Sensex, Nifty Halt Three-Day Winning Streak As Autos, Financials Drag

Indiabulls Housing Finance Tumbles On Exposure To Default-Rated SuperTech

• LA Opala RG has 43.3 lakh shares change hands in a block on BSE. Stock up 0.2 percent at Rs 233.15.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Noida-based IT services company swung between gains and losses after it reported July-September quarter earnings.

Key earnings highlights:

• Net profit up 30 percent at Rs 112 crore versus Rs 85.8 crore; Bloomberg estimate of Rs 93.61 crore (QoQ)
• Revenue up 10 percent at Rs 907.4 crore versus Rs 825 crore (QoQ)
• EBIT up 32.7 percent at Rs 130.4 crore versus Rs 98.3 crore (QoQ)
• Margin at 14.4 percent versus 11.9 percent (QoQ)

Shares of the Mumbai-based non-banking mortgage lender fell as much as 13.26 percent, the most since Sept. 25, to Rs 787 on heavy volumes.

Trading volume was three times its 20-day average, data compiled by Bloomberg showed.

As many as 95 lakh shares changed hands on the National Stock Exchange, according to information on the National Stock Exchange.

Shares of the country's largest two-wheeler maker swung after its profit met Bloomberg consensus in September quarter.

Key earnings highlights:

• Revenue up 8.6 percent at Rs 9,091 crore.
• Net profit down 3.4 percent at Rs 976.3 crore.
• Ebitda down 5.3 percent at Rs 1,378.7 crore.
• Margin at 15.2 percent versus 17.4 percent.
• Other Income at Rs 223.7 crore versus Rs 117.6 crore.

• ITC has 11.9 lakh shares change hands in a block deal. Stock up 2.6 percent at Rs 290.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based auto parts maker rose as much as 5.5 percent to Rs 272 after its profit jumped 74 percent to Rs 43 crore.

Key earnings highlights:

• Revenue up 21.7 percent at Rs 652.5 crore.
• Net profit up 73.9 percent at Rs 42.6 crore.
• Ebitda up 36.8 percent at Rs 80.3 crore.
• Margin at 12.3 percent versus 10.9 percent.

Shares of the Srinagar-based private sector lender rose as much as 18.5 percent to Rs 49.70 after its profit rose 31 percent to Rs 94 crore.

Key earnings highlights:

• Gross non-performing assets as a percentage of total advances at 9.00 percent versus 9.83 percent (QoQ)
• Net non-performing assets as a percentage of total advances at 3.91 percent versus 4.65 percent (QoQ)

A sale of treasury bills and RBI's Rs 12,000 crore open market operation to buyback bonds will be in close focus in the sovereign debt market.

A series of positive news and data has helped yield on the 10-year bond to decline 20 basis points in the last five sessions. It fell 5 basis points on Tuesday to 7.87 percent. The positive momentum may continue, and the yield may stay in a range of 7.85-7.90 percent in the day.

In the currency market, rupee is set to gain further tracking gains in Asian equities. The closely-tracked South Korean won rose 0.3 percent against the dollar. Implied opening from forwards suggest the pair may open at around 73.3668 and trade in a range of 73.20-73.60 a dollar in the day.

Brokerages On Infosys

BofAML

• Maintained ‘Buy’; raised price target to Rs 805 from Rs 790, implying a potential upside of 16 percent from the last regular trade.
• Improved growth outweighs margin miss in the second quarter.
• Expect a return to double-digit revenue growth by the end of the current financial year.
• Attrition rates likely to normalize in next two quarters.

Nomura

• Maintained ‘Reduce’ with a price target of Rs 670, implying a potential downside of 4 percent from the last regular trade.
• September quarter review: Beat on growth, margin miss a negative.
• Unchanged revenue growth and EBIT margin guidance despite easy asking rates a disappointment.
• Growth was broad-based; Outlook appears optimistic on BFSI and Retail.

CLSA

• Maintained ‘Buy’ with a price target of Rs 950, implying a potential upside of 36 percent from the last regular trade.
• September quarter review: Sharp revenue beat and stellar deal wins, soft margins and guidance.
• Digital focus keeps client relevance strong.
• Growth acceleration potential at reasonable multiples.

Macquarie

• Maintained ‘Outperform’; raised price target to Rs 775 from Rs 770, implying a potential upside of 11 percent from the last regular trade.
• Focusing on investments for medium-term growth is a step in right direction.
• Large deal wins were strong at $2 billion.
• Believe Infosys deserves to trade at a 20 percent discount to TCS.

UBS

• Maintained ‘Buy’ with a price target of Rs 890, implying a potential upside of 28 percent from the last regular trade.
• Constant currency revenue grew higher than estimates.
• Strong revenue growth and contract wins are early signs of investments paying off.
• Expect a positive stock reaction.

Credit Suisse

• Maintained ‘Neutral’ with a price target of Rs 680, implying a potential downside of 2 percent from the last regular trade.
• September quarter results were mixed; Large deal wins were nearly twice that in the first quarter.
• Revenue was encouraging across many segments.
• Weaker-than-expected margins take away the sheen from strong growth.

Brokerages On Hero MotoCorp

Morgan Stanley

• Maintained ‘Underweight’ with a price target of Rs 2,795, implying a potential downside of 4 percent from the last regular trade.
• September quarter results largely in line.
• Ebitda growth to remain weak due to competitive and inflationary pressures.
• Market shares in scooters and premium bikes is key to monitor.

CLSA

• Maintained ‘Sell’; cut price target to Rs 2,800 from Rs 3,000, implying a potential downside of 3 percent from the last regular trade.
• Weak operating results due to higher input cost and expiry of duty benefits at Haridwar plant.
• Higher ownership costs impacting two wheeler demand; Hero expects improvement.
• Margin concern continues given high competitive intensity amidst a cost push.

UBS

• Maintained ‘Buy’ with a price target of Rs 3,500, implying a potential upside of 21 percent from the last regular trade.
• September quarter results came inline.
• Expect growth to be supported by better demand momentum in rural.
• For urban, see slower two wheeler demand outlook; Financing not yet an issue.

BofAML

• Maintained ‘Buy’; cut price target to Rs 3,500 from Rs 3,800, implying a potential upside 21 percent from the last regular trade.
• September quarter results were largely in line as higher volumes have offset pricing competition.
• Tailwind from rural uptick likely to keep volumes healthy.
• Recent correction makes risk reward favourable.

Credit Suisse

• Maintained ‘Neutral’; cut price target to Rs 3,020 from Rs 3,500, implying a potential upside of 4 percent from the last regular trade.
• September quarter results were almost in line with estimates.
• Mgmt. says availability of finance is not a concern for growth in festive season.
• Lower valuation multiple on concerns related to two wheeler industry growth.

Brokerages On Federal Bank

Deutsche Bank Research

• Maintained ‘Buy’; cut price target to Rs 110 from Rs 115, implying a potential upside of 35 percent from the last regular trade.
• Asset quality held up well despite floods; Core business momentum is strong.
• Growth is steady and granular; CASA growth is also strong.
• Lower recoveries and upgrades resulted in 11 percent rise on a sequential basis in GNPA.

UBS

• Maintained ‘Buy’ with a price target of Rs 95, implying a potential upside of 16 percent from the last regular trade.
• Strong loan growth and stable margins drove second quarter earnings
• Expect loan book growth of 23 percent over FY18-20; RoA and RoE to improve to 0.8 percent and 10.3 percent respectively by March 2020.
• Maintain buy due to inexpensive valuation.

Kotak

• Maintained ‘Buy’ with a price target of Rs 105, implying a potential upside of 29 percent from the last regular trade.
• Strong performance led by strong loan growth even as higher provisions dented earnings.
• Focus likely to shift back to RoE improvement.
• Expect a re-rating going forward.

Brokerages On Reliance – Hathway And Den Deal

CLSA

• Potential deal to give RIL access to broadband homes and subscribers.
• Absolute investment for acquisition would be small compared to its telecom capex.
• Acquisition to help get permissions; Still investment in laying last mile fibre required.
• Deal to drive market share gains and help gain wallet share among consumers at top-end.

Macquarie

• Primary benefit of this deal would be access to the last mile.
• Blending of Hathway and DEN’s cable operations with Jio’s plans will be key monitorable.
• Deal to put pressure on urban-focussed DTH operators like Tata Sky and Airtel.
• Deal to strengthen bargaining power of Hathway and DEN with regard to broadcasters.

More Brokerage Calls

Goldman on Industrials

• The rupee depreciation, refinancing risks and higher borrowing costs impacted share performance.
• Expect firms with good earnings visibility and reasonable valuations to outperform.
• Downgrade Thermax to Sell as lower RoE improvement does not justify premium valuations.
• Upgrade Blue Dart to Neutral post significant underperformance.
• L&T best-placed in current macro environment; Remains our top pick.
• Prefer NTPC, Powergrid and Tata Power which offer stable earnings and valuation support.

HSBC on Maruti Suzuki

• Maintained ‘Buy’; cut price target to Rs 9,000 from Rs 10,000, implying a potential upside of 26 percent from the last regular trade.
• Changing consumer patterns and slow income growth had an impact on new car demand.
• Major car markets are already showing signs of stagnation.
• Remains strong long-term play, but weak festive season and margin pressures are near-term risk.

Insider Trades

• Mukand promoter group Baroda Industries acquired 50,000 shares from Oct.10-11.
• Cox & Kings promoter acquired 31,800 shares on Oct. 12.

(As reported on Oct. 16)

Trading Tweaks

• Thyrocare Technologies to discontinue its share buy back.
• Capital India Finance added to ASM Framework.
• Gravita India and Adlabs Entertainment price band revised to 5 percent.
• Aptech, GTPL Hathway and TD Power Systems price band revised to 10 percent.
• Arshiya, RSWM and HEG price band revised to 10 percent.

• India’s 200 Mph bullet train can’t get started
• How India’s largest hedge fund deals with volatility
• China cuts U.S. treasury holdings for third straight month
• U.S. firms seek another 12 months to meet data localisation rules
• Flipkart deal to hit Walmart earnings
• Tenth round of city gas distribution auctions by December
• General provident fund interest rate raised to 8% for October-December quarter
• How India’s richest man shook up its phone industry, in charts
• Now transfer money from one mobile wallet to another
• Trade deficit fall pointing towards weakening domestic demand?
• Uber valued at $120 billion in an IPO? maybe

Here are some key events coming up this week:

• China’s new yuan loans may have risen to 1.36 trillion yuan ($196 billion) in September from August’s 1.28 trillion yuan as officials sought to buoy economic growth.
• Third-quarter GDP for China comes Friday, with headline growth forecast to slow to 6.6 percent year on year from 6.7 percent, in addition to last month’s retail sales and factory output.
• Minutes from the Fed are due on Wednesday.