Sensex, Nifty Fall For Second Day Led By Decline In ITC

Indian equity benchmarks fell for second day in a row led by decline in ITC after its profit grew at slowest pace in seven quarters.

The S&P BSE Sensex fell 0.92 percent or 336 points to 36,108 and the NSE Nifty 50 Index dropped 0.84 percent or 91 points to 10,831.

ITC's net profit rose 4 percent year-on-year to Rs 3,209 crore in the quarter ended December, the country’s largest cigarette maker said in an exchange filing. That compares with the Rs 3,129 crore consensus estimate of analysts tracked by Bloomberg.

Losses in ITC alone wiped out over 100 points from the Sensex making it biggest drag on the 30-share index.

Seventeen of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Fast Moving Consumer Goods Index's 1.4 percent decline. On the other hand, S&P BSE Metal Index was top gainer, up 0.63 percent.

Mid- and small-cap shares also witnessed a mild selling pressure as the S&P BSE MidCap Index declined 0.3 percent and the S&P BSE SmallCap Index declined 0.2 percent.

Board of directors of the country's largest wireless telecom service provider approved raising up to Rs 25,000 crore via rights issue.

• Vodafone will contribute Rs 11,000 crore
• Aditya Birla will add up to Rs 7,250 crore

Shares of the Chennai-based hotel chain operator rose as much as 8.56 percent to Rs 48.85 after its profit rose over six times in December quarter.

Key earnings highlights:

• Revenue at Rs 89.81 crore versus Rs 92.50 crore (YoY)
• Other income at Rs 3.75 crore versus Rs 1.66 crore (YoY)
• Net profit at Rs 14.85 crore versus Rs 2.37 crore (YoY)

Shares of the country's largest cigarette maker fell as much as 4.28 percent, the most since February 2018, to Rs 277.35 after its margins missed Bloomberg consensus estimates in December quarter.

ITC Ltd.’s profit rose at its slowest pace in seven quarters but met analyst estimates.

Net profit rose 4 percent year-on-year to Rs 3,209 crore in the quarter ended December, the country’s largest cigarette maker said in an exchange filing. That compares with the Rs 3,129 crore consensus estimate of analysts tracked by Bloomberg.

• Hathway Cable: The Mumbai-based cable TV services provider rose as much as 3.57 percent to Rs 31.95. Trading volume was 200 times its 20-day average.
• Security & Intelligence Services: The Delhi-based security services provider rose as much as 1.23 percent to Rs 789. Trading volume was 20 times its 20-day average.
• ICICI Prudential: The Mumbai-based insurance services provider fell as much as 11 percent to Rs 307.55. Trading volume was 20 times its 20-day average.
• Star Cement: The Kolkata-based cement maker rose as much as 2.6 percent to Rs 96.55. Trading volume was 10 times its 20-day average.

Indian equity benchmarks extended decline led by losses in ITC after its margins missed Bloomberg estimates in December quarter.

The S&P BSE Sensex fell 0.45 percent or 158 points to 36,284 and the NSE Nifty 50 Index declined 0.35 percent or 38 points to 10,884.

Fifteen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Power Index's 0.7 percent decline. On the flipside, S&P BSE Metal Index was top gainer, up 0.84 percent.

The overall market breadth was negative as 1,340 shares were declining while 1,107 were advancing on the BSE.

Shares of the country's largest cigarette maker erased gains and declined as much as 0.7 percent to Rs 288 despite meeting Bloomberg estimates in December quarter.

Key earnings highlights:

• Revenues up 15 percent at Rs 11,227 crore versus Rs 9,772 crore (YoY); Estimate of Rs 10,880 crore
• Net profit up 4 percent at Rs 3,209 crore versus Rs 3,090 crore (YoY); Estimate of Rs 3,130 crore
• EBITDA up 11 percent at Rs 4,325.5 crore versus Rs 3,889 crore.
• Margin at 38.5 percent versus 39.8 percent (YoY); Estimate of 40.2 percent

Shares of the Pune-based government-owned bank rose as much as 8.45 percent to Rs 15.40 after its asset quality improved in December quarter sequentially.

Key earnings highlights:

• Net interest income at Rs 872 crore versus Rs 853 crore
• Net loss widens to Rs 3,764.26 crore versus loss of Rs 596.70 crore
• Gross non-performing assets as a percentage of total advances at 17.31 percent versus 18.64 percent
• Net non-performing assets as a percentage of total advances at 5.91 percent versus 10.61 percent
• Provisions for bad loans at Rs 4,538.28 crore versus Rs 941.71 crore (QoQ); Rs 1,343.62 crore (YoY)

Shares of the Mumbai-based textile manufacturer held on to gains and rose 0.8 percent to Rs 819 after it reported 30 percent increase in net profit in December quarter.

Key earnings highlights:

• Revenue at Rs 167.51 crore versus Rs 148.42 crore (YoY)
• Net profit up 30 percent at Rs 37.56 crore versus 28.84 crore (YoY)

Shares of the Gujarat-based newspaper publisher declined 0.3 percent to Rs 177 after its profit declined in December quarter.

Key earnings highlights:

• Revenue at Rs 660 crore versus Rs 593 crore (YoY)
• Net profit at Rs 75.63 crore versus Rs 77.72 crore (YoY)

Shares of the country's largest cigarette maker rose 1.14 percent to Rs 293.05 ahead of December quarter earnings.

Here is what to expect from ITC in Q3 (Standalone estimates compiled by Bloomberg):

• Net sales seen rising 11.3 percent at Rs 10,881 crore versus Rs 9,772 crore
• EBITDA seen up 12 percent at Rs 4,373 crore versus Rs 3,905 crore
• Margin seen at 40.2 percent versus 40 percent
• Net profit seen advancing 1.3 percent to Rs 3,129 crore versus Rs 3,090 crore

Shares of the Delhi-based liquor maker held on to gains and rose as much as 2 percent to Rs 421.60 after its profit rose in December quarter.

Key earning highlights:

• Revenue up 18 percent at Rs 2,058 crore versus Rs 1,741.78 crore (YoY)
• Net profit up 49 percent at Rs 52.01 crore versus Rs 35.01 crore (YoY)
• EBITDA up 27 percent at Rs 95.9 crore versus Rs 75.5 crore (YoY)
• margin at 17.3 percent versus 16 percent (YoY)

Shares of the Bengaluru-based public sector lender fell as much as 2 percent to Rs 44.45 after its asset quality deteriorated further in December quarter.

Key earnings highlights:

• Net interest income up 2.85 percent at Rs 1,187 crore versus Rs 1,154 crore (YoY)
• Net profit up 80 percent at Rs 143.38 crore versus Rs 79.56 crore (YoY)
• Gross non-performing assets as a percentage of total advances at 6.14 percent versus 5.86 percent (QoQ)
• Net non-performing assets as a percentage of total advances at 4.08 percent versus 3.81 percent (QoQ)
• Provisions for non-performing assets at Rs 582.22 crore versus Rs 488.21 crore (QoQ)

Shares of the Chennai-based water and sewage treatment plant builder rose as much as 5.69 percent to Rs 305.80 after it secured desalinisation order worth Rs 467 crore from Mangalore Refinery and Petrochem towards construction of a 30 MLD Sea Water Desalination plant expandable up to 70 MLD in Karnataka.

• Zee Entertainment has 10.4 lakh shares change hands in a block deal. Stock up 2.57 percent at Rs 436.20.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Ahmedabad-based specialty pharma company extended gains and rose as much as 3.92 percent to Rs 228 after its profit increased in December quarter.

Key earnings highlights:

• Revenue down 1 percent at Rs 427.39 crore versus Rs 431 crore (YoY)
• Net profit up 22 percent at Rs 51.37 crore versus Rs 42 crore (YoY)

Shares of JMC Projects (india) Ltd. halted a four-day decline and rose as much as 2.1 percent to Rs 90.95.

The company bagged orders worth Rs 507 crore for residential and commercial projects in South India, according to its stock exchange filing.

The stock advanced 4.5 percent so far this month compared to a 1 percent rally in the Sensex.

• Indian equity benchmarks continued to fluctuated between gains and losses and was trading a little changed from yesterday’s close.
• The S&P BSE Sensex Index fell 0.05 percent to 36.425 and the NSE Nifty 50 Index traded a little changed at 10,925.
• About 847 stocks advnaced and 768 shares declined on National Stock Exchange.

Shares of ICICI Prudential falls over 12 percent, its worst intraday fall since listing. Niraj Shah and Kannan get you all the details.

Shares of Den Network rose as much as 2.6 percent to Rs 71.75 and the shares of Hathway Cable & Datacom rose as much as 3.6 percent to Rs 31.95.

Reliance Industries received Competition Commission of India’s nod for acquisition of stake in Den Networks and Hathway, according to its stock exchange filing.

Meanwhile, shares of RIL fluctuated between gains and losses to trade a little changed at Rs 1,236.

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

Premium on the contract fell 4.6 percent to Rs 69.95. Over 3.47 lakh shares were reduced from the open interest which stood at over 37.22 lakh shares.

Shares of Bombay Burmah Trading Corporation Ltd. rose as much as 5.8 percent, the most since Dec. 28, to Rs 1,291.55.

Trading volume was more than 30 times its 20-day average, Bloomberg data showed. The stock declined 18.8 percent over the past year compared to a 2 percent advance in the Sensex.

Shares of Zee entertainment halted its five-day losing streak, its longest losing streak in nearly three months. The stock rose as much as 3.4 percent to Rs 439.80.

Trading volume was more than double its 20-day average, Bloomberg data showed. The scrip declined 30 percent in the past 12 months compared to a 1.8 percent advance in the Sensex.

Shares of ICICI Prudential Life Insurance Company Ltd. fell for the second day. The stock declined as much as 11.5 percent, the most since its listing on September 2016, to Rs 306.

Trading volume was almost 30 times its 20-day average, Bloomberg data showed. The Open Interest jumped over 70 percent.

The company’s net profit fell 34 percent on a yearly basis to Rs 296.8 crore during October-December period, according to its stock exchange filing.

Key Earnings Highlights (Q3, YoY)

• Net premium income up 27 percent at Rs 7,483 crore.
• Net profit down 34 percent at Rs 296.8 crore.
• AUM up 8.44 percent at Rs 1.49 lakh crore.
• New business premium up 18.6 percent at Rs 910 crore.

Here’s what analsyts had to say about ICICI Prudential after the company announced its quarterly results:

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 415.
• Weighed down by capital market volatility.
• Sharp decline in VNB margins as operating leverage benefits reverse.
• ICICI Pru is a deeply cyclical stock; opportunity to accumulate.

CLSA

• Maintained ‘Buy’; cut price target to Rs 430 from Rs 450.
• December quarter review: weaker capital market flow, lower persistency and margins.
• ULIP dependence drags down premium growth.
• Persistency weakens and hurts margin but strong protection growth.

Shares of the information technology extended gains for the second day. The stock rose as much as 2 percent to trade at its highest levels since February 2000.

The stock traded at 16.1 times estimated forward earnings per share compared to 15 times for the two-year historical average, Bloomberg data showed. The scrip was the second best performer on Nifty.

Shares of Bharti Infratel rose as much as 1.4 percent to Rs 281.40 ahead of its results announcement.

The stock traded at 22 times estimated forward earnings per share for the coming year, Bloomberg data showed. The stock has declined 19 percent in the past 12 months compared to a 1.8 percent advance in the Sensex.

Here's what analysts tracked by Bloomberg expects the company report on a sequential basis in its December quarter earnings:

• Revenue seen down 3 percent at Rs 3,541 crore.
• Ebitda seen down 10 percent at Rs 1,361 crore.
• Margin seen at 38.4 percent versus 41.3 percent.
• Net Profit seen down 8 percent at Rs 554 crore.

Indian equity benchmarks fluctuated in the open. The benchmark indices halted their five-day rally yesterday.

The S&P BSE Sensex Index traded a little changed at 36,451 as of 9:18 a.m. and the NSE Nifty 50 Index traded at 10,928.

The market breadth was tilted in favour of sellers. About 1,241 stocks declined and 537 shares advanced on National Stock Exchange. All the 11 sectoral gauges compiled by NSE rose, led by the NSE Nifty Realty Index's 0.27 percent advance.

The local legal tender is seen drawing strength from a drop in crude oil prices. Oil held losses on Wednesday amid pessimism over prospects for a U.S.-China trade deal and which is likely to darken the global economic outlook.

Meanwhile, bonds are likely to supported after the RBI announced a fresh tranche of open market bond purchases for 100 billion rupees. Yields on the most-traded 10-year debt fell four basis points on Tuesday to 7.53 percent, adding to a three basis-point drop on Monday after Bloomberg reported the additional annual expenditure for the federal government on a full roll out of the farmers’ relief program will probably be about Rs 70,000 crore a year.

That is less than what has been speculated and comes as a relief to investors. Apart from the budget, markets are also closely watching for cues on the policy outlook with the MPC set to announce its rates decision on Feb. 7.

F&O Cues

• Nifty January futures closed trading at 10,936, premium of 13 points.
• Max open interest for January series at 11,000 strike value call (open interest at 33.8 lakh shares).
• Max open interest for January series at 10,500 strike value put (open interest at 33.5 lakh shares).

Stocks In F&O Ban

• Adani Power
• Jet Airways

Put-Call Ratio

• Nifty PCR at 1.53 versus 1.59.
• Nifty Bank PCR at 1.13 versus 1.18.

On Asian Paints

Macquarie

• Upgraded to ‘Outperform’ from ‘Neutral’; hiked price target to Rs 1,580 from Rs 1,180.
• Volume growth picks up significantly; volume growth outlook has improved.
• Recent price increases with falling input costs will improve margins.
• Raise FY19-21 EPS estimates by 7-16 percent; full effect of lower GST rates yet to play out.

CLSA

• Maintained ‘Outperform’ with a price target of Rs 1,565.
• December quarter results were ahead of estimates; Strong 22 percent volume growth.
• Management’s outlook on demand was fairly cautious which is surprise in the context of strong performance.
• Volatility in crude prices as well as rupee is a concern.

On TVS Motor

CLSA

• Maintained ‘Sell’ with a price target of Rs 360.
• Good growth in December quarter, but was in line with estimates.
• Two wheeler demand concerns; TVS better in scooter/premium-bikes but mopeds a drag.
• Margin expansion unlikely amidst regulatory cost push and high competition.

Macquarie

• Maintained ‘Underperform’ with a price target of Rs 450.
• Strong average selling price drives better-than-expected performance.
• Challenges related to costs and safety and emission regulations lie ahead.
• Maintain Underperform given rich valuations.

On Havells India

CLSA

• Maintained ‘Outperform’; hiked price target to Rs 775 from Rs 720.
• Revenue growth surprises across categories.
• Input costs impact consumer durables and Lloyd’s margins.
• Large channel inventory in the AC industry remains a concern.

Macquarie

• Maintained ‘Outperform’; hiked price target to Rs 842 from Rs 695.
• Strongest revenue growth in core portfolio in 6.5 years driven by volume growth.
• Operating margins to recover as company is taking price hikes.
• Higher working capital not a concern; Lloyd business to watch out for in the March quarter.

On Shree Cement

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 19,050.
• Strong volumes offset cost headwinds.
• Cost deflation to benefit from March Quarter, price hike can drive upgrades.
• Capacity growth to drive market-share gain in the next two financial years.

CLSA

• Maintained ‘Outperform’ with a price target of Rs 18,275.
• Operating income beats estimates led by cement realisations and power units and margins.
• Unit operating margin and Power Ebitda was at multi-quarter high.
• Sustained increase in cement prices is the key to stock-price performance.

On HDFC Life

CLSA

• Maintained ‘Buy’; cut price target to Rs 475 from Rs 510.
• Steady premium growth but with weaker persistency and margins.
• Steady credit protect business aids growth and profitability.
• Lower growth and margin forecasts driving 4-9 percent cuts to VNB forecasts for FY20-21.

Macquarie

• Maintained ‘Neutral’ with a price target of Rs 400.
• VNB margins fell due to seasonality and transient factors.
• Protection uptick robust, a millennial growth story awaits.
• Valuation leave limited upside; await better entry points.

On ICICI Prudential

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 415.
• Weighed down by capital market volatility.
• Sharp decline in VNB margins as operating leverage benefits reverse.
• ICICI Pru is a deeply cyclical stock; opportunity to accumulate.

CLSA

• Maintained ‘Buy’; cut price target to Rs 430 from Rs 450.
• December quarter review: weaker capital market flow, lower persistency and margins.
• ULIP dependence drags down premium growth.
• Persistency weakens and hurts margin but strong protection growth.

More Calls

• Emkay on Prabhat Dairy
• Suspending Coverage given exit from its core business.
• Sale of dairy business appears to be negative for minority shareholders.

Emkay on Reliance Nippon

• Maintained ‘Buy’; cut price target to Rs 192 from Rs 204.
• Weak AUM growth drags earnings down.
• Cut revenue estimates by 8 percent and 14 percent for the next two financial years respectively, resulting in an earnings decline of 10.8 percent and 8.1 percent respectively.
• Trail expense cost burden would be shared with distributors – average should be 60 percent.

SBICap on Aviation

• Domestic air passenger traffic growth continued to moderate in December from earlier highs.
• In strongest quarter of the year, passenger growth has been dragged down to 12 percent.
• There has been attempt to increase fares which is an encouraging sign.
• Even as yields improve, decline in PLFs and elevated ATF prices will keep profitability muted.

• Vivimed Labs price band revised to 10 percent.

• Page Industries: Nalanda India Fund sold 1.85 lakh shares or 1.66 percent equity at Rs 22,161.05 per share.
• Prabhat Dairy: Alquity Sicav - Alquity Indian Subcontinent Fund sold 16 lakh shares or 1.64 percent equity at Rs 86.56 each.

Kewal Kiran Clothing

• SBI Mutual Fund acquired 2.95 lakh shares or 2.4 percent equity at Rs 1,100 per share.
• Nalanda India Fund sold 3 lakh shares or 2.43 percent equity at Rs 1.100.02 per share.

Nifty Earnings To Watch

• ITC
• Bharti Infratel

Other Earnings To Watch

• Bank of Maharashtra
• BASF
• Can Fin Homes
• DB Corp
• Dishman Carbogen Amcis
• Essel Propack
• Everest Industries
• Hathway Cable & Datacom
• Indoco Remedies
• InterGlobe Aviation
• JM Financial
• Kirloskar Pneumatic
• Mafatlal Finance
• Navin Fluorine
• Orient Paper & Industries
• Pidilite Industries
• Premier Explosives
• Radico Khaitan
• Raymond
• Reliance Communications
• Sintex Plastics Technology
• Tejas Networks
• Thirumalai Chemicals Ujjivan Financial Services
• United Spirits
• Vijaya Bank
• Wendt (India)
• Tanla Solutions
• Shree Digvijay Cement
• Rajratan Global Wire
• Oriental Hotels
• Atlanta

Earnings Reaction To Watch

HDFC Standard Life Insurance (Q3, YoY)

• Net premium Income up 27 percent at Rs 6,897.7 crore.
• Net profit up 18.5 percent at Rs 245.6 crore.
• AUM up 13 percent at Rs 1.17 lakh crore.
• New business premium up 41 percent at Rs 9,940 crore.

ICICI Pru Life Insurance (Q3, YoY)

• Net premium income up 27 percent at Rs 7,483 crore.
• Net profit down 34 percent at Rs 296.8 crore.
• AUM up 8.44 percent at Rs 1.49 lakh crore.
• New business premium up 18.6 percent at Rs 910 crore.

Oberoi Realty (Q3, YoY)

• Revenue up 48.4 percent at Rs 528.6 crore.
• Net profit up 14.7 percent at Rs 137.9 crore.
• Ebitda down 2.3 percent at Rs 188.1 crore.
• Margin at 35.6 percent versus 54.1 percent.
• Operating costs up 26 percent at Rs 353.7 crore.

Sadhana Nitrochem (Q3, YoY)

• Revenue up 2.6 times at Rs 70.3 crore.
• Net profit up 3.4 times at Rs 27.3 crore.
• Ebitda up 3.4 times at Rs 33.6 crore.
• Margin at 47.8 percent versus 37.2 percent.
• Colourformer capacity to be expanded by 250 MTPA in Q4.

Genus Power Infra (Q3 Standalone, YoY)

• Revenue up 45.9 percent at Rs 292.1 crore.
• Net profit up 74.2 percent at Rs 23 crore.
• Ebitda up 90.5 percent at Rs 38.3 crore.
• Margin at 13.1 percent versus 10 percent.

Syngene International (Q3, YoY)

• Revenue up 20.5 percent at Rs 467.1 crore.
• Net profit up 6.1 percent at Rs 87 crore.
• Ebitda up 26.1 percent at Rs 140.2 crore.
• Margin at 30 percent versus 28.7 percent.

Confidence Petroleum (Q3, QoQ)

• Revenue up 15.3 percent at Rs 283 crore.
• Net profit up 14.8 percent at Rs 18.6 crore.
• Ebitda up 15.79 percent at Rs 35.3 crore.
• Margin at 12.5 percent versus 12.4 percent.

Agro Tech Foods (Q3, YoY)

• Revenue flat at Rs 215.3 crore versus Rs 214.6 crore.
• Net profit up 11.1 percent at Rs 10 crore.
• Ebitda flat at Rs 17.9 crore.
• Margin unchanged at 8.3 percent.

• Reliance Industries received Competition Commission of India’s nod for acquisition of stake in Den Networks and Hathway.
• Infosys’ arm EdgeVerve Systems launched an automation tool for enterprises.
• Cyient said it was increasing its stake in its arm ‘Cyient DLM’ from 74 percent to 100 percent for a consideration of Rs 42.5 crore.
• VA Tech Wabag secured desalinisation order worth Rs 467 crore from Mangalore Refinery and Petrochem towards construction of a 30 MLD Sea Water Desalination plant expandable up to 70 MLD in Karnataka.
• Jharkhand Bijli Vitran Nigam cancelled contract with IL&FS Engineering & Construction Company over electrification works projects citing slow progress and failure of the project in Jharkhand.
• IRB Infra Developers arm’s HAM project received appointed date from NHAI for Vadodara-Mumbai Expressway, with cash outlay of Rs 2043 crore.
• Maharashtra Seamless said it will acquire 100 percent stake in United Seamless Tabulaar for Rs 477 crore. For this arrangement the company had received NCLT nod on Jan. 21.
• Walchandnagar Industries entered into an agreement with ISRO to manufacture component for the Polar Satellite Launch Vehicle Program for Rs 96 crore ( with an escalation clause) for the next three years.
• Godwari Power and Ispat, on the scheme of amalgamation of company with Jagdamba Power & Alloys, the latter’s shareholders disapproved the scheme as the exchange ratio was arrived at Rs 508 per share citing price fall of the share prices thereby making the transaction unviable.
• Prabhat Dairy reiterated that it intends to share a substantial portion of the proceeds from the sale with shareholders after meeting tax and transaction costs. It says it is evaluating all potential options available to return capital to shareholders in the most optimal manner. The proceeds being referred considers those receivable by the company and its subsidiary Cheese Land Agro (India) Pvt. Ltd.

• There are monetary-policy decisions for the Bank of Japan (Wednesday), the Bank of Korea and the European Central Bank (both Thursday).

• Brent crude halted a two-day rally, ended 1.98 percent lower at $61.50 per barrel. It was trading a little changed today.
• West Texas Intermediate crude declined 0.4 percent to $52.80 a barrel.
• Gold rose 0.7 percent to $1,285 an ounce.

London Metal Exchange

• Aluminium ended 1.67 percent higher.
• Tin halted a three-day rally, down 1.09 percent.
• Nickel ended lower for the second day, down 1.82 percent.
• Lead ended higher for the third day, up 0.35 percent.
• Zinc halted a four-day rally, down 0.46 percent.
• Copper ended lower for the second day, down 0.77 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, parred losses and rose 0.15 percent to 10.948 as of 8:20 a.m.

Asian stocks reversed early losses Wednesday as traders juggled continuing doubts about the prospects for Sino-American trade progress with signs of China stimulus and moves in Congress to end the U.S. government shutdown.

Shares in Hong Kong, China and Korea led the turnaround, even after all major U.S. benchmarks declined.

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