Sensex, Nifty Gain As Moody’s Upgrades India Rating; Banks Lead

Indian equity benchmarks rose for second day in a row after Moody's Investor Service upgraded India's credit rating to 'Baa2' from 'Baa3' for first time since 2004, citing continued progress in the nation’s economic and institutional reforms.

The S&P BSE Sensex rose 0.71 percent to 33,342.80 and the NSE Nifty 50 Index advanced 0.67 percent to 10,284. The gains were broad-based as the S&P BSE MidCap Index rose 1 percent and the S&P BSE SmallCap Index advanced 0.8 percent.

Seventeen out of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Realty Index's 3.7 percent surge. On the other hand, the S&P BSE Information Technology Index was the top sectoral loser, down 1.4 percent after rupee rose most in over eight months against the U.S. dollar.

• Need some clarity from government on bank recapitalisation framework
• Government may look for current market price and SEBI formulation for capital infusion into banks
• Prefer private sector banks over PSU banks as looking for more clarity on bank recap policy

Shares of the country's biggest carmaker rose as much as 2.4 percent, the most since Oct. 26, to Rs 8,362 after Suzuki Motor and Toyota signed memorandum of understanding to launch electric vehicles in India by 2020.

• Upgrade has come at a very wrong time, we will see a very different government now
• Greater pressure for the government to keep the fiscal metrics intact
• Indian companies will have a better reception at U.S. to raise money via debt
• Formalisation of economy is good but has been brought with a lot of pain
• Lot of people have been left out in this formalisation of economy
• Disconnect in the process of formalisation is the big pain a lot of people are facing

Shares of the real estate companies were trading higher after the cabinet approved the enhancement of the carpet area of houses for the middle-income group category under the Pradhan Mantri Awas Yojana-Urban.

The S&P BSE Realty Index was the top sectoral gainer, the index rose as much as 4.7 percent, the most in over three months.

Under the MIG-I category, the carpet area of the houses has been enhanced from 90 square metres to 120 square metres, while under the MIG-II segment, it has been increased to 150 square metres from the current 110 square metre, Union Minister Ravi Shankar Prasad told reporters while briefing them about the Union Cabinet decisions.

• FIIs will be able to increase exposure in India after this upgrade
• Cost of borrowing will definitely come down
• Chances of real interest rate stability increases with this rating upgrade
• Rating upgrade sends a message to foreign direct investors to turn more positive on India
• India’s tax compliance standards are comparable to that of Africa
• Many stocks where FII limit is full but if there is scope we may see more inflows

• Emphasis now will be on implementing reforms
• Infra spending is one of the steps government will take
• GST is a reform that creates a bigger market for businesses
• Those who doubted government's reform steps should introspect now
• This upgrade has happened after 13 years
• Welcome this upgrade from Moody's
• This is a belated recognition of steps taken by government
• Moody’s upgrade is an endorsement of reform process taken place in India
• Structural changes have placed India in a path of high trajectory growth
• Moody’s recognises that India continues to be a on a path of fiscal prudence
• Fiscal prudence efforts recognised by Moody's

• Brigade Enterprises: The Bangalore-based real estate developer rose as much as 4.3 percent, the most since Nov. 3, to Rs 285. Trading volume was 13.6 times its 20-day average.
• Vesuvius India: The Kolkata-based maker of ceramic systems declined 2.46 percent to Rs 1,200. Trading volume was six times its 20-day average.
• Thermax: The Pune-based electrical power equipment maker rose 1.5 percent to Rs 1,046. Trading volume was six times its 20-day average.
• Jubilant Life Sciences: The Noida-based drugmaker rose as much as 7 percent. The trading volume was 6.6 times its 20-day average.

Moody's Investor Service upgraded ratings of four Indian financial institutions to Baa2.

These institutions include:

• State Bank of India, stock up 2.14 percent
• HDFC Bank, stock up 1.4 percent
• Exim India
• Indian Railway Finance Corporation

Shares of the shrimp producer were locked in 5 percent upper circuit for third day in a row at Rs 534.70.

The stock has been witnessing strong buying interest ever since it announced its earnings on Nov. 14.

Shares of the Pune-based real estate developer rose as much as 4.6 percent after its board approved sale of its subsidiary GMP Technical Solutions' Mumbai division for Rs 18 crore, Vascon Engineers said in a stock exchange filing.

Shares of the Mumbai-based drugmaker rose as much as 3.4 percent to Rs 613. Cipla received a green signal from U.S. FDA for Budesonide Inhalation Suspension, used to treat asthma and as prophylactic therapy in children 12 months to 8 years of age, according to its stock exchange notification.

Shares of the life insurer which got listed at 7 percent premium, against its issue price of Rs 290, staged a sudden spike.

The stock rose as much as 20 percent to Rs 369.

• Moody's upgrade is a fitting reply to Modi's critics
• Modi has track record of being a fiscally responsible person
• Expect rupee to fall to 66-67 against U.S. dollar
• Expect earnings to improve sequentially
• Very difficult to predict investment cycle

• Pick-up in investments already started
• Volatile oil prices should not be of concern to investors in India
• Investment cycle is a journey and not a destination
• Expect investment cycle to pick up gradually
• Bank recap move is not important for capex cycle
• Local investors know the markets better than foreign investors
• Do not care what foreign investors do in markets, locals always know better
• This is just a flood, tsunami is yet to come in Indian markets

• Looking at investment return of 15 percent CAGR on equities moving ahead
• Rating upgrade is an endorsement of policy change India is undergoing
• Moody's upgrade didn't surprise me at all
• Expect crude to trade between $50-60 per barrel

• Moody's upgrade a very positive news for India
• Very happy to hear the news, will be very positive for our economy
• Confidence has increased with the ratings upgrade and this is positive
• Government has taken measures to ensure that fiscal deficit will remain low
• Don’t think there is a particular problem with the debt-to-GDP ratio as of now
• Reforms like GST, bank recapitalisation remain positive for economy
• Fiscal deficit target of 3.2 percent of GDP likely to be met
• Very positive on GST, need to give 6 months to 1 year to see the benefits
• Government on path to implement and undertake big reforms

Shares of the life insurer got listed at a premium on the stock exchanges. The stock rose as much as 8.27 percent to Rs 314 against its issue price of Rs 290.

HDFC Standard Life Insurance Company raised Rs 8,695 crore through an initial public offer which was subscribed 4.9 times.

• Rating upgrade could lower cost of capital for Indian corporates which could help drive earnings growth
• Historic day and historic signal for India
• Rating agency has taken a delayed call in upgrading India's rating
• Rating upgrade is not going to be a substitute for earnings growth

Banking shares were witnessing good buying interest following India's credit rating upgrade by Moody's Investor Service.

• Nifty Bank rose 1.8 percent to record high of 25,902
• Nifty PSU Bank index rose nearly 3 percent
• All stocks in the Nifty PSU Bank basket of shares were trading higher

Shares of technology companies were trading lower in an otherwise strong market as the rupee strengthened sharply against the U.S. dollar. Indian rupee rose as much as 1 percent, the most in over eight months, to 64.67.

Rupee's strength against the U.S. dollar adversely impacts revenues of the IT companies which earn sizeable chunk of revenues in dollars

• Wipro declined 0.49 percent
• TCS fell 0.9 percent
• Tech Mahindra declined 0.85 percent
• Infosys dropped 1.5 percent
• Hexaware Technologies fell 0.54 percent

Indian equity benchmarks surged, and the rupee rose 1 percent after Moody's Investor Service upgraded India's credit rating for the first time since 2004 to Baa2 from Baa3.

The S&P BSE Sensex rose 1.2 percent to 33,520 and the NSE Nifty 50 Index advanced 1.2 percent to 10,339.

All sector gauges compiled by BSE were trading higher led by the S&P BSE Metal Index's 2.2 percent gain.

• Rupee opens sharply higher at 64.67 per dollar against yesterday's close of 65.32. The Indian unit rose as much as 1 percent, the most in over eight months.

• Have upgraded India's rating as we believe reforms will support India's growth going forward
• Impact of reforms will materialise in coming years
• Expect growth to sustain at high levels that will help government’s fiscal metrics
• Short-term disruptions triggered revision in India's growth, fiscal deficit forecasts
• Revised our current year growth forecast to 6.7 percent before it picks up next year
• Reforms comes with short-term pain but benefit in long-term
• Debt-to-GDP ratio at 68 percent is relatively higher for India as compared to Asian peers
• Expect debt-to-GDP ratio to be broadly stable in next few years before it starts declining
• Do not expect any rating change for sometime now, we do see upside & downside risks
• Expect crude prices at $40-60 per barrel over next few years
• Rising crude oil prices will put pressure on India's current account deficit and inflation

Moody’s Investors Service has upgraded India’s sovereign rating for the first time since 2004, citing continued progress in the nation’s economic and institutional reforms. The rating agency on Monday upgraded India's rating to Baa2 from Baa3. The outlook on the rating is 'stable'.

• Nifty November futures closed at 10,251, premium of 37 points versus 36 points
• November contracts: Nifty open interest down 4 percent; Bank Nifty open interest down 2 percent.
• India VIX closed down 5.6 percent at 13.4.
• Max open interest for Nov. series at 10,500 Call (open interest at 54.4 lakh, down 6 percent).
• Max open interest for Nov. series at 10,200 Put (open interest at 51.8 lakh, up 14 percent).

• JMT Auto
• Kalyani Forge
• Mayur Uniquoters
• Sadbhav Infra
• Salzer Electronics
• S Chand

Honda Siel Power Products (Q2, YoY)

• Revenue up 5 percent at Rs 184.5 crore.
• Net profit down 10 percent at Rs 15 crore.
• EBITDA down 3 percent at Rs 25.7 crore.
• Margin at 13.9 percent versus 15.1 percent.

Ahluwalia Contracts (Q2, YoY)

• Revenue up 15.3 percent at Rs 334.5 crore.
• Net profit up 30 percent at Rs 26 crore.
• EBITDA up 23.75 percent at Rs 49.5 crore.
• Margin at 14.8 percent versus 13.8 percent.

Bharat Matrimony (Q2, YoY)

• Revenue up 13.6 percent at Rs 83.6 crore.
• Net profit up 58 percent at Rs 19 crore.
• EBITDA up 41 percent at Rs 20.6 crore.
• Margin at 24.6 percent versus 19.8 percent.

• HDFC Standard Life to list on exchanges with a base price of Rs 290 per share. The issue was subscribed 4.9 times.

Dixon Technologies

• Business Excellence Trust sold 4.94 lakh shares or 4.4 percent equity stake at an average of Rs 2704.23 each.
• Birla Sun Life AMC bought 1.80 lakh shares or 1.6 percent equity stake at Rs 2700 each.

Royal Orchid Hotels

• Industrial Development Bank of India sold 1.42 lakh shares or 0.5 percent equity stake at Rs 152.41 each.

Thangamayil Jewellery

• Old Bridge Capital Mgmt bought 4.89 lakh shares or 3.6 percent equity stake at Rs 410 each.
• Promoter Balusamy Ramesh sold 5 lakh shares or 3.6 percent equity stake at Rs 410.05 each.

Arshiya Ltd

• Ecap Equities bought 60 lakh shares or 2.7 percent equity stake at Rs 80.4 each.
• Promoter Mittal Archana sold 60 lakh shares or 2.7 percent equity stake at Rs 80.4 each.

ADF Foods

• JSL Enterprises bought (net) 1.62 lakh shares or 0.8 percent equity stake at Rs 254.16 each.

Deutsche Bank on NTPC

• Maintained ‘Buy’ with a price target of Rs 215.
• 8 percent positive net profit impact for the next two financial years, if gross calorific value on coal relief is accepted.
• Net profit could jump 20 percent from the second half of the current financial year if GCV order favours NTPC.
• Multiple positives have emerged for NTPC which are likely to drive strong profitability.
• Positives: 5-6GW capacity addition per annum, higher plant load factors and relief from GCV losses.
• Potential risk of regulated return on equity reduction is much smaller than positives.

Nomura on Just Dial

• Maintained ‘Buy’; Hiked price target to Rs 635 from Rs 590.
• Company has now renewed focus on its core Search business.
• Positives: improved traffic growth trends, stable realisations and operational efficiencies.
• Justdial remains the most cost-effective small and medium enterprises advertising platform in India, with scope for coverage expansion in tier 2/3 cities.
• Competition from Google or vertical players is an issue.
• Expect earnings per share to grow at a compound annual growth rate of 19 percent by March 2020 and Revenue to grow at a compound annual growth rate of 10 percent by March 2019.

CLSA on ONGC

• Maintained ‘Buy’ with price taregt of Rs 225
• Stock down $4 billion on worst-case risk of $1.1 billion.
• Correction is an overreaction and is a buying opportunity, as ONGC is pricing in sub-$50/bbl Brent.
• ONGC is also the cheapest global E&P stock on most key parameters.
• Re-rating likely as subsidy uncertainties are largely behind us and ONGC has started to deliver on production growth.

JPMorgan on Ashok Leyland

• Maintained ‘Neutral’ with price target of Rs 113.
• Acquisition of stake in NBFC values the entity at Rs 4,800 crore.
• The deal is a very mild positive and helps benchmark some value for NBFC.
• On core business, competitive activity will remain heightened for the second half of the current financial and next financial year as Tata Motors looks to claw back lost share.

JPMorgan on India Real Estate

• Increased in carpet area for houses eligible under interest subsidy scheme is positive.
• Should significantly enhance coverage of the scheme by increasing the qualifying population set multi-fold.
• Should spur up some activity on project sales around major metros and Tier 1 cities.
• Key beneficiaries: Prestige Estates/Sobha Developers/Godrej Properties.
• Other beneficiaries: Major Housing Finance companies and Cement/Building Material companies.

• Ashok Leyland to acquire 4.68 percent stake in Hinduja Leyland Finance at Rs 110 per share, valued at Rs 225.42 crore. Increases stake to 61.9 percent.

• RBI said FPI limit In ICICI Lombard increased to 49 percent from 24 percent.
• RBI said FPI limit In Edelweiss Financial Services increased to 49 percent from 40 percent.
• RBI said FPI limit In Petronet LNG increased to 40 percent from 30 percent.
• JSW Energy to be out of F&O from February series.
• Bank of Baroda to consider raising up to Rs 6,000 crore through a QIP, Rights Issue on Nov. 21.
• Vascon Engineers to sell Mumbai division of its subsidiary GMP Technical Solutions for Rs 18 crore in a slump sale.
• Mercator aims to begin oil production by H1 2018 at Cambay basin oil block.
• PVR to acquire minority stake in U.S. based luxury restaurant-and-theater company iPic.

For a complete list of stocks to watch, click here

• Mukesh Ambani’s family tops Forbes list of Asia’s richest
• ONGC-HPCL deal won’t be ‘rushed through’, says divestment secretary
• NK Singh may head the 15th finance commission
• Cabinet clears setting up GST anti-profiteering authority
• Centre increases carpet area of houses under Pradhan Mantri Awas Yojana
• As shares of RCom fall, lenders face tough choices
• Seven states submit proposals for ‘power for all’ scheme
• Indian market must fall 20% to hit fair value: UBS’ Geoffrey Dennis
• Vijay Rupani rejects SEBI’s stock rigging charge, says sold shares at a loss
• House passes tax bill in first step toward historic overhaul

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.8 percent to 10,3347.

In what comes in as a big boost to Prime Minister Narendra Modi’s government, rating agency Moody’s Investor Service has raised India’s government bond rating, citing continued progress in the nation’s economic and institutional reforms.

The rating agency upgraded India's bond rating to 'stable' from 'positive' and said reforms being pushed through by the government will help stabilise debt. (More details here)

Asian stocks advanced to build on a rally, suggesting a strong finish to a tumultuous week as risk appetite returned amid rising odds of U.S. corporate tax cuts and encouraging earnings. The dollar declined against major peers.

Here are some key events slated for the remainder of this week:

• Malaysia’s economic growth may have slowed slightly in the third quarter, forecasts showed prior to Friday’s release.
• European Central Bank President Mario Draghi will speak in Frankfurt Friday. Here’s a link to the big events coming up next week.

Commodities

• West Texas Intermediate crude gained 0.3 percent to $55.31 a barrel. It’s heading for its first weekly loss since the start of October.
• Gold increased 0.4 percent to $1,283.10 an ounce.