KEY HIGHLIGHTS
Closing Bell: A Full Stop, Finally.
The 10-day rally for the Indian equity markets finally came to a halt on the weekly options expiry day.
The S&P BSE Sensex ended 2.6% or 1,066 points lower at 39,728, while the NSE Nifty 50 index failed to hold the 11,700 mark, ending 2.4% or 300 points lower at 11,680. 47 out of the 50 index constituents ended with losses.
With today's fall, the Nifty has given up gains of six out of the last 10 trading sessions.
This was also the first instance in the October series when the Sensex and the Nifty have ended with losses.
The catalyst for the final hour recovery in Wednesday's session - the Nifty Bank saw a swift fall today. The index ended not only 3.3% or 800 points lower, but also below Wednesday's low of 23,149, from which it staged a reversal. The index finally closed at 23,072.
All other sectoral indices ended with losses as well. The Nifty I.T., Nifty Media and Nifty PSU Bank index declined 2.8% each, while the Nifty Realty index fell 2.4%.
The Nifty Pharma index fell for the third straight day, ending 1.8% lower. The Nifty Auto and FMCG index fell over 1% each.
Broader markets too ended lower, but the decline was modest as compared to other indices. Both Nifty Midcap and Nifty Smallcap index ended 1.7% lower.
The India Volatility Index ended 9.1% higher, above the mark of 22 at 22.05.
1,359 stocks on the NSE ended with losses while 507 managed to buck the trend.
How Did The Sectoral Indices Fare
All Constituents Of PSU Bank Index Decline
Pharma Index Declines For The Third Day
Buzzing Stock: Bharti Airtel
- Among top laggards on the Nifty 50 index
- Declines as much as 4.4% to Rs 395
- Trading at the lowest level since November 2019
- Down for the second straight day
- Has declined in three out of the last four trading sessions
- Today's volumes are 29% higher than its 20-day average
- One-month implied volatility is 54%
- Trading well below all of its key Daily Moving Averages
- Stock in oversold territory with Relative Strength Index (RSI) at 28
- Has declined 35% from its 52-week high of Rs 612 on May 20, 2020
- All 30 analysts tracking the stock have a buy recommendation
- Return potential of the stock as per Bloomberg data is 72.6%
All Constituents Of The Nifty Bank Decline
Bucking The Trend: Petronet LNG
- Among top gainers on the Nifty 500 index
- Gains as much as 4.8% to Rs 220.4
- Biggest single-day gain in over four months
- Snaps two-day losing streak
- Still trading below all of its key Daily Moving Average
- Today's volumes are 71% higher than its 20-day average
- One-month implied volatility at 25%
- Relative Strength Index (RSI) of the stock at 44
- Trading over 20% below its 52-week high of Rs 292 on October 30, 2019
- 35 out of the 41 analysts tracking the stock has a buy recommendation; 1 sell call
- Return potential of the stock as per Bloomberg data is 36.7%
Active Stock Options
- Infosys' 1,200 Call: Premium down 66.2% to Rs 6.9. The contract has added 31.4 lakh shares in Open Interest.
- Reliance Industries' 2,300 Call: Premium down 36.6% to Rs 43.5. The contract has added 4.3 lakh shares in Open Interest.
- State Bank of India's 200 Call: Premium down 28.75% to Rs 5.7. The contract has added 25 lakh shares in Open Interest.
Finance Ministry Examining Vodafone Arbitration Award
India's Finance Ministry has denied a media report that claimed that the country's Attorney General has given an opinion in favour of not appealing in the Vodafone Arbitration award.
The speculative news story being circulated in some sections of the media is totally incorrect and without any factual basis, the ministry said in a statement.
The arbitration award along with all options are under examination within the Ministry and further course of action will decided based on such examination, the ministry said.
Markets At 2:10 P.M.
- Benchmark indices poised to snap 10 day gaining streak
- Nifty down 1.7% at 11,762
- Sensex down 1.9% at 40,016
- Nifty Bank down 2% at 23,402
- Nifty Midcap index down 1%
- Nifty Smallcap index down 1.1%
- India Volatility Index up 6.4% to 21.5
- Nifty I.T. index extends losses as the top sectoral laggard; down 3.3%
- Nifty Pharma, Nifty PSU Bank index down 1.6% and 1.4% respectively
- Nifty Realty and Nifty Media index down 1.2% and 1% respectively
- Tata Steel is the top Nifty gainer; up 1.6%
- HCL Technologies is the top Nifty laggards; down 5.2%
- 36 out of the 50 Nifty stocks decline
- 1,214 stocks on the NSE trade with losses; 607 trade with gains
Money Market Update
The rupee has ended with losses in today's session, in-line with the sentiment prevailing in the equity markets.
The currency ended at 73.38 against the U.S. Dollar, as compared to Wednesday's close of 73.3. It had a pullback from the intraday high of 73.21 and fell to an intraday low of 73.40.
Today's performance made Rupee the fifth worst performing currency in Asia.
The Reserve Bank of India bought bonds worth Rs 20,000 crore as planned at an Open Market Purchase Auction.
The central bank bought 6.97% 2026 bonds worth Rs 6,600 crore at 5.564% whereas the estimated cutoff was 5.52%. It bought 7.17% 2028 bonds worth Rs 5,177 crore, 5.79% 2030 bonds worth Rs 3,475 crore and 7.57% 2033 bonds worth Rs 4,748 crore.
F&O Snapshot: Active Options Contracts
- Nifty October futures add 6.1% and 7 lakh shares in Open Interest.
- Nifty Bank October futures add 8.4% and 1.4 lakh shares in Open Interest.
Nifty: October 22 Expiry
- 12,000 Call: Premium down 47.5% to Rs 61. The contract has added 9 lakh shares in Open Interest.
- 11,900 Put: Premium up 63.3% to Rs 145. The contract has added 3.9 lakh shares in Open Interest.
- 11,950 Call: Premium down 43.5% to Rs 79.7. The contract has added 2.4 lakh shares in Open Interest.
Nifty Bank: October 22 Expiry
- 24,000 Call: Premium down 28.75% to Rs 311. The contract has added 1.8 lakh shares in Open Interest.
- 23,500 Put: Premium down 66.5% to Rs 23.2. The contract has added 15.1 lakh shares in Open Interest.
- 24,200 Call: Premium down 35.7% to Rs 228.2. The contract has added 58,500 shares in Open Interest.
Stock Reaction: Lakshmi Vilas Bank
The lender has informed the exchanges that its board has approved the raising of funds to the tune of Rs 500 crore through a rights issue.
The terms of the rights issue will be decided by the board or a duly constituted committee at a later date, the lender said in an exchange filing.
Shares gained as much as 3.3% to Rs 18.75, post the announcement. The stock is currently off the day's high, up 0.8% at Rs 18.3.
Earnings Reaction: Rane Brake Lining
- Revenue down 3% to Rs 105.3 crore
- Net profit up 55% to Rs 11.5 crore
- Ebitda up 66% to Rs 20.3 crore
- Ebitda margin at 19.3% from 11.2%
- Sales to OE customers down 8%
- Sales to aftermarket customers up 1% despite lower demand from STUs, bus operators
- Favourable price movement and product mix helps margin expansion
- Board approves buyback of equity shares
- Buyback price of Rs 825 is a 29% premium to Wednesday's closing price
- Total cost for the buyback will be Rs 22 crore excluding transaction costs and taxes
- Remain cautiously optimistic about sustenance of demand post the festive season
- All numbers are compared on a year-on-year basis
Shares gained as much as 11.8% to Rs 715.45, post the announcement. The stock trades at the highest level in over nine months.
Buzzing Stock: Mahanagar Gas
- Second best performer on the Nifty Midcap index
- Gains as much as 4.4% to Rs 828
- Biggest single-day gain in two months
- Up for the second straight day
- Today's volumes are more than double its 20-day average
- One-month implied volatility was 42%
- Continues to trade below all key Daily Moving Averages
- Relative Strength Index (RSI) of the stock at 42.5
- Trading 32% below its 52-week high of Rs 1,226 on January 30, 2020
- 23 out of the 31 analysts tracking the stock have a buy recommendation; 2 sell calls
- Return potential of the stock as per Bloomberg data is 33.5%
European Stocks Extend Losses
Benchmark indices have opened lower for the third straight day, amidst the worst slump for the Stoxx 600 index this month so far. A rise in Covid-19 cases as well as fruitless U.S. stimulus negotiatios continue to weigh on sentiment.
The Stoxx 600 index has opened 1.3% lower with all sectors declining. Insurance and automakers are the top laggards.
Most Asian markets have ended lower while futures on the Dow Jones are trading lower by 130 points.
Brent crude is trading 0.4% lower at $43.1 per barrel while Gold is trading at $1,900/Oz, down 0.2%.
Let's take a look at how European markets are trading:
- Euro Stoxx 50 down 1.5% at 3,225
- DAX down 1.5% at 12,826
- CAC down 1.3% at 4,876
- FTSE 100 down 1.5% at 5,847
- IBEX 35 down 1.3% at 6,829
How Are The Sectoral Indices Faring
The Midcap Earnings In Focus
Buzzing Stock: Gujarat Narmada Valley Fertilisers
- Second best performing stock on the Nifty Smallcap index
- Gains as much as 7.3% to Rs 198.4
- Biggest single-day gain in over a month
- Snaps four-day losing streak
- Heading towards 50-Day Moving Average at 200.7
- Today's volumes are 28% higher than its 20-day average
- Relative Strength Index (RSI) of the stock at 45
- The stock is trading 14.7% below its 52-week high of Rs 232.5 on August 25, 2020
- Currently trading 21% higher on a year-to-date basis
I.T. Index Down For The Second Day
Markets At Noon
- Benchmark indices extend losses, trading near the day's low
- Nifty down 0.7% at 11,889
- Sensex down 0.74% at 40,494
- Nifty Bank unchanged at 23,866
- Nifty Midcap index up 0.1%
- Nifty Smallcap index unchanged
- India Volatility Index up 3.3% to 20.9
- Nifty I.T. extends losses as the top sectoral laggard; down 2.7%
- Nfity Auto is the top sectoral gainer; up 0.6%
- Nifty Metal and Nifty FMCG up 0.4% and 0.2% respectively
- Asian Paints is the top Nifty gainer; up 2%
- Tech Mahindra is the top Nifty laggard; down 4.1%
- 890 stocks on the NSE trade with gains while 862 are declining
Stock Reaction: Adani Green Energy
The company has informed the exchanges that it has expanded its Joint Venture with TOTAL with acquisition of solar assets worth Rs 1,632 crore.
It has transferred operating solar assets worth 205 MW to its Joint Venture. Pursuant to the transaction, TOTAL has invested a sum of Rs 310 crore in the JV, the company said in an exchange filing.
The company had earlier announced completion of the acquisition of the assets from the Essel Group.
With the acquisition, the total operating renewable portfolio under the Joint Venture now stands at 2,353 MW.
Shares are little changed after recovering from the day's low, trading at Rs 724.65.
Buzzing Stock: Lakshmi Machine Works
- Trading at a 52-week high
- Gains as much as 4.3% to Rs 4,085
- Trading at the highest level since July 2019
- Up for the fifth straight day
- Longest winning streak in two months
- Today's volumes are six times its 20-day average
- Continues to trade above all key Daily Moving Averages
- Stock in overbought territory with Relative Strength Index (RSI) at 71
- Has doubled from its 52-week low of Rs 2,000 on March 25, 2020
- Return potential of the stock as per Bloomberg data is 16.6%
Earnings Reaction: Den Networks
- Revenue up 1.6% to Rs 337.7 crore
- Net profit up 2.5 times to Rs 36.8 crore
- Ebitda up 28.9% to Rs 62.5 crore
- Ebitda margin at 18.5% from 14.6%
- Lower content costs and employee expenses aid margins
- Lower taxes aid net profit growth
- Subscription revenue up 5% to Rs 206 crore
- Placement / marketing income up 9% to Rs 96 crore
- Activation revenue down 4% to Rs 28 crore
- All numbers are consolidated and compared on a year-on-year basis
Shares fell as much as 7.9% - the biggest drop in four months to Rs 80.2. The stock is down for the third straight day.
Buzzing Stock: JSW Energy
- Top gainer on the BSE Midcap index
- Gains as much as 4% to Rs 62.6
- Biggest single-day gain in a month
- Trades at the highest level in over seven months
- Up for the fourth straight day
- Longest winning streak in two months
- Has gained 11% in the last four trading sessions
- Todays volumes are quadruple its 20-day average
- One-month implied volatility at 88%
- Takes support and rebounds from 50-Day Moving Average of 56.8
- Relative Strength Index (RSI) of the stock at 65.4
- Trading 22.5% below its 52-week high of Rs 80 on November 8, 2019
- 15 out of the 16 analysts tracking the stock have a buy recommendation; 0 sell calls
- The stock is trading at its 12-month consensus price target level of Rs 62.5
Earnings Reaction: Goa Carbon
The company reported a 13.3% decline in its revenue as compared to last year to Rs 88 crore. It reported a net loss for the quarter.
However, the loss of Rs 5 crore was narrower than the Rs 13.8 crore loss it reported during the same period last year.
The company's operating losses too narrowed as compared to the previous year. Ebitda loss stood at Rs 2.4 crore from Rs 9.6 crore last year.
Lower raw material costs and other expenses led to the narrowing of the operating loss.
Shares gained as much as 7.6% to Rs 229.95, post the announcement. The stock had gained 20% on Tuesday, post which it ended 12% lower in Wednesday's trading session.
Tata Group Is Said To Chase E-Commerce Deals
The Tata Group is seeking to buy online retailers to beef up its presence in e-commerce, people familiar with the matter have told Bloomberg News.
The group has reached out to IndiaMART InterMESH, a business-to-business market place for a potential stake purchase, the sources said, asking not to be identified.
The sources also said that the Tata Group is also looking at BigBasket as one of the potential investment targets.
“Any talk of IndiaMart being in discussions with Tata Group for investment or acquisition is completely baseless,” Dinesh Agarwal, founder and chief executive officer of IndiaMart, said in a response to a Bloomberg News query.
Shares of IndiaMart InterMesh fell as much as 2.4% before recovering from the day's low.
Stock Reaction: Tata Power
The company has updated on the creation of the Infrastructure Investment Trust for its renewables business.
The latest update mentions that Anchor investors in the InvIT have begun their due diligence of the assets proposed to be transferred to the InvIT and the binding documents are likely to be signed in the next few months.
"Necessary board and shareholder approvals will be sought on finalisation of binding agreements," the company said in a statement.
It has also expressed confidence of completing this transaction in the current financial year.
Shares gained as much as 2.3% to Rs 54.1 and have gained in two out of the last three trading sessions.
Buzzing Stock: Phillips Carbon Black
- Second best performer on the Nifty 500 index
- Gains as much as 4.3% to Rs 136.9
- Trading at the highest level in over eight months
- Has gained in two out of the last three trading sessions
- Today's volumes are on par its 20-day average
- Continues to trade above all of its key Daily Moving Averages
- Relative Strength Index (RSI) of the stock at 62
- Trading near its 52-week high of Rs 143 on January 22, 2020
- Eight out of the nine analysts tracking the stock have a buy recommendation; 0 sell calls
- Return potential of the stock as per Bloomberg data is 16.5%
Earnings Reaction: Tata Elxsi
- Revenue up 7.4% to Rs 430.2 crore
- Net profit up 14.5% to Rs 78.9 crore
- Ebitda up 27.4% to Rs 118.1 crore
- Ebitda margin at 27.5% from 23.1%
- Lower employee expenses and revenue growth aid margins
- Software Development segment revnue up 7.7% to Rs 420.5 crore
- System integrations and support revenue down 4% to Rs 9.7 crore
- Healthcare segment saw growth of 14.1% on a sequential basis
- Media and Communications saw grow of 6.7% as compared to last quarter
- Seeing some recovery in the automotive market
- Going into the second half of FY21 with a strong deal pipeline across verticals
- Back to pre-Covid momentum and expect it to continue in H2FY21: MD & CEO
- All numbers are standalone and compared on a quarter-on-quarter basis
Shares gained as much as 5.2% to a record high of Rs 1,534.9, up for the second straight day.
Markets At 10:20 A.M.
- Benchmark indices give up early gains in the first hour of trade
- Nifty down 0.1% at 11,954
- Sensex down 0.15% at 40,737
- Nifty Bank up 0.5% at 23,984
- Nifty Midcap index up 0.3%
- Nifty Smallcap index up 0.5%
- India Volatility Index up 0.7% to 20.35
- Nifty I.T. is the top sectoral laggard; down 1.6%
- Nifty Realty is the top sectoral gainer; up 1.4%
- Nifty Auto is the other sectoral gainer; up 1%
- Eicher Motors is the top Nifty gainer; up 1.8%
- Tech Mahindra is the top Nifty laggards; down 3.4%
- Top three laggards on the Nifty 50 index are I.T. stocks
- 1,003 stocks on the NSE trade with gains while 687 decline
Money Market Update
The currency opened little changed in today's session after snapping a two-day losing streak on Wednesday.
The rupee opened at 73.3 against the U.S. Dollar, which was the same level at which it closed on Wednesday.
According to Kotak Securities, the Reserve Bank's efforts to protect the rupee's 73 level by its dollar purchases has helped curb volatility. However, it expects the volatility to rise ahead of the U.S. Presidential elections.
Yield on the 10-year government bond opened at 5.898% as compared to Wednesday's close of 5.903%.
Bond market traders will be looking forward to the Rs 20,000 crore Open Market bond purchase by the central bank.
Bank of America says that the bond market sentiment has changed post the RBI policy. It expects yields to drift downwards because buying confidence that was missing has been restored.
New Listing: Likhitha Infrastructure
Shares of Likhitha Infrastructure, which had extended its initial public offering and cut price band, opened flat on its debut on the stock exchanges.
The oil and gas pipeline infrastructure service provider's stock listed at Rs 130, as compared to the issue price of Rs 120 per share. Shares rose to as much as Rs 131 in early trade.
That compares with a 24-115% premium on listing by previous debutantes such as CAMS Ltd., Route Mobile Ltd., Happiest Minds Technologies Ltd., Chemcon Specialty Chemicals Ltd. and Mazagon Dock Shipbuilders Ltd. Angel Broking Ltd. and UTI Asset Management Co., however, debuted at a discount of 10-11%.
Brokerage Reaction: Ashok Leyland
Shares of the M&HCV player are gaining in today's session after brokerage firm Credit Suisse upgraded the stock to outperform from neutral and also raised its price target to Rs 95 from Rs 68.
Credit Suisse's Rationale:
- Roadblocks for the next CV upcycle are behind
- Strong freight demand in September and seasonality supportive of sequential improvement over the next six months
- See FY23 bottom-up volume estimates for key freight segments ~20%
- Replacement cycle could be strongest for CVs and could supplement growth over FY22-23E
- Raise FY22-23 Ebitda estimates by 17-18%
Another brokerage firm Nomura has raised its price target on the stock to Rs 101 from the earlier target of Rs 73.
Nomura's Rationale:
- CV cycle to rebound sharply over FY22-25F
- To benefit due to higher share in higher tonnage trucks
- New LCV range an added upside
- Expect sharp rebound in freight rates over next six months, driving new truck demand
- Valuations based on near-term Ebitda will not fully capture the margin recovery over FY24-25F
- Current valuations are attractive
Shares gained as much as 5.7% to Rs 77.35.
Coronavirus India Update
- Active cases decline for the 12th straight day
- 67,708 new cases reported over the last 24 hours
- Total confirmed cases now at 73,07,097
- Active cases now at 8,12,390
- Patients cured / discharged / migrated at 63,83,441
- Death toll rises to 1,11,266
- 680 deaths reported in the last 24 hours
- 81,541 patients recovered in the last 24 hours
Stock Reaction: NMDC
The government on Wednesday approved the demerger of the under construction Nagarnar steel plant from the company.
Post the demerger, the strategic divestment of the plant will take place by selling the entire government shareholding to a strategic investor.
The cost for setting up the plant is pegged at Rs 23,140 crore while the demerger process is likely to be completed by April 2021, I&B Minister Prakash Javadekar said on the sidelines of the media briefing on various cabinet decisions on Wednesday.
Shares gained as much as 1.3% to Rs 81 and are up for the second straight day.
Earnings Reaction: Infosys
The I.T. major raised its FY21 revenue and margin guidance after its second quarter results, which were ahead of analyst estimates.
The FY21 revenue growth guidance has now been raised to 2-3% from the earlier 0-2% while the Ebitda margin guidane now stands at 23-24% from the earlier 21-23%.
The company has also declared a dividend of Rs 12 per share.
“The resilience at Infosys was fully visible with the company witnessing broad-based growth and its highest ever deal wins,” Chief Executive Officer Pravin Rao said in a statement. Infosys’ deal wins stood at $3.15 billion, he said.
Infosys has also said that it will resume handing out salary increments and promotions from Jan. 1. The company had put hikes and promotions on a halt due to uncertainty from the Covid-19 pandemic.
Most brokerages have maintained their bullish stance on the stock and raised its price targets as well.
14.3 lakh shares of the company had exchanged hands in pre-market trading as per Bloomberg data. Buyers and sellers of the trade are unknown.
Shares gained as much as 4.3% to an all-time high of Rs 1,186. The stock is off the opening highs currently.
Opening Bell: Up For Day 11
Indian equity markets have opened higher for the 11th straight day, extending a multi-year winning streak despite subdued global cues.
The S&P BSE Sensex opened 0.6% higher at 41,048 while the NSE Nifty 50 was back above the mark of 12,000 - opening 0.44% higher at 12,023.
The Nifty I.T. index is the top sectoral gainer, courtesy gains seen in Infosys post its second quarter earnings. Other sectoral indices have opened flat to positive.
The Nifty Metal and Nifty Realty indices are up 0.6% respectively while Nifty Bank, Nifty Auto and Nifty FMCG are up 0.2% each.
Broader markets have had a sedate start as well. The Nifty Midcap index gained 0.2% on open while the Smallcap index is up 0.4%.
950 stocks on the NSE have opened with gains while 490 stocks are declining.
Current Market Update
How Did The Fund Flows Fare On Wednesday
Key Stocks In Focus
- Infosys: FY21 revenue growth guidance raised to 2-3% from 0-2%. Operating margin guidance raised to 23-24% from 21-23%. Constant currency growth of 4% as compared to estimate of 2.5%. Brokerages raise price target on the stock. Declares dividend of Rs 12 per share.
- NMDC: Government approves demerger of Nagarnar steel plant. Strategic divestment of the demerged entity will take place by selling entire government stake to a strategic buyer. The cost of setting up the Nagarnar steel plant is pegged at Rs 23,148 crore. The demerger is likely to be completed by April 2021.
- Indiabulls Housing Finance: National Housing Bank levies a penalty of Rs 3.5 lakh due to non-disclosure of related party transactions.
- United Spirits: Enters into a definitive agreement to sell its entire shareholding in its non-operative arm Tern distilleries for Rs 30 crore.
- Goa Carbon: Net loss narrows, as does operating loss due to lower raw material costs.
- Tata Elxsi: MD & CEO says heading into FY21 with a strong deal pipeline and momentum is back to pre-Covid levels. Expect momentum to sustain in H2FY21.
To know more about the key stocks in focus, brokerage updates and F&O cues, click here.
Your Trade Setup For The Day
A Check On Indian ADRs
Weekly Options Expiry Session
Good Morning!
India's equity markets ended higher for the 10th straight day on Wednesday, led by a 725-points recovery in the Nifty Bank in the last hour of trade.
The last time the NSE Nifty 50 had gained for 10 straight sessions was in January 2015, and the Sensex in October 2007.
Today is the weekly options expiry of the Nifty and Nifty Bank contracts. Futures are so far pointing to a flat to positive start to the day's trade. The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.2% to 11,987 as of 8:15 a.m. on Thursday.
Stocks like Infosys, Goa Carbon, Den Networks, Tata Elxsi and Titagarh Wagons will be in focus as they announced their quarterly earnings. Besides, Infosys' management offered strong commentary, and brokerages raised their price targets for the stock.
Among companies that will report earnings today are Mindtree, Cyient, South Indian Bank, Hathway Cable and Rane Brake Lining. Rane Brake will also consider a share buyback today.
Asian markets are declining early this morning as stimulus hopes from the U.S. fades ahead of the elections. Benchmark indices in Japan, South Korea and Hong Kong trade lower, while Australian markets are outperforming.
Futures on the Dow Jones are trading 60 points lower. The index ended 0.6% lower on Wednesday.
West Texas Intermediate crude stood at $41 per barrel, while gold fell 0.4% to $1,894.7/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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