Nifty Settles Below 10,500 On F&O Expiry Day

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Closing Bell

Indian equity benchmarks edged lower led by losses in State Bank of India, HDFC and Kotak Mahindra Bank as futures and options contracts for the month of December expired.

The S&P BSE Sensex fell 0.19 percent or 64 points to 33,848 and the NSE Nifty 50 Index fell 0.12 percent or 13 points to 10,478. For most part of the day, the Sensex and Nifty traded in narrow band.

Twelve out of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Bankex Index's 0.4 percent drop. On the other hand, the S&P BSE Metal Index was the top sectoral gainer, up 2 percent.

Countdown

Fab Four Stocks Of The Day

  • Reliance Communications: The Anil Ambai-led company rallied for third day in a row. The stock has surged more than 100 percent in three days after the company announced exit from SDR plan with zero write-off to lenders.
  • Kolte Patil Developers: The Pune-based real estate developer rose as much as 6.67 percent to Rs 384.50 after its Pune township Life Republic entered into Rs 193 crore agreement with KKR, the company said in a stock exchange notification.
  • Mahindra CIE Automotive: The auro component maker rose as much as 4.8 percent to Rs 262 after domestic brokerage Motilal Oswal initiated coverage on the stock with a 'buy' for target price of Rs Rs 297.
  • Quess Corp: Shares of the Bangalore-based professional service provider rose as much as 6.41 percent to Rs 1,152.60 after it acquired Master Staffing Solutions and 60 percent stake in Golden Star Facilities and Service.

Market Check

  • Indian equity benchmarks were trading in a narrow range ahead of expiry of December futures and options contracts.
  • The S&P BSE Sensex was little changed at 33.918 and the NSE Nifty 50 Index was also little changed at 10,500. The broader markets were outperforming the benchmark indices as the S&P BSE MidCap Index rose 0.2 percent and the S&P BSE SmallCap Index advanced 0.5 percent.
  • Fifteen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Metal Index's 2 percent gain. On the other hand, the S&P BSE Bankex was the top sectoral loser, down0.3 percent.
  • From the Nifty 50 basket of shares, 27 were advancing while 23 were declining.

Government Said to Renew Demand For Additional Dividend From RBI

Economic Affairs Secretary Subhash Garg has written to Reserve Bank of India Governor Urjit Patel to transfer additional dividend of Rs 13,140 crore, people with knowledge of the matter said.

The latest communication is a follow up to an earlier demand made in August, people said, asking not to be identified citing rules.

Power Lunch

#Ask BQ

Jaiprakash Group Shares In Focus

  • Jaiprakash Associates: Shares of the Noida-based infrastructure firm rose as much as 10 percent to 23.45. As many as 1.34 crore shares changed hands on the BSE compared with an average of 65 lakh shares traded daily in the past two weeks.
  • Jaypee Infratech: Shares of the Noida-based infrastructure firm rose as much as 17.36 percent to Rs 21. As many as 60.47 lakh shares changed hands on the BSE compared with an average of 5.4 lakh shares traded daily in the past two weeks.
  • Jaiprakash Power Ventures: The Delhi-based power producer rose as much as 6 percent to Rs 7.72. As many as 19.43 lakh shares changed hands on the BSE compared with an average of 6.89 lakh shares traded daily in the past two weeks.

Hot Money

Reliance Communications Surges Over 100% In Three Sessions

Shares of the Anil Ambani-led company rose for third day in a row. The stock rose as much as 17.7 percent to Rs 33.83.

In last three trading sessions the stock has rallied over 100 percent.

Trend Spotting

Mohnish Pabrai To BloombergQuint

  • Overshooting and undershooting of prices creates opportunity in the market
  • Bought Rain Industries in the range of Rs 30 to Rs 45 per share
  • Buying the index basket a good idea for retail investors
  • Had anticipated 5-10 times return from Rain Industries
  • Would not buy Rain Industries at current price but not in a hurry to sell either
  • Selling is probably 10 times tougher than buying
  • Difficulty in selling comes when the asset looks fully priced but still has tailwinds
  • Selling too early has been one of my biggest mistakes
  • Bought Rain Industries in 2015 at a forward PE of 1x
  • Demonetisation, GST and RERA has imploded the Mumbai market
  • Expect entire city of Mumbai to be rebuilt in the future
  • Hope to never sell my real estate bets

Kolte Patil Developers Gains On Agreement With KKR

Shares of the Pune-based real estate developer rose as much as 4.2 percent to Rs 384.50 after its Pune township Life Republic entered into Rs 193 crore agreement with KKR, the company said in a stock exchange notification.

Alpha Moguls

Indian Bonds Extend Losses As Yield On 10-Year Bond Rises Further

Yields on government's 10-year bond yield rose the most in more than five months to 17-month high of 7.327 percent as government looks at additional borrowing in Jan-March.

Star Cement Surges Hits Fresh 52-Week High

Shares of the east India based cement maker rose as much as 11 percent to fresh 52-week high of Rs 142.75 after its subsidiary Star Cement Meghalaya received Rs 158.82 crore towards capital investment subsidy claim from the Central government, Star Cement said in a stock exchange filing.

The F&O Show

Quess Corp Rises On Acquiring Master Staffing Solutions

Shares of the Bangalore-based professional service provider rose as much as 647 percent to Rs 1,152.60 after it acquired Master Staffing Solutions and 60 percent stake in Golden Star Facilities and Service.

Bond Yield Surges, Rupee Falls As Government Looks At Additional Borrowing

Yield on 10-year Indian bond rose to 7.325 percent and the Indian rupee fell to 64.27 against the U.S. dollar after the government said it will increase its gross borrowings from the market above the budgeted amount. This is the first time since fiscal 2012 that the central government has announced a substantial increase in the planned gross borrowings.

IndianOpen

Opening Bell

Indian equity benchmarks edged higher while Indian rupee and bonds fell after the government said it will increase its gross borrowings from the market above the budgeted amount. This is the first time since fiscal 2012 that the central government has announced a substantial increase in the planned gross borrowings.

The S&P BSE Sensex was little changed at 33,945 and the NSE Nifty 50 Index rose 0.17 percent to 10,508.

Seventeen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Metal Index's 1.6 percent gain. On the flipside, the S&P BSE Auto Index was the top sectoral loser, down 0.1 percent.

Money Market Heads-Up

Indian sovereign bonds may slide when trading begins today after the government announced an additional Rs 50,000 crore in borrowings through bonds for the current fiscal year to fund its deficit as revenues slow.

The government will borrow Rs 93,000 crore during January and March, the central bank said in a statement after local markets closed on Wednesday. The amount is more than twice of that announced in a September release.

The Indian rupee is seen gaining against the dollar in line with Asian peers as the dollar declined to a three-week low after treasury yields dropped.

BQ Heads Up!

F&O Cues

  • Nifty December futures closed trade at 10500, premium of 9.5 points versus discount of discount of 5 points.
  • Nifty January futures trading at 10,533, premium of 42 points versus premium of 37 points.
  • Across all series: Nifty open interest down 1 percent; Bank Nifty open interest up 0.4 percent.
  • Nifty rollover at 51 percent, Bank Nifty rollover at 44 percent.
  • India VIX ended at 12.4, up 3.6 percent.
  • Max open interest for Dec. series at 10,600 Call (open interest at 54.5 lakh, up 21 percent).
  • Max open interest for Dec. series at 10,000 Put (open interest at 64.4 lakh, down 9 percent).

Bulk Deals

Bajaj Auto

  • Nirav Trust sold 16.69 lakh shares or 0.6 percent equity at Rs 3351.40 each.

JHS Svendgaard

  • Sixth Sense India Opportunities-I sold 3.16 lakh shares or 0.7 percent equity at Rs 74.06 each.

Bajaj Finserv

  • Anant Bajaj Trust sold 9.19 lakh shares or 0.6 percent equity at Rs 5372.14 each.

Sintex Plastics

  • Hypnos Fund sold 30 lakh shares or 0.5 percent equity at Rs 81.01 each.

Bajaj Electricals

  • Madhu Bajaj bought 7.70 lakh shares or 0.8 percent equity at Rs 475 each.
  • Neelima Bajaj Swamy bought 7.90 lakh shares or 0.8 percent equity at Rs 475 each.
  • Anant Bajaj Trust sold 21.80 lakh shares or 2.1 percent equity at Rs 475 each.

Bajaj Holdings

  • Nirav Trust bought 21.99 lakh shares or 2 percent equity at Rs 3012.40 each.
  • Anant Bajaj Trust bought 21.65 lakh shares or 1.9 percent equity at Rs 2963.76 each.
  • Kumud Bajaj sold 12.12 lakh shares or 1.1 percent equity at Rs 2987.50 each.
  • Madhu Bajaj sold 18.97 lakh shares or 1.7 percent equity at Rs 2987.50 each.

ADF Foods

  • Kuber India Fund bought 6 lakh shares or 2.8 percent equity at Rs 324 each.
  • Promoter Priyanka Thakkar sold 8 lakh shares or 3.8 percent equity at Rs 324.23 each.

Stocks To Watch

  • Star Cement received Rs 158.82 crore as capital investment subsidy from Central government.
  • Quess Corp acquired Master staffing solutions and 60 percent stake in Golden Star Facilities and Service.
  • Riddhi Siddhi board approved proposal to de-list shares of the company. Promoters set the offer floor price at Rs 510 apiece.
  • SEBI asked Axis Bank to conduct inquiry on leak of unpublished price sensitive financial information within three months.
  • Kolte Patil’s Pune township signed Rs 193 crore agreement with KKR.
  • SBI board approved raising up to Rs 8,000 crore through tier-1 bonds by March.
  • United Bank raised Rs 100 crore through tier-1 bonds.

Brokerage Radar

Motilal Oswal On Mahindra CIE Automotive

  • Initiated ‘Buy’ rating with target price of Rs 297, implying a potential upside of 19 percent from yesterday’s close.
  • Mahindra CIE Automotive is all primed for a growth phase after three years of consolidation.
  • Mahindra CIE Automotive's India (ex BFL) business is focused on fast-growing/recovering segments.
  • A strong, focused and disciplined parent, CIE has instilled financial discipline.
  • The Bill Forge (BFL) acquisition is an excellent strategic fit for Mahindra CIE Automotive.
  • Estimate consolidated revenue to grow at a compounded rate of about 8 percent by 2019.
  • Expect Ebitda margin expansion of about 260 basis points to around 15.1 percent by 2019.
  • Strong earnings growth, limited capex (5-6 percent of sales) to drive improvement in capital efficiencies.

Motilal Oswal On NTPC

  • Maintained ‘Buy’ rating with a price target of Rs 211, implying a potential upside of 19 percent.
  • Revised norms provide relief from low PLF inefficiencies.
  • Three plants had PLF of less than 75 percent in the financial year-ended March 2014, which increased to five plants in the previous financial year.
  • The revised regulatory norms can compensate earnings by about 2 percent, visible in September quarter results.
  • Swapping/flexible coal linkages also a positive since this leads to reduction in landed cost of coal.
  • Expect earnings to grow at a compounded rate of 14 percent over the financial years through March 2020, driven by strong capitalization.
  • Stock could re-rate as return on equity could get a boost from capitalization outpacing the capex.

Ventura On Hyderabad Industries

  • Maintained ‘Buy’ rating with a price target of Rs 1700, implying a potential upside of 21 percent from yesterday’s close.
  • Fiber cement roofing sheets is a cash cow for Hyderabad Industries.
  • Management to launch new product in fiber cement roof segments by March.
  • Hyderabad Industries is planning a capacity expansion in the pipes & fittings segment.
  • See higher contribution from low costing AAC blocks, boards and panels segment.
  • Expect revenue, operating income and net profit to grow at a compounded rate of 12 percent, 21 percent and 22 percent in three years.

Goldman Sachs On Sun Pharma

  • Maintained ‘Buy’ rating and price target at Rs 600, implying a potential upside of 4 percent from yesterday’s close.
  • NDA filing of OTX-101 for Dry Eye Disease in line with expectation.
  • Expect an NDA approval for OTX-101 over the next 12 months.
  • Expect commercialization of OTX drug to follow in the financial year-ending March 2020.
  • Potential generic entry for Restasis could reduce the overall market potential for the drug.
  • Delayed Halol plant resolution timeline, US price erosion intensity a key risk.

Talking Points

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.29 percent to 10,524.

A measure of Asian stocks flirted with a record high on Thursday in muted trading after a listless U.S. session overnight offered little direction ahead of New-Year holidays.

The MSCI Asia Pacific Index of stocks was trading less than half a percentage point from the record it reached in November, before a wave of profit taking saw the gauge retreat. Japanese shares started Thursday little changed, following suit from Sydney’s exchange, while futures pointed to a flat open in Hong Kong.

Among the key events remaining for investors this week:

  • U.S. trade figures are due Thursday.
  • Egypt decides on interest rates.

Commodities

  • West Texas Intermediate crude was little changed at $59.61 a barrel
  • Gold futures were little changed at $1,287.55 an ounce
  • LME copper futures advanced 1.6 percent to $7,240.00 per metric ton Wednesday, reaching the highest in about four years
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