Sensex, Nifty Post Worst 5-Day Decline In Over Seven Months

Indian equity benchmarks fell for fifth day in a row dragged by financials and automakers.

The S&P BSE Sensex plunged 1.5 percent or 536 points to 36,305 and the NSE Nifty 50 Index slumped 1.6 percent or 176 points to 10,967.

In the last five trading sessions, Sensex and Nifty have tanked over 4.5 percent dragged by financials as there are rising concerns over liquidity after IL&FS defaulted on interest payment of bonds… people are afraid to give money to NBFCs, AK Prabhakar, head of research at IDBI Capital Market, told BloombergQuint over phone.

In today’s trade, sixteen of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Realty Index's 5.1 percent drop. It was followed by Auto and Finance Indexes which fell 3.5 percent. On the other hand, the S&P BSE IT Index was top gainer, up 2 percent.

The mid- and small-cap shares also witnessed selling pressure as the S&P BSE MidCap Index tumbled 2.4 percent and the S&P BSE SmallCap Index plunged 2.7 percent.

Mahindra & Mahindra is among cheapest stocks in the auto space and is a good buy at current price, Gurmeet Chadha of Complete Circle Consultants told BloombergQuint in an interview.

Bajaj Finance has fallen in one way and it can fall further and test 200-DMA at Rs 2,080, Sumeet Bagadia, associate director at Choice Broking told BloombergQuint. Till the time it does not break Rs 2,380, it is better to stay on the sell side, he added.

The current fall in non-banking finance companies (NBFCs) is a good opportunity to buy on the back of rising demand for credit in longer term. We have increased stake in Bajaj Finance, HDFC, L&T Financial Services, Yes Bank and Equitas Holdings, Sanjeev Bhasin of IIFL told BloombergQuint in an interview.

Government is planning to sell its stake in SJVN to NTPC and in Power Finance Corp. to Rural Electrification Corp., people familiar with the matter told Bloomberg.

The government expects to raise Rs 8,000 crore from stake sale in SJVN and about Rs 12,000 crore from sale of shares in Power Finance, the people said asking not to be named as the information is not public.

Any deal would be dependent on approval from the cabinet committee of ministers.

Indian equity benchmarks extended decline as volatility surged dragged by selling pressure in auto, finance and banking shares.

The Sensex slumped 1.4 percent or 507 points to 36,344 and the Nifty 50 Index tumbled 1.4 percent or 158 points to 10,983. Meanwhile, a gauge of volatility — India VIX surged 6.3 percent.

Seventeen of 19 sector gauges compiled by BSE plunged led by the S&P BSE Realty Index's 4.5 percent drop. On the flipside, the S&P IT Index was top gainer, up 2.25 percent.

Nifty's 11,200 strike price call option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract plunged 71 percent to Rs 18.80. Over 12.22 lakh shares were added to the open interest which stood at over 32.34 lakh shares.

Click here to see the complete options chain

• Finolex Industries: The Pune-based PVC pipes maker rose as much as 2.24 percent to Rs 542. Trading volume was 12.3 times its 20-day average.
• Care Ratings: The Mumbai-based credit rating agency fell as much as 3 percent to Rs 1,200. Trading volume was 1.4 times its 20-day average.
• Kansai Nerolac: The Mumbai-based paint maker fell as much as 6 percent to Rs 414.60. Trading volume was 9-times its 20-day average.
• SKF India: The Mumbai-based metal bearings maker fell as much as 1.82 percent to Rs 1,702. Trading volume was 5.5 times its 20-day average.

Carmakers declined as the gauge of auto companies — Nifty Auto Index slumped as much as 4.15 percent to 9,976 dragged by weakness in Motherson Sumi, Mahindra & Mahindra, Maruti Suzuki and Eicher Motors.

NSE Nifty 50 Index extended losses and broke below 11,000 dragged by weakness in Mahindra & Mahindra, HDFC, Maruti Suzuki and Tata Steel.

Shares of the Mumbai-based brokerage firm fell as much as 11.4 percent to a fresh 52-week low of Rs 209.

Indian equity benchmarks extended decline dragged by banking and financial counters.

The S&P BSE Sensex fell 0.84 percent or 311 points to 36,531 and the NSE Nifty 50 Index dropped 101 points to 11,040.

The overall market breadth was extremely negative as over 1,800 shares were declining while a little over 500 shares were advancing on the BSE.

Shares of the Mumbai-based housing finance company fell as much as 7.11 percent to Rs 986.60 as trading volumes surged.

Trading volume was 7.6 times its 20-day average, according to data compiled by Bloomberg.

As many as 2.33 lakh shares changed hands on the BSE compared with an average of 1.94 lakh shares traded daily in the past two weeks.

Shares of the country's largest mortgage lender fell as much as 3.97 percent, most since February, to Rs 1,766.40, its lowest level in over six months on heavy volumes.

Trading volume was 2.1 times its 20-day average.

Shares of sugar makers declined as much as 9.2 percent dragged by weakness in Rajshree Sugars, Dwarikesh Sugar and KM Sugar Mills.

Real estate developers were among the worst hit in today's trade with the Nifty Realty Index declining 4 percent dragged by weakness in DLF, Oberoi Realty and Phoenix Mills.

Shares of the country's fourth largest private sector lender rose as much as 5.4 percent to Rs 226.70 after Friday's 30 percent drop.

Yes Bank has informed exchanges that credit rating agency — Moody's has affirmed its 'Baa3' foreign currency issuer rating on Sept. 20. It also received reaffirmation of AA+ ratings on various borrowings from ICRA with a stable outlook on Sept. 21, the bank said.

Shares of the Mumbai-based construction company rose as much as 7.71 percent, the most in over two months, to Rs 130 after it received order worth Rs 845 crore for Trichy’s International airport by Airports Authority of India and Port Blair’s jetty development.

Shares of the Mumbai-based public sector lender plunged for a second day in a row, the stock fell as much as 20 percent to Rs 42.60 on heavy trading volumes.

Trading volume was 196 times its 20-day average, according to data compiled by Bloomberg.

On the BSE as many as 7.66 lakh shares changed hands compared with an average of 41,000 shares traded daily in the last two weeks.

In the last two trading sessions, the stock has plunged as much as 37 percent.

Shares of the Mumbai-based mortgage lender surged as much as 25.2 percent, the most in over 26 years, to Rs 438.75 after Friday's 42 percent plunge.

DHFL’s Kapil Wadhawan stated that the company has not defaulted on any bonds or repayment nor has there been any single instance of delay on any of its repayment of any liability.

In his statement he also said that the company has no exposure to IL&FS. He added that the company’s debt instruments or fixed deposits are neither under watch nor there is any downgrade in the existing credit rating.

The company stands with a liquidity of Rs 10,000 crore which equates to six months of cash, he expressed in a statement reported to the exchanges.

Indian equity benchmarks were highly volatile as financials and banking shares extended Friday's selloff.

The S&P BSE Sensex fell 0.3 percent or 142 points to 36,697 and the NSE Nifty 50 Index dropped 0.5 percent or 58 points to 11,086.

Nine of 11 sector gauges compiled by National Stock Exchange were trading lower led by the Nifty Realty Index's 1.8 percent drop. On the other hand, the Nifty IT Index was top gainer, up 0.4 percent.

Jyotivardhan Jaipuria, founder of Veda Investments told BloombergQuint that Indian markets are expensive, and the ongoing correction is healthy going ahead.

Key highlights of conversation:

• Markets are expensive and expensive markets are vulnerable for shocks
• Historically, India has traded at a premium to EMs and now the premium got expanded
• Correction will be healthy as it will bring down the premium between India and Ems
• NBFCs likely to correct further, will look to buy stronger NBFCs

Indian rupee opened at 72.47 per dollar against Friday’s close of 72.20 as traders await further possible actions from authorities to calm local financial market after the central bank said it was closely monitoring developments.

The traders are awaiting further possible actions from authorities to calm local financial market after the central bank said it was closely monitoring developments.

Turmoil at India's non-bank finance companies is deepening with a troubled lender further missing debt payment. Sovereign bonds too may see some pressure and yield may stay in a range of 8.05-8.10 percent in the day.

In the rupee market, implied opening suggests the rupee to start trading at around 72.40 and dealers expect a range of 72.20-72.80 in the day. With most markets closed in the region, the volumes could be low.

IIFL on NBFCs

• Believe the panic in NBFC stocks has not settled completely.
• See concerns over short-term liquidity in commercial papers raised by NBFCs.
• Believe investors will probably wait and watch for a clear picture to emerge.
• Broker margin calls is expected to lead to further pressure on market from Monday onwards.

JPMorgan on Tata Steel

• Maintained ‘Overweight’ with a price target of Rs 980, implying a potential upside of 57 percent from the last regular trade.
• Usha Martin acquisition at attractive valuations.
• Removes overhang of Bhushan Power acquisition.
• Indian steel environment currently is strongest over the last few years.

Morgan Stanley on Biocon

• Maintained ‘Overweight’ with a price target of Rs 785, implying a potential upside of 16 percent from the last regular trade.
• Fulphila received a positive opinion from Committee for Medicinal Products for Human Use (CHMP) on Sept. 21, with approval likely in the December quarter for the EU.
• If approved, this would be fifth potential biosimilar approval in nine months.
• Regulatory progress seems to be on track for monetizing biosimilar assets for EU and the U.S. markets.

Credit Suisse on Marico

• Maintained ‘Outperform’ with a price target of Rs 405, implying a potential upside of 20 percent from the last regular trade.
• Floods in Kerala have not impacted the reversal of copra cycle reversal.
• Copra is now at Rs 100 per kg compared to peak of Rs 145 a kg in January 2018.
• Improving volume trends to address key investor concern.

BofA-ML on Telecom

• Handset checks suggest Jio is adding 4-5 million JioPhone users per month.
• Expect Jio's 9-10 million subs add to continue due to 20 million featurephone inventory, better coverage and Chhattisgarh order.
• Industry experts expect another smartphone upgrade cycle in the second half of 2018.
• Expect Bharti/Jio to gain share; Vodafone Idea vulnerable.

Morgan Stanley on Reliance Industries

• Maintained ‘Overweight’ with a price target of Rs 1,230, implying a potential upside of 1 percent from the last regular trade.
• Chemicals division is going through a tussle.
• Rise in ethane costs getting cushioned by very strong PX margins.
• Believe both ethane gas prices and PX margins remain unsustainable at current levels.

Morgan Stanley on L&T

• Maintained ‘Overweight’ with a price target of Rs 1,786, implying a potential upside of 34 percent from the last regular trade.
• Orders in buildings and water divisions have seen a very sharp increase in the next financial year.
• Contributions from power T&D and hydrocarbons is lower.
• 'Saubhagya' implementation and higher oil prices could reverse these trends.

• Nifty September futures closed trading at 11,166 at premium of 23 points versus 39 points.
• September series-Nifty open interest down 8.7 percent; Bank Nifty open interest up 6.7 percent.
• India VIX ended at 15.5, up 10.9 percent.
• Max open interest for Sept series at 11,500 strike price call option (open interest at 33.7 lakh, open interest down 19 percent).
• Max OI for Sept series at 11,000 strike price put option (open interest at 38.4 lakh, open interest up 2.6 percent).

Trading Tweaks

• IL&FS Investment Managers’ circuit filter revised to 10 percent.
• Shree Renuka Sugars’ circuit filter revised to 5 percent.
• Globus Spirits placed under ASM framework.
• Navneet Education’s buyback period is from Sept. 24 to Oct. 8.
• Thyrocare Technologies’ buyback up to Rs 63 crore at a maximum price of Rs 730 per share starts today.

Insider Trades

• Apollo Tyres promoter group acquired 7.85 lakh shares on Sept.18.
• Elpro International promoter acquired 4.6 lakh shares on Sept. 19.
• Som Distilleries promoter acquired 11,000 shares on Sept. 18.

(As reported on Sept. 21)

Bulk Deals

• BSE: MV SCIF Mauritius acquired 2.73 lakh shares or 0.52 percent equity at Rs 734.3 each.
• Indiabulls Real Estate: JNL Mellon Capital Management acquired 37.7 lakh shares or 0.83 percent equity at Rs 162.22 each.
• Bajaj Hindusthan Sugar: The Vanguard Group sold 57.4 lakh shares or 0.51 percent equity at Rs 10.42 each.
• Markans Pharma: The Vanguard Group sold 23.4 lakh shares or 0.57 percent equity at Rs 33.23 each.

Who’s Meeting Whom

• Jindal Steel to meet investors from Sept. 24-25.
• Eicher Motors to meet Wells Fargo Asset Management and Lazard Asset Management from Sept. 24-25.
• Galaxy Surfactants to meet investors from Sept. 24-28.

• IL&FS Group said that it was unable to service obligations on some debentures due Sept. 21, Bloomberg reported.
• DHFL’s Kapil Wadhawan stated that the company has not defaulted on any bonds or repayment nor has there been any single instance of delay on any of its repayment of any liability. In his statement he also said that the company has no exposure to IL&FS. He also added that the company’s debt instruments or fixed deposits are neither under watch nor there is any downgrade in the existing credit rating. The company stands with a liquidity of Rs 10,000 crore which equates to six months of cash, he expressed in a statement reported to the exchanges.
• Biocon and its partner Mylan announced that they have received positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use for recommending approval of bio-similar product ‘Fulphila’. This positive opinion will now be considered by the European Commission. The decision on approval is expected by Nov. 2018. The U.S. FDA also completed their inspection at Biocon’s Bangalore facility with no Form 483 being issued.
• Reliance Industries’ telecom unit signed a five-year contract with Star TV for broadcasting cricket content on its platform ‘JioTV’ and Hotstar. Reliance Jio will also launch iPhone XS and iPhone XS Max on its network with pre-booking starting from Sept. 21 and the company will also enable eSim features for both phones.
• ITD Cementation received an order worth Rs 845 crore for Trichy’s International airport upgradation from International Airport by Airports Authority of India and Port Blair’s jetty development by the Ministry of Shipping.
• ABB India to supply power solutions at 23 subtraction stations between 1,500 kilometers lines between Mumbai and Dadri. The deal is with Indian Railways over its Dedicated Freight Corridor which will run through Delhi, Mumbai. Kolkata and Chennai.
• Bayer CropScience mulls to merge with Monsanto India Ltd.
• Tata Steel to takeover steel business of Usha Martin for anywhere between Rs 4,300 crore to Rs 4,700 crore.
• Sequent Scientific to acquire Mahad facility of Solara Active Pharma for an enterprise value of Rs 46.4 crore.
• Galaxy Surfactants gets clearance from the Maharashtra Pollution Control Board to re-open Taloja facility.

• Emerging markets face a reality check
• What makes Templeton India the top bond fund manager
• Oil rises near 2-month high as OPEC stops short of pledging more
• IL&FS said to seek $4.2 billion in asset sales
• PM Modi launches Ayushman Bharat Health Scheme from Jharkhand
• Hollande contradicts himself; Dassault chose reliance, says Jaitley
• RBI, SEBI, SBI step in to assure nervous credit markets
• Few hits and many misses from India’s cash ban after two years
• RBI calls for a meeting with IL&FS shareholders: BQ Exclusive
• Why creditors’ double dipping has guarantors at the edge of their seats
• Fed Hike, China hold: What to keep your economy eye on this week

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.16 percent to 11,153 as of 7:12 a.m.

U.S. equity futures and the Australian dollar edged lower after China called off planned trade talks with U.S. officials, potentially triggering an escalation in the protracted tariff war between the world’s two-biggest economies.

The Australian and New Zealand dollars remained lower just hours before a new round of tariffs between the U.S. and China was due to take effect. Australian and New Zealand equities retreated. Markets are closed in Japan, China and South Korea and volumes will likely remain subdued.

Currencies

• The yen was flat at 112.60 per dollar.
• The Aussie dollar declined 0.2 percent to 72.78 U.S. cents.
• The offshore yuan was steady at 6.8548 per dollar.
• The euro bought $1.1747.

Commodities

• West Texas Intermediate crude jumped 1.1 percent to $71.53 a barrel.
• Gold fell 0.3 percent to $1,196.51 an ounce.

Here are some key events coming up this week:

• European Central Bank President Mario Draghi speaks to the EU Parliament in Brussels Monday.
• Japanese Prime Minister Shinzo Abe meets with President Donald Trump in New York to discuss trade.
• The Fed decision on Wednesday will be followed by a press conference with Chairman Jerome Powell.
• Thursday sees durable goods, GDP data and jobless claims for the U.S.