Wipro Buyback, Reliance Profit Help Nifty Clock Third Weekly Gains

Indian shares climbed for a third time this week after a share buyback from Wipro Ltd. and better-than-expected profit from Reliance Industries pushed equity benchmarks higher.

The S&P BSE Sensex gained 0.4 percent to 32,028 while the NSE Nifty 50 rose 0.4 percent as well to 9,915. For the week, the 51-share index gained 0.3 percent, its third one in a row, while the Sensex was little changed.

The S&P BSE Energy and the S&P BSE Information Technology indices were the top gainers among the 13 sector gauges compiled by the BSE Ltd.

The market breadth was skewed in favour of the sellers both on the two stock exchanges.

Shares of the truck maker dropped as much as 5.3 percent, to its lowest level in four months, after its first quarter net profit missed street estimates.

• Profit down 62 percent at Rs 111 crore versus Rs 291 crore (estimate Rs 156 crore)
• Revenue down 0.5 percent Rs 4,514 crore versus Rs 4,531 crore (estimate Rs 4,070 crore)
• EBITDA down 37 percent at Rs 306 crore versus Rs 482 crore
• EBITDA margin 7.2 percent versus 11.3 percent

Shares of the oil and gas major jumped as much as 3.9 percent after owner Mukesh Ambani announced a bonus issue.

Shareholders will get one stock for every one held in the company, Ambani said.

The proposal will require shareholders’ approval.

Jio phone, launched at an effective price of Rs 0, may eat into the DTH service providers’ pie with its TV-enabled features.

To read live updates from the RIL AGM, click here

• Rakesh Jhunjhunwala sold 1.03 crore shares in TV18 Broadcast in quarter-ended June, according to BSE data
• Post the transaction, Jhunjhunwala’s stake in the company reduced to 1.15 percent from 1.75 percent

Shares of the industrial congolmerate gained as much as 14.97 percent, to a two-year high of Rs 26.50 after investor Rakesh Jhunjhunwala bought 2.5 crore shares of the company during the June quarter.

The stock has surged 210 percent in 2017, outperforming the S&P BSE Sensex index, which gained 20 percent during the same period.

The stock's RSI of 73 indicates that it may have been overbought.

The rupee gained 0.1 percent to 64.35 against the U.S. dollar as of 10:01 a.m. The local currency is headed for a second weekly gain amid sustained foreign flows into Indian stocks and bonds.

Overseas investors have bought net $274.9 million shares this week through Wednesday, according to NSDL data.

Shares of the technology company gained as much as 8.12 percent, the most since July 2013 after the company announced a buyback of 34.37 crore shares worth Rs 11,000 crore.

The shares will be bought back at Rs 320 per share.

Wipro also announced its April-June quarter earnings during which its net profit fell 8.1 percent to Rs 2,077 crore. The company however guided for a muted second quarter, projecting revenues to remain flat or lower between $1.96 billion and $2 billion.

The stock's Relative Strength Index of 73 suggests that the stock is overbought. The consensus price target of Bloomberg analysts for the stock is 13.5 percent lower than its current market price.

The stock has gained over 10 percent this week, outperforming the S&P BSE Sensex index, which has remained flat during the same period.

Reliance Industries Ltd. hit another nine-year high after the company's April-June period results beat analysts estimates for the eighth quarter in a row.

Despite the fall in crude prices, refining margins were at a nine-year high.

RIL will invest more in its telecom arm Reliance Jio Infocomm Ltd. The wireless carrier plans to raise Rs 20,000 crore through a rights issue. It is offering 400 crore non-cumulative optionally convertible preference shares at Rs 50 each to RIL, according to a stock exchange filing.

Shares gained as much as 2.3 percent to Rs 1,564 on the National Stock Exchange. The Relative Strength Index (RSI) was 74 suggests that the stock may be overbought.

The stock has outperformed the S&P BSE Sensex index on a year-to-date basis with gains of 44.2 percent compared to the 20 percent gains of the benchmark.

Shares of Balaji Telefilms Ltd. gained as much as 8.73 percent to a fresh nine-year high of Rs 203, after Reliance Industries Ltd. decided to buy 24.92 percent stake in the company.

The stake, for a total consideration of Rs 413.28 crore will be executed at a price of Rs 164 per share.

Shares have gained for seven out of the last ten trading sessions. The stock's Relative Strength Index (RSI) is at 77, indicating that it may be overbought.

The stock has gained 128.82 percent during 2017, outperforming the S&P BSE Sensex index that gained 20 percent during the same period.

Stock specific activity ensured Indian shares opened higher despite mixed cues from Asian equity markets.

The S&P BSE Sensex index gained 0.24 percent to open at 31,984 while the NSE Nifty 50 index opened with gains of 0.15 percent at 9,887.

Technology major Wipro Ltd. was the top gainer on the Nifty followed by Reliance Industries Ltd., both of which reacted to their quarterly earnings.

Advance-decline was in favour of the buyers. 938 stocks advanced while 484 stocks declined on the National Stock Exchange.

Underwriting commissions released on Thursday suggest demand at today's government bond auction will be well supported. HSBC in a note said that a 25 basis point reduction in the repo rate at the next RBI meeting is fully priced into the market and that it sees little value at the front-end of the yield curve.

HSBC recommends positioning for a fall in long-dated yields and said the RBI is likely to announce further OMO sales only if bond yields fall, so as to ensure a minimal market impact.

Options traders are bullish on the rupee, betting that the Indian currency is better prepared to endure a sell-off when major central banks start paring stimulus. Rand Merchant Bank, the rupee’s most accurate forecaster in Bloomberg’s quarterly rankings, has raised its forecast to 64 per dollar by year-end.

• Nifty Bank sees open interest addition of 1.7 lakh shares
• Nifty Bank continues to show more strength than the Nifty
• Rangebound market with support at 9,800 and resistance at 10,000 levels
• Nifty Put-Call Ratio drops as call writers aggressive at 9,900-10,100 levels
• Put writers avoid any major positions; shed positions at 9,900-10,000

Reliance Industries

• Remained ‘Accumulate’ at Prabhudas Lilladher with a target price of Rs 1,431
• Remained ‘Overweight’ at Morgan Stanley with a target price of Rs 1,531

Kotak Mahindra

• Remained ‘Neutral’ at Credit Suisse with a target price of Rs 950
• Remained ‘Neutral’ at Macquarie with a target price of Rs 940

Wipro

• Remained ‘Outperform’ at CLSA with a target price of Rs 310
• Remained ‘Underweight’ at Morgan Stanley with a target price of Rs 240

• Bajaj Auto: Remained ‘Underpeerform’ at Macquarie with a target price of Rs 2,400
• DB Corp: Remained ‘Buy’ at CLSA with a target price of Rs 450
• NIIT Rechnologies: Remained ‘Outperform’ at Credit Suisse with a target price of Rs 640

Reliance Industries (Q1, YoY)

• Revenue down 4.4 percent to Rs 64,217 crore
• EBITDA up 2.7 percent to Rs 11,589 crore
• EBITDA margin expands to 18 percent from 16.8 percent
• Net profit up 0.6 percent to Rs 8,196 crore
• To acquire 2.52 crore shares or 24.92 percent stake in Balaji Telefilms at Rs 164 per share for a total investment of Rs 413.28 crore
• To invest up to $25 million in Jerusalem Innovation Incubator over a period of about 8 years

Wipro (Q1, QoQ)

• Revenue up 2.6 percent to Rs 13,626 crore
• EBIT down 9.7 percent to Rs 2,174 crore
• EBIT margin contracts to 16 percent from 16.7 percent
• Net profit down 8.1 percent to Rs 2,077 crore
• To buyback up to 34.37 crore shares worth Rs 11,000 crore at Rs 320 per share
• Shareholders approve appointment of Azim Premji as Executive Chairman and Managing Director of the company
• Expects revenue to remain flat or lower in the next quarter between $1.96 billion and $2 billion

• Aurobindo Pharma: U.S. FDA gives tentative approval to Esomeprazole Magnesium capsule.
• Jaiprakash Associates: Rakesh Jhunjhunwala bought 2.5 crore shares during the June quarter
• Jubilant Life Sciences: Rakesh Jhunjhunwala picks up 1.26 percent stake in the company
• Aban Offshore: Promoter sells 20,000 shares in the open market

For a complete list of stocks to watch, click HERE!

• Wipro board approves Rs 11,000-crore buyback
• NSE files plea with SEBI to settle co-location probe
• RIL surprises the street for eighth straight quarter
• Enforcement Directorate summons Shah Rukh Khan, Juhi Chawla in IPL FEMA case
• Battle over margins brews between Britannia and its distributors
• Reliance Jio’s push to scrap call connect charges will kill the industry, says Bharti Airtel
• Temporarily halt Rupee-denominated bond issuance: SEBI
• BMR’s M&A, risk consulting business to be merged with KPMG India

Good Morning!

The Singapore traded SGX Nifty, an early indicator of Nifty’s performance in India remained little changed at 9,914.

Stocks in Asia are headed for a first weekly decline in two after markets in Japan and Hong Kong scaled two-year highs this week.

U.S. dollar hit an 11-month low. Investors feel that an economic recovery is uncertain amid reports that Special Counsel Robert Mueller expanded his investigation further into Trump’s real estate agreements and financial dealings.

European Central Bank president Mario Draghi suggested that ECB will discuss its asset purchase plan in autumn.

The West Texas Intermediate crude remained little changed at $46.93 a barrel. Oil has been trading near $47 as investors consider increasing American crude production amid declining U.S. and Saudi Arabian stockpiles.

Gold snapped a five-day rally and fell 0.15 percent to $1,244.50 an ounce.

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