India Markets open in 7 hrs 42 mins

Sensex, Nifty Post Longest Losing Streak Of 2017

  • Nifty can correct 10 percent from all-time highs by December
  • Some stocks can fall even more than 10 percent
  • Earnings growth is some quarters away
  • Lot more pain left for mid-cap shares
  • September quarter earnings will be bad
  • FY18 earnings are gone and there is no chance of recovery in the last six months

Shares of the government-owned banks fell sharply in trade. The NSE Nifty PSU Bank index slumped 3 percent, the most in over a month, to 3,028.

  • S&P BSE Sensex and NSE Nifty 50 Index touched their lowest level since August 11
  • Nifty Bank touched its lowest level since July 14
  • Nifty small-cap and Nifty mid-cap touched lowest level since September 25
  • Nifty market cap eroded by more than RS 90,000 crore today
  • The NSE Nifty 50 Index breaks below 100-day moving average for the first time since January 24, 2017.
  • Max India: The Delhi-based firm declined as much as 1.15 percent, the most since September 25, to Rs 137.5. Trading volume was 9.7 times its 20-day average.
  • Crompton Greaves Consumer Electricals: The Mumbai-based consumer electrical maker fell as much as 2.7 percent, the most since September 25, to Rs 205.25. Trading volume was 7.8 times its 20-day average.
  • Shriram Transport Finance: The Mumbai-based truck financer rose as much as 7 percent, the most in over two months, to Rs 1,077. Trading volume was 4.6 times its 20-day average.
  • Nava Bharat Ventures: The Hyderabad-based ferro alloys maker declined as much as 2 percent, the most since September 25, to Rs 118. Trading volume was 4.2 times its 20-day average.
  • Not likely to see a drop in earnings and they will catch up soon
  • Greenshoots visible as auto numbers are picking up, bank credit is picking and cement sales are robust
  • FIIs taking out money to invest in other markets
  • Cyient has about 1.35 crore shares (or 12 percent of equity) change hands in two block deals on the NSE. Stock drops as much as 9.8 percent after the trade.

Buyers and sellers were not immediately known

Source: Bloomberg

Banking shares were among the worst performing stocks. The Nifty Bank Index declined 1 percent to 23,954. State Bank of India, ICICI Bank, HDFC Bank and Canara Bank were among the top losers in this space.

  • Rupee breaks below 200-day moving average against the U.S. dollar for first time since February 2, 2017.
  • Nifty fell below 9,800 for first time since August 29, 2017
  • All sector gauges barring IT index trade lower on the National Stock Exchange
  • Pharma, metal and banking shares among the worst hit
  • From the Nifty 50 basket of shares, 43 fell while 8 were among the gainers
  • Adani Ports, Sun Pharma, ICICI Bank, Reliance Industries, Vedanta and State Bank of India among top Nifty losers

The rupee fell as much as 0.42 percent to 65.74 against the U.S. dollar also its lowest level since March 15, 2017.

The drugmakers were facing selling pressure with the Nifty Pharma Index declining nearly 2 percent to its lowest in two weeks.

PVR's second quarter was not upto mark as not many films did well on the box office, Nitin Sood, CFO of PVR told BloombergQuint.

The company is hoping to make good in third quarter on the back of three big releases -- Judwa 2 (this weekend), Padmavati and Tiger Returns.

Shares of the Gurugram-based multiples operator were trading 1.6 percent lower at Rs 1,192.

Shares of the India's biggest infrastructure developer recovered partially after falling 1.8 percent after its construction arm won orders worth Rs 2,170 crore.

Key Order Highlights

  • Water and effluent treatment division won order worth Rs 1,547 crore
  • Power transmission and distribution division won order worth Rs 623 crore

Stock market debutant which fell in early trade staged a recovery and moved above its issue price of Rs 661. The stock rose as much 0.6 percent to Rs 665.

  • Indian equity benchmarks extended losses led by weakness in pharma, metal and capital goods stocks
  • The S&P BSE Sensex fell 151 points to 31,446 and NSE Nifty 50 Index declined 52 points to 9,819
  • Thirteen out of 19 sector gauges compiled by BSE were trading lower
  • From the Nifty 50 basket of shares, 38 were trading lower while 13 were among the gainers

Shares of the Delhi-based cable TV service provider jumped as much as 12.86 percent, the most in over five months, to Rs 99.15.

Reliance Industries is said to be in talks to acquire Den Networks and deal is likely to go through valuing Den Networks between Rs 2,000-2,200 crore, The Economic Times reported.

ICICI Lombard General Insurance Company made a weak stock market debut, listing at a discount to its issue price. The stock fell as much as 3.45 percent on the National Stock Exchange to Rs 638 compared to its issue price of Rs 661.

  • Higher crude prices not good for Indian current account and balance of payments
  • Exports have slowed down, challenges persist in pharma and IT space
  • Private consumption has supported GDP growth
  • India does not have scope to do a large fiscal stimulus
  • Big chance for companies to shift from informal to formal economy
  • Macro-economic picture is weaker than what it was a few months back
  • Recent slippage in macros may dampen investment sentiment
  • Earnings have generally disappointed in recent times
  • Economy faces cyclical and structural issues
  • Market valuations look rich at the moment
  • See Nifty FY19 EPS growth at 24.7 percent
  • See some upside for refining margins
  • On the macro side things will worsen from where we are

Shares of the Hyderabad-based drugmaker fell as much as 9.38 percent, the most in over six months, to Rs 870.10.

Observations in the Form 483 issued by the U.S. drug regulator against Unit-2 of Divi’s Laboratories Ltd.’s Visakhapatnam facility do not appear to be “procedural” in nature, contrary to what the company said in its stock exchange notification following the closure of the inspection.

Indian equity benchmarks edged higher led by select auto and banking shares. However, the gains were capped as pharma stocks came under selling pressure.

The S&P BSE Sensex rose 0.2 percent to 31,674 and the NSE Nifty 50 Index advanced 0.16 percent to 9,887.

Seventeen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Realty Index's 1.2 percent gain. On the other hand, the S&P BSE Healthcare Index was among the laggards, down 0.3 percent.

The dollar retained gains after the U.S. Federal Reserve Chair Janet Yellen boosted expectations for an interest-rate rise in December ahead of President Donald trump's tax reform proposals. Most of the Asia-pacific currencies were down today and that will impact the rupee, which fell to the lowest level since March on Tuesday.

Indian benchmark government bonds may also remain under stress on wider expectations of a fiscal stimulus intended to boost growth may dent its fiscal deficit targets.

Indian bonds faced outflows on Tuesday as foreign funds trimmed rupee-debt holdings by Rs 800 crore.

  • Nifty September Futures closed with a discount of 4.5 points from a premium of 6 points
  • Nifty October Futures trading with a premium of 28 points versus 39 points at 9899.8
  • Rollover: Nifty at 31 percent, Bank Nifty at 26 percent
  • Nifty Futures open interest across series up 5 percent and Bank Nifty up 10 percent
  • India VIX closed 3 percent lower at 12.9
  • September series highest Call base at 10,000 (open interest at 59.2 lakh shares, down 8 percent)
  • September series highest Put base shifts to 9800 (open interest at 43.7 lakh shares, up 17 percent)
  • September strikes 9900 Call and 9800 Put see open interest addition
  • October options data show maximum open interest at 10,000 Call and 9700 Put strikes
  • Prataap Snacks IPO was subscribed 46.9 times on final day of bidding.

Listing Today

  • ICICI Lombard General Insurance to make stock market debut with an issue price Rs 661 per share.

IOL Chemicals and Pharmaceuticals

  • Indiastar (Mauritius) Ltd. sold 3 lakh shares or 0.5 percent stake at Rs 50 each

Monnet Ispat

  • Sri Silverdale Opportunities fund bought 13.88 lakh shares or 0.7 percent stake at Rs 29 each
  • APMS Investment Fund sold 13.88 lakh shares or 0.7 percent stake at Rs 29 each

Morgan Stanley Asia Strategy Note

  • Upgrade Capital Goods to ‘Overweight’ with a strong preference for India, China
  • Upgrade Energy to ‘Equalweight’ post YTD underperformance.
  • L&T: Expect strong upcoming construction demand in India;
  • Havells: Improving macro conditions, diversified portfolio and strong brand to drive growth
  • Cummins India: Improving growth to expand margins from nine-year lows
  • RIL: Improving margins and clarity on telecom. Expect windfall profits in coming quarters
  • IOC: Steady rise in margins amid strong demand. Expect 18 percent earnings CAGR over FY17-20

CLSA on Maruti Suzuki

  • Maintain ‘Buy’ with price target of Rs 9,230
  • Kia Motors product launches from 2019 not a meaningful threat to Maruti
  • Maruti is now much better placed to maintain its dominance
  • Full utilisation of Kia's capacity by 2021 implies 6-7 percent market share by volume

HSBC on Grasim

  • Maintains ‘Hold’; Hiked price target to Rs 1,200 from Rs 960
  • Hike to factor in merger Aditya Birla Nuvo and higher valuations of Ultratech
  • Triggers:- better than expected demand and realisations for cement, improving business conditions for standalone segments and higher valuation for investments

Macquarie on Emami

  • Maintain ‘Outperform’ with price target of Rs 1,314
  • Management suggest significant restocking seen
  • Rural recovery critical to maintain high growth momentum says management
  • Expect 10 percent revenue growth in FY18, implying 18-19 percent revenue growth for the next three quarters

Credit Suisse on Alkem Labs

  • Initiates with ‘Outperform’ rating and price target of Rs 2,150
  • Expect margins to expand by 200 basis points over FY17-20 estimates ,led by scale in chronics and Indian subsidiaries
  • Expect return on capital employed to improve by 400 basis points by FY20
  • EPS to grow at CAGR of 18-20 percent over FY17-20
  • In U.S. it has achieved a critical scale and has a good pipeline
  • Alkem is a play on the steady growth and high-return Indian market

Nomura on Cement Sector

  • Cement sector revival has begun; Demand drivers like housing and infrastructure are strong
  • Industry has surprised with pricing discipline, which can get better
  • Capacity adds are likely to average 15-16 MTPA over the next three years
  • Expects 5-6 percent demand growth in FY18 and 7-9 percent in FY19-21
  • Upturn can lead to sharp earnings growth of 21-33 percent CAGR over FY17-20

Nomura on Shree Cement

  • Resume coverage with ‘Buy’ rating and price target of Rs 23,500; Potential Upside 31 percent
  • Expect earnings to grow at 33 percent CAGR over FY17-20; Return on equity to improve to 23-25 percent
  • Cement sales volume to rise by 18 percent, 23 percent and 17 percent in FY18, FY19 and FY20 respectively
  • Large capacity growth done with strong financial discipline

Nomura on Ultratech Cement

  • Resume coverage with ‘Buy’ rating and price target of Rs 5,150; Potential Upside 32 percent
  • Expect earnings to grow at 21 percent CAGR over FY17-20; In FY19 earnings could double
  • Cement production to grow at 15 percent CAGR over FY17-20
  • Ultratech best positioned to benefit from cement sector upturn and demand growth
  • Despite large acquisition, balance-sheet remains quite strong

Nomura on Ambuja Cements

  • Resume coverage with ‘Neutral’ rating and price target of Rs 300; Potential Upside 15 percent
  • Expect earnings to grow at 26 percent CAGR over the next three years; Volume to grow 6-7 percent annually
  • Capacity growth to be muted, but earnings can go up sharply
  • Higher utilisation, improved pricing and cost synergy benefits from ACC merger to drive earnings

Nomura on ACC

  • Resume coverage with ‘Neutral’ rating and price target of Rs 1,890; Potential Upside 16 percent
  • Expect EPS to grow at 31 percent CAGR over CY16-19; From Rs 34 in CY16 to Rs 77 in CY19
  • Expect cement production volumes to grow at 6 percent CAGR over the next three years
  • Earnings to grow on the back of higher prices and utilisations
  • Recovery in earnings likely priced in

Morgan Stanley on India Steel

  • Estimate 6 percent and 7 percent demand growth in FY18 and FY19 respectively; India will remain a net exporter
  • Expect steel prices to rise 21 percent and 2 percent in FY18 and FY19 driven improving domestic utilisation and global prices
  • Prefer companies with expansion-led volume growth and cost advantage
  • Tata Steel: Hiked price target to Rs 830 from Rs 741; FY18 earnings estimate hiked by 9 percent
  • JSW Steel: Hiked price target to Rs 300 from Rs 267; FY18 earnings estimate hiked by 9 percent
  • JSPL: Cut price target to Rs 161 from Rs 134
  • SAIL: Cut price target to Rs 45 from Rs 48

Morgan Stanley on ITC

  • Upgrade to ‘Overweight’ from ‘Equalweight’; Hiked price target to Rs 320 from Rs 285
  • Triggers:- cigarette volume growth over next 2-3 years, operating margin expansion under GST, and the trend in GST cess collection
  • Expects steady cigarette tax policy from here, But volume decline of 2 percent in FY18
  • ITC has been a strong consensus buy – yet it is one of the worst-performing stocks YTD

Morgan Stanley on Metals

  • Vedanta: Hiked price target to Rs 391 from Rs 310, Remain ‘Overweight’
  • Vedanta to benefit from favourable commodity exposure and robust volume growth
  • Hindalco: Hiked price target to Rs 290 from Rs 241, Remain ‘Overweight’
  • Hindalco to gain from positive outlook for aluminium and deleveraging focus
  • FY19 Net profit estimates increased by 14 percent and 7 percent for Vedanta and Hindalco respectively.
  • Ajay Piramal to make strategic announcement at 11 a.m.
  • TCS’ UK based subsidiary Diligenta secured a 15-year deal from Scottish Widows
  • Aurobindo Pharma received Form 483 with 2 observations from the U.S. FDA
  • Dabur Partners with Amazon to strengthen international business
  • United Spirits settles Pioneer Distilleries case with SEBI
  • IDBI Bank ties up with Boston Consulting Group to boost financial health
  • Petron Engineering received order worth Rs 280 crore from JSW Steel
  • Madhucon Projects says it is looking to sell its road projects but buyers for the same are not yet finalised
  • DGFT permits RCF, National Fertilizer to import Urea only for 3 months
  • Blue Star Forays into engineering facility management
  • Infinite Computer Solutions to issue bonus shares in the ratio of 1:26
  • MT Educare says NCLT approves merger of subsidiaries of the company
  • APL Apollo Tubes said NCLT approved merger with Lloyds Line Pipes
  • TVS Motor says Jupiter scooter sales crossed 2 million mark in 4 years
  • Under investor pressure, IDFC and Shriram to redo merger formula (Economic Times)
  • Reliance Industries in talks to acquire DEN Networks; move to help RIL launch home broadband, cable TV services soon (Economic Times)
  • NMDC to seek major investor for steel plant (Bloomberg)

For a more detailed list of stocks to watch, click here

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was up 0.2 percent at 9,874.

A cautious tone resumed for Asian equities, with Japanese stocks sliding. The dollar retained modest gains after Federal Reserve Chair Janet Yellen boosted expectations for an interest-rate rise in December and ahead of the U.S. president laying out his tax-reform plan. (more details here)

Commodities

  • West Texas Intermediate crude was at $52.10 a barrel, after an industry report was said to have shown an unexpected decline in crude inventories.
  • Gold was little changed at $1,291.52 after slumping 1.3 percent in Tuesday’s session.

. Read more on Markets by BloombergQuint.