What Did You Miss
Closing Bell
Indian equity benchmarks declined for third straight session and the rupee dropped to a 10-week low on concerns that the nation’s fiscal deficit will widen after the government said it was considering measures to boost growth.
The S&P BSE Sensex was little changed at 32,370 while the NSE Nifty 50 Index slipped 0.2 percent to 10,122.
Sixteen out of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Realty Index's 2.3 percent drop. On the flipside, the S&P BSE Healthcare Index was the top sectoral gainer, up 2.7 percent.
Pharma shares can go up 15-20 percent in the short term, says independent market expert Mehraboon Irani.
For the longer term Irani continues to hold his negative outlook on the sector citing valuations not justifying earnings outlook. Apart from regulatory concerns, he said the pricing power enjoyed by the drugmakers is also over.
Stocks Gaining On Heavy Volumes
- Torrent Pharma: The Ahmedabad-based drugmaker jumped as much as 6 percent, the most in over a month, to Rs 1,333. trading volume was 6.9 times its 20-day average.
- Ipca Labs: The Mumbai-based pharma company rose as much as 19 percent, the most in over five years, to Rs 586. Trading volume was 5.1 time its 20-day average.
- Reliance Communications: The Mumbai-based telecom service provider climbed as much as 9 percent, the most in over a month, to Rs 21.5. Trading volume was 4.8 time its 20-day average.
- Alembic Pharma: The Vadodara-based drugmaker advanced 4.6 percent, the most in over two months, to Rs 503. Trading volume was 3.8 times its 20-day average.
ITI Surges To Record On Emerging As Lowest Bidder For Defence Project
Shares of the Bangalore-based communication equipment maker jumped as much as 20 percent, the most since April 24, to Rs 122, also its all-time high.
ITI has emerged as the lowest bidder for Rs 7,000 crore "ASCON Phase IV Project" by the ministry of defence, company said in a stock exchange filing.
Power Lunch
Rupee Falls To Over Two-Month Low, Bond Yield Jumps
- The Indian rupee fell to 64.78 against the U.S. dollar, its lowest level since July 6.
- Yield on 6.79 percent government bonds due May 2027 jumped 7 basis points to 6.65 percent; a close at this level will be highest since May 31.
Pharma Stocks Gain In Weak Session
Shares of the drugmakers were trading higher in an otherwise weak market. The NSE Nifty Pharma Index rose as much as 3.2 percent, the most in nearly one month.
European Shares Advance
#Ask BQ
BQ Spotted: GOCL Corp Surges Most In 2 Years
- The Hyderabad-based mining and infrastructure company rose as much as 17 percent intraday, to its highest level in over nine years.
- Trading volume was at 42 times its 20-day average for this time of the day.
- The company has a market cap of Rs 2,800 crore and has returned 115 percent so far this year.
Divi's Labs Rises For Third Day, Hits 9-Month High
Shares of the drugmaker rose as much as 6 percent to Rs 998.70, its highest level in nine months. The brokerage firm Axis Capital has upgraded the stock to buy and raised its target price to Rs 1,600.
The brokerage in a note said:
- Quick U.S. FDA re-inspection could be due to large dependence of innovator/generic companies
- Increase FY19 EPS estimates by 15 percent with improved visibility on U.S. FDA resolution
- Expect earnings to start improving from end FY18/FY19
- Expect 16 percent revenue growth; 250 basis points EBITDA margin expansion in FY19
The Mutual Fund Show
NBCC Surges To Record High On Order Win
Shares of the government owned construction company gained as much as 3.8 percent to record high of Rs 228.50 after it won Rs 3,200 crore order.
Key order highlight:
- Department of customs and excise has awarded contract for construction of office complex and residential quarters in Mumbai.
NCLAT Rejects Cyrus Mistry's Plea Against Tata Sons
Metal Index At One Month Low
The S&P BSE Metal index fell as much as 2.2 percent, the most in over one month, to 13,669.
The F&O Show
ITDC Rallies For Second Day
Shares of the state-run tourism company jumped as much as 13.6 percent to Rs 658 after the cabinet approved transfer of two hotel properties to state governments and divestment of stake in hotel joint venture.
Market Check
- Eighteen out of 19 sector gauges compiled BSE trade lower
- The S&P BSE Metal and the S&P BSE Realty Indices lead decline, fall nearly 2 percent
- Market breadth extremely bearish as 1,600 shares fall while 529 gain on the BSE
- From the Nifty 50 basket, 40 shares decline while 11 shares advance
Dr Reddy's Labs Extends Gains
The drugmaker extended gains and rose as much as 6.7 percent to Rs 2,470, its highest in nearly two months.
The company received an Establishment Inspection Report (EIR) from the U.S. FDA for its Srikakulam Plant in Andhra Pradesh.
New Listings
- Matrimony.com falls 3.5 percent on stock market debut to Rs 950 against issue price of Rs 985.
- Dishman Carbogen Amcis re-lists at Rs 350 versus last close of Rs 301.2 per share
- Lasa Supergenerics lists at Rs 140.20 per share
Indian Open
UR Bhat Of Dalton Capital On Markets And Earning Expectations
- Expect markets to consolidate with negative bias
- September earnings not expected to be encouraging
- Expect earnings to stage recovery in the December quarter
- Awaiting more government measures in boosting investments and exports
- Like financials and consumption related stocks
Dr Reddy's Labs Gains On Morgan Stanley Upgrade
Shares of the drugmaker jumped as much as 3.5 percent to Rs 2,396, its highest level in over one month after international brokerage firm Morgan Stanley upgraded the stock to 'Overweight' from 'Equalweight'.
Morgan Stanley on Dr. Reddy’s Labs:
- Upgraded to ‘Overweight’ from ‘Equalweight’; Hiked target price to Rs 3,133 from Rs 2,798
- Expect earnings recovery in FY19-20 to be driven by key product launches in U.S. over next 4-8 quarters
- Cost control and positive operating leverage to lead earnings CAGR of 57.2 percent for FY19-20
- India business to see steady recovery after GST over the next few quarters
Opening Bell
Indian equity benchmarks edged higher led by gains in pharma stocks. Meanwhile, the gains were capped as index heavyweights TCS, HDFC Bank and ICICI Bank were among the laggards.
The S&P BSE Sensex rose 0.13 percent to 32,443 and the NSE Nifty 50 Index advanced 0.10 percent to 10,150.
Fifteen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Healthcare Index's 1.3 percent gain. On the other hand, the S&P BSE Telecom Index was the top loser, down 0.12 percent.
Rupee Falls Against U.S. Dollar
- Rupee opens lower at 64.52 per dollar against Wednesday's close of 64.27.
Nifty Chart Check
Rupee Heads-Up
IPO Market Update
- Matrimony.com to make stock market debut after concluding its Rs 500 crore initial public offer last week.
- SBI Life Insurance IPO continues on day 2. The issue has been subscribed 0.09 times so far.
BQ Heads Up!
Futures And Options Cues
- Nifty September Futures closed with a premium of 26.5 points from 21 points
- September Nifty Futures open interest up 2 percent, Bank Nifty open interest down 4 percent
- India VIX closed higher by 1.4 percent at 11.46
- September series highest Call base at 10200 (open interest at 56 lakh )
- September series highest Put base at 10,000 (open interest at 56.9 lakh, open interest down 4 percent)
- Call strikes 10,000, 10,100 sees unwinding of open interest & addition seen for 10,300 & 10,400
- Put strikes 10,000, 10,100 sees unwinding of open interest & addition seen for 10,300
Brokerage Radar
Macquarie On United Spirits
- Maintain Underperform; Hike price target to Rs 1,933 from Rs 1,600
- Expecting price increases in Telangana; 10 percent price hike to boost EBITDA margins by 50-60 basis points
- Channel checks suggest muted volume growth in Q2FY18; But situations improving
- Expect prestige segment volume growth CAGR of 7 percent for next three years
- EBITDA CAGR of 16 percent 340 basis points margins expansion for next three years
Axis Capital On Divi’s Lab
- Upgrading to Buy; Hiked price target to Rs 1,080 from Rs 625
- Quick U.S. FDA re-inspection could be due to large dependence of innovator/generic companies
- Increase FY19 EPS estimates by 15 percent with improved visibility on U.S. FDA resolution
- Expect earnings to start improving from end FY18/FY19
- Expect 16 percent revenue growth; 250 basis points EBITDA margin expansion in FY19
Edelweiss On Tata Steel
- Maintain Buy with price target of Rs 720
- Deal will aid consolidation and pare debt of balance sheet
- Rs 90 per share benefit due to synergies of EUR400-600 million
- Merger likely to create second largest player in Europe
IDFC Securities on Tata Steel
- Maintain Outperformer; Hiked price target to Rs 694 from Rs 623
- Deal will restrict any future cash outflows from Indian operation
- Proposed JV is expected to be financially self- sustainable
- Net debt will fall to Rs 49,800 crore from Rs 69,300 crore post JV
Axis Capital on Tata Steel
- Maintain Buy; Hiked price target to Rs 765 from Rs 690
- Tata Steel as the company can now focus on Indian growth opportunity
- Tata Steel would now likely look to expand Kalinganagar (Odisha) capacity
CLSA on Tata Steel
- Maintain Buy; Hiked price target to Rs 850 from Rs 800
- Synergies to drive EPS; Focus back on India
- Deal to be EPS accretive by 14-18 percent & value accretive by 4-6 percent by FY20
- FY20 consolidated net debt to drop by 28 percent; Net debt/EBITDA remain unchanged at 3.1 times.
- Expect regulatory approvals to complete by March 2019
Macquarie on Tata Steel
- Maintain Underperform; Hiked price target to Rs 560 from Rs 505
- Free cash flow from JV to service remaining EU debt
- Increase FY18 EBITDA estimates by 6 percent on steel price resistance
- Increase FY18 and FY19 EPS estimates by 13 percent and 1 percent respectively
- Tata Steel is well placed to benefit from the recent steel price resistance
Credit Suisse on Tata Steel
- Maintain Outperform; Hiked price target to Rs 800 from Rs 720
- Closing expected in late CY18 post regulatory approvals
- Expect synergies value to be Rs 100 per share
- Increase FY18 EPS estimates by 6.5 percent
Morgan Stanley on Dr. Reddy’s
- Upgraded to Overweight from Equalweight; Hiked price target to Rs 3,133 from Rs 2,798
- Expect earnings recovery in FY19/20 driven by key product launches in U.S. over next 4-8 quarters
- Cost control and positive operating leverage to lead earnings CAGR of 57.2 percent for FY19-20
- India business to see steady recovery after GST over the next few quarters
IDFC Securities on Zee
- Zee has created a strong business model with its disciplined content investments
- Weak ad growth commentary, led to cut FY18 ad growth estimate to 12 percent versus 14 percent earlier
- FY18/19 earnings estimates cut by 3 percent; expect net profit to grow at CAGR of 19 percent over FY17-19
- Advertising and subscription revenue to grow at CAGR of 15 percent and 16 percent respectively over FY17-19
On Bharat Electronics After Analyst Meet
IDFC Securities Says
- Maintain Outperform with price target of Rs 220
- Annual order inflow momentum to sustain at Rs 15,000 crore over FY18-20
- Well-positioned to capture the growing defense spend
- Expect margins to drop by 170 basis points to 18.8 percent over FY17-FY19
- EBITDA to grow at CAGR of 14 percent over FY17-19
- Triggers:- sustained order inflows, long-term earnings potential & improvement in return ratios
Jefferies Says
- Maintain Buy with price target of Rs 195
- Management guided 16 percent YoY revenue growth and double-digit order flow growth
- BEL-Thales joint venture likely to take time to ramp-up
- Two new business areas: homeland security and space-linked equipment
Stocks To Watch
- NBCC bags Rs 3,200 crore project from the finance ministry to develop a residential-cum-office complex in Mumbai
- Novartis India’s board to consider the proposal for buyback at its meeting on September 25
- Granules India QIP opens; Floor price set at Rs 127.63 per share
- Reliance Capital says Reliance Home Finance Ltd. to list on September 22
- SMS Pharma mulls joint venture with Chemo S.A. (Switzerland)
- Den Networks received NCLT nod to demerge its broadband/internet service arm Skynet Cable
- Allahabad Bank’s board approves merger with subsidiary AllBank Finance
- ITDC signs pact for transfer of Lalitha Mahal Palace Hotel, Mysore to Government of Karnataka
- NPPA fixes ceiling price of 39 more drug formulations
- Walchandnagar Industries Circuit filter revised to 10 percent
- Yes Bank Ex-date for 5:1 stock split. Futures and options lot size revised to 1,750
- Dishman Carbogen Amcis to be relisted after reverse merger of Carbogen Amcis into company
- Lasa Supergenerics, a demerged entity of Omkar Speciality Chemicals, to list on exchanges
- Amtek Auto creditors likely to meet soon (Financial Express)
- Reliance Industries plans major expansions at world’s largest oil refinery complex
- SBI starts the process to sell non-core assets; to hire merchant bankers (Mint)
Talking Points
- What India’s Top Three Mutual Funds Bought And Sold In August
- Surging Onion, Egg, Squid Prices Spice Up Asian Inflation Rates
- ICICI Pru’s Top Holders Are Said to Weigh $570 Million Sale
- Nearly 22 Lakh GST Returns Filed Till 6 PM, Deadline Ends Midnight
- NCLAT Verdict Over Cyrus Mistry’s Waiver Plea Today
- Reliance Jio Says Lower Interconnect Charge Benefits Users, Not The Company
- Drug Price Regulator Fixes Ceiling Price Of 39 More Drug Formulations
- M&M Consolidates Farm Equipment Business In Turkey, Acquires Second Company
Good Morning!
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.24 percent to 10,143.
Asian equities open mixed with Japanese stocks advancing while the South Korean and Australian fluctuated. Most major currencies extended losses against the U.S. dollar as the Federal Reserve set an October start for shrinking its balance sheet and maintained a forecast for another rate increase this year.
Attention now turns to the Bank of Japan, which ends a two-day policy meeting on Thursday. All 45 economists surveyed by Bloomberg this month said they expect the BOJ to leave policy unchanged.
Commodities
- West Texas Intermediate crude climbed 0.5 percent to $50.68 a barrel following a 1.9 percent advance. A drop in U.S. fuel supplies boosted the outlook for crude demand.
- Gold lost 0.2 percent to $1,297.98 an ounce.
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