Sensex, Nifty End At Over Six-Month Low Dragged By IT, Pharma Stocks

Indian equity benchmarks fell for fourth day in a row to their lowest levels in over six months dragged by IT and pharma stocks as global stocks resumed selloff.

The S&P BSE Sensex fell 0.84 percent or 287 points to 33,847 and the NSE Nifty 50 Index dropped 0.96 percent or 98 points to 10,147.

Indian markets are likely to remain weak till expiry of futures and option contracts and rupee has again started to weaken which is also negative for markets, said Avinash Gorakshakar, head of research at Joindre Capital Services.

Seventeen of 19 sector gauges compiled by BSE ended lower dragged by the S&P BSE Information Technology and S&P BSE Healthcare Indices’ over 2 percent drop. On the other hand, the S&P BSE Realty Index rose 0.4 percent.

Mid- and small-cap shares fell in line with larger peers as the S&P BSE MidCap Index fell 0.9 percent and the S&P BSE MidCap Index tumbled 1.2 percent.

We do have exposure to IL&FS to the tune of Rs 225 crore and the loan is for two commercial properties in GIFT City, Rajeev Jain, MD at Bajaj Finance told BloombergQuint in an interview.

Key highlights of the conversation:

• Liquidity was much worse in 2013 due to taper tantrum
• Bond markets were frozen for 50-55 days in 2013
• Current freeze is much better than it was in 2013
• CP markets are active and bond markets are beginning to come through
• Have exposure to IL&FS to the tune of Rs 225 crore through loan against property
• Loan is for two commercial properties in GIFT City and asset as of now is standard
• We do see interest cost go up in near term
• Committed to clock net income growth at 20-23 percent
• Credit profile at comfortable level

BSE will introduce weekly futures and options contracts on Sensex 50 index from Friday.

The bourse will introduce 7 weekly futures and options contracts expiring on every Thursday of the week, excluding monthly expiry week, BSE -- formerly known as Bombay Stock Exchange -- said in a circular.

Shares of the Mumbai-based airline operator rose as much as 4 percent to Rs 220 after it approached banks for a moratorium on loans and asked for fresh funds to ease a cash crunch, Bloomberg reported citing people with direct knowledge of the matter.

Shares of the Pune-based non-banking finance company struggled despite it beating profit estimates compiled by Bloomberg in July-September quarter.

Key earnings highlights:

• Net interest income up 42 percent at Rs 2,729 crore versus Rs 1,925 crore (YoY)
• Net profit came in at Rs 920 crore versus estimate of Rs 863 crore
• Net non-performing assets at 0.53 percent versus 0.44 percent (QoQ)
• Gross NPA at 1.49 percent versus 1.39 percent (QoQ)

Shares of the Chennai-based two-wheeler maker rose as much as 4.51 percent to Rs 539 after its profit came met Bloomberg consensus estimates in September quarter.

Key earnings highlights:

• Net profit declined 0.86 percent to Rs 211 crore versus 213.16 crore; Estimate of Rs 205 crore
• Revenue rose 23 percent to Rs 4,993 crore versus Rs 4,168.45 crore (YoY)
• Ebitda up 18 percent at Rs 428.3 crore versus Rs 362.5 crore (YoY)
• Margin at 8.6 percent versus 8.9 percent (YoY)

Shares of the Kolhapur-based private sector lender fell as much as 6.62 percent to Rs 438.20 after it reported July-September quarter earnings.

Key earnings highlights:

• Net profit up 35.8 percent at Rs 204.5 crore versus Rs 150.6 crore; estimate of Rs 205 crore (YoY)
• NII up 41 percent at Rs 593 crore versus Rs 420 crore (YoY)
• NIM at 4.08 percent, provision coverage ratio at 61.4 percent
• Provisions at Rs 139.6 crore versus Rs 140.3 crore (QoQ); Rs 75 crore (YoY)
• Net NPA at 0.74 percent versus 0.75 percent (QoQ)
• Gross NPA unchanged at 1.4 percent (QoQ)

Indian equity benchmarks continue to trade on a weak note dragged by weakness in oil & gas, IT and healthcare stocks.

The S&P BSE Sensex fell 0.56 percent or 192 points to 33,942 and the NSE Nifty 50 Index dropped 0.8 percent or 82 points to 10,162.

Seventeen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Oil & Gas Index's 1.8 percent drop. On the other hand, the S&P BSE Realty Index was top gainer, up 0.6 percent.

The mid- and small-cap shares were underperforming their larger peers as the S&P BSE MidCap and S&P BSE SmallCap Indices fell over a percent each.

The overall market breadth was negative as 1,600 shares were declining while 710 were advancing on the BSE.

Click here for more stock market statistics

Shares of the Mumbai-based women’s innerwear maker fell for seventeenth day in a row to Rs 113.60.

Ashapura Intimates Fashion's promoter Harshad Thakkar has been missing since Oct. 2 and has apologised for letting the company’s stakeholders down and causing them financial loss, Mumbai Mirror reported on Oct. 21.

Thakkar has blamed stock market manipulation by his rivals for the dramatic drop in the company’s stock price, the report said.

In the last 17 trading sessions the stock has plunged 74 percent from Rs 450.15.

It’s time India took advantage of U.S.-China trade war and brought in some manufacturing to the South Asian country, says Mark Mobius, the veteran emerging-market investor.

• Says he is interested in coming to India as the country offers “a lot of bargains”
• India needs to accelerate transition to other sources of energy, Mobius, who left Franklin Templeton Investments earlier this year to set up Mobius Capital Partners, says in Mumbai in reply to a query on rising oil prices
• Indian government should make it easier for investors to come in, especially now when liquidity is tight

Source: Bloomberg

• BHEL has 27.8 lakh shares change hands in two block deals. Stock up 1.2 percent at Rs 74.85.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Gautam Adani-led company rose 0.4 percent to Rs 316 ahead of its July-September quarter earnings which are due to be announced later in the day. Analysts polled by Bloomberg are estimating its net profit for the period at around Rs 767 crore.

Adani Ports and SEZ earnings preview (Consolidated; YoY)

• Revenue seen down 5 percent to Rs 2,571 crore versus Rs 2,706 crore
• Ebitda seen down 19.5 percent to Rs 1,500 crore versus Rs 1,863 crore
• Ebitda margin seen at 58.3 percent versus 68.8 percent
• Net profit seen down 23 percent to Rs 767 crore versus Rs 992 crore

• Den Networks: The Delhi-based cable television service provider rose as much as 4.92 percent to Rs 71.45. Trading volume was 11 times its 20-day average.
• Advanced Enzyme Technologies: The Thane-based specialty chemical maker rose as much as 2.15 percent to Rs 190.30. Trading volume was 3 times its 20-day average.
• Linde India: The Kolkata-based chemical maker rose as much as 3 percent to Rs 420. Trading volume was 6 times its 20-day average.
• TTK Prestige: The Bengaluru-based pressure cooker maker fell as much as 1.31 percent to Rs 5,966.55. Trading volume was 6.5 times its 20-day average.

Share price of Page Industries has slumped over Rs 8,500 per share from its all-time high of Rs 36,370 hit on Aug. 28.

The stock in today’s session fell as much as 2.33 percent to Rs 27,850 as trading volumes spiked. Trading volume was 1.3 times its 20-day average.

The stock trades at P/E multiple of 91 times trailing 12-month earnings per share and 70 times its estimate for the coming year, according to data compiled by Bloomberg.

Nifty 10,300 call option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract slumped 40 percent to Rs 31.55. Over 6.89 lakh shares were added to the open interest of over 30.05 lakh shares.

Shares of IT companies were facing selling pressure and the measure of IT companies on the National Stock Exchange — Nifty IT Index was the top sectoral loser down 1.8 percent.

Shares of the Coimbatore-based textile machinery maker fell as much as 7.14 percent, the most in nearly two years, to Rs 5,700 after its profit declined in September quarter.

Meanwhile, the company also announced that it will buy back 2 lakh shares at Rs 6,000 each was at a discount of 2.2 percent against its yesterday's closing price.

Key earnings highlights:

• Revenue up 35 percent at Rs 772 crore.
• Profit down 13 percent at Rs 40.4 crore.
• Ebitda up 43 percent at Rs 90.3 crore.
• Margin at 11.7 percent versus 11 percent.

Shares of the Noida-based information technology company fell as much as 1.5 percent to Rs 965.65.

The company is scheduled to announce its September quarter results today. The analysts surveyed by Bloomberg are estimating its net profit for the period at around Rs 2,433 crore.

HCL Tech Q2 earnings preview (Q2, QoQ):

• Dollar revenue seen up 2 percent at $2,096 million.
• Income from operations seen up 6.3 percent at Rs 14,748 crore.
• EBIT seen up 6.9 percent at Rs 2,916 crore.
• EBIT margins seen at 19.8 percent versus 19.7 percent.
• Profit seen up 1.2 percent at Rs 2,433 crore.

Shares of the Mumbai-based construction company rose as much as 3.8 percent to Rs 114.80.

The company bagged multiple orders worth over Rs 1066 crore, according to its notification on the exchanges.

Shares of the Tamil Nadu-based private sector lender rose as much as 6.15 percent to Rs 95 on report that it has shortlisted Blackstone Group, Bain Capital and TPG Capital Management among others to sell controlling in the bank, The Economic Times reported citing multiple sources.

Meanwhile, Parthasarathi Mukherjee, MD & CEO, Lakshmi Vilas Bank told BloombergQuint that they had called for bids and it will be difficult to put a timeline on deal completion.

Key highlights of the conversation:

• We had called for bids and the process continues
• Difficult to put a timeline on deal completion
• RBI approval will be taken at appropriate time, will depend on the deal structure
• Capital raised will be used towards growth capital
• Bank does have exposure to a subsidiary of IL&FS

Shares of the country's largest paint maker fell as much as 6.11 percent, the most since November 2.16, to Rs 1,128 after its profit missed Bloomberg consensus earnings estimates in September quarter on higher raw material cost.

Key earnings highlights:

• Revenue up 8.8 percent at Rs 4639 crore.
• Ebitda down 2.1 percent at Rs 784 crore.
• Margin at 16.9 percent versus 18.8 percent.
• Net profit down 14.4 percent at Rs 493 crore.

Indian equity benchmarks extended decline paced by losses in Asian Paints, Indian Oil, HPCL and Indiabulls Housing Finance.

The S&P BSE Sensex fell 274 points or 0.8 percent to 33,860 and the NSE Nifty declined 0.9 percent or 93 points to 10,152.

All 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Oil & Gas Index's 1.6 percent drop.

Mid- and small-cap shares were also facing selling pressure as the S&P BSE MidCap and the S&P BSE SmallCap Indces declined over 0.5 percent each.

Indian rupee opened lower at 73.70 per dollar against yesterday's close of 73.56.

The local unit fell as much as 0.31 percent or 23 paise to 73.79.

Bond traders will be focusing on Rs 9,600 crore of debt sales by state governments and will also be watching out for announcement of bond purchases by the central bank through its open-market operations.

The Reserve Bank had earlier said it will conduct auctions in the second, third and fourth week of October and buy Rs 36,000 crore of securities in a bid to ease the liquidity squeeze in the money market.

The yield on the benchmark 10-year bonds rose 1 basis point on Monday to end at 7.93 percent, having dropped to as low as 7.89 percent in the intra-day trade. Global funds sold a net $20.5 million of rupee-denominated bonds on Oct. 19, according to exchange data. That took outflows for the month to $1.6 billion.

Those outflows could weigh on the rupee. The implied opening from forwards suggests pair may start trading around 73.7603, having ended at 73.5625 per dollar on Monday.

Oil was trading steady on Tuesday, although global risk aversion is likely to keep investors away from high-yielding currencies like the Indian rupee. Other emerging market currencies were also lower against the dollar.

On Oil Marketing Companies

Nomura

• With strong oil prices and weaker rupee, there are high risk of further populist measures.
• Regaining marketing margins looks unlikely at least in the near term.
• Expect OMCs to share subsidy burden due to strong financials.
• Stake sales by Government another overhang.
• IOCL: Cut to ‘Neutral’ from ‘Buy’; cut price target to Rs 140 from Rs 220, implying a potential upside of 8 percent from the last regular trade.
• BPCL: Cut to ‘Neutral’ from ‘Buy’; cut price target to Rs 310 from Rs 555, implying a potential upside of 14 percent from the last regular trade.
• HPCL: Cut to ‘Neutral’ from ‘Buy’; cut price target to Rs 230 from Rs 415, implying a potential upside of 9 percent from the last regular trade.

On Asian Paints

Macquarie

• Maintained ‘Neutral’ with a price target of Rs 1,300, implying a potential upside of 8 percent from the last regular trade.
• September quarter was below estimates due to higher raw material prices.
• Decoratives volume growth continues in double digits of 11-12 percent.
• Margin pressure evident; Recent price hikes to alleviate some pressure.

JPMorgan

• Maintained ‘Neutral’ with a price target of Rs 1,400, implying a potential upside of 17 percent from the last regular trade.
• September quarter was operationally weak on adverse mix and high cost inflation.
• Adverse mix weighs on value growth even as domestic volume growth was low.
• Believe there is need for more price hikes to offset high cost inflation.

BofAML

• Maintained ‘Buy’ with a price target of Rs 1,650, implying a potential upside of 37 percent from the last regular trade.
• Healthy volume, but bottom-line miss on weak margins.
• Lower margin due to delay in price hikes led to a miss.
• Recent dealer checks suggest surging optimism for the second half of the current financial year.

On Kansai Nerolac

CLSA

• Downgraded to ‘Underperform’ from ‘Outperform’; cut price target to Rs 400 from Rs 550, implying a potential upside of 3 percent from the last regular trade.
• September quarter results was slightly below estimates.
• Expect margin pressure and subdued growth for industrial segment.
• Cut EPS estimates by 13-17 percent on lower growth/margin forecasts.

Deutsche Bank Research

• Maintained ‘Buy’; cut price target to Rs 525 from Rs 575, implying a potential upside of 35 percent from the last regular trade.
• September quarter results were below estimates on all counts.
• Expect margins to improve on price hikes.
• Volume growth to sustain on aggressive growth strategies and festive sales.

On Hindustan Zinc

JPMorgan

• Maintained ‘Neutral’ with a price target of Rs 290, implying a potential upside of 3 percent from the last regular trade.
• September quarter was in-line quarter with both Ebitda and net profit declining sharply.
• Large dividend declared – a strong positive, in our view.
• Expect second half to be materially stronger than the first half of the current financial year.

Edelweiss

• Maintained ‘Buy’; cut price target to Rs 312 from Rs 327, implying a potential upside of 10 percent from the last regular trade.
• Performance in line; Outlook benign on favourable volumes.
• Expect Ebitda growth led by volume ramp-up, lower haulage cost and better grades.
• Cut price target to adjust for higher than expected interim dividend.

Citi

• Maintained ‘Neutral’; cut price target to Rs 270 from Rs 285, implying a potential downside of 4.5 percent from the last regular trade.
• September quarter was impacted due to higher cost, lower realisations and volumes.
• See costs at peak; Expect improvement in the second half.
• Cut price target to factor in higher costs.

On Glaxo Pharma

IDFC Securities

• Maintained ‘Underperform’ with a price target of Rs 1,185, implying a potential downside of 14 percent from the last regular trade.
• Positives: Higher revenue, inline employee and other costs; Negatives: Lower gross margins.
• Glaxo begun to show signs of turning the corner by clocking double digit revenue growth.
• Rich valuations and limited near-term triggers to cap upside.

Citi

• Maintained ‘Sell’ with a price target of Rs 1,340, implying a potential downside of 2 percent from the last regular trade.
• September quarter numbers were marginally ahead of estimates.
• Business is clearly recovering, but do not see margins back at over 30 percent range.
• Current valuations leave very little buffer for any potential risks.

More Calls

Macquarie on IndusInd Bank

• Maintained ‘Outperform’ with a price target of Rs 1,975, implying a potential upside of 37 percent from the last regular trade.
• Stock fell as IL&FS rights issue postponed.
• Investors expect overall exposure to IL&FS group to be higher.
• Bank has strong loan growth and earnings power.
• Remain positive on the bank.

Macquarie on Jubilant Life Sciences

• Maintained ‘Outperform’; cut price target to Rs 1,038 from Rs 1,192, implying a potential upside of 59 percent from the last regular trade.
• Life Science Ingredients still recovering; Pharma business continues to deliver.
• Management expects second half to be better than first half for both segments.
• Remain bullish on Jubilant; Top mid-cap pharma pick.

Macquarie on ICICI Lombard

• Maintained ‘Underperform’ with price target of Rs 585, implying a potential downside of 27 percent from the last regular trade.
• September quarter’s net profit was ahead of estimates led by recoveries of written off dues.
• Corporate group health premium picked up.
• Positives already priced in; Trades at high valuations in a highly competitive industry.

CLSA on Inox Leisure

• Maintained ‘Buy’ with a price target of Rs 275, implying a potential upside of 27 percent from the last regular trade.
• Poor content, partial non-presence on BookMyShow impact footfalls.
• Steady advertising revenue growth; Strong screen additions.
• Management reiterated that Inox is open to any inorganic expansion.

• Nifty October futures ended at 10,232, with a discount of 13 points.
• Nifty October open interest down 12 percent; Nifty Bank October open interest up 10.9 percent.
• Nifty 50 futures rollovers at 24 percent.
• Nifty Bank futures rollovers at 25 percent.
• Maximum open interest for October series at 11,000 strike price call option (open interest at 44.3 lakh shares).
• Maximum open interest for October series at 10,000 strike price put option (open interest at 36.8 lakh shares).

Bulk Deals

• DHFL: Jasmine Capital sold 71.2 lakh shares at Rs 197.77
• Hathway Cable: Rajasthan Global Securities bought 55.7 lakh shares at Rs 29.27. Ashish Dhawan sold 80.6 lakh shares at Rs 29.04
• Trident Limited: Trident Group bought 15.7 lakh shares at Rs 63.85; Asian Cotspin seller.

Trading Tweaks

• Included in T to T segment: Raj Television Network, Shree Rama Newsprint, Subex
• Indiabulls Real Estate circuit filter changed to 5 percent.
• In ASM: Kwality, Hathway Cable.

Insider Trading

• Nandan Denim promoter buys 45,000 shares from open market on Oct. 17.

Asian Paints (Q2, YoY)

• Revenue up 8.8 percent at Rs 4639 crore.
• Ebitda down 2.1 percent at Rs 784 crore.
• Margin at 16.9 percent versus 18.8 percent.
• Net profit down 14.4 percent at Rs 493 crore.

Oberoi Realty (Q2, YoY)

• Revenue up 95 percent at Rs 592 crore.
• Profit up 105 percent at Rs 214 crore.
• Ebitda up 81 percent at Rs 295.8 crore.
• Margin at 50 percent versus 54 percent.

Lakshmi Machine Works (Q2, YoY)

• Revenue up 35 percent at Rs 772 crore.
• Profit down 13 percent at Rs 40.4 crore.
• Ebitda up 43 percent at Rs 90.3 crore.
• Margin at 11.7 percent versus 11 percent.

Welspun India (Q2, YoY)

• Revenue up 11 percent at Rs 1780 crore.
• Net profit up 19 percent at Rs 115 crore.
• Ebitda up 2.2 percent at Rs 289.5 crore.
• Margin at 16.3 percent versus 17.6 percent.
• Margin impacted due to higher raw material cost and higher other expenses
• Net profit growth aided by lower tax rate.
• Company says full impact of exchange rate will be evident in next financial year.

Schaeffler India (Q2, YoY)

• Revenue up 19 percent at Rs 1,191.5 crore.
• Net profit down 5 percent at Rs 91 crore.
• Ebitda up 19 percent at Rs 200 crore.
• Margin at 16.8 percent versus 16.7 percent.
• Exceptional expense of Rs 39 crore booked related to merger.

Omax Autos (Q2, YoY)

• Revenue up 7 percent at Rs 309 crore.
• Ebitda down 30 percent at Rs 10 crore.
• Margin at 3 percent versus 4.8 percent.
• Net loss at Rs 1.5 crore versus 3.3 crore.
• Higher cost of raw material impacted financials.
• Higher tax outgo versus tax refund led to higher losses.

Can Fin Homes (Q2 Standalone, YoY)

• NII up 2 percent at Rs 130.4 crore.
• Net Profit up 7.5 percent at Rs 76.8 crore
• Fee and Commission income fell 25.4 percent.

• Adani Ports
• Bajaj Finserv
• Bajaj Finance
• HCL Technologies

Other Earnings To Watch

• Ambuja Cements
• Bajaj Corp
• Bayer Cropscience
• HDFC Standard Life Insurance
• ICICI Prudential Life Insurance
• MCX
• Rallis India
• RBL Bank
• Sasken Technologies
• Tata Metaliks
• TVS Motor Co
• Zensar Tech

• ITD Cementation bagged multiple orders worth over Rs 1066 crore.
• Lakshmi Machine Works said it will buy back 2.66 lakh shares at Rs 6,000 each at a discount of 2.2 percent to CMP.
• Orient Press received order from the Maharashtra Pollution Control Board directing the company to stop all manufacturing activity at its Tarapur plant within 72 hours. The company derives 46.54 percent of its gross revenues from this plant.
• Digjam said manufacturing of woollen and worsted fabrics at its mill in Jamnagar were suspended due to extremely tight liquidity and working capital position.
• Syndicate Bank raised Rs 728 crore via preferential allotment from the government.
• Himachal Futuristic Communications received Rs 366.36 crore advance purchase order from BSNL.
• Tata Steel opposes JSW Steel’s bid for Bhushan Power, according to Bloomberg report.
• BHEL to consider proposal for shares buyback on Oct. 2.

• Former CBI ‘insider’ calls for removal of two top feuding officers
• Oil declines to five-week low as Saudi supply risk dissolves
• Taxman launches crackdown against Indians with illegal foreign assets
• Indian banks’ profitability weaker than BRICS peers
• IL&FS board appoints three advisors to develop resolution plan
• Jet Airways cancels wet leasing deal with TruJet
• Number of crorepatis has risen by 60% in India, CBDT says
• Three held for blackmailing Paytm boss with stolen personal data
• Now apps can track you even after you uninstall them
• Oyo now wants to rent houses, too
• The large caps that were small on returns

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.85 percent or 89 points to 10,163 as of 7:32 a.m.

Asian equities opened lower as U.S. futures built on Monday declines ahead of a slew of key earnings reports this week. The dollar traded around the highest level in two months.

Stocks fell in Japan, Australia and South Korea. Futures in China and Hong Kong were lower, suggesting the biggest jump in more two years in the Chinese equities Monday may not extend.

Currencies

• The yen rose 0.1 percent to 112.70 per dollar after weakening 0.2 percent.
• The offshore yuan was little changed at 6.9458 per dollar.
• The Bloomberg Dollar Spot Index was little changed.
• The euro was at $1.1464 after falling 0.4 percent.

Commodities

• Crude oil increased 0.2 percent to $69.51 a barrel.
• Gold was steady at $1,222.58 an ounce.