Market Unplugged Podcast: Here’s why metals and midcaps are outperforming

Rising inflation in the US sparked a sell-off in the equity market across the globe, including the US. In this edition of the Market Unplugged Podcast, CNBC-TV18 National News Editor Prashant Nair talks to CNBCTV18.com Executive Editor Santosh Nair about the historical trends in the link between inflation and the stock market performance in the US.

They also discuss the factors driving the outperformance in midcap stocks and why the rally in metal stocks is likely to continue for some more time. They finally touch upon whether defensive stocks will find takers, given their expensive valuations, if the overall market outlook darkens.

Tune in to the Market Unplugged Podcast for more.

Here are key stocks that moved the most on May 14

stocks, markets

Indian indices ended flat on Friday as losses in metal, auto stocks offset a surge in FMCG majors. Asian Paints surged 8.5 percent and UPL ralled over 7 percent after both the stock reported stellar earnings for the March quarter.

The Sensex ended 42 points higher at 48,732 while the Nifty fell 19 points to settle at 14,678. Both indices finished the holiday-shortened week about 1 percent lower after losses earlier in the week on US inflation worries.

Broader markets underperformed benchmarks with the midcap and smallcap indices down around 1.5 percent each for the day.

Here are the key stocks that moved today:

PowerGrid InvIT: The initial public offering (IPO) of PowerGrid Infrastructure Investment Trust (PowerGrid InvIT) made a muted debut on the bourses today. The stock rose 3 percent to Rs 103 per share on BSE as against its issue price of Rs 100 per unit. The IPO was open for subscription from April 29-May 3 with a price band fixed at Rs 99-100 per unit. Sponsored by Power Grid Corporation of India, this was the first InvIT to be launched by the government company.

Asian Paints: The share price of Asian Paints surged over 8 percent after the company reported better-than-expected earnings for the March quarter. The company reported an 81.13 percent jump in its consolidated net profit to Rs 869.89 crore in Q4 helped by volume growth in the domestic as well as in the international market. The company had posted a net profit of Rs 480.25 crore during the January-March quarter of the previous fiscal, Asian Paints said in a regulatory filing.

UPL: The share price of UPL rallied over 7 percent after the company reported better-than-estimated earnings for the fourth quarter of fiscal 2021. The agrochemical company reported a consolidated profit at Rs 1,361 crore in Q4FY21, registering a 74 percent growth against Rs 784 crore in the year-ago quarter. The company’s consolidated revenue from operations during the quarter rose 14.8 percent to Rs 12,796 crore from Rs 11,141 crore, YoY, with volume growth at 18 percent and a price increase of 1 percent

HG Infra Engineering: Shares of HG Infra Engineering soared 15 percent after the company reported a robust set of numbers for the quarter ended March 2021 (Q4FY21), with standalone profit after tax jumping 91 percent year-on-year (YoY) to Rs 97.70 crore on the back of strong revenue. The construction and engineering company had logged a profit of Rs 51.3 crore in Q4FY20.

Welspun India: Welspun India shares rose 10 percent after the firm said that it has again signed an agreement with US-based retailer Target Corp. It added that until FY16, business with Target Corp accounted for 10 percent of the overall business.

 

Motilal Oswal’s top largecap investment ideas amid second COVID wave; ICICI Bank, Infosys, Titan and more

markets
Infosys
Infosys | Motilal Oswal continues to see Infosys as a key beneficiary of a recovery in IT spends in FY22E, given its capabilities around Cloud and Digital transformation. Leading operational performance in FY21 and strong deal wins should translate into strong outperformance in EPS growth versus the sector.
ICICI Bank | The bank has delivered double-digit RoE (~12.6%) for the first time post FY17 and we expect RoA/RoE to improve to 1.7%/15.2% in FY23E, Motilal Oswal said.
UltraTech Cement
UltraTech Cement | We estimate an 11%/19% consolidated EBITDA/PAT CAGR over FY21–23E, driven by an 11% volume CAGR, lower operating costs, and lower interest costs, the brokerage firm said.
hindustan unilever
Hindustan Unilever | The strong outlook on rural, GSK Consumer Healthcare synergies, and sustained growth and premiumization in Skin Cleansing offer further medium-term tailwinds, the brokerage said.
Mahindra and Mahindra, coronavirus, COVID-19
Mahindra & Mahindra | Tractors and Pickup UVs are on a strong footing in terms of outlook, M&M’s competitive positioning, and industry-level consolidation. However, M&M’s SUV business is severely challenged. Further, it has guided for an almost 90 percent reduction in international subsidiary losses in FY22E, driven by the completion of phase-1 of the capital allocation exercise, Motilal Oswal said.
SBI | The brokerage believes the earnings normalization cycle for SBI has begun as the uncertainty ushered by COVID-19 has receded significantly. IT maintains FY22E/FY23E estimates and projects RoA/RoE of 0.8%/14.5% by FY23E.
Initial Public Offering, IPO, SBI, SBI Cards, SBI Cards and Payment Services, State Bank of India
SBI Cards & Payment Services | Gradual decline in the RBI RE book and an increase in the revolver mix, coupled with controlled funding cost, would support margins over the medium term. We estimate a loan book/earnings CAGR of 24%/60% over FY21–23E. We estimate RoA/RoE to improve to 6.8%/28% in FY23E.
HCL Technologies
HCL Technologies | Given its deep capabilities in the IMS space and strategic partnerships, investments in cloud, and digital capabilities, the brokerage expects HCL Technologies to emerge stronger on the back of an expected increase in enterprise demand for these services.
Titan (stock image)
Titan Company | There is a strong growth runway given Titan’s market share of less than 10% and the continuing struggles of unorganized and other organized peers. Balance Sheet improvements, especially on the working capital front, were impressive. If sustained, these could significantly elevate the medium to longer-term RoCE, especially for a business that has prospects of 20% topline growth beyond the near term COVID-related blip, Motilal Oswal said.
Hindalco Industries | Hindalco Industries is Motilal Oswal’s preferred non-ferrous pick owing to its strong profitability in the India Aluminum business from its low-cost integrated operations, a positive outlook for Novelis, driven by a recovery in auto demand and cost synergies from Aleris, solid FCF generation, which should reduce leverage sharply, and reasonable valuations.
drugs, drug price
Divi’s Laboratories | We are encouraged by promising demand prospects and multiple growth levers – a) new product additions, b) a strong chemistry skill set, c) efficient manufacturing capabilities, d) scale-led advantage in legacy molecules, e) minimal financial leverage, and f) sufficient cash available for new projects. We expect 27%/38% sales/earnings CAGR over FY20-23, the brokerage house said.

GoAir plans D-Street landing with Rs 3,600 crore IPO

GoAir

Wadia Group-owned GoAir has filed the Draft Red Herring Prospectus (DRHP) for its IPO with market regulator SEBI. The move came just ahead of the airline deciding to rebrand itself as ‘GoFirst’ from ‘GoAir’. The airline intends to raise Rs 3,600 crore through its proposed IPO.

A Draft Red Herring Prospectus is a preliminary registration document prior to a public offering. ICICI Securities, Citigroup, Morgan Stanley are bankers to GoAir’s IPO.

According to sources, the company would be issuing 25-30 percent equity into the market via the fresh issue. Since there will not be any Offer For Sale (OFS) element in the issue, all funds raised would come into the company. As per the DRHP filed, GoAir intends to use Rs 2,015 crore or prepayment or scheduled repayment of all or a portion of outstanding borrowings. The airline also intends to use Rs 279 crore for replacement of letters of credit issued to certain aircraft lessors and Rs 254 crore is for repayment of dues to the Indian Oil Corporation.

Repayment and prepayment would substantially reduce the total borrowings of the airline which stands at Rs 2,955 crore.

If one looks at financials, total income for the airline stood at Rs 1,438 crore for the nine months ending December 2020. The airline has been incurring losses which stood at Rs 470 crore for nine months ending December 2020.

GoAir in its DRHP has mentioned that the airline has placed firm orders for 144 Airbus A320 NEO aircraft as part of its growth plan. Of these, they have taken delivery of 46 Airbus A320 NEO aircraft and awaiting delivery of 98 Airbus A320 NEO aircraft. The remaining aircraft are scheduled to be delivered from 2021 onwards, subject to any delivery advancements or deferrals to be negotiated with Airbus.

Talking about risks, the DRHP mentioned that the airline has and continues to be in payment default under several aircraft lease agreements. Such defaults may lead to lessors initiating legal or enforcement proceedings or enforce bank guarantees, appropriate security deposits or repossess aircraft, which will adversely affect the business, financial condition and results of operations.

GoAir has also defaulted under one of the loan agreements (in relation to which the airline has entered into an agreement to reschedule the principal repayments).

Four lessors have issued default notices to GoAir. These notices relate to 24 aircraft and the total amount claimed under these notices is $35.75 million.

The airline commenced operations in 2005 and has just over 50 aircraft in its fleet.

UPL shares hit 52-week high after better-than-expected Q4 earnings

Stock market

The share price of UPL rallied over 7 percent to hit a 52-week high of Rs 744 apiece in early trade on Friday after the company reported better-than-estimated earnings for the fourth quarter of fiscal 2021.

The agrochemical company reported a consolidated profit at Rs 1,361 crore in Q4FY21, registering a 74 percent growth against Rs 784 crore in the year-ago quarter.

The company’s consolidated revenue from operations during the quarter rose 14.8 percent to Rs 12,796 crore from 11,141 crore, YoY, with volume growth at 18 percent and price increase of 1 percent.

UPL’s earnings were ahead of CNBC-TV18’s analysts’ poll that pegged profit at Rs 986 crore on revenue of Rs 12,167 crore.

On the operating front, EBITDA during the quarter increased 31 percent YoY to Rs 2,839 crore, while EBITDA margin expanded by 270 bps YoY to 22.2 percent.

In FY21, UPL achieved its guidance for revenue growth of 6-8 percent and surpassed EBITDA guidance of 10-12 percent growth.

Global brokerage CLSA reiterated a Buy rating on the stock and increased the target price to Rs 900 per share from Rs 740 earlier. It also raised FY22-23 EPS estimates by 4-5 percent.

“Strong India, EU and Latin America performance was offset by weak rest-of-world/North America sales. UPL beat FY21 revenue/Ebitda growth guidance but missed debt-reduction guidance by Rs 7 billion,” CLSA said.

JPMorgan believes that UPL’s positive earnings momentum is likely to continue, while net debt reduction needs to accelerate.

UPL is well-positioned to gain in current environment and strong crop prices will continue to drive net debt reduction, JPMorgan said.

It maintained an Overweight call with a target price of Rs 760 per share.

Domestic brokerage house Kotak Institutional Equities maintained Sell rating, but raised the target price to Rs 650 per share. “Q4 earnings were above estimate, led by higher revenue growth and gross margin,” it said.

Kotak Institutional Equities raised FY22/23 EBITDA estimates by 10%/15%.

 

Catch all the latest updates from the stock market here.

Opening Bell: Sensex, Nifty open higher amid positive global cues; banks, FMCG stocks gain

Sensex, Nifty, Bank Nifty, Nifty IT, Nifty FMCG, Nifty Auto, Nifty Metal, HDFC, HDFC Bank, Reliance Industries, TCS, Hindustan Unilever, BSE India, NSE India, Markets Today, Market News

The Indian equity benchmark indices opened higher on Friday led by financials and pharma stocks amid positive global cues.

At 9:15 am, the Sensex opened 0.43 percent, or 208.13 points higher at 48,898.93, while the Nifty50 index opened at 14,749.40, up 52.90 points, or 0.36 percent.

Broader markets traded higher with Nifty Smallcap100 and Nifty Midcap100 indices up 0.80 percent and 0.47 percent, respectively.

Among sectoral indices, the Nifty PSU Bank saw the most gains followed by Nifty FMCG, Nifty Pharma and Nifty Financial Services. Selling was seen in IT, metals and auto indices.

UPL, Asian Paints, Coal India, Cipla and Dr Reddy’s Laboratories were the Nifty50 top gainers, while Wipro, TCS, Tata Steel, Infosys and Tech Mahindra were the top losers.

UPL shares rallied over 4 percent after the company’s Q4FY21 consolidated profit jumped 73.6 percent to Rs 1,361 crore from Rs 784 crore and revenue rose 14.9 percent to Rs 12,796 crore from Rs 11,141 crore, YoY.

Globally, Japanese shares led a rebound in Asian markets on Friday, building on the lead from investors on Wall Street snapping up stocks that would benefit most from an economic recovery, a Reuters report said.

The rally interrupted a three-day rout for stocks globally, as market jitters over accelerating US inflation were calmed by Federal Reserve officials reiterating that price pressures from the reopening of the economy would prove transitory.

Japan’s Nikkei jumped 1.3 percent, while MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.6 percent. Chinese blue chips rose just 0.1 percent, while Australia’s benchmark rallied 0.7 percent.

 

Catch all the latest updates from the stock market here.

10 things you need to know before the opening bell on May 14

1. Wall Street: Stocks closed higher on Wall Street Thursday, snapping a three-day losing streak that included the biggest drop for the S&P 500 since February. The S&P 500 rose 1.2 percent, the DJIA gained 1.3 percent and the Nasdaq 0.7 percent.
Vaccine news triggers cash dump on emerging markets - IIF
2. Asian stocks: Stocks in Asia-Pacific rose Friday morning, following an overnight bounce for stocks stateside. In Japan, the Nikkei 225 jumped 1.43 percent in morning trade — partially recovering from the more than 2 percent plunge seen on Thursday. South Korea’s Kospi advanced 0.78 percent. Mainland Chinese stocks were higher in early trade, with the Shanghai composite rising 0.3 percent. Hong Kong’s Hang Seng index gained 0.64 percent. Over in Australia, the S&P/ASX 200 climbed 0.74 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.74 percent higher.
3. D-Street: The National Stock Exchange and the Bombay Stock Exchange remained closed on Thursday on account of Id-Ul-Fitr. On Wednesday, the Sensex ended 471.01 points or 0.96 percent lower at 48690.80 while the Nifty fell 154.30 points or 1.04 percent to close at 14696.50.
4. Crude oil: Oil prices fell on Friday after dropping about 3 percent a day earlier as coronavirus cases remained high in major oil consumer India and as a key fuel pipeline in the United States resumed operations after being shut due to a cyber attack. Brent crude oil futures were down 0.5 percent at $66.70 a barrel by 0200 GMT, while US WTI was down 0.4 percent at $63.54 a barrel.
5. Rupee: The rupee declined by 8 paise to close at 73.42 against the US currency on Wednesday, snapping its four-day gaining streak due to risk aversion in the global markets and surge in crude oil prices.
6. Gold: Gold edged lower on Friday, as a firmer dollar made bullion more expensive for other currency holders, although a pullback in the US Treasury yields limited losses for the safe-haven metal. Spot gold was down 0.2 percent at $1,823.77 per ounce by 0127 GMT. Bullion lost 0.4 percent so far this week. US gold futures were steady at $1,823.20.
Explained: What's this craze for 'NFTs' all about, anyway?
7. Bitcoin: Bitcoin slid to a 2-1/2-month low on Thursday after a regulatory probe into crypto exchange Binance added to pressure from Tesla Inc chief Elon Musk’s reversing his stance on accepting the digital currency. Bitcoin dropped to $45,700, the lowest since March 1, then steadied at $49,312 in Asia morning trade on Friday.
8. COVID-19 vaccine: A government panel has recommended increasing the gap between two doses of Covishield vaccine to 12-16 weeks and said that pregnant women may be offered the choice to take any vaccine, official sources said on Thursday. Read more
9. Auto industry: Automotive dealers have sought fiscal support, including an extension of GST payment for the next three months, to survive the second wave of COVID-19. As per industry sources, the automotive dealers’ body FADA has written to Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das, apprising them of the difficulties being faced by the sector while seeking immediate relief measures.
paracetamol medicines drugs pharma pharceuticals
10. Pharma industry: The pharma industry has reached out to the government on concerns over the rising input costs for drugs, according to people in the know. The industry has requested the government to allow it to increase the prices of formulations by 20 percent as a one-time measure. Read more

Here’s a look at buzzing stocks for trade on May 14

Panacea Biotec, stocks of panacea biotec, Sputnik V, stock market, NSE, BSE

The Indian market is likely to open on a cautious note Friday. The SGX Nifty was trading around 14,686 versus Nifty May Futures’ previous close of 14,708.

Here are the top 10 buzzing stocks for today:

1. Infosys: The company has collaborated with RXR Realty to develop a smart office platform running on Microsoft Azure for safe return to work.

2. UPL: The company’s Q4FY21 consolidated profit jumped 73.6 percent to Rs 1,361 crore from Rs 784 crore and revenue rose 14.9 percent to Rs 12,796 crore from Rs 11,141 crore, YoY.

3. Vedanta: The company reported a consolidated profit of Rs 6,432 crore for March quarter 2020-21 as against a loss of Rs 12,521 crore in the year-ago period. Revenue increased to Rs 29,065 crore from Rs 20,382 crore, YoY.

4. Jindal Steel & Power: The company reported Q4FY21 consolidated profit at Rs 2,139.28 crore against Rs 305.62 crore and revenue jumped to Rs 11,880.61 crore from Rs 6,795.18 crore, YoY.

5. Torrent Pharmaceuticals: The company has entered into a voluntary licensing agreement with Lilly for Baricitinib for Covid-19 in India.

6. Apollo Tyres: The company’s Q4FY21 consolidated profit jumped to Rs 287.3 crore from Rs 77.86 crore, revenue climbed to Rs 5,025.7 crore from Rs 3,615.57 crore, YoY.

7. Hindalco Industries: Subsidiary Novelis’ Q4FY21 net income from continuing operations rose 186 percent YoY to $180 million and net sales increased 33 percent YoY to $3.6 billion.

8. Tata Power Company: The company’s Q4FY21 profit of Rs 570 crore beat the estimate of Rs 386 crore, revenues too came in ahead of estimates at Rs 10,127 crore, up 53% YoY.

9. Piramal Enterprises: The company reported a net loss of Rs 510.4 crore in Q4FY21 versus a loss of Rs 1,702.6 crore, YoY. Revenue was up 1.8 percent to Rs 3,401.6 crore from Rs 3,341 crore, YoY.

10. Happiest Minds Technologies: The company’s Q4FY21 consolidated net profit jumped to Rs 36.05 crore from Rs 5.30 crore, while revenue rose 18.4 percent to Rs 220.71 crore from Rs 186.35 crore, YoY.

Stock Market Highlights: Sensex ends flat, Nifty below 14,700; metals, auto drag, FMCG stocks gain

Stock Market Highlights: Indian equity indices, Sensex and Nifty ended Friday’s volatile session flat as losses in metal, auto stocks offset a surge in FMCG majors. Broader markets underperformed benchmarks with the midcap and smallcap indices down around 1.5 percent each for the day. Barring Nifty FMCG, all other sectoral indices ended in the red with metal and realty indices falling the most.

CNBC-TV18’s top stocks to watch out for on May 14

Markets, Stocks
PowerGrid InvIT | The units of the infrastructure investment trust will be listed on exchanges today.
FILE PHOTO: The logo of Infosys is pictured inside the company's headquarters in Bengaluru
Infosys | The company has collaborated with RXR Realty to develop a smart office platform running on Microsoft Azure for safe return to work.
UPL | The company’s Q4FY21 consolidated profit jumped 73.6 percent to Rs 1,361 crore from Rs 784 crore and revenue rose 14.9 percent to Rs 12,796 crore from Rs 11,141 crore, YoY.
Srinivasan Venkatakrishnan resigns
Vedanta | The company reported a consolidated profit of Rs 6,432 crore for March quarter of 2020-21 as against a loss of Rs 12,521 crore in the year-ago period. Revenue increased to Rs 29,065 crore from Rs 20,382 crore, YoY.
Jindal Steel & Power | The company reported Q4FY21 consolidated profit at Rs 2,139.28 crore against Rs 305.62 crore and revenue jumped to Rs 11,880.61 crore from Rs 6,795.18 crore, YoY.
TorrentPharma
Torrent Pharmaceuticals | The company has entered into a voluntary licensing agreement with Lilly for Baricitinib for Covid-19 in India.
Hindalco Industries | The company’s subsidiary Novelis’ Q4FY21 net income from continuing operations rose 186 percent YoY to $180 million and net sales increased 33 percent YoY to $3.6 billion.
Commerce min for extension of anti-dumping duty on carbon black used in rubber industry
Apollo Tyres | The company’s Q4FY21 consolidated profit jumped to Rs 287.3 crore from Rs 77.86 crore, revenue climbed to Rs 5,025.7 crore from Rs 3,615.57 crore, YoY.
Mumbai Power Cut: Maha energy minister hits out at Tata Power, seeks reforms in isMumbai Power Cut: Maha energy minister hits out at Tata Power, seeks reforms in islanding systemlanding system
Tata Power Company | The company’s Q4FY21 profit of Rs 570 crore beat the estimate of Rs 386 crore, revenues too came in ahead of estimates at Rs 10,127 crore, up 53% YoY.
piramal
Piramal Enterprises | The company reported a net loss of Rs 510.4 crore in Q4FY21 versus a loss of Rs 1,702.6 crore, YoY. Revenue was up 1.8 percent to Rs 3,401.6 crore from Rs 3,341 crore, YoY.
Happiest Minds Technologies | The company’s Q4FY21 consolidated net profit jumped to Rs 36.05 crore from Rs 5.30 crore, while revenue rose 18.4 percent to Rs 220.71 crore from Rs 186.35 crore, YoY.
McDonald's hires diversity chief amid corporate turmoil
Westlife Development | The company’s Q4FY21 net loss narrowed to Rs 6.45 crore from Rs 25.26 crore, while revenue rose 6.31 percent to Rs 357.58 crore from Rs 336.35 crore, YoY.
Pidilite Industries | The company reported a sharp rise in consolidated profit at Rs 307.44 crore in Q4FY21 against Rs 156.51 crore, YoY. Revenue rose to Rs 2,235.52 crore from Rs 1,544.68 crore YoY.
Shipping Corporation of India | The company’s Q4FY21 net profit fell 23 percent to Rs 85.76 crore from Rs 111 crore, while income declined to Rs 900.73 from 1,391.85 crore, YoY.
Sensex, Nifty, Bank Nifty, Nifty IT, Nifty FMCG, Nifty Auto, Nifty Metal, HDFC, HDFC Bank, Reliance Industries, TCS, Hindustan Unilever, BSE India, NSE India, Markets Today, Market News
BSE | The company posted a net profit of Rs 31.75 crore in Q4FY21 versus a net loss of Rs 1.91 crore, while revenue rose 27 percent to Rs 152.18 crore from Rs 119.56 crore, YoY.
Hindustan Construction Company | The company’s joint venture with KEC International won a Rs 1,147 crore order from Chennai Metro Rail.
Polycab
Polycab India | The company’s Q4FY21 net profit was up 32 percent YoY at Rs 283.2 crore and revenue rose 43 YoY to Rs 3,037.4 crore.
S&P Global confirms 'BBB-A/-3' rating on Indian economy, outlook stable
KCP | CRISIL upgraded long-term credit rating to A/Stable, from A-/Stable, and short term credit rating to A1 from A2+.
Earnings Today | Larsen & Toubro, Dr Reddy’s Laboratories, Cipla, Aditya Birla Capital, Macrotech Developers, Automotive Axles, Balkrishna Industries, Cholamandalam Financial Holdings, Escorts, Greenpanel Industries, HIL, Indigo Paints, Jindal Stainless, Just Dial, Mindspace Business Parks REIT, Monte Carlo Fashions, Oberoi Realty, Reliance Infrastructure, Rossari Biotech, SKF India, Texmaco Infrastructure, Welspun India, among others.