Sensex, Nifty Log Second Worst Week In Over A Month

India's NSE Nifty 50 Index edged lower paced by Zee Entertainment's biggest single day decline in nearly 20 years.

The S&P BSE Sensex fell 0.47 percent or 170 points to 36,025 and the NSE Nifty 50 Index dropped 0.64 percent or 69 points to 10,781.

For most part of the day, benchmarks traded firmly higher but wiped out gains in afternoon deals as Zee Entertainment dropped as much as 33.55 percent after a report said that its controlling shareholder Essel Group’s name had emerged in a probe linked to large deposits made after demonetisation.

Maruti Suzuki added to the selling pressure after its profit missed Bloomberg consensus estimates in December quarter.

All sector gauges compiled by National Stock Exchange, barring the Nifty IT Index ended lower led by the Nifty Media Index's 16 percent decline.

Mid- and small-cap shares also witnessed selling pressure as Nifty Midcap 100 and Nifty Smallcap 100 Indices declined over 1.5 percent each.

Shares of the Chennai-based bank fell as much as 10 percent to Rs 231 after its asset quality worsened in December quarter.

Key earnings highlights:

• Net interest income up 5.8 percent at Rs 1716.7 crore versus Rs 1622.7 crore
• Net profit down 49.8 percent at Rs 152.3 crore versus Rs 303.1 crore
• Provisions at Rs 973.9 crore versus Rs 385.5 crore (Rs 752.5crore QoQ)
• GNPA at 7.46 percent versus 7.16 percent (QoQ)
• NNPA at 4.42 percent versus 4.23 percent (QoQ)

Shares of the Delhi-based real estate developer fell as much as 19.5 percent, the most in over two years, to Rs 143.10 after CNBC TV18 reported that Central Bureau of Investigation visited the real estate major’s offices in Delhi-NCR in connection to a land acquisition matter.

Shares of the country's largest car maker fell as much as 9 percent, the most in over 18 months, to Rs 6,411 after its profit missed Bloomberg consensus estimates in December quarter.

Key earnings highlights:

• Revenue up 2 percent at Rs 19,668 crore versus Rs 19,283 crore (YoY); Estimate of Rs 19,600 crore
• Profit down 17 percent at Rs 1,489.30 crore versus Rs 1,799 crore (YoY); Estimate of Rs 1,695 crore
• Ebitda down 36 percent Rs 1,930 crore versus Rs 3,038 crore (YoY); Estimate of Rs 2,620 crore
• Margin at 9.8 percent versus 15.7 percent (YoY); Estimate of 13.4 percent

India's 50-share Nifty 50 index erased gains paced by losses in Zee Entertainment, UltraTech Cement and Asian Paints.

The Sensex rose 0.1 percent or 46 points to 36,236 and the NSE Nifty 50 Index declined 0.13 percent or 14 points to 10,834.

Nine of 11 sector gauges compiled by National Stock Exchange were trading lower led by Nifty Media Index's 8.1 percent decline. On the flipside, Nifty IT Index was top gainer, up 0.3 percent.

Selling pressure intensified in mid and small-caps as the Nifty Midcap 100 Index dropped 0.8 percent and the Nifty Smallcap 100 Index fell 0.7 percent.

Shares of the Mumbai-based entertainment channel operator fell as much as 13 percent, the most since August 2011, to Rs 377, also its lowest level in over two years on the back of heavy volumes.

Trading volume was more than double its 20-day average, according to data compiled by Bloomberg.

Over 5.66 lakh shares changed hands on the BSE compared with an average of 2.88 lakh shares traded daily in the past two weeks, as per information on BSE's website.

Shares of the Pune-based internal combustion engine maker rose as much as 5.32 percent to Rs 190 after it reported December quarter earnings.

Key earnings highlights:

• Revenue rose 13 percent to Rs 774.31 crore versus Rs 684.61 crore (YoY)
• Net profit rose 6.5 percent to Rs 42 crore versus Rs 39.45 crore (YoY)

Shares of graphite electrode makers extended decline on demand concerns.

Graphite India slid 8.8 percent to Rs 568.80, a seventh day of declines, while HEG fell 17 percent in two sessions and down 27 percent this month.

“The fundamentals for the sector remain the same,” with margins expected to be good for the next couple of quarters, says Anik Das, an analyst at Skp Securities, by phone. “Some investors were looking to exit the stocks at higher levels but we have seen some buying coming in on declines.”

Graphite India is being impacted by rising supplies coming into India from China; HEG is more focused on exports so impact limited. According to industry reports, ultra-high power graphite electrode prices dropped 7 percent from last week due to inventory buildup in China, Nomura says in report.

Source: Bloomberg

Over the past month, India's government has announced a range of policies to support the incomes of small enterprises and low-income households. It is also considering additional steps to support farmers facing financial distress.

In the absence of new revenue boosting measures, the policies will collectively make it harder for the government to achieve its fiscal consolidation objectives.

Meanwhile, meeting the short-term fiscal objectives through one-off sources of revenue and cuts in capital expenditure would denote low fiscal policy effectiveness.

Indian equity benchmarks came off intraday highs as ICICI Bank, Asian Paints and Hero MotoCorp came under selling pressure.

The Sensex rose 0.48 percent or 176 points to 36,371 and the NSE Nifty 50 Index advanced 0.38 percent or 41 points to 10,890.

Thirteen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Telecom Index's 2 percent gain. On the flipside, S&P BSE Realty Index was top loser, down 1 percent.

Mid- and small-cap shares were underperforming their larger peers as the S&P BSE MidCap Index fell 0.3 percent and the S&P BSE SmallCap Index declined 0.14 percent.

Shares of the country's largest infrastructure developer rose as much as 1.45 percent to Rs 1,314 ahead of December quarter earnings.

Here is what to expect from Larsen & Toubro in December quarter (Bloomberg consolidated consensus estimates YoY):

• Net sales seen at Rs 32,952 crore versus Rs 28,747 crore, up 15 percent.
• Net profit seen at Rs 1,900 crore versus Rs 1,490 crore, up 27 percent.
• Ebitda seen at Rs 3,653 crore versus Rs 3,144 crore, up 16 percent.
• Margin seen at 11.0 percent versus 10.9 percent.

Shares of the country's largest car maker rose as much as 1.31 percent to Rs 7,133 ahead of December quarter earnings.

Here is what to expect from Maruti Suzuki in December quarter (Bloomberg consensus estimates):

• Revenue seen at Rs 19,600 crore versus Rs 19,283, up 1 percent (YoY)
• Ebitda seen at Rs 2,620 crore versus Rs 3,038 crore, down 14 percent (YoY)
• Profit seen at Rs 1,695 crore versus Rs 1,799 crore, down 6 percent (YoY)
• Margin seen at 13.4 percent versus 15.8 percent (YoY)

Shares of the Noida-based broadcast satellite subscription television services provider fell as much as 8.79 percent, the most in three months, to Rs 30.60, also its lowest level since May 2009.

Nifty's 10,900 put option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract fell 40 percent to Rs 61.10. Over 9.52 lakh shares were added to the open interest which stood at over 31.81 lakh shares.

• Supreme Court upholds constitutional validity of IBC.
• Upholds ban on founders from bidding under the bankruptcy law.
• Supreme Court rejects operational creditors' challenge to the IBC.

Shares of the Mumbai-based drugmaker rose as much as 6.18 percent to Rs 2,848.25 after its profit rose 51 percent in December quarter.

Key earnings highlights:

• Revenue up 12.6 percent at Rs 513.8 crore.
• Net profit up 51.3 percent at Rs 131.9 crore.
• Ebitda up 31 percent at Rs 154.4 crore.
• Margin at 30.1 percent versus 25.8 percent.
• Other income up twice at Rs 64.4 crore.

Shares of the Pune-based fertiliser maker rose as much as 8.62 percent to Rs 115.25.

Deepak Fertilisers clarified that the company has been repaying commercial papers in accordance with due dates and the company along with its arms have no commercial papers outstanding as on date, it said in an exchange notification.

Shares of Spencer’s Retail got listed at Rs 225 and CESC Ventures was listed at Rs 545 on the exchanges today, after their demerger from CESC Ltd.

Soon after listing Spencer’s Retail declined 3.5 percent to Rs 217.10 and CESC Ventures fell 4.58 percent to Rs 520.

Both Spencer’s Retail and CESC Ventures will be a part of the trade-for-trade segment for 10 trading days after listing and be part of special pre-open session for IPO.

• Reliance Home Finance has 18.5 lakh shares change hands in a single block. Stock up 2.2 percent at Rs 38.90.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based private lender extended gains and rose as much as 13.74 percent to Rs 245 after it named Ravneet Singh Gill as the new CEO of the bank yesterday.

In the last two trading sessions, Yes Bank stock has surged as much as 24 percent, its best two-day gain since September 2013, according to data compiled by Bloomberg.

Shares of the Kolkata-based gas maker fell as much as 20 percent to Rs 568.65 after its promoters rejected the delisting from the bourses after discovering the company was worth nearly thrice its market capitalisation.

BOC Group Ltd. and Linde Holdings Netherlands B.V., the promoters, said in an exchange filing yesterday that the discovery price came to nearly Rs 2,025 per share in the delisting process.

Indian equity benchmarks staged a gap up opening paced by rally in Yes Bank which extended gains and rose as much as 14 percent after it named Ravneet Singh Gill as the new CEO.

The S&P BSE Sensex rose 0.75 percent or 276 points to 36,464 and the NSE Nifty 50 Index climbed 0.7 percent or 76 points to 10,926.

All 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Telecom Index's 1.5 percent gain.

Mid- and small-cap shares were also witnessing buying interest as the S&P BSE MidCap Index rose 0.4 percent and the S&P BSE SmallCap Index climbed 0.6 percent.

On Yes Bank

CLSA

• Maintained ‘Buy’; hiked price target to Rs 280 from Rs 260.
• Steady operating results and IL&FS pushes-up NPLs.
• New CEO comes with strong corporate banking experience.
• Clarity on strategy and capital raise could drive a re-rating.

UBS

• Maintained ‘Sell’ with a price target of Rs 150.
• CEO announcement positive; NPL and liabilities still a concern.
• RBI divergence report a key near-term catalyst.
• Due to NPL risks and wholesale funding believe risk-reward is unfavourable.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 310.
• Appointment of Ravneet Gill removes the uncertainty.
• December quarter’s net profit down due to miss on other income and provisions taken against IL&FS exposure.
• Catalyst: divergence report, new MD’s strategic directions.

On UltraTech

CLSA

• Maintained ‘Sell’ with a price target of Rs 3,150.
• December quarter results were results broadly in-line – net earnings ahead.
• Unit Ebitda down to multi-quarter low.
• Managment commentary was more cautious on cement pricing.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 4,420.
• December quarter reivew: Weak margins, but worst behind.
• Cost deflation to benefit from Q4, demand remains robust.
• UltraTech to outperform market growth and gain market share in the next two financial years.

Investec

• Maintained ‘Buy’; cut price target to Rs 4,118 from Rs 4,284.
• Ebitda complicated on arms-length Binani transfer, lack of disclosures.
• Management turned less optimistic noting surplus capacity and challenging price environment.
• Preferred large cap play; to trade at premium valuations going forward.

More Calls

UBS on Indian Auto Sector

• See potential headwinds to demand growth with safety norms for premium two wheelers and BS-VI.
• Expect 10-20 percent price increases for two wheelers over FY18-21 causing a slowdown in all segments.
• Bosch is not a material gainer from BS-VI as it has a limited presence in exhaust after treatment.
• Ashok will need to adopt selective catalytic reduction system, it may see sharper cost increases.
• Petrol to offset diesel decline in car market.
• HeroMoto Corp: Downgraded to ‘Sell’ from ‘Buy’; cut price target to Rs 2,650 from Rs 3,500.
• Bosch: Downgraded to ‘Sell’ from ‘Neutral’; cut price target to Rs 15,500 from Rs 21,000.
• Ashok Leyland: Maintained ‘Sell’; cut price target to Rs 80 from Rs 95.
• Eicher Motors: Maintained ‘Sell’; cut price target to Rs 19,000 from Rs 20,000.
• Bajaj Auto: Maintained ‘Sell’; cut price target to Rs 2,300 from Rs 2,400.
• Maruti Suzuki: Maintained ‘Buy’ with a price target of Rs 9,000.
• M&M: Maintained ‘Buy’ with a price target of Rs 950.

Investec on PNB Housing

• Maintained ‘Buy’; hiked price target to Rs 960 from Rs 935.
• Good performance in a volatile environment.
• Strong loan growth; Stable asset quality.
• Spreads decline due to increase in cost of funds.

Emkay on Sterlite Tech

• Maintained ‘Buy’ with a price target of Rs 520
• Seventh consecutive quarters of record profits; trend to continue for next two years.
• Expect 24 percent EPS CAGR, 34 percent RoE and 30 percent RoCE by FY21E.
• Stock looks cheap; good entry opportunity.

CLSA on Colgate

• Maintained ‘Buy’ with a price target of Rs 1,575.
• December quarter marked acceleration in growth rates with healthy margins.
• There may be some concern on margins in near term due to rise in key input prices.
• Remain assured on Colgate’s pricing power and see no risk to earnings forecasts.

F&O Cues

• Nifty January futures closed trading at 10868, premium of 18 points.
• Max open interest for January series at 11,000 call, (open interest at 43.9 lakh shares).
• Max open interest for January series at 10,700 put, (open interest at 31.1 lakh shares).

New Offerings

• K. Raheja Corp-Promoted Chalet Hotels may announce shares sale price in IPO; offer opens Jan. 29 and closes on Jan. 31.
• Xelpmoc Design IPO fully subscribed; gets 126 percent demand for shares offered on second day sale. The offer closes today.

Bulk Deals

• CARE Ratings: Norges Bank sold 2.48 lakh shares or 0.84 percent equity at Rs 985 each.
• Balaji Telefilms: GHI Group sold 24.82 lakh shares or 2.45 percent equity at Rs 89 each.
• Orissa Minerals Development Company: GHI JBD sold 30,900 shares or 0.51 percent equity at Rs 828.65 each.

Shankara Building Product

• UBS Principal Capital Asia acquired 4.6 lakh shares or 2 percent equity at Rs 447.35 each.
• Mondrian Emerging Markets Small Cap Equity Fund sold 2.43 lakh shares or 1.07 percent equity at Rs 447.61 each.
• Ontario Pension Board sold 2.26 lakh shares or 0.99 percent equity at Rs 447.61 each.

Insider Trading

• Future Retail promoter Future Corporate Resources acquired 5.2 lakh shares on Jan. 22.
• Aarti Industries promoter Chandrakant Vallabhaji Gogri sold 12,000 shares from Jan. 21-22.
• Aster DM Healthcare promoter Dr. Azad Moopen acquired 30,000 shares on Jan. 23.

(As reported on Jan. 25)

Nifty Earnings To Watch

• Larsen & Toubro
• Maruti Suzuki

Other Earnings To Watch

• Dewan Housing Finance
• GATI
• Gruh Finance
• Gujarat State Fertilizers & Chemicals
• Kirloskar Oil Engines
• Mahindra & Mahindra Financial Services
• Rane Engine Valve
• Shriram City Union Finance
• Sundaram Clayton
• V2 Retail,
• Wonderla Holidays
• Foseco
• JTEKT India
• Kirloskar Brothers
• Kirloskar Oil Engines
• Poly Medicure
• Swaraj Engines

Earnings Reaction To Watch

PNB Housing Finance (Q3, YoY)

• Net interest income up 36.1 percent at Rs 667.4 crore.
• Net profit up 32 percent at Rs 303 crore.
• Net interest margin at 3.06 percent versus 3.02 percent.
• AUM up 38 percent at Rs 79,737 crore.

Quess Corp (Q3, YoY)

• Revenue up 37.1 percent at Rs 2,172.2 crore.
• Net profit up 4.4 percent at Rs 64 crore.
• Ebitda up 30.1 percent at Rs 118.4 crore.
• Margin at 5.5 percent versus 5.7 percent.

Hatsun Agro Product (Q3, YoY)

• Revenue up 14 percent at Rs 1154.5 crore.
• Net profit up 23.3 percent at Rs 18.5 crore.
• Ebitda up 8.9 percent at Rs 94.6 crore.
• Margin at 8.2 percent versus 8.6 percent.

Biocon (Q3, YoY)

• Revenue up 45.6 percent at Rs 1,540.8 crore.
• Net profit up 2.4 times at Rs 217.2 crore.
• Ebitda up 71.7 percent at Rs 380.7 crore.
• Margin at 24.7 percent versus 21 percent.

Bharat Bijlee (Q3, YoY)

• Revenue down 1.3 percent at Rs 224.8 crore.
• Net profit up 34 percent at Rs 13 crore.
• Ebitda up 34 percent at Rs 18.9 crore.
• Margin at 8.4 percent versus 6.2 percent.

Pfizer (Q3, YoY)

• Revenue up 12.6 percent at Rs 513.8 crore.
• Net profit up 51.3 percent at Rs 131.9 crore.
• Ebitda up 31 percent at Rs 154.4 crore.
• Margin at 30.1 percent versus 25.8 percent.
• Other income up twice at Rs 64.4 crore.

Mphasis (Q3, QoQ)

• Revenue up 3 percent at Rs 1,971 crore.
• Net profit up 2.6 percent at Rs 278 crore.
• EBIT down 1 percent at Rs 311 crore.
• EBIT Margin at 15.8 percent versus 16.4 percent.

Sun Teck Realty (Q3, YoY)

• Revenue down 3.4 percent at Rs 194.7 crore.
• Net profit down 21.2 percent at Rs 43.9 crore.
• Ebitda down 8.7 percent at Rs 81.3 crore.
• Margin at 41.8 percent versus 44.2 percent.

• Yes Bank appointed Maheswar Sahu and Anil Jaggia as independent directors and recommended Ashish Agarwal to the Reserve Bank of India for the post of executive director.
• Interglobe Aviation appointed Ronojoy Dutta as chief executive officer and Meleveeti Damodaran as chairman of the company with effect from Jan. 24.
• Oriental Hotels’ Chief Financial Officer Rajneesh Jain resigned from his post with effect from Feb. 4. Sreyas Arumbakkam was chosen as the CFO-designate for the company.
• Linde India promoter BOC Group rejected discovered price of Rs 2,025 per share for the company’s delisting. The acquiring entities will launch open offer again after the public announcement for the delisting which will happen on Jan. 25.
• Deepak Fertilisers & Petrochemicals clarified that the company had been repaying commercial papers in accordance with due dates and the company along with its arms have no commercial papers outstanding as on date.
• UPL said that with respect to its 100 percent acquisition of the U.S.-based Arysta LifeScience, both parties obtained all regulatory approvals to complete the transaction, which is expected to close by Jan. 31.
• Laxmi Machine Works launched nine varieties of machining centers and three types of lathes machines for use in heavy duty tools industry and auto industry.

• CBI files FIR against Chanda Kochhar; role of KV Kamath may be probed
• Yes Bank names Ravneet Gill as CEO
• IndiGo appoints Ronojoy Dutta as CEO
• FIR against Chanda Kochhar: What the CBI alleges
• Stricter emission norms a Y2K moment for automakers, says Pawan Goenka
• NSE, SGX submit plan to trade through Gujarat finance hub
• Aditya Mittal calls Ruias’ Essar Steel bid a tactic to delay resolution
• The hidden subtext in Priyanka Gandhi’s political entry
• Journalists need to be better listeners, says Washington Post’s Martin Baron

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.5 percent or 54 points to 10,940 as of 8:28 a.m.

Stocks in Asia climbed on the final day of a week that’s seen the equity rally stall amid conflicting signals over U.S.-China trade progress. The pound climbed on reports Northern Ireland’s Democratic Unionist Party has privately agreed to back the Brexit deal.

Shares in Japan, Hong Kong and China all gained. Technology companies led the way following a strong U.S. session for chipmakers, and shrugged off a weak sales forecast from Intel Corp.

Stocks

• The MSCI Asia Pacific Index gained 0.4 percent as of 9:30 a.m. Hong Kong time.
• Japan’s Topix Index rose 0.5 percent.
• Futures on the S&P 500 Index were flat after the underlying gauge rose 0.1 percent.
• Hang Seng added 0.6 percent.
• Shanghai Composite index gained 0.2 percent.
• Australia’s S&P/ASX 200 Index rose 0.4 percent.

Currencies

• The yen was flat at 109.67 per dollar.
• The offshore yuan was steady at 6.7945 per dollar.
• The Bloomberg Dollar Spot Index was little changed.
• The euro held at $1.1311.
• The British pound rose 0.3 percent to $1.3103.
• The Aussie slid 0.2 percent to 70.78 U.S. cents.

Commodities

• West Texas Intermediate crude rose 0.1 percent to $53.16 a barrel.
• Gold held at $1,281.62 an ounce.

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