Benchmark indices on Thursday saw midcap and smallcap stocks, among others, supporting the indices. IT midcap Mindtree was among the top gainers on the shoulders of above-estimate quarterly results announced on Wednesday. The second half of the day saw banking stocks gaining ahead of HDFC bank results awaited on 16 October. India Vix was down 2.26% indicating positive sentiments in the market. Indian markets will be closed on Friday for Dussehra.
Rupee gains 11 paise to close at 75.26 against US dollar
The rupee gained 11 paise to close at 75.26 (provisional) against the US dollar on Thursday as heavy buying in domestic equities and weakness in the greenback strengthened investor sentiment. Besides, fresh foreign capital inflows also helped the domestic unit to post gains for a second straight day, forex traders said. However, surging crude prices in the international market restricted the rupee’s gain, they added. At the interbank forex market, the local unit opened strong at 75.27 against the greenback, and moved in a range of 75.20 to 75.37 in the day trade. It finally ended at 75.26 against the American currency, registering a rise of 11 paise over its previous close. On Wednesday, the rupee had settled at 75.37 against the US dollar. On the domestic equity market front, the BSE Sensex ended 568.90 points or 0.94% higher at 61,305.95, while the broader NSE Nifty surged 176.80 points or 0.97% to 18,338.55. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, dipped 0.28 per cent to 93.81. Brent crude futures, the global oil benchmark, increased 1.30 per cent to $84.26 per barrel. Foreign institutional investors emerged as net buyers in the capital market on Wednesday, as they purchased shares worth ₹937.31 crore, as per exchange data.
Outlook on Wipro: Axis Securities
Strong performance, robust outlook backed by efficient execution
CMP : 673 | Target: 775 | Upside: 15%
Wipro Ltd (Wipro) delivered an excellent performance on all fronts with revenue at ₹19,667 crore, up 8.1% quarter-on-quarter (q-o-q)and 30% year-on-year (y-o-y) in CC terms. While operating profit represented a growth of 30.8% y-o-y at ₹3,492 crore, operating margin de-grew by 180 bps and stood at 17.7% q-o-q, aided by unfavourable currency mix and wage hikes. Net profit for the quarter reported a growth of 34% y-o-y as it stood at ₹2,931 crore. The company’s management gives strong Q3FY22 guidance at 2%-4% revenue growth in CC terms and its commentary continues to be positive in the verticals such as BFSI, Hi-tech Media, Life Sciences, and Communications. The Retail vertical is expected to recover slowly across geographies in the near term. Operating Cash Flow was at ₹1,879 crore ($451.1 mn), 103.7% of net income. IT Services hiring continues to remain strong with a closing headcount at 2,21,365 to ensure timely delivery. We recommend a BUY rating on the stock and assign a 28x P/E multiple to its FY24E earnings of ₹27.7/share to arrive at a TP of ₹775/share, implying an upside of 15% from CMP.
On market closing: Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments
“We were very close to the 18,400 mark but did not achieve it. The target is still open and if we can sustain there, 18,600 should be the next level for the Nifty. Considering the support is at 17,800, the risk-reward is skewed and hence traders should only seek intra-day dips to accumulate long positions on the index for higher targets.”
On market closing: Gaurav Udani, CEO & founder, ThincRedBlu Securities
“Nifty made a new life-time high of 18,350 today. It closed at 18,335, up by 175 points since yesterday’s close. Volumes in Nifty were higher than its average which is a good sign for longs. Nifty has a strong support in the 18,050-18,110 range. Traders can use buy on dips strategy with strict stoploss for 18,380-18,420 as targets.”
Sensex closed at 61,305.95, up 568.90 points, or 0.94%, while Nifty closed at 18,338.55, up 176.80 points, or 0.97%. Sensex surpassed the 61,000 mark for the first time. Nifty had touched its life-time high of . At close, HDFC Bank was the top gainer with over 3% seen as the markets factoring in the expected results of the lender to come out on 18 October. TCS and HCL Tech were among the laggards on the index. HCL Tech, which was down 1.17% at close, will be announcing its results after market hours. Adani Ports, Wipro, Grasim, ITC and HDFC Bank were among top gainers on the Nifty, while Coal India, Eicher Motors, Tata Motors, HCL Tech and TCS led stocks in the red. With HDFC Bank set to announce its results on 16 October, kicking off the earnings season for the sector, markets are expected to factor in the results at open on Monday.
Markets at 3:30 pm
Nifty sectoral indices
The day started led by IT. Metals, PSU banks, and realty joined in supporting the market. In the latter half of the day financial services, banks, private banks, media have pushed the market further. Auto was the sole drag throughout.
Sensex, Nifty at 03:06 pm
Consumer durables review: Axis Securities
Growth recovering, Higher RM costs impact margins
Demand improvement leads revenue growth: Business sentiments have improved with economic unlocking and increasing vaccination. Demand across categories have been witnessing strong traction with the re-opening of markets and retails outlets along with permission for more hours for operations. Distributors and channel partners are stocking up to capitalize on this recovery and strong demand expected in the upcoming festive season.
Healthy overall demand scenario: Demand recovery was seen during the quarter post unlocking. Our channel checks indicated strong demand in July 2021 (esp. RAC’s) due to the extended summer in North India and a demand uptick during the Onam festival in South India. Dealer check indicated that demand across categories such as ACs, TVs, Washing Machines, Refrigerators, C&Ws, and other FMEG goods witnessed an uptick despite price hikes during the past two quarters. However, it believes further price hikes may impact demand recovery moving ahead. We expect that the industry won’t undertake any further price hikes to maintain prevailing demand buoyancy.
Key points to monitor: We would watch out for management commentaries on a) Sustainability of product demand, b) Price hikes taken by the companies to pass on the increased RM cost, c) Market share gains vs. unorganized players (for Polycab India and Sheela Foam), especially in light of unorganized players becoming active again, d) Updates on PLI schemes (for Dixon Technologies and Amber Enterprises, e) Demand trends in rural and urban areas, sales mix, and online sales. We would also monitor commentary on international subsidiaries and their performance (especially Symphony and Sheela Foam) as well as export opportunities going forward.
Positive: Amber Enterprises, Dixon Technologies