Shares of LIC Housing Finance jumped nearly 5 percent in early trade on August 4 after the company reported strong earnings for the June quarter. At 9:41am, the stock was trading 3.32 percent up at Rs 411.20 on the NSE.

LIC Housing Finance reported a 43 percent surge in the standalone net profit to Rs 1,324 crore for the first quarter this fiscal on strong demand for housing loans.

The company's net interest income (NII) surged 38 percent to Rs 2,252 crore during the quarter under review from Rs 1,628 crore in the last fiscal. The stage 3 exposure at default (gross non-performing asset) as of June 30, 2023, stood at 4.98 percent as against 4.96 per cent a year back. However, its net NPA decreased to 2.99 percent from 3.01 percent on-year.

LIC Housing Finance's total expenses in the said quarter increased 23 percent, with finance costs escalating 23 percent to Rs 4,494 crore and interest income rising 28 percent to Rs 6,704 crore. Housing demand in India has risen in the post-pandemic period, as an expanding middle class looks to invest in real estate despite higher interest rates and home prices.

Brokerage Views

Morgan Stanley has given an 'underweight' rating to the LIC Housing Finance stock with a target price of Rs 320 per share. 'Sharp improvements in loan spreads caused an 18 percent net interest margin (NII) beat. Higher other income led to a 20 percent pre-provision operating profit (PPOP) beat. Home Loan Disbursements fell 24 percent QoQ and 28 percent YoY. Total loans grew 1 percent QoQ and 8 percent YoY,' said the brokerage house.

YES Securities is bullish on LIC Housing Finance and the brokerage firm has recommended the 'buy' rating on the stock with a target price of Rs 470 in its May 17 research report. Brokerage firm Sharekhan is also bullish on LIC Housing Finance and has recommended 'buy' rating on the stock with a target price of Rs 435.

Stock Performance

The LIC Housing Finance stock has given a return of 3.05 percent over the last six months. The stock has thus underperformed the benchmark Nifty50 index which has given a return of 9.10 percent over the same duration.

Nasdaq 100 futures ticked higher Friday morning as Wall Street parsed the latest earnings from big-name technology companies in the runup to a major employment report due Friday morning.

Futures linked to the tech-heavy index rose about 0.72%, while S&P 500 futures climbed 0.48%. Futures tied to the Dow Jones Industrial Average climbed 92 points, or 0.26%.

A deluge of earnings reports released after the bell sent individual stocks moving. Amazon jumped nearly 9% after trouncing expectations on profit and offering positive guidance, while Apple lost around 2% after revenue came in lower than it did in the same quarter a year ago.

Beyond mega-cap tech, Airbnb slid after the company said nights and experiences booked grew at a slower rate than Wall Street anticipated. DraftKings and Dropbox rose around 13% and 4%, respectively, on the back of reports that exceeded analysts’ expectations.

These are among the latest reports this earnings season. Roughly 79% of S&P 500 companies have given results, with about 80% surpassing Wall Street expectations, according to FactSet.

Traders will follow jobs data due Friday morning for further insights into the strength of the labor market and economy. Investors are hoping slowed growth in hourly earnings can signal to the Federal Reserve that previous interest rate hikes have had their intended effects on the economy, according to Rob Haworth, senior investment strategist, wealth management, at U.S. Bank.

“All eyes are on the jobs report,” Haworth said. “We just want to see: Is the Fed getting some help here on the inflation fight?”

Economists polled by Dow Jones expect nonfarm payrolls to grow by 200,000 in July. Meanwhile, the consensus estimate shows the unemployment rate should hold steady at 3.6%. Economists are expecting average hourly wages to rise by 0.3% from June and 4.2% on an annualized basis.

A pop in the 10-year U.S. Treasury yield weighed on stocks in Thursday’s session, with the three major indexes finishing down.

With just Friday’s session left in the trading week, the three major indexes are on pace to end lower. The Nasdaq Composite and S&P 500 — down about 2.5% and 1.8%, respectively — are poised to post their worst weekly performances since March. The Dow has slid 0.7% on a week-to-date basis.

Morgan Stanley has upgraded its stance on India to ‘overweight’ on the back of multipolar world trends that support FDI and portfolio flows, boosted by India’s reform and macro-stability agenda that underpins a strong capex and profit outlook.

The report by the foreign bank said India is now the most-favoured equity market, with relative valuations less extreme than in October last year. It sees a secular trend with respect to sustained superior dollar EPS growth than other, with equity inflows being given a fillip by the young demographic profile.

China, on the other hand, has slipped to the 13th rank, owing to negative earnings revisions and weak return on equity and profit margins. The report points out that issues such as LGFV (local government financing vehicle) debt, property and labour markets and the geopolitical situation need to improve for a re-rating.

In addition, China is faced with the new challenge of coping with multipolar world pressures (from the US in particular), leading to new restrictions on inward technology transfers and a more generalised slowdown in inward FDIs and FPIs. Passing of the US executive order on outbound investment screening in August would only add to the woes.

Aggressive policy implementation and solutions to such structural problems could lead to a more positive stance on the country.

According to Morgan Stanley, India is “arguably at the start of a long wave boom at the same time as China may be ending one” — with GDP per capita of only $2,500 per capita (compared to $12,700 for China) and positive demographic trends. Household debt/GDP in India is 19%, vis-à-vis 48% in China.

Among key factors, manufacturing and services PMIs have rallied since the end of Covid restrictions, in contrast to a rapid fall seen in China. In addition, real estate transaction volumes and construction have broken out to the upside. India’s ability to leverage multipolar world dynamics is also a significant advantage, says the report.

Strong FDI flows thanks to American, Taiwanese and Japanese firms exploring the large domestic market here, and a much-improved export infrastructure situation have boosted India’s appeal. Private equity firms are expanding in India (and ASEAN) while they are struggling with exits in China.

Indian market is expected to consolidate on Wednesday tracking muted global cues.

The S&P BSE Sensex fell nearly 70 points while the Nifty50 managed to hold on to 19700 levels on Tuesday.

India VIX was down by 1.22% from 10.41 to 10.25 levels in the previous trading session. Volatility sank during the day and has been overall hovering near its lower band.

On the weekly front, the maximum Call OI is placed at 19800 and then towards 20000 strikes while the maximum Put OI is placed at 19600 and then towards 19700 strikes.

Call writing is seen at 19800 and then towards 19900 strikes while Put writing is seen at 19700 and then towards 19500 strikes.

'Options data suggests a broader trading range in between 19300 to 20200 zones while an immediate trading range in between 19500 to 19900 zones,' Chandan Taparia, Analyst-Derivatives at Motilal Oswal Financial Services Limited, said.

'Nifty formed a Bearish candle on a daily frame on Tuesday but has been forming higher highs - higher lows from the last two sessions,' he said.

'Now the index has to hold above 19700 zones to extend the move towards 19867 then 19991 zones while on the downside support is placed at 19650 and 19560 zones,' recommends Taparia.