Sensex, Nifty Post Worst Three-Day Decline In Six Months

Indian equity benchmarks posted their worst three-day decline in six months dragged by HDFC twins, Indusind Bank, Maruti Suzuki and ITC.

In last three sessions, the S&P BSE Sensex and NSE Nifty 50 Index slumped over 2.5 percent to lowest levels in nearly two months. Investors’ wealth of over Rs 2 lakh crore has been wiped out by fall in the Nifty, data compiled by Bloomberg showed.

In today’s trade, Sensex fell 0.45 percent or 169 points to 37,121 and Nifty declined 0.39 percent or 45 points to 11,234.

Thirteen of 19 sector gauges compiled by BSE ended lower dragged by S&P BSE FMCG Index’s 1.1 percent drop. On the flipside, the S&P BSE Metal Index was top gainer, up 1.25 percent.

The mid- and small-cap shares underperformed their larger peers as the S&P BSE MidCap Index fell 0.7 percent and the S&P BSE SmallCap Index tumbled 1 percent.

Shares of the country's largest private sector lender and the country's largest mortgage lender fell as much as 1.64 percent and 1.58 percent respectively.

With today’s decline both HDFC Bank and HDFC fell below their 200-day moving average.

Shares of the Mumbai-based private sector lender fell as much as 3.4 percent, the most since February, to Rs 1,799.25 on heavy volumes. Trading volume was 1.2 times its 20-day average.

Large cap stocks are likely to perform better in near future, Ravi Shankar, MD - investment banking, JPMorgan India told BloombergQuint on the sidelines of JPMorgan India Investor Summit.

Key highlights of conversation:

• Expect large caps to perform better in near future
• Currently Indian telecom market is turning into duopoly
• Mid cap IT players will benefit from niche approach unlike large-cap companies

Indian equity benchmarks extended decline weighed down by weakness in Reliance Industries, HDFC twins and ITC.

The Sensex fell 0.36 percent or 131 points to 37,157 and the NSE Nifty 50 Index declined 0.41 percent or 44 points to 11,233.

Shares of the Delhi-based auto parts maker fell for eleventh day in a row and was on track to post longest stretch of slump since August 2004, when it started trading on stock exchanges.

In intraday deals, the stock fell as much as 4.7 percent to Rs 366.85. And in the last 11 sessions it has slumped as much as 15 percent.

Shares of the Mumbai-based power producer fell as much as 8.46 percent, the most since February, to Rs 391.65 on heavy volumes.

Trading volume was 1.4 times its 20-day average.

Small-cap shares were underperforming their larger peers as the S&P BSE SmallCap Index fell 0.77 percent compared with S&P BSE Sensex advancing 0.08 percent.

Losses in small cap space were paced by Rolta India, Aptech Kesar Terminals and Take Solutions.

• Indian equity benchmarks erased gains as financials and FMCG shares came under selling pressure.
• The S&P BSE Sensex fell 0.07 percent or 25 points to 37,266 and the NSE Nifty 50 Index declined 0.07 percent or 8 points to 11,269.
• Eight of 11 sector gauges compiled by National Stock Exchange were trading lower led by the Nifty FMCG Index's 0.66 percent drop. On the flipside, Nifty Metal Index was top gainer, up 1.3 percent, after a report suggested that government may raise import duty on some steel products.
• The overall breadth was negative as 1,462 shares were declining while 992 were advancing on the BSE.

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Stocks advanced globally, with European shares taking their cue from a rally in Asia as investors wagered the world’s two-biggest economies have time to iron out trade differences in the wake of the latest tariff salvos. The dollar slipped and yuan advanced as China said it won’t devalue its currency.

Law Minister Ravi Shankar Prasad briefed media persons in New Delhi on the decisions taken by the Cabinet Committee on Economic Affairs (CCEA).

• Cabinet approved an ordinance on Triple Talaq
• Cabinet approved equity investment of over Rs 1,033.54 crore for setting up coal gasification based fertilizer project in Talcher Fertilizer by Rashtriya Chemicals & Fertilizers.
• Cabinet gave ex-post facto approval to ASHA Benefit Package with effect from October, 2018 (to be paid in November, 2018) with two components.

Shares of the Ghaziabad-based mattress maker rose as much as 5.4 percent to Rs 1,750 after Axis Securities initiated 'buy' call on the stock for target price of Rs 2,039.

Axis Securities in a note said:

• Strong brand awareness among consumers to give competitive edge over peers.
• Positives: product expansion, introduction of low price products and high margin products.
• New plant setup and investment in existing plants to be supported by strong cash flow position.
• Expected fall in price of major raw material TDI to further increase margin.

Shares of sugar makers rallied as much as 8.19 percent after an official told reporters in Delhi that the government may consider sugar export proposal next week, Bloomberg reported.

• Dena Bank: The Mumbai-based public sector lender fell as much as 10 percent to Rs 17.15. Trading volume was 39 times its 20-day average.
• Shriram City Union Finance: The Chennai-based consumer loan provider rose as much as 2.33 percent to Rs 1,920. Trading volume was 15.9 times its 20-day average.
• Bharat Dynamics: The Hyderabad-based defence equipment maker fell as much as 1.48 percent to Rs 339. Trading volume was 13.6 times its 20-day average.
• Oracle Financial Services Software: The Mumbai-based software developer rose as much as 2.9 percent to Rs 4,385. Trading volume was 24 times its 20-day average.

Gauge of metal shares on the National Stock Exchange extended gains and rose as much as 1.93 percent after Reuters reported that government may raise import duty on some steel products to 15 percent.

Rally was led by steel makers such as JSE Steel, SAIL, Jindal Steel and Tata Steel.

• Indian rupee extended gains and rose as much as 0.59 percent or 43 paise to 72.54 per dollar.

• NHPC has 50 lakh shares change hands in two blocks on BSE. Stock down 0.8 percent at Rs 24.10.
• Bharat Electronics has 12 lakh shares change hands in a block on BSE. Stock up 0.1 percent at Rs 84.15.
• ICICI Bank has 10 lakh shares change hands in a block on BSE. Stock up 0.6 percent at Rs 320.85.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Bengaluru-based pig iron products maker fell as much as 20 percent to Rs 183.20 after its board approved buyback of 1.26 crore shares (1.98 percent equity) at Rs 170 apiece, which was 26 percent lower than yesterday's closing price of Rs 229.

Shares of the Bengaluru-based drugmaker fell as much as 3.55 percent to Rs 480.50.

Strides Pharma's formulations facility in Bengaluru underwent pre- approval product inspection by the U.S. FDA for which it was issued Form 483 with three observations, the company said in an exchange filing.

Strides added that the observations are not material in nature and they have already responded to the U.S. FDA.

Shares of the Gurugram-based engineering services provider rose as much as 5.75 percent to Rs 261.90 after it won an additional turnkey contract worth Rs 436 crore from the Indian Railways.

RITES had been executing a project of Indian Railways for setting up of wagon workshop at Dalmianagar for which the initial contract cost was Rs 89 crore. The enhanced scope and revision in estimates has resulted in additional contract value of Rs. 436 crore, the company said in an exchange notification.

Shares of the Mumbai-based commodities exchange operator rose as much as 4 percent to Rs 814.90 after SEBI said it has taken steps to open commodities derivative market for foreign investors.

Shares of the country's largest pharmaceutical company rose as much as 1.9 percent to Rs 654.65.

The drugmaker announced that it has received the European Commission’s approval for anti-body Ilumetri by Almirall. The rollout of this product will start in Europe in the next few weeks and will be used to treat moderate-severe chronic plaque Psoriasis.

The stock was the best performer on Sensex and Nifty. The scrip traded at 31 times estimated forward earnings per share, compared to 24.6 times for the two-year historical average, Bloomberg data showed.

Indian equity benchmarks opened higher after a two-day blip, following its Asian peers.

The S&P BSE Sensex Index rose as much as 0.64 percent to 37,530.63 and the NSE Nifty 50 Index rose as much as 0.45 percent to 11,329.45.

The market breadth was tilted in favour of buyers. Nine out of 11 sectoral gauges compiled by NSE advanced, led by NSE Nifty Metal Index's 1.2 percent gain. On the flipside, NSE Nifty Media Index was the top sectoral loser, down 0.1 percent.

The Indian rupee strengthened against the U.S. dollar in the open. The home currency began trading at 72.69 against the U.S. dollar after appreciating 0.37 percent.

The local currency may head toward an unprecedented 73 to a dollar after a record low close yesterday amid the ongoing U.S.-China trade war and rising crude oil prices.

The sovereign bond gained as yield on 10-year benchmark security drops two basis points to 8.12 percent.

The currency and bond markets would be watching for two things today —The outcome of the RBI's purchase of Rs 10,000 crore of bonds via open-market operations and further government measures to support the currency.

Bond issuance to overseas Indians is a preferable policy options to aid the rupee, compared to other measures, according to Bank of America Merrill Lynch.

State Bank of India and Nomura think the central bank has enough reserves to defend the currency. The Indian lender said the RBI can sell at least an additional $25 billion in the forex market.

F&O Cues

• Nifty September futures closed trading at 11,310, premium of 32 points.
• Nifty September open interest down 0.5 percent ; Nifty Bank September open interest up 25 percent.
• Max open interest for September series at 11,500 Call, (open interest at 42.9 lakh shares).
• Max open interest for September series at 11,200 Put, (open interest at 37.2 lakh shares).

F&O Ban

• In ban: Adani Enterprises, Balrampur Chini
• New in ban: Balrampur Chini

Put-Call Ratio

• Nifty 1.20 versus 1.28
• Nifty Bank 0.58 versus 0.84

Motilal Oswal on MCX

• Maintained ‘Buy’ with a price target of Rs 1,000, implying a potential upside of 28 percent from the last regular trade.
• SEBI allow foreign entities to participate in commodity derivatives.
• Move to increase liquidity and depth in far-month contracts.
• Move to encourage domestic firms to trade on Indian exchanges instead of overseas hedging.
• Will wait and watch for any contribution from this new segment.

Nomura on JSW Steel

• Initiated ‘Buy’ with a price target of Rs 484, implying a potential upside of 19 percent from the last regular trade.
• Leading play on Indian steel revival.
• Expect Indian steel demand to grow at 5-7 percent over the next decade.
• Combination of cost efficiency and timely capacity expansion to drive profitability growth.
• Balance sheet to remain strong despite capex-intense phase.

IDFC Securities on Dr Lal PathLabs

• Initiated ‘Outperform’ with a price target of Rs 1,184, implying a potential upside of 23 percent from the last regular trade.
• Company is one of the winners, given its proven execution capabilities and profitable business model.
• Positives: focus on volume growth, competitive pricing and steady network expansion.
• Expect a compounded annual growth rate of 16 percent in revenue and steady 26 percent margin over FY18-21.
• Expect economic gains to increase for large players and create multi-year growth stories.

Axis Securities on Sheela Foam

• Initiated ‘Buy’ with a price target of Rs 2,039, implying a potential upside of 22 percent from the last regular trade.
• Strong brand awareness among consumers to give competitive edge over peers.
• Positives: product expansion, introduction of low price products and high margin products.
• New plant setup and investment in existing plants to be supported by strong cash flow position.
• Expected fall in price of major raw material TDI to further increase margin.

Goldman Sachs on Shriram Transport

• Upgraded to ‘Buy’ from ‘Neutral’; cut price target to Rs 1,491 from Rs 1,530, implying a potential upside of 26 percent from the last regular trade.
• Volume growth to sustain momentum
• Asset quality stabilising while loan loss reserve moderating.
• Improving RoA and earnings trajectory not fairly priced.
• Cut FY19-FY21 EPS estimates by 1-3 percent to factor in higher cost of funds.

HSBC on M&M Financials

• Maintained ‘Buy’; cut price target to Rs 569 from Rs 578, implying a potential upside of 28 percent from the last regular trade.
• Tracks well on growth and asset quality led by strong rural demand.
• Rising interest rates could weigh on net interest margins.
• See enough levers in P&L to sustain RoE improvement.

Citi on India Property

• Some signs of a rebound, but still a long way to go.
• Residential new launches appear to be bottoming.
• Survey indicate residential prices have inched up.
• Commercial new launches appear to be increasing from a low base.
• Weak demand conditions and tightening interest-rate to further toll on the sector.

Credit Suisse on India Telecom

• Strong subscriber addition aided by renewed push for JioPhone.
• Incremental market share gains for Jio at expense of incumbent operators.
• All operators other than Jio witnessed decline in active subscriber base.
• Expect ARPU and Ebitda pressures to continue for incumbent operators.

Brokerages On Asset Management Companies

Morgan Stanley on HDFC AMC

• Maintained ‘Overweight’; cut price target to Rs 1,765 from Rs 2,050, implying a potential upside of 15 percent form the last regular trade.
• SEBI has cut TER quite sharply resulting into EPS estimates cut of 13-14 percent.
• Stock has been weak in anticipation of adverse regulation.
• Expect some further near-term weakness; Overhang should subside post this cut.

Nomura on Reliance Nippon

• Downgraded to ‘Neutral’ from ‘Buy’; cut price target to Rs 210 from Rs 315, implying a potential downside of 2 percent from the last regular trade.
• AMCs will also have to absorb some part of lower TER.
• Operating leverage taken away to large extent.
• Ability to absorb such large TER cuts is limited for Reliance Nippon.
• A 35 percent absorption of lower TER would mean 10-15 percent cumulative reduction in profits for Reliance Nippon.

CLSA on AMCs

• Lowering of TER could lead to 15-25 basis point reduction in equity fees.
• Equity AUMs form 40 percent of total funds and could lead to 25 percent earnings impact on sector.
• Companies to pass on majority of this to distributors.
• Banning of upfront commission to reduce investor churn and improve working capital cycle.

Citi on AMCs

• MFs could cushion lower TER impact by passing it to distributors and by lower promotional expenses.
• Banning upfront commissions to improve quality of flows.
• Lower charges to make mutual funds more attractive for investors and aid penetration.

• Ircon IPO subscribed 1.02 times on second day. Offer closes today.

• AMC companies are in focus as SEBI changed total expense ratio for mutual funds.
• MCX in focus SEBI said that they have taken the first step to open commodities derivatives market to foreign investors
• Sun Pharma announced that it has received the European Commission’s approval for anti-body Ilumetri by Almirall. The roll out of this product will start in Europe in next few weeks and will be used to treat moderate-severe chronic plaque Psoriasis.
• ICICI Prudential Life Insurance signed bancassurance partnership with Saraswat Co-operative Bank. Through this partnership, over 280 branches of the Saraswat Bank in Maharashtra, Goa, Gujarat, Delhi, Madhya Pradesh and Karnataka will offer customer-centric life insurance products of ICICI Prudential Life.
• ICICI Bank clarified that they have not filed any application for settlement but only a response to the show-cause notice has been submitted to SEBI. This clarification came after the SEBI chairman Ajay Tyagi stated that ICICI Bank had filed consent petition with SEBI regarding the Videocon group dealings.
• RITES received additional turnkey contract work worth Rs 436 crore from the Indian Railways. This contract is in addition to existing project for setting up of a wagon workshop at Dalmianagar for which the initial contract cost was worth Rs 89 crore.
• KIOCL board approved buyback of 1.26 crore shares (1.98 percent of paid up capital) at Rs 170 apiece for an aggregate consideration of Rs 214 crore. The record date for the buyback is Oct. 1.
• Som Distilleries & Breweries arm launched lager beer ‘Blackfort’ to tap the mild beer segment in Karnataka.
• NIIT Technologies launched blockchain-based solution ‘Chainm’ for Airlines and its partners. This will help airlines and its partners in the backend process of
• settlements.
• IL&FS Transportation Networks arm Moradabad Bareilly Expressway Ltd. to receive a claim compensation of Rs 425 crore from NHAI for losses suffered on account of cost overruns for the development of the project.

• The Bank of Thailand decides on policy 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 slid 0.2 percent to $69.72 a barrel.
• LME copper gained 0.4 percent to $6,109.50 a metric ton.
• Gold was little changed at $1,198.46 an ounce.

Shanghai Exchange

• Steel traded higher for the fourth day; up 1.33 percent.
• Aluminium traded lower for the third day; down 0.07 percent.
• Zinc traded 1.83 pecent higher.
• Copper traded 2.5 percent higher.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, parred losses and traded 0.2 percent higher at 11,340.50 as of 8:20 a.m.

Asian stocks extended a rally as investors wagered the world’s two-biggest economies have time to iron out trade differences in the wake of the latest salvos on tariffs. Equities in Japan led the charge, with the Topix index touching a three-month high. Shares in Hong Kong and Australia also climbed, though a rally in mainland Chinese shares petered out.

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