View-Point:
- With negative cues emanating from overseas peers, native markets will trade under pressure for the day. Volatility could be rife as we tread through the August series derivatives expiry day.
Buy ICICI Bank (ICICIBC IN)
- After its period of consolidation (FY08-10), the bank is back into the growth mode.
- They have been posting back-to-back above estimate nos. with Q1 PAT rising 36%YoY to Rs. 18.2bn (est 17bn).
- Performance is robust on back of strong loan growth; stable margins and better asset quality, helping ROA to improve. (expect 1.7% by FY14).
- Asset quality will remain strong given the benign asset quality in retail segment, changing loan portfolio mix (unsecured retail forms only 1.3% v/s 9%+ in FY08), and better risk management practices.
- Overall, we expect FY12-14 NII CAGR of ~22%, compared with a loan CAGR ~17% and model margin improvement of 27bps for FY13 and stable for FY14.
- Stock looks attractively priced at 1.4x FY14 PBV. Our Top Pick in sector, maintain buy with SOTP target of Rs. 1,230
News:
-YC Deveshwar - chairman of ITC, has sold shares worth about Rs. 470mn through open market. In a regulatory filing on BSE, ITC said that Deveshwar has sold about 1.79mn shares on 23rd and 24th of August.
- The Rs. 11bn Agra inner circle road project, awarded to JP group company - Jaypee Infratech three years ago, has been shelved by the state govt. citing that the land-for-development model is not working out
- As per media reports, BT Group Plc. may sell about 5% stake in Tech Mahindra in a deal that is expected to raise $100mn. BT currently holds 23% in the tech firm. The deal is expected to go through at Rs. 735-790 a share, about 5-9% discount from its previous day's closing price of Rs 837.
- As per media reports, Lanco Infratech is engaged in talks with PE firms Bain Capital and Kohlberg Kravis Roberts (KKR) to sell stake in its power business. Company is known to have put 30% stake on block, in some of its projects.
- Fitch has downgraded enterprise communications service provider Tulip Telecom from junk to default status following its failure to redeem its $97mn outstanding Foreign Currency Convertible Bonds (FCCBs) by 26th August.
- Orchid Chemicals & Pharmaceuticals has sold its penicillin and penem API business to the US-based Hospira for $200mn.
Derivatives:
- Nifty Futures OI decreased by 0.3m shs to 32.4m shs. Nifty Aug futures settled at a premium of 9 as against a premium of 11 in the previous session.
- Auto Stocks: Bajaj-Auto (CMP 1625, down 4%) has witnessed delivery of 0.5m shs (10d-avg 0.1m shs) and Hero MotoCo (CMP 1849, down 3%) has witnessed delivery of 0.4m shs (10d-avg 0.2m shs) indicating negative biasness.
- In Aug series for Nifty, Highest Call OI is at 5400 strike with 10m shs up 1.5m shs which has changed from 5500 (OI at 8.8m shs down 0.3m shs) and highest Put OI is at 5000 strike with 9.4m shs down 0.1m shs which has changed from 5300 (OI at 7.7m shs down 1.9m shs).
Key Statistics:
Market Sensex 17,491 down 141 & Nifty 5,288 down 47
Advance:Decline 1060 : 1720
F&O data (29th) Index Rs. (68)mn & Stock Rs (5.79)bn
Cash (prov 29th) FIIs Rs 1.43bn & DIIs Rs. (2.4)bn
Cash (28th) FIIs Rs. 1.69bn & MFs Rs. (2.24)bn
Others Brent Oil $112.54 v 112.34 & INR 55.62 v 55.67
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