Sensex, Nifty Fall For Fourth Day As Financials Drag

Indian equity benchmarks fell for a fourth day in a row paced by losses in Yes Bank, Indiabulls Housing Finance and Bajaj Finance.

The S&P BSE Sensex fell 0.75 percent to 280 points and the NSE Nifty 50 Index dropped 0.8 percent or 91 points to 11,143.

For most part of the day, benchmarks traded firmly higher, but slumped sharply in afternoon trading as housing finance companies came under heavy selloff dampening the overall market sentiment. At day’s lowest level, the Sensex slumped over 1,100 points and Nifty fell below psychologicaly important level of 11,000.

All 11 sector gauges compiled by the National Stock Exchange fell dragged by the Nifty Realty Index’s 3.5 percent drop followed by Nifty Private Bank Index’s 3.45 percent decline.

Mid- and small-cap shares also saw a selloff as the Nifty Midcap 100 Index fell 2.5 percent and the Nifty Smallcap 100 Index plunged 3.7 percent.

Manav Chopra of Indiabulls Ventures discussed trading strategies after markets witnessed highly volatile session.

• Nifty has support at 11,000 and resistance at 11,350
• Nifty Bank has support at 25,700 and resistance at 26,500
• Sell Godrej Industries for target of Rs 520 with stop loss at Rs 570
• Buy Indian Oil for target of Rs 170 with stop loss at Rs 150.

Today’s sharp selloff in housing finance companies does not indicate that there is a systemic flaw for them, market expert and well known investor Madhu Kela told BloombergQuint.

Key earnings highlights:

• Very clear it does not looks like there is a systemic flaw in the system for housing finance companies (HFCs)
• This kind of vertical fall in HFCs comes because of lack of buyers and not because of crores of shares are up for sale.
• Post such correction stocks usually take time to consolidate
• This kindly of selling could be a final capitulation
• Need to be careful and invest from long term perspective and not for short term

Shares of the Mumbai-based parent of luxury car maker Jaguar Land Rover fell as much as 9.4 percent to Rs 229, also its lowest level in nearly six years.

Fitch revised outlook on Tata Motors to Negative; Affirms at 'BB+'. The revision of the outlook reflects Fitch's expectations of rising negative free cash flow (FCF) over the next two financial years.

Basant Maheshwari, veteran investor and partner at Basant Maheshwari Wealth Advisers told BloombergQuint that one NBFC in problem does not mean that the entire financial sector is in problem.

Key highlights of the conversation:

• Quality stocks have recovered smartly after the sudden fall
• Regulator and government getting too involved in how businesses are run
• Market discounting current government coming back with lower majority
• Recovery of Bank of Baroda has been pushed back by 2-3 years
• Biggest Fear in market is to how will investors position themselves
• Markets expects to put money in growth areas

• Indian equity benchmarks resumed decline after a brief recovery on the back of a broad-based selloff.
• The Sensex fell 1.2 percent or 455 points to 36,664 and the Nifty 50 index tumbled 1.3 percent or 146 points to 11,090.
• Selling pressure was broad-based as all 11 sector gauges compiled by the National Stock Exchange were trading lower led by the Nifty Realty Index's 4 percent drop.
• The mid- and small-cap stocks underperformed their larger peers as the Nifty Midcap 100 Index and Nifty Smallcap 100 Indexes plunged 3.1 percent and 3.8 percent each respectively.
• The overall market breadth was extremely bearish as over 1,500 shares were declining while a little over 200 shares were advancing on the NSE.

Shares of the Bengaluru-based alcohol beverage maker fell as much as 9.68 percent, the most in over a year, to Rs 506.65 after Delhi government's financial commissioner blacklisted United Spirits for allegedly using duplicate barcodes and banned it from selling Smirnoff Vodka and Vat 69 whisky in the national capital, The Hindustan Times reported.

After witnessing a sharp decline in the stock price Ashwini Kumar Hooda of Indiabulls Housing Finance told BloombergQuint that panic reaction in market is due to a large NBFC defaulting two weeks back.

Key highlights of the conversation:

• Panic reaction due to default by one of large NBFCs
• Short term borrowings at 7.7 percent, long term five year borrowing at 8.85 percent
• Fall in stock price due to fear in market
• Indiabulls has Rs 20,000 crore liquidity

The rumours are causing distress in the markets, Kapil Wadhawan, chairman and managing director at Dewan Housing Finance told BloombergQuint in an interaction.

Key highlights from the conversation:

• The company is sitting on a strong liquidity position,
• Short-term borrowing is very small and have spiked recently.

Indian equity benchmarks slumped on the back of a sudden sell-off across as the board.

The S&P BSE Sensex fell as much as 3 percent to 35,993.64 and the NSE Nifty 50 Index dropped as much as 3.27 percent 10,866. However, after falling sharply the benchmarks pared losses to trade with decline of over a percent.

Shares of the Mumbai-based mortgage lender fell as much as 30 percent to Rs 809.55 as trading volumes surged following sharp fall in Dewan Housing Finance.

Trading volume was 3.6 times its 20-day average.

CEO Gagan Banga told Bloomberg the company is well matched in terms of asset liability position while margins have been going up. “Our capital adequacy is at 24 percent.”

He denied having any exposure to junked rated IL&FS.

Shares of housing finance companies came under sharp selling pressure after Dewan Housing Finance slumped 45 percent.

Shares of the Mumbai-based mortgage lender nosedived as much as 40 percent, its worst fall since July 1997, to Rs 366.35 on heavy trading volumes.

Trading volume was 4.1 times its 20-day average at this time of the day.

Shares of the Mukesh Ambani-led oil-to-telecom conglomerate rose as much as 2.2 percent, the most in over two weeks, to Rs 1,237.40.

Reliance Industries' MA D26 field in KG-D6 block stopped production on Sept. 17 and Reliance Industries is in the process of permanently and safely shutting the field, the company said in a stock exchange filing.

Production from the field had been under natural decline and facing continuous challenges due to high water production and sand ingress. The field has cumulatively produced about 0.53 TCF of Gas and 31.4 Million Barrel of Oil & Condensate and had no remaining reserves, the filing added.

• JK Lakshmi Cement: The Delhi-based cement maker rose as much as 7.5 percent to Rs 320. Trading volume was 38 times its 20-day average.
• Godrej Properties: The Mumbai-based real estate developer fell as much as 7 percent to Rs 575. Trading volume was 11 times its 20-day average.
• General Insurance Corporation: The Mumbai-based insurer rose as much as 4.87 percent to Rs 358.25. Trading volume was 7.8 times its 20-day average.
• Minda Industries: The Delhi-based auto parts maker snapped its 11-day losing streak and rose as much as 4 percent to Rs 383. Trading volume was 7 times its 20-day average.

Shares of the Mumbai-based state-run lender rose as much as 1.94 percent to Rs 91.90 after it floated Request For Proposal (RFP) for stake sale in three associate companies — STCI Finance Ltd., Small Industries Development Bank of India (SIDBI) and Equifax Credit Information Services Pvt. Ltd, Bank of India said in an exchange filing.

Shares of the Bhopal-based infrastructure construction company rose as much as 2.94 percent to Rs 759 after it was declared as the lowest bidder (L1 Bidder) for metro rail project by Madhya Pradesh government.

The order is for design and construction of elevated viaduct of 5.29 kms for Indore Metro Rail Project. The bid project cost of the contract is Rs 228.96 crore and has to be completed within 27 months, Dilip Buildcon said in an exchange filing.

Shares of the Jaipur-based lead maker rose as much as 13 percent, the most in nearly one year, to Rs 113.40.

The company expanded production capacity of Andhra Pradesh plant by adding new washing line and PPCP granules extrusion lines with annual capacity or 4,800 MTPA, Gravita India said in an exchange filing.

Shares of the Bengaluru-based drugmaker rose as much as 4.31 percent, the most in nearly a month, to Rs 511 after the Australian Competition and Consumer Commission announced clearance of the merger of Arrow Pharmaceuticals, a subsidiary of Strides Pharma Science and Apotex Australia.

Shares of the cigarette-to-hotel conglomerate rose as much as 2.32 percent to Rs 306.60 after its hotel unit acquired Park Hyatt Goa Resort and Spa.

The acquisition is a part of an auction held by Industrial Finance Corporation of India (IFCI) for Rs 541 crore in 2015 and upheld by the Supreme Court in its March 19, 2018 judgement, ITC Hotels said in a statement.

The property spread across 45 acres is currently under minor renovation to comply with all the ITC's exemplary sustainability practices, it added.

Shares of the country's second largest private sector lender rose as much as 3.97 percent, the most in over a month, to Rs 333.70.

ICICI Bank will consider offshore raising of funds via debt instruments on Sept. 24.

Meanwhile, SEBI clarified that the bank and Chanda Kochhar have filed replies to the show-cause notices but they have not received any settlement application from the bank or any other related entity.

Shares of the Mumbai-based airline operator fell as much as 7.6 percent, the most in over a month, to Rs 224.70 as the Income Tax Department began inspecting the books of crisis-hit Jet Airways for alleged falsification of accounts and suspicious transactions, news agency PTI reported citing sources.

Shares of the Delhi-based company rose as much as 6.2 percent, the most in over two weeks, to Rs 85.50 after Life Healthcare South Africa sold 49.7 percent stake in Max Healthcare to Radiant Life.

Life Healthcare Group Holdings is an equal joint venture partner in Max Healthcare Institute Ltd. along with Max India Ltd.

Indian equity benchmarks rose sharply led by ICICI Bank, HDFC twins and Reliance Industries.

The S&P BSE Sensex rose 0.8 percent or 305 points to 37,427 and the NSE Nifty 50 Index climbed 0.8 percent or 11,327.

Seventeen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Metal Index's 1.6 percent surge. On the other hand, the S&P BSE IT Index was top loser, down 0.6 percent.

The mid-cap stocks rose in line with their larger peers as the S&P BSE MidCap Index rose 0.7 percent.

Indian rupee extended Wednesday's rally and opened 0.72 percent higher at 71.86 per dollar tracking peers in the region that are mostly up against the greenback.

For the week, the currency is headed for a fourth week of losses as more steps from the government to stem its decline are still not forthcoming.

The rupee may extend its Wednesday's rally, tracking peers in the regions that are mostly up against the greenback. For the week, the currency is headed for a fourth week of losses as more steps from the government to stem its decline are still not forthcoming.

The State Bank of India expects the rupee is set to recover as oil peaks out and investors realize the currency has been oversold amid the emerging-market rout.

The benchmark government bond yield is headed for the first weekly fall in six weeks.

Investors will be watching out for the RBI's auction of Rs 12,000 crore of G-Secs and Rs 23,000 crore of 14-day term-repo auction, both due later today.

Going forward both the markets will also be bracing for bad news in the form of less monsoon rains in the June-September period. The rains have so far been 10 percent below normal. That may spur food inflation.

Jefferies on Graphite India

• Maintained ‘Buy’ with a price target of Rs 1415, implying a potential upside of 48 percent from the last regular trade.
• Closure of Bengaluru facility to not impact volumes.
• Power cost to increase if the company would start graphitisation at Nasik facility
• Impact on operating income would be less than 0.5 percent.

CIMB on NMDC

• Maintained ‘Add’; raised price target to Rs 161, implying a potential upside of 36 percent from the last regular trade.
• Expect higher iron ore prices; global ore prices to remain stable.
• NMDC to benefit from likely mining disruption in Odisha.
• Steel plant when commissioned can add Rs 35 per share to the price target.

UBS on Havells India

• Maintained ‘Sell’; hiked price target to Rs 540 from Rs 500, implying a potential downside of 16 percent from the last regular trade.
• Strong brand franchise visible but priced in.
• Scope of further premiumisation low.
• Lloyd performance bears watching.

HSBC on Grasim

• Maintained ‘Hold’; cut price target to Rs 1,140 from Rs 1,190, implying a potential upside of 7 percent from the last regular trade.
• VSF and caustic business continue to shine, boosting standalone earnings.
• Believe continued weakness in other business will have an offsetting effect.
• Sharp decline in ABC and Idea market caps has been a major drag on share price.

CLSA on Infosys

• Maintained ‘Buy’ with a price target of Rs 780, implying a potential upside of 8 percent from the last regular trade.
• Infosys sees optimism in BFSI and outsourcing momentum in Europe.
• Deal wins better, digital focus stays, pricing pressure normalised.
• Proactive capital allocation, senior exits not a worry.

Brokerages On Yes Bank

IDFC Securities

• Downgraded to ‘Underperform’ from ‘Neutral’; cut price target to Rs 230 from Rs 350, implying a potential downside of 28 percent from the last regular trade.
• Cut in Rana’s tenor is a very big negative for Yes Bank.
• Rana’s absence will slow down loan and fee growth.
• Could also impact bank’s ability to raise high net worth deposits.
• This risk has not been priced in; expect significant correction.

Citi

• Downgraded to ‘Sell’ from ‘Buy’; cut price target Rs 270 from Rs 440, implying a potential downside of 15 percent from the last regular trade.
• Believe there is premium attached to the stock due to Rana Kapoor.
• Likely that bank will have to defer its capital raise plans.
• Delay in capital raise to impact growth.
• Time period of over four months could prove short to find a suitable external candidate.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 425, implying a potential upside of 33 percent from the last regular trade.
• Rejection is a major negative development.
• Expect a sharp gap-down opening on Friday.
• Absence of any communication from Yes Bank or RBI will be an overhang on stock.

• Nifty September futures ended at 11,273, with a premium of 39 points.
• Nifty September open interest (OI) down 2.6 percent and Nifty Bank September OI up 4.3 percent.
• Max OI for September series call at 11,500 strike price call option, OI at 41.7 lakh shares.
• Max OI for September series put at 11,200 strike price put option, OI at 35.6 lakh shares.

Bulk Deals

• Marshall Machines: Ashish Kacholia acquired 99,000 shares at Rs 43.15 each. (The company is listed SME on NSE Emerge).
• Solara Active Pharma Sciences: Karst Peak Asia Master Fund sold 1.83 lakh shares or 0.74 percent equity at Rs 286.02 each.

Insider Trades

• Dish TV India promoter World Crest Advisors LLP acquired 30 lakh shares on Sept. 19.
• Elpro International promoter acquired 5 lakh shares on Sept. 17.
• Balaji Telefilms promoter Ekta Kapoor acquired 12,500 shares on Sept. 17.

(As reported on Sept. 19)

• Aurobindo Pharma to meet investors on Sept. 21.
• IIFL Holdings to meet Progressive India Fund, Motilal Oswal AMC and Morgan Stanley from Sept. 21-24.

• Ircon International IPO subscribed 9.7 times on the final day of subscription.
• Dinesh Engineers to sell shares at Rs 183-185 each in IPO starting Sept. 28.

• Yes Bank received RBI’s letter stating that Rana Kapoor can continue to be the bank’s managing director and CEO till Jan. 31, 2019. The board will meet on Sept. 25 to discuss future course of action.
• ICICI Bank to consider raising offshore raising of funds via debt instruments on Sept. 24. SEBI also clarified that the bank and Chanda Kochhar have filed replies to the show-cause notices but they have not received any settlement application from the bank or any other related entity.
• Jet Airways’ books are being inspected by the Income Tax Department for alleged falsification of accounts and suspicious transactions. Inspection started across four premises of the airlines across Mumbai and Delhi. As part of the survey operations, tax sleuths will only visit the business premises of a firm and check their books of accounts. (Press Trust of India)
• ITC Hotels acquired Park Hyatt Goa Resort and Spa. The company said that this acquisition is a part of auction held by Industrial Finance Corporation of India for Rs 541 crore and upheld by the Supreme Court in its March 19 judgement, according to a PTI report.
• Manali Petrochemicals started the supply of Notedome Products from Sept. 19.
• CEAT launched high speed range of CEAT SecuraDrive tyres. These products will cater to the premium sedan segment of cars in India.
• NBCC secured business of Rs 921.67 crore for the month of August.
• Life Healthcare South Africa sold 49.7 percent stake in Max Healthcare to Radiant Life. Max Healthcare is a 50 percent subsidiary of Max India.
• Karnataka State Pollution Board said that the Bengaluru units of Graphite India should be shut down, Times of India reported. The company clarified to the news and said that its stack emissions are well within prescribed norms and it is a law abiding entity.
• Australian Competition and Consumer Commission announced clearance of the merger of Arrow Pharmaceuticals, a subsidiary of Strides Pharma Science and Apotex Australia.
• Bharti Airtel, Jio said to be among bidders for Aircel assets, according to Mint report.
• Clariant Chemicals (India) to divest plastics and coatings business by 2020 because of parent company’s stated intent to do so globally. Implications of this strategic decision will be given in next few months.
• Aditya Birla Finance filed an arbitration before High Court of Delhi against the IL&FS Transportation Networks. The court has passed an interim order injuncting company from transferring or creating third party interest in their unencumbered assets till the next date of hearing fixed on Dec. 07.
• Gravita expanded its production capacity of Andhra Pradesh plant by adding new washing line and PPCP Granules extrusion lines with annual capacity or 4,800 MTPA.
• Dilip Buildcon declared as L-1 bidder for Metro rail project for Rs 228.96 crore by Madhya Pradesh Metro Rail Co, Urban Administration. Construction period for the project is 27 months.
• Fitch revised outlook on Tata Motors to Negative; Affirms at 'BB+'. The revision of the outlook reflects Fitch's expectations of rising negative free cash flow (FCF) over the next two financial years.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.4 percent to 11,355 as of 8:00 a.m.

Stocks in Asia are set to cap two strong weeks with further gains after U.S. equities climbed to fresh records and concerns about trade tensions eased. Hong Kong’s dollar jumped the most in a year.

Japan’s Topix index is on course for the best week in two years and shares advanced from Sydney to Hong Kong Friday.

Currencies

• The yen was steady at 112.51 per dollar.
• The offshore yuan held at 6.8350 per dollar.
• The Hong Kong dollar rose 0.2 percent to 7.8285 per dollar.
• The Bloomberg Dollar Spot Index was flat after dropping 0.4 percent Thursday.
• The euro bought $1.1781.
• The British pound was at $1.3273 after rising 0.9 percent.

Commodities

• The Bloomberg Commodity Index rose 0.6 percent Thursday.
• West Texas Intermediate crude fell 0.2 percent to $70.17 a barrel.
• LME copper rose 1 percent to $6,141.50 a metric ton.
• Gold was flat at $1,209.17 an ounce.