Elevators travel next to electronic boards displaying stock figures at the National Stock Exchange. (Photographer: Dhiraj Singh/Bloomberg)

Sensex, Nifty Slip Ahead Of RBI’s Monetary Policy Decision

Closing Bell

Indian equity benchmarks slipped ahead of the Reserve Bank of India's monetary policy decision.

The Reserve Bank of India will keep the repurchase rate unchanged at 6 percent on Wednesday, according to 40 of 44 economists in a Bloomberg survey. The rest see a cut to 5.75 percent.

The S&P BSE Sensex fell 0.2 percent to 32,802 and the NSE Nifty 50 Index was little changed at 10,118.

Thirteen out of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Power Index's 1 percent fall. On the other hand, the S&P BSE Bankex Index was the top sectoral gainer, up 0.38 percent.

Countdown

Setco Automotive Gains For Second Day

The Mumbai-based auto component maker rose for second day in a row after it reported strong earnings in second quarter. The stock rose as much as 11.48 percent intraday to Rs 53.40.

Speaking to BloombergQuint Harish Sheth, CMD of the company expects Setco to clock Ebitda margin of 16-17 percent in coming quarters.

Fab Four Stocks Of The Day

Apex Frozen Foods: The Kakinada-based shrimp manufacturer was locked in a 5 percent upper circuit for a seventh day in a row at Rs 859.15. The stock has gained over 300 percent since it was listed on exchanges earlier this year.

Virinchi: The Secunderabad-based IT services firm was locked in 5 percent upper circuit at Rs 121.30 after it reported earnings.

  • Revenue up 1 percent at Rs 84.6 crore versus Rs 83.9 crore
  • Net profit up 16 percent at Rs 8.1 crore versus Rs 7 crore
  • Ebitda up 9 percent at Rs 15.2 crore versus Rs 14 crore
  • Margin at 18 percent versus 16.7 percent

Bharat Forge: The Pune-based maker of steel forgings for automobile companies rose nearly 4 percent, the most in over a month, to Rs 702 after North America class 8 trucks sales in November rose 68 percent year-on-year to 32,387 units.

Balaji Amines: Shares of the Secunderabad-based chemical maker rose as much as 7 percent to record high of Rs 674.50 after the government of Maharashtra conferred 'Mega Project' status to the expansion being undertaken by the company at MIDC Chincholi in Solapur, Maharashtra.

Nifty Bank Index Rises Ahead Of RBI's Decision

Banking shares helped Nifty move above 10,100. The NSE Nifty Bank Index rose 0.4 percent to 25,176, a day ahead of Reserve Bank of India's decision on monetary policy.

Market Check

  • Indian equity benchmarks came off intraday lows to trade flat led by gains in Reliance Industries, State Bank of India and ICICI Bank.
  • The S&P BSE Sensex was little changed at 32,838 and the NSE Nifty 50 Index was also little changed at 10,126.
  • Thirteen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Power Index's 1 percent fall. On the other hand, the S&P BSE Bankex Index was the top sectoral gainer, up 0.4 percent.
  • From the Nifty 50 basket of shares, 30 were declining while 20 were advancing.

European Shares Little Changed

Bank Of China Says Won't Provide Funding For Adani's Carmichael Project

  • Has not and doesn’t intend to provide funding for Adani’s Carmichael coal mine project, Bank of China says in a statement.
  • Investec, ICBC have also said they won’t be funding the mine.

Source: Bloomberg

Power Lunch

Bank of Maharashtra Rises On QIP Issue

Shares of the Pune-based bank rose as much as 5.18 percent to Rs 27.4.

The bank had announced yesterday that it had opened its QIP issue at a floor price of Rs 26.89 per share.

Bank of Maharashtra's shares snapped a four-day losing streak and has given negative returns of 6.9 percent this year as compared to Sensex's returns of 23.11 percent.

Fiberweb India Surges On Bonus Issue, Interim Dividend Announcement

Shares of the textile maker rose as much as 9 percent, the most since Nov. 27, to Rs 350. Its board announced issuing bonus share of face value of Rs 10 each in ratio of one bonus share for every one share held and also declared interim dividend of 50 paise per share, Fiberweb said in a stock exchange filing.

Metal Stocks Under Pressure

Shares of metal companies were trading lower and the S&P BSE Metal Index was the top sectoral loser, down 1 percent at 13,581.

Hot Money

Stocks Moving On Heavy Volumes

  • ICRA: The Delhi-based credit rating agency fell as much as 3 percent, the most in over two months, to Rs 3,821. Trading volume was 9.3 times its 20-day average.
  • Gillette India: The Mumbai-based shaving razor and foam maker rose for fifth day in a row to record high of Rs 6,907. Trading volume was 7.8 times its 20-day average.
  • Schaeffler India: The Mumbai-based ball bearing maker fell as much as 2.6 percent, the most since Nov. 9, to Rs 5,028. Trading volume was three times its 20-day average.
  • Berger Paints: The Kolkata-based paint maker fell as much as 3.16 percent to Rs 243.55. Trading volume was 5.4 times its 20-day average.

Market Check

  • Indian equity benchmarks held on to losses owing to weakness in HDFC Bank, Larsen & Toubro and Power Grid.
  • The S&P BSE Sensex fell 0.4 percent to 32,739 and the NSE Nifty 50 Index declined 0.37 percent to 10,090.
  • Fourteen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Metal Index's 1.11 percent drop. On the other hand, the S&P BSE Realty Index was top sectoral gainer, up 0.4 percent.
  • From the Nifty 50 basket of shares, 37 were trading lower while 13 were among the gainers.

Stocks Moving On Heavy Volumes

  • ICRA: The Delhi-based credit rating agency fell as much as 3 percent, the most in over two months, to Rs 3,821. Trading volume was 9.3 times its 20-day average.
  • Gillette India: The Mumbai-based shaving razor and foam maker rose for fifth day in a row to record high of Rs 6,907. Trading volume was 7.8 times its 20-day average.
  • Schaeffler India: The Mumbai-based ball bearing maker fell as much as 2.6 percent, the most since Nov. 9, to Rs 5,028. Trading volume was three times its 20-day average.
  • Berger Paints: The Kolkata-based paint maker fell as much as 3.16 percent to Rs 243.55. Trading volume was 5.4 times its 20-day average.

Trend Spotting

RCom Falls As PR Firm Files Insolvency Case

Shares of the debt-laden telecom company fell as much as 7 percent to Rs 10.70 after a public-relations firm became the latest company to ask an Indian tribunal to place billionaire Anil Ambani-run Reliance Communications Ltd. under insolvency proceedings after the unprofitable mobile-phone operator failed to pay its dues.

Parag Milk Food Rises After Edelweiss Initiates Coverage With 'Buy'

Shares of the Pune-based dairy products maker rose as much as 5 percent, the most in over a month, to Rs 254 after brokerage firm Edelweiss initiated coverage on the stock with 'buy' for target price of Rs 340.

Edelweiss Says:

  • Value added products revenue share to increase to 70 percent by March 2020.
  • Parag is fortifying its profitable value‐added share by investing and expanding capacity
  • Aggressive ad spends to strengthen brand equity.
  • Expect revenue, operating income and net profit to grow at a compound annual growth rate of 14 percent, 32 percent and 49 percent by March 2020
  • Expect margins to expand by 335 basis points to 9.6 percent by March 2020, led by improving utilisations
  • RoCE to expand by 1064 basis points to 19 percent by March 2020.
  • Improving cash flow to lower debt/equity to 0.1 times by March 2020.

Eris Lifesciences Rises Over 3%

Shares of the Ahmedabad-based drug maker rose as much as 3.2 percent to Rs 782 after it completed acquisition of Strides Shasun's India brand business.

India's Nikkei PMI Contracts in November

Activity in the Indian services sector contracted in November after two consecutive months of growth, as new business failed to pick up pace amid rising costs.

The Nikkei India Services Purchasing Managers’ Index declined to 48.5 last month from 51.7 in October, according to a statement by Markit. It fell for the first time in three months. A reading above 50 indicates economic expansion, while a reading below 50 signals contraction.

Balaji Amines Surges To Record High

Shares of the Secunderabad-based chemical maker rose as much as 7 percent to record high of Rs 674.50 after the government of Maharashtra conferred 'Mega Project' status to the expansion being undertaken by the company at MIDC Chincholi in Solapur, Maharashtra.

PSU Bank Shares Fall As RBI Policy Meet Begins

Shares of government-owned banks were trading lower as Reserve Bank of India's Monetary Policy Committee began its two day meet to decide on the future course of interest rates.

Block Deal Alerts

  • Grasim Industries has 12 lakh shares change hands in a block.
  • HCL Technologies has 11 lakh shares change hands in a block deal.
  • Aditya Birla Fashion and Retail has 15 lakh shares change hands at Rs 165.25 per share in a block on the BSE.
  • Century Textiles has 17.8 lakh shares change hands at Rs 1,284.9 per share in a block on the BSE.

Buyers and sellers were not immediately known

Source: Bloomberg

The F&O Show

Stocks Reacting To Q2 Earnings

Sandur Manganese and Iron Ores (Q2 YoY)

Shares of the Karnataka-based maker of pig iron and ferro manganese rose as much as 14.18 percent, the most in over a month, to Rs 1,150.

  • Revenue up 88 percent at Rs 144 crore.
  • Net profit up 211 percent at Rs 28 crore.
  • Ebitda up 258 percent at Rs 43 crore.
  • Margin at 29.9 percent versus 15.7 percent.

GOCL Corp (Q2 YoY)

Shares of the Hyderabad-based specialty chemical company fell as much as 6.64 percent, the most in over two months, to Rs 481.

  • Revenue up 1 percent at Rs 102 crore.
  • Net profit down 42 percent at Rs 6 crore.
  • Ebitda down 28.6 percent at Rs 5 crore.
  • Margin at 4.9 percent versus vs 6.9 percent.

Shree Pushkar Chemicals & Fertilisrs (Q2 YoY)

Shares of the Mumbai-based specialty chemical company rose as much as 3.16 percent to Rs 282.

  • Revenue up 21.5 percent at Rs 96 crore.
  • Net profit up 16 percent at Rs 10.4 crore.
  • Ebitda up 14 percent at Rs 17.1 crore.
  • Margin at 17.8 percent versus 19 percent.

Lumax Auto Technologies (Q2 YoY)

Shares of the Pune-based auto parts maker rose as much as 2.39 percent, the most since Dec. 1, to Rs 645.

  • Revenue up 4 percent at Rs 268 crore.
  • Net profit up 14 percent at Rs 13.3 crore.
  • Ebitda up 16 percent at Rs 25.6 crore.
  • Margin at 9.6 percent versus 8.5 percent.

IndianOpen

Mahesh Patil Of Birla Sun Life AMC To BloombergQuint

  • Wait and watch for GST collection
  • Fiscal pressure may build up as GST collections are not good
  • Market normally looks to pause before making the next move
  • Earnings last quarter better than expected
  • Expect earnings recovery in the coming quarters
  • Seeing signs of recovery in the economy
  • Earnings recovery will be more widespread
  • Expect strong earnings from BFSI, cement, auto, consumer discretionary and pharma
  • Underweight on IT, FMCG and consumer staples

Opening Bell

Indian equities edged lower ahead of the RBI's Dec. meeting as investors awaited clues from the central bank on future monetary policy.

The S&P BSE Sensex 0.2 percent to 32,803 and the NSE Nifty 50 Index declined 0.18 percent to 10,110.

Ten out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Power Index's 0.4 percent drop. On the other hand, the S&P BSE Consumer Durables Index was the top sectoral gainer, up 0.51 percent.

Rupee Opens Higher Against U.S. Dollar

  • Rupee opens higher at 64.30 per dollar against Monday's close of 64.37

BQ Heads Up

Economic Data To Watch

  • Nikkei India Composite PMI for November (Reading was 51.3 in October)
  • Government to release mid-term review of foreign trade policy for 2015-20 period

F&O Cues

  • Nifty December Futures trading at 10,159, premium of 31.5 points from 32 points.
  • December Futures: Nifty open interest up 4 percent; Bank Nifty open interest up 12 percent.
  • India VIX closed 0.4 percent higher at 14.8.
  • Max open interest for Dec. series at 10,500 Call (open interest at 61.7 lakh, up 7 percent).
  • Max open interest for Dec. series at 10,000 Put (open interest at 80 lakh, up 1 percent).

IPO

  • Shalby Limited IPO opens with a price band of Rs 245-248 per share. Issue closes on December 7.
  • The company raised Rs 150 crore selling shares to anchor investors at Rs 248 each.

Earnings To Watch

  • Dish TV
  • Harrisons Malayalam
  • Lux Industries
  • Manali Petro
  • Orient Bell
  • Plastiblends
  • Rane Holdings
  • Byke Hospitality

Earnings Reaction To Watch

Alphageo India (Q2 YoY)

  • Revenue up 249 percent at Rs 21.3 crore.
  • Net loss of Rs 3.4 crore versus net loss of Rs 3.6 crore.
  • Ebitda at Rs 4.7 crore versus Ebitda loss of Rs 0.1 crore.
  • Margin at 22.1 percent versus -1.6 percent.
  • Depreciation up 115 percent at Rs 8.6 crore.

GOCL Corp (Q2 YoY)

  • Revenue up 1 percent at Rs 102 crore.
  • Net profit down 42 percent at Rs 6 crore.
  • Ebitda down 28.6 percent at Rs 5 crore.
  • Margin at 4.9 percent versus vs 6.9 percent.

FIEM Industries (Q2 YoY)

  • Revenue up 12 percent at Rs 326.5 crore.
  • Net profit up 1.4 percent at Rs 14.3 crore.
  • Ebitda up 4 percent at Rs 37.5 crore.
  • Margin at 11.5 percent versus 12.4 percent.

GPT Infraprojects (Q2 YoY)

  • Revenue down 19 percent at Rs 98 crore.
  • Net profit up 23 percent at Rs 3.8 crore.
  • Ebitda down 3 percent at Rs 17.5 crore.
  • Margin at 17.9 percent versus 15 percent.

Shree Pushkar Chemicals & Fertilisrs (Q2 YoY)

  • Revenue up 21.5 percent at Rs 96 crore.
  • Net profit up 16 percent at Rs 10.4 crore.
  • Ebitda up 14 percent at Rs 17.1 crore.
  • Margin at 17.8 percent versus 19 percent.

Lumax Auto Technologies (Q2 YoY)

  • Revenue up 4 percent at Rs 268 crore.
  • Net profit up 14 percent at Rs 13.3 crore.
  • Ebitda up 16 percent at Rs 25.6 crore.
  • Margin at 9.6 percent versus 8.5 percent.

Sandur Manganese and Iron Ores (Q2 YoY)

  • Revenue up 88 percent at Rs 144 crore.
  • Net profit up 211 percent at Rs 28 crore.
  • Ebitda up 258 percent at Rs 43 crore.
  • Margin at 29.9 percent versus 15.7 percent.

Corporate Action

  • IL&FS Investment Managers circuit filter revised to 10 percent.
  • 5paisa Capital circuit filter revised to 5 percent.
  • Lakshmi Vilas Bank Ex date for rights issue.
  • Sri Krishna Constructions last trading day before 1:10 ex bonus.

Bulk Deals

Just Dial

  • HDFC MF bought 9 lakh shares 1.3 percent equity Rs 500 each.
  • SCI Growth Investments II sold 5.74 lakh shares or 0.9 percent equity at Rs 501.54 each.
  • Sequoia capital sold 4.54 lakh shares or 0.7 percent equity at Rs 500.05 each.

Stocks To Watch

  • Bharat Forge and Ramkrishna Forgings in focus after North America Class 8 trucks sales in November rose 68 percent year-on-year at 32,387 units. (down 9 percent on a monthly basis).
  • Eris Lifesciences completed acquisition of Strides Shasun’s India brand business.
  • Bank of Maharashtra QIP issue opens at a floor price of Rs 26.89 per share.
  • Eros International Media’s parent Eros International Plc Announces $100 Million equity-linked financing.
  • Indiabulls Real Estate says IPIT became a wholly owned unit. IPIT to get delisted from Singapore exchange.
  • Balaji Amines’ expansion project at Solapur conferred ‘Mega Project’ status.
  • Colgate India to consider second interim dividend on Dec. 11.

Brokerage Radar

HSBC on Indian Aviation Sector

  • Airline industry on the cusp of a strong recovery.
  • Future looks highly profitable, particularly for the low-cost carriers.
  • Positives: Favourable government policies, FX rates, and modern fleets to offset the impact of rise in fuel prices.
  • International market fragmented; Privatisation of Air India to create structural benefits.
  • Market to consolidated further, led by Air India.

HSBC on Indigo

  • Initiated ‘Buy’ with price target of Rs 1,500.
  • Positives: best balance of market positioning, comparatively high FCF and dividend yield, and the strongest balance sheet.
  • Expect market share to increase by another 5ppts by March 2021.
  • Costs are 15-30 percent below peers; Fleet modernisation to reduce this further.
  • Strong free cash flow generation to continue.
  • Expect net profit to grow at a compound annual growth rate of 37 percent by March 2020.

HSBC on SpiceJet

  • Initiated ‘Buy’ with price target of Rs 180.
  • Traffic to grow at a compound annual growth rate of 18.5 percent by March 2020.
  • Bulk order for 200 aircraft to help regain market share.
  • Expect the company to be debt free by March 2019.
  • SpiceJet set to grow much faster led by new aircraft addition and as regional operations mature
  • Expect net profit to grow at compound annual growth rate of 45 percent by March 2020.

HSBC on Jet Airways

  • Initiated ‘Hold’ with price target of Rs 600.
  • Highly leveraged and faces a tough debt repayment schedule.
  • Weaker Gulf demand is hurting profitability; Expansion on other international routes to help.
  • Fall in domestic market share to continue.
  • Margin to increase as it shifts focus away from the Gulf.
  • Hold due to the growth potential at its international operations.
  • Expect net profit to grow at a compound annual growth rate of 9 percent by March 2019.

Citi on Hindustan Petroleum

  • Maintained ‘Buy’ with price target of 564; implying a potential upside of 37 percent form yesterday’s close.
  • Remain upbeat on third quarter.,
  • ONGC-HPCL deal to gather pace as we approach fourth quarter.
  • Risk-reward for Hindustan Petroleum minorities remains meaningfully skewed to upside.
  • Any correction in crude could trigger a relief rally.
  • Post-election marketing margins have recovered.
  • Positive: Sing. GRMs holding up well, a likely increase in inventory gains, and a boost from expansion of Bhatinda refinery.

Edelweiss on Parag Milk Foods

  • Initiated ‘Buy’ with price target of Rs 340.
  • Value added products revenue share to increase to 70 percent by March 2020.
  • Parag is fortifying its profitable value‐added share by investing and expanding capacity
  • Aggressive ad spends to strengthen brand equity.
  • Expect revenue, operating income and net profit to grow at a compound annual growth rate of 14 percent, 32 percent and 49 percent by March 2020
  • Expect margins to expand by 335 basis points to 9.6 percent by March 2020, led by improving utilisations
  • RoCE to expand by 1064 basis points to 19 percent by March 2020.
  • Improving cash flow to lower debt/equity to 0.1 times by March 2020.

Talking Points

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.36 percent to 10,123.

Asian stocks dropped as technology shares tracked a selloff in U.S. tech companies and after gains in U.S. equities spurred by the tax bill passage petered. The Australian dollar jumped on stronger-than-expected retail sales data.

Stocks fell in Tokyo, Sydney and Hong Kong. Tech stocks on the MSCI Asia Pacific Index paced declines after tech-heavy Nasdaq fell.

Here are some of the key events facing markets in the coming days:

  • China’s economy is set to end the year with steady but unspectacular growth. Caixin’s composite and services PMI data are due after coming in at 51 and 51.2, respectively, in October. Officials have yet to face a hard trade-off between growth and deleveraging that’s coming in 2018, Bloomberg Economics said.
  • India PMI is also due, a key piece of data before the central bank’s rate decision.
  • The European Commission College of Commissioners discusses Brexit on Wednesday and will likely make its recommendation on whether sufficient progress has been made to move negotiations onto the future relationship.
  • The U.S. faces a partial government shutdown after money runs out on Dec. 8 if Congress can’t agree on a spending bill by then.
  • U.S. employers probably hired at a robust pace in November as the unemployment rate held at an almost 17-year low. The Labor Department’s jobs report Friday may also show a bump up in average hourly earnings.
  • Other countries setting monetary policy this week include Brazil, Canada, and Poland.

Commodities

  • West Texas Intermediate crude was up 0.2 percent at $57.60 a barrel after slumping 1.5 percent.
  • Gold traded at $1,276.66 an ounce.
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