3:10 pm Slew of upgrades:
Goldman Sachs has upgraded ICICI Bank to buy from neutral following recent underperformance, with the stock having fallen 7-20 percent over the last 3-6 months and underperforming the Sensex. It has set a target price of Rs 340 indicating 27 percent upside potential.
The brokerage expects the private lender to grow its retail loan book by 21.4 percent CAGR FY15-FY18, and loan growth by 16.6 percent, higher than industry. “It continues to focus on margin which will likely remain stable as the bank increases its retail book proportion and sees the benefit of deposit re-pricing
of the last year reflect in its average cost of funds,” Goldman Sachs says in a note.
Goldman Sachs has also upgraded other private banks Axis Bank, YES Bank and Kotak Mahindra Bank.
3:00 pm Market under pressure: The Sensex fell 30.31 points to 25735.01 and the Nifty declined 41.80 points to 7830.45. About 1026 shares have advanced, 1499 shares declined, and 96 shares are unchanged on the BSE.
2:55 pm Market Expert: Despite volatility and fall, Girish Pai Head-Research, Nirmal Bang Institutional Equity is convinced that the market in undergoing a correction in a bull market. According to him, a high volatility phase in the market is part and parcel of any asset class.
However, he envisages a slow growth both for the global markets and Indian market because of what is happening in China. He expects India to grow in a 7-7.5 percent range.
“We do not think it is the end of the bull market because our base case view is that we will probably see some slower global growth because of some bit of collateral damage from what is happening in China. So, if that is the base case scenario from a global growth standpoint and in India, we will probably grow a little slower than what probably people anticipated six months back,” says Pai.
2:40 pm ONGC firm on capex: Global oil majors have slashed spending and cut jobs in response to plunging oil prices but state-owned ONGC is using the slump to build assets.
Oil majors including Shell, Total and BP have cut capital spending by at least USD 14 billion this year in response to the plummeting oil price. Addressing company shareholders, ONGC Chairman and Managing Director Dinesh K Sarraf said energy industry, particularly the oil and gas sector, was facing challenging times due to the collapse of crude prices.
Oil prices, he said, have collapsed from USD 110 per barrel to sub-50 dollars a barrel due to lower growth in demand than expected from China, slow recovery in some of the developed economies and steady build-up of new supplies backed by strong North American output.
“While many of the global E&P companies have responded to this situation by cutting down their investments, ONGC takes this as an opportunity to build its assets in this environment of lower costs as well,” he said.
ONGC, he said, remains “steadfastly committed to the quest of energy security, a national priority endorsed by none other than our Prime Minister.” Sarraf said ONGC has stepped up ongoing development efforts to bring new hydrocarbon volumes into the country’s energy basket.
2:25 pm Asian Paints in focus: Government is likely to extend till June 2018 the validity of environment clearance (EC) given to Asian Paints – the country’s largest paint maker — for expansion of its Patancheru unit in Telangana.
The EC, granted to Asian Paints in 2008 for expansion of its Patancheru plant, expired in 2013. During this period, the company could not expand the capacity due to some restrictions imposed by the state government.
“Asian Paints’ proposal seeking extension of the validity of EC for its expansion project in Telangana was examined by the Expert Appraisal Committee (EAC) in a recent meeting. It suggested for extension of the EC validity till June 2018. The final EC is expected to be issued soon,” a senior Environment Ministry official said.
Asian Paints informed the EAC that the state government has lifted restrictions and the company is keen to start the expansion work, the official added.
2:15 pm Bidding starts for imported LNG subsidy: As many as 16 power companies including NTPC, GMR and GVK today began bidding to get government subsidy support to buy imported LNG for restarting their stranded electricity generating stations. For the auction of subsidy support, 16 bidders have been technically qualified, sources said. Power producers bidding for the lowest subsidy support, will get the first right over the fuel.
The auction started at a base price of Rs 1.45 per unit. “The plant load factor (PLF) for SGP will come at 35 percent which can go up to 50 percent in the increment of 2.5 percent per round,” the source said. The auction for plants receiving Domestic Gas (DGP) will be held tomorrow and “11 bids have been technically qualified for it”.
According to sources GMR, GVK, NTPC and Lanco were among the companies that had submitted bids earlier this month to be qualified for the second phase of auction of financial assistance of Rs 2,600 crore under Power System Development Fund set up by the government.
“The maximum bidding price under the reverse auction has been fixed at Rs 4.7 per unit for stranded gas based plant (SGP) and Rs 3.39 per unit for domestic gas plants (DGP),” the source had earlier said, adding that the firms will bid for a total of 15 Million Metric Standard Cubic Meter Per Day (MMSCMD).
Power Ministry had invited technical bids to undertake the reverse auction of the PSDF support to eligible gas-based power plants for a period from October 1, 2015 to March 31, 2016, as per the tender.
2:00 pm Market Check
Benchmark indices sank further over the last half an hour of trade, with the Sensex now at 25687, down 168 points or 0.7 percent over its previous close, and the Nifty at 7812, down 59 points or 0.8 percent over its previous close.
Tata Steel (-5 percent), Vedanta (-4 percent), Tata Motors (-4 percent) and Ambuja Cements (-3 percent) were the big losers in the Nifty. Other laggards in the index were Hero Motocorp (-2 percent), Tata Power (-2 percent), ICICI Bank (-2 percent) and Asian Paints (-2 percent).
However, gainers included Tech Mahindra (2 percent), Power Grid Corp (1 percent), NTPC (1 percent) and Sun Pharma (1 percent).
In sectoral performance as reflected by the respective indices, metals (-2.2 percent), capital goods (-1.9 percent), consumer durables (-1.4 percent) and auto (-1.4 percent) were under pressure, while FMCG (0.2 percent) gained.
Bharat Forge (-6 percent), Jaiprakash Associates (-4 percent), Jain Irrigation (-4 percent), Century Textiles (-3 percent) and Reliance Infrastructure (-3 percent) were the big losers in the midcap space. Other notable laggards included Strides Arcolab (-3 percent), Jindal Steel (-3 percent), IRB Infra (-3 percent), Ashok Leyland (-3 percent) and Max India (-3 percent).
The rupee was quoting at 66.43 to the dollar, down 11 paise over its previous close.
European shares were trading weak with UK’s FTSE down 51 points at 6032, Germany’s DAX down 28 points at 10103, and France’s CAC down 5 points at 4512.
The trend in key Asian markets was broadly bearish. Singapore’s Straits Times was down 27 points or 1 percent at 2843. China’s Shanghai closed at down 110 points or 3.5 percent over its previous close, Taiwan’s Taiwan Index closed at 8259, down 47 points, and Hong Kong’s Hang Seng closed at 21455, down 106 points. In gainers, Japan’s Nikkei 225 closed at 18026, up 60 points, and Korea’s KOSPI closed at 1937, up 6 points.