KEY HIGHLIGHTS
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Dr. Reddy's Extends Losses; Trading Volume Triples
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Market Update: Sensex, Nifty Hold Gains Led By Larsen & Toubro
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PSU Banks Rally For Second Day On Hopes Of Relaxation For Banks Under PCA
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We've Put To Work $7 Billion In Credit Business In India: Henry Kravis
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GMR Infra Surges Most In Nearly Three Months; Trading Volume Triples
BQ Live
Sensex Surges 629 Points Led By HDFC Twins, ICICI Bank
Indian equity benchmarks extended gains and posted their best two-day rally since Oct. 15 as investors welcomed a quick appointment of a central bank governor who’s expected to shift away from a hawkish view.
The S&P BSE Sensex rose 1.8 percent or 629 points to 35,779 and the NSE Nifty 50 Index climbed 1.8 percent or 188 points to 10,738.
Veteran bureaucrat Shaktikanta Das took over as the 25th Governor of the Reserve Bank of India for a period of three years today.
Brokerages expect the appointment of Das as the Reserve Bank of India governor to address a few market concerns emerging from the sudden resignation of Urjit Patel after a standoff with the government over the central bank’s independence.
All the 19 sector gauges compiled by BSE ended higher led by the S&P BSE Realty Index's 4 percent surge.
Mid- and small-cap shares outperformed their larger peers as the S&P BSE MidCap and S&P BSE SmallCap Indices rose 2.5 percent each.
Market Update: Sensex Surges Over 500 Points, Nifty Reclaims 10,700
Indian equity benchmarks extended gains on the back of a broad-based buying interest as investors welcomed a quick appointment of a central bank governor who’s expected to shift away from a hawkish view.
- All the 19 sector indexes compiled by BSE Ltd. rallied, paced by a gauge of property shares.
- All Sensex stocks were trading higher led by the Hero MotoCorp's 7.4 percent gain. Bharti Airtel and Yes Bank also rose over 5 percent each.
- Overall market breadth was positive as 1,838 shares were advancing while 649 were declining on the BSE.
ICICI Bank Hold Gains Amid Another Block Deal
- ICICI Bank has 46.2 lakh shares change hands in a block deal. Stock up 2 percent at Rs 350.25.
Buyers and sellers were not immediately known
Source: Bloomberg
NBCC Rises On Winning Construction Order Worth Rs 172 Crore
Shares of the Delhi-based state-run construction company rose as much as 6 percent to Rs 52.90 after it won construction order worth Rs 172 crore from Ministry of Skill Development and Entrepreneurship, NBCC said in an exchange notification.
Market Update: Sensex Rises Over 400 Points, Nifty Above 10,650
Indian equity benchmarks extended gains led by HDFC Bank, ICICI Bank and Larsen & Toubro.
The S&P BSE Sensex rose 1.2 percent or 430 points to 35,580 and the NSE Nifty Index surged 1.2 percent or 126 points to 10,675. All Sensex stocks barring Infosys were trading led by Hero MotoCorp's 6 percent gain.
Overall market breadth was extremely positive as 1,760 stocks were advancing while 650 were declining on the BSE.
Urjit Patel' Resignation Highlights Risks To RBI's Policy Priorities, Says Fitch Ratings
The RBI's efforts to address bad loan problems have the potential to improve banking-sector health over the long term and its commitment to inflation targeting has supported a more stable macroeconomic environment in recent years. Increased government influence on the central bank could undermine this progress, Fitch Ratings said.
Ambuja Cements To Invest More To Add Capacity At Rajasthan Plant
The Mumbai-based cement maker's board approved investing an additional Rs 960 crore to add annual clinker capacity of 1.4 million tonnes and cement grinding capacity of 1.8 million tonnes and captive power plant at Marwar Mundwa, Ambuja Cement said in an exchange filing.
- Total investment seen at Rs 2,350 crore
- Projects to be funded through internal accruals
- With this expansion, company’s total cement capacity will increase to 31.5 million tonnes
Dr. Reddy's Extends Losses; Trading Volume Triples
Shareas of the Hyderabad-based drugmaker extended decline and fell as much as 6.7 percent, the most in nearly five months, to Rs 2,534.
Dr. Reddy’s Laboratories will have to wait a little longer before it can start selling a generic version of Indivior Plc’s Suboxone Film opioid addiction treatment, a U.S. appeals court ruled Tuesday, according to a Bloomberg report.
Market Update: Sensex, Nifty Hold Gains Led By Larsen & Toubro
Indian equity benchmarks held on to gains paced by Tata Motors, Hero MotoCorp, Yes Bank and Bajaj Auto.
The S&P BSE Sensex rose 0.96 percent or 340 points to 35,491 and the NSE Nifty 50 Index climbed 1 percent or 103 points to 10,652.
All the 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Auto Index's 3 percent gain.
Mid- and small-cap shares were outperforming larger peers as the S&P BSE MidCap and S&P BSE SmallCap Indices rose nearly 2 percent each.
Westlife Development Rises On Opening McDonald's Outlet In Kerala
Shares of the McDonald's restaurant chain operator rose as much as 3.45 percent to Rs 364 after it opened its first an outlet in Thiruvananthpuram.
Shaktikanta Das Assumes Charge As New RBI Governor
Veteran IAS officer Shaktikanta Das has assumed charge as the Governor of Reserve Bank of India, Das commented via tweet.
PSU Banks Rally For Second Day On Hopes Of Relaxation For Banks Under PCA
Shares of the state-run lenders rose for second day in a row on hopes that the new Reserve Bank of India Governor Shaktikanta Das may relax norms for banks under the Prompt Corrective Action (PCA).
Nifty PSU Bank Index rose as much as 2.22 percent paced by gains in Bank of India, Vijaya Bank and Union Bank of India.
We've Put To Work $7 Billion In Credit Business In India: Henry Kravis
India's got areas that need improvement. You have no capital market here. Yeah, you have a stock market, but you have no bond market. That puts the entire onus on banks. That makes it tough for mid-size and small companies to find capital, Henry Kravis, co-founder of KKR said in a press conference.
Key highlights of the conversation:
- GST, IBC are very positive steps that India has taken.
- If you have NPAs in banks you need to take the tough medicine and go to the bad bank solution.
- The drip test of putting good money after bad money never pays off.
- I would encourage banks to go ahead and take the tough medicine.
- It could be a government created bad bank or some banks (in the world) have created it on their own.
- I laugh about when I see India putting pressure on RBI. We have the same situation in the U.S.
- This has been historical. There's nothing new about the government trying to jawbone central banks. But central banks must be independent.
- If all of a sudden, they woke up and closed the spigots (credit controls) then yes. I don't see that here. Today's excitement about the new RBI governor. Tomorrow it will be just news. The more fundamental issues here is that you have a govt that is pro-business. And over the next 5-6months there will be large amount of liquidity in the system due to elections.
- The best private equity company in the world is Berkshire Hathaway. Warren Buffett has permanent capital, his power of compounding is huge, he never has to sell a company.
- We've taken a lot of minority positions in India that didn't always give us the influence we'd want. Some have us a guaranteed return. But we haven't had the same control that we'd have in control situations.
Hero MotoCorp Sees A Sudden Spike; Trading Volumes Jump 5 Times
Shares of the country's largest two-wheeler maker rose as much as 5.27 percent, the most since Nov. 26, to Rs 3,199.
Trading volume was five times its 20-day average, according to data compiled by Bloomberg.
GMR Infra Surges Most In Nearly Three Months; Trading Volume Triples
Shares of the Bengaluru-based airport developer rose as much as 6.44 percent, the most since Sept. 24, to Rs 15.70.
Trading volume was nearly three times its 20-day average, according to data compiled by Bloomberg.
Over 1.14 crore shares changed hands on the National Stock Exchange, according to information on NSE's website.
F&O Check: Premium On Nifty 10,500 Put Falls Over 40%
Nifty's 10,500 put option contract was among the most active option contracts on the National Stock Exchange.
Premium on the contract plunged 43 percent to Rs 67.20. Over 7.52 lakh shares were added to the open interest which stood at over 42.18 lakh shares.
UFO Moviez Rises After Non-Promoter Entity Agrees To Sell Stake In Qube Digital Cinema
Shares of the film production and distribution company rose as much as 4.91 percent to Rs 273.50.
UFO Moviez’s non-promoter investors have agreed to sell their shares in Qube Digital Cinema Pvt. Ltd. to UFO Moviez and ICICI Ventures at Rs 264.88 per share as against an earlier decided price of Rs 302.65, according to an exchange filing.
ICICI Bank Near Day's High After Block Deal
- ICICI Bank has 12.5 lakh shares change hands in a block. Stock up 0.5 percent to Rs 345.
Buyers and sellers were not immediately known
Source: Bloomberg
Dr. Reddy's Labs Falls As It Will Have To Wait To Sell Suboxone Copy, Says Court
Shares of the Hyderabad-based drugmaker fell as much as 1.9 percent to Rs 2,658 and was the top loser on the Nifty 50 and Nifty 500 Indexes.
Dr. Reddy’s Laboratories will have to wait a little longer before it can start selling a generic version of Indivior Plc’s Suboxone Film opioid addiction treatment, a U.S. appeals court ruled Tuesday, according to a Bloomberg report.
Indiabulls Group Stocks Rally After Housing Finance Unit Raises Rs 250 Crore
Shares of Indiabulls group companies rose after Indiabulls Housing Finance successfully raised Rs 250 crore by selling 18-month bonds at coupon rate of 9.2244 percent, according BSE.
- Indiabulls Housing Finance rose as much as 5.64 percent to Rs 732
- Indiabulls Ventures advanced 8.94 percent to Rs 368.80
- Indiabulls Real Estate climbed 6 percent to Rs 75.80
- Indiabulls Integrated Services jumped 5 percent to Rs 281.30
Aavas Financers Surges After Receiving First Rating
Shares of Aavas Financers rose as much as 3.5 percent to Rs 813.20.
Brokerage and research firm Citi initiated coverage on the stock with a 'Buy' rating and a price target of Rs 930, implying a potential upside of 18 percent from the last regular trade. This is the first analyst coverage on the stock as per Bloomberg data.
Here's what Citi had to say:
- Growth to come from existing locations as well as geographic expansion.
- Niche focus and priority sector lending compliant portfolio supports healthy spreads.
- Premium valuations supported by long growth runway and strong asset quality.
- Expect AUM and profit to grow at a CAGR of 35 percent 33 percent respectively over FY18-21.
Opening Bell: Sensex, Nifty Open Higher
Indian equity benchmarks extended gains for the second day, mirroring the rally in its Asian peers.
The S&P BSE Sensex index rose as much as 0.51 percent to 35,329.37 and the NSE Nifty 50 Index rose as much as 0.47 percent to 10,598.30.
The market breadth was tilted in favour of buyers. About All the sectoral gauges compiled by NSE advanced, led by the NSE Nifty Realty Index's 1.45 percent gain.
BQ Heads Up: Indian ADRs, Insider Trades, Trading Tweaks
Money Market Update: Rupee Weakens For Third Day
The Indian rupee weakened for the third day in a row against the U.S. dollar. The home currency depreciated 0.44 percent intraday to 72.18 against the greenback.
The local legal tender could trade lower as the new central bank chief and Prime Minister Narendra Modi’s party suffered a setback in a key state election. Shaktikanta Das, who oversaw Prime Minister Narendra Modi’s controversial cash ban program, was appointed new RBI governor for a three-year term, a day after Urjit Patel abruptly quit following disagreements with the government.
In the bond markets, the benchmark 10-year bond dropped six basis points to end at 7.53 percent on Tuesday. Nomura is constructive on Indian bonds due to favorable supply dynamics and expectations that lower inflation will fuel a dovish RBI stance. Inflation data is due out later in the day.
Brokerage Radar: Top Analysts on State Election Results; Aavas Financiers Gets Its First Rating
Brokerages on State Elections
CLSA
- NDA should win 245-280 seats in 2019, enough for Modi to retain power.
- SP-BSP combine in the state of Uttar Pradesh could be a big challenge for the BJP.
- Key worry for markets would be if the domestic investors start to reduce new investments.
- State election manifesto shows competitive populism which could aid consumption but impact capex recovery.
Credit Suisse
- No conclusive evidence determining the next ruling party at the center.
- Loss in Chhattisgarh was a big negative surprise.
- Political takeaway could be farm stress must be addressed.
- Results do not drive any visible change in market directions.
UBS
- State assembly elections not positive for BJP; Market focus to shift towards general election 2019.
- BJP coming back in 2019 is being priced in; Market evaluating various outcome possibilities.
- Market risk-reward remains unattractive as it continues to trade expensively.
Morgan Stanley
- First indicators of how things may pan out in May 2019.
- Do not ignore results, but be cognisant of the complexities of politics.
- Investors should watch for pre-poll alliances and the growth/inflation mix.
- Maharashtra and Uttar Pradesh are likely to be crucial to the results in 2019.
More Brokerage Calls
Citi on Aavas Financiers
- Initiated ‘Buy’ with a price target of Rs 930.
- Growth to come from existing locations as well as geographic expansion.
- Niche focus and priority sector lending compliant portfolio supports healthy spreads.
- Premium valuations supported by long growth runway and strong asset quality.
- Expect AUM and profit to grow at a CAGR of 35 percent 33 percent respectively over FY18-21.
Nomura on Sun Pharma
- Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 516 from Rs 513
- Stock price factoring muted expectations from the U.S. generics and specialty.
- Expect higher sales and cost control to lead to margin expansion.
- Upgrade to Buy on recent correction; risk-reward favourable.
- Catalysts: U.S. approvals, specialty ramp-up, Ebitda margin expansion.
CLSA on Aditya Birla Fashion
- Maintained ‘Buy’; hiked price target to Rs 240 from Rs 232.
- See multiple growth triggers till March 2021.
- Expect margin expansion from Pantaloons ahead as store network matures.
- Focus on improving profitability in Fast Fashion; innerwear losses peak in the current financial year.
Citi on Persistent Systems
- Maintained ‘Neutral’ with a price target of Rs 650.
- To focus on 4 areas in 3 sectors – AI, cloud, security and IoT in healthcare, BFSI and industrial & manufacturing.
- To continue to invest in accelerite portfolio and concentrate on reseller and -added business.
- Cash kept for acquisition; company will likely take a call on extra cash post Q3 results.
Your Complete Trade Setup
F&O Cues
- Nifty December futures closed trading at 10,581, premium of 32 points.
- Max open interest for December series at 11,000 Call (open interest at 49.8 lakh shares).
- Max open interest for Dec series at 10,000 Put (open interest at 53.1 lakh shares).
Stocks In F&O Ban
- Adani Enterprises
- Adani Power
Put-Call Ratio
- Nifty PCR at 1.33 from 1.30
- Nifty Bank PCR at 1.14 from 1.00
Data Watch: CPI, IIP
- 5:30pm: India October industrial production YoY; Bloomberg estimates at 6 percent (prior 4.5 percent).
- 5:30pm: India November consumer price inflation YoY; Bloomberg estimates at 2.53 percent (prior 3.31 percent).
- Dec. 12-15: India November trade balance, Bloomberg estimates at -$15.8 billion, prior -$17.1 billion
- India November exports YoY, prior 17.86 percent.
- India November imports YoY, prior 17.62 percent.
Stocks To Watch: Dr. Reddy's Lab, PNC Infra, Reliance Industries
- Dr. Reddy’s Laboratories will have to wait a little longer before it can start selling a generic version of Indivior Plc’s Suboxone Film opioid addiction treatment, a U.S. appeals court ruled Tuesday, according to Bloomberg report.
- Reliance Industries’ telecom unit Reliance Jio Infocomm board approved transferring fibre and tower businesses into two separate companies. The plan is yet to get statutory and regulatory approvals.
- Zydus Wellness: Competition Commission of India approved acquisition of Heinz India jointly with Cadila Healthcare. It will be acquiring business related to the four brands—Glucon-D, Nycil, Sampriti Ghee and Complan.
- Tata Sponge Iron: Competition Commission of India approved acquisition of Usha Martin’s steel division for around Rs 4,300-4,700 crore.
- Unichem Laboratories received tentative approval for ANDA-Tadafil Tablets from U.S. FDA.
- PNC Infratech arm submitted financing documents to NHAI regarding its HAM project in Karnataka worth Rs 1,157 crore. The company now has submitted documents for financial closure for all its 7 HAM projects.
- Sugar stocks in focus as Brazil to consult WTO Dispute Settlement Body to challenge the Indian policy to support the export of sugar. Brazil says that the domestic support and export subsidies granted by the Indian government have caused significant impacts on the world sugar market in a scenario of declining prices and declining production in major centers - Brazil, China and Thailand, Bloomberg reported.
- UFO Moviez India’s non-promoter investors agree to sell their shares in Qube Digital Cinema Pvt. Ltd. to UFO Moviez and ICICI Ventures at Rs 264.88 per share as against an earlier decided price of Rs 302.65.
Commodity Cues: Metals Rally, Crude Hovers Around $60/Barrel
- West Texas Intermediate crude rose 0.1 percent to $52.16 a barrel.
- Brent crude ended 0.38 percent higher at $60.20 per barrel.
- Gold was little changed at $1,243.59 an ounce.
London Metal Exchange
- Aluminium ended 0.05 percent higher.
- Copper ended 1.3 percent higher.
- Zinc halted a three-day decline, up 0.58 percent.
- Nickel ended lower for the second day, down 0.28 percent.
- Lead ended 1.23 percent higher.
- Tin ended 0.9 percent higher.
Nifty Futures Hint Tepid Start; Asian Stocks Climb
Good Morning!
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fluctuated between gains and losses to trade at 10,588 as of 8:30 a.m.
Asian equities climbed with U.S. stock futures and the offshore yuan following positive signs on the outlook for U.S.-China trade talks. Equity benchmarks rose in Japan, Hong Kong and South Korea, and the Aussie ticked higher.
Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell podcast.
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