Sensex, Nifty Close At Two-Week High

Indian equity indices extended gains for the second day in a row paced by gains in Tata Motors and Britannia Industries.

Finance Minister Nirmala Sitharaman announcing steps to support slowing economy last week continued to boost investor sentiments. Also, Reserve Bank of India’s transfer of Rs 1.76-lakh crore from its reserves to the government eased concerns on meeting fiscal deficit target.

The S&P BSE Sensex rose 0.39 percent to close at 37,641.27 and the NSE Nifty 50 rose 0.43 percent to 11,105.35. The broader markets represented by the NSE Nifty 500 Index advanced 0.64 percent.

“Two positive news (RBI's surplus transfer and FPI surcharge withdrawal) may have changed the market sentiment but it hasn't changed the ground reality," said Sameer Kalra, founder, Target Investing, advising participants to still remain cautious. An investor can use this bounce to offload stocks which one may not have the intention to hold onto anymore, he said in an interview to BloombergQuint.

The market breadth was tilted in favour of buyers. About 1,280 stocks advanced and 504 shares declined on National Stock Exchange. Eight of the eleven sectoral indices compiled by National Stock Exchange advanced, led by Nifty PSU Bank's 2.51 percent gain. Nifty IT Index was the top loser, down 1.35 percent.

Shares of the telecom company declined as much as 4.4 percent to Rs 344.75, its lowest level in two weeks.

Around 22.7 lakh shares changed hands in two block deals on Bombay Stock Exchange, according to Bloomberg data. Buyers and sellers were not known immediately.

The stock traded 12 percent below the Bloomberg consensus one-year target price.

Shares of Mumbai-based conglomerate’s group companies rallied led by Bombay Burmah Trading’s 18.5 percent intraday jump.

• Bombay Dyeing’s shares rose close to 19 percent, the most in 18 months, to Rs 82.60 each.
• Bombay Burmah Trading rose 18.5 percent to Rs 936.90 each.
• Britannia Industries gained 7.5 percent to Rs 2,724.30.
• National Peroxide rose nearly 10 percent to Rs 1,587.75.

Shares of the Kolkata-based company rose 1.1 percent intraday to hit a lifetime high of Rs 369 each.

The relative strength index on the stock was above 70, indicating it may be overbought. The stock traded at 55 times its estimated earnings per share, Bloomberg data showed.

Shares of software exports were among the worst performers as the home currency gained 0.48 percent to Rs 71.67 against the U.S. dollar. Tech companies bill majority of their global and American clients in terms of U.S. dollars.

• Infosys declined as much as 2.7 percent to Rs 781.10 each.
• Mindtree fell 3.2 percent to Rs 683.75.
• TCS fell close to 2 percent to Rs 2,232.30.
• Tech Mahindra declined 1.7 percent to Rs 679.15.

Shares of the private lender rose as much as 3.9 percent to Rs 65.35 apiece.

The stock has declined 83 percent in the past 12 months compared to a 2.6 percent fall in the Sensex.

Meanwhile, talks between Yes Bank Ltd. and global private equity funds for a possible stake sale went cold after the funds did not get enough comfort from publicly available information on the bank.

Shares of Coffee Day Enterprises Ltd. hit the upper circuit of 5 percent to Rs 88.40 apiece for the seventh straight trading session—its longest gaining streak since April last year.

ITC Ltd. is considering a bid to buy a stake in Coffee Day as the cigarette maker seeks to diversify its businesses, Bloomberg quoted people as saying in a Aug. 21 report.

ITC received an inquiry from an intermediary on Coffee Day and there has been no progress, its spokesman said in response to Bloomberg’s query. The news is incorrect and Coffee Day is unaware of any such developments, Coffee Day said in a filing.

Coffee Day has taken several steps to pare its debt since founder VG Siddhartha's death on July 31. The company has planned to sell its Global Village Tech Park in Bengaluru to Blackstone Group—a deal that brought down its debt to less than Rs 1,000 crore.

The Coffee Day stock has gained 40.35 percent in the current winning streak while the Sensex has risen 0.2 percent.

Here’s what Morgan Stanley had to say on the stock:

• Maintained 'Overweight'; cut target price to Rs 140 from Rs 325.
• Disclosure on cash and potential asset sale to unlock value could drive material stock upside.
• See favourable risk-reward which drives overweight rating.

Indian equity indices extended gains for the second day in a row, led by gains in Tata Motors and Britannia Industries.

Finance Minister Nirmala Sitharaman announcing steps to support slowing economy last week continued to boost investor sentiments.

Two positive news (RBI's surplus transfer and FPI surcharge withdrawal) may have changed the market sentiment but it hasn't changed the ground reality," said Sameer Kalra, founder, Target Investing, advising participants to still remain cautious. An investor can use this bounce to offload stocks which one may not have the intention to hold onto anymore, he said in interview to BloombergQuint.

The S&P BSE Sensex rose 0.43 percent to 37,652.75 and the NSE Nifty 50 rose 0.52 percent to 11,114.50 as of 11:50 am. The broader markets represented by the NSE Nifty 500 Index advanced 0.69 percent.

The market breadth was tilted in favour of buyers. About 1,274 stocks adavnced and 421 shares declined on National Stock Exchange. Nine of the eleven sectoral indices compiled by National Stock Exchange advanced, led by Nifty PSU Bank's 2.67 percent gain. Nifty IT Index was the top loser, down 1.12 percent.

The annual general meeting of InterGlobe Aviation is underway in Delhi, and the proceedings are being overshadowed by the absence of Rakesh Gangwal, the billionaire co-founder of the budget airline, who had accused his fellow co-founder Rahul Bhatia of corporate-governance lapses.

Gangwal had said last week that he intends to support a move to expand the company’s board to 10 directors, reversing his earlier stance. Gangwal's statement came after the board of IndiGo approved a new related-party transaction policy.

Currently, InterGlobe Aviation has six board members. Gangwal and his affiliates hold around 37 percent stake in the company, while Bhatia's group owns nearly 38 percent shareholding.

InterGlobe Aviation's shareholders will also vote on an ordinary resolution to appoint M Damodaran as an independent director for a five-year term starting from Jan. 23, 2019.

Damodaran, who is currently the firm's chairman, would attain the age of 75 years during his tenure as an independent director, the company said in an exchange filing on Aug. 23.

The stock fluctuated between gains and losses to trade little changed at Rs 1,677.95 apiece.

Shares of the Wadia-group company surged 6.2 percent, its biggest intraday gain since August 2017, to Rs 2,689.90 apiece.

The biscuit maker has gained over 12 percent n the past four sessions. This comes as its rival Parle Products said it may be forced to lay off up to 10,000 workers over the next one year due to slowdown in demand coupled with impact of high Goods and Service Tax rate.

A “sharp stock price correction has turned risk-reward ratio in favour of the company, said Bloomberg quoting a JM Financial Services’ research report. Also, short-term costs are likely to fall in the next two quarters, following the spike witnessed last year due to Britannia’s 100 year anniversary-related expenses, Bloomberg said.

The stock traded at 50 times its 20-day average, according to Bloomberg data.

Shares of the agro-chemicals maker rose 3.7 percent to Rs 569.95, its highest price in three weeks.

Brokerage firm JP Morgan initiated its coverage on the stock with an ‘Overweight’ rating. It also fixed the target price at Rs 700, indicating a potential upside of 27.3 percent from previous close.

Here’s what the firm had to say on the stock:

• Synergies from Arysta to help drive higher than industry average growth.
• Earnings execution remains the key for deleveraging over the next two years.
• Financial year ending 2020 started as tough year but shows the strength of UPL’s business.

The stock gained 29 percent in the past 12 months compared with a 2.9 percent fall in the Sensex.

Shares of parent firms of small-finance lenders gained after Reserve Bank of India may allow promoters to offload their holding fully after five years, according to an Economic Times report, citing unidentified sources.

• Shares of Equitas Holdings rose 6.7 percent, the biggest intraday rally in five months, to Rs 11.90 each.
• Shares of Ujjivan Financial Services surged 7.9 percent to 296.85 each.

Also, the report said allowing promoters to totally exit would pave the way for reserve merger of holding companies into the bank promoted by these firms.

Shares of the asset management firm rose as much as 3.1 percent to Rs 258.80 apiece.

Nippon Life Insurance increased its stake by 10.59 percent to 53.46 percent., according to an exchange filing. Nippon will continue to run the company and its operations without any change in its structure and management, the filing added.

The trading volume was six times its 20-day average for this time of the day, Bloomberg data showed.

India benchmark 2029 yields fell 8 basis points to 6.41 percent.

The Reserve Bank of India will transfer a record high surplus of a little over Rs 1.76 lakh crore to the government, the central bank said after a board meeting on Monday.

The move will ease concerns about meeting the fiscal deficit. The RBI’s transfer of the record amount to the government should offset any revenue shortfall from lower tax buoyancy amid slower growth this year, allowing more room to boost spending, according to a Bloomberg Economics report.

Indian equity indices extended gains for the second day in a row, led by gains in Tata Steel and NTPC.

The S&P BSE Sensex rose 0.47 percent to 37,672.64 and the NSE Nifty 50 rose 0.52 percent to 11,116.65 as of 9:20 am. The broader markets represented by the NSE Nifty 500 Index advanced 0.58 percent.

The market breadth was tilted in favour of buyers. About 960 stocks advanced and 475 shares declined on National Stock Exchange.

Nine of the 11 sectoral gauges compiled by NSE traded higher, led by the NSE Nifty PSU Index’s 1.91 percent gain. Nifty IT Index was the top sectoral loser, down 0.85 percent.

The Indian rupee opened higher against the U.S. dollar. The home currency appreciated as much as 0.42 percent to Rs 71.72 against the greenback.

Futures

• Nifty August futures closed at 11,054, discount of 3.6 points versus premium of 13.4 points
• Nifty futures across series open interest up 1 percent, adds 1.5 lakh shares in OI.
• Bank Nifty futures closed at 27,921.5, discount of 29.8 points versus premium of 57 points.
• Bank Nifty futures open interest across series down 7 percent, sheds 1.3 lakh shares in OI.
• Rollovers: Nifty 24 percent, Nifty Bank 23 percent.

Options

• Nifty PCR unchanged at 1.20 versus 1.02 (across all series).

Nifty Monthly Expiry Aug. 29

• Max open interest on call side at 11,000 (31.5lakh shares).
• Max open interest on put side at 11,000 (34.4lakh shares).
• Open interest addition seen at 10,900P (+13.4lakh shares), 11,000P (+10.5lakh shares).
• Open interest shedding seen at 11,000C (-14.5lakh shares), 10.900C (-8.4lakh shares).

• Reliance Nippon Life Asset Management: Nippon Life Insurance increased its stake by 10.59 percent to 53.46 percent. As per the press release, Nippon will continue to run the company and its operations without any change in its structure and management.
• Pidilite Industries has entered into joint venture with engineering technologies company Chetana. The JV company will be responsible to deploy technology in the field of Post Compressed Aerated Concrete Wall Panels in projects in India, Sri Lanka and Bangladesh. The company shall be the majority partner in this JV.
• Bank of Baroda: Board approved issuance of bonds aggregating Rs 2,150 crore.
• Kajaria Ceramics: Board approved merger of wholly-owned arm Kajaria Tiles with the company.
• Strides Pharma Science to be excluded in F&O Segment with effect from Nov. 1.
• LIC Housing Finance: Fidelity Group reduced stake in the company from 9.76 percent to 3.14 percent on Aug. 22.
• Sastasundar Ventures: Mitsubishi Corporation signed an agreement to invest Rs 100 crore in company’s digital healthcare platform.
• HDIL to appeal against National Company Law Tribunal order, after the tribunal passed on order to admit the company under Insolvency and Bankruptcy Code proceedings.
• Excel Crop Care to be suspended from trading with effect from Aug. 29, due to composite scheme of amalgamation. The company will be amalgamated into Sumitomo Chemical India Limited.
• Kingfa Science & Technology has started trial production of its new factory in Pune.
• IL&FS Transportation Networks defaulted in payment of non-convertible debentures interest aggregating to Rs 2.3 crore, which was due on Aug. 26.
• Vadilal Enteprises: Care Ratings downgraded long term bank facilities to ‘BBB’ from ‘BBB+’.
• Bajaj Hindusthan Sugar: All 13 lenders signed the inter-creditor agreement for the resolution of the company’s debt. The company has got a standstill of 180 days and the required resolution plan needs to be implemented as per RBI rules during the said time period.
• Kamdhenu Paints has re-opened its paint’s production facility in Rajasthan.

Good morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.40 percent to 11,097 as of 8:25 a.m.

Asian stocks posted modest gains Tuesday as the erratic trade narrative turned hopeful, lifting U.S. equities. Shares climbed in Tokyo and Seoul, and were little changed in Sydney.

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