Closing Bell
Indian equity benchmarks slipped marginally, halting a four-day record closing streak as crude oil continues to gain above two-year high, ahead of the third quarter earnings season.
The S&P BSE Sensex Index was a little changed at 34,433.07, while the NSE Nifty 50 Index was also a little changed at 10,632.20.
The market breadth was tilted in favour of sellers. Thirteen out of 19 sector gauges compiled by BSE closed lower led by the S&P BSE Auto Index’s 0.7 percent decline. On the other hand, the S&P BSE Information Technology Index was the top sectoral gainer, up 1.8 percent.
Countdown
Stocks Moving On Heavy Volumes
Infinite Computer Solutions
- Stock rose as much as 15.7 percent to Rs 385.90.
- Trading volume was 25.2 times its 20-day average.
Astec Lifesciences
- Stock rose as much as 13.5 percent to Rs 624.90.
- Trading volume was 26.2 times its 20-day average.
Tinplate Co of India
- Stock rose as much as 18.9 percent to Rs 319.45.
- Trading volume was 19.9 times its 20-day average.
Tata Metaliks
- Stock rose as much as 14.2 percent to Rs 975.50.
- Trading volume was 17 times its 20-day average.
Tata Sponge Iron
- Stock rose as much as 15.3 percent to Rs 1,234.
- Trading volume was 12.2 times its 20-day average.
Analysts' Rating Update
Persistent Systems
- Stock Rating: Initiate ‘Outperform’
- Price Target: Set at Rs 960, implying a potential upside of 28.8 percent from current market price.
HDFC Securities on Zee Entertainment Enterprises
- Stock Rating: Downgraded to 'Neutral from 'Buy'.
- Price Target: Raised to Rs 518 from Rs 575, implying a potential upside of 6.3 percent from current market price.
Axis Capital on Zee Entertainment Enterprises
- Stock Rating: Upgraded to 'Buy' from 'Hold'.
- Price Target: Raised to Rs 670 from Rs 560, implying a potential upside of 15.4 percent from current market price.
Narnolia Securities on South Indian Bank
- Stock Rating: Downgraded to ‘Accumulate’ from ‘Buy’.
- Price Target: Raised to Rs 37 From Rs 36, implying a potential upside of 14 percent from current market price.
IIFL On Asian Paints
- Stock Rating: Upgraded to ‘Buy’ from ‘Add’.
- Price Target: Raised to Rs 1,300 from Rs 1,200, implying a potentail upside of 10.6 percent from current market price.
IIFL On Coal India
- Stock Rating: Upgraded to ‘Buy’ from ‘Add’.
- Price Target: Raised To Rs 357 from Rs 300, implying a potential upside of 15.8 percent form current market price.
Haitong International On IndusInd Bank
- Stock Rating: Initiated ‘Buy’.
- Price Target: Rs 2,000, implying a potential upside of 16.7 percent from current market price.
(Source: Bloomberg)
Lupin Jumps After FDA Boost
Shares of the drug maker rose as much as 1.1 percent to Rs 933, the highest in two months.
The pharmaceutical company received a green signal from the U.S. drug regulator for generic Tamiflu Capsules, according to its stock exchange notification.
The Relative Strength Index was 73, indicating that the stock may be overbought. Lupin trades at 16.3 times trailing 12- month earnings per share and 24 times its estimates for the coming year.
European Stocks Halt Longest Rally In Two Months
Power Lunch
Union Cabinet Upgrades FDI Policy Amendments
- Approved 100 percent FDI in construction sector via automatic route
- Allowed foreign airlines to invest up to 49 percent in Air India. Effective control of Air India to stay with Indian Nationals.
- Approved amending definition of medical devices in FDI.
- Allowed FIIs/FPIs to invest in power exchanges via primary market
- Foreign investors allowed to specify choice of auditor in Indian joint ventures.
Simplex Infrastructures Jumps After Winning MMRDA Order
Shares of the construction service provider rose as much as 4.7 percent to Rs 620, the highest since June 2008.
The company received an order from Mumbai Metropolitan Region Development Authority (MMRDA) worth Rs 1,080 crore for part design and construction of elevated viaduct and 11 elevated stations, according to its stock exchange notification.
Simplex Infrastructures trades at 27 times its estimated earnings per share for the coming year. It has returned 108 percent in the last 12 months.
Lalit Agrawal, CMD At V-Mart Retail Speaks To BloombergQuint
- 100 percent FDI in single brand retail will definitely benefit economy, retail sector and consumer.
- Great opportunity for foreign investors to expand in Indian market.
- Will bring more resources, skilled manpower as well as technology in the sector.
- Foreign retailers or brand will have easier as well as faster access to Indian markets.
- Move will take away business from less competent players in the market.
Retail Stocks Rally After FDI Boost
Shares of the retailers rose after the Union Cabinet allowed 100 percent foreign direct investment in single-brand retail via automatic route, a government official told Bloomberg.
- Future Retail: up 1.3 percent top Rs 574.40.
- Future Consumer: up 4.7 percent to Rs 77.
- Shoppers Stop: up 2.6 percent to Rs 552.55.
- V-Mart Retail: up 4 percent to Rs 1,747.65.
- Avenue Supermarts: up 2.5 percent to Rs 1,266.
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Market Check
Indian equity benchmarks erases gains, led by declines in Sr. Reddy’s Laboratories. The S&P BSE Sensex Index fell 0.2 percent to 34,374 as of 12:45 p.m., while the NSE Nifty 50 Index declined 0.3 percent to 10,607.
Hot Money
JP Home Buyers' Case Update
- RBI seeks Supreme Court nod to move NCLT against Jaiprakash Associates.
- Court will consider RBI’s request at a later stage.
- Supreme Court asks Jaiprakash Associates to submit an affidavit giving details of its housing projects and construction updates.
- Court directs JP Associates to set up of a portal where home buyers can submit their claims.
- Next date of hearing: Feb. 5.
Trend Spotting
Brent Crude Crosses $69 Per Barrel Mark
PSU Banks Extend Decline
Tata Motors Pares Losses After December Global Wholesales Rise
Shares of the automaker parred early losses and rose as much as 0.3 percent to Rs 439 after it's global wholesale including Jaguar Land Rover rose 23 percent last month on a yearly basis.
Highlights from December sales:
- December Jaguar wholesales 16,826 units.
- December Land Rover wholesales 38,240 units.
Ravi Bhandari, CEO At Shalby Speaks To BloombergQuint
- Older hospitals are reporting positive operating income.
- Repaid debt close to Rs 300 crore.
- Looking at new segments like cardiac apart from the ortho segment.
The hospital chain operator reported its previous quarter earnings yesterday.
Key highlights from earnings (YoY):
- Revenue up 9 percent at Rs 97 crore.
- Net profit down 24 percent at Rs 1.1 crore.
- Ebitda down 6.5 percent at Rs 21.5 crore.
- Margin at 22.2 percent from 25.8 percent.
F&O Show
Abhijit Sen, Former Member Of Planning Commission Speaks To BloombergQuint
- 2017-18 harvest has just started coming in October.
- Believe GVA figures for Agriculture for 2017-18 might be underestimated.
- Prices are still fairly low and the area sown for Rabi doesn't look good except for pulses.
- Lower construction has an impact on rural wages.
- Construction and MSME sectors are equally important for rural as is agriculture.
- Agri prices have been volatile since long time.
- Demonetisation could have had an impact on prices.
- Market and technology are two long-run areas to focus on.
- The 2018 year performance will depend on monsoon.
- Won't quarrel with what the CACP does concerning crop MSPs.
- Govt should stay away from loan waivers.
- Talk on agriculture in Budget is more than what gets implemented
- Advise not to give loan waivers but be prepared for a bad monsoon: Advice on Budget.
S Sivakumar, CEO-Agri Business At ITC Speaks To BloombergQuint
- Loan waivers bought in cash flows in some states.
- Cash flows meant some improvement in demand for FMCG.
- Tractor sales pick up from farmers' incomes in the previous year.
- The government spends compensated for a slowdown.
- Raising on import duties on certain crops has not had an impact on prices.
- Need to see budgetary allocations to state.
- Positive on ground feedback in areas where DBT has been implemented.
Indian Open
Block Deal Alert
- Welspun India: About 4.6 crore shares or 4.7 percent equity changed hands in three blocks.
Buyers and sellers were not immediately known.
Source: Bloomberg
Currency Market Check
IndianOpen: Trade Setup
Opening Bell
Indian equity benchmarks opened at record high for the fourth straight trading session, led by gains in Coal India Ltd.
The S&P BSE Sensex Index rose as much as 0.4 percent to 34,565.63 after 16 out of 31 stocks gained. The NSE Nifty 50 Index rose as much as 0.2 percent to 10,655.50.
The market breadth was tilted in favour of buyers. Eleven out of 19 sector gauges compiled by BSE opened higher led by the S&P BSE Healthcare Index’s 0.5 percent gain. On the other hand, the S&P BSE consumer Durable Index was the top sectoral loser, down 0.2 percent.
Money Market Update
Bonds are likely to stay under pressure, digesting fresh supply of state government paper on Tuesday and bracing for more issuances later this week from the federal government. The yield on the 10-year bond rose 2 basis points to finish at 7.37 percent, and of course worth remembering that the yield is on course to rise for a sixth straight month in January, the longest rising streak since 2000.
That comes amid accelerating inflation and concerns about a wider budget deficit. Of course, the higher yields are attracting foreign investors and they raised their holdings in both corporate and government debt by the most in a month.
All that should be underpinning the rupee. The implied opening based on forwards suggest the rupee will open at around 63.675, up from 63.715 on Wednesday. Foreigners have also been buying into Indian stocks and a Moody's report said that India and China would remain the fastest growing Asian economies.
IndianOpen: FirstWord
BQ Heads Up!
F&O Cues
- Nifty January futures trading at 10,647, premium of 9.9 points from 8.5 points.
- January Series: Nifty open interest up 5 percent; Bank Nifty open interest up 4 percent.
- India VIX ended at 13.8, up 0.8 percent.
- Max open interest for January series at 11,000 Call (open interest at 45.4 lakh, up 1 percent).
- Max open interest for January series at 10,500 Put (open interest at 69.2 lakh, up 11 percent).
F&O Ban
- In ban: Fortis, GMR Infrastructure, HDIL, IFCI, Jindal Steel and Power, Jain Irrigation, JP Associates, Reliance Communications, Reliance Capital, Wockhardt.
- No new stocks in or out of ban list.
Only intraday positions can be taken in stocks which are in F&O ban. There is a penalty in case of a rollover of these intraday positions.
Put-Call Ratio
- Nifty PCR at 1.67 from 1.63.
- Nifty Bank PCR at 0.95 from 0.93.
Brokerage Radar
Credit Suisse on InterGlobe Aviation
- Initiated ‘Buy’ with price target of Rs 1,650; implying a potential upside of 34 percent from yesterday’s close.
- Strong run so far which is likely to get even better.
- Indigo has strong balance sheet and cost structure with lead in market share.
- Air traffic growth to have added cyclical upside with stronger economy.
- Strong yields and seat factors to continue.
- Best in class; Competition modest but reviving.
- Usage of unrestricted cash for buying airplanes can optimise cost structure and returns.
- Positives: strong sectoral growth, superior positioning and relatively attractive valuations.
- Expect revenue, EBITDAR and net profit to grow at a compounded rate of 22 percent, 28 percent and 39 percent over the financial years through March 2020.
- Profitability has high sensitivity to fuel; Expect brent at $65/bbl.
IIFL on Magma Fincorp
- Initiated ‘Buy’ with price target of Rs 220; implying a potential upside of 31 percent from yesterday’s close.
- Business performance at an inflexion.
- Larger part of business restructuring is complete; Disbursements growth is gradually improving.
- Improving financial performance should lead to a credit rating upgrade.
- Financial performance will improve with AUM growth.
- Higher loan growth, margins would aid revenue growth.
- Expect disbursements, AUM and net profit to grow at a compounded rate of 26 percent, 17 percent and 28 percent respectively over the financial years through March 2021.
- Expect return on assets and return on equity to expand to 2.4 percent and 15 percent respectively.
- Valuation is highly attractive and presents a good opportunity for entry at this point.
- Sanguine earnings outlook, attractive valuations strengthen investment case.
BofAML on Jubilant FoodWorks
- Maintained ‘Buy’; raised price target to Rs 2,300 from Rs 2,000.
- Strong same-store sales growth (SSSG) profitability could to drive consensus upgrade.
- Previous quarter to be marked by double-digit SSSG and by further clarity on cost-control initiatives.
- Cost control to back non-stop increase in profitability.
- Expect 10 percent SSSG in the previous quarter, led by favorable base, industry changes.
- Strong earnings per share’s compounded growth rate to back premium valuation; Expect earnings per share to grow at a compounded rate of 59 percent over the financial years through March 2020.
Citi on JSPL
- Maintained ‘Buy’; raised price target to Rs 375 from Rs 219.
- Operational capacity has potential to generate higher Operating income.
- Positives: execution speed, control on capex and ability to fund capex without debt.
- Volume ramp-up to start now.
- Still Undervalued; Best is yet to Come.
- Expect breaking even at net profit level from the next financial year onwards.
Motilal Oswal on Emami
- Maintained ‘Buy’; raised price target to Rs 1,655 from Rs 1,564.
- Prime play on rural demand growth and wholesale recovery.
- Pace of innovation among the best of breed.
- R&D and advertising spend highest among peers.
- International business poised to turn around.
- Recovery in Kesh King business key.
- Expect earnings to grow at a compounded rate of 20 percent over the financial years through March 2021.
- Remains a credible long-term play; Valuations attractive.
Credit Suisse on Sun Pharma
- Maintained ‘Outperform’; raised price target to Rs 640 from Rs 595.
- Shift towards specialty and high India contribution to drive outperformance.
- Stay negative on US outlook and expect price erosion to accelerate; But positive on Sun Pharma.
- Halol reinspection in the current quarter could unlock several key filings.
- Sun Pharma has started monetisation on speciality side.
- Specialty success to help Sun to revert to 20 percent growth trajectory.
- Expect consolidated earnins per share to grow at a compounded rate of 20 percent over the financial years through March 2022, even beyond Halol recovery.
Credit Suisse on Pharma Sector
- U.S. generic market is still very profitable and vulnerable.
- Price erosion to accelerate further in this year.
- Expect U.S. generic market and profit pool to decline by 5 percent and around 9 percent respectively through December 2020.
- Fight for market share to further intensify and will pull down industry RoCE further.
- Prefer Cipla: low price erosion risk and good pipeline.
- Prefer Sun: shifting away from generics.
- Concerned on Dr. Reddy’s: high product concentration.
HSBC on Cement
- ACC: Downgrade to Hold from Buy; Cut price target to Rs 1,875 from Rs 1,900.
- Ambuja: Maintains Hold; raised price target to Rs 260 from Rs 252.
- Likely to report strong sales volumes coupled with benign base in the previous quarter.
- Industry cost pressures negatively impacting profitability.
Axis Capital on Infosys
- APA agreement positive for Infosys.
- Positive impact on earnings by 5 percent between current quarter to December 2022.
- APA to result in reversal of tax provisions of $225 million in the previous financial year.
- Company expects tax rate to be lower by 100 basis points.
- Agreement to improve predictability of tax outflow.
- New agreement to clear the ambiguity around the Base Erosion Anti-Abuse Tax.
Credit Suisse on Infosys
- Maintained ‘Neutral’ with price target of Rs 1,000.
- Tax agreement to reduce tax rates by 100 basis points till March 2021.
- Reduction in tax rate does not materially help earnings.
- Agreement removes uncertainty around U.S. tax implications for next three years.
- Reduction in tax rate to add over 1 percent to earnings.
Morgan Stanley on Infosys
- Maintains Equal-weight with price target of Rs 1,028.
- Agreement means tax rate guidance of 28-29 percent will decline to 27-28 percent.
- Agreement could positively impact on the earnings per share during the next two financial years by up to 1 percent.
Offerings
- Apollo Micro Systems IPO opens with an issue price of Rs 270-275 (Here's an all you need to know)
- Amber Enterprises’ Rs 600 crore IPO opens for subscription on Jan. 17 and closes on Jan. 19. Price band between Rs 855 and Rs 859.
- NMDC offer for sale for the non-retail category was subscribed 1.68 times at an indicative price of Rs 154.
- Newgen Software to sell shares at Rs 240-245 each in IPO from Jan. 16.
Trading Tweaks
- Circuit filter revised to 10 percent: Moser Baer and Subros.
- Circuit filter revised to 5 percent: Pincon Spirit.
- Orient Paper and Industries last trading day before ex date for demerger.
- Technocraft Industries’ and Swaraj Engines’ last trading day before entitlement date for buyback.
Bulk Deals
- KSK Energy Ventures: Societe Generale bought 54.17 lakh shares or 1.3 percent equity at an average of Rs 17.86.
- Philips Carbon Black: FIL Investments (Mauritius) sold 2.32 lakh shares or 0.7 percent equity at Rs 1465.08 each.
Greenlam Industries
- IDFC MF bought 4.38 lakh shares or 1.8 percent equity at Rs 1315 each.
- Jwalamukhi Investment Holdings sold 5.30 lakh shares or 2.2 percent equity at Rs 1315 each.
Emami Infra
- Ganpati Industrial Pvt Ltd sold 3.99 lakh shares or 1.6 percent equity at Rs 351.05 each.
- Shubham Enterprises bought 3.99 lakh shares or 1.6 percent equity at Rs 351.05 each.
Chembond Chemicals
- Promoter Perviz Dastur sold 96,800 shares or 0.7 percent equity at Rs 242.84 each.
- Shree Damodar Krishna Trust bought 83,000 shares or 0.6 percent equity at Rs 242.65 each.
Camlin Fine Sciences
- Promoter Abha Dandekar sold 48.98 lakh shares or 4.7 percent equity at Rs 132.4 each.
- Promoter Leena Leena Dandekar sold 29.90 lakh shares or 2.9 percent equity at Rs 130.04 each.
- Promoter Vivek Dandekar sold 48.98 lakh shares or 4.7 percent equity at Rs 129.17 each.
Media Reports
- Azure Power bags a solar project in Rajasthan (Business Line).
- Essar to sell off office space in Mumbai for Rs 24 billion (Business Standard).
- RInfra moves MERC for sale approval of Mumbai biz to Adani transmission (Business Standard).
- IDFC Bank, Capital First explore merger; talks at initial stage (Economic Times).
- Axis looks to foray into life insurance business; bank eyes IDBI Federal Life, also in talks with Tata AIA (Economic Times).
- RCom’s spectrum band in 4G-ready 850 MHz band up for grabs (Economic Times).
- BoB, Union Bank put over Rs 17k-cr bad loans on sale (Economic Times).
Stocks To Watch
- Infosys signed an advance pricing agreement (APA) with the U.S. Internal Revenue Services. The pact would result in a reversal of $225 million of tax provisions.
- Electrosteel Steels received resolution plans from Tata Steel, Vedanta, Edelweiss ARC and Renaissance Steel.
- Power Grid Corp board approved a Rs 92 crore investment in Tumkur Ultra Mega Solar Power Park.
- NMDC offer for sale for the non-retail category was subscribed 1.68 times at an indicative price of Rs 154.
- Spice Mobility divested its entire stake in Sunstone Eduversity.
- HIL tied up with Chennai Super Kings as official partner for the next two seasons of IPL.
- Syndicate Bank kept MCLR unchanged.
- Nath Bio Genes institutional share sale opens on Jan. 22 at a floor price of Rs 468.69 per share.
Talking Points
- Maharashtra banks on a taller Mumbai to fund infrastructure, slum rehab.
- Naspers plans $200 million backing for Swiggy.
- Infosys Q3 earnings to get a boost on advance pricing pact with U.S.
- Dimon says he regrets calling Bitcoin a ‘Fraud’.
- Gold is beating everything since Fed raised rates..even Bitcoin.
- 400 deaths a day are forcing India to take car safety seriously.
- Prime Minister Modi to hard sell India as investment destination at Davos.
- Aadhaar data breach: committed to freedom of Press, says Government.
Commodity Cues
- Gold futures fell 0.2 percent to $1,310.23 an ounce.
- West Texas Intermediate crude was little changed at $63.45 a barrel, up about 5 percent since the year began.
- Brent crude ended higher at $68.82 per barrel, up 1.5 percent.
- Sugar ended lower for fifth day at 14.73 cents per pound; down 0.3 percent.
Shanghai Exchange
- Steel trades 0.4 percent lower.
- Aluminium trades lower for third day; down 0.3 percent.
- Zinc fell 0.5 percent.
- Copper slipped nearly 0.1 percent.
- Rubber trades 0.5 percent lower.
Good Morning!
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was little changed at 10,646 as of 8:05 a.m.
Asia’s stock rally to record highs looked to take a breather on Wednesday as investors consider the impact of a jump in bond yields that spurred the fixed-income veteran Bill Gross to declare a bond bear market.
Here are some of the key events scheduled for this week:
- U.S. inflation data are forecast to show price pressures remain muted for now, giving hawks little reason to argue for faster tightening.
- St. Louis Fed bank President James Bullard and head of the New York Fed Bill Dudley are among central bankers scheduled to speak.
- China’s producer and consumer prices data come Wednesday, while a reading on the country’s money supply is expected in coming days.
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