Sensex Snaps Worst Losing Streak In Six Months Led By RIL

India's Sensex snapped its longest losing streak in six months led by energy and pharma stocks.

The Sensex rose 0.6 percent or 224 points to 38,243 and the Nifty 50 index climbed 0.5 percent 60 points to 11,537.

For most part of the day, the benchmarks were volatile as weekly derivative contracts of Nifty Bank expired. However, late buying in Reliance Industries, HDFC twins and Kotak Mahindra Bank boosted Sensex and Nifty to intraday highs.

Fifteen of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Energy and S&P BSE Pharma indexes over 2 percent gain. On the flipside, the S&P BSE Telecom index was top loser, down 0.3 percent.

Shares of the Bengaluru-based bio pharmaceutical company rose as much as 6.4 percent, the most in over a month, to Rs 664.15 on heavy trading volumes.

Trading volume was 3.6 times its 20-day average.

• Indian equity benchmarks staged a sharp recovery from intraday low levels in last one hour of trade led by Reliance Industries, Kotak Mahindra Bank and HDFC twins.
• The Sensex rose 0.7 percent or 270 points to 38,288 and the Nifty 50 index climbed 0.6 percent or 69 points to 11,546.
• Sixteen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Healthcare index's 2 percent gain. On the other hand, the S&P BSE Telecom index was top loser, down 0.4 percent.
• the market breadth turned positive as 1,562 shares were advancing while 1,076 were declining on the BSE.

Shares of the construction company snapped a three-day decline and rose as much as 3.9 percent to Rs 815.

The company received a Letter of Acceptance for a mining project, valued at Rs 717.45 crore, according to its stock exchange notification.

The stock declined 19.5 percent so far this year compared to a 13.2 percent advance in the Sensex.

Lakshmi Iyer, CIO (Debt) at Kotak Mutual Fund told BloombergQuint in an interview that Reserve Bank of India has not taken any meaningful steps to contain the rupee fall and that is plaguing the debt markets.

Key highlights of the conversation:

• No meaningful steps have been taken by the Reserve Bank of India and that is a single pain point plaguing the debt market.
• No answer to when the rupee depreciation will stop.
• In similar situation in 2013 real interest rates were negative but today situation is not as ominous as 2013.
• Not sure we need to react at all as other emerging market currencies are in the same bandwagon as rupee.

• Indian equity benchmarks erased gains dragged by ICICI Bank, HDFC Bank and Axis Bank after rupee breached 72 per dollar for the first time.
• The S&P BSE Sensex fell 0.2 percent or 82 points to 37,935 and the NSE Nifty 50 index declined 0.3 percent or 38 points to 11,437.
• All sector gauges barring the Nifty Pharma index were trading lower dragged by Nifty Media index's 2.7 percent drop.
• Selling pressure was broad-based as the mid- and small-cap shares also erased gains with the respective indices declining 0.1 percent.

• Bajaj Corp: The Mumbai-based hair care products maker fell as much as 2.2 percent to Rs 407.35. Trading volume was 12.1 times its 20-day average.
• Lakshmi Machine Works: The Coimbatore-based industrial machinery maker fell as much as 1.2 percent to Rs 6,990. Trading volume was 8.1 times its 20-day average.
• ICICI Lombard: The Mumbai-based general insurance company rose as much as 3.2 percent to Rs 856. Trading volume was 7 times its 20-day average.
• Tube Investments: The Chennai-based metal products maker rose as much as 7.8 percent to record high of Rs 327. Trading volume was 6 times its 20-day average.

Nifty Bank index was trading flat ahead of the weekly derivative expiry as gains in Kotak Mahindra Bank and IndusInd Bank were offset by losses in Axis Bank and RBL Bank.

Meanwhile, the Nifty Bank index was hovering near its 50-day moving average placed at 27,386.11, according to the data compiled by Bloomberg.

Shares of the Bhubaneswar-based aluminium manufacturer fell as much as 7.3 percent, the most in over four months, to Rs 70.80 on fears of alumina price correction as Norsk Hydro looks to open mines.

Norwegian aluminum maker Norsk Hydro on Wednesday said that it had signed two deals with Brazilian authorities which could pave way for a resumption of full output at the company’s Alunorte alumina refinery that was accused of polluting the environment, Bloomberg reported.

Nifty Bank's 27,500 call option contract was among the most active option contracts on the National Stock Exchange ahead of weekly expiry.

Premium on the contract fell 51 percent to Rs 25. Over 17 lakh shares were added to the open interest which stood at 27.33 lakh shares.

Shares of the Hyderabad-based software company fell as much as 3.6 percent to Rs 98.10 after Aspire Emerging Fund sold 1 lakh shares or 0.59 percent equity at Rs 105.09 apiece, according to data availble on stock exchanges.

Shares of the Rewa-based telephone cables maker fell as much as 4.8 percent, the most in nearly a month, to Rs 1,465.15 after it was placed under the Additional Surveillance Measure framework.

Shares of the Ahmedabad-based textile manufacturer and exporter surged as much as 19.3 percent, the most in nearly two years, to Rs 92.75 after it received sanction for subsidy under the Gujarat State Textile Policy, 2012.

The company expects to save Rs 65 crore on account of interest and power subsidy over a period of five years starting from December 2016. Further, the company is entitled to a GST / VAT refund up to Rs 340 crore till 2024, Nandan Denim said in a press release.

• Adani Enterprises started trading at Rs 150.41 as it went ex-Adani Gas. Pre-open indicates that Adani Gas is valued at Rs 60 per share.

Shares of the Delhi-based provider of finance for urban infra and housing projects rose as much as 14.5 percent, the most in over a year, to Rs 63.80 after its profit more than doubled in April-June quarter.

Key earnings highlights:

• Net profit at Rs 333.38 crore versus Rs 162.38 crore.
• Provisions at Rs 248 crore versus Rs 220 crore.
• Gross NPA at 6.87 percent versus 9.32 percent.
• Net NPA at 1.09 percent versus 2.81 percent.

Shares of the Mumbai-based entertainment channel operator fell as much as 7.2 percent, the most in nearly 10 months, to Rs 447.70 after international brokerage Morgan Stanley downgraded the stock to 'Underweight'.

Morgan Stanley downgraded the stock from 'Overweight' to 'Underweight' and cut its target price to Rs 410 from Rs 610 as it wrote in a note that investments in Zee5 are likely to drag margins in the near term.

The brokerage expects possible breakeven for Zee5 only by March 2025 and the operating income growth could significantly decelerate and de-rate valuation multiples.

India equity benchmarks edged higher paced by gains in UltraTech Cement, Tata Motors, GAIL India and UPL.

The S&P BSE Sensex rose 0.2 percent or 81 points to 38,100 and the NSE Nifty 50 index climbed 0.16 percent or 17 points to 11,497.

Sixteen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Realty index's 1 percent gain. On the flipside, the S&P BSE IT index was top loser, down 0.3 percent.

Mid- and small-cap shares were in line with their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indices rose 0.4 percent each.

• Rupee opened higher at 71.65 per dollar against yesterday's close of 71.75.

The rupee may move further away from the record low it touched on Wednesday as emerging market currencies are witnessing a broad recovery.

The implied opening from forwards suggests that the pair may start trading around 71.53 a dollar. In the day, the currency may move in a range of 71.10-71.80 a dollar.

The small recovery in the rupee may also help sovereign bonds. Yield on the benchmark 10-year note is trading at 8.05 percent after rising as much as 8.11 percent in the last session. Dealers expect the yield to stay broadly in a range of 8-8.05 percent in the day.

Aurobindo Pharma’s U.S. arm will acquire dermatology and oral solids businesses from Sandoz Inc., U.S., Aurobindo Pharma said in an exchange filing. The acquisition is for an upfront purchase price of $0.9 billion in cash, the filing added.

Key highlights:

• Aurobindo would become the second largest generic player in the U.S. by number of prescriptions.
• Acquisition will add approximately 300 products including projects in development as well as commercial and manufacturing capabilities in the U.S.

CLSA on Reliance Industries

• Maintained ‘Buy’; raised price target to Rs 1,500 from Rs 1,365, implying a potential upside of 22 percent from the last regular trade.
• Grand omni-channel strategy may be a big long-term promise for the stock.
• Remove holding company discount on retail and Jio to raise target.
• High customer engagement to create a big market opportunity.

Morgan Stanley on Zee Entertainment

• Downgraded to ‘Underweight’ from ‘Overweight’; cut price target to Rs 410 from Rs 610, implying a potential downside of 15 percent from the last regular trade.
• Investments in Zee5 likely to drag margins in near term.
• Expect possible breakeven for Zee5 only by March 2025.
• The operating income growth could significantly decelerate and de-rate valuation multiples.

JPMorgan on NMDC

• Upgraded to ‘Overweight’ from ‘Underweight’; raised price target to Rs 145 from Rs 130, implying a potential upside of 30 percent from the last regular trade.
• Domestic iron ore pricing strong on pellet pricing, domestic steel pricing.
• Market is giving zero value to steel investments, we value it at Rs 45 per share.
• Steel investment positives: capacity to come at an ideal time, low fixed costs and captive iron ore.
• NMDC also offers an interesting option to potential mining disruption post March 2020.

Nomura on Tata Motors

• Maintained ‘Buy’ with a price target of Rs 356, implying a potential upside of 34 percent from the last regular trade.
• JLR’s August 2018 U.S. retail volumes better than our estimate.
• For the current financial year, we expect 4 percent growth in overall JLR volumes driven by stronger demand in China.
• Stock trading at lowest end of the historical trading band.

Credit Suisse on Bharat Forge

• Maintained ‘Outperform’ with a price target of Rs 750, implying a potential upside of 13 percent from the last regular trade.
• The company is expected to benefit with sharp rupee depreciation. About 60 percent of revenues come from exports.
• Stands to benefit from the strong crude price environment as rig counts have started rising again.
• Main concern is peaking of U.S. Class 8 trucks cycle.

Credit Suisse on Avenue Supermarts

• Maintained ‘Underperform’ with a price target of Rs 1,150, implying a potential downside of 26 percent from the last regular trade.
• On most financial and business metrics, DMART scores low versus India FMCG.
• With FMCG multiples starting to correct, think DMART risks a derating.
• Valuations are factoring in a bull case scenario with low margin for safety.

CLSA on Two-wheelers

• Bajaj’s price cuts have boosted demand in entry-level motorcycles.
• Aggressive pricing of Pulsar has also helped but cannibalization as well.
• TVS’s dealers have not felt much impact on their premium Apache bike sale.
• Dealers slightly concerned due to big price increase post new insurance norms.

Brokerages On Bharat Electronics

UBS

• Maintained ‘Sell’; cut price target to Rs 95 from Rs 115, implying a potential upside of 0.5 percent from the last regular trade.
• New pricing policy reduces margins on nominated orders to 7.5 percent from 12.5 percent.
• Estimate a 150-225 basis point margin impact due to the new policy.
• EVM order to help the current financial year’s revenue, but defence revenue to decline.

Antique

• Maintained ‘Buy’; cut price target to Rs 146 from Rs 175, implying a potential upside of 54.5 percent from the last regular trade.
• In the worst-case scenario, expect margin to fall to 16 percent in the financial year-ending March 2023 from 19 percent expected in the current financial year.
• Expect lower 10 percent earnings CAGR over the next five years versus 13 percent growth over FY18-20
• Cut target on lower growth along with uncertainty related to new guidelines.

• IG Petrochemicals promoter group sold 10.2 lakh shares on Sept. 3.
• Oriental Hotels promoter acquired 60,500 shares from Aug. 29-Sept. 3.
• NOCIL promoter sold 25,000 shares on Sept. 3.
• UPL promoter acquired 1.3 lakh shares from Aug. 31-Sept. 3.
• Nava Bharat Ventures promoter group acquired 10,000 shares from Sept 3-4.
• Panama Petrochem promoter group acquired 10,600 shares from Aug. 31-Sept 4.

Who’s Meeting Whom

• Igarashi Motors to meet DSP Mutual Fund, Axis Mutual Fund and other investors from Sept. 6-7.
• Allcargo Logistics to meet Morgan Stanley, Edelweiss Securities and other investors from Sept. 6-11.
• Syngene International to meet Mirae Asset, Perpetuity Ventures LLP and other investors from Sept. 6-27.
• PSP Projects to meet Unilazer Ventures Private Limited on Sept. 6.

• Nifty September futures ended at 11,518.2, with a premium of 41.3 points versus 52.8 points.
• September series: Nifty open interest up 5.4 percent and Bank Nifty open interest down 7 percent.
• India VIX ended at 13.6, down by 1 percent.
• Max open interest for September series call at 11,800 strike price call option (open interest at 41.8 lakh shares, up 0.5 percent).
• Max open interest for September series put at 11,400 strike price put option (open interest at 38.8 lakh shares, up 13 percent).

Bulk Deals

• GSS Infoteh: Aspire Emerging Fund sold 1 lakh shares or 0.59 percent equity at Rs 105.09 apiece.

Trading Tweaks

• Vindhya Telelinks and Gallantt Ispat placed under ASM framework.
• Jaiprakash Power Ventures’ circuit filter revised to 5 percent.
• TCS buyback period from Sept. 6-21
• Adani Enterprises ex-date for demerger. Shareholders to get 1 share of Adani Gas for every share of Adani Enterprises.
• Zensar Technologies last trading day before ex-bonus date.

Last Trading Day Under ASM Framework

• Amrutanjan Health Care
• Borosil Glass Works
• International Paper APPM
• JK Paper
• Kirloskar Oil Engines
• Lincoln Pharmaceuticals
• Pfizer
• Tamil Nadu Newsprint & Papers

Hudco (Q1, YoY)

• Net Profit at Rs 333.38 crore versus Rs 162.38 crore.
• Provisions at Rs 248 crore versus Rs 220 crore.
• Gross NPA at 6.87 percent versus 9.32 percent.
• Net NPA at 1.09 percent versus 2.81 percent.

SREI Infrastructure (Q1, YoY)

• Revenue from operations up 20.7 percent at Rs 1,467.8 crore.
• Net Profit up 114 percent to Rs 139.5 crore.
• Provisions at Rs 95.8 crore versus Rs 104 crore.
• Consolidated AUM up 24.2 percent at Rs 49,390 crore.
• Disbursements growth at 35 percent at Rs 5,941 crore.

• Delhi High Court ordered Malvinder Singh to deposit S$3.5 million and release of Rs 9 crore to Daiichi. The money has been attained from the sale of shares Iisted by the Singh brothers. The deposit order is due to the allegation of share sale despite ban. The court also barred the brothers from moving any assets abroad, and froze their shares in the company that owns the Fortis trademark. (Bloomberg News)
• ONGC’s overseas investment arm ONGC Videsh said that it will decide on the Iran gas project post November amidst U.S. sanctions. The foreign arm expects its first LNG production from the Mozambique project in 2022. It also said that output from the South Sudan oil field will increase from 8,000 barrel/day to 20,000 barrel/day. (Bloomberg News)
• PSP Projects reported that it has received work orders worth Rs 226.07 crore (standalone basis) from various clients for industrial and institutional projects since its last intimation date of July 26. The total work order received during this financial year till date stands at Rs 419.97 crore.
• Sagar Cements August sales up 24 percent at 247,051 MT versus 199,179 MT on a consolidated year to year basis.
• Nandan Denim received a sanction of subsidy under the Gujarat State Textile Policy, 2012. The company expects to save Rs 65 crore on account of interest and power subsidy over a period of five years starting from December 2016. Further, the company is entitled to a GST / VAT refund up to Rs 340 crore till 2024.
• Jindal Stainless mull increasing its foreign portfolio investor investment limit to 100 percent of the paid-up equity share capital of the company. The annual general meeting is scheduled for Sept. 27.
• Welspun Corp board approved the merger plan of Welspun Pipes with self. Post the merger, there will be no change in the shareholding of promoters in the listed entity.
• Bharti Infratel: Vodafone Idea Ltd. to exit 27,447 co-locations w.e.f. Sept. 1, 2018. The aforesaid co-locations contributed 13.7 percent of the total co-locations as on June 30, 2018. Exit to results in revenue loss of Rs 60-65 crore per month. Some of this will be mitigated by exit charges.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.3 percent to 11,534 as of 7:00 a.m.

Asian stocks posted modest losses Thursday amid ongoing concerns about emerging-markets and as U.S. tech shares tumbled after executives of some heavyweights faced scrutiny on Capitol Hill.

Benchmarks fell in Japan and Australia, while futures signaled losses for equities in China and Hong Kong. An emerging-market currency gauge edged higher from a one-year low and its equity equivalent steadied.

Currencies

• The yen rose 0.1 percent to 111.40 per dollar.
• The offshore yuan was steady at 6.8438 per dollar.
• The Bloomberg Dollar Spot Index fell 0.1 percent.
• The MSCI Emerging Markets Currency Index slipped 0.3 percent.
• The euro bought $1.1643, up 0.1 percent.
• The pound was at $1.2920 after large swings Wednesday.

Commodities

• West Texas Intermediate crude edged lower to $68.50 a barrel, adding to a 1.7 percent drop.
• Gold added 0.2 percent to $1,198.50 an ounce.
• LME copper gained 0.5 percent to $5,898.50 per metric ton.

Here are some events coming up during the remainder of this week:

• South Korea reports on its current-account balance Thursday.
• Australian trade balance data is due Thursday.
• A key monthly U.S. employment report for August is due Friday.