Sensex, Nifty Close At New Highs Fuelled By PSU Bank Stocks Rally

Indian equity benchmarks surged to record highs powered by a rally in government-owned banks which came in high demand a day after government announced Rs 2.11 lakh crore recapitalisation package to strengthen the NPA-hit public sector banks.

The S&P BSE Sensex rose 1.33 percent or 435 points to 33,042 and the NSE Nifty 50 Index advanced 0.86 percent or 88 points to 10,295.

Nine out of 11 sector gauges compiled by the National Stock Exchange ended higher led by the Nifty PSU Bank Index's 30 percent surge, its biggest single day gain since inception. On the other hand, Nifty Pharma Index was the top sectoral loser, down 1.5 percent.

Shares of the FMCG product maker rose 3.2 percent to Rs 1,173 after it met consensus earnings estimates compiled by Bloomberg in September quarter.

• Net profit up 50 percent at Rs 98.6 crore versus estimate of Rs 100 crore
• Revenue up 8 percent at Rs 628 crore versus estimate of Rs 625 crore
• Total costs at Rs 427 crore
• EBITDA up 14.7 percent at Rs 201.3 crore versus Rs 175.5 crore (YoY)

Shares of the Kochi-based electrical components maker jumped as much as 6.78 percent, the most in over five months, to Rs 211 after it beat consensus earnings estimates compiled by Bloomberg.

• Net profit up 25 percent at Rs 46.5 crore versus estimate of Rs 39.9 crore
• Revenue up 15 percent at Rs 559.91 crore versus estimate of Rs 544 crore

Shares of the private sector lender rose as much as 1.4 percent to Rs 57.85 after its asset quality improved slightly in the July-September quarter.

• Net profit down 40 percent at up Rs 234 crore versus estimate of Rs 313 crore
• Net interest income down 7 percent at Rs 462 crore versus estimate of Rs 492 crore
• Gross non-performing assets as a percentage of total advances at 3.92 percent versus 4.13 percent in the previous quarter
• Net non-performing assets at 1.61 percent versus 1.7 percent (QoQ)

Shares of the drugmaker were down 0.6 percent to Rs 2,443 despite meeting consensus Bloomberg estimates in September quarter.

• Q2 net profit up 32 percent at Rs 130.32 crore versus estimate of Rs 108 crore
• Revenue up 5 percent at Rs 832.36 crore versus estimate of Rs 829 crore

The Delhi-based educational service provider extended decline and fell 5.6 percent after its revenue during the July-September quarter declined.

• Net Profit up 18 percent to Rs 12.7 crore
• Revenue down 7 percent to Rs 208.4 crore
• EBITDA at Rs 17.8 crore
• EBITDA margin at 9 percent

Shares of the private sector lender continued to trade on a weak note despite meeting consensus Bloomberg estimates.

• Net profit jumps 22 percent to Rs 994 crore versus estimate of Rs 978 crore
• Net interest income rises 16 percent to Rs 2,313 crore versus estimate of Rs 2,325 crore
• Gross non-performing assets as a percentage of total advances at 2.47 percent versus 2.58 percent in the previous quarter
• Net non-performing assets at Rs 1,918 crore versus Rs 1,778 crore in previous quarter
• Net interest margin at 4.33 percent versus 4.47 percent (YoY)
• Loan growth at 21 percent versus estimate of 19 percent
• Basel-III capital adequacy ratio at 18.36 percent as on September 30

Shares of the road construction companies were trading higher after the government on Tuesday approved highway projects worth Rs 7 lakh crore for development of over 80,000 km of highways including Bharatmala project in the next five years.

• Dilip Buildcon up 4.20 percent
• IRB Infrastructure Developers rises 5.5 percent
• NCC Ltd gains 5 percent
• Sadbhav Engineering up 10.6 percent
• Gayatri Projects jumps 5.5 percent
• HCC advances 13 percent

• Indian equity benchmarks held on to record highs led by strong gains in state-owned lenders
• The S&P BSE Sensex rises 330 points or 1 percent to 32,937 and the NSE Nifty 50 Index advances 0.6 percent or 61 points to 10,268
• Thirteen out of 19 sector gauges were trading higher led by the S&P BSE Bankex Index's 3.75 percent surge. On the other hand, the S&P BSE Realty Index was the top sectoral loser
• From the Nifty 50 basket of shares, 30 were advancing while 20 were among the losers
• State Bank of India, ICICI Bank, L&T, ultraTech Cement and Axis Bank were among the top Nifty gainers.
• Kotak Mahindra Bank, Indiabulls Housing Finance, Yes Bank, IndusInd Bank and Bajaj Finance were among the top Nifty losers

Shares of the non-banking finance companies fell after the government pledged to inject Rs 2.11 lakh crore in PSU banks on worries of loss of market share.

“Now the government has infused unprecedented amount to recapitalise PSU banks, it will lead to a re-rating of state-run lenders,” AK Prabhakar, head of research at IDBI Capital Market told BloombergQuint by phone.

PSU Banks were ignored for a long time and now there will be a shift of market share to PSU banks from NBFCs and private sector lenders as they already have a well-established branch and franchise network, added Prabhakar.

• Edelweiss Financial Services fell 6.2 percent
• Cholamandalam Investment and Finance declines 6.15 percent
• CSL Finance declines 5 percent
• Indiabulls Housing Finance drops 4.6 percent
• Satin Creditcare down 3.2 percent
• MAS Financial Services declines 3 percent

Shares of the country's biggest lender rose as much as 24.56 percent, the most in over eight years, to Rs 316.95, also its highest level in over two years.

In today's session alone, the bank added more than Rs 50,000 crore in its market capitalisation.

Shares of the country's fourth-largest software exporter fell as much as 3.66 percent, the most in over two months, to Rs 881.10 after it announced September quarter earnings.

• Net profit rose to Rs 2,207 crore against estimate of Rs 2,137 crore
• Revenue rose 2.3 percent to $1,928 million, largely in line with the $1,956 million estimated.
• Revenue in terms of rupee rose 2.3 percent to Rs 12,434 crore by a 22.3 percent growth in its manufacturing segment
• The company maintained its guidance for sales growth for the current year at 10.5-12.5 percent in terms of constant currency
• The guidance for operating margin was also maintained at 19.5-20.5 percent

State-owned General Insurance Corporation of India Ltd. made its stock market debut at Rs 850 per share on the National Stock Exchange, a 6.8 percent discount to the issue price of Rs 912. The stock saw an intraday low of Rs 780 thereafter.

Shares of the private sector lender fell as much as 6 percent, the most in nearly one year ahead of its September quarter earnings.

Reliance Nippon Life AMC's Rs 1,542-crore three-day initial public offer which opened today was fully subscribed within hours on the first day of subscription. The IPO was subscribed 1.72 times as of 10:01 a.m.

• Portion reserved for qualified institutional buyers was subscribed 1.66 times
• Portion set aside for non-institutional bidders was subscribed 5.75 times
• Retail portion was subscribed 0.02 times

Source: Company PR

Shares of the Delhi-based government-owned lender rose as much as 40 percent, the most since its listing in 2002, to Rs 193.45, also its highest level in two years, after the government announced Rs 2.11 lakh crore two-year road map for strengthening NPA-hit public sector banks.

General Insurance Corporation of India made a weak debut on stock exchanges. The stock opened 6.8 percent lower at Rs Rs 850 compared to its issue price of Rs 912.

Shares of the government-owned lenders were witnessing strong buying interest after the government on Tuesday unveiled an unprecedented Rs 2.11 lakh crore two-year road map for strengthening NPA-hit public sector banks, which includes re-capitalisation bonds, budgetary support, and equity dilution.

The Nifty PSU Bank Index gained as much as 24 percent, the most since inception, to 3,836.

The capital infusion, Finance Minister Arun Jaitley said, will be accompanied by reforms to enable the state-owned banks to play major role in the financial system and give a strong push to the job-creating MSME sector.

Indian equity benchmarks rose to record highs led by strong gains in government-owned banks which rose after the government on Tuesday announced recapitalisation package of Rs 2.11 lakh crore for them.

The S&P BSE Sensex rose as much as 1.56 percent or 510 points to 33,117 and the NSE Nifty 50 Index advanced 1.3 percent or 133 points to 10,340.55.

Nine out of 11 sector gauges compiled by the National Stock Exchange were trading higher led by the Nifty PSU Bank Index's 23 percent surge. On the other hand, the NSE Private Bank Index was the top sectoral loser, down 0.7 percent.

Analysts say India’s plan to pump Rs 2.11 lakh crore into state-controlled lenders to revive growth may spur a sovereign bond selloff on expectations of a widening fiscal deficit.

Under the plan announced late Tuesday, the government will sell Rs 1.35 lakh crore of recapitalisation bonds while banks will raise another Rs 76,000 crore through “budgetary support” and from the markets.

Both Moody's and Fitch have lauded the capital injection plan. Moody's says the move is credit positive for state-run banks and that the amount of capital pledged is enough to address the lenders’ solvency challenges and recapitalize them adequately.

While the capital infusion announcement is a clear rupee-positive in the long run, but in the short-term market reaction might be slightly negative, according to Standard Chartered, which targets USD/INR at 65.50 by the year-end.

• Nifty October Futures closed with a premium of 11.6 points versus 4.7 points
• Nifty Rollover at 32 percent; Bank Nifty Rollover 25 percent
• India VIX closed lower by 6 percent at 11.59
• October series highest Call base shifts to 10,300 from 10,200 (open interest at 39.6 lakh, up 8 percent)
• October series highest Put base at 10,000 (open interest at 70.5 lakh, up 1 percent)
• October Call strikes 10,200 sees unwinding & 10,250 & 10,300 saw open interest addition
• October Put strike 10,000, 10,200 saw open interest addition

• Kotak Mahindra Bank
• Hindustan Unilever
• Emami
• Engineers India
• Exide Industries
• GlaxoSmithKline Pharmaceuticals
• IDFC Bank
• Mahindra & Mahindra Financial Services
• MindTree
• MphasiS
• NIIT
• PI Industries
• PNB Housing Finance
• Quess Corp
• RBL Bank
• Tata Elxsi
• V-Guard Industries
• Tata Communications

HCL Technologies (Q2, QoQ)

• Net profit at Rs 2,207 crore versus Bloomberg estimate of Rs 2,137 crore
• Maintains FY18 revenue growth guidance at 12.1-14.1 percent in dollar terms
• Revenue at Rs 12,433 crore versus Bloomberg estimate of Rs 12,575 crore
• Consolidated EBIT at Rs 2,445 crore versus Rs 2,467 crore (QoQ)
• Announces dividend of Rs 2 per share

Infosys (Q2, QoQ)

• Dollar revenue up 2.9 percent to $2,728 million
• Operating revenue up 2.9 percent to Rs 17,567 crore
• EBIT up 3.3 percent to Rs 4,246 crore
• EBIT margin at 24.2 percent versus 24.1 percent
• Net profit up 7 percent to Rs 3,726 crore
• Revised revenue guidance for FY18 downwards to 5.5-6.5 percent from 6.5-8.5 percent

Ambuja Cements (Q3, YoY)

• Net sales up 15 percent to Rs 2,320 crore
• Net profit down 2 percent to Rs 272 crore
• EBITDA up 15 percent to Rs 354 crore
• Margin unchanged at 15.3 percent

ABB (Q3, YoY)

• Net sales down 12 percent to Rs 1,915 crore
• Net profit up 18 percent to Rs 83.4 crore
• EBITDA up 14 percent to Rs 134 crore
• Margin at 7.0 percent versus 5.7 percent

Mahindra CIE (Q2, YoY)

• Net sales up 9.2 percent to Rs 484 crore
• Net profit up 45 percent to Rs 20.3 crore
• EBITDA up 39 percent to Rs 48.3 crore
• Margin at 10 percent versus 8.7 percent

Saregama India (Q2, YoY)

• Revenue up 76 percent to Rs 84.5 crore
• EBITDA up 275 percent to Rs 7.5 crore
• Margin at 8.9 percent versus 4.2 percent
• Profit up 125 percent to Rs 4.5 crore

International Paper APPM (Q2, YoY)

• Revenue up 14 percent to Rs 285 crore
• EBITDA up 220 percent to Rs 32 crore
• Margin at 11.2 percent versus 4.2 percent
• Net profit of Rs 6 crore versus net loss of Rs 21 crore

Raymond (Q2, YoY)

• Net sales up 2.6 percent to Rs 1595 crore
• Net profit up 140 percent to Rs 59.9 crore
• EBITDA up 33 percent to Rs 137 crore
• Margin at 8.6 percent versus 6.6 percent
• Exceptional gain of Rs 21 crore

ICICI Prudential (Q2, YoY)

• Net premium income up 21 percent to Rs 6,539 crore
• Net profit up 0.6 percent to Rs 421 crore

• General Insurance Corp to be listed on exchanges. The issue was subscribed 1.38 times at Rs 912 per share.
• Reliance Nippon Life Asset Management IPO opens today with an issue price of Rs 247-252 per share
• New India Assurance, India’a largest general insurance company, will hit the capital markets on November 1 to raise an estimated Rs 10,000 crore

• IEX: Added to BSE IPO Index
• Siyaram Silk Mills: Ex-date for stock split from Rs 10 to Rs 2 per share
• Circuit filter revised to 10 percent: Unity Infraprojects and Electrosteels Steel

Dixon Technologies

• Tata AIA Life Insurance bought 1 lakh shares (0.9 percent equity) at Rs 2760 each
• Business Excellence Trust sold 1.55 lakh shares (1.4 percent equity) at Rs 2760.02 each

Dr. Lal Path Labs

• Franklin Templeton bought 10.48 lakh shares (1.3 percent equity) at Rs 729.94 each
• Wagner Ltd sold 10.12 lakh shares (1.2 percent equity) at Rs 730.02 each

Saint Gobain

• Kuber India Fund bought 5 lakh shares (0.5 percent equity) at Rs 56.08 each

TTK Prestige

• Abu Dhabi Investment Authority sold 63,598 (0.6 percent equity) at Rs 6140.02 each

Asian Hotels (West)

• Promoter Sushil Kumar Gupta bought 1.24 lakh shares (1.1 percent equity) at Rs 165 each

8K Miles Software

• Promoter MV Bhaskar sold 1.53 lakh shares (0.5 percent equity) at Rs 569 each

CLSA on Infosys

• Maintain Buy with price target of Rs 1,100
• Q2: Revenue miss, Guidance cut and Margin beat
• Infosys returning to basics with focus on execution and cost control while maintaining client relevance
• Appointment of a CEO would be a key catalyst

Macquarie on Infosys

• Maintain ‘Outperform’ with price target of Rs 1,070
• Q2 results – strong execution steals the show
• Hunt for CEO continues; strategy under new chairman largely unchanged
• FY18 EBIT margin to be at the mid-way of 23-25 percent guidance
• Pecking order: HCL Tech>Infosys>TCS>Wipro and Tech Mahindra

CLSA on Asian Paints

• Upgrade to Underperform from Sell; hiked price target to Rs 1,250 from Rs 1,080
• Management hopes for improvement in demand environment
• Gross margins down to at least 10-quarter low
• Volume growth aided by festive season and GST re-stocking

Macquarie on Asian Paints

• Maintains Neutral with price target of Rs 1,100
• Volume growth returning back after GST led disruption in Q1
• Margin recovers back aided by lower other expenses
• In near term raw material could keep pressure on margins
• Advise investors with a long term investment horizon; Add the stock on dips

CLSA on Zee

• Maintain Buy with price target of Rs 660
• Positive surprise in ad revenues despite GST disruption
• Ad growth should accelerate in H2FY18
• Expect subscription revenues, ad revenues and earnings to grow at CAGR of 13 percent, 13 percent and 21 percent over FY17-20
• Management maintains mid-teens guidance for domestic subscription growth

CLSA on Ambuja Cements

• Maintains Buy with price target of Rs 325
• Ambuja failed to meet expectations after stellar results from UltraTech and ACC
• Industry leading volumes were offset by realisation miss and higher costs
• Cut EPS estimates by 2 percent for CY17
• Ambuja as a beneficiary of a demand pick-up

Macquarie on ICICI Prudential Life Insurance

• Maintain Underperform and price target of Rs 345
• IPRU is making hay while the sun shines – equity markets are supportive and financialisation of savings is picking up
• Scarcity premium has come off since the listing of SBI Life and proposed listing of HDFC Life
• Cautious on the stock

Macquarie on HDFC Bank

• Maintain Outperform with price target of Rs 2,200
• Impressive growth on a large base; Asset quality – no improvement or deterioration
• Bank believes that an uptick in credit demand from MSME sector at least a year away
• HDFC Bank top pick in the sector

Macquarie on Bank recapitalisation

• Bank recap is a bold and decisive move to stabilise the stressed balance sheets of PSU banks
• This would not alter the near-term earnings trajectory but would likely further compress risk premiums
• Expect market to ignore near term earnings miss and discount stronger growth
• Expect rally in PSU Banks being the clear winner and cyclical sectors like Industrials

• Cabinet approved Rs 2.11 lakh crore PSU Banks' recapitalisation plan for a two-year period
• RBI imposed Rs 6 crore penalty on Yes Bank for non-compliance Of RBI directions on Income Recognition Asset Classification
• RBI imposed Rs 2 crore penalty on IDFC Bank due to non-adherence with certain directions pertaining to sanction and renewal of loans and advances
• Lupin got U.S. FDA approval for generic Lodosyn Tablets
• Government will sell up to 5 percent of NLC at Rs 94 per share

• Recapitalisation plan credit positive for state-run banks, CRISIL says
• Government’s lifeline for banks won’t hurt fiscal consolidation, says Bimal Jalan
• Will the mega bank recapitalisation nudge India off the fiscal track?
• RBI imposes penalties on Yes Bank and IDFC Bank
• Infosys cuts FY18 revenue guidance even as earnings meet estimates
• Trump asks GOP senators for show of hands on Fed nominee choices
• Twitter shows who pays for ads amid election meddling probe
• There’s now a Cryptocurrency fund-of-funds
• Why Rex Tillerson’s India visit is important
• Saudi Arabia just announced plans to build a mega city that will cost $500 billion

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.9 percent to 10,312.

Equities in Asia paused at recent highs despite optimism in the world economy and encouraging earnings reports that buoyed the dollar and bond yields. The Australian dollar sunk to its lowest since July after inflation data damped the outlook for higher interest rates.

These are some of the key events coming up:

• South Korea reports on GDP and Hong Kong on imports and exports, while Japan reports on CPI later in the week.
• The U.S. economy probably expanded at about a 2.5 percent annualized pace in the third quarter, restrained in part by the effects of two hurricanes, economists forecast the government to report on Friday.
• Companies reporting earnings this week include Alphabet Inc., Microsoft Corp. and Twitter Inc. in the technology sector. Ford Motor Co., Volkswagen AG and Boeing Co. headline cars and planes. Coca-Cola Co. and brewer Heineken NV join European banks including UBS Group AG, Deutsche Bank AG and Barclays Plc.
• The week also boasts rate decisions from the Bank of Canada, Norges Bank and Riksbank.

Commodities

• Gold was little changed at $1,275.24 an ounce. It fell 0.4 percent in the previous session.
• West Texas Intermediate crude was at $52.44 a barrel following an advance of 1.1 percent.