Sensex, Nifty End Flat Ahead Of F&O Expiry, GDP Data

Indian equity benchmarks were little changed a day ahead of July-September quarter GDP data and futures and options expiry for the November series.

Meanwhile, the Indian economy likely expanded at 6.4 percent in July-September quarter, according to the latest results of a Bloomberg News survey of 46 economists conducted from Nov. 22 to Nov. 28.

The S&P BSE Sensex was little changed at 33,602.76 and the NSE Nifty 50 Index was also little changed at 10,361.

Eleven out of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Realty Index’s 0.7 percent gain. On the other hand, the S&P BSE Metal Index was the top sectoral loser, down 0.55 percent.

The Ahmedabad-based drug maker rose for second day in a row. The stock rose as much as 8.8 percent to Rs 777, on top of yesterday's 9.4 percent jump after Credit Suisse initiated coverage on the stock with an 'outperform'.

Credit Suisse said:

• Initiated ‘Outperform’ rating with a price target of Rs 770.
• Eris is a pure play in India pharma market with scalable business model.
• It has generated high free cash flow and used the same to accelerate growth.
• Free cash flow generation at 60 percent of Operating Income.
• Eris has the best return profile and growth in the sector
• Return on capital employed at 100 percent and expected profit to grow at a compound annual growth rate of 24 percent over the financial years till March 2020.
• Turnaround of recent four loss-making acquisitions could re-rate the stock.
• With synergies coming in, market should be convinced on Eris’ ability to accelerate growth inorganically.

• Kakatiya Cements: The Andhra Pradesh-based cement maker rose as much as 13 percent, the most in nearly three months, to Rs 423.80 on the back of strong earnings. Its net profit rose over four times to Rs 8.2 crore compared with Rs 1.8 crore during the same period last year. Kakatiya’s Ebitda or operating profit jumped nearly five times to Rs 12.4 crore while margin rose to 19.9 percent from 5.1 percent.
• Technofab Engineering: The Delhi-based construction company rose as much as 20 percent, the most in over five months, to Rs 289.20 after the company bagged order worth Rs 281 crore which is backed by the Asian Development Bank, Technofab Engineering said in a stock exchange filing.
• Power Mech Projects: Hyderabad-based integrated power infrastructure services company rose as much as 10.27 percent, the most since Nov. 3, to Rs 797 after it received manufacturing order worth Rs 357 crore under the Make in India from Andhra Pradesh government.
• Bajaj Corp: The Rajasthan-based hair care products maker rose as much as 10 percent, the most in over seven months, to Rs 420. Trading volume was 17.6 times its 20-day average.

• Indian equity benchmarks edged higher led by Reliance Industries, HDFC Bank and ITC tracking gains in European markets.
• The S&P BSE Sensex rose 0.2 percent to 33,681 and the NSE Nifty 50 Index rose 0.16 percent to 10,387.
• The small cap stocks were mostly outperforming their large cap peers with the S&P BSE SmllCap Index up 0.4 percent.
• Thirteen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Realty Index's 0.8 percent gain. On the flipside, the S&P BSE Power Index was top sectoral loser, down 0.15 percent.
• From the Nifty 50 basket of shares, 30 were advancing while 20 were declining.
• Bosch was the top Nifty gainer, up 5.5 percent at Rs 20,035 while Axis Bank was the top Nifty loser, down 2 percent at Rs 551.

Shares of the Bangalore-based real estate developer rose as much as 12 percent to Rs 601. Recently Sobha entered into partnership with Purvankara to develop super luxury waterfront residential project in Kochi, The Economic Times newspaper reported.

Shares of the Hyderabad-based drug maker erased gains and fell 0.85 percent to Rs 2,271 after a U.S. class action lawsuit was served against the company, Dr Reddy's Labs said in a stock exchange filing.

Meanwhile, the company said claims in U.S. SEC class action lawsuit are without merit.

Shares of the Jaipur-based lender rose as much as 2.77 percent to Rs 698.40 after it started mutual fund distribution business partnering with 11 fund houses, the company said in a stock exchange filing.

• V-Guard has 29.8 lakh shares (0.7 percent equity) change hands in two blocks on the NSE and BSE at Rs 235 per share. Stock up 1.7 percent at Rs 237.40.
• SAIL has 18.7 lakh shares worth Rs 14.8 crore change hands in a single block.
• ICICI Bank has 21 lakh shares cahnge hands in a single block. Stock up 0.27 percent at Rs 314.60.
• Action Construction Equipment has 45.2 lakh shares (3.8 percent equity) change hands at between Rs 134.35-139.5 per share on NSE. Stock falls 6.1 percent to Rs 139.20.
• GNA Axles has 10 lakh shares (5 percent equity) change hands at Rs 390.35-395.30 per share on the BSE. Stock fell as much as 5.3 percent, the most in over a month, to Rs 387.50.

Buyers and sellers were not immediately known

Source: Bloomberg

• Tata Coffee: The Bangalore-based coffee producer rose as much as 4.47 percent to Rs 183.50. Trading volume was 19.3 times its 20-day average.
• Techno Electric & Engineering: The Kolkata-based engineering services company rose as much as 3.65 percent to Rs 412.70. Trading volume was 16.4 times its 20-day average.
• Bajaj Corp: The Rajasthan-based hair care products maker rose as much as 10 percent, the most in over seven months, to Rs 420. Trading volume was 17.6 times its 20-day average.
• Alkem Labs: The stock rose as much as 8 percent, the most in over seven months, to Rs 2,135. Trading volume was 12.4 times its 20-day average.

Shares of the Mumbai-based airline rose as much as 2.68 percent to Rs 675 after Jet Airways expanded its code-sharing agreement with Air France KLM.

Naresh Goyal, chairman, Jet Airways says:

• Congratulate Air France for celebrating 70 years in India
• Believe this partnership will be very fruitful for customers as well as company
• Focusing on improving our cost structure and give value to our customers
• Want to be number one preference in for people travelling to North America and Europe

JM Janaillac, CEO Air France KLM says:

• Will increase presence in India going forward
• Need to reinforce cooperation with partners

Shares of the Delhi-based construction company rose as much as 20 percent, the most in over five months, to Rs 289.20 after the company bagged order worth Rs 281 crore which is backed by the Asian Development Bank, Technofab Engineering said in a stock exchange filing.

Shares of the real estate companies were trading higher in an otherwise subdued session. The S&P BSE Realty Index was the top sectoral gainer, up 1.8 percent.

• Somany Ceramics: The Delhi-based wall and floor tiles maker rose as much as 2.4 percent, the most since Nov. 27, to Rs 879.95 after NTAsian Discovery Master Fund sold 7.72 lakh shares or 1.8 percent equity stake at Rs 855.1 each.
• Pincon Spirit: The Kolkata-based liquor maker rose as much as 3.3 percent to Rs 40.95 after Lively Equipment Suppliers sold 2.88 lakh shares or 0.6 percent equity stake at Rs 39.93 each.
• Gitanjali Gems: The Mumbai-based jewellery retailer rose nearly 5 percent to Rs 94.50 after Ramesh Himatlal shah sold 31.88 lakh shares or 2.7 percent equity stake at Rs 91.5 each.
• Onward Technologies: The Mumbai-based IT service provider rose as much as 5 percent to Rs 137.70 after Kuber India Fund sold 1.50 lakh shares or 1 percent equity stake at Rs 134.06 each.

Hubtown: The stock rose as much as 3 percent to Rs 133.70 after multiple block deals:

• Epoch Synthetics bought 5.21 lakh shares or 0.7 percent equity stake at Rs 128.55 each.
• Nomura Singapore bought 4.10 lakh shares or 0.6 percent equity stake at Rs 130.1 each.
• Promoter Mahipatray V Shah (HUF) sold 12.59 lakh shares or 1.9 percent equity stake at Rs 129.2 each.
• Promoter Lata M Shah sold 6.92 lakh shares or 2.5 percent equity stake at Rs 128.9 each.

Shares of the Punjab-based diesel engine maker fell as much as 2.18 percent to Rs 1,952 after its board approved buying back 2.94 lakh shares (2.37 percent) at a price of Rs 2,400 for an aggregate amount not exceeding Rs 70.7 crore.

• There is a lot of money to be made in the mid cap space
• Mean reversion on valuations will happen only if it happens in growth
• See discretionary companies doing very well
• Repco, Shriram Transport have not completely participated in NBFC rally, see upside in select NBFCs
• Consumption has picked up in rural areas
• Upgraded Alkem Labs as it can outperform its peers
• Have Capital First, MAS Finanical in our portfolio; very positive on housing finance theme
• PSU banks will help to expand this market further
• NBFCs have built far more efficient models than rest of the banking system

Indian equity benchmarks were little changed as gains in HDFC Bank, Infosys and Larsen & Toubro was offset by losses in ICICI Bank, HDFC and TCS.

The S&P BSE Sensex rose 0.13 percent to 33,683 and the NSE Nifty 50 Index was little changed at 10,382.

Seventeen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Healthcare Index's 0.55 percent gain. On the other hand, the S&P BSE Telecom index was the top sectoral loser.

• Rupee opened at 64.49 per dollar against yesterday’s close of 64.41.

International brokerage Morgan Stanley has raised its December 2018 target on the S&P BSE Sensex to 35,700 versus its earlier estimate of 34,000. The brokerage says India will outperform emerging markets in 2018 but absolute returns may slow as global equity returns are moderating, added Morgan Stanley.

Catalysts for Sensex hitting 35,700

• Supportive global growth
• Improving capex
• Fiscal spending
• Buoyant consumer base

Risks to Sensex rally

• Potential drag from job losses in small firms due to GST
• Hit to economy if government decides to retrospectively link Aadhaar to property ownership

Bitcoin surpassed $10,000 for the first time, bringing this year’s price surge to more than 10-fold even as warnings multiply that the largest digital currency is an asset bubble.

Here’s why most experts are saying meteoric rise of the digital currency may turn out to be the “biggest bubble of our lifetimes”.

• Atlas Cycles
• Kakatiya Cements
• Mukta Arts
• Premier Explosives
• Safari Industries
• Tara Jewels
• TBZ

ADF Foods (Q2, YoY)

• Revenue down 3 percent at Rs 48.2 crore.
• Net profit up 90 percent at Rs 5.9 crore.
• EBITDA up 24 percent at Rs 6.1 crore.
• Margin at 12.7 percent from 9.8 percent.

Walchandnagar Industries (Q2, YoY)

• Revenue down 23 percent at Rs 76 crore.
• Net loss of Rs 13 crore versus loss of Rs 15.4 crore.
• EBITDA down 18.75 percent at Rs 13 crore.
• Margin at 17.1 percent versus 16.2 percent.

RPP Infra Projects (Q2, YoY)

• Revenue up 26 percent at Rs 108 crore.
• Net profit up 10 percent at Rs 6.6 crore.
• EBITDA up 8 percent at Rs 14 crore.
• Margin at 13 percent versus 15.1 percent.

IL&FS Engineering & Construction (Q2, YoY)

• Revenue down 4.5 percent at Rs 341 crore.
• Net profit of Rs 40 crore versus loss of Rs 82 crore.
• EBITDA loss at Rs 5 crore.
• Margins at -1.5 percent versus -3.1 percent.

• Nifty November futures closed at 10,377.5 with a premium of 7.5 points versus 19 points.
• Nifty December Futures trading at 10,418.7 with a premium of 48.7 points versus 57 points.
• All series: Nifty open interest up 1 percent , Bank Nifty open interest down 2 percent.
• Rollover: Nifty at 39 percent, Bank Nifty at 23 percent.
• India VIX closed 0.9 percent at 13.14.
• Max open interest for Nov. series at 10,500 Call (open interest at 67.8 lakh, open interest up 10 percent).
• Max open interest for Nov. series at 10,000 Put (open interest at 56.8 lakh, down 2 percent).

Somany Ceramics

• NTAsian Discovery Master Fund sold 7.72 lakh shares or 1.8 percent equity stake at Rs 855.1 each.

Pincon Spirits

• Lively equipments suppliers sold 2.88 lakh shares or 0.6 percent equity stake at Rs 39.93 each.

Gitanjali Gems

• Ramesh Himatlal shah sold 31.88 lakh shares or 2.7 percent equity stake at Rs 91.5 each.

Onward Technologies

• Kuber India Fund sold 1.50 lakh shares or 1 percent equity stake at Rs 134.06 each.

Gopala Polyplast

• Aspire emerging fund sold 1.34 lakh shares or 1.5 percent equity stake at Rs 124.69 each.

Hubtown

• Epoch Synthetics bought 5.21 lakh shares or 0.7 percent equity stake at Rs 128.55 each.
• Nomura Singapore bought 4.10 lakh shares or 0.6 percent equity stake at Rs 130.1 each.
• Promoter Mahipatray V Shah (HUF) sold 12.59 lakh shares or 1.9 percent equity stake at Rs 129.2 each.
• Promoter Lata M Shah sold 6.92 lakh shares or 2.5 percent equity stake at Rs 128.9 each.

• Coal India is considering hiking salary of its executives, which may cost the company about Rs 800 crore (PTI).
• Reliance Communications enters into binding Share Purchase Agreement with Pantel Technologies to sell 100 percent of DTH business.
• AU Small Finance Bank begins offering MF distribution. Partners with 11 AMCs.
• Technofab Engineering received order in the domestic water sector worth Rs 281 crore.
• JP Associates completed the exchange of its $150 million foreign currency convertible bonds. Exchange bonds are expected to be listed on SGX on Nov. 30.
• Swaraj Engines to buyback 2.94 lakh shares (2.37 percent) at a price of Rs 2,400 for an aggregate amount not exceeding Rs 70.7 crore. Promoters to participate.
• SREI Equipment Finances files DRHP with SEBI. Offer consists fresh issue of shares worth Rs 1,100 crore and OFS of up to 43.86 lakh shares by SREI Infra.

Jefferies on Britannia

• Initiated ‘Hold’ rating and price target of Rs 4,850.
• Expect pick-up in rural growth given the distribution efforts in rural India.
• Expect volume, revenue and earnings per share to grow at a compound annual growth rate of 8.3 percent, 11.5 percent and 16.1 percent respectively till March 2020.
• Expect limited margin expansion as promotions have increased significantly.
• Rising share of in-house production and entry into new segments to lower return on capital employed.
• Current valuation has factored in the expected growth potential.
• Bull case price target of Rs 6,200: expect volume, revenue and earnings per share to grow at a compound annual growth rate of 12 percent, 16 percent and 23 percent respectively till March 2020.

ICICI Direct on Varun Beverages

• Initiated ‘Buy’ rating and price target of Rs 590.
• Varun is a strong proxy play for soft drink industry in India.
• Changing trend to non-carbonated drinks to be potential driver in future.
• Varun is strongly placed to tap the upcoming opportunity in NCD space.
• Expect NCD segment to clock revenue at a compound annual growth rate of 25.8 percent till 2019.
• Lower per capita consumption of soft drinks to provide huge opportunity.
• Expect revenue and net profit to grow at a compound annual growth rate of 12.3 percent and 39.2 percent respectively till 2019.
• Positives: consolidation of newly acquired territories, product launches, high growth potential in operating regions, low per capita soft drink consumption and increasing penetration through territory acquisition.

SMC Institutional on Kolte Patil Developers

• Initiated ‘Buy’ rating with price target of Rs 485.
• Sales velocity getting back on track; Should achieve 3 million square feet sales volume for the next two financial years.
• Perfect product mix resulting into higher margins and better volumes.
• Operating margins to expand by 600 basis points to 31 percent by March 2020.
• Asset light model and financial prudence ensures higher IRR and low capital requirement.
• Return on equity and return on capital employed to expand to 22 percent and 33 percent respectively by FY20.
• KPDL will be biggest beneficiary with leadership position in Pune.
• Diversification in Bengaluru & Mumbai to increase sales visibility.

UBS on Hindalco

• Maintained ‘Neutral’; hiked price target to Rs 270 from Rs 240.
• Earnings picture remains solid overall.
• Standalone business has struggled to capitalise on strength in aluminium prices, but this has been offset by Novelis.
• Enforcement of aluminium shuts in China is critical driver.
• Novelis underpinning earnings, but will need to invest in automotive segment.
• Expect an announcement on North America capacity expansion soon.

Macquarie on Coal India

• Upgraded to ‘Outperform’ from ‘Neutral’; hiked price target to Rs 310 from Rs 280.
• Supply tightness makes risk-reward favourable.
• Expect domestic coal market to remain tight in near to medium term.
• Lower supply and strong global prices to help E-auction prices from third quarter.
• Raise earnings per share estimates by 3 percent, 6 percent and 10 percent each for the three financial years till March 2020.
• Wage hikes and grade slippage factored in the first half of the current financial year.
• Low coal inventory to keep volumes elevated in the next financial year.
• EPS to grow after five years with dividends limiting downside.

Motilal Oswal on Alkem Laboratories

• Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 2,500 from Rs 1,950.
• Expect domestic business to grow at 20 percent over the next three quarters.
• Low base of second half of previous financial year and the first quarter of the current financial year and likely recovery of 8-10 days of sales in the current quarter to boost domestic business.
• Improvement in Chronic and U.S. to drive overall margin improvement.
• Lower tax rate from Sikkim plant to boost net profit by 10 percent from the next financial year.
• Alkem to shift production of profitable products to Sikkim plant.
• Acute segment to provide stability; OTC business – a new growth avenue.
• Thirty approvals expected over the next 24 months.

CLSA on Zee Entertainment

• Maintained ‘Buy’; hiked price target to Rs 707 from Rs 660.
• Well placed to leverage pickup in advertising post GST rollout.
• Local advertising is still recovering, advertising by national advertisers is picking up faster.
• Zee’s gains in both network and Hindi GEC viewership are extensive.
• Notwithstanding delays in TRAI tariff regulations, domestic subscription revenue to grow at a compound annual growth rate of 16 percent till March 2020. Expect net profit to grow at compound annual growth rate of 20 percent during the period.

• Time to take money off table for emerging-market bulls, LGT says
• Powell says case for higher rates in December ‘coming together’
• Crude wavers amid Russia’s shaky stance on OPEC deal extension
• India restores faith in capitalism
• Pakistan hasn’t stemmed terrorism in Afghanistan, U.S. says
• Telecom regulator bats for net neutrality, but with riders
• Paytm aims to become largest full-service digital bank
• Pradeep Singh Kharola appointed new Air India chairman
• BN Sharma will head GST national anti-profiteering authority
• Prime Minister Modi inaugurates Hyderabad Metro, takes first ride
• This private equity veteran says it’s still early days to invest in stressed assets
• Why TRAI left out ‘specialised services’ from net neutrality ambit
• Grofers wants to be the D-Mart of online commerce

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.34 percent to 10,405.

Asian stocks were mixed following a surge in U.S. equities and a North Korean missile test. The dollar maintained gains as U.S. tax cuts inched close to reality.

U.S. consumer confidence unexpectedly improved in November to a 17-year high, a sign Americans are growing more upbeat about the economy and labor market. That comes as global equities head into the end of the year at record highs, on track for one of the best year’s since the immediate aftermath of the global financial crisis.

Here are some key events coming up this week:

• In China later this week, the official and Caixin manufacturing PMIs are expected to show mostly steady momentum.
• Japan industrial production is forecast to have rebounded in October, but CPI may show a sharp divergence between headline and core inflation, Bloomberg Intelligence said.
• The second print of third-quarter U.S. GDP on Wednesday may be revised up thanks to consumer spending and inventory accumulation, Bloomberg Intelligence said. The core PCE deflator, the Fed’s preferred gauge of inflation, is due Thursday.
• OPEC meets in Vienna on Thursday.

Commodities

• West Texas Intermediate crude fell 0.4 percent to $57.74 a barrel, down for a third day. U.S. industry data showed crude stockpiles expanded before OPEC meets to decide on prolonging supply cuts past the end of March.
• Gold was flat at $1,293.98 an ounce.