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Reports India

Indian stock market and companies daily report (May 07, 2014, Wednesday)

May 7, 2014, Wednesday, 04:13 GMT | 23:13 EST | 07:43 IST | 10:13 SGT
Contributed by Angel Broking

The Indian Markets are expected to open flat with a negative bias tracking flat opening in SGX Nifty and negative opening in most of the Asian markets.

After coming under pressure in early trading on Tuesday, US stocks saw further downside over the course of the trading session. A negative reaction to quarterly results from American International Group (AIG) contributed to the weakness on Wall Street, with the insurer falling by 4.1%. The weakness on Wall Street also reflected lingering concerns about the crisis in Ukraine amid reports of continued clashes between Ukrainian armed forces and pro-Russian militants. European stocks also tumbled on Tuesday, extending modest losses from the previous session amid escalating violence in Ukraine.

The Indian shares extended gains for a second consecutive session on Tuesday, with heavyweight stocks like Reliance Industries and ICICI Bank pacing the gains. Investors shrugged off disappointing service sector data, which showed that activity in India's services industry contracted for a tenth straight month in April. The seasonally adjusted HSBC Services Purchasing ManagersRs. Index, compiled by Markit, rose to 48.5 from 47.5 in March, holding stubbornly below the 50-mark that divides growth from contraction.

Markets Today

The trend deciding level for the day is 22,529 / 6,720 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 22,582 - 22,656 / 6,739 - 6,762 levels. However, if NIFTY trades below 22,529 / 6,720 levels for the first half-an-hour of trade then it may correct 22,455 - 22,402 / 6,697 - 6,679 levels.

Result Review

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

HDFC reported in-line standalone earnings performance for the quarter. Earnings adjusted for dividends and sale of investments, for the company grew at 9.9% yoy. Robust Individual advances growth (26% yoy after adding back loans sold in last 12 months) and stability on the overall asset quality front (Gross NPA at 0.69%) were the key highlights from the results. NII for the company grew at 10.9% yoy, on back of lower 15.9% yoy growth in its loan book which was slower as compared to previous quarters reflecting the weak macro environment. Noninterest income for the company came in at Rs.155cr as compared to Rs.117 in 4QFY2013. Operating income and pre-provisioning profit grew at 12.0% and 12.2% yoy, respectively, in line-with expectations. Provisioning expenses for the company came in at Rs.30cr, higher than Rs.25cr during 4QFY2013. Overall, the company reported standalone earnings growth of 10.8% yoy at Rs.1,723cr. Currently, HDFC's core business (after adjusting Rs.274/share towards the value of its subsidiaries) trades at 3.6x FY2016E ABV, which in our view, offers limited scope for upside here on. Hence, we maintain our Neutral rating on the stock.

Result Preview

Lupin (CMP:Rs.1,002/TP:1,122/Upside:11.9%)

Lupin, is expected to register a strong revenue growth of 41.8% to end the period at Rs.3598cr, mainly driven by exports. Its OPM is expected to remain flat at 24.0%. Its net profit is expected to increase by 22.5% for the quarter to end at Rs.500cr.We maintain an Accumulate on the stock with a target priced of Rs.1,122.

Economic and Political News

- US faces pressure to take India to WTO on patent rules

- Deepak Parekh to present blueprint on infrastructure worth $tn to next govt

- Rising bad loans threaten economic recovery: OECD

Corporate News

- NTPC can cut power to BSES if not paid: SC

- Glenmark Pharma gets BSE nod to merge subsidiaries with itself

- Punj Lloyd wins Rs.1,270cr road project in Yemen

- CIL modifies fuel supply agreement model for new power plants