Sensex, Nifty Extend Declines As Private Lenders Drag

Indian benchmark indices fell for the second day as private banks failed to lend support.

The S&P BSE Sensex ended 1.02 percent lower at 37,068.93 and the NSE Nifty 50 fell 0.89 percent to 10948.30. The broader markets represented by the NSE Nifty 500 Index fell 0.72 percent.

The sell-off in emerging markets such as India is triggered by foreign investors who find them unattractive due to global woes such as Brexit and U.S. Federal Reserve’s policy statements. That’s according to Mahantesh Sabarad, head of retail research, SBI CAP Securities. “"I think it will take another quarter for foreign portfolio investors to return to Indian markets despite the measures taken by the government,” he said in an interview to BloombergQuint.

Agreed Ajit Mishra, vice president (Research) at Religare Broking, saying that global cues will continue to dictate the market trend in the absence of any major domestic event scheduled in the near term.

The market breadth was tilted in favour of sellers. About 1,119 stocks declined and 662 shares advanced on National Stock Exchange.

Seven of the 11 sectoral gauges compiled by NSE traded lower, led by the NSE Nifty PSU Bank Index’s 2.70 percent decline. Nifty Pharma Index was the top sectoral gainer, up 2.25 percent.

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

Premium on the weekly contract which is set to expire today fell 87.41 percent to Rs 8.95. Over 23.47 lakh shares were added to the open interest which stood at over 46.16 lakh shares.

Global concerns in the form of U.S. Federal Reserve’s statements and Brexit are impacting emerging markets including India. That’s according to Mahantesh Sabarad, head of retail research, SBI CAP Securities.

"Foreign portfolio investors are having problems overall in terms of investing in emerging markets due to global concerns such as flip-flops of Fed's policy statements and uncertainty over Brexit," said Sabarad in an interview to BloombergQuint, adding that it may take a quarter for the foreign investors to “conclusively” return to the Indian markets.

Shares of the drugmaker declined 3.9 percent intraday to Rs 242.50 each, the lowest price since September 2010.

India Ratings and Research downgraded long term loan facilities to ‘IND BB+’ from ‘IND BBB-’, with outlook remaining ‘Negative’, according to an exchange filing. The downgrade was due to refinancing risks, R&D expenses and regulatory overhang, the filing said.

The relative strength index was below 30, indicating the stock may be oversold.

Shares of the private lender slumped as much as 7.6 percent to Rs 55 each, making it the worst performer on Nifty Index.

On Wednesday, Credit rating firm Moody’s lowered the bank’s rating to Ba3 from Ba1, according to a statement. The firm gave a negative outlook citing risk of further deterioration in the bank’s solvency, funding or liquidity.

The stock declined 85 percent in the past 12 months compared to a 4 percent fall in the Sensex.

Shares of the financial services company fluctuated between gains and losses to trade flat at Rs 94.45 each as of 1:20 p.m.

The company is planning to sell its wealth management business for Rs 230 crore to IIFL Wealth, according to an exchange filing. The definitive agreement to acquire 100 percent stake is subject to regulatory approvals, the filing added.

The stock traded at 40 percent below the Bloomberg consensus one-year target price.

Shares of the country’s largest drugmaker jumped 4.5 percent intraday to Rs 431.65 each.

An inquiry by the Securities and Exchange Board of India has found no merit in allegation of violation of securities laws over diversion of funds from the company, said a Business Standard report quoting two unidentified sources.

Also, the company initiated clinical development of new indications for its psoriasis drug Ilumya which will require front-ended investments, Chairman Israel Makov said at shareholders’ meeting.

Trading in the company's call options totaled nearly 20,500 contracts, nearly twice the 20-day average.

The chances of "marquee" stocks bouncing back is more likely than beaten down stocks in case of an economic turnaround. That’s according to UR Bhat, managing director, Dalton Capital Advisors.

"It is always better to be invested in leading names which have corrected especially in an environment which does not offer favourable valuations from a macro perspective," said Bhat in an interview to BloombergQuint.

An investor with a two-year time horizon can enter auto stocks as the sector is expected to recover from episodic problems such as Bharat Standard VI transition or non-banking financial companies crisis, he said.

Watch the full interaction here:

CG Power & Industrial Solutions Ltd.’s board removed Gautam Thapar as chairman after a probe by a legal firm unearthed governance and financial lapses at the company.

The stock was locked in the upper circuit for the third-straight session after it rose 5 percent to Rs 10 each.

Earlier this month, CG Power had said a probe by a legal firm revealed that the Gautam Thapar-founded Avantha Group flagship understated its liabilities and advances made to related and unrelated parties.

Shares of the electronic equipment maker rose as much as 3.5 percent to a one-month high of Rs 591.25 each.

Brokerage firm Citi initiated coverage on the stock with a ‘Buy’ rating. Also, the target price was fixed at Rs 736 per share, indicating a 28.9 percent upside from previous close.

Here’s what the brokerage firm had to say on the stock:

• Well placed to capitalize on growth opportunities in cables, wires and fast moving electrical goods.
• More successful than others in the FMEG business.
• Strong balance sheet and cash flow with improving working capital.
• Expect earnings per share to grow at a compounded-annual growth rate of 26 percent over financial years 2019-21.

The stock traded 15 times its estimated earnings per share for the coming year, according to Bloomberg data.

Indian equity indices extended declines in the afternoon trade led by losses in Indiabulls Housing and Yes Bank.

The S&P BSE Sensex declined 0.67 percent to 37,204.42 and the NSE Nifty 50 fell 0.66 percent to 10,971.95. The broader markets represented by the NSE Nifty 500 Index fell 0.64 percent.

Nifty is expected to close between the range of 10,950 and 11,000, said Ashish Kelkar, chief executive officer, Kiran Jadhav & Associates, in an interview to BloombergQuint. August monthly future contracts expire today.

The market breadth was tilted in favour of sellers. About 1,099 stocks declined and 553 shares advanced on National Stock Exchange.

Ten of the 11 sectoral gauges compiled by NSE traded lower, led by the NSE Nifty Financial Services Index’s 1.20 percent decline. Nifty Pharma Index was the only sectoral gainer, up 0.49 percent.

Shares of the sugar manufacturers rallied as Indian Government announced a Rs 6,268 crore subsidy.

The package is intended for export of six million tonnes of sugar during the 2019-20 marketing year starting October in order to liquidate surplus domestic stock and help mills in clearing Rs 15,000 crore worth of arrears to farmers.

Shares of the packaging material maker reversed opening losses and gained 1.6 percent to Rs 96.80 apiece.

Around 11.3 lakh shares changed hands on the National Stock Exchange, according to Bloomberg data. Buyers and sellers were not known immediately.

The trading volume was more than 13 times the 20-day average for this time of the day.

Shares of the Mumbai-based company rose nearly 6 percent to Rs 332.40 apiece.

On Wednesday, RBL Bank responded to an Economic Times report on employees selling the private lender’s shares. The filing said:

• Employee holding in the Bank is 3.46 crore shares as on Aug 3.
• Transactions in company's shares by employees is a routine activity.
• Employee stock options exercise and sale of shares for July 2019 is in line with the past.
• No Management Committee member including Key Managerial Personal sold shares on July 30 or till date.

The stock has declined 49 percent in the past 12 months compared to a 4 percent fall in the Sensex.

Shares of the non-banking lender slumped close to 8 percent to Rs 420.80 each, its lowest level since December 2014.

Indiabulls Housing Finance to be excluded from Nifty 50 Index with effect from Sept. 27 and will be replaced by Nestle India, according to a statement from the exchange. Also, the company’s board approved raising non-convertible debentures up to Rs 1,50,000 crore.

Here’s what the brokerages had to say on the Nifty rejig:

Edelweiss

• Nestle will see an inflow of $112 million due to inclusion.
• Indiabulls will see an outflow of $41 million due to exclusion.

Motilal Oswal

• Nestle will see an inflow of $95 million due to inclusion.

Indian equity indices opened lower mirroring their Asian peers, led by losses in Indiabulls Housing and JSW Steel.

The S&P BSE Sensex declined 0.54 percent to 37,255.14 and the NSE Nifty 50 fell 0.53 percent to 10,988.50 as of 9:18 am. The broader markets represented by the NSE Nifty 500 Index fell 0.45 percent.

The market breadth was tilted in favour of sellers. About 875 stocks declined and 577 shares advanced on National Stock Exchange.

Ten of the 11 sectoral gauges compiled by NSE traded lower, led by the NSE Nifty Metal Index’s 1.11 percent decline. Nifty Pharma Index was the only sectoral gainer, up 1.18 percent.

The Indian rupee opened lower against the U.S. dollar. The home currency weakened as much as 0.20 percent to Rs 71.92 against the greenback.

The currency may trade lower in line with Asian peers as the dollar held near a nine-month high.

• Indiabulls Housing Finance to be excluded from Nifty 50 Index with effect from Sept. 27. Stock will be replaced by Nestle India. Replacement to be applicable to Nifty 50 Equal Weight Index. Board approved raising non-convertible debentures up to Rs 1,50,000 crore.
• InterGlobe Aviation named M. Damodaran as Independent Director and Anil Parashar as Non-Executive Director. Company also stated that M. Damodaran and Anil Parashar have not been debarred from holding office of director by virtue of a Securities and Exchange Board of India order or any such authority. Maximum number of directors to increase from six to 10. S.R. Batliboi & Co. LLP appointed as Statutory Auditors in place of retiring auditors BSR & Co. LLP.
• Piramal Enterprises: Committee deferred the issue of NCDs up to Rs 3000 crore to a future date.
• IIFL Wealth Group to acquire L&T Finance Holdings’ wealth management business for Rs 230 crore. Group entered into a definitive agreement to acquire 100 percent stake in L&T Finance Holding’s wholly owned arm L&T Capital Markets. Transaction is subject to regulatory approvals. L&T Capital Markets has Assets Under Advice of Rs 24,000 crore.
• Lakshmi Vilas Bank: Parthasarathi Mukherjee resigned from post of managing director and chief executive officer , with effect from Aug. 31. Board approved raising Rs 1,000 crore via various modes of equity and raising up to Rs 500 crore via NCDs.
• Sun Pharmaceutical Industries has initiated clinical development of new indications for its psoriasis drug Ilumya which will require front-ended investments, Chairman Israel Makov said at shareholders’ meeting in Vadodara. (Bloomberg News)
• Wockhardt: India Ratings and Research downgraded long term loan facilities to ‘IND BB+’ from ‘IND BBB-’, with outlook remaining Negative due to refinancing risks, R&D expenses and regulatory overhang.
• DHFL defaulted in NCDs interest payment worth Rs 22.91 crore, which was due on Aug. 28.
• Balaji Amines arm has completed the EU REACH Registration process for Ethylenediamine. Registration will allow the company to supply the Ethylenediamine to large number of European customers.
• Central Bank of India: Board to consider increasing authorized share capital on Aug. 31.
• Mahindra CIE Automotive: Acacia Banyan Partners increased in their stake n the company from 4.75 percent to 5.01 percent on Aug. 21.
• Kingfa Science & Technology: To start commercial production in its new manufacturing facility in Pune from Sept. 2.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.10 percent to 11,040 as of 8 a.m.

Asian stocks retreated Thursday as investors awaited clarity on when the next steps in the U.S. and China trade negotiations might happen. Equities fell across the region and U.S. futures pointed lower.

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