Sensex Drops Over 450 Points Dragged By RIL, HDFC

Indian equity benchmarks extended decline dragged by bluechip stocks like Reliance Industries, HDFC, Infosys and Yes Bank.

The S&P BSE Sensex fell 1.33 percent or 464 points to 34,316 and the NSE Nifty 50 Index dropped 1.43 percent or 149 points to 10,304.

Seventeen of 19 sector gauges compiled by BSE ended lower dragged by the S&P BSE Energy and S&P BSE IT Indices’ over 2.5 percent drop. On the flipside, the S&P BSE FMCG Index was top gainer, up 0.4 percent.

The mid- and small-cap shares were in-line with their larger peers as the S&P BSE MidCap Index fell 1.1 percent and the S&P BSE SmallCap Index tumbled 1.3 percent.

The Reserve Bank of India, in consultation with the Government of India, has converted two securities maturing in 2018-19 and 2019-20 having total face value of Rs 6,155 crore to two longer tenor securities maturing in 2025-26 and 2023-24 respectively.

The transaction has been conducted on October 17, 2018 at the Financial Benchmarks India Private Limited (FBIL) prices with a scheduled commercial bank.

Shares of the Mumbai-based cement maker fell as much as 5.32 percent, the most in over 10 months, to Rs 3,525 after it missed Bloomberg consensus estimates in July-September quarter.

Key earnings highlights:

• Standalone net profit down 9 percent at Rs 391 crore versus estimate of Rs 421 crore (YoY)
• Revenue up 21 percent at Rs 7,771 crore versus Rs 6,426 crore (YoY)
• EBITDA down 7 percent at Rs 1,207 crore versus Rs 1,294 crore (YoY)
• Margin at 15.5 percent versus 20.1 percent (YoY)

• Blue Dart: The Mumbai-based courier service company fell as much as 0.8 percent to Rs 2,760. Trading volume was 18 times its 20-day average.
• Sudarshan Chemicals: The Pune-based chemical maker fell as much as 20.52 percent to Rs 300.20. Trading volume was 205 times its 20-day average.
• Mahindra CIE: The Pune-based auto parts maker fell as much as 2.45 percent to Rs 257.10. Trading volume 13.4 times its 20-day average.
• Finolex Industries: The Pune-based PVC pipe maker fell as much as 2.12 percent to Rs 471.20. Trading volume was 9.5 times its 20-day average.

Indian equity benchmarks continue to struggle as bluechips like Reliance Industries, Yes Bank, Infosys and Tata Motors DVR came under selling pressure.

The Sensex fell 1.13 percent or 393 points to 34,386 and the Nifty 50 Index dropped 1.2 percent or 127 points to 10,326.

Fifteen of 19 sector gauges compiled by BSE were trading lower dragged by the S&P BSE Energy Index's 3.3 percent decline. On flipside, the S&P BSE Metal Index rose 0.6 percent.

The mid- and small-cap shares were in-line with larger peers as the S&P BSE MidCap Index tumbled 1 percent and the S&P BSE SmallCap Index slipped 1.5 percent.

• Kotak Mahindra Bank has 10 lakh shares change hands in a block. Stock up 0.09 percent at Rs 1,177.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based mortgage lender fell 12.3 percent to Rs 662.30 as it made a presentation to debt investors.

Indiabulls Housing Finance said:

• Top 25 developer loans are standard
• Average loan-to-value (LTV) of top 25 developer loans is 43 percent

• Power Finance Corporation has 10 lakh shares change hands in a block on BSE. Stock up 0.8 percent at Rs 81.

Buyers and sellers were not immediately known

Source: Bloomberg

Current valuations remain on the higher side and we continue to remain cautious on the market, Harsha Upadhyaya, CIO - equity at Kotak Mahindra AMC told BloombergQuint in interview.

Key highlights of the conversation:

• Continue to remain cautious on the market
• Valuations remain on the higher side
• Over owned stocks generally take a hit in market corrections
• Continue with underweight stance on NBFC space

Shares of the Delhi-based news broadcasting company fell as much as 5 percent to Rs 32.35.

NDTV has received a notice from Ahmedabad City Civil Court (Court) with regard to a suit for defamation instituted by Reliance Infrastructure claiming damages of Rs 10,000 crore, the company said in an exchange filing.

The suit for defamation has been instituted on account of the NDTV‘s weekly show, ‘Truth vs Hype’ wherein the story 7 ‘The Ideal Partner in Rafael Deal’ was broadcasted on the channel ‘NDTV 24X7’, on September 29, 2018, the filing added.

Nifty's 10,500 strike price call option contract was among the most active option contracts on the National Stock Exchange.

Premium on contract slumped 50 percent to Rs 34.45. Over 9.84 lakh shares were added to the open interest which stood at over 39.43 lakh shares.

Shares of the Noida-based software services company fell as much as 4.94 percent to Rs 973.65 on heavy volumes.

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

Over 8.3 lakh shares changed hands on the National Stock Exchange, as per the information on the NSE website.

Shares of housing finance companies continued their losing streak on Friday.

Rating agency Moody’s Investors Service in a report said that the liquidity tightness could lead to sharply higher financing costs or even difficulty in rolling over liabilities for NBFCs as they rely heavily on market borrowing to fund asset growth.

Indiabulls Housing Finance declined as much as 10.6 percent to Rs 705.20 while PNB Housing Finance declined close to 7.5 percent to Rs 800 per share.

Shares of the Bengaluru-based IT company fell as much as 18 percent, the most since September 2011, to Rs 801.10 after Citi downgraded the stock to 'neutral' after it announced September quarter earnings.

Key earnings highlights:

• Revenue up 7.1 percent at Rs 1,755.4 crore (QoQ)
• Net profit up 30.4 percent at Rs 206.3 crore (QoQ)
• EBIT up 21.9 percent at Rs 229.5 crore (QoQ)
• Margin at 13.1 percent versus 11.5 percent (QoQ)

Citi downgraded the stock to 'neutral' from 'buy' and cut target price to Rs 1,090 and said that September quarter was weak and open a negative catalyst watch. It expects stock to correct given high expectations and sudden change in management commentary.

Shares of the Mumbai-based troubled airline operator rose as much as 8.5 percent to Rs 234.90.

Tata Sons is said to be in early stage of talks to acquire stake in Jet Airways, according to a PTI report. The diversified Tata Group already owns majority stakes in two airline joint ventures—Vistara and AirAsia India.

Shares of the Mukesh Ambani-led oil-to-telecom conglomerate fell as much as 7 percent, the most since Oct. 5, to Rs 1,070.25 despite meeting Bloomberg consensus estimates in July-September quarter.

Reliance Industries net profit rose 0.4 percent to Rs 8,859 crore in second quarter of current financial year compared with BloombergQuint’s estimate of Rs 8,853 crore.

Meanwhile, RIL announced buying controlling stakes in Den Networks and Hathway Cable & Datacom for more than Rs 5,200 crore as it prepares to disrupt broadband and direct-to-home TV services industry.

Key earnings highlights:

• Revenue rose 5.5 percent to Rs 96,167 crore on a quarterly basis
• Operating profit fell 1.7 percent to Rs 14,892 crore.
• Operating margin contracted 110 basis points to 15.5 percent.
• The gross refining margin declined to $9.5 per barrel from $10 earlier.

Meanwhile, most brokerages have maintained their bullish stance on stock. Motilal Oswal and Nomura expect Reliance Industries to rise 29 percent from its last regular trade.

Indian equity benchmarks opened with steep losses dragged by Reliance Industries after it announced second quarter earnings post market hours on Wednesday.

The S&P BSE Sensex fell as much as 1.4 percent or 491 points to 34,288 and the NSE Nifty 50 Index dropped 1.4 percent or 148 points to 10,304.

Reliance Industries fell as much as 7 percent, the most since Oct. 5, to Rs 1,070.25 a after its profit in the July-September quarter met estimates as a strong performance by its petrochemicals business offset the weakness in its mainstay refining unit.

Fourteen of 19 sector gauges compiled by BSE were trading lower dragged by the S&P BSE Energy Index's 3.15 percent drop. On the other hand, the S&P BSE Telecvom Index was top gainer, up 0.7 percent.

• Rupee opened flat at 73.62 per dollar against previous close of 73.61.

Brent crude oil prices staying below $80 levels for a second session may provide some comfort to the Indian sovereign bonds. The yield on the 10-year note had jumped four basis points in the last session to 7.91 percent. For the week though, they are down seven basis points. Dealers will be closely tracking the bond auction cutoffs to gauge the liquidity outlook. Yield may trade in a range of 7.87-7.95 percent in the day.

In the currency market, the implied opening is suggesting a flattish opening for the rupee at around 73.6140 a dollar. Asian markets are mixed while the closely tracked South Korean won is up 0.2 percent. Dealers see the pair in a range of 73-74 a dollar in the session.

F&O Cues

• Nifty October Futures closed trading at 10444, premium of nine points.
• Nifty October OI down 1.5 percent; Nifty Bank Oct OI down 12.7 percent.
• Max OI for October series at 11,000 Call, OI at 57.8 lakh shares.
• Max OI for October series at 10,000 Put, OI at 31.5 lakh shares.

F&O Ban

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

Put-Call Ratio

• Nifty PCR at 1.21 versus 1.24.
• Nifty Bank PCR at 0.54 versus 1.19.

Brokerages On Reliance Industries

Credit Suisse

• Maintained ‘Outperform’ with a price target of Rs 1,320, implying a potential upside of 15 percent from the last regular trade.
• Refining surprised negatively while petchem continues to be solid.
• Consumer businesses continue to scale well. Acquisitions to accelerate broadband ambitions.
• Continue to like on combination of large cash generating businesses and high-growth consumer ones.

Nomura

• Maintained ‘Buy’ with a price target of Rs 1,480, implying a potential upside of 29 percent from the last regular trade.
• September quarter was marginally weaker. Further delay in petcoke gasification plant is disappointing.
• Jio’s pace of subs addition remains strong. Profitability to get better.
• New investments to facilitate Jio’s fibre to home foray.

IDFC Securities

• Maintained ‘Outperform’; cut price target to Rs 1,310 from Rs 1,350, implying a potential upside of 14 percent from the last regular trade.
• Strong petchem metrics, Jio beat and strong retail results.
• Key Negatives: Lower GRMs and higher interest costs.
• Price target cut to factor in higher debt.

Deutsche Bank Research

• Maintained ‘Buy’ with a price target of Rs 1,270, implying a potential upside of 11 percent from the last regular trade.
• Petchem and telecom drive robust growth in September quarter.
• Feedstock flexibility to boost petchem margins.
• Commissioning of petcoke gasifiers to improve refining margins from April 2019.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 1,315, implying a potential upside of 15 percent from the last regular trade.
• September quarter was modestly ahead of estimates led by chemicals, retail and Jio.
• Petchem margins led by strength in polyester chain and ethane feed stock sourcing.
• Free cash flow likely to remain elusive and disappoint consensus.

Motilal Oswal

• Maintained ‘Buy’ with a price target of Rs 1,479, implying a potential upside of 29 percent from the last regular trade.
• Consolidated Ebitda was in line led by healthy retail performance.
• Robust volume growth, healthy deltas drive petchem profitability.
• Jio to focus on subscriber growth in feature phone and postpaid segment.
• Announced acquisition of cable cos to fasten FTTH rollout.

Brokerages On Media

IDFC Securities

• Reliance Industries deal is the best thing that could happen to Hathway and Den.
• Deal to address leverage, capex and competition issues.
• RIL invested in MSOs to get access to LCOs given their fragmented nature.
• Well capitalised and consolidated MSO space is negative for Broadcasters and DTH players.
• Move Hathway and Den to ‘Under Review’ as more clarity required on role of these companies.
• Dish TV: Maintain ‘Outperform’; cut price target to Rs 84 from Rs 111, implying a potential upside of 67 percent from the last regular trade.

BofAML

• Dish likely to be vulnerable from RIL's acquisitions.
• See pressure on high ARPU/HD subs which would pressure overall ARPU.
• Hathway and Den to use funds to upgrade existing infrastructure.

Brokerages On ACC

CLSA

• Maintained ‘Buy’ with price target of Rs 1,900, implying a potential upside of 23 percent from the last regular trade.
• Positive surprise on cost and volumes offset by lower realisations.
• Blended unit Ebitda declined to Rs 570/t which was a disappointment.
• Mgmt. fairly optimistic on demand outlook and focus on cost efficiencies.

Deutsche Bank Research

• Maintained ‘Buy’; cut price target to Rs 1,730 from Rs 1,775, implying a potential upside of 12 percent from the last regular trade.
• September quarter missed estimates on weaker realisation.
• Continues to deliver on cost control.
• Better realisation and cost control to drive robust earnings growth.

Nomura

• Maintained ‘Buy’ with a price target of Rs 1,900, implying a potential upside of 23 percent from the last regular trade.
• September quarter was weak on lower realisations and rising costs.
• Remain sanguine on a cement cycle upturn.
• Rising costs inflation remains key risk to earnings in near term.

Brokerages On Mindtree

Citi

• Downgraded to ‘Neutral’ from ‘Buy’; cut price target to Rs 1,090 from Rs 1,240, implying a potential upside of 11 percent from the last regular trade.
• September quarter was weak and open a negative catalyst watch.
• Expect stock to correct given high expectations and sudden change in management commentary.
• Cut price target on cut in EPS estimates and lower valuation multiple.

PhillipCapital

• Maintained ‘Neutral’; cut price target to Rs 1,020 from Rs 1,070, implying a potential upside of 4 percent from the last regular trade.
• Muted revenue performance led by top client.
• Remain concerned about increasing dependency on top client.
• Expensive valuations leave limited upside from current levels.

IDFC Securities

• Maintained ‘Neutral’; cut price target to Rs 1,000 from Rs 1,160, implying a potential upside of 2 percent from the last regular trade.
• Disappointing quarter considering strong exit rates of June quarter and a weaker rupee.
• Management expects December quarter’s margins to be better, but revenue growth similar to that of the second quarter.
• Revenue and margin miss doesn’t bode well for multiples.

Motilal Oswal

• Maintained ‘Buy’; cut price target to Rs 1,125 from Rs 1,260, implying a potential upside of 15 percent from the last regular trade.
• Revenue miss; Cautious macro commentary in contrast to current sector mood.
• Customers engaging in short term contracts given uncertainty around Brexit.
• Soft commentary for near term will weigh on the valuation multiple.

Brokerages On NIIT Tech

Credit Suisse

• Upgraded to ‘Outperform’ from ‘Neutral’; raised price target to Rs 1,375 from Rs 1,250, potential upside of 16 percent from the last regular trade.
• September quarter reported strong numbers. Consistent pick-up in order wins.
• Lift estimates by 11-12 percent based on the second quarter numbers.
• Upgrade on better visibility of sustained growth in future.

Antique

• Maintained ‘Buy’; raised price target to Rs 1,700 from Rs 1,530, implying a potential upside of 43 percent from the last regular trade.
• Solid performance in the second quarter on revenue and margins; Significant beat on both fronts.
• Robust outlook continues; Deal pipeline getting stronger.
• Believe NIIT Tech will be amongst the fastest growing mid-cap IT Company.

PhillipCapital

• Maintained ‘Buy’; raised price target to Rs 1,400 from Rs 1,300, implying a potential upside of 18 percent from the last regular trade.
• Super strong performance across board.
• Strong order inflow paves way for strong double-digit growth in 2018-19.
• Reiterate positive stance and maintain it as top pick in midcap IT space.

Brokerages On Havells India

CLSA

• Maintained ‘Buy’ with a price target of Rs 710, implying a potential upside of 21 percent from the last regular trade.
• Switchgears reports strong growth and commodity volatility impacts cable margin.
• Robust growth in ECDs continues; Lighting business margin stable.
• Lloyd’s backward integration plans on-track.

Citi

• Maintained ‘Neutral’ with a price target of Rs 726, implying a potential upside of 24 percent from the last regular trade.
• Topline growth healthy, but margins impacted by commodity cost pressures.
• High channel inventory, seasonal slackness, commodity cost and forex movements impacted Lloyd.
• Maintain neutral on expensive valuations.

Credit Suisse

• Maintained ‘Outperform’; cut price target to Rs 700 from Rs 725, implying a potential upside of 19 percent from the last regular trade.
• Very strong revenue growth but faced significant drop in margins in the second quarter.
• Cut FY19-21 EPS estimates by 7 percent to reflect weaker-than-expected margins.
• Remain positive on its ability to grow faster than market.

More Brokerage Calls

Citi on Dilip Buildcon

• Maintained ‘Buy’; cut price target to Rs 966 from Rs 1,271, implying a potential upside of 107 percent from the last regular trade.
• Price target cut to factor in lower sales, margins and lower valuation multiples.
• Cut EPS estimates over FY19-21 by 16-25 percent, while valuation multiple lowered due to recent derating.
• Rising interest rates unlikely to have a significant impact on road project returns.

PhillipCapital on Cyient

• Maintained ‘Buy’ with a price target of Rs 940, implying a potential upside of 40 percent 40 percent from the last regular trade.
• Strong revenue performance while margins came way above estimates.
• Growth outlook for next year remains upbeat.
• Perfect way to play the growing ERD segment.

• Adlabs Entertainment Ltd. and Capri Global Capital Ltd. added to ASM Framework.
• 8K Miles Software Services Limited retained in ASM Framework.
• Indian Energy Exchange ex-date for stock split to Re 1 from Rs. 10.

• DHFL Pension Reserves Investment Trust Fund sold 25.2 lakh shares or 0.80 percent equity at Rs. 245.92 each.

La Opala RG

• ABG Capital sold 8.2 lakh shares or 0.74 percent equity at Rs. 225 each.
• LTR Focus Fund sold 6 lakh shares or 0.54 percent equity at Rs. 225 each.
• Steadview Capital Mauritius Limited sold 34.4 lakh shares or 3.1 percent equity at Rs. 225 each.
• UTI Mutual Fund acquired 15.5 lakh shares or 1.4 percent equity at Rs. 225 each
• DSP Blackrock Mutual Fund acquired 22.7 lakh shares or 2.05 percent equity at Rs. 225 each.

Nifty Earnings To Watch

• UltraTech Cement

Other Earnings To Watch

• SBI Life Insurance
• ICICI Securities

Earnings Reactions To Watch

Reliance Industries (Q2, QoQ)

• Revenue up 5.5 percent at Rs 96,167 crore.
• Net profit up 0.4 percent at Rs 8,859 crore,
• Ebitda down 1.7 percent at Rs 14,892 crore.
• Margin at 15.5 percent versus 16.6 percent.
• GRM at $9.5/bbl versus $10.5/bbl.

Also Read: Q2 Results: Reliance Industries’ Profit Meets Estimates On Petchem Boost

Reliance Jio (Q2, QoQ)

• Revenue up 14 percent at Rs 9,240 crore.
• Net profit up 11.3 percent at Rs 681 crore.
• Ebitda up 13.5 percent at Rs 3572 crore.
• Margin at 38.66 percent versus 38.81 percent.
• Average Revenue Per User down 1.9 percent at Rs 132.

Also Read: Q2 Results: Reliance Jio Profit Rises On Aggressive Subscriber Additions

Mindtree (Q2, QoQ)

• Revenue up 7.1 percent at Rs 1,755.4 crore.
• Net profit up 30.4 percent at Rs 206.3 crore.
• EBIT up 21.9 percent at Rs 229.5 crore.
• Margin at 13.1 percent versus 11.5 percent.

Havells India (Q2, YoY)

• Revenue up 23.3 percent at Rs 2,191 crore.
• Net Profit up 4.7 percent at Rs 179 crore.
• Ebitda up 2 percent at Rs 263 crore.
• Margins at 12 percent versus 14.5 percent.
• Gross margins down 400 basis points at 38.3 percent.

ACC (Q3 CY18, YoY)

• Revenue up 10.2 percent at Rs 3,433.2 crore.
• Net profit up 15.7 percent at Rs 205.6 crore.
• Ebitda up 6.7 percent at Rs 442.7 crore.
• Margin at 12.9 percent versus 13.3 percent.
• Volumes up 10 percent at 6.55 MT vs 5.96 MT.
• Ebidta/tonne at Rs 676 versus Rs 696.

Cyient (Q2, QoQ)

• Revenue up 9.9 percent at Rs 1,186.9 crore.
• Net profit up 54.9 percent at Rs 127.1 crore.
• EBIT up 30.4 percent at Rs 123.9 crore.
• Margin at 10.4 percent versus 8.8 percent.
• Other Income at Rs 56.9 crore vs Rs 16.9 crore.

DCB Bank (Q2, YoY)

• Net Interest Income down 19 percent at Rs 281.9 crore.
• Net profit up 24.6 percent at Rs 73.4 crore.
• Provisions at Rs 31.9 crore versus Rs 33.3 crore (QoQ).
• GNPA at 1.84 percent versus 1.86 percent (QoQ).
• NNPA at 0.7 percent versus 0.72 percent (QoQ).

Mphasis (Q2, QoQ)

• Revenue up 5.2 percent at Rs 1,915 crore.
• Net profit up 5 percent at Rs 271 crore.
• EBIT up 4 percent at Rs 315 crore
• EBIT Margin at 16.4 percent versus 16.5 percent.
• Revenue growth on constant currency basis was 3 percent and 15 percent on a yearly basis.

• Reliance Industries to acquire 51.3 percent stake in Hathway Cable for Rs 2,940 crore and 66 percent stake in Den Networks for Rs 2,290. It will also make an open offer to existing public shareholders of the companies.
• Videocon Industries: IDBI Bank has withdrawn nomination of Sanjiv Kumar Sachdev from the board of directors with effect from Sept. 17.
• Yes Bank received a reaffirmation order from RBI a successor to Rana Kapoor, MD and CEO of the bank should be appointed by Feb. 1, 2019. The Bank’s appointed selection committee is targeting to complete the recruitment process latest by mid-December this year.
• NTPC is said to plan buying stressed power assets, according to a Bloomberg report.
• Arcelor Mittal to pay $1 billion to creditors of Uttam Galva and KSS Petron to make its offer for Essar Steel eligible for consideration by Essar’s creditors committee. This council of creditors has 8 weeks to accept the offer, Bloomberg reported.
• State Bank of India to consider raising of equity capital on Oct. 22.
• Inox Leisure clarified that no negotiation has taken place between the company and Cinepolis India.
• APL Apollo Tubes’ wholly owned subsidiary to acquire promoters shares and warrants of Apollo Tricoat Tubes at Rs 120 per share, discount of 11 percent to the current market price. The total acquisition would cost APL Apollo close to Rs 96 crore. Company would also make open offer to the public shareholders of Apollo Tricoat.
• Fortis Healthcare And Religare Enterprises: SEBI directs Malvinder, Shivinder Singh, Religare Finvest Ltd. and seven others to repay Rs 403 crore to Fortis Healthcare Ltd. in three months. These 10 entities prevented from disposing off assets. Singh brothers not to associate themselves with affairs of the company.
• Cadila Healthcare: Zydus receives tentative approval from the U.S. FDA for Colchicine Tablets. It will be manufactured at the group’s formulations manufacturing facility at SEZ, Ahmedabad. This medication is used to prevent or treat attacks of gout.
• Tata Sons Ltd., the parent of Tata Group, is mulling acquiring stake in crisis-hit Jet Airways (India) Ltd., sources told PTI.

• India’s richest brothers and how they grew $41 billion apart.
• Hold Tight: Here’s why the NBFC scare isn’t over yet.
• Air India receives Rs 1,000 crore from National Small Savings Fund.
• U.S. Treasury Department report says India may be removed from currency watchlist.

• West Texas Intermediate crude rose 0.2 percent to $68.81 a barrel.
• Brent crude traded below $80 for the first time in October.
• Gold was steady at $1,225.85 an ounce.

Shanghai Exchange:

• Copper declined for the fourth day, down 0.5 percent.
• Zinc traded 0.9 percent lower.
• Steel traded lower for the second day, down 1.1 percent.
• Aluminium traded 0.2 percent higher.
• Rubber traded lower for the second day, down 0.7 percent.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.4 percent to 10,334.50 as of 8:45 a.m.

Asian stocks posted further losses Friday after another slide in the U.S. overnight. China’s equities rose, reversing losses, after verbal intervention by the nation’s top financial regulators, who assured they’ll keep financial risks under control.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell podcast!