Employees work at computers at a brokerage firm in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Sensex Settles Above 34,000 For First Time Led By RIL, Bharti Airtel

Closing Bell

Indian equity benchmarks rose to record highs led by gains in index heavyweight Reliance Industries, Bharti AIrtel, Yes Bank and ICICI Bank.

The S&P BSE Sensex rose 0.21 percent or 70 points to 34,010.61 and the NSE Nifty 50 Index 0.37 percent or 38 points to 10,531.50.

All sector gauges compiled by BSE ended higher led by the S&P BSE Telecom Index's 2.28 percent gain.

Countdown

Reliance Group Shares Extend Gains

Reliance Group shares extended gains after the group's telecom company Reliance Communications exited strategic debt restructuring plan.

  • Reliance Communications up 35 percent
  • Reliance Capital up 4.37 percent
  • Reliance Infrastructure gains 2.34 percent
  • Reliance Naval and Engineering advances 4 percent
  • Reliance Nippon Life AMC advances 1 percent
  • Reliance Power up 4 percent

Anil Ambani Addresses Media

Shares of the Anil Ambani-led telecom company were trading 34 percent higher at Rs 21.90 after the company exited strategic debt restructuring plan.

  • Reliance Communications to cut debt to Rs 6,000 crore from Rs 45,000 crore
  • Ran asset monetisation process under the supervision of lenders
  • As a part of this we announced strategic transformation of RCom to a robust business-to-business company
  • RCom debt to be reduced by Rs 25,000 crore through prepayment and transfer of DOT
  • Expect full and final closure between Jan.-March 2018
  • Entire monetisation proceeds to be only used to prepay lenders
  • Pleased and happy to announce today that we have achieved full resolution for Reliance Communications
  • Resolution involves existing form strategic debt restructuring (SDR) framework
  • Resolution involves no conversion of any equity to lenders fully protecting all shareholders and zero write off to all lenders
  • Major stress in telecom business was the wireless segment
  • We completed long standing merger with SSTL

Dr Reddy's Labs Gains On Launching Cancer Injection In U.S.

Shares of the Hyderabad-based drug maker rose as much as 1.65 percent to Rs 2,371.60 after it launched Melphalan Hydrochloride for injection, a therapeutic equivalent generic version of Alkeran for injection in the U.S. approved by U.S. Food and Drug Administration (U.S. FDA), the company said in a stock exchange filing.

Buzzing Stocks

  • SAIL India: The state-run steel maker rose 5.2 percent to Rs 89.90. As many as 18.21 lakh share changed hands on the BSE compared with its two-week average of 13.15 lakh shares.
  • Jindal Steel and Power: The Delhi-based steel and energy company rose 5.4 percent to Rs 194.30. As many as 9.13 lakh shares changed hands on the BSE compared with its two-week average of 5,66 lakh shares.
  • Sintex Industries: The Gujarat-based plastic water tank maker rose 5.8 percent to Rs 24.60. As many as 16 lakh shares changed hands on the BSE compared with its two-week average of 10.13 lakh shares.

Reliance Group Shares Gain Ahead Of RCom's Media Briefing

Reliance Group shares were trading higher ahead of Reliance Communications' media briefing scheduled later in the day.

  • Reliance Capital rose 1.36 percent
  • Reliance Infrastructure gained 2.25 percent
  • Reliance Naval and Engineering advanced 3.24 percent
  • Reliance Communications jumped 14 percent
  • Reliance Home Finance rose 0.45 percent
  • Reliance Nippon Life Asset Management gained 1 percent
  • Reliance Power rose 2.29 percent l

Power Lunch

EID Parry Rises On Sale Of Bio Pesticides Business

The Chennai-based sugar manufacturer rose as much as 4 percent to Rs 364.60 after it informed stock exchanges that it will sell its bio pesticides business to Coromandel International on a slump sale basis for Rs 338 crore.

#Ask BQ

Reliance Communications Gains Ahead Of Corporate Announcement

Shares of the Anil Ambani-led company rose as much as 19.25 percent to Rs 19.45 ahead of the important corporate announcement.

The company's management will address media in Mumbai later in the day.

Trading volume on the stock jumped as 1.79 crore shares changed hands on the BSE compared to an average of 1.35 crore shares traded daily in the past two weeks.

Hot Money

Jet Airways Hits Record High On Heavy Volumes

Shares of the Mumbai-based airline rose as much as 6.36 percent to record high of Rs 806 on the back of heavy volumes.

Trading volume on the stock surged as 7.54 lakh shares changed hands on the BSE compared with its two-week average of 3.13 lakh shares.

Trend Spotting

Cummins, Kirloskar Oil Engines Gain On Acquisition Report

Shares of the Pune-based Cummins India rose as much as 5.2 percent to Rs 923 and Kirloskar Oil Engines surged 18 percent to Rs 450 after Cummins Group was in talks to acquire a controlling stake in Kirloskar Oil Engines in a deal valued at over $500 million through one of its Indian subsidiaries, The Mint newspaper reported citing two people aware of talks between the companies.

SEBI Revokes Shell Companies Status On Prakash Industries; Shares Rise

Shares of the Delhi-based steel maker rose as much as 7.7 percent to Rs 184 after SEBI revoked its earlier order classifying Prakash Industries as shell company.

NHPC Rises As Motilal Oswal Initiates Coverage With Buy

Share of the state-run hydel power producer rose as much as 3.13 percent to Rs 31.30 after domestic brokerage firm Motilal Oswal initiated coverage on the stock with a 'buy' for target price of Rs 37 per share.

Motilal Oswal in a note said:

  • Valuations attractive at one-time book value and 6 percent dividend yield.
  • Regulated equity to increase 35 percent, despite Subhanshiri project being on hold.
  • Under-recoveries to decline on natural attrition and approval of five tariff orders.
  • Higher dividend pay-out is boosting return on equity; room for even higher payout/buyback.
  • Earnings are at inflexion after five years of stagnation.

Welspun Corp Surges On Order Win

Shares of the Mumbai-based maker large diameter pipes rose as much as 13.5 percent to Rs 155 after it received an order for supply of 1.24 lakh MT pipes, Welspun Corp said in a stock exchange filing on Friday.

The company has a total order book of Rs 7,400 crore, added the company in the exchange notification.

The F&O Show

NBCC Falls After CBI Files Corruption Charges Against Chairman

Shares of the state-run construction company fell as much as 3.7 percent to Rs 244 after Central Bureau of Investigation has filed corruption charges against NBCC India Ltd. chairman Anoop Kumar Mittal in a case related to a redevelopment project, Bloomberg reported.

A case was filed against Mittal and four others on Friday, Bloomberg said, adding that calls made to Mittal's office phone on the weekend were not answered.

Opening Bell

Indian equity benchmarks rose to record highs led by gains in TCS and Reliance Industries. However, the benchmarks soon turned flat as Infosys and HDFC Bank cam under a mild selling pressure.

The S&P BSE Sensex rose as much as 0.19 percent to 34,005 and the NSE Nifty 50 Index was little changed at 10,494. The mid-cap and small-cap shares were outperforming the large cap peers as the S&P BSE MidCap Index rose 0.47 percent and the S&P BSE SmallCap Index advanced 0.5 percent.

Sixteen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Oil & Gas Index's 0.9 percent gain. On the flipside, the S&P BSE Information Technology Index was the top sectoral loser, down 0.2 percent.

IndianOpen

Money Market Heads-Up

Appetite for debt continues to be feeble and there seems no value buying momentum at current valuations, according to Edelweiss Securities. Markets will test appetite for a Rs 12,590 crore sale of state debt today after an auction of federal bonds on Friday had to be partly rescued by primary dealers.

Implied opening from forwards suggests onshore USD/INR will start trading around 64.02 today.

BQ Heads Up!

F&O Cues

  • Nifty December Futures closed trade at 10505, premium of 12 points versus 18 points.
  • December Futures-Nifty open interest down 2 percent and Bank Nifty open interest down 1 percent.
  • India VIX ended at 11.5, down 4 percent.
  • Max open interest for December series at 10,500 Call, open interest at 56.4 lakhs, open interest down 14 percent.
  • Max open interest for December series at 10,000 Put, open interest at 75 lakh, open interest down 6 percent.

Trading Tweaks

  • Morepen Labs and DB Realty’s circuit filter revised to 10 percent
  • Jindal Worlwide: Ex date for 2:1 stock split.
  • Confidence Finance And Trading: Last trading day before consolidation from Re1 to Rs10 per share.

Bulk Deals

Ester Industries

  • Garnet International bought 7.5 lakh shares or 0.9 percent equity at Rs 49.86 each.

Rushil Decor

  • Aspire Emerging Fund bought 1.6 lakh shares or 1.1 percent equity at Rs 900 each.

Lokesh Machines

  • Sushmita Ashish Kacholia sold 1.2 lakh shares or 0.7 percent equity at Rs 73.95 each.

Tara Jewels

  • Promoter Rajeev Sheth sold 3.4 lakh shares or 1.4 percent equity at Rs 16.86 each.

The Byke Hospitality

  • Promoter Anil Patodia bought 2.01 lakh shares or 0.5 percent equity at Rs 173.91 each.

Stocks To Watch

  • BHEL gets Rs 672 crore order from Indian Railways
  • CBI files corruption charges against NBCC chairman
  • Larsen & Toubro gets Delhi Expo Centre phase-I contract for Rs 2,790 crore
  • Tata Power wins mining license project in Kamchatka province in Russian Far East
  • EID Parry to hive off its bio-pesticides business to Coromandel on a slump sale basis for Rs 338 crore
  • Religare unit to divest its entire 50 percent holding in Bartleet
  • Thyssenkrupp to have 50 percent stake in Tata Steel joint venture for six years
  • Bharat Financial completes the third securitisation, sells loan portfolio worth Rs 653 crore
  • Suzlon to sell its stake in Shanay and Saroja to Skeiron renewable energy for Rs 280 crore
  • GVK Power unit wins bid for 17,06,300 tonnes coal
  • Tech Mahindra to acquire 32.07 percent stake in Comviva Technologies for Rs 328.65 crore
  • Dewan Housing Finance approves additional investment of Rs 16.33 crore in Social Worth Technologies
  • Lumax Auto says tax department conducting search at group’s locations
  • SEBI revokes shell company status on Prakash Industries
  • Welspun Corp receives an order for the supply of 1.24 lakh MT pipes
  • Jindal Poly’s Netherlands subsidiary to issue 2.6 lakh shares to a third-party investor

Brokerage Radar

Credit Suisse on Tata Steel

  • Maintained ‘Outperform’ for price target of Rs 830 per share, implying a potential upside of 16 percent from Friday’s close.
  • Assess sensitivity around Rs 12,800 billion rights issue and capacity expansion.
  • 5mt brownfield capacity expansion to cost Rs 23,500 billion over four years.
  • Rights issue to keep leverage ratios at a comfortable level for organic expansion.
  • Capex will lead to higher debt, no Ebitda generation at a point making the stock look expensive.
  • Project EV much higher than CapEx cost.
  • Outlook does not change, and we remain constructive on the stock.

Kotak On Wipro

  • Maintained ‘Reduce’ with a price target of Rs 275 per share.
  • Management confident of catching up with industry peers on growth by the next quarter.
  • EBIT margins to remain steady and possibly have an upward bias in the next two years.
  • Stock builds in management optimism.
  • Pressure on market share especially in vendor consolidation decision a concern.
  • Shrinkage in revenues on Healthplan already has played out.
  • Valuations are full even after building in acceleration in growth.

Motilal Oswal On NHPC

  • Initiated a coverage with ‘Buy’ rating for price target of Rs 37, implying a potential upside of 23 percent from yesterday’s close.
  • Valuations attractive at one-time book value and 6 percent dividend yield.
  • Regulated equity to increase 35 percent, despite Subhanshiri project being on hold.
  • Under-recoveries to decline on natural attrition and approval of five tariff orders.
  • Higher dividend pay-out is boosting return on equity; room for even higher payout/buyback.
  • Earnings are at inflexion after five years of stagnation.

Nomura On HDFC

  • Upgraded to ‘Buy’ From ‘Neutral’ and price target of Rs 2000, implying a potential upside of 17.5 percent from Friday’s close.
  • Risk reward evenly placed now.
  • Core mortgage – Growth robust; spread pressure could remain.
  • HDFC’s subsidiaries contribute above 50 percent of SOP value and best in class.
  • HDFC’s strategy of investing more in subsidiaries a high-value accretion for investors.

Nomura On Ashok Leyland

  • Maintained ‘Buy’ rating with price target of Rs 145 per share.
  • Improving on MHCV demand visible.
  • Roadmap for the e-way bill to curtail overloading: positive for demand.
  • Higher tonnage share continues to rise.
  • Ashok Leyland is a pure play on MHCV segment and commands a higher share in the higher tonnage segments.

Talking Points

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.23 percent to 10,506 as of 7:27 a.m.

Japan’s stocks opened flat after reaching the highest in more than a quarter century Monday, while the euro rebounded from a brief slump during holiday-thinned trading.

U.S. equity-index futures opened little changed in their first trading this week. Australia and Hong Kong markets remain shut Tuesday, though most of the rest of Asia comes back online.

Among the events in focus for investors this week:

  • Bank of Japan Governor Haruhiko Kuroda delivers a speech Tuesday.
  • U.S. consumer confidence, home prices and trade data are on tap.
  • Vietnam, which has been averaging around 6 percent growth, reports fourth-quarter GDP.
  • Italy’s parliament is expected to be dissolved ahead of elections in 2018

Commodities Check

  • West Texas Intermediate crude was little changed at $58.55 a barrel.
  • Gold was little changed at $1,274.31 an ounce.
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