Employee monitoring securities at the BSE (Photographer: Dhiraj Sing/Bloomberg)

Sensex, Nifty Snap Three-Day Winning Streak

Closing Bell

Indian equity benchmarks snapped three-day winning streak led by losses in heavyweights like Bharti Airtel, TCS and ITC.

Meanwhile, yield on Indian government's generic 10-year bond rose to 17-month high on concerns that inflation might have risen at the fastest pace in November since Sept. 2016.

CPI rose 4.28 percent (YoY) last month, fastest since Sept. 2016 and up from 3.58 percent in Oct., according to Bloomberg survey.

The S&P BSE Sensex fell 0.68 percent or 228 points to 33,228 and the NSE Nifty 50 Index declined 0.80 percent or 82 points to 10,240. Selling pressure in today’s session was broad-based with the S&P BSE MidCap Index falling 1 percent and the S&P BSE SmallCap Index slipping 0.68 percent.

All sector gauges compiled by BSE ended lower led by the S&P BSE Telecom Index’s 2.12 percent drop.

Countdown

Reliance Industries Plans Jio IPO

Mukesh Ambani’s Reliance Industries Ltd. is considering an initial public offer of its mobile operator Jio, Bloomberg reported quoting people with knowledge of the matter. The company is holding internal talks for an IPO of Reliance Jio in late 2018 or early 2019.

Apex Frozen Foods Locked In 5% Lower Circuit For Fourth Day

Shares of the shrimp processor were locked in 5 percent lower circuit for the fourth day in a row. The stock came under selling pressure after it saw strong buying interest and was locked in an upper circuit of 5 percent for eight trading sessions in a row.

Market Check

  • Indian equity benchmarks extended losses in last hour of trade on the back of a broad-based selling pressure.
  • The S&P BSE Sensex 0.72 percent or 240 points to 33,215 and the NSE Nifty 50 Index declined 0.78 percent or 81 points to 10,241.
  • All the sector gauges compiled by BSE were trading lower led by the S&P BSE Telecom Index's 2.3 percent drop.

Fab Four Stocks Of The Day

  • Century Plyboards: The Kolkata-based plywood maker rose as much as 6.35 percent, the most since Nov. 27, to Rs 342.50 after domestic brokerage Edelweiss initiated coverage on the stock with a ‘buy’ rating for target price of Rs 442.
  • Dolphin Offshore: The Mumbai-based marine service provider to offshore oil exploration companies rose as much as 8.51 percent, the most in over a month, to Rs 123 after Brent Crude rose to $65.60, its highest level since June 2015.
  • HEG: The Madhya Pradesh-based graphite electrodes maker rose as much as 5 percent to Rs 1,965 after India Ratings upgraded its credit rating to A+ with a positive outlook. India Ratings expect company to demonstrate continued strong profitability in FY19 driven by healthy electrode price realisations coupled with ability to manage input costs.
  • PC Jeweller: The Delhi-based jewellery retailer rose for fifth day in a row, rising as much as 4.71 percent intraday to hit record high of Rs 454.20. In the course of last five trading sessions the stock has rallied 17 percent.

Stocks Moving On Heavy Volumes

  • Procter & Gamble: The Mumbai-based household products maker rose as much as 0.95 percent, the most since Dec. 8, to Rs 9,684. Trading volume was 19.5 times its 20-day average.
  • TTK Prestige: The Bangalore-based pressure cooker maker fell as much as 1.23 percent, the most since Dec. 6, to Rs 7,270. Trading volume was 15.5 times its 20-day average.
  • Rupa & Company: The Kolkata-based innerwear maker rose as much as 13.3 percent, the most in over six months, to Rs 509.45. Trading volume was 8.3 times its 20-day average.
  • Ramco Systems: The Chennai-based IT company rose as much as 7.48 percent, the most since Dec. 4, to Rs 530.90. Trading volume was 7.2 times its 20-day average.

European Shares Little Changed

Oil Marketing Companies Fall As Crude Hits Over Two-Year High

Shares of the oil marketing companies like Hindustan Petroleum, Indian Oil and Bharat Petroleum were trading lower after Brent Crude rose to $65.60, its highest level since June 2015.

Waterbase Surges To Record High As It Meets Institutional Investors

Shares of the Andhra Pradesh-based shrimp feed maker rose as much as 16.67 percent, the most in nearly one month, to record high of Rs 227.80 as it meets institutional investors like Kotak Securities and Philip Capital.

Power Lunch

Unitech Falls As Top Court Defers Plea

Shares of the Gurugram-based troubled real estate developer fell nearly 2 percent to Rs 7.85 after the Supreme Court deferred Unitech's plea to Wednesday.

Unitech's plea is against NCLT's order that allowed government to appoint 10 nominee directors on the board of the company and restrained current directors from acting as the board members.

#Ask BQ

Alembic Pharma Rises On Getting U.S. FDA Nod

Shares of the Vadodara-based drug maker rose as much as 3.09 percent to Rs 534.60 after it got approval from U.S. drug regulator for Darifenacin extended-release tablets, 7.5 mg and 15 mg.

The drug is used to treat urinary disorders.

Fiberweb Rises On Winning Export Order

Shares of the textile and textile products maker rose as much as 3.1 percent to Rs 328 after it won export order from Melt Brown Products worth Rs 15.2 crore.

Hot Money

Larsen & Toubro Infotech Gains As Company To Offer Blockchain Solution

Shares of the Mumbai-based IT company rose as much as 2.58 percent, the most since Dec. 8, to Rs 1,007 after the company in a stock exchange notification said it will offer blockchain solution powered by Microsoft Azure.

Market Check

  • Indian equity benchmarks extended losses led by selling pressure in banking and FMCG shares.
  • The S&P BSE Sensex fell 0.44 percent or 147 points to 33,308 and the NSE Nifty 0 Index declined 52 points or 0.50 percent to 10,270.
  • Mid cap and small cap shares were also trading lower with the respective indices down 0.4 percent and 0.06 percent each.
  • Nine out of 11 sector gauges compiled by the National Stock Exchange were trading lower led by the NSE Nifty FMCG Index's 1.1 percent drop.
  • From the Nifty 50 basket of shares, 33 were trading lower while 17 were among the gainers.

Most Cement Stocks Quiet A Day Ahead Of Court Hearing On Pet Coke

Shares of most of the cement companies were trading lower a day ahead of Supreme Court hearing to discuss ban on use of pet coke.

  • Ambuja Cement slipped 1.4 percent
  • Shree Cement slipped 0.2 percent
  • ACC declined 1.03 percent
  • Grasim Industries fell 0.33 percent
  • Dalmia Bharat declined 0.65 percent
  • OCL India declined 0.43 percent
  • JK Cement fell 0.1 percent
  • India Cements declined 0.44 percent
  • Star Cement fell 0.95 percent
  • JK Lakshmi Cement declined 0.48 percent

Trend Spotting

Oil Exploration Companies Gain As Crude Surges To Two-Year High

Shares of oil exploration companies were trading higher after Brent Crude rose to $65.60, its highest level since June 2015.

  • ONGC rose 1.65 percent
  • Oil India advanced 2.18 percent
  • Hindustan Oil Exploration rose 4.2 percent
  • Selan Exploration gained 5 percent
  • Asian Oilfield Services rose 2.33 percent

Ajay Tyagi, SEBI Chairman On IPO And Mutual Funds

  • Working to simplify IPO procedure
  • Will reduce listing time for IPOs
  • Will avoid over regulating the capital markets
  • IPO momentum to continue in the coming year
  • Rs 86,000 crore worth of IPOs have come this year
  • Want retail investment to continue, investment bankers should look at the pricing of the IPOs
  • One way of increasing retail investments in SMEs can be through the mutual fund route
  • Relaxations given to SMEs are working well so far, will jointly work with the exchanges if any more easing is required
  • Mutual funds (MFs) are doing well with 21 lakh crore in AUMs, but one should be cautious in terms of where they are investing as it is people's money
  • 1.5 crore people investing in MFs, that's not such a large number
  • Don't want the MF story to go bad and therefore have a separate department looking only at mutual funds
  • Will look to curb any mis-selling in MFs
  • Corporate bonds another important story we want to continue
  • Last year, through private placement issue raised record money from bonds
  • With the NPA issue of banks, corporate bonds have got a push in the past year
  • Out of 21 lakh crore of AUMs, 12 lakh crore in debt market and this therefore is also a good channel
  • Trying to systematize the private placement and direct route for retail investors
  • Introducing guidelines to improve securities lending and borrowing market
  • Will take a view for investor protection in the derivatives market
  • Government needs to pursue that listed PSUs achieve NPA resolution
  • Examining recommendations by the Kotak committee
  • Seeing as to how to go about implementing corporate governance standards

Stocks Reacting To Q2 Earnings

Repro India: The Mumbai-based commercial printing service provider fell as much as 7 percent, the most in four months, to Rs 802.

  • Revenue down 7 percent at Rs 69.55 crore.
  • Net profit down 86 percent at Rs 2.5 crore.
  • Ebitda loss at Rs 2.1 crore.
  • Margin at -3 percent versus 10.9 percent.

ARSS Infra Projects: The Delhi-based infrastructure construction company fell as much as 6.7 percent, the most since Dec. 5, to Rs 60.60.

  • Revenue down 59 percent at Rs 51 crore.
  • Net loss of Rs 28 crore versus loss of Rs 56 crore.
  • Ebitda loss at Rs 16 crore versus Ebitda loss of Rs 37 crore.
  • Margin at -31.4 percent versus -29.6 percent.

Lasa Supergenerics: The Mumbai-based specialty chemical maker fell as much as 5 percent, the most in two months, to Rs 132.80.

  • Revenue up 9 percent at Rs 64.5 crore.
  • Net profit up 24 percent at Rs 8.7 crore.
  • Ebitda down 14 percent at Rs 12.5 crore.
  • Margin at 19.4 percent versus 24.6 percent.

Mawana Sugar: The Delhi-based sugar maker fell as much as 10.26 percent, the most in four months, to Rs 86.15.

  • Revenue down 9.6 percent at Rs 175 crore.
  • Net loss of Rs 11 crore versus loss of Rs 9.5 crore.
  • Ebitda loss at Rs 10 crore.
  • Margin at -5.7 percent versus 0.5 percent.

Andrew Yule: The Kolkata-based electric transformers and air pollution control equipment maker fell as much as 10 percent, the most in over a year, to Rs 31.

  • Revenue down 28.6 percent at Rs 95 crore.
  • Net profit up 31 percent at Rs 21.7 crore.
  • Ebitda down 28 percent at Rs 13.1 crore.
  • Margin at 13.8 percent versus 13.7 percent.

The F&O Show

Banking Shares Fall Led By ICICI Bank, SBI

Banking shares were trading lower led by losses in Bank of Baroda, ICICI Bank and State Bank of India. A gauge of banking shares compiled by the National Stock Exchange- NSE Nifty Bank Index was the top sectoral loser, down 0.8 percent to 25,163.

IndianOpen

10-Year Bond Yield Jumps To 17-Month High On Inflation Concerns

Yield on Indian government's generic 10-year bond rose to 17-month high of 7.22 percent ahead of November inflation data which will be declared later in the day.

CPI rose 4.28 percent (YoY) last month, fastest since Sept. 2016 and up from 3.58 percent in Oct., according to Bloomberg survey.

Block Deal Alert

  • Fortis Healthcare has 1.14 crore shares change hands (2.2 percent equity) in a single block.

Buyers and sellers were not immediately known

Source: Bloomberg

Dr. Reddy's Labs Surges As Plant Gets EIR

Shares of the Hyderabad-based drug maker rose as much as 6 percent, the most since Nov. 21, to Rs 2,326 after it got establishment inspection report (EIR) from the U.S. FDA for its Bachupally formulations plant.

U.S. FDA had issued Form 483 with 11 observations for the Bachupally manufacturing plant earlier this year.

Opening Bell

Indian equity benchmarks edged lower led by losses in banking stocks such as State Bank of India, ICICI Bank and Kotak Mahindra Bank.

The S&P BSE Sensex fell 0.2 percent or 67 points to 33,390 and the NSE Nifty 50 Index declined 27 points or 0.26 percent to 10,296.

The broader markets were also trading on a subdued note with the S&P BSE MidCap Index and S&P BSE SmallCap Index edging marginally lower.

Fourteen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Bankex Index's 0.6 percent drop. On the other hand, the S&P BSE Healthcare Index was the top sectoral gainer, up 0.7 percent.

Rupee Opens Higher Against U.S. Dollar

  • Rupee opens higher at 64.41 per dollar against yesterday's close of 64.46.

BQ Heads Up

  • 5:30pm: Oct. industrial production YoY; est. 2.9 percent (prior 3.8 percent)
  • 5:30pm: India Nov. YoY consumer price inflation; Est. 4.28 percent (prior 3.58 percent)
  • 12/12-12/29: Q3 BoP current account balance, est. -$8.30 billion, (Prior -$14.30 billion)

Earnings To Watch

  • Axiscades Engineering Tech.
  • Chartered Logistics.
  • Deccan Gold Mines.
  • Goldstone Infra.
  • Gujarat Apollo.
  • Lincoln Pharma.
  • Nitesh Estates.
  • Poddar Housing.
  • Simbhaoli Sugars.
  • Speciality Restaurants.
  • Talwalkars Better Value Fitness.

Earnings Reaction To Watch

Repro India (Q2, YoY)

  • Revenue down 7 percent at Rs 69.55 crore.
  • Net profit down 86 percent at Rs 2.5 crore.
  • Ebitda loss at Rs 2.1 crore.
  • Margin at -3 percent versus 10.9 percent.

Arss Infra Projects (Q2, YoY)

  • Revenue down 59 percent at Rs 51 crore.
  • Net loss of Rs 28 crore versus loss of Rs 56 crore.
  • Ebitda loss at Rs 16 crore versus Ebitda loss of Rs 37 crore.
  • Margin at -31.4 percent versus -29.6 percent.

Lasa Supergenerics (Q2, QoQ)

  • Revenue up 9 percent at Rs 64.5 crore.
  • Net profit up 24 percent at Rs 8.7 crore.
  • Ebitda down 14 percent at Rs 12.5 crore.
  • Margin at 19.4 percent versus 24.6 percent.

Mawana Sugar (Q2, YoY)

  • Revenue down 9.6 percent at Rs 175 crore.
  • Net loss of Rs 11 crore versus loss of Rs 9.5 crore.
  • Ebitda loss at Rs 10 crore.
  • Margin at -5.7 percent versus 0.5 percent.

Andrew Yule (Q2, YoY)

  • Revenue down 28.6 percent at Rs 95 crore.
  • Net profit up 31 percent at Rs 21.7 crore.
  • Ebitda down 28 percent at Rs 13.1 crore.
  • Margin at 13.8 percent versus 13.7 percent.

Nandan Denim (Q2, YoY)

  • Revenue up 37 percent at Rs 415 crore.
  • Net profit down 0.6 percent at Rs 16.1 crore.
  • Ebitda up 27 percent at Rs 63 crore.
  • Margin at 15.2 percent versus 16.3 percent.

V2 Retail (Q2, YoY)

  • Revenue up 33.5 percent at Rs 137.5 crore.
  • Net profit up 285 percent at Rs 5 crore.
  • Ebitda up 46.3 percent at Rs 9.8 crore.
  • Margin at 7.1 percent versus 6.5 percent.

Associated Alcohol and Breweries (Q2, YoY)

  • Revenue up 4.9 percent at Rs 64 crore.
  • Net profit at Rs 3.6 crore.
  • Ebitda up 14.3 percent at Rs 8 crore.
  • Margin at 12.5 percent versus 11.5 percent.

F&O Cues

  • Nifty December Futures trading at 10,346, premium of 24.4 points versus 26 points.
  • December Futures: Nifty open interest up 1 percent; Bank Nifty open interest up 2 percent.
  • India VIX at 14.1, up 3.5 percent.
  • Max open interest for Dec. series at 10,500 Call (open interest at 53.2 lakh, down 5 percent).
  • Max open interest for Dec. series at 10,000 Put (open interest at 85.4 lakh, down 2 percent).

Trading Tweaks

  • Wipro buyback date revised from Nov. 29 - Dec. 13.
  • Chaman Lal Setia circuit filter revised to 10 percent.
  • SRS circuit filter revised to 5 percent.
  • Future Retail last trading day under T group.

Bulk Deals

JK Paper

  • Societe de Promotion et de Participation Pour la Cooperation sold 21.58 lakh shares or 1.2 percent equity stake at Rs 136 each.

Radico Khaitan

  • Societe Generale sold 14.88 lakh shares or 1.1 percent equity stake at Rs 270.05 each.

NBCC

  • Morgan Stanley France SAS sold 73.31 lakh shares or 0.8 percent equity stake at Rs 260.4 each.
  • Societe Generale bought 73.31 lakh shares or 0.8 percent equity stake at Rs 260.4 each.

SREI Infra

  • Morgan Stanley France SAS sold 28.24 lakh shares or 0.6 percent equity stake at Rs 100.65 each.
  • Societe Generale bought 28.24 lakh shares or 0.6 percent equity stake at Rs 100.65 each.

Stocks To Watch

  • Dr. Reddy’s Bachupally formulations plant 3 gets U.S.FDA EIR.
  • GNA Axles started commercial production from its two newly installed Automated Machining Lines at its unit in Punjab.
  • Asian Paints acquired remaining 49 percent stake in Sleek from Ahuja Family for Rs 50 crore.
  • Xpro India sold land located in Kolkata for Rs 21 crore.
  • Tata Teleservices total number of subscribers in November, down 4.1 percent at 70.74 lakh versus. 73.78 lakh in October.
  • L&T Infotech completes acquisition of 100 percent stake in banking solution provider Syncordis SA.
  • Natco Pharma QIP opens at a floor price fixed at Rs 937.63 per share.
  • Canara Bank floats request for proposal to select bankers to raise equity through a QIP.
  • Cement stocks: SC to hear matter of ban on pet coke and furnace oil on Dec. 13.

Brokerage Radar

Credit Suisse on Zee Entertainment

  • Maintained ‘Outperform’ with price target of Rs 610.
  • Expect strong report in the second half; positive growth outlook on advertising and subscription.
  • Cut in GST rates to support advertising in the next financial year.
  • Phase 3 digitisation benefits should start benefiting Zee in the next financial year.
  • OTT launch another near-term trigger.
  • Like both the near and medium-term story at Zee.

Goldman Sachs on Motherson Sumi

  • Upgraded to ‘Buy’ from ‘Neutral’; Raised price target to Rs 430 from Rs 318.
  • Best positioned among our India autos coverage.
  • Wiring Harness - Largely insulated from electric vehicles; positively exposed to AVs.
  • Polymer Parts - Integral to premiumization, light-weighting and safety; EV/AV positive.
  • Rear View Mirrors - Digital mirrors are closer than they appear and more profitable
  • Raise revenue estimates for the next three financial years by 5 percent, 9 percent and 8 percent respectively.
  • Raise operating income estimates for for the next three financial years by 5 percent, 17 percent and 21 percent respectively.
  • Positives: global structural trends of premiumisation, light-weighting, modularisation and vendor consolidation.

Jefferies on Indian Energy Exchange

  • Initiated ‘Buy’ with price target of Rs 1,950.
  • IEX has a headstart in the power exchange market.
  • IEX to gain market share from less transparent bilateral traders.
  • Transparency to drive rise in exchange volume share.
  • Medium term power oversupply provides an additional safety net.
  • Expect volumes and net profit to grow at compounded rate of 14 percent by March 2020.
  • Pricing, a concern area, but within CERC trader limits.
  • High dividend payout ratio is a key positive; To keep return on equities more than 40 percent.
  • Bull Case price target of Rs 2,247.

Edelweiss on Asian Granito

  • Initiated ‘Buy’ with price target of Rs 720.
  • Well placed to leverage its vast distribution network and strong brand equity.
  • Prudently shifting focus to high-margin retail segment.
  • Rising utilisation and focus on premium products to propel bottom line.
  • Expect revenue, operating income and net profit to grow at a compounded rate of 14 percent, 21 percent and 40 percent respectively by March 2020.
  • Expect return on capital employed to expand to 20 percent by March 2020, compared to 12 percent clocked in the previous financial year.
  • AGL entails strong re-rating potential on improvement in retail mix.

Edelweiss on Century Plyboards

  • Initiated ‘Buy’ with price target of Rs 442.
  • Only integrated player with presence across wood panel industry.
  • Capacity in place to tackle burgeoning opportunities.
  • Lower raw material cost to spur margin.
  • Company in last stage of capex and is well-positioned to reap benefit of anticipated demand.
  • Expect revenue, operating income and net profit to grow at a compounded rate of 20 percent, 24 percent and 28 percent respectively by March 2020.
  • Strong compounding play in domestic wood panel industry.
  • Positive: Favourable GST rate, shift to organised players and government’s focus on housing.

Edelweiss on Greenlam Industries

  • Initiated ‘Buy’ with price target of Rs 1,477.
  • Leader to rake in GST benefits; Well leveraged to expand product basket.
  • Expect veneer business to turnaround by the next financial year.
  • Capex through, time to reap benefits.
  • Financial leverage to propel bottom-line growth.
  • Expect revenue, operating income and net profit to grow at a compounded rate of 12 percent, 21 percent and 35 percent respectively by March 2020.
  • Expect healthy growth in existing segments and turnaround in newer segments.
  • Strong re-rating potential.

Edelweiss on Greenply Industries

  • Initiated ‘Buy’ with price target of Rs 395.
  • Expect pick up in real estate market, demand shift to organised players to propel growth.
  • MDF capacity augmentation: Potent revenue booster.
  • Plywood business perking up; high outsourcing to bolster revenue.
  • Tripling capacity to drive growth and to keep margins under pressure.
  • Expect revenue, operating income and net profit to grow at a compounded rate of 20 percent, 22 percent and 21 percent by March 2020.
  • Aggressive capex phase by March 2019, to keep return on capital employed under pressure.
  • Triggers: start of MDF capacity and pick up in plywood demand.

Talking Points

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India was little changed at 10,338.

Asian equities were mixed as traders await U.S. and European central bank meetings this week for further clues on the 2018 policy outlook. The dollar was steady and oil maintained gains around $58 a barrel.

Benchmarks in Tokyo sat on recent gains, while Korean shares slipped, after U.S. stock indexes hit fresh highs overnight. Most major American gauges advanced, led by more than 1 percent increases in media, telephone and technology-hardware shares.

Here are some of the key events scheduled for this week:

  • Fed policy makers announce their decision on Wednesday.
  • The ECB, Bank of England and Swiss National Bank set monetary policy at their respective meetings on Thursday.
  • Among top U.S. economic reports are consumer inflation on Wednesday and retail sales on Thursday.
  • European lawmakers continue to debate Brexit and weigh moves on the next step, while North America Free Trade Agreement negotiators meet again.

Commodities

  • West Texas Intermediate crude was at $58.03 a barrel after gaining 1.1 percent.
  • Gold traded at $1,243.89 an ounce.
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