Nifty Logs Worst F&O Series In Seven Months As Financials Drag

Indian equity benchmarks extended losses dragged by banking and financial shares as futures and options contracts for September series expired.

The S&P BSE Sensex fell 0.6 percent or 218 points to 36,234 and the NSE Nifty 50 Index dropped 0.7 percent or 76 points to 10,978.

Nifty logged in the worst futures and option series since February as it fell 5.99 percent.

In today’s trade, seventeen of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Realty Index’s 2.8 percent drop. On the other hand, the S&P BSE IT Index was top gainer, up 0.77 percent.

Shares of the country's largest carmaker fell as much as 4.2 percent to Rs 7,510, its lowest level in 13 months on heavy volumes.

Trading volume was 1.3 times its 20-day average, data compiled by Bloomberg showed.

• GMR Infra has 81 lakh shares change hands in three blocks. Stock down 4.3 percent at Rs 16.85.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Delhi-based automotive air-conditioning systems maker slumped after its board approved issuing 52.47 lakh equity shares to Denso Corporation, Japan on preferential basis.

• Board approved preferential issue of shares at Rs 400 per share.
• Post preferential issue Denso's stake in the company will increase to 20 percent from 13 percent.
• Stock fell as much as 6.35 percent to Rs 317.05

Indian equity benchmarks extended decline led by losses in financials and private sector lenders on the F&O expiry day.

The Sensex fell 0.5 percent or 185 points to 36,356 and the Nifty 50 Index declined 0.6 percent or 68 points to 10,987.

Sixteen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Finance Index's 1.55 percent decline.

Top Five Nifty Losers

• Yes Bank
• Indiabulls Housing Finance
• Bajaj Finance
• Dr. Reddy's Labs
• Axis Bank

Top Five Nifty Gainers

• Tata Steel
• Asian Paints
• Titan
• Infosys
• State Bank of India

• Kesoram Industries: The Kolkata-based cement and iron pipes maker rose as much as 14 percent, the most in over 5 months, to Rs 73.60. Trading volume was 14.5 times its 20-day average.
• Indian Energy Exchange: The Delhi-based power trading platform operator fell as much as 2.5 percent to Rs 1,702. Trading volume was 9.3 times its 20-day average.
• APL Apollo Tubes: The Delhi-based steel tubes maker fell as much as 5.5 percent to Rs 1,320. Trading volume was 7.3 times its 20-day average.
• Varun Beverages: The Gurugram-based Pepsi bottler fell as much as 3.2 percent to Rs 761.30. Trading volume was 7.5 times its 20-day average.

Shares of the Mumbai-based brokerage firm fell as much as 10.4 percent to Rs 190.10, its lowest level in over 14 months, on heavy volumes.

Trading volume was triple its 20-day average, data compiled by Bloomberg showed.

As many as 4.76 lakh shares changed hands on the BSE compared with an average of 2.33 lakhs shares traded daily in the past two weeks.

Shares of the Mumbai-based private sector lender resumed decline after halting in yesterday's session. The stock has fallen in five of the last six trading sessions.

Yes Bank plunged as much as 7.5 percent to Rs 207. Meanwhile, on the relative strength index the stock is at 16 indicating that it may be oversold.

Indian equity benchmarks were trading lower as financials and banking stocks came under selling pressure. However, the losses were capped as IT stocks witnessed buying.

The S&P BSE Sensex fell 0.24 percent or 89 points to 36,453 and the NSE Nifty 50 Index declined 0.33 percent or 36 points to 11,017.

Seven of 11 sector gauges compiled by BSE were trading lower led by Nifty Realty Index's 2.7 percent drop. On the flipside, Nifty IT Index was top gainer, up 0.6 percent.

Mid- and small-cap shares were underperforming their larger peers as the Nifty Midcap 100 and Nifty Smallcap 100 Indexes fell over a percent each.

Click here for more stock market statistics

Shares of the Mumbai-based lender fell for an eighth session in a row to Rs 174.15. In the last eight sessions, the stock has slumped as much as 34 percent.

The trouble at the airline aggravated after the Income Tax Department, earlier this month, began inspecting the books of the company for alleged falsification of accounts and suspicious transactions, news agency Press Trust of India reported.

Meanwhile, Jet Airways has told its pilots, aircraft maintenance engineers and senior management team that part of their August salaries will be paid by Oct. 9, according to a communication.

Rising crude and an import tax on imported jet fuel is also adding to the pressure for the airline.

In intraday deals, the stock declined as much as 10 percent.

• Indian rupee erased gains and depreciated as much as 0.14 percent or 10 paise to 72.72 per dollar.

Shares of non-banking finance companies plunged led by losses in Can Fin Homes and Indiabulls Housing Finance.

• Can Fin Homes fell 6.92 percent
• Indiabulls Housing Finance declined 6.34 percent
• Repco Home Finance tumbled 5.9 percent
• Edelweiss Financial Services declined 5.87 percent

Nifty's 11,200 call option contract was among the most active option contracts on the National Stock Exchange ahead of monthly F&O expiry.

Premium on the contract fell 88 percent to 60 paise. Over 10 lakh shares were added to the open interest which stood at over 46 lakh shares.

Click here to see the complete options chain

Shares of footwear makers advanced after the government hiked import duty on shoes from 20 percent to 25 percent.

• Bata India rose 2.8 percent
• Relaxo Footwears advanced 0.3 percent
• Liberty Shoes climbed 3.74 percent
• Khadim India 2.4 percent
• Sreeleathers rose 5.93 percent

Banking shares swung after the Reserve Bank of India allowed lenders to dip further into statutory liquidity reserves, to help them meet their liquidity coverage ratio requirement.

The central bank said that banks could ‘carve out’ upto 15 percent of holdings under SLR to meet their LCR requirements, compared to 13 percent earlier. The measure will help reduce the need for statutory bond requirements of banks and increase funds available for lending to their clients.

Meanwhile, following the comments from the banking regulator, banking shares were mixed as the Nifty Bank was little changed at 25,355.

Shares of the air conditioner, washing machine and refrigerator makers fell after the government hiked import duty on a range of products including air conditioners, refrigerators, compressors and washing machines.

Hike in duties on compressor by 2.5 percent is a negative since most of the compressors are bought from China with little domestic manufacturing, Motilal Oswal said in a note.

• Voltas fell 3.4 percent
• Whirlpool of India declined 2.7 percent
• Havells India declined 1.55 percent to Rs 635

Shares of the aviation companies fell after the government increased import duty on jet fuel. The government introduced an import levy of 5 percent on the aviation turbine fuel.

Indian equity benchmarks swung between gains and losses ahead of the derivative expiry for the month of September.

The S&P BSE Sensex rose 31 points to 36,572 and the NSE Nifty 50 Index advanced 12 points or 0.1 percent to 11,067.

Fifteen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Utilities Index's 0.8 percent gain. On the other hand, the S&P BSE Telecom Index was top loser, down 0.3 percent.

The Indian rupee strengthened for the second day against the U.S. dollar. The home currency was trading at 72.41 a dollar.

Currency dealers will be a busy lot today watching for the impact from Indian government's decision to raise the custom duties on a whole host of products to narrow current account deficit and support the currency.

Philip Capital in a note said it doesn’t expect these steps, but this with a rate hike by RBI in October may support the rupee.

The currency may stay in a range of 72.20-73 in the day.

In the bond markets, the yield on the benchmark note slipped five basis points to 8.07 percent. All eyes are set on the government's second-half borrowing program that is likely to be announced on Friday.

A tempered market borrowing plan may help keep the market nervousness in check. For today, the yield is expected to stay in a range of 8.05-8.10 percent.

F&O Cues

• Nifty September futures closed trading at 11,062 at premium of 8 points versus 20 points.
• September series-Nifty open interest down 16 percent; Bank Nifty open interest down 20.5 percent.
• Nifty Rollovers at 43 percent; Nifty Bank Rollovers at 36 percent.
• India VIX ended at 17.1, up 2.4 percent.
• Max open interest for September series at 11,200 strike value call option (open interest at 36.2 lakh, open interest up 45 percent)
• Max open interest for September series at 11,000 strike value put option (open interest at 38.7 lakh, open interest up 4 percent)

Put-Call Ratio

• Nifty PCR at 1.09 versus 1.13.
• Nifty Bank PCR at 0.74 versus 0.7 .

Stocks In F&O Ban

• In Ban: Adani Power, Jet Airways, PNB
• Out of Ban: DHFL

Brokerages On Custom Duty Hike

CLSA

• Government hiked custom duty rates on AC, refrigerators, washing machines.
• Havells currently imports 70 percent Lloyds requirement but has option to shift to domestic manufacturing.
• Voltas’s JV with Arcelik would be hurt as appliances are 100 percent imported.
• Voltas Beko’s domestic factory will likely take a year to start.

Goldman Sachs

• Hike in custom duty rates are negative for Voltas and Havells India.
• Crompton Consumer best placed as none of its product categories have been impacted.
• Expect industry to collectively pass this custom duty hike.
• Price hike could be with a lag and impact margins in the near to medium term.

Brokerages On Titan

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 1,250, implying a potential upside of 54 percent from the last regular trade.
• No change in import duty on Gold to lift overhang on Titan.
• Hike in rate or jewellery pieces is marginally positive as it reduces competitiveness.
• Expect Titan to react positively.

BofAML

• Maintained ‘Buy’ with a price target of Rs 1,080, implying a potential upside of 33 percent from the last regular trade.
• Stock corrected on market concerns about the current financial year’s growth guidance and gold import regulation.
• Believe concerns are overdone and expect Titan to post robust jewelry growth in 2018-19.
• Stock is currently pricing in 10-year EBIT CAGR of just 19 percent despite strong growth prospects.

More Brokerage Calls

Credit Suisse on Consumer Staples

• Margin performance depends on revenue growth as it will provide operating leverage
• Margin Negative: increasing commodity inflation and GST tailwinds getting anniversarise from the third quarter.
• Marico best placed in entire consumer pack as Copra prices trending down.
• Britannia seems most susceptible to rising input costs.

Morgan Stanley on Havells India

• Maintained ‘Equalweight’ with a price target of Rs 712, implying a potential upside of 10 percent from the last regular trade.
• Increase in duty on consumer durables will hurt earnings in the second half.
• Likely commissioning of AC plant by Mar-19 will moderate the impact in the next financial year.
• Medium-term outlook for consumer durables is intact.

Goldman Sachs on Asian Paints

• Upgraded to ‘Buy’ from ‘Neutral’; raised price target to Rs 1,550 from Rs 1,407, implying a potential upside of 21 percent from the last regular trade.
• Capacity expansion to offer significant competitive advantages and better returns.
• Dominant position to help navigate a more turbulent input cost environment.
• Government initiatives starting to bear fruits in home building.
• Optionality from other home improvement categories.

HSBC on SpiceJet

• Maintained ‘Hold’; cut price target to Rs 70 from Rs 100, implying a potential upside of 1 percent from the last regular trade.
• Indian aviation is set for a poor second quarter – generally the weakest.
• Freight business broadly neutral for profitability since the scale has been small.
• Expect positive momentum after December as high fuel prices will start to be built into the base.

• Dewan Housing Finance Corporation: BNP Paribas acquired 51.5 lakh shares (1.64 percent) at Rs 297.87 each.
• Astra Microwave Products: HDFC MF sold 34.9 lakh shares or 4.03 percent equity at Rs 85 each.

Apollo Hospitals Enterprise

• Oppehheimer sold 14 lakh shares or 1.01 percent equity at Rs 1,044.23 each.
• Wellington acquired 9.5 lakh shares or 0.68 percent equity at Rs 1,044.23 each.

• The date for Garden Reach Shipbuilders and Engineers’ initial public offering has been extended until Oct. 1 after the issue received 0.67 times subscription during the three-day bid period. The price band of the failed issue, first for a state-run companies, has been revised lower to Rs 118-114 per share.

Also Read: State-Run Shipbuilder Garden Reach’s IPO Fails To Attract Investors

• Aavas Financiers IPO day 3. Issue subscribed 0.29 times on day 2.

Also Read: Aavas Financiers’ IPO: Here’s All You Need To Know

• West Texas Intermediate crude gained 1.3 percent to $72.51 a barrel.
• Brent crude traded 1.1 percent higher at $82.20 per barrel.
• Gold rose 0.2 percent to $1,196.89 an ounce.

Shanghai Exchange

• Steel snapped four-day losing streak; up 0.4 percent.
• Aluminium traded lower for the third day; down 0.5 percent.
• Zinc traded higher for the third day; up 0.2 percent.
• Copper snapped a three-day winning-streak; down 0.2 percent.
• Rubber traded lower; down 0.9 percent.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.3 percent higher at 11,080 as of 8 a.m.

Asian stocks fluctuated Thursday as investors assessed commentary from the Federal Reserve that reaffirmed the U.S. economy is strong enough to warrant another interest-rate increase by the end of this year.

Equity benchmarks grappled for direction throughout the region, trading little changed from Japan to Australia.

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