Sensex, Nifty End Near 1-Month Low As Tata Motors, Dr. Reddy’s Labs Drag

Indian equity benchmarks declined for a fourth straight session to a one month low after the country’s largest automaker’s outlook disappointed investors.

The S&P BSE Sensex declined 0.8 percent to 31,531 while the NSE Nifty dropped 0.9 percent to 9,820. The 51-share index fell 1.33 percent intraday, its biggest decline this year.

The mid-caps and small-caps fared even worse with their gauges declining well over 2 percent each. The market breadth was dominated by the sellers. About 1,340 stocks declined while 113 advanced on the NSE.

Seventeen out of 19 sector indices compiled by the BSE Ltd. declined, led the S&P BSE Realty Index’s 5.12 percent drop, the most in nine months. The S&P BSE Information Technology bucked the trend, rising 0.6 percent.

The Gautam Adani-led company reported loss for the first quarter that was narrower than the average analyst estimate.

• Q1 loss Rs 450 crore versus estimate loss Rs 832 crore
• Revenue Rs 5,590 crore versus estimate of Rs 5,401 crore
• Total costs Rs 6,100 crore versus Rs 5,700 crore
• Average plant load factor 63 percent versus 66 percent year-on-year
• Says PLF drop mainly on customer back down and maintenance shutdowns

Shares of the power plant equipment maker fell as much as 4.6 percent intraday to Rs 126.85, most in over three months, after its first quarter profit missed analyst estimate.

The company reported a net profit of Rs 80.82 crore for the April-June quarter, against Rs 120 crore estimate of analyst tracked by Bloomberg.

Key Q1 Highlights

• Revenue at Rs 5,730 crore versus estimate of Rs 6,030 crore
• Total costs at Rs 609 crore
• Other income at Rs 462 crore
• Total order book at June end at Rs 1.01 lakh crore

Shares of the drug maker gained as much as 5.6 percent, making it the best performing stock on the NSE Nifty 50 Index after reporting April-June quarter earnings that met analyst estimates.

The pharmaceutical company reported a net profit of Rs 518 crore in the first quarter of financial year 2017-18, compared to Rs 585 crore figures in the corresponding quarter. The consensus estimate of analysts tracked by Bloomberg had pegged the bottomline at Rs 567 crore.

Conference Call Highlights: Aurobindo Pharma Management Confident Of A Strong FY18

Shares of the automobile manufacturer fell as much as 6.89 percent, the most in six months after its first quarter results failed to meet analyst expectations.

A one-time gain of Rs 3,609 crore ensured the company's net profit rose 25 percent to Rs 3,182 crore on a year-on-year basis. While margins for the company declined 540 basis points to 8.5 percent, Jaguar Land Rover posted single-digit margins of 7.9 percent from an estimated 12.5 percent.

Shares were trading at a 52-week low and declined for the fourth straight day. The Relative Strength Index (RSI) stood at 18, indicating that the stock is in oversold territory.

Indian equity benchmarks extended their decline for a fourth straight session weighed down by Tata Motors in a backdrop of mixed trade in Asian peers.

The S&P BSE Sensex fell 0.6 percent to 31,588 while the NSE Nifty 50 Index dropped 0.7 percent to 9,835 – a near one-month low for both the indices. The market breadth was firmly skewed in favour of the sellers. About 1245 stocks decline while 288 advanced on the NSE.

Seventeen of the 19 sector gauges compiled by BSE Ltd. declined, led by S&P BSE Industrials’ 2.13 percent loss, the most in over two months. The S&P BSE Information Technology Index rose 0.24 percent, the best performer.

Some pressure is seen on sovereign notes as supply burden may deter position building and might even lend negative bias to the bond markets. RBI will sell debt worth Rs 10,000 crore via its open market operations today, while on Friday it will auction bonds worth Rs 15,000 crore.

Market sources told Bloomberg that the Reliance Group has boosted the duration of its bond portfolio, and has moved about Rs 7,000 crore from short-term funds to income funds. Now this contrast with the general trend where bond traders have been paring exposure to long-term notes on bets the RBI is almost finished cutting interest rates.

Though the broader trend for the Indian rupee is positive, it may trade in a range today as most regional currencies stabilize after U.S. officials eased concern about an imminent attack against North Korea.

Aurobindo Pharma

• Citi: Best placed to navigate the headwinds in U.S. generics; remains a top pick with target price of Rs 1,070
• Goldman Sachs: Strong launch ratio drives U.S. business growth; target price at Rs 850
• JPMorgan: U.S. business, higher than expected margin should reverse the declining trend in its stock price; target price at Rs 800
• CLSA: Upgrades to ‘Outperform’ from ‘Sell’; target raised to Rs 770 from Rs 520. Renvela launch to support near-term earnings

Tata Motors

• CLSA: Cuts target to Rs 380—21%-34% below consensus—from Rs 405 earlier. Reduced FY18-20 earnings per share by 3-11 percent.
• Axis Capital: Cuts target to Rs 493 from Rs 570 earlier. Cuts FY19 estimates by 40 percent after weak results
• Credit Suisse: Cuts target to Rs 570 from Rs 630. Says first quarter definitely marks the bottom for margin. Expects volumes to pick up going forward.
• Bank of America Merrill Lynch: Cuts target to Rs 515 from Rs 600. New launches and forex gains to aid recovery in second half
• Citi: Front loading of costs impacted JLR's Q1; expect improvement ahead. Target Rs 600.
• Edelweiss: Lower our FY18/19 EPS by 20 percent/10 percent. Results disappointed on all fronts
• Kotak: Cut target to Rs 540 from Rs 560. Maintain Buy on attractive valuations
• HSBC: Cut target to Rs 500 from Rs 550. Clean ex-hedging EBITDA margins were 15 percent, in line with FY18/19 estimates

• Nifty futures premium moves to 18.7 points from 21 points earlier
• Nifty futures adds 2.7 lakh shares in open interest
• Bank Nifty Futures sheds 1.3 lakh shares in open interest
• Maximum Call open interest at 10,100 with open interest of 50 lakh shares
• Maximum Put open interest shifts to 9,800 followed by 10,000 strike
• Open interest addition seen on call strikes of 9,900, and 10,000
• Open interest unwinding seen on Put strikes of 10,000, 10,100 and 10,200

• NHPC: Signed Power Purchase Agreement with BSES Yamuna Power for a period of 35 years from the date of commercial operation of the seven power stations
• Dabur: Dabur Tunisie, subsidiary of company, to be dissolved and liquidation is under process
• IDBI Bank: Government infuses additional Rs 1,861 crore
• Aurobindo Pharma: Increased its stake in Tergene Biotech from 60 percent to 80 percent for an amount of Rs 5.65 crore

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

• NCLT names insolvency resolution professional for Lanco Infratech
• JLR’s one-time gain cushions Tata Motors in Q1
• Eicher’s profit grows on best ever quarterly sales for Royal Enfield
• Inter-Ministerial Group set to finalise telecom sector report soon
• Reliance Communications plans to issue shares to lenders in lieu of debt
• Aurobindo Pharma’s Q1 profit misses estimates
• Sahara moves Supreme Court to put Aamby Valley auction on hold
• A Dozen of 162 ‘shell’ firms facing curbs may resume trading in a week

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.2 percent to 9,899.

Asian stocks halted a decline triggered by rising tension between the United States and North Korea as American officials tried to ease concerns that sparked a flight to safe haven assets.

The MSCI Asia Pacific Index was little changed in muted trading, with Japanese shares mixed, and Australian equities climbing, while South Korea’s benchmark gauge extended declines.

Attention is likely to flip back to the implications for monetary policy and U.S. economic growth with a speech by Fed Bank of New York President William Dudley due ahead of Friday’s inflation data. U.K. factory output for June is and France industrial production are due Thursday.

West Texas Intermediate crude was little changed at $49.56 a barrel after climbing 0.8 percent the previous session. U.S. production eased and crude inventories extended declines, trimming a glut.

Gold slipped 0.1 percent to $1,275.96 an ounce after surging 1.3 percent on Wednesday.