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Sensex, Nifty Suffer Second Worst Week Of 2017 On Earnings Concern

  • The NSE Nifty 50 Index slipped below 9,850 on the back of weakness in Wipro, TCS, Hindustan Unilever and ITC
  • The S&P BSE FMCG and S&P BSE IT indices were quoting in the red
  • S&P BSE Oil & Gas Index was the top sectoral gainer led by gains in GAIL
  • Markets not far away from top don't think it is a bearish signal
  • Flat earnings growth expected for large-caps
  • Liquidity trend is changing as FIIs taking money out of India
  • GST de-stocking to impact earnings
  • Service industries not likely to report good earnings as there is negativity in consumer spending
  • Like stocks in industrial chemicals space
  • Sell out of the money put options
  • Buy Apollo Hospital with stop loss at Rs 990 for target of Rs 1,050

Shares of the Pune-based electrical power equipment maker jumped as much as 6.2 percent, the most since September 2014, to Rs 959.

  • Rupa & Company: The Kolkata-based apparel maker jumped as much as 15 percent, the most in over a month, to Rs 446. Trading volume was 16.4 times its 20-day average.
  • Schaeffler India: The Mumbai-based ball bearings maker jumped as much as 2.2 percent, the most since September 1, to Rs 4,900. Trading volume was 13.8 times its 20-day average.
  • Radico Khaitan: The Delhi-based liquor maker jumped as much as 9.4 percent, the most since September 8, to Rs 172.65. Trading volume 7.8 times its 20-day average.

The broader markets were outperforming the benchmark indices. The S&P BSE MidCap Index rose 1.3 percent and the S&P BSE SmallCap Index advanced 1.4 percent.

Shares of the Mumbai-based infrastructure developer jumped as much as 6.7 percent to Rs 102.95 after the company won an order worth Rs 1,206 crore for toll tax collection from SDMC for a period of five years.

  • S&P BSE Sensex up 0.4 percent at 31,429 and NSE Nifty 50 Index rose 0.5 percent to 9,815
  • All the sector gauges barring the S&P BSE IT and S&P BSE Teck indices were trading higher
  • S&P BSE Realty Index top sectoral gainer, up 2.7 percent
  • Banking shares witness buying, Nifty Bank jumped 0.6 percent
  • From Nifty 50 basket of shares, 34 were trading higher while 16 were among the gainers

Satpal Arora, MD, TFCI To BlombergQuint:

  • Confirms IFCI sold stake in the company
  • Not aware of the bidders or final buyer
  • Prospective buyers we had discussions with were NBFCs and PE funds
  • Not aware of IFCI’s plans of remaining 2 percent stake
  • Expect to see 30 percent growth in disbursements in current financial year
  • Tourism Corporation of India has 1.94 crore shares change hands in two block deals. Shares surge as much as 9.4 percent to Rs 158.95.

Source: Bloomberg

Shares of the infrastructure developer rallied as much as 7.5 percent, the most this month, to Rs 35. The lenders have decided to invoke the Strategic Debt Restructuring (SDR) scheme for its Lavasa township project. Using the scheme, lenders will convert debt into a majority equity holding in the unit.

Shares of the real estate companies were trading higher. The S&P BSE Realty Index advanced as much as 3.2 percent, the most since September 26, to 2,081.

Shares of the Mumbai-based apparel maker jumped as much as 15 percent, the most since June 14, to Rs 258.8 on the back of share buyback proposal.

The company's board will meet on October 6 to consider the proposal for buyback of equity shares of the company, it said in an exchange filing.

Shares of the natural gas distributor rose as much as 8.3 percent, the most in over two years, to Rs 429, its highest level in over four months.

The Petroleum and Natural Gas Regulatory Board (PNGRB) has put up a consultation paper on unified pipeline tariff proposing a 60 percent hike in tariff by GAIL.

  • Corporate earnings have not delivered
  • Will qualify India as 'buy on dips’ market
  • Will take a couple of quarters for earnings to revive
  • Earnings recovery will be helped by lower base in December
  • Higher valuations making investors cautious
  • Government push for affordable housing will kick start housing sales
  • Investors can play the housing theme by investing in Mumbai-based and Bangalore-based developers
  • Delhi and NCR-based developers still have demand-supply concerns
  • Housing sector pick up will have positive effect on cement companies

Indian equity benchmarks moved higher led by gains in GAIL India which rose as much as 8 percent, the most in over two months, to Rs 429. The government put up a consultation document on unified pipeline tariff proposing a 60 percent hike in tariff by GAIL.

The S&P BSE Sensex rose 0.4 percent to 31,407 and the NSE Nifty 50 Index advanced 0.48 percent to 9,815.

All the sector gauges compiled by BSE were trading higher led by the S&P BSE Realty Index's 1.9 percent surge.

  • GAIL had suggested that due to differential pricing, far off places are being charged extra
  • If government implements the tariff as suggested by GAIL, it could reflect in 40 percent gain in revenue book

India's benchmark government bonds will find support after finance ministry kept its fiscal second half borrowing plan unchanged amid calls for fiscal stimulus to boost a slowing economy.

However, there could be sceptic voices about how it would prop up growth without borrowing more. Another important data to watch out today will be the August fiscal deficit number.

The Indian rupee is set for the biggest monthly decline since August 2015 as outflows continue unabated in both bonds and stocks.

However, the currency may find support today as rupee in the forward market are trading higher. Also, OppenheimerFunds said the sell-down will probably be short-lived. The more significant challenges for India is the slowing economy and relatively high valuations which are issues that could persist, it said.

Nifty Inclusion:

  • Bajaj Finance
  • Hindustan Petroleum
  • United Phosphorus

Nifty Exclusion:

  • ACC
  • Bank of Baroda
  • Tata Power
  • Tata Motors-DVR
  • Nifty October Futures trading with a premium of 18 points versus 36.6 points at 9,787
  • Rollover: Nifty at 70 percent, Bank Nifty at 64 percent
  • India VIX closed 5 percent lower at 13.17
  • October series highest Call base at 10,000 (open interest at 40.6 lakh shares, up 26 percent)
  • October series highest Put base at 9,700 (open interest at 29.9 lakh shares, up 14 percent)
  • September call strikes 9,700, 9,800, 10,000 saw open interest addition
  • September put strikes 9,500, 9,600 saw open interest addition

Bulk Deals/Circuit Revisions

  • Premier Polyfilm: Circuit filter revised to 10 percent
  • Nagarjuna Agrichem: Company name changed to NACL Industries
  • Tata Motors DVR: SBI MF sold 32.66 lakh shares or 0.64 percent stake at Rs 221.31 a piece
  • Equitas Holdings: BNP Paribas Arbitrage sold 32 lakh shares or 0.95 percent stake, at Rs 151.92 a piece.

Brokerages on Titan

Motilal Oswal says

  • Maintain neutral stance; hiked price target to Rs 590
  • Advancement of sales and PMLA affect Q2FY18 sales
  • Despite slowdown jewellery business gains market share
  • Watches and eyewear saw good growth, but continue to be drag on earnings growth

CLSA says

  • Maintain buy rating with a price target of Rs 700
  • Modest customer response to activation, regulatory issues and sale advancement to weigh on Q2FY18
  • Expect 5 percent revenue growth in jewelry business; Titan remains our preferred pick in the consumer space
  • Titan is a strong play on a pick-up in discretionary consumption
  • Titan also benefits from the government’s focus on formalising the economy

JPMorgan says

  • Maintain buy rating with price target of Rs 620
  • Growth moderates on account of GST/PMLA; Market share gains continue
  • Highlights on expected lines and key reason for the recent share price pullback
  • Maintain constructive stance on Titan; Add on dips

Motilal Oswal on PNB Housing Finance

  • Initiates coverage with buy rating and price target of Rs 1,675; potential upside of 19 percent
  • PNBHF’s asset quality has been one of the best among peers
  • Growth, asset quality & improving RoE to justify valuation premium
  • New branch openings and improving productivity to drive 37 percent AUM CAGR over FY17-20
  • Expect net profit to grow at CAGR of 40 percent over FY17-20
  • Return on equity to improve to 19 percent in FY20 vs 14 percent in FY17 on account of higher leverage
  • Return on asset to remain largely stable at 1.5 percent

Kotak Securities on ICICI Bank

  • Maintain buy with price target of Rs 370; ICICI Bank top idea of Kotak Securities
  • ICICI Bank continues to make better than expected progress in retail space
  • Despite near term concerns of RERA, Retail mortgages to remain the bedrock of retail assets
  • In auto loans growth opportunity is healthy, but profitability is a challenge

Deutsche Bank on Ambuja Cements Management Meet

  • Maintain hold with price target of Rs 250
  • Ambuja expects improvement in cement demand in Q3 and Q4 CY17 driven by rural economy
  • Ambuja guides 6 percent (YoY) volume growth in CY17 and 7-8 percent in CY18
  • DB expects EPS to grow at CAGR of 20 percent over CY16-19
  • Hold as expiry of sales tax incentives in CY20 to hurt earnings and existing premium valuation

Kotak on Apollo Hospitals

  • Maintain reduce; Cut price target to Rs 1,050 from Rs 1,190
  • Regulatory challenges, declining growth trajectory in Chennai and up-front cost related to Navi Mumbai to impact profitability
  • Cut EBITDA estimates by 8-10 percent for FY18-20; Company's target to turnaround in FY19 to be difficult
  • Expect losses to decline by Rs 20-30 crore over FY18-19, driven by ramp up of Cradle and diagnostics business
  • GAIL India’s new tariff is 60 percent higher following PNGRB’s consultation document
  • Titan: Company says operational performance in Q2 was close to expectation
  • State Bank of India: To cut base rate by 5 basis points to 8.95 percent from Sunday
  • NTPC: To start commercial operations of 500 MW unit at Feroze Gandhi Uchahar Thermal Power Station
  • Infosys: Company says Mediterranean Bank upgraded Finacle's lending module
  • Godrej Properties: Acquired new project in Bengaluru which is expected to offer 4.7 million square feet
  • Vakrangee: Promoters hike stake in company from 41.59 percent to 41.72 percent
  • Shreyas Shipping: Signed memorandum of association for acquiring one multipurpose vessel and one container vessel
  • Loveable Lingerie: Board to consider share buyback proposal on October 6
  • EPC Industries: Company says sales volume of micro irrigation products declined after July
  • IMFA: To merge two group units with itself

For a complete 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 0.33 percent at 9,769.

Asian stocks diverged on the final trading day of what’s been a strong quarter, with emerging markets coming under pressure.

Japanese shares edged lower, while they were modestly higher in South Korea and Hong Kong. End-of-quarter volatility would not be a surprise on Friday and some major markets, including China, will shut next week for a holiday.

Oil slipped after climbing into a bull market this week. Gold traded near the lowest since August, on track for the worst month of the year.

What to watch out for prior to the weekend:

  • Japan’s inflation rose the most in more than two years in August and advanced for an eighth month. Meanwhile, the nation’s industrial production climbed 2.1 percent last month versus an estimate of 1. 8 percent.
  • The euro-area inflation rate may have accelerated a touch to 1.6 percent in September from 1.5 percent but the core will probably remain at 1.2 percent. The data is out on Friday.
  • South Korea’s markets will be closed next week for a holiday.
  • Data on U.S. personal spending, income and prices is due out.
  • India fiscal deficit in rupees for April-August

. Read more on Markets by BloombergQuint.