An Electronic Ticker Board Indicates Prices of the BSE Sensex at the Bombay Stock Exchange (Photographer: Prashanth Vishwanathan/Bloomberg)

Sensex, Nifty Pare Some Weekly Gains As Infosys Slumps On CEO’s Exit

Market Wrap

Closing Bell

Indian equity benchmarks declined for the first time in four sessions, led by slump in shares of Infosys Ltd. after Vishal Sikka resigned as chief executive officer of the country’s second-largest software services exporter.

The S&P BSE Sensex dropped 0.85 percent to 31,524 while the NSE Nifty 50 Index lost 0.67 percent to 9,837. Both the indices posted weekly advance of over 1 percent after retreating over 3 percent in the previous week. Thirteen of the 19 sector gauges compiled by BSE Ltd. dropped, led by the technology group that fell to its lowest level in over a month.

Infosys Falls Most In 12 Months After Sikka Resigns As CEO

Shares of Infosys Ltd. plunged as much as 12 percent to Rs 895.75, a three-year low for the stock, after Vishal Sikka resigned as the managing director and chief executive officer of the country's second-largest software services company.

The company has wiped out over Rs 24,000 crore in market value, according to Bloomberg data.

Trading volume was 26.8 times the 20-day average for this time of the day. The stock was the worst performer on the S&P BSE Sensex, Nifty and MSCI Asia-Pacific indices. It has lost 4.43 percent so far this year, against a 18.7 percent gain in the benchmark Sensex index.

Full Statement: Vishal Sikka’s Resignation Letter To Infosys Board

InterGlobe Aviation Says Reports Of Flight Cancellations Misleading

Update: IndiGo has eight A320 Neo planes grounded and the carrier’s schedule was already planned in June to account for the non-availability of these aircraft for July, August and September, a spokesperson for the company told Bloomberg.

Shares of the budget carrier operator fell as much as 4.95 percent to Rs 1,247.50 after a PTI report said IndiGo cancelled 84 flights and grounded thirteen A320 Neo planes due to Pratt & Whitney engine issues.

European Shares Open Lower

UB Holdings Locked In Lower Circuit

Shares of the Vijay Mallya-promoted firm slipped 5 percent to Rs 17.60 after the National Stock Exchange and BSE Ltd said that they would suspend trading in the stock from September 8,

The suspension was mainly "on account of non-compliance with financial results and non-payment of fine for two consecutive quarters", NSE said in a communication.

The bourses also froze the entire promoter shareholding with immediate effect.

Top Movers & Shakers

Opening Bell

Indian shares declined, in line with global peers, after terrorists struck a crowded tourist street in Barcelona, exacerbating unease triggered by mounting concerns about dysfunction in President Donald Trump’s administration and U.S. policy paralysis.

The S&P BSE Sensex 0.6 percent to 31,589 while the NSE Nifty 50 Index dropped 0.6 percent as well to 9,840. All the 19 sector gauges compiled by the BSE Ltd declined, led by the S&P BSE IT Index’s 2.5 percent drop, the most in over two months.

Money Markets Heads-Up

The message from the RBI policymakers' meeting minutes is loud and clear: Effective transmission of a policy rate cut is the key to achieve growth and investment. And that's why Governor Urjit Patel and Deputy Viral Acharya are pushing commercial banks to cut borrowing costs.

Both also voiced concerns about inflationary pressures from farm loan waivers announced by several state governments and warned this could crowd out private borrowers.

Trading in the benchmark sovereign bonds may be muted ahead of the RBI's bond sale of Rs 15,000 crore later today.

Indian rupee is little changed in the two days that it has traded this week. Today, the signal from the Asia Pacific currencies is mixed. The Aussie dollar and Japanese yen rose against the dollar while the Korean won fell the most.

Technical charts suggest the rupee’s calm patch is about to end. Storm clouds are brewing, with the central bank expressing concern over inflation amid faster-than-expected rise in CPI, and local stocks faltering.

Nifty Chart Check

Futures And Options Cues

  • Nifty Futures added 13.9 lakh shares in open interest, premium down to 5 points from 8 points earlier.
  • Bank Nifty Futures shed 1 lakh shares in open interest
  • Maximum Call open interest at 10,000 at 53.6 lakh shares
  • Maximum Put open interest at 9800 at 64 lakh shares
  • Call strikes 9800, 10000 see unwinding of open interest
  • Put strikes 9800 & 9900 see open interest addition

Brokerage Radar

Yes Bank

  • Goldman Sachs: 'Buy' with a target of Rs 1,875. Cutting interest rate to improve the retail franchise, which in turn should drive the earnings and valuations of the bank. Estimate 3-9 basis points positive impact on net interest margins.

AU Small Finance

  • Citi: Initiate coverage with a 'Neutral' rating; target at Rs 600. The stock looks fairly valued; AUM/credit cost at 30 percent/31 percent and 1.65 percent/1.55 percent for FY18/FY19. Valuations to limit upside, given pressure on earnings for the next 4-6 quarters

KNR Construction

  • Nomura: Retains Buy; target price hiked to Rs 287 from Rs 227 earlier. Hike EPS estimates for FY18/19F by 16 percent/4 percent. High order book opportunities over FY18-20. Says order inflow of Rs 2,500 crore achievable.

Dish TV

  • Motilal Oswal: Buy with a target of Rs 106. Margin recovery expected in FY18 led by content cost reduction and synergy gains from the merger.
  • IDFC: Retains Neutral but target cut to Rs 92 from Rs 95. FY18E/19E EBITDA cut by 7.3 percent/7.7 percent. ARPU up move started; expect this to sustain for the next three-quarters. Merger to yield both revenue and cost synergies.
  • CLSA: Retains Buy but cuts target price to Rs 97 from Rs 112. EBITDA estimates cut by 10-11 percent led by a 2-4 percent cut in subscriber and ARPU estimates. Expect EBITDA CAGR of 6 percent over FY17-20 (pre-merger).
  • Goldman Sachs: Neutral with a target of Rs 80. FY17-19E EPS cut by 21 percent-2 percent. Long-term outlook to stay challenged given competition from FTA, and easier/cheaper access to online content.
  • Morgan Stanley: Says revenue growth in FY18 will be volume led, while GST will aid margin expansion, albeit lower than earlier expected.

Infosys

  • CLSA: Buyback to take at least another 4 months to complete. Expect 10 percent-20 percent premium to drive a 4.8 percent-5.3 percent acceptance ratio. ROE to increase by 550 basis points to 24.4 percent in FY19 and its payout ratio in FY18 should be 155 percent.

Stocks To Watch

  • IndusInd Bank cuts some savings deposit rates by 100 basis points
  • Punjab National Bank will reduce the interest rate for savings deposits up to Rs 50 lakh by 50 basis points to 3.5 percent.
  • Dish TV to transfer of Videocon Infra support undertaking to subsidiary Dish Infra
  • Somany Ceramics to set up a manufacturing facility in Andhra Pradesh
  • Raymond Group takes control of brand Kamasutra; buys out Australian partner’s stake in joint venture
  • Raymond sells its glove business to Pacific Dunlop for Rs 11.3 crore
  • Manaksia Industries to set up a subsidiary in Bangladesh, Sri Lanka and Georgia
  • SpiceJet deposits Rs 329 crore in share transfer dispute with Kalanithi Maran
  • ICICI Lombard General expects SEBI nod for IPO in 2-3 weeks
  • Rajasthan government signs joint venture pact with HPCL for Barmer refinery
  • IIFL AMC buys 2.59 percent in Reliance Nippon Life Asset Management
  • Mindtree buy back starts today; to remain open until September 1
  • UFO Moviez meets Centrum, Quantum Securties and Premji Investment
  • BSE, NSE to suspend trading in United Breweries Holdings from September 8 on account of “non-compliance with financial results and non- payment of fine for two consecutive quarters".

Talking Points

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.58 percent to 9,853.

Asian stocks were trading lower after terrorists attacked a crowded tourist street in Barcelona. Equities fell from Tokyo to Sydney after the S&P 500 Index on Thursday tumbled 1.5 percent, its second-biggest drop for 2017.

The latest terror attack exacerbated unease among investors already reeling from mounting concerns about dysfunction in President Donald Trump’s administration and U.S. policy paralysis.

Meanwhile, oil was headed for a third weekly drop as U.S. crude output rose to a two-year high and Chinese refining slowed, signs that the world's two biggest consumers may stymie OPEC-led efforts to trim global glut.

Gold futures rose for second straight day and inched toward $1,300 an ounce on safe haven demand.

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