Sensex, Nifty Gain For Third Day As Inflation Cools To 17-Month Low

Indian equity benchmarks rose for third day in a row after inflation fell to its lowest in 17 months in November as food prices continued to decline and lower crude costs brought down fuel inflation.

The S&P BSE Sensex rose 0.42 percent or 150.57 points to 35,929.64 and the NSE Nifty 50 Index climbed 0.5 percent or 54 points to 10,791.55.

Investors sentiment got a boost as slower-than-estimated inflation may enable the new central bank governor to reverse an interest-rate increase cycle.

Reserve Bank of India’s new Governor Shaktikanta Das stoked speculation of interest-rate cuts saying inflation was “benign” and emphasised that supporting economic growth was within the ambit of the RBI, his comments came after market hours yesterday.

Sixteen of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Consumer Durables Index’s 1.4 percent gain. On the flipside, the S&P BSE Metal Index was top loser, down 0.7 percent.

Indian Oil's board approved share buyback of up to 297.7 million shares at Rs 149 per share.

• Indian Oil to spend Rs 4,435 crore on share buyback plan
• Board sets Dec. 25 as record date for buyback and dividend
• Stock closed at 0.96 percent higher at Rs 137.40

Shares of the Mumbai-based private lender fell as much as 7.66 percent, the most since Nov. 29, to Rs 172.30.

Yes Bank Ltd.'s board has chosen a new non-executive, part-time chairman, the lender said in a filing to the exchanges, without mentioning the name.

The bank will now seek requisite approvals from the Reserve Bank of India, it said in a statement.

The board members at today's meet included two newly independent directors TS Vijayan and Uttam Agarwal. This leaves only one vacancy on the board after three members left the board over the last month citing governance issues.

As for a replacement for Chief Executive Officer Rana Kapoor, the lender has shortlisted names and will submit the final recommendation to the central bank after the next board meeting on Jan. 9, 2019.

• Yes Bank has 19.5 lakh shares change hands on the NSE. Stock down 2.8 percent at Rs 181.40.

Buyers and sellers were not immediately known

Source: Bloomberg

State-run bank chiefs demanded an easing in norms related to bad loan recognition and the so-called prompt corrective action framework in their first meeting with the new Reserve Bank of India Governor Shaktikanta Das, Bloomberg reported citing people familiar with the matter.

• Lenders also demanded boost in liquidity to ease a funding crunch for non-bank financiers, the people said asking not to be named as the information is not public.
• Governor Das met heads of State Bank of India, Punjab National Bank, Union Bank, Central Bank of India, Bank of India and Dena Bank at the central bank office today.

Shares of the Anil Ambani-led company erased gains and fell as much as 4.8 percent to Rs 14.90 after the Supreme Court rejected its plea to grant more time to pay money to Ericsson.

Reliance Communications has to pay Ericsson Rs 550 crore by December 15.

Shares of the Chandigarh-based steel wheel rim maker recovered from intraday low levels and rose as much as 1 percent to Rs 992.25 after it received order for 90,000 truck wheels from truck and trailer aftermarket in U.S.

The company is likely to generate additional revenue of $4 million from this order, Steel Strips Wheels said in an exchange filing.

India's GDP growth will slow to just above 7 percent for fiscal 2019 and 2020. This result is below an estimated 7.4 percent out-turn in the fiscal year ending March 2018 and below the pick-up in growth that we envisaged a few months ago, Michael Taylor, Chief Credit Officer - Asia Pacific at Moody's Investors Service said.

In a downside scenario, a sharper slowdown in NBFI (non-bank financial institutions) credit supply would significantly tighten overall credit availability, drive up borrowing costs and reduce economic growth by around half a percentage point over a few years, Joy Rankothge, Senior Analyst & VP at Moody's Investors Service said.

Shares of the Bengaluru-based active pharmaceutical ingredients maker recovered from low levels and rose as much as 4.15 percent to Rs 74 after its arm — SeQuent Research received Establishment Inspection Report (EIR) from U.S. FDA for analytical lab at Mangalore.

Indian equity benchmarks held on to gains led by rate sensitive shares after inflation cooled down to lowest level in 17 months in November.

The S&P BSE Sensex rose 0.6 percent or 215 points to 35,994 and the NSE Nifty 50 Index climbed 0.62 percent or 67 points to 10,805.

All the 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Realty Index's 1.8 percent gain.

The overall breadth was positive as 1,542 shares were advancing while 775 were declining on the BSE.

Shares of the Delhi-based news broadcast company recovered from low levels and rose as much as 3.9 percent, the most since Dec. 11, to Rs 38.65.

NDTV in an exchange filing said that the final hearing in assessment year 2009-10 tax case is on May 14 and court has issued an absolute stay on tax department's demand.

Shares of the Mumbai-based automobile maker rose as much as 2.5 percent to Rs 168 after the company said it plans to raise passenger-vehicle prices across models by as much as Rs 40,000 to offset the impact of higher input costs and an increase in fuel prices.

The stock was top gainer on the 30-share Sensex.

Shares of the West Bengal-based railway carriage maker extended gains to third day and rose as much as 11 percent, the most since July 24, to Rs 82.90.

The stock has been moving higher ever since it won order worth Rs 1,560 crore for supply of 5,058 wagons to Indian Railways.

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

Premium on the contract rose 11.56 percent to Rs 45.85. Over 7.33 lakh shares were added to the open interest which stood at over 50.86 lakh shares.

Shares of the Coimbatore-based auto parts maker rose as much as 18.38 percent, the most since Feb. 10, to Rs 58.60.

Pricol signed a joint venture agreement with Israel-based mobile resource management company ‘Pointer Telocation’ to provide digital telematic solutions to both OEM and after-market segment players in India and other countries in South East Asia, the company said in a press release.

Shares of the Indiabulls Group companies extended rally on hopes of softer liquidity conditions after appointment of new RBI governor.

Shares of rate sensitive banking and real estate shares extended gains after inflation cooled down to lowest level in 17 months in November.

• Nifty Bank Index up 1 percent
• Nifty PSU Bank rose 2.76 percent
• Nifty Realty Index climbed 1.71 percent

High power committee has come out with good solution for Mundra Power Project as it has recommend amending the Power Purchase Agreement (PPA), Praveer Sinha, Managing Director & CEO of Tata Power told BloombergQuint in an interview.

Key highlight of the conversation:

• Hopeful that CERC will soon look into amended PPAs once states submit draft
• There is no single solution for various stressed power projects in India
• Every power unit may have its own problem to resolve
• Mundra Project is one of the low-cost power producing unit in the country
• Government needs to take into account merits of the case which could vary for different power projects
• Have been able to reduce transmission losses in Rajasthan
• Have received $155 million so far for stake sale in one of the Indonesian coal mines
• Expect to receive $100 million dues from sale of Indonesian coal mine stake this year
• Opportunities in India have improved than in overseas markets for the power generation business
• Focus of Tata Power has shifted for expansion in domestic market

Shares of the Mumbai-based construction related professional services provider rose as much as 5.42 percent to Rs 293.60.

The company has initiated the process to foray into financial services business with primary focus in rural India, Soril Infra said in an exchange notification.

The company has started the necessary process of acquiring an existing NBFC, it added.

• Bharti Infratel has 10.7 lakh shares change hands in a block. Stock down 0.4 percent at Rs 248.35
• ICICI Bank has 17 lakh shares change hands in a block. Stock up 0.7 percent at Rs 352.35.
• Jyothy Labs has 28.7 lakh shares change hands in a block deal. Stock down 2.65 percent at Rs 189.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Kolkata-based private lender rose as much as 7.85 percent, the most since Nov. 2, to Rs 509.

The Reserve Bank of India has allowed the lender to open 40 new branches. The bank was earlier debarred from opening new branches by the central bank. An email statement from the company stated that it has opened five branches and will open additional 35 branches by end of this month.

The stock has advanced 26 percent in the past 12 months compared to 7.7 percent in the S&P BSE Sensex Index.

Indian equity benchmarks rose after inflation cooled down to 17-month low led by gains in Reliance Industries, HDFC Bank, State Bank of India and ITC amid positive Asian cues.

The S&P BSE Sensex advanced 0.6 percent or 206 points to 35,985 and the NSE Nifty 50 Index climbed 0.7 percent or 73 points to 10,810.

All sector gauges barring the S&P BSE Healthcare Index were trading higher led by the S&P BSE FMCG and S&P BSE Realty Indices' 0.9 percent gain.

Mid- and small-cap shares were outperforming their larger peers as the S&P BSE MidCap and S&P BSE SmallCap Indices rose 1 percent each.

Indian rupee opened higher at 71.70 per dollar against yesterday's close of 72.02.

The local unit rose as much as 0.48 percent or 34 paise to 71.67 against the greenback.

The country's government bonds are expected to gain today on speculation that the RBI will shift to a neutral policy stance.

This comes after yesterday's slowing inflation figures. November inflation rose 2.33 percent year on year versus an estimated 2.58 percent.

Indranil Pan, economist at IDFC Bank said that fading inflation risks will offer RBI room to provide greater flexibility to adjust rates either way depending on what’s needed.

Yield on 10-year sovereign bonds fell 12 basis points to 7.41 percent on Wednesday, the lowest since April, after Shaktikanta Das was appointed as RBI's governor.

In currency markets, the rupee is likely to track a rise in emerging market peers that gained on some positive developments in the U.S.-China trade talks.

Implied forwards suggest that the rupee may start trading around 71.8882 against the dollar. On Wednesday, the rupee closed 0.23 percent lower at 72.02 per dollar.

Source: Bloomberg

Brokerage Radar

HSBC on Gujarat State Petronet

• Initiated ‘Reduce’ with a price target of Rs 152.
• Despite positive tariff revision, see earnings decline in the next financial year.
• Decline in volumes and lower capacity utilisation to impact top-line.
• Stock expensive at current multiples as a decline in earnings expected.

Morgan Stanley on InterGlobe Aviation

• Upgraded to ‘Overweight’ from ‘Equalweight’; hiked price target to Rs 1,311 from Rs 790.
• Competitive position has strengthened in recent downcycle.
• Signs of receding cost headwinds with rising yields.
• Attractive valuations; risk reward favourable.

Morgan Stanley on SBI

• Maintained ‘Overweight’; hiked price target to Rs 375 from Rs 350
• Bad loans caused large losses in the previous financial year and the first half of the current financial year; expect this to turn around from the next financial year.
• Provisions to drop quickly from the second half of the current financial year and core earnings to pick up
• Expect profit of more than Rs 30,000 crore and Rs 37,000 crore in the nest two financial years respectively.

Macquarie on Ujjivan Financial

• Maintained ‘Outperform’; cut price target to Rs 290 from Rs 460.
• RBI rules an overhang, but opportunity for long-term investors.
• Improving business fundamentals are being overlooked.
• Cut EPS estimates to factor in higher cost of funds.
• Think there is a case for stock to double in next three years.

CLSA on NTPC

• Maintained ‘Buy’; cut price target to Rs 180 from Rs 190.
• Stock has fallen on CPSE ETF-related share supply and OFS speculation.
• Speculated acquisition of SJVN would be value accretive from day one.
• Start of plant shutdown to help return on equity recovery in the second half of the current financial year.

Morgan Stanley on ACC and Ambuja

• Announces next round of expansion.
• Capacity expansion is a medium-term positive.
• Near-term volume growth constrained as utilisations at over 80 percent.

Jefferies on Dabur

• Maintained ‘Buy’ with a price target of Rs 460.
• Market share gain continues amidst steady demand.
• Management reiterated steady demand scenario and improving execution.
• Investments to impact the current financial year’s margins but should uptick in the next financial year aided by benign raw material cost.

• Nifty December Futures closed trading at 10784, premium of 46 points.
• Max open interest for December series at 11,000 Call (open interest at 43.5 lakh shares).
• Max open interest for December series at 10,000 Put (open interest at 42.9 lakh shares).

Who’s Meeting Whom

• Mahindra Logistics to meet Ashmore Capital on Dec. 24.
• Mahindra Holiday’s and Resorts to meet HDFC AMC and Edelweiss Securities on Dec. 14.
• PSP Projects to meet Bellwether Capital and other investors from Dec. 13-17.
• Eicher Motors to meet India Nivesh, Sundaram MF and other investors from Dec. 13-14.

Insider Trading

• Greaves Cotton promoter group Karun Carpets acquired 1lakh shares on Dec. 10.
• Filatex India promoter group Fargo Estates acquired 2lakh shares from Dec. 10-11.
• Confidence Petroleum India promoter acquired 42k shares on Dec. 10.
• Jindal Stainless promoter and director Abhuday Jindal acquired 43,000 shares from Dec. 10-11.
• Skipper promoter group Skipper Polypipes acquired 80,000 shares from Dec. 10-11.

• India November trade balance, Bloomberg Estimates at -$15.1 billion, prior -$17.1 billion.
• India November Exports YoY, prior 17.9 percent.
• India November Imports YoY, prior 17.6 percent.

• Lupin announced that European Union’s General Court upheld European Commission’s decision in Perindopril litigation. The pharma company is liable to pay fine of 40 million euros. The company stated that it will study the General Court’s judgement and will evaluate further course of action.
• Sun Pharma’s Taro received tentative ANDA approval for Dapsone by the U.S. FDA.
• Bandhan Bank: RBI allowed the bank to open 40 new branches. The bank was earlier debarred from opening new branches by the central bank. An email statement from the company stated that it has opened five branches and will open additional 35 branches by end of this month.
• Pricol signed a joint venture agreement with Israel-based mobile resource management company ‘Pointer Telocation’ to provide digital telematic solutions to both OEM and after-market segment players in India and other countries in South East Asia.
• Strides Pharma Sciences’ Singapore arm received U.S. FDA approval for Lidocaine Ointment, which is used to numb the skin. This drug will be immediately launched by the company in the U.S.
• Sadbhav Engineering received appointed date from NHAI for EPC project worth Rs 981 crores in Uttar Pradesh.
• Soril Infra Resources said that the company has initiated the process to foray into financial services business with primary focus in rural India. The company has started the necessary process of acquiring an existing NBFC.
• United Bank of India increased interest rates on domestic term deposits for less than Rs 1 crore by 25 basis points across various tenors. one-year term-deposit rate at 6.5 percent.
• DLF’s board approved QIP of 17.3 crore equity shares. The company’s Saurabh Chawla, Group CFO resigned, while Ashok Tyagi (who was the CFO till December 2017) will be the new group CFO.
• Punjab & Sind Bank to raise equity via QIP upto Rs 500 crore and issue bonds worth Rs 1,500 crore in next 12 months. To issue five crore equity shares to employees.
• Infibeam Avenues’ board meet to consider strategic growth opportunities rescheduled to December 17.
• Yes Bank’s board meets today to shortlist names for new chairman for RBI’s approval and also consider the appointment of independent directors.
• Indian Oil’s board meet today to consider and approve buyback of equity shares and interim dividend.

• SEBI eases rules for foreign investors, allows side-pocketing by mutual funds
• RBI can’t dictate promoter shareholding limit, argues Kotak
• What India’s top three mutual funds bought and sold in November
• India’s IIP growth at 11-month high
• Cohen gets three years prison for hiding Trump’s ‘dirty deeds’
• A new governor takes charge
• Patel’s resignation highlights risks to RBI’s policy priorities: Fitch
• U.K.’s May wins confidence vote but vows to quit after Brexit
• India prepares for mammoth 2019 election
• SEBI wants tighter risk management for liquid, money market schemes
• Elections 2018: Rajdeep Sardesai’s ten takeaways
• Colgate’s ayurvedic bet to protect turf starts to pay off

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.34 percent or 36 points to 10,825 as of 7:14 a.m.

Asian equities ticked higher alongside U.S. equity futures on Thursday after a series of positive developments in U.S.-China trade talks buoyed global stocks. The British pound held its advance after U.K. Prime Minister Theresa May survived an attempt to oust her.

Stocks

• Japan’s Topix index rose 0.4 percent as of 9:12 a.m. in Tokyo.
• Australia’s S&P/ASX 200 Index was little changed.
• South Korea’s Kospi index added 0.3 percent.
• FTSE China A50 Index futures gained 0.4 percent.
• Hang Seng Index futures were up 0.9 percent.
• Futures on the S&P 500 gained 0.1 percent. The S&P 500 Index rose 0.5 percent.

Currencies

• The yen traded at 113.33 per dollar.
• The offshore yuan added 0.1 percent to 6.8700 per dollar after rising 0.5 percent.
• The Bloomberg Dollar Spot Index was steady after decreasing 0.4 percent.
• The euro traded at $1.1371.
• The British bought $1.2627, holding a 1.1 percent increase.

Commodities

• West Texas Intermediate crude added 0.3 percent to $51.32 a barrel.
• Gold was steady at $1,245.72 an ounce.

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