Sensex, Nifty End Lower On Rupee Woes

Indian equity benchmarks ended lower after the local currency declined to a record low against the U.S. dollar.

The S&P BSE Sensex Index closed 0.5 percent lower at 37,663.56 and the NSE Nifty 50 Index closed at 11,385.05, down 0.44 percent.

Seven out of 11 sectoral gauges compiled by NSE fell, led by NSE Nifty Metal Index's 2.2 percent decline. On the flipside, NSE Nifty Pharma Index was the top sectoral gainer, up 1.4 percent.

Shares of the real estate developer rose as much as 20.2 percent to Rs 31.20.

About 15.3 lakh shares changed hands in a block deal, Bloomberg data showed. Buyers and sellers were not known immediately.

Maruti Suzuki India Ltd. announced price hike that varies across models and is up to Rs 6,100 due to owing to increase in commodity and distribution costs and adverse foreign exchange rates, according to its regulatory filing.

The stock rose as much as 1.1 percent to Rs 9,236.

Zensar Technologies

• Stock rose as much as 13.1 percent to Rs 1,428.45.
• Trading volume was 10.7 times its 20-day average.

Vakrangee

• Stock rose as much as 10.4 percent to Rs 46.20.
• Trading volume was 2.7 times its 20-day average.

Jain Irrigation Systems

• Stock fell as much as 9.9 percent to Rs 75.
• Trading volume was 2 times its 20-day average.

Reliance Communications

• Stock fell as much as 13.8 percent to Rs 17.80.
• Trading volume was 1.7 times its 20-day average.

European equities climbed as mining shares rebounded after falling the most in more than two years yesterday.

Shares of the information technology company rose as much as 12.4 percent to trade at over a two-month high at Rs 367.25.

Trading volume was 6.7 times its 20-day average. The stock rose 13 percent in the past month compared to 3.4 percent advance in Sensex.

The Indian rupee weakened further after opening at an all-time low. The local currency depreciated as much as 0.7 percent to 70.39 a dollar.

Shares of the software developer rose as much as 4.1 percent to Rs 4.1 percent.

The company’s subsidiary bagged a contract, to provide temporary staffing services for Seattle Public Schools, according to its stock exchange filing.

Trigyn trades at 9.2 times trailing 12-month earnings per share and 8.4 times for the coming year, according to Bloomberg data.

Shares of Gruh Finance fluctuated between gains and losses to trade at Rs 321.25.

About 19.9 lakh shares changed hands in a block deal, Bloomberg data showed. Buyers and sellers were not known immediately.

• Indian equity benchmarks traded subdued after erasing early losses.
• The S&P BSE Sensex Index traded a little changed at 37.823 and the NSE Nifty 50 Index traded at 11,428.
• The NSE Nifty Metal Index was the top sectoral loser, down 1.5 percent.

Shares of the hospital chain operator rose as much as 2.7 percent to Rs 150.05. The company swung to a loss during April-June period, according to its stock exchange filing.

Key earnings highlights (Q1, YoY):

• Revenue down 9.9 percent at Rs 1,042 crore.
• Net loss at Rs 70.7 crore versus net profit at Rs 5.3 crore.
• Ebitda at Rs 8 crore versus Rs 86.1 crore.
• Margin at 0.8 percent versus 7.4 percent.

When Uday Kotak proposed to reduce promoter holding in the bank which bears his name using preference shares rather than bringing down his share of common equity, banking sector watchers raised their eyebrows collectively.

What Kotak was trying to do was not just protect his interests, but also force a redefinition of the regulatory thinking on bank ownership. (more details here)

The NSE Nifty Metal Index fell as copper entered into a bear market.

Key highlights from the conversation:

Highlights from Shibani Sircar Kurian, head of equity research at Kotak Mahindra AMC

• June quarter came in line with expectations.
• Downside seems to be protected in large cap it stocks; earnings to improve.
• Do not expect run away growth rates for IT companies.
• See slight pick up in demand in it sector doing forward.
• Positive on cement, see pricing growth up in coming quarters.
• Expect margin uptick to drive earnings growth.
• Rural recovery, premiumisation, low consumer leverage driving consumption and volume growth.
• Valuation are not at attractive zones currently.
• Demand recovery in micro space back on track.
• Overall Nifty trends show double-digit growth.

Highlights from Jitendra Gohil, head of India equity research At Credit Suisse:

• Staying away from telecom space, see further pressure.
• Positive on retail focused private sector banks.
• Selective in NBFC space, mainly in housing finance companies.
• Four-wheeler market doing good; exporters may see recovery going ahead.
• Recommend auto sector, before festive season picks up.
• No concerned for commercial vehicale makers due to recent news on axle loading norms.
• Expect tractors, auto ancillaries to do well.
• Auto space performed below expectations.
• Festive season demand to drive growth along with rural pick up.
• Bullish on consumption sector, performed better than expectations.

Shares of the real estate developer fell as much as 3.4 percent to Rs 144.90 after its June quarter profit declined.

Key earnings highlights (Q1, YoY):

• Revenue up 38.5 percent at Rs 810.9 crore.
• Net profit down 5.3 percent at Rs 117.5 crore.
• Ebitda down 23.4 percent at Rs 246.2 crore.
• Margin at 30.4 percent versus 54.9 percent.

The NSE Nifty PSU Bank Index extended gains for the second straight trading session, led by the rally in Punjab National Bank.

• The Indian equity benchmarks traded off day's low.
• The S&P BSE Sensex Index traded 0.1 percent lower at 37,811 and the NSE Nifty Index traded at 11,425, down 0.08 percent.
• About 806 stocks declined and 793 shares rallied on National Stock Exchange.

Shares of the Bengaluru-based software developer rose for the fourth straight trading session and is poised for its longest winning streak in over a month. The stock rose as much as 2.9 percent to Rs 1,038.85.

The company’s stock is expected to touch Rs 1,050 in the next twelve months, JP Morgan said in a research note as it initiated coverage with a neutral rating.

Here’s what JP Morgan had to say about Mindtree:

• Initiated ‘Neutral’ with a price target of Rs 1,050.
• Mindtree has carved a strong positioning for itself in digital services.
• RUN business is nicely complementing digital and offering revenue stability.
• Robust mid-teen revenue growth and Rupee depreciation to lead to strong earnings growth.
• Assign lower multiple on account of margin volatility and skewed top-client contribution.

Shares of the cement manufacturer hit its daily upper limit of 5 percent for the second day at Rs 218.25. The company’s profit rose 94 percent year-on-year during the April-June period, according to its stock exchange filing.

Key earnings highlights (Q1, YoY):

• Net profit up 94 percent at Rs 295 crore.
• Revenue up 44.2 percent at Rs 3,803 crore.
• Ebitda up 48 percent at Rs 692 crore.
• Margin at 18.2 percent versus 17.7 percent.

Shares of the road construction company rose as much as 4.8 percent to Rs 888.

The company’s profit during April-June period jumped 107.9 percent on a yearly basis, according to its stock exchange notification.

Key earnings highlights (Q1, YoY):

• Revenue up 46.4 percent at Rs 2,436.3 crore.
• Net profit up 107.9 percent at Rs 254.9 crore.
• Ebitda up 44.1 percent at Rs 432.6 crore.
• Margin at 17.8 percent versus 18 percent.

Key highlights from the conversation:

• Further Rupee depreciation is fine, investors can hedge.
• Do not expect further hike in crude prices in near term.
• The worst may be over in private bank space.
• May see upside in cement demand if rural housing continues to grow.

Shares of the country’s largest drugmaker extended gains for the third day. The stock rose as much as 2.1 percent, to trade at nearly a 15-month high Rs 614.70.

The pharmaceutical company received a green signal from the U.S. regulator for CEQUA, which is indicated to increase tear production in patients with keratoconjunctivitis sicca (dry eye), according to its stock exchange notification.

Sun Pharma trades at 51.8 times trailing 12-month earnings per share and 34 percent its estimates for the coming year, Bloomberg data showed.

Indian equity benchmarks resumed declines after a one-day rally. The S&P BSE Sensex Index fell as much as 0.55 percent to 37,644.97 and the NSE Nifty 50 Index fell as much as 0.51 percent to trade below 11,400.

The market breadth was tilted in favour of buyers. Nine out of 11 sectoral gauges compiled by NSE fell, led by NSE Nifty Metal Index's 1.7 percent decline. On the flipside, NSE Nifty Pharma Index was the top sectoral gainer, up 0.8 percent.

How much further can the rupee fall and will the Reserve Bank of India step in to stop it? is the top question on every investor's mind.

The trade deficit, which widened to 18 billion dollars in July, the biggest in five years, has further complicated the local currency's fortunes.

The pair is expected to open at around 70.25 and trade between 69 and 72 a dollar in the day. So a fresh low for the rupee is in the offing.

On the other hand, sovereign bonds too may remain under pressure following the rupee's disappointment. Dealers see the 10-year yield in the range of 7.81-7.87 percent in the session.

F&O Cues

• Nifty August futures closed trading at 11,463, premium of 28.3 points versus 25.4 points.
• August Series: Nifty open interest up 1.4 percent; Bank Nifty open interest down 0.6 percent.
• India VIX ended at 13.2, down 0.8 percent.
• Max open interest for August series at 11,500 Call (open interest at 42.1 lakh, down 7 percent).
• Max open interest for August series at 11,000 Put (open interest at 51.3 lakh, up 2 percent).

F&O Ban

In ban: Adani Enterprises, Adani Power, Jet Airways, Punjab National Bank.

Put-Call Ratio

• Nifty PCR at 1.70 versus 1.66
• Nifty Bank PCR at 1.14 versus 0.95

• Globe Capital Markets acquired 82 lakh shares or 1.88 percent equity at Rs 12.2 each.
• ITF Mauritus sold 82 lakh shares or 1.88 percent equity at Rs 12.2 each.

JPMorgan on Mindtree

• Initiated ‘Neutral’ with a price target of Rs 1,050.
• Mindtree has carved a strong positioning for itself in digital services.
• RUN business nicely complementing digital and offering revenue stability.
• Robust mid teen revenue growth and Rupee depreciation to lead to strong earnings growth.
• Assign lower multiple on account of margin volatility and skewed top-client contribution.

IDFC Securities on India Strategy

• June quarter review: Consumption, IT and commodities did well; financials disappointed.
• Overall operationally strong quarter; broad-based in line performance.
• Higher slippages, ageing provisions cause weakness in financials.
• Cut Nifty EPS estimates for the current and the next financial year reduced to Rs 516 and Rs 645 respectively from Rs 549 and Rs 682 respectively.
• Top Nifty Picks: Coal India, NTPC, IndusInd Bank, GAIL, Hero MotoCorp.

Morgan Stanley On MakeMyTrip

• June quarter’s operating performance was better than expected.
• Traffic metrics and customer metrics are strong.
• Unit economics in budget hotels are improving.
• Growth in key segments and market share dynamics remain healthy.

JPMorgan On Coal India

• Maintained ‘Buy’ with a price target of Rs 330.
• Strong fundamental outlook for near term.
• Well placed in improving domestic coal market.
• Expect dividend payout to remain elevated.
• Technical overhang of a potential stake sale by Government.
• Stock struggle to break out of Rs 260-330 range on concerns of earnings growth beyond 2018-19.

Deutsche Bank On UPL

• Maintained ‘Buy’ with a price target of Rs 765.
• Emerging Markets currency volatility is a worry, but risk-reward remains favorable.
• Revenue growth for the current financial year is to recover to 12 percent from 6.5 percent in 2017-18.
• Margins to also expand driven by backward integration.
• Dollar appreciation of 1 percent can reduce post-acquisition EPS by 4 percent.

On Kotak Mahindra Bank

Goldman Sachs

• Maintained ‘Buy’ with a price target of Rs 1,506.
• RBI rejection to impact stocks’ performance in near-to-medium term.
• Investor focus to shift from fundamental performance to regulatory aspect.
• Continue to remain positive on Kotak’s fundamental performance.
• Expect continued growth recovery and improving profitability.

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 1,435.
• Slight negative as the overhang of significant equity supply would increase.
• Another potential solution could be sizeable inorganic growth opportunities.
• Probability of equity capital raising appears low to given its good capital position.

Citi

• Maintained ‘Buy’ with a price target of Rs 1,565.
• If capital raised then it will further increase an already high Tier 1 and depress RoE for a long period.
• Selling stake in secondary market - not preferred in the past.
• Consider a meaningful acquisition either in the banking space or via one of its subsidiaries.

On Grasim Industries

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 1,329.
• June quarter’s Ebitda surpassed estimates, driven by strong VSF margins.
• Outlook for VSF business remains constructive.
• Capacity growth in VSF and chemicals should further support earnings.
• While capex will rise, standalone balance sheet remains healthy.

Deutsche Bank

• Maintained ‘Buy’ with a price target of Rs 1,380.
• June quarter’s standalone result beats estimates on better margins.
• Volume growth to be robust in both VSF and chemicals businesses.
• Strong growth outlook in its core businesses.
• Prefer Grasim over UltraTech given better valuation.

On Sun Pharma

CLSA

• Maintained ‘Buy’; raise price target to Rs 750 from Rs 600.
• June quarter was a strong quarter after the U.S. and India spring a positive surprise.
• Specialty launches in the U.S. on track.
• Regulatory challenges behind and pipeline monetisation underway.
• Believe Sun is well-placed to double its adjusted EPS over the next two years.

Citi

• Maintained ‘Neutral’ with a price target of Rs 600.
• June quarter earnings was ahead of estimates largely on strong traction in U.S.
• Low R&D spend drive earnings beat.
• US traction is encouraging, margins could taper a bit.

Macquarie

• Maintained ‘Neutral’ with a price target of Rs 522
• June quarter’s performance was in line adjusted for lower R&D spend and tax rate.
• Sun is guiding for higher cost largely due to upcoming specialty launches.
• U.S. pricing remains challenging, as competitive intensity is not abating.

SP Apparels (Q1, YoY)

• Revenue up 26.7 percent at Rs 190.8 crore.
• Net profit up 13.5 percent at Rs 12.6 crore.
• Ebitda up 51.6 percent at Rs 28.5 crore.
• Margin at 14.9 percent versus 12.5 percent.

Aster DM Healthcare (Q1, YoY)

• Revenue up 14 percent at Rs 1,774.7 crore.
• Net profit at Rs 12.4 crore versus net loss at Rs 76.9 crore.
• Ebitda at Rs 124 crore versus Rs 39.8 crore.
• Margin at 7 percent versus 2.6 percent.

Suven Lifesciences (Q1, YoY)

• Revenue up 36 percent at Rs 191.7 crore.
• Net profit up 31.1 percent at Rs 38.8 crore.
• Ebitda up 28.7 percent at Rs 58.3 crore.
• Margin at 30.4 percent versus 32.1 percent.

Dilip Buildcon (Q1, YoY)

• Revenue up 46.4 percent at Rs 2,436.3 crore.
• Net profit up 107.9 percent at Rs 254.9 crore.
• Ebitda up 44.1 percent at Rs 432.6 crore.
• Margin at 17.8 percent versus 18 percent.

Khadim India (Q1, YoY)

• Revenue up 8.7 percent at Rs 189.6 crore.
• Net profit unchanged at Rs 7.4 crore.
• Ebitda flat at Rs 16.6 crore.
• Margin at 8.8 percent versus 9.6 percent.

Cox & Kings (Q1, YoY)

• Revenue up 14.5 percent at Rs 2183.9 crore.
• Net profit down 56.1 percent at Rs 66.6 crore.
• Ebitda down 20.2 percent at Rs 297.9 crore.
• Margin at 13.6 percent versus 19.6 percent.

Indiabulls Real Estate (Q1, YoY)

• Revenue up 38.5 percent at Rs 810.9 crore.
• Net profit down 5.3 percent at Rs 117.5 crore.
• Ebitda down 23.4 percent at Rs 246.2 crore.
• Margin at 30.4 percent versus 54.9 percent.

Fortis Healthcare (Q1, YoY)

• Revenue down 9.9 percent at Rs 1,042 crore.
• Net loss at Rs 70.7 crore versus net profit at Rs 5.3 crore.
• Ebitda at Rs 8 crore versus Rs 86.1 crore.
• Margin at 0.8 percent versus 7.4 percent.

• Cipla’s Ugandan unit sets IPO price at UGX 256.5 per share.
• Mrs Bectors Food Specialities files with SEBI for IPO.

• The Bloomberg Commodity Index fell 1.9 percent Wednesday to the lowest since July 2017.
• West Texas Intermediate crude slid 0.3 percent to $64.84 a barrel.
• LME copper was up 0.3 percent after sinking 4 percent.
• Gold fell 0.1 percent to $1,173.55 an ounce, having slid more than 3 percent this week.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, declined 0.2 percent to 11,415 as of 8:15 a.m.

Asian stocks largely reversed losses and U.S. equity futures climbed with Treasury yields, after China said its vice commerce minister will visit America for trade talks in late August. Equities in Hong Kong and China recouped most of their decline, while shares in Japan pared losses.

Short on time? Well, then listen to this podcast for a quick summary before the opening bell!

Here are the key events to watch out for this week:

• Australia jobs data is coming Thursday.
• Earnings are still to come from companies including Maersk and Carlsberg.
• Brexit talks between the EU and the U.K. resume in Brussels Thursday.