Drugmakers Lift Nifty Near 9,900; Cement Stocks Slide On Weak Outlook

Indian equity benchmarks gained most in over a week led by drugmakers and telecom companies.

The S&P BSE Sensex Index rose 0.8 percent to 31,955, rebounding from Tuesday’s biggest decline since December. The NSE Nifty 50 advanced 0.8 percent as well to 9,899.

The benchmarks have climbed to multiple fresh peaks this year as domestic and foreign investors bet on strong economic growth and improving sentiment on earnings results.

All 13 sector indices compiled by BSE Ltd. advanced, led by the S&P Telecom, S&P BSE Healthcare and S&P BSE Fast Moving Consumer Goods Index.

UltraTech Cement Ltd. said the outlook for the cement industry was muted due to a variety of concerns ranging from the drought in South India to the subdued urban housing demand.

The industry will register an aggregate volume growth of under five percent in the July to September quarter, the Kumar Mangalam Birla group company said in a conference call with analysts.

Shares of the optical fibre maker jumped 8 percent after it reported its highest-ever revenue for June quarter.

Revenue rose 23 percent to Rs 744 crore on a year-on-year basis, driven by a "strong order book and export sales", the company said in exchange filing. It clocked record export sales at Rs 320 crore for the June quarter.

Shares of the I.T. services company rose 20 percent to Rs 558, its highest level since April 2000, after reporting a strong set of first quarter earnings.

• Net profit up 39.9 percent at Rs 14.7 crore versus Rs 10.40 crore (QoQ)
• Revenue up 2.9 percent at Rs 186 crore versus Rs 180 crore (QoQ)

Metal stocks were among the top gainers on benchmark indices after steel prices in China surged to a four year high.

Shares of Bajaj Finance rose as much as 4.3 percent to Rs 1,577 – a new intraday all-time high for the stock – after a 42 percent jump in first quarter net profit led by strong growth in its core business.

The net profit for the quarter stood at Rs 602 crore, better than the Rs 578 crore estimated by analysts polled by Bloomberg. The non-banking finance company’s (NBFC) net interest income rose over 49 percent on a year on year basis to Rs 2,087 crore.

The assets under management (AUM) grew 38.9 percent during the quarter.

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Shares of the software solutions manufacturer fell for the fourth straight day after its net profit during the April-June quarter declined 60.1 percent.

While the company's Earnings before interest, tax, depreciation and amortisation fell 14.9 percent to Rs 12.81 crore, margins contracted to 10.9 percent from 12.8 percent during the year-ago period.

The stock has moved in-line with the S&P BSE Sensex Index in 2017 having gained 24.2 percent as compared to the index's gain of 20.8 percent.

Shares of the metal component maker fell as much as 9.6 percent, the most since November 2016. The company reported a 44 percent jump in its net profit during the April-June quarter compared to the corresponding quarter last year.

The company's earnings before interest, tax, depreciation and amortisation grew 21.38 percent to Rs 28.9 crore, margin contracted to 7.7 percent from 8.1 percent.

The stock has outperformed the S&P BSE Sensex index on a year-to-date basis having gained 136.03 percent compared to the index's gain of 19.64 percent during the same period.

L&T Finance Holdings Ltd. had 45 lakh shares worth Rs 67.15 crore exchange hands on the Bombay Stock Exchange at Rs 149.55 per share.

Buyers and sellers were not immediately known.

Heritage Foods Ltd. gained as much as 5.5 percent to Rs 1,179 after the board decided to consider sub-division of equity shares of the company on June 30, 2017.

Out of the 7 analysts tracked by Bloomberg, having coverage on the stock, four of them have a ‘Buy’ rating, two have an ‘accumulate’ rating while one has a ‘reduce’ rating on the stock.

The consensus price target of analysts tracked by Bloomberg is at Rs 1,345, which is 15 percent higher than the current market price.

The stock has outperformed the S&P BSE Sensex index on a year-to-date basis, gaining 32.43 percent compared to 19.66 percent gains of the benchmark.

Shares of Federal Bank Ltd. gained as much as 3.17 percent to Rs 117 after the Reserve Bank of India issued a notification stating an increase in the investment limit for foreign institutional investors (FIIs) to 74 percent of the bank’s paid up capital.

Previously, the foreign investment limit in the bank was fixed at 49 percent.

The 3.17 percent gain in stock is the most since June 1. The analysts' consensus price target of Rs 125.04 is 10 percent above the lender's current market price.

The stock has outperformed the S&P BSE Sensex index on a year-to-date basis having gained 71 percent versus the index's gain of 20 percent during the same period.

UltraTech Cement Ltd., in an investor presentation cited drought in Tamil Nadu, subdued demand for urban housing, compliance towards RERA and issues related to sand availability as some of the key concerns for the short to long-term.

The presentation also spoke about the impact on volumes due to sand shortage in the northern part of the country, subdued demand in the west and a slowdown in the south due to the drought in Tamil Nadu.

While infrastructure spending continues to remain a key growth driver, interest subvention scheme and expectations of a normal monsoon will be the key factors to look forward to, the presentation said.

Shares of the company fell as much as 1.75 percent, the most since June 27, 2017, to Rs 4,255 on the National Stock Exchange.

Shares of Reliance Capital Ltd. fell as much as 3.19 percent, the most since May 29, 2017, after 56 lakh shares or 2.2 percent of equity exchanged hands on the Bombay Stock Exchange.

The shares, amounting to a total of Rs 367 crore were exchanged at Rs 650.25 - Rs 653 per share.

Buyers and sellers of the shares were not immediately known.

Shares of the drugmaker gained as much as 8.23 percent, the most since May 30, after it received an approval from the U.S. FDA for the tablet version of the drug gRenvela.

IMS data estimates the market size for the drug to be as much as $1.8 billion. Deutsche Bank in its research note has estimates sales worth $128 million for the company via this drug.

Motilal Oswal in a similar note has projected sales to be in the range of $125-150 million.

The stock was also the top gainer on the Nifty Pharmaceutical Index, gaining for the fourth time in the last five trading sessions.

Despite the recent upmove, the stock has underperformed the S&P BSE Sensex on the year-to-date basis with gains of 15.81 percent compared to the benchmark's 19.69 percent.

India's drugmakers, helped by a slew of approvals from the U.S. drug regulator, led key benchmark indices higher in opening trade. Aurobindo Pharma Ltd., Lupin Ltd. and Sun Pharma Ltd., gained post receiving regulatory approvals.

The S&P BSE Sensex gained 0.4 percent to 31,834 while the NSE Nifty 50 index gained 0.36 percent to 9,862. All the sectoral indices on the National Stock Exchange traded with gains. The market breadth was firmly in favour of the buyers.

The Nifty Pharma index leads gains with a 1.3 percent jump. The 10-member index has gained for six days in a row.

Indian government bonds are seen trading in a narrow range today amid low volumes as caution prevails ahead of RBI’s policy on August 2.

RBI on Tuesday evening announced open-market sale of bonds as it drains funds to bring liquidity to a neutral situation from a surplus one. The auction of Rs 10,000 crore will be conducted tomorrow.

Strong external balances, ample forex reserves are likely to limit the rupee's vulnerability to external shocks, according to Standard Chartered.

It says the rupee carry still looks attractive, but spot appreciation may be limited as portfolio inflows have slowed and equity valuations are stretched. Standard Chartered expects the rupee at around 64 per dollar by the end of this quarter.

• Long unwinding seen in Nifty with the index shedding 18 lakh shares in open interest
• Nifty Bank sees fresh longs and adds 2 lakh shares in open interest
• Heavy call writing seen at levels of 9,900-10,000
• 10,000 level has total open interest concentration of 67.2 lakh shares
• 9,900 call sees open interest addition of 17.6 lakh shares
• 10,000 call adds 20.2 lakh shares in open interest
• 9,900 put sees open interest shedding of 16.9 lakh shares
• Nifty Put-Call Ratio falls to 1.34 from 1.53

HUL

• CLSA maintained 'Underperform' and hiked price target to Rs 1,250 from Rs 1,100
• Edelweiss maintained a 'Hold' rating and raised price target to Rs 1,253 from Rs 1,106
• Credit Suisse maintained a 'Neutral' stance, hiked price target to Rs 1,200 from Rs 1,100
• Morgan Stanley maintained 'Underweight' and raised price target to Rs 850 from Rs 795

• UltraTech: JP Morgan maintained an 'Overweight' rating with the price target set at Rs 4,400
• HPCL: HSBC maintained 'Buy' rating and hiked price target to Rs 433 from Rs 431
• Edelweiss Financial Services: Citi initiated coverage on the stock with a 'Buy' rating and hikes price target to Rs 240.
• Reliance Industries: HSBC upgraded stock to 'Hold' with the price target hiked to Rs 1,340 from Rs 1,170
• BPCL: HSBC maintained a 'Hold' rating on the stock with the price target increased to Rs 477 from Rs 437
• Thermax: Deutche Bank upgrades stock to 'Hold' and hikes price target to Rs 870 from Rs 850

Aurobindo Pharma

• Gets U.S. FDA nod for tablet version of gRenvela
• Market size for the drug at $1.8 billion, according to IMS data
• Drug had multiple filers including Lupin, Glenmark, Cipla and Impax
• Product can result in annual sales of $128 million, according to Deutsche Bank
• Sales through the product can be between $125-150 million, according to Motilal Oswal

MOIL

• Government to sell 6.65 lakh shares at Rs 346.75 per share via OFS
• OFS to be open from July 19-27

• Glenmark: Signs pact with Cyndea Pharma for Generic soft-gelating capsules
• Bhansali Engineering Polymers: To invest Rs 300 crore to increase ABS production capacity to 137 kilo tonnes per annum from 80 kilo tonnes per annum
• Federal Bank: RBI raises FII limit to 74 percent from 49 percent
• Sun Pharma: Gets U.S. FDA nod for Paroxetine Hydrochloride oral tablet
• Lupin: Gets U.S. FDA nod for Armondafinil oral tablet
• Cadila Healthcare: Gets U.S. FDA nod for Pitavastatin oral tablet

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• GST hits HUL’s April-June volume growth
• Nine-Judge Supreme Court bench to decide if privacy is a fundamental right
• Matrimony.com, Shalby Hospitals get SEBI’s nod for IPOs
• Tribunal upholds tax demand raised on NDTV
• Air India net loss declines to Rs 3,643 crore; operating profit rises in 2016-17
• UltraTech to set up cement plant in Madhya Pradesh
• China border tensions cloud Asia trade pact talks in India
• Indian roads a $100-billion opportunity over next three years: Nomura

The Singapore traded SGX Nifty, an early indicator of Nifty’s performance in India gained 0.1 percent to 9,868.

Asian stocks were mixed, after seven days of gains that pushed regional equities to the highest since the financial crisis. The dollar held at the lowest level in almost a year, as investors weigh the potential for tepid economic growth.

Part of that is due to signs that Trump’s healthcare reform bill is effectively dead in its current form, after two more Republicans senators announced their opposition to the plan.

The possibility of a rate hike from the U.S. Federal Reserve towards the end of the year has diminished over the past two weeks. Futures data tracked by Bloomberg project the odds at 40 percent.

Bloomberg Intelligence expects no change in rates ahead of the ECB meet on Thursday. No rate increases are projected until 2019.

West Texas Intermediate crude fell 0.3 percent to $46.27 per barrel. Gold declined 0.2 percent to $1,241.81 an ounce.