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Reports India

Indian stock market and companies daily report (May 06, 2014, Tuesday)

May 6, 2014, Tuesday, 04:53 GMT | 00:53 EST | 08:23 IST | 10:53 SGT
Contributed by Angel Broking

The Indian Markets are expected to open on a positive note today tracking positive opening in SGX Nifty and most of the Asian markets.

After recovering from an early move to the downside, US stocks moved modestly higher over the course of the trading day on Monday. The initial weakness on Wall Street was partly due to news of continued clashes between Ukrainian armed forces and pro-Russian militants in the eastern part of the country. However, an upbeat report on service sector activity from the Institute for Supply Management (ISM) showing that service sector activity expanded at a faster than expected rate in April contributed to the rebound in the US markets. The ISM said its non-manufacturing index rose to 55.2 in April from 53.1 in March, with a reading above 50 indicating growth in the service sector. Economists had been expecting the index to show a more modest increase to a reading of 54.2. Meanwhile, European stocks managed to trim steep early losses on Monday, but finished the choppy session in negative territory after weak Chinese data.

The Indian markets snapped a five-day losing streak on Monday, although gains remained marginal amid weak global cues as investors remained concerned about the situation in Ukraine and digested weak manufacturing data out of China.

Markets Today

The trend deciding level for the day is 22,464 / 6,707 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 22,573 - 22,701 / 6,733 - 6,768 levels. However, if NIFTY trades below 22,464 / 6,707 levels for the first half-an-hour of trade then it may correct 22,336 - 22,226 / 6,673 - 6,646 levels.

Result Preview

HDFC- (CMP: Rs.887 / TP: - / Upside: -)

HDFC is expected to announce its 4QFY2014 results today. NII is expected to increase by 13.9% yoy to Rs.2,164cr. Non-interest income is expected to come de-grow by 9.7% yoy to Rs.306cr. Operating Income and operating profit are expected to grow by 10.4% and 9.9% respectively to Rs.2,470cr and Rs.2,335cr. Provisioning is expected to come in at Rs.36cr, an increase of 45.9% yoy. Consequently the PAT is expected to increase by 12.4% yoy to Rs.1,748cr. At CMP, the stock trades at 4.1x FY2016 ABV. We recommend Neutral rating on the stock.

Result Review

Canara Bank - (CMP: Rs.304/ TP: Rs.329 - / Upside: 16.0%)

Canara Bank reported healthy numbers on the NII as well as asset quality front. On the operating front, NII growth was healthy at 21.3% yoy on back of advance growth of 24.3% yoy, while non-interest income grew 6.3% yoy, ahead of our expectations. Operating expenses grew by 23.1% yoy thus limiting operating profit growth to 10.9% yoy. The bank witnessed asset quality improvement during the quarter, as absolute Gross and Net NPAs for bank decreased by 6.2% and 13.2% sequentially. Thus Gross and Net NPAs improved by 30bp and 41bp to 2.5% and 2.0% respectively qoq. We await further clarity from management regarding asset quality performance during quarter. Provisioning expenses for the bank grew 45.0% yoy to Rs.1,091 cr, leading to a earnings de-growth of 15.8% yoy. At CMP, the stock trades at valuations of 0.5x FY2016E ABV. We maintain our Buy recommendation on the stock.

Economic and Political News

- CAD to be at 2% of GDP: Rangarajan

- Exporters may get 50% freight subsidy: Draft export policy

- New Govt should respect Rajan's appointment: Chidambaram

Corporate News

- GE plans Rs 2,340-cr open offer for Alstom units

- Asian Paints closes Bhandup plant in Mumbai

- M&M launches SsangYong's Rexton RX6

- Sun Pharma denies unit's role in Ranbaxy share surge