Sensex, Nifty End At Over One-Month Low

Indian equity benchmarks closed lower for the second day, ending at over one-month low.

The S&P BSE Sensex Index closed 0.78 percent lower at 37,290.67 and the NSE Nifty 50 Index closed at 11,278.90.

The market breadth was tilted in favour of sellers. Ten out of eleven sectoral gauges compiled by NSE fell, led by NSE Nifty PSU Bank Index's 5.4 percent decline. On the flipside, NSE Nifty FMCG Index was the top sectoral gainer, up 1.1 percent.

Uniphos Enterprises

• Stock rose as much as 19.9 percent to Rs 120.75.
• Trading volume was 21.3 times its 20-day average.

Bajaj Hindusthan Sugar

• Stock rose as much as 9.8 percent to Rs 11.20.
• Trading volume was 26.1 times its 20-day average.

Investment Trust of India

• Stock rose as much as 13 percent to Rs 285.
• Trading volumne was 5.1 times its 20-day average.

Balrampur Chini Mills

• Stock fell as much as 14.5 percent to Rs 81.85.
• Trading volume was 4.6 times its 20-day average.

Praj Industries

• Stock fell as much as 11.1 percent to Rs 102.75.
• Trading volume was 2.3 times its 20-day average.

Shares of the shrimp exporter was locked in upper circuit for the second day. The stock has returned 28.5 percent over the past 12 months compared to a 17 percent advance in the Sensex.

Shares of the construction giant fluctuated between gains and losses to trade at Rs 1,344.05 as of 12:42 p.m.

The engineering major bagged order worth Rs 2,048 crore, according to its stock exchange filing.

The stock traded at 20.3 times estimated forward earnings per share compared to 22.5 times for the two-year historical average, Bloomberg data showed.

Shares of the chlor-alkalies manufacturer rose as much as 6 percent, the most since Aug. 06, to trade at over a three month high at Rs 615.

The company commissioned 14,000 MTPA Hydrogen Peroxide plant at Dahej, according to its stock exchange notification.

With this, the company’s total capacity of the Hydrogen Peroxide plants will be 54,400 tonnes per annum, the statement added.

Shares of the beverage maker fell 0.7 percent to Rs 157.70 as of 11:10 a.m.

The company plans to dispose its Assam’s Bargang tea estate to Amgoorie India for Rs 59.65 crore, according to its stock exchange notification. It also plans to sell Harchurah estate to Goodricke group for Rs 31.64 crore.

The stock declined 23.3 percent so far this year compared to a 17.1 percent advance in the Sensex.

• Indian equity benchmarks maintained losses after fluctuating in the early trade.
• The S&P BSE Sensex Index traded 0.12 percent lower at 37,538.56 as of 10:55 a.m. and the NSE Nifty 50 Index traded at 11,353.95, down 0.21 percent.
• About 964 stocks declined and 665 shares advanced on National Stock Exchange.

Shares of the drug regulator fluctuated between gains and losses to trade 0.3 percent higher at Rs 792.15 apiece as of 10:37 a.m.

The pharmaceutical company received a green signal from the South African regulator for a fixed-dose HIV drug, according to its stock exchange notification.

The Relative Strength Index was 71, indicating that the stock may be overbought, Bloomberg data showed. The stock traded at 16.9 times estimated forward earnings per share compared to 14.4 times for the two-year historical average.

Shares of Gujarat Gas rose as much as 3.7 percent to Rs 745.

The company received authorisation for local natural gas distribution for the Narmada district in Gujarat from PNGRB, according to its stock exchange notification. The gas distributor has been granted infrastructure exclusivity till 2043 and marketing exclusivity till 2026.

The proposed gas distribution network will cover a geographical area of 2,817 square kilometres, the statement added.

Gujarat Gas traded at 33.9 times trailing 12-months earnings per share and 20 times its estimates for the coming year, according to Bloomberg data.

Shares of the Anil Ambani-led companies gained as the annual general meeting begins.

Catch all the live AGM updates here

Shares of the Jaguar Land Rover owner fell as much as 1.5 percent to Rs 256.30.

The Jaguar Land Rover, on Monday, confirmed a cut in its production schedule at the Castle Bromwich plant in the West Midlands region of England due to “continuing headwinds” impacting the British automobile industry, according to a PTI report.

The stock fell 36.2 percent so far this year, compared to a 17.4 percent advance in the Sensex.

Indian equity benchmarks fluctuated between gains and losses during the opening trade. The S&P BSE Sensex Index traded 0.23 percent higher at 37,667.86 and the NSE nifty 50 Index traded at 11,3967.55, up 0.19 percent.

The market breadth was tilted in favour of buyers. Nine out of 11 sectoral gauges compiled by NSE advanced, led by NSE Nifty FMCG Index's 0.6 percent gain. On the flipside, the NSE Nifty PSU Bank Index was the top sectoral loser, down 0.8 percent.

The consolidation of the three state-run PSU banks will improve the credit growth, Vijaya Bank's Managing Director and Chief Executive Officer told BloombergQuint in an interaction.

Key highlights from the conversation:

• The merger will aid deposits and credits for the combined entity.
• The consolidation process may take about four to six months.

The merger of the state-run PSU banks will create synergy benefits for all the three lenders, Dena Bank's Executive Director Ramesh Singh told BloombergQuint in an interaction.

Key highlights from the conversation:

• The merger is not a bailout package for Dena Bank.
• Dena Bank is strong in Gujarat, Maharashtra and Chhatisgarh.
• The government will decide merger ratio in due course of time.

The Indian rupee opened weaker against the U.S. dollar. The home currency started trading at 72.59 a dollar.

Rupee weakened against dollar as govt measures disappoint. The home unit snaps two-day winning streak; ends 0.9 percent lower at 72.51 against the U.S. dollar.

The rupee will remain in focus as traders concluded the government's measures to support the currency weren't enough. They now await further steps from the finance ministry, including details on its move to curb non-essential imports.

ET Now reported the government is working on steps to impose import duty on items such as steel, furniture, electronics and food items like almonds. However, prices of crude oil, which is one of India's major import expense, has risen to about $78 a barrel. That's adding to the currency's woes.

DBS expects government measures to trigger only a modest improvement in the current-account gap, and rising oil-import bill will likely throw a spanner in the works.

The focus now shifts to the next RBI meeting as markets frontload rate hike risk. The benchmark government bonds are likely to take cues from the rupee.

F&O Cues

• Nifty September futures closed trading at 11,408, premium of 30 points.
• Nifty September open interest down 0.9 percent; Nifty Bank September open interest up 4.5 percent.
• Max open interest for September series at 11,800 Call (open interest at 41 lakh shares).
• Max open interest for September series at 11,400 Put (open interest at 36.8 lakh shares).

F&O Ban

• In ban: Adani Enterprise
• Out of ban: Balrampur Chini

Put-Call Ratio

• Nifty PCR at 1.28 versus 1.38
• Nifty Bank PCR 0.84 versus 1.02

Kotak on Bajaj Auto

• Maintained ‘Sell’; raised price target to Rs 2,700 from Rs 2,500, implying a potential downside of 5.5 percent from the last regular trade.
• Rupee depreciation to aid margins but medium-term concerns stay.
• Rupee depreciation to improve operating margin as well as competitiveness in export markets.
• Retain ‘Sell’ due to deterioration in profitability and absence of scooters in portfolio.

HSBC on Titan

• Maintained ‘Buy’; cut price target to Rs 1,050 from Rs 1,100, implying a potential upside of 27 percent from the last regular trade.
• Correction due to wavering revenue growth guidance and fear of regulations amid growing CAD.
• Positives: good studded jewellery promotion, low base in the third quarter and own scheme to spur growth.
• Valuation remains compelling post current sell-off.

PhillipCapital on Jubilant Foodworks

• Maintained ‘Buy’ with a price target of Rs 1780, implying a potential upside of 31.5 percent from the last regular trade.
• Believe Jubilant is poised to deliver strong second quarter.
• Channel checks suggest more than 18 percent SSSG in July-August 2018.
• Expect 44 percent and 59 percent in operating income and net profit respectively in the second quarter.

UBS on Indian Pharma

• Pharma stock valuations towards the high end of 10-year average.
• Rupee weakening likely to translate to earnings upgrades.
• Emerging Market exposure is a negative.
• Cipla remains top pick; Also like Sun Pharma.

Macquarie on Yes Bank

• Maintained ‘Outperform’ with a price target of Rs 425, implying a potential upside of 33 percent from the last regular trade.
• Management expects divergence to be benign.
• Not alarmed about pace of growth; Lending done to quality customers.
• The growth of 25 percent is sustainable without equity capital raising.

Brokerages On Hindustan Unilever

CLSA

• Maintained ‘Outperform’ with a price target of Rs 1,950, implying a potential upside of 22 percent from the last regular trade.
• Management commentary pre-quarter close remains positive.
• Increase in crude and rupee depreciation to be offset by lower palm oil prices and price hikes.
• Outlook for demand remains fairly positive; May get further fillip from pre-election spending.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 1,870, implying a potential upside of 17 percent from the last regular trade.
• Price increases to offset margin pressure due to rupee depreciation.
• No incremental competitive intensity in Laundry care.
• GST-related rationalization and cost savings continue to boost margin.

BofAML

• Maintained ‘Buy’ with a price target of Rs 1,900, implying a potential upside of 18.5 percent from the last regular trade.
• Healthy volumes and better profitability to mark stable second quarter.
• Steady compounder with strong execution capability.
• Expect healthy earnings per share with a compounded annual growth rate of 18 percent to back premium valuations.
• Recent correction offers attractive buying opportunity.

Brokerages On PSU Banks Merger

IDFC Securities on Bank of Baroda

• Downgraded to ‘Neutral’ from ‘Outperform’; cut price target to Rs 130 from Rs 180, implying a potential downside of 4 percent from the last regular trade.
• Believe BoB is in for a de-rating with merger announcement.
• Integration issues and higher NPLs post-merger are key concerns.
• Proforma numbers of merged entity indicate no material change in financial parameters.
• Based on current market price, post-merger shares will be 19 percent higher than BoB’s current shares.

JPMorgan

• Merger of Bank of Baroda, Dena and Vijaya Bank an incremental positive for the sector.
• Immediate share price action should be negative for BoB, given further integration risks.
• Additional provisioning requirements is likely negative for BoB’s incremental earnings outlook.

CLSA

• Bank of Baroda to acquire to smaller PSUs; Not a material dilution of the franchise.
• Deal valuation may be at a tad discount to BoB.
• Risk from clean-up post-merger announcement; Synergy could take 1-2 years.
• PSU consolidation is a long-term positive but a near-term overhang.

UBS

• Big overhang is behind; See no major impact over medium term.
• Believe this merger would be different from a SBI merger.
• Tier-1 of merged entity similar to BOB, while Provision Coverage Ratio bit lower.
• Believe merger would offer operating cost and cross sell synergies over medium term.

Citi

• Merger neutral for Bank of Baroda.
• Strong financials of Vijaya Bank could offset weak financials of Dena.
• Cultural issues significant, technology not as much.

• Promoter Sapna Pennam sold 2.56 lakh shares or 0.93 percent equity at Rs 390.01 each.
• Infina Finance Private Limited acquired 2.55 lakh shares or 0.93 percent equity at Rs 390 each.

• Tata Motors-owned Jaguar Land Rover confirmed a cut in its production schedule at the Castle Bromwich plant in the West Midlands region of England due to “continuing headwinds” impacting the British automobile industry.
• Government announced the merger of Bank of Baroda, Dena Bank and Vijaya Bank. The proposal will now need to be passed by the boards of the individual banks. The combined bank will be the third largest in India.
• Gujarat Gas received authorisation for local natural gas distribution for the Narmada district in Gujarat from PNGRB. The company has been granted infrastructure exclusivity till 2043 and marketing exclusivity till 2026. The proposed gas distribution network will cover a geographical area of 2,817 square kilometers.
• Bank of Maharashtra request, to set-off accumulated losses worth Rs 2,543.7 crore from its share premium account, gets rejected by RBI.
• Mcleod Russel to dispose its Assam’s Bargang tea estate to Amgoorie India for Rs 59.65 crore and Harchurah estate to Goodricke group for Rs 31.64 crore.
• Aurionpro Solutions to provide its cash management platform to Sudan based Bank of Khartoum’s UAE and Bahrain’s branches.

• South Korean President Moon Jae-in visits Pyongyang for a summit with Kim Jong Un Tuesday.
• Japanese trade-flow numbers are due on Wednesday.
• The Bank of Japan holds its policy meeting on Wednesday.
• Britain releases inflation data on Wednesday
• European PMIs are due on Thursday
• The Organization of Petroleum Exporting Countries and its allies meet in Algiers this weekend.

• West Texas Intermediate crude fell 0.5 percent to $68.56 a barrel.
• Brent crude traded 0.4 percent lower at $77.77 a barrel.
• Gold fell 0.2 percent to $1,199.10 an ounce.

Shanghai Exchange

• Steel traded higher for third day; up 0.8 percent.
• Aluminium traded lower for second day; down 0.4 percent.
• Zinc traded higher; up 0.2 percent.
• Copper traded higher; up 0.7 percent.
• Rubber traded lower for third session; down 1 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.2 percent lower at 11,366.50 as of 8:20 a.m.

Asian stocks were mixed, while U.S. stock futures declined after the Trump administration’s latest barrage of tariffs against China.

Equity benchmarks in Japan advanced, while Chinese stocks consolidated around four-year lows and Hong Kong shares dropped for a second day.

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