Sensex, Nifty Post Worst Day In Nearly Six Months On Rupee Woes

Indian equity benchmarks posted their worst day in nearly six months as rupee depreciated to record low amid President Donald Trump’s threat to escalate the trade war with China.

The S&P BSE Sensex fell 1.2 percent or 468 points to 37,922 and the NSE Nifty 50 index tumbled 1.3 percent or 151 points to 11,438.

On Friday, U.S. President Donald Trump doubled down on his threats to impose higher tariffs on China’s goods, saying he’s ready to tax all imports "at short notice."

Multiple factors like rupee weakness and threat of trade war escalation between U.S. and China led to a selloff in the markets amid expensive valuations, AK Prabhakar, head of research at IDBI Capital Market told BloombergQuint over phone.

Eighteen of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Auto index’s 1.75 percent drop. On the flipside, S&P BSE IT index was the lone gainer.

The government has asked the central bank to bolster efforts to support the rupee, Asia’s worst-performing currency of the past month, people familiar with the matter said.

Government officials communicated last week with the Reserve Bank of India on the need to intervene more aggressively in the market to support the rupee, the people said, asking not to be identified as the information is not public. They also discussed the need for other measures including deposit schemes for non-resident Indians, the people said.

Source: Bloomberg

Shares of the Delhi-based automation equipment maker were suspended from trading.

The company informed exchanges that it is currently under Corporate Insolvency Resolution Process (CIRP) as per Insolvency and Bankruptcy Code.

Keeping in view the same, Ricoh India Limited is not in a position to honour its obligation to pay 7 percent half yearly interest on Rs 200 Crores Non-Convertible Debentures issued by the company to Ricoh Asia Pacific Pte Limited, the company added in the exchange notification.

• Edelweiss has 23.5 lakh shares change hands in a block. Stock down 1.7 percent at Rs 257.60.

Buyers and sellers were not immediately known

Source: Bloomberg

Rupee came off intraday low levels after it hit record low of 72.6738 per dollar.

The domestic unit came off intraday low levels and was down 0.7 percent at 72.23 per dollar.

• Syngene International: The Bengaluru-based healthcare services company rose as much as 2.88 percent to Rs 634. Trading volume was 20 times its 20-day average.
• eClerx Services: The Mumbai-based data analytics company rose as much as 6.3 percent, the most in over nine months, to Rs 1,120.60. Trading volume was 24.4 times its 20-day average.
• ICICI Lombard: The Mumbai-based general insurer rose as much as 3.91 percent to Rs 909. Trading volume was 8.4 times its 20-day average.
• AIA Engineering: The Gujarat-based specialty chemicals company rose as much as 1.95 percent to Rs 1,765. Trading volume was 4.7 times its 20-day average.

The Rupee is the worst performing EM currency today, weakening over a percent against the dollar and printing a session low of 72.50, Abhishek Goenka of India Forex Advisor told BloombergQuint.

• U.S. President Trump's threat on Friday of imposing tariffs on all of imports from China on short notice has hurt risk assets.
• Sell off in domestic equities and bonds is weighing on the rupee.
• Central bank activity has surprisingly been limited considering that rupee has depreciated more compared to its peers.

Indian equity benchmarks extended losses led by decline in banks after the rupee fell to a record low of 72.66 per dollar.

The S&P BSE Sensex fell 1.09 percent or 420 points to 37,970 and the NSE Nifty 50 index slumped 1.2 percent or 135 points to 11,454.

All sector gauges barring the Nifty IT index were trading lower led by the Nifty PSU Bank index's 1.9 percent drop.

The overall market breadth was negative as 1,529 shares were declining while 968 were advancing on the BSE.

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• India needs forex reserves of $436 billion, $36 billion more than what it has now, as a buffer against rising volatility in imports and narrowing interest-rate differential with the U.S.
• This is forcing the RBI to do less active forex interventions and is building up the case for higher rates.
• Maintains 10-year yield fair value forecast at 8.4 percent

Source: Bloomberg

Indian rupee extended decline against the U.S. dollar.

The local unit fell as much as 78 paise or 1.08 percent, the most in a month, to 72.5163 per dollar. In the futures market, rupee fell past 72.70 per dollar mark.

Do Not Think Pain For Rupee Is Necessarily Over, Says Edelweiss

Despite rupee's near 10 percent depreciation since the beginning of FY19, we do not think that the pain is necessarily over, says Edelweiss.

• Sharp swing in balance of payments dynamics will act as a natural pressure point.
• Global forex volatility & increasing domestic vulnerabilities and possibly limited policy support will continue to weigh.
• USD/INR range revised to 69-74/$ from 68-72/$ earlier for remainder of FY19.

Government official says power PSUs and banks will hold stake in asset reconstruction company under Pariwartan scheme.

• Asset Reconstruction Company to keep stressed power assets for 4-5 years.
• Process of registering ARCs has begun.
• Power PSUs, bankers to be part of ARCs.
• Pariwartan is for power projects without PPAs.
• Pariwartan is meant to keep commissioned projects operational.

Source: Government Official

Nifty Bank's 27,500 call option was among the most active option contracts on the National Stock Exchange.

Premium on the contract fell 69 percent to Rs 51.10. Over 6.86 lakh shares were added to the open interest which stood at over 13.06 lakh shares.

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Shares of the Gurugram-based auto parts maker rose as much as 5 percent, the most in over a month, to Rs 117.60 after its board approved proposal for establishing a new manufacturing unit in Uttar Pradesh for manufacturing products and equipment supplied to railways.

Shares of the Mumbai-based diagnostic lab operator rose as much as 6.7 percent, the most in over a month, to Rs 684 after its board approved share buyback proposal.

The board approved buyback of 8.63 lakh shares at Rs 730 per share aggregating to Rs 66 crore. The buyback size is 14.97 percent of the aggregate paid-up share capital and free reserves.

Shares of the Delhi-based life insurer rose as much as 9.7 percent, the most in over four months, to Rs 519.35.

Axis Bank has been a channel partner of Max Financial Services’ insurance products and brokerages pointed that with Amitabh Chaudhary at helm of Axis Bank, could strengthen Max’s relationship with Axis Bank.

How the partnership of Axis Bank evolves with Max Life will be interesting to watch in the wake of Amitabh Chaudhary becoming MD and CEO of Axis Bank, Edelweiss wrote in a report.

HDFC Life had earlier evaluated merger with Max Life and Chaudhry will be best positioned to evaluate strategic benefit of the tie-up, the report added.

Shares of the Gurugram-based engineering services company rose as much as 5.4 percent, the most in nearly a month, to Rs 275 after it received an order worth Rs 294.67 crore from railways for doubling Dharmavaram Penukunda rail lines for South Western Railways.

• Adani Ports has 23 lakh shares change hands in a single block. Stock down 0.12 percent at Rs 377.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based private lender rose as much as 4.7 percent, the most in over a month, to Rs 675.70, also its record high.

The Reserve Bank of India approved the appointment of Amitabh Chaudhry as the managing director and chief executive officer at Axis Bank.

Chaudhry will be succeeding Shikha Sharma for a period of three years, effective Jan. 1, the bank informed the bourses on Saturday.

Indian equity benchmarks edged lower dragged by weakness in banking stocks.

The S&P BSE Sensex fell 0.2 percent or 72 points to 38,320 and the NSE Nifty 50 index declined 0.16 percent or 20 points to 11,568.

Eight of 11 sector gauges compiled by the National Stock Exchange were trading lower led by the Nifty PSU Bank index's 0.5 percent drop. On the flipside, the Nifty IT index was top gainer, up 0.5 percent.

Indian rupee fell to record low of 72.18 per dollar after emerging market peers came under pressure as the trade war showed no sign of abating after U.S. President Trump threatened to impose even more tariffs on Chinese goods.

Data late on Friday which showed India’s current-account deficit widened in the April-June quarter from a year ago due to a larger trade gap is unlikely to offer the battered rupee much comfort.

India’s rupee is set to come under pressure with the rest of its emerging market peers as the trade war shows no sign of abating after U.S. President Trump threatened to impose even more tariffs on Chinese goods.

Data late on Friday which showed India’s current-account deficit widened in the April-June quarter from a year ago due to a larger trade gap is unlikely to offer the battered rupee much comfort.

A Bloomberg survey had forecast a gap of $17.3 billion while the CAD widened to $15.8 billion. The implied opening from forward suggests the spot rupee may start trading at 72.17 per dollar, having ended at 71.7375 on Friday.

Meanwhile, the dour sentiment towards the currency was weighing on bonds. Yields on the 10-year bonds rose 8 basis points last week, although it did fall 3 basis points on Friday. Traders will eye the inflation report later this week and which is expected to show a drop in the headline number to below 4 percent.

Macquarie on Minda Industries

• Initiated ‘Outperform’ with a price target of Rs 550, implying a potential upside of 36 percent from the last regular trade.
• Dominant market share and technology leadership in core products.
• Future ready products to gain from impending shift in Indian autos.
• Well aligned to the growth drivers of Indian automotive industry.
• Expect revenue, operating income and net profit to grow at a compounded annual growth rate of 24 percent, 28 percent and 34 percent over FY18-21.

Elara Capital on Cholamandalam Investment

• Initiated ‘Buy’ with a price target of Rs 1,816, implying a potential upside og 26 percent from the last regular trade.
• Solid core: Continues to shine on diversification, market share.
• Expect broad-based AUM growth; expect 20 percent CAGR over FY18-21.
• GNPA stable over FY18-21, with credit cost likely to sustain at 1 percent.

Elara Capital on Magma Fincorp

• Initiated ‘Buy’ with a price target of Rs 190, implying a potential upside of 34 percent from the last regular trade.
• Visible transformation: ongoing restructuring paying dividends.
• Improving trajectory: AUM CAGR of 17 percent over FY18-21.
• Expect credit cost fall to 2.1 percent in the financia year ending March 2021., thereby improving ROA.

Elara Capital on M&M Financial

• Initiate Accumulate with a price target of Rs 501, implying a potential upside 9 percent from the last regular trade.
• Play on rural revival: AUM CAGR of 18 percent over FY18-21.
• Growth Drivers: ability to sustain NIM, revamped vertical structure and stable AUM growth.
• Expect earnings CAGR of 30 percent over FY18-21 aided by AUM growth and reduction in credit cost.

Elara Capital on Shriram Transport Finance

• Initiated ‘Accumulate’ with a price target of Rs 1,324, implying a potential upside of 9 percent from the last regular trade.
• Concentrated play: The current financial performance holds key.
• Concentration a dampener: AUM CAGR of 17 percent over FY18-21.
• Waiting game: asset quality slow to show signs of sustainability.
• Expect reversal in credit cost from the peaks of 4.4 percent in the previous financial year to 2.8 percent in the financial year ending March 2021.

Morgan Stanley on Havells India

• Downgraded to ‘Equalweight’ from ‘Overweight’; hiked price target to Rs 712 from Rs 642, implying a potential upside of 6 percent from the last regular trade.
• Remains in a structural sweet spot.
• Lloyd is a potential growth boost in the medium term.
• Downgrade on recent stock performance; See modest upside from current levels.

Citi on GAIL (India)

• Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 420 from Rs 408, implying a potential upside of 11 percent from the last regular trade.
• Increasingly become a play on rising oil prices.
• Positives: Rise in LPG prices, widening spread in gas trading and petchem stabilization.
• Stock’s year-to-date underperformance offers an attractive entry point.

Citi on Wipro

• Maintained ‘Sell’ with a price target of Rs 280, implying a potential downside of 14 percent from the last regular trade.
• Management continues to be upbeat on demand environment.
• Investments to be focused on digital, cloud and cybersecurity.
• Growth catch versus peers remains key to any valuation rerating.

Goldman Sachs on Bajaj Auto

• Maintained ‘Neutral’; raised price target to Rs 2,908 from Rs 2,685, implying a potential downside of 0.5 percent from the last regular trade.
• Expect higher volumes across domestic and exports segments.
• Expect higher average selling price on back of rupee weakness and recent price hike.
• Full benefit of rupee weakness will get reflected in the next financial year.

Goldman Sachs on Two-wheelers

• Price competition concerns ease as Bajaj raises price of CT100/Pulsar.
• Within six months of dropping prices Bajaj has raised prices in the range of 1-4 percent.
• Maintain Buy on TVS Motor and Neutral on Bajaj Auto and Hero MotoCorp.

Nomura on India Industrials

• PSU share buyback news is a positive.
• Cash distribution through any form is a welcome change.
• Expect RoE boost in near-term and makes a case for a structural re-rating.
• Buyback is a longer-term positive for PSUs in general.

Brokerages On Axis Bank

Edelweiss

• Maintained ‘Hold’; hiked price target to Rs 647 from Rs 543, implying a potential upside of 0.3 percent from the last regular trade.
• Appointment of Amitabh Chaudhry is a positive development because of a proven track record.
• News already been doing the rounds and stock has outperformed recently.
• Further structural re-rating will be driven by asset quality performance, visibility on execution and strategic changes.

Motilal Oswal

• Maintained ‘Buy’; raised price target to Rs 750 from Rs 670, implying a potential upside of 16 percent from the last regular trade.
• RBI’s approval removes a big overhang.
• Building blocks falling in place to further strengthen recovery.
• Expect earnings to start normalizing the second half of the current financial year onwards.

• Nifty September Futures ended at 11,632.9, with a premium of 43.8 points versus 30 points.
• September series: Nifty open interest up 2 percent and Bank Nifty open interest unchanged.
• India VIX ended at 13.8, up 1.2 percent.
• Max open interest for September series call at 11,800 strike price call option, (open interest at 40 lakh, open interest down 4 percent).
• Max open interest for September series put at 11,500 strike price put option (open interest at 47.6 lakh, open interest up 14 percent).

Insider Trades

• Apollo Tyres promoter Classic Auto Tubes acquired 1.5 lakh shares on Sept. 5.
• UPL promoter acquired 1 lakh shares on Sept. 5.
• Apar Industries promoter acquired 11,000 shares on Sept. 5-6.
• AU Small Finance Bank promoter group sold 21,000 shares July 27-Aug. 10.

(As reported on Sept. 7)

Trading Tweaks

• Texmo Pipes & Products placed under ASM framework.
• GlaxoSmithKline Pharmaceuticals last trading day before ex date for 1:1 bonus.

• Asian Paints to meet Government of Singapore Investment Corporation and AXA Investment Managers U.K. on Sept. 11.
• Mahanagar Gas to meet SBICAP Securities and Ocean Dial Asset Management on Sept. 11.
• Mannapuram Finance to meet Quantum Securities on Sept. 12.

• Amitabh Chaudhry has received the Reserve Bank of India’s approval to be appointed as the managing director and chief executive officer at Axis Bank. Chaudhry, who will be succeeding Shikha Sharma, will be appointed for a period of three years, effective Jan. 1.
• Tata Motors’ Jaguar Land Rover’s total retail sales for August fell 4.9 percent to 36,629 units on a year on year basis. Jaguar retail sales were 11,802 units, up 7.7 percent, driven by the introduction of the E-PACE and I-PACE, as well as XE long wheelbase sales in China. Land Rover retailed 24,827 vehicles, down 9.9 percent as increased sales of the Velar and the refreshed Range Rover were offset by the impact of the lower sales in China on Range Rover Evoque and Discovery Sport in particular.
• Coal India received a notice from Orissa State Pollution Control Board for non-compliance of environmental norms. The notices issued in July and August to two mines, alleged that sludge treatment plant in one of the mines was found to be defunct and water sprinkling systems keep inadequate dust under control. The pollution board also said that a coal fire was observed in one of the mines and the firefighting measures were inadequate. The company said that the issues are being rectified or are in the process of rectification. (Bloomberg News)
• Thyrocare Technologies approved buyback of 8.63 lakh shares at Rs 730 per share aggregating to Rs 66 crores. The buyback size is 14.97 percent of the aggregate paid-up share capital and free reserves.
• Omax Autos’ board approved proposal for establishing a new manufacturing unit in Uttar Pradesh, for manufacturing products and equipment supplied to railways. The investment required will be between Rs 100 crore-120 crore.
• RITES received a turnkey railway contract of Rs 294.67 crore from ministry of railways for doubling of rail lines for South Western Railways.
• Union Bank of India, Bank of India and Bank of Maharashtra received a penalty order of Rs 1 crore each from Reserve Bank of India. The Penalty is levied on delay on the part of the banks to detect and report fraud in an account.
• JK Lakshmi Cement to issue securities up to Rs 500 crore.
• Indian Overseas Bank raised its MCLR by five basis points across various tenors.
• State Bank of India spokesperson said that the bank withdrew itself from the process of sale of debt of Essar Steel India Ltd. and will proceed as per the order of NCLAT.
• HDIL sought shareholders’ approval to raise $200 million. The annual general meeting will be held on Sept. 29.
• Reliance Capital received certificate of registration from RBI as a core investment company- non-deposit taking systemically important institution.
• Linde India got approval from Competition Commission of India for its combination with Praxair, subject to compliance of certain modifications. (Bloomberg News)
• Tata Power Solar introduced residential rooftop solution. (Bloomberg News).

• Soril Infra Resources plans to raise Rs 550 crore for diversification/expansion of the existing and future businesses. Promoters to infuse Rs 440 crore, while non-promoters to infuse Rs 110 crore. The company to issue 1 crore convertible warrants at Rs 550 each (28 percent discount).
• Reliance Industries’ subsidiary Reliance Retail Ventures acquired additional 16.31 percent equity holding in Genesis Colors Ltd. for Rs 34.8 crore. Post the acquisition Reliance Retail Ventures along with its subsidiaries owns 65.77 percent in Genesis Colors.
• HEG and Graphite in focus as Supreme Court allowed import of needle pet coke.

Earnings To Watch

• Reliance Home Finance

• The rupee is falling and India should let it
• ‘Ajay Bharat, Atal BJP’: Modi’s slogan for 2019 polls
• China’s trade outlook darkens as Trump raises stakes on tariffs
• SEBI may summon Kochhars soon
• TRAI slaps fine on Jio, Airtel, others for not meeting service quality norms
• Once-in-a-lifetime dealmaking spree underway in India
• Alibaba’s Jack Ma to hand chairman’s role to CEO Zhang next year
• Crypto wipeout deepens to $640 billion
• Inflation dip may be mirage for embattled bond traders
• Essar Steel’s insolvency: Is Numetal one up on ArcelorMittal?
• RBI initiates special audit of IL&FS: BQ Exclusive

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.4 percent to 11,586 as of 7:16 a.m.

Asian stocks were off to a muted start Monday as investors digested President Donald Trump’s threat to escalate the trade war with China. The dollar held gains and Treasuries ticked lower as a rise in U.S. wages bolstered the prospects for further interest-rate hikes.

Benchmarks were little changed in Japan, Australia and South Korea while futures indicated losses for equities in China and Hong Kong.

Currencies

• The yen was at 110.97 per dollar.
• The offshore yuan held at 6.8654 per dollar.
• The euro bought $1.1559, up less than 0.1 percent.
• The Bloomberg Dollar Spot Index ticked lower.

Commodities

• West Texas Intermediate crude rose 0.5 percent to $68.10.
• Gold fell 0.1 percent to $1,195.28 an ounce.

Here are some key events coming up this week:

• Policy decisions from the Bank of England and the European Central Bank.
• Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe will meet.
• Apple unveils its latest iPhones.