A man walks past the Bombay Stock Exchange (BSE) logo displayed outside the building’s lobby in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Sensex Ekes Out Fifth Day Of Gain As Sun Pharma Advances

Market Wrap

Closing Bell

Indian stocks rose marginally as an extended selloff in metal companies capped gains in the drug makers led by Sun Pharma after it was upgraded by a brokerage house.

The S&P BSE Sensex rose 0.17 percent to 32,241.93 and the NSE Nifty 50 Index was little changed at 10,126.

Eleven out of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Healthcare Index's 2.1 percent gain. On the other hand, the S&P BSE Metal Index fell 0.67 percent.

Nifty can rise to 10,200 once it crosses the previous high of 10,137.85, says Jay Thakkar, technical analyst at Anand Rathi.

"The Nifty has been making higher top higher bottom formation on charts and the up move will be supported by Bank Nifty," Thakkar told BloombergQuint by phone. On the downside, the index will find support at 10,000, he added.

Oil & Gas Shares Erase Gains

Shares of the energy companies erased gains. The S&P BSE Oil & Gas Index which rose as much as 2.2 percent, fell 0.9 percent.

Stocks Moving On Heavy Volumes

  • eClerx Services: The Mumbai-based data analytics service provider fell as much as 2 percent, the most since August 24, to Rs 1,202. Trading volume was 29.5 times its 20-day average.
  • Piramal Enterprises: The Mumbai-based specialty pharmaceutical company rose as much as 4.97 percent, the most in over two months, to Rs 2,895. Trading volume was 5.3 times its 20-day average.
  • SORIL Holdings and Ventures: The Gurugram-based company rose as much as 5.1 percent, the most since September 11, to Rs 50.40. Trading volume was 15.1 times its 20-day average.
  • Singer India: The Delhi-based sewing machine maker fell as much as 8.6 percent, the most in 10 months, to Rs 260. Trading volume was 8.4 times its 20-day average.

Markets At Lunch

Wholesale Inflation Rises To Four-Month High

Wholesale inflation rose to a four-month high of 3.24 per cent in August as prices of food articles, led by onions and vegetables, soared.

Inflation based on the wholesale price index (WPI) was 1.88 per cent in July 2017 and 1.09 per cent in August 2016.

Financial, Infrastructure Shares To Outperform: Amit Jeswani

Stocks in financial and infrastructure space will outperform, says Amit Jeswani, founder of Stallion Asset.

“The theme going forward will be financialisation of savings as a lot of IPOs of insurance and asset management companies are on the anvil,” Jeswani said. He is also bullish on road developers as they stand to gain from government’s focus on infrastructure.

European Shares Fall

Panacea Biotec Falls Most In 7 Months

Shares of the Punjab-based drugmaker fell nearly 10 percent to Rs 216.85, the most in seven months after its net loss widened more than twice, year-on-year in the quarter ended June.

The company's loss in the first quarter of current financial year stood at Rs 47.99 crore compared with loss of Rs 20.49 crore, during the same period last year.

BHEL Rallies Most In A Year

Shares of the heavy electrical equipment maker rose as much as 10.16 percent, the most in over a year to Rs 145.80. Japan’s Prime Minister Shinzo Abe while laying the foundation stone of Mumbai-Ahmedabad bullet train said BHEL and Kawasaki Heavy will make rolling stock for bullet train.

BHEL has tied-up with Kawasaki to make rolling stock of bullet train, according to a Bloomberg report.

Wipro Falls Ahead Of Record Date Of Share Buyback

Shares of the Bangalore-based IT company fell as much as 5 percent, the most in over 10 months, to Rs 281.20 ahead of share buyback.

The stock had hit a fresh 52-week high of Rs 303.55 on September 11 and has since then fallen 7.2 percent.

HEG, Graphite India Rise After Jefferies Initiates Coverage

HEG Ltd rose as much as 7.9 percent and Graphite India advanced as much as 5.3 percent after the international brokerage Jefferies initiated coverage on both the stocks with a 'Buy'

Jefferies On Graphite India

  • Buy for target price of Rs 342 (Potential Upside 31 percent)
  • Earnings to grow at CAGR of 116 percent over FY17-20
  • Improvement in realisation to drive revenue CAGR of 32 percent over FY17-20
  • German subsidiaries to turnaround with revival in graphite demand
  • Cash conversion cycle to improve to 27-20 days in FY18-19

Jefferies on HEG

  • Buy for target price of Rs 1,050 (Potential Upside of 50 percent)
  • Company will return to profitability in FY18
  • Expect earnings CAGR of 129 percent over FY18-20
  • Expect graphite electrode prices to rise and utilisation to improve
  • Expect capacity utilisation of 85-90 percent in FY18-19
  • Revenue to grow at CAGR of 44 percent over FY17

Rupee Falls To 64.14 Against U.S. Dollar

The Indian rupee fell to its lowest level in a week against the U.S. dollar. Rupee fell to 64.14 against Wednesday's close of 63.99.

Pharma Shares Gain For Third Day

Shares of the drugmakers rose for third day in a row. The S&P BSE Healthcare Index was the top sectoral gainer, rising as much as 1.7 percent to 13,739.

Indian Oil, BPCL Gain As Government Rules Out Interference On Fuel Pricing

Shares of the state-run oil marketing companies rose after the government ruled out interfering in daily revision of petrol and diesel prices done by the oil marketing companies.

"The government has no business to interfere in day to day operations of oil companies," Oil Minister Dharmendra Pradhan said.

Commodity Market Outlook

Opening Bell

Indian equity benchmarks edged higher led by gains in oil marketing companies after the government said it will not interfere with the fuel pricing.

The S&P BSE Sensex rose 0.2 percent to 32,257 and the NSE Nifty 50 Index advanced 0.3 percent to 10,108. Meanwhile, the broader markets were outperforming the larger benchmarks. The S&P BSE MidCap and the S&P BSE SmallCap Indices rose 0.8 percent each.

Seventeen out of 19 sector gauges compiled by BSE Ltd were trading higher led by the S&P BSE Oil & Gas Index's 1.6 percent advance. On the other hand, the S&P BSE IT Index declined 0.3 percent.

Money Market Heads-Up

Some pressure is seen on sovereign notes as the Reserve Bank of India will sell Rs 10,000 crore of debt via its open market operations today. Wholesale price inflation, which is due for release today, is seen rising to 3.2 percent YoY in August from 1.88 percent in July.

The rupee is seen weakening in today's session as dollar rebounded overnight after President Trump discussed tax reform with members of Democrat party.

Credit Agricole in a note said that this week’s correction in emerging market currencies is likely to be temporary as the environment still favors developing-nation assets. Credit Agricole recommends investors go long on Asian FX, particularly high-yielding Indian rupee, Indonesian rupiah and the Chinese currency.

F&O Cues

  • Nifty Sept Futures closed with a premium of 12 points from 15 points
  • Sept Nifty Futures open interest up 3 percent; Bank Nifty open interest down 5 percent
  • India VIX closed flat-to-negative at 11.7
  • September series highest call base at 10,200 (open interest at 41.2 lakh, up 7 percent )
  • September series highest put base at 9,900 (open interest at 60.6 lakh, down 4 percent)
  • Call strikes 10,100, 10,200 see open interest addition and unwinding for 10,000
  • Put strikes 10,000, 10,100 see open interest addition

Earnings Reaction To Watch

ISMT (Q1FY18, YoY)

  • Revenue up 8.8 percent to Rs 308 crore
  • EBITDA up 69 percent at Rs 13.5 crore
  • Margin at 4.8 percent from 3.1 percent
  • Net loss of Rs 64 crore from a loss of Rs 76 crore

Sandur Manganese (Q1FY18, YoY)

  • Revenue up 45 percent to Rs 129 crore
  • EBITDA at Rs 27.5 crore
  • Margin at 22 percent from 8 percemt
  • Profit up 236 percent to Rs 18.5 crore

WPIL (Q1FY18, YoY)

  • Revenue up 81 percent to Rs 76 crore
  • EBITDA up 33 percent to Rs 8 crore
  • Margin at 10.8 percent from 15 percent
  • Profit up 67 percent at Rs 5 crore

Walchandnagar Industries (Q1FY18, YoY)

  • Revenue up 17.5 percent to Rs 94 crore
  • EBITDA up 36 percent to Rs 19 crore
  • Margin at 21.6 percent from 18.2 percent
  • Net loss of Rs 8.5 crore from a loss of Rs 13 crore

CMI (Q1FY18, YoY)

  • Revenue up 65.5 percent to Rs 144 crore
  • EBITDA doubles to Rs 18 crore
  • Margin at 13.6 percent from 11.7 percent
  • Profit at Rs 6 crore

Kopran (Q1FY18, YoY)

  • Revenue down 19 percent to Rs 51 crore
  • EBITDA down 12.5 percent to Rs 3.5 crore
  • Margin at 6.9 percent from 6.3 percent
  • Profit down 50 percent to Rs 1 crore

Lovable Lingerie (Q1FY18, YoY)

  • Revenue down 9.7 percent at Rs 60.5 crore
  • EBITDA down 33 percent at Rs 8 crore
  • Margin at 13.2 percent versus 17.9 percent
  • PAT down 50 percent at Rs 6 crore

Minda Corp (Q1FY18 YoY)

  • Revenue up 19 percent to Rs 623 crore
  • EBITDA down 10.2 percent to Rs 44 crore
  • Margin at 7.6 percent from 10 percent
  • Profit down 9.8 percent to Rs 23 crore

Earnings To Watch

  • Arvee Denims
  • Autoline Industries
  • Balkrishna Paper
  • BF Utilities
  • Chartered Logistics
  • Fineotex Chemicals
  • Goodluck India
  • Kesoram
  • Lincoln Pharma
  • OK Play
  • Talwalkars
  • Vadilal Industries
  • Veto Switch

Data/Events To Watch

  • Ceremony for India’s first high speed bullet train will be held in presence of Prime Minister Modi and Prime Minister of Japan Abe in Ahmedabad
  • 12:00 p.m.: Wholesale price inflation for August; Bloomberg estimate 3.20 percent (prior 1.88 percent)

BQ Heads-Up!

Brokerage Radar

Credit Suisse on Sun Pharma

  • Upgrade rating to Outperform from neutral; Hiked target price to Rs 595 from Rs 490; potential upside of 23 percent
  • Specialty pipeline to boost profit CAGR to 20% over FY19-22
  • Price erosion risk at Sun to be lower at mid-single digit while industry faces higher risk
  • Halol re-inspection and MK-3222 approval are key catalysts

CLSA on Apollo Hospitals

  • Cut target to Rs 1,400 from Rs 1,480; Maintain Buy
  • Expect hospital business recovery from second half FY18 onward
  • Moderate margin assumptions by 100-150 basis points for FY18-20
  • 28-43 percent earnings cuts on back of weak Q1 and price caps
  • Morgan Stanley on Oil Marketing Companies
  • No intervention by government leads to more conviction
  • Remain overweight on IOCL, BPCL and HPCL
  • See strong upcoming earnings season and even stronger 2018

Citi on L&T

  • Maintain Buy; target Rs 1,452
  • Asking rate to meet order inflow guidance is not easy
  • Management expects lumpy second half like earlier years
  • Defence prospects could also fructify in the next 12-15 months
  • Cheapest stock in India industrials coverage universe

Deutsche Bank on Axis Bank

  • Upgrade to buy from Hold; target hiked to Rs 600 from Rs 560
  • Favorable risk-reward; tailwinds could be stronger than headwinds
  • A long NPL cycle is seemingly peaking now; FY19 will be the year of change
  • Business model getting better; higher share of retail is derisking balance sheet

Deutsche Bank on Jubilant Food

  • Maintain Buy; Target of Rs 1,450
  • Received an update from Jubilant Foodworks on bug incident
  • Expect that this incident to have no material impact on operations
  • Forecast 35 percent EBITDA growth and EPS to grow 3.3 times in FY17-19
  • Jubilant Foodworks remains a top pick

Stocks To Watch

  • Oil marketing companies in focus as government clarifies that it won't interfere in pricing by oil companies
  • Tata Chemicals: To sell its phosphatic fertiliser business to Indorama Holdings BV, Netherlands for Rs 400-500 crore
  • InterGlobe Aviation: QIP to open on 15 September. Price band fixed at Rs 1,125 to Rs 1,175 per share
  • Thermax: Bags EPC order worth $43 million from UAE cement company
  • Himachal Futuristic: Exits CDR mechanism
  • Jubilant Foodworks: Clarifies and says all its food ingredients safe to consume
  • Reliance Communication: Says Ericsson India files insolvency case against company for the recovery of Rs 491.41 crore
  • Wipro: To partner with Rebuild Texas Fund to help in the recovery and rebuilding efforts in Texas
  • Persistent Systems: Partners with Ohio Department of Commerce
  • Strides Shasun: Receives U.S. FDA approval for Potassium Citrate Extended-Release Tablets
  • V2 Retail: Opens store in Haridwar, Uttarakhand. Total number of stores increases to 41
  • Bharat Gear: Board to consider issue of equity shares to promoters at its meeting on September 18
  • India Cements: Says NCLAT approves merger of subsidiaries Trinetra Cement and Trishul Concrete Products with self
  • Puravankara: Aims to sell 1,000 residential units online
  • Sobha: To buy back up to 14.6 lakh shares at Rs 425 each
  • Borosil Glass Works: Ex-date for stock split from Rs 10 to Re 1 per share
  • Wipro: Ex-date for determining buyback eligibility
  • Aditya Birla Capital: Last day of trade in ‘T’ group, to be shifted to ‘B’ group with effect from September 15
  • Sintex Plastic: New 1.55 crore equity shares will list today (conversion against FCCB)
  • JP Power: Eleven buyers -- including Adani Power, Tata Power, JSW Energy -- show interest in buying the company (Business Standard)

For a more complete list of stocks to watch, click here

Talking Points

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, declined 0.07 percent to 10,094.

Asian stocks were mixed as the rally in risk assets took a breather after further signs that China’s economy is cooling and ahead of U.S. inflation data that may offer clues for monetary policy direction.

Chinese retail sales, industrial production and fixed-asset investment all slowed last month after a lackluster July as efforts to rein in credit expansion and reduce excess capacity in the world’s second-largest economy are hitting home ahead of the key 19th Party Congress in October.

Commodity Cues

  • West Texas Intermediate crude lost 0.2 percent to $49.21 a barrel after surging 2.2 percent overnight and reaching a five-week high. Global oil demand will climb this year by the most since 2015, the International Energy Agency said, amid stronger-than-expected consumption in Europe and the U.S.
  • Gold was little changed at $1,322.16 an ounce.
  • ICE sugar ended higher at 14.80 cents a pound; down 1.79 percent
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