Sensex, Nifty Close Higher For The Fourth Time This Month

Indian equity benchmarks halted three-day losing streak, closing higher for the fourth time this month. The S&P BSE Sensex Index closed 0.4 percent higher at 33,844.86, and the NSE Nifty 50 Index closed at 10,397.45, up 0.4 percent.

The market breadth tilted in favour of sellers. Twelve out of 19 stocks compiled by BSE declined, led by S&P BSE Metal Index’s 1.3 percent fall. On the flipside, S&P BSE Teck Index was the top sectoral gainer, up 1.8 percent.

EIH Associated Hotels

• Stock rose as much as 20 percent to Rs 519.60.
• Trading volume was 25.8 times its 20-day average.

Schneider Electric Infrastructure

• Stock rose as much as 12.6 percent to Rs 115.25.
• Trading volume was 55.4 times its 20-day average.

Paul Merchants

• Stock fell as much as 11.5 percent to Rs 5,000.
• Trading volume was 1.8 times its 20-day average.

L&T Technology Services

• Stock rose as much as 9 percent to Rs 1,376.45.
• Trading volume was 1.7 times its 20-day average.

Shares of the pipe maker rose as much as 4.8 percent to Rs 391.70. The company bagged an order worth Rs. 135.78 Crore from Public Health & Municipal Engineering Department, Govt. of Andhra Pradesh - Tadipatri Municipality for Tadipatri Water Supply improvement scheme, according to its stock exchange notification.

The stock has declined 15.1 percent so far this year, compared to 0.7 percent decline in Sensex.

Shares of the drug maker swung between gains and losses and traded at Rs 827.95. The pharmaceutical company received a green signal form U.S. drug regulator for its Tamiflu, used to treat influenza, according to its stock exchange notification.

Key highlights from the conversation:

• New order from BMW valued at 2.5 million Euros.
• Usually long timeline to dispatch steel wheels order.
• Aiming to increase exports to 12-13 percent from 10 percent.
• Expect 10-12 percent CAGR from domestic business.
• Debt equity little higher due to Rs 600 crore expenditure.
• Aiming to reduce debt-equity to 1.2 from current 1.9.

• Expect investor participation in newly launched cross currency derivatives.
• Increased imports, low exports one of the reasons for Rupee depreciation.
• Fundamentals still remain strong for India.
• Current Rupee fluctuation is correction.

India graphite electrodes makers dropped amid concerns China will restart steel production it cut during the winter to curb pollution after lunar new year holidays, according to Anand Rathi Financial Services Ltd.

• Graphite India fell as much as 5 percent
• HEG Ltd. as much as 4.5 percent
• Rain Industries fell 1 percent.

Source: Bloomberg

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Watch the full conversation here:

Shares of the health services provider rose as much as 4.5 percent to Rs 101. South Africa's Life Healthcare Group, Max India's equal joint venture partner in the healthcare business, is exploring possibilities of acquiring shares in Max Healthcare Institute, according to the company's exchange notification.

Max India rose after falling for four consecutive sessions. Trading volume of the stock was 15.4 times the 20-day average.

Shares of the Mumbai-based pharmaceutical firm fell as much as 5.9 percent, the most in 9 months, to Rs 526.2, after the investors in the stock remain cautious ahead of the Halol plant inspection.

Trading volume of the stock was double the 30-day average of 1.8 million. Sun Pharma’s move compares with a 2.39 percent drop in the Nifty Pharma Index in today session. The stock is currently trading 6.3 percent below the Bloomberg consensus one-year target price.

Shares of the Bhopal-based infrastructure construction company snapped three-day decline and rose as much as 4.6 percent to Rs 958.

The company has been declared as the lowest bidder by National Highways Authority of India for a new engineering, procurement, construction (EPC) project worth Rs 380 crore in Karnataka, according to its stock exchange notification.

The project completion period is 30 months and the length of the road to be completed in the project is 52.3 kilometres. The stock declined 5.29 percent so far this year this year, compared to Sensex's negative returns of 0.96 percent.

• Kotak Mahindra Bank: About 10 lakh shares changed hands in a block deal.
• NTPC: About 20 lakh shares changed hands in a block deal.
• Sun Pharma: About 13 lakh shares changed hands in a block deal.

Buyers and sellers were not known immediately.

Source: Bloomberg

Key highlights from the conversation:

• Push towards digital means there is a lot of activity.
• I am optimistic about the business which is coming in.
• New opportunities have been very good for the industry.
• We are on a transformation journey and our partnerships are spurring it.
• Things are trending in the right direction.
• We have an uptake in our Q3 revenues because of our IP business.
• This is the time for us to sales and marketing.

Shares of the movie maker and distributor snapped three-day decline and rose as much as 10.7 percent, the most in seven weeks to Rs 219.

The Mukesh Ambani-led Reliance Industries plans to buy 5 percent stake in Eros' parent company or $48.75 million, according to a stock exchange notification. It also announced Joint Partnership with the company to set-up a Rs 1,000 crore corpus to co-produce and consolidate content.

Trading volume was 14 times, its 30-day average. The stock rose 4.9 percent so far this year, compared to 0.7 percent decline in Sensex.

Jyoti Deshpande, Group CEO & MD At Eros International Speaks To BloombergQuint

• Stake at Plc level is an alignment.
• Stake in Plc is less about money and more about partnership.
• Cash at Plc is close to $140 million.
• Parent will give advances to Indian subsidiary.
• Eros India exports rights to parent and will fund through that funds coming.
• Will announce first few deals very soon.
• Will be putting in the funds ASAP.
• Eros dominates the OTT space.
• Have partnership with all the telcos.
• Will be investing in growth.

Key highlights from the conversation:

• Will buy more now despite stellar rally in markets.
• See upside of above 25-30 percent in ICICI bank and Axis Bank.
• Bullish on corporate banking stocks like ICICI Bank, Axis Bank and SBI.
• Metals seeing recovery in earnings.
• Hotels have seen best occupancy levels compared to last seven years.
• Expect consumer durables to perform better.

Shares of the drug maker extended decline for the third consecutive trading session and fell as much as 2.5 percent to Rs 558, the lowest in over a month.

The Bengaluru-based pharmaceutical company’s Malaysian plant received Form 483 with six observations from the U.S. drug regulator. (Click here to read more..)

Form 483 is used by the U.S. Food and Drug Administration to document and communicate concerns discovered during plant inspections.

Biocon trades at 72 its estimated earnings per share for the coming year. It returned 5.3 percent since January.

Indian equities have opened in the green, as I.T. stocks and pharmaceutical stocks lead the rally. Coal India which now has to brace up for some competition is down more than a percent in early-morning trade.

The S&P BSE Sensex Index rose as much as 0.6 percent to 33,911, while the NSE Nifty 50 Index rose as much as 0.6 percent to 10,426.10.

The market breadth was tilted in favour of buyers. Eighteen out of 19 sectoral gauges compiled by BSE rose, led by S&P BSE S&P BSE Information Technology Index’s 0.9 percent gain. On the flipside, S&P BSE Healthcare Index declined marginally by 0.02 percent.

Bonds are likely to stay under pressure, with traders awaiting the RBI minutes due to being released after the end of trading hours. The minutes are expected to show a hawkish bias with one member voting for a rate hike and another member who is a well-known dove, dumping his call for a rate cut.

Traders will want to know the views of Governor Urjit Patel and Deputy Governor Viral Acharya who in the past has said the room for further cuts is somewhat limited. The yield on the 10-year bonds rose nine basis points to 7.67 percent on Tuesday with some of the states unable to sell their quota of debt at the auction.

Meanwhile, the rupee is likely to stay under pressure with stock markets in the red in the past week or so. The rupee closed at 64.79 on Tuesday, its lowest since Nov. 23 with forwards suggesting it will open at 64.85 against the dollar.

Key highlights from the conversation:

• Divergence has been a major issue.
• Perhaps RBI and auditors are not on the same page.
• Perception that regulator has been changing norms has to be removed.
• Never miss out on market moving news, top trends and compelling perspectives.
• Should do operational risk check for banks like AQR was done for NPAs.
• Would recommend operational risk audit of banks.
• Time has come to revive audit of foreign exchange branches.

• Nifty February futures closed at 10,343.7, discount of 16 points.
• Nifty March Futures at 10,371, premium of 11 points versus 37 points on Monday.
• All series-Nifty open interest up 22 percent, Bank Nifty open interest up 11 percent.
• Rollover: Nifty Rollover at 30 percent, Bank Nifty at 21 percent.
• India VIX ended at 16.8, up 1.2 percent.
• Maximum open interest for February series at 11,100 call strike; open interest at 48.4 lakh, open interest down 1 percent.
• Maximum open interest for February series at 10,300 Put, open interest at 54.8 lakh, up 20 percent.
• March series maximum open interest at 10,000 Put and 11,000 Call.

F&O Ban

• In Ban: Balrampur Chini, Dish TV, Fortis Healthcare, GMR Infra, IFCI, Jain Irrigation, JP Associates
• New in ban: IFCI
• Out of ban: HDIL, Oriental Bank

Alert: 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 1.10 versus 1.06.
• Nifty Bank PCR at 0.79 versus 0.89.

Stocks Seeing High Open Interest Change

Macquarie on Indian IT services

• Next fiscal guidance hints at marginal improvement.
• Strong GDP growth momentum in developed markets to aid growth.
• Expect most large companies in India to grow at industry level in the next financial year.
• Headcount growth to remain lower than revenue growth rate.
• Expect fiscal revenue growth to be marginally better than current fiscal.
• Large cap pecking order: HCL Tech > Infosys > TCS > Wipro and Tech Mahindra.
• In Mid-cap space: prefer L&T Infotech and Hexaware.

Deutsche Bank on Ambuja Cement

• Maintained ‘Hold’; raised price target to Rs 275 from Rs 252.
• December quarter results surprise positively.
• Ebitda significantly above estimates due to better volumes and margins.
• Realisations improved marginally, but barely adequate to compensate cost inflation.
• Expect earnings per share to grow at a compounded rate of 17 percent by 2019.

Macquarie on Ambuja Cement

• Maintained ‘Neutral’ with price target of Rs 300.
• December quarter’s operating income was significantly higher than estimates due to an inventory gain.
• Strong volume push in previous quarter.
• Capacity to constrain volume growth.
• Ambuja-ACC merger final step still awaited.

Deutsche Bank on Titan

• Maintained ‘Buy’ with price target of Rs 970.
• Expect growth of exchange gold usage to sustain through the financial years till March 2020.
• Use can increase as flat gold prices since 2013 means gold is not an appreciating asset.
• Exchange gold possess a risk to near to medium term revenue growth.

Macquarie on Titan

• Maintained ‘Outperform’ with price target of Rs 907.
• Believe recent bank fraud case has implications on Titan’s market share.
• Big opportunity for Titan to accelerate the pace of market share gains.
• Demand from trusted players like Tanishq to further accelerate.
• Big opportunity for Tanishq for store expansion in medium term.
• Compulsory Hallmarking- another step towards formalization of jewellery.

Morgan Stanley on Coal India

• Maintained ‘Underweight’ with price target of Rs 221.
• Execution and timelines for private coal mining are key.
• Could take few years for mining to start.
• Positive for India's coal production; Pose downside risk to coal imports.
• For Coal India, key will be aggression in auction bids.

Morgan Stanley on Maruti Suzuki

• Maintained ‘Overweight’ with price target of Rs 10,563.
• Expect Japanese Yen to rise sharply against U.S. dollar.
• Impact on next fiscal’s earnings per share will be moderate, but the earnings per share is expected to take a hit by 4-8 percent in the financial year-ending March 2020.
• With Maruti’s focus on reducing FX exposure, risk is manageable.

Credit Suisse on Tata Steel

• Maintained ‘Outperform’ with price target of Rs 860.
• Bhushan bid implies EV at six times adj. Ebitda.
• Valuation not cheap, but with steel cycle picking up; Deal can be EPS accretive.
• Disagree with market concerns about bid being too aggressive.
• Minor working capital plus capex would be needed for the asset.

Macquarie on Tata Steel

• Maintained ‘Outperform’ with price target of Rs 800.
• Bid appears 10–15 percent higher than expectations.
• See Bhushan assets as an attractive strategic fit for Tata.
• Quality assets with high integration.
• Assets offer growth optionality and attractive strategic fit.
• Valuations need to evaluate factors beyond headline capacity.
• Stock correction on headline bid provides a buying opportunity.

Credit Suisse on Hexaware

• Maintained ‘Neutral’; raised price target to Rs 330 from Rs 265.
• Strategy looks well thought-out and realistic.
• Business can sustain low to mid-teen growth.
• Not much scope for margin expansion.
• Expect dividend payout to increase.
• Rich valuations and stake sale by Baring an overhang.

• Reliance Industries to acquire 5 percent stake in Eros International Plc for $48.75 million, announces Joint Partnership to set-up a Rs 1,000 crore corpus to co-produce and consolidate content.
• Union Bank said that it classified Rotomac Global account as a non-performing asset in October 2016.
• Bank of Baroda discloses Rs 456.6 crore exposure to Rotomac Global.
• Weizmann Forex postponed the demerger of wind power operations in Karma Energy for fundraising.
• Edelweiss units invoke 3.9 percent stake in Fortis Healthcare; reduces shareholding to 4.17 percent.
• Dilip Buildcon bags order worth Rs 380 crore from NHAI in Karnataka.
• The NSE to exclude futures and options contracts of HDIL from April 27.
• Central Bank to consider raising up to Rs 4,835 crore via preferential issue on Feb. 23.
• Nitin Spinners approves preferential issue of 3.32 lakh equity shares at Rs 120.5 apiece to promoters.
• Mawana Sugar to acquire the entire stake of Usha International in Mawana Foods Pvt. Ltd. for Rs 24.83 crore.
• Max India said that its joint venture partner is exploring stake in Max Healthcare.
• High Court asked cops to probe into allegations against Gitanjali Gems promoter Mehul Choksi.

Earnings Reactions To Watch

Mahindra CIE Q4 (YoY)

• Revenues up 40 percent to Rs 561.5 crore.
• Net profit up 33 percent to Rs 14.6 crore.
• Ebitda up 72 percent to Rs 58.5 crore.
• Margin at 10.4 percent versus 8.5 percent.

Huhtamaki PPL Q3 (YoY)

• Revenues up 7 percent to Rs 562 crore.
• Net profit up 75 percent to Rs 21 crore.
• Ebitda up 11 percent to Rs 60 crore.
• Margin at 10.7 percent versus 10.3 percent.

• West Texas Intermediate crude fell 0.2 percent to $61.65 a barrel.
• Gold rose 0.1 percent to $1,330.47 an ounce after dropping 1.3 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.5 percent to 10,378.50 as of 7:40 a.m.

Asian stocks traded mixed following a decline in their American counterparts while shorter-dated U.S. Treasuries extended losses amid a massive debt issuance. Japanese and Australian shares recouped early losses to trade little changed, while futures signaled gains when Hong Kong trading begins.