Sensex, Nifty Clock Worst Three-Day Decline In Over A Month

Indian equity benchmarks clocked their worst three-day performance in over a month led by declines in Reliance Industries, HDFC twins and Larsen & Toubro.

The S&P BSE Sensex fell 0.18 percent or 64 points to 35,592 and the NSE Nifty 50 Index declined 0.1 percent or 9 points to 10,652.

Eleven of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Energy Index's 1.2 percent decline. On the flipside, S&P BSE Telecom Index was top gainer, up 1 percent.

Mid- and small-cap shares ended mixed as the S&P BSE MidCap Index rose 0.4 percent while the S&P BSE SmallCap Index declined 0.1 percent.

Shares of the Mumbai-based mortgage lender rebounded as much as 15 percent from intraday low levels to hit high of Rs 750 on heavy volumes.

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

Shares of the Mumbai-based mortgage lender extended decline to second and fell as much as 12.76 percent intraday to Rs 161.30.

In the last two trading sessions, the stock has fallen 19 percent.

Shares of the Pune-based consumer finance company rose as 1.8 percent to Rs 2,505 after its profit surpassed Bloomberg consensus estimates in December quarter.

Key earnings highlights:

• Net interest income up 42 percent at Rs 3,094 crore versus Rs 2,182 crore (YoY); Estimate of Rs 2,880 crore.
• Net profit up 48 percent at Rs 1,023 crore versus Rs 692 crore (YoY); Estimate of Rs 990 crore.
• Other income at Rs 8.27 crore.
• Gross NPA at 1.55 percent versus 1.49 percent (QoQ)
• Net NPA at 0.62 percent versus 0.53 percent (QoQ)
• Provision up 44 percent at Rs 454 crore versus Rs 315 crore (QoQ)
• Assets under management rose 41 percent to Rs 1.09 lakh crore versus Rs 78,033 crore

Shares of the country's largest mortgage lender continue to trade on a weak note after its profit missed Bloomberg consensus estimates in December quarter.

Key earnings highlights:

• Net profit down 60 percent at Rs 2,114 crore versus Rs 5,300 crore (YoY); Estimate of Rs 2,210 crore.
• Had exceptional gain of Rs 3,675 crore in base quarter on account of HDFC Life IPO.
• Net interest income up 17 percent at Rs 3,191 crore versus Rs 2,736 crore. (YoY)
• Revenue up 20 percent at Rs 10,450 crore versus Rs 8,679 crore.
• HDFC approves proposal to issue debentures of up to Rs 45,000 crore
• Ireena Vital, of Mckinsey and Co, appointed to the board of directors of HDFC for a period of five years.

Keki Mistry, MD and CEO of HDFC in a media briefing says:

• Growth for individual loan book stands at 17 percent.
• Non-individual loan book grew by 9 percent.
• Total loan book has grown 9 percent to Rs 3.85 lakh crore in December quarter from Rs 3.42 lakh crore. (YoY)
• Net interest margin (NIM) has rises to 3.5 percent in December quarter from to 3.3 percent. (YoY)
• NIM including securitisation income.
• During third quarter, HDFC sold Rs 6,959 crore of individual loans.

• Lenders led by SBI will hold nearly 30 percent in Jet Airways after conversion of loans to equity.
• Etihad Airways’ stake may go above 40 percent from current 24 percent as they infuse more equity.
• Naresh Goyal’s stake may go below 20 percent from the current 51 percent after fresh share issuance.

Source: People With Knowledge Of The Matter

Indian equity benchmarks extended slide paced by losses in financial services and IT shares.

The S&P BSE Sensex fell 0.76 percent or 273 points to 35,385 and the NSE Nifty 50 Index broke below its crucial psychological level of 10,600 — down 0.66 percent or 70 points to 10,591.

Eight of 11 sector gauges compiled by National Stock Exchange were trading lower led by Nifty IT Index's 0.8 percent decline. On the other hand, Nifty Media Index was top gainer, up 1.2 percent.

The overall market breadth was negative as 1,340 shares were advancing while a little over 950 were advancing on the BSE.

Shares of the Chennai-based cement maker continue to trade lower despite its profit meeting Bloomberg consensus estimates in December quarter.

Key earnings highlights:

• Revenue at Rs 1,210 crore versus estimate of Rs 1,190 crore
• Net profit at Rs 100 crore versus estimate of Rs 104 crore
• Other income at Rs 6.56 crore

Shares of the Bengaluru-based drugmaker came off intraday high levels after it reported December quarter earnings.

Key earnings highlights:

• Net profit down 37.3 percent at Rs 30.94 crore versus Rs 49.35 crore (YoY)
• Revenue up 6 percent at Rs 794.50 crore versus Rs 748.79 crore (YoY)
• Ebitda down 3 percent at Rs 127.09 crore versus Rs 130.96 crore (YoY)
• Strides Pharma to exit Arrow for a value of A$394 million
• Strides Pharma Science to buy Vensun Pharmaceuticals
• Converting Jversus with Vivimed to 100 percent ownership
• To acquire 80 percent stake in Pharmapar
• Margin at 16 percent versus 17.5 percent (YoY)

Shares of the Ahmedabad-based sanitary ware maker swung between gains and losses after its profit met Bloomberg consensus estimates in December quarter.

Key earnings highlights:

• Revenue at Rs 319 crore versus Rs 290 crore (YoY)
• Net profit at Rs 28.36 crore versus Rs 23.08 crore (YoY)

The pound weakened against all its Group-of-10 peers as traders await the U.K. Parliament’s vote on Prime Minister Theresa May’s amended Brexit deal.

• GBP/USD fell for a second day, slipping 0.1 percent to 1.3156, with May seeking to block a proposal that would hand Parliament the power to delay the process and prevent a no-deal divorce. Sterling also fell against the euro.
• “Investors are definitely cautious ahead of the vote, and that’s driving some of the pound sentiment right now,” said Janu Chan, senior economist at St. George Bank in Sydney.
• The yen rose to its strongest level in more than a week as investors sought the safety of haven assets amid a worsening in U.S.-China tensions.

Source: Bloomberg

Shares of the Chennai-based non-banking finance company rose as much as 5.57 percent to Rs 123.30 after it formed a committee for evaluation of various options for listing of Equitas Small Finance Bank, Equitas said in an exchange filing.

Shares of the Ahmedabad-based drugmaker fell as much as 4.60 percent to Rs 201.05 after U.S. FDA issued Establishment Inspection Report (EIR) after conducting inspection in October.

Shares of the country's fourth largest private sector lender rose as much as 0.55 percent to Rs 660 ahead of December quarter earnings.

Here's what to expect from Axis Bank in December quarter. (Bloomberg consensus estimates YoY):

• Net interest income seen rising 14 percent to Rs 5,414 crore versus Rs 4,732 crore
• Net profit seen advancing 72 percent to Rs 1,251 crore versus Rs 726 crore
• First result post CEO change and could lead to some volatility in earnings
• Higher focus on coverage and hence elevated credit costs possible
• Expect slippages to be close to Rs 4,500 crore
• Fee income growth should be muted driven by weak corporate banking
• Some moderation in capital market activities will also dent earnings
• Strong growth in the retail and SME segments
• Expect asset quality to improve slightly

Shares of the country's largest motgage lender fell as much as 1.23 percent to Rs 1,923 ahead of December quarter earnings.

Here's what to expect from HDFC in December quarter:

• Net interest income seen declining 2 percent to Rs 2,905 crore versus Rs 2,959 crore.
• Net profit seen declining 61 percent at Rs 2,209 crore versus Rs 5,300 crore.
• Exceptional gain of Rs 3,675 crore in base quarter
• Exceptional gain due to HDFC Life IPO
• HDFC expected to gain market share due to NBFC crisis
• Expect AUM growth to remain broadly stable
• Mix of retail and corporate lending will remain stable
• Assignment income is likely to be robust in the quarter
• Asset quality has remained healthy over past several quarters

• Power Finance Corporation has 11.6 lakh shares change hands in a block deal. Stock down 0.45 percent at Rs 100.30.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Ahmedabad-based gas distribution company rose as much as 6.78 percent to Rs 94.55 after the Supreme Court ruled in favour of Adani Gas in case of city gas distribution network for Jaipur and Udaipur.

Supreme Court said:

• Petroleum and Natural Gas Regulatory Board's order withdrawing no-objection certificate to Adani Gas quashed.
• PNGRB to take a fresh decision about laying down gas pipelines in 2 cities - Jaipur and Udaipur.

Nifty's 10,700 call option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract fell 10 percent to Rs 58. Over 6.21 lakh shares were added to the open interest which stood at over 28.70 lakh shares.

Click here to see the complete options chain

• Tata Power has 10 lakh shares change hands in a block deal. Stock down 1.5 percent at Rs 69.90.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based public-sector bank rose as much as 4.53 percent to Rs 94.70 after its asset quality improved in December quarter.

Key earnings highlights:

• Net Interest Income up 33.2 percent at Rs 3,332.2 crore.
• Net loss at Rs 4,737.6 crore versus net loss of Rs 2,341.2 crore.
• Provisions at Rs 9,179 crore versus Rs 2,828 crore (QoQ).
• GNPA at 16.31 percent versus 16.36 percent (QoQ).
• NNPA at 5.87 percent versus 7.64 percent (QoQ).
• Reports large loss as it steps up provisions.
• Net NPA below threshold for RBI’s prompt corrective action.

Shares of Adani Power and Adani Ports rebounded after witnessing heavy selling pressure in yesterday's session.

• Adani Ports rose as much as 4.60 percent to Rs 341.
• Adani Power rose as much as 10 percent to Rs 44.

Shares of the Pune-based engineering firm rose as much as 10 percent, the most in over two weeks, to Rs 123.70 after its profit in December quarter more than tripled.

Key earnings highlights:

• Revenue up 33 percent at Rs 330.3 crore.
• Net profit up three times at Rs 22.4 crore.
• Ebitda up 42.5 percent at Rs 23.8 crore.
• Margin at 7.2 percent versus 6.7 percent.
• Other Income of Rs 7.4 crore in the current quarter.

Shares of the Pune-based software services company rose as much as 5.32 percent, the most in three weeks, to Rs 595 after its board approved share buyback proposal.

Persistent Systems will buy back up to 30 lakh shares or 3.75 percent equity at Rs 750 per share aggregating to Rs 225 crore. The buyback is at 33 percent premium to the current market price.

Persistent Systems also reported December quarter earnings post market hours yesterday. Here are the key earnings highlights:

• Revenue up 3.5 percent at Rs 864 crore.
• Profit up 4.1 percent at Rs 91.7 crore.
• EBIT up 2.9 percent at Rs 106 crore.
• EBIT margin flat at 12.3 percent.
• Declared dividend of Rs 8 per share.

Following its December quarter earnings CLSA maintained its buy call on the stock but cut its target price to Rs 700 from Rs 800. On the other hand, Investec maintained buy and raised target price to Rs 840 from Rs 800.

Indian equity benchmarks edged lower paced by declines in Mahindra & Mahindra, Bajaj Auto and Yes Bank.

The S&P BSE Sensex fell 0.33 percent or 119 points to 35,537.54 and the NSE Nifty 50 Index declined 0.42 percent or 45 points to 10,617.

Seventeen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Utilities Index's 0.75 percent decline. On the flipside, S&P BSE Bankex was among the gainers with a marginal gain.

Mid- and small-cap shares were underperforming their larger peers as the S&P BSE MidCap Index fell 0.66 percent and the S&P BSE SmallCap Index dropped 0.42 percent.

Rupee opened lower at 71.15 per dollar against yesterday's close of 71.11.

The local unit fell as much as 0.11 percent or 8 paise to 71.19 against the greenback.

A sale of state bonds today will test the investor appetite in the sovereign bond market that is grappling with the likely fiscal impact of government expected farm-relief package.

The yield on the most traded 2028 bond fell 1 basis point to 7.54 percent in the last session. It is likely to stay in a range of 7.52-7.60 percent in the day. The state bond sale cutoffs will be closely watched.

In the currency market, implied opening suggests spot may start trading around 71.13 a dollar. The sentiment in the region remains weak and rupee too may stay under pressure. Dealers see the currency in a range of 71 to 71.50 a dollar.

On Persistent Systems

CLSA

• Maintained ‘Buy’; cut price target to Rs 700 from Rs 780.
• Mixed revenue performance: Alliance & services weak but digital bounces back.
• Margin surprises positively, but gains will have to be reinvested.
• Buy due to a cheap valuation and buyback.

Investec

• Maintained ‘Buy’; hiked price target to Rs 840 from Rs 800.
• Solid margin performance; growth back in digital.
• Margin performance in December quarter was strong; refrain from extrapolating.
• Commentary suggest improving growth trajectory.

On Tata Power

CLSA

• Maintained ‘Buy’; cut price target to Rs 90 from Rs 96.
• December quarter’s core Ebitda fell due to domestic market obligation.
• Indonesian coal spread collapses 39 percent; highest contraction in 13 quarters.
• December quarter was one of its weakest quarters, but this could mark the bottom for several reasons.

Macquarie

• Maintained ‘Neutral’ with a price target of Rs 83.
• Earnings disappoint on account of higher under-recovery and lower profits in coal mining business.
• Coal business impacted by Indonesia’s domestic market obligation rule.
• Still await CERC’s final decision on tariffs for Mundra plant.

On Shriram Transport

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 1,320.
• December quarter was in line with estimates; AUM growth slowed down.
• Marginal deterioration in asset quality and NIM broadly stable.
• Await management commentary on liquidity position and trajectory in cost of funds.

JPMorgan

• Maintained ‘Overweight’ with a price target of Rs 1,600.
• December quarter review: Steady performance in a challenging quarter.
• Growth slows, but ROE construct maintained.
• Believe stock offers reasonable value; any reorganization of corporate structure to be watched.

On Escorts

Emkay

• Downgraded to ‘Hold’ from ‘Buy’; cut price target to Rs 660 from Rs 830.
• Management expects domestic tractor industry growth to taper from 19 percent in December quarter to 3-5 percent in the March quarter.
• Outlook for the next financial year remains uncertain due to factors such as high base and monsoons.
• Expect revenue growth to taper from 23 percent in the current financial year; project it to grow 8 percent and 2 percent in the next two financial years respectively.

More Calls

Investec on RBL Bank

• Maintained ‘Buy’ with a price target of Rs 660.
• Strong top line momentum led by credit cards; On target to touch 15 percent RoE by the next financial year.
• Higher provision on MFI loans post demon and high agri stress caused by farm loan waiver.
• Growth should come through and premium valuations are sustainable.

CLSA on Godrej Properties

• Maintained ‘Buy’ with a price target of Rs 1,024.
• Six new launches drive record sales in tough quarter.
• Cash flow positive and new project additions to pick-up pace.
• Consolidation benefits unfolding; maintain Godrej as top sector pick.
• r the next financial year remains uncertain due to factors such as high base and monsoons.
• Expect revenue growth to taper from 23 percent in the current financial year; project it to grow 8 percent and 2 percent in the next two financial years respectively.

• Nifty January futures closed trading at 10,677, premium of 15 points.
• Max open interest for January series at 11,000 Call (open interest at 50.3 lakh shares).
• Max open interest for January series at 10,500 Put (open interest at 28.5 lakh shares).

Bulk Deals

• Zee Entertainment Enterprises: DVI Fund Mauritius acquired 89.7 lakh shares or 0.93 percent equity at Rs 343.05 each
• Sadbhav Engineering: Promoter Shantaben Vishnubhai Patel acquired 9.52 lakh shares or 0.55 percent equity at Rs 190 each.

Trading Tweaks

• Sadhana Nitrochem ex-date for stock split from Rs 10 to Rs 5 per share.
• Seamec, 5paisa Capital, Vivimed Labs, SKIL Infrastructure to move into short term ASM Framework.
• HEG, Thirumalai Chemicals, Prabhat Dairy price band revised to 10 percent
• SMS Lifesciences price band revised to 5 percent

Who’s Meeting Whom

• PVR to meet investors from Jan. 29-31

Nifty Earnings To Watch

• Axis Bank
• Bajaj Finance
• Bajaj Finserv
• HCL Technologies
• Housing Development Finance Corporation

Other Earnings To Watch

• Apar Industries
• Apcotex Industries
• Bank of Baroda
• Bharat Financial Inclusion
• Bliss GVS Pharma
• Cera Sanitaryware
• Crompton Greaves Consumer Electricals
• DCM Shriram
• Eimco Elecon (India)
• Electrosteel Castings
• Eris Lifesciences
• Godrej Consumer Products
• Granules
• Hawkins Cookers
• Hester Biosciences
• Himadri Speciality Chemical
• Info Edge
• Johnson Controls
• Kalyani Forge
• Kansai Nerolac
• KEC International
• KEI Industries
• Mahanagar Gas
• Oriental Bank of Commerce
• Panasonic Carbon
• Ramco Industries
• SORIL Infra Resources
• Strides Pharma Science
• Tata Coffee
• Tata Steel BSL
• Teamlease Services
• Ramco Cements
• WABCO
• Welspun Enterprises
• Pokarna
• Kingfa Science & Technology
• Indiabulls Integrated Services
• Fertilizers and Chemicals Travancore

Earnings Reaction To Watch

Bank of India (Q3, YoY)

• Net Interest Income up 33.2 percent at Rs 3,332.2 crore.
• Net loss at Rs 4,737.6 crore versus net loss of Rs 2,341.2 crore.
• Provisions at Rs 9,179 crore versus Rs 2,828 crore (QoQ).
• GNPA at 16.31 percent versus 16.36 percent (QoQ).
• NNPA at 5.87 percent versus 7.64 percent (QoQ).
• Reports large loss as it steps up provisions.
• Net NPA below threshold for RBI’s prompt corrective action.

Shoppers Stop (Q3, YoY)

• Revenue up 2.9 percent at Rs 991.1 crore.
• Net profit up 2.7 times at Rs 44.3 crore.
• Ebitda up 12.2 percent at Rs 89.1 crore.
• Margin at 9 percent versus 8.2 percent.
• Exceptional loss of Rs 16.6 crore in base quarter.

Praj Industries (Q3, YoY)

• Revenue up 33 percent at Rs 330.3 crore.
• Net profit up three times at Rs 22.4 crore.
• Ebitda up 42.5 percent at Rs 23.8 crore.
• Margin at 7.2 percent versus 6.7 percent.
• Other Income of Rs 7.4 crore in the current quarter.

CEAT (Q3, YoY)

• Revenue up 8.9 percent at Rs 1,713.9 crore.
• Net profit down 36.1 percent at Rs 52.8 crore
• Ebitda down 23.8 percent at Rs 142.5 crore versus Rs 187 crore.
• Margins at 8.3 percent versus 11.9 percent.
• Raw material costs up 24 percent at Rs 1181.9 crore.

Persistent Systems (Q3, QoQ)

• Revenue up 3.5 percent at Rs 864 crore.
• Profit up 4.1 percent at Rs 91.7 crore.
• EBIT up 2.9 percent at Rs 106 crore.
• EBIT margin flat at 12.3 percent.
• Declared dividend of Rs 8 per share.

Siyaram Silk Mills (Q3, YoY)

• Revenue up 13.4 percent at Rs 446.3 crore.
• Net profit down 9.9 percent at Rs 20.1 crore.
• Ebitda up 4.6 percent at Rs 52.7 crore.
• Margin at 11.8 percent versus 12.8 percent.
• Finance cost up 49 percent at Rs 13.7 crore.

Music Broadcast (Q3, YoY)

• Revenue up 14.2 percent at Rs 87 crore.
• Net profit up 37.8 percent at Rs 16.4 crore.
• Ebitda up 22.7 percent at Rs 28.6 crore.
• Margin at 32.9 percent versus 30.6 percent.
• Phase III Market Utilisation at 53 percent.
• Inventory Utilisation for 39 radio stations moved up to 60-70 percent.

Chennai Petroleum (Q3, YoY)

• Revenue up 14.9 percent at Rs 9,865.8 crore.
• Net loss at Rs 363 crore versus net profit of Rs 392 crore.
• Ebitda loss at Rs 345.4 crore versus Ebitda profit at Rs 833.8 crore.
• Raw material cost up 15 percent at Rs 8,856.4 crore.

• Persistent Systems: Board approved buyback of up to 30 lakh shares or 3.75 percent equity at Rs 750 per share aggregating to Rs 225 crore. The buyback is at 33 percent premium to the current market price.
• Zee Media Corporation: Vishwapati Trivedi resigned from the post of Independent Director with effect from Jan. 27 citing that he will not be able to contribute in ‘turbulent’ times.
• Syndicate Bank: Determined the issue price of Rs 37.75 per share in respect of preferential issue aggregating to Rs 728 crore to promoter-Government of India. The bank says that at the determined issue price it can allot up to 43.2 crore shares against a capital infusion of Rs 1,632 crore. With these actions, Government of India’s stake in the bank will increase from 76.16 percent to 81.23 percent.
• Aurionpro Solutions: Implements smart solutions in Noida Metro Project by automation of fare collection. This installation has been done between a consortium between SBI, SC Soft and the company itself.
• KNR Constructions: To sell its entire shareholding its JV with Cube Highways and Infra to the latter for Rs 73.6 crore in a phased manner.
• Power Grid Corporation of India: Arm commissioned 765 Kv transmission line in Tamil Nadu on Jan. 26.
• Astron Paper & Board Mill: Arm’s plant to remain shut from Jan. 30 to Feb. 6 for maintenance work.

• Here’s what Rahul Gandhi’s minimum income guarantee scheme will look like
• Bank of America India bond expert sees budget surprising market
• Finance Minister discusses steps to promote lending to MSME, agri sectors
• Bank of India moves closer to exiting RBI’s corrective action framework
• Tata Steel to cut debt by Rs 3,800 crore by selling, more assets
• Oil dips most in a month as China slowdown signals demand drop
• EU rules out any change to withdrawal agreement
• Foreign direct investments grew 18% in FY18, RBI data show
• SEBI provides clarity on lock-in period for warrants
• Government turns to RBI for help before polls
• Jet seeks shareholder nod to convert loans into equity

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.2 percent or 21 points to 10,666 as of 7:13 a.m.

Asian stocks declined Tuesday after their U.S. counterparts retreated on concerns the trade war with China is hitting corporate profits.

Shares posted modest losses across the region, with technology stocks underperforming after a reminder that U.S.-China tensions are deep seated: American prosecutors filed criminal charges against Huawei Technologies Co., China’s largest smartphone maker.

Asian Trade

• Japan’s Topix Index fell 0.7 percent.
• Hong Kong’s Hang Seng dropped 0.5 percent.
• Shanghai Composite fell 0.2 percent.
• Australia’s S&P/ASX 200 fell 0.6 percent.
• Korea’s Kospi declined 0.5 percent.
• S&P 500 futures retreated 0.3 percent. The S&P 500 fell 0.8 percent Monday.

Currencies

• The Bloomberg Dollar Spot Index was flat.
• The euro was little changed at $1.1423.
• The British pound declined 0.1 percent to $1.3145.
• The Japanese yen gained 0.1 percent to 109.22 per dollar.

Commodities

• West Texas Intermediate oil futures steadied at $52.14 a barrel after falling 3 percent Monday.
• Gold was little changed at $1,302.96 an ounce.