Nifty Ends At Over Seven-Month Low; Yes Bank Top Loser

India's NSE Nifty 50 Index fell for the second day in a row, to its lowest level in over seven months, dragged by weakness in IT firms like TCS and HCL Technologies, and banking blue-chips including Yes Bank and Axis Bank.

The S&P BSE Sensex fell 1.01 percent or 341 points to 33,349 and the NSE Nifty 50 Index dropped 0.94 percent or 95 points to 10,030.

For the week, Sensex fell 2.82 percent and the Nifty 50 Index declined 2.65 percent.

Fifteen of 19 sector gauges compiled by BSE ended lower led by the S&P BSE IT Index's 2 percent drop. On the other hand, the S&P BSE Energy Index was top gainer, up 0.6 percent.

Dr. Reddy's Laboratories Ltd.’s profit nearly doubled year-on-year to Rs 504 crore in the second quarter of the financial year, exceeding analyst estimates of Rs 354 crore.

Revenue rose 7.2 percent to Rs 3,817 crore, also higher than the Rs 3,783 crore estimate.

Sales in North America rose 0.4 percent to Rs 1,426 crore while in Europe jumped 21 percent to Rs 191 crore.

Earnings before interest, tax, depreciation and amortisation rose 25.5 percent year-on-year to Rs 864 crore while Ebitda margin rose to 22.8 percent from 19.4 percent in the same quarter last year.

Shares of the country’s largest cigarette maker extended decline and fell as much as 4 percent, the most since Oct. 5, to Rs 276 after it reported July-September quarter earnings.

Key earnings highlights:

• Revenue up 7 percent at Rs 11,069 crore versus Rs 10,314 crore (YoY); Estimate of Rs 10,720 crore
• Net profit up 12 percent at Rs 2,955 crore versus Rs 2,640 crore (YoY); Estimate of Rs 2,880 crore
• Ebitda up 12 percent at Rs 4,205 crore versus Rs 3,761 crore (YoY)
• Margin at 38 percent versus 36.5 percent (YoY)

Shares of the Mumbai-based agricultural chemicals maker erased gains and fell as much as 1.6 percent to Rs 590 after its profit missed estimates in July-September quarter.

Key earnings highlights:

• Net profit up 14 percent at Rs 270 crore versus Rs 237 crore (YoY); Estimate of Rs 386 crore
• Revenue up 13 percent at Rs 4,257 crore versus Rs 3,770 crore
• Ebitda up 17 percent at Rs 839 crore versus Rs 719 crore
• Margin at 19.7 percent versus 19.1 percent
• Exceptional loss of Rs 52 crore

Shares of the Raipur-based steel maker rose as much as 7.83 percent to Rs 412 after its profit more than doubled in July-September quarter.

Key earnings highlights:

• Net profit up 139 percent at Rs 67 crore versus Rs 28 crore (YoY)
• Revenue up 45 percent at Rs 805 crore versus Rs 555 crore (YoY)

Shares of Equitas Holdings and Ujjival Financial Services extended decline after the Reserve Bank of India has clarified that promoters of small finance banks must list their banking units separately within three years of operation in line with the regulator’s licensing requirements.

• Equitas Holdings fell as much as 34 percent to Rs 85.10
• Ujjivan Financial Service slumped as much as 24 percent to Rs 167.35

Indian equity benchmarks came off intraday low levels led by gains in Reliance Industries, HDFC, Tata Motors and ICICI Bank.

The Sensex fell 0.2 percent or 72 points to 33,617 and the NSE Nifty 50 Index declined 0.17 percent or 19 points to 10,106.

Thirteen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Consumer Durables Index's 1.8 percent gain. On the other hand, the S&P BSE IT Index was top loser, down 1.4 percent.

The overall breadth was neutral as 1,200 were advancing while a little over 1,100 were declining on the BSE.

Nifty has strong support at 10,000 and next two-three quarters will be challenging for the equity markets, says Nilesh Shah of Envision Capital told BloombergQuint in an interview.

Key highlights of the conversation:

• 10,000 for Nifty could act as a strong support level
• Next 2-3 quarters to be challenging for equity markets
• Expect price correction to take place in good quality names in next round of sell-off
• Expect FY20 to be better for commodity stocks; margin pressure to continue in FY19
• Cable space is bet avoided; uncertainty prevails
• IT sector looks attractive after recent correction and rupee weakness
• Engineering, capital goods and cement companies make for an attractive investment options

Ambuja Cements had more shares trade in block deals after 60 lakh shares changed hands in morning deals.

Ambuja Cements had additional 48 lakh shares changed hands on the National Stock Exchange in two separate block deals of 38 lakh shares and 10 lakh shares. Stock down 1 percent at Rs 190.50.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based financial services company held on to gains and rose as much as 5 percent to Rs 140.55 after it reported September quarter earnings.

Key earnings highlights:

• Net profit up 47 percent at Rs 272 crore versus Rs 185 crore (YoY)
• Total revenue at Rs 2,650 crore versus Rs 2,017 crore (YoY)

• Great Eastern Shipping: The Mumbai-based cargo ship operator rose as much as 4.5 percent to Rs 300.50. Trading volume was 28 times its 20-day average.
• Schaeffler India: The Mumbai-based ball and bearings maker fell as much as 0.4 percent to Rs 4,784. Trading volume was 12 times its 20-day average.
• Carborundum Universal: The Chennai-based non-wood building materials maker fell as much as 2.8 percent to Rs 360.50. Trading volume was 12.2 times its 20-day average.
• SH Kelkar: The Mumbai-based chemical maker fell as much as 1.5 percent to Rs 173.50. Trading volume was 9 times its 20-day average.

Nifty Bank's 25,000 strike price call option contract was the most active option contracts on the National Stock Exchange.

Premium on the contract fell 43 percent to Rs 132.65. Over 2.45 lakh shares were added to the open interest which stood at 7.01 lakh shares.

Shares of Indiabulls group companies declined in Friday’s trade.

• Indiabulls Housing Finance fell 6.4 percent to Rs 645.25 per share.
• Indiabulls Real Estate fell as much as 4.8 percent to Rs 70.15 apiece.
• Indiabulls Ventures declined 5 percent to Rs 370 per share.

Shares of the Mumbai-based textile maker rose as much as 8.34 percent to Rs 670 after it reported July-September quarter earnings.

Key earnings highlights:

• Revenue up 16 percent at Rs 1,848 crore.
• Net profit up 5 percent at Rs 63 crore.
• Ebitda up 35 percent at Rs 186 crore.
• Margin at 10.1 percent versus 8.6 percent.

• Ambuja Cements has 60 lakh shares change hands in two blocks on the National Stock Exchange.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based steel products maker rose as much as 11.57 percent, the most in over three months, to Rs 48.70.

Kridhan Infra informed exchanges that its arm — Vijay Nirman Company Pvt. Ltd. secured order worth Rs 167 crore for civil construction work.

Shares of the Ahmedabad-based mining company fell as much as 9.32 percent, the most in nearly two years, to Rs 81.25 after it reported loss in July-September quarter.

Key earnings highlights:

• Revenue down 12 percent to Rs 332 crore versus Rs 377 crore (YoY)
• Net loss of Rs 222 crore versus profit of Rs 113 crore
• Ebitda down 14 percent to Rs 114 crore
• Margin at 34.2 percent versus 35 percent

Shares of Equitas Holdings and Ujjivan Financial Services fell as much as 28 percent and 19.09 percent each respectively, the most since their debut on stock exchanges.

The Reserve Bank of India has clarified that promoters of small finance banks must list their banking units separately within three years of operation in line with the regulator’s licensing requirements.

The RBI’s clarification was disclosed by Ujjivan Financial Services Ltd. and Equitas Holdings Ltd. in separate statements to the stock exchanges. Both groups have listed the holding companies, which run the small finance banks.

Shares of the Mumbai-based private sector lender fell as much as 15 percent, the most in a month, to Rs 168.60 after its profit missed Bloomberg consensus estimates in September quarter.

Key earnings highlights:

• Net Interest Income up 27 percent at Rs 2,407 crore.
• Net profit down 4 percent at Rs 965 crore.
• Provisions up 50 percent at Rs 940 crore.
• GNPA at 1.60 percent versus 1.31 percent (QoQ).
• NNPA at 0.84 percent versus 0.59 percent (QoQ).

Meanwhile, brokerages have maintained their stance on the stock with CLSA cutting target price to Rs 300 from Rs 450, implying a potential upside of 51 percent from yesterday's closing price.

Indian equity benchmarks edged lower paced by losses in Yes Bank, Maruti Suzuki, Indiabulls Housing Finance and NTPC.

The S&P BSE Sensex fell 0.7 percent or 234 points to 33,468 and the NSE Nifty 50 Index dropped 0.7 percent or 78 points to 10,043.

All sector gauges compiled by BSE were trading lower led by the S&P BSE Metal Index's 1.8 percent drop. Power, Realty, Utilities and Basic Materials Indices also fell over a percent each.

The mid- and small-cap stocks were also facing selling pressure as the S&P BSE MidCap Index declined 0.4 percent and the S&P BSE SmallCap Index fell 0.6 percent.

The Indian rupee fell for the second day and depreciated as much as 0.25 percent to 73.46 against the U.S. dollar.

Indian sovereign bonds are headed for the third week of gains amid easing crude prices and the central bank’s liquidity injection via open market operations.

Lower oil prices are likely to offer relief to investors who are expecting the central bank to stay on pause in its rate tightening cycle amid expectations headline inflation will hover around the 4 percent mark in coming months.

The yield on the benchmark 10-year bonds fell one basis point to 7.87 percent on Thursday and is down five basis points this week. And in a sign that sentiment is probably turning for the better, international funds were net buyers of $296.9 million of rupee bonds on Oct. 24, the biggest purchase since March, according to exchange data.

F&O Cues

• Nifty November futures closed trading at 10174, premium of 50 points.
• Nifty November open interest up 28 percent; Nifty Bank October open interest up 68 percent.
• Max open interest for October series at 11,000 Call (open interest at 19.9 lakh shares).
• Max open interest for October series at 10,000 Put (open interest at 30.7 lakh shares).

Put Call Ratio

• Nifty PCR at 0.97 from 1.1.
• Nifty Bank PCR at 0.85 from 0.82.

On Yes Bank

CLSA

• Maintained ‘Buy’; cut price target to Rs 300 from Rs 450, implying a potential upside of 51 percent from the last regular trade.
• Earnings miss on higher provisioning.
• Cut earnings estimates to build-in higher credit costs and slower top-line.
• Succession clarity key; Capital will force consolidation near term.

Macquarie

• Maintained ‘Outperform’; cut price target to Rs 310 from Rs 416, implying a potential upside of 56 percent from the last regular trade.
• GNPA rose led by lumpy slippages.
• Cut estimates largely due to cut in growth and an increase in credit costs.
• Ruling out chances of near term capital raise.

JPMorgan

• Maintained ‘Neutral’; cut price target to Rs 225 from Rs 260, implying a potential upside of 13 percent from the last regular trade.
• September quarter review: Earnings miss on bond provisions.
• Loan growth remains solid; Slippages increased sharply almost doubling on a sequential basis.
• Leadership and capital two key constraints on valuations.

On JSW Steel

CLSA

• Downgraded to ‘Underperform’ from ‘Buy’; cut price target to Rs 375 from Rs 410, implying a potential upside of 6 percent from the last regular trade.
• Ebitda beat estimates, margins soften sequentially.
• Steel spread contracting from recent highs; expect softer margins in the second half of the current financial year.
• High-priced acquisition and potential iron ore constraints post March 2020 pose risk.

Macquarie

• Maintained ‘Neutral’; cut price target to Rs 362 from Rs 411, implying a potential upside of 2 percent from the last regular trade.
• September quarter’s Ebitda was ahead led by better realisation with higher domestic sales mix.
• See margin headwinds ahead with higher raw material and stagnant steel prices.
• Cut price target on lower target multiple, uncertainty around inorganic growth and equity dilution.

On Maruti Suzuki

CLSA

• Maintained ‘Buy’ with a price target of Rs 9,200, implying a potential upside of 37 percent from the last regular trade.
• September quarter’s Ebitda and net profit were broadly inline.
• Do not see much risk to Maruti’s volume.
• Near-term pressures but valuations more conducive.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 9,000, implying a potential upside of 34 percent from the last regular trade.
• Solid fundamentals outweigh near-term risks.
• Multiple levers to mitigate cost inflation medium-term.
• Expect Maruti to grow ahead of industry given its strong rural network.

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 8,725, implying a potential upside of 30 percent from the last regular trade.
• Reported inline results; Management maintained 2018-19 outlook.
• Expect Maruti to continue to get engineering payout from Suzuki due to new launches.
• Company expects volumes to recover and maintained double-digit volume growth outlook for the current financial year.

On BHEL

Jefferies

• Maintained ‘Underperform’ with a price target of Rs 70, implying a potential downside of 0.5 percent from the last regular trade.
• September quarter results came in below expectations led by higher raw material expenses.
• Remain negative on BHEL as there is no change in the outlook.
• Announced equity buyback at Rs 86 does not move the needle.

Deutsche Bank Research

• Maintained ‘Buy’; cut price target to Rs 99 from Rs 110, implying a potential upside of 41 percent from the last regular trade.
• Negative operating leverage, amidst rising power demand and tariffs.
• Medium-term thesis intact, though near-term transition pains.
• Find valuation support due to buyback at premium.

More Calls

Macquarie on Ujjivan Financial

• Maintained ‘Outperform’ with a price target of Rs 460, implying a potential upside of 109 percent from the last regular trade.
• RBI denied IPO exemption for small finance bank.
• Negative for Ujjivan Financial as an IPO of SFB will result in dual listing and attract a Hold Co. discount.
• Due date for this for Ujjivan is January 2020 and for Equitas is September 2019.
• Stock could fail to attract new buyers if SFB lists separately.
• Stock now suitable only for truly long-horizon investors willing to ride out this hoopla.

Credit Suisse on Bharti Airtel

• Maintained ‘Neutral’ with a price target of Rs 400, implying a potential upside of 35 percent from the last regular trade.
• See further sharp slide in India business metrics.
• Deferred tax benefits helped return to profit.
• See an upside risk to capex, which does not bode well for leverage.

CLSA on PVR

• Maintained ‘Buy’; cut price target to Rs 1,540 from Rs 1,690, implying a potential upside of 20 percent from the last regular trade.
• Strong all-round performance; Cost pressure a bit concerning.
• SPI Cinema acquisition, online platform deal fortifies leadership position.
• Cut EPS estimates by 2-3 percent to account for higher capex and SPI acquisition.

• Bharat Financial Inclusion: Route One Fund buys 8 lakh shares or 0.6 percent equity at Rs 914.17 each.
• Mastek: KIFS Enterprises sold 2 lakh shares or 0.8 percent equity at Rs 405.25 each.

Yes Bank (YoY)

• Net Interest Income up 27 percent at Rs 2,407 crore.
• Net profit down 4 percent at Rs 965 crore.
• Provisions up 50 percent at Rs 940 crore.
• GNPA at 1.60 percent versus 1.31 percent (QoQ).
• NNPA at 0.84 percent versus 0.59 percent (QoQ).

Also Read: Q2 Results: Yes Bank’s Profit Misses Estimates On Higher Provisions

Bharti Airtel (QoQ)

• Revenue up 2 percent at Rs 20,423 crore.
• Net Profit up 22 percent at Rs 119 crore.
• Ebitda down 7 percent at Rs 6,244 crore.
• Margin at 30.6 percent versus 33.5 percent.
• India ARPU at Rs 101 versus Rs 105.

Also Read: Q2 Results: Bharti Airtel Posts Surprise Profit On Deferred Tax Gain

Biocon (YoY)

• Revenue up 36 percent at Rs 1,321 crore.
• Net profit up 5.1 times at Rs 355 crore.
• Ebitda up 86 percent at Rs 340 crore.
• Margin at 25.7 percent versus 18.9 percent.
• Exceptional gain of Rs 189 crore.

Liberty Shoes (YoY)

• Revenue up 32.6 percent to Rs 166.9 crore.
• Ebitda up 17.8 percent to Rs 10.9 crore.
• Margin at 6.5 percent versus 7.3 percent.
• Profit at Rs 2.02 crore versus Rs 1.2 crore.

L&T Technologies (YoY)

• Revenue up 40.6 percent at Rs 1,226.1 crore.
• Ebitda up 66.5 percent at Rs 228.8 crore.
• Ebitda Margin at 18.1 percent.
• Profit up 55.7 percent at Rs 191 crore.

Tata Coffee (YoY)

• Revenue up 19.3 percent at Rs 455.9 crore.
• Net profit up 11.4 percent at Rs 25.4 crore.
• Ebitda down by 18 percent at Rs 58.8 crore.
• Margin at 12.8 percent versus 18.7 percent.

Ceat (YoY)

• Revenue up 15 percent to Rs 1,755 crore.
• Ebitda down 9 percent to Rs 159 crore.
• Ebitda Margin at 9.1 percent versus 11.5 percent.
• Net profit down 18 percent to Rs 63.2 crore.

Gujarat Mineral Development Corporation (YoY)

• Revenue down 12 percent to Rs 332 crore.
• Ebitda down 14 percent to Rs 114 crore.
• Margin at 34.2 percent versus 35 percent.
• Net Loss of Rs 222 crore.

JM Financial (YoY)

• Revenue up 27 percent to Rs 960 crore.
• Net profit up 14 percent to Rs 240 crore.
• GNPA at 0.5 percent versus 0.6 percent (QoQ).
• NNPA at 0.4 percent versus 0.5 percent (QoQ).

Kewal Kiran Clothing (Standalone; YoY)

• Revenue down 9 percent to Rs 152 crore.
• Ebitda down 2 percent to Rs 48 crore.
• Margin at 31.4 percent versus 29.2 percent.
• Net Profit down 4.6 percent to Rs 34 crore.

Crompton Greaves Consumer Electricals (YoY)

• Revenue up 8 percent at Rs 1,038 crore.
• Net profit up 8.5 percent at Rs 77 crore.
• Ebitda up 2.5 percent at Rs 124 crore.
• Margin at 11.9 percent versus 12.6 percent.

Shriram City Union Finance (YoY)

• Net Interest Income up 17 percent at Rs 1,020 crore.
• Net profit up 6 percent at Rs 249 crore.

Raymond (YoY)

• Revenue up 16 percent at Rs 1,848 crore.
• Net profit up 5 percent at Rs 63 crore.
• Ebitda up 35 percent at Rs 186 crore.
• Margin at 10.1 percent versus 8.6 percent.

Shriram Transport Finance (Q2, YoY)

• NII up 24.6 percent at Rs 2,055 crore.
• Net profit up 22.6 percent at Rs 609 crore.
• NIM on AUM at 7.52 percent versus 7.44 percent.
• Core operating profit was above 23.5 percent.
• Provisions at Rs 683 crore versus Rs 523 crore (QoQ).

Nifty Earnings Preview

Dr Reddy's Lab (Q2, YoY)

• Revenue seen 7 percent higher at Rs 3,783 crore.
• Net profit seen 21 percent higher at Rs 345 crore.
• Ebitda seen 8 percent higher at Rs 732 crore.
• Margin seen at 19.3 percent versus 19.0 percent.

ICICI Bank (Q2, YoY)

• NII seen 8 percent higher at Rs 6,163 crore.
• Net Profit seen 54 percent lower at Rs 950 corre.
• Other income is expected to decline sequentially due to muted treasury gain.
• Credit cost to remain high due to ramp up in provision coverage ratio, ageing of existing NPAs and provisions towards below investment grade exposure.

ITC (Q2, YoY)

• Net sales 4 percent higher at Rs 10,722 crore.
• Ebitda seen 9.5 percent higher at Rs 4118 crore.
• Margin seen at 38.4 percent versus 36.5 percent.
• Profit seen 9.1 percent higher at Rs 2879 crore.

UPL (Q2, YoY)

• Revenue seen 9.8 percent higher at Rs 4140 crore.
• Ebitda seen 14.1 percent higher at Rs 820.5 crore.
• Margin seen at 19.8 percent versus 19.1 percent.
• Net Profit seen 63 percent higher at Rs 386 crore.

Other Earnings To Watch

• Bharat Electronics
• Capital First
• Kokuyo Camlin
• Mahindra Lifespace Developers
• Nestle India
• Nucleus Software Exports
• PI Industries
• Shoppers Stop
• Shriram Asset Management

• RBI clarified that Ujjivan Financial and Equitas Holdings must list small finance bank separately.
• Ruia family offered to pay all creditors to retain ownership of Essar Steel.
• Shalimar Paints to issue 3.37 crore equity shares via rights issue at a price of Rs 64.50 per share. Rights entitlement ratio fixed at 3:2.
• ArcelorMittal said that the law did not permit Ruia’s offer to withdraw Essar Steel from insolvency.
• Kridhan Infra arm received construction order worth Rs 167 crore.
• Tata Teleservices’ board said it was considering an extension of redeemable preference shares on Nov. 15.
• JSW Steel’s board approved raising Rs 5,000 crore through a rights issue. Also, it will merge four subsidiaries with itself.
• IDFC Bank said that only NCLT approval pending for Capital First merger.
• Jubilant Industries said it will offer up to 18 lakh equity share and up to 13 lakh convertible warrants to the promoters/ members of promoter group on a preferential basis.
• IL&FS transportation said it was considering selling some road projects stakes: Bloomberg News.

• West Texas Intermediate crude slid 0.7 percent to $66.89 a barrel.
• Brent crude traded 0.5 percent lower at $76.50 per barrel.
• Gold was steady at $1,231.84 an ounce.

Shanghai Exchange:

• Copper snapped a two-day decline, up 0.5 percent.
• Zinc snapped a three-day winning streak, down 0.9 percent.
• Steel traded higher for the second day, up 1 percent.
• Aluminium traded lower for the second day, down 0.2 percent.
• Rubber snapped a three-day losing streak, up 0.6 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.3 percent to 10,153 as of 8:40 a.m.

Asian stocks began Friday mixed at the end of a torrid week that dragged the region’s equities deeper into a bear market. Japan’s Topix index climbed, though it’s still on track for a slide of almost 5 percent this week. South Korean shares slipped and in Australia, stocks were flat.

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