Sensex, Nifty Clock Best Single-Day Gains In 2019 Ahead Of Budget

Indian equity benchmarks logged in best single-day gains of 2019 a day ahead of Union Budget after the Federal Reserve's dovish outlook boosted appetite for risk.

The S&P BSE Sensex rose 1.87 percent or 665 points to 36,257 and the NSE Nifty 50 Index climbed 1.68 percent or 179 points to 10,831.

Indian markets mirrored rally in other Asian and European markets after the Federal Reserve signaled it’s done raising interest rates for at least a while and will be flexible in reducing its bond holdings, a sweeping pivot from its bias toward tighter monetary policy just last month.

All the 19 sector gauges compiled by BSE ended higher led by the S&P BSE Information Technology and S&P BSE Energy indices’ over 2 percent gain.

Mid- and small-cap shares underperformed larger peers as the S&P BSE MidCap Index rose 0.4 percent and S&P BSE SmallCap Index climbed 0.8 percent.

Shares of the Kolkata-based grooming products maker extended decline and fell as much as 2.57 percent to Rs 405 after its profit declined in December quarter.

Key earnings highlights (Q3, YoY):

• Revenue up 7.0 percent at Rs 810 crore
• Net profit down 6 percent at Rs 137.75 crore
• Ebitda down 1 percent at Rs 351.17 crore
• Margin at 43.4 percent versus 46.8 percent

Shares of the Ghaziabad-based household products maker rose as much as 0.94 percent to Rs 435.20 after it met Bloomberg consensus estimates in December quarter.

Key earnings highlights (Q3, YoY):

• Revenue up 11.83 percent at Rs 2,199.21 crore; Estimate of Rs 2,158 crore.
• Net profit up 10.2 percent at Rs 366.05 crore; Estimate of Rs 365 crore.
• Ebitda up 10 percent at Rs 445.40 crore.
• Margin at 20.3 percent versus 20.5 percent.

Shares of liquor companies fell after Kerala government raised tax on alcohol by 2 percent, The Times of India reported citing announcement made by Kerala Finance Minister Thomas Isaac while presenting the state Budget for financial year 2019-20.

Shares of the Mumbai-based software developer fell as much as 5.5 percent, the most in over two months, to Rs 985 after its profit missed Bloomberg consensus estimates in December quarter.

Key earnings highlights:

• Revenue at Rs 358 crore versus estimate of Rs 368 crore
• Net profit at Rs 38.96 crore versus estimate of Rs 67.8 crore

Shares of shrimp feed makers were witnessing buying interest in today's session led by Apex Frozen Foods' over 13 percent surge on the back of heavy volumes.

• Avanti Feeds rose as much as 14.58 percent to Rs 362.60.
• Apex Frozen Foods advanced 20 percent to Rs 357
• Waterbase rose 12 percent to Rs 162.

Indian equity benchmarks continue to surge led by rally in Infosys, Reliance Industries and HDFC twins ahead of January F&O expiry.

The Sensex rose 1.43 percent or 508 points to 36,099 and the NSE Nifty 50 Index climbed 1.25 percent or 133 points to 10,785.

All sector gauges compiled by BSE were trading higher led by the S&P BSE Information Technology Index's 2 percent gain.

Mid- and small-cap shares were underperforming larger peers as the S&P BSE MidCap Index was trading flat while the S&P BSE SmallCap Index rose 0.5 percent.

• Eris Lifesciences: The Ahmedabad-based drugmaker fell as much as 1.43 percent to Rs 632.40. Trading volume was more than 20 times its 20-day average.
• Avanti Feeds: The Hyderabad-based shrimp feed maker rose as much as 14.58 percent to Rs 363. Trading volume was more than 14 times its 20-day average.
• Venky's India: The Pune-based chicken producer rose as much as 15 percent to Rs 2,377. Trading volume was almost 14 times its 20-day average.
• Jyothy Labs: The Mumbai-based household products maker rose as much as 1.91 percent to Rs 187. Trading volume was more than 12 times its 20-day average.

• Lemon Tree Hotels has 10.1 lakh shares change hands in a block on BSE. Stock up 1.2 percent at Rs 69.10.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based mortgage lender extended decline and fell as much as 20 percent, the most in over three months, to Rs 129.50, also its lowest level in almost five years.

Following a report by an investigative news website alleging financial irregularities, the registrar of companies is verifying records of Dewan Housing Finance, Bloomberg reported citing unidentified people aware of the matter.

Shares of the Mumbai-based mortgage lender continue to trade on a weak note after its profit declined in December quarter.

Key earnings highlights:

• Net profit fell 14 percent to Rs 985 crore versus Rs 1,142 crore (YoY)
• Revenue up 24 percent at Rs 4,237 crore versus Rs 3,420 crore (YoY)
• Board approves issuing non-convertible debentures of up to Rs 26,000 crore
• Board approves issuing rupee overseas bonds

Indian equity benchmarks extended gains led by gains in Reliance Industries, Infosys, HDFC and ICICI Bank.

The S&P BSE Sensex rose 1.23 percent or 436 points to 36,028 and the NSE Nifty 50 Index climbed 1.02 percent or 109 points to 10,761.

Eight of 11 sector gauges compiled by National Stock Exchange were trading higher led by the Nifty IT Index's 1.1 percent gain. On the flipside, Nifty Media Index was top loser, down 3.7 percent.

The overall market breadth was positive as 1,032 shares were advancing while 868 were declining on the BSE.

Shares of the Kolkata-based pig iron maker rose as much as 2 percent to Rs 618 after the Forest Ministry granted environmental clearance for increasing hot metal production from 0.5 MTPA to 0.75 MTPA.

The ministry also granted increasing production of ductile iron pipe production from 0.3 MTPA to 0.5 MTPA and castings of 0.1 MTPA at the company's existing facility located in West Bengal, Tata Metaliks said in an exchange filing.

Nifty's 10,700 call option contract was among the most active option contracts on the National Stock Exchange ahead of futures and options expiry of derivative contracts for the month of January.

Premium on the contract surged 11 percent to Rs 18.50. Over 9.18 lakh shares were added to the open interest which stood at over 37.12 lakh shares.

Shares of Dewan Housing Finance Corporation Ltd. extended declines for the fourth day and fell as much as 9.5 percent to Rs 146.05, its lowest level in three years.

The Ministry of Corporate Affairs is said to have started examining the company’s accounts following an investigative report by CobraPost that alleged irregularities, Bloomberg reported quoting two people familiar with the matter.

The Relative Strength Index was at 17, indicating that the stock may be oversold.

Shares of the Oberoi hotels operator halted a three-day decline. The rose as much as 13.7 percent, the most since Nov. 27, to Rs 204.95.

The company’s quarterly profit for the three months ended December rose 50 percent on a yearly basis to Rs 63.89 crore, according to its stock exchange filing.

Key Earnings Highlights (Q3, YoY)

• Revenue up 20.8 percent at Rs 456.98 crore.
• Net Profit up 50 percent at Rs 63.89 crore.
• Ebitda up 47 percent at Rs 145.49 crore.
• Margin at 31.8 percent versus 26.2 percent.

Shares of Zydus Wellness halted a four-day decline and rose as much as 1 percent to Rs 1,298.70.

The company completed 100 percent acquisition of stake in Heinz India for Rs 4,667.4 crore, according to its stock exchange filing.

The dairy products maker traded at 35 times its estimated earnings per share for the coming year, Bloomberg data showed.

Shares of Bharti Airtel rose as much as 1.6 percent to Rs 308.65.

Qatar Investment Authority will infuse $200 million or Rs 1,400 crore in the telecom operator’s Africa unit. The investment authority will own less than 4 percent stake in African unit. (more details here). Besides, the company is set to announce its quarterly earnings for the three months ended December.

The stock declined 29 percent in the past 12 months compared to a 0.9 percent gain in the Sensex.

Shares of ICICI Bank extended gains for the third day and rose as much as 2.3 percent, to Rs 374.45. The stock was the best performer on Sensex and Nifty.

The lender’s enquiry committee headed by former Supreme Court judge BN Srikrishna found Chanda Kochhar was in violation of bank’s code of conduct for conflict of interest. Bank will seek claw back of all bonuses paid to her from April 2009 until March 2018. (Read the full statement by Chanda Kochhar here).

Besides, its net profit fell in the December-ended quarter as the bank made larger provisions.

Key Earnings Highlights (Q3, YoY)

• Net interest income up 20.5 percent at Rs 6,875.2 crore.
• Net profit down 2.75 percent at Rs 1,604.9 crore.
• Provisions at Rs 4,244.2 crore versus Rs 3,569.2 crore.
• GNPA at 7.75 percent versus 8.54 percent (QoQ).
• NNPA at 2.58 percent versus 3.65 percent (QoQ).

Here’s what analysts had to say about ICICI Bank:

CLSA

• Maintained ‘Buy’; hiked price target to Rs 470 from Rs 450.
• Lower slippages and rise in coverage increase visibility of earnings turnaround.
• December quarter’s topline included some one-offs; CASA growth key to market-share gains.
• Watch out for investigations on conflict of interest.

Morgan Stanley

• Maintained ‘Buy’; hiked price target to Rs 525 from Rs 510.
• Provisioning catchup is done, implying normalised earnings from the first quarter of the next financial year.
• Core profit was strong; Top pick in Asian banks.
• Enquiry report on ex-CEO's conflict has no implications on bank's published numbers.

Macquarie

• Maintained ‘Outperform’; hiked price target to Rs 460 from Rs 416.
• Strong asset quality performance, other operational parameters are stable.
• Current price implies market is not assigning any value to subsidiaries.
• ICICI is preferred play on normalisation of credit costs theme as Axis Bank has already run up.

Indian equity benchmarks traded higher in the open. The S&P BSE Sensex Index rose as much as 0.7 percent to 35,840.82 and the NSE Nifty 50 Index rose as much as 0.53 percent to 10,707.85.

The market breadth was tilted in favour of buyers. About 993 stocks advanced and 465 shares declined on National Stock Exchange. Nine out of 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty PSU bank Index’s 1.4 percent gain. On the flipside, the NSE Nifty Media Index was the top sectoral loser, down 0.4 percent.

The Indian rupee strengthened past 71 against the U.S. dollar. The home currency appreciated as much as 0.33 percent to 70.89 against the greenback.

The local legal tender is headed for its worst performance among major Asian currencies in January as fiscal concerns weigh ahead of Friday's federal budget. Strong Asian cues may limit the downside for the local unit. Dealers expect the rupee to trade in a range of 70-75-71.35 a dollar.

In the sovereign bond market, the central bank plans to buy up to Rs 10,000 crore of debt via open market operation. Today also is a day of important data, the GDP estimate for 2017-18 is scheduled to be released today. Yield on the most traded 2028 bonds may stay in a range of 7.52-7.60 percent in the day.

F&O Cues

• Nifty January futures closed trading at 10,642, discount of 9 points.
• Max open interest for January series at 10,800 Call, (open interest at 41.1 lakh shares).
• Max open interest for January series at 10,500 Put, (open interest at 26.4 lakh shares).

Stocks In F&O Ban

In Ban:

• Adani Enterprises Ltd
• Adani Power
• Bank Of India
• DHFL

Out Of Ban:

• Jain Irrigation

Put-Call Ratio

• Nifty PCR at 1.21 versus 1.22.
• Nifty Bank PCR at 0.96 versus 0.77.

Macquarie on Hexaware

• Maintained ‘Outperform’; cut price target to Rs 440 from Rs 500
• Good execution in December quarter despite furloughs
• Deal wins sets stage for revenue acceleration in 2019.
• Cut 2019 and 2020 EPS estimates by 4 percent and 2.5 percent respectively due to lower margins and reduce target multiple.

On NTPC

CLSA

• Maintained ‘Buy’ with a price target of Rs 180.
• Marked improvement in operations and availability.
• Management guided for a much better December quarter on lower under-recoveries.
• Enough steam left in its lofty December quarter project starts.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 186.
• Adjusted net profit miss expectation.
• May miss commissioning target; equity base set to rise.
• Mgmt. expects to reduce under-recoveries which would be higher than earlier guidance.

On ICICI Bank

CLSA

• Maintained ‘Buy’; hiked price target to Rs 470 from Rs 450.
• Lower slippages and rise in coverage increase visibility of earnings turnaround.
• December quarter’s topline included some one-offs; CASA growth key to market-share gains.
• Watch out for investigations on conflict of interest.

Morgan Stanley

• Maintained ‘Buy’; hiked price target to Rs 525 from Rs 510.
• Provisioning catchup is done, implying normalised earnings from the first quarter of the next financial year.
• Core profit was strong; Top pick in Asian banks.
• Enquiry report on ex-CEO's conflict has no implications on bank's published numbers.

Macquarie

• Maintained ‘Outperform’; hiked price target to Rs 460 from Rs 416.
• Strong asset quality performance, other operational parameters are stable.
• Current price implies market is not assigning any value to subsidiaries.
• ICICI is preferred play on normalisation of credit costs theme as Axis Bank has already run up.

On Bajaj Auto

CLSA

• Maintained ‘Sell’; cut price target to Rs 2,225 from Rs 2,450.
• 3W and export growth likely to taper; pressures in domestic two wheelers.
• Gaining share in domestic two wheelers but at cost of margins.
• Regulatory changes in the next financial year will push up two wheeler prices and impact demand/margins.

Macquarie

• Maintain Underperform with price target of Rs 2,200
• Realisations and profitability miss expectations
• See significant cost headwinds over next 2 years due to safety regulations and BS-VI emission norms
• Despite discounting led market share gains, continue to see structural challenges

Investec

• Maintained ‘Buy’; cut price target to Rs 3,200 from Rs 3,485.
• Operational miss due to increase in cost, higher exports and lower rupee realisation.
• Believe Bajaj’s aggression should help raise EPS growth from April.
• Africa & Asia to drive double digit growth in exports in the next financial year.

On Jubilant FoodWorks

CLSA

• Maintained ‘Buy’ with a price target of Rs 1,600.
• Strong same-store sales growth with a seven-year high margin.
• Worst of the man power issue has passed.
• Aggressive competition from food aggregators is the key risk.

UBS

• Maintained ‘Neutral’ with a price target of Rs 1,475.
• Strong SSSG; base getting tougher moving ahead.
• Believe going forward SSSG could be comparatively muted.
• Competitors are increasing prices; Domino’s pizza available at a discount.

On Indian Oil Corp

Macquarie

• Maintained ‘Neutral’ with a price target of Rs 140.
• Net income was about breakeven due to significant inventory losses and weak refining environment.
• Inventory losses in refining and marketing hurts performance.
• Risk of subsidies or marketing margin cuts is not relevant in current crude environment.

Emkay

• Maintained ‘Buy’; cut price target to Rs 170 from Rs 180.
• Strong core earnings amid heavy inventory losses.
• Macro commodity outlook is cloudy due to weak GRMs and oil price/currency volatility.
• Marketing pricing power should be steady after elections .

SBICAP

• Maintained ‘Buy’; cut price target to Rs 184 from Rs 199.
• Core GRM strong but marketing and petchem margin subdued.
• Lower GRM assumption but raise marketing margin assumption.
• Trading at attractive valuation.

• R System International ex-date for share buyback.
• Leel Electricals price band revised to 10 percent.
• Tanla Solutions price band revised to 5 percent.

Geojit Financial Services

• Copthall Mauritius Investment acquired 22.5 lakh shares or 0.95 percent equity at Rs 35.5 each.
• HSBC Global Investment Funds sold 24.8 lakh shares or 1.04 percent equity at Rs 35.59 each.

Nifty Earnings To Watch

• Bharti Airtel
• Hero MotoCorp
• United Phosphorus Ltd.
• Vedanta
• Power Grid Corporation of India

Other Earning To Watch

• Accelya Kale Solutions
• Aegis Logistic
• Apollo Micro Systems
• Ballarpur Industries
• Chambal Fertilizers & Chemicals
• CL Educate
• CreditAccess Grameen
• Dabur
• Dena Bank
• eClerx Services
• Emami
• Essar Shipping
• GTL Infrastructure
• Gujarat Alkalies and Chemicals
• IFB Industries
• Jamna Auto Industries
• JBF Industries
• JMC Projects
• Jubilant Industries
• L.G.Balakrishnan
• Laurus Labs
• LGB Forge
• Mafatlal Industries
• Magma Fincorp
• Mold-Tek Packaging
• Narayana Hrudayalaya
• NMDC
• Oriental Carbon & Chemicals
• Petronet LNG
• Selan Exploration Technology
• Solar Industries
• Solara Active Pharma Sciences
• Srikalahasthi Pipes
• Sundaram Finance
• TD Power Systems
• V-Guard Industries
• Uniphos Enterprises
• Menon Bearings
• Mahanivesh
• Kennametal
• HSIL
• Enkei Wheels
• EIH Associated Hotels
• Datamatics Global Services

Earnings Reaction To Watch

ICICI Bank (Q3, YoY)

• Net interest income up 20.5 percent at Rs 6,875.2 crore.
• Net profit down 2.75 percent at Rs 1,604.9 crore.
• Provisions at Rs 4,244.2 crore versus Rs 3,569.2 crore.
• GNPA at 7.75 percent versus 8.54 percent (QoQ)
• NNPA at 2.58 percent versus 3.65 percent (QoQ)

NTPC (Q3 Standalone, YoY)

• Revenue up 16.1 percent at Rs 2,4120.4 crore.
• Net profit up 1 percent at Rs 2,385.4 crore.
• Ebitda up 24.7 percent at Rs 6,579.9 crore.
• Margin at 27.3 percent versus 25.4 percent.
• Board recommends bonus issue in the ratio of 1:5.

Hexaware Technologies (Q4CY18, QoQ)

• Revenue up 3.5 percent at Rs 1,252 crore.
• Net profit down 28 percent at Rs 123 crore.
• EBIT down 6.4 percent at Rs 175 crore.
• EBIT margin at 14 percent versus 15.5 percent.

BEL (Q3 Standalone, YoY)

• Revenue up 8.4 percent at Rs 2.716.5 crore.
• Net profit up 67.6 percent at Rs 507.6 crore.
• Ebitda up 72.5 percent at Rs 768.1 crore.
• Margin at 28.3 percent versus 17.8 percent.

Ajanta Pharma (Q3, YoY)

• Revenue down 17.4 percent at Rs 485.1 crore.
• Net profit down 54.6 percent at Rs 66.9 crore.
• Ebitda down 45.7 percent at Rs 107.3 crore.
• Margin at 22.1 percent versus 33.6 percent.
• Export down 27 percent at Rs 304 crore.

Dixon Technologies (Q3, YoY)

• Revenue up 16.7 percent at Rs 794 crore.
• Net profit up 15.8 percent at Rs 17.6 crore.
• Ebitda up 36.2 percent at Rs 39.1 crore.
• Margin at 4.9 percent versus 4.2 percent.

Torrent Pharma (Q3)

• Revenue up 40 percent at Rs 2,051 crore.
• Net profit up 4.2 times at Rs 246 crore.
• Ebitda up 56 percent at Rs 561 crore.
• Margin at 27.3 percent versus 24.5 percent.
• Declares dividend of Rs 13 per share.

LIC Housing Finance (Q3, YoY)

• Net interest income up 42 percent at Rs 1,084.3 crore.
• Net profit up 25.5 percent at Rs 596.3 crore.

Castrol (Q4CY18, YoY)

• Revenue up 6.5 percent at Rs 1,033.4 crore.
• Net profit up 40.9 percent at Rs 211.9 crore.
• Ebitda up 3.5 percent at Rs 317.4 crore.
• Margin at 30.7 percent versus 31.6 percent.

Tata Communications (Q3, QoQ) (Adjusted For Incomes Not Pertaining To Q3)

• Revenue up 2.7 percent at Rs 4,179.5 crore.
• Net profit at Rs 173 crore vs Rs 1.65 crore
• Ebitda down 21.6 percent at Rs 493.8 crore.
• Margin at 11.8 percent versus 15.5 percent.
• Other Income up 2.2 times at Rs 19.2 crore.
• Deferred Tax Credit reversal of Rs 29.6 crore in Q3
• Company recorded a revenue of Rs 90 crore and recovery of cost worth Rs 259 crore in Q3 due to favourable court ruling.

• Chalet Hotels IPO gets 28 percent demand on second day sale; offer closes today.

• ICICI Bank enquiry committee headed by former Supreme Court judge BN Srikrishna found Chanda Kochhar was in violation of bank’s code of conduct for conflict of interest. Bank will seek claw back of all bonuses paid to her from April 2009 until March 2018. (Read the full statement by Chanda Kochhar here).
• Qatar Investment Authority to infuse $200 million in Bharti Airtel’s Africa unit. The investment authority will own less than 4 percent stake in African unit.
• Castrol’s board approved proposal for capacity expansion of its Gujarat’s production facility from 100 million litres to 140 million litres with an investment of Rs 138 crore.
• Jet Airways clarified that the company had not grounded a single aircraft due to any grounding notice by GECAS. Temporary grounding of four planes for repairs and technical reasons have been reported while a single aircraft was grounded due to termination of lease contract.
• Dredging Corporation of India lost appeal against Mercator by England Court, where the tribunal had passed an order to pay Rs 56.3 crore to Mercator which was only 25 percent of what the company had claimed for arbitration settlement.
• Zydus Wellness completed 100 percent acquisition of stake in Heinz India for Rs 4,667.4 crore.
• Tata Metaliks received environmental clearance from Forest Ministry to increase hot metal production from 0.5 MTPA to 0.75 MTPA and ductile iron pipe production from 0.3 MTPA to 0.5 MTPA and castings of 0.1 MTPA at the company's existing facility located in West Bengal.
• Hathway Cable and Datacom allotted 90.9 crore shares at a price of Rs 32.35 per share aggregating to Rs 2,940 crore to Reliance’s Jio and its arms, which has triggered the open offer where Reliance’s four arms will offer 46 crore equity shares to the public, representing 26 percent of voting share capital at Rs 32.35 per share, aggregating to Rs 1,488.8 crore.
• Container Corporation of India signed a memorandum of understanding with Russia based JSC Logistics for exploring logistics opportunities in Russia, India and international corridors.
• Hero MotoCorp set up technological centre in Germany. This centre will operate in tandem with the company’s global R&D hub in Rajasthan.
• Future Enterprises said it was considering raising funds on Feb. 5.
• Torrent Pharma board approved issuing NCDs worth Rs 5,000 crore.

• 4:30pm: India fiscal deficit for April-December period.
• 5:30pm: India revised annual GDP estimate for FY18 YoY (prior 7.2 percent).
• 5:30pm: Eight Infrastructure Industries Index for December (Prior +3.5 percent).

• West Texas Intermediate crude rose 0.5 percent to $54.48 a barrel.
• Brent crude extended gains for the second day, ended 0.5 percent higher at $61.65 a barrel.
• Gold held at $1,320.34 an ounce.

London Metal Exchange

• Aluminium ended 0.9 percent higher.
• Nickel ended 1.9 percent higher.
• Tin ended higher for the second day, up 0.48 percent.
• Lead halted a two-day decline, ended 0.7 percent higher.
• Zinc resumed rally after a one-day blip, ended 1.13 percent higher.

Stocks in Asia climbed as the Federal Reserve signaled it is putting further interest-rate increases on hold, boosting emerging-market equities and currencies.

Japanese shares led regional gains along with Hong Kong, indicating a strong end to a stellar month for equities in Asia. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.69 percent to 10,710 as of 8:10 a.m.

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