A bronze bull statue stands at the entrance to the Bombay Stock Exchange (BSE) building in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Sensex, Nifty Extend Gains To Fourth Day; BPCL, Tata Motors Top Performers

Closing Bell

Indian equities rose for fourth straight session led by gains in energy, FMCG, auto and pharma shares.

The S&P BSE Sensex rose 0.87 percent to 32,158.66 and the NSE Nifty 50 Index advanced 0.87 percent to 10,093.05. Gains in today's session were broad-based as the S&P BSE MidCap Index and S&P BSE SmallCap indices rose 1 percent each.

All the 19 sector gauges compiled by BSE Ltd ended higher led by the S&P BSE Realty Index's 2.1 percent gain.

Nifty faces resistance around 10,100 levels, says Dhaval P Vyas, founder and chief market analyst at www.dhavalpvyas.com.

"If Nifty closes above 10,100 consistently for two sessions then chances of it going up to 10,450-10,500 are quite high," Vyas adds.

NBCC Rises On Appointment As Project Management Consultant

Shares of the state-run construction company jumped as much as 4.41 percent, the most since August 14, to Rs 217.65 after it was appointed as project management consultant for two projects.

The projects include redevelopment of ITPO Complex into an Integrated Exhibition-Cum-Convention Centre (IECC) at Pragati Maidan in New Delhi and for canal work in Nagpur, Maharashtra.

Market Check

The Indian equity benchmarks extended gains and rose to fresh one-month highs led by gains in Tata Steel, Sun Pharma and Tata Motors.

  • The NSE Nifty 50 Index rose as much as 91 points or 0.91 percent to 10,097.55
  • The S&P BSE Sensex advanced as much as 281 points or 1 percent to 32,163.68
  • From the Nifty basket of shares, 44 were trading higher while 7 were among the losers
  • The S&P BSE Real Estate Index was the top sectoral gainer, rising as much as 2 percent

Matrimony.com IPO Fully subscribed

The matchmaking and marriage services company's Rs 501 crore IPO was fully subscribed as of 2:30 p.m.

  • The issue was subscribed 109 percent as of 2:30 p.m., according to the stock exchange data.

Stocks Gaining On Heavy Volumes

  • Elgi Equipments: The Coimbatore-based industrial machinery maker rose as much as 10.5 percent, the most since July 28, to Rs 249.95. Trading volume was 78.6 times its 20-day average.
  • BASF India: The Mumbai-based chemical manufacturer climbed as much as 2 percent, the most since September 6, to Rs 1,480. Trading volume was 12.1 times its 20-day average.
  • S.P. Apparels: The Ahmedabad-based apparel maker and exporter rose as much as 4.55 percent, the most since September 5, to Rs 423. Trading volume was 27.9 times its 20-day average.
  • Arvind SmartSpaces: The Ahmedabad-based real estate company jumped as much as 20 percent to record high of Rs 173.40. Trading volume was 44.3 times its 20-day average.

Divi's Labs Surges 11%; U.S. FDA Inspection Underway At Vizag Facility

Shares of the drugmaker rose as much as 10.99 percent, the most in over three months to Rs 798.70.

The U.S. FDA is inspecting the Unit II of Divi’s Laboratories Ltd.’s Visakhapatnam facility, people with knowledge of the matter told BloombergQuint.

The drug regulator had issued an import alert in March and a warning letter in May for Unit II. Plants on the FDA's import alert list cannot export drugs to the U.S.

Matrimony.com IPO Update

Matchmaking and marriage services company's Rs 501 crore IPO was subscribed 87 percent as of 12:00 p.m.

  • Portion reserved for institutional investor was subscribed 83 percent
  • Portion reserved for retail investor was subscribed 2.29 times

Markets At Lunch

Force Motors Rises Over 5% On Joint Venture With Rolls-Royce

Shares of the automaker jumped as much as 5.2 percent, the most since September 4, to Rs 4,300 after the company entered into a non-binding term sheet with Rolls-Royce Power Systems AG (R-RPS) to form an Indian Joint Venture Company for producing engines, according to a stock exchange filing.

PSU Bank Shares Advance

Shares of the state-ruin lenders were trading higher. The PSU Bank Nifty rose as much as much as 2 percent.

European Shares Advance

Investors Should Remain Stock Specific: Vinod Nair

Indian shares are gaining driven by liquidity, Vinod Nair, head of research at Geojit Financial Services told BloombergQuint told BloombergQuint by phone.

“Investors should remain stock specific.” Nair advised investing in select mid-cap IT, pharma and FMCG shares.

Confidence Petroleum Locked In 5% Upper Circuit

Shares of the LPG bottler rose as much as 5 percent to Rs 19, the most since September 1. The company commissioned a new LPG bottling plant near Kolkata and started providing bottling assistance to HPCL, it said in a stock exchange filing.

It also commissioned three new auto LPG dispensing stations at Chennai.

Realty Shares Outperform

The BSE Realty Index was the top sectoral gauge on the BSE, rising as much as 2 percent, the most since September 1 to 2,234.

Godrej Industries Gains As Arm Gets SEBI Clearance For IPO

Shares of the Mumbai-based company jumped as much as 4.2 percent, the most since August 16, to Rs 657.9 after its subsidiary Godrej Agrovet received SEBI’s approval to raise an estimated Rs 1,000-1,200 crore through an initial public offering.

Tata Coffee Rallies To Record High

Shares of the coffee and tea producer rose as much as 16.6 percent to record high of Rs 175 after well-known investor Porinju Veliyath bought shares in the company.

  • Equity Intelligence buys 10 lakh shares or 0.5 percent stake at Rs 150 each
  • F Born AG sold 15 lakh shares or 0.8 percent stake at Rs 150.01 each

Block Deal Alert

Karur Vysya Bank has 25 lakh shares or 0.41 percent equity change hands in two block deals at Rs 147 per share. Total deal is valued at Rs 37 crore.

Buyers and sellers were not immediately known.

Source: Bloomberg

Liberty Shoes Surges To Two Year High

Shares of the shoe maker rallied as much as 16 percent to Rs 283, its highest level since August 2015 after well-known investor Porinju Veliyath bought shares, stock exchange data showed.

  • Equity Intelligence bought 3.21 lakh shares or 1.9 percent stake at Rs 235.48 each
  • EQ India Fund bought 1.13 lakh shares or 0.7 percent stake at Rs 210.7 each
  • Elsamma Joseph bought 1.25 lakh shares or 0.7 percent stake at Rs 223.06 each

Tata Steel At 6-Year High As U.K. Regulator Approves Pension Agreement

Shares of the steel maker rose as much as 4.6 percent to Rs 693, its highest level since February 2011 after U.K. regulator approved Regulated Apportionment Arrangement (RAA).

As part of RAA, Tata Steel U.K. will pay £550 million to British steel pension scheme.

Meanwhile, international brokerage HSBC has maintained its 'Buy' rating on Tata Steel for target price of Rs 750. It says pension settlement is paving way for merger with Thyssenkrupp and merger would realise annual synergies of 400-600 million euros.

Opening Bell

Indian shares gained for a fourth day, reflecting a rebound in global equity markets after concerns around Hurricane Irma ebbed and lack of further provocative developments from North Korea.

The S&P BSE Sensex rose 0.34 percent to 31,991 and the NSE Nifty 50 index advanced 0.31 percent to 10,037.

All the 19 sector gauges compiled by BSE Ltd were trading higher led by the S&P BSE Metal Index’s 1.6 percent gain.

Money Market Heads-Up

Traders will watch out for the crucial inflation data that is due later today as it will be the final reading on consumer prices before the Reserve Bank of India decides on interest rates next month. Consumer Price Index (CPI) is expected to rise to 3.27 percent Y-O-Y in August, up from 2.36 percent in July, according to a Bloomberg survey.

Bankers say CPI above 3 percent could trigger a selloff in the bond market as it indicates that it will be highly unlikely that the RBI will cut interest rates next month. Later in the day, India will also detail its Industrial Production number for July.

The direction of the local stock markets and position of portfolio flows is expected to guide the near-term direction in the rupee, according to NSP Treasury Risk Management. NSP expects dollar demand emerging from importers and corporates at regular intervals, could lead to gradual weakness in the rupee toward 64.50 or so in the next two weeks.

Earnings To Watch

  • ABM Knowledge
  • Asahi Songwon Colours
  • Future Ligfestyle Fashions
  • Jet Air
  • Kesar Terminals
  • Orient Refractories
  • Shemaroo
  • Windsor Machines

For a more detailed earnings report, click here

Data To Watch

  • 5:30pm: July industrial production YoY; estimate 1.7 percent (prior -0.1 percent)
  • 5:30pm: India August YoY consumer price inflation; estimate 3.27 percent (prior 2.36 percent)

F&O Cues

  • Nifty September Futures closed with a premium of 20 points versus 15 points
  • September Nifty Futures OI up 2 percent, Bank Nifty OI up 24 percent
  • India VIX closed lower by 4.6 percent at 12.26
  • September series highest Call base at 10,000 (OI at 38.8 lakh, down 18 percent)
  • September series highest Put base shifts to 9,900 (OI 56 lakh, OI up 8 percent)
  • Call strikes 9,900, 9,950, 10,000 see OI unwinding, 10,150 & 10,200 see OI addition
  • Put strikes 9,900, 10,000 see OI addition

IPO Watch

  • Matrimony.com IPO subscribed 67 percent on Day 1
  • Godrej Agrovet and SBI Life get SEBI approval for IPO

Brokerage Radar

Morgan Stanley on Coal India

  • Maintain ‘Underweight’ with a target price of Rs 221
  • Coal inventory at power plants declined to 9 days versus 15-20 days
  • Expect 580 MT of production in FY18
  • Low base and improvement in power demand to aid coal demand
  • Pricing and employee wage hikes will be key to track

Morgan Stanley on Tata Steel

  • Maintain ‘Overweight’ with a target price of Rs 741
  • De-risking on pension issue; focus will now shift to potential JV
  • JV to be medium-term positive given overall cost reductions and improved pricing in Europe

HSBC on Tata Steel

  • Maintain ‘Buy’ with a target price of Rs 750
  • Pension settlement paving way for merger with Thyssenkrupp
  • Financial impact of settlement to reflect in second quarter of FY18
  • Merger would realise annual synergies of 400-600 million euros

UBS on IndusInd Bank

  • Maintain ‘Neutral’ with a target price of Rs 1,800
  • Merger could be EPS accretive by FY19-20
  • Assume swap ratio of 0.67 and funds savings of 125 basis points in FY19/20, then IndusInd’s EPS post-merger to increase by 1 percent and 5 percent in FY19 and FY20 respectively
  • Microfinance to generate high return on equity
  • Net interest margins to be higher by 40-45 basis points in FY19-20 estimates to 4.4-4.5 percent

Macquarie on IndusInd Bank

  • Maintain ‘Outperform’ with a target price of Rs 1,625
  • Merger to increase IndusInd’s return on assets by 9 basis points
  • MFI exposure to increase to 10 percent of loans, exposing it to more event risks
  • Synergies:- lower cost of funds, lower operating costs, better capital efficiency & higher leverage
  • Do not expect a boost to CASA ratio from the merger

CLSA on IndusInd-Bharat Financial

  • Bharat Financial benefits: lower regulatory risk and funding costs
  • IndusInd benefits: ability to leverage Tier I CAR of 30 percent and PSLC fees
  • IndusInd risk profile to rise a bit as share of micro-finance institutional loans rises
  • Normalisation of business for Bharat Financial is key

JPMorgan on IndusInd Bank

  • Maintain ‘Overweight’; Hiked target price to Rs 1,975 from Rs 1,675
  • Acquisition accretive with some near-term integration risks
  • IndusInd would get firm footing in MFI segment
  • IndusInd to enhance Bharat Financial’s profitability

Stocks to Watch

  • InterGlobe Aviation to sell 3.35 crore equity shares. Fresh issue of 2.23 crore shares and offer-for-sale by promoters of 1.12 crore shares
  • Sun Pharma gets U.S. FDA nod for Fenofibrate Oral Tablet
  • Tata Steel says U.K. regulator approves pension agreement
  • Thyssenkrupp says Tata Steel Europe merger deal may come in September (Manager Magazin)
  • Bharti Airtel launches 4G VoLTE services in Mumbai, pan India rollout by March
  • Electrosteel says CBI conducts raids at company’s offices
  • Tanla Solution to allot 14.83 lakh equity shares to promoter Tanuja Reddy pursuant to conversion of warrants into equity
  • NTPC Commissions 40 mega-watt of Rojmal wind energy project
  • Zee to launch premium HD English movie channel
  • Andhra Bank to cut rate on up to 5 million saving accounts 50 basis points from Friday
  • Diamond Power, Kamat Hotel, Store One Retail, Adhunik Metaliks: Circuit filter revised to 10 percent
  • SORIL Holdings & Ventures: Circuit filter revised to 5 percent

Talking Points

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.3 percent to 10,056.

Asian shares extended gains after the S&P 500 Index rose to a record high and Treasuries tumbled, with less damage than originally feared from Hurricane Irma supporting the case for a gradually improving U.S. economy.

Commodities

  • Gold was steady at $1,326.29 an ounce after sinking 1.4 percent on Monday.
  • West Texas Intermediate crude was little changed at $48.06 following a 1.2 percent gain on Monday.
  • ICE Sugar ended higher for second day at 14.29 cents a pound; up 1.42 percent.
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