Sensex, Nifty Fall On Expiry Day As Private Banks Drag

Indian equity benchmarks fell for second straight day dragged by private sector lenders as derivative contracts for the month of August expired.

The S&P BSE Sensex fell 0.08 percent or 33 points to 38,690 and the NSE Nifty 50 index declined 0.13 percent or 15 points to 11,677.

Nine out of 19 sector gauges compiled by BSE declined, led by the S&P BSE Energy index's 1 percent drop. On the other hand, the S&P BSE Utilities index was the top gainer, up 1.4 percent.

Shares of the Gurugram-based budget carrier fell 3.6 percent to Rs 932.70.

Pratt & Whitney is investigating incidents of excessive vibration in its engines that power Airbus SE’s A320neo aircraft, the latest in a series of problems that have plagued the new turbine, Bloomberg reported citing people familiar with the matter.

• DLF has 1.62 crore shares change hands in two blocks. Stock up 2.3 percent at Rs 222.35.

Buyers and sellers were not immediately available

Source: Bloomberg

Indian equity benchmarks extended losses led by decline in Reliance Industries, Kotak Mahindra Bank and HDFC twins ahead of the monthly expiry of derivative contracts.

The S&P BSE Sensex fell 0.3 percent or 103 points to 38,620 and the NSE Nifty 50 index declined 0.3 percent or 33 points to 11,658.

Eight out of 11 sector gauges compiled by National Stock Exchange were trading lower led by the Nifty Private Bank index's 0.9 percent drop. On the flipside, the Nifty Metal index was top gainer, up 0.8 percent.

The overall breadth was marginally positive as 1,339 stocks were advancing while 1,161 were declining on the BSE.

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Shares of the Anil Ambani group companies rose for a second straight day after Reliance Infrastructure's board approved 100 percent sale of integrated Mumbai power business to Adani Transmission.

Mid- and small-cap shares were outperforming their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes rose 0.5 percent compared with S&P BSE Sensex which fell 0.1 percent.

• Nilkamal: The Mumbai-based plastic furniture maker rose as much as 9.4 percent, the most in over nine months, to Rs 2,134. Trading volume was 23 times its 20-day average.
• MTNL: The Delhi-based telecom company rose as much as 18 percent to Rs 17.60. Trading volume was 1.4 times its 20-day average.
• ITI: The Bengaluru-based communication equipment maker rose as much as 16.25 percent, the most in over a month, to Rs 108.40. Trading volume was 12 times its 20-day average.
• Bosch: The Bengaluru-based auto parts maker rose as much as 7.2 percent, the most in nine months, to Rs 21,525. Trading volume was 11 times its 20-day average.

Banking stocks declined for a second straight day ahead of the expiry of monthly derivative contracts.

The measure of banking stocks on NSE — Nifty Bank index was top sectoral loser, down 0.5 percent, dragged by weakness in RBL Bank, IndusInd Bank and Kotak Mahindra Bank.

Shares of the Jalgaon-based irrigation system maker rose as much as 4.2 percent to Rs 86.45 after it received Rs 127 crore export order from Rwandan government, Jain Irrigation said in an exchange filing.

Shares of the Mumbai-based auto parts maker rose as much as 12 percent, the most in nearly three years, to Rs 164.70 after its board approved acquisition of Ampere Vehicles.

Greaves Cotton board approved acquiring a 67 percent stake in Ampere Vehicles for Rs 77 crore, with an option of acquiring another 13 percent stake in the electric vehicle company for Rs 75.5 crore, Greaves Cotton in an exchange notification.

The main objective of this acquisition was to accelerate development of clean energy technology solutions and to address wider range of customer segments.

Nifty's 11,700 strike price call was among the most active option contracts on the National stock Exchange ahead of monthly derivative expiry.

Premium on the contract fell 78 percent to Rs 6.80. Over 17.65 lakh shares were added to the open interest which stood at over 40.86 lakh shares.

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Consumer companies cannot grow at 12 percent perpetually and SBICAP maintains bearish stance on them, Nirav Sheth, head of institutional equities at SBICAP Securities told BloombergQuint.

Key highlights of the conversation:

• Extremely bearish on consumer companies due to valuations.
• Consumer companies cannot grow at 12 percent perpetually.
• Would not take long term bets in the midcap IT space.
• Believe story is yet to begin for corporate facing banks.

Shares of the Hyderabad-based drugmaker rose as much as 6.6 percent, the most in over nine months, to Rs 468.95 after it received U.S. drug regulator's nod Metformin Hydrochloride Tablets, Laurus Labs said in an exchange notification.

Metformin Hydrochloride Tablets 500mg, 850mg, and 1000mg are therapeutically equivalent to Glucophage Tablets of Bristol-Myers Squibb Company and it will be commercialized from its Unit 2 located at APSEZ, Visakhapatnam in Andhra Pradesh, the notification added.

Shares of the Mumbai-based financial services company rose as much as 4.84 percent, the most in over a month, to Rs 143.95 after it entered into a joint venture with Varde Partners.

Aditya Birla Capital and Varde Partners created a joint venture to invest in stressed assets in India. Varde Partners will acquire 50 percent stake in Aditya Birla ARC for at least Rs 98 crore, Aditya Birla Capital said in an exchange notification.

Indian equity benchmarks swung between gains and losses ahead of August derivative expiry.

The S&P BSE Sensex was unchanged at 38,723 and the NSE Nifty 50 index fell 0.1 percent to 11,679.

Six out of 11 sector gauges compiled by National Stock Exchange were trading higher led by the Nifty Media index's 0.45 percent gain. On the other hand, the Nifty PSU Bank index was top loser, down 0.9 percent.

The mid- and small-cap shares were mixed as the Nifty Midcap 100 index was little changed while the Nifty Smallcap 100 index rose 0.4 percent.

Gold heads for fifth monthly drop, longest stretch of losses since 2013, as U.S. equities rise to another fresh record and Federal Reserve sticks to rate-rise game plan.

Bullion for immediate delivery declined 0.2 percent to $1,204.89/oz at 11:16am in Singapore, after rising 0.5 percent on Wednesday.

Source: Bloomberg

• Sovereign bond dropped for fourth day in a row, as yields spiked to 7.93 percent, its highest level since June 28.

Rupee opened depreciated to record low of 70.6850 per dollar against yesterday's close of 70.59.

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

Sameet Chavan, Angel Broking

• Buy Nifty with stop loss at 11,640 for target of 11,750.
• Buy Raymond with stop loss at Rs 794 for target price of Rs 895.
• Buy Century Text with stop loss at Rs 938 for target price of Rs 998.

Aditya Agarwal, Yes Securities

• Sell Nifty below 11,650 for target of 11,550 with stop loss at 11,700.
• Sell Nifty Bank below 28,150 for target of 28,000 with stop loss at 28,230.

Goldman Sachs on Vedanta

• Initiated ‘Buy’ with target price of Rs 280, indicating potential upside or 23 percent.
• Attractive commodity exposure to zinc and oil.
• Strong volume growth across businesses to drive earnings.
• Expect strong dividend yield of 5 percent despite growth capex.
• Zinc price recovery and volume growth to drive stock re-rating.

UBS on Axis Bank

• Maintained ‘Buy’; raised target price to Rs 765 from Rs 675; indicating potential upside 16.5 percent.
• Well placed to gain market share in deposits.
• Asset quality clean-up nearing the end.
• Expect re-rating as visibility on asset quality improves in second half and growth accelerates.

Nomura on Indian Autos

• Delayed festive season to impact growth.
• Expect MHCVs to report single-digit growth while PVs/two-wheeler growth to remain flat in August.
• Floods in Kerala could have an impact on sales.
• Maruti Suzuki and Eicher volumes could see worse than expected impact.

BofAML on ITC

• Maintained ‘Buy’ with target price of Rs 360; indicating potential upside of 15 percent.
• Early checks suggest 3-4 percent (YoY) volume growth likely in cigarettes in second quarter.
• Expect healthy show in FMCG despite rising competitive intensity.
• Valuations undemanding; structural benefits to drive long-term growth.

Citi on Petronet LNG

• Maintained ‘Buy’; raised target price to Rs 290 from Rs 285; indicating potential upside of 24 percent.
• Management assured minimal impact from upcoming terminals.
• Exploring investment opportunities in LNG terminals; open to higher dividend.
• Buy given potential upside to earnings and attractive valuations.

JPMorgan on PNB Housing Finance

• Maintained ‘Underweight’ with target price of Rs 1,050
• Book risks are contained, and they do need monitoring given the state of real estate market.
• Near-term catalysts remain on the announced stake sale.
• Transaction price will be key; expect stock volatility to be high.

Citi on Pidilite Industries

• Maintained ‘Neutral’ with target price of Rs 1,216
• Pidilite to prioritise growth over margins; expect margin in the 20-24 percent band.
• GST-related gains have been muted so far.
• Next six months will be crucial for gauging inherent demand.

Citi on India Financials

• NPA recoveries picked up; IND-AS mixed bag for NBFCs.
• Slippages down and recoveries up.
• NIMs see pressure; loan growth led by retail.
• Expect gradual recovery in asset quality for corporate banks.
• Private banks and NBFCs to continue to see loan growth as they take share from PSU banks.

• The Indian rupee fell 0.7 percent to close at an all-time low of 70.59 against the dollar yesterday.
• The home unit is poised for a seventh straight month of decline in August, its longest losing streak in nearly 18 years. It is down 9.5 percent year-to-date, making it the Asia's worst performing currency.
• Meanwhile, sovereign bonds extend losses after yield rises to 7.92 percent. It has risen 5 basis points so far this week.
• The dollar index trades lower for fifth consecutive session, above the 94.50-mark.

Who’s Meeting Whom

• Shemaroo Entertainment to meet Pabrai Investment Funds and Emkay Global Financial Services on Aug. 30.
• Magma Fincorp to meet Edelweiss Wealth, Vallum Capital and other investors from Aug. 30-31.
• Mahindra Lifespace Developers to meet Cardiff Asset Management on Aug. 30.
• Fine Organics to meet investors on Aug. 30.

Insider Trades

• Welspun Enterprises promoters acquired 25 lakh shares from Aug. 27-28.
• Meghmani Organics promoter acquired 43,300 shares on Aug. 27.
• Aegis Logistics promoter acquired 30,100 shares on Aug. 27.
• Nirlon promoter group sold 12,500 shares from Aug. 4-24.
• Srikahalashti Pipes promoter acquired 15,000 shares from Aug. 27-28.
• Trident promoter Trident Group acquired 18.5 lakh shares on Aug. 28.

(As reported on Aug. 29)

• Nifty August futures ended at 11,707, with a premium of 15 points versus 14 points.
• Nifty September futures ended at 11,749.8, with a premium of 58 points versus 50 points.
• Rollover: Nifty at 53 percent and Bank Nifty at 45 percent.
• Across series: Nifty open interest unchanged; Bank Nifty open interest up 9 percent.
• India VIX unchanged at 12.4.
• Max open interest for August series call at 11,800 strike price call option, (open interest at 31.8 lakh shares, up 20 percent)
• Max open interest for August series put at 11,000 strike price put option, (open interest at 35 lakh shares, down 9 percent)

Bulk Deals

• Camlin Fine Sciences: Morgan Stanley (France) S.A. sold 8 lakh shares, or 0.66 percent equity at Rs 62.69 each.

Trading Tweaks

• Bharat 22 Index futures and options to be introduced with effect from Sept. 3.
• Adani Transmission Ltd and Pfizer Ltd placed under ASM framework.
• HCL Technologies and Navneet Education ex-date to determine buyback eligbility.
• Aurionpro Solutions Ltd circuit filter revised to 20 percent.

• Reliance Infrastructure board approved 100 percent sale of integrated Mumbai power business to Adani Transmission.
• Aditya Birla Capital and Varde Partners create a joint venture to invest in stressed assets in India. Varde Partners will acquire 50 percent stake in Aditya Birla ARC for at least Rs 98 crore.
• Laurus Labs received the U.S. Food and Drug Administration’s approval for Metformin Hydrochloride tablets, which are used for treatment of diabetes. The product and the active pharmaceutical ingredient will be commercialised from the company’s unit two located in Visakhapatnam.
• Greaves Cotton board has approved acquiring 67 percent stake in Ampere Vehicles Pvt. for Rs 77 crore, with an option of acquiring another 13 percent stake in the electric vehicle company for Rs 75.5 crore. The main objective of this acquisition was to accelerate development of clean energy technology solutions and to address wider range of customer segments.
• ICICI Prudential Life Insurance reduced its stake in Tata Chemicals from 5.02 percent to 2.97 percent. The company offloaded 52.1 lakh shares of the chemical company for Rs 216 crore. The cost at which the shares were sold was at Rs 414.21 each.
• National Fertilizers signed memorandum of agreement with Ramagundam Fertilizers and Chemicals Limited to market the latter’s product including 12.71 LMT of urea under its brand ‘Kisan’.
• Jain Irrigation said that it has received a contract worth Rs 127 crore from the Rwandan government for developing irrigation and watershed facilities. This was an engineering, procurement and construction contract and the company said that it will complete the project on next 18 months, PTI reported.
• Jet Airways introduced 28 new flights in September to enhance domestic connectivity.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.26 percent to 11,735 as of 7:12 a.m.

Asian stocks posted modest gains, tracking a rise in U.S. equities after a better than expected reading on the U.S. economy and a rally in tech shares buoyed sentiment.

Equity indexes in Japan and Australia edged higher while the South Korean benchmark slipped. Futures pointed to gains in Hong Kong and China.

Currencies

• The yen was steady at 111.71 per dollar after slipping 0.4 percent.
• The offshore yuan was at 6.8202 per dollar.
• The Bloomberg Dollar Spot Index was flat.
• The euro bought $1.1709.
• The pound traded at $1.3035 after rising 1.2 percent.

Commodities

• West Texas Intermediate crude was little changed at $69.65 a barrel, the highest in seven weeks, after jumping 1.4 percent.
• Gold was steady at $1,206.31 an ounce.

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

• China’s official factory PMI are due Friday.
• The Bank of Korea sets policy on Friday. Weak jobs growth has cooled speculation of an interest-rate increase.