Sensex, Nifty Clock Best Week In Over A Month Led By RIL

Indian equity benchmarks were little changed as gains in Reliance Industries were offset by losses in Sun Pharma after another whistle blower complaint surfaced against the company.

The S&P BSE Sensex rose 13 points to 36,387 and NSE Nifty 50 Index was flat at 10,907.

Reliance Industries was the top Nifty gainer after it rose the most in over three months on profit beat in December quarter. On the other hand, Sun Pharma plunged to lowest level in nearly six years after a media report of a new whistle-blower complaint sent to India’s market regulator alleging corporate governance lapses.

Sixteen of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Telecom Index’s 3.83 percent decline. On the flipside, S&P BSE Energy index was top gainer, up 2.7 percent.

Mid- and small-cap shares underperformed their larger peers as the S&P BSE MidCap and S&P BSE SmallCap Indices declined nearly 1 percent each.

Shares of the Mukesh Ambani-led company extended gains and rose as much as 4.89 percent to Rs 1,190 after its profit rose 0.8 percent over the previous three months to Rs 8,928 crore in the quarter ended December. That compares with BloombergQuint’s estimate of Rs 8,665 crore.

Whistle blower documents are so explosive that I was not able to believe large parts of it, Debashish Basu, founder and editor of MoneyLife told BloombergQuint in an interview.

Key highlights of the conversation:

• No idea of what institutional shareholders have done with Sun Pharma shares
• Eight to 10 people have visited us to see documents and which included pharma sector analysts as well
• There are huge governance issues which have shocked and surprised me
• Money from public held company is going to Aditya Medisales which is a promoter driven entity
• Found a lot of things which pertains to real estate and buying distressed assets
• The issue is about governance and not about plants operated by Sun Pharma

Shares of the Mumbai-based software services company fluctuated between gains and losses to trade at Rs 1,775 per share after it reported December quarter earnings.

Key earnings highlights:

• Net profit fell 6.2 percent to Rs 376 crore versus Bloomberg estimate Rs 372 crore
• Revenue rose 6 percent to Rs 2,473 crore versus estimate Rs 2,440 crore

Shares of the Noida-based software services company rose 0.3 percent to Rs 1,225.75 after it met Bloomberg estimates in December quarter.

Key earnings highlights:

• Net profit at up 10.7 percent at Rs 100 crore versus estimate of Rs 112 crore
• Revenue up 7 percent at Rs 972 crore versus estimate of Rs 964 crore
• EBIT up 13.5 percent at Rs 150 crore versus Rs 132 crore
• EBIT margin at 15.4 percent versus 14.6 percent
• NIIT Tech says growth strong in U.S. across all verticals

Shares of the Delhi-based tile maker rose as much as 0.9 percent to Rs 540 after its profit beat Bloomberg consensus estimates in December quarter.

Key earnings highlights:

• Net profit at Rs 64.8 crore versus estimate of Rs 57.80 crore
• Revenue at Rs 759 crore versus estimate of Rs 745 crore
• EBITDA at Rs 121 crore
• Margin at 15.93 percent

Shares of the Thrissur-based private sector lender rose as much as 4.35 percent to Rs 19.20 after it turned profitable in December quarter.

Key earnings highlights:

• Net interest income up 8.6 percent at Rs 91.21 crore versus Rs 84 crore (YoY)
• Net profit at Rs 16.90 crore versus loss of Rs 22 crore (YoY)
• Gross non-performing assets as a percentage of total advances at 8.11 percent versus 7.81 percent (QoQ)
• Net non-performing assets as a percentage of total advances at 2.93 percent versus 2.92 percent (QoQ)
• Provisions at Rs 20.17 crore versus Rs 48.41 crore (YoY)

Shares of the Delhi-based basmati rice exporter rose as much as 8.82 percent to Rs 369, also its highest level since Sept. 21 on the back of heavy volumes.

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

As many as 52,000 shares changed hands on the BSE compared with an average of 52,000 shares traded daily in the past two weeks, as per information on BSE's website.

• ITC has 30 lakh shares change hands in a block deal. Stock down 0.7 percent at Rs 292.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Delhi-based company rose as much as 3.16 percent to Rs 250 after it obtained an order for supply of LED street lights worth Rs 45.67 crore from Energy Efficiency Services Limited.

Indian equity benchmarks continue to trade on a weak note paced by losses in Sun Pharma, Bharti Airtel and Axis Bank.

The S&P BSE Sensex declined 0.2 percent or 77 points to 36,296 and the NSE Nifty 50 Index fell 0.2 percent or 23 points to 10,882.

Fifteen of 19 sector gauges compiled by BSE were trading lower led by S&P BSE Telecom Index's 3.2 percent decline. On the flipside, S&P BSE Energy Index was top gainer, up 0.8 percent.

The overall market breadth was negative as 1,278 shares were declining while 843 were advancing on the BSE.

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Shares of the Bengaluru-based bio-pharmaceutical company rose for sixth day in a row to clock its longest stretch of gains since December 2017.

In the course of last six sessions the stock has advanced 6.16 percent to Rs 669.

The stock trades at 40.2 times estimated forward earning per share versus 24.7 times for comparable companies, data compiled by Bloomberg showed.

• Alembic Pharma: The Vadodara-based drug maker rose as much as 3.82 percent to Rs 614. Trading volume was more than 40 times its 20-day average.
• Future Lifestyle: The Mumbai-based apparel retail stores operator rose as much as 7.43 percent to Rs 419.35. Trading volume was 30 times its 20-day average.
• Cyient: The Hyderabad-based engineering services provider fell as much as 8.6 percent to Rs 575.25. Trading volume was 19 times its 20-day average.
• Varroc Engineering: The Aurangabad-based auto parts maker rose as much as 0.77 percent to Rs 722.45. Trading volume was 16 times its 20-day average.

Shares of Bharti Airtel and Vodafone Idea dropped as much as 6.58 percent and 6.50 percent each respectively after Reliance Jio Infocomm reported strong December quarter and announced monetisation plans to cut debt.

Net profit of the telecom operator rose 22 percent sequentially to Rs 831 crore in the October-December period, according to filings by its parent Reliance Industries Ltd. This surpassed the Rs 788 crore analysts’ consensus estimate compiled by BloombergQuint. The company’s subscriber base breached the 280-million mark during the quarter.

Key Highlights Of The Quarter:

• Jio’s average data consumption per user per month was at 10.8 GB.
• The average voice consumption was at 794 minutes per user per month
• Video consumption drove most of the usage, increasing to 460 crore hours per month.
• Total wireless data traffic amounted to 864 crore GB.

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

Premium on the contract fell 9 percent to Rs 73. Over 5.99 lakh shares were added to the open interest which stood at over 43.89 lakh shares.

Shares of Wipro fluctuated between gains and losses to trade a little changed at Rs 335.70 ahead of its quarterly results announcement for the October-December period.

Here’s what analysts tracked by Bloomberg expects Wipro to report for the December quarter on a sequential basis:

• IT services revenue seen up 1.4 percent at $2070 million.
• Revenue seen up 4.1 percent at Rs 15,167 crore.
• EBIT seen up 23 percent at Rs 2,577 crore.
• EBIT margin at 17 percent versus 14.4 percent.
• Net Profit seen up 22.6 percent at Rs 2,313 crore.

Shares of the country's largest FMCG company fluctuated between gains and losses to trade 0.4 percent lower at Rs 1,744.50.

The company delivered double digit volume growth for the fifth straight quarter (more details here).

Key earnings highlights (Q3, YoY)

• Revenue up 11.3 percent at Rs 9,558 crore.
• Net profit up 8.9 percent at Rs 1,444 crore.
• Ebitda up 21.8 percent at Rs 2,046 crore.
• Margin at 21.4 percent versus 19.6 percent.
• Volume growth at 10 percent.

Here's what analysts had to say after the company announced its quarterly results:

CLSA

• Maintained ‘Outperform’ with a price target of Rs 2,010.
• Overall earnings in-line with our forecasts.
• Volume growth of 10 percent is commendable.
• Tougher base from hereon – execution is strength.

Macquarie

• Maintained ‘Outperform’; cut price target to Rs 2,059 from Rs 2,086.
• Like focus on driving higher penetration in categories which are leading superior volume growth.
• Cut earnings estimate by 1-2 percent on lower pricing and other income assumptions.
• Demand environment stable with rural demand at 1.3 times of urban.

UBS

• Maintained ‘Neutral’ with a price target of Rs 1,800.
• December quarter review: Good volume growth, but profit miss.
• Management cautioned about one-off costs post completion of GSK acquisition.
• See EPS upgrades post Horlicks deal, still valuating impact on stock valuations.

Shares of Reliance Industries rose as much as 2 percent to Rs 1,157.10.

The Mukesh Ambani-led company’ standalone profit rose 0.8 percent over the previous three months to Rs 8,928 crore in the quarter ended December, according to its stock exchange notification.(More details here)

Key highlights (Q3, QoQ)

• Revenue up 4 percent to Rs 1,00,096 crore.
• Net profit up 0.8 percent to Rs 8,928 crore.
• Ebitda down 2.6 percent to Rs 14,507 crore.
• Ebitda margin at 14.5 percent versus 15.5 percent.
• GRM down 7.4 percent to $8.8 a bbl versus $9.5.

Reliance Jio (Q3, QoQ)

• Revenue up 12 percent to Rs 10,383 crore.
• Net profit up 22 percent to Rs 831 crore.
• Ebitda up 13.4 percent to Rs 4,052 crore.
• Ebitda margin at 39 percent versus 38.7 percent.
• ARPU down 1.5 percent to Rs 130.

Here's what analsyts had to say after the company announced their quarterly results:

UBS

• Maintained ‘Sell’ with a price target of Rs 1,070.
• Petchem better than expectations; other income driven beat.
• Expect investors to look positively at increasing contribution from RIL's consumer businesses, robust performance in petchem and GRM.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 1,315.
• Petchem was the key positive surprise, while refining, Jio, and retail were in line.
• Expect RIL’s refining margins to strengthen to $15, $20 and $18 in the next three financial years respectively.
• See upside risk to consensus’ earnings estimates.

Edelweiss

• Maintained ‘Buy’ with a price target of Rs 1,415.
• Consumer and petchem shine; lower opex offsets lower GRM.
• Demerger of non-core telecom assets could prove to be a game changer.
• Multiple triggers: petcoke gasifier on schedule for March 2019 and an imminent FTTH roll out.

Prabhudas Lilladher

• Maintained ‘Accumulate’ with a price target of Rs 1,238.
• Stellar petrochemicals performance make up for weak refining earnings.
• RIL with high complexity well placed to capitalise benefits of IMO 2020.
• Maintain rating as we await clarity on petcoke commercialisation.

Indian equity benchmarks opened higher and are headed for their second week of gains.

The S&P BSE Sensex Index rose as much as 0.26 percent to 36,469.98 and the NSE Nifty 50 Index rose as much as 0.2 percent to 10,928.20.

The market breadth was tilted in favour of buyers. About 749 stocks advanced and 661 shares declined on National Stock Exchange.

Six out of 11 sectoral gauges compiled by NSE fell, led by the NSE Nifty Pharma Index's 2.03 percent decline. On the flipside, the NSE Nifty Metal Index was the top sectoral gainer, up 0.29 percent.

The Indian rupee opened marginally lower against the U.S. dollar after rallying yesterday. The home currency depreciated 0.12 percent to 71.12 against the greenback.

Crude oil prices set for its third week of gains and concerns that fiscal deficit could be wider than previously expected continue to be a drag on the Indian rupee. The local unit is headed for its second week of losses. It may trade in a range of 70.90-71.30 in the day.

In sovereign bonds, yield on the most traded 2028 bond fell two basis points to 7.55 percent in the last session. However, Finance Minister Arun Jaitley’s comments that there have been precedents of interim budgets containing major policy announcements to tackle urgent situations may keep the market volatile. The yield on the 2028 bond may stay in a range of 7.52-7.60 percent in the session.

F&O Cues

• Nifty January futures closed trading at 10,926, premium of 20 points.
• Max open interest for January series at 11,000 strike value call (open interest at 37.9 lakh shares).
• Max open interest for January series at 10,500 strike value put (open interest at 38.3 lakh shares).

Stocks In F&O Ban

• Adani Power
• Jet Airways

Put-Call Ratio

• Nifty PCR at 1.52 versus 1.54.
• Nifty Bank PCR at 1.09 versus 0.99.

CLSA on L&T Technology

• Maintained ‘Buy’ with a price target of Rs 2,100.
• December quarter review: Stellar growth, margins beat and strong outlook.
• Large deals ramping-up, pipeline healthy & mining strong but one client issue.
• See more scope margin improvement; increase estimates by 30-40 basis points.

On HUL

CLSA

• Maintained ‘Outperform’ with a price target of Rs 2,010.
• Overall earnings in-line with our forecasts.
• Volume growth of 10 percent is commendable.
• Tougher base from hereon – execution is strength.

Macquarie

• Maintained ‘Outperform’; cut price target to Rs 2,059 from Rs 2,086.
• Like focus on driving higher penetration in categories which are leading superior volume growth.
• Cut earnings estimate by 1-2 percent on lower pricing and other income assumptions.
• Demand environment stable with rural demand at 1.3 times of urban.

UBS

• Maintained ‘Neutral’ with a price target of Rs 1,800.
• December quarter review: Good volume growth, but profit miss.
• Management cautioned about one-off costs post completion of GSK acquisition.
• See EPS upgrades post Horlicks deal, still valuating impact on stock valuations.

On RIL

UBS

• Maintained ‘Sell’ with a price target of Rs 1,070.
• Petchem better than expectations; other income driven beat.
• Expect investors to look positively at increasing contribution from RIL's consumer businesses, robust performance in petchem and GRM.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 1,315.
• Petchem was the key positive surprise, while refining, Jio, and retail were in line.
• Expect RIL’s refining margins to strengthen to $15, $20 and $18 in the next three financial years respectively.
• See upside risk to consensus’ earnings estimates.

Edelweiss

• Maintained ‘Buy’ with a price target of Rs 1,415.
• Consumer and petchem shine; lower opex offsets lower GRM.
• Demerger of non-core telecom assets could prove to be a game changer.
• Multiple triggers: petcoke gasifier on schedule for March 2019 and an imminent FTTH roll out.

Prabhudas Lilladher

• Maintained ‘Accumulate’ with a price target of Rs 1,238.
• Stellar petrochemicals performance make up for weak refining earnings.
• RIL with high complexity well placed to capitalise benefits of IMO 2020.
• Maintain rating as we await clarity on petcoke commercialisation.

• FID Funds Aian acquired 7 lakh shares or 1.30 percent equity at Rs 267.49 each.
• Fidelity Asian Values acquired 7.24 lakh shares or 1.35 percent equity at Rs 267.49 each.
• Fidelity Funds acquired 7 lakh shares or 1.30 percent equity at Rs 267.49 each.

Nifty Earnings To Watch

• Wipro

Other Earnings To Watch

• Atul
• Dhanlaxmi Bank
• ICICI Lombard General Insurance
• Kajaria Ceramics
• Larsen & Toubro Infotech
• MPS
• MT Educare
• Muthoot Capital Services
• NIIT Technologies
• SBI Life Insurance Company
• Zee Learn
• TGV Sraac
• Ugro Capital

Earnings Reaction To Watch

Reliance Industries (Q3, QoQ)

• Revenue up 4 percent to Rs 1,00,096 crore.
• Net profit up 0.8 percent to Rs 8,928 crore.
• Ebitda down 2.6 percent to Rs 14,507 crore.
• Ebitda margin at 14.5 percent versus 15.5 percent.
• GRM down 7.4 percent to $8.8 a bbl versus $9.5.

Also Read: Q3 Results: Reliance Industries Beats Estimates Even As Refining Margin Falls

Reliance Jio (Q3, QoQ)

• Revenue up 12 percent to Rs 10,383 crore.
• Net profit up 22 percent to Rs 831 crore.
• Ebitda up 13.4 percent to Rs 4,052 crore.
• Ebitda margin at 39 percent versus 38.7 percent.
• ARPU down 1.5 percent to Rs 130.

Also Read: Q3 Results: Reliance Jio Profit Surges On Higher Subscriber Base

Hindustan Unilever (Q3, YoY)

• Revenue up 11.3 percent at Rs 9,558 crore.
• Net profit up 8.9 percent at Rs 1,444 crore.
• Ebitda up 21.8 percent at Rs 2,046 crore.
• Margin at 21.4 percent versus 19.6 percent.
• Volume growth at 10 percent.

Also Read: Q3 Results: HUL Delivers Double Digit Volume Growth For Fifth Straight Quarter

L&T Technology Services (Q3, YoY)

• Revenue up 35.9 percent at Rs 1,316.9 crore.
• Net profit up 47 percent at Rs 185.6 crore.
• Ebitda up 63 percent at Rs 241.7 crore.
• Margin at 18.4 percent versus 15.3 percent.

Cyient (Q3, QoQ)

• Revenue flat at Rs 1,188 crore.
• Net profit down 27 percent at Rs 92.3 crore.
• EBIT up 11.1 percent at Rs 137.7 crore.
• Margin at 11.6 percent versus 10.4 percent.
• Other income of Rs 56.9 crore in base quarter.

AU Small Finance Bank (Q3, YoY)

• Net Interest Income up 38.9 percent at Rs 347.9 crore.
• Net profit up 20.8 percent at Rs 95.3 crore.
• Provisions at Rs 32.5 crore.
• GNPA at 2.09 percent versus 2.03 percent.
• NNPA at 1.31 percent versus 1.28 percent.

Rallis India (Q3, YoY)

• Revenue up 7 percent at Rs 417.4 crore.
• Net profit down 44.6 percent at Rs 13.9 crore.
• Ebitda down 26.7 percent at Rs 27.7 crore.
• Margin at 6.6 percent versus 9.7 percent.
• Materials cost up 43 percent at Rs 281.6 crore.

• Aurobindo Pharma’s U.S. arm entered into an agreement to acquire seven marketed oncology injectable products, intellectual property and commercial infrastructure from Spectrum Pharma.
• Sundram Fasteners said that its plant located at Mahindra World City’s SEZ unit in Tamil Nadu had started its commercial production from Jan. 16.
• Bajaj Holdings & Investments received the Supreme Court’s nod to acquire 27 percent stake in Maharashtra Scooters. The company will acquire 30.85 lakh shares from the scooter company’s promoter Western Maharashtra Development Corporation.
• Rallis Industries board approved the merger of its wholly owned arm Metahelix Life Sciences with self.
• IL&FS Transportation said that its tunnel contract in Jammu Kashmir was terminated by NHIDCL with effect from Jan. 15.
• Great Eastern Shipping contracted to sell its large gas carrier and will be delivered to new buyer in the first half of financial year 2020.
• Cyient said it will consider a share buyback on a later date.
• Axis Bank clarified on news relating to Hawala Scam stating accounts have been opened after complying with KYC norms and the bank does not have any credit exposure to the said entity. The bank also stated that it was working closely with the authorities on this issue.
• Hindalco clarified that the company had stopped its mining operation at Durgamandi Mines since March 17 last year, as per the show-cause notice received from the Ministry of Environment Forest and Climate Change. This closure will not have material impact in the operations, as state in the press release.
• UCO Bank board approved the issue of equity shares on a preferential basis worth Rs 3,076 crore to the government of India and raising of Rs 1,000 crore via equity through qualified institutional placement.

• West Texas Intermediate crude rose 0.3 percent to $52.23 a barrel.
• Brent crude extends rally after a one-day blip, up 0.74 % to $61.63 per barrel.
• Gold was flat at $1,291.19 an ounce.

Also Read: Oil's Dealmaking 'Sun King' Returns

London Metal Exchange

• Aluminium halted a two-day rally, down 0.05 percent.
• Tin resumed rally after a one-day blip, up 0.05 percent.
• Nickel ended lower for the second day, down 0.34 percent.
• Lead resumed declines after a one-day rally, down 0.61 percent.
• Copper ended higher for the third day, up 0.37 percent.
• Zinc ended higher for the second day, up 2.02 percent.

Also Read: Pimco Favors ‘Unloved’ Platinum That's Looking Cheap Versus Gold

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.54 percent to 10,978.50 as of 8:20 a.m.

Stocks in Asia gained Friday, building on the recent rally in risk assets, amid optimism for progress in U.S.-China trade talks that earlier lifted U.S. equities and Treasury yields. Shares in Japan and Hong Kong led the advance.

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