Sensex, Nifty Extend Rebound As Tech, Drugmakers Lead

Indian equity benchmarks extended gains for the second day, led by the rally in tech and pharma shares.

The S&P BSE Sensex index closed 0.38 percent higher at 34,865.10 and the NSE Nifty 50 Index ended at 10,512.50, up 0.38 percent.

The market breadth was tilted in favour of buyers. Eight out of 11 sectoral gauges compiled by NSE advanced, led by NSE Nifty Pharma Index's 2.7 percent gain. On the flipside, NSE Nifty Auto Index was the top sectoral loser, down 0.6 percent.

Shares of the gold exporter fell as much as 6.9 percent to trade at over a two-month low at Rs 566.20.

The Relative Strength Index was 27, indicating that the stock may be oversold, according to Bloomberg data. The stock traded at 9.9 times estimated forward earnings per share compared to 13.6 times for the two-year historical average.

Shares of the housing finance company rose as much as 3 percent to Rs 960.20. The company is set to announce its quarterly results for the July-September period today.

The stock traded at eight times estimated forward earnings per share compared to 11.3 times for the two-year historical average, Bloomberg data showed.

Shares of ITC extended gains for the second day and rose as much as 2.9 percent to Rs 282.75.

The company is set to announce its quarterly results for the July-September period on Oct. 26.

The stock has returned 9.1 percent so far this year, compared to a 3.3 percent advance in the Sensex.

MT Educare (Q2, YoY)

• Stock rose as much as 19 percent to Rs 56.
• Revenue down 5.8 percent at Rs 58.2 crore.
• Net profit up 100 percent at Rs 1.15 crore.
• Ebitda down 10.8 percent at Rs 8.3 crore.
• Margin at 14.3 percent versus 15 percent.

TV18 Broadcast (Q2, Consolidated, YoY)

• Stock rose as much as 13.1 percent to Rs 39.75.
• Revenue at Rs 1,198.3 crore.
• Net profit at Rs 167 crore.
• Ebitda at Rs 107.8 crore.
• Figures cannot be made comparable as Viacom18 Media Pvt and IndiaCast Media Distribution Pvt have become subsidiaries with effect from March 1.

Shares of the textile company rose as much as 19.2 percent, the most in over three years to Rs 68.90. The company’s profit jumped 114 percent on a yearly basis during the July-September period, according to its stock exchange notification.

Key earnings highlights (Q2, YoY):

• Net profit up 114.4 percent at Rs 109.14 crore.
• Revenue up 24.2 percent at Rs 1,391.5 crore.
• Ebitda up 82.8 percent at Rs 316.8 crore.
• Margin at 22.7 percent versus 15.4 percent.

Billionaire investor Rakesh Jhunjhunwala added 13.3 lakh shares or 0.4 percent equity of DHFL as of the quarter ended September. Jhunjhunwala currently holds one crore shares or 3.2 percent equity in DHFL.

Shares of the Mumbai-based lender fell as much as 3.6 percent to Rs 1,592.20 after its quarterly profit during the July-September period missed estimates. (more details here).

Key earnings highlights (Q2, YoY):

• Net profit up 4.6 percent at Rs 920.2 crore (Bloomberg Estimate at Rs 1,083 crore)
• NII up 21 percent at Rs 2,203.3 crore.
• Provisions at Rs 590.3 crore versus Rs 350 crore (QoQ), Rs 293.8 crore (YoY).
• Gross NPA at 1.09 percent versus 1.15 percent (QoQ).
• Net NPA at 0.48 percent versus 0.51 percent (QoQ).
• Gross NPA in absolute terms at Rs 1,781.4 crore versus Rs 1,740.6 crore (QoQ).

Shares of Zee Learn rose as much as 9.9 percent to Rs 41. The company's profit declined nearly 40 percent on a sequential basis, according to its stock exchange filing.

Key earnings highlights (Q2, QoQ):

• Net profit down 39.4 percent to Rs 13 crore.
• Revenue up 11.5 percent to Rs 126 crore.
• Ebitda down 21.5 percent to Rs 33.3 crore.
• Margin at 26.4 percent versus 37.5 percent.

Moody’s said that the Indian non-bank financial institutions’ credit profiles would erode significantly if the current liquidity stress is protracted.

“In our base scenario, the authorities will continue to take measures to limit the scope and duration of the prevailing liquidity challenges, while most NBFIs can cope with multi-weeks of tight liquidity conditions,” Moody's Investors Service Vice President Srikanth Vadlamani said. “However, prolonged liquidity distress will significantly erode the NBFIs’ credit standing, and prove negative for the broader economy and structured finance sector.”

India’s wholesale price-based inflation rose in September. The inflation, measured by the Wholesale Price Index, stood at 5.13 percent last month, according to a statement by the Ministry of Commerce and Industry. A Bloomberg poll of economists had estimated it to be around 5 percent.

Shares of the investment services provider snapped a six-day decline, its longest losing streak since Aug. 27. The stock rose as much as 13.6 percent, the most in over five months, to Rs 260.

The stock traded at 9.9 times its last reported book value compared to 13.2 times for a two-year historical average, Bloomberg data showed.

Shares of oil retailers fell as Brent crude prices extended gains for the second day.

Brent crude extended gains for the second day and rose 1.32 percent at $81.49 per barrel.

The U.S. FDA has started the inspection of Lupin Ltd.'s Pithampur (Indore) plant, according to two people familiar with the matter.

E-mail sent to the pharmaceutical company remains unanswered.

Shares of the Mumbai-based lender fell as much as 1.8 percent to Rs 1,622.70. The bank is set to announce its quarterly earnings for July-September period today.

Key earnings preview (Q2, YoY):

• Net profit is seen up 23 percent at Rs 1,083 crore.
• NII is seen up 21 percent at Rs 2,206 crore.
• NIM is expected to be steady (QoQ).

• Indian equity benchmarks traded off-day's low.
• The S&P BSE Sensex Index fell 0.2 percent to 34,670 and the NSE Nifty 50 Index traded at 10,450.
• About 1,045 stocks gained and 584 shares declined on National Stock Exchange.

Shares of the pharmaceutical company rose as much as 5.7 percent to Rs 716.70.

The U.S. court affirmed prior decisions finding Copaxone patents invalid, according to its stock exchange filing.

The stock traded at 16.2 times estimated forward earnings per share compared to 24.9 times for the two-year historical average, Bloomberg data showed.

Shares of the recruitment service provider rose as much as 6.7 percent to Rs 1,583.

The company said that it reduced its stake in Zomato to 27.68 percent from 30.91 percent after Zomato signed a definitive agreement to raise $210 million from existing shareholder Ali Baba Group’s Alipay Singapore Holding.

The stock has returned 11.9 percent so far this year compared to a 3 percent advance in Sensex.

Shares of the private lender rose as much as 4 percent to Rs 486.

The bank got the SEBI’s exemption on one-year lock-in in equity shares held by promoter shares after the IPO. The Reserve Bank of India had imposed penalties on the Bank for not diluting promoter shareholding in line with rules.

The rise traded 26.7 percent higher since its listing.

Shares of the electricity supplier rose as much as 5.4 percent to Rs 950.

The company plans to go ahead with part demerger plan which will result into three instead of earlier planned four businesses. It will continue to seek the PPA actively and eventually demerge the power generation and distribution businesses.

At present, the company will keep its power generation and distribution businesses in a single entity and demerger the retail and venture companies.

Each shareholder holding 10 shares of CESC to get six shares in retail and two shares in venture company. The record date for eligibility is set at Oct. 31.

Shares of the D-Mart operator fell as much as 6 percent to Rs 1,325.10. The company’s September quarter’s profit missed the analysts' consensus estimate tracked by Bloomberg.

Key earnings highlights (Q2, YoY):

• Revenue up 38 percent at Rs 4,872 crore.
• Net profit up 18 percent at Rs 226 crore.
• Ebitda up 22 percent at Rs 389 crore.
• Margin at 7.9 percent versus 9 percent.

Indian equity benchmarks fluctuated between gains and losses. The S&P BSE Sensex Index traded at little changed at 34,750 as of 9:17 a.m. and the NSE Nifty 50 Index traded at 10,476.

The market breadth was tilted in favour of buyers. Six out of 11 sectoral gauges compiled by NSE declined, led by NSE Nifty Private Bank Index's 0.6 percent fall. On the flipside, the NSE Nifty IT Index was the top sectoral gainer, up 1 percent.

The Indian rupee snapped a three-day rally. The home currency opened at 73.80 against the U.S. dollar. It further depreciated as much as 0.4 percent to 73.87 a dollar.

India’s inflation for the month of September came sharply below estimates, reiterating the view that retail prices may remain benign in the second half of the fiscal year. CPI index rose 3.77 percent last month compared to 4.02 percent in a Bloomberg survey. Today, the wholesale price inflation is scheduled to be released and a Bloomberg survey expects the number at 5 percent. The yield on the 10-year note may stay in a range of 7.95-8.02 percent in the day.

The technical support for the rupee is now at 72.975. The weak trend for Asian equities may weigh on the currency today and dealers see it in range of 72.90-74 a dollar in the session.

F&O Cues

• Nifty October futures closed trading at 10,486, premium of 14 points.
• Nifty October open interest down 2.3 percent; Nifty Bank October open interest up 4 percent.
• Max open interest for October series at 11,000 strike value call option (Open interest at 47.8 lakh shares)
• Max open interest for October series at 10,000 strike value put option (Open interest at 42.1 lakh shares)

F&O Ban

Stocks In Ban: IDBI Bank
New In Ban: Adani Power

Put-Call Ratio

• Nifty PCR at 1.21 versus 1.08.
• Nifty Bank PCR at 1.14 versus 0.92.

On Hindustan Unilever

CLSA

• Maintained ‘Outperform’; cut price target to Rs 1,750 from Rs 1,950, implying a potential upside of 12 percent from the last regular trade.
• Strong Homecare and pick-up in personal care.
• Recent surge in crude oil prices and rupee depreciation risk margins.
• Cut price target due to margin risk and market correction.

Morgan Stanley

• Maintained ‘Underweight’ with a price target of Rs 1,260, implying a potential downside of 12 percent from the last regular trade.
• September Quarter Review: Strong operating margin and expansion continues.
• Continue to expect gradual recovery in underlying volume growth in 2018-19.
• Valuation and potential disruption from small brands a concern.

More Brokerage Calls

B&K on Karnataka Bank

• Maintained ‘Outperform’ with a price target of Rs 130, implying a potential upside of 32 percent from the last regular trade.
• Healthy September quarter led by strong growth and lower Opex.
• NIMs declined mainly on pressure on CoD and lower CASA.
• Entire IL&FS exposure (1 percent of loans) are standard.

IDFC Securities on CESC

• Maintained ‘Outperform’ with a price target of Rs 1,184, implying a potential upside of 32 percent from the last regular trade.
• Restructuring will lead to value unlocking in retail and BPO businesses.
• Dhariwal’s tie-up to help reduce losses in the current financial year.
• Trades at an attractive valuation.

Macquarie on Maruti Suzuki

• Maintained ‘Outperform’; cut price target to Rs 9,000 from Rs 11,500, implying a potential upside of 24 percent from the last regular trade.
• Lower valuation multiple and cut EPS estimates by 6-8 percent for FY19-21 to factor in the rupee depreciation.
• Concerns: increase in cost of ownership, competition, premium valuations and rising input cost.
• Maruti best positioned to mitigate these concerns.

• Larsen & Toubro record date to determine buyback eligibility.

• Just Dial: New York State Common Retirement Fund acquired 4.16 lakh shares or 0.62 percent equity at Rs 471.39 each.

HUL (Q2, YoY)

• Revenue up 11 percent at Rs 9,234 crore.
• Net profit up 19 percent at Rs 1,525 crore.
• Ebitda up 20 percent at Rs 2,012 crore.
• Margin at 21.8 percent versus 20.2 percent.
• Underlying volume growth at 10 percent.

Jay Bharat Maruti (Q2, YoY)

• Revenue up 25.6 percent at Rs 549.8 crore.
• Net profit down 1.2 percent at Rs 16.4 crore.
• Ebitda up 16.1 percent at Rs 48.3 crore.
• Margin at 8.8 percent versus 9.5 percent.

Avenue Supermarts (Q2, YoY)

• Revenue up 38 percent at Rs 4,872 crore.
• Net profit up 18 percent at Rs 226 crore.
• Ebitda up 22 percent at  Rs 389 crore.
• Margin at 7.9 percent versus 9 percent.

AU Small Finance Bank (Q2, YoY)

• Net Interest Income up 46.2 percent at Rs 321.1 crore.
• Net profit up 34 percent at Rs 91.4 crore.
• Provisions at Rs 35 crore versus Rs 35.1 crore (QoQ).
• GNPA at 2.03 percent versus 2.17 percent (QoQ).
• NPA at 1.28 percent versus 1.38 percent (QoQ).

Nifty Earnings To Watch

• IndusInd Bank
• Indiabulls Housing Finance

Other Earnings To Watch

• Delta Corp
• Network18
• Pitti Engineering
• Reliance Industrial Infrastructure
• South Indian Bank
• Zee Learn
• Zee Media Corporation
• MT Educare
• Monnet Ispat & Energy
• Trident
• TV18 Broadcast

• Emami Cement files for Rs 1,000 crore IPO with SEBI. The IPO comprises fresh issuance of shares worth Rs 500 crore. The company said net proceeds raised through the issue will be used for re-payment of certain indebtedness and for other general corporate purposes.

(Source: PTI)

• 12 noon: India September wholesale prices inflation (YoY), estimate 5.0 percent, prior 4.53 percent.
• India September trade balance, estimate. $17.35 billion deficit, prior $17.39 billion deficit
  • India September exports YoY, prior 19.21 percent.
  • India September imports YoY, prior 25.4 percent.

• 8K Miles Software Services said that 25.7 lakh shares, representing 8.42 percent of total equity holding held by promoter Suresh Venkatachari in his demat accounts held with Quantum Global Securities Ltd. and Kumar Share Brokers Limited, had been wrongfully and illegally transferred through off-market transactions on various dates to various parties without his knowledge/consent. The company also informed that the promoter had taken legal action and filed a police complaint on Sept.17 against the aforementioned parties and others for fraudulent and unlawful transactions by wrongfully and illegally transferring his shares of the Company.
• Bandhan Bank got the SEBI’s exemption on one-year lock-in in equity shares held by promoter shares post the IPO. The Reserve Bank of India had imposed penalties on the Bank for not diluting promoter shareholding in line with rules.
• Info Edge said that its stake in Zomato reduced to 27.68 percent from 30.91 percent after Zomato signed a definitive agreement to raise $210 million from existing shareholder Ali Baba Group’s Alipay Singapore Holding.
• Indian Oil Corporation Chairman Sanjiv Singh said that the company will not stop its aviation turbine fuel supply to Air India. He said that the national carrier was paying for less fuel than it buys on a daily basis. (Bloomberg News)
• Saregama India set up its arm in UAE to start business of distribution of music players and pre-recorded songs player ‘Carvaan’ and dealing with related music and films right in Gulf countries and other geographies.
• CESC to go ahead with part demerger plan which will result into three instead of earlier planned four businesses. For now the company to keep its power generation and distribution businesses in single entity and demerger the retail and venture companies. Each shareholder holding 10 shares of CESC to get six shares in retail and two shares in venture company. Record date for eligibility is set at Oct. 31. It will continue to actively seek the PPA and eventually demerge the power generation and distribution businesses.
• NALCO board approved share buy back of 67.3 crore equity shares representing 3.48 percent of the equity paid-up share capital at a price of Rs 75 apiece. The company will spend a maximum of Rs 504.8 crore in the buy back
• United Breweries forayed into a new line business of non-alcoholic beverages segment with launch of ‘Kingfisher Radler’. The company invested Rs 12 crore in the product for the carbonated malt based non-alcoholic beverage. The company also confirmed that officers from the Director General’s Office of Competition Commission of India visited the company seeking certain business-related information on Oct. 10. The company said that it is currently reviewing its legal risks and potential implications.
• French energy giant Total is in talks to buy up to half of Adani Group's stake in LNG projects in Gujarat and Odisha. The group will also buy stake in an under-construction LPG import facility and in its city gas projects, sources privy to the development told PTI.

• FPIs remain in sell-off mode; pull out Rs 26,600 crore in two weeks.
• Lagarde expects more market volatility with trade trouble.
• Emerging-Market bulls start to overtake the bears, survey shows.
• Prime Securities’ Jayakumar says pharma a safe bet amid volatility.
• CPI inflation stays below 4% as food prices remain in check.

• West Texas Intermediate crude rose 1.1 percent to $72.15 a barrel.
• Brent crude traded 1.3 percent higher at &81.50 per barrel.
• Gold rose 0.2 percent to $1,220.50 an ounce.

Shanghai Exchange:

• Copper traded higher for the second day, up 0.5 percent.
• Zinc snapped a two-day decline, up 0.6 percent.
• Steel extended gains for the second day, up 0.6 percent.
• Aluminium snapped a three-day decline, up 0.1 percent.
• Rubber snapped a three-day decline, up 0.6 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, erased early gains and fell 0.1 percent as of 8:30 a.m.

A rebound in global equities Friday saw no traction at the start of the week, with markets in Asia dropping on Monday. Equities in Japan, Hong Kong and Australia bore the brunt as a risk-off mood returned in choppy trading, following a weekend of warnings on global economic fragility from finance chiefs meeting at an annual IMF gathering.

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