Sensex, Nifty Extend Record Led By RIL, HDFC Twins

Indian equity benchmarks extended record-breaking run for the second straight day led by Reliance Industries, HDFC twins and Infosys.

The S&P BSE Sensex rose 0.5 percent or 202 points to record closing high of 38,897 and the NSE Nifty 50 index advanced 0.4 percent or 47 points to 11,738.

Six out of 11 sector gauges compiled by National Stock Exchange ended higher led by the Nifty Metal index's 1.8 percent gain. On the other hand, the Nifty PSU Bank index was the top loser, down 1.5 percent.

The mid- and small-cap shares ended on a subdued note as the Nifty Midcap 100 index fell 0.3 percent while the Nifty Smallcap 100 index rose 0.1 percent.

Below are trading strategies discussed by stock market experts with BloombergQuint:

Sacchitanand Uttekar, Tradebulls

• Buy HDFC Bank today and sell tomorrow with stop loss at Rs 2,078
• Sell Interglobe Aviation for target of Rs 995 with stop loss at Rs 1,048.
• Sell Punjab National Bank for target of Rs 78 with stop loss at Rs 84.90.

Amar Singh, Angel Broking

• Buy Kotak Mahindra Bank around Rs 1,275 with stop loss below Rs 1,240 for target of Rs 1,350.
• Buy Bata for target of Rs 1,110 with stop loss at Rs 1,054.
• Buy Torrent Power for target of Rs 273 with stop loss at Rs 254.50.
• Sell HPCL for target of Rs 249 with stop loss at Rs 265.

European stocks pared an advance, U.S. futures drifted and Asian shares edged higher as investors digested the latest developments on global trade.

• GMR Infra has 1.02 crore shares change hands in a single block. Stock down 0.3 percent at Rs 19.10.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the state-run lender fell as much as 5.4 percent to Rs 58 after the bank said that Life Insurance Corporation's stake will not exceed 14.9 percent up on share issue.

The government currently holds 86 percent in the bank while public holding stands at 14 percent, which including 7.8 percent held by LIC.

At the current market price LIC is likely to infuse close to Rs 2,000 crore, according to BloombergQuint’s calculations. The government’s stake will be reduced to 79.5 percent.

• Gujarat Pipavav Port: The Mumbai-based shipping port operator rose as much as 3.5 percent to Rs 112.40. Trading volume was 30.2 times its 20-day average.
• Asahi India Glass: The Gurugram-based safety glass maker fell as much as 0.9 percent to Rs 320.60. Trading volume was 24 times its 20-day average.
• Shoppers Stop: The Mumbai-based retail store operator rose as much as 5.5 percent to record high of Rs 669.30. Trading volume was 12 times its 20-day average.
• Adani Transmission: The Ahmedabad-based electricity generation and distribution company rose as much as 16.3 percent to Rs 237. Trading volume was 16 times its 20-day average.

Indian equity benchmarks held on to record highs led by Reliance Industries, HDFC, Infosys and Maruti Suzuki.

The S&P BSE Sensex rose 0.5 percent or 210 points to 38,903 and the NSE Nifty 50 index climbed 0.44 percent or 552 points to 11,744.

Six out of 11 sector gauges compiled by National Stock Exchange were trading higher led by the Nifty Metal index's 1.4 percent gain. On the flipside, Nifty PSU Bank index was top loser, down 1.4 percent.

The mid- and small-cap shares were trading mixed as the Nifty Midcap 100 index was little changed while the Nifty Smallcap 100 index rose 0.5 percent.

The overall breadth was 1,343 shares were declining while 1,225 were advancing on the BSE.

Click here for more stock market statistics

• JSW Energy has 16 lakh shares change hands in a single block. Stock up 0.9 percent at Rs 69.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based drugmaker rose as much as 0.9 percent to Rs 919 after it received U.S. drug regulator's nod for Gabapentin tablet.

The drug is a generic version of Pfizer's Neurontin and is indicated for the treatment of postherpetic neuralgia in adults and adjunctive therapy in the treatment of partial onset seizures, Lupin said n an exchange filing.

Shares of the Vadodara-based engineering services provider rose as much as 9.2 percent, the most in over a month, to record high of Rs 1,755 on heavy volumes. Trading volume was 4.5 times its 20-day average.

On the Relative Strength Index (RSI), the stock is quoting at 80, indicating that it may be overbought. A reading above 70 on the RSI indicates the stock is overbought while below 30 indicates that it is oversold.

Fertiliser companies were trading higher with Chambal Fertlisers, Madras Fertilizers, National Fertilisers and Rashtriya Chemical Fertlisers surging as much as 13 percent as the rollout of subsidy has become more streamlined.

The policy for fertiliser subsidy was always for a weekly payment. The rollout of fertiliser subsidy has become more streamlined since going live pan India from April onwards and the subsidy payment are being received every seven days for the last couple of months, Abhay Baijal, CFO of Chambal Fertlisers told BloombergQuint.

Shares of the Mumbai-based airline operator rose as much as 3.4 percent to Rs 291.80 after a report suggested that Boeing may return $200 million to Jet Airways, Financial Express reported citing sources.

To help crisis-ridden Jet Airways, U.S. aircraft manufacturer Boeing is understood to be returning a portion of the amount paid by the carrier to procure 75 Boeing 737 Max, the report added.

Nifty 11,700 strike price call option contract was among the most active option contracts on the National Stock Exchange.

The premium on the contract fell 31 percent to Rs 28.40. Over 16 lakh shares were added to the open interest which stood at over 34.44 lakh shares.

Click here to see the complete options chain

Shares of the Delhi-based real estate developer rose as much as 18 percent to Rs 58.80 after it won an order from Uttar Pradesh Expressway Industrial Development Authority, Vipul said in an exchange filing.

The order is for operating, maintaining, managing and transfer of wayside amenities facility along the Agra-Lucknow Expressway.

Stressed power generation companies fell after a court rejected their plea to ease RBI rules on bad loans, clearing the way for lenders to take these assets to bankruptcy courts and raising prospects of loan write-offs.

Allahabad High Court on Monday rejected power producers’ request for relaxation in RBI’s stricter rules on debt servicing, which power producers said could push nearly 75GW of projects into bankruptcy.

Generators with stressed assets including GMR Infrastructure, Monnet Ispat & Energy and GVK Power fell; Monnet lost as much as 4.8 percent, GMR declined 2.1 percent and GVK Power fell 4 percent.

Shares of the Mumbai-based polyester products maker were locked in a five percent upper circuit at Rs 41.05 after its board approved a debt restructuring plan of its subsidiary JBF Petrochemicals, JBF Industries said in an exchange notification.

KKR Jupiter Advisors has agreed to buy out 100 percent stake in the petrochemicals arm. The total debt of $464 million in JBF Petrochemicals will now no longer be consolidated in the accounts of JBF Industries, the notification added.

Shares of the Delhi-based construction company rose as much as 5 percent to Rs 31.90 after it won a road construction order worth Rs 266 crore, C&C Constructions said in an exchange notification.

Shares of the Mumbai-based construction company rose as much as 5.9 percent to Rs 239 after Citi initiated coverage on the stock with a 'buy' for target price of Rs 416, indicating a potential upside of 85 percent from yesterday’s closing price.

Citi in a note said:

• Play on India’s urban infra opportunity; Top India E&C pick.
• Backward integration to lead to sector-high margins.
• See healthy growth prospects.
• Expect revenue, operating income and net profit to grow at a compounded annual growth rate of 15 percent, 19 percent and 23 percent respectively over FY18-21.

Midcap index can show a delayed response to the ongoing market rally, Dhananjay Sinha of Emkay told BloombergQuint in an interview.

Key highlights of the conversation:

• Midcap index can show lagged response to the current market rally.
• Would not look for value in the broader market at current levels.
• Positive on IT space on the back of currency impact.
• Expect rupee to depreciate further against the dollar.
• Expect 5-6 percent rupee depreciation over the next 12 months against the dollar.
• Reliance Jio performance driving RIL’s stock price higher.
• Underweight on telecom due to competition from Reliance Jio.

Indian equity benchmarks extended record-breaking run led by Reliance Industries, HDFC twins and ITC.

The S&P BSE Sensex rose 0.5 percent or 198 points to 38,892 and the NSE Nifty 50 index climbed 0.51 percent or 59 points to 11,751.

All 11 sector gages compiled by the National Stock Exchange were trading higher led by the Nifty Metal index's 1 percent gain.

The gains were broad-based as the Nifty 500 and Nifty 200 indexes rose 0.4 percent each.

• Rupee opened higher at 70.07 per dollar against yesterday's close of 70.16.

Dharmesh Shah, AVP, technical analyst at ICICI Securities recommends buying:

• Tech Mahindra for target of Rs 752 with stop loss at Rs 729 for intraday trade
• Ultratech Cement for target of Rs 4,420 with stop loss at Rs 4,340 for intraday trade
• SBI for target of Rs 341 with stop loss at Rs 278 for time frame of six months

The sale of Rs 5,700 crore of state bonds will test appetite for debt even as yields have risen 12 basis points over past two weeks. The rupee may gain as currencies rally in emerging markets after the U.S.-Mexico trade deal.

Kotak Mahindra Bank expects the 10-year yield to trade in a range between 7.80 percent to 7.90 percent ahead of the quarterly GDP data. The bank also expects liquidity situation to improve toward the month end as government spending starts to flow in.

In other global news, investors would be disheartened as the U.S.-China trade talks aren't happening. Donald Trump Trump said he's rejecting overtures from Beijing, saying that it wasn't the right time for talks.

Citi on J.Kumar Infra

• Initiated ‘Buy’ with a price target of Rs 416, implying a potential upside of 85 percent from the last regular trade.
• Play on India’s urban infra opportunity; Top India E&C pick.
• Backward integration to lead to sector-high margins.
• See healthy growth prospects.
• Expect revenue, operating income and net profit to grow at a compounded annual growth rate of 15 percent, 19 percent and 23 percent respectively over FY18-21.

Elara Capital on Dixon Technologies

• Initiated ‘Buy’ with a price target of Rs 3,475, implying a potential upside of 30 percent from the last regular trade.
• Large addressable market size with market leadership position.
• Asset-light model: Superior business and healthy profitability.
• Positives: higher operating leverage, better revenue mix and backward integration.
• Expect revenue, operating income and net profit to grow at a compounded annual growth rate of 19 percent, 31 percent and 36 percent over FY18-21.

Elara Capital on Amber Enterprise

• Initiated ‘Buy’ with a price target of Rs 1,225, implying a potential upside of 27 percent from the last regular trade.
• Positives: deep backward integration, strong R&D capability, customer stickiness, strong execution capability and significant entry barriers.
• Expect revenue to grow at a compounded annual growth rate of 25 percent over FY18-21 led by products, clients and geographic cluster additions.
• Expect EPS to grow at a compounded annual growth rate of 39 percent due to operating leverage and savings in interest cost.
• RoE improvement largely driven by asset efficiency and margin improvement.

SBICAP on Jet Airways

• Maintained ‘Hold’ with a price target of Rs 335, implying a potential upside of 19 percent from the last regular trade.
• Recapitalisation imperative for continuity of business operations.
• Pressure on yields and PLFs resulted into lower unit revenue.
• Adjusting for forex loss Jet reported break-even at Ebitdar, but suffered cash losses.

UBS on Jubilant Foodworks

• Upgraded to ‘Neutral’ from ‘Sell’; raised price target to Rs 1750 from Rs 950, implying a potential upside of 13 percent from the last regular trade.
• Revenue and SSSG momentum can be maintained.
• Jubilant unlikely to lose the battle against its competitors in the long run.
• Limited upside till RoIC improvements begin to show.

Macquarie on KEC International

• Maintained ‘Outperform’ with a price target of Rs 443, implying a potential upside of 43 percent from the last regular trade.
• Margin concern due to commodity inflation overdone.
• Power Grid capex slowdown imminent, but impact on KEC limited.
• Multiple levers in place to cushion commodity price inflation risk.

JPMorgan on Hindalco

• Maintained ‘Overweight’; raised price target to Rs 370 from Rs 355, implying a potential upside of 60.5 percent from the last regular trade.
• Aluminum outlook is improving slowly but surely.
• India demand pick up should aid local premiums.
• Positives: strong FCF generation, strong positioning across upstream and downstream.

Macquarie on Dish TV

• Maintained ‘Outperform’ with a price target of Rs 94, implying a potential upside of 31 percent from the last regular trade.
• Dish TV confident to tackle uncertainties like Jio GigaFiber, OTT threat and tariff order.
• Company on track for 35 percent exit operating margin led by merger synergies.
• Given attractive valuations primarily due to macro concerns, Dish TV is a good contra play.

JPMorgan on Westlife Development

• Improving consumer sentiment, menu innovations, value platforms and McCafe/McDelivery to help deliver double digit SSSG in the current financial year.
• Confident of delivering 13-15 percent operating margin by March 2023.
• Judicious pricing, better mix, cost optimization measures and operating leverage to aid margins.
• Capital allocation and cost discipline remains fairly high.

Edelweiss on Power

• Allahabad High Court’s decision paves way for sector consolidation.
• One-third of stressed assets potential candidates for resolution.
• JSW has the strongest balance sheet with appetite to absorb stressed projects.
• Tata Power and Adani Power too could exploit this M&A opportunity.
• NTPC could be the joker in the pack garnering a lion’s share of distressed assets.

UBS on India Small Finance Banks

• Loan growth strong in Q1; expect more than 30 percent loan growth through the financial years till March 2021.
• Liability scale-up strong; Rise in rates to drive marginal cut in NIM.
• Opex pressure has peaked for Equitas; Ujjivan lagging in branch roll-out.
• Equitas: Maintained ‘Buy’; cut price target to Rs 240 from Rs 250, implying a potential upside of 66 percent from the last regular trade.
• Ujjivan: Maintained ‘Buy’; cut price target to Rs 480 from Rs 575, implying a potential upside of 34 percent from the last regular trade.
• AU Small: Maintained ‘Neutral’; cut price target to Rs 775 from Rs 800, implying a potential upside of 8 percent from the last regular trade.

UBS on Indian IT Services

• Adoption of digital services to not lead to further revenue deceleration.
• Expect organic revenue growth to stabilise near current levels.
• Expect operating margins to trend down for offshore services companies.
• Valuations are no longer inexpensive for the sector.

Morgan Stanley on Cement Sector

• Overall cement price hikes could be lower if demand driven by institutional sales.
• Modest price hikes is not detrimental to margins.
• Continue to believe that margins track overall utilisation.
• With rising capacity utilisation, margin expansion will follow.

Brokerages On Marico

BofAML

• Downgraded to ‘Neutral’ from ‘Buy’; cut price target to Rs 410 from Rs 420, implying a potential upaisde of 9 percent from the last regular trade.
• Kerala floods to hinder ongoing softening of copra prices.
• Expect a potential 10-15% increase in bulk copra prices near term.
• Margin revival could be delayed; but medium-term growth levers intact.

CLSA

• Maintained ‘Buy’ with a price target of Rs 435, implying a potential upside of 15 percent from the last regular trade.
• Copra price correction to help margins by the fourth quarter.
• Company is taking efforts to improve copra crop in the long term.
• Confident on VAHO and Parachute but WIP for Saffola.

Who’s Meeting Whom

• TVS Motor Company to meet HDFC Life Insurance, IIFL AMC and other investors on Aug. 28.
• Eicher Motors to meet TVS Capital Fund on Aug. 28.
• Supreme Industries to meet JP Morgan Asset Management and other investors on Aug. 28.
• Allcargo Logistics to meet Premji Investments and other investors on Aug. 28.
• Future Consumer to meet UTI MF, Sundaram Asset Management Co. and other investors on Aug. 28.

Insider Trades

• JSW Steel promoter group acquired 5 lakh shares on Aug. 23.
• Liberty Shoes promoter sold 84,000 shares from Aug. 23-24.
• Mangalore Chemicals & Fertilizers promoter sold 3.75 lakh shares on Aug. 24.
• Wonderla Holidays promoter acquired 20,000 shares from Aug. 23-24.

• Nifty August futures ended at 11,705.3, with a premium of 13.4 points versus 14 points.
• Nifty September futures ended at 11,741.9, with a premium of 50 points.
• Rollover: Nifty 23 percent; Bank Nifty 19 percent.
• Across series: Nifty open interest up 2.2 percent and Bank Nifty open interest down 3.6 percent.
• India VIX ended at 12.2, down 1.3 percent.
• Max open interest for August series call at 11,700 strike price call option (open interest at 28 lakh shares, down 2 percent).
• Max open interest for August series put at 11,000 strike price put option (open interest at 40.7 lakh shares, down 2 percent).

Welspun Enterprises

• Promoter Welspun Group Master Trust acquired 11.5 lakh shares, or 0.78 percent equity at Rs 165.77 each.

Orient Refractories

• Promoter Dutch US Holding BV sold 37.6 lakh shares, or 3.13 percent equity at Rs 224.01 each.
• HDFC Small Cap Fund acquired 13.4 lakh shares, or 1.12 percent equity at Rs 224 each.
• L&T Mutual Fund acquired 23.3 lakh shares, or 1.93 percent equity at Rs 224 each.

Phoenix Mills

• Nordea India Fund sold 8.3 lakh shares, or 0.54 percent equity at Rs 600.04 each.
• Reliance Mutual Fund acquired 8.3 lakh shares, or 0.54 percent equity at Rs 600 each.

• Jet Airways indicated that they are considering strategies for a turnaround. The board also considered various cost cutting measures, debt reduction and funding options, including infusion of capital, monetisation of assets including the company’s stake in its loyalty programme.
• Adani Power will take over about Rs 3,800 crore of loans out of total Rs 5,800 crore that its unit GMR Chhattisgarh Energy owes, said people requesting anonymity. The company will also assume non-funded liabilities of about Rs 1,400 crore of its energy arm. A deal is likely to be announced in the next few weeks after lenders give a formal approval, Bloomberg reported.
• JBF Industries’ board approved debt restructuring plan for its subsidiary JBF Petrochemicals. KKR Jupiter Advisors has agreed to buy out 100 percent stake in the petrochemicals arm. The total debt of $464 million in JBF Petrochemicals Ltd. will now no longer be consolidated in the accounts of JBF Industries Ltd.
• Lanco Infratech got liquidation order from NCLT Hyderabad. The tribunal rejected Thriveni Earthmovers plea to consider its bid. The resolution professional has filed a plea for liquidation. The total outstanding debt stands at Rs 45,000 crore. ICICI Bank, IDBI, PNB are the major lenders to this company, Bloomberg reported.
• SAIL is considering locations in three states of Gujarat, Andhra Pradesh and Maharashtra to set up Rs 5,000-crore auto grade steel plant in joint venture with ArcelorMittal, Steel Minister Chaudhary Birender Singh said today. The auto-grade steel plant project with a capacity of 1.5 million tonne per annum will be scaled to 2.5 MTPA, he added. According to official sources, negotiations were still underway with regard to detailed technical agreements of the joint venture, PTI reported.
• C&C Constructions’ joint venture has been awarded construction project by BSCPL Infrastructure Ltd. under the Bagmati flood management scheme in Bihar for Rs 266.22 crore.
• Oriental Bank of Commerce is mulling to raise Rs 1,000 crore via qualified institutional placement on Aug. 30.
• Colgate Palmolive (India) board has appointed Mukul Deoras as the chairman of the company, with effect from Sept. 1. He will also serve as the President, Asia Pacific Division of Colgate Palmolive.
• Debt-ridden power companies suffered a setback. Lenders will be allowed to initiate insolvency proceedings against power producers, which didn’t get an interim relief from the Allahabad High Court against the Reserve Bank of India’s stricter debt resolution framework.

• Will government invoke a rare provision to sidestep RBI’s circular?
• Free up NCLTs for serious cases, panel recommends
• SBI says RBI’s new framework won’t cause a spurt in accounts referred to NCLT
• Toyota invests $500 million in Uber for self-driving tech
• Warren Buffett agrees to back Paytm
• India to soon announce bio jet fuel policy, says Nitin Gadkari
• India’s growth indicators show animal spirits very much alive
• Trump says he will ditch ‘Nafta’ name, announces new deal with Mexico
• Facebook and Google chase a new $1 trillion payments market
• Stuck housing projects of $66 billion weighing down India realty
• Criminal enterprise to blame, says ecologist who foresaw Kerala floods
• Games Indian banks play in injury time

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.2 percent to 11,748 as of 7:03 a.m.

Asian stocks extended Monday’s advance after U.S. equities climbed to fresh all-time highs, as the Trump administration sealed a bilateral trade deal with Mexico. The dollar steadied after a decline and Treasuries were little changed.

Stocks in Japan, South Korea and Australia all followed their U.S. counterparts higher after President Donald Trump unveiled details of the agreement that he says will replace Nafta. The yen slipped and U.S. futures edged higher.

Currencies

• The Japanese yen fell 0.1 percent to 111.15 per dollar.
• The offshore yuan rose less than 0.05 percent to 6.7925 per dollar.
• The euro rose 0.1 percent to $1.1689.
• The Bloomberg Dollar Spot Index fell less than 0.05 percent to 1,176.20.

Commodities

• West Texas Intermediate crude rose 0.4 percent to $69.12 a barrel.
• Gold rose 0.1 percent to $1,212.49 an ounce.
• LME copper rose less than 0.05 percent to $6,107.50 per metric ton.

Here are some key events coming up this week:

• Earnings are due from companies including Canada’s largest banks and China Construction Bank Corp., ICBC, Pernod Ricard and Dollar General.
• China’s official factory PMI are due Friday.
• The U.S. economy probably grew in the second quarter at a slightly slower pace, economists predict ahead of Wednesday’s report.
• The Bank of Korea sets policy on Friday. Weak jobs growth has cooled speculation of an interest-rate increase.