Sensex, Nifty End Lower For Third Day As Earnings Off To Shaky Start

India’s equity benchmarks extended declines into a third day as most of the nation’s largest companies quarterly earnings posted so far have missed estimates.

The S&P BSE Sensex shed 0.68% to 52,198.51, and NSE Nifty 50 Index posted losses of similar magnitude to 15,632.10

The broader markets underperformed their larger peers. The S&P BSE MidCap shed 1.28% while the S&P BSE SmallCap declined by 1.44%. All the 19 sectoral indices declined with S&P BSE Realty and S&P BSE Metal shedding 2.4%.

The market breadth was skewed in favour of the bears. About 1,138 stocks advanced, 2,096 stocks declined and 109 remained unchanged on the BSE.

In the first quarter earnings season, six of the eight Nifty 50 members that have announced results so far fell short of analysts’ estimates.

Bajaj Finance Ltd. posted a worse-than-expected 4% rise in first-quarter profit on muted earnings from lending and higher provisioning as the consumer financier sought to balance asset quality risks and fresh lending amid India’s deadly second coronavirus wave.

The shadow lender’s consolidated net income was Rs 1,000 crore in the three months through June, compared with Rs 960 crore a year ago, according to a statement Tuesday. That lagged an average estimate of Rs 1,370 crore based on a Bloomberg survey of eight analysts.

While the recent coronavirus wave has hit Bajaj Finance’s lending due to the curbs on physical movement, analysts expect the financier to accelerate growth on the back of its digital infrastructure.

The IPO was subscribed 94.43 times as of 2:00 p.m. on July 20.

• Institutional investors: 55.46 times

• Non-institutional investors: 293.41 times

• Retail investors: 31.42 times

Indraprastha Gas Ltd. is lower for the eighth straight day, on track for the longest losing streak since the period ended Nov. 9, 2015.

Indraprastha Gas has lost a total of 6.8% during the streak while today, the stock fell 1.9% to Rs 539.45. Stock advanced 29% in the past 52 weeks. The Sensex gained 40%.

The company trades at 26 times its estimated earnings per share for the coming year. Of the 36 analysts covering Indraprastha Gas, 27 recommend a 'buy', 4 'hold' and 5 suggest a 'sell'. The average of 12-month consensus price targets implies an upside of 8.4%, according to Bloomberg data.

Asian Paints reported net income for the first quarter that met the average analyst estimate.

• Net income Rs 582.22 crore vs. Rs 814.71 crore QoQ, estimate Rs 580 crore

• Revenue Rs 5,585.36 crore, -16% QoQ, estimate Rs 4,837 crore

• EBITDA down 31% at Rs 913.56 crore Vs Rs 1,318.26 crore QoQ (Bloomberg estimate Rs 938.6 crore)

• Margin at 16.4% Vs 19.8% (Bloomberg Est: 19.4%)

• UltraTech Cement options volume 3.8x the 20-day average, with 45,967 calls changing hands vs 9,695 puts

  • Stock up 2.7%, volume 2x the 20-day average for this time of day

• HCL Tech options volume 3.2x the average, with 53,086 calls vs 27,427 puts

  • Stock down 2.1%, volume 2x the average

• Asian Paints options volume 3.1x the average, with 31,377 calls vs 9,230 puts

  • Stock up 1.6%, volume 1.3x the average

• Shree Cement options volume 3x the average, with 1,967 calls vs 101 puts

  • Stock up 0.9%, volume 1.1x the average

• Nestle India options volume 2x the average, with 1,433 calls vs 85 puts

  • Stock up 0.3%, volume 0.5x the average

• Nifty 50 options volume 0.8x the average, with 6.51 million calls vs 6 million puts; gauge down 0.6%

  • Cost of hedging as measured by the 90/110, one-month skew ranks in the 6th percentile over the past year

• Nifty Bank index options volume 0.7x the average, with 10.2 million calls vs 11.3 million puts; gauge down 1.6%

  • 90/110, one-month skew in the 17th percentile

• India VIX Index up 4.4%

India's stock benchmarks were set for a third day of losses amid weak global cues, concerns around rising Covid cases and a disappointing start to the quarterly earnings.

The S&P BSE Sensex shed 0.6% to 52,240.58, and NSE Nifty 50 Index posted losses of similar magnitude to 15,642.70.

The broader markets underperformed their larger peers. The S&P BSE MidCap shed 1.24% while the S&P BSE SmallCap declined by 1.38%.

All the sectoral indices barring S&P BSE FMCG posted losses with S&P Power index shedding over 2% and S&P BSE Telecom declining 1.89%.

The market breadth was skewed in favour of the bears. About 931 stocks advanced, 2,190 declined and 112 remained unchanged on the BSE.

Shares of Astral Ltd shed 3.52%, the steepest decline in 14 weeks, to Rs 1,985.00 apiece. Over the past 5 sessions, Shares of Astral have fallen by 3.3%.

Astral trades at 85 times its estimated EPS. Out of the 24 analysts tracking the company, seven maintained ‘buy’, six maintained ‘hold’ and 11 analysts maintained ‘sell’ recommendations. The consensus price target of analysts tracked by Bloomberg implied a 15.3% downside.

Shares of Astral have advanced 172% in the past 52 weeks.

Shares of Aegis Logistics jumped as much as 2.74% after Nomura said the benefits of its joint venture with Dutch tank storage company Royal Vopak were significantly underestimated. The stock had declined for the last six sessions.

Nomura maintained its ‘buy’ rating on Aegis Logistics and said that the deal could lead to capex levels thrice of what Aegis would have without the deal. “Without the deal, Aegis could have incurred a growth capex of Rs 1,500 crore over FY23-27F. With the expanded opportunity set, a capex level of Rs 2,500 crore-Rs 4,500 crore is planned,” it said in a note.

It further added that Aegis gains new opportunities in industrial terminals, additional liquids and gas markets not addressed by it. Long-term growth with opportunities in green energy have also been unlocked, since Vopak is an early entrant with strong technology access for green hydrogen storage, it said.

Nomura hiked its target price for Aegis Logistics to Rs 440 from Rs 415, implying a potential upside of 37.5%.

Of the seven analysts tracking the stock, five have a ‘buy’ rating, two suggest a ‘hold’ and none recommend a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies an upside of 19.6%.

The stock has risen 29.1% year-to-date as compared to S&P BSE Sensex’s 10.2% gain.

Shares of Prism Johnson Ltd. gained 4.11% to Rs 145.60 apiece on ratings upgrade by India Ratings and Research Pvt. Ltd.

The credit rating agency has affirmed long-term issuer rating at IND A+ with a stable outlook on Prism Johnson. According to exchange filings by Prism Johnson, the ratings upgrade was due to strong operational and strategic linkages among Prism Johnson and its subsidiaries and the completion of amalgamation of some of the subsidiaries with itself over the last few months.

Out of the 8 analysts tracking the company, 7 maintained ‘buy’ and 1 analyst maintained ‘sell’ recommendation. The consensus target price of analysts tracked by Bloomberg implied an upside of 14.1%.

Shares of the building materials company have added nearly 60% since the union budget on February 1 and nearly 65% for the year so far.

Firms controlled by billionaire Gautam Adani fell for a second day, after the junior finance minister told parliament that some of them are being probed by the country’s markets regulator over compliance with local securities rules.

Besides the Securities and Exchange Board of India, Directorate of Revenue Intelligence, or DRI, is also “investigating certain entities” belonging to the Adani Group for compliance to another set of local laws, junior Finance Minister Pankaj Chaudhary said in response to a lawmaker’s question in the Indian parliament on Monday. Chaudhary didn’t elaborate on the investigations or name the Adani group companies being probed.

Shares of all six listed Adani group companies slipped in early trading today. Adani Total Gas Ltd., Adani Transmission Ltd., Adani Green Energy Ltd. and Adani Power Ltd. declined by 5% in Mumbai. Flagship Adani Enterprises Ltd. fell as much as 3.2%, while Adani Ports & Special Economic Zone Ltd. dropped 2.6%.

Shares of rating agency companies extend their rally to a second session.

Shares of CRISIL added 2.71% to Rs 3203.15 apiece. The rise comes ahead of quarterly earnings for the June quarter due today. The relative strength index on the stock was above 70, indicating that the company may be overbought. Out of the six analysts tracking the company, four maintained ‘buy’ and two maintained ‘sell’ recommendations. The consensus price target of analysts tracked by Bloomberg implies a downside of 27%

Shares of ICRA gained nearly 5.33% to Rs 4011.95 apiece ahead of its ex-dividend date on Friday while shares of CARE Ratings gained nearly 1% to Rs. 731.20 a piece. For the year so far, ICRA added nearly 35% while CARE Ratings gained nearly 39%, respectively.

Shares of ACC Ltd. gained 5.53% to Rs 2,271.00 apiece on the back of April-June quarter earnings.

The cement manufacturer reported 9.5% sequential fall in revenue to Rs 3,884.8 crore from Rs 4,291.9 crore in quarter-ended March, but above Bloomberg estimate of Rs 3,705.3 crore.

Net profit also slipped 4.2% to Rs 533.8 crore from Rs. 557.4 crore QoQ, but exceeded Bloomberg estimate of Rs 453.2 crore.

Ebitda gained 1.8% in the quarter to Rs 874.7 crore from Rs 859.4 crore in the March quarter while margins expanded to 22.5% in June quarter from 20.02% QoQ

Out of the 42 analysts tracking the company, 34 maintained ‘buy’, 6 maintained ‘hold’ and 4 analysts maintained ‘sell’ recommendation. The consensus target price of analysts tracked by Bloomberg implied an upside of 1.2%. Shares of ACC have added nearly 36% in 2021 so far.

Nirmal Bang

• Maintains ‘accumulate’ with a target price of Rs 2,326.

• Improved realization and better-than-expected control on total operating cost aided Ebitda.

• Highest ever Ebitda/mt reported by ACC

• Higher sales of premium products, enhanced retail pricing of products, lower discounts supported Q2CY21 earnings.

• Impact of high fuel cost mitigated by various efficiency projects.

Emkay Global

• Upgrades to ‘buy’ from ‘hold’ with a 12-month target price of Rs 2580.

• Q2CY21 Ebitda growth driven by lower opex/ton, favourable coal mix, efficient logistics, and various cost efficiency actions under project ‘Parvat’.

• Better realisation and lower increase in opex/ton likely.

• Strong earnings to offset the valuation gap of ACC with peers which has widened by around 25% in the last 4 months.

• Government’s investments in infrastructure and cement demand recovery are key growth drivers.

Prabhudas Lilladher

• Recommends buy with a target price of Rs 2,460.

• Limited cost increase despite higher coal/diesel prices and 14% lower volumes.

• Better than expected realisations and lower costs led to the sixth consecutive quarter of beat on consensus estimates.

• Expect further cost reduction of Rs 115-120 per tonne due to upcoming waste heat recovery and upgradation of plants.

• Construction work on Ametha plan in Madhya Pradesh has begun which would likely strengthen market share in one of the most profitable markets for the company.

To read more brokerage views on ACC and cement stocks, click here.

Indian equity benchmarks started trading lower, in line with regional peers, as investors assess the shaky start to the quarterly earnings season.

The S&P BSE Sensex lost as much as 0.5% to 52,307.99, while the NSE Nifty 50 fell by a similar magnitude to 15,681.30. HDFC Bank Ltd. contributed the most to the index decline, decreasing 1.9%. HCL Technologies Ltd. had the largest drop, falling 2.4%.

Seventeen of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by a gauge of power companies.

In India’s earnings season, five of the six Nifty 50 members that have announced results so far fell short of analysts’ estimates. HCL Technologies Ltd. fell 2% after posting profit and sales that missed expectations after yesterday’s market close. Bajaj Finance Ltd. and Asian Paints Ltd. are scheduled to announce results later today.

Just Dial gains 2.2% in pre-market trade after about 13 million shares change hands on BSE, according to data compiled by Bloomberg.

• Trading volume >3.4x 3-month full-day average

• Buyers, sellers not immediately known

Indian sovereign bonds are poised to open higher due to a slide in crude oil, and a decline in U.S. Treasury yields amid concern over the global spread of the delta coronavirus variant.

• USD/INR rose 0.4% to 74.8763 on Monday, the biggest gain in a month

  • Implied opening from forwards suggest spot will start trading around 75.01

• India’s 10-year yields fell 2bps Monday to 6.19%

• The new 10-year will remain in a 6.05-6.15% range in the near term as global market conditions remain favorable due to lower UST yields and crude oil prices, while domestic inflation peaks and near-term supply concerns ease, according to a Kotak Mahindra Bank note

A retreat in global stocks moderated Tuesday and U.S. futures climbed as investors assessed the threat posed to the economic recovery from the spread of the delta coronavirus variant.

Equities fell modestly in Japan and China -- where banks kept the benchmark loan rate steady -- and were little changed in Hong Kong. India's SGX Nifty 50 Index futures for July delivery fell 0.1% to 15,722.50, while MSCI Asia Pacific Index dipped 0.6%. The NSE Nifty 50 Index fell 1.1% Monday to 15,752.40.

U.S. contracts advanced after the S&P 500 fell the most in two months on a reversal of the reopening trade as cyclicals like energy and financial shares slid.

Oil climbed after sinking on an OPEC+ deal to boost supply into 2022. Bitcoin traded just above the closely watched $30,000 level.

Geopolitical jitters also resurfaced on Monday after the U.S., the U.K. and their allies said the Chinese government has been the mastermind behind a series of malicious ransomware, data theft and cyber-espionage attacks against public and private entities -- including the sprawling Microsoft Exchange hack earlier this year.

Back home, HCL Tech, ACC, Nippon Life may react as the companies reported quarterly results after the market closed Monday. Asian Paints, Bajaj Finance, ICICI Prudential, TV18, Network 18 are among the companies scheduled to report earnings Tuesday. HDFC, Bajaj Finance, Bank of India among companies holding their annual shareholders’ meeting. Foreign investors sold net Rs 424 crore of stocks on July 16, according to NSDL website.