A security guard stands behind a glass facade displaying the CNX Nifty logo at the National Stock Exchange in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Volatile Nifty Settles Above 10,250 Ahead Of Exit Polls

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Closing Bell

Indian equity benchmarks rose in a volatile trading session ahead of Gujarat and Himachal Pradesh exit polls which will be declared later in the day.

The S&P BSE Sensex rose 0.59 percent or 194 points to 33,246.70 and the NSE Nifty 50 Index advanced 0.58 percent or 59 points to 10,252.10.

For the most part of the day, the Sensex and Nifty swung between gains and losses.

Fifteen out of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Oil & Gas Index's 1 percent gain. On the flipside, the S&P BSE Consumer Durables Index was the top sectoral loser, down 0.6 percent.

Countdown

Nifty Surges In Late Trade Led By ITC, Axis Bank

Angel Broking To BloombergQuint

Basic premise is BJP will win Gujarat Assemble Elections. However, the quantum of win will matter. Meanwhile, the markets have not factored in the worst election outcome. If there is a selloff after the election, we will look at buying qualitative stocks in falling market.
Mayuresh Joshi, fund manager at Angel Broking

Fab Four Stocks Of The Day

  • Oberoi Realty: Shares of the Mumbai-based real estate developer rose as much as 6.72 percent, the most in over a month, to Rs 482 after domestic brokerage Motilal Oswal initiated coverage on the stock with a 'buy' for target price of Rs 580.
  • Religare Enterprises: The Delhi-based financial services firm rose as much as 5 percent, the most since Dec. 1, to Rs 60.25 after 1.1 crore shares (6.2 percent equity) changed hands in a single block.
  • Prataap Snacks: The Indore-based snack maker rose as much as 10.46 percent, the most since Nov. 29, to Rs 1,415 after it reported strong earnings in September quarter.
  • Sandur Manganese: Shares of the Karnataka-based miner rose as much as 5.45 percent, the most since Dec. 11, to Rs 1,215 after the Supreme Court increased the cap on iron ore mining from 30 million tonnes to 35 million tonnes in Karnataka.

SC Setback For Government In Vodafone Tax Dispute

Ventura Securities To BloombergQuint

In our analysis, BJP is winning Gujarat Assembly election and there is a little chance of Congress on the back of anti-incumbency. However, if Congress wins then invincibility of Modi government could come in question. Traders can hedge their long positions by buying derivatives going into trade.
Vinit Bolinjkar, head of equity research at Ventura Securities

Kiranjadhav.Com To BloombergQuint

Technically Nifty is trading in range of 10,000 on downside and 10,400 on the upside. If it breaks above 10,400 mark it can go up to 10,800 and a break below 10,000 level can take Nifty below 9,700 which was the swing low made in September.
Kiran Jadhav, technical analyst

Stocks Moving On Heavy Volumes

  • Essel Propack: The Mumbai-based packaging company rose as much as 8.8 percent, the most in over two months, to Rs 297.95 after its shareholders approved board's decision to make private placement of non-convertible debentures. Trading volume was 10.6 times its 20-day average.
  • Natco Pharma: The Hyderabad-based drug maker rose as much as 5.94 percent, the most in over two months, to Rs 1,019. Trading volume was 9.1 times its 20-day average.
  • DCM Shriram: The Delhi-based packaged food maker rose as much as 7.86 percent, the most in a month, to Rs 620. Trading volume was 5.6 times its 20-day average.
  • Kansai Nerolac: The Mumbai-based paint maker fell as much as 3.92 percent, the most in over two months, to Rs 488.60. Trading volume was 6.5 times its 20-day average.

Kunal Kapoor Of Morningstar To BloombergQuint

  • Seeing greater interest towards financial assets post demonetisation
  • Indian mutual fund industry will continue to grow
  • ETFs to pressurize expense ratio
  • India is a good long-term story versus short-term

Power Lunch

Oberoi Realty Surges After Motilal Oswal Initiates Coverage

Shares of the Mumbai-based real estate developer rose as much as 6.72 percent, the most in over a month, to Rs 482 after the domestic brokerage Motilal Oswal initiated coverage on the stock with a 'buy' for target price of Rs 580.

Motilal Oswal in a note said:

  • Sharp focus and trusted brand are the key strengths.
  • Company to be a key beneficiary of likely consolidation post RERA.
  • Annuity business – portfolio expansion to provide consistent cash flows.
  • Recent foray into affordable housing should help it enjoy tax incentives.
  • Low net debt provides ample room to acquire large land parcels in the Mumbai.
  • Expect revenue and net profit to grow at a compounded rate of 47 percent and 56 percent respectively by March 2020.
  • High operating margins to be backed by premium pricing.
  • Strong cash flow visibility for 10-12 years from ongoing/planned projects.
  • Bull case price target of Rs 638.

Voter Turnout In Gujarat Till 12 PM

Voters are turning up in large numbers in second phase of Gujarat Assembly elections. 39 percent of eligible voters had exercised their franchise till 12 pm, according to news agency ANI.

#Ask BQ

Block Deal Alerts

  • Federal Bank has 23 lakh shares change hands in two blocks.
  • Religare has 1.1 crore shares (6.2 percent equity) change hands at Rs 58.50 per share in two blocks on the BSE.

Buyers and sellers were not immediately known

Source: Bloomberg

Hot Money

India’s Wholesale Inflation Climbs To 3.93% In November

India's wholesale inflation rose to 3.93 percent in November up from 3.59 percent in October.

Analysts polled by Bloomberg estimated wholesale inflation to come in at 4 percent.

Trend Spotting

Market Check

  • Indian equity benchmarks broke out of the rangebound trading and extended losses on the back of a broad-based selling pressure.
  • The S&P BSE Sensex fell 0.33 percent or 108 points to 32,645 and the NSE Nifty 50 Index declined 0.29 percent or 29 points to 10,164.
  • The S&P BSE MidCap Index fell 0.5 percent and the S&P BSE SmallCap Index declined 0.75 percent.
  • All sector gauges compiled by BSE were trading lower led by the S&P BSE Consumer Durables Index's 0.9 percent drop.

Manpasand Beverages Gains After RBI Raises Foreign Investment Limit

Shares of the Gujarat-based beverage maker rose as much as 10.11 percent, the most in three months, to Rs 409.55 after the Reserve Bank of India hiked foreign investment limit in the company to 49 percent from 24 percent.

Sandur Manganese Gains After SC Raises Iron Ore Mining Cap In Karnataka

Shares of the Karnataka-based miner rose as much as 5.45 percent, the most since Dec. 11, to Rs 1,215 after the Supreme Court increased the cap on iron ore mining from 30 million tonnes to 35 million tonnes in Karnataka.

Ruchi Soya Slumps; IDBI Bank Declares It As Wilful Defaulter

Shares of the Mumbai-based edible oil producer fell as much as 16.49 percent, the most in 17 months, to Rs 15.70, its lowest level in thirteen years. The state-run lender IDBI Bank declared the company as a wilful defaulter, Ruchi Soya said in a stock exchange filing.

Alpha Moguls

Everest Industries Gains After Brokerage Initiates Coverage

Shares of the Delhi-based asbestos sheet maker rose as much as 10.4 percent, the most since Nov. 28, to Rs 581.70 after domestic brokerage Ventura initiated coverage on the stock with a 'buy' for target price of Rs 712.

Ventura in a note said:

  • Government policies to promote housing sector is positive.
  • Boards and panels segment to lead to better profitability.
  • Roofing - new product launches to maintain growth momentum.
  • Change in product mix to boost profitability; To reduce dependence on roofing.
  • Expect revenue, operating income and net profit to grow at a compounded rate of 11 percent, 53 percent and 173 percent by March 2020.
  • Benefits from low base of previous financial year, which was impacted by demonetisation and high material costs.
  • Margin expansion and debt repayment to boost return ratios.

Corporation Bank Falls After RBI Places It Under Prompt Corrective Action

The Mangalore-based public sector lender fell as much as 3.58 percent, the most in a month, to Rs 39.10 after the Reserve Bank of India placed it under the Prompt Corrective Action framework following its high ratio of non-performing assets.

Stocks Reacting To Q2 Earnings

Prataap Snacks: The Indore-based snack maker rose as much as 10.46 percent, the most since Nov. 29, to Rs 1,415.

  • Revenue up 11 percent at Rs 264 crore.
  • Net profit up 143 percent at Rs 12.9 crore.
  • EBITDA up 148 percent at Rs 26 crore.
  • Margin at 9.8 percent from 4.4 percent.

Bodal Chemicals: The Ahmedabad-based dye manufacturer fell as much as 8.11 percent, the most in a month, to Rs 157.

  • Revenue down 23 percent at Rs 262.5 crore.
  • Net profit down 28 percent at Rs 26 crore.
  • EBITDA down 18 percent at Rs 46.5 crore.
  • Margin at 17.7 percent from 16.7 percent.

The F&O Show

Tata Communications Gains On Transfer Of Surplus Land

Shares of the Mumbai-based telecom company rose as much as 8.85 percent, the most in four months, to Rs 758 after the company said it will transfer surplus land to Hemisphere Properties which will be listed on stock exchanges subsequently.

IndianOpen

Shyam Sekhar Founder Of I-Thought To BloombergQuint

  • Markets have sustained higher levels backed by liquidity
  • Adverse news not factored in by the market
  • Looking for companies which will benefit from economy
  • Focusing on no debt, growth companies with great managements
  • Shift from fixed deposit to balanced funds will halt in 2018
  • Food chain logistics could be worth looking at
  • Will definitely suggest buying in infrastructure sector
  • Will not suggest investing in real estate sector
  • Would play infra space through material stocks
  • Extremely cautious on dairy sector now after a decade of investment

S Chand Surges After Credit Suisse Initiates Coverage

Shares of the Delhi-based book publisher rose as much as 5.18 percent, the most in over a month, to Rs 508.20 after international brokerage Credit Suisse initiated coverage on the stock with an 'outperform' rating for target price of Rs 625.

Credit Suisse in a note said:

  • S Chand is the largest player in this market and with a strong track record.
  • Leading player in attractive Indian education content market
  • Expect compounded growth rate of 14 percent, 13 percent and 25 percent for revenue, operating income and earnings per share by March 2020.
  • Lower borrowing cost and tax rate to accelerate earnings per share.
  • Management looking at two acquisitions in Western India state board and Cambridge international board.
  • Positives: large and young population, growth of private schools and increasing share of education in consumers' discretionary budget.

Opening Bell

Indian equity benchmarks edged higher led by gains in Tech Mahindra, Vedanta and ONGC as Gujarat votes for the second phase of assembly elections.

The S&P BSE Sensex rose 0.2 percent or 66 points to 33,117 and the NSE Nifty 50 Index rose 0.20 percent or 20 points to 10,211.

Barring NSE Nifty FMCG Index all the sector gauges compiled by National Stock Exchange were trading higher led by the NSE Nifty Realty Index's 0.98 percent gain.

Rupee Opens Higher Against U.S. Dollar

  • Rupee opened higher at 64.32 per dollar against yesterday's close of 64.44.

Money Market Heads Up

India's government bonds are likely to inch higher, having ended with slight gains on Wednesday after a recent surge in yields attracted buyers and the government said it will buyback some bonds.

The yield on the 10-year benchmark fell two basis points to 7.17 percent, having risen to as high as 7.25 percent, the highest since July 2016.

Meanwhile, the rupee is expected to open slightly firmer against a dollar that was on the backfoot given a slightly tempered view on the U.S. economy by the Federal Reserve.

The Fed raised its benchmark rate by a quarter percentage point but it still doesn’t see inflation accelerating. The rupee might also be helped by local data that showed India's current account shrinking in the July-Sept quarter. The rupee ended at 64.44 on Wednesday.

BQ Heads Up!

F&O Cues

  • Nifty December Futures trading at 10,215, premium of 22 points from 24 points.
  • Open interest unchanged for Nifty and Bank Nifty Futures of December contract
  • India VIX closed up 4.4 percent at 15.9.
  • Max open interest for Dec. series at 10,500 Call (open interest at 63.4 lakh, up 9 percent).
  • Max open interest for Dec. series at 10,000 Put (open interest at 85.6 lakh, down 6 percent).

Earnings To Watch

  • Atlas Cycles
  • Goodluck India
  • Gufic Bio
  • JBM Auto
  • Kopran
  • Lawreshwar Polymers
  • Linc Pens
  • Lovable Lingerie
  • OK Play
  • Sree Rayalaseema Hi-Stength Hyp
  • Stylam Industries
  • Veto Switchgear

Earnings Reaction To Watch

Bodal Chemicals (Q2, YoY)

  • Revenue down 23 percent at Rs 262.5 crore.
  • Net profit down 28 percent at Rs 26 crore.
  • EBITDA down 18 percent at Rs 46.5 crore.
  • Margin at 17.7 percent from 16.7 percent.

Prataap Snacks (Q2, YoY)

  • Revenue up 11 percent at Rs 264 crore.
  • Net profit up 143 percent at Rs 12.9 crore.
  • EBITDA up 148 percent at Rs 26 crore.
  • Margin at 9.8 percent from 4.4 percent.

Bulk Deals

V2 Retail

  • Goldman Sachs India bought 9.54 lakh shares or 2.8 percent equity at an average of Rs 502 each.
  • Naresh Bhargava sold 4.50 lakh shares or 1.3 percent equity at Rs 500 each.
  • Vivek Lodha sold 4.50 lakh shares or 1.3 percent equity at Rs 500.79 each.
  • Pramod Chand Mahnot sold 7 lakh shares or 2.1 percent equity at Rs 502.59 each.

Shriram Transport Finance

  • Societe Generale bought 15 lakh shares or 0.7 percent equity at Rs 1362.50 each.
  • Morgan Stanley France S.A.S sold 15 lakh shares or 0.7 percent equity at Rs 1362.50 each.

Stocks To Watch

  • Tata Communications to transfer surplus land to Hemisphere Properties which will be subsequently listed.
  • InterGlobe Aviation offer for sale to non-retail investors gets subscribed 1.12 times
  • PVR signs pact with CJ 4DPLEX to launch another 16 4DX screens in India.
  • UCO Bank sold Jai Balaji loan to Edelweiss ARC.
  • NCC to raise Rs 550 crore via QIP.
  • RBI imposes penalty of Rs 3 crore on IndusInd Bank for non-compliance with IRAC norms.
  • Corporation Bank says RBI has placed the lender under Prompt Corrective Action framework for high NPAs.
  • RBI increases Manpasand Beverages’ FII limit to 49 percent from 24 percent and allows further FII buying.
  • IVRCL, Ruchi Soya, Orchid Pharma and Jaiprakash Associates part of RBI’s second list of defaulters (Mint).
  • Maruti Suzuki to raise vehicle prices by 2 percent from January (PTI).

Brokerage Radar

Credit Suisse on S Chand

  • Initiated ‘Outperform’ with price target of Rs 625.
  • S Chand is the largest player in this market and with a strong track record.
  • Leading player in attractive Indian education content market
  • Expect compounded growth rate of 14 percent, 13 percent and 25 percent for revenue, operating income and earnings per share by March 2020.
  • Lower borrowing cost and tax rate to accelerate earnings per share.
  • Management looking at two acquisitions in Western India state board and Cambridge international board.
  • Positives: large and young population, growth of private schools and increasing share of education in consumers' discretionary budget.

Motilal Oswal on Oberoi Realty

  • Initiated ‘Buy’ with price target of Rs 580.
  • Sharp focus and trusted brand are the key strengths.
  • Company to be a key beneficiary of likely consolidation post RERA.
  • Annuity business – portfolio expansion to provide consistent cash flows.
  • Recent foray into affordable housing should help it enjoy tax incentives.
  • Low net debt provides ample room to acquire large land parcels in the Mumbai.
  • Expect revenue and net profit to grow at a compounded rate of 47 percent and 56 percent respectively by March 2020.
  • High operating margins to be backed by premium pricing.
  • Strong cash flow visibility for 10-12 years from ongoing/planned projects.
  • Bull case price target of Rs 638.

Ventura on Everest Industries

  • Initiated ‘Buy’ with price target of Rs 712.
  • Government policies to promote housing sector is positive.
  • Boards and Panels segment to lead to better profitability.
  • Roofing - new product launches to maintain growth momentum.
  • Change in product mix to boost profitability; To reduce dependence on roofing.
  • Expect revenue, operating income and net profit to grow at a compounded rate of 11 percent, 53 percent and 173 percent by March 2020.
  • Benefits from low base of previous financial year, which was impacted by demonetisation and high material costs.
  • Margin expansion and debt repayment to boost return ratios.

IDFC Securities on Tata Communications

  • Maintained ‘Underperformer’ with price target of Rs 655.
  • Approval for de-merger of surplus land is a positive.
  • Market has been expecting an announcement in this regard.
  • Stock price partially reflecting the value of de-merged entity.
  • Would be sellers in the land-related rally.

CLSA on ONGC

  • Maintained ‘Buy’ with price target of Rs 225.
  • Fears of overpaying in HPCL deal has made ONGC underperform.
  • Stock already building worst case on HPCL acquisition.
  • Using Oil India as a benchmark, ONGC stock should be 25 percent higher.
  • ONGC pricing in $9 billion value leakage due to HPCL acquisition.
  • Using spot Brent of US$65/bbl, we estimate upside of 29 percent.

Goldman Sachs on Hero MotoCorp

  • Upgraded to ‘Neutral’ from ‘Sell’; maintained price target of Rs 3,295.
  • Added Hero to Sell List on December 2014.
  • The risk reward is more balanced now at current levels.
  • New launches hold the key for the company in the medium to long term.
  • Expect volume and revenue to grow at a compounded rate of 7 percent by March 2020.

Macquarie on IndusInd Bank

  • Monetary impact of penalty is negligible; May remain an overhang on valuations.
  • Penalty pertains to an inspection of financial position as of financial year-ended March 2016.
  • Compliance has become more important for banks of late.
  • Issue may remain overhang for the stock, if it reports large divergences for the previous financial year as well.
  • Results of RBI audit likely to be announced with the current quarter results.

HSBC on Sun TV

  • Maintained ‘Reduce’; raised price target to Rs 800 from Rs 730.
  • Markets not pricing potential structural risks.
  • Near term growth prospects look good, but less comfort on medium-term profitability.
  • Sun faces tough competition from Star India.
  • Spending may increase for Sun if competition continues.

Talking Points

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.47 percent or 48 points to 10,270.

Asian stocks were mixed and the dollar maintained losses after the Federal Reserve raised its outlook for U.S. growth and held its forecast for the number of interest-rate increases next year amid benign inflation. The Australian dollar jumped after the release of better-than-expected jobs figures.

Equity indexes in Japan fluctuated, while they rose in Hong Kong, Australia and South Korea.

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

  • The ECB, Bank of England and Swiss National Bank set monetary policy at their respective meetings on Thursday.
  • China updates on November factory output and retail sales on Thursday. Factory output probably gained 6.1 percent from a year earlier, while retail sales growth is expected to have picked up to 10.3 percent.
  • U.S. retail sales data is due 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 rose 0.4 percent to $56.82 a barrel.
  • Gold lost 0.1 percent to $1,254.21 an ounce
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