KEY HIGHLIGHTS
Closing Bell: Benchmarks Halt Three-Day Surge
India's benchmark indices ended lower after gaining for three-straight days on the back of weak global cues and a stronger U.S. Dollar.
The S&P BSE Sensex ended 1% lower at 38,220 while the NSE Nifty 50 index managed to hold the mark of 11,300, ending 0.84% lower at 11,312.
NTPC ended as the top gainer on the Nifty 50 index, with gains of 7%, while Tata Motors was the top laggard, ending 2.6% lower. ICICI Bank, Axis Bank and HDFC were the other major laggards.
Midcaps and Smallcaps were the outperformers in today's session. The midcap index ended 0.8% higher while the smallcap index ended with gains of 0.66%.
Among the sectoral indices, the Nifty Bank ended as the top laggard with cuts of 1.3%. The Media index posted another day of gains, ending 3% higher while the Metal index saw gains of 1%.
Other sectoral laggards included the FMCG, I.T. and auto index which fell close to 0.5% each.
Market breadth remained in favour of the gainers. 1,029 stocks on the NSE posted gains while 806 declined.
How Did The Sectoral Indices Fare
Covid-19 Impact: ENIL
- Revenue from FM Radio broadcasting business has been adversely impacted
- Do not anticipate an early normalisation of revenue and margins
- Expect revenue to remain below normal levels in the near future with a potential for unpredictable disruptions.
- Operating cash flow and profit severely impacted though the company has not defaulted on any financial obligations.
- Anticipate delays in collection of receivables from clients.
Shares are off the day's low after declining as much as 4.75% to Rs 150.45. The stock trades lower for the second straight day.
Stock Reaction: Steel Strips Wheels
The company informed the exchanges that it has won export orders for nearly 25,000 wheels for the EU Caravan Trailer Market.
The for the order is about 2.2 lakh Euros, the exchange filing said.
The order will be executed from the company's Chennai plant in September.
Shares are off the day's high, after gaining as much as 2.5% to Rs 445.
Buzzing Stock: Adani Transmission
- Gains as much as 9.3% to Rs 267.9
- Biggest single-day gain since November 2019
- Trading at the highest level in nearly two months
- Up for the third straight day
- Has gained 15% in the last three trading sessions
- Today's volumes are more than triple its 20-day average
- Breaks above 200-Day Moving Average at 257.2
- Is closer to doubling from its 52-week low of Rs 147.5 on March 13, 2020
- 1 out of the three analysts tracking the stock has a buy recommendation; 2 sell calls
- The stock trades 26% higher than its 12-month consensus price target of Rs 194, implying a negative return potential
Broader Markets Outperform
Active Stock Options
- NTPC's 100 Call: Premium up 205.6% to Rs 2.75. The contract has shed 590 shares in Open Interest.
- RBL Bank's 190 Call: Premium down 14.4% to Rs 5.65. The contract has added 1,047 shares in Open Interest.
- Zee Entertainment's 210 Call: Premium up 29% to Rs 5.55. The contract has added 509 shares in Open Interest.
Buzzing Stock: Power Finance Corporation
- Gains as much as 7.3% to Rs 103.9
- Biggest single-day gain in over two months
- Trades at the highest level in five months
- Up for the fourth straight day
- Has gained in eight out of the last nine trading sessions
- Up 20% in the last nine trading sessions
- Today's volumes are nearly triple its 30-day average
- Breaks above its 200-Day Moving Average of 100.9
- Stock in overbought territory with Relative Strength Index (RSI) at 75
- Five out of the six analysts tracking the stock have a buy recommendation
- Return potential of the stock as per Bloomberg data is 29.2%
Brokerage Reaction: Muthoot Finance
Shares of the Gold loan company are declining after most brokerages downgraded the stock post its first quarter results.
Kotak Institutional Equites downgraded the stock to reduce from add after a strong rally over the last 12 months.
Kotak Institutional Equities' Rationale:
- Marginal decline in loan book despite sharp rally in gold prices
- Growth may catch up over the next nine months
- Valuations are overheated post the re-rating
- Better funding, stabilising Covid-19 cases prompt us to look at other inexpensive NBFCs
- Raise estimates by 2-11%
- Expect 16% loan book CAGR over FY21-23E and a 15% EPS CAGR during the period
- Near-term RoE to range between 22-24%
- Continuous rise in gold prices poses a risk to the call
Kotak Institutional Equities has raised its price target on the stock to Rs 1,100 from the previous Rs 1,025.
Shares ended 5.5% lower at Rs 1,187, snapping a five-day gaining streak.
Markets At 2:10 P.M.
- Benchmark indices fall towards the day's low
- Nifty down 0.9% at 11,305
- Sensex down 1% at 38,201
- Nifty Bank down 1.65% at 21,920
- Nifty Midcap index up 0.61%
- Nifty Smallcap index up 0.5%
- India Volatility Index up 5.3% to 21.02
- Nifty Media off day's high but up 2.3%
- Nifty Metal (up 0.7%) and Nifty Realty (up 0.5%) are the other sectoral gainers
- Nifty I.T. (down 0.7%), Nifty FMCG (down 0.6%), Nifty Auto (down 0.6%) are some other sectoral laggards
- NTPC remains the top Nifty gainer; up 6.3%
- ICICI Bank remains the top sectoral laggard; down 3%
- 978 stocks on the NSE trade with gains while 801 decline
Money Market Update
The currency ended with losses for the second straight session, in-line with the weakness in the equity markets and due to the strengthening of the U.S. Dollar.
The rupee ended at 75.03 against the Greenback, as compared to Wednesday's close of 74.82.
Today's losses put the rupee as the third worst performing currency in Asia.
Yield on the 10-year government bond ended at 5.947% as compared to Wednesday's close of 5.969%.
Buzzing Stock: Essel Propack
- Trades at an all-time high
- Gains as much as 6.65% to Rs 299.7
- Up for the fifth straight day
- Has gained in 12 out of the last 14 trading sessions
- Has gained 11% in the last five trading sessions
- Today's volumes are 10% higher than its 20-day average
- Stock in overbought territory with Relative Strength Index (RSI) at 79
- Has tripled from its 52-week low of Rs 78 on August 22, 2019
- All 12 analysts tracking the stock have a buy recommendation
- The stock trades 16.5% higher than its 12-month consensus price target of Rs 246, implying a negative return potential
Sixth Day Of Gains For The Metal Index
Stock Reaction: RBL Bank
The bank in its board meeting has decided to create, issue, offer and allott 8.84 crore shares of face of Rs 10 each on a preferential basis.
The shares will be issued at a price of Rs 177 per share, which is a 4% discount to Wednesday's closing price.
The bank will raise Rs 1,566 crore through the preferential issue of shares, the exchange filing said.
Shares will be issued to Maple II - funds affiliated with Baring PE Asia, ICICI Prudential Life, CDC Group, Gaja Capital Among others.
The Capital Adequacy Ratio of the bank will rise to 18.6% with CET-1 ratio rising to 17.4%, post the issue.
Shares recovered from the day's low, ending 1.5% lower at Rs 181.95.
Buzzing Stock: Himadri Speciality Chemical
- Among top performers on the BSE 500 index
- Gains as much as 9.6% to Rs 58.6
- Trades at the highest level in six months
- Up for the four straight session
- Has gained 29% in the last four trading sessions
- Today's volumes are nearly eight times higher than its 20-day average
- Stock in overbought territory with Relative Strength Index (RSI) at 75
- Has doubled from its 52-week low of Rs 27.3 on March 25, 2020
- All six analysts tracking the stock have a buy recommendation
- Return potential of the stock as per Bloomberg data is 1.7%
European Markets Open Weak
Benchmark indices in Europe followed their Asian peers lower as investors take note of the commentary from the U.S. Federal Reserve in their latest minutes.
The Stoxx 600 has opened 1.2% lower with all sectors declining. Miners, Banks and Auto stocks are among the top laggards.
Asian markets have ended with declines while futures on the Dow Jones are trading lower by 120 points.
Brent crude trades 0.7% lower at $45.1 per barrel while Gold prices trade 0.8% higher at $1,943/Oz.
Let's take a look at how Benchmark indices across Europe have opened:
- Euro Stoxx 50 down 1.4% at 3,271
- DAX down 1.22% at 12,820
- CAC down 1.34% at 4,910
- FTSE 100 down 1.2% at 6,036
- IBEX 35 down 1.5% at 6,987
How Are The Sectoral Indices Faring
Stock Reaction: Man Industries
The company announced that it will hold a board meeting on Saturday, August 22 in order to discuss and explore the possibility of raising funds by issue of equity shares or any other method.
The fund raising will not be limited to a private placement, preferential issue and a QIP, the company said in its exchange filing.
The fund raise is subject to shareholder and regulatory approval.
Shares gained as much as 6.6% to Rs 68.9 - the highest level since April 2019. The stock is up for the third straight day.
Large Trade Alert: Future Consumer
1.4 crore shares of the Future Group company exchanged hands in five large trades on the Bombay Stock Exchange.
The deals took place between Rs 11-11.24 per share, as per Bloomberg data.
Buyers and sellers in all the five deals remain unknown.
Shares gained as much as 5% to Rs 11.24 and are up for the second straight day.
Buzzing Stock: Varroc Engineering
- Top performing stock on the Nifty 500 index
- Gains as much as 19.1% to Rs 323.4
- Trades at the highest in over five months
- Up for the fourth straight day
- Has gained 49% in the last four trading sessions
- Today's volumes are more than 15 times higher than its 20-day average
- Stock in overbought territory with Relative Strength Index (RSI) at 83
- Breaks above its 200-Day Moving Average at 291.6
- Has more than doubled from its 52-week low of Rs 120 on April 3, 2020
- All nine analysts tracking the stock have a buy recommendation
- Return potential of the stock as per Bloomberg data is 3%
Markets At Noon
- Benchmark indices trading near the day's low
- Nifty down 0.6% at 11,340
- Sensex down 0.7% to 38,336
- Nifty Bank down 1% to 22,052
- Nifty Midcap index up 0.8%
- Nifty Smallcap Index up 1.1%
- India Volatility Index up 2.6% at 20.47
- Nifty Bank remains the top sectoral laggard; down 1%
- Nifty Media is the top sectoral gainer; up 3.2%
- Nifty Realty is the other major sectoral gainer; up 1.4%
- Nifty FMCG, I.T., Auto trade with modest losses
- NTPC remains the top Nifty gainer; up 5.2%
- ICICI Bank is the top Nifty loser; down 2.2%
- 1,065 stocks on the NSE gain while 681 decline
ICICI, Axis, Kotak Lead Declines On The Nifty Bank
Stock Reaction: NTPC
The state-run power company said on Wednesday that it will reduce the cost of coal supplies at its Kudgi plant by using a newly constructed bridge.
The company said that it will be able to reduce its transportation cost of coal to fuel to its Kudgi Super Thermal Power station to around Rs 200-500 per MT. The move will bring down the cost of electricity generation, a company statement said.
The move will also reduce transit time by 8-15 hours, according to the company.
The company awaits final approval from the South-Western Railway and will begin operations as soon as it gets clearance.
Shares gained as much as 5.9% to Rs 100.2 - the highest level in two months.
F&O Snapshot: Active Options Contract
- Nifty August futures add 4.6% and 4.5 lakh shares in Open Interest.
- Nifty Bank August futures add 13.8% and 1.7 lakh shares in Open Interest.
Nifty: Today's Expiry
- 11,300 Put: Premium up 32.9% to Rs 15.95. The contract has added 41,881 shares in Open Interest.
- 11,400 Call: Premium down 90% to Rs 5.25. The contract has added 84,235 shares in Open Interest.
- 11,350 Call: Premium down 78% to Rs 19. The contract has added 50,453 shares in Open Interest.
Nifty Bank: Today's Expiry
- 23,500 Call: Premium down 79.3% to Rs 0.65. The contract has added 30,792 shares in Open Interest.
- 22,000 Put: Premium up 57.68% to Rs 76. The contract has added 31,284 shares in Open Interest.
- 22,000 Call: Premium down 72.3% to Rs 96.2. The contract has added 46,491 shares in Open Interest.
Buzzing Stock: Gujarat Mineral Development Corporation
- Among the top performers on the BSE Smallcap index
- Gains as much as 9.3% to Rs 53.3
- Biggest single-day gain in four months
- Trades at the highest level in six months
- Up for the ninth straight day
- Longest winning streak since March 2014
- Has gained 26% in the last nine trading sessions
- Today's volumes are more than five times higher than its 20-day average
- Stock in overbought territory with Relative Strength Index (RSI) at 85
- Has nearly doubled from its 52-week low of Rs 29.5 on March 27, 2020
- Both analysts tracking the stock have a buy recommendation
- Return potential of the stock as per Bloomberg data is 11%
Stock Reaction: PNB Housing Finance
The company at its board meeting held yesterday approved raising equity capital to the tune of Rs 1,800 crore.
The capital raising will be done either through a preferential issue or a rights issue, the company said in the exchange filing.
The fund raising will be subject to shareholder and other statutory / regulatory approvals.
Shares gained as much as 3.3% to Rs 284.3. The stock is up for the fifth straight day and is trading at the highest level in five months. Volumes on the stock are 72% higher than its 20-day average.
Buzzing Stock: Indraprastha Gas
- Gains as much as 4.4% to Rs 412.4
- Biggest single-day gain in three months
- Trades at the highest level in a month
- Up for the fourth straight day
- Has gained in seven out of the last nine trading sessions
- Today's volumes are more than five times higher than its 20-day average
- Approaching its 50-Day Moving Average at 418.8
- Has recovered 45% from its 52-week low of Rs 284 on March 19, 2020
- 18 out of the 36 analysts tracking the stock have a buy recommendation; 9 sell calls
- Return potential of the stock has per Bloomberg data is 16.6%
Zee Entertainment Among Top Gainers On The Media Index
Brokerage Reaction: IndiaMART InterMESH
Shares of the e-commerce company are surging in today's trading session after brokerage firm Motilal Oswal initiated coverage on the company with a buy rating.
Motilal Oswal's Rationale:
- Leader in B2B classifieds space with positive operating leverage
- Strong moats shield from disruption
- High free cash flow yield and strong balance sheet
- Forecast 9% CAGR in paid suppliers along with 2% ARPU CAGR, implying a 10% revenue CAGR over FY20-23
- Expect 8% margin expansion over FY20-23 on better management of cost structure
- See Ebit, PAT CAGR of 22% and 26% respectively over FY20-23
- Risk Factors: High mortality in supplier base and potential entry of a cash rich global player
Motilal Oswal has a price target of Rs 3,550 on the stock, implying a potential upside of 19% from Wednesday's closing level.
Shares gained as much as 4% to Rs 3,100 and are up for the fourth straight day. The stock has more than tripled from its 52-week low of Rs 952 which it made on August 28, 2019.
Stock Reaction: IIFL Wealth
The company has informed the exchanges that it has declared a special interim dividend of Rs 40 per equity share of face of Rs 2 each.
The board has also fixed August 27 as the record date for determining the eligibility of shareholders for the dividend.
Shares are off the day's high, after gaining as much as 7.7% - the biggest single-day gain in two months to Rs 1,215. The stock trades at the highest level in five months.
Buzzing Stock: Tata Power
- Second best performer on the Nifty Midcap index
- Gains as much as 8.9% to Rs 61.75
- Biggest single-day gain in four months
- Trades at the highest level since September 2019
- Up for the second straight day
- Has gained in eight out of the last 10 trading sessions
- Up 24% in the last 10 trading sessions
- Today's volumes are more than quadruple its 20-day average
- Stock in overbought territory with Relative Strength Index (RSI) at 78
- Has doubled from its 52-week low of Rs 27 on May 12, 2020
- 16 out of the 18 analysts tracking the stock have a buy recommendation; 2 sell calls
- Return potential of the stock as per Bloomberg data is 3.8%
Jefferies On Tata Power
- Underperform rating maintained
- Price target of Rs 40
- Management outlines plan for 15% revenue & 25% profit CAGR between FY20-25E
- Concern remains that a competitive landscape, capex and subdued coal prices will keep RoE below 10% in the medium-term
- Subdued RoE to cap valuation upside
Markets At 10:10 A.M.
- Benchmark indices trade with losses after three days of gains
- Nifty down 0.7% at 11,327
- Sensex down 0.8% at 38,304
- Nifty Bank down 1.2% at 22,024
- Nifty Midcap index up 0.5%
- Nifty Smallcap index up 0.6%
- India Volatility Index up 3.1% at 20.59
- Most sectoral indices recover from day's low
- Nifty Metal, Nifty Media, Nifty Pharma buck the trend
- Nifty Realty is the top sectoral gainer; up 1.1%
- Nifty Metal, Nifty Pharma up 0.4% each
- NTPC is the top sectoral gainer; up 4.3%
- ICICI Bank is the top sectoral loser; down 2.2%
- 961 stocks on the NSE trade with gains while 733 decline
Money Market Update
The currency opened weaker, in-line with the weakness in the equity markets, after posting modest losses on Wednesday.
The rupee opened at 74.98 against the U.S. Dollar as compared to Wednesday's close of 74.82. It was the second worst performer in Asia on Wednesday.
Within the bond market, traders wonder how much the RBI may provide support for the government's record borrowing plan this year.
The release of the minutes of the latest MPC meeting may shed some light on RBI's thinking.
Stock Reaction: L&T, NTPC
The company's wholly-owned subsidiary L&T Hydrocarbon Engineering signed a Memorandum of Understanding (MoU) with NTPC on Wednesday.
L&T Hydcocarbon will be the engineering, procurement and construction management partner to build Carbon Dioxide-Methanol demonstratio plant at NTPC's power station, according to the exchange filing.
The partners will further collaborate to accelerate the development and subsequently commercialise Carbon Dioxide to Methanol plants.
Shares of Larsen & Toubro are off the day's low, currently trading 1% lower at Rs 999, after falling as much as 2.8% in early trade.
Shares of NTPC trade near the day's high, rising as much as 1.5% to Rs 96.05, post the announcement. The stock is also the top gainer on the Nifty 50 index.
Large Trade Alert: V-Guard Industries
95 lakh shares of the electrical components manufacturing company exchanged hands in a single large trade on the National Stock Exchange, as per Bloomberg data.
Buyers and sellers of the trade remain unknown.
Shares gained as much as 5.9% - the most in five months to Rs 169.7. Volumes on the stock are now 40 times higher than its 20-day average.
Coronavirus India Update
- India reports largest single-day spike in new cases
- 69,652 new cases reported in the last 24 hours
- Total confirmed cases now at 28,36,925
- Active cases now at 6,86,395
- Patients cured / discharged / migrated at 20,96,664
- Death toll rises to 53,866
- 977 deaths reported over the last 24 hours
- 58,974 patients recovered in the last 24 hours
Contributors To Nifty's Decline
Opening Bell: A Weak Start
Indian equity markets opened on a weak note, in-line with its global peers after a three-day winning streak.
The S&P BSE Sensex opened 0.86% lower at 38,283 while the NSE Nifty 50 index opened 0.8% lower at 11,317.
All sectoral indices have opened with losses. The Metal index is the top sectoral laggard, down 1.6% while other indices like the Nifty Bank, Nifty Auto, Nifty PSU Bank and Nifty Realty opened with losses of over 1% each. Nifty FMCG and Nifty I.T. 0.5-1% lower.
Broader markets too have opened lower. Both midcap and smallcap indices have opened with losses of 0.8%.
Market breadth was in favour of the laggards. 1,005 stocks on the NSE traded with losses while 495 managed to gain at the start of trade.
Latest On The Coronavirus
- Global cases cross 22.3 million
- Death toll rises to 7.84 lakh
- New Zealand reports 5 new cases, taking the total to 101
- Puerto Rico orders new containment measures
- Overall cases in the U.S. rise 0.8%
- Texas hospitalisations fall to the lowest in June even as new cases rise by 7,024
- France reports 3,776 new cases - the biggest increase since early-May
- Spain reports 3,715 new cases - the highest since April
- United Aram Emirates repots 435 new cases over the last 24 hours
Top Reads On BloombergQuint.com
How Did The Fund Flows Fare On Wednesday
Key Stocks In Focus
- Titan: Fully hedged with gold on lease and gold bought from stock markets. The company said that the ineffective hedge loss due to mismatch in sales quantity will be reversed subsequently with a corresponding reversal of stock gain accrued in the first quarter of fiscal 2021.
- PNB Housing Finance: Board approved raising Rs 1,800 crore via preferential issue / rights issue.
- IIFL Wealth: Board declares special dividend of Rs 40 per share. Record date set at August 27. Dividend yield at 3.58% as of the closing on Wednesday.
- RBL Bank: Board meeting today to consider issue of raising funds through a preferential issue.
- Aarti Drugs: Board meeting today to consider issue of bonus shares.
- IndiaMART InterMESH: Motilal Oswal initiates coverage with buy rating and a price target of Rs 3,550.
- Cosmo Films: Board has given in-principle approval for company's foray into the pet care business. Pilot launch is expected early next year with an investment of Rs 15 crore over the next 18 months in NCR.
- Yes Bank: Sold its entire stake of 6.34 crore shares (10.12% stake) in CG Power & Industrial Solutions, in various tranches.
- Non-Nifty Earnings Today: Healthcare Global, Indian Overseas Bank, J Kumar Infra, MOIL, Sheela Foam
To know more about the key stocks in focus, brokerage updates and other trading cues, click here.
Your Trade Setup For The Day
A Check On Indian ADRs
Three-Day Winning Streak Under Cloud
Good Morning!
India's stock market ended with gains for the third straight day while heading into the penultimate weekly options expiry session of this month. Futures, however, indicate that the rally may pause.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 1.2% to 11,285 as of 8:00 a.m. on Thursday.
The street will watch out for stocks like Cosmo Films that reported their quarterly earnings late on Wednesday. Some broader market companies like Indian Overseas Bank, Healthcare Global, J Kumar Infra, MOIL and Sheela Foam are set to announce their financials today.
Globally, Asian markets are under pressure this morning after the U.S. Federal Reserve minutes signalled tempered optimism over growth in the second half of the year.
Markets in Japan, China and Australia are declining, while those in Hong Kong and South Korea are underperforming.
The U.S. dollar continues to extends gains after a five-day decline and treasury yields are edging lower.
West Texas Intermediate crude fell 0.8% to $42.57 per barrel, while gold pared an overnight loss, rising 0.3% to $1,934.4/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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