Sensex, Nifty Fall After Global Peers See Rough Start To 2019

Indian equity benchmarks fell along with rupee mirroring losses in European and Asian markets after evidence of slowing Chinese growth dashed investor hopes for an upbeat start to 2019.

The S&P BSE Sensex fell 1 percent or 363 points to 35,891.52 and the NSE Nifty 50 Index dropped 1.08 percent or 118 points to 10,792.50.

Contracts on the S&P 500 Index at one point dropped more than 2 percent, while those on the Nasdaq plunged as much as 2.8 percent. The Stoxx Europe 600 Index fell for the first time in three trading sessions as every sector retreated.

Back home, all the 11 sector gauges compiled by National Stock Exchange ended lower led by Nifty Metal and Nifty Auto Indices' over 3 percent decline.

Eicher Motors was the top Nifty loser after it slumped 9.40 percent, posting its biggest single day fall since October 2008, to Rs 21,014 after Royal Enfield reported a 13 percent slump in sales on a yearly basis to 58,278 units in December, according to its stock exchange filing.

The heads of several Indian banks are meeting in Mumbai today to discuss plans for how to resolve delinquent loans to about ten stressed power producers, according to a person familiar with the matter.

The banks are discussing a so-called scheme of asset management and debt change structure for the delinquent power producers, the person said, asking not to be identified because the details are private.

Source: Bloomberg

Rupee depreciated further against the dollar to hit 70 per dollar against yesterday's close 69.43.

The local unit fell as much as 0.89 percent or 62 paise to 70.05 per dollar.

Indian equity benchmarks extended declines mirroring losses in European markets amid deep cuts in U.S. equity futures.

The Sensex fell 1.44 percent or 520 points to 35,734 and the Nifty 50 Index dropped 1.6 percent or 175 points to 10,735.

All 11 sector gauges compiled by National Stock Exchange were trading lower led by the Nifty Metal Index's 3.2 percent drop.

• U.S. equity market futures contract were trading sharply lower on the first session of 2019.

Shares of the Delhi-based auto company extended losses and fell as much as 7.5 percent, the most since Oct. 4, to Rs 21,502 after Royal Enfield reported a 13 percent slump in sales on a yearly basis to 58,278 units in December, according to its stock exchange filing.

Trading volume was eight times its 20-day average, according to data compiled by Bloomberg.

As many as 16,000 shares changed hands on the BSE compared with an average of 2,170 shares traded daily in the past two weeks, as per information on the BSE's website.

Rupee depreciated against the U.S. dollar and home unit fell as much as 0.8 percent or 55 paise to 69.98 against the greenback.

Shares of the country's second largest airline extended decline and fell as much as 4.70 percent to Rs 267.60 after ICRA downgraded company's credit rating.

Jet Airways in an exchange filing said:

• ICRA downgraded long-term rating on bonds and loans to D from C
• ICRA downgraded short-term rating to D from A4
• Rating downgrade considers the delay by the company in the payment of interest and principal installment due on 31 December, 2018 due to cash flow mismatches and delays in the implementation of proposed liquidity initiatives by the company.

Indian equity benchmarks extended losses led by declines in HDFC twins, ITC and Mahindra & Mahindra.

The Sensex fell 0.9 percent or 319 points to 35,935 and the Nifty 50 Index declined 1 percent or 104 points to 10,805.

All but two sector gauges compiled by BSE were trading lower led by the S&P BSE Metal and Auto Indices' over 2 percent fall. On the flipside, S&P BSE IT Index came off day's high and was up 0.3 percent.

The mid- and small-cap shares also came under selling pressure as the S&P BSE MidCap Index fell 0.66 percent and the S&P BSE SmallCap Index dropped 0.4 percent.

Shares of the Anand Mahindra-led automaker extended decline to second day and fell as much as 4.18 percent to Rs 741, also its lowest level since Dec. 12.

The stock has been facing selling pressure after it reported weak sales figures in December.

Shares of the Mumbai-based construction and engineering services provider held on to gains and rose 1.52 percent to Rs 251.

The company received order worth Rs 97.69 crore for construction of sub-structure and super structure of proposed research building of Institute of Chemical Technology at Matunga in Mumbai, Capacite Infraprojects said in an exchange filing.

Nifty's 11,000 call option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract dropped 12.5 percent to Rs 134.90. Over 1.57 lakh shares were added to the open interest which stood at over 27.69 lakh shares.

Indian equity benchmarks continue to trade on a weak note paced by losses in Eicher Motors, M&M, Hero MotoCorp and Vedanta.

The S&P BSE Sensex fell 0.3 percent or 108 points to 36,148 and the NSE Nifty 50 Index dropped 0.37 percent or 40 points to 10,870.

Sixteen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Metal Index's 2 percent drop. S&P BSE Auto index also dropped 1.8 percent tracking weak December sales posted by a slew of auto makers. On the flipside, the S&P BSE IT Index was top gainer, up 1 percent.

The mid- and small-cap shares were mixed as the S&P BSE MidCap Index fell 0.3 percent while the S&P BSE SmallCap Index was little changed.

The market breadth was neutral as 1,033 shares were advancing while 1,076 were declining on the BSE.

Shares of the Anil Agarwal-led mining conglomerate fell as much as 3.71 percent, the most since Dec. 6, to Rs 194.60 after Tamil Nadu government moved Supreme Court for closure of its copper plant in Tuticorin.

The National Green Tribunal had on Dec. 17 said the company could restart its copper smelter that accounts for nearly half of India’s output.

Shares of the Ludhiana-based drug maker rose as much as 6.79 percent, the most since Dec. 11, to Rs 176.95.

Credit rating agency Care Ratings has improved rating on the company's banking facilities, IOL Chemicals & Pharmaceuticals said in an exchange notification.

Rating on company's long-term bank facility of Rs 429.33 crore was revised from CARE BBB- to CARE BBB+ with stable outlook.

While rating on company's short-term bank facility of Rs 150 crore was revised from CARE A3 to CARE A2.

Shares of the Delhi-based fertiliser maker rose as much as 5.77 percent, the most in over a month, to Rs 155.75.

The company has started commercial production of urea from its Kota plant in Rajasthan, Chambal Fertilisers said in an exchange filing.

The plant has capacity to manufacture 1.34 million metric tonnes of urea per annum.

Hero MotoCorp Ltd.'s sales declined 4 percent on a yearly basis to 4.53 lakh units in December, according to its stock exchange notification.

Shares of the country’s largest two-wheeler maker fell as much as 2.4 percent to Rs 3,051.35.

Nifty’s 11,000 call option contract was among the most active option contracts on National Stock Exchange.

Premium on the contract fell 9.84 percent to Rs 139.90. Over 1.45 lakh shares were added to the open interest which stood at over 27.58 lakh shares.

India’s manufacturing sector improved further in December, amid companies’ move to scale up production and employment to respond to new orders.

The Nikkei India Manufacturing Purchasing Managers Index, or PMI, was adjusted to 53.2 in December from 54.0 in November. Readings above 50 point to expansion, while those below 50 indicate contraction.

Despite easing from November, the rise in production was among the quickest seen in 2018. Both domestic and international markets contributed to sales growth, with stronger demand and expanded client bases.

“It’s particularly encouraging to see the quarterly PMI average climb to its highest mark since Q3 FY 2012, suggesting that the sector made a robust contribution to GDP,” said Pollyanna De Lima, Principal Economist at IHS Markit and author of the report. The signs of easing inflationary pressures, such as spare capacity and softening input cost inflation indicate that “we’re likely to see the RBI adopt an accommodative monetary policy stance in early 2019.”

Source: Nikkei Asian Review

Shares of the airline company snapped a five-day gaining streak, its longest winning streak in nearly two months. The stock declined 3.3 percent, the most since Dec. 18, to Rs 271.50 apiece.

The company delayed the payment of interest and principal instalment due to the consortium of Indian banks due on Dec. 31, according to its exchange filing. The company stated temporary cash-flow mismatch as the reason for the default. (Read the full story here).

The stock traded at 53.5 times estimated forward Ebitda, compared to a 15.2 times for the two-year historical average, Bloomberg data showed.

Shares of Ashok Leyland fell as much as 2.2 percent to Rs 100.20. The truck and bus maker’s monthly sales fell the most in nearly two years in December.

The company’s sales in December declined 20 percent on a yearly basis to 15,493 units, according to its stock exchange notification.

Key sales highlights (YoY)

• Sales of medium and heavy commercial vehicles segment fell 29 percent to 11,295 units.
• Sales of light commercial vehicles rose 27 percent to 4,198 units.

Bajaj Auto Ltd. sold 3.46 lakh units last month, an increase of 18 percent from December 2017, according to its stock exchange filing.

Key sales highlights (YoY)

• Domestic motorcycles sales rose 39 percent to 1.57 lakh units.
• Overall motorcycles sales rose 31 percent to 2.98 lakh units.
• Commercial vehicles sales fell 26 percent to 47,344 units.
• Overall domestic sales rose 21 percent to 1.8 lakh units.
• Overall exports rose 16 percent to 1.65 lakh units.

Shares of Bajaj Auto fluctuated between gains and losses to trade at 2,725.60 apiece.

Shares of Eicher Motors fell as much as 5.8 percent, the most in over two months, to Rs 21,860.

The company’s motorcycle segment—Royal Enfield reported a 13 percent slump in sales on a yearly basis to 58,278 units in December, according to its stock exchange filing.

Sales of models with engine capacity up to 350cc fell 15 percent to 53,790 units while the sales of models with engine capacity exceeding 350cc rose 21 percent to 4,488 units. The company exported 2,252 units last month, an increase of 41 percent from December 2017.

Trading volume was more than 13 times its 20-day average, Bloomberg data showed. The stock traded at 22.1 times estimated forward eearnigs per share compared to 29.5 times for the two-year historical average.

Indian equity benchmarks opened lower after rallying yesterday. The S&P BSE Sensex Index fell 0.6 percent intraday to 36,035.78 and the NSE Nifty 50 Index fell 0.38 percent to trade near 10,850.

The market breadth was tilted in favour of sellers. Nine out of 11 sectoral gauges compiled by NSE fell, led by the NSE Nifty Metal Index’s 1.4 percent decline. On the flipside, NSE Nifty IT Index was the top sectoral gainer, up 0.61 percent.

The Indian rupee weakened after a three-day rally against the U.S. dollar. The home currency depreciated as much as 0.29 percent to 69.63 against the greenback.

F&O Cues

• Nifty January futures closed trading at 10,960, premium of 55 points.
• Maximum open interest for January series call at 11,200 strike price, open interest at 27.9 lakh shares.
• Maximum open interest for January series put at 10,500 strike price, open interest at 35.8 lakh shares.

Stocks In F&O Ban

• Adani Power

Put-Call Ratio

• Nifty PCR at 1.57 versus 1.53.
• Nifty Bank PCR at 1.15 from 1.03.

Deutsche Bank Research on L&T

• Maintained ‘Buy’ with a price target of Rs 1,620.
• Order announcements lagging guidance.
• L&T’s guidance could be cut to 0-2 percent.
• Expect good execution in December quarter; stock valuations undemanding.

Emkay on Dynamatic Technologies

• Maintained ‘Buy’ with a price target of Rs 2,052.
• Aluminium business sale to improve financials.
• Sale to improve profit before tax by Rs 24 crore from April.
• Company positioning for profitable growth in ferrous division.

CLSA on Metals

• Deteriorating Chinese demand outlook to weigh on commodity prices
• Cut FY20-21 EPS estimates by 9-38 percent factoring in lower commodity prices and stronger rupee.
• Tata Steel: Downgraded to ‘Sell’ from ‘Buy’; cut price target to Rs 460 from Rs 855.
• JSW Steel: Downgraded to ‘Sell’ from ‘Underperform’; cut price target to Rs 260 from Rs 375.
• Hindalco: Downgraded to ‘Sell’ from ‘Underperform’; cut price target to Rs 210 from Rs 255.
• Vedanta: Maintained ‘Buy’; cut price target to Rs 250 from Rs 300.
• Coal India: Maintained ‘Buy’; cut price target to Rs 310 from Rs 360.

Motilal Oswal on Cement

• Demand outlook fortified by affordable housing and infra traction.
• Positives: government programs, road project executions and increase in infrastructure activities.
• Expect 4 percent incremental annual demand from PMAY in FY20.
• Key Beneficiaries: ACC, Shree Cement, Dalmia Bharat.

Motilal Oswal on Auto Sales

• Maruti: Lowering volume growth estimates to 5 percent and 10 percent for the current and the next financial year respectively from 8 percent and 11 percent respectively; cut EPS estimates by 4-5 percent for the current and the next financial year.
• M&M: Volumes miss estimate as both Tractors and utility vehicles disappoint.
• Tata Motors: Wholesale units in line estimate; Passenger Vehicles above estimates.
• Eicher Motors: Royal Enfield big disappointment; Lower Royal Enfield volume estimates for the current and the next financial year by 46,000 and 89,000 respectively; cut EPS estimates by 6 percent and 9 percent for the current and the next financial year respectively.

• Dhanuka Agritech record date for share buyback.
• Techno Electric & Engineering Company ex-date for share buyback.
• 5paisa Capital Limited, CMI, Butterfly Gandhimathi Appliances, Indo Rama Synthetics to move into ASM Framework.
• Mahanagar Telephone Nigam, Butterfly Gandhimathi Appliances price band revised to 10 percent.

Eicher Motors:

• Motorcycle Sales down 13 percent at 58,278 units.
• Motorcycle Export Sales up 41 percent at 2,252 units.

Tata Motors:

• Domestic Commercial and Passenger Vehicles Sales down 8 percent at 50,440 units.
• Export Commercial and Passenger Vehicles Sales down 36 percent at 3,999 units.
• December liquidity crisis in the industry, higher interest rates and rising fuel costs continued to impact the commercial vehicle sales, Tata Motors said. The company also stated that its exports were subdued due to sharp Total Industrial Volume contraction in Bangladesh due to elections and political uncertainty in Sri Lanka.

VST Tillers Tractors:

• Power Tillers Sales down 55 percent at 1353 units.
• Tractors Sales down 1 percent at 602 units.

Catch all the auto sales updates here.

• NMDC said it would consider share buyback on Jan. 8.
• Chambal Fertilisers and Chemicals declared commencement of commercial production from Rajasthan plant with effect from Jan. 1.
• Weizmann Forex promoters intended to sell their entire stake of 74.84 percent stake in the company to EBIX Group. With this the acquirers have made on open offer for 28 crore shares, representing 25.16 percent stake in Weizmann Forex for offer price of Rs 528 per share.
• Glenmark Pharma completed the transfer of the company’s API business to its wholly owned arm Glenmark Life Sciences.
• Coal India said its coal production in December was down 0.9 percent at 54.13 MT versus 54.63 MT on a year on year basis.
• Bank of Maharashtra said its board would consider raising equity capital aggregating to Rs 4,498 crore via preferential allotment to Government of India on Jan. 4.
• Power Grid Corporation of India’s Madhya Pradesh arm commissioned transmission project. This project has started its commercial production from Jan. 1.
• Infrastructure Leasing & Financial Services: Deloitte Haskins & Sells would seek two weeks to submit a reply to allegations made by Ministry of Corporate Affairs on the auditor’s role, Mustafa Doctor, a lawyer representing the firm, tells Mumbai Court. He also stated that case of fraud against auditors is totally illusory and the action cannot be taken against auditors until Institute of Chartered Accountants of India’s inquiry ends.
• Tech Mahindra: High Courts of Telengana and Andhra Pradesh set aside the order of provisional attachment of fixed deposits of Satyam Computers aggregating to Rs 822 crore by the Directorate of Enforcement of Hyderabad. Satyam Computers had merged with Tech Mahindra in the year 2012.
• IOL Chemicals and Pharma: CARE Ratings revised Long Term Bank Facilities worth Rs 529.33 rating from BBB- to BBB+ with stable outlook. The rating agency also revised short term bank facilities worth Rs 150 crore from A3 to A2. The agency gave the rationale for this upgrade that there was improvement in the operational performance of the company reflected by significant growth in total income and expansion in margins resulting in healthy growth in cash accruals.
• LIC Housing Finance’s Chairman VK Sharma resigned from his post with effect from Dec. 31, consequent to attainment of superannuation from the services of LIC.
• Karnataka Bank revised its Marginal Cost of funds based Lending rate across various tenors. One-year MCLR at 9.1 percent and Overnight MCLR set at 8.5 percent. The bank says it is also offering housing loan up to Rs 75 lakh at 8.8 percent per annum. These rates are effective from Jan. 1.
• Adani Infra’s board would consider raising capital via issue of NCD on Jan. 4.

• 10:30 a.m.: Nikkei India Manufacturing PMI for Dec., prior 54.0.
• The U.S. December jobs report is due Friday, Jan. 4.
• Fed Chair Powell is interviewed with predecessors Janet Yellen and Ben Bernanke at the annual meeting of the American Economic Association Friday. Atlanta Fed President Raphael Bostic joins a panel on long-run macroeconomic performance.

• West Texas Intermediate crude rose 0.8 percent to $45.77 a barrel.
• Gold dipped 0.1 percent to $1,281.50 an ounce.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.22 percent to 10,942.50 as of 7:50 a.m.

Asian stocks fell on the first trading day of 2019 and U.S. futures and oil pared gains as evidence of slowing Chinese growth weighed on investors already reeling from the worst year for global equities since the financial crisis.

The steepest declines were in Hong Kong and China, while shares also fell in Australia and South Korea. S&P 500 Index futures trimmed an advance.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell!