Sensex, Nifty End Little Changed; Bharti Airtel Closes At 8-Year High

Indian equity benchmarks were little changed as gains in Bharti Airtel, Cipla and Bharat Petroleum were offset by losses in banking shares.

The S&P BSE Sensex was little changed at 32,609 and the NSE Nifty 50 Index added 4 points to rise to all-time closing high of 10,234. The broader markets outperformed the benchmarks as the S&P BSE MidCap Index rose 0.4 percent and the S&P BSE SmallCap Index advanced 0.5 percent.

Fifteen out of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Telecom Index's 2.7 percent surge. On the other hand, S&P BSE Bankex Index was the top sectoral loser, down 0.2 percent.

• Snowman Logistics: The logistics service provider gained the most in over three months after it announced that it has partnered with IKEA to manage back end of their in-store restaurants business in India.
• Aries Agro: The stock gained as much as 18 percent to hit fresh 52-week high of Rs 244.70 on the NSE after well-known investor Vijay Kedia bought additional 2 percent stake in the company.
• Prime Focus: The stock was locked in 20 percent upper circuit after brokerage firm Motilal Oswal imitated coverage on the stock with a buy rating for target price of Rs 130.
• Panacea Biotech: The stock rose more than 7 percent after the company received compliance certificate for 22 medicinal products from Ukraine.

Shares of the cement maker jumped as much as 1.6 percent, the most since October 13, to Rs 1,818 after its net profit in the September quarter rose 98 percent beating consensus analysts estimate compiled by Bloomberg.

Key Q2 Highlights:

• Net profit jumped 98 percent to Rs 177.69 crore from Rs 89.5 crore in September against estimate of Rs 165 crore (YoY)
• Revenue came in at Rs 3,054 crore against estimate of Rs 2,810 crore
• Total costs at Rs 2,880 crore
• Other income at Rs 23.77 crore
• EBITDA up 47.4 percent at Rs 414.9 crore versus Rs 281.5 Cr (YoY)
• Standalone margins at 13.3 percent versus 11.4 percent (YoY)
• Sales volume rose 17.6 percent to 5.96 million tonnes on a year-on-year basis

• At this point we are advising clients to be mindful of valuations
• Private financials good space to be in we like Yes Bank ICICI Bank, DBS Bank and Chola
• Despite the steep run up in markets there are stocks which investors can look at

• ITC has 12.8 lakh shares change hands in a block deal.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the securities brokerage firm fell over a percent to Rs 82.75 after its net profit slipped marginally in September quarter.

• Net profit slipped 13 percent to Rs 22.7 crore versus Rs 26.14 crore (YoY)
• Revenue at Rs 361 crore versus Rs 328 crore (YoY)

Shares of Prakash Industries rose as much as 4.86 percent, the most since October 12, to Rs 143.45 after its profit in September quarter more than quadrupled.

• Net profit up over 4-fold at Rs 65.83 crore versus Rs 14.54 crore (YoY)
• Revenue from operations rise 16 percent to Rs 647.92 crore versus Rs 556.42 crore (YoY)

Shares of the two-wheeler maker rose over 2 percent to Rs 3,315 after it beat consensus analysts estimate compiled by Bloomberg.

Key Q2 Highlights:

• Net profit declined 0.6 percent to Rs 1,193 crore versus estimate of Rs 1,090 crore
• Revenue at Rs 6,566.24 crore against estimate of Rs 6,590 crore
• EBITDA at Rs 1,298 crore versus Rs 1,294 crore (YoY)
• EBITDA margin at 19.7 percent versus 21.4 percent (YoY)

Shares of the general insurer jumped as much as 2.5 percent, the most since September 27, to Rs 714 after it reported 19 percent year on year jump in net profit.

• Net profit up 19 percent at Rs 207 crore versus Rs 171 crore (YoY)
• Revenue at Rs 2,100 crore versus Rs 1,950 crore

Shares of the Punjab-based drugmaker rose as much as 12.5 percent, the most since October 9, to Rs 254.70 after it got GMP compliance certificate for making 22 medicinal products from Ukraine.

Shares of the country's biggest telecom service provider rose for third day in a row, rising as much as 1.8 percent, to an eight-year high of Rs 461.50.

Bharti Airtel on Monday launched Online Store which will offer a range of premium smartphones with affordable down payments, instant credit verification and financing and bundled monthly plans.

• Indian equity benchmarks were trading in a narrow band as gains in Bharti Airtel and TCS were offset by losses in Tata Motors and Infosys
• The S&P BSE Sensex traded in a band of 100 points and the NSE Nifty 50 Index touched high of 10,251 and low of 10,212
• Barring S&P BSE Metal Index all the sector gauges were trading higher led by the S&P BSE Telecom Index's 1 percent gain
• The broader markets were outperforming with the S&P BSE MidCap Index up 0.3 percent and the S&P BSE SmallCap Index up 0.5 percent
• From the Nifty 50 basket of shares, 31 were trading higher while 19 were among the losers

• Look for stocks doing well in poor economy
• Sectors benefit when overall economy picks up
• Check key ratios of the company before investing
• Estimates generally go wrong for growth companies
• Look for change in value for investment

Shares of the commodity bourse rose as much as 2.4 percent, the most since October 13, to Rs 1,158 after it launched commodity options on futures trading.

Shares of the steel wheel rim maker jumped as much as 1.55 percent to Rs 902.80 after it won an export order for supply pf steel wheels for EU Caravan market, SSWL said in an exchange filing.

"Order comprises of 1,50,000 steel wheels to be shipped from SSWL's Chennai plant from next month onwards until period of six months," the company said in a press release.

• Federal Bank has 20 lakh shares change hands at Rs 127 per share on the BSE and NSE
• The stock was up 1.7 percent at Rs 126.90

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Hyderabad-based drugmaker rose as much as 2 percent to Rs 772.40 after it got U.S. drug regulator's approval to manufacture Esomeprazole Magnesium delayed-release capsules.

Capsules are indicated to treat frequent heartburn.

Shares of the Raipur-based steel producer were locked in 5 percent upper circuit at Rs 130.35 after the company was awarded additional 28,700 metric tonnes of long-term coal linkage for its sponge iron unit, Godawari Power informed exchanges in a regulatory filing.

Shares of the Noida-based power producer were locked in a 10 percent upper circuit at Rs 8.80 after Brookfield, Resurgent Power, India Power, Edelweiss ARC and JSW Energy submitted bids to buy 30 percent stake in the company.

Shares of the Mumbai-based agri-chemical maker rose as much as 18 percent to Rs 243.60 on top of yesterday's 20 percent gain after well-known investor Vijay Kedia bought stake in the company.

Vijay Kedia bought 2.6 lakh shares or 2 percent equity stake in the company at Rs 199.93 each.

The Mumbai-based entertainment content producer, rose as much as 20 percent, the most in over two years to Rs 107.60 after Motilal Oswal initiated coverage on the stock with a 'Buy'.

Motilal Oswal in a note said:

• Forte in global media services to drive profitable growth
• The company turned profitable in FY17 post completion of M&A integration in FY15-16. In our view, the four M&A transactions in the last five years have allowed Prime Focus to become a strong media service player globally.
• Improving EBITDA and lower capex requirement are expected to help generate healthy FCF

• Continue to be positive view on markets
• Once the dust around GST settles down, will see a pick up in the economy
• Expect earnings to recover from December-March quarter
• No disappointments so far in current quarter
• Important to watch out for management commentary in current quarter
• Positive on cement, travel and hospitality, industrials, consumer goods and private banks
• Negative on commodities

Indian equity benchmarks edged lower tracking weakness in index heavyweights such as Infosys and Tata Motors.

The S&P BSE Sensex was little changed at 32,641 and the NSE Nifty 50 Index was also little changed at 10,225. The mid-cap and small-caps were broadly in-line with the benchmarks as the S&P BSE MidCap Index rose 0.1 percent and the S&P BSE SmallCap Index gained 0.2 percent.

Eleven out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Telecom Index's 0.7 percent gain. On the other hand, the S&P BSE Realty Index was the top sectoral loser, down 0.4 percent.

The Indian rupee rose for a sixth day in a row on Monday, the highest since February. However, the rally may run out of steam just ahead of the Diwali holidays as peers in the Asia-Pacific market are down.

The ongoing tension in the Korean peninsula may act as a catalyst in currency selloff.

North Korea's deputy UN ambassador said a nuclear war may break out any moment, the AP reported. The ambassador also said that U.S. sanctions against the country are an act of state terrorism.

WPI numbers came in below expectations, raising hopes of a rate cut in December.

Indian government bonds may see muted trade ahead of Diwali. Investors would watch for the outcome of reverse repo auctions for a total of Rs 20,000 crore.

• Nifty October Futures closed with a premium of 24.9 points at 10,255.9
• October Futures: Nifty open interest up 0.3 percent and Bank Nifty open interest down 6 percent
• India VIX closed higher by 0.4 percent at 11.31
• October series highest Call base at 10,200 (open interest at 32.4 lakh, down 6 percent)
• October series highest Put base at 10,000 (open interest at 70.8 lakh)
• October Call strikes 10,000 10,100, 10,200 saw open interest unwinding
• October Put strikes 10,200, 10,300 saw open interest addition

Nifty Companies

• Axis Bank
• Bajaj Auto
• Wipro

Other Results Today

• ACC
• AB Money
• Atul Ltd.
• Bajaj Holdings
• Blue Dart
• Crisil
• ICICI Lombard
• Nucleus Softare
• Prakash Industries
• RS Software
• Som Distilleries
• Tata Sponge

JPMorgan on Bajaj Finance

• Maintain ‘Overweight’ with price target of Rs 1,875
• Earnings miss was largely driven by lower revenues; Asset quality remained stable with a sequential improvement seen in credit costs
• Though risk of short-term correction persist, from long term view this is an entry opportunity as growth profile remains robust
• Bajaj Finance has the capacity to sustain more than 35 percent loan growth over the next 3-5 years, despite the high base

Credit Suisse on Bajaj Finance

• Maintain ‘Underperform’; hiked price target to Rs 1,250 from Rs 1,000
• Loans growing at 38 percent could be a tad disappointing given that the festive season arrived earlier
• Difficult to justify current stock valuations, in light of rising risk profile and high growth
• Growth rates could disappoint given the company’s size, short tenure book and competition in the consumer durables space

Citi on Persistent Systems

• Maintain ‘Sell’; hiked price target to Rs 585 from Rs 575
• Company delivering well in Enterprise business, but concerns on ISV and core IP businesses remain in medium term
• Management says ISV business continues to shrink
• Hiked FY18/19 estimates by 2-3 percent to factor in Q3 results

CLSA on Colgate India

• Maintain ‘Sell’ with a price target of Rs 1,000
• Volume decline of 1 percent was disappointment; Expect market share to drop below 54 percent in toothpaste
• Growth to accelerate in H2FY18 as the base is quite low and price cuts of 8-9 percent to improve competitive position
• Management expects a gradual recovery ahead

Credit Suisse on Colgate India

• Maintain ‘Neutral’; Cut price target to Rs 1,025 from Rs 1,090
• Volume decline despite possible re-stocking paints a gloomy picture, likely to be the weakest among its FMCG peers
• Expectations of a major GST benefit failed to play out; Margin expansion driven by low ad spends
• Earnings to be strong in Q3 due to a very low base of 12 percent volume decline during demonetisation
• Business continues to see a major challenge as market share continues to slip

UBS on Colgate India

• Maintain ‘Buy’ rating with a price target of Rs 1,250
• Steady earnings in troubled times
• Channel checks confirm that post GST price-corrected stocks have just begun to reach consumers
• It means that the volume uplift which was being expected from GST implementation is still to come
• Company's focus on revenue mix improvement shows through the launch of ‘Swarna Vedshakti’

IDFC Securities on Kansai Nerolac

• Maintain ‘Outperformer’; hiked price target to Rs 522 from Rs 483
• Strong volume growth, but gross margin under pressure due to higher input cost & weak pricing
• Given the strong distribution expansion and improving Kansai can continue to drive market share gains
• Expect strong revenue growth coupled with improvement in profitability in auto segment
• Kansai top pick in paints space

IDFC Securities on Sterlite Technologies

• Maintain ‘Outperformer’; hiked price target to Rs 280 from Rs 260
• In line quarter; Strong growth in order book
• Hiked FY18/19 EPS by 3-7 percent; FY20 EPS introduced at Rs 10.5
• IDFC estimates profit of $64 million vs company target of $100 million by FY20
• Company well placed to ride the long-term demand story

KRChoksey on Sterlite Technologies

• Maintain ‘Buy’; hiked price target to Rs 348 from Rs 308
• Expect Revenue and Net Profit to grow at CAGR of 23 percent and 54 percent respectively over FY17-19
• Company well positioned to support laying of optic fiber for transition from 3G to 5G
• Expect company to bag more projects from telecom and internet service providers
• Government’s Digital India initiative to drive further growth for its product portfolio and system integration service for building Smart Cities

HDFC Securities on Strides Shasun

• Initiate ‘Buy’ rating with price target of Rs 1,200; Potential Upside 36 percent
• Strides has a diversified business mix, strong regulatory record, high growth potential and comfortable valuation
• Filing/approval momentum expected to pick-up over the next 15-18 months
• With no major CAPEX and operating leverage to aid margins expect return ratios to reach high-teens by FY20
• Return on invested capital to expand by 500 basis points to 17 percent by FY20; Strong free cash flow generation of $250 million over FY18-20
• Expect Revenue and Net Profit to grow at CAGR of 18 percent and 34 percent respectively over FY17-20
• Australia which contributes 23 percent to topline is expected to grow at CAGR of 13 percent over FY17-20

Morgan Stanley on Federal Bank

• Maintain ‘Equalweight’ with price target of Rs 95
• Q2 showed sequential improvement in asset quality, driven by lower corporate slippages
• Expect broadly stable asset quality and gradual improvement in pre-provision operating profit
• Expect slippages to remain broadly stable; Credit cost to remain under pressure near term given relatively lower coverage levels

Deutsche Bank on Federal Bank

• Maintain ‘Buy’; hiked price target to Rs 135 from Rs 130
• Q2FY18: Asset quality stable; strong loan growth at 25 percent
• Slippages normalize; Capital infusion drives improvement in net interest margin
• Expect lower treasury gains, but core earnings to remain strong

UBS on Federal Bank

• Maintain ‘Buy’ with price target of Rs 140
• Expect long growth of 22-26 percent over FY18-20 with lower asset quality risk
• Expect credit costs of 80/65 basis points in FY18-19
• Management maintains guidance of Net interest margin and Loan growth of 3.25 percent and above 25 percent respectively

• Reliance Industries, BP submit revised investment plan for KG-D6 gas finds
• Xl group to acquire a 20 percent minority stake in Mahindra insurance brokers, a subsidiary of Mahindra & Mahindra Financial Services Ltd.
• Five investors including Brookfield, Resurgent Power, India Power, Edelweiss ARC and JSW Energy submit bids for Jaiprakash Power
• DB Realty settles LIC Housing Finance Rs 30.6 crore debt claim (Cogencis)
• Steel Authority of India (SAIL) supplies special grade steel for INS Kiltan
• Pradeep Bakshi to takeover as CEO of Voltas
• V2 Retail to allot 20 lakh shares to India 2020 Fund II Ltd. at Rs 380 each and 10 lakh shares to promoters
• Jain Irrigation redeems foreign currency convertible bonds of $40 million
• HCL Infosystems to consider rights issue on October 20
• Punjab National Bank looks to raise $250-300 million via QIP (Mint)
• GTL Infra to refinance Rs 4,800 crore debt In three months. The company is talks with four global banks. It may sign a deal in next 2-3 months (Business Line)

For a complete list of stocks to watch, click here

• JSW Cement plans Rs 1,800 crore capex, IPO by March 2020
• Reliance, BP submit revised investment plan for KG-D6 gas finds
• Higher costs may weigh on cement makers’ earnings
• Festive demand likely to boost automakers’ earnings
• National Investment and Infrastructure Fund inks $1-billion pact with Abu Dhabi Wealth Fund
• Japan’s Kobe Steel may have faked data for over a decade
• Bid to game GST may be behind September exports surge
• In Modi’s India, 55% of citizens prefer a ‘strong leader’
• China’s most influential leader since Mao is expected to play it safe

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.2 percent to 10,260.

Stocks in Asia paused near recent highs as concerns about North Korea reemerged, while Australian bonds fell with Treasuries as speculation climbed that the next head of the Federal Reserve will be more hawkish.

Here are some key events coming up this week:

• Among Fed speakers lined up this week are Philadelphia Fed President Pat Harker on Tuesday, and New York Fed President Bill Dudley and Dallas Fed President Robert Kaplan on Wednesday.
• U.S. economic data will include a couple of September housing reports. Beginning construction on new homes and sales of previously owned properties will probably show the negative effects of Hurricanes Harvey and Irma on demand and building.
• China releases data for GDP, industrial production and retail sales on Thursday.
• Earnings season gets into full swing with major U.S. financial firms including Morgan Stanley, Goldman Sachs Group Inc. and Blackstone Group LP. posting results.
• Bank of England Governor Mark Carney appears before the U.K. Parliament’s Treasury Committee for the first time since June’s election on Tuesday.

Commodities

• West Texas Intermediate crude was trading at $51.76 a barrel after climbing 0.8 percent in the previous session.
• Gold was at $1,293.64 an ounce after falling 0.6 percent.

• LME copper remained above $7,000 a metric ton, close to the highest in more than three years, after it jumped 3.7 percent on Monday.