‘Unattractively Valued’ Sensex, Nifty Extend Decline To Two-Month Low

Indian equity benchmarks closed at a two-month low, led by declines in HDFC Twins and carmakers.

The S&P BSE Sensex fell 1.44 percent to 38,337 and the NSE Nifty 50 declined nearly 1.53 percent to close at 11,419.25. The broader market index represented by the NSE Nifty 500 Index fell as much as 1.60 percent.

Markets witnessing a sharp correction is long overdue and not due of any specific alarming reason. That’s according to Saurabh Mukherjea, founder, Marcellus Investment Managers.

The market breadth was tilted in favour of sellers. Over 1,347 stocks declined while 425 stocks advanced. All sectoral gauges compiled by NSE traded lower, led by the NSE Nifty Auto Index’s 3.31 percent fall.

Nifty Auto Index emerged as the worst sectoral performer among those compiled by National Stock Exchange. The gauge fell 3.24 percent in today’s trade.

Shares of RBL Bank fell 14.4 percent, its biggest-ever intraday fall, to Rs 496.40 apiece after the private lender announced its June quarter results today.

European equities advanced as investors embraced bets on more aggressive monetary easing by global central banks.

Indian benchmarks witnessing a sharp correction is long overdue and not due of any specific alarming reason. That’s according to Saurabh Mukherjea, founder, Marcellus Investment Managers.

“We have had weak earnings growth in India for the best part of last six years now and therefore the market was unattractively valued for quite some time,” said Mukherjea in an interview to BloombergQuint. He, however, said high-quality stocks such as HDFC Bank and Kotak Mahindra Bank will continue to perform well.

Indian equity benchmarks sustained losses in afternoon trade, led by declines in Bajaj Finance and automakers.

The S&P BSE Sensex fell as much as 1.28 percent to 38,403 and the NSE Nifty 50 declined nearly 1.34 percent to 11,441.30. The broader market index represented by the NSE Nifty 500 Index fell as much as 1.42 percent.

The market breadth was tilted in favour of sellers. Over 1,382 stocks declined while 351 stocks advanced. All sectoral gauges compiled by NSE traded lower, led by the NSE Nifty Auto Index’s 3.02 percent fall.

Shares of the Kolkata-based lender pared losses and traded 1.5 percent lower at Rs 521 apiece. The stock fell over 4 percent intraday.

Key Highlights (YoY)

• Net interest income rose 26 percent to Rs 1,410.4 crore.
• Net profit rose 46 percent to Rs 701 crore.
• Gross NPAs stood at 2.02 percent versus 2.04 percent. (QoQ)
• Net NPAs stood at 0.56 percent versus 0.58 percent (QoQ)
• Provisions at Rs 125 crore versus Rs 153 crore. (QoQ)

The stock traded at 27 times its estimated earnings per share for the coming year, according to Bloomberg data.

Shares of the Chennai-based dairy products maker rose 10 percent intraday to Rs 775 apiece, its highest in over three months. The company announced its June quarter results on Thursday.

Key Highlights: (YoY)

• Revenue up 15.2 percent at Rs 1423.2 crore.
• Net profit up 35.1 percent at Rs 51.2 crore.
• Ebitda up 32.5 percent at Rs 162.7 crore.
• Margin at 11.4 percent.

The trading volume was more than 50 times the 20-day baverage for this time of the day, Bloomberg data showed.

Shares of RBL Bank fell 4.7 percent to Rs 552.50 apiece after the private lender announced its June quarter results today.

Key Highlights (YoY)

• Net Interest Income rose 47.9 percent to Rs 817.32 crore.
• Profit after tax rose 40.5 percent to Rs 267 crore.
• Gross NPAs remained unchanged at 1.38 percent. (QoQ)
• Net NPAs at 0.65 percent versus 0.69 percent (QoQ)
• Provisions rose 7 percent to Rs 213.18 crore. (QoQ)

The relative strength index on the stock was below 30, indicating the stock may be oversold.

Shares of the consumer finance company snapped its four-day rally and fell close to 6 percent to Rs 3,263.10 each—its lowest in over two months.

The stock was the top loser both on Nifty and Sensex. However, the stock has advanced 30 percent in the past 12 months compared to a 6 percent gain in the Sensex.

Indian equity indices witnessed a sharp fall in today’s trade after opening higher. Bajaj Finance and Bajaj Finserv were among the worst performers.

The S&P BSE Sensex fell as much as 0.94 percent to 38,544.50 and the NSE Nifty 50 declined nearly a percent to 11,487.20. The broader market index represented by the NSE Nifty 500 Index fell as much as 0.94 percent.

The sudden fall is a compounded effect of liquidity crunch among investors and a lacklustre start to the earnings session, said G Chokkalingam, founder & managing director, Equinomics Research & Advisory. “Also, no change to the surcharge rule from the government’s side is still hurting sentiments.”

The market breadth was tilted in favour of sellers in the ratio of 3:1. All sectoral gauges compiled by NSE traded lower, led by the NSE Nifty Auto Index’s 2.06 percent fall.

Shares of the Mukesh Ambani-led conglomerate fluctuated between gains and losses to trade at Rs 1,262.95 each. The company is scheduled to announce its first quarter results today.

Q1 Preview (QoQ):

• Revenue expected to rise 4 percent to Rs 86,862 crore.
• Ebitda seen to fall 1.6 percent to Rs 13,489 crore.
• Ebitda margin seen at 15.5 percent versus 16.4 percent.
• Net profit seen up 0.7 percent to Rs 8,618 crore.
• Gross Refining Margin expected to gain 1.2 percent to $8.3/bbl vs $8.2/bbl.

The stock advanced 14 percent in the past 12 months compared to a 6.5 percent gain in the Sensex.

About 1.18 crore shares or 1 percent equity of the bio-technology company changed hands through two block deals, Bloomberg data showed. Buyers and sellers were not known immediately.

The stock traded 24 percent below the Bloomberg consensus one-year target price. Fifteen out of the 23 analysts tracked by Bloomberg had a ‘Buy’ recommendation on the stock.

Shares of the information technology firm slumped 9.5 percent intraday to Rs 482.70— the lowest since September 2017.

Key Highlights (QoQ):

• Revenue was down 6.4 percent at Rs 1,089 crore.
• Net profit fell 49 percent to Rs 90 crore.
• EBIT was down 30 percent to Rs 98.8 crore.
• Margin stood at 9.1 percent versus 12.1 percent

The relative strength index on the stock was below 30, indicating it may be oversold. Trading volume was 50 times the 20-day average for this time of the day.

Indian equity benchmarks erased their opening gains and traded lower. Yes Bank and auto makers were among the worst performers.

The S&P BSE Sensex fell as much as 0.41 percent to 38,74.50 and the NSE Nifty 50 declined 0.45 percent to 11,544. The broader market index represented by the NSE Nifty 500 Index fell as much as 0.50 percent.

The market breadth was tilted in favour of sellers in the ratio of 3:1. All sectoral gauges compiled by NSE traded lower, led by the NSE Nifty Auto Index’s 1.31 percent fall.

Shares of the Pune-based electrical equipment maker rose nearly 3 percent to Rs 1,122.85 apiece.

Thermax secured orders worth Rs 471 crore from a state-owned power company to set up Flue Gas Desulphurisation systems in Jharkhand, according to an exchange filing.

The trading volume was seven times its 20-day average for this time of the day, Bloomberg data showed. The stock traded 34 times its estimated earnings per share for the coming year, Bloomberg data showed.

Shares of the cement maker rose as much as 5.1 percent to Rs 1,647.55 apiece, the highest in over a month. The company reported its June quarter earnings on Thursday.

Key Highlights (YoY)

• Revenue up 7.8 percent at Rs 4149.72 crore.
• Net profit up 38.6 percent at Rs 451.3 crore.
• Ebitda up 25.3 percent at Rs 781.68 crore.
• Margin widens to 18.8 percent.
• Sales volume at 7.2 mt.
• Ebitda at Rs 1,100 per tonne.

Here’s what the brokerages had to say on the stock:
BofA Securities

• Maintained ‘Neutral’; hiked price target to Rs 1,773 from Rs 1,695.
• June quarter review: beat on higher than industry pricing growth.
• Demand to be muted in 2019; price roll-backs to continue.
• Costs flat; expect marginal benefit from lower coal prices in Q3.

Citi

• Maintained ‘Buy’ with a price target of Rs 2,175.
• June quarter beat estimates as volumes and pricing were ahead of expectations; Ebitda per tonne at a seven-year high. Near-term pullback on volumes and pricing may be temporary.

Indian equity benchmarks opened higher, driven by gains in Reliance Industries and private lenders.

The S&P BSE Sensex gained as much as 0.34 percent to 39,030.50 and the NSE Nifty 50 rose 0.37 percent to 11,635.60. The broader market index represented by the NSE Nifty 500 Index advanced as much as 0.35 percent.

The market breadth was tilted in favour of buyers. About 789 stocks advanced and 537 shares declined on National Stock Exchange.

All sectoral gauges compiled by NSE traded higher, led by the NSE Nifty Metal Index’s 0.82 percent gain.

Indian equity benchmarks are set to open higher.

The S&P BSE Sensex traded 0.42 percent higher at 39,059.60 while the Nifty rose 0.27 percent to 11,628 during the pre-market trade.

The Indian rupee opened higher against the U.S. dollar. The home currency appreciated as much as 0.28 percent to 68.77 against the greenback.

However, the home currency is headed for a weekly drop as foreigners pull out of equities due to a tax imposed in the budget.

The local legal tender having ended at 68.96 on Thursday. The traders keeping a wary eye on crude oil prices which snapped four days of losses on Friday to trade more than 1 percent higher.

In the bond market, the yields are likely to trade in a range after they rose four basis points on Thursday. The 10-year benchmark bond yield finished at 6.38 percent, but is still down by nearly 50 basis points so far this month, boosted by expectations of further rate cuts and subdued inflation.

F&O Cues

July Futures

• Nifty futures closed at 11,604.3, premium of 7 points versus discount of 11.7 points.
• Nifty futures open interest down 0.3 percent, sheds 51,000 shares in open interest.
• Bank Nifty futures closed at 30,448.6, premium 18 points.
• Bank Nifty futures open interest up 1 percent, adds 11,000 shares in open interest.

Options

• Nifty PCR at 1.25 versus 1.34 (across all series).

Nifty Monthly Expiry 25-July

• Max open interest on call side at 12,000 (34.7 lakh shares).
• Max open interest on put side at 11,300 (26 lakh shares).
• Max open interest addition seen in 11,700C (+12.9 lakh shares), 11,650C (+5.5 lakh shares).

Stocks In F&O Ban

In Ban:

• DHFL
• IDBI Bank
• Reliance Capital
• Reliance Infrastructure
• Tata Elxsi

Nifty Earnings To Watch

• Reliance Industries

Other Earnings To Watch

• InterGlobe Aviation
• RBL Bank
• Dabur India
• Dhanuka Agritech
• Bandhan Bank
• Bhageria Industries
• Hindustan Zinc
• ICICI Lombard General Insurance Company
• JM Financial
• L&T Finance Holdings
• L&T Technology Services
• Mahindra CIE Automotive
• Phillips Carbon Black
• Unitech

Earnings Reaction To Watch

L&T Infotech (Q1, Consolidated, QoQ)

• Dollar revenue up 0.8 percent at $356.5 million.
• Revenue flat at Rs 2485 crore.
• Net profit down 6.1 percent at Rs 355.8 crore.
• EBIT down 9.7 percent at Rs 396.9 crore.
• Margin narrows to 16 percent.

ACC (Q2CY19 Standalone, YoY)

• Revenue up 7.8 percent at Rs 4149.72 crore.
• Net profit up 38.6 percent at Rs 451.3 crore.
• Ebitda up 25.3 percent at Rs 781.68 crore.
• Margin widens to 18.8 percent.
• Sales volume at 7.2 mt.
• Ebitda at Rs 1,100 per tonne.

Sterlite Technologies (Q1, Consolidated, YoY)

• Revenue up 63.3 percent at Rs 1432 crore.
• Net profit up 17.1 percent at Rs 141.4 crore.
• Ebitda up 32 percent at Rs 323.4 crore.
• Margin at 22.6 percent.
• Finance costs up 2 times at Rs 68.3 crore.
• Raw material as percent of sales at 49.4 percent.

Hatsun Agro Product (Q1, Standalone, YoY)

• Revenue up 15.2 percent at Rs 1423.2 crore.
• Net profit up 35.1 percent at Rs 51.2 crore.
• Ebitda up 32.5 percent at Rs 162.7 crore.
• Margin at 11.4 percent.
• Tax as percent of PBT at 34.1 percent.

Cyient (Q1, Consolidated, QoQ)

• Revenue down 6.4 percent at Rs 1089 crore.
• Net profit down 49 percent at Rs 90 crore.
• EBIT down 30 percent at Rs 98.8 crore.
• Margin narrows to 9.1 percent.

Rallis India (Q1, Consolidated, YoY)

• Revenue up 8.7 percent at Rs 623.2 crore.
• Net profit up 23.9 percent at Rs 67.8 crore.
• Ebitda up 14 percent at Rs 94.8 crore.
• Margin widens to 15.2 percent.

Sasken Technologies (Q1, Consolidated, QoQ)

• Revenue flat at Rs 134.7 crore.
• Net profit down 15.6 percent at Rs 23.2 crore.
• EBIT down 2.7 percent at Rs 22 crore.
• Margin narrows 16.3 percent.
• Tax expenses up 72 percent at Rs 10.3 crore.

• InterGlobe Aviation stated that they have received communication from MCA to furnish explanations in relation to complaint received from director and co-founder Rakesh Gangwal.
• Thermax secured orders worth Rs 471 crore from an Indian government power company to set up FGD systems in Jharkhand.
• CCI has approved acquisition of up to 75 percent stake in Reliance Nippon Life Asset Management by Nippon Life Insurance Company.
• KRBL stated in their letter addressed to investors that the company has nothing do with Augusta Westland Helicopter scam and company’s solicitor Gautam Khaitan’s (who was on the board from 2007 to 2013) individual dealings have brought the company’s name into alleged illegal activities.
• Gufic Biosciences has received regulatory approval to manufacture bacteria which will be used in therapeutic and aesthetic procedures. This toxin will be launched in India in collaboration with U.S.-based Prime Bio.
• Vodafone Idea hired Bank of America and Morgan Stanley to help sell its fiber assets which could be valued at Rs 13,000 crore. (Bloomberg News)
• NHPC stalled Subansiri Lower hydropower project has been revised to an estimated Rs 20,850 crore from the original cost of Rs 6,285 crore approved in 2003, Power Minister R.K. Singh informed lawmakers in the Parliament. Construction of the project was challenged in National Green Tribunal, which is yet to give a final order on the matter, Singh said in a written reply. (Bloomberg News)
• Cyient: Board announced merger of Cyient DLM and Cyient Insights into the company.
• Srei Infra and its arm Srei Equipment Finance have withdrawn amalgamation plans of both entities due to developing market conditions in NBFC sector.

• U.S. stocks rebounded after Federal Reserve Bank of New York President John Williams highlighted the need for swift action should policy makers conclude the economy is in trouble.
• The NYSE FANG+ Index slid on Netflix Inc.’s surprise loss of U.S. customers.
• Stocks rose in Asia as bets increased for a more aggressive policy move at the Federal Reserve later this month.
• Oil climbed but remains on course for biggest weekly decline since May.

Good Morning!

Japanese and Korean stocks rose, with modest gains in Australia. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.34 percent to 11,643.50 as of 8:50 a.m.

Asia stocks tracked an advance in U.S. shares as New York Federal Reserve said its President, John Williams, wasn’t sending a specific policy signal for a rate cut.

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

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