Sensex, Nifty Resume Decline After A Day’s Breather

Indian equity benchmarks resumed decline after a day's breather weighed down by IT and FMCG shares.

The S&P BSE Sensex fell 0.3 percent or 110 points to 36,542 and the NSE Nifty 50 Index declined 0.12 percent or 14 points to 11,054.

For most part of the day, benchmarks traded with a negative bias as volatility creeped in a day ahead of expiry of derivative contracts for the month of September.

Five of 11 sector gauges compiled by National Stock Exchange ended lower led by the Nifty IT Index's 1.9 percent drop. On the flipside, the Nifty Realty Index was top gainer, up 2.4 percent.

Mid-cap shares outperformed their larger peers as the S&P BSE MidCap Index rose 0.4 percent.

Shares of the Bengaluru-based application software maker rose as much as 20 percent, the most in two months, to Rs 82 after its subsidiary Hughes Precision Manufacturing received the license to manufacture and proof test military calibre ammunition under the Arms Act, 1959, IZMO said in an exchange notification.

Shares of sugar makers fell after the government approved a policy to deal with excess output, Finance Minister Arun Jaitley told media persons after the cabinet meet in New Delhi.

Arun Jaitley in the meet said:

• Government to provide assistance of Rs 5,538 crore to sugar mills
• Expect higher sugar backlog in 2019
• Sugarcane production has been surplus in last year and this year
• Surplus of sugar will get accumulated in the next year as well
• To provide assistance to sugar mills freight handling for exports
• To provide assistance of Rs 13.88 rupees/quintal in 2018-19 to mills to offset cost of cane

Shares of the electric storage batteries maker rose as much as 5.8 percent, the most in over three months, to Rs 272.35 on heavy volumes.

Trading volume was 1.5 times its 20-day average, according to data compiled by Bloomberg.

European equities were mixed as investors eyed the U.S. Federal Reserve meeting, which is expected to bring another rate hike.

• GMR Infrastructure has 2.09 crore shares change hands in two blocks. Stock up 1.8 percent at Rs 17.15.
• JM Financial has 12.6 lakh shares change hands in a single block. Stock down 2.7 percent at Rs 93.80.
• ITC has 18.3 lakh shares change hands in a block. Stock down 2.3 percent at Rs 294.20.
• HPCL has 10 lakh shares change hands in a block. Stock down 0.3 percent at Rs 242.55.

Buyers and sellers were not immediately known

Source: Bloomberg

Indian equity benchmarks extended decline dragged by a sharp drop in banking stocks a day ahead of September derivative expiry.

The Sensex fell 0.6 percent or 230 points to 36,420 and the Nifty 50 Index declined 0.5 percent or 54 points to 11,014.

Seven of 11 sector gauges compiled by National Stock Exchange were trading lower led by the Nifty IT Index's 1.6 percent drop. On the flipside, Nifty Realty Index was top gainer, up 2.2 percent.

Shares of the Anil Ambani-led telecom company rose as much as 4.78 percent to Rs 12.05 after it along with its arm GCX annonced plan to expand connected data centres across India

Shares of the Mukesh Ambani-led company rose as much as 0.85 percent to Rs 1,241 after its subsidiary Reliance Industrial Investments and Holdings invested $8 million in NetraDynevia preferential shares.

NetraDyne is a high-end technology driven product, deep learning solutions and vision based analytics business with focus on verticals such as fleet management, automotive, security and surveillance, Reliance Industries said in an exchange notification.

• Supreme Court while pronouncing verdict on legality of Aadhaar quashed mandatory linking of bank accounts while it upheld PAN linking with Aadhaar.

• Orient Cement: The Hyderabad-based cement maker rose as much as 11.5 percent, the most in over two months, to Rs 110. Trading volume was 170 times its 20-day average.
• Eveready Industries: The Kolkata-based dry batteries maker fell as much as 1.4 percent to Rs 206. Trading volume was 11.3 times its 20-day average.
• Religare Enterprises: The Delhi-based brokerage firm rose as much as 9.2 percent to Rs 41.65. Trading volume was 9 times its 20-day average.
• SIS: The Delhi-based private security service provider rose as much as 2.9 percent to Rs 975. Trading volume was 8.2 times its 20-day average.

Indian equity benchmarks extended decline dragged by FMCG and auto stocks.

The S&P BSE Sensex fell 0.6 percent or 219 points to 36,432 and the NSE Nifty 50 Index declined 0.5 percent or 55 points to 11,013.

Twelve of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE FMCG Index's 1.5 percent drop. On the other hand, the S&P BSE Realty Index was top gainer, up 1 percent.

Overall market breadth was neutral as 1,135 shares were advancing while 1,090 were declining on the BSE.

Nifty's 11,000 strike price put option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract rose 4.8 percent to Rs 42.55. Over 9.43 lakh shares were added to the open interest which stood at over 46.91 lakh shares.

Click here to see the complete options chain

Shares of the Ahmedabad-based renewable energy producer rose as much as 5.61 percent to Rs 47.05 after it won a tender to setup 300MW wind generation project floated by Solar Energy Corporation of India.

The project is expected to be commissioned by the second quarter of financial year 2021. The tender is for Rs 2.76/KWH for 25-year period, Adani Green said in an exchange notification.

Shares of the Bengaluru-based defence equipment maker rose as much as 9.71 percent, the most in nearly two months, to Rs 83.60 after Bank of America Merrill Lynch maintained 'buy' on the stock for target price of Rs 109, implying a potential upside of 43 percent from the last regular trade.

The brokerage in a report said:

• Worst case impact of margin cap to be 100 basis points, management said.
• Payment started to flow-in, but working capital improvement unlikely.
• Valuations to re-rate as the company continues delivering.

Huge baggage of bad loans that PSU banks carry continue to be huge overhang on their operations, Saswata Guha, director at Fitch Ratings told BloombergQuint in an interview.

Key highlights of the conversation:

• RBI has taken strict action in many cases of appointments in private banks
• Huge baggage of bad loans that PSU banks carry continue to be huge overhang on their operations
• Migration from watchlist to non-performing loans (NPLs) is as high as 80 percent
• Banks need capital to pursue recovery at a faster pace
• Wait until end of FY19 before making claim that things have finally turned
• Any change is leadership should be in the interest of shareholders
• Yes Bank board asking for more time for smooth transition is not unreasonable
• Funding and liquidity key factors for NBFCs from a rating perspective
• For now, it is NIMs that are at-risk for NBFCs

Shares of the Delhi-based auto parts maker rose as much as 8.4 percent, the most in over two months, to Rs 388.

Minda Industries board approved setting up a new manufacturing plant of two-wheeler alloy wheel in Maharashtra. The investment will be around Rs 500 crore for the project and production is expected to start from Nov. 2019, the company said in an exchange notification.

Shares of the Mumbai-based private lender rose as much as 4 percent to Rs 228.50 after its board formed a panel to search for new MD and CEO.

Meanwhile, Yes Bank has decided to request the Reserve Bank of India (RBI) for an extension on Rana Kapoor’s term as the bank’s managing director and chief executive officer.

• The benchmarks pared opening gains as Wipro, ONGC, ITC and Adani Ports came under selling pressure.
• The Sensex trimmed gains and was up 0.2 percent at 36,728 and Nifty 50 Index rose 0.3 percent to 11,102.

Indian equity benchmarks edged higher paced by gains in Yes Bank, Tata Steel, ICICI Bank and HDFC.

The S&P BSE Sensex rose 0.6 percent or 200 points to 36,852 and the NSE Nifty 50 Index climbed 0.5 percent or 48 points to 11,102.

Sixteen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Healthcare Index's 0.6 percent gain. On the flipside, the S&P BSE telecom Index was top loser, down 0.4 percent.

Mid- and small-cap shares edged higher as the S&P BSE MidCap Index advanced 0.2 percent and the S&P BSE SmallCap Index climbed 0.3 percent.

Rupee opened lower at 72.72 per dollar against yesterday's close of 72.69 tracking Asian peers as investors await government or central bank steps to curb dollar demand.

The Indian rupee is likely to open lower tracking Asian peers as investors await government or central bank steps to curb dollar demand.

Implied opening suggests the rupee may start trading at around 72.75 and dealers expect a range of 72.50-73 in the day. Meanwhile, all eyes are set on the U.S. Fed rate commentary.

In the bond markets, higher crude oil prices continue to be a concern while yield on the 10-year benchmark note remains steady at 8.13 percent. The cutoffs at treasury bill auction today will provide insight on the current liquidity situation in the market.

For today, yield on the benchmark note may stay in a range of 8.08-8.15 percent.

UBS on Reliance Industries

• Maintained ‘Sell’; raised price target to Rs 1,100 from Rs 870, implying a potential downside of 11 percent from the last regular trade.
• Expect strong show from petchem and retail businesses to continue.
• Raise refining and petchem estimates on the rupee depreciation.
• Expect strong subscriber addition for Jio, but ARPU to remain subdued.

Morgan Stanley on Titan

• Maintained ‘Overweight’; raised price target to Rs 1,250 from Rs 1,120, implying a potential upside of 57 percent from the last regular trade.
• Expect revenue growth acceleration and margin expansion ahead of expectation.
• Expect 35 percent growth for jewellery business in the second quarter; Shift in festive season implies strong third quarter.
• Risk-reward is firmly skewed to upside; Growth runway long with high visibility.

CLSA on Oil & Gas

• Expect a very tight crude market, particularly in the second half of 2019.
• Big concern for OMCs marketing margins as it coincides with key elections.
• ONGC’s stock implies no downside even if asked to share subsidy.
• Gail, Vedanta and ONGC are preferred Buys.

Credit Suisse on NBFCs

• Expectation of softer margins and slowdown in loan growth rate impacting NBFCs.
• Expect 19-33 percent earnings hit under these changes.
• Fall in stock price does not factor in this scale of change yet.
• Not yet time to start hunting for value in the sector.

Goldman Sachs on India Financials

• Liquidity concerns exaggerated; Business momentum strong.
• Believe sell off in financials has been overdone; Profitability is on the mend.
• NBFCs would be better off having better capitalisation levels.
• Asset quality pain largely over; Banks to achieve desired levels of coverage in the current financial year.

Credit Suisse on Two Wheelers

• Exports outlook strong; forex will aid margins.
• Bajaj is the main beneficiary of the pickup in exports.
• Fairly cautious view on domestic demand outlook.

Macquarie on Jubilant Life

• Maintained ‘Outperform’ with a price target of Rs 1,192, implying a potential upside of 61 percent from the last regular trade.
• Pharma business is witnessing broad-based growth across segments.
• Channel checks suggest subdued second quarter for LSI, but better second half.
• Valuations attractive; Remain bullish on Jubilant.

BofAML on Bharat Electronics

• Maintained ‘Buy’ with a price target of Rs 109, implying a potential upside of 43 percent from the last regular trade.
• Worst case impact of margin cap to be 100 basis points, management said.
• Payment started to flow-in, but working capital improvement unlikely.
• Valuations to re-rate as the company continues delivering.

Morgan Stanley on Eicher Motors

• Maintained ‘Overweight’ with a price target of Rs 34,104.
• Insurance, rear disc and ABS will increase cost by Rs 26,000, management said.
• Customer demand for rear disc is higher than expected.
• Overall sales in Maharashtra flat; Festive demand is key monitor.

Brokerages On Yes Bank

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 425.
• Extension request may not be entertained given the nature of the allegations.
• RBI may not approve internal candidates as they may be construed equally responsible for bank operations.
• Believe an external candidate may not be able to quickly take over the reins of the bank.
• Stock re-rating now hinges on outcomes of stated action plans as well as 2017-18 divergences.

JP Morgan

• Maintained ‘Overweight’ with a price target of Rs 400.
• Outcome was widely anticipated.
• Lack of visibility on succession plan prevails.
• Unsure what view RBI will take on the Board’s request.

IDFC Securities

• Maintained ‘Underperform’ with a price target of Rs 230.
• RBI unlikely to review tenor; Reason for extension goes against RBI’s broad basing principle.
• Madhu Kapur and RBI both have to approve Rajat Monga and Pralay Mondal as EDs.
• Board meet has done nothing to address management uncertainty.

• Nifty September futures ended at 11,087, with a premium of 20 points versus 31 points.
• September series: Nifty open interest down 16 percent; Bank Nifty open interest down 23 percent.
• Nifty Rollovers at 30 percent while Nifty Bank Rollovers at 27 percent.
• India VIX ended at 16.7, down 4.3 percent.
• Maximum open interest for September series call at 11,500 strike price call option (open interest at 25.3 lakh shares, down 17 percent)
• Maximum open interest for September series put at 11,000 strike price put option (open interest at 37.5 lakh shares, up 10 percent)

Bulk Deals

• Ujjivan Financial Services: IIFL acquired 9.01 lakh shares or 0.74 percent equity at Rs 267.58 apiece.
• ICICI Lombard General Insurance: Tamarind Capital sold 72.1 lakh shares or 1.59 percent equity at Rs 800.01 apiece.

Insider Trades

• Bajaj Holdings & Investments promoter group Niraj Bajaj acquired 44,500 shares from Sept. 19-21.
• Plastiblends India promoter Jyoti Kabra acquired 10,000 shares from Sept. 18-21.
• KEC International promoter Instant Holdings acquired 1.5 lakh shares on Sept. 21.

(As reported on Sept. 25)

Trading Tweaks

• Vakrangee circuit filter revised to 5 percent.
• Lasa Supergenerics removed from ASM framework.
• Kirloskar Pneumatic ex-date for stock split to Rs 2 from Rs 10 per share.
• Igarashi Motors last trading day before ex-bonus.

• Greaves Cotton to meet Karma Capital, Alchemy Capital and other investors from Sept. 25-26.
• Tailbros Automotive Components to meet investors on Sept.26.
• PSP Projects to meet IDFC Securities on Sept. 26.
• Som Distilleries & Breweries to meet investors on Sept. 26.

• Yes Bank board formed a search panel to identify current CMD Rana Kapoor’s successor. The board also sought extension of Rana Kapoor’s tenure till Sept. 30, 2019 from the RBI. For the long-term succession plan within the bank itself, Rajat Monga and Pralay Mondal have been appointed as executive directors, subject to RBI approval. RBI had approved Rana Kapoor’s tenure extension till January 31 next year.
• Glenmark Pharma to consider buyback of its foreign currency debt worth $200 million on Sept. 28.
• Minda Industries board approved setting up a new manufacturing plant of two-wheeler alloy wheel in Maharashtra. The investment will be around Rs 500 crore for the project and production is expected to start from Nov. 2019.
• Tech Mahindra announced a strategic partnership with U.S.-based Cloudleaf Inc. The company will leverage Cloudleaf’s patented sensor fabric to deliver internet of things solutions across manufacturing telecom, aerospace, healthcare and automotive industries, according to Bloomberg report.
• Blue Dart to invest Rs 200 crore for its expansion plans in tier II, IIII and IV towns. The plan aims to cover more than 19,100 pin codes by December.
• Adani Green Energy won a tender to setup 300MW wind generation project floated by Solar Energy Corporation of India. The project is expected to be commissioned by the second quarter of financial year 2021. The tender is for Rs 2.76/KWH for 25-year period.
• BPCL, HPCL, IOC will be in focus as government is said to cut imports of Iranian oil to zero in November (Bloomberg)

• Garden Reach IPO day 3. Issue subscribed 0.03 times on second day of bidding.
• Avaas Financers IPO day 2. Issue subscribed 0.03 times on first day of bidding.
• Flair Writing seeks SEBI’s approval for Rs 450 crore.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.4 percent to 11,123 as of 7:23 a.m.

Asian stocks opened mixed Wednesday, with Japan’s Topix index retreating from the highest in almost eight months, as traders awaited the Federal Reserve meeting. U.S. Treasuries were steady, with yields near the seven-year highs reached in May.

Equity benchmarks fell in Japan, while Australia’s rose. Hong Kong futures were little changed as traders return from a holiday.

Currencies

• The yen was steady at 112.95 per dollar.
• The offshore yuan was at 6.8667 per dollar.
• The Bloomberg Dollar Spot Index was stable.
• The euro traded at $1.1765.
• The British pound was steady at $1.3179 after gaining 0.5 percent Wednesday.

Commodities

• West Texas Intermediate crude dropped 0.5 percent to $71.93 a barrel, while Brent fell 0.5 percent to $81.45.
• Gold traded at $1,201.30 an ounce.
• LME copper fell 0.6 percent to $6,281 a metric ton, down for a third day.

Here are some key events coming up this week:

• 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.