Sensex, Nifty Snap 4-Day Winning Streak

Indian shares declined for the first time in five trading sessions amid weak trade in global equities as investors weighed the impact of Donald Trump’s order halting some immigration and ahead of central bank decisions from the U.S. and Japan.

The S&P BSE Sensex fell 0.1 percent to 27,849 while the NSE Nifty dropped 0.1 percent as well to 8,632. This after both the indices posted their best weekly gains in eight months as overseas investors boosted purchases of local shares.

The S&P BSE Telecom Index gained 5.9 percent, making it the best performing sectoral gauge on the exchange, led by Idea Cellular after it confirmed its merger talks with Vodafone.

On the flip-side, the S&P BSE Auto and S&P BSE BANKEX snapped their four-day winning streak and were the worst performing indexes.

Not Out Of The Woods

While Amisha Vohra of Prabhudas Lilladher was enthused by the resilience of local equities, having wiped out most of their post-demonetisation losses, she said the market was in no way “out of the woods”.

“The macro picture hasn’t improved much and the earnings from most of the FMCG companies highlighted the fact that there has been a demand disruption,” she told BloombergQuint in a phone conversation.

Investors have now shifted their focus to the upcoming Union Budget, which has been dubbed as a make or break one for the Modi government since it could be the last shot at any sort of big bang reforms.

However, Vohra is unsure of the government’s ability to dole out sops and incentives. “I think if you’re a long-term investor then equities remain the best asset class for you. But for traders and medium-term investor, it would be better to wait for the budget announcement and then take a call,” he advised.

• Zydus Wellness: Q3 Net Rs 25.14 crore versus estimate Rs 26.5 crore; stock up 0.9 percent
• Monsanto India: Q3 Net Rs 59.93 crore versus Rs 40.76 crore; stock up 2.3 percent
• Sharda Cropchem: Q3 Net Rs 17.57 crore versus Rs 11.93 crore; stock down 2.5 percent
• GE T&D India: Q3 Rs 44.31 crore versus Rs 38.4 crore loss; stock up 1.4%
• Southern Petrochemicals: Q3 net Rs 3.95 crore versus Rs 18.37 crore; stock up 0.5 percent

• Talwalkars to consider issue of shares to founders, shareholders via private placement
• PNB Housing NCD placement for Rs 1,025 crore, including green shoe; issue date January 30-31
• Shriram EPC allotted 26.5 million shares to PNB on preferential basis
• Hindustan Organic to delist shares from NSE

Shares of the residential property developer fell as much as 3.4 percent after reporting a 36.3 percent drop in net profit for the third quarter.

The company made a net profit of Rs 15.81 crore for quarter-ended December, compared to Rs 24.82 crore in the same period last year. It clocked sales of around Rs 35.22 crore for the period in focus versus Rs 23.79 crore year-on-year.

Shares of Idea Cellular jumped as much as 29 percent, the most on record, after Vodafone Group confirmed its merger discussion with the country’s third largest telecom operator.

U.K. based Vodafone Plc confirmed its discussion with the Aditya Birla Group about an all-share merger of its India unit (excluding Vodafone’s 42 percent stake in Indus Towers) and Idea.

From the press release:

• Any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone deconsolidating Vodafone India
• There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction

For more details on what it means for the two companies and the sector, CLICK HERE

Shares of the flagship company of the Aditya Birla Group rose after its net profit jumped 21.9 percent during the third quarter of financial year 2016-17.

Net profit rose to Rs 331.4 crore from Rs 271.9 crore in the same quarter last year, according to the company’s filing. Analysts tracked by Bloomberg had pegged the profit at Rs 337 crore.

Total income rose 7.8 percent to Rs 2,738 .3 crore from Rs 2,540.1 crore. Other income stood at Rs 55.3 crore at the end of the quarter.

The pharmaceutical firm will acquire drugs portfolio from Mallinckrodt LLC in an all-cash deal for consideration of $171 million and up to an additional $32 million to financial performance over the next three years, according to its filing.

Shares of the non-banking financial firm gained as much as 5.7 percent to Rs 1,053 after reporting its third quarter earnings.

• Q3 net Rs 556 crore versus estimate of Rs 480 crore
• Sales Rs 2,700 crore versus Rs 2,060 crore a year ago
• Gross NPA 1.47 percent end-Dec.
• Loan provisions, loan losses at Rs 180 crore verus Rs 150 crore YoY

Management Commentary

• Small business cut borrowing after cash ban
• SME borrowing slowly returning to normalcy

Shares of the housing finance company dipped 1 percent after announcing its third quarter earnings.

The lender reported a net profit of Rs 1,700 crore on a standalone basis, compared to Rs 1670 crore estimated by analysts Bloomberg polled.

• Total income Rs 8,140 crore versus Rs 7,270 crore year ago
• Gross non-performing loans at 0.81 percent end-December
• Loan book at Rs 2.87 lakh crore as of December 31

HDFC Chairman Keki Mistry Said

• 54 percent of incremental loans in Q3 came from individual loans, rest from non individual
• 30 percent of incremental loans in third quarter were in the lease rental discounting segment
• Made provisions of Rs 117 crore during the quarter, of which 78 crore was regulatory, Rs 39 crore was other

A gauge of the country’s top 10 information technology firms dropped 0.5 percent, led by Mindtree and Wipro on concerns around protectionist measure by the Trump administration.

The draft of an executive order from President Donald Trump may restrict the use of work visas for outsourcing firms such as Infosys and Wipro, according to Bloomberg News.

“Our country’s immigration policies should be designed and implemented to serve, first and foremost, the U.S. national interest,” the order reads, according to draft reviewed by Bloomberg News.

Infosys, Wipro, TCS among others use H-1B visas and other programmes to bring workers to the U.S.

Shares of the fast moving consumer goods firm gained 2.4 percent after its third quarter earnings beat street estimates.

The company reported a net profit of Rs 352 crore for the three-month period ending December 31, compared to Rs 329 crore estimated by analysts in a Bloomberg poll. It clocked sales of Rs 2,490 crore for the quarter in focus, which was also higher than the Rs 2,440 crore estimate.

• Q3 total costs Rs 2,010 crore versus Rs 1,860 crore

For a complete report on GCPL’s third quarter earnings, click HERE

Shares of the Anil Ambani-led firm gained as much as 8.2 percent intraday, the most since October 3, after it signed a contract for design and construction of 14 Fast Patrol Vessels for Indian Coast Guard.

The company won the contract, valued at Rs 916 crore, through competitive bidding process undertaken by the Ministry of Defence.

Shares of the construction major rose 1.9 percent to Rs 1,467 after reporting a 38.5 percent increase in net profit for the third quarter of the financial year 2016-17. However, the company cut its revenue growth guidance for the year to 10 percent from 15 percent.

Shares of the country’s third largest telecom operator jumped as much as 9 percent to Rs 85 amid reports of a possible merger with Vodafone. The share price of Idea Cellular has risen 24 percent since January 18.

Talks to explore a merger have been "on for some time", according to an Economic Times report citing unnamed sources. Idea's decision to postpone its January 23 meeting to consider third quarter results has added fuel to the speculation; a fresh date is yet to be set, the daily said.

Global brokerage house CLSA believes a potential merger between Vodafone India with Idea Cellular would change the industry order. The combined entity would have 43 percent revenue share in the market by FY19 against 33 percent of Bharti Airtel and 13 percent for Reliance Jio.

The merged entity will also have the highest spectrum holding across the industry.

Indian shares slid marginally lower in opening trade, tracking weak trade in global equities, after local benchmarks posted their best weekly gains since May of last year.

The S&P BSE Sensex slipped 0.1 percent to 27,847 while the NSE Nifty too fell 0.1 percent to 8,627. However, the market breadth was encouraging with the bulls maintaining a slight edge over the bears. About 769 stocks advanced, 665 declined while 420 remained unchanged.

Movers & Shakers: Bharat Electronics, Om Metals, Kalindee Rail And More

• Gokaldas Exports: To invest around Rs 200 crore on four apparel units
• Kalindee Rail: Won Rs 197 crore order for Eastern Dedicated Freight Corridor
• Tata Steel: To seek board approval to expand Odisha plant capacity to 8 million tonne a year
• Balrampur Chini: Signed pact with Ganesh Explosive to sell its entire stake in unit Indo Gulf Industries
• Gujarat Alkalies: Approved to spend Rs 22 crore to set up 32,000tpa PAC plant at Vadodra
• ONGC: To invest $5.1 billion to develop oil findings of Andhra Pradesh coast. (PTI)
• SPML Infra, Om Metals Infraprojects: Joint venture firm gets order worth $16.6 million from Rwanda Agriculture Board for development of irrigation and watershed development in the Mpanga sector.

For a complete list of stocks to watch, click HERE

• HDFC
• Tech Mahindra
• Bajaj Finance
• Godrej Consumer Products
• Grasim Industries
• Dish TV India
• Bajaj Finserv
• Zydus Wellness
• Walchandnagar Industries
• V-Guard Industries
• V-Mart Retail
• Southern Petrochemicals Industries Corporation
• TIL
• Texmaco Infrastructure & Holdings
• Dalmia Bharat Sugar and Industries
• Nava Bharat Ventures
• Monsanto India
• Info Edge (India)
• Pfizer
• Shree Cement
• Shriram City Union Finance

• India said the General Anti-Avoidance Rule (GAAR) provisions of Income Tax Act effective April 1
• CCI approves joint venture between Reliance Aerostructure, Dassault
• Power equipment makers seek lower tax on parts, inputs
• Farmers plant winter-sown crops in 63.73 million hectares versus 60 million YoY
• Forex reserves rise $932.4 million to $360.8 billion in week to January 20: RBI
• Global funds buy Rs 212 crore of local stocks; domestic funds buy Rs 483 crore Friday: Provisional data
• Global sugar shortfall seen widening to 5.32 million tonne (Datagro)
• Common cancer drug prices rose sharply 2011-2016: U.K. Study
• U.S. judges block parts of Trump’s order on Muslim immigration
• India’s gems and jewellery exports may rise around 10 percent in FY17 (PTI)
• RBI may extend asset quality review deadline by few months (PTI)

This is the budget week and all eyes will be on Finance Minister Arun Jaitley's proposals on February 1.

There are chances that there could be a minor fiscal slippage in the budget, and the roadmap of a 3 percent fiscal deficit target for FY18 may be revised. Still, the markets may be willing to accommodate a small change, provided the additional spending is focused on boosting growth.

India’s currency is poised to weaken past 70 per dollar this year and touch 75 at the end of 2019, according to Deutsche Bank.

India's benchmark bond yield logged its biggest weekly drop in last three weeks on optimism the government will be prudent when it presents the budget.

The Reserve Bank may give banks more time for implementing the asset quality review, PTI reported yesterday.

Good Morning!

The Nifty futures on the Singapore Stock Exchange, an early indicator of Nifty’s performance in India, fell 0.5 percent to 8,628.

Asian stocks declined this morning, as traders digested the tensions sparked by U.S. President Donald Trump’s order halting some immigration, a move that’s ignited opposition from world leaders.

The dollar weakened against all its major peers in early Asian trading. The Bloomberg Dollar Spot Index dropped 0.2 percent while the yen gained 0.3 percent to 114.72 per dollar.

U.S. stock futures slipped lower after the underlying gauge gained 1 percent last week. Investor sentiment was also subdued after data on Friday showed U.S. economic growth slowed sharply in the fourth quarter.

Economic growth in the world largest economy slowed more than expected in the fourth quarter, with GDP rising at a 1.9 percent annual rate following the prior quarter’s 3.5 percent gain, according to data from the Commerce Department.

Gold rose on growing haven interest, while crude dropped for the second day amid signs of increased output from the U.S.