from Rs 375 earlier).
According to the research house, the larger part of asset quality clean-up is behind.
CLSA also reduced its target price to Rs 350 from Rs 360 following cut in earnings estimates but it has maintained buy rating, saying asset quality disappointed but better than PSU banks and the key disappointment was high non-performing loans reflecting stress in corporate, retail & agri loans.
9:53 am Market Check: Benchmark indices remained strong in morning trade as the Sensex was up 219.35 points at 31,432.94 and the Nifty rose 70.95 points to 9,781.75.
More than four shares advanced for every share falling on the BSE.
9:38 am Market Outlook: Aditya Narain of Edelweiss said the research house sees the market at 11,100 in June 2018.
“Our preferred themes would be the savings shift, consumer discretionary step-up, lower rates and India build / process capex,” he said, adding overweights are banks & financials, consumer discretionary/durables, cement & construction.
9:25 am Buzzing: Shares of Suzlon Energy added 10 percent intraday as the company turned profitable in the quarter ended June 2017.
The company has reported net profit of Rs 63.7 crore in the quarter ended June 2017 (Q1FY18) against the loss of Rs 257 crore, in the same quarter last fiscal.
Revenue of the company increased 62.5 percent at Rs 2,676 crore versus Rs 1,646 crore.
The board also approved the issuance of redeemable non-convertible debentures (NCDs) to the extent of Rs 900 crore on private placement basis in one or more tranches for replacement of existing debt subject to approval of shareholder in the ensuing annual general meeting of the company.
The company’s 2nd AGM will be held on September 22, 2017.
9:15 am Market Check: Equity benchmarks rebounded in opening on Monday after losing 3.5 percent in previous week, backed by short covering in most beaten stocks.
The 30-share BSE Sensex was up 182.89 points at 31,396.48 and the 50-share NSE Nifty gained 58.15 points at 9,768.95.
Dr Reddy’s Labs, Sun Pharma, Bank of Baroda, BPCL, Infosys and Bharti Airtel were only losers among Nifty stocks.
Nifty Midcap was up 1.5 percent on strong market breadth. About five shares advanced for every share falling on the NSE.
Suzlon Energy, CESC, BEML, Adani Ports, DLF, Sun TV, CG Power, JP Associates, GVK Power, GMR Infra, Techno Electric, Voltamp Transformers and Mercator surged up to 7 percent.
Parsvnath Developers (down 10 percent) and Signet Industries (down 20 percent) fell after SAT stayed SEBI order.
REC, HDIL, Jamna Auto and Chennai Petroleum were down nearly 5 percent.
