KEY HIGHLIGHTS
Closing Bell: A Volatile Last Hour
Indian equity markets ended little changed in today's session after a volatile final hour of trade, attributed by some to the FTSE rebalancing and by some to the tensions on the borders with Pakistan and China.
The final hour saw the S&P BSE Sensex and NSE Nifty 50 give up modest gains, fall to the day's low and witness a pullback from the lows.
The S&P BSE Sensex ended 0.34% lower at 38,845 while the NSE Nifty 50 was unchanged as compared to its close on Thursday, at 11,516.
The volatile moves were led by the Nifty Bank, which saw a sharper correction, falling as much as 550 points at one point. The index then recovered nearly 300 points from the day's low to end 1.1% lower.
There would be no doubt in anybody's mind that the day belonged to Pharma stocks. Dr Reddy's Laboratories and Cipla were the top two gainers on the Nifty 50 index, ending 9.9% and 7.1% higher respectively. The Pharma index too ended with gains of 5% - the biggest single-day gain in over a month. The index ended at the highest level in nearly five years. All constituents of the Pharma index ended with gains.
Nifty Realty was the other sectoral gainer, ending with gains of 1.9%.
Pressure on banking stocks led to a decline in the PSU Bank index as well, which ended 1.6% lower.
Broader markets were largely in-line with the benchmarks. The midcap index ended little changed while the smallcap index ended 0.4% lower.
The India Volatility Index ended 0.8% lower at 19.94.
Market breadth turned adverse in the final minutes of trade. 990 stocks on the NSE ended with losses while 826 stocks posted gains.
Decoding The Market Performance For The Week
Economic Activity Spurts In August
Buzzing Stock: Bayer Cropscience
- Trades at an all-time high
- Gains as much as 10% to Rs 6,538
- Has gained in five out of the last seven trading session
- Up 14% in the last seven trading sessions
- Today's volumes are 76% higher than its 20-day average
- Rebounds from its 50-Day Moving Average of 5,855
- Has more than doubled from its 52-week low of Rs 2,925 on March 25, 2020
- Four out of the 11 analysts tracking the stock have a buy recommendation; 3 sell calls
- The stock has crossed its 12-month consensus price target of Rs 5,950 in today's session
Google Removes PayTM From Play Store
PayTM’s Response
Buzzing Stock: GSK Pharma
- Worst performing stock on the BSE Midcap index
- Falls as much as 5.5% to Rs 1,666
- Biggest single-day fall in six months
- Down for the third straight day
- Longest losing streak in a month
- Today's volume are 24% higher than the 20-day average
- Down 7% from its 52-week high of Rs 1,805 on September 15, 2020
- Five out of the 11 analysts tracking the stock have a buy recommendation; 5 sell calls
- The stock trades 10.2% higher than its 12-month consensus price target of Rs 1,528.3, implying a negative return potential
Sharp Correction In Nifty Bank
Gold Heads For Second Weekly Gain
The Yellow Metal is headed for its second straight weekly advance as the U.S. Dollar steadies, with investors weighing climbing cases of Covid-19 and lukewarm commentary from the U.S. Federal Reserve.
Earlier this week, Fed officials indicated that interest rates will stay low for years to come, but fell short of tweaking bond purchases as some expected.
"Gold remains stuck in a range thanks to a lack of movement in real treasury yields and demand from Asian retail investors," according to Adrian Ash, Director of Research at BullionVault.
Analysts believe that Gold will retest $2,000/Oz this year as the Fed will eventually increase asset purchases and focus on longer-dated treasuries.
Buzzing Stock: Delta Corp
- Top gainer on the Nifty Smallcap index
- Gains as much as 9.9% to Rs 118.75
- Biggest single-day gain in over a month
- Trades at the highest level in a month
- Set to snap a three-week losing streak
- Today's volumes are more than double its 20-day average
- Testing 200-Day Moving Average at 120.2
- Nearly 50% lower than its 52-week high of Rs 224.8 on December 2, 2019
- All five analysts tracking the stock have a buy recommendation
- Return potential of the stock as per Bloomberg data is 27.6%
Markets At 2:10 P.M.
- Benchmark indices set to post modest gains for the week.
- Nifty up 0.5% at 11,573
- Sensex up 0.24% at 39,073
- Nifty Bank unchanged at 22,331
- Nifty Midcap index up 0.5%
- Nifty Smallcap index up 0.6%
- India Volatility index down 4.5% to 19.19
- Nifty Pharma index extends gains; up 6% - trading at the highest level in nearly five years
- Nifty Realty is the other major sectoral gainer; up 2.6%
- Nifty Auto and Nifty Media up 1%
- Nifty FMCG and Nifty PSU Bank are the sectoral laggards; down 0.6% and 0.5% each respectively
- Dr Reddy's Laboratories remains the top Nifty gainer; up 12.2%
- Hindustan Unilever remains the top Nifty laggard; down 1.5%
- 992 stocks on the NSE trade with gains while 777 decline
Money Market Update
The rupee continued to alternate between gains and losses for the seventh straight session, ending today's session with gains, and posting a modest advance for the week.
The currency ended at 73.45 against the U.S. Dollar as compared to Thursday's close of 73.65.
For today's trade, the rupee was the fifth best performing currency in Asia.
“We expect the sideways trend to continue next week as well,” Rahul Gupta of Emkay Global said in a statement. “Unless the support zone of 72.90-73 does not break, the spot will trade higher towards 73.75,” he said.
Even though the rupee posted a modest advance this week, it ended as the second worst performing currency in Asia, only managing to outperform the Hong Kong Dollar.
Yield on the 10-year government bond ended at 5.996% as compared to Thursday's close of 6.033%.
Active Stock Options
- Dr Reddy's 5,400 Call: Premium up 410% to Rs 103.9. The contract has added 3.2 lakh shares in Open Interest.
- Cipla's 800 Call: Premium up 287% to Rs 23.2. The contract has shed 2.6 lakh shares in Open Interest.
- Lupin's 1,100 Call: Premium up 212.4% to Rs 36.5. The contract has added 2.1 lakh shares in Open Interest.
FMCG Index Is The Top Sectoral Laggard
F&O Snapshot: Active Options Contracts
- Nifty September futures add 2.6% and 3 lakh shares in Open Interest
- Nifty Bank September futures add 13.2% and 2.3 lakh shares in Open Interest
Nifty: September 24 Expiry
- 11,600 Call: Premium up 3.2% to Rs 77.3. The contract has added 12.5 lakh shares in Open Interest.
- 11,500 Put: Premium down 28.7% to Rs 73.5. The contract has added 14.9 lakh shares in Open Interest.
- 11,700 Call: Premium down 3.5% to Rs 37.7. The contract has added 3.3 lakh shares in Open Interest.
Nifty Bank: September 24 Expiry
- 22,000 Put: Premium down 9.1% to Rs 207.1. The contract has added 2.3 lakh shares in Open Interest.
- 22,500 Call: Premium down 12.8% to Rs 297.2. The contract has added 5.8 lakh shares in Open Interest.
- 23,000 Call: Premium down 22.1% to Rs 126.4. The contract has added 4.5 lakh shares in Open Interest.
Buzzing Stock: Gujarat Narmada Valley Fertilisers
- Top gainer on the Nifty Smallcap index
- Gains as much as 6.6% to Rs 228.7
- Biggest single-day gain in over three weeks
- Trades at the highest level since July 2019
- Up for the third straight day
- Has gained 10% in the last three trading sessions
- Today's volumes are nearly triple of its 20-day average
- Trades near its 52-week high of Rs 232.5 on August 25, 2020
- Both analysts tracking the stock have a buy recommendation
European Markets Open Flat
Benchmark indices in Europe have begun trade on a muted note. The Stoxx 600 index has opened 0.1% lower. Travel and real estate stocks are the top laggards.
The outperformers include miners and technology stocks. The index is still on course for its second straight weekly gain.
Asian markets have had a subdued but positive close, while futures on the Dow Jones trade lower by 40 points.
Brent crude trades 1.1% higher at $43.79 per barrel while Gold trade at $1,953.5/Oz, up 0.5%.
Let's take a look at how benchmark indices in Europe have opened:
- Euro Stoxx 50 down 0.1% at 3,313
- DAX unchanged at 13,207
- CAC down 0.2% at 5,030
- FTSE 100 down 0.2% at 6,037
- IBEX 35 down 0.5% at 7,052
How Are The Sectoral Indices Faring
Buzzing Stock: MM Forgings
- Top gainer on the BSE Smallcap index
- Gains as much as 12.2% to Rs 341.3
- Trading at the highest level in six months
- Has alternated between gains and losses in the five trading sessions this week
- Today's volumes are 10% higher than its 20-day average
- Stock in Overbought territory with Relative Strength Index (RSI) at 76
- Broke above 200-Day Moving Average at 271.1 on Friday, September 11
- Still trades 27.4% below its 52-week high of Rs 470.5 on January 31, 2020, despite more than doubling from its 52-week low of Rs 151 on May 22, 2020
- Two out of the three analysts tracking the stock have a buy recommendation; 0 sell calls
- Return potential of the stock as per Bloomberg data is 47.8%
Buzzing Stock: Oberoi Realty
- Top gainer on the Nifty Realty index
- Second best performer on the BSE Midcap index
- Gains as much as 7.7% to Rs 439.4
- Biggest single-day gain in five months
- Trading at the highest level in six months
- Has gained in eight out of the last 10 trading sessios
- Up 20% in the last 10 trading sessions
- Today's volumes are 29% below its 20-day average
- Breaks above its 200-Day Moving Average at 420.4
- Stock nearing overbought territory with Relative Strength Index (RSI) at 70
- Trades 25% below its 52-week high of Rs 584 on January 27, 2020
- 16 out of the 27 analysts tracking the stock have a buy recommendation; 3 sell calls
- The stock rose above its 12-month consensus price target of Rs 415.1 in today's session
Realty Index Among Top Sectoral Gainers
Markets At Noon
- Benchmark indices remain in a range
- Nifty up 0.36% at 11,557
- Sensex up 0.14% at 39,034
- Nifty Bank unchanged at 22,313
- Nifty Midcap index up 0.6%
- Nifty Smallcap index up 0.8%
- India Volatility Index down 3.3% at 19.43
- Nifty Pharma extends gains as top sectoral gainer; up 5.7%
- Nifty Realty and Nifty Media are the other sectoral gainers; up 2% and 1.4% respectively
- Nifty FMCG is the top sectoral laggard; down 0.8%
- Dr Reddy's extends gains as the top Nifty gainer; up 8.6%
- Hindustan Unilever is the top Nifty laggard; down 1.7%
- 1,024 stocks on the NSE trade with gains while 700 decline
Top Reads On Bloombergquint.com
India Opens Door For Foreigeners In Defence Manufacturing
India will give greater direct access to foreign investors in the defence sector.
Foreign investors can now invest up to 74% in defence manufacturing under the automatic route, up from the earlier 49%, the DPITT said in a statement on Friday.
Interest of foreign investors in India's defence sector was negligible even in the pre-Covid-19 times. The sector attracted just $9.5 million in FDI over the last two decades, for which data is available, whereas overall investment flows in the country stood at over $50 billion in 2019 alone.
"Amendments will enhance self-reliance in defence production, while keeping national interests and security paramount," Commerce Minister Piyush Goyal wrote on twitter.
Stock Reaction: Cadila Healthcare
The drugmaker has informed the exchanges that it has received the final approval from the U.S. FDA to market the Potassium Chloride Extended-release tablets in the strength of 10mEq (750 mg) and 20 mEq (1500 mg).
The medication is a mineral supplement used to treat or prevent low amounts of potassium in the blood, the drugmaker said in an exchange filing.
Shares gained as much as 5.1% to Rs 413.8, post the announcement. The stock is up for the fourth straight day and is trading at the highest level since September 2018.
India Ratings Revises Outlook On Banks
India Ratings & Research has revised its outlook on the banking sector to negative for H2FY21. It has revised its outlook to negative from stable.
The revision has been done with an expectation of a spike in stressed assets, higher credit costs, weaker earnings on account of interest reversals and lower fee income and muted growth prospects in view of the measures taken to contain the spread of Covid-19.
The agency has revised the rating outlook on Public Sector Banks to negative from stable. The agency expects the capital buffers of PSU banks to deplete further in FY21.
The agency has maintained a stable outlook for private banks. It expects credit costs for banks to range between 2.6%-3.4%.
Buzzing Stock: Sumitomo Chemical India
- Among the top performing stocks on the Nifty 500 index
- Gains as much as 8.2% to Rs 308.8
- Biggest single-day gain and trading at the highest level in three months
- Has gained in six out of the last seven trading sessions
- Up 17% in the last seven trading sessions
- Today's volumes are 11 times higher than its 20-day average
- Stock enters overbought territory with Relative Strength Index (RSI) at 70
- Has doubled from its 52-week low of Rs 151 on March 25, 2020 and is trading close to its 52-week high of Rs 317 on June 25, 2020
- Two out of the five analysts tracking the stock have a buy recommendation; 0 sell calls
- The stock crossed its 12-month consensus price target level of Rs 290 in today's session
Stock Reaction: Cipla & Lupin
Both pharma majors are surging in today's session after Perrigo Company on Thursday announced a voluntary U.S. nationwide recall of Albuterol Sulfate inhalation aerosol to the retail level, after previously halting production and distribution.
Perrigo's exit will provide a temporary window of opportunity to both Cipla and Lupin in the short-term, Praful Bohra of Emkay Global wrote in a note.
Assuming Perrigo remains out of the market for the next six months and a shift of incremental $30 million sales to Lupin and Cipla each, a rough calculation indicates an 8-9% upgrade for Cipla and a 13-14% upgrade for Lupin in FY21, the note added.
Shares of Lupin gained as much as 7.2% to Rs 1,112 to its highest level since July 2017. The stock is up for the eighth straight day - its longest winning streak since October 2017.
Shares of Cipla gained as much as 6.45% to Rs 800 and are trading at a record high.
Stock Reaction: EIH
The company on Thursday set its rights issue price at Rs 65 per share, which is a 24.8% discount to Thursday's closing price.
The board has set the record date for the rights issue as September 23. The rights entitlement ratio has been set at 8 shares for every 85 shares held.
The company has proposed to allot 5.38 crore rights shares at a face of Rs 2 each. It had given an approval to raise Rs 350 crore through the rights issue on September 7.
Shares gained as much as 3.65% to Rs 89.5 and have alternated between gains and losses this week.
Fourth Day Of Gains For Nifty Pharma
Buzzing Stock: Sudarshan Chemicals
- Top gainer on the BSE Smallcap index
- Gains as much as 9.7% to Rs 536
- Biggest single-day gain in over five months
- Trades at the highest level since May 2018
- Up for the seventh straight day
- Longest winning streak since January 2018
- Up 23% in the last seven trading sessions
- Today's volumes are more than six times higher than its 20-day average
- Stock in overbought territory with Relative Strength Index (RSI) at 76
- Has nearly doubled from its 52-week low of Rs 286.2 on March 13, 2020
- All six analysts tracking the stock have a buy recommendation
- The stock crossed its 12-month price target of Rs 502.8 in today's trading session
Stock Reaction: TVS Motor
The two-wheeler and three-wheeler maker on Thursday announced their new distribution partnership with Autotecnica Colombiana SAS - a leading motorcycle assembler in Columbia.
Autotecnica Colombiana SAS will operate 50 dealerships exclusive to TVS Motor and create dedicated space for the brand in over 600 retail outlets, the company said in an exchange filing.
It will also support TVS Motor with dedicated sales service, spares and customer relationship management.
The deal marks the expansion of the company's presence in the Columbian market, the statement said.
Shares gained as much as 2.4% to Rs 468 and trade at the highest level in three weeks. Brokerage firm CLSA maintained its sell rating on the stock but raised its price target to Rs 435 from the earlier Rs 418.
Markets At 10:10 A.M.
- Benchmark indices trade with modest gains
- Nifty up 0.55% at 11,579
- Sensex up 0.44% at 39,150
- Nifty Bank up 0.52% at 22,435
- Nifty Midcap index up 0.65%
- Nifty Smallcap index up 0.8%
- India Volatility Index down 2.8% to 19.53
- Nifty FMCG is the only sectoral laggard; down 0.5%
- Nifty Pharma is the top sectoral gainer; up 4%
- Nifty Auto, Nifty Realty, Nifty Media up 0.8% each
- Cipla is the top Nifty gainer; up 5.4%
- 40 out of the 50 Nifty constituents trade with gains
- Top three gainers on the Nifty 50 index are pharma stocks
- Hindustan Unilever is the top Nifty laggard; down 1.4%
- 1,114 stocks on the NSE trade with gains while 535 decline
Money Market Update
The currency opened with gains in today's session, continuing its trend of alternating between gains and losses during this week.
The rupee opened at 73.46 against the U.S. Dollar as compared to Thursday's close of 73.65. It was the third worst performing currency in Asia on Thursday.
Yield on the 10-year government bond opened at 6.01% as compared to Thursday's close of 5.993%.
The Reserve Bank of India on Thursday said that it will resume outright open-market operations, announcing one on September 24.
Bond market traders will also look forward to the sale of bonds worth Rs 30,000 crore today.
Buzzing Stock: Natco Pharma
- Top gainer on the Nifty 500 index
- Gains as much as 12.8% to Rs 872.8
- Biggest single-day gain since October 2017
- Trades at the highest level in over a month
- Snaps two-day losing streak
- Today's volumes are 20 times higher than its 20-day average
- Breaks out above its 50-Day Moving Average of 772.1
- Stock heading towards overbought territory with Relative Strength Index (RSI) at 66
- Trades at a 4% discount to peers compared to an average 14% discount over the last two years on a blended forward price-to-earnings basis
- The stock is 3% away from its 52-week high of Rs 898 on August 11, 2020
- 11 out of the 17 analysts tracking the stock have a buy recommendation; 2 sell calls
- The stock crossed its 12-month consensus price target of Rs 829.75 in today's trade
Stock Reaction: Essel Propack
Shares of the company are declining at the start of trade after 7.35 crore shares or 23.3% of the total equity exchanged hands in five large trades, according to Bloomberg data.
Bloomberg had reported on Thursday that the company's promoter Blackstone Group's entity Epsilon Bidco is looking to sell up to 7.26 crore shares or 23% of the total outstanding capital of the company.
The floor price of Rs 255 per share was a 6.5% discount to Thursday's closing price.
On sale of the complete stake, Epsilon Bidco's stake in the company would fall to 51.99% from the earlier 74.99%.
Buyers and sellers in those five large trades remain unknown as of now.
Shares fell as much as 6.1% to Rs 256, post the deals. The stock is down for the fourth straight day and is trading at the lowest level in nearly two months.
Coronavirus India Update
- India reports close to 1 lakh cases for the second day in a row
- 96,424 new cases reported in the last 24 hours
- Total confirmed cases now at 52,14,677
- Active cases now at 10,17,754
- Patients cured / discharged / migrated at 41,12,551
- Death toll rises to 84,372
- 1,174 deaths reported in the last 24 hours
- 87,472 patients recovered in the last 24 hours
- Biggest single-day recovery figure in India
Stock Reaction: Dr Reddy's Laboratories
The Hyderabad-based drugmaker announced the settlement of its patent litigation with Celgene, pertaining to the Revlimid capsules.
Celgene has agreed to provide Dr Reddy's with a license to sell volume-limited amounts of the generic lenalidomide capsules in the U.S. after March 2022, the company said in a exchange filing.
The company is also licensed to sell the generic lenalidomide capsules in the U.S., without volume limitations starting January 31, 2026.
Brokerages too have expressed optimism on the stock post the settlement of this litigation, citing potential earnings visibility post FY22.
Shares gained as much as 3.8% to a new record high of Rs 5,010. The stock is up for the fourth straight session. The company's American Depository Receipt (ADR) too ended with gains of 6.3% overnight.
Opening Bell: A Positive Start
Indian equity markets have begun the final trading day of the week on a positive note, led by strong traction in Pharma stocks like Dr Reddy's Laboratories & Cipla.
The S&P BSE Sensex opened 0.57% higher at 39,200 while the NSE Nifty 50 index opened 0.6% higher at 11,584. Both benchmarks were up 0.4% for the week, as of closing on Thursday.
All sectoral indices have opened with gains, led by the Nifty Pharma index, which has begun trade with gains of 2%.
The Nifty Media is the other sectoral gainer, starting 1% higher while other indices like Nifty Bank, Nifty Auto, Nifty Metal and Nifty Realty have opened with gains of 0.5% each.
Broader markets have opened higher after being subdued over the last two sessions. The midcap index is up 0.5% while the smallcap index has gained 0.6% at the start of trade.
Market breadth was in favour of the gainers. 1,063 stocks on the NSE traded with gains while 356 opened with losses.
Trading Strategies For The Day
- Nifty: Sell 11,300 Put of the September 24 expiry in the range of Rs 48-50. Target of Rs 34-24 and stop loss of Rs 64.
- Nifty Bank: Buy in the range of 22,200-22,250 for target of 22,375 and 22,500 with a stop loss of 22,100
- Buy SRF September futures for target of Rs 4,459 and Rs 4,513 with a stop loss of Rs 4,387
- Sell Bajaj Finserv September futures for target of Rs 5,953 and Rs 5,845 with a stop loss of Rs 6,097
- SRF and Bajaj Finance are intraday recommendations
Source: ICICI Securities
How Did The Fund Flows Fare On Thursday
Key Stocks In Focus
- Dr Reddy's Laboratories: Announces settlement of litigation with Celgene, relating to Revlimid capsules. Celgene has agreed to provide DRL with the license to sell volume-limited amount of the capsule in the U.S. starting March 2022. The company is also allowed to sell the capsule without volume limitation, starting January 31, 2026.
- TVS Motor: Announced their new distribution partnership with Autotecnica Colombiana SAS - a motorcycle assembler in Colombia. This entity will operate 50 dealerships exclusive to TVS Motor and create dedicated space for the brand in over 600 retail outlets.
- EIH: Sets rights issue price at Rs 65 per share - a 24.8% discount to Thursday's closing. Rights entitlement ratio at 8 shares for every 85 shares held. Record date set as September 23. The company proposes to issue 5.38 crore rights shares at a face of Rs 2 per share.
- Essel Propack: Bloomberg News reports that the company's promoter Blackstone Group's entity - Epsilon Bico is planning to sell up to 7.26 crore shares or 23% of the total outstanding capital. Floor price for the proposed sale is set at Rs 255 per share, a 6.5% discount to Thursday's closing price. The total stake is d at Rs 1,850.8 crore. Post the sale, Epsilon Bico's stake to fall to 51.99% from 74.99% earlier.
- Sterling and Wilson Solar: Signed a 106.71 MW solar power project worth Rs 462 crore in Chile. The order has been received from a global independent power producer and the work is expected to begin by Q4FY21.
- Elantas Beck: Signs a Memorandum of Understanding with Talegaon Industrial Parks for acquisition of land situated at Pune for setting up a new greenfield manufacturing facility. The said facility will provide additional capacity to cater to the market demand.
- Happiest Minds Technologies: Plutus Wealth Management acquired 10 lakh shares at Rs 350 per share.
To know more about the stocks in focus, key brokerage updates and F&O cues, click here.
Your Trade Setup For The Day
A Check On Indian ADRs
A Day Of Consolidation?
Good Morning!
Indian equity markets ended near the lowest point of the day amid volatility during the weekly options expiry on Thursday.
Both S&P BSE Sensex and NSE Nifty 50 nearly wiped out gains for the week and are now up only 0.4% as of closing yesterday.
And futures are indicating a flat start to trade again. The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, was little changed at 11,530 as of 7:45 a.m. on Friday.
Stock-specific action will continue in today's session on the back of litigation settlements, rights issues and order wins.
Asian markets are now mixed after a positive start, although they remain on course to post their first weekly gain in September. Markets in South Korea and Australia retreated, while those in Japan are flat.
Futuers on the Dow Jones are trading lower by 100 points currently. The index fell 0.5% on Thursday.
West Texas Intermediate crude fell 0.3% to $40.83 per barrel, while gold traded at $1,950.6/Oz.
Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.
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