Nifty Logs Best Two-Day Gains Of 2018

Indian equity benchmarks rose for a second consecutive day, with the NSE Nifty 50 Index posting its best two-day rally of 2018, after consumer inflation fell below 4 percent for the first time this year in August.

The S&P BSE Sensex rose 0.99 percent or 373 points to 38,091 and the NSE Nifty 50 Index climbed 1.28 percent or 145 points to 11,515.20.

In the last two trading sessions, the Nifty rose 2 percent while the Sensex advanced 1.8 percent.

Data released by the Central Statistics Office on Wednesday, showed that retail inflation was at 3.69 percent in August compared to 4.17 percent in July. A Bloomberg poll of 41 economists had estimated inflation at 3.77 percent for August 2018.

In today’s trade, all 19 sector gauges compiled by BSE ended higher led by the S&P BSE Realty index’s 3.3 percent gain.

The mid- and small-cap shares outperformed larger peers as the S&P BSE MidCap Index climbed 1.6 percent and the S&P BSE SmallCap Index jumped 1.4 percent.

• Ashok Leyland: The Chennai-based commercial vehicle maker rose as much as 4.15 percent, the most in over a week, to Rs 133.15 after it won order for supply of 200 buses in Bangladesh.
• SPARC: The Mumbai-based drug research company rose as much as 7.8 percent to Rs 414 after the U.S. drug regulator approved new drug application for Xelpros.
• RCF: The Mumbai-based state-run fertiliser maker rose as much as 17.6 percent, the most in over three years, to Rs 79.85 after Cabinet approved transfer of land of Rashtriya Chemicals & Fertilizers to Mumbai Metropolitan Regional Development Authority and Municipal Corporation of Greater Mumbai.
• Vedanta: Shares of the Anil Agarwal-led mining conglomerate rose as much as 5.77 percent, the most in over a month, to Rs 236.50. Vedanta informed management committee, ministry of petroleum and natural gas and Directorate General of Hydrocarbons of a hydrocarbon Discovery in well A3-2 within its operated block KG-OSN-2009/3 within Krishna-Godavari Basin.

• Indian equity benchmarks extended gains led by private sector lenders, pharma and metal stocks.
• The S&P BSE Sensex rose 1 percent to 38,092 and the NSE Nifty 50 Index climbed 1.3 percent to 11,515.
• All 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Realty Index's 3.2 percent surge.
• The overall breadth was extremely positive as 1,807 shares were advancing while 800 were declining on the BSE.

• Steel Authority of India has 13 lakh shares change hands in a block. Stock up 4.4 percent at Rs 78.25.

Buyers and sellers were not immediately known

Source: Bloomberg

• Shree Renuka Sugars: The Mumbai-based sugar maker rose as much as 18.22 percent, the most in three months, to Rs 15.25. Trading volume was 38 times its 20-day average.
• Indian Energy Exchange: The Delhi-based power trading platform rose as much as 2.24 percent to Rs 1,735. Trading volume was 37.7 times its 20-day average.
• Jindal Stainless Hisar: The Delhi-based steel maker rose as much as 12.15 percent, the most in 14 months, to Rs 156.90. Trading volume was 12 times its 20-day average.
• Kolte-Patil Developers: The Pune-based real estate developer rose as much as 19 percent, the most in over two months, to Rs 320.20. Trading volume was 9.4 times its 20-day average.

Brokerages are urging market regulator to modify a plan to extend equity derivatives trading hours due to concerns over their readiness and the costs of implementing the proposal, according to people with knowledge of the matter.

Local and foreign brokers have asked the Securities & Exchange Board of India to postpone until January its plan to introduce longer trading hours, citing the need for more testing, the people said.

They also discussed extending trading till 5 p.m., a shorter day than the 11:55 p.m. close that SEBI had said it would allow, the people said, asking not to be identified because the discussions are private.

Source: Bloomberg

Shares of the oil marketing companies rose after Brent crude fell 1.96 percent to $78.18 per dollar in yesterday's session.

• Bharat Petroleum rose 5.2 percent to 351.50
• Hindustan Petroleum advanced 4.2 percent to Rs 250.45
• Indian Oil climbed 3.55 percent to 154.40

Shares of the Delhi-based dairy products maker erased gains and fell as much as 4.22 percent to Rs 20.45 after its profit slumped in June quarter.

Key earnings highlights:

• Revenue at Rs 1,262.4 crore versus Rs 1,572 crore (YoY)
• Net profit at Rs 1 crore versus Rs 27.8 crore (YoY)

Shares of the Mumbai-based construction company rose as much as 2.4 percent to Rs 14.75 after it filed draft offer letter for rights issue with SEBI and stock exchanges.

India's inflation, measured by the Wholesale Price Index, eased to 4.53 percent in August from 5.09 percent in July, rising slower than the Bloomberg consensus estimate of 4.62 percent.

Safeguard duty to be assessed and collected in accordance with notification issued on July 30, finance ministry says on its website.

Directorate General of Trade Remedies issued a recommendation on July 16 to impose a 25 percent safeguard duty on solar cells from China and Malaysia; implementation was delayed due to court challenges.

Source: Bloomberg

Shares of the Bengaluru-based software developer rose as much as 1.55 percent to Rs 1,354.80 after it extended alliance with Bharti Airtel for building application software for hybrid set-top box, Tata Elxsi said in a press release.

Shares of the Anil Agarwal-led mining conglomerate rose as much as 4.4 percent, the most in nearly a month, to Rs 233.40.

Vedanta informed management committee, ministry of petroleum and natural gas and Directorate General of Hydrocarbons of a hydrocarbon Discovery in well A3-2 within its operated block KG-OSN-2009/3 within Krishna-Godavari Basin.

Nifty's 11,400 strike price put option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract slumped 37 percent to Rs 68.70. Over 2.62 lakh shares were added to the open interest which stood at over 44 lakh shares.

Click here to see the complete options chain

Shares of the Shriram group consumer finance company fell as much as 2.5 percent to Rs 1,877.70 after its holding company SVL Ltd was admitted into the bankruptcy process by the NCLT, Chennai on Sept. 10.

• Fortis Healthcare has 46 lakh shares change hands in three blocks. Stock up 1.11 percent at Rs 146.50.
• JSW Energy has 12.6 lakhs shares change hands in a bock deal. Stock up 2.8 percent at Rs 68.05.
• IRB INVIT Fund has 61 lakh shares change hands in three blocks. Stock up 0.01 percent at Rs 75.70.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of dairy product makers rose after yoga guru Baba Ramdev's Patanjali Ayurved announced its foray into the dairy segment by launching milk and milk products, including curd and cheese, targeting sales worth Rs 1,000 crore from the segment.

• Prabhat Dairy rose 2.4 percent
• Kwality rose 4.2 percent
• Hatsun Agro Products advanced 1.6 percent
• Heritage Foods climbed 1.4 percent
• Parag Milk Foods advanced 2.4 percent

Shares of the Mumbai-based state-run fertiliser maker rose as much as 17.6 percent, the most in over three years, to Rs 79.85 after Cabinet approved transfer of land of Rashtriya Chemicals & Fertilizers to Mumbai Metropolitan Regional Development Authority and Municipal Corporation of Greater Mumbai.

Shares of the country's largest drugmaker and its research arm rose as much as 3.2 percent and 7.8 percent each respectively after the U.S. drug regulator approved new drug application for Xelpros.

The drug is used for the reduction of elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension, Sun Pharma said in a press release.

Xelpros TM will be commercialized in the U.S. by Sun Ophthalmics and will be manufactured at its Halol facility in Gujarat, the release added.

Indian equity benchmarks rose sharply along with the rupee paced by gains in Sun Pharma, State Bank of India and Maruti Suzuki.

The S&P BSE Sensex rose as much as 0.9 percent or 341 points to 38,059 and the NSE Nifty 50 Index climbed 1 percent or 115 points to 11,485.

Seventeen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Metal, Healthcare and Oil & Gas Indexes 1.3 percent gain. On the flipside, the S&P BSE IT Index was top loser, down 0.8 percent.

The mid- and small-cap shares were in line with their larger peers as the S&P BSE MidCap Index rose 0.9 percent and the S&P BSE SmallCap Index advanced 0.8 percent.

Indian rupee opened higher at 71.69 per dollar against Wednesday's close of 72.18.

The local unit rose after consumer prices rose 3.69 percent in August from a year earlier, versus 4.17 percent in July and broadly in line with estimates.

Indian government bonds may gain as markets resume trading after a holiday, given that a report late on Wednesday showed inflation eased below 4 percent for the first time in 10 months.

Investors are awaiting further details on possible steps by authorities to stem the currency’s drop. The yield on the 10-year bond dropped 5 basis points on Wednesday ahead of the report's release and ended at 8.13 percent. Still the yield is up 10 basis points on the week.

Consumer prices rose 3.69 percent in August from a year earlier, versus 4.17 percent in July and broadly in line with estimates. Most economists expect the RBI to see through this report given the recent slump in the currency and higher oil prices both of which are likely to stoke inflation in coming months.

Meanwhile, the rupee is likely to start firmer given expectations of measures from authorities to halt its slide.

Wednesday proved to be such an unusually good day and further recovery looks in store, based on technical patterns. The rupee ended at 72.1825 per dollar on Wednesday, having hit a record low of 72.9125 in intraday trade. Implied opening from forwards suggests spot may start trading at around 71.73.

Deutsche Bank on JSW Steel

• Maintained ‘Buy’; raised price target to Rs 440 from Rs 390, implying a potential upside of 10 percent from the last regular trade.
• Strong domestic demand to sustain robust spreads; depreciating rupee positive.
• Low inventory in China and winter capacity cuts should support robust spreads.
• Rising share of VAP to drive higher margins over FY18-20.

Credit Suisse on Shriram Transport

• Maintained ‘Neutral’; cut price target to Rs 1,250 from Rs 1,500, implying a potential upside of 6 percent from the last regular trade.
• Holding company of Shriram group admitted into bankruptcy process by NCLT.
• See high likelihood of corporate guarantees getting invoked.
• Expect higher credit cost and cut growth expectations.
• Maintain Neutral with a cautious stance.

Deutsche Bank on Power Finance Corp

• Maintained ‘Buy’ with a price target of Rs 110, implying a potential upside of 34 percent from the last regular trade.
• June quarter review: Book value impacted, but NPLs now recognised and well provided for.
• Coverage ratios improve under Ind AS; Loan growth steady.
• NIMs could continue to remain under some stress.

Citi on Cement Industry

• Checks suggest average cement realizations to be flattish to higher on a sequential basis during the second quarter.
• Would Buy into weakness in share prices as cement prices expected to rise.
• Expect June quarter’s EBITDA/tonne to likely be lower on a sequential basis.

Macquarie on United Spirits

• Maintained ‘Underperform’ with a price target of Rs 443, implying a potential downside of 23 percent from the last regular trade.
• Launch of McDowell’s No.1 Platinum whisky in U.P. could mean market share gains.
• Underperform rating based on significantly lower margin estimates.
• Negatives: reversal in input cost deflation, higher A&P spend and lower price hike in run-up to general elections.

Citi on HDFC Standard Life

• Maintained ‘Sell’ with a price target of Rs 380, implying a potential downside of 13 percent from the last regular trade.
• New CEO appointment should ensure continuity.
• Padalkar has been associated since Aug 2008 and her elevation to ensure smooth transition.
• Maintain Sell rating on valuations expensive.

Brokerages on CPI

Goldman Sachs

• CPI inflation softens in line with expectations on lower food inflation.
• Expect moderation in inflation to be temporary.
• Headline inflation to rise to upper end of RBI’s target band by late 2018.
• Risks are tilted towards earlier rate hikes after sharp fall in rupee.

Deutsche Bank

• Overall CPI outturn is definitely better than expectations.
• Expect positive trend to continue till the end of this calendar year.
• No need for RBI to hike the policy rate immediately.
• Will review rates outlook, post announcement on rupee stabilisation measures next week.

Nomura

• Inflation cools on food and base effects.
• Cautious in the near term owing to weakness in rupee.
• Believe lower inflation trajectory and relaxed stance on monetary policy to reduce correlation between rates markets and FX over time.

Edelweiss

• Expect adjusted core inflation to continue to soften gradually.
• Core inflation could turn sticky if recent spike in crude oil prices and the rupee depreciation persist.
• Expect food inflation to remain benign as global food prices continue to be subdued.

• Nifty September futures closed trading at 11,336, with a premium of 47 points versus 49 points.
• September series: Nifty open interest down 2.3 percent and Bank Nifty open interest up 0.5 percent.
• India VIX ended at 14.25, down 7 percent.
• Max open interest for September series call at 11,800 strike price call, open interest at 45.5 lakh shares, 3.5 percent.
• Max open interest for September series put at 11,400 strike price put, open interest at 41.6 lakh shares, down 0.6 percent.

• JSW Steel promoter group acquired 7.25 lakh shares from Sept. 10-11.
• Raymond promoter JK Investors (Mumbai) acquired 50,00 shares on Sept. 11.
• Apollo Tyres promoter PTL Enterprises acquired 2.7 lakh shares on Sept. 10.
• Balaji Telefilms promoter and director Ekta Kapoor acquired 74,000 shares on Sept. 11.
• Syngene International promoters Biocon Limited and Biocon Research Limited sold 10 lakh shares on Sept. 11.

(As reported on Sept. 12)

Who’s Meeting Whom

• Dr. Lal PathLabs to meet HDFC Mutual Funds, Sudhir Power Limited and other investors from Sept. 13-20.
• IIFL Holdings to meet Helios Capital, Ward Ferry and Taiyo Pacific from Sept. 14-24.
• Mahindra & Mahindra to meet Ambit Capital, AIA Hongkong and other investors from Sept. 18-21.

• Kwality
• Rural Electrification Corp.

• 12 p.m.: India August wholesale prices inflation YoY, estimate 4.62 percent, prior 5.09 percent.
• Sept. 12-15: India August Trade Balance, estimate $17.3 billion deficit, prior $18. billion deficit.

• Vedanta has encountered indications of hydrocarbon during drilling and formation evaluations. The company still needs to assess potential commerciality of this discovery.
• Engineers India to acquire 100 percent stake from government of India in Projects and Development India Ltd. Details not disclosed due to confidentiality of the matter.
• Adani Enterprises shrinks Carmichael rail ambitions to trim coal mine costs. It will save more than A$1 billion ($719 million) by shortening the rail line to its planned Carmichael coal mine in Australia. (Bloomberg)
• Cadila Healthcare’s Zydus Cadila received final approval from U.S. FDA to market Risedronate Sodium Delayed-Release Tablets, 35 mg. The product will be manufactured at the group’s formulations manufacturing facility at Moraiya, Ahmedabad.
• Voltas has inked a JV with Arcelik. JV’s new brand Voltas Beko plans to launch over 100 units of refrigerators, washing machines and microwaves over the next three months.
• HCL Technologies offers to buy-back 3.63 crore shares or 2.61 percent equity at Rs 1,100 per share. The buy-back size for this offer will aggregate to Rs 4,000 crore. The offer will open on Sept. 18 and close on Oct. 3.
• Cabinet approved transfer of land of Rashtriya Chemicals & Fertilizers to Mumbai Metropolitan Regional Development Authority and Municipal Corporation of Greater Mumbai; and selling of transferable development right certificate received/receivable against this transfer.
• Dr Reddy’s Laboratories launches Neostigmine Methylsulfate Injection in U.S. This injection is a generic version of Bloxiverz injection, which was approved by U.S. FDA. The brand and generic had U.S. sales of approximately $111 million MAT for the most recent twelve months ending in July 2018 according to IMS Health.
• Lupin got U.S. FDA approval for generic Atovaquone Oral Solution USP to market a generic version of GlaxoSmithKline’s Mepron Oral Suspension. This drug will help in treatment of pneumonia.
• Glenmark Pharma’s development of immune-oncology drugs gets a boost, as U.S. based- Mitra Biotech announced its partnership with the pharma company. This will be used for translation and clinical studies of immune-oncology and bispecific antibodies.
• Maruti Suzuki announced that it will boost productions of Baleno cars to cut down the waiting time for its customers. The automobile company has sold over 4.5 lakh units cumulatively since its launch.
• Jain Irrigation Systems’ U.S. arm acquires irrigation technology company ‘ETwater’. The company says its position in U.S. smart agriculture market will be fortified and its operations will scale up, post this acquisition.
• Wipro and Anaplan announced a partnership to deliver cloud-based enterprise performance management solutions. As part of this alliance, Wipro will leverage its strong consulting and execution expertise to deploy Anaplan's Connected Planning platform across customers' business functions.
• SBI appointed deputy managing director Prashant Kumar as the chief financial officer of the bank.
• LIC lawyer said it will take around three months to complete IDBI deal (Bloomberg)

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.4 percent to 11,490 as of 6:54 a.m.

Asian stocks extended a rally after their recent battering drove valuations to a two-year low, following a technology-supported advance in U.S. equities. The dollar held declines after U.S. inflation unexpectedly cooled in August.

Shares in South Korea and Japan led gains, while futures signaled a strong start in Hong Kong and China. Emerging-market currencies climbed, with the lira surging after Turkey’s larger-than-expected interest-rate hike.

Currencies

• The yen slid 0.1 percent to 112.07 per dollar after slipping 0.6 percent.
• The offshore yuan held at 6.8441 per dollar.
• The Bloomberg Dollar Spot Index dropped 0.3 percent Thursday.

Commodities

• West Texas Intermediate crude rose 0.4 percent to $68.88 a barrel.
• Gold was steady at $1,202.90 an ounce.

Here are some key events coming up for the remainder of this week:

• China releases August industrial production, retail sales data on Friday.
• U.S. retail sales, industrial production, consumer sentiment on Friday.