The bottom-out effect along with the government's growth-inducing measures were the prime reasons for the Indian equity markets stellar rise on Monday

Experts have said that key indices had bottomed-out last week as investors waited for the government's measures to shore up growth. The steps were announced after market hours on Friday. 

In stock parlance, the bottom-out effect appears when any scrip or index touches the lowest possible point with respect to various market conditions and time periods. 

"Equity markets had bottomed-out on a near-term basis last Friday. Today's rise has come as a result of that trend," HDFC Securities' Retail Research Head Deepak Jasani told IANS. 

"If further steps are taken to usher in growth then the bottom-out effect will last from immediate to medium term period."

Last Friday, Finance Minister Nirmala Sitharaman gave a major economic boost to diverse sectors such as NBFCs, auto, housing, MSMEs, equity markets and banking via a slew of measures on tax surcharge, GST refunds, easier loans and demand generation.

"Multi RSI (relative strength index) divergence, record FPI futures short position and the subsequent reversal candle indicates that a swing low and bottom is in place," Edelweiss Professional Investor Research Chief Market Strategist Sahil Kapoor told IANS.

"The market rose on positive breadth with the corresponding decline in yields and stoppage of rupee depreciation. This indicates that a break above 200DMA (day moving average) for Nifty is likely to take it from 11,400 to 11,600 range."

On Monday, Indian markets advanced sharply on the back of Finance Minister Sitharaman's measures to combat slowdown and improve foreign investor confidence.

Both the Sensex and Nifty surged over 2 per cent as investors rejoiced over what many analysts are dubbing as Sitharaman's "mini-budget". The single biggest push came via the roll-back of the much-criticized tax surcharge on Foreign Portfolio Investors (FPIs).

The BSE Sensex jumped 792.96 points, or 2.16 per cent, to close on Monday at 37,494.12, while the Nifty gained 228.50 points, or 2.11 per cent, to 11,057.85.

The financial sector and public sectors banks (PSBs) led the charge on Monday. The Nifty Financial Service index closed 4 per cent higher, followed by the Nifty PSB index that was up 3.58 per cent. The Nifty Realty index surged by 3.74 per cent.

"The initial set of actions, though small, has enhanced market sentiment and confidence," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

The market will trade in a positive bias awaiting further developments regarding additional government measures and US-China trade talks, he added.

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Etihad Airways, a strategic partner of Jet Airways, also backed out of the resolution process earlier this month stating “there remained very significant issues relating to Jet's liabilities

The resolution professional (RP) for Jet Airways has received a fresh expression of interest (EoI) from a “known foreign entity”, two people with knowledge of the matter told FE. The committee of creditors (CoC) for Jet Airways will meet on August 26 to consider the proposal, which came in this week. The CoC will also try to resolve the dispute over Siroya Centre, Jet’s headquarters till recently, sources said.

“A fresh EoI was received this week which looks promising. Since it came after the deadline had ended on August 10, it will be taken up for the CoC’s consideration on Monday. Of the three EoIs that were submitted before the deadline, Volcan Investments has officially withdrawn its EoI this week and Avantulo group was not provisionally shortlisted,” one of the persons mentioned above said.

Volcan Investments is the family-owned trust of Anil Agarwal, the founder and executive chairman of Vedanta Resources.

Etihad Airways, a strategic partner of Jet Airways, also backed out of the resolution process earlier this month stating “there remained very significant issues relating to Jet’s liabilities.” Before the August 10 deadline, two other parties — Panama-based Avantulo Group and a Russian entity, Treasury RA Creator — had submitted EoIs.

The CoC will also take up the settlement proposal put forth by the legal counsel for Luckystar, the owner of Siroya Centre, over the disputed premises. Luckystar had approached the tribunal last month seeking to repossess Siroya Centre, the six-storey building which was the headquarters of Jet Airways; the lease expired on June 7. The legal counsel for Luckystar has since put forth a settlement proposal, which, if agreed upon by the CoC, will lead to Jet Airways vacating the premises.

Additionally, the CoC will take up the settlement proposal put forth by HDFC regarding the dispute on keeping Godrej BKC out of Jet’s resolution proceedings. The National Company Law Tribunal (NCLT) will hear both matters on August 28.

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Bharti Airtel, is staying strong and growing and has a robust balance sheet, said broking house, Goldman Sachs

Airtel has a robust balance sheet and a "best-in-class" spectrum footprint position which favours Bharti Airtel for future network roll-outs and market share gains. With declining capex intensity and rising margins on stable revenue growth, we expect Bharti to be FCF (Free Cash Flow) positive in the financial year 2020-21, Goldman Sachs said in a report. 

The report said the telecom operator has a strong wireless business growth potential.

"We forecast a 30 per cent EBITDA growth CAGR for India wireless (46 per cent of FY19E revenue) in FY19-22E driven by market share gains, customer upgrades/better customer monetization in data, and tariff hikes. With a recovery in India wireless, steady growth in Africa, and stable non-wireless businesses, we forecast Bharti to deliver an 8 to 18 per cent revenue/EBITDA CAGR in FY19-22E", it said.

The broking house also said the telco has a solid growth outlook for Africa. "We forecast a 9 to 11 per cent revenue/EBITDA CAGR in FY19-22E for Bharti's Africa business (24 per cent of FY19E revenue) driven by data and mobile money." 

"Its valuation is at t 8.5x CY20E EV/EBITDA, Bharti trades higher than its own historical average (of 7.3x) and its Asian telco peer median (of 7.1x). However, we expect Bharti's EBITDA growth over the next two-to-three years to be more than 3x its Asian telco peers and view a higher multiple as justified; Bharti trades in line with Asian peers on CY21 EV/EBITDA. 

"Our 12-month Discounted Cash Flow-based Trading Price of Rs 415 implies 15 per cent upside; our bull/bear scenarios suggest 40 per cent upside vs. 13 per cent downside."

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The National Company Law Appellate Tribunal (NCLAT) on Wednesday asked the Committee of Creditors of Jet Airways to file an affidavit stating whether it is ready to cooperate with the Dutch bankruptcy administrator which is also pursuing insolvency proceedings against the airline.

The appellate tribunal has directed the CoC to file the affidavit within a week's time.

The debt-ridden Jet Airways is facing insolvency proceedings in The Netherlands too. It was declared bankrupt thereafter it had failed to pay two European creditors. The Dutch court subsequently appointed a bankruptcy administrator.

The three-judge bench headed by NCLAT Chairman S.J. Mukhopadhaya will next hear the matter on September 4.

Jet Airways on April 17 announced a temporary suspension of all flight services as it failed to secure interim funding from lenders to maintain even bare minimum operations.

Currently, Jet is under the insolvency process, under which a committee of creditors has invited expressions of interest (EoI) from potential bidders.

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Shares of HCL Technologies Ltd lost about 10% since its March quarter results, underperforming the Nifty IT index, due to concerns over growth and profitability. The June quarter results will reassure investors to some extent

Constant currency revenues grew 4.2% from the March quarter, better than the most optimistic estimate on the Street. From a year ago, they are up 17%, the highest in recent years. Excluding the benefit of a recent acquisition, sequential revenue growth stood at 3.8%, which is healthy.

However, the benefit of revenue acceleration was negated by a steep fall in profitability to 17.1%. It is down a good 1.8 percentage points from the March quarter. As a consequence, operating earnings (earnings before interest and tax ) in dollar terms fell 6.3% sequentially. “Management already guided that Q1 margins will be weak owing to IBM products acquisition led transition costs while revenues would be absent and flow only from Q2. However, the quantum of margin drop is steep," said an analyst on condition of anonymity.

Apart from IBM product acquisition-related costs, a significant part of the incremental growth last quarter is on-site dependent, which has a low margin.

Even so, the company retained the 18.5-19.5% margin guidance for the full year. “I know that there is a bit of a climb from 17.1%, but we have an action plan," said C. Vijayakumar, president and chief executive officer of HCL Technologies.

The plan involves cost rationalization and revenue generation from recent investments. The IBM products acquisition will begin generating revenues from the current quarter, covering the costs of this investment. Investments and spends in the engineering division are projected to moderate. Further, the management plans to optimize the on-site-offshore mix and rationalize several other costs.

The steps will aid HCL Technologies’ profitability. But how well the management will succeed in eking out the gains will be known only when it delivers the September quarter results. Otherwise, it is confident of delivering 14-16% constant currency revenue growth it had guided for FY20.

Deal bookings moderated a bit last quarter, but the pipeline is strong. This should help the HCL Technologies stock, especially given its undemanding valuations and recent underperformance. “Potential acceleration in revenue growth, encouraging investments in applications business and momentum of large deals have been completely ignored," Kotak Institutional Equities said in a note. “To be clear, we do not like the products strategy of HCL, but find valuations at 12 times FY2021 estimated earnings difficult to ignore."

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The rupee on August 5 crashed by 113 paise - the biggest single-day drop in the past six years - to close at a five-month low of 70.73

The Indian rupee is trading higher by 8 paise at 70.65 per dollar versus previous close 70.73.

It opened lower by 7 paise at 70.80 per dollar.

The rupee on August 5 crashed by 113 paise - the biggest single-day drop in the past six years - to close at a five-month low of 70.73 due to heavy capital outflows by investors anxious over the US-China trade tension, a sharp devaluation in yuan and uncertainty over Kashmir issue. This was the third straight session of fall for the rupee, during which it lost a massive 194 paise.

Rahul Gupta, Currency Research Head, Emkay Global Financial Services said, "The global trade turmoil between US-China and political imbalance in Kashmir led USD/INR spot open at the 11-week high. Over the day, USD/INR violated the major resistance of 70.20 from its 200 SMA."

The dollar-rupee August contract on the NSE was at 70.85 in the previous session. Open interest increased 35.88% in the previous session, said ICICIdirect."If the pair closes above 70.20 then the view will continue to be bullish and we can see 71.30 before the month-end. While on the downside 69.85 will continue to act as strong support. Meanwhile, this week is the RBI policy. Widely, RBI is expected to cut rates further by 25bps and continue to hold the accommodative stance which will weigh on rupee," he added. We expect the USD-INR to find supports at lower levels. Utilise downsides in the pair to initiate long positions, it added.

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India's biggest automaker, Maruti Suzuki India Ltd, said it had cut the number of its temporary workers to cope with a slowdown in auto sales, adding to the jobless problem in Asia's third-largest economy

The vehicle industry, accounting for nearly half of India's manufacturing output, is facing one of its worst slowdowns in nearly a decade, with vehicle sales falling rapidly. There is little sign of a swift revival.

Maruti Suzuki said in an email sent to Reuters it employed 18,845 temporary workers on average in the six months ended June 30, down 6% or 1,181 from the same period last year. The company also said job cuts had accelerated since April.

Two sources familiar with the matter said the company would freeze hiring new employees until the downturn reversed.

It is the first time the reduction has been reported. The listed firm is not required to disclose any reduction in its temporary workforce.

India's jobless rate rose to 7.51% in July 2019 from 5.66% a year earlier, according to private data group CMIE. Those figures do not include many people on the margins of society who are day labourers and are often unemployed or underemployed.

Economists say government jobless figures are out of date and lack credibility.

Maruti Suzuki, majority-owned by Japan's Suzuki Motor Corp, said it had not reduced its 15,892-strong more permanent workforce. It declined to say whether further reductions were planned or comment on the hiring freeze.

The automaker previously said it had cut production by 10.3% in the first six months of the year.

Maruti Suzuki, which produces every second passenger vehicle sold in India, reported a 33.5% decline in sales in July to 109,265 vehicles compared with July 2018.

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The company reported a 17 percent year-on-year growth in June quarter profit at Rs 329.1 crore from Rs 281.5 crore in same period last fiscal.

Share price of Canara Bank shed 4 percent intraday on July 25 as research house Morgan Stanley remained underweight on stock with a target of Rs 220 per share.

The company reported weaker PPoP and asset quality in Q1FY20, while company's Q1FY20 PAT is Rs 300 crore against estimate of Rs 600 crore, said Morgan Stanley.

Lower margins and sequential rise in slippages are the key negatives, while higher fees and lower than expected other operating expenses are the key positives.

The company reported a 17 percent year-on-year growth in June quarter profit at Rs 329.1 crore from Rs 281.5 crore in same period last fiscal.

However, net interest income in June quarter fell 16.6 percent to Rs 3,240.1 crore year-on-year but loan growth was 12 percent at Rs 4.32 lakh crore YoY while deposits grew 14.5 percent to Rs 6.1 lakh crore YoY.

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The stock has lost nearly 90 percent of its value in the last one year.        

Dewan Housing Finance Corporation (DHFL) shares were locked at 10 percent lower circuit at Rs 61.65 on July 15 after posting a loss for first time since inception and warning about its survival.

There were pending sell orders of 6,49,477 shares, with no buyers available on the BSE at 0920 hours IST. The stock has lost nearly 90 percent of its value in the last one year.

The housing finance company posted a loss of Rs 2,224 crore for the quarter ended March 2019, against a profit of Rs 314 crore in the December quarter and Rs 134 crore in the June quarter of last year.

"In the backdrop of a significant slowdown in disbursement and loan growth after September 2018, the financials of the company have been quite strained for the quarter impacting the overall performance of the year," Kapil Wadhawan, Chairman and Managing Director said in a BSE filing.

Due to the additional provisioning of Rs 3,280 crore (including net loss on fair value), the company reported a net loss of Rs 2,223 crore for the quarter and a net loss of Rs 1,036 crore for the whole year (as against a profit of Rs 1,240 crore in previous year), he added.

The company also warned that its financial situation was so grim that it may not survive.

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Customer franchise as of June 2019 stood at approximately 36.9 million, which was quite higher compared to 28.3 million in the same period last year

Shares of Bajaj Finance rallied 6 percent intraday on July 9 after the company reported the highest loan growth in the last 11 quarters. The stock had fallen 8 percent on July 8.

The stock was quoting at Rs 3,614.25, up Rs 199.50, or 5.84 percent on the BSE at 1210 hours IST.

As per the provisional data, the non-banking finance company said it booked 7.3 million new loans during the quarter ended June 2019 against 5.6 million in same period last year. In Q1, the company acquired 2.5 million new customers, it added.

Bajaj Finance further said its assets under management (AUM) stood at approximately Rs 1.29 lakh crore as of June 2019, increasing significantly by 41.3 percent compared to Rs 91,287 crore as of June 2018 and 11.3 percent compared to Rs 1,15,888 crore at the end of March 2019.

Customer franchise as of June 2019 stood at approximately 36.9 million, which was quite higher compared to 28.3 million in the same period last year.

Bajaj Finserv was also trading higher at Rs 7,911.20, up 4.27 percent. It had shed 10 percent in the previous session after Sanjiv Bajaj, Managing Director told CNBC-TV18 that as the economy is slowing down, Bajaj Finance has seen slower growth in Q1FY20.

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Credit Suisse has maintained underperform call on the stock with a target price at Rs 115 per share, implying 5 percent potential downside from the current level.

Bank of Baroda shares gained 3 percent intraday on June 28 despite global brokerage Credit Suisse maintaining its bearish call on the stock.

"We maintain underperform call on the stock with a target price at Rs 115 per share, implying 5 percent potential downside from current levels," the research firm said.

The brokerage further said growth for the merged entity has continued to weaken and it expects growth to remain tepid.

Vijaya Bank and Dena Bank amalgamated with Bank of Baroda w.e. f. April 1, 2019. "The Board of Directors on June 27 approved opening balance sheet of the amalgamated bank," the bank said.

Credit Suisse said post-merger balance sheet reveals Rs 6,000 crore hit taken to harmonise acting policies. "CET1 is now at 8.6 percent versus 10.4 percent reported by bank in Q4. It implies the acquisition cost of 1.1x FY19 P/B for Dena & 0.8x for Vijaya Bank."

The brokerage further said coverage to IL&FS exposure remains low at 25 percent, but exposure to ADAG, DHFL & NBFCs will keep slippages & credit costs elevated. "We expect a return on equity to remain in single digits even in FY21."

The stock rallied 7 percent in last one year. It was quoting at Rs 122.85, up 1.19 percent on the BSE, at 1448 hours.

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The share touched its 52-week high Rs 690 and 52-week low Rs 60 on 03 September 2018 and 19 June 2019, respectively.

Shares of Dewan Housing Finance Corporation (DHFL) declined more than 7 percent intraday on June 28 after the company deferred Q4 earnings announcement.

The company was scheduled to announce Q4 earnings on June 29.

Earlier, the company had informed the stock exchanges that it will not be able to furnish the audited standalone and consolidated financial statements for FY19 within the time stipulated by SEBI norms.

DHFL said that the delay was due to new submissions under the provisions of the Companies (Indian Accounting Standards) Rules, 2015, which came into effect from April 1, 2018. This means the financial year which ended on March 31, was the first full financial year when these rules were applicable.

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Company's current portfolio consists of 157 products authorized for distribution in the US marketplace and 58 ANDA’s pending approval with the USFDA.

Shares of Glenmark Pharma gained 2 percent in the early trade on July 28 after the company received USFDA approval for Ezetimibe and Simvastatin Tablets.

Glenmark Pharmaceuticals Inc., USA has been granted final approval by the United States Food & Drug Administration (USFDA) for Ezetimibe and Simvastatin Tablets, 10 mg/10 mg, 10 mg/20 mg, 10 mg/40 mg, and 10 mg/80 mg, a generic version of Vytorin 1 Tablets, 10 mg/10 mg, 10 mg/20 mg, 10 mg/40 mg, and 10 mg/80 mg, of MSD International GmbH, as per BSE release.

Company's current portfolio consists of 157 products authorized for distribution in the US marketplace and 58 ANDA’s pending approval with the USFDA.

In addition to these internal filings, Glenmark continues to identify and explore external development partnerships to supplement and accelerate the growth of its existing pipeline and portfolio.

At 09:24 hrs Glenmark Pharma was quoting at Rs 455.00, up to Rs 6.65, or 1.48 percent on the BSE.

The share touched its 52-week high Rs 711.55 and 52-week low Rs 446.80 on 10 September 2018 and 27 June 2019, respectively.

Currently, it is trading 36.06 percent below its 52-week high and 1.84 percent above its 52-week low.

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The important reason for the merger by Bandhan Bank is to meet minimum shareholding norms set by SEBI

Bandhan Bank shares gained 3 percent intraday on June 24 after the company received approval from National Company Law Tribunal for the merger with GRUH Finance.

The stock was quoting at Rs 537.40, up to Rs 6.75, or 1.27 percent on the BSE at 1204 hours IST.

"The National Company Law Tribunal by way of its order dated June 20, approved the scheme of amalgamation of GRUH Finance into and with Bandhan Bank," the Kolkata-based bank said in its BSE filing.

In January 2019, Bandhan Bank and GRUH Finance announced a scheme of amalgamation and according to the share swap ratio, for every 1,000 shares of GRUH, shareholders will get 568 shares of Bandhan.

The important reason for the merger by Bandhan Bank is to meet minimum shareholding norms set by SEBI.

The merger received approval of the Competition Commission of India (CCI) in April and nod from RBI in March.

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The non-banking finance company continues to deliver high loan growth without any asset quality incident and 30 per cent-plus asset CAGR remains plausible for an extended period, Edelweiss said.

Edelweiss Securities has initiated coverage on AU Small Finance Bank with a buy rating and target price of Rs 880 apiece, implying 24 percent potential upside from current levels.

At 0916 hours IST, it was quoting at Rs 712, up to Rs 3.85, or 0.54 percent on the BSE.

The non-banking finance company continues to deliver high loan growth without any asset quality incident and 30 per cent-plus asset CAGR remains plausible for an extended period, the brokerage said.

It feels operating and financial leverage will continue to play through and return on average equity (RoAE) should nudge to 18 percent mark by FY21.

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The observations include aspects such as lack of appropriate test measures for lab controls along with some procedural issues too.

Shares of Sun Pharmaceutical fell over 5 percent on Friday morning on buzz of observations being issued by the US drug regulator for its Halol plant.

The stock touched an intraday high of Rs 658.00 and an intraday low of Rs 640.95.

According to reports on CNBC-TV18, the US Food and Drug Administration (FDA) issued six observations for its Halol unit in Gujarat.

The observations include aspects such as lack of appropriate test measures for lab controls along with some procedural issues too.

Further, the report quoted observations such as procedures designed to prevent objectionable microorganisms were not followed. It also said that written stability programme did not include sample size based on statistical data.

Cleaning and maintenance of equipment did not see any written procedures being followed as well.The stock has gained 13 percent in the past one month, while in the past three days, it has fallen a percent. At 09:34 hrs, the stock was quoting at Rs 648.05, down Rs 28.60, or 4.23 percent, on the BSE.

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