Sensex, Nifty End At 2-Month High As Investors Shift Focus To Earnings

Indian shares climbed with the benchmarks closing near their two-month highs as investors shift focus to local cues rather than fixating on global news flow, a norm for the previous sessions.

Market watchers will closely eye India Inc.’s performance in the third quarter and more importantly the commentary from the managements on the impact of the demonetisation move on the growth. Besides that, they will also be waiting for the all-important Union Budget, which will be announced next month.

The S&P BSE Sensex gained 0.6 percent to 26,899, while the NSE Nifty too advanced 0.6 percent to 8,288. The market breadth was skewed in favour of the buyers with 916 stocks advancing, 572 declining and 84 remaining unchanged on the NSE.

Except the S&P BSE Realty (down 0.4 percent), all other 18 sectoral gauges advanced on the exchange.

Shares of IndusInd Bank reversed losses and gained as much as 0.6 percent after reporting third quarter earnings in line with street estimates.

The lender’s net profit came in at Rs 751 crore for the quarter-ended December, compared to Rs 581 crore same period last year. A Bloomberg consensus of analysts’ estimate had pegged the profit at Rs 725 crore.

• Gross NPA as of end-December 0.94 percent versus 0.90 percent in end-September
• Q3 provisions Rs 217 crore versus Rs 177 crore
• Interest income Rs 3,700 crore versus Rs 3,000 crore
• Interest expense Rs 2,120 crore versus Rs 1,830 crore

China’s producer price index rose at the fastest pace in more than five years in December as the factory to the world swings from being a drag on global inflation to another potential force pushing prices higher.

Read full report HERE

The margins of information technology companies will come under further pressure, in the event of the new U.S. bill titled ‘Protect and Grow American Jobs Act’ gets passed, said India Ratings and Research.

The cash cushion and low debt levels that I.T. companies enjoy however will mean the squeeze on margins will be credit neutral.

Read full report HERE

Passenger vehicle sales, which include SUVs and vans, declined 1.4 percent to 227,824 units for the month of December, from 230,959 units year ago, according to data released by the Society of Indian Automobile Manufacturers in New Delhi.

Wholesale sales typically reflect reality with a lag of one month, making December to be the first month to bear the actual brunt on the government’s demonetisation move.

• Local car sales 158,617 units versus 172,671(Biggest fall since April 2014)
• Two-wheeler sales 910,235 units versus 1.17 million (Biggest fall ever)
• Truck, bus sales 53,966 units versus 56,840 units

Vishnu Mathur, the new director general of SIAM expects the impact of demonetisation to be short-lived. He said the decline in sales happened despite automakers offering steep discounts in the month of December. “We do not expect huge sales in January either,” he told reporters in New Delhi.

Shares of the Cafe Coffee Day chain operator rose 1.7 percent to Rs 199 on the NSE on high trading volume of around 19.3 times its 30-day average.

The stock was resting resistance at 50-day moving average.

Nandan Nilekani, the co-founder of Infosys, raised his holding in Coffee Day Enterprises to 2.57 percent in the quarter-ended December, from earlier 1.4 percent, according to exchange filing.

The stock had fallen 30.1 percent last year, compared to gain of 3 percent on the Nifty.

Billionaire investor Rakesh Jhunjhunwala increased his stake in the pharmaceutical company to 1.84 percent from 1.72 percent earlier. He now holds 82.9 lakh shares as compared to 77 lakh shares that he held earlier, said an exchange filing of the company on the Bombay stock exchange.

Shares of Lupin were trading higher by 0.4 percent at Rs 1,495.85 per share.

Atlas Cycles Up 52% Over The Last 10 Sessions

• Stock up 11 percent today
• Is currently in the overbought zone, with relative strength index above 70 for four trading sessions
• Stock has ended in the green for 10 consecutive days

More Movers & Shakers: Max Ventures, Engineers India, Ajanta Pharma And More

Rupee strengthened by 17 paise to 68.04 against the dollar in early trade at Interbank Foreign Exchange on fresh selling of the US currency by exporters and banks.

Further, forex dealers said, weakness in the dollar against some other currencies overseas, supported the rupee. Moreover, a higher opening in the domestic equity market influenced the rupee uptrend, they added.

Yesterday, the rupee had tumbled by over 25 paise to close at 68.21 against the US dollar on renewed worries over fall in the country's economic growth coupled with concerns regarding quarterly earnings due from this week.

PTI

Indian shares climbed, shrugging off weak trade in global equity markets, as investors shift focus to the third quarter earnings season starting this week. The performance, and more importantly, the commentary from corporates will be keenly listened into amidst backdrop of the demonetisation move.

The S&P BSE Sensex gained 0.6 percent to 26,891 while the NSE Nifty advanced 0.6 percent as well to 8,285. The market breadth was firmly in favour of the buyers once again. About 1,026 stocks advanced, 388 declined and 442 remained unchanged on the NSE.

All 19 sectoral gauges on the BSE advanced led by a rebound in the S&P BSE Oil & Gas Index followed by the S&P BSE Metal Index.

Stocks To Watch

• Ajanta Pharma: Gets U.S. FDA approval for Duloxetine Hydrochloride capsules
• Engineers India: To execute Rs 2,500 crore contract of HPCL’s Vizag refinery modernisation
• Max Ventures: To sell 22.5 percent stake to New York Life unit
• Valecha Engineering: Wins Rs 56.71 crore of Kurla project
• Havells India raised to outperform versus neutral at Macquarie
• IndusInd Bank: Third quarter net profit estimated at Rs 730 crore

For a complete list of stocks to watch, click HERE

IPO Watch

• BSE said to consider IPO at Rs 800-850 range next month

Data To Watch

• 10:30am: India car sales data for Dec. (prior 173,606)

Money Market Heads-Up

The dollar was off its highs offering some relief to Asian currencies. The South Korean won has climbed 0.7 percent against the greenback in early trade.

The rupee, which dropped 0.4 percent to about 68.20 a dollar could recover in the session. It is also important to note that the rupee's one-month volatility, a gauge of expected swings in the currency, snapped its five sessions of gains to drop eight basis points today.

For sovereign bonds, the next key data print is inflation, which is due on Thursday. A Bloomberg survey expects it to be at 3.56 percent — lower than the 3.63 percent recorded in November. The estimate could slightly change as we continue to add more analysts to the poll.

For bonds lower inflation could mean more room for rate cuts but the math isn’t that easy. The last meeting of the monetary policy committee had a strong view on inflation so as of now fingers-crossed; the market will trade in a range.

Talking Points

• PM Narendra Modi opens international exchange in Gujarat financial zone

• India SEBI’s HFT probe of NSE said to focus on fix, not penalty
• India trying to ease start-ups funding woes: Sitharaman
• SIDBI, VCS, Start-Ups to meet February 2 on Funding
• Cooperative banks used note ban as opportunity to launder crores: I-T Department (PTI)

• DIPP seeking credit guarantee fund for start-ups: Abhishek
• India considering talking to banks on loans to hydro projects
• India ICEX gets approval for diamond futures contract trades
• Tata Sons says Mistry reduced board representation at Tata firms
• Flipkart names Binny Bansal CEO of group
• Entergy says Indian point no longer economically viable: call
• Daiichi Sankyo to close research subsidiary in India
• Global funds sell Rs 325 crore of local stocks; domestic funds buy Rs 96.82 crore yesterday: Provisional data

Good Morning!

The Nifty futures on the Singapore Stock Exchange, an early indicator of Nifty’s performance in India, nudged slightly higher by 0.1 percent to 8,258.

Asian stocks retreated this morning, with banks and energy shares leading declines as crude oil nursed losses and haven assets found support.

Japanese equities fell on their first day of trading this week, tracking losses in the U.S., where the S&P 500 Index dropped from a record high. The yen maintained its rebound as gold edged higher for the fifth time in six days, while oil dropped to the $52 per barrel-mark.

U.S. oil inventories probably rose by 2 million barrels last week, according to the median estimate in a Bloomberg survey before government data on Wednesday.

Anxiety over political developments has crept back into markets in the new year, with investors expressing their concern largely via the currency market.

The Bloomberg Dollar Spot Index fell 0.1 percent. The gauge has now lost almost 1 percent since scaling a 14-year high on January 3. The pound sterling fell to a 10-week low, touching its lowest level since October 28, amidst uncertainty over the U.K.’s future in Europe’s single market.

On Monday, the Dow Jones Industrial Average failed once again to take on its 20,000-point milestone amid anxiety shares rose too far too fast in the wake of Donald Trump’s victory.

In data to watch: China, which has allowed the yuan to strengthen in 2017 amid a struggle to contain capital outflows, reports on consumer and producer prices Tuesday.