Sensex, Nifty Post First Weekly Gains In February

Indian equity benchmarks posted their first weekly gain this month as some investors deemed the decline in equities overdone. The S&P BSE Sensex Index closed 1 percent higher at 34,138.97, while the NSE Nifty 50 Index ended at 10,491.50, up 1.1 percent.

The market breadth was tilted in favour of buyers. All the 19 sectoral gauges compiled by BSE Ltd. traded higher, led by S&P BSE Sensex Index's 2.9 percent gain.

Shares of the country’s largest drug maker extended gains and rose as much as 5.4 percent to Rs 571.50. The pharmaceutical company received form 483 from the U.S. drug regulator with three observations for its key Halol plant, according to its stock exchange notification.

The company said that it is preparing the response to the observations and that it will submit to USFDA within 15 business days, adding that it is committed to addressing these observations promptly.

The only positive is that the number of observations has come down to three form the earlier time, Ranjit Kapadia, Centrum Broking Analyst told Bloomberg. “We still need details on these three observations, how serious there are, before commenting further.”

• Jubilant Life Sciences: About 51.2 lakh shares or 3.2 percent equity changed hands in a block deal.
• Delta Corp: About 10 lakh shares changed hands in a block deal.
• Bharat Electronics: About 10 lakh shares changed hands in a block deal.
• NTPC: About 62.3 lakh shares changed hands in two block deals.

Buyers and sellers were not known immediately

Source: Bloomberg

European stocks were steady in early trade amid investors’ cautiousness after Wall Street failed to hold onto gains for a fourth session in a row on Thursday.

Dynamatic Technologies

• Stock rose as much as 20 percent to Rs 1,947.65.
• Trading volume was 23.2 times its 20-day average.

Vardhman Special Steels

• Stock rose as much as 14.1 percent to Rs 172.
• Trading volume was 9.3 times its 20-day average.

Venky’s India

• Stock rose as much as 11.2 percent to Rs 3,269.
• Trading volume was 6.2 times its 20-day average.

Source: Bloomberg

Defaults triggered at RHT Health Trust. Fortis Health owns 27% stake in RHT. (Singapore-listed RHT owns several of Fortis' hospitals.)

Lakshmi Mittal, chairman and CEO at ArcelorMittal today met Finance Minister to express his interest to acquire Essar Steel. Mittal said that he has placed well-planned for the debt-ridden company.

The Finance Ministry plans to ask Punjab National Bank to compensate a major part of the loss to other banks once liabilities are determined, Bloomberg reported quoting a person with direct knowledge of the matter.

PNB’s share price declined as much as 4 percent from the day’s high.

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Watch the full conversation here:

Shares of the construction and engineering services firm rose as much as 3.2 percent, the most in nearly four months.

A memorandum of understanding will be signed in New Delhi today between Department of Economic Affairs, Ministry of Finance and NBCC (India) Ltd., for the construction of a housing project for officers of the Indian Economic Service (IES), as per a Finance Ministry tweet.

Shares of the Gujarat-based power transmission firm rose as much as 3 percent to Rs 214.3 after it received a approval for a project in Rajasthan. This is now the fourth out of five sessions where the stock has gained.

Adani Transmission Ltd. disclosed in an exchange filing that it received approval to construct, own, operate and maintain a power transmission project in Rajasthan. The project "Fatehgarh-Bhadla Transmission Ltd," is being constructed to distribute renewable energy from Rajasthan to to different beneficiaries, both within and outside the state, the company said.

Trading volume was nearly three times the 20-day average.

The power producer company files draft red herring prospectus for Initial Public Offering, where it plans to raise $631 million.

Source: Bloomberg

Sanofi India Q4 (YoY)

• Stock fell as much as 0.9 percent to Rs 4,790.
• Revenues up 11 percent at Rs 670 crore.
• Net profit rose 43 percent to Rs 76 crore.
• Ebitda up 23 percent at Rs 134 crore.
• Margins at 20 percent versus 18 percent.

Merck Q3 (YoY)

• Stock rose as much as 5.1 percent to Rs 1,520.
• Revenues up 22 percent at Rs 304 crore.
• Net profit rose 42 percent to Rs 27 crore.
• Ebitda up 30 percent to Rs 30.5 crore.
• Margins at 10 percent versus 9.4 percent.

KSB Pumps Q3 (YoY)

• Stock rose as much as 3.1 percent to Rs 810.10.
• Revenues jumped 31 percent to Rs 328 crore.
• Net profit up 17 percent at Rs 27 crore.
• Ebitda up 12 percent to Rs 42.5 crore.
• Margins at 13 percent versus 15.1 percent.

Shares of the industrial products maker rose as much as 1.9 percent to Rs 1,199 after CLSA initiated bullish coverage on the stock.

CLSA expects the company’s shares to touch Rs 1,482 levels in the next 12 months, implying a potential upside of 25 percent from last regular trade, Bloomberg reported. The price target is the highest among the analysts tracked by Bloomberg.

The stock has declined 7.6 percent so far this year, compared to 0.2 percent decline in the country's benchmark Sensex.

Key highlights from the conversation:

• The issue with PNB should be used as a "swallow in summer".
• Series of interventions and regulations have led to change in behaviour among customers.
• Diamonds not being real does create some amount of distrust in the industry.
• Titan is not a jewellery exporter at all.
• The awareness of Tanishq in some ways precedes its presence.
• We are on track to meet and exceed our current fiscal targets.

Watch the full conversation here:

Key highlights from the conversation:

• PNB has to raise capital by liquidating non-core assets.
• Government should plug in capital requirement post sale of non-core assets.
• HR practices at PSU banks need to undergo drastic change.
• Compensation structure for PSU managements has to be somewhere aligned to markets.
• Everybody including the regulator is responsible for the PNB issue.
• Recovering money is most important now.

Watch the full conversation here:

Key highlights from the conversation:

• Expect volatility to continue in markets.
• Will see rise in earnings going ahead.
• Momentum still remains strong, fund flow continues in the market.
• Expect slight slowdown in markets during March-April.
• Expect private sector banks, NBFCs, auto ancillary segment to perform Well.
• Rural space looks interesting.
• Do not expect sharp depreciation in rupee.
• Private sector banks, consumption space performed good in December quarter.
• Large Caps performed well in the previous quarter, Mid Cap was a mixed bag.
• Rural financing space is a risky region, recommend to play cautiously.

Watch the full conversation here:

The construction giant bagged order worth Rs 1,266 crore across its various business segments, including testing and commissioning of traction and power supply, works for Mumbai Metro Line-3, according to its stock exchange notification.

Shares of L&T fluctuated between gains and losses to trade at Rs 1,292.45 after the announcement.

Shares of the lender rose as much as 5 percent 4.9 percent, the most in over four months to Rs 94.20, after its plans to buy 26 percent stake in Equirus Capital, according to its stock exchange notification.

The stock was the top gainer on Nifty Bank Index. It declined 13.6 percent so far this year.

Shares of the pharma and life science company fell as much as 9.6 percent, the most since Feb.5, after about 51.2 lakh shares or 3.2 percent equity changed hands in a block deal, Bloomberg data showed.

Buyers and sellers were not known immediately. Trading volume was 73.6 times its 30 day average. The stock is 9.1 percent below the Bloomberg consensus one-year price target.

Sun Pharmaceutical Ltd.’s near-term fortunes are tied to the outcome of U.S. drug regulator’s ongoing inspection of its facility in Halol, Gujarat that can’t win drug approvals in America, the biggest market for India’s No. 1 drugmaker. (Click here to read more...)

Indian equity benchmarks began trading higher led by gains in Sun Pharma ahead of the outcome of U.S. drug regulator’s inspection of its facility in Halol.

The S&P BSE Sensex Index rose as much as 0.3 percent to 33,934.12, while the NSE Nifty 50 Index rose as much as 0.4 percent to 10,422.10.

The market breadth was tilted in favour of buyers. Eighteen out of 19 sectoral gauges compiled by BSE Ltd. traded higher, led by S&P BSE Healthcare Index’s 1.2 percent gain. On the flipside, S&P BSE Captial goods Index was the only sectoral index trading negative after it marginally declined by 0.03 percent.

Sovereign bonds are set for their worst week in three with sentiment hit by the hawkish minutes from the RBI's last policy meeting. The yield on the 10-year rose four basis points to 7.75 percent on Thursday, up 17 basis points so far this week and traders expect it to climb towards the 8 percent psychological mark sooner rather than later.

Reflecting the weak sentiment, foreign funds lowered holdings of government and corporate rupee debt by a net Rs 4.6 billion on Feb. 22.

Meanwhile, the Indian rupee faces the risk of posting its biggest weekly loss since Nov. 2016, with sentiment hurt by a wider trade deficit and a bank fraud at the country's second largest state-run bank.

Morgan Stanley analysts recommended investors to stay bearish on the rupee by going long in favour of the Malaysian ringgit in the offshore NDF market. Forwards indicate the rupee may open at 64.89 per dollar having closed at 65.045 on Thursday, down more than 1 percent on the week.

Deutsche Bank on Siemens

• Maintained ‘Sell’ with price target of Rs 1,030.
• Mobility business separated just before potential uptick.
• It was a growing division with good prospects given Railways and Metro capex.
• Valuations look steep; Expect 26 percent compounded growth rate in net profit over the financial years through March 2020.

Goldman Sachs on Avenue Supermarts

• Maintained ‘Buy’; raised price target to Rs 1,672 from Rs 1,611.
• Expect Avenue to open 24,28 and 30 stores over the next three financial year.
• Lower SSSG estimates to 11.6 percent from 12.3 percent for the financial years between April 2019-March 2021.
• Higher number of stores will lead to some cannibalization.

Edelweiss on Prataap Snacks

• Increasing presence in South and west India and launch of new products to boost revenue.
• Planning to launch 5-6 products over the next three years in sweet snack.
• Sweet snack – relatively untapped and higher margin segment.
• Streamlining procurement process to protect raw material from market volatility.
• Targeting revenue to compound at 18‐20 percent over the next three years.
• Strategic location of plants, outsourcing bolster distribution network.
• Product mix to improve return on equity.

Jefferies on Federal Bank

• Maintained ‘Buy’ with price target of Rs 145.
• Acquisition augurs well with strategy of building up corporate & institutional banking team.
• Bank is significantly capitalized and can easily pay for this acquisition.
• Primary synergies lie in broadening product offerings to corporate & SME clients.

• Fortis Healthcare: Earc Trust SC 304 sold 36.93 lakh shares, or 0.7 percent equity, at Rs 147.42 each.
• Karnataka Bank: Macquarie Emerging Markets Asian Trading sold 17.48 lakh shares, or 0.6 percent equity, at Rs 128.72 each.

Indiabulls Real Estate

• UBS Principal Capital Asia bought 1.61 crore shares, or 3.4 percent equity, at Rs 211 each.
• Orient Global Cinnamon Capital sold 1.64 crore shares, or 3.5 percent equity, at Rs 211.01 each.

• ITC merges its tobacco leaf, agri-business units. (Economic Times)
• Religare’s new auditors pull up PW over 'Unmodified Report' (Economic Times)
• JSW Group offers highest bid for Jaypee Infra, offering a little over Rs 9,900 crore to bank (Economic Times)
• Axis Bank asks CIO Amit Sethi to resign following whistleblower complaint. (Economic Times)
• Jewellery Export Council may cancel Firestar, Gitanjali Gems’ membership. (Economic Times)

Sanofi India Q4 (YoY)

• Revenues up 11 percent at Rs 670 crore.
• Net profit rose 43 percent to Rs 76 crore.
• Ebitda up 23 percent at Rs 134 crore.
• Margins at 20 percent versus 18 percent.

Merck Q3 (YoY)

• Revenues up 22 percent at Rs 304 crore.
• Net profit rose 42 percent to Rs 27 crore.
• Ebitda up 30 percent to Rs 30.5 crore.
• Margins at 10 percent versus 9.4 percent.

KSB Pumps Q3 (YoY)

• Revenues jumped 31 percent to Rs 328 crore.
• Net profit up 17 percent at Rs 27 crore.
• Ebitda up 12 percent to Rs 42.5 crore.
• Margins at 13 percent versus 15.1 percent.

• Fortis Healthcare: All existing F&O contracts will expire on March 28, and no fresh contracts will be available if the firm fails to submit results for quarters ended September and December 2017 by March 1.
• Federal Bank: Board approved buying 26 percent stake in Equirus Capital.
• Mahanagar Gas will bid for more city gas networks in the next auction.
• Genus Paper & Boards signed two MOUs for setting up Kraft Paper manufacturing plant.
• Bank of Baroda said that it has no exposure to LOUs issued by PNB in the alleged fraud case involving Nirav Modi.
• Dilip Buildcon bagged engineering, procurement, and construction project worth Rs 157 crore from Karnataka government.
• Aditya Birla Idea Payments Bank has commenced operations.
• Great Eastern Shipping completed its sale of vessels.
• Adani Transmission received letter of intent for one inter-state transmission project in Rajasthan.

• West Texas Intermediate crude slipped 0.1 percent to $62.68 per barrel after climbing Thursday thanks to an unexpected drop in American supplies unexpectedly shrank.
• Brent Crude snapped two-day gains, declining 0.2 percent to $66.25 per barrel.
• Gold futures were down 0.2 percent to $1,329.84 an ounce.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.2 percent to 10,404.50 as of 8:20 a.m.

Asian stocks look set to close out a lackluster week on a positive note on Friday as investors continue to debate the outlook for central bank policy normalisation and the impact of higher bond yields.