Banks in FY20: Slippages double as de-risking continues; ICICI, IndusInd Bank top picks for Jefferies

The banks continued de-risking in the financial year 2020 as data showed that the risk-weighted asset/ total during the year fell by another 150 bps YoY to 59 percent after a 230 bps fall last year. The private banks derisked more than the state-run lenders.

Push for lending to PSUs, slower rise in exposure to real estate and other sensitive sectors helped, global brokerage Jefferies said.

Deposit strength is divergent and reflects in the divergent share of retail and total deposits, concentration and cost of deposits, it added.

During FY20, net slippages doubled, due to a 28 percent rise in downgrades including DHFL and lower recovery/upgrade from a high base of last year. An on-year rise in net slippages comes from a low base, but much below FY16-18 levels. Read more

NHAI aims to garner Rs 2,000 cr from fifth TOT bundle, bids in 2-3 weeks

The National Highways Authority of India (NHAI) is likely to invite bids for the next tranche of highways under the toll-operate-transfer (TOT) model within 2-3 weeks, sources close to the development told CNBC-TV18.

The next bundle of highways will include highway assets of a cumulative length of around 180 km, the sources said. This is likely to be called Part A of TOT-5 or TOT Bundle-5 (A-1), indicating that it is expected to be followed by more such small stretches of highways.

This will be the first time that the government is offering smaller bundles of highways under the TOT model as TOT-1 offered 648 km, TOT-2 invited bids for 586 km of highways, TOT-3 offered 566 and TOT-4 initially offered around 400 km. Click here to read more

Stock Update: Gayatri Projects’ shares traded 4.40 percent higher to Rs 17.80 per share on the NSE after it announced it is the L-1 bidder for a State Water and Sanitation Mission project in Uttar Pradesh. The project is valued at Rs 196 crore, with time-period of 10 years. The project involves construction of Kachonda Kalan Group of villages water supply scheme in Lalitpur, UP.

Stock Update: Shares of JB Chemicals and Pharmaceuticals surged over 16 percent intraday and hit a 52-week high of Rs 965.00 on the BSE after the company reported strong earnings in the first quarter of fiscal 2021.

The company’s consolidated net profit in Q1FY21 rose 92.4 percent to Rs 119.5 crore from Rs 62.11 crore, YoY. Its net profit margin increased 8.96 percent YoY to 22.88 percent. Revenue during the quarter increased 17.07 percent to Rs 522.28 crore as compared to Rs 446.11 crore in the year-ago quarter. EBITDA in Q1FY21 jumped 61.94 percent to at Rs 155.41 crore while EBITDA margin increased to 29.76 percent.

The stock price of JB Chemicals and Pharmaceuticals rose as much as 16.25 percent intraday. The stock has risen almost 90 percent since April 2020.

Technical Experts’ View: Ajit Mishra, Religare Broking suggests two stock recommendations. First one is Cipla, with a stop loss at Rs 730 and target of Rs 775. Second is Godrej Consumer Products, as it is is trying to break from long-term declining trendline on the weekly charts. It can be bought at current levels with a stop loss at Rs 690 and target of Rs 750, says Mishra.

Stock Update: MindTree’s shares hit 52-week high to Rs 1,252 per share on the NSE. The stock is up for the fourth day in a row and also top performer from the Nifty IT index. 

Bullion outlook by Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services Ltd

Gold extended its gains following weakness in the dollar against its major crosses and volatility in the next couple of sessions is expected to remain high ahead of the important Fed policy statement that is scheduled for release this week. Expectation is that the central bank could maintain a dovish stance and that could continue to keep the greenback weighed down. Uncertainty on the Brexit front is also likely to keep gold prices supported at lower levels. Yesterday, the PM won the so-called second reading vote on the bill that the EU says would collapse trade talks and propel the United Kingdom towards a messy Brexit. Apart from Fed, Bank of England will be releasing its policy statement and is likely to have an impact on the overall market. For today we expect gold on MCX to quote in the range of Rs 51,250 and Rs 52,250. On COMEX the expected range is $1,930 and $1,990.

Buzzing | Shares of SREI Infrastructure Finance rallied over 9 percent after the company reported its earnings for the first quarter of fiscal 2020. The company posted a net profit of Rs 23.01 crore in the June quarter as against a loss of Rs 69.29 in the March quarter. Revenue was at Rs 1,188.6 crore.

Technical View | We are trading above the 11,500 levels but I would still look out for the Nifty to trade in the 11,550-11,575 trading zone as that would signal that we are entering into a bullish zone. The support continues to be around the 11,300 levels, says Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.

Anuj Gupta – DVP- Commodities and Currencies Research, Angel Broking Ltd

Indian Forex reserve stands at around $542.013 billion on 04 September 2020, the highest ever, with the Foreign Exchange Assets (FCA) component at around $498.362 billion. As of today, we are expecting more appreciation may be seen in the Indian rupee. Traders can sell USDINR at 73.40 levels with the stop loss of 73.80 and for the target of 72.80 levels. Rupee may test 72.00 soon.

Stock Update: TAKE Solutions’ shares are trading over 7 percent lower to Rs 45.90 per share on the NSE after the company decided to sell its entire shareholding to its subsidiary, APA Engineering. “The liquidity and business constraints, consequent to the impact of Covid-19 pandemic, have significantly impacted operations of the step-down subsidiary,” added the company’s statement. 

Gold rate today: Yellow metal rises on weak dollar; may face resistance at Rs 52,100 per 10 grams level

Gold prices in India traded higher on the Multi Commodity Exchange (MCX) Tuesday following positive momentum in the international spot prices amid a subdued US dollar. Silver was also trading above Rs 69,000 per kg level.

At 10:10 am, gold futures for October delivery rose 0.33 percent to Rs 51,860 per 10 grams as against the previous close of Rs 51,687 and opening price of Rs 51,850 on the MCX. Silver futures traded 0.49 percent higher at Rs 69,300 per kg. The prices opened at Rs 69,500 as compared to the previous close of Rs 68,965 per kg.

“Gold prices gained on a subdued dollar. However, the upside remains restricted due to some positive developments over COVID-19 vaccine. Any major trend in the yellow metal may be seen after the US Federal Reserve policy meet and decision on the stimulus package,” said Ajay Kedia, director, Kedia Commodity Comtrade. Read more

Rupee Update: The Indian currency opened with gains on Tuesday amidst positive equity markets. The rupee opened at 73.37 against the US dollar as compared to Monday’s close of 73.48. The focus will be on the trade data for the month of August.

Route Mobile IPO: Here’s how to check your allotment status

The Rs 600-crore initial public offer of Route Mobile, a cloud communications service provider, was fully subscribed on the first day of its listing and ended with a stellar response from the investors. The IPO was subscribed 74.13 times on the last day of its bidding. It received bids for 89.23 crore equity shares against the IPO size of 1.2 crore shares.

Route Mobile has already garnered Rs 180 crore from 15 anchor investors including Goldman Sachs, Franklin Templeton Mutual Fund and SBI Life Insurance among others.

Here’s a step-by-step guide to help you check the allotment status on the Route Mobile IPO:

Technical Experts’ View:  Shubham Agarwal, CEO & Head of Research of Quantsapp Advisory gives out 3 stock recommendations

Shubham Agarwal’s first sell recommendation is on HDFC. He said, “If you look at the derivative data, the stock has one of the weakest structure where for the 35-40 days it is in the short covering cycle.  Yesterday,  it saw a breakdown, there is a good possibility we might see a further follow up on selling in the stock. So, keep Rs 1,700 as strike put for a target of Rs 40 with a stop loss at Rs 15.”

His second sell call was on Axis Bank. It has been correcting for the long time but now again we are seeing that the continuation pattern has a breakdown. Therefore, keep Rs 430 as strike put option can be bought for a target of Rs 18 with a stop loss at Rs 6, added Agarwal.

Lastly, the market expert has a buy call from the midcap IT space. He recommended MindTree, saying that it is at a new high. One can put Rs 1,240 strike call option bought as well as target at Rs 50 with a stop loss at Rs 22.

Opening Bell: Sensex opens 148 points higher, Nifty above 11,480; broader markets gain, Grasim top gainer

The Indian market opened higher with minor gains on Tuesday led by the positive sentiment across global markets.

The Sensex opened 148 points higher to 38,904.7 while the Nifty50 index opened at 11,487.20, up 47 points. Broader indices also gained, with Nifty Midcap 100 index up nearly 100 points and Nifty Smallcap 100 index up over 90 points.

Barring private banks, all sectoral indices traded higher, with Nifty Pharma registering most gains.

Grasim and Titan were the Nifty50 top gainers while IndusInd Bank and Bharti Airtel remained the top losers. 

Market breadth stood in favour of the gainers. 1,146 stocks on the NSE opened with gains while 332 stocks declined.

Govt proposes additional cash spend of Rs 1.67 lakh cr; Rs 20,000 cr of recap bonds for PSBs announced

The government has sought the Parliament’s nod for additional cash expenditure of Rs 1.67 lakh crore, less than 1 percent of GDP, in the first supplementary demand for grants for FY21 tabled in the Parliament on Monday by Finance Minister Nirmala Sitharaman.

While a large part of the additional cash spend relates to the PM Garib Kalyan Yojana and Aatma Nirbhar Bharat announcements, the government has moved to bridge the gap between revenue deficit grants budgeted for FY21, against what was recommended by the Finance Commission.

The government had budgeted Rs 30,000 crore against the Rs 76,000 crore recommended by the 15th Finance Commission. Hence, the finance minister sought parliament’s nod for additional spend of Rs 44,000 crore to meet the gap on the revenue deficit grants for states, as recommended by the Finance Commission. Read more

Let’s quickly go through the 10 things you must know before the opening bell today, CLICK HERE

CPI Inflation numbers came out yesterday, slightly better as compared to July

India’s retail inflation softened marginally to 6.69 percent in August from 6.73 percent in July, as per government data released on Monday.

The CPI core inflation was recorded at 5.8 percent as compared to 5.7 percent, all comparisons made month on month.

The combined food price inflation during the month was at 9.05 percent versus 9.62 percent. The vegetable inflation rose marginally to 11.41 percent from 11.29 percent while fuel & light inflation increased to 3.10 percent from 2.80 percent. 

Further, housing inflation during August was recorded at 3.10 percent as against 3.25 percent in July.

Clothing & Footwear inflation was at 2.77 percent versus 2.91 percent; Cereals inflation at 5.92 percent versus 6.96 percent and Pulses inflation was at 14.44 percent versus 15.92 percent. To watch the video, click here

Infra stocks on road to re-rating: Massive order book, inexpensive valuations are key positives, say brokerages

Infrastructure companies that cover laying of roads and work on irrigation and mining projects have suffered badly over the past few months. With the economy gradually opening up, brokerages are back to being bullish on the sector given the massive order book and series of investments expected this fiscal. Moreover, Aatma Nirbhar Bharat Abhiyaan, NHAI and NIP programmes will build a long-term view on the sector with scope of re-rating, brokerages said.

Continuous project awards by NHAI and expected government projects in Q3FY21 are making this space bullish. Brokerages suggest that there’s a scope of re-rating in infrastructure companies as banks are also being supportive by using surplus liquidity and low interest rates to increase allocation, for infra companies. Click here

Multicap Muddle: All you need to know about the new multicap fund rules

The market regulator Securities and Exchange Board of India (SEBI) clarified that complying with the new multicap fund rules is not the only option for asset management companies (AMCs).

Earlier, the multicap category of mutual funds (MFs) allowed the fund manager absolute and complete flexibility in investing wherever he or she wanted, largecaps, midcaps, multicaps or smallcaps. But now, SEBI has said that it needs to follow a 25-25-25 percent mandate at least for 75 percent of the folio. It needs to be equally divided between largecap, midcap and smallcaps. Watch Surabhi Upadhayay explaining it all out in this video