Our key picks include: Infosys, Bharti, ICICI Bank, Axis Bank, ITC, UNSP, UTCEM, IGL, CDSL, CIFC. While the CoVid-19 situation remains fluid, we believe that Nifty correction of ~30% already factors in the impact of ~1 month lockdown and return to business normalcy by Q1 end. However, if the lockdown is more severe and the business impact extends well into 2Q, we see further downsides. Recent sharp correction presents attractive opportunity for long term investing into high quality names. While government and RBI have announced stimulus packages, we expect further measures to tide over the crisis. The extent of lockdown, pace of return to normalcy and further fiscal responses remain key monitorables.

Covid-19 impact: Top quality at attractive valuations Bank Nifty is down by 38% from the peak in a little over 3 months. A sharp free-fall since mid-February explains more than 85% of this correction. As a measure to contain the covid-19 outbreak in the country, declared as a global pandemic, the government has directed a complete lockdown' (of non-essentials) across the country. While 4QFY20 may not be affected much due to this event since the economy-wide disruption began only towards the end of the quarter, we think the lending industry could see challenges in 1HFY21 on two fronts credit growth and asset quality. As of Feb'20, the systemic credit growth was 6.4% compared to 14.7% a year ago, which implies that a cyclical credit growth slowdown had already set in...

The recent outbreak of COVID-19 (corona virus) is one such event which could not have been predicted and has created havoc across different industries and the real estate industry is no exception. The retail arm of the industry is the worst hit because of the sharp fall in consumption, followed by the residential segment, which was already facing slowdown. The commercial segment is comparatively better off because of the visibility of contractual cash flows. In order to curb the spread of corona virus in India, the center and many state governments have acted swiftly and taken precautionary measures including: 1. Suspension of all tourist visas till 15th April 2020,...

Banking & Financials Sector Update- Covid-19 impact: Top quality at attractive valuations: Bank Nifty is down by 38% from the peak in a little over 3 months. A sharp free-fall since mid-February explains more than 85% of this correction. As a measure to contain the covid-19 outbreak in the country, declared as a global pandemic, the government has directed a complete lockdown' (of nonessentials) across the country. While 4QFY20 may not be affected much due to this event since the economy-wide disruption began only towards the end of the quarter, we think the lending industry could see challenges in 1HFY21 on two fronts credit growth and asset quality. As of Feb'20, the systemic credit growth was 6.4% compared to 14.7% a year ago, which implies that a cyclical credit growth slowdown had already set in before the covid-19 event....

While it is difficult to gauge the impact of the current Covid-19 outbreak as the situation vishal.punmiya@nirmalbang.com keeps on evolving, we have done some revision to our earnings estimates and valuation +91-22-6273 8064 for our coverage universe based on the assessment of the information available with us. We will further assess our numbers and multiples as and when we get more updates and Ayush Chaturvedi...

The Reserve Bank of India (RBI) has cut the repo rate by 75bps and the reverse repo by 90bps to (Economist) discourage banks from parking money with the RBI. In addition, the marginal standing facility teresa.john@nirmalbang.com (MSF) limit has been increased to 3% of net demand and time liabilities (NDTL) from 2% earlier. +91 22 6273 8114 This increases the limit by which banks can borrow against statutory liquidity ratio (SLR) securities and will benefit banks that do not hold excess SLR. The RBI has also introduced a number of other liquidity measures which will support both corporate bonds yields and G-Sec yields. The RBI has announced targeted LTROs (TLTROs) of up to Rs1tn for investment in investment grade corporate bonds, commercial paper (CP) and non-convertible debentures...

Asian markets are trading lower as investors continue to assess the impact of global coronavirus pandemic. Nikkei is trading lower by 3.20%, Hang Seng is trading lower by 1.39% and Shanghai is trading lower by 1.31%. Indian indices are expected to open in lower. Sgx Nifty is trading lower by 2.14%.

We expect 4QFY20 earnings to be monotonous for most pharma companies in our coverage universe. We do not see a meaningful adverse impact of COVID-19 lockdown on earnings. With China resuming supplies of raw materials, potential disruption in manufacturing is now no longer a concern. There has been inflation in select raw material supplies but the same should only have a minor impact on gross margins during the quarter. The India pharma market growth continues on expected lines high single digit. In the US, we could see marginal benefit coming from USD appreciation and potential increase in stocking at the wholesaler level which should be offset by currency depreciation in emerging markets due to declining crude prices....

As highlighted in our previous report, we maintain our bullish stance on Wipro, Infosys, TechM, L&T; Infotech, Sonata Software, Firstsource and Persistent With the situation surrounding Covid-19 spread and control still unclear, the managements of major companies are opting to wait for a few more days to provide a clear indication of the impact of the virus outbreak on the business. Recent commentary from the management of one of the Indian IT companies indicates a likely delay in decision making by clients and...

On account of the spread of Covid-19 on a global scale, we have seen Government of India announcing a lockdown across the country for 21 days with effect from March 24, 2020. However, the lockdown could continue for much more than 21 days. This lockdown would result in shortage of workers to factories in addition to many of our FMCG coverage companies shutting down some of their manufacturing facilities for discretionary products in addition to supply chain disruptions. However, we believe demand for daily use items such as staples, soaps, toothpaste, milk, sanitisers, grocery would...

Multiplexes were the first casualty of the Covid-19 led lockdown. The gradual closure of theatres from mid-March onwards and further till April 14 has meant that Q4FY20 as well as Q1FY21 will be hit badly. We expect the lockdown (albeit region specific) to continue at least till May and resumption of optimum operation only from June, 2020 onwards in our base case assumptions. Our interaction with the management and their disclosures through conference call transcripts, reveals that multiplexes are going to invoke Force Majeure to shield themselves from critical costs of rentals (that...

Rework estimates to build in delay in recovery As per SIAM estimates, the present suspension of production activities at OEMs and ancillaries would cost the industry ~ 2,300 crore/day in lost revenues. Q4FY20 (till March 15) was witness to production rationalisation at most OEMs as the focus remained firmly on rundown of BS-IV stock. With half of March slated to be a washout, the quarter is another poor one. Going forward, we expect industry volumes to decline sharply (~40-50%) in Q1FY21E amid plant closures, accounting for at least two months of...

RBI has largely met industry expectations through today's policy announcements. The measures announced covered liquidity expansion, easing banking regulations and three-month moratorium which will provide relief to stakeholders across the Indian economy.

Following the relief measures announced by the Finance Minister, the RBI followed suit by providing a slew of relaxation and inducing higher support to system liquidity. Advancing the MPC meeting to be held on April 3, 2020, RBI announced a reduction in repo rate to the extent of 75 basis points (bps) to 4.40% from 5.15% with immediate effect. This was largely in line with expectations. However, increasing the band between repo and reserve repo rate, reverse repo rate has been lowered by 90 bps to 4% to encourage...

Asian markets are trading in the green tracking positive cues from Wall Street overnight. On the data front, China's industrial profits for January-February declined by 38.3% y-o-y. Nikkei is trading higher by 1.24%, Hang Seng is trading higher by 0.64% and Shanghai is trading higher by 0.60%. Ind..

We revise the financial estimates and target price of companies under our coverage owing chirag.muchhala@nirmalbang.com to the impact of COVID-19. The challenges faced by the sector are multi-fold in the form of +91-22-6273 8092 supply constraints from China (dependence on imported components) as well as a complete lockdown of the domestic market which has resulted in closure of factories, Rahulkumar Mishra stoppage of project execution and disruption in consumer demand. While the measures Research Associate taken by the government are aimed at safety and well-being of the people, the business rahulkumar.mishra@nirmalbang.com...

Covid-19 impact: Good entry points from a medium-term perspective Bata India (BIL) and V-Mart Retail (VRL) stocks have corrected by ~39% and ~45% respectively from their 3 month highs due to the Covid-19 impact on financials and more importantly due to the risk aversion induced by the event. We are cutting our estimates and target prices for the two retail stocks that are under our coverage. We are incorporating the adverse impact of national lockdown (starting 25th March, 2020 till 14th April, 2020) as well as the state level lockdowns before that. Also, even prior to the lockdowns, footfalls had been weakening starting the second week of March. We are...

Companies with high share of discretionary products such as apparel, jewellery, footwear and other accessories are expected to witness a sharper decline in revenue growth in the short-term as consumers may restrict their discretionary purchase Post normalisation, discretionary categories like jewellery, apparel and footwear could see some revival of revenue growth due to pent up consumer demand. However, given the discretionary nature, the entire revenue loss may not be entirely recouped in FY21...

Asian markets are trading lower on mixed cues from Wall Street while investors await U.S. jobs data which could provide clues to the economic impact of the coronavirus. Nikkei is trading lower by 4.10%, Hang Seng is trading lower by 1.21% and Shanghai is trading lower by 0.10%. Indian indices are ex