A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., (Photographer: Michael Nagle/Bloomberg)

Sensex, Nifty Post Best Single-Day Gains In Nearly A Month

Closing Bell

Indian equity benchmark rebounded after form a six-week low, led by Bharti Airtel and Asian Paints.

The S&P BSE Sensex Index closed 1.1 percent higher at 32,949 as 26 of its 31 members advanced. The Sensex erased losses from Wednesday, when the central bank left rates unchanged, as predicted by most economists and tweaked inflation forecasts higher.

The NSE Nifty 50 Index closed 1.2 percent higher at 10,166. The market breadth was tilted in the favour of buyers.

Fab Four Stocks Of The Day

Earnings Update: Hotel Leela Venture Jumps After September Quarter Margins Expand

Shares of Hotel Leela Venture Ltd. rose as much as 5.6 percent today, the most in two weeks to Rs 20.90, after its operating margins expanded in July-September period.

Earnings Highlights (Q2 YoY)

  • Net loss at Rs 24.4 crore versus net loss of Rs 8.9 crore.
  • Revenue up 1 percent to Rs 158.4 crore.
  • Ebitda up 15.4 percent to Rs 38 crore.
  • Margins expanded to 24 percent from 21 percent.

Count Down

Europe Update

Religare Enterprises Jumps The Most In A Week After A Block Deal

Shares of the capital market company snapped a four-day decline and rose as much as 5 percent, the most in a week to Rs 58.05.

Nearly 1.8 crore shares or 9.6 percent equity, changed hands in a single block deal on the National Stock Exchange.

Buyers and sellers were not known immediately.

Power Lunch

Avenue Supermarts Gains After A Block Deal

Shares of D-Mart owner snapped two-day decline and rose as much as 2.3 percent to Rs 1,150 after a block deal. About 19.92 lakh shares worth Rs 225 crore changed hands in a single block, Bloomberg data showed.

Buyers and sellers were immediately not known.

Sobha Plans 2-4 Launches Every Quarter

Sobha Ltd. plans to launch around two to four projects every quarter till Match 2019, its Managing Director JC Sharma said.

The real estate developer, which recently launched a project in Bengaluru, is planning more such launches in Chennai, Thrissur and Mysuru, Sharma told BloombergQuint in an interview.

Besides, Sharma said that RERA Act will be a game changer from a customer perspective and that they will not suffer any more losses going forward.

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Tata Motors Snaps Two-Day Decline After Jaguar Land Rover Sales Rise In November

Shares of the Jaguar Land Rover (JLR) owner snapped two-day decline and rose as much as 2.1 percent to Rs 405.30.

JLR sales roses by 10 percent on a yearly basis last month, largely led by the new Land Rover Discovery and the Range Rover Velar, according to its stock exchange notification.

Segment Wise Sales:

  • Jaguar Sales fell 6.3 percent year-on-year to 13,688 units in November.
  • Land Rover Sales rose 17.2 percent year-on-year to 38,644 units.

Hot Money

L&T Snaps Two-Day Decline After Subsidiary Wins Order

Shares of the engineering equipment maker snapped two-day decline and rose as much as 2 percent to Rs 1,215.

The company's subsidiary L&T Hydrocarbon Engineering bagged an order worth Rs 1,600 crore from Hindustan Petroleum Corporation Ltd., according to its stock exchange notification.

Besides, brokerage and research firm Nomura upgraded its stock rating yesterday to 'Buy' from 'Neutral' and lifted its price target to Rs 1,453 from Rs 1,285. The hike in price target implies a potential upside of 22 percent from the current market price.

Trend Spotting

IPO Update: Shalby Fully Subscribed On The Final Day Of Bidding

Shalby Ltd.’s initial public offering was subscribed 1.08 times on the Third and final day of bidding as of 11 a.m., according to data provided by Axis Capital.

Category Wise Subscription:

  • Qualified institutional buyers: 1.97 times
  • Non-institutional bidders: 0.02 times
  • Retail investors: 1.04 times
  • Employees: 0.73 times

Auto Index Snaps 5-Day Decline

Cipla Talks To BloombergQuint

Shares of the pharmaceutical company snapped 10-day decline and rose as much as 0.6 percent to Rs 600.

The drug maker expects that market to contribute about a quarter of its total sale in the next 3-5 years (more details here).

The market for Renvela is crowded but Dacogen and Pulmicort are fairly large opportunities for the company. Pulmicort can be a $20-25 million opportunity while Dacogen can be slightly lower than $20-25 million. The opportunity of $40-50 million from these two drugs on a U.S. base of $400 million is large.
Umang Vohra, Global CEO & MD, Cipla

You can watch the full interview here:

Stocks Reacting To Earnings

Pokarna (Q2, YoY)

  • Stock fell as much as 7.4 percent to Rs 208.
  • Revenue down 9 percent to Rs 85 crore.
  • Net profit down 37 percent to Rs 12 crore.
  • EBITDA down 27 percent to Rs 27 crore.
  • Margins at 31.8 percent from 39.6 percent.

Centum Electronics (Q2, YoY)

  • Stock fell as much as 9.5 percent to Rs 580.
  • Revenue down 14 percent to Rs 91 crore.
  • Net loss of Rs 9 crore from a net profit of Rs 10 crore.
  • EBITDA at Rs (6.7 crore) versus Rs 16.6 crore.
  • Margins at (7.4 percent) from 15.7 percent.

Arshiya (Q2, YoY)

  • Stock rose as much as 2.3 percent to Rs 98.35.
  • Revenue up 11 percent to Rs 24 crore.
  • Net loss of Rs 22.5 crore versus Net loss of Rs 22.6 crore.
  • EBITDA up 14 percent to Rs 16.3 crore.
  • Margins at 67.9 percent from 66.2 percent.

Ador Welding (Q2, YoY)

  • Stock rose as much as 4.9 percent to Rs 514.
  • Revenue up 20 percent to Rs 122 crore.
  • Net profit up 4 percent to Rs 5.5 crore.
  • EBITDA up 8 percent to Rs 10.8 crore.
  • Margins at 8.9 percent versus 9.8 percent.

Nifty Tests 10,050 Mark

GAIL India Best Performer On Nifty After Company Outlines Its Strategy

Shares of the state-owned gas utility rose as much as 3.7 percent, the most in over two weeks to Rs 472.78, GAIL plans to spend Rs 6,000 crore by March 2019 to build new pipelines, Director-Projects Ashutosh Karnatak told reporters yesterday. (More details here.)

The stock was the best performer on the country's benchmark Nifty. It has returned 46 percent so far this year.

F&O Show

IRB Infra Falls After CBI Filed Charge Sheet In Land Case

Shares of the road builder fell as much as 5 percent after Central Bureau of Investigation filed a charge sheet against the company in a Pune court over alleged illegal purchase of government land in Pimpoli village and in Maval Taluka.

HSBC on IRB Infra

  • Downgraded to ‘Hold’ from ‘Buy’; cut price target to Rs 200 from Rs 331.
  • CBI filed a charge sheet against IRB, its promoter, its subsidiary, and few other employees in a government land grab case.
  • Historically, the stock has reacted very negatively on such news flow.
  • Very difficult to predict how the case will progress.
  • Expect stock to be under pressure and will not be driven by business fundamentals.
  • Downgrade to Hold despite attractive valuations.

Opening Bell

Indian equity benchmarks rose for the first time in three sessions after Asian peers bounced back from their longest losing streak in more than two years.

The S&P BSE Sensex rose as much as 0.42 percent to 32,732 while the NSE Nifty 50 Index gained 0.40 percent as well to 10,085. This while a gauge of expected stock-price swings declined for the first time in six trading sessions.

All 19 sector gauges compiled by the BSE Ltd. rose led by the S&P BSE Utilities Index’s 1.2 percent jump.

Indian Open

Money Market Heads Up!

While the RBI kept interest rates unchanged yesterday on expected lines its tone wasn’t as hawkish as anticipated. So, this may support bond buying in the short-term even though government's fiscal plan remains the top concern.

The yield on the 10-year note may stay in a range of around 7.05 percent in the session.

In the currency market, the rupee may open higher tracking gains in Asian currencies. The dollar index, though in the green for a fourth session, is little changed. The local unit may open around 64.45 and trade between 64.35-64.65 a dollar.

BQ Heads Up!

Put-Call Ratio

  • Nifty PCR at 1.11 from 1.16.
  • Nifty Bank PCR at 0.71 from 1.

F&O Ban

  • In ban: Jain Irrigation.

Only intraday positions can be taken in stocks which are in F&O ban. In case of a rollover of these intraday positions, there is a penalty.

F&O Cues

  • Nifty December Futures trading at 10,068, premium of 24.6 points versus 28.7 points.
  • December Futures: Nifty open interest up 5 percent; Bank Nifty open interest up 16 percent.
  • India VIX closed 0.5 percent higher at 15.
  • Max open interest for Dec. series at 10,500 Call (open interest at 66.8 lakh, up 7 percent).
  • Max open interest for Dec. series at 10,000 Put (open interest at 80.5 lakh).

IPO Update

  • Shalby Limited IPO continues on day 3. The issue has been subscribed 0.46 times.
  • Future Supply Chain Solutions IPO continues on day 2. The issue has been subscribed 0.32 times.

Trading Tweaks

  • Circuit filter revised to 10 percent: Ansal Properties, Rain Inds, Centrum Cap, LKP Fin, Graphite India, Deccan Gold, OK Play, Liberty Shoes, Goldstone Infra, Pincon Spirits and Adani Transmission.
  • Circuit filter revised to 20 percent: Bombay Dyeing, HFCL, 63 Moons, Soril Infra, GNFC, GM Breweries, Shalimar Paints, 8K Miles, MMTC, Hind Copper, Kitex, Castex Technologies, TV Today and Puravankara.

Earnings To Watch

  • BPL
  • Fortune Financial
  • Haldyn Glass
  • Hotel Leela
  • Indian Hume Pipe
  • Jet Airways
  • Multibase
  • Venus Remedies

Earnings Reaction To Watch

Pokarna (Q2, YoY)

  • Revenues down 9 percent to Rs 85 crore.
  • Net profit down 37 percent to Rs 12 crore.
  • EBITDA down 27 percent to Rs 27 crore.
  • Margins at 31.8 percent from 39.6 percent.

Centum Electronics (Q2, YoY)

  • Revenues down 14 percent to Rs 91 crore.
  • Net loss of Rs 9 crore from Net profit of Rs 10 crore.
  • EBITDA at Rs (6.7 crore) versus Rs 16.6 crore.
  • Margins at (7.4 percent) from 15.7 percent.

Arshiya Ltd (Q2, YoY)

  • Revenues up 11 percent to Rs 24 crore.
  • Net loss of Rs 22.5 crore versus Net loss of Rs 22.6 crore.
  • EBITDA up 14 percent to Rs 16.3 crore.
  • Margins at 67.9 percent from 66.2 percent.

Ador Welding (Q2, YoY)

  • Revenues up 20 percent to Rs 122 crore.
  • Net profit up 4 percent to Rs 5.5 crore.
  • EBITDA up 8 percent to Rs 10.8 crore.
  • Margins at 8.9 percent versus 9.8 percent.

Bulk Deals

  • C&C Constructions: Ketan Karani sold 1.94 lakh shares or 0.8 percent stake at Rs 77.67 each.

Weizmann Forex

  • Girik wealth advisors bought 70,000 shares or 0.6 percent stake at Rs 1399.52 each.
  • Parmatma Power Projects Pvt Ltd sold 79,711 shares or 0.6 percent stake at Rs 1399.52 each.

Media Reports

  • Arun Jaitley signals rethink on Financial Resolution and Deposit Insurance bill (Mint).
  • IBA suggests steps to ease financial stress on telecom firms (Mint).
  • Honda Cars to hike prices from January (Financial Express).
  • Banks seek relief measures for stressed telcos under debt restructuring plan (Economic Times).
  • Centrum’s PE fund backs The Label Life (Times of India).

Brokerages On RBI Policy

Motilal Oswal

  • Expect inflation to rise towards 5 percent by March 2018, primarily on account of low base.
  • On the other hand, expect real GVA to rise slower than the RBI’s expectations.
  • No rate action expected in remaining part of this financial year.

CLSA

  • India’s credit growth remains massively below what would support a cyclical upswing and inflation is still below the centre of the inflation target.
  • Discussion of a cut has more merit given the weakness of growth.
  • CPI inflation will rise a little further which implies no change in monetary policy in 2018 either.

Macquarie

  • We read the policy statement as neutral.
  • Expect the RBI to be on an extended pause with inflation risks contained and growth in a gradual recovery mode.
  • With ongoing liquidity tightness to persist into the fiscal year-end, expect market rates to remain under pressure which could potentially hurt financial stocks, particularly NBFCs.
  • A rate hike in the next financial year will be premature on expectations of a gradual growth recovery and inflation risks remaining contained.

Nomura

  • Believe both growth and inflation are headed higher.
  • Expect rates to be on hold through 2018 as the RBI has a sufficient real rate cushion to absorb higher inflation.
  • FX strategy: remain constructive on Indian Rupee.
  • Rates Strategy: do not expect any further open market operation sales.
  • Rates Strategy : Expect bond markets to consolidate around current levels.

Kotak

  • The tone of the communique was broadly neutral even as it adequately highlighted the upside risks to inflation.
  • Maintain call that the RBI MPC will likely remain on a pause for the rest of FY2018 as inflation continues to inch higher.
  • Believe that the focus will start shifting to MPC’s possible moves in FY2019 with the rate-cut cycle broadly over, for now.

Brokerage Radar

Credit Suisse on Indian Market

  • Structural reforms have weakened near-term visibility.
  • Weak agricultural income growth to lower broad-based consumption.
  • Unclear outlook with low utilisations to keep investment demand weak.
  • 2018 less uncertain but growth could still be weak.
  • State elections have limited economic impact.
  • Changes in market sentiment to drive volatility as 2019 elections approach.
  • Market is not relatively expensive, but cuts should resume.
  • Expect double-digit earnings per share growth in the next financial year.
  • Overweight: Energy and metals, PSU banks and IT.
  • Underweights on high price-to-earnings sectors with possible earnings per share cuts: NBFCs, Cement, Discretionary and Staples.
  • Outperforms: SBI, ONGC, Tata Steel.
  • Underperforms: Bajaj Finance, UltraTech Cement, Dr. Reddy's.

Ventura Securities on Solar Industries

  • Initiated ‘Buy’ rating with a price target of Rs 1,537, implying a potential upside of 37 percent over 27 months.
  • Solar Industries is dominant player in the explosives industry and five times of its nearest peer.
  • Infrastructure growth and mining boom to boost demand for explosives.
  • Opening up of Indian defense and tapping international markets is positive.
  • Expect healthy operating cash flows going ahead.
  • Net debt to equity to be maintained at 0.4 times in future
  • Expect revenue, operating income and net profit to grow at a compound annual growth rate of 25.3 percent, 27.2 percent and 28.6 percent by March 2020.
  • Expect return on equity to expand by 157 basis points to 21.7 percent by March 2020.
  • Expect return on capital employed to expand by 357 basis points to 28.7 percent by March 2020.
  • Incisive business strategy, enviable financial performance, regulatory compliant and well managed capex compelling case for premium valuation.

Citi on UFO Moviez

  • Maintained ‘Buy’; raised price target to Rs 610 from Rs 530.
  • Consolidation to enhance in-cinema ad opportunity.
  • Merger with Qube to increase geographical strength and client base.
  • GST and demonetization impacts are temporary issues and provide buying opportunity.
  • Worst is behind and expect better numbers in the second half of the current financial year.

Credit Suisse on Idea Cellular

  • Maintained ‘Underperform’ with price target of Rs 70.
  • Operating income decline eats up most of targeted synergies.
  • Vodafone-Idea would still have high leverage at 3.8 times.
  • Timelines on merger approvals critical to prevent further market share/EBITDA erosion.
  • Idea has not been a participant of massive growth in Indian mobile data market.

Credit Suisse on PI Industries

  • Initiated ‘Outperform’ rating and price target of Rs 1,150.
  • PI strongly positioned in custom synthesis and manufacturing; Orderbook provides visibility.
  • PI to have a less than 5 percent market share of global industry in custom synthesis and manufacturing, offering ample opportunity to grow.
  • Focus on speciality products in domestic business a key differentiator.
  • Expect revenue of custom synthesis and manufacturing business and Domestic business to grow at a compound annual growth rate of 20 percent and 14 percent by March 2020.
  • Expect earnings per share to grow at a compound annual growth rate of by March 2020, with better growth for custom synthesis and manufacturing in the second half of the current financial year itself.
  • Operating margins should sustain in narrow range.

Nomura on BSE

  • Initiated ‘Neutral’ rating with a price target of Rs 1,000; implying a potential upside of 9 percent.
  • Monetising/diversifying its franchise but losing the core battle.
  • Large part of BSE’s business value driven by non-core segment.
  • High EBIT growth led by transaction revenues from highly volatile illiquid segment.
  • Refrain from giving higher multiple to unsustainable/volatile portion.
  • Dependence on investment income reducing; Operational costs stable.
  • Expect revenue, EBIT and profit before tax to grow at a compound annual growth rate of 4 percent, 11 percent and 14 percent respectively by March 2020.
  • EBIT margin improve to 30 percent by March 2020.

Stocks To Watch

  • IRB Infra says CBI filed charge sheet in Pimpoli land case.
  • Quess Corp received NCLT Bengaluru’s approval to acquire facility management and catering business of Manipal Integrated services.
  • Bank of Maharashtra sets one-year MCLR at 8.65 percent from Dec. 7.
  • Hatsun Agro approves raising Rs 900 crore via rights issue.
  • IDBI Bank to sell 27.99 lakh shares (7 percent) in NSDL.
  • Tata Motors rolls out first lot of Tigor electric vehicles from Sanand plant.
  • DLF reopens sales, sells Rs 300 crore flats in Gurgaon in November.
  • Infosys says it has submitted settlement plea with SEBI.
  • Claris Life Science’s board finds delisting option best for shareholders.
  • Kaveri Seed Says COO G.S. Satish resigned.
  • UltraTech Cement says some cement kilns using coal after petcoke ban.

Talking Points

  • Trump recognised Jerusalem as Israeli Capital in U.S. Shift.
  • Bangladesh approved Plan to buy 1.5 lakh tons of rice from India.
  • Fitch sees India as fastest-growing APAC Economy in 2018.
  • RBI set rules for merchant discount rate for card transactions.
  • Economists, brokerages expect RBI to hit the pause button next year.
  • China Development Bank files insolvency plea against Reliance Telecom.

Commodity Update

  • West Texas Intermediate crude was little changed at $56.11 a barrel after falling 2.9 percent.
  • Gold was at $1,263.60 an ounce.
  • Sugar ended near one-month low at 14.45 cents a pound; down 3.02 percent.

Shanghai Exchange

  • Steel trades lower for second day; down 1 percent.
  • Aluminium trades lower for third day; down 1.4 percent.
  • Zinc trades lower for third day; down 0.5 percent.
  • Copper trades lower for third day; down 0.27 percent.
  • Rubber trades higher; up 0.11 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was little changed at 10,073.50 as of 7:50 a.m.

Asian equities bounced back to stem their longest losing streak in more than two years as the recent rout in global stocks abated.

Global markets have succumbed to a bout of profit taking this week with eight days of losses for Asian equities culminating Wednesday in the biggest slide since last December for the region’s stocks index.

Here are some key events coming up this week:

  • 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.
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