Sensex Ends Above 36,100; Nifty Scales 11,000 Amid Earnings Optimism  

Indian equity benchmarks extended their record run to fifth day led by strong gains in metal, banking, IT and oil & gas shares amid earnings optimism.

Of the 18 Nifty members that have reported earnings so far this season, 12 have beaten or matched estimates, data compiled by Bloomberg show.

Both the S&P BSE Sensex and NSE Nifty 50 Index settled above their crucial psychological levels of 36,000 and 11,000, respectively.

The Sensex rose 0.96 percent or 342 points to 36,139.98 and Nifty climbed 1.07 percent or 117 points to 11,084.

The broader markets were mixed in trade as the S&P BSE MidCap Index rose over 1 percent while the S&P BSE SmallCap Index edged 0.2 percent higher.

All sector gauges compiled by BSE ended higher barring the S&P BSE Consumer Durables Index. Gains in today's session were led by the S&P BSE Metal Index's over 4 percent surge. Banking, IT and Oil & Gas indices also rose over a percent each.

Shares of the Pune-based casino chain operator rose as much as 14.69 percent to Rs 401.60 in the last hour of trade on the back of heavy volumes as 19.7 lakh shares changed hands on the BSE compared with an average of 9.35 lakh shares traded daily in the past two weeks.

Rane Madras: The Chennai-based auto parts maker was locked in 20 percent upper circuit at record high of Rs 863 on the back of strong December quarter earnings.

Key earnings highlights:

• Revenues up 32 percent at Rs 318 crore versus Rs 241 crore
• Net profit up 318 percent at Rs 14.2 crore versus Rs 3.4 crore
• EBITDA up 85 percent at Rs 37 crore versus Rs 20 crore
• Margins at 11.6 percent versus 8.3 percent

Hathway Cables: The Mumbai-based cable TV service provider rose as much as 16 percent to Rs 48.50 after 30 lakh shares change hands in two block deals.

Havells India: The Noida-based electrical appliances maker rose as much as 6.36 percent to record high of Rs 587.80 after Credit Suisse maintained its ‘outperform’ rating on the stock and raised its target price to Rs 635 from Rs 600.

Jet Airways: The Mumbai-based airline rose more than 5 percent to Rs 823 on the back of report that domestic air traffic surged 17.4 percent in December to cross the 100-million mark for the first time in 2017.

Shares of the state-run oil explorer rose as much as 3.76 percent to Rs 208.25 after it got government's approval to sell its stake in GAIL India and Indian Oil, news agency Press Trust of India reported.

Shares of the Delhi-based educational service provider rose as much as 7.57 percent, the most since Jan. 5, to Rs 117.90 after it reported strong December quarter earnings.

Key earnings highlights:

• Consolidated net profit up 350 percent at Rs 19.7 crore versus Rs 4.4 crore (YoY)
• Consolidated revenue up 4 percent at Rs 209 crore versus Rs 202 crore (YoY)
• Consolidated EBITDA up 69 percent at Rs 18.4 crore versus Rs 10.9 crore (YoY)

• Net debt at Rs 41.9 crore

• NIIT acquired Eagle Productivity Solutions in U.S.

Shares of the Mumbai-based stock brokerage and other financial services provider rose as much as 2.6 percent to Rs 297 after it reported October-December quarter earnings.

Key earnings highlights:

• Consolidated net profit up 52 percent At Rs 236 crore versus Rs 155 crore (YoY).
• Consolidated revenue up 29 percent At Rs 2,069 crore versus Rs 1,605 crore (YoY).

Shares of the Bangalore-based mortgage lender came off intraday highs after it reported December quarter earnings. The stock was trading 0.9 percent higher at Rs 489.45, earlier in the day, the stock rose as much as 4.2 percent to Rs 505.45.

Earnings highlights:

• Net profit up 34.4 percent at Rs 80 crore versus Rs 59.6 crore (YoY)
• Revenue up 12 percent at Rs 392 crore versus Rs 349.6 crore (YoY)

Shares of the Ahmedabad-based air cooler maker erased early gains after it reported October-December quarter earnings. The stock was trading flat at Rs 1,989.

• Net profit up 20.7 percent at Rs 66.3 crore versus Rs 54.9 crore (YoY).

• Revenue up 21 percent at Rs 217.6 crore versus Rs 180 crore (YoY).

• EBITDA up 29.2 percent at Rs 86.7 crore versus Rs 67.1 crore (YoY).

• Margin at 39.9 percent versus 37.3 percent (YoY).

• Indian equity benchmarks extended record run on the back of surge in metal, banking, IT and energy shares.

• The S&P BSE Sensex rose 0.93 percent or 338 points to 36,141 and the NSE Nifty 50 Index climbed 1.07 percent or 117 points to 11,082.

• The broader markets also trading higher as the S&P BSE MidCap Index advanced 1.3 percent and the S&P BSE MidCap Index rose 0.6 percent.

• All sector gauges compiled by BSE were trading higher led by the S&P BSE Metal Index's 5.2 percent surge.

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Shares of the Delhi-based steel maker and power producer rose as much as 11.32 percent to Rs 293.50 on the back of heavy volumes.

As many as 22.63 lakh shares changed hands on the BSE compared with an average of 17.96 lakh shares traded daily in the past two weeks.

Shares of the metal companies were witnessing good buying interest. The S&P BSE Metal index rose as much as 4.76 percent, the most in over two months, to 15,860 led by gains in Tata Steel, Jindal Steel and SAIL.

• Oriental Hotels has 1.2 crore shares change hands (6.71 percent equity) in a single block. Stock rose as much as 11.24 percent to 67.80 after the block deal.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the aviation companies were trading higher after domestic air traffic surged 17.4 percent to cross 100-million mark for the first time, Business Standard newspaper reported.

• Jet Airways rose as much as 5.16 percent to Rs 823
• Spicejet advanced as much as 2.71 percent to Rs 125
• InterGlobe Aviation climbed as much as 3.91 percent to Rs 1,245

Shares of the Chennai-based software developer rose as much as 4.97 percent to Rs 819.85 after DSP Blackrock MF bought 4.26 lakh shares or 1.4 percent equity at Rs 748 each. Meanwhile, its promoter R S Ramani sold 6.82 lakh shares or 2.2 percent equity at an average of Rs 749.32 each.

Shares of the Aurangabad-based consumer electronic appliance maker fell as much as 2.4 percent to Rs 20.20 after Yes Bank sold 17.39 lakh shares or 0.6 percent equity at Rs 21.27 each.

Shares of the Mumbai-based drug maker rose as much as 5.4 percent to Rs 303 after Reliance Growth Fund bought 12.11 lakh shares or 1.3 percent equity at Rs 275 each.

Shares of the Mumbai-based power transmission line tower maker rose as much as 11.39 percent to Rs 535 after it won multiple orders worth Rs 871 crore.

Shares of the Raipur-based steel billet maker rose were locked in 5 percent upper circuit at record high of Rs 544.50 after the company reported strong earnings in October-December quarter.

Godawari Power and Ispat reported net profit of Rs 64.21 crore on revenue of Rs 573.71 crore compared with a loss of Rs 13.58 crore during the same quarter last year.

Godawari Ispat To BloombergQuint:

• Q3 numbers were better, next 3-4 quarters to be more robust.

• Pellet business is doing very well.
• Captive power prices not impacting company.
• Don't want to expand our capacity but integrate it.
• Iron ore prices are going up due to shutting of mines.
• See no sign of improvement in mining capacity.
• Total revenue by the end of FY18 will be Rs 2,200 crore.

• Valuations not expensive and markets can move up 10 percent from here on.
• Within consumption play expect durables and hotels to pick up.

• Hathway Cable has about 30 lakh shares changed hands in two block deals.
• Zee Entertainment has about 2.5 percent equity changed hands in a single block deal.

Buyers and sellers were immediately not known.

Source: Bloomberg

• Focused on private banks which are not corporate facing from valuations perspective.
• Looking at those banks which despite NPA issues have been holding on to their lending franchise as these banks are primed for earnings recovery.
• There are good number of pockets which are not priced to perfection at current juncture.
• Not sitting on cash but we are cognizant about what positions which we are taking.
• We are in first year of earnings recovery and we can look forward to cyclical recovery in earnings.
• Risks have not been fully manifested and have to be cognizant of those risks.
• Finding favour and bias towards large-cap versus mid-caps.
• Not completely out of mid-cap space, but relatively safer in large-cap space.
• Overweight on technology sector, we were the first ones to find value in technology sector.
• FIIs turned positive since last 1 month
• Risk control utmost important at current market level
• Keeping eyes on Q3 results and budget outcome

Indian equity benchmarks continued the bull run led by gains in Reliance Industries, Infosys, Larsen & Toubro and Axis Bank amid positive global cues.

The NSE Nifty 50 Index rose above 11,000-mark for the first time, the index rose 0.44 percent or 49 points to 11,015 and the S&P BSE Sensex gained 0.48 percent or 171 points to 35,972.

Gains in the morning trades were broad-based as the S&P BSE MidCap Index rose 0.6 percent and the S&P BSE SmallCap Index climbed 0.4 percent.

All sector gauges compiled by BSE were trading higher led by the S&P BSE Energy Index's 1.4 percent gain.

The government plans to sell Rs 11,000 crore of bonds this Thursday, lesser than the Rs 15,000 crore planned earlier. You would recall the government last week said it will cut back on additional borrowing.

Further, comments by Prime Minister Narendra Modi to local television channel that the budget may not be populist should support prices even as high yields are attracting buyers.

Yield on the benchmark note may trade in a range of 7.25-7.30 percent in the day. Also, watch out for the Rs 13,000 crore of state loan auction today.

In the currency markets, Asian stocks are headed for a fresh record high lending support to local currencies. A Bloomberg dollar spot index though is little changed after falling 0.2 percent in the last session.

The rupee seems to be stuck in a groove and may stay around the current levels of 63.87 even though technicals point out a decline to 64.25 a dollar.

For full coverage of WEF Davos 2018, click here

• Indiabulls Housing Finance

Other Earnings To Watch

• Alembic
• Can Fin Homes
• Crompton Greaves Consumer Electricals
• Edelweiss Financial Services
• Force Motors
• Indiabulls Real Estate
• L&T Technology Services
• NIIT
• PNB Housing Finance
• RBL Bank
• Symphony
• Syngene International
• United Spirits
• Wabco India

Asian Paints Q3 (YoY)

• Revenue up 10.5 percent at Rs 4,260.5 crore.
• Net profit up 19 percent at Rs 555 crore.
• EBITDA up 18 percent at Rs 891.5 crore.
• Margin at 20.9 percent.

Rallis India Q3 (YoY)

• Revenue up 18.5 percent at Rs 390 crore.
• Net profit down 1 percent at Rs 25.1 crore.
• EBITDA down 14 percent at Rs 37 crore.
• Margin at 9.5 percent versus 13.1 percent.

Sasken Tech Q3 (QoQ)

• Revenue up 5.6 percent at Rs 132 crore.
• Net profit up 8.5 percent at Rs 20.4 crore.
• EBITD down 11.7 percent at Rs 15 crore.
• Margin at 11.4 percent versus 13.6 percent.

Tinplate Q3 (YoY)

• Revenue up 146 percent at Rs 547 crore.
• Net profit up 189 percent at Rs 13 crore.
• EBITDA up 89.5 percent at Rs 36 crore.
• Margins at 6.6 percent versus 8.6 percent.

Just Dial Q3 (QoQ)

• Revenue up 1 percent at Rs 197 crore.
• Net profit down 24 percent at Rs 28.6 crore.
• EBIT up 25 percent at Rs 38 crore.
• Margin at 19.3 percent versus 15.7 percent.

MPS Q3 (YoY)

• Revenue down 15 percent at Rs 68 crore.
• Net profit down 2 percent at Rs 17.6 crore.
• EBITDA down 5 percent at Rs 25.1 crore.
• Margin at 36.4 percent versus 32.8 percent.

• Indian Oil Corporation board to consider bonus issue on Jan. 30.
• Kalpataru Power gets multiple orders worth Rs 871 crore.
• Torrent Pharma to consider fund raising via bonds, share placement on Jan. 25.
• Om Metals reached an agreement with a Jaipur-based developer to withdraw claim on 56,000 square metre land.
• Bajaj Corp. introduced new Coco Jasmine hair oil.
• Swaraj Engines buyback to open on Jan. 31.
• HSIL commissions pipe manufacturing plant in Telangana.

For a complete list of stocks to watch, click here

• Excel Realty and Infra ex-date for 2:1 bonus.

• Lux Industries: Kotak Mahindra AMC bought 1.68 lakh shares or 0.7 percent equity at Rs 1525.2 each.
• Indoco Remedies: Reliance Growth Fund bought 12.11 lakh shares or 1.3 percent equity at Rs 275 each.
• IRB Invit: Prusik Umbrella UCITS Fund PLC - Prusik Asian Equity Income Fund bought 28.25 lakh units at Rs 87.17 each.
• Videocon: Yes Bank sold 17.39 lakh shares or 0.6 percent equity at Rs 21.27 each.
• Religare Enterprises: IDBI Trusteeship services sold 22.55 lakh shares or 1.3 percent equity at Rs 50.26 each.

8K Miles

• DSP Blackrock MF bought 4.26 lakh shares or 1.4 percent equity at Rs 748 each.
• Promoter R S Ramani sold 6.82 lakh shares or 2.2 percent equity at an average of Rs 749.32 each.

MCX

• SBI MF bought 8.19 lakh shares or 1.6 percent equity at Rs 840.5 each.
• Baron International Growth Fund sold 11.3 lakh shares or 2.2 percent equity at Rs 840.5 each.

• Nifty January futures trading at 10,968, premium of 1.8 points versus discount of 6.2 points.
• January Series: Nifty open interest down 9 percent; Bank Nifty open interest down 3 percent.
• Across series: Nifty open interest up 2 percent; Bank Nifty open interest up 5 percent.
• India VIX ended at 15.3, up 10 percent.
• Rollover: Nifty at 20 percent, Bank Nifty at 23.5 percent.
• Max open interest for January series at 11,000 Call (open interest at 51.1 lakh, down 5 percent).
• Max open interest for January series at 10,500 Put (open interest at 70.6 lakh, down 5 percent).

Elara Capital on L&T Technology Services

• Initiated ‘Accumulate’ with price target of Rs 1,170.
• Broad portfolio, deep expertise driving growth.
• Expect new client relationships to scale up gradually.
• Lower client concentration than domestic peers.
• L&T helping in domain expertise, client access.
• Expect revenue, operating income and net profit compounding at 17.4 percent, 25.2 percent and 22.5 percent respectively over the financial years through March 2020.
• Faster growth to lead to earnings upgrade.
• Bull case price target of Rs 1,560.

Credit Suisse on Havells India

• Maintained Outperform; raised price target to Rs 635 from Rs 600.
• December quarter was a strong broad-based quarter.
• Consumer durables and lighting drove growth.
• Switchgears saw modest pick-up; B2B initiatives seeing traction.
• Margins very strong; Cables have set new normal of profitability.
• Lloyd growth aided by some pre-buying before new energy norms.

Edelweiss on Havells India

• Maintained ‘Buy’ with price target of Rs 640.
• Favorable base leads to in-line quarter; Growth profile intact.
• Impressive growth in lighting/consumer durable on low base.
• Havells well placed to benefit with demonetization and GST mostly behind.
• Positives: shift to organized, rising premiumisation and ramp up in Lloyds’ profitability.

Morgan Stanley on Dr. Reddy’s

• Maintained ‘Overweight’ with price target of Rs 3,133.
• Raised prices by 5 percent for Sernivo spray and Zembrace in January 2018.
• Small brands with gross sales of $20/25 million.
• Price hike to have small impact but shows confidence in the ramp-up ahead.
• March 2018 important month with three upcoming Target Action Dates.

Brokerages On Earnings

IDFC Securities on Asian Paints

• Maintained ‘Outperform’; cut price target to Rs 1,262.
• Volume miss; lower costs drive earnings growth.
• Volume growth of 6 percent for the quarter is disappointing.
• Cost management initiatives and better mix resulted in strong margin improvement.
• Expect uptick in volumes driven by favourable base and improving demand.
• Expect price hikes to mitigate input cost pressure.
• Market share loss over last three quarters is a concern.

Credit Suisse on Asian Paints

• Maintained ‘Underperform’; raised price target to Rs 1,100 from Rs 1,060.
• Volume growth significantly below expectations.
• Competitors continue to grow volumes faster.
• Management cautiously optimistic as December growth had been good.
• EBITDA growth driven by tightening fixed costs, lowering marketing spends and GST savings.
• Raw material costs firming up; Needs to take a price hike to stem gross margin decline.

On Axis Bank

JPMorgan

• Maintained ‘Overweight’, raised price target to Rs 700 from Rs 650.
• Guidance of 225-260 basis points with normalised credit costs expected.
• See the next 2-3 quarters as challenging given the uncertainty over timing and quantum of back-book provisioning.
• At about 2 times price-to-book and a FY20 return on equity estimate of 19.5 percent, Axis Bank is our top value pick.

Morgan Stanley

• Maintained ‘Overweight’; price target Rs 770
• Impaired loans at Axis showed good trends after a weak December quarter.
• Expect asset quality and core pre-provision operating profit trends to be volatile over the next four quarters.
• Expect continued improvement in impaired loans over the next four quarters.
• This should drive strong stock performance over the next 12 months.

Credit Suisse

• Maintained ‘Neutral’, raised price target to Rs 595 from Rs 525.
• Asset quality stabilises, operating profitability yet to improve.
• Expect credit costs to normalise from 2.7 percent in current fiscal to 1.2 percent in Fiscal 2020.

CLSA

• Maintained ‘Buy’, raised price target to Rs 730 from Rs 650.
• Key positive in the result was improvement in asset quality.
• Expect earnings to normalise from the next fiscal.

• IMF sees global growth picking up, partly on U.S. tax cuts
• Tata counsel urges NCLT to consider buyout of Mistry shareholding
• DP World, India’s Infrastructure Fund plan $3 billion investment
• Higher borrowing cost could dent nascent growth recovery, says HSBC’s Pranjul Bhandari

• Possible merger with MRPL may not happen at premium, HPCL says
• Chandrasekaran feels empowered at the helm of Tata Group
• The fun is just starting for emerging-market stocks
• Three events that could derail global growth
• Terrorists and hackers worry CEOs more than rising taxes
• Senate moves to end U.S. shutdown, sets up immigration fight
• India must be a statesman and not a salesman: Uday Kotak

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.37 percent to 11,008 as of 6:58 a.m.

Asian stocks extended the strong start to the year, heading for fresh all-time highs, as investors turn with optimism toward the earnings season.

Equities in Japan, Australia and South Korea climbed following the S&P 500 Index’s rise to a record as Congress voted to end the government shutdown after three days. The dollar traded near lows for the year, while 10-year Treasury yields held near 2014 highs.

Here’s what to watch out for this week:

• Earnings season is in full swing: Fanuc, Novartis, General Electric, Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks and Hyundai Motor come later in the week.
• Barring any last minute changes in Washington, President Donald Trump will join world leaders and senior executives in Davos, Switzerland, for the annual World Economic Forum.
• Central banks: Bank of Japan monetary policy decision and briefing on Tuesday; European Central Bank rate decision on Jan. 25.
• U.K. Prime Minister Theresa May’s Brexit bill is set to be taken up in the House of Lords.
• Prime Minister Narendra Modi to address at the Davos World Economic Forum, International Business Council and interact with CEOs.

Commodities

• Gold was little changed at $1,333.51 an ounce.
• West Texas Intermediate crude rose 0.4 percent to $63.82 a barrel.