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Sensex, Nifty steady; HCL Tech up 3%, defense stocks spike

11:00

The News International Team

11:55am Bajaj Auto in focus

Shares of Bajaj Auto gained 1.5 percent on hopes of strong growth in premium motorcycles business. Deutsche Bank upgraded the stock to hold from sell earlier with a 17 percent increase in target price to Rs 2100 apiece.

“Premium motorcycles (150- 250cc) are showing early signs of revival and should grow faster than the industry over the next three years. Bajaj’s dominance (42 percent share) in this segment should aid its market share (17.7 percent in Q1FY15) and a model launch in its Pulsar line-up would strengthen its presence,” says the brokerage house.

The rating upgrade by brokerage was on the bank of likely market share gains for Bajaj in domestic motorcycles (+230 basis points by FY17E) and current valuation at 15xFY16E PE coupled with a one-year stock underperformance of 15 percent (versus Sensex) which reflects balanced risk-reward.

11:25am Shriram EPC on buyers’ radar

Shriram EPC shares gained 16.5 percent after media reports suggested that the corporate debt restructuring (CDR) cell approved a Rs 2,530-crore debt recast proposal of the company.

The company has also sought additional funding from the banks, says the report quoting unnamed sources.

“Bankers said the firm’s contribution to the restructuring package would be Rs 160 crore as promoters’ equity; banks have been assured by the company that it hopes to obtain its receivables in the next 2-3 years. The company has been paying its 21 lenders, led by Oriental Bank of Commerce, at the rate of 13-14 percent but now would be charged only 11.25 percent. There would also be a two-year moratorium on interest payments,” it added.

11:00am Equity benchmarks maintained early gains with the Sensex rising 125.19 points to 26568.00 and the Nifty climbing 30.30 points to 7935.05. About 1395 shares have advanced, 929 shares declined, and 72 shares are unchanged.
 
ONGC gained 1.8 percent on media reports that the petroleum ministry has formulated a plan to cut ONGC and Oil India’s oil subsidy burden by 40-50 percent to Rs 39,200 crore as oil marketing companies’ losses may be shared equally by government and upstream firms. This news came ahead of the meeting scheduled between CCEA and cabinet to consider a 5 percent divestment in ONGC via offer for sale.

HCL Technologies shot up over 3 percent after Jefferies maintains a buy rating and has raised target price to Rs 1860 from Rs 1650. The brokerage said the slowdown in infra management services was a concern but it believe the company will show quick turnaround and current valuations is at the low end of peers and hence reflects an opportunity.

Defence stocks like Bharat Electronics, BEML and Astra Microwave Products rallied 3-7 percent as the DIPP released a press note on defence FDI via which 49 percent FDI in defence allowed through FIPB route. For above 49 percent FDI in defence, a Cabinet Committee on Security (CCS) nod on case to case basis.

GVK Power surged 5 percent on news that GVK Mumbai International Airport (MIAL) awarded land parcel to Oasis Realty worth Rs 580 crore.

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