The Indian equity market extended its positive run to a third day on Friday, aided by positive global cues, a stronger rupee, and overall good corporate earnings for the June quarter. The 30-share BSE Sensex closed near the day’s high at 57,570.25, gaining 712.46 points or 1.25 per cent. The Nifty ended 228.65 points, or 1.35 per cent, higher at 17,158.25.
This added optimism to the domestic market, and the rupee strengthened against the dollar, thereby increasing the appetite of foreign institutional investors (FIIs), Nair added. The Indian rupee gained around 43 paise against the dollar.
Among the sectors, barring the Nifty PSU bank, all sectors recorded healthy gains. The Nifty metals index was up 3.86 per cent, the IT index was up 1.7 per cent and auto gained 1.3 per cent.
On the BSE, all sectoral indices ended in the green, the metal index gaining 4.59 per cent. The BSE energy index was up 2.4 per cent and the oil & gas was up 2.21 per cent. Broader indices mirrored the benchmarks. The BSE midcap index gained 1 per cent and the smallcap 1.38 per cent. The India VIX, which indicates the degree of volatility traders expect over the next 30 days, declined sharply by 2.7 per cent from 17.01 to 16.55.
HDFC Bank
CMP Rs 1,404| Target Price Rs 1,850| Time Period: 6-12 Months
The game-changing mega-merger between HDFC and HDFC Bank is a win-win assumption for all the stakeholders. This mega-merger will unleash the synergies between the HDFC twins wherein HDFC would benefit from the low-cost funds of HDFC Bank and its large branch network whereas HDFC Bank will benefit from the competence of HDFC in mortgage finance and together we will have a large global bank. We believe this merger would create meaningful value for various stakeholders as the combined business would benefit from comprehensive product offering in the market, balance sheet resiliency, and the ability to drive synergies across revenue opportunities in Indian banking systems.
MARUTI
CMP Rs 8,650| Target Price Rs 10,500| Time Period: 6-12 Months
The game-changer SUV launch (The Grand Vitara) with the Intelligent Electric Hybrid Technology will change the way the SUV segment has grown tremendously in the past 3-4 years as customers have shown a strong inclination towards new-age technology especially EV. But India’s shift to electric vehicles is also much slower than other major markets like China and the US. Maruti has further moved ahead into cars that can run on combinations of CNG cleaner/cheaper than petrol or diesel models and hybrid EVs, making them a viable option for low-income consumers who want to upgrade from a two-wheeler or only petrol cars. Hence with the lack of adequate EV charging infrastructure, the new hybrid model is the need of the hour for Indian customers and we believe Grand Vitara will set new benchmarks in the SUV market.
ITC
CMP Rs 304| Target Price Rs 380| Time Period: 6-12 Months
The most awaited demerger game is on cards in the near term. In the recent conference, ITC Chairman and Managing Director Sanjiv Puri hinted at the demerger of the conglomerate’s business segments like hotel business and maybe the IT business as well. Puri also pointed out various moods of value creation to stakeholders in the long term through route may be bonuses, buybacks, and so on and so forth. We believe the first Hotel then IT listing and later on based on the outcome other businesses would also get demerged. For a long-term investor, this demerger would unlock the value going forward. Hence we believe ITC has the potential to perform in the medium to long term.
TATA POWER
CMP Rs 218| Target Price Rs 300| Time Period: 6-12 Months
Tata Power is the largest integrated private power utility, with a diversified presence across the power business spectrum, from generation (thermal, hydro, solar and wind) to transmission and distribution. With this, we believe there is a huge scope for continued growth in the power sector with a growing urban population followed by increased economic activity driving up electricity demand in recent times we saw India’s electricity demand grow 6-8 per cent during the last first half of this FY23. In addition to this, the next trigger would be from raising funds for its renewable energy unit. Tata Power is spending Rs 14,000 crore in capital expenditure, and Rs 10,000 crore out of this shall be invested by its renewable energy subsidiary. And in the next 5 years, Tata Power is also planning to invest a massive amount of Rs 75,000 crore in the renewable energy sector which is the biggest in the power sector. In April 2022 Tata Power entered into an agreement where Blackrock and Mubadala will invest funds in Tata Power Renewables as the first step toward the larger scope of value creation in medium to long-term stakeholders.
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