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Reports India

Indian stock market and companies daily report (May 19, 2014, Monday)

May 19, 2014, Monday, 05:28 GMT | 00:28 EST | 08:58 IST | 11:28 SGT
Contributed by Angel Broking


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

After showing a lack of direction throughout much of the session, US stocks moved to the upside in the latter part of the trading day on Friday. The upward move seen late in the trading session came as some traders looked to pick up stocks at somewhat reduced levels following the steep losses posted on Wednesday and Thursday. A mixed batch of U.S. economic data contributed to the choppy trading seen for most of the day, with traders weighing an upbeat housing report against disappointing consumer sentiment data. Meanwhile, the European stocks were mixed Friday, with German shares lagging behind other markets thanks to concerns about global demand for industrial goods.

Indian shares rallied on Friday, bucking weak global cues after election results suggested the opposition Bharatiya Janata Party and its allies won an absolute majority in the recently concluded Lok Sabha polls. According to Election Commission data, the BJP-led NDA has won 334 seats of the 543 constituencies.


Markets Today

The trend deciding level for the day is 24,457 / 7,299 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 25,041 - 25,959 / 7,467 - 7,732 levels. However, if NIFTY trades below 24,457 / 7,299 levels for the first half-an-hour of trade then it may correct 23,538 - 22,954 / 7,035 - 6,866 levels.


BJP gets a decisive mandate, Narendra Modi to be the next Prime Minister

The results of the 2014 general elections has been historic and for the first time since 1984, a single party has won a majority on its own in the Lok Sabha. The BJP has secured on its own 282 seats in the parliament and with its pre-poll alliance partners, the NDA has 334 members in parliament. Meanwhile, the ruling Congress Party suffered a devastating defeat, pulling in an abysmal tally of 44 seats, its lowest tally ever. A strong showing in the Hindi heartland, consisting of Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, Chhattisgarh, Haryana, Delhi, Jharkhand, Himachal Pradesh and Uttarakhand where the BJP won as many as 190 out of 225 seats led to the rout of not only the Congress but regional players such as SP, BSP, JD(U) and RJD. BJP also did exceedingly well in the crucial state of Gujarat, Maharashtra, Karnataka and Assam.

We believe that this is an unprecedented election results and something that the markets will rejoice in coming days. A strong stable mandate was the need of the hour and it has been delivered even more decisively than the markets had hoped for. There is well-grounded expectation that the new government will usher in strong pro-reform policies and kick-start the investment cycle. More importantly, given the crucial phase that we are in of India's demographic dividend, the key now is that the new government delivers on the aspirations of one of the largest and fastest growing youth populations in the world and catalyses a meaningful and long-term up-move in the economy's GDP growth trajectory. In this backdrop, Indian equities are likely to be amongst the best-performing asset classes and we believe that sector rotation towards domestic cyclicals should be a strategy investors should continue to pursue over the medium-term.


Result Review

Cadila Healthcare (CMP:Rs.912/TP:-Rs.1,064/Upside:-16.8%)

Cadila Healthcare, posted numbers lower than expected on sales and OPM front, while the net profit came in higher than expected. On the sales front, the company posted a strong quarter with 22.4% yoy growth in net sales to Rs.1916cr v/s Rs.1,979cr. For exports, the company's exports grew by 38.3% yoy, driven by US markets, which grew by 74.7% yoy. Other markets posted a lackluster growth during the period. Indian formulation markets on the other hand grew by 9.4% yoy. On the OPM front, it posted an OPM of 16.0% V/s 17.0% expected , expanding 102bps.While, the gross margins dipped by 100bps, dip in R&D expenses by 25.0% yoy aided the margin expansion during the period. Thus, the net profit came in at Rs.238.9cr V/s Rs.198cr expected, on back of lower than expected tax and depreciation charges. We maintain our buy with a price target of Rs.1,064.


Economic and Political News

- Spurring higher sustainable growth is key for new govt: Fitch

- Industry seeks strong steps from new government for growth

- Telegraph law change for safety standards in mobile handsets


Corporate News

- Adani Ports acquires Dhamra Port for Rs.5,500cr

- Kumar Birla to buy 16% in Century Textiles

- Adani Group slapped with Rs.5,500cr notice

Stock Market Forum