Sensex Resumes Rally After One-Day Blip

Indian equity benchmark S&P BSE Sensex resumed rally after a one-day blip, following the rally in its Asian peers amid renewed optimism over trade talks after U.S. President Donald Trump extended the deadline to raise tariffs on Chinese goods beyond March 1.

The 31-share index ended 351.90 points higher at 36,213.38 after gaining 370 points intraday. The NSE Nifty 50 Index also ended near day’s high to close at 10,880.10.

The market breadth was tilted in favour of buyers. About 1064 stocks advanced and 675 shares declined on National Stock Exchange.

Eight out of 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty Private Bank Index’s 1.1 percent gain. On the flipside, the NSE Nifty realty Index was the top sectoral loser, down 0.7 percent.

WABCO India

• Stock rose as much as 5.6 percent to Rs 6,240.05
• Trading volume was almost six times its 20-day average.

Motherson Sumi

• Stock rose as much as 12.1 percent to Rs 160.90.
• Trading volume was more than six times its 20-day average.

DCM Shriram

• Stock rose as much as 9 percent to Rs 398.60.
• Trading volume was more than five time its 20-day average.

Sundaram-Clayton

• Stock rose as much as 16.9 percent to Rs 2,882.25.
• Trading volume was more than triple its 20-day average.

Shares of Kaveri Seed fell for the eighth consecutive trading session and are set for their longest losing streak since July 2016. The stock fell as much as 4.7 percent to Rs 384.

The scrip declined 16 percent in the past five days and fell 33 percent in the past 30 days, according to Bloomberg data.

Shares of IDFC First Bank rose for the fifth consecutive trading session and are poised for their longest losing streak since July 2017. The stock rose as much as 1.5 percent to Rs 46.25.

The scrip had declined 12 percent in the past 12 months compared to an 5.6 percent advance in the Sensex.

European stocks advanced in early trading amid renewed optimism over trade talks after the U.S. President Donald Trump extended the deadline to raise tariffs on Chinese goods beyond March 1.

• Indian equity benchmarks traded at day’s High.
• Sensex jumped nearly 200 points to 36,061 and Nifty traded near 10,850.
• About 1,060 stocks advanced and 630 shares declined on NSE.

Bengaluru-based Bharat Electronics Ltd. received export orders valued about $33 million from Israel-based Elbit Systems ElectroOptics Elop, according to its stock exchange filing.

Shares of the company fluctuated between gains and losses to trade 0.5 percent lower at Rs 78.10.

Shares of Caplin Point Laboratories extended gains for the fourth consecutive trading session and rose as much as 15.4 percent, the most since July 2017, to Rs 409.90.

Trading volume was 17 times its 30-day average, Bloomberg data showed. The stock traded at 14.5 times estimated forward earnings per share compared to a 24.5 times for the two year historical average.

Shares of Adani Ports and Special Economic Zone Ltd. fell as much as 9.1 percent to Rs 322.

The company’s unit Adani Logistics Ltd. plans to acquire Adani Agri Logistics Ltd. from Adani Enterprises Ltd. for a cash consideration of Rs 946 crore in a deal expected to be completed by March, subject to regulatory approval.

Trading volume was four times its 30-day average, Bloomberg data showed. The stock traded at 14.8 times estimated forward earnings per share compared to a 19.1 times for the two-year historical average.

Here’s what brokerages had to say about the acquisition plans:

CLSA

• Maintained ‘Buy’ with a price target of Rs 475.
• Acquires Adani’s agriculture logistics from group at premium valuation.
• Funding is not a problem as its post-acquisition leverage will be 0.72 times.
• Will group merge more assets into Adani Ports—a key client concern.

JPMorgan

• Maintained ‘Overweight’ with a price target of Rs 430.
• Expensively priced inter-group deal on FY20 basis, synergies kick-off starting FY21.
• Management does not see any other Adani group asset that overlaps with port/logistics business aside.
• Expect a negative stock reaction to this instance of inter-group M&A.

Citi

• Downgraded to ‘Neutral’ from ‘Buy’; cut price target to Rs 385 from Rs 500.
• Downgrade as acquisition appears expensive and raises questions on capital allocation.
• Acquisition might lead to resurgence of investor concern around related party transaction.
• Underlying operations are of high quality and stock valuations are reasonable.

Nifty’s 10,800 option contract was among the most active Nifty option contracts on National Stock Exchange.

Premium on the contract fell 20.78 percent to Rs 51.10. Over 6.19 lakh shares were added to the open interest which stood at over 28.99 lakh shares.

About 10.4 lakh shares of ITC changed hands in a single block, Bloomberg data showed. Buyers and sellers were not known immediately.

Shares of JBM Auto Ltd. rose as much as 7.3 percent to Rs 283.80.

JBM Group acquired major shareholding in German-based Linde-Wiemann, according to its stock exchange filing. The Group’s turnover would rise to $2.2 billion after the acquisition, the statement added.

The stock traded at 13 times its estimated earnings per share for the coming year, Bloomberg data showed.

Shares of the cash-strapped carrier snapped its three-day rally and declined 4.8 percent intraday to Rs 225.

Jet Airways extra-ordinary general meeting saw 98 percent of shareholders vote in favour of conversion of loan into shares, increase in authorised share capital and to alter the Articles of Association, according to its notification to the bourses. Besides, the company’s additional two aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements.

The stock fell close to 70 percent in the past 12 months compared with a 5.1 percent gain in the BSE Sensex Index.

Shares of IIFL Holdings Ltd. and Motilal Oswal Financial Services Ltd. fell between 5-9 percent in today’s trade.

The Securities and Exchange Board of India has declared the commodity broking arms of Motilal Oswal and India Infoline (IIFL) as not ‘fit and proper’, as part of the action in the National Spot Exchange Ltd. case. (more details here)

Shares of UPL Ltd. extended gains for the fourth day and rose as much as 1.2 percent to Rs 837.20, its highest level since Oct. 30, 2017.

The stock has advanced 18 percent in the past 12 months compared to a 5.1 percent gain in the Sensex.

The NSE Nifty Realty Index extended gains for the sixth consecutive trading session, its longest gaining streak in nearly four months.

This after the Goods and Services Tax Council approved lowering the tax rate on under-construction properties to 5 percent without input tax credit, from 12 percent earlier, while the affordable housing projects will attract 1 percent tax as against 8 percent earlier. (More details here)

The 10-share gauge rose over 2 percent, aided by Sunteck Realty Ltd.’s 4.7 percent rally.

Indian equity benchmarks opened higher following gains in their Asian peers after the U.S. President Donald Trump postponed the date for boosting tariffs on Chinese imports.

The S&P BSE Sensex Index rose as much as 0.43 percent to 36,027 and the NSE Nifty 50 Index rose as much as 0.32 percent to 10,826.35.

The market breadth was tilted in favour of buyers. About 970 stocks advanced and 459 shares declined on National Stock Exchange.

All the sectoral gauges compiled by NSE advanced, led by the NSE Nifty Realty Index’s 2.1 percent gain.

The Indian rupee strengthened for the second day against the U.S. dollar. The home currency appreciated as much as 0.2 percent to 70.99 against the greenback.

The local legal tender is likely to rally in line with its emerging Asian peers after the U.S. agreed to extend a tariff deadline on Chinese goods beyond this week. A better risk appetite for global stocks following optimism about a trade deal is also likely to offer the rupee some comfort, traders said.

In the bond market, yields are likely to ease after rising on Friday when traders made way for fresh stock.

The yield on the most-traded debt due January 2028 rose six basis points on Friday and three basis points for week to 7.61 percent while the yield on new 10-year bonds due January 2029 gains seven basis points to 7.42 percent.

State-run banks were the biggest buyers of government debt on Friday while primary dealers were the biggest sellers.

F&O Cues

• Nifty February futures closed trading at 10809, premium of 17 points.
• Max OI for February series at 11,000 Call, OI at 41.1 lakh shares.
• Max OI for February series at 10,700 Put, OI at 35.8 lakh shares.

Stocks In F&O Ban

• In Ban: Adani Enterprises, Adani Power, Allahabad Bank, IDBI, Jet Airways, Reliance Power, PC Jeweller
• Out of Ban: Kaveri Seed, Reliance Capital, Reliance Infra.

Put-Call Ratio

• Nifty PCR at 1.37 versus 1.38.
• Bank Nifty PCR at 1.08 versus 1.26.

UBS On SBI

• Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 360 from Rs 330.
• Lower credit costs and operating leverage to boost RoE to 13 percent.
• Best positioned with strong retail liability franchise.
• Expect 370 basis points decline in the cost to income ratio in the next financial year.

Motilal Oswal on Phoenix Mills

• Maintained ‘Buy’ with a price target of Rs 708.
• On-track execution; five new malls to drive rental growth.
• Operational retail portfolio to double in four years.
• Believe that Phoenix is a unique play in India’s retail growth story.

Morgan Stanley on Indian Metals

• Steel companies’ earnings will accelerate led by domestic demand and price hikes.
• Non-ferrous downgrades reflects earnings risk from commodity prices.
• Coal India positives: firm e-auction prices, costs controls and net cash position.
• Jindal Steel and Power: Upgraded to ‘Overweight’ from ‘Equal-weight’; hiked price target to Rs 188 from Rs 174.
• JSW Steel: Upgraded to ‘Equal-weight’ from ‘Underweight’; hiked price target to Rs 296 from Rs 278.
• SAIL: Upgraded to ‘Equal-weight’ from ‘Underweight’; hiked price target to Rs 54 from Rs 53.
• Hindalco: Downgraded to ‘Equal-weight’ from ‘Overweight’; cut price target to Rs 211 from Rs 290.
• Vedanta: Maintained ‘Equal-weight’; cut price target to Rs 176 from Rs 235.
• Coal India: Maintained ‘Overweight’; cut price target to Rs 268 from Rs 296.

On Adani Ports

CLSA

• Maintained ‘Buy’ with a price target of Rs 475.
• Acquires Adani’s agriculture logistics from group at premium valuation.
• Funding is not a problem as its post-acquisition leverage will be 0.72 times.
• Will group merge more assets into Adani Ports—a key client concern.

JPMorgan

• Maintained ‘Overweight’ with a price target of Rs 430.
• Expensively priced inter-group deal on FY20 basis, synergies kick-off starting FY21.
• Management does not see any other Adani group asset that overlaps with port/logistics business aside.
• Expect a negative stock reaction to this instance of inter-group M&A.

Citi

• Downgraded to ‘Neutral’ from ‘Buy’; cut price target to Rs 385 from Rs 500.
• Downgrade as acquisition appears expensive and raises questions on capital allocation.
• Acquisition might lead to resurgence of investor concern around related party transaction.
• Underlying operations are of high quality and stock valuations are reasonable.

• Reliance Home Finance price band revised to 5 percent.

• Kotak Mahindra Bank: ING Mauritius Investments sold 5.84 crore shares or 3.06 percent equity at Rs 1228.51 each.

IndInfravit Trust (No shareholding details given)

• Omer Infra Asia Holdings acquired 8.28 crore shares at Rs 104.5 each.
• ICICI Prudential Mutual Fund sold 1 crore shares at Rs 104.5 each.
• L & T Transportation Infrastructure sold 26 lakh shares at Rs 104.5 each.
• Larsen & Toubro sold 6.62 crore shares at Rs 104.5 each.
• Yes Bank sold 26 lakh shares at Rs 104.5 each.

Stride Pharma

• Promoter Abusha Investment & Management Services sold 5 lakh shares or 0.56 percent equity at Rs 423 each.
• Lifecell International acquired 5 lakh shares or 0.56 percent equity at Rs 423 each.

Suprajit Engineering

• Stewart Investors Asia Pacific Fund acquired 16.51 lakh shares or 1.18 percent equity at Rs 198.9 each.
• Small Cap World Fund sold 30.63 lakh shares or 2.19 percent equity at Rs 198.9 each.

• Realty stocks will be in focus after the Goods and Services Tax Council approved lowering the tax rate on under-construction properties to 5 percent without input tax credit, from 12 percent earlier, while the affordable housing projects will attract 1 percent tax as against 8 percent earlier. (More details here)
• Kotak Mahindra Bank’s Mark Newman resigned from the board with immediate effect, as ING Group sold its remaining stake in the bank.
• NTPC arm’s 250MW thermal power project in Bihar started its operations with effect from Feb. 20.
• Spicejet received an IATA operational safety audit certification (Bloomberg News)
• Infosys Ltd.’s CSR arm stated that the company is in receipt of copies of appeals for funds typed on a fake letterhead of the Infosys Foundation (CSR arm), bearing forged signatures of Sudha Murthy, Chairperson, Infosys Foundation. The company stated that the Foundation neither accepts or request donations for its activities.
• ZF Steering: petition filed by Robert Bosch Automotive Steering to NCLT for winding up of JV between the German based company and ZF Steering.
• State Trading Corporation of India: Syndicate Bank filed insolvency pleas against the company for Rs 625.32 crore.
• Suzlon Energy clarified that it was exploring multiple options for debt reduction along with its lenders and won’t comment on market speculation.
• Piramal Enterprises’ board decided to withdraw issue of NCDs worth Rs 130 crore.
• Jet Airways extra-ordinary general meeting saw 98 percent of shareholders vote in favour of conversion of loan into shares, increase in authorized share capital and to alter the Articles of Association. Besides, the company’s additional two aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements.
• Hindustan Zinc’s Chairman Agarwal resigned from his post, citing that he will pursue other interests.
• GVK Power and Infra: GVK to acquire 13.5 percent stake of Mumbai International Airport Ltd. (MIAL) from Bidvest for Rs 1,247.4 crore. The company will acquire 16.2 crore equity shares at Rs 77 each. Post acquisition, GVK will hold 64 percent stake in MIAL.
• IFB Agro Industries: Company’s wholly owned subsidiary to carry the business of distribution of seafoods products in the local markets of UAE.
• Adani Ports and SEZ to acquire Adani Agri Logistics Ltd. from Adani Enterprises Ltd. for a cash consideration of Rs 946 crore. The deal is expected to complete by March 31, 2019 and is subject to regulatory approvals. The deal will not require approval of minority shareholders as the acquisition is done through a wholly owned subsidiary – Adani Logistics Ltd. Adani Ports’ will also take in net debt of close to Rs 700 crore on its book. The enterprise value of this deal is close to Rs 1,662 crore.

Reliance Power Investors Meet Takeaways

• Thermal Portfolio of Reliance Power operated at 81 percent PLF versus national average of 62 percent PLF.
• Expects to achieve resolution of regulatory issue aggregating to Rs 5000 crore
• The Company’s risk management is on track:

1. Tilaiya UMPP closed with release of Bank Guarantees of Rs. 808 crore. and receipt of Rs. 113 crore towards transfer of SPV to procurers.
2. Samalkot Project Equipment being relocated to Bangladesh - Phase I is under implementation.
3. Krishnapatnam UMPP - SPV being returned to PFC /procurers for buyback price.

• No further equity will be required for projects under development.
• Bangladesh Project’s equity to be funded in kind and the project will done in phased manner, while unlocking investments in Samalkot.
• No hydro, solar and wind investments at current tariff levels.

Reliance Industries’ Acquisition Plans

• Company to invest Rs 68 crore to acquire 76 percent stake in Easygov, software service and data solutions company. The company will complete acquisition by March 2021.
• Company to invest Rs 216 crore to acquire 83 percent stake in SankhyaSutra Labs Pvt. Ltd., high-performance computing software simulation services company. The company will complete acquisition by December 2021.
• Company to invest Rs 267 crore to acquire 83.3 percent stake in Reverie Language Technologies Pvt. Ltd., a language technologies development company. The company will complete acquisition by March 2021.

Media Reports

• Three Mideast funds eye Reliance Capital’s $1 billion stake in asset management company. (Times of India)

• Fed Chairman Jerome Powell delivers the semi-annual Humphrey-Hawkins hearing on monetary policy and discusses the state of the economy as well as testifying to the Senate Banking Committee.
• U.K. Prime Minister Theresa May updates the House of Commons on Brexit talks as the March 29 deadline nears for Britain to leave the EU. Lawmakers will vote on Feb. 27.
• President Donald Trump and North Korea leader Kim Jong Un are expected to meet for a second summit beginning on Tuesday.
• Thursday brings fourth quarter U.S. GDP.

• Brent crude traded 0.42 percent higher at $67.40 per barrel.
• West Texas Intermediate crude gained 0.2 percent to $57.37 a barrel Friday.
• Gold slipped 0.1 percent to $1,327.73.

London Metal Exchange

• Nickel resumed rally after a one-day blip, ended 1.1 percent higher.
• Copper resumed rally after a one-day blip, ended 1.5 percent higher.
• Aluminium ended higher for the third day, up 0.42 percent.
• Lead ended higher for the third day, up 0.44 percent.
• Tin ended higher for the fourth day, up 0.33 percent.
• Zinc ended 1.53 percent higher.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.1 percent to 10,817.50 as of 8:15 a.m.

Asian stocks climbed with U.S. futures and the yuan rose after U.S. President Donald Trump postponed the date for boosting tariffs on Chinese imports, in the latest sign of progress in bilateral trade talks.

Chinese shares led the region higher after Trump said he will delay the March 1 deadline. Equities in Japan, whose economy has been hit by the trade war, also jumped, though rallies fizzled in South Korea and Australia.

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