Sensex, Nifty Rebound After Government Plans Steps To Curb Rupee Fall

Indian equity benchmarks rebounded from one-month lows after an official said the government may announce measures to support the currency after a planned review of the economy by Prime Minister Narendra Modi this weekend.

The Sensex rose 0.81 percent or 305 points to 37,718 and Nifty 50 Index climbed 0.73 percent or 82 points to 11,370.

Sixteen of 19 sector gauges compiled by BSE ended higher led by the S&P BSE FMCG Index's 2.4 percent gain. On the flipside, S&P BSE Telecom Index was top loser, down 0.8 percent.

The mid- and small-cap shares were mixed in trade as the S&P BSE MidCap Index rose 0.5 percent while the S&P BSE SmallCap Index fell 0.27 percent.

• Shree Renuka Sugars: The Mumbai-based sugar maker rose as much as 15.65 percent, the most in nearly two months, to Rs 13.30 on reports that the government has approved hiking ethanol price by up to 25 percent.
• Godrej Consumer Products: The Mumbai-based FMCG company rose as much as 4.66 percent to Rs 870.95 after it turned ex-bonus in ration of 1:2.
• A2Z Infra: Shares of the Gurugram-based engineering company rose as much as 8.2 percent, the most in over a month, to Rs 20.50 after it won a contract from Nepal Electricity Authority.
• ITC: The Kolkata-based cigarette maker snapped its three-day losing streak and rose as much as 3.77 percent to Rs 308.40. Trading volume was 1.7 times its 20-day average.

Shares of the Gurugram-based engineering company rose as much as 8.2 percent, the most in over a month, to Rs 20.50 after it won a contract from Nepal Electricity Authority.

The company has won an order for installation and commissioning of 11/0.4 kV distribution system, A2Z Infra Engineering said in an exchange filing.

Indian equity benchmarks edged lower weighed down by banking, telecom and auto stocks.

The S&P BSE Sensex fell 0.14 percent or 54 points to 37,356 and the NSE Nifty 50 index declined 0.26 percent or 30 points to 11,256.

Fifteen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Telecom Index's 2 percent drop. On the flipside, the S&P BSE FMCG Index was top gainer, up 1.65 percent.

The mid- and small-cap shares were underperforming their larger peers as the S&P BSE MidCap Index tumbled 0.7 percent and the S&P BSE SmallCap Index slumped 1.25 percent.

• RattanIndia Power: The Delhi-based power generation company fell as much as 7.6 percent to 4.25. Trading volume was 19 times its 20-day average.
• Carborundum Universal: The Chennai-based non-wood building materials company rose as much as 2.34 percent to Rs 394. Trading volume was 8.5 times its 20-day average.
• Alembic Pharma: The Vadodara-based specialty pharma company rose as much as 7.8 percent to Rs 657.90. Trading volume was 3.5 times its 20-day average.
• Bliss GVS Pharma: The Mumbai-based drugmaker rose as much as 11.93 percent, the most in over a month, to Rs 198.85. Trading volume was 6 times its 20-day average.

AirAsia Group Bhd. and InterGlobe Aviation Ltd. led declines among Asian budget carriers on concern that their costs would rise as oil prices climb near $80 a barrel, said Mohshin Aziz, an aviation analyst at Maybank Investment Bank Bhd.

• AirAsia Group fell as much as 6.2 percent, the biggest intraday decline since June, in Kuala Lumpur.
• InterGlobe, operator of IndiGo, India’s largest airline, fell as much as 3 percent in Mumbai.

Source: Bloomberg

Nifty Bank index fell for a third day in a row, down 0.45 percent at 26,686.95, dragged by weakness in Bank of Baroda, Axis Bank and Punjab National Bank.

In the last three trading sessions the index has fallen 2.89 percent to fall below its 100-day moving average.

Nifty Bank's 27,000 strike price call option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract fell 86 percent to Rs 5.55. Over 18.89 lakh shares were added to the open interest which stood at 27.94 lakh shares.

The NSE Nifty FMCG Index halted a two-day blip, led by the gains in Dabur India Ltd. Godrej Consumer Products Ltd. and Marico Ltd.

Shares of oil marketing companies traded at their lowest levels since 2016.

Shares of the integrated pharmaceutical company fluctuated between gains and losses to trade at Rs 53.75 apiece.

The company's board has approved demerging Identified Real Estate Undertaking of the Company into Shreno Limited. The demerger would consist of a premium residential real estate project of Alembic Ltd., interest in real estate business held through investment in Shreno Ltd. and project management consultancy business, services of which are provided by the company to Shreno Ltd.

• Indian equity benchmarks fluctuated between gains and losses.
• The S&P BSE Sensex Index traded at 37,413.13 as of 10:35 a.m. and the NSE Nifty 50 Index traded at 11,287.50.
• About 1,121 stocks advanced and 521 shares declined on the NSE.

Bharat Petroleum Corporation Ltd. plans to invest Rs 1 lakh crore in upgrading its refinery, its Chairman and Managing Director D Rajkumar told BloombergQuint in an interaction.

Key highlights from the conversation:

• Plan Rs 7,400 crore capex for the current financial year for Kochi and Mumbai Refineries.
• Plan to invest Rs 1 lakh crore for refinery upgradation.
• Plan to provide PNG and CNG connections. Aim to invest Rs 4,500 crore for the same.
• To expand capacity to 14 million metric tonnes in Mumbai refinery.
• To Invest Rs 4,500 to invest 5 MMPTA capacity in four years.
• Looking for potential investors for Bina Refinery.
• No plans to sell the stake in Bina Refinery. Oman Oil may undergo divestment.
• Kuwait Petroleum can be a potential partner for Bina Refinery.

GNA Axles Ltd. expects about 35 percent overall growth in the current financial year, its Wholetime Director Kulwin Seehra told BloombergQuint in an interaction.

Key highlights from the conversation:

• June quarter clocked strong sales.
• Volatility in rupee will not impact the company's margins.
• We have been passing higher steel prices to customers.
• Monthly order book stands at Rs 80-85 crore.
• Plan to invest Rs 80 crore for higher capacity.
• Target to invest Rs 150 crore in Capex next year.

The money market volatility is a key challenge for earnings growth, Kotak AMC's Chairman Nilesh Shah told BloombergQuint in an interaction.

Key highlights from the conversation:

• Near-term view on the market clearly on the negative side.
• Would evaluate investments based on the fair value of stocks.
• Have seen 50 percent slowdown in domestic flows.
• Swap curve suggests 2 - 3 rate hikes by RBI.
• Would suggest STP route in an "underweight equity" case.
• Money market volatility, a key challenge for earnings growth.

Shares of the agribusiness company rose as much as 2.9 percent to Rs 594.35.

The company mulls to merge its subsidiary Astec LifeSciences with self on Sept. 14. The company holds a 57.4 percent stake in Astec Lifesciences, as reported to the exchanges.

Trading volume was 6.7 times its 30-day average, according to Bloomberg data. The stock has returned 1.8 percent so far this year, compared to a 11.2 percent advance in the Sensex.

Shares of the drugmaker fluctuated between gains and losses to trade at Rs 652.

The pharmaceutical company received approval for its HIV treatment combination medicine ‘TLD’ from the South African Health Products Regulatory Authority. This drug will be manufactured at the companies’ Durban and Uganda plants.

The stock traded at 25.6 times estimated forward earnings per share compared to 24 times for two-year historical average, according to Bloomberg data.

Shares of the pharmaceutical company declined for the fourth day and is poised for its longest losing streak in over four months. The stock fell as much as Rs 620.

The drugmaker clarified that it’s Mohali facility is undergoing inspection by U.S. FDA. The inspection had started on Sept. 10.

The stock traded at 30.4 times estimated forward earnings per share compared with 24.5 times for a two-year historical average, Bloomberg data showed.

• ITC: About 10 lakh shares changed hands in a block deal.
• NTPC: About 10 lakh shares changed hands in a single block.

Buyers and sellers were not known immediately.

Source: Bloomberg

Shares of the supply chain solution fluctuated between gains and losses to trade at Rs 110.55 as of 9:30 a.m.

The company plans to consider share buyback on Sept. 17, according to its stock exchange notification.

Trading volume was 18.1 times its 20-day average, according to Bloomberg data. Redington India trades at 31.6 times trailing 12-month earnings per share and 9.2 times its estimates for the coming year.

Indian equity benchmarks opened higher after a two-day blip. The S&P BSE Sensex index rose as much as 0.6 percent to 37,638 and the NSE Nifty 50 Index rose as much as 0.5 percent to 11,340.10.

The market breadth was tilted in favour of buyers. Seven out of 11 sectoral gauges compiled by NSE advanced, led by NSE Nifty Media Index's 0.6 percent gain. On the flipside, NSE nifty Realty Index was the top sectoral loser, down 0.3 percent.

The Indian rupee opened at a fresh record low of 72.75 against the U.S. dollar. It further slumped to 72.86 a dollar.

The sovereign bond extend losses for third day as yields climb to its highest level since November 2014

India releases August consumer price inflation report at 5:30 this evening and which is expected to show price pressures easing. August CPI is estimated at 3.78 percent from a year ago, down from 4.17 percent in July and below the RBI's medium-term target of 4 percent.

That is mostly due to subdued food prices, but traders are most likely to see through this report as a weaker rupee and a high oil prices sour the outlook.

Indeed, traders are increasingly worried that high oil prices and a weakening rupee would force the central bank to raise rates sooner rather than later. The yield on the 10-year bond rose two basis points to 8.18 percent on Tuesday.

On the rupee front, there is little respite seen for the currency. The rupee weakened to close at 72.6950 on Tuesday, having hit a record low of 72.7375.

The implied opening from forwards suggests spot may start trading around 72.63 per dollar, although with oil prices rising due to Hurricane Florence, it may come under pressure in later trading.

• Nifty September futures closed trading at 11,336 premium of 49 points versus 53 points.
• September series: Nifty open interest down 1.6 percent; Bank Nifty open interest up 9 percent.
• India VIX ended at 15.3, up 0.8 percent.
• Max open interest for September series at 11,800 at strike price call option (open interest at 45.5 lakh, open interest up 0.5 percent).
• Max open interest for September series at 11,400 at strike price put option (open interest at 41.6 lakh, open interest down 6 percent).

Put Call Ratio

• Nifty PCR at 1.25 versus 1.33.
• Nifty Bank PCR at 0.58 versus 0.84.

Citi on HDFC AMC

• Initiated ‘Neutral’ with a price target of Rs 1,850, implying a potential upside of 14 percent from the last regular trade.
• Strong brand and franchise, fairly valued.
• Higher equity AUM drives profitability; SIPs add stability.
• Expect AUM, Equity AUM and net profit to grow at a compounded annual growth rate of 21 percent, 30 percent and 17 percent respectively over FY18-21.

HSBC on Oil & Gas

• Oil India: Maintained ‘Buy’; raised price target to Rs 270 from Rs 253, implying a potential upside of 33 percent from the last regular trade.
• ONGC: Maintained ‘Buy’ with a price target of Rs 240, implying a potential upside of 43 percent from the last regular trade.
• Upside from higher oil to be offset by risks of higher costs and subsidy burden.
• Yet earnings should grow, driven by higher volumes and increasing gas.
• Trough valuations and attractive dividend yield still make risk-reward look.

UBS on Steel

• Tata Steel: Maintained ‘Buy’; raised price target to Rs 750 from Rs 710, implying a potential upside of 27 percent from the last regular trade.
• JSW Steel: Maintained ‘Neutral’; raised price target to Rs 425 from Rs 360, implying a potential upside of 8 percent from the last regular trade.
• India volume and price environment strong.
• External pressures look to be limited for now.
• Still see Tata Steel as attractively valued relative to peers.

Credit Suisse on Titan

• Maintained ‘Neutral’; cut price target to Rs 935 from Rs 950, implying a potential upside of 14 percent from the last regular trade.
• Absence of wedding dates to squeeze near-term demand.
• Growth guidance of 25 percent in jewellery for the current financial year is in serious risk.
• Potential regulatory action is an overhang if currency depreciates further.

Deutsche Bank on Vodafone Idea

• Maintained ‘Buy’ with a price target of Rs 100, implying a potential upside of 116.5 percent from the last regular trade.
• Key concern for the mergeco remains its leverage.
• Expect funding gap on a cashflow basis to be around Rs 7,100 crore.
• Funding gap to increase net debt by Rs 3,600 crore.

Deutsche Bank on Grasim

• Maintained ‘Buy’ with a price target of Rs 1,430, implying a potential upside of 43 percent from the last regular trade.
• Positive on growth outlook of standalone businesses.
• Expect robust 20 percent EPS CAGR in FY18-21 driven by strong margins and volumes.
• Share price fully discounts the risk of further equity infusion in Vodafone Idea.

Macquarie on Lupin

• Maintained ‘Underperform’ with a price target of Rs 788, implying a potential downside of 16 percent from the last regular trade.
• U.S.-based business continues to remain under the weather.
• Slower than expected ramp-up of key products could play spoilsport.
• Ex-currency, any meaningful topline and margin improvement will be protracted.

Credit Suisse on Sun Pharma

• Maintained ‘Outperform’ with a price target of Rs 705, implying a potential upside of 12 percent from the last regular trade.
• India margins (ex. Ranbaxy) scaled up to 50 percent now; Stub margins low on specialty loss and Halol.
• India business provides downside protection.
• Halol’s observations not very critical; Stay positive for new approvals.

Emkay on Apollo Tyres

• Maintained ‘Buy’; cut price target to Rs 295 from Rs 310, implying a potential upside of 28 percent from the last regular trade.
• Channel checks indicate that aftermarket demand remains robust.
• Price increases to pass on commodity inflation and adverse currency movements.
• Cut FY19/20 EPS estimates to factor in lower margins.

• Fedders Electric And Engineering removed from ASM framework.
• Godrej Consumer Products ex-date for 1:2 bonus. F&O lot size revised to 1,200

• Marshall Machines: Ashish Kacholia acquired 6.99 lakh shares at Rs 41.88 apiece. The SME is listed on NSE Emerge.

Earnings To Watch

• Tourism Finance Corp.

Earnings Reaction To Watch

Reliance Capital (Q1, YoY)

• Revenue up 4.5 percent at Rs 4,619 crore versus Rs 4,420 crore.
• Net profit at Rs 272 crore versus net loss at Rs 378 crore.

• Sun Pharma clarified that it’s Mohali facility is undergoing inspection by U.S. FDA. The inspection had started on Sept. 10.
• Cipla received approval for its HIV treatment combination medicine ‘TLD’ from the South African Health Products Regulatory Authority. This drug will be manufactured at the companies’ Durban and Uganda plants.
• InterGlobe Aviation’s IndiGo has grounded another Airbus A320 neo aircraft due to Pratt and Whitney engine problem. The aircraft was grounded on Monday afternoon after it operated from Nagpur to New Delhi. The sources said oil chips were detected in the engine, a problem responsible for grounding other IndiGo neo aircraft earlier as well, according to a PTI report.
• Godrej Agrovet mulls to merge its subsidiary Astec LifeSciences with self on Sept. 14. The company holds a 57.4 percent stake in Astec Lifesciences, as reported to the exchanges.
• Wipro appointed as a Europe-based delivery partner for Duck Creek Technologies’ insurance software products. The IT major will offer implementation services and related software and data solutions for the property and casualty insurance products of Duck Creek.
• NTPC clarified that it is considering an investment approval for Talcher plant expansion. Details from the meeting to be disclosed are under the stages of finalisation.
• Redington (India) to consider share buyback on Sept. 17.
• Alembic’s board has given approval for demerging Identified Real Estate Undertaking of the Company into Shreno Limited. The demerger would consist of a premium residential real estate project of Alembic Ltd., interest in real estate business held through investment in Shreno Ltd. and project management consultancy business, services of which are provided by the company to Shreno Ltd.
• Narayana Hrudayalaya’s Bangladesh step down subsidiary entered into an agreement with Imperial Hospital Ltd. to operate and manage the latter’s cardiac services department in Bangladesh.
• Ajanta Pharma received U.S. FDA nod for Fenofibrate oral capsule.
• Reliance Industries’ Reliance Jio and Bharti Airtel received demand notices towards penalties totalling to Rs 34 lakh and Rs 11 lakh respectively from the TRAI for not meeting certain call centre service parameters.
• CARE and ICRA downgraded IL&FS Transportation’s NCDs and bank loan facilities.

Media Reports

• Maruti wants to move factory out of Gurugram (Economic Times).
• Seven bidders in race for $2.3 billion PNB Housing Finance buyout; Godrej, Bandhan Bank, Dewan Housing among suitors (Times of India).
• U.S. to probe Mahindra & Mahindra over Fiat Chrysler Jeep complaint (Economic Times).

• West Texas Intermediate crude rose 0.8 percent to $69.79 a barrel.
• Gold was little changed at $1,197.81 an ounce.

Shanghai Exchange

• Steel traded lower for second day; down 3.6 percent.
• Aluminium snapped two-day winning streak; down 1 percent.
• Zinc traded lower for second day; down 1.2 percent.
• Copper traded marginally lower.
• Rubber traded higher; up 0.1 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fluctuated between gains and losses to trade at 11,331.50 as of 8:40 a.m.

Asian stocks fell as investors assessed the outlook for global growth with no end in sight for trade tensions.

Equity benchmarks declined from Japan to Australia, with Hong Kong shares sliding further into a bear market.

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