Sensex Ends Above 38,000 For First Time Led By Banks

Indian equity benchmarks extended record breaking spree with S&P BSE Sensex closing above 38,000 for first time. Today’s up move was fueled by a rally in banking shares.

The S&P BSE Sensex rose 0.36 percent or 137 points to 38,024 and the NSE Nifty 50 index climbed 0.2 percent or 21 points to record closing high of 11,471.

Liquidity, good earnings and foreign flows turning positive are driving Indian markets to new highs, Sanjiv Bhasin, EVP-markets & corporate affairs at IIFL, told BloombergQuint over the phone. “There is upside still left in mid- and small-cap stocks and there has been an early Diwali with this rally.”

Last year, broader markets outperformed and this time large caps are outperforming as local and global flows are chasing heavyweights, he said. Forget about discounts, stocks like Reliance Industries Ltd., Hindustan Unilever Ltd., ITC Ltd. and Tata Consultancy Services Ltd. will command a premium from hereon, Bhasin said. “Market breadth will be narrow but that is typical of a bull market.”

Bhasin prefers consumption, auto, public-sector banking and NBFC stocks.

In today's session, seven out of 11 sector gauges compiled by National Stock Exchange ended higher led by the Nifty PSU Bank index's 3 percent surge. On the flipside, the Nifty Pharma index was top loser, down 0.6 percent.

Mid- and small-cap shares outperformed their larger peers as the Nifty Midcap 100 index rose 0.5 percent and the Nifty Smallcap 100 index advanced 0.9 percent.

Shares of the Chennai-based tyre maker fell as much as 1.66 percent to Rs 75,379 after it reported June quarter earnings.

Key earnings highlights:

• Revenue up 8.1 percent at Rs 3,855.6 crore versus Rs 3,566.6 crore
• Net profit up 144.8 percent at Rs 260.7 crore versus Rs 106.5 crore
• Ebitda up 116.4 percent at Rs 595.3 crore versus Rs 275.1 crore
• Margin at 15.4 percent versus 7.7 percent

Shares of the Anil Ambani-led company rose for an eighth session in a row posting its longest winning streak since June 2006.

In intraday deals, the stock jumped as much as 11.4 percent to Rs 20.50 and in the course of last eight trading sessions it has advanced 47 percent.

European stocks declined on Thursday after a mostly positive session in Asia that saw Chinese equities shrug off the ongoing tariff to-and-fro between Beijing and Washington.

• Sudarshan Chemicals: The Pune-based chemical maker rose as much as 5.8 percent to Rs 510. Trading volume was 3.1 times its 20-day average.
• Schaeffler India: The Mumbai-based fabricated metal products maker rose as much as 2.6 percent to Rs 5,425. Trading volume was 6 times its 20-day average.
• Sheela Foam: The Ghaziabad-based mattress maker rose as much as 4.6 percent to Rs 1,536. Trading volume was 7.2 times its 20-day average.
• JP Associates: The Noida-based industrial conglomerate fell as much as 10 percent to Rs 13.50. Trading volume was 6.8 times its 20-day average.

• Bank of Baroda has 15.2 lakh shares change hands in a blocks deal. Stock up 5 percent at Rs 156.

Buyers and sellers were not immediately known

Source: Bloomberg

Indian equity benchmarks were trading near record highs led by banking shares.

The S&P BSE Sensex rose 0.3 percent or 123 points to 38,011 and the NSE Nifty 50 index climbed 0.15 percent or 17 points to 11,466.

Eight out of 11 sector gauges compiled by National Stock Exchange were trading higher led by the Nifty PSU Bank index was top gainer, up 2.7 percent. On the other hand, the Nifty Pharma index was top loser, down 0.85 percent.

The overall market breadth was marginally positive as 1,326 stocks were advancing while 1,177 stocks were declining.

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Shares of the Mumbai-based chemical maker fell as much as 5.3 percent, the most in over two months, to Rs 572.60 after its profit declined in June quarter.

Key earnings highlights:

• Net profit dips 26 percent to Rs 28.9 crore versus Rs 38.9 crore (YoY)
• Revenue at Rs 1,496 crore versus Rs 1,425 crore (YoY)

Shares of the Ahmedabad-based bathroom accessories maker rose as much as 1.6 percent to Rs 3,100 after it reported June quarter earnings.

Key earnings highlights:

• Revenue up 19.7 percent at Rs 280.7 crore versus Rs 234.6 crore
• Net profit up 6.2 percent at Rs 20.5 crore versus Rs 19.3 crore
• Ebitda up 6.6 percent at Rs 35.3 crore versus Rs 33.1 crore
• Margin at 12.6 percent versus 14.1 percent

Shares of the Mumbai-based fans and lighting products maker rose as much as 3.85 percent to Rs 648 after it reported June quarter earnings.

Key earnings highlights:

• Revenue up 11.7 percent at Rs 1,139.9 crore versus Rs 1,020.5 crore
• Net profit up 97.6 percent at Rs 40.5 crore versus Rs 20.5 crore
• EBITDA up 76.5 percent at Rs 79.8 crore versus Rs 45.2 crore
• Margin at 7 percent versus 4.4 percent

• Bharti Airtel has 10 lakh shares change hands in a block. Stock down 4.5 percent at Rs 367.95.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Pune-based auto component maker rose as much as 4.27 percent to Rs 709 after its profit met Bloomberg consensus estimates in June quarter.

Key earnings highlights:

• Revenue down 1 percent at Rs 1,328 crore versus Rs 1,340.7 crore
• Net profit down 17.6 percent at Rs 183 crore versus Rs 222.2 crore; Estimate of Rs 188 crore
• Ebitda up 10 percent at Rs 214.8 crore versus Rs 195.2 crore
• Margin at 16.2 percent versus 14.6 percent

Nifty Bank 28,300 strike price call option contract was among the most active option contracts on the National Stock Exchange ahead of weekly expiry.

Premium on the contract surged 99 percent to Rs 25.90. Over 14.5 lakh shares were added to the open interest which stood at over 21.58 lakh shares.

Shares of the country's third largest private sector lender by market cap advanced as much as 8.5 percent to a six-month high of Rs 345.5 after it clarified to the exchanges that it made full disclosures about its bad loans and accounting policies.

Meanwhile, investment Bank Morgan Stanley expects the stock to double in two years, and sees the risk-reward favourable as it trades at 1.2 times FY20 estimated price-to-book value.

In its note to investors, it highlighted that the foreign ownership in the bank at 60 percent was close to lowest in 15 years.

The weight of the second-largest Indian private lender by assets stands at 15 percent in Morgan Stanley’s Asia banks’ portfolio.

Shares of the Bhubaneswar-based aluminium producer rose as much as 9 percent, the most in nearly four months, to Rs 73.55 after it reported strongh June quarter earnings.

Key earnings highlights:

• Revenue up 64.9 percent at Rs 2,973.3 crore
• Net profit at Rs 687.1 crore versus Rs 128.9 crore
• Ebitda at Rs 1,011.1 crore versus Rs 227.5 crore
• Margin at 34 percent versus 12.6 percent

Shares of the Noida-based construction company rose as much as 4.9 percent to Rs 5.14 after Supreme Court ordered for fresh invitation of bids for insolvency process.

Supreme Court said:

• 180-day deadline to begin from today's order
• Committee of Creditors to be constituted afresh

• Unitech has 11 lakh shares change hands in a block. Stock up 7.4 percent at Rs 4.35.

Buyers and sellers were not immediately known

Source: Bloomberg

• Reliance Communications has 62.8 lakh shares change hands in three blocks. Stock rose as much as 10.87 percent to Rs 20.40.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based packaging company rose as much as 6.2 percent to Rs 118, as promoters are exploring to sell their controlling interest in the company as global consolidation grips the sector, The Economic Times reported citing unknown people aware of the developments.

Shares of the Pune-based auto parts maker rose as much as 2.1 percent to Rs 652.90 after the company's profit rose 34 percent on a yearly basis during April-June period.

Key earnings highlights:

• Revenue up 23 percent at Rs 1,480 crore
• Net profit up 34 percent at Rs 234 crore
• Ebitda up 29 percent at Rs 428 crore.
• Margin at 28.9 percent versus 27.6 percent

India's S&P BSE Sensex traded above 38,000 for the first time led by ICICI Bank, Reliance Industries and Infosys.

The S&P BSE Sensex rose as much as 0.4 percent or 163 points to 38,050 and the NSE Nifty 50 index climbed 0.4 percent or 45 points to record high of 11,495.

All sector gauges compiled by National Stock Exchange were trading higher with the Nifty Bank index surging to an all-time high of 28,216.

The mid- and small-cap shares were in line with their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes rose 0.5 percent each.

Nomura on ACC

• Upgraded to ‘Buy’ from ‘Neutral’; raised target price to Rs 1,900 from Rs 1,890.
• After correction, valuations are no longer demanding.
• Cycle uptrend has begun; Earnings recovery on track.
• Volume upside limited, but may surprise on realisations/costs.

Nomura on Ambuja

• Upgraded to ‘Buy’ from ‘Neutral’; cut target price to Rs 295 from Rs 300.
• Post-correction valuations attractive.
• As demand growth continues, earnings outlook looks better.
• New capacity improves volume outlook.
• See synergy benefits to improve after master supply agreement.

Deutsche Bank on Siemens India

• Maintained ‘Hold’; cut target price to Rs 1,070 from Rs 1,150.
• Reported a solid net profit growth, but flat on order inflows.
• Thesis of good revenue growth but weak orders is playing out.
• Expect single-digit revenue growth in 2018-19.

IDFC Securities on Strides Shasun

• Maintained ‘Outperform’ with a target price of Rs 613.
• Q1 positives: Higher U.S. and institutional business.
• Management expects pick up in U.S. business from October onwards
• Remain positive given strong position in Australia and growth potential in the U.S.

UBS on SRF

• Maintained ‘Buy’ with a target price of Rs 2,500.
• Riding on packaging film and guiding strong.
• Packaging strong due to higher realization, currency tailwinds, volume uptick and inventory gains.
• Management maintained strong growth guidance for specialty chemical.

Brokerages On BPCL

SBICAP Securities

• Maintained ‘Buy’ with a target price of Rs 526.
• June quarter’s net profit above estimates purely driven by higher than expected inventory gains.
• Refining core performance was weak with lower core GRM and higher opex.
• Marketing inventory gain was higher than expected.
• Temporary pause in price hike doesn’t change structural deregulation story.

Nomura

• Maintained ‘Buy’ with a target price of Rs 555.
• Large inventory gains was a key reason for the beat.
• Strong marketing margins adjusted for inventory gains.
• Near-term focus will likely remain on retail prices of diesel/petrol.
• Continue to believe OMCs should be able to pass on cost increases.

Brokerages On HPCL

JPMorgan

• Maintained ‘Underweight’; cut target price to Rs 260 from Rs 295.
• Large inventory gains drove earnings beat.
• Underlying refining sharply weaker.
• HPCL's older refineries means not ideally positioned for IMO.
• Remain underweight given confluence of headwinds.

Nomura

• Maintained ‘Buy’ with a target price of Rs 415.
• Large inventory gains was a key reason for the beat.
• Marketing apart from inventory gains remained strong.
• Near-term focus will likely remain on retail prices of diesel/petrol.
• Continue to believe OMCs should be able to pass on cost increases.

Brokerages On Cipla

CLSA

• Maintained ‘Buy’; raised target price to Rs 760 from Rs 650.
• Operationally in-line, Net profit beat on higher other income.
• US ramp-up weak but should pick up in the second half of the current financial year.
• Expect margin expansion to continue as U.S. sales ramp up.

Morgan Stanley

• Maintained ‘Overweight’ with a target price of Rs 716.
• June quarter came in line; steady improvement under way.
• Top-line growth to be driven across geographic segments.
• U.S. Margins are poised to improve.
• Complex launches, cost control and better revenue mix to aid.
• Reasonable valuations keep us overweight.

Brokerages On Lupin

Credit Suisse

• Downgraded to ‘Underperform’ from ‘Neutral’; cut target price to Rs 715 from Rs 770
• Sharp erosion in U.S. sales; price erosion to accelerate with increasing approvals.
• June quarter had no one-offs in U.S.; Current weak base is the new normal.
• Expect earnings to remain subdued for the next two quarters.

JPMorgan

• Maintained ‘Neutral’ with a target price of Rs 760.
• Lower U.S. revenues leads to margin miss.
• Margins weak despite lower R&D and other expenses.
• Erosion in US business and margin reset is concerning.
• Few catalysts for earnings recovery in the near term.

Brokerages On Sobha

CLSA

• Maintained ‘Buy’ with a target price of Rs 764.
• June quarter results were steady amidst major accounting change.
• Non-Bengaluru presales drive performance; Expect acceleration ahead.
• Contracting business is seeing good growth.
• Accounting changes drive financial adjustments.

Deutsche Bank

• Maintained ‘Buy’ with a target price of Rs 550.
• Started new fiscal with steady operational and financial performance.
• New launch momentum accelerated over the quarter.
• See improved performance in contract and manufacturing units.

Who’s Meeting Whom

• Mahindra and Mahindra Financial services to meet investors on Aug. 09.
• Wipro to meet investors on Aug. 09.

Insider Trades

• Chambal Fertilizers promoter acquired 37,000 shares on Aug. 07.
• Nocil promoter Navin Fluorine International Limited sold 2 lakh shares from Aug. 3-6.

(As reported on Aug. 8)

Bulk Deals

• Selan Exploration: Dolly Khanna bought 1.04 lakh shares or 0.6 percent equity at Rs 244.03 each.
• Sunteck Realty: DSP Blackrock MF bought 9.50 lakh shares or 0.6 percent equity at Rs 415.5 each.
• Vindhya Telelinks: Aequitas Investment Consultancy bought 1.59 lakh shares or 1.3 percent equity at Rs 1333.28 each.

F&O Cues

• Nifty August futures ended at 11,467.6, with a premium of 17.6 points versus 29 points.
• August series: Nifty open interest (OI) up 3 percent; Bank Nifty open interest down 2 percent.
• India VIX ended at 12.5, up 0.3 percent.
• Max open interest for August series call at 11,500 strike price call option (Open interest at 36.4 lakh shares, down 5 percent)
• Max open interest for August series put at 11,000 strike price put option (Open interest at 52.4 lakh shares, up 3 percent)

Nifty Earnings To Watch

• Eicher Motors

Other Earnings To Watch

• 3M India
• Aegis Logistics
• AIA Engineering
• Apar Industries
• Aurobindo Pharma
• Bajaj Electricals
• Bharat Forge
• Cera Sanitary
• CLariant Chemicals
• Coffee Day
• Cummins India
• Deepak Fertilisers
• Eris Lifesciences
• Engineers India
• Godrej Agrovet
• Gujarat Narmada Valley
• Gujarat Pipavav
• Himatsingka Seide
• Hindustan Copper
• HSIL
• ICRA
• Indian Energy Exchange
• Ingersoll Rand India
• IPCA Labs
• ITD Cementation
• Jet Airways
• J Kumar Infraprojects
• Jindal Steel & Power
• Kaveri Seed
• KEI Industries
• Mahindra Holidays
• MRF
• Page Industries
• PNB Housing
• PSP Projects
• SH Kelkar & Co.
• Subros
• Swan Energy
• Tata Communications
• TV Today Network
• United Bank of India
• VA Tech Wabaq
• Varun Beverages
• Whirlpool India
• Zensar Technologies

Earnings Reaction To Watch

BPCL (Q1, QoQ)

• Revenue up 9.9 percent at Rs 71,697 crore.
• Net profit down 14.2 percent at Rs 2,293 crore.
• Ebitda up 4.1 percent at Rs 3,875 crore.
• Margin at 5.4 percent versus 5.7 percent.

HPCL (Q1, QoQ)

• Revenue up 11.2 percent at Rs 67,628.8 crore.
• Net profit down 1.6 percent at Rs 1,719.2 crore.
• Ebitda up 9.2 percent at Rs 3,190.6 crore.
• Margin at 4.7 percent versus 4.8 percent.

NALCO (Q1, YoY)

• Revenue up 64.9 percent at Rs 2,973.3 crore.
• Net profit at Rs 687.1 crore versus Rs 128.9 crore.
• Ebitda at Rs 1,011.1 crore versus Rs 227.5 crore .
• Margin at 34 percent versus 12.6 percent.

Siemens (Q3, YoY)

• Revenue up 15.9 percent at Rs 3,073 crore.
• Net profit up 25.5 percent at Rs 204.4 crore.
• Ebitda up 33.4 percent at Rs 302.3 crore.
• Margin at 9.8 percent versus 8.5 percent.

Trent (Q1, YoY)

• Revenue up 19.5 percent at Rs 590.6 crore.
• Net profit up 0.5 percent at Rs 38.4 crore.
• Ebitda up 21.2 percent at Rs 71 crore.
• Margin at 12 percent versus 11.9 percent.

Phoenix Mills (Q1, YoY)

• Revenue up 4.4 percent at Rs 413.2 crore.
• Net profit up 40.1 percent at Rs 59.7 crore.
• Ebitda up 11 percent at Rs 195.4 crore.
• Margin at 47.3 percent versus 44.5 percent.

Indian Bank (Q1, YoY)

• Net interest income up 23.8 percent at Rs 1,807 crore.
• Net profit down 43.8 percent at Rs 209.3 crore.
• Provisions at Rs 456.6 crore versus Rs 1,772 crore (QoQ)
• GNPA at 7.2 percent versus 7.37 percent (QoQ)
• NNPA at 3.79 percent versus 3.81 percent (QoQ)

Sadbhav Infrastructure Project (Q1, YoY)

• Revenue up 58.8 percent at Rs 797.6 crore.
• Net loss at Rs 65.6 crore versus net loss at Rs 116.1 crore.
• Ebitda up 25.5 percent at Rs 283.5 crore.
• Margin at 35.5 percent versus 45 percent.

Blue Star (Q1, YoY)

• Revenue flat at Rs 1,507.8 crore.
• Net profit up 20.2 percent at Rs 91.6 crore.
• Exceptional gain of Rs 15 crore in current quarter.
• Ebitda up 23.7 percent at Rs 136.7 crore.
• Margin at 9.1 percent versus 7.3 percent.

Thermax (Q1, YoY)

• Revenue up 18.8 percent at Rs 1,035.3 crore.
• Net profit up 20.7 percent at Rs 49 crore.
• Ebitda down 3.9 percent at Rs 69.4 crore.
• Margin at 6.7 percent versus 8.3 percent.

Quick Heal Technologies (Q1, YoY)

• Revenue up 78 percent at Rs 52.8 crore.
• Net profit at Rs 6.4 crore versus loss of Rs 11.8 crore.
• Ebitda up at Rs 9.3 crore versus loss of Rs 15.8 crore.
• Margin at 17.6 percent.

• HPCL plans Rs 8,400 crore capex in 2018-19; to setup unit in UAE to expand Africa and Middle East market.
• Apollo Pipes board proposed issuance of 9.5 lakh shares to promoters.
• Pidilite Industries plans to invest $500,000 in U.S. arm.
• PNB in talks with Income Tax, Excise departments to sell erstwhile headquarters. (PTI)
• BPCL says Mumbai refimnery operations normal after hydrocracker fire
• TCS says Digitate Automation now has 50-plus clients

• China announces date to match $16 billion U.S. tariffs
• U.S. sanctions Russia, with more threatened, for nerve-agent use
• Crude slumps as trade war overshadows drop in U.S. inventories
• Former ministers Shourie and Sinha liken Rafale deal to Bofors scam
• Maharashtra says outside food in multiplexes may be a security issue
• Bharti Airtel plans to list Africa unit in one year, says Singtel
• This GST amendment may force taxpayers to reverse credit
• NSE not averse to a merger if it makes sense, says Limaye
• RBI surplus transfer to government rises in 2017-18
• Crypto’s $600 billion crash hits a new low
• Elon Musk talked with SoftBank in 2017 about Tesla investment
• What, no meatballs? How Ikea caters to different global tastes

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India was little changed at 11,474 as of 7:24 a.m.

Asian stocks traded mixed as China hit back against the Trump administration’s latest tariffs and tensions ratcheted up between the U.S. and Russia. The yen edged higher, while oil held on to its losses.

Shares fell in Japan and South Korea, fluctuated in Hong Kong, and pushed higher in China and Australia. Treasuries added to gains made as investors scooped up a record $26 billion 10-year auction.

Currencies

• The yen rose 0.2 percent to 110.81 per dollar.
• The offshore yuan fell 0.2 percent to 6.8359 per dollar.
• The euro bought $1.1605.
• The kiwi plunged 1.2 percent to 66.68 U.S. cents.
• The Bloomberg Dollar Spot Index edged less than 0.1 percent higher.

Commodities

• West Texas Intermediate crude slid 0.1 percent to $66.86 a barrel, after slumping 3.2 percent.
• Gold was little changed at $1,212.50 an ounce.

Here are some key events coming up this week:

• Samsung Electronics is set to unveil its next Galaxy Note smartphone on Thursday.
• U.S. consumer prices probably rose in July from June, consistent with a pickup in inflation that’s projected to keep the Federal Reserve on a path of gradual interest-rate increases, economists forecast before Friday’s release.