Sensex Wipes Out 2018 Gains On Global Market Selloff

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India plunged 2.2 percent or 230 points to 10,249 as of 7:12 a.m.

Stocks in Asia tumbled after a rout in U.S. equities that deepened late in the day amid concerns the trade war is heating up as financial conditions tighten, dampening the outlook for profits. The yen advanced and Treasuries held gains.

Japan’s Topix index plunged more than 3 percent, set for the biggest drop since March, with Hong Kong stocks also seen lower. Shares in Australia and South Korea slid. The S&P 500 Index fell the most since February and the Nasdaq 100 Index tumbled more than 4 percent for its worst day in seven years as equity volatility spiked.

Currencies

• The yen gained 0.2 percent to 112.10 per dollar after gaining 0.6 percent.
• The offshore yuan traded at 6.9319 per dollar.
• The Bloomberg Dollar Spot Index fell 0.1 percent.
• The euro bought $1.1540.

Commodities

• West Texas Intermediate crude added to a 2.4 percent slide, falling 0.8 percent to $72.58 a barrel.
• Gold was little changed at $1,194.41 an ounce.

• How to think about the market sell-off
• IL&FS needs Rs 100 crore every month to stay afloat, says official
• India’s most profitable carrier is having a déjà vu moment
• Supreme Court asks government for details on Rafale deal
• An oversold Indian market may not suggest upside just yet
• Why two-wheeler dealers expect a subdued festival season
• Older generation of leaders move on at India’s private banks
• Does SBI’s purchase of NBFC loans make business sense?
• Government cuts excise duty on aviation turbine fuel to 11%
• Has the Supreme Court curtailed the ability of bidders to litigate?

• Government cuts excise duty on aviation turbine fuel to 11 percent from 14 percent. Cut in excise duty to benefit listed airline companies in following pecking order: InterGlobe Aviation > SpiceJet > Jet Airways
• PTC India signed a fresh pact for supplying 200 MW power to Bangladesh for 15 years. The company was already supplying 290 MW power to Bangladesh. The transaction is expected to give export earnings of $1.8 billion over its contract period.
• ITI received purchase order worth Rs 334 crore for executing RajNet Project from Rajasthan government to setup 40,000 outdoor Wi-Fi access points.
• Cochin Shipyard to consider approval for share buy-back on Oct. 16.
• Indiabulls Integrated Services’ reorganisation committee recommended the board for demerger of the company’s non-financial business segment to SORIL Infra Resources.
• Soril Infra Resources’ reorganisation committee recommended the board for acquiring the ongoing business operations and undertaking of Indiabulls Group’s pharma arm.
• IDBI Bank appointed Rakesh Sharma as its MD and CEO for six months from Oct. 10 or any until further orders, whichever is earlier.
• Dilip Buildcon has been declared L1 bidder for EPC project worth Rs 1,000 crore by Mahanadi Coalfield for removal of over-burden mining project in Odisha.
• GE Power India to close its factory at Shahabad with effect from Oct. 11. Earlier the company reported that its Vadodara plant was shut from Aug. 27. The management said that it was exploring various options to dispose of the land and building, including machinery and equipment related to these factories.
• Oil India made two hydrocarbon discoveries in Assam in the second quarter of this financial year.

• TCS likely to post margins of over 26 percent for first time in 7 quarters
• Dollar revenue seen up 2.8 percent at $5,190 million versus $5,051 million
• Income from operations seen up 6 percent at Rs 36,329 crore versus Rs 34,261 crore
• EBIT seen up 10.9 percent at Rs 9,514 crore versus Rs 8,578 crore
• EBIT margin seen at 26.2 percent versus 25 percent
• Profit seen up 7.9 percent at Rs 7,917 crore versus Rs 7,340 crore

(Bloomberg consolidated QoQ earnings)

Other Earnings To Watch

• GM Breweries

Who’s Meeting Whom

• Great Eastern Shipping Corporation to meet Vibrant Securities on Oct. 11.
• Balaji Telefilms to meet Motilal Oswal MF on Oct. 11.
• Eicher Motors to meet Columbia Threadneedle and HSBC Global Asset Management from Oct. 11-12.

Insider Trades

• Hinduja Ventures promoter sold 1 lakh shares on Oct. 8.
• LG Balakrishnan & Bros. promoter group acquired 22,000 shares from Oct. 8-9.

(As reported on Oct. 10)

Trading Tweaks

• Dhampur Sugar Mills added in ASM Framework.
• Just Dial ex-date to determine buyback eligibility.
• Kisan Mouldings price band revised to 2 percent.

Bulk Deals

• JK Paper: Kotak Mahindra AMC sold 12.15 lakh shares or 0.68 percent equity at Rs 161.85 each.
• NCL Industries: Promoter NCL Homes sold 2.5 lakh shares or 0.55 percent equity at Rs 130.07 each.
• Capri Global Capital: Wellington Management Co. LLP sold 30.3 lakh shares or 1.73 percent equity at Rs 81.5 each.

• Nifty October futures ended at 10,465, with a premium of 5 points.
• Nifty October open interest up 1 percent; Nifty Bank October open interest up 29 percent.
• Maximum open interest for October series call at 10,500 strike value call option (open interest at 25.6 lakh shares)
• Max open interest for October series put at 10,000 strike value put option (open interest at 37.9 lakh shares)

CLSA on Colgate

• Upgraded to ‘Buy’ from ‘Sell’; raised price target to Rs 1,265 from Rs 1,120, implying a potential upside of 20 percent from the last regular trade.
• Colgate has increased growth focus. Promotion activity is at its best.
• Worst seems to be over, as wholesale is stabilising and competition peeked.
• Valuations at a discount to most peers.
• Expect current valuations to sustain as outlook improves.

BofAML on Asian Paints

• Maintained ‘Buy’ with a price target of Rs 1,650, implying a potential upside of 35 percent from the last regular trade.
• Pan-India check indicates swelling optimism about future growth.
• Expect a healthy second half led by solid festive season
• 2-3 percent price hike taken in Oct. 18; Another 4-5 percent hike likely in Dec. 18 if crude remains elevated.
• Premium valuations to sustain on robust and visible growth ahead.

Brokerages On Zee Entertainment

CLSA

• Maintained ‘Buy’; cut price target to Rs 670 from Rs 675, implying a potential upside of 46 percent from the last regular trade.
• Second quarter results were ahead of estimates led by growth in domestic advertising revenues.
• Management reiterated strong ad and subscriptions outlook.
• Zee’s digital platform ZEE5 reported very encouraging numbers.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 556, implying a potential upside of 21 percent from the last regular trade.
• ZEE delivered blockbuster second quarter led by a strong show on all counts.
• TV ad growth remains robust for ZEE, given its consistent share gains.
• Keenly watching on updates related to Zee5; Expect further increase in reach.

Credit Suisse

• Maintained ‘Buy’; cut price target to Rs 560 from Rs 640, implying a potential upside of 22 percent from the last regular trade.
• Another strong quarter with the base business doing extremely well.
• Ebitda margin arose despite rising investments in digital platform.
• Maintain estimates but lower the valuation multiple.

BofAML

• Maintained ‘Neutral’ with a price target of Rs 470, implying a potential upside of 2 percent from the last regular trade.
• September quarter review: Strong set of numbers beating estimates.
• Subscription growth was led by catch-up revenue and phase-3 realisation.
• Maintain Neutral as questions remain on sustainability of numbers.

Brokerages On Bandhan Bank

Macquarie

• Downgraded to ‘Neutral’ from ‘Outperform’; cut price target to Rs 540 from Rs 560, implying a potential upside of 5.5 percent from the last regular trade.
• September quarter results were strong with robust operating parameters.
• Overhangs: resolution of promoter stake sale and market perceptions of loans given to IL&FS.
• Downgrade on valuations and uncertainties; Await better entry point.

JPMorgan

• Maintained ‘Neutral’; cut price target to Rs 590 from Rs 670, implying a potential upside of 15 percent from the last regular trade.
• September quarter earnings met expectations. Loan growth was more modest.
• Believe bank is on track to meet estimate.
• Cut price target given lower visibility on growth from April 2019.

The rupee may track the broader decline in emerging market peers, after a tumble in U.S. equities spurred risk-off sentiment. Sovereign bonds will await the outcome of Rs 12,000 crore of OMO purchase by the RBI later today.

The currency may find some support from the decline in Brent oil prices. Crude fell 2.25 percent yesterday and fell a further 1.7% today.

Markets would also wait for any government action to arrest the rupee's slide. One such action may include raising funds from overseas Indians.

Indian rupee opened lower and fell as much as 0.3 percent or 24 paise to record low of 74.46 per dollar.

Indian markets have corrected ahead of global markets and another correction of 2-3 percent will not bother anybody, Ajay Shrivastava of Dimensions Consulting told BloombergQuint in an interview.

Key highlights of the conversation:

• Indian markets have corrected ahead of global markets. But our response will be much muted than the rest of the world.
• U.S. market correction has been far steeper and more painful.
• We have corrected so much that a little more correction of 2-3 percent is not going to bother anybody
• There will be correction but at large we will have more peaceful times ahead
• RBI has faulted in not increasing the rates. They may have to be forced now to increase rates as U.S. yields have now spiked

Indian equity benchmarks slumped after biggest stock sell-off in U.S. since February rolled through Asia after 10-year yields hit the highest since 2011.

The S&P BSE Sensex plunged 2.9 percent or 1,008 points to 33,753 and the NSE Nifty 50 Index dropped 3 percent or 316 points to 10,144.

The selloff was seen across the sectors as all 19 sector gauges compiled by BSE were trading lower with 15 of 19 sector gauges falling between 2-3.5 percent each.

The overall market breadth was extremely bearish as 1,274 shares were advancing while a little over 200 were advancing on the BSE.

Shares of airline operators rose in an otherwise weak market after the government cut excise duty on jet fuel from 14 percent to 11 percent.

• InterGlobe Aviation rose 2.1 percent
• SpiceJet rose 0.88 percent
• Jet Airways advanced 1.4 percent

Shares of the Gurugram-based real estate advisory firm rose as much as 3.7 percent to Rs 382.80 after its reorganization committee recommended the board for demerger of the company’s non-financial business segment to Soril Infra Resources.

India’s benchmark Sensex wiped out entire gains of 2018 on the back of falling rupee and rising oil amid a rout in non-bank lenders following defaults at IL&FS.

HDFC twins, Reliance Industries, Infosys and TCS were among the biggest drags in today’s sessions.

The Sensex’s relative strength index sank to 23.4 on Tuesday, the lowest level since November 2016, data compiled by Bloomberg showed.

Note: A reading below 30 on RSI indicates that index may be oversold while above 70 indicates to be in overbought zone.

Graphite electrode makers — Grapite India and HEG extended gains for the third day amid selloff in equity markets.

HEG rose as much as 6.54 percent to Rs 4,140 per share and Graphite India was locked in the upper circuit of 5 percent to Rs 870 per share.

Bank of America-Merrill Lynch had initiated coverage on both the stocks with a ‘Buy’ rating with return potential of 100 percent.

Asian markets extended decline with the Chinese and Taiwanese indices cracking over 5 percent each.

• SITI Networks has 15 lakh shares change hands in a block. Stock down 1.6 percent at Rs 9.35.
• South Indian Bank has 13.3 lakh shares change hands in a block. Stock down 4.5 percent at Rs 12.65.

Buyers and sellers were not immediately known

Source: Bloomberg

After steep fall in the markets a surprise upside return can be expected from pharma sector and top PSU banks, N. Jayakumar, managing director at Prime Securities told BloombergQuint.

Key highlights of the conversation:

• Surprise upside return can be expected from pharma sector and top PSU banks
• Airports and its ancillary industries to grow in next 2-3 years
• Will be surprised if Nifty Index will bottom out at 9,800 levels
• Everything is not lost for the NBFC space
• Pharma sector’s revenue propped up by currency depreciation
• Much stronger outlook for aviation sectors
• Bottom up stock picking is the name of the game now
• Consumption will come under pressure
• Consumption of imported goods will reduce
• Economy will revert to lower growth projections

Shares of the Mumbai-based lender recovered from intraday low levels and surged in an otherwise weak trading session.

The stock zoomed as much as 15 percent, the most in over five years, to Rs 269 compared with a 2 percent or 700-point cut in the Sensex.

• Indiabulls Ventures: The Gurugram-based consumer finance lender was locked in a five percent upper circuit at Rs 395.20. Trading volume was 57.5 times its 20-day average.
• Eris Lifesciences: The Ahmedabad-based drugmaker fell as much as 2.6 percent to Rs 657. Trading volume was 16.5 times its 20-day average.
• HEG: The Madhya Pradesh-based graphite electrode maker rose as much as 11.43 percent to Rs 4,330. Trading volume was 7.5 times its 20-day average.
• Gulf Oil Lubricants: The lubricating oil and grease maker fell as much as 4.34 percent to Rs 702.10. Trading volume was 6.3 times its 20-day average.

Shares of oil retailers rose after Brent crude fell for second day in a row. Brent crude fell 0.9 percent to $82.35 on top of yesterday's 2.25 percent drop.

• Hindustan Petroleum rose 7.7 percent
• Indian Oil climbed 2.34 percent
• Bharat Petroleum advanced 1.75 percent

Shares of Hindustan Petroleum surged as much as 20 percent, the most since July 2011, to Rs 216.40 on heavy trading volumes.

Trading volume was 2.3 times its 20-day average, data compiled by Bloomberg showed.

Indian equity benchmarks pared losses but still traded with deep cuts led by losses in Infosys, HDFC twins, TCS and State Bank of India.

The S&P BSE Sensex fell 1.6 percent or 560 points to 34,200 and the NSE Nifty 50 Index dropped 1.6 percent or 166 points to 10,293.

Sixteen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE IT Index's 2.8 percent drop. On the other hand, the S&P BSE Oil & Gas Index was top gainer, up 4.2 percent.

The market breadth improved slightly but remained negative as 1,580 shares were declining while 828 shares were declining on the BSE.

Click here for more stock market statistics

In the ongoing correction expensive stocks have corrected and right valuations are coming back for the markets, Gautam Sinha Roy of Motilal Oswal Asset Management Company told BloombergQuint.

Key highlights of the conversation:

• Surprised by pace of P/E correction of growth stocks
• Large caps are still preferred choice
• Continue to have reduced exposure in OMCs
• Refining side of OMCs business is still exciting
• Crude as commodity is highly cyclical commodity
• P/E expectations should be low for OMC companies
• Earnings will be weaker than Q1 for OMCs
• Growth stocks have become more cheaper than value stocks
• IT sector will have marginal tailwinds from currency depreciation
• Banks with high CASA ratios have become a good bet
• Near term growth expectations quite high from auto stocks

After paring losses around 1:00 p.m. the Indian equity benchmarks again extended declines dragged by losses in IT, financial services and banking shares.

The Sensex fell 2 percent or 728 points to 34,030 and the NSE Nifty 50 Index dropped 2 percent or 220 points to 10,238.

All sector gauges compiled by the National Stock Exchange were trading lower dragged by the Nifty PSU Bank Index's over 5 percent drop. IT, Private Bank, Auto and Financial Services Indices also tumbled 2.5-3 percent each.

Top Five Sensex Losers

• State Bank of India down 5.5 percent
• Tata Steel down 5.2 percent
• Infosys down 4.8 percent
• Mahindra & Mahindra down 4.1 percent
• Adani Ports down 3.7 percent

• Bharti Airtel has 63 lakh shares change hands in a block. Stock down 3.5 percent at Rs 285.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the country's second largest IT company fell as much as 5.3 percent, the most since July 5, to Rs 663.30 as trading volumes spiked.

Trading volume was 1.7 times its 20-day average and Infosys fell below its 100-day moving average placed at Rs 673.29, according to data compiled by Bloomberg.

Sensex erased its 2018 advance as the biggest stock sell-off since February rolled from the U.S. through Asia.

The S&P BSE Sensex fell 2.2 percent or 760 points to 34,001 and the NSE Nifty 50 Index dropped 2.2 percent or 225 points to 10,235.

Sensex wiped out all its 2018 gains as it fell 0.16 percent year-to-date.

Seventeen of 19 sector gauges compiled by BSE ended lower dragged by the S&P BSE Metal and S&P BSE IT Indices’ over 3 percent drop. On the flipside, S&P BSE Oil & Gas Index rose 2.8 percent after oil retailers jumped tracking drop in crude prices.

Mid- and small-cap shares also declined as the S&P BSE MidCap Index fell 2.3 percent and the S&P BSE SmallCap Index tumbled 1.4 percent.