Sensex, Nifty Rebound From 6-Month Lows Led By Private Lenders

Indian equity benchmarks rebounded from six-month lows hit in the previous session as earnings season began with Zee Entertainment.

The S&P BSE Sensex rose 1.35 percent or 461 points to 34,761 and the NSE Nifty 50 Index jumped 1.5 percent or 159 points to 10,460.

"Selling was overdone and it was a time to buy," Sanjiv Bhasin, executive VP-markets & corporate affairs, told BloombergQuint over phone. Nifty has formed a support at 10,200 and it can go up to 11,000 by Diwali as rally in crude prices may be getting over and bond yields will trade below 8 percent, Bhasin said.

Bandhan Bank has beaten all expectations which tells that most banks will come out with good numbers and going ahead the banks will leave apart all the uncertainties of NBFCs, he said.

All sector gauges barring the Nifty IT Index ended higher led by the Nifty PSU Bank Index's 5.6 percent gain. Media, Realty, Private Bank, Bank and Financial Services Indices also rose between 3-5 percent.

The mid- and small-cap shares outperformed larger peers as the Nifty Midcap 100 and Nifty Smallcap 100 Indices rose over 4 percent each.

Shares of the state-run lender rose as much as 10.27 percent, the most in seven months, to Rs 72.50 as trading volumes rose.

Trading volume was 1.3 times its 20-day average, data compiled by Bloomberg showed.

• Nifty Bank Index surged as much as 3.44 percent or 843 points to 25,371 led by gains in ICICI Bank, Axis Bank and State Bank of India.

• Vodafone Idea has 53 lakh shares change hands in two blocks. Stock up 3.7 percent at Rs 35.75.

Buyers and sellers were not immediately known

Source: Bloomberg

• Philips Carbon: The Kolkata-based carbon black maker rose as much as 15.38 percent to Rs 221. Trading volume was 9 times its 20-day average.
• Thermax: The Pune-based electrical power equipment maker rose as much as 2.24 percent to Rs 910. Trading volume was 6 times its 20-day average.
• Great Eastern Shipping: The Mumbai--based cargo ship operator rose as much as 15.5 percent, the most in over three years, to Rs 345. Trading volume was 5 times its 20-day average.
• Thyrocare Technologies: The Mumbai-based diagnostic lab operator fell as much as 1.7 percent to Rs 658. Trading volume was 6 times its 20-day average.

Shares of the Kolkata-based private sector lender rose as much as 5.54 percent to Rs 513.80 after its profit rose 47 percent in September quarter.

Key earnings highlights:

• Net profit rose 47 percent to Rs 488 crore versus Rs 331 crore (YoY)
• Net interest income rises 55 percent to Rs 1,078 crore versus Rs 693 crore (YoY)
• Loan portfolio grew 51 percent to Rs 33,373 crore (YoY)
• Net NPA at 0.69 percent versus 0.64 percent (QoQ)
• Gross NPA at 1.29 percent versus 1.26 percent (QoQ)

Shares of the country's largest carmaker rose as much as 5.23 percent, the most since Dec. 19, to Rs 7,050 as its trading volumes rose.

Trading volume was 1.3 times its 20-day average, data compiled by Bloomberg showed.

Indian equity benchmarks extended gains led by ICICI Bank, HDFC twins, Axis Bank and Larsen & Toubro.

The Sensex surged 1.6 percent or 535 points to 34,834 and the Nifty 50 Index climbed 1.6 percent or 168 points to 10,469.

Seventeen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Capital Goods Index's 3.85 percent gain. Consumer Discretionary Goods & Services, Finance, Industrials, Bankex and Consumer Durable Indices also advanced over 3 percent.

Overall market breadth was extremely positive as over 1,949 shares were advancing while 543 were declining on the BSE.

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Shares of mid- and small-cap companies outperformed their larger peers as the S&P BSE MidCap Index climbed 3.7 percent and the S&P BSE SmallCap Index rose 3.14 percent.

Top Mid-Cap Gainers

• Dewan Housing Finance up 17.45 percent
• Shriram Transport Finance up 12.91 percent
• Edelweiss Financial Services up 10 percent
• NLC India up 9.8 percent
• Cholamandalam Investment up 9.53 percent

Top Small-Cap Gainers

• HEG up 20 percent
• Genius Power up 18.13 percent
• IFB Agro up 17.43 percent
• TD Power Systems up 17.41 percent
• Goa Carbon up 17.14 percent

• Tata Motors has 13.3 lakh shares change hands in a single block. Stock up 1.9 percent at Rs 188.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based local search engine rose as much as 9.71 percent, the most since May 28, to Rs 467 on the back of heavy volumes.

Trading volume was 1.7 times its 20-day average, data compiled by Bloomberg showed.

Over 24 lakh shares changed hands on the National Stock Exchange as per the information available on NSE's website.

Shares of the state-owned power generator rose as much as 12.6 percent, the most since March 2017, to Rs 83 apiece.

NLC India’s board approves to buy back 14.19 lakh shares at Rs 88 a share, according to an exchange filing. The amount of buyback aggregates to Rs 1,249 crore. The shares proposed in the buyback represent 9.28 percent of the company’s equity paid-up share capital.

Shares of aviation companies rose after a report suggested that the government has sought for Election Commission's nod for cutting excise duty on jet fuel, CNBC TV18 reported citing sources.

Current rate of excise duty on ATF is 14 percent; In 2014, excise duty on ATF Was increased from 8 percent to 14 percent.

• Jet Airways rose 8.85 percent to Rs 191.30
• Interglobe Aviation climbed 3.5 percent to Rs 749.65
• Spicejet advanced 5.36 percent to Rs 68.80

Shares of the Gurugram-based consumer loan provider were locked in a five percent lower circuit for thirteenth day in a row ahead of its September quarter earnings.

In the last 13 trading sessions the stock has plunged 49 percent to Rs 376.40.

Indiabulls Venture is quoting at 14 on the Relative Strength Index, according to data compiled by Bloomberg. A reading below 30 indicates stock may be oversold while above 70 indicates to be in the overbought zone.

• NTPC has 10 lakh shares change hands in a single block. Stock up 1.5 percent at Rs 164.10.
• Infosys has 12 lakh shares change hands in a single block. Stock down 1.13 percent at Rs 709.

Buyers and sellers were not immediately known

Source: Bloomberg

Indian equity benchmarks extended gains led by Reliance Industries, ICICI Bank, HDFC and Maruti Suzuki.

The Sensex rose 1 percent or 335 points to 34,635 and the Nifty 50 Index climbed 1 percent or 108 points to 10,409.

Seventeen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Auto Index's 2.2 percent gain. On the other hand, the S&P BSE IT Index was top loser, down 0.3 percent.

Shares of Graphite India and HEG were locked in 5 percent and 20 percent upper circuits after Bank of America Merrill Lynch initiated coverage on both the stocks with 'buy' for a potential upside of 100 percent from the last regular trade.

Bank of America Merrill Lynch in a note said:

HEG

• Initiated ‘Buy’ with a price target of Rs 6,700, implying a potential upside of 108 percent from the last regular trade.
• Purest play on the global graphite electrode profit boom.
• Strong cash flow – expansion and higher payout ahead.
• Expect 30-40 percent dividend payout ratio implying 8.5 percent dividend yield.
• Substantial value seen as multiples below prior troughs.

Graphite India

• Initiated ‘Buy’ with a price target of Rs 1,550, implying a potential upside of 96 percent from the last regular trade.
• India's largest producer; Cheapest electrode stock globally.
• Extended period of high profit not currently priced into valuation.
• Expect record earnings this year and next on strong global electrode demand.
• Likely strong cash flow means higher shareholder returns.

Shares of the state-run ship builder fell 13 percent to list at Rs 102.40 against issue price of Rs 118.

Its initial public offer was subscribed 1.02 times.

The company extended the issue closure date after receiving lukewarm response and also revised the price band from Rs 115-118 to Rs 114-118 per share.

Shares of the non-banking finance companies rose after the country's largest lender said that it will increase its planned purchase of portfolios from non-banking financial companies.

“The bank had initially planned for a growth of Rs 15,000 crore through portfolio purchase during the current year which is now being enhanced,” SBI said in a statement. “As per the bank’s internal assessment, there may be an opportunity to buy additional portfolio in the range of Rs 20,000-30,000 crore.”

NBFCs often sell down a part of their loan portfolios after holding them for a stipulated period. Banks, in turn, buy these portfolios to show growth or to meet priority sector lending requirements.

Shares of the Mumbai-based parent of luxury carmaker Jaguar Land Rover rebounded as much as 3.5 percent to Rs 191 after it reported wholesale numbers for September, after market hours yesterday.

Key wholesales highlights:

• Group September global wholesales including Jaguar Land Rover rose 6 percent to 123,577 units (YoY)
• Commercial vehicles and Tata Daewoo global wholesales jumped 25 percent to 52,018 units (YoY)
• Passenger vehicle global wholesales declined 4 percent to 71,559 units (YoY)
• JLR global wholesales stood at 52,987 units

Indian equity benchmarks edged higher paced by gains in Bajaj Finance, Tata Motors, Hero MotoCorp and Bharti Infratel.

The S&P BSE Sensex rose 0.3 percent or 97 points to 34,394 and the NSE Nifty 50 Index climbed 0.3 percent or 33 points to 10,333.

Sixteen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Auto Index's 1.4 percent gain. On the other hand, the S&P BSE IT Index was top loser, down 0.5 percent.

Mid- and small-cap shares were witnessing buying interest as the S&P BSE MidCap Index rose 1.3 percent and the S&P BSE SmallCap Index advanced 0.8 percent.

The rupee may find some support after sources said that the government may consider raising funds from overseas Indians to prop up the currency.

However, the pressure on the rupee has been relentless. And the fall in the currency to a new low against the dollar is set to extend to 75 by the end of the year after the RBI decided to hold rates.

The central bank has left the rupee out in the cold, seemingly opening the floodgates for further rupee weakness, according to Commerzbank.

In bonds, investors will watch out for the outcome of the Rs 7,000 crore of T-bill sales later today.

DBS Bank expects the 10-year bond yields to stay supported at 7.9-7.95 percent. It also expects shorter tenors to move sideways-to-slightly above 7.70 percent as speculation over imminent rate hikes abated. Inflation data on Friday will be watched.

BofAML on HEG

• Initiated ‘Buy’ with a price target of Rs 6,700, implying a potential upside of 108 percent from the last regular trade.
• Purest play on the global graphite electrode profit boom.
• Strong cash flow – expansion and higher payout ahead.
• Expect 30-40 percent dividend payout ratio implying 8.5 percent dividend yield.
• Substantial value seen as multiples below prior troughs.

BofAML on Graphite India

• Initiated ‘Buy’ with a price target of Rs 1,550, implying a potential upside of 96 percent from the last regular trade.
• India's largest producer; Cheapest stock electrode globally.
• Extended period of high profit not currently priced into valuation.
• Expect record earnings this year and next on strong global electrode demand.
• Likely strong cash flow means higher shareholder returns.

Macquarie on Ashoka Buildcon

• Maintained ‘Outperform’ with a price target of Rs 215, implying a potential upside of 102 percent from the last regular trade.
• Financial closure of all HAM projects boost confidence on execution pick up from the third quarter.
• EPC business in sweet spot with strong revenue and net profit growth of 30 percent and 17 percent respectively over FY18-21.
• Minimal dependency on new order inflows due to strong order book.

JPMorgan on Tata Steel

• Maintained ‘Overweight’ with a price target of Rs 980, implying a potential upside of 71 percent from the last regular trade.
• Management said that Bhushan ramping up well with iron ore supplies from Tata starting.
• Management sees strength in domestic steel market for the next three years.
• Expect Tata Steel to surprise positively on deleveraging over next two years.

Credit Suisse on Avenue Supermarts

• Maintained ‘Underperform’ with a price target of Rs 1,150, implying a potential downside of 16 percent from the last regular trade.
• Even D-Mart is not immune to 100 percent FDI in multi-brand retail.
• Near-term earnings momentum should be decent.
• Expect potential valuation derating due to 100 percent FDI.

CLSA on Financials

• NBFCs have outperformed Bank growth but liquidity will shift the pendulum.
• Expect an elevated level of securitisation activity from NBFCs.
• Securitisation to lift domestic credit growth to 15-16 percent for banks
• Prefer banks and select HFCs over NBFCs.

• Nifty October future ended at 10,314, with a premium of 13 points.
• Nifty October open interest down 4 percent; Nifty Bank October open interest down 7 percent.
• Maximum open interest for October series call at 10,500 strike price call option contract (open interest at 29.9 lakh shares).
• Maximum open interest for October series put at 10,000 strike price put option contract (open interest at 41.6 lakh shares).

Bulk Deals

• TCNS Clothing Co: Fidelity acquired 3.5 lakh shares or 0.57 percent equity at Rs 590 each.

Insider Trades

• Kirloskar Industries promoter acquired 30,000 shares on Oct. 5.
• Greaves Cotton promoter acquired 2.5 lakh shares on Oct. 8.
• Cox & Kings promoter acquired 77,000 shares on Oct. 8.
• MEP Infra Developers promoters acquired 2 lakh shares on Oct. 6.
• Lemon Tree Hotel promoter acquired 50,000 shares from Oct. 3-5.

Trading Tweaks

• Bhushan Steel and Viceroy Hotels added in ASM Framework.
• JB Chemicals & Pharma buy back window starts from Oct. 10-24.
• Veto Switchgears and Cables Ltd price band revised to 10 percent.
• IL&FS Transportation Network price band revised to 5 percent.
• Jubilant Industries price band revised to 5 percent.

Who’s Meeting Whom

• Finolex Industries to meet Emkay Global Financial Services on Oct. 10.

(As reported on Oct. 9)

• Garden Reach Shipbuilders & Engineers to start trading on BSE/NSE after its initial public offer was subscribed 1.02 times. The company extended the issue closure date after receiving lukewarm response and also revised the price band from Rs 115-118 to Rs 114-118 per share.

Zee Entertainment Q2

• Bloomberg consensus estimates (consolidated, YoY)
• Revenues seen at Rs 1,848 crore versus Rs 1,582 crore, up 17 percent
• Net profit seen at Rs 400 crore versus Rs 591 crore, down 32 percent
• Ebitda seen at Rs 577 crore versus Rs 491 crore, up 17 percent
• Margins seen at 31.2 percent versus 31.0 percent

Other Earnings To Watch

• Bandhan Bank
• Indiabulls Ventures

• Indiabulls Housing Finance increased effective lending rates for builder loans by 100 basis points. The benchmark rate for such loans has been increased by 200 basis points to 14.9 percent, with effect from Oct. 1.
• Tata Motors group September global wholesales including Jaguar Land Rover rose 6 percent to 123,577 units on a year on year basis. Tata Motors’ commercial vehicles and Tata Daewoo global wholesales jumped 25 percent at 52,018 units. Passenger vehicle global wholesales declined 4 percent to 71,559 units and JLR global wholesales stood at 52,987 units.
• State Bank of India steps up target to purchase good portfolio of assets from non-banking financial companies, the lender believes there is a good opportunity to expand loan portfolio at attractive rates, according to an emailed statement. The bank sees an opportunity to buy additional portfolio in the range of Rs 20,000 crore to Rs 30,000 crore this year in both priority and non-priority sectors.
• Usha Martin clarified that union quoted in the news for raising concern over irregular payment of salaries is not a recognised trade union of the company and that does not represent the voice of the employee of the company at the Ranchi plant.
• Graphite India decided to halt operations in its Bengaluru graphite electrode plant by halting the furnaces in a sequential manner by October end, during the ongoing revamp work for the replacement of roof sheets. The revamping work will be completed by November end. The company said that it will make up for the production loss and expects total production levels to remain unchanged from other production facilities.
• Bharat Forge initiates voluntary liquidation process of its joint venture with NTPC for business of manufacturing, buying and selling equipment relating to the power sector. The company said since its incorporation the venture has not commenced any business activity.

• HealtchCare Global Enterprises’ associate arm has signed an agreement to acquire Indian medical diagnostics business of Quess Diagnostics.
• Glenmark Pharma executed a pact to transfer the company’s API business to its wholly owned subsidiary Glenmark Life Sciences.
• NLC India board approves to buy back 14.19 lakh shares at Rs 88 per share, aggregating to Rs 1,249 crore. The proposed buy-back represent 9.28 percent of the company’s equity paid-up share capital.
• NALCO to consider share buyback proposal on Oct. 12.

• SBI is rushing to support NBFCs
• U.S. Ambassador to the UN Nikki Haley resigns
• Fuel excise duty cut is ‘credit negative’ for India
• RBI to pump Rs 12,000 crore into system on Oct.11
• SEBI allows foreign entities in commodity derivatives market
• Ex-Goldman banker looks to fill India lending gap after IL&FS
• The new Google Pixel is here
• How Singh brothers’ aviation dream burned a Rs 1,200-crore hole
• Vijay Mallya fights UBS bid to foreclose on $26 million home
• India is considering tapping its citizens abroad to prop rupee
• What separates sexual harassment from social misconduct?
• Portfolio managers face the worst rout of the year
• Slay this Indian hydra so its body can live

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.4 percent or 40 points to 10,352 as of 7:12 a.m.

Asian stocks began mixed on Wednesday following a volatile session for U.S. equities and as yields on Treasuries retreated from a seven-year peak. The dollar nudged lower.

The recent sell-off in bonds and equities eased, with Japanese shares rising after four days of losses, while stocks were little changed in South Korea and Australia. Futures nudged higher in Hong Kong and China.

Currencies

• The yen was steady at 112.98 per dollar.
• The offshore yuan was at 6.9155 per dollar.
• The Bloomberg Dollar Spot Index declined less than 0.1 percent.
• The euro bought $1.1505.
• The pound rose 0.1 percent to $1.3156.

Commodities

• West Texas Intermediate crude slid 0.3 percent to $74.76 a barrel.
• Gold was steady at $1,189.76 an ounce.

Here are some key events coming up:

• The U.S. Treasury has $230 billion worth of debt auctions this week.
• The IMF and World Bank will hold meetings in Bali from Friday, where finance chiefs from around the world will gather.
• A closely watched gauge of U.S. consumer prices probably remained elevated in September and rose 2.3 percent from a year earlier, according to forecasts ahead of Thursday’s release.
• JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. kick off earnings season for U.S. banks on Friday.