Sensex, Nifty Fall For Third Day Dragged By L&T, ICICI Bank

Indian equity benchmarks fell for third day in a row led by declines in Larsen & Toubro, HDFC and ICICI Bank.

The S&P BSE Sensex fell 0.43 percent or 156 points to 35,853.56 and the NSE Nifty 50 Index dropped 0.53 percent or 57 points to 10,738.

Seventeen of 19 sector gauges compiled by BSE ended lower led by S&P BSE Capital Goods Index's 1.93 percent decline. On the flipside, S&P BSE Healthcare Index was top gainer, up 0.38 percent.

Mid- and small-cap shares also witnessed selling pressure as the S&P BSE MidCap Index fell 0.44 percent and the S&P BSE SmallCap Index declined 0.5 percent.

• Kotak Mahindra Bank has 49.6 lakh shares change hands in a block. Stock down 0.66 percent at Rs 1,215.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based airline operator extended gains and rose as much as 18.61 percent, the most in two months, to Rs 300.85 after CNBC TV18 citing unidentified people reported that its chairman Naresh Goyal is likely to step down from the board of directors

Meanwhile, Etihad Airways is in talks to raise its stake in Jet Airways from currently 24 percent, BTVI reported, citing unidentified people familiar with the matter.

• Etihad likely to have more say in operations, day-to-day management.
• Naresh Goyal likely to step down for Jet Airways board
• Deal may be announced soon

• NHPC has 15.5 lakh shares change hands in a block deal. Stock down 0.20 percent at Rs 25.45.

Buyers and sellers were not immediately known

Source: Bloomberg

Stocks dropped in Europe and Asia, with U.S. equity futures also declining as China trade data showed a worse-than-expected slump, reigniting concerns about global growth. Treasury yields slipped and the dollar held steady.

• Tata Motors has 20 lakh shares change hands in a block deal. Stock up 0.8 percent at Rs 182.

Buyers and sellers were not immediately known

Source: Bloomberg

• Indoco Remedies: The Mumbai-based drugmaker fell as much as 0.57 percent to Rs 219. Trading volume was 30 times its 20-day average.
• KPR Mill: The Coimbatore-based apparel maker fell as much as 1.7 percent to Rs 514.10. Trading volume was 20 times its 20-day average.
• Gujarat Pipavav: The Mumbai-based shipping port operator fell as much as 2.18 percent to Rs 90. Trading volume was more than 11 times its 20-day average.
• Jammu & Kashmir Bank: The Srinagar-based lender rose as much as 6.61 percent to Rs 38.70. Trading volume was 13 times its 20-day average.

Shares of the Delhi-based steel maker rose 0.6 percent to Rs 97.95 after its December quarter profit rose 39 percent year on year.

Key earnings highlights:

• Net profit up 39 percent at Rs 141 crore versus Rs 101 crore
• Revenue up 41 percent at Rs 1,025.81 crore versus Rs 725.97 crore

Indian equity benchmarks continue to trade lower led by declines in HDFC, Larsen & Toubro, ITC, TCS and ICICI Bank.

The S&P BSE Sensex fell 0.71 percent or 254 points to 35,760 and the NSE Nifty 50 Index declined 0.74 percent or 80 points to 10,715.

Seventeen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Utilities Index's 1.55 percent decline. On the flipside, S&P BSE Healthcare Index was top gainer, up 0.11 percent.

Mid- and small-cap shares were also witnessing selling pressure as the S&P BSE MidCap Index fell 0.5 percent and the S&P BSE SmallCap Index declined 0.7 percent.

Bharat Heavy Electricals Ltd. won an order from Singareni Collieries to install 129 MW Solar Photovoltaic power plants in Telangana, according to its stock exchange filing.

The order is valued at Rs 565 crore and is the company’s largest SPV order so far, the statement added.

Inflation based on wholesale prices moderated in December led by a fall in fuel price.

Wholesale inflation fell to 3.8 percent in December compared to 4.64 percent in the previous month, according to data from the Ministry of Commerce. (Read the full story here)

• Bharti Infratel: About 12 lakh shares changed hands in a block deal.
• Container Corp: About 13.3 lakh shares changed hands in a block deal.

Buyers and seelers were not known immediately.

Source: Bloomberg

Dhananjay Sinha, head of research at Emkay Global Financial Services spoke to BloombergQuint. Here are the highlights from the conversation:

On Indusind Bank

We have been cautious on IndusInd bank so far. The IL&FS issue has been plaguing it. From its peak, the stock has corrected nearly 30 percent and I think after the result also it has corrected. It's provision ratio has been lesser than expected so while the bank has been showing good amount of growth, these issues are likely to plague the stock for atleast a couple of quarters. Unless the bank is able to come out of this, I don't think investors will be able to look at it in a very constructive manner.

On Federal Bank

On Federal Bank, we were positive on the stock. The exit of Mr. Shankaran will challenge the growth trajectory, or at least that is what the concern is that the market has. There will be someone to replace him but at this juncture because he's been the key guy who has been pushing for corporate lending and MSME lending. The bank has been growing rapidly n lending growth, in excess of 20 percent. So that is something that will be challenged. The stock had done well, from a low of Rs 70 it has come to Rs 95. We'll have to see who the replacement is and how the bank drives growth going forward.

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

Premium on the contract declined 31.67 percent to Rs 45.10. Over 3.44 lakh shares were added to the open interest which stood at over 50.36 lakh shares.

Shares of the automobile parts manufacturer rose as much as 4.9 percent to hit a new all-time high at Rs 3,649.

Bajaj Holdings shall pay Rs 232 per share to Western Maharashtra Development Corporation (One of the promoters of Maharashtra Scooters) instead of Rs 151.63 along with interest of 18 percent per annum from Jan. 14, 2006 for sale of 27 percent holding in MSL, as per the Supreme Court order, Maharashtra Scooters said in a stock exchange filing.

Trading volume was more than 11 times its 20-day average, Bloomberg data showed. The Relative Strength Index was 77, indicating that the stock may be overbought.

Corrects earlier version which named the wrong buyer for Maharashtra Scooters' stake.

Shares of the Kerala-based lender fell as much as 6.7 percent, the most in nearly four months, to Rs 89.

The bank’s Executive Director Ganesh Sankaran will step down with effect from Feb. 15, according to its stock exchange filing.

The stock has declined 20.6 percent over the past 12 months, compared to a 4.9 percent advance in the Sensex.

Shares of Srinagar-based lender rose as much as 6.6 percent, the most in nearly three months, to Rs 38.70.

The company’s profit rose 43 percent on a yearly basis to Rs 104 crore during October-December period, according to its stock exchange filing.

Key earnings highlights (Q3, YoY):

• Net Interest Income up 13 percent at Rs 882 crore.
• Net Profit up 43 percent at Rs 104 crore.
• Provisions up 52 percent at Rs 263 crore (QoQ).
• GNPA at 9.94 percent versus 9 percent (QoQ).
• NNPA at 4.69 percent versus 3.91 percent (QoQ).

Trading volume was 222 times its 30-day average, Bloomberg data showed. The stock has declined 55 percent in the past 12 months.

Shares of the hypermarket operator fell as much as 9.5 percent, the most since its stock market debut, to Rs 1,422.15.

The company missed analyst estimates due to higher costs on account of price cuts and extra working hours during the festive season.

Key earnings highlights (Q3, YoY)

• Net Profit up 2 percent at Rs 257 crore.
• Revenue up 33 percent at Rs 5,451 crore.
• Ebitda up 7.5 percent at Rs 453 crore.
• Margin at 8.3 percent versus 10.3 percent.
• Added 4 stores during the quarter; Total store count at 164.
• Margins dropped on account of price cuts and higher operating hours during festive season.

Shares of the software developer rose as much as 3.9 percent, the most since Nov. 28, 2018, to Rs 710.20.

Infosys hiked constant currency guidance to 8.5-9 percent. It’s board also approved buy back worth Rs 8,260 crore at a share price of not more than Rs 800 per share involving 2.36 percent equity and the tech company also declared a special dividend of Rs 4 per share. The buyback is at 17 percent premium to the current market price of Rs 683.5 per share.

Key earnings highlights (Q3, QoQ)

• Net Profit down 12.2 percent at Rs 3610 crore.
• $Revenue up 2.3 percent at $2,987 million.
• Revenue up 3.8 percent at Rs 21,400 crore.
• EBIT down 10.5 percent at Rs 4,379 crore.
• Adjusted EBIT Margin at 22.6 percent versus 23.7 percent.

Here’s what analysts had to say:

CLSA

• Maintained ‘Buy’; hiked price target to Rs 930 from Rs 910.
• December quarter review: stellar revenue growth and deal wins and raised guidance.
• Growth was broad-based led by key geographies, key verticals and digital.
• Growth acceleration, capital return and a demand recovery merit a rerating.

PhillipCapital

• Maintain “Buy”; increased price target to Rs 800 from Rs 750.
• Strong performance; small miss on margins.
• Expect strong revenue growth in coming quarters due to recent performance and deal flow momentum.
• Remain positive on the back of improving business metrics and significant valuation gap to Tata Consultancy Services.

Investec

• Maintain “Buy”; cut price target to Rs 784 from Rs 820.
• Solid beat on revenue; margin weakness to continue.
• Announced buyback to restrict downsides on the stock.
• With growth coming back, believe valuation gap with TCS to narrow.

Indian equity benchmarks declined for the third straight trading session and are poised for their longest losing streak in 20 days.

The S&P BSE Sensex Index fell as much as 0.45 percent to 35,846.58 and the NSE Nifty 50 fell as much as 0.46 percent to 10,745.30.

The market breadth was tilted in favour of sellers. About 850 stocks declined and 574 shares advanced on National Stock Exchange.

The Indian rupee opened marginally lower against the U.S. dollar. The home currency depreciated as much as 0.02 percent to 70.50 against the greenback.

The local legal tender depreciated 1.1 percent in the last week. Goldman Sachs is underweight the currency and sees it at 73 to a dollar in six months. For today, a range of 70.20-70.80 is expected.

It is a data heavy day for sovereign bonds as both retail and wholesale inflation prints for the month of December will be announced today. This will be key data ahead of the RBI rate review meeting on Feb. 05. Also, both data are likely to show a slower pace as per a Bloomberg survey. CPI is expected to come at 2.17 percent versus 2.33 percent in November while WPI is seen at 4.58 percent versus 4.64 percent a month back. The 2028 bond is likely to move in a range of 7.47-7.53 percent.

F&O Cues

• Nifty January futures closed trading at 10828, premium of 33 points.
• Max OI for January series at 11,000 Call, OI at 46.9 lakh shares.
• Max OI for January series at 10,500 Put, OI at 38.9 lakh shares.

Stocks In F&O Ban

• Adani Power
• Jet Airways

Put-Call Ratio

• Nifty PCR at 1.39 versus 1.46.
• Nifty Bank PCR at 0.9 versus 0.92.

On Infosys

CLSA

• Maintained ‘Buy’; hiked price target to Rs 930 from Rs 910.
• December quarter review: stellar revenue growth and deal wins and raised guidance.
• Growth was broad-based led by key geographies, key verticals and digital.
• Growth acceleration, capital return and a demand recovery merit a rerating.

PhillipCapital

• Maintain “Buy”; increased price target to Rs 800 from Rs 750.
• Strong performance; small miss on margins.
• Expect strong revenue growth in coming quarters due to recent performance and deal flow momentum.
• Remain positive on the back of improving business metrics and significant valuation gap to Tata Consultancy Services.

Investec

• Maintain “Buy”; cut price target to Rs 784 from Rs 820.
• Solid beat on revenue; margin weakness to continue.
• Announced buyback to restrict downsides on the stock.
• With growth coming back, believe valuation gap with TCS to narrow.

Also Read: Q3 Results: Brokerages Remain Upbeat On Infosys

More Calls

JM Financial on Avenue Supermarts

• Maintained ‘Buy’ with a price target of Rs 1,740.
• December quarter turned out to be another disappointing quarter.
• Revenue momentum sustained quite well; store expansion quite muted .
• The current financial year is a margin-reset year for the company with relatively ‘muted’ Ebitda growth.

• SPL Industries to move into ASM Framework
• Deccan Healthcare price band revised to 20 percent.

Earnings To Watch

• Indiabulls Ventures
• ICICI Securities
• Tata Metaliks
• Supreme Infrastructure
• Prakash Industries

Earnings Reactions To Watch

Infosys (Q3, QoQ)

• Net Profit down 12.2 percent at Rs 3610 crore.
• $Revenue up 2.3 percent at $2,987 million.
• Revenue up 3.8 percent at Rs 21,400 crore.
• EBIT down 10.5 percent at Rs 4,379 crore.
• Adjusted EBIT Margin at 22.6 percent versus 23.7 percent.

Also Read: Q3 Results: Infosys Raises Revenue Forecast On Strong Deal Momentum

GNA Axles (Q3, YoY)

• Net profit up 42 percent at Rs 18 crore.
• Revenue up 47 percent at Rs 246 crore.
• Ebitda up 45 percent at Rs 39 crore.
• Margin at 15.8 percent versus 16.1 percent.

Avenue Supermarts (Q3, YoY)

• Net Profit up 2 percent at Rs 257 crore.
• Revenue up 33 percent at Rs 5,451 crore.
• Ebitda up 7.5 percent at Rs 453 crore.
• Margin at 8.3 percent versus 10.3 percent.
• Added 4 stores during the quarter; Total store count at 164.
• Margins dropped on account of price cuts and higher operating hours during festive season.

Also Read: Q3 Results: DMart Net Profit Growth Slowest In Eight Quarters

Tata Sponge Iron (Q3, YoY)

• Net Profit down 25.6 percent at Rs 27 crore.
• Revenue up 22 percent at Rs 261 crore.
• Ebitda down 37 percent at Rs 30 crore.
• Margin at 11.6 percent versus 22.4 percent.
• Higher raw material cost, other expenses and employee cost weighed on Q3 results
• Raw material cost as a % of revenue grew to 75 percent from 64 percent.
• Other expenses and employee cost were on an average 21 percent higher.

J&K Bank (Q3, YoY)

• Net Interest Income up 13 percent at Rs 882 crore.
• Net Profit up 43 percent at Rs 104 crore.
• Provisions up 52 percent at Rs 263 crore (QoQ).
• GNPA at 9.94 percent versus 9 percent (QoQ).
• NNPA at 4.69 percent versus 3.91 percent (QoQ).

• Infosys’ board approved buy back worth Rs 8,260 crore at a share price of not more than Rs 800 per share involving 2.36 percent equity and the tech company also declared a special dividend of Rs 4 per share. The buyback is at 17 percent premium to the current market price of Rs 683.5 per share. The management has also hiked financial year constant currency guidance to 8.5 percent to 9 percent.
• Sun Pharma said commercialisation of Xelpros has triggered $10 million payment and sales linked royalties to Sun Pharma Advanced Research Company. The research company had licensed Xelpros to Sun Pharma in June 2015.
• Bharti Airtel agreed to reduce its stake in its Tanzanian unit to 51 percent from 60 percent after months of negotiations with the government, which accused the operator of acquiring the initial shareholding illegally. (Bloomberg News)
• BLS International announced expansion of operations for Attestation and Apostille services following the renewal of its contract with Ministry of External Affairs. The company said that it will add 11 cities to its profile because of the renewal of the contract.
• NTPC to raise Rs 4,000 crore via Non-Convertible Debentures.
• KNR Constructions’ arm received financial closure from NHAI for projects in Tamil Nadu and Andhra Pradesh worth Rs 22,121 crore.
• Shakti Pumps extended its production shut down till Jan.12. The company’s operation has been shut down since Jan. 09 due to labour contractor issues with the company.
• IL&FS Engineering and Construction: Gujarat Metro Rail Corporation terminated contract with company for construction of metro rail corridor in Ahmedabad citing the reason of slow progress. The Rail Corporation may encash Bank Guarantees provided by the company amounting to Rs 37.5 crore.
• Hindusthan National Glass to raise Rs 394 crore by issuing compulsorily convertible preference shares at Rs 83.77 to Lotus One Investment. Preference shares will be converted into equity shares after 18 months.
• Cadila Healthcare: Zydus receives final approvals from the U.S. FDA for Betamethasone Dipropionate Cream and Amlodipine & Atorvastatin Tablets. Cream is used to treat a variety of skin conditions, while the tablets are used to treat blood pressure and cholesterol.
• Yes Bank named Brahm Dutt as the part-time chairman. Reserve Bank of India approved his appointment up till July 04, 2020 vide its letter dated Jan. 11.

Media Reports

• Government mulls raising minimum selling price of sugar (Economic Times)
• Jet Airways’ 18 aircraft held back in Singapore over unpaid dues (Business Standard)
• Finance Ministry may sell part of SUUTI holding in Axis Bank, ITC (PTI)

• 11:30 a.m.: India car sales data for month of December.
• 12 noon: December Wholesale Prices Inflation YoY, Bloomberg estimates 4.58 percent, prior 4.64 percent.
• 5:30 p.m.: December Consumer Price Inflation YoY; Bloomberg estimates 2.17 percent (prior 2.33 percent)
• Some of the world’s biggest banks announce earnings, including Citigroup, JPMorgan, Bank of America, Wells Fargo, Morgan Stanley and Goldman Sachs. Alcoa, Indian IT company Mindtree, Netflix, Taiwan Semiconductor, American Express and BlackRock also post results.
• China trade data is released on Monday.
• U.K. Parliament will vote on the Brexit deal.

• The Bloomberg Commodity Index added 0.2 percent on Friday.
• West Texas Intermediate crude rose 0.7 percent to $51.97 a barrel.
• Brent crude resumed rally after a one-day blip. up 0.5 percent to &60.78 per barrel.
• Gold slipped 0.1 percent to $1,288.61 an ounce.

London Metal Exchange

• Aluminium resumed declines after a one-day rally, ended 1.34 percent lower.
• Lead rallied for the sixth day, ended 1.32 percent higher.
• Copper ended 0.2 percent higher.
• Tin ended higher for the fifth day, up 0.79 percent.
• Zinc ended 1.26 percent higher.
• Nickel ended 1.87 percent higher.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.06 percent to 10,823 as of 7:50 a.m.

Asian stocks were mixed on Monday, following the best week for regional stocks since the start of November, as investors awaited a raft of earnings and the January rally in risk assets showed signs of abating.

Shares in Australia advanced, while South Korean stocks dipped and futures indicated a small decline when equity trading begins in Hong Kong. U.S. equity futures slipped after the S&P 500 on Friday closed flat and the yield on 10-year Treasuries declined. Japan is closed for a holiday, so Treasuries won’t trade until the London open.

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