Sensex, Nifty Halt 3-Week Advance; Tata Motors DVR Worst Performer

Indian equity benchmarks ended little changed as gains in construction major Larsen & Toubro and private sector lenders were offset by losses in energy and pharma shares. On weekly basis, the benchmarks snapped three weeks of gains.

The S&P BSE Sensex rose 0.08 percent to 31,687 and the NSE Nifty 50 Index edged 0.05 percent higher to 9,935.

Thirteen out of 19 sector gauges compiled by the BSE Ltd ended lower with the S&P BSE Realty Index's 1.5 percent decline. On the other hand, the S&P BSE Capital Goods Index was the top performer, up 1.88 percent.

“Market is evenly poised and it could head in any direction, but bias looks upwards,” Dinesh Rohira, founder and CEO of 5nance.com told BloombergQuint by phone.

Going into next week Rohira expects non-banking finance companies, select mid-caps and metal stocks to outperform while IT and pharma shares will remain laggards.

The Hyderabad-based drugmaker was locked in 5 percent upper circuit after receiving EIR from U.S. FDA for its formulation facility in Telangana.

The company had received a warning letter from the U.S. FDA in July for the same plant.

The stock has been gaining for the last seven days and has surged 32.2 percent.

• JK Cement: The Kanpur-based cement maker jumped as much as 3.37 percent, the most since August 14, to Rs 1,045.60. Trading volume was 23.3 times its 20-day average.
• Solar Industries: The Nagpur-based explosives maker fell as much as 2.58 percent, the most since August 10, to Rs 860. Trading volume was 40.5 times its 20-day average.
• Gulf Oil Lubricants India: The lubricant oil maker jumped as much as 8.49 percent, the most in over two months, to Rs 845. Trading volume was 28.2 times its 20-day average.
• Finolex Industries: The PVC pipe maker fell as much as 0.98 percent to Rs 601. trading volume was 5.9 times its 20-day average.

A break below 9,850 may lead to a big correction in the Nifty to 9,500 levels, said Rakesh Bansal, vice president at RK Global.

On the flipside, he said a break above 9,960-9,970 could lead to new highs for the benchmark.

“The market is going through a phase of consolidation, but chances of the breakout on the upside is high,” he told BloombergQuint by phone.

Shares of the software solution provider surged as much as 12 percent to Rs 548 after promoters hinted at planning to hike stake in the company.

Shares of the construction company jumped as much as 11.45 percent to Rs 25.30 after the company received an order worth Rs 870 crore for canal work in Maharashtra.

Shares of the infrastructure developer jumped as much as 4.6 percent, the most in since May 25, to Rs 1,181. Trading volume was 5.1 times its 20-day average.

Shares of the Kiran Mazumdar-Shaw promoted firm jumped as much as 5.45 percent, the most since July 19, to Rs 353 after its Malaysian subsidiary Biocon Sdn Bhd has received EU GMP compliance certificate from the Health Products Regulatory Authority of Ireland for its insulin manufacturing facility.

Shares of the drugmaker fell as much as 6.96 percent, the most in 11 months, to Rs 2,069 after the German drug regulator concluded audit of its manufacturing facility in Duvvuda, Vishakhapatanam with zero critical and six major observations.

The company has said that it will submit corrective action plan to authorities.

The metal stocks advanced for sixth straight day. The S&P BSE Metal Index rose as much as 1.5 percent and was the top sectoral gainer.

Shares of the coffee manufacturer surged as much as 13.57 percent, the most in 16 months, to Rs 323 after the Reserve Bank of India hiked foreign investment limit in the company to 40 percent from 24 percent under the Portfolio Investment Scheme.

Shares of the auto maker jumped as much as 1.89 percent, extending its record making run to fourth day, to Rs 33,483.95 after brokerage firm maintained 'Buy' rating and raised its target price to Rs 39,300.

The brokerage in a note said:

• Order inflow remains above production and is growing at 15 percent level
• Enfield’s production capacity will rise 40 percent over FY17-19
• Earnings to grow at CAGR of 29 percent over the next 3 years
• Positive on strong long-term growth outlook and low competitive threat

Indian shares edged higher led by gains in capital goods, auto and metal stocks.

The S&P BSE Sensex rose 0.23 percent to 31,735 and NSE Nifty 50 Index advanced 0.23 percent to 9,952.

Eighteen out of 19 sector gauges compiled by BSE Ltd were trading higher led by the S&P BSE Capital Goods Index's 0.8 percent gain. On the other hand, the S&P BSE Oil & Gas Index was the only laggard, down 0.09 percent.

The rupee strengthened by 22 paise to 63.83 against dollar at the interbank foreign exchange in early trade on continuous selling of the U.S. currency by exporters and banks.

A fall in dollar against major world currencies globally boosted the rupee, currency traders said.

The Indian rupee is seen supported by a weak dollar and strong regional currencies. The dollar tumbled and yen and gold rallied as investors sought something safe amid looming threats of Hurricane Irma and a missile test in North Korea. The euro, however, stayed stronger after the European Central Bank stopped short of attempting to jawbone it lower.

In bonds, the yields in India's benchmark sovereign bonds are up about 3 basis points this week and investors will be watching for the outcome of auction of Rs 15,000 crore of bonds. The RBI will also conduct reverse repo auctions for a total of Rs 40,000 crore.

Inflows continues into bonds, while equities witness an outflow.

Global funds increased rupee-debt holdings by $125 million yesterday and were net sellers of $201 million in Indian equities on Sept. 6.

• Nifty Sept Futures closed with a premium of 24.7 points versus 19 points
• Nifty Sept Futures open interest (OI) up 1 percent and Bank Nifty OI up 6 percent
• India VIX closed down 0.8 percent at 13
• Sept series highest Call base at 10,000 (OI at 47 lakh, up 9 percent)
• Sept series highest Put base at 9,700 (OI at 50.4 lakh, up 8 percent)
• Call strikes 9,900, 10,000, 10,200 see OI addition
• Put strikes 9,700, 9,800, 9,900 see OI addition

• Dixon Technologies IPO Day 3. Issue subscribed 4.25 times at end of Day 2.
• Bharat Road Network IPO Day 3. Issue subscribed 0.69 times at end of Day 2.
• ICICI Lombard General Insurance IPO price band set at Rs 651-Rs 661 per share.

Credit Suisse on Glenmark Pharma

• Cut target to Rs 650 from Rs 700, Maintain Neutral
• Annual report shows debt surprise driven by sharp increase in inventories
• Near-term overhang is guidance of further increase in debt in second quarter of FY18
• Cut FY18/19 EPS 4 percent/5 percent on higher Zetia competition, Taro's entry into Mupirocin

Citi on L&T

• Raise target to Rs 1452 from Rs 1341; Maintain Buy
• L&T is top India industrial pick with limited downside but tremendous upside
• Inexpensive valuations with the stock trading at a cons P/E of 19.6x FY19
• Asking rate to meet order inflow guidance is not easy but management remains confident
• Defence prospects could also fructify in the next 12-15 months

JPMorgan on Metals

• Raise Vedanta target to Rs 350 from Rs 310; Maintain Overweight
• Raise Hindalco target to Rs 270 from Rs 255; Maintain Overweight
• Strong multi-year earnings growth not being priced in Vedanta
• Hindalco a re-rating candidate; near-term news flow on potential U.S. M&A to weigh

HSBC on Hindalco

• Raise target to Rs 285 from Rs 240; Maintain Buy
• Aluminium breaches $2,100 per tonne mark on improving fundamentals
• Potential acquisition in VAP space should help Novelis consolidate its position
• China’s commodity demand continues to surprise while supply reforms should support prices

IDFC on Tata Motors

• Maintain Neutral rating on Tata Motors with a target price of Rs 404
• Car makers are offering high discounts to scrap older, polluting vehicles in U.K., Germany
• JLR faces a choice of either losing market share or joining the bandwagon with profitability impact

Edelweiss on SpiceJet

• Maintain Buy; hiked target price to Rs 150 from Rs 138
• Expect revenue from passenger per km and EPS to grow at CAGR of 18 percent and 49 percent over FY17-19
• Expects 16 percent dilution risk on conversion of warrants
• New aircrafts to lead to 15 percent fuel savings and low maintenance
• Raised FY19 EV/EBITDAR to 8.5x from 8x

IIFL on Motherson Sumi

• Maintain Buy and target price of Rs 350
• Expect revenues to see a leg-up in FY19 as it starts executing order from Daimler
• Higher growth and margins expected as new plants scale up
• Expect EPS to grow at CAGR of 24 percent over FY17-FY20

IIFL on Sun TV

• Maintain Add and target price of Rs 892
• Expect subscription revenue to grow at CAGR of 20 percent over FY17-22
• FY19 revenue estimates raised by 4 percent due to IPL
• New IPL rights deal value accretive but not significantly

• Bharat Financial assigns Rs 519 crore of receivables to a bank as per RBI guidelines
• TCS partners with GE to integrate intelligence into services data lake platform
• Punj Lloyd gets Rs 870 crore order for canal work in Maharashtra
• Biocon's insulin facility in Malaysia receives EU GMP compliance certificate
• Gammon India sells stake in Gammon Infrastructure Projects (GIPL) in various tranches in the open market. GIPL ceases to be subsidiary of company, post the sale
• CCL Products FII/FPI limit raised to 40 percent from 24 percent
• GTPL Hathway FII limit hiked to 49 percent from 24 percent
• Bombay Dyeing sold 48.457 acres land in Pune for Rs 13.57 crore
• Crest Ventures acquired 3.16 percent in Classic Mall Development for Rs 43.50 crore. Holding increased to 49 percent from 45.84 percent post acquisition
• Monsanto exits cotton seeds business in India (Economic Times)
• Brookfield joins race to buy Vodafone and Idea Cellular's stakes in Indus Towers (Economic Times)
• IDBI Bank seeks bids to sell 13.71 percent stake in SIDBI (Financial Express)
• Merger talks between energy companies Orient Green Power and IL&FS Wind hit a snag (Economic Times)

For a complete list of stocks to watch, click here

• BP, Reliance close in on India gas field near missile test site
• Speak freely, grow faster to skirt social unrest: Rajan To India
• Indian mutual funds now manage record Rs 20 lakh crore
• White House considering at least six for Fed chair
• Trump sees ‘lot of good reasons’ to get rid of debt ceiling
• Edelweiss Group offers Rs 800 crore in interim financing to Essar Steel
• Stable policy needed to push electric vehicles, says SIAM chief
• SEBI imposes Rs 2,423 crore fine on PACL, four directors
• SEBI to look into physical settlement for stock derivatives
• 21,000 people disclosed Rs 4,900 crore black money under PMGKY

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was up 0.17 percent at 9,974.

Stocks in Asia were mixed while dollar held losses as investors braced for damage that Hurricane Irma may inflict on Florida.

The S&P 500 Index, Nasdaq Composite Index and Dow Jones Industrial Average barely budged on Thursday, as traders remain alert to a potential escalation of North Korea risks amid concerns Pyongyang may fire a ballistic missile.

The euro climbed overnight after ECB President Mario Draghi cautioned on the common currency’s strength though didn’t expand on any action to address it.

Commodity Cues

• West Texas Intermediate crude was steady at $49.12 a barrel.
• Gold was little changed at $1,349.5 an ounce, and touched its highest in a year. It advanced 1.1 percent on Thursday.

The key events this week:

• Japan revised down its second-quarter economic growth to an annualized 2.5 percent from 4 percent, weaker than expectations for a revision to 2.9 percent.
• Australia’s home-loan approvals rose 2.9 percent in July, beating estimates.
• China’s trade surplus is forecast to widen to $48.5 billion in August from July’s $46.7 billion.
• China’s forex reserves climbed $11 billion to $3.09 trillion in August, a seventh gain in a row as the yuan rose, the PBOC said Thursday.
• Also due in Asia are Taiwan exports.
• Malaysia’s central bank held its main rate at 3 percent Thursday as expected.
• U.S. jobless claims surged last week by the most since November 2012 because of benefit claims from Hurricane Harvey. They increased to 298,000 versus an estimate of 245,000.
• The White House is considering at least six candidates to succeed Janet Yellen as the next Fed chair, people familiar with the matter said.

Source: Bloomberg