Sensex, Nifty Snap Two Session Losing Streak

Indian equity benchmarks held on to the comeback in afternoon trade, snapping a two-session losing streak, as investors weighed the benchmark index’s pace of gains against a slew of better-than-expected local earnings.

The S&P BSE Sensex rose 0.4% to 51,531, while the NSE Nifty 50 Index gained 0.4% as well to end the session at 15,173. Both indices had closed the previous to sessions lower after six days of gains, their longest winning streak in a month that took them to new highs.

Among the sectoral indices, the Nifty Metal index was the top performer, ending with gains of 1%. The Nifty FMCG index rose 0.8% higher while the Nifty IT index climbed 0.6%.

The Nifty PSU Bank index was the biggest laggard, ending 1.25% lower.

“Earnings have been very good and most companies have reported numbers that were better than expectations, but I think all of that has already been factored in,” said Gaurav Garg, head of research at Indore-based CapitalVia Global Research Ltd. “We might see the market consolidating around current levels, before further upside.”

Coal India reported net income for the third quarter that missed the average analyst estimate.

• Revenues up 2.1% at Rs 23,686.03 crore vs Rs 23,190.49 crore (Bloomberg estimate: Rs 2461.8 crore)
• Net profit down 21.4% at Rs 3,085.39 crore vs Rs 3,923.87 crore (Bloomberg estimate: Rs 4,171.5 crore)
• Ebidta up 3.9% at Rs 5,164.8 crore vs Rs 4,968.8 crore (Bloomberg estimate: Rs 5702.2 cr)
• Margins at 21.8% vs 21.4%

Arvind Ltd., an Indian textile maker, jumped as much as 11% to the highest level since June 2019. Trading volume was ~ 3x the 3-month, full-daily average.

“On all parameters, the business is doing better than expected, be it recovery or debt repayment,” said Nihal Jham, an analyst at Edelweiss Securities, who has a buy rating on the stock.

• Revenue Rs 355 crore, -26% y/y
• Net profit Rs 62.7 crore, -37% y/y, estimate Rs 12.8 crore (range 1.01 billion to 1.59 billion) (Bloomberg Consensus)
• Total costs Rs 310 crore, -19% y/y
• Other income Rs 30.8 cror
  Dividend per share Re 1

The L&T unit is lower for the sixth straight day, on track for the longest losing streak since the period ended Feb. 26, 2019.

In the past, the stock has rebounded 2.6% on average in the week following six straight days of losses.

The tyre maker reported a profit of Rs 511.72 crore during the quarter ended December, as compared to Rs 236.63 crore in the year-ago period, an increase of around 116%.

Total revenue rose to Rs 4,567 crore from Rs 4008.89 crore in the year-ago period, an increase of around 14%.

• Other income Rs 63.38 crore
• Dividend per share Rs 3
• MRF approved raising up to Rs 1,000 crore via debentures.

Shares of HCL Infosystems declined nearly 5% after the I.T. firm reported a loss of Rs 34.32 crore for the quarter ended December.

The losses are primarily on account of delayed receipts on certain system integration contracts, certain historical low margin contracts, slow-down of distribution businesses and finance costs, the company filing said.

Meanwhile, the company's board of directors has also approved the sale of its wholly-owned subsidiary HCL Infotech to Novezo Consulting at a purchase price based on the enterprise value of HCL Infotech as of the date of the share transfer.

Shares of the automaker declined as much as 6.9% after brokerages' rating downgrade following its third-quarter earnings.

Net profit for the maker of Royal Enfield motorcycles rose 7% year-on-year to Rs 533 crore in the quarter ended December, according to an exchange filing. That compares with the Rs 535-crore consensus estimate of analysts tracked by Bloomberg.

Operating margin, however, contracted to 24% from 25%.

According to broking firm Macquarie Capital, the automaker has been consistently underperforming peers on both volume growth and margins since FY18, when its waiting period ended.

Yet, it said, the stock is trading at a significant premium to two-wheeler peers which is 'unjustified'.

Click here to read what brokerages made of its Q3 earnings.

Indian bonds trade slightly lower ahead of the Rs 22,000 crore rupees of government debt sales.

Traders are awaiting the results of the auction for cues on the trajectory of bond yields after the nation’s central bank purchased debt at lower-than-expected yields on Wednesday.

RBI plans to sell Rs 11,000 crore each of benchmark 5.85% 2030 and 5.15% 2025 bonds at a special auction on Thursday. These are the same bonds for which the RBI had rejected all bids on Friday.

Most yields along the India sovereign yield curve fell, with 4-year bonds moving the most in Thursday morning trading.

• The 3-year yield fell 1.5bps to 5.192%
• The 10-year yield fell 2.4bps to 5.986%
• The 15-year yield fell 2.5bps to 6.552%
• The 3-year-10-year yield spread was 79.4bps, vs previous close 80.2bps
• The Dollar Rupee fell 0.2% to 72.70.

(Source: Bloomberg)

Affle India Ltd. rose 8.9% with its trading volume at nine times the daily average. The stock was the best performer among its peers.

Trading volume was 64,685 shares, nine times the 20-day average of 7,049 shares for this time of day. The relative strength index on the stock was above 70, indicating it may be overbought.

Stock advanced 177% in the past 52 weeks while the Sensex gained 25% during the same period. The shares are up 33% in the past 5 days.

According to Bloomberg date, it trades at 127 times its estimated earnings per share for the coming year. It trades at 196 times trailing EPS.

Shares of the city gas company climbed as much as 3.3% after opening 2% lower after it posted a mixed set of earnings on Wednesday market hours.

Net profit of the city gas distributor rose 18% over the year earlier to Rs 334.9 crore in the three months ended December, according to an exchange filing. That compares with the Rs 327.7-crore consensus estimate of analysts tracked by Bloomberg.

Its net sales fell 13% to Rs 1,446.1 crore, against the Rs 1,500.3-crore forecast. Overall volumes declined 6% year-on-year to 6.26 mmscmd, while CNG volumes fell 9% to 412 million scm.

Click here to read what brokerages made of its Q3 earnings.

Indian equity benchmarks recovered most of their losses after opening lower ahead of the weekly derivatives expiry.

The S&P BSE Sensex was little changed at 51,313 after opening 0.3% lower. Similarly, the NSE Nifty 50 index reversed losses to trade with small gains at 15,106.

Reliance Industries Ltd. contributed the most to the index gain, increasing 1.1%. Hindalco Industries Ltd. had the largest increase, rising 3.9%.

In early trading, 29 of 50 shares rose, while 21 fell on the Nifty.

The Indian government is seeking to sell 87.15 million shares in Railtel Corp. of India Ltd., the telecom unit of the country’s railway services, through an initial public offering, according to an advertisement in the Financial Express newspaper Thursday.

• IPO to open Feb. 16, close Feb. 18; 500,000 shares reserved for employee
• Investors can bid for a minimum of 155 shares of face value Rs 10 each
• Government to raise about Rs 820 crore at the top end of the price band.

There may be too many moving parts across the globe to predict if we’re at the start of a new bull cycle, but Indian companies are at levels never seen before.

That’s according to a memo to investors written by Samit Vartak, founder of SageOne Investment Advisors, which analysed nearly 700 companies beyond the top 100 listed firms over the last 16 years. The improvement shown by mid- or small-cap firms during this period, he wrote, has been more striking than its large-cap counterparts.

Catch the full note, here.

Good Morning!

Indian stock benchmarks lost some steam after posting losses for two sessions in a row.

The S&P BSE Sensex ended 20 points lower at 51,309 on Wednesday, while the NSE Nifty 50 ended flat at 15,106.

Futures are again indicating a weak start to Thursday’s session. The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, is little changed at 15,069 as of 8 a.m.

Aurobindo Pharma, Indraprastha Gas, Metropolis Healthcare, Bata India, among others, may react to their quarterly results reported after market hours on Wednesday.

Three Nifty 50 companies — Coal India, ITC and Power Grid — will announce their earnings on Thursday, along with broader market stocks such as Ashok Leyland, ACC, Natco Pharma, Allcargo Logistics, Piramal Enterprises.

Meanwhile, the U.S. equity futures edged down this morning as investors assessed the implications of weaker-than-expected American inflation data for the so-called reflation trade that bets on a recovery from the pandemic.

A gauge of Asian stocks was steady, with volumes low as markets in China and South Korea were closed. The dollar held losses in the wake of the inflation report. Crude oil dropped after a spell of gains.

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