7 stocks from BSE Smallcap index rally over 50% in July

STOCK MARKET – Parsvnath Developers, GTL Infrastructure, McNally Bharat, Aksh Optifibre, Gujarat NRE Coke, Himachal Futuristic Communications (HFCL) and GVK Infrastructure & Power are the seven stocks from the S&P BSE Smallcap index that have rallied by more than 50% thus far in July.

At 12:05 pm: the S&P BSE Smallcap index was trading at 16,103, gaining 4.5% during the current month. On comparison, the S&P BSE Midcap index up 4.7%, while the benchmark S&P BSE Sensex up 4.9%, set to post its record monthly gain since March 2016 (up 10.2%).

As many as 48 stocks from the smallcap index have surged more than 25% thus far in July. The list includes Tinplate Company, Sterlite Technologies, Saregama India, Thirumalai Chemicals, Rico Auto Industries and Jubilant FoodWorks are among those which soared between 40% and 49%.

Foreign portfolio investors (Rs 2,662 crore) and domestic institutional investors (Rs 3,018 crore) have collectively pumped in net amount of Rs 5,680 crore in equity market, the stock exchange data shows.

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SBI gains after cutting savings bank rate to 3.5% for deposits below Rs 1 cr

STOCK MARKET – Shares of public sector undertakings (PSU) banks were trading higher by upto 4%, recovering from their intra-day lows, after the state-owned banking giant State Bank of India (SBI) cut saving bank interest rates.

SBI rallied by 2.7% to Rs 307 on BSE after the bank introduced a two-tier saving bank interest rate from today, due to the decline in the rate of inflation and high real interest rates.

“The Bank is introducing 2 tier saving bank interest rate w.e.f. 31st July, 2017. While balance above Rs 1 crore will continue to earn interest rate at 4% per annum, interest rate at 3.5% per annum shall be offered on balances of Rs 1 crore and below,” SBI said in a press release.

The decline in the rate of inflation and high real interest rates are the primary considerations warranting a revision in the rate of interest on saving bank deposits, it added.

The revision in saving bank rate would enable the bank to maintain the MCLR (marginal cost based lending rates) at existing rates, benefiting a large segment of retail borrowers in SME, agriculture and affordable housing segments, it added.

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Larsen & Toubro nears 52-week high on good Q1 results

STOCK MARKET – Larsen & Toubro (L&T) gained 4% to Rs 1,206 on BSE in early morning trade after the engineering giant reported a 46% year-on-year (Y-o-Y) jump in consolidated net profit at Rs 893 crore for the quarter ended June 2017 (Q1FY18). Consolidated revenues rose 10% to Rs 23,990 crore on Y-o-Y basis.

The stock is trading close to its 52-week high of Rs 1,223, touched on May 30, 2017 in the intra-day trade. It hit a record high of Rs 1,262 on March 4, 2015.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) margin declined to 8.1% from 9.2%, primarily due to job mix and cost overruns on extended stay in a few projects, L&T said in a press release.

Order inflow, however, fell 11% to Rs 26,352 crore over the previous year quarter.

“Order inflow reflects muted capex environment. The trend of higher public sector outlay vis-a-vis reduced private sector capex continues,” it added.

The order pipeline across segments remains strong though. The orders backlog at Rs 262,900 crore logged 2% growth during the quarter.

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Buy Reliance Infra, Mahindra CIE, IRB Infra, says Prabhudas Lilladher

SHARE MARKET – Few trading ideas by Vaishali Parekh, Research Analyst – Technical Research at Prabhudas Lilladher:

BUY RELIANCE INFRA

CMP: Rs 526

TARGET: Rs 570

STOP LOSS: Rs 502

The stock has witnessed a steep correction from the peak of Rs 620 to fall to Rs 436 levels and thereafter has recovered significantly and has gained strength to retrace almost 50%. It has produced a healthy positive candle now and the RSI has shown a trend reversal signaling a buy in this stock. We anticipate the stock to move further upward and with decent volume participation witnessed, we recommend a buy in this stock for an upside target of Rs 570 keeping a stop loss of Rs 502.

BUY MAHINDRA CIE AUTOMOTIVE      

CMP: Rs 251.70

TARGET: Rs 274

STOP LOSS: Rs  235

The stock has been gradually on the rise gaining potential and strength to signify more upward rally in the coming days and with the RSI also indicating a trend reversal on the positive side, we anticipate the stock to rise further to reach new targets. With good volume participation and also MACD on the rise, we recommend a buy in this stock for an upside target of Rs 274 keeping a stop loss of Rs 235.

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Sebi issues new bond regulations to reduce corporates’ funding sources

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STOCK MARKET – The new regulations of Securities and Exchange Board of India (Sebi) on foreign holdings of rupee-denominated corporate bonds will reduce options for companies to diversify their funding sources, says a report.

Last week, the market regulator had said that foreign purchases of rupee-denominated corporate notes would only be permitted through auction once the foreign holdings reached 95 per cent of the cap.

“New, tighter regulations on foreign holdings of rupee-denominated corporate bonds and offshore issuance will reduce options for companies to diversify their funding sources, at least temporarily,” Fitch Ratings said in a report.

The new norms will also prevent the use of certain complex transaction structures, which have recently gained popularity among corporate issuers, it said.

At present, the foreign portfolio investors can invest up to Rs 2,44,300 crore ($ 51 billion) in corporate bonds issued by domestic companies.

Foreign ownership is already above 95 per cent of the cap, which means these restrictions have come into effect, the report said.

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ICICI Bank slips post 8% fall in June-quarter profit

STOCK MARKET – ICICI Bank fell as much as 2.9% in today’s trade after the private lender reported 8% fall in June quarter profit to Rs 2,049 crore (YoY), in line with Street expectations. The drop in profit was impacted by higher provisions and subdued growth in other income & operating income.

 

Slow growth in net interest income also hit profitability but the asset quality was stable during the quarter with sharp fall in slippages. Slippages for the quarter stood at Rs 4,975 crore, which were much lower than Rs 11,289 crore reported in Q4FY17.

Chanda Kochhar, MD & CEO, explained that the dip in profit was on account of the fact that exchange rate gain related to overseas operations, which was available in the year-ago quarter, was no longer permitted to be accounted for as income from the reporting quarter and ICICI Prudential Life had moved to dividend payments on half-yearly basis from quarterly basis.

 

Asset quality of the country’s largest private sector lender was stable during the quarter. Gross non-performing assets increased to 7.99% from 7.89% but net NPA declined to 4.86% from 4.89% (QoQ).

 

Kochar said that the gross additions to NPAs at Rs 4,976 crore in the June quarter were the lowest in the last seven quarters, reiterating the bank’s guidance that incremental bad loans in the current financial year to March will be lower than the last financial year.

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Reliance Capital hits 52-week high post Q1 results

STOCK MARKET – Reliance Capital hit 52-week high of Rs 698, up 6% on BSE in early morning trade in an otherwise weak market, after the company reported 15% rise in consolidated net profit at Rs 238 crore during the first quarter on back of strong growth in all business segments. The company had posted profit of Rs 207 crore in year ago quarter.

Total income during the quarter under review rose 33% to Rs 4,857 crore from Rs 3,663 crore in the corresponding previous period.

The profit before tax of the mutual fund business grew 23% to Rs 150 crore. Assets under management grew 23% to Rs 3.62 lakh crore at the end of the quarter.

The commercial finance business of the company reported 44% in net profit to Rs 65 crore, while the general insurance arm posted 22% growth in net profit to Rs 44 crore during the quarter.

“Listing of Reliance Nippon Life Asset Management and Reliance General Insurance to be completed in FY18, subject to necessary regulatory approvals,” Reliance Capital said in a press release.

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Idea Cellular erases initial losses to gain even after poor Q1 results

STOCK MARKET – Idea Cellular pared initial losses to gain as much as 2.1% on value buying after the company on Thursday posted a loss of Rs 815.9 crore in the first quarter ended June 30, missing estimates as Reliance Jio triggered a price war in the Indian mobile telephony market.

 

The company had reported a net profit of Rs 217.1 crore in the corresponding quarter last year. This is the company’s its third net loss in succession. Revenue for India’s No. 3 mobile phone operator also fell nearly 14% on year to Rs 8,166.5 crore.

 

Idea attributed the steep decline in voice and mobile data realisations to the aggressive tariff led by unlimited voice and data bundle plans. “However, the fall in realisation rate was largely compensated by a substantial volume growth,” it said.

 

The scrip lost as much as 5.4% in the early morning trade but later erased initial losses and was trading 0.7% higher at Rs 90.30 at 12.47 pm (IST). On the other hand, Sensex was down 0.57 per cent at 32,198.

 

Shares of the company had hit their fresh 52-week high of Rs 123.75 on March 20, 2017 and 52-week low of Rs 66 on November 9, 2016.

 

Idea ended June with 189 million users, compared with 189.5 million it had at the end of March.

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L&T Finance Holdings hits record high on stellar Q1 results

STOCK MARKET – L&T Finance Holdings (LTFH) hit its record high of Rs 170, up 6%, extending its 4% gains on BSE, after reported 49% year-on-year (YoY) growth in consolidated net profit at Rs 309 crore in June quarter (Q1FY18),led by strong earnings momentum in housing and investment management business. The company had a profit of Rs 207 crore in a year ago quarter.

“Assets quality of the company also improved with gross non-performing assets (GNPA) has reduced by 18% – from Rs 4,519 crore to Rs 3,698 crore. With improved provision coverage, NNPA% has seen a sharp reduction from 5.02% in Q4FY17 to 3.31% in Q1FY18,” LTFH said in a release.

Return on Equity (RoE) improved by 385 bps – 13.63% in Q1FY18 as against 9.78% in Q1FY17.

“With increase in profitability supported by a strong balance sheet, I believe that we are now at a juncture, where the strategic roadmap towards a top quartile RoE can be accelerated by “Growing Fearlessly”,” said Dinanath Dubhashi, Managing Director & CEO, LTFH.

Over past five quarters LTFH has shown commendable progress on its well articulated strategy. Cost control, increased sell down and strengthening the digital/analytics capabilities remain the key focus area even as the company aims to achieve top quartile RoE by 2020 or “earlier”, according to analysts at Antique Stock Broking.

So far in 2017, the stock has outperformed the market by surging 95%, as compared to 22% rise in the S&P BSE Sensex.

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Tata Elxsi hits 52-week high on 1:1 bonus share

SHARE MARKET – Tata Elxsi hit a 52-week high of Rs 1,767, up 5% on BSE in intra-day trade, after the company’s board recommended 1:1 bonus share.

“The board at its meeting held on July 27, 2017 has, subject to the approval of the shareholders, recommended the capitalization of its reserves for issuance of bonus shares to the shareholders in the ratio of 1 (one) bonus equity share of Rs 10 each fully paid-up for every 1(one) existing equity share of Rs 10 each fully paid-up (in the ratio of 1:1) held by the shareholders as on the “Record date” to be fixed for the purpose,” Tata Elxsi said in a statement.

Meanwhile, the company engaged in IT software products reported 19% year on year growth in its net profit at Rs 50 crore in June quarter (Q1FY18). The company had profit of Rs 42 crore in the same quarter year ago.

Revenues from operations during the quarter grew 9% to Rs 323 crore from Rs 296 crore in the corresponding quarter of previous fiscal.

At 3:16 am, the stock was up 3.3% at Rs 1,734 on BSE, as compared to a marginal 0.02% rise in the S&P BSE Sensex. The trading volumes on the counter jumped multiple-fold with 2.63 million shares changing hands on BSE and NSE so far.
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