KEY HIGHLIGHTS
Closing Bell: A Mixed Session
Indian equity markets barely moved from the levels at which they closed on Monday. However, the benchmark indices managed to close higher for the ninth straight day.
The S&P BSE Sensex ended with gains of 30 points, extending its winning run for the ninth straight day to close at 40,625.
The NSE Nifty 50 index too managed to salvage gains of 3 points in the final minutes of trade, to end at 11,934.
It was I.T. that saved the day for the markets in today's session. The index ended higher for the 12th straight day, with gains of 1.3%. This is the longest winning streak for the index in 22 years.
Reliance Industries was the other major contributor to the upside, ending with gains of nearly 2%.
The gains in Reliance and I.T. stocks was offset by banking majors. The Nifty Bank ended nearly 1% lower while the PSU Bank index declined over 1.5%.
The other major laggards in today's session were Pharma stocks, with the index ending 1.8% lower while the Nifty Media index fell 1.7%.
Broader markets continued to underperform. The Nifty Midcap index fell 0.5% while the smallcap index ended with losses of 0.2%.
India Volatility Index fell close to 2% to end at 20.71.
1,019 stocks on the NSE ended with losses while 814 stocks managed to gain.
How Did The Sectoral Indices Fare
Only A Select Few
Buzzing Stock: Kotak Mahindra Bank
- Bucking the trend on the Nifty Bank index
- Second best performing stock on the Nifty 50 index
- Gains as much as 2.8% to Rs 1,349
- Trading at the highest level in over a month
- Snaps four-day losing streak
- Today's volumes are 18% higher than its 20-day average
- One-month implied volatility at 42%
- Breaks above 100 and 50-Day Moving Average of 1,331 and 1,337 respectively
- Relative Strength Index (RSI) of the stock at 57
- Trading 23% below its 52-week high of Rs 1,740 on February 19, 2020
- 32 out of the 46 analysts tracking the stock have a buy recommendation; 4 sell calls
- Return potential of the stock as per Bloomberg data is 5.6%
Buzzing Stock: L&T Technology Services
- Top gainer on the Nifty Midcap index
- Gains as much as 14% to Rs 1,879.4
- Biggest single-day gain since January 2018
- Trading at a record high
- Up for the second straight day
- Today's volumes are more than nine times its 20-day average
- Stock trades in overbought territory with Relative Strength Index (RSI) at 74
- Has nearly doubled from its 52-week low of Rs 995 on March 23, 2020
- 11 out of the 24 analysts tracking the stock have a buy recommendation; 6 sell calls
- The stock trades 16.5% higher than its 12-month consensus price target of Rs 1,523, implying a negative return potential
Buzzing Stock: Sonata Software
- Gains as much as 7.7% to Rs 360
- Biggest single-day gain in nearly six months
- Trading at the highest level since September 2018
- Up for the sixth straight day
- Longest winning streak in over two months
- Has gained 14% in the last six trading sessions
- Stock in overbought territory with Relative Strength Index (RSI) at 71
- Today's volumes are more than triple its 20-day average
- Has more than doubled from its 52-week low of Rs 147.2 on March 24, 2020
- Six out of the eight analysts tracking the stock have a buy recommendation; 0 sell calls
- Return potential of the stock as per Bloomberg data is 5.3%
Nifty Bank Extends Losses
Active Stock Options
- Reliance Industries' 2,300 Call: Premium up 30.1% to Rs 70.8. The contract has added 21,210 shares in Open Interest.
- Lupin's 1,100 Call: Premium up 41.3% to Rs 34. The contract has added 1.55 lakh shares in Open Interest.
- Titan's 1,300 Call: Premium down 18% to Rs 22. The contract has added 5.3 lakh shares in Open Interest.
Stock Reaction: Cyient
The company has announced a collaboration with U.K.-based SPRINT (Space Research and Innovation Network for Technology), for major projects in space data and technologies.
The partnership will enable Cyient to identify new business opportunities, lower its product development costs and to offer geospatial solutions with higher precision.
“The new partnership with SPRINT will allow us to strike up a dialogue with academic institutions and SMEs in SPRINT’s network, and gain access to their cutting-edge technology, skill sets, and expertise for potential collaborations,” Matt Wood of Cyient was quoted as saying.
Shares recovered from the day’s low to gain as much as 1.14% to Rs 381.5, post the announcement.
Markets At 2:10 P.M.
- Benchmark indices continue to trade little changed
- Nifty up 0.1% at 11,940
- Sensex unchanged at 40,620
- Nifty Bank down 0.7% at 23,550
- Nifty Midcap index down 0.2%
- Nifty Smallcap index down 0.1%
- India Volatility Index down 1.5% to 20.8
- Nifty PSU Bank and Nifty Media are the top sectoral laggards; down over 1% each
- Nifty I.T. is the top sectoral gainer; up 1.5%
- Other sectoral indices are trading flat
- HCL Technologies is the top Nifty gainer; up 4.4%
- ICICI Bank remains the top Nifty laggard; down 2.3%
- 759 stocks on the NSE trade with gains while 1,016 stocks are declining
Money Market Update
The currency has ended lower for the second straight day, after snapping a three-day winning streak on Monday.
The rupee ended at 73.36 against the U.S. Dollar, as compared to Monday's close of 73.27. It made an intraday low of 73.41 and 73.32 acted as the day's high, indicating a narrow trading range.
Today's losses made rupee the fourth worst performing currency in Asia.
Yield on the 10-year government bond ended at 5.901% as compared to Monday's close of 5.898%.
Earnings Expectations: Wipro Q2FY21
- Revenue seen 1.1% higher at Rs 15,084.7 crore
- U.S. Dollar revenue seen 2% higher at $1,960 million
- Ebit seen 4.1% higher at Rs 2,680.2 crore
- Ebit margin seen at 17.8% from 17.2%
- Net profit seen 3.6% higher at Rs 2,477 crore
- All estimates are compared on a quarter-on-quarter basis
Factors At Play For Wipro:
- Buyback worth Rs 7,000 crore - Rs 9,000 crore expected
- Cashflow hedge gain seen at Rs 135 crore
- Constant currency growth seen between 0.7-2% as per a BQ poll
- Revenue growth to be aided by integration of 4C and IVIA acquisitions
- Turnaround plans of the new MD & CEO to be in focus
- Guidance for Q3FY21 will be critical to watch.
Stock Reaction: Ramco Systems
The aviation software provider has announced that it will implement its flagship aviation software Ramco Aviation M&E for a leading helicopter OEM, to digitally transform its global MRO operations.
The Ramco Aviation Suite will enable high productivity and automation of MRO operations by moving away from manual recording of data and enabling access to real time information, the company said in an exchange filing.
"Having gained the confidence of seven out of the top 10 heli-operators, this win puts us on the front foot to lead the Heli MRO segment," Virender Aggarwal, the company's CEO was quoted as saying.
Shares are locked in an upper circuit of 5% at Rs 513.45, post the announcement, up for the second straight day.
F&O Snapshot: Active Options Contracts
- Nifty October futures add 2.5% and 2.8 lakh shares in Open Interest
- Nifty Bank October futures add 10.1% and 1.65 lakh shares in Open Interest
Nifty: October 15 Expiry
- 12,000 Call: Premium down 30% to Rs 50.55. The contract has added 9.6 lakh shares in Open Interest.
- 11,900 Put: Premium down 5.7% to Rs 79.7. The contract has added 14 lakh shares in Open Interest.
- 11,800 Put: Premium down 10.4% to Rs 44.2. The contract has added 7.5 lakh shares in Open Interest.
Nifty Bank: October 15 Expiry
- 24,000 Call: Premium down 45.4% to Rs 141.35. The contract has added 3.6 lakh shares in Open Interest.
- 23,500 Put: Premium up 17.4% to Rs 300.3. The contract has added 2.2 lakh shares in Open Interest.
- 23,000 Put: Premium up 12.6% to Rs 125. The contract has added 1.9 lakh shares in Open Interest.
Buzzing Stock: Prism Johnson
- Among top performers on the BSE Smallcap index
- Gains as much as 8.5% to Rs 70.65
- Biggest single-day gain in nearly two months
- Trading at the highest level in over eight months
- Up for the second straight day
- Has gained in seven out of the last eight trading sessions
- Up 23% in the last eight trading sessions
- Today's volumes are more than double its 20-day average
- Stock in overbought territory with Relative Strength Index (RSI) at 76
- Trading 20% below its 52-week high of Rs 85.4 on November 5, 2019
- Nine out of the 10 analysts tracking the stock have a buy recommendation; 0 sell calls
- The stock trades 8% higher than its 12-month consensus price target of Rs 63.5, implying a negative return potential
European Markets Lower
Benchmark indices in Europe opened with modest losses after a three-day gaining streak as vaccine development news from Johnson and Johnson keeps a lid on the risk-on Sentiment.
The Stoxx 600 has opened 0.2% lower with travel along with retail stocks declining. Utilities and Real Estate stocks are gaining.
Asian markets have ended with gains while futures on the Dow Jones are trading 130 points lower.
Brent crude is trading 0.3% higher at $41.86 while Gold trades 0.3% lower at $1,915/Oz.
Let's take a look at how European markets are trading:
- Euro Stoxx 50 down 0.1% at 3,295
- DAX down 0.1% at 13,124
- CAC down 0.1% at 4,973
- FTSE 100 unchanged at 6,000
- IBEX 35 up 0.1% at 6,955
How Are The Sectoral Indices Faring
Buzzing Stock: JK Cement
- Trading at a record high
- Gains as much as 4.3% to Rs 1,725
- Biggest single-day gain in a month
- Up for the eighth straight day
- Longest winning streak in over eight months
- Today's volumes are nearly quadruple 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 795.2 on March 23, 2020
- 23 out of the 27 analysts tracking the stock have a buy recommendation
- The stock crossed its 12-month consensus price target of Rs 1,680.1 in today's session
I.T. Index's Longest Winning Streak In 22 Years
State Development Loan Yields Down Most In Five Months
Average yields on Indian state development loans fell to 6.57% on Monday. The 8.7 basis points decline was the most in nearly five months, according to the Clearing Corporation of India index data.
RBI Governor Shaktikanta Das on Friday had said that the central bank will be buying state debt. It will buy bonds issued by the state governments as a special case.
The yields on such debt had also declined 7.7 basis points on Friday, according to Bloomberg data.
State development loans are quasi-sovereign securities and are generally considered low risk investments as compared to corporate bonds.
Markets At Noon
- Benchmark indices continue to trade in a narrow range
- Nifty up 0.3% at 11,963
- Sensex up 0.25% at 40,695
- Nifty Bank unchanged at 23,728
- Nifty Midcap index up 0.2%
- Nifty Smallcap index up 0.1%
- India Volatility Index flat at 21.1
- Nifty Media index remains the top sectoral laggard; down 1.3%
- Nifty Realty and Nifty FMCG are up 0.7% each
- Nifty I.T. and Nifty Pharma are up 0.5% each
- UltraTech extends gains as the top Nifty gainer; up 4.4%
- ICICI Bank is off the day's low but remains the top Nifty laggard; down 1.3%
- 891 stocks on the NSE are trading with gains while 882 are declining
Stock Reaction: TCS
The I.T. major has informed the exchanges that the Bahrain Development Bank has selected the company's BaNCS Global Banking Platform to speed up innovation.
The platform will help the bank meet the unique needs of the small and medium business segment spanning digital banking channels, origination, core banking, trade finance, treasury and other supporting services, the company said in an exchange filing.
"Designed on the Digital First, Cloud First philosophy, TCS BaNCS will help BDB enhance agility, drive superior customer experiences and transform itself to meet the needs of an ever evolving banking environment,” said Venkateshwaran Srinivasan, Head, TCS Financial Solutions.
Shares currently trade 0.5% lower at Rs 2,815.
Buzzing Stock: Newgen Software Technologies
- Among top gainers on the BSE Smallcap index
- Gains as much as 10.3% to Rs 232
- Biggest single-day gain in three months
- Had surged to the highest level in eight months in early trade
- Has snapped a two-day losing streak
- Today's volumes are triple its 20-day average
- Takes support and rebounds from its 50-Day Moving Average of 206.2
- Relative Strength Index (RSI) of the stock at 57
- Trading 14.7% below its 52-week high of Rs 272 on October 14, 2019
- Both analysts tracking the stock have a buy recommendation
- Return potential of the stock as per Bloomberg data is 9.5%
Stock Reaction: Cipla
The company's arm Avenue Therapeutics received a Complete Response Letter from the U.S. FDA regarding the company's New Drug Application for IV Tramadol.
The letter stated that the application cannot be approved in its present form as the drug, intended to treat patients who are in acute pain and require and opioid, is not safe for the intended patient population.
In addition, the CRL stated that the FDA requires an adequate terminal sterilization validation prior to NDA approval, which is planned for later this quarter.
Shares are currently flat after gaining as much as 1.9% to an all-time high of Rs 829.
Vedanta To Return Delisting Funds
Vedanta Resources Ltd. plans to start returning funds it raised from banks and bondholders to finance the delisting of the India unit as soon as this week, Bloomberg News reports citing people with knowledge of the matter.
The decision has been taken after the delisting plan of the company failed.
In addition to the principal, Vedanta will also pay a small interest on the $1.1 billion loan. The company has not made any decision on whether it will propose a delisting again as it is still very early days, the sources said.
The company had drawn $1.1 billion from banks and raised $1.4 billion via bonds to fund the share buyback for the delisting process.
A Vedanta representative declined to comment on Bloomberg's story.
Shares are off the day's high after gaining as much as 7.2% to Rs 103.9. The stock currently trades 3.5% higher at Rs 100.3.
Media Index Is The Top Laggard
Buzzing Stock: Hindustan Zinc
- Top gainer on the Nifty Next 50 index
- Gains as much as 4.5% to Rs 206.9
- Biggest single-day gain in a month
- Has gained in two out of the last five sessions
- Today's volumes are double its 20-day average
- One-month implied volatility is 186%
- Back above 100-Day Moving Average at 204.2
- Relative Strength Index (RSI) of the stock at 45.5
- Trading 20% below its 52-week high of Rs 259 on August 11, 2020
- 14 out of the 22 analysts tracking the stock have a buy recommendation; 1 sell call
- Return potential of the stock as per Bloomberg data is 7.7%
Brokerage Reaction: Cement Stocks
Cement stocks are surging in today's session after brokerage firm Jefferies in its channel checks indicated an improving demand outlook.
Jefferies also mentoned that the improving demand may pave the way for an increase in cement prices which had corrected between 2-5% in Q2.
In its note, the brokerage has forecasted a near-stable FY21 realisation, the benefits of which may be offset by higher energy and overhead costs.
Stock Picks:
- Upgrade UltraTech to buy from hold; price target raised to Rs 5,150 from Rs 4,350
- Upgrade Ramco Cements to buy from hold; price target raised to Rs 900 from Rs 625
- Upgrade Shree Cement to hold from underperform; price target raised to Rs 23,000 from Rs 18,700
Stock Reaction:
- UltraTech: Shares gained as much as 3.9% to Rs 4,474. The stock is trading at the highest level in seven months.
- Shree Cement: Shares gained as much as 2.9% to Rs 21,562. The stock has gained in five out of the last six sessions.
- UltraTech and Shree Cement are the top two gainers on the Nifty 50 index.
- Ramco Cements: Shares gained as much as 5% to Rs 795.5, trading at the highest level in eight months.
Stock Reaction: Steel Strips Wheels
The company has confirmed that it has received orders of nearly 38,000 wheels from the U.S. and European Union market.
The order for the wheels is worth $3,68,000, and will be executed in the months of December and January, the company said in an exchange filing.
The orders will be executed in the company's Dappar and Chennai plant, according to the company, who also said that it is anticipating more orders from the same customer base.
Shares gained as much as 4.9% to Rs 496, post the announcement. The stock is trading at the highest level in nearly two months.
Stock Reaction: Alembic Pharma
Rhizen Pharma announced that it has entered into an exclusive license agreement with Curon Biopharma for development and commercialisation of Tenalisib - a Dual PI3K Delta and Gamma inhibitor for Oncology in Greater China.
Alembic Pharma, through its wholly-owned subsidiary, holds 50% stake in Rhizen Pharma.
Rhizen, under the deal will receive an undisclosed upfront cash payment and is eligible to receive additional development and commercial milestone payments.
The overall deal is pegged at $149.5 million along with double-digit royalties on annual net sales of Tenalisib.
RK Baheti, Alembic Pharma's CFO told BloombergQuint that the company had invested in Rhizen a few years back and it is working out well. "We are doing good in the oncology drugs in the U.S. This will be a big material deal for Rhizen," he said.
Shares gained as much as 1.8% to Rs 957.9, and has snapped a four-day losing streak.
Stock Reaction: Rane Brake Lining
The company informed the exchanges that it will hold a board meeting to consider a proposal for buyback of equity shares.
The board meeting is scheduled to be held on October 15, the exchange filing said.
Shares gained as much as 19% - the most in nearly four months to Rs 694. The stock is trading at the highest level since January 1 this year.
It is up for the second straight day, and has gained in five out of the last seven trading sessions.
Markets At 10:10 A.M.
- Benchmark indices flat after eight days of gains
- Nifty up 0.2% at 11,956
- Sensex up 0.2% at 40,669
- Nifty Bank down 0.7% at 23,548
- Nifty Midcap index down 0.1%
- Nifty Smallcap index up 0.1%
- India Volatility Index up 1% to 21.35
- Nifty Media is the top sectoral laggard; down 1%
- Nifty FMCG, Nifty Pharma and Nifty I.T. are up 0.6% each
- Other sectoral indices are trading flat
- Ultratech is the top Nifty gainer; up 3.3%
- ICICI Bank is the top Nifty laggard; down 2.2%
- 875 stocks on the NSE are trading with gains while 791 are declining
Money Market Update
The currency has opened weaker for the second straight day in today's session after snapping a three-day gaining streak on Monday.
The rupee opened at 73.39 against the U.S. Dollar as compared to Monday's close of 73.27.
Yield on the 10-year government bond opened at 5.918% as compared to Monday's close of 5.937%.
Within the bond markets today, 13 Indian states plan to sell bonds worth Rs 17,750 crore.
ICICI Securities Primary Dealership told Bloomberg that the RBI has acknowledged with a higher OMO size that it cannot hope to control the yield curve by doing only limited interventions.
Stock Reaction: Vivimed Laboratories
The company informed the exchanges that it has received approvals for two ophthalmic products and two oral liquid suspension products.
The exchange filing also said that it is expecting five more approvals in Ophthalmic and Oral Solids business in the fourth quarter of Calender Year 2020.
Shares gained as much as 4.8% to Rs 17.6, post the announcement. The stock has snapped a three-day losing streak.
The Rakesh Jhunjhunwala Interview
Brokerage Reaction: Dixon Technologies
Shares of the company are gaining in today's session after Jefferies initiated coverage on the stock with a buy rating and a price target of Rs 12,600.
Jefferies' Rationale:
- Notable industry opportunity with EMS market likely to grow at 47%+ CAGR over the next five years
- Leadership position and expansive product mix
- Upside from PLI scheme in mobiles and pristine balance sheet
- Higher return ratios and buoyant growth prospects
- Estimate sales / PAT CAGR of 33% and 41% over FY20-23E
- Key Risks: Extended demand slowdown, market share loss for key customers, rising competition and pricing pressures.
Shares gained as much as 4% to Rs 8,788. The stock has gained only twice in the last seven trading sessions.
Coronavirus India Updates
- Lowest new Covid-19 cases reported in the last 56 days
- 55,342 new cases reported in the last 24 hours
- Total confirmed cases at 71,75,880
- Active cases now at 8,38,729
- Patients cured / discharged / migrated at 62,27,295
- Death toll rises to 1,09,856
- 706 deaths reported in the last 24 hours
- 77,760 patients recovered in the last 24 hours
Earnings Reaction: Shalby
The healthcare company reported a year-on-year decline of 8% in its consolidated revenue for the July-September quarter to Rs 115.6 crore.
Net profit nearly doubled to Rs 24.5 crore but that was due to a tax reversal.
Ebitda rose 5% while Ebitda margin stood at 25.5% from 22.3% as compared to the same period last year.
Operating performance was steady owing to lower operating costs and higher bed occupancy due to Covid-19 patients.
Shares of the company rose as much as 6.4% to Rs 106.2, post the announcement. The stock is trading at the highest level in over eight months. It is also up for the fifth straight day, the longest winning streak since November 2019.
Opening Bell: A Subdued Start
Indian equity markets have opened flat as they begin to show signs of exhaustion after an eight-day gaining streak.
The S&P BSE Sensex and NSE Nifty 50 have opened unchanged at 40,592 and 11,934 respectively. Both indices have had their longest winning streak in the last two and a half years.
Sectoral indices too have opened little changed. Most of them have opened flat with a negative bias, as have the broader markets which have no significant moves to talk about at the start of trade.
Market breadth is even at the start of trade. 704 stocks on the NSE have opened with gains while 727 are declining.
Current Market Update
Trading Strategies For The Day
- Nifty: Sell 11,750 put of the October 15 expiry in the range of Rs 38-40. Target of Rs 24-14 with a stop loss of Rs 54.
- Nifty Bank: Buy in the range of 23,550-23,650 for target of 23,850-24,000 with a stop loss of 23,450
- Buy SRF October futures for target of Rs 4,440 and Rs 4,494 with stop loss of Rs 4,368
- Sell Apollo Tyres October futures for target of Rs 131.1 and Rs 128.4 with stop loss of Rs 134.7
- SRF and Apollo Tyres are intraday recommendations.
Source: ICICI Direct
How Did The Fund Flows Fare On Monday
Key Stocks In Focus
- Cipla: Arm Avenue Therapeutics gets complete response letter from the U.S. FDA for IV Trambol. The letter states that the application cannot be accepted in its present form. The drug is intended to treat patients in acute pain who require an opioid and is not safe for the intended patient population, according to the letter. U.S. FDA requires an adequate terminal sterlisation validation prior to the NDA approval, which has been planned for later this quarter.
- SRF: Launches QIP issue on Monday. The floor price of Rs 4,168.7 per share is a 4.58% discount to Monday's closing price. As per SEBI regulations, the company may not offer a discount of more than 5% on the floor price.
- Vivimed Labs: Gets approval for two Ophthalmic products and two oral liquid suspension products. The company is expecting five more approvals in ophthalmic and oral solids during the December quarter.
- Shalby: Revenue down 8% year-on-year while net profit up 89.9% due to a tax reversal. Ebitda margin at 25.5% from 22.3% courtesy lower operating costs and higher bed occupancy from Covid-19 patients.
- Rane Brake Lining: To consider share buyback on October 15.
- Lakshmi Vilas Bank: Board to consider rights issue on October 15.
- JSW Steel: Approved issuance of dollar denominated notes worth $500 million.
- Nifty Earnings Today: Wipro
- Non-Nifty Earnings Today: California Software, Karnataka Bank, Tata Steel Long Products.
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
Eight-Day Winning Run Under Cloud?
Good Morning!
Indian equity markets posted their longest winning streak in over two-and-a-half years. The S&P BSE Sensex and NSE Nifty 50, although flat, ended higher for the eighth straight day. The last time benchmark indices gained for eight days in a row was in April 2018.
The rally, however, may pause as futures are indicating a negative start to Tuesday's trade. The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 0.3% to 11,930 as of 7:55 a.m.
Wipro Ltd. will announce its results for the quarter ended September today. The company will also consider a proposal to buy back equity shares.
Asian markets are mixed this morning. Benchmark indices in Japan are fluctuating, declining in South Korea and China, while they are advancing in Australia.
Futures on the Dow Jones are trading lower by 120 points. The index ended 0.9% higher on Monday. The Nasdaq gained the most since April, courtesy technology shares.
West Texas Intermediate crude was flat at $39.47 per barrel after an overnight drop of 3%, while gold fell 0.2% to $1,920/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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