Sensex Closes Above 35,000 For First Time, Nifty Touches 10,800

Indian equity benchmarks scaled new peaks after the government slashed its borrowing target allaying some of the concerns around a widening fiscal deficit ahead of the budget.

The S&P BSE Sensex Index closed 0.9 percent higher at 30,801 and the NSE Nifty 50 Index rose 0.8 percent to close at 10,788.

The market breadth was tilted in favour of buyers. All the 19 sector gauges compiled by BSE closed higher led by the S&P BSE Capital Goods Index’s 1.6 percent gain.

Shares of the power transmitter extended decline for the fifth trading session and fell as much as 5.9 percent to Rs 39.75 after its net loss widened during the previous quarter.

Highlights From Earnings (Q3, Consolidated, YoY)

• Net loss at Rs 1,290 crore versus net loss of 667.9 crore.
• Revenue declined 10.8 percent to Rs 4,844.46 crore.
• Ebitda declined 44.2 percent to Rs 728 crore.
• Ebitda margin contracted to 15 percent versus 24 percent.

Management Speaks

• Received approval for setting up 1600 MW power plant in Jharkhand for power supply to Bangladesh.
• Jharkhand plant to be financed by debt, equity.
• Jharkhand project aimed to commence in May 2022.
• Appoints Rajat Kumar Singh as CFO.

• Recovery led by strong demand from FMCG.
• Have taken adequate steps to ensure supply; margins have expanded due to cost control measures.
• No substantial price increases this quarter, growth based on good volumes.
• Have paid 12 million Euros for acquisition for Italy-based company.
• Italy-based company's acquisition funded from internal accruals.
• Remaining 49 percent acquisition will be completed in the next three years.
• Confident of maintaining 15 percent CAGR growth.

Shares of the pharmaceutical company rose as much as 5.4 percent to Rs 854.30 after the company’s earnings beat estimates during the quarter-ended December.

Key Highlights from Earnings (Q3, YoY)

• Net profit rose 79 percent to Rs 213 crore.
• Revenue rose 41.8 percent to Rs 2067.7 crore.
• Ebitda rose 25.6 percent to Rs 416.7 crore.
• Ebitda margins expanded 260 basis points to 20.2 percent.

European stocks fall, mirroring a retreat on Wall Street and in Asia following recent sharp gains.

• HDFC Standard Life: About 12.7 lakh shares changed hands in a block deal.
• Fortis Healthcare: About 46 lakh shares changed hands in two block deals.

Buyers and sellers were not known immediately

Source: Bloomberg

Shares of the motion pictures producer snapped three-day gains and fell as much as 3.2 percent to Rs 594.05 after its quarterly results missed estimates in almost all parameters.

Key Highlights From Earnings (Q3, YoY)

• Net profit up 28 percent to Rs 322 crore.
• Revenue up 12 percent to Rs 1838 crore.
• Domestic advertising revenue up 30.4 percent to Rs 1137.3 crore (Adjusted For Sports).
• Domestic subscription revenue up 7.5 percent to Rs 403.6 crore (Adjusted For Sports).
• Ebitda up 24 percent to Rs 551.3 crore.
• Ebitda margins expanded to 30 percent versus 27.1 percent.

Shares of the household products manufacturer rose as much as 4.8 percent, the most in nearly two months to Rs 387, after the company reported strong earnings for the December-ended quarter.

Key Highlights From Earnings (Q3, YoY):

• Net profit up 61 percent to Rs 34.73 crore.
• Revenue up 12.3 percent to Rs 431.21 crore.
• Ebitda up 36.8 percent to Rs 69.3 crore.
• Operating margin expanded to 16.1 percent versus 13.2 percent.

Shares of the electrical components maker parred early losses and rose as much as 3.3 percent to Rs 375.30, after the company's earnings for the quarter-ended December beats estimates widely.

Key Highlights From The Earnings (Q3, YoY):

• Net Profit up 83.7 percent to Rs 90 crore.
• Revenue up 24 percent to Rs 835.18 crore.
• Ebitda up 44 percent to Rs 202 crore.
• Ebitda margins expanded to 24.2 percent from 20.8 percent.

Shares of the country’s first listed exchange extended declines for the third consecutive trading session and fell as much as 6.1 percent to Rs 841, the lowest since April 2016.

The de-utilised exchange reported its earnings for the quarter ended December. Key highlights from the earnings (YoY):

• Net Profit down 44.8 percent at Rs 18.77 crore.
• Revenue down 11 percent at Rs 60.97 crore.

Mrugank Paranjape, managing director and CEO speaks to BloombergQuint. Key highlights from the conversation:

• Regarding our trend, Q3 was lower than Q2.
• Witnessed 9 percent decrease in ADT is reflected in a decrease in operating revenue.
• Saw 29 percent decrease in bullion in Q3.
• The steep increase in bond yield in December led to a huge mark-to-mark variance.
• Trying to reduce exposure to Bonds/MFs in nine months.
• Minor variations in cost, some licensing fee included.
• Change in the mix does not impact operating margins.
• Bullion is now down to 20 percent of our volumes, base metals have gone up to 40 percent at present.
• Approaching SEBI for next set of option contract approvals in crude, zinc and copper.
• Regarding volumes, 20 percent of the underlying is our target, today at 6-10 percent.
• Already in the process of applying for options to SEBI.
• Will apply for incremental contracts on crude, copper and silver in a fortnight or so.
• Expect SEBI to take appropriate actions for institutional partnerships.
• Institutional participation has not picked up but expects it to pick-up going forward.
• The universal exchange has been in the offing, and we are well prepared.
• Pressures in term of pricing but uptick will create enough volumes.
• Welcome institutional investors but have no idea about institutional investors' strategies as of now.

#AskBQ is BloombergQuint’s daily offering where market experts help investors make the right investment choice — be it in equities, commodities or the derivatives markets.

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Watch the full conversation here:

Shares of the power plant equipment maker snapped four-day decline and rose as much as 1.1 percent to Rs 100.30. The company bagged order worth Rs 2,800 crore for setting up 600 megawatt coal fired power project, according to its stock exchange notification.

The stock trades at 21.8 times estimated forward earnings per share, compared to 25.6 times for two-year historical average.

Shares of the construction services provider rose as much as 2 percent to Rs 216.70. The company won two orders worth Rs 923 crore from National Highway Authority of India, according to its stock exchange notification.

Trading volume was 42 percent its 20-day average, according to Bloomberg data. The stock is 2.1 percent below Bloomberg consensus one-year price target.

ICICI Prudential

• Stock Rating: Initiated ‘Neutral’
• Price Target: Set at Rs 450, implying a potential upside of 10 percent from current market price.

Sterlite Technologies

• Stock Rating: Reinstated ‘Buy’
• Price Target: Set at Rs 430, implying a potential upside of 16.7 percent from current market price.

Source: Bloomberg

Shares of the milk powder maker fell as much as 5.8 percent, the most in over five months to Rs 825. The company’s net profit was more than halved during the quarter-ended December, according to its stock exchange notification.

Key Earnings Highlights (Q3, YoY):

• Net profit down 53 percent at Rs 15 crore.
• Revenue up 7 percent at Rs 1,013 crore.
• EBITDA down 6 percent at Rs 87 crore.
• Margin at 8.6 percent from 9.8 percent.

RG Chandramogan, chairman and managing director at Hatsun Agro Product speaks to BloombergQuint.

Key highlights from the conversation:

• No drop in prices of milk in South India
• Massive expansion going on, expect to complete new plant expansion by March
• Rs 1,100 crore is the current debt on company.
• Company planning a rights issue in next 3 months to repay debt.
• Hopeful of handling 36-37 lakh litre of milk by July.
• Currently operating at 75 percent capacity utilisation
• Danone shut down will not benefit our business as we are focused on South India.
• Expect double-digit growth this year too, expect to maintain 20 percent CAGR.
• Depreciation and interest costs have gone up by Rs 18 crore.
• New machinery to help increase capacity by 25 percent.

Shares of the Chennai-based heavy commercial vehicle maker snapped four-day decline and rose as much as 1.8 percent to Rs 124.55. The company signed a pact with Israel-based firm Phinergy, according to its media statement on the exchange.

“Ashok Leyland and Phinergy will work towards the adaption of sustainable solutions for high-energy applications in the commercial vehicles space,” the statement said.

Ashok Leyland trades at 22.6 times trailing 12-month earnings per share and 27 times its estimates for the coming year. The stock has returned 3.8 percent since the start of the year.

Amber Enterprise’s management speaks about Rs 600 crore IPO that opens for subscription today.

Shares of the lead products maker snapped two-day decline and rose as much as 2.8 percent to Rs 184.95 after the company won an order worth Rs 250 crore from Luminous Power, according to its stock exchange filing.

Gravita India trades at 40.9 times trailing 12-month earnings per share and 25 times its estimates for the coming year. The stock returned 302 percent last year, compared to 27.9 percent advance in Sensex.

The government has reassessed additional borrowing requirements taking note of revenue receipts and expenditure pattern, the DEA secretary in a tweet today. He said requirement of additional borrowing being reduced from Rs 50000 crore as notified earlier to Rs 20000 crore.

Indian equity benchmarks swung between gains and losses in the opening trade as gains in TCS and Infosys countered losses in Vedanta and Kotak Mahindra Bank. The S&P BSE Sensex Index rose as much as 0.2 percent to 34,856.05, while the NSE Nifty 50 Index also rose as much as 0.2 percent to 10,721.70.

The market breadth was tilted in favour of sellers. Fifteen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Consumer Durable Index’s 0.7 percent decline. On the flipside, the S&P BSE Information Technology Index was the top sectoral gainer, up 1.91 percent.

The benchmark 10-year yield surge toward its highest level since July 2016. Yesterday, rupee traders started to feel the pain as well with the currency sliding by the most in eight months.

Fueling concerns are fast-rising oil prices that will put pressure on India’s fiscal deficit as well as spur inflation higher. The appetite for debt will be tested today by a 140-billion-rupee treasury-bill sale. The government will also offer Rs 15,000 crore of securities at a weekly sale on Friday.

Traders will also be keen to see if comments by the Reserve Bank of India deputy governor Viral Acharya on interest-rate risks continue to push yields higher. Acharya signaled this week that banks can’t rely on the regulator to manage losses from investments in government bonds.

• Nifty Jan. Futures trading at 10,709.5, premium of 9.5 points from 1.8 points.
• Jan. Series: Nifty open interest up 1 percent; Bank Nifty open interest down 8 percent.
• India VIX ended at 14.08, down 1.5 percent.
• Max open interest for Jan. series at 11,000 Call (open interest at 52.2 lakh, up 9 percent).
• Max open interest for Jan. series at 10,500 Put (open interest at 75 lakh, down 9 percent).

F&O Ban

• In ban: Balrampur Chini, Capital First, Dish TV, Fortis, HCC, IFCI, India Cement, Jet Airways, Jindal Steel, Jain Irrigation, JP Associates, Kaveri Seed, Reliance Communications, Reliance Power and Wockhardt.
• New in ban: Balrampur Chini, India Cements, HCC.
• Out of ban: GMR Infra, HDIL, Reliance Capital.

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

Put-Call Ratio

• Nifty PCR at 1.65 from 1.78.
• Nifty Bank PCR at 1.24 from 1.31.

KR Choksey on ABB India

• Initiated ‘Buy’ with price target of Rs 1,823.
• Higher government spending on power ABB offers strong growth prospects.
• ABB’s Power Grids segment to support financial performance over medium to long term.
• Triggers: National Solar Mission, EVs in India and Railway modernisation and electrification.
• Expect order flow, revenue and net profit to grow at a compounded rate of 25 percent, 23 percent and 42.2 percent respectively over the years till 2019.
• Robust execution to support strong top-line growth.
• Increase in localization of manufacturing projects to lower operational cost.
• Higher return ratios to help company demand higher valuations.

Daiwa Capital Markets on Crompton Greaves Consumer

• Initiated ‘Outperform’ with price target of Rs 300.
• India’s electrical industry to see double-digit growth over the next five years.
• Crompton is well positioned to seize these opportunities.
• Impressive franchise, strong management pedigree and growth outlook.
• Focus on distribution, branding and segments to support sales growth.
• Company has multiple levers for growth.
• Positives: premiumisation, entry into new categories, brand building, and expanding distribution.
• Expect revenue and earnings per share to grow at a compounded rate of 17 percent and 25 percent respectively over the financial years through March 2020.
• Valuations not cheap, but strong sales and profits to support.
• Bull case price target of Rs 340.

Motilal Oswal on Laurus Labs

• Initiated ‘Buy’ with a price target of Rs 651.
• In a sweet spot to get business in regulated market due to cost efficiency and consistent compliance.
• Formulations business in take-off mode.
• Positive on forward integration to formulation in regulated markets.
• Expect U.S. sales to multiply as company targets 30 ANDA filings over three years.
• Expect revenue, operating income and net profit to grow at a compounded rate of 17 percent, 20 percent and 28 percent respectively over the financial years till March 2020.
• Addition of formulations and healthy momentum in API business to lead growth.
• Volume growth to drive ARV and Hep-C base business.
• Interest outgo to reduce; Capex to continue to support growth.
• Return ratios to improve on higher asset utilization.
• Bull case price target of Rs 769: Expect revenue and net profit to grow at a compounded rate of 20 percent and 35 percent respectively over the financial years till March 2020.

Credit Suisse on Godrej Agrovet

• Initiated ‘Neutral’ with price target of Rs 630.
• Godrej Agrovet is a diversified agri-business with strong pedigree.
• Indian agricultural value chain offers business opportunities.
• Brand and corporate pedigree a key advantage, diversification hedges risks.
• Expect earnings to grow at a compounded rate of 18 percent over the financial years through March 2020.
• Good long-term potential, but valuations leave little upside.
• Key earnings driver will be crop protection which will see new launches and exports growth.
• Animal feed will be a drag as it is facing headwinds.
• New product introductions a key lever for growth may come in from March 2019.
• Dairy margins will bounce back in the second half of the current financial year, likely to see gradual margin expansion from thereon.
• Poultry to see much faster growth if Godrej management takes over control of JV.
• Bull case price target of Rs 725.

Morgan Stanley on FMCG

• Top pick shifts from Titan to Jubilant Foodworks.
• Favorable demand trends and high visibility of margin expansion offer a clear runway for earnings growth.
• Jubilant Foodworks: Maintained ‘Overweight’; raised price target to Rs 2,400 from Rs 1,900.
• Future Retail: Maintained ‘Overweight’; raised price target to Rs 715 from Rs 660.
• Titan Company: Maintained ‘Overweight’; raised price target to Rs 1,050 from Rs 920.
• United Spirits: Downgraded to ‘Equal-weight’ from ‘Overweight’; raised price target to Rs 4,000 from Rs 2,900.

CLSA on ICICI Lombard

• Maintained ‘Buy’; raised price target to Rs 970 from Rs 820.
• Healthy premium growth with sub-100 percent combined ratio; Rates a concern.
• Competitive intensity & pricing environment improving; Regulations supportive.
• New third-party motor law may be passed in upcoming budget session; Significant positive.
• Expect earnings to grow at a compounded rate of 24 percent over the financial years till March 2020, led by healthy growth in premiums.

CLSA on GAIL

• Maintained ‘Sell’ with a price target of Rs 405.
• Supplies from Gazprom to expand Gail’s long-term LNG headache.
• This is a negative surprise, as popular belief was that Gail would avoid this contract.
• An oversupplied global LNG market will make it challenging to place these long-term volumes.
• Stock is ignoring risks of large long-term U.S. LNG portfolio.

• Newgen Software Technologies continues on Day 2. The issue is subscribed 0.2 times.
• Amber Enterprises India IPO opens at an issue price of Rs 855-859 per share. (Here’s all you need to know about the IPO)

• JVL Agro Industries circuit filter revised to 10 percent.
• Fiberweb India’s last trading day before ex-bonus.
• SJVN last trading day to determine buyback eligibility.
• Singer India last trading day before stock split.

• Punjab Alkalies & Chemicals: IDBI Banks sold 2.61 lakh shares or 1 percent equity at Rs 35.5 each.
• Prozone Intu: Promoter Nigam Patel Family Trust sold 9 lakh shares or 0.6 percent equity at Rs 67.25 each.

Bharti Airtel

• SRS Partners (Cayman) LLC bought 3.86 crore shares or 1 percent equity at Rs 499.1 each.
• Merrill Lynch Markets Singapore PTE sold 3.86 crore shares or 1 percent equity at Rs 499.1 each.

Jay Bharat Maruti Q3 (YoY)

• Revenue up 13 percent at Rs 435 crore
• Revenue up 13 percent at Rs 435 crore.
• EBITDA up 11 percent at Rs 36.6 crore.
• Margin at 8.4 percent from 8.5 percent.

Hatsun Agro Products Q3 (YoY)

• Net profit down 53 percent at Rs 15 crore.
• Revenue up 7 percent at Rs 1,013 crore.
• EBITDA down 6 percent at Rs 87 crore.
• Margin at 8.6 percent from 9.8 percent.

Agro Tech Foods (YoY)

• Revenue up 3 percent at Rs 214.55 crore.
• Net profit up 15 percent at Rs 9 crore.
• EBITDA up 4 percent at Rs 17.85 crore.
• Margin at 8.3 percent from 8.25 percent.

• Bharti Infratel
• Hindustan Unilever
• Zee Entertainment

Other Earnings To Watch

• Adani Power
• Adani Transmission
• DCB Bank
• Jubilant Life Sciences
• Jyothy Laboratories
• Mindtree
• Srei Infrastructure Finance
• Sterlite Technologies
• Tata Sponge Iron
• Thirumalai Chemicals

• Sun Pharma got a license to sell the generic version of Linzess in U.S. from Feb. 1, 2031 after settling patent litigation.
• Symphony’s wall mounted air cooler patented in South Africa; launched 2 new product ranges.
• SAL Steel informs of closure of corporate insolvency process.
• GAIL, Gazprom sign pact for re-negotiated long-term LNG sale.
• Texmaco Rail considering setting up logistics hub and food park in West Bengal.
• Pioneer Distilleries’ workers at its Nanded, Maharashtra manufacturing plant go on strike.

• Ruia Family may have found a way to bid for Essar Steel.
• Amber Enterprises mop up Rs 178 crore from anchor investors.
• Shell companies crackdown: Government to deregister 1.20 lakh more firms.
• Supreme Court to start final Aadhaar Hearing: Here’s all you need to know.
• Why Danone shut its dairy arm in world’s largest milk consuming nation.
• HUL received notice from anti-profiteering body.

• Gold rose 0.2 percent to $1,340.98 an ounce.
• West Texas Intermediate crude gained 0.2 percent to $63.86 a barrel.
• Brent crude snaps six-day winning streak; ends lower at $69.15 per barrel, down 1.6 percent.
• Sugar ended near seven-month low at 13.59 cents per pound; down 4.2 percent.

Shanghai Exchange

• Steel trades higher for second day; up 0.6 percent.
• Aluminium trades lower for second day; down 1.6 percent.
• Zinc trades lower for second day; up 0.1 percent.
• Copper trades lower for fourth day; down 1.3 percent.
• Rubber trades lower for second day; down 0.5 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was a little changed at 10,713.50 as of 8:40 a.m.

Asian stocks pulled back from record highs, following declines in U.S. counterparts. The dollar declined against most major currencies while Treasuries steadied amid congressional talks to avert a U.S. government shutdown Friday.

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

• Earnings season ramps up: Taiwan Semiconductor Manufacturing Co., ASML Holdings NV, Bank of America Corp. and Goldman Sachs Group Inc. are among some notable releases.
• Industrial production in the U.S. probably increased in December, a report may show Wednesday, completing a solid year for manufacturing.
• U.S. housing starts probably slipped in December for the first time in three months as frigid winter weather impeded work, forecasts show ahead of Thursday’s release.
• The Bank of Canada’s interest-rate decision comes Wednesday. Monetary policy announcements are also this week due in South Korea, South Africa and Turkey.
• China releases fourth quarter GDP, December industrial production and retail sales Thursday.