Sensex, Nifty Snap Six-Day Rally As HDFC Twins Drag

Indian equity benchmarks snapped their longest run of gains in four months on higher crude prices amid weakness in HDFC twins.

The S&P BSE Sensex fell 0.3 percent or 107 points to 36,134 and the NSE Nifty 50 Index declined 0.13 percent or 14 points to 10,869.

Twelve of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Realty Index’s 0.6 percent decline. On the flipside, the S&P BSE IT Index was top gainer, up 1.7 percent.

Mid- and small-cap shares closed on a muted note as the S&P BSE MidCap and S&P BSE SmallCap indices ended little changed.

Shares of the Noida-based IT company rose as much as 2.44 percent to Rs 1,043 after it expanded strategic IT partnership with Barclays.

HCL Technologies will start new operations centre in Lithuania and deal will be concluded first quarter of calendar year 2019, HCL Technologies said in a press release.

Shares of the Mumbai-based drugmaker rose as much as 2.5 percent to Rs 1,950 after the U.S. drug regulator closed inspection of its St. Louis plant in U.S. with one observation.

In response to Form 483 issued by U.S. FDA has containing one observation, the company has submitted a detailed corrective and preventive action (CAPA) plan to the regulator within the stipulated timelines, Alkem Labs said in an exchange notification.

Shares of the Gujarat-based tiles maker rose as much as 5.93 percent, the most in over a week, to Rs 209.

The company’s board approved issuance of 20 lakh convertible warrants to non-promoters of the company — Santario Ceramics and Oxento Ceramics at Rs 245 per convertible warrant, Asian Granito said in an exchange notification.

Indian equity benchmarks were trading on a weak note weighed down by selling pressure in financial services and metal shares.

The Sensex fell 0.36 percent or 131 points to 36,109 and the NSE Nifty 50 Index slipped 0.25 percent or 27 points to 10,856.

Eight of 11 sector gauges compiled by BSE were trading lower dragged by the Nifty Financial Services Index's 0.8 percent drop. On the other hand, the Nifty IT Index was top gainer, up 1.4 percent.

• Blue Dart Express: The Mumbai-based courier services provider rose as much as 1.8 percent to Rs 3,174. Trading volume was 40 times its 20-day average.
• Shriram City Union Finance: The Chennai-based consumer finance company rose as much as 3.52 percent to Rs 1,626. Trading volume was 20 times its 20-day average.
• Dr Lal Path Labs: The Mumbai-based pathology lab operator rose as much as 8 percent to Rs 972. Trading volume was 16 times its 20-day average.
• Mahindra Holidays & Resorts: The Chennai-based hospitality company rose as much as 3.57 percent to Rs 213. Trading volume was 11 times its 20-day average.

Akhilesh Ranjan, member of Central Board of Direct Taxes and Convenor of task force on Direct Tax Code says:

• Important to consider that a mere reduction in corporate tax cannot happen
• This needs to be accompanied by anti-avoidance measures

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 fell 11 percent to Rs 135.25. Over 99,000 shares were added to the open interest which stood at over 27.99 lakh shares.

Click here to see complete options chain

• Bharti Infratel has 15 lakh shares change hands in a block on the National Stock Exchange (NSE). Stock down 0.7 percent at Rs 254.
• Bank of Baroda has 26 lakh shares change hands in a block on NSE. Stock up 1.7 percent at Rs 109.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Anil Ambani-led company rallied for third day in a row returning as 43.53 percent to investors.

Reliance Communications had yesterday said its subsidiary Reliance Realty has furnished corporate guarantee of Rs 1,400 crore to Telecom Department as directed by the Supreme Court, stepping closer towards concluding its spectrum sale to Reliance Jio.

The Supreme Court on Nov. 30, had asked the Department of Telecom to give a no-objection certificate to Reliance Communications to sell its spectrum to Reliance Jio, provided a corporate guarantee of the said amount is furnished by its group firm in favour of government.

• Shares of sugar manufacturers were outperforming in an otherwise weak session. Mawana Sugars was the gainer among the sugar pack, it rose 5 percent to Rs 49.

Shares of the Mumbai-based airline operator rose as much as 2.92 percent to Rs 315 after it suspended lounge facility for privilege customers on economy class as it looks to cut costs.

Complimentary lounge access for JetPrivilege Platinum, Gold and Silver members travelling in economy class has been “temporarily suspended” starting this month, Jet Airways said on its website.

The Mumbai-based construction company rose as much as 3.84 percent to Rs 115 after its subsidiary signed an agreement with NHAI for four-laning of Sattanathapuram to Nagapattinam section on National Highway 45A in Tamil Nadu, Welspun Enterprises said in an exchange notification.

The bid project cost of the project stood at Rs 2,004.51 crore.

Shares of the Delhi-based flexible packaging company rose as much as 6.8 percent, the most in over a month, to Rs 297.

Its subsidiary FlexFilms has received the U.S. patent that covers entire categories of BOPET films. The company got the exclusive rights of manufacturing of the special film in the U.S., Europe and India.

Shares of the lubricating oil manufacturer rose as much as 15.75 percent, its biggest intraday jump in over two years, to Rs 882 after domestic brokerage Emkay initiated coverage on the stock with a 'Buy' for target price of Rs 1,150.

Emkay in a note said that strong volume growth trajectory is leading to market share gains and margins are likely to recover with proactive pricing, premiumisation and softer base oil prices.

The brokerage expects better sector outlook with premiumisation opportunities.

Shares of the country's largest drugmaker rebounded from its worst fall in 18 months and rose as much as 2 percent to Rs 465.

Sun Pharma’s promoter Dilip Shanghvi denied allegations of insider trading and poor corporate governance after a report that the market regulator may reopen its probe against Sun Pharma and some of its promoters for various lapses.

Shanghvi tried to allay investor concerns after PTI reported over the weekend that the Securities and Exchange Board of India is likely to reopen its probe into an insider trading case against Sun Pharmaceutical Industries and alleged lapses by some of its promoters and other entities in raising funds overseas. A whistleblower, according to the report, approached SEBI with a document alleging irregularities at the company.

Indian equity benchmarks were flat as gains in Sun Pharma, ONGC and Infosys were offset by losses in HDFC twins, Mahindra & Mahindra and Kotak Mahindra Bank.

The S&P BSE Sensex declined 0.15 percent or 54 points to 36,186 and the NSE Nifty 50 Index fell 0.14 percent or 15 points to 10,870.

Ten of 19 sector gauges compiled by BSE were trading lower dragged by the S&P BSE Realty Index's 0.55 percent drop. On the flipside, the S&P BSE Oil & Gas Index was top gainer, up 0.5 percent.

Mid- and small-cap shares were underperforming their larger peers as the S&P BSE MidCap and S&P BSE SmallCap Indices rose over 0.15 percent each.

• Rupee opened lower at 70.51 per dollar against yesterday’s close of 70.46.

Emkay on Gulf Oil

• Initiated ‘Buy’ with a price target of Rs 1,150.
• Strong volume growth trajectory leading to market share gains.
• Margins likely to recover with proactive pricing, premiumisation and softer base oil prices.
• Expect better sector outlook with premiumisation opportunities.

UBS on UltraTech Cement

• Maintained ‘Buy’ with a price target of Rs 4,700.
• Cut FY19-21 EPS estimates by 11-14 percent to factor in Binani acquisition.
• Expect pricing benefits within few months and cost synergies to be realised throughout the next financial year.
• Improving product mix and easing cost elements could boost margins.

On Sun Pharma

Edelweiss

• Maintained ‘Reduce’; cut price target to Rs 430 from Rs 500.
• Seems to be no end to Sun Pharma’s woes.
• Questions regarding unsecured loan extended to Aditya Medisales remain unanswered.
• Other issues were dated, but enough to question the track record of Sun Pharma.
• Unless Sun re-evaluates its structures and transactions, these issues will overshadow overall performance.

JPMorgan

• Maintained ‘Neutral’ with a price target of Rs 525.
• Sun Pharma did not receive any query from SEBI, but the news does create some uncertainty.
• Medium-term earnings trajectory will be crucial for a sustained stock recovery.
• Expect ramp-up of specialty to improve margins over time.

Morgan Stanley

• Maintained ‘Underweight’ with a price target of Rs 470.
• Management believes that corporate governance issues raised appear to be either incorrect, unrelated, misrepresented, and/or old issues.
• Company flexible about reversing certain related/non-related party arrangements.

On HUL

Jefferies

• Maintained ‘Hold’ with a price target of Rs 1,650.
• GSK deal seems strategically positive and financially accretive.
• See potential 6-9 percent EPS accretion in 2020-2021.
• Execution will determine medium to long term accretion.

CLSA

• Maintained ‘Outperform’; hiked price target to Rs 2,010 from Rs 1,750.
• View the deal as clear positive; EPS accretive even without synergy.
• GSK’s core brands are highly underleveraged.
• Core brands provide relevant scale, growth potential and profitability.

UBS

• Maintained ‘Neutral’ with a price target of Rs 1,800.
• Deal EPS accretive despite the exit premium given to GSK shareholders.
• Concerns regarding relevance of Horlicks may be un-warranted.
• Not raising target price given potential overhang of excess supply.

• Nifty December futures closed trading at 10924, premium of 40 points.
• Max open interest for December series at 11,000 Call (open interest at 27 lakh shares).
• Max open interest for December series at 10,000 Put (open interest at 38.5 lakh shares).

Insider Trading

• NOCIL promoter Mafatlal Industries sold 5 lakh shares on Nov. 29.

(As reported on Dec. 3)

Trading Tweaks

• Vikas Ecotech price band revised to 20 percent.
• Bharat Road Network price band revised to 10 percent.

Who’s Meeting Whom

• Great Eastern Shipping to meet HDFC Pru AMC, ICICI Pru Life, Tata MF on Dec. 4
• Dr Lal PathLabs to meet JN Asia Infra Fund and HDFC Life on December 4
• Shriram Transport Finance to meet Moon Capital and Wellington Management on Dec. 4.
• SKF India to meet Franklin Templeton, Premji Invest and ADIA on Dec. 4.

• Sun Pharma highlighted that there was no wrongdoing and gave clarity on the recent queries raised on the company. Founder Dilip Shanghvi said that the points raised in the sales note pertained to information which was sourced from public domain. He added that while few of the issues were not related to the company, and some were factually incorrect and were 10-15 years. He also said that the company had not received any communication from the SEBI on reopening the insider trading case.
• GAIL said that it will challenge CESTAT Delhi’s order of demand notice of Rs 2,822 crore at a higher forum. The order had allowed the appeal filed by the Department and held that the product manufactured by GAIL at its Gas Processing Plants was 'Natural Gasoline Liquid ' and not Naphtha. This had attracted an additional Excise Duty of Rs.15 per liter. Company said that necessary disclosure in Notes to Accounts under contingent liability for aforesaid show-cause notices for financial year 2017-18 had been made.
• Axis Bank clarified the news on IT Department probing the company’s staff for alleged facilitation of benami deals. It said that the matter was reported in media in March and an internal inquiry had already been conducted by the bank.
• Uflex’s global film manufacturing arm received an U.S. patent that covers the entire categories of BOPET films. The company got the exclusive rights of manufacturing of the special film in the U.S., Europe and India.
• NCC received two new orders worth Rs 220.2 crore for November from state government agencies. Of this, Rs 174.2 crore pertains to the electrical division while Rs 46 crore is for water division.
• NMDC revised Lump Ore prices to Rs 3,550 per ton and Fines at Rs 3,110 per ton, effective Dec.1.
• Welspun Enterprises arm signed a concession agreement with NHAI for a four-laning construction project in Tamil Nadu. Bid project cost stood at Rs 2,004.51 crore
• Omax Autos board approved the proposal of setting up new industrial unit for manufacture and supply of ‘Long Member’ in Uttar Pradesh. Project would cost Rs 165 crore and the proposed capacity addition will be 144 thousand Long Member.
• VST Tillers Tractors’ Power Tillers sales were at 2108 units and Tractors sales at 628 units for November.

• Dilip Shanghvi on allegations against him and Sun Pharma
• India’s inflation data questioned by RBI policy maker
• Rattled nerves at Indian Inc. lead to boom in overnight funds
• NCLT seeks details of personal assets of nine former IL&FS executives
• Tech snag has HDFC Bank pulling out its new mobile banking app
• Yes Bank appoints former IRDAI chief Vijayan as additional director
• Tackling the world’s worst smog in India, one scooter at a time
• Strong case for the MPC to shift stance back to neutral, says Rajeev Malik
• Ex-Uber security employees allege ‘deeply troubling’ practices
• Will farmers vote as farmers in five state elections?
• A Wall Street rule for the #MeToo Era: Avoid women at all cost
• How India’s laws made it a ‘Hindu-secular’ state

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.1 percent or 11 points to 10,927 as of 7:50 a.m.

Asian stocks fell with American futures on Tuesday after confusing signals over U.S.-China trade talks. The inversion of a portion of the Treasury yield curve for the first time since 2007 reinforced the impression that markets are approaching the end of the current cycle.

Stocks dropped in Japan, Korea and Australia and fluctuated in China, while the yen advanced and Treasuries edged up.

Currencies

• The Bloomberg Dollar Spot Index fell 0.2 percent for a second day.
• The euro was little changed at $1.1365.
• The British pound was at $1.2725.
• The Japanese yen advanced 0.3 percent to 113.33 per dollar.
• China’s offshore yuan gained 0.2 percent to 6.8618 per dollar.

Commodities

• West Texas Intermediate crude rose 0.8 percent to $53.37 a barrel.
• Gold gained 0.3 percent to $1,234.15.
• LME copper climbed 1.6 percent to $6,295 per metric ton Monday.