Anand James, Chief Market Strategist, Geojit Financial Services
Short covering ahead of the F&O expiry gave muscle to relief rallies, after bargain hunting trickled in Nifty tested 100-EMA. Market will now look forward to possible return of FIIs from a month long hiatus and positive outcomes from the next week's GST council meeting may instil some buying interest in the domestic market.
3:45 PM Sectoral trend
All but two sectors (Nifty IT, Nifty Media) ended in green.
3:42 PM Sensex heatmap at close
The BSE Smallcap and the BSE Midcap outperformed to gain 0.9% and 0.7%, respectively.
3:39 PM Markets at close
The S&P BSE Sensex ended at 31,282, up 122 points, while the broader Nifty50 closed at 9,768, up 33 points.
World Gold Council to set up India's first spot gold exchange
The World Gold Council (WGC) plans to form a committee soon to help set up India's first spot gold exchange within 12 to 18 months, a senior official of the industry body said on Thursday.
A dedicated exchange for physical gold is expected to pave the way for standard gold pricing practices in India, apart from bringing in transparency into a market which sees large cash transactions. READ MORE
3:17 PM European markets
European shares were little changed on Thursday as gains in financial stocks and a weaker euro provided support, while fashion group H&M fell after disappointing results.
The pan-European STOXX 600 index was down 0.1% to just below the two-month high it reached in the previous session in anticipation of US President Donald Trump’s tax overhaul proposal.
Germany's export-oriented DAX index and France's CAC outperformed, trading up 0.2% and flat respectively. Spain's IBEX added 0.1% as worries over the Catalonia independence referendum eased.
3:15 PM Volatility index
India VIX eases nearly 5%.
At 3:00 pm, the S&P BSE Sensex was trading at 31,242, up 83 points, while the broader Nifty50 was ruling at 9,751, up 15 points.
2:50 PM Buzzing stock
Dishman Carbogen Amcis hit an upper circuit limit of 5% at Rs 321.55 on BSE after the company said its Switzerland unit received zero observations from the US health regulator.
2:33 PM Top five losers on Nifty
Top 10 stocks Morgan Stanley recommends
Babaj Finance, which has gained over 100 per cent year-to-date, is the preferred pick of the global brokerage from its financials coverage. The stock is a pure play on consumer and SME financing growth given it has the highest exposure (over 90 per cent) to these segments as a share of the loan book.
Cement shares trade firm
Shares of cement companies were trading higher by up to 7% on the BSE in noon deal on expectation of production recovery in October-December (Q3) quarter of FY17.
The frontline cement shares like ACC, Ambuja Cements, India Cements, UltraTech Cement and Shree Cement were up in the range of 1% to 4%, as compared to 0.06% rise in the S&P BSE Sensex. Sanghi Industries, Saurashtra Cement, NCL Industries, Mangalam Cement and KCP were up between 2% to 5% on BSE. READ MORE
1:41 PM Market Check
Equity benchmarks continued to be volatile in afternoon ahead of expiry of September derivative contracts today.
At 1:40 pm, the S&P BSE Sensex was trading at 31,176 up 17 points while the broader Nifty50 index was ruling at 9,728, down 7 points
Agrovet listing additional trigger for Godrej Industries
Strong prospects of subsidiaries and steady performance of its investment companies are expected to be the much-needed shot in the arm for Godrej Industries’ valuation. While it has stakes in Godrej Consumer (23.8%) and Godrej Properties (56.7%), and will benefit from their growth, the immediate trigger is the listing of Godrej Agrovet, its 63.7% subsidiary.
Given that Godrej Agrovet is valued at Rs 8,600-8,800 crore, the value of Godrej Industries’ stake after considering holding company discount would be about Rs 4,200 crore. READ MORE
1:13 PM Gold declines
Gold fell to over one-month lows today as the dollar rose on expectations of a US interest rate hike in December.
US gold futures for December delivery fell 0.36% to $1,283.10 a barrel.
Prince Pipes and Fittings filed draft prospectus with capital market regulator to raise an estimated Rs 800 crore through an initial public offering.
The public issue comprises fresh issue of shares worth up to Rs 500 crore besides an offer for sale by the company's promoters -- Jayant Shamji Chheda, Tarla Jayant Chheda, Parag Jayant Chheda and Vipul Jayant Chheda, according to the draft red herring prospectus (DRHP).
Rai Saheb Reckhchand (RSR) Mohota Spinning & Weaving Mills hit a fresh 52-week high of Rs 256, up 5% on BSE, extending its past one-month rally after the company said it has taken various initiatives including expansion plans.
In the last one month, the stock soared 53% from Rs 167, as compared to 2% decline in the S&P BSE Sensex. In four months, it zoomed 246% from Rs 74 against a marginal 0.42% gain in the benchmark index.
Dr Reddy's gains
Dr Reddy’s Laboratories has moved higher by 4% to Rs 2,409 on BSE in intra-day trade after the company received an Establishment Inspection Report (EIR) from the US health regulator for a unit of its Srikakulam plant in Andhra Pradesh.
“The company's formulation Srikakulam plant (SEZ) Unit I, Andhra Pradesh, have received an Establishment Inspection Report (EIR) from the US FDA,” Dr Reddy’s Laboratories said in BSE filing.
Consumer loans will drive growth: Morgan Stanley
Morgan Stanley is of the view that corporate loan growth will remain muted even when the economy picks up on account of RBI's regulations on exposures to large corporates.
The brokerage, however, added that consumer loans will remain big drivers of growth.
“As data availability becomes better and quicker, banks will be able to roll out new products (for instance HDFC Bank's "loan in 10 seconds"); in our view this, along with fairly strong economic growth, will help drive consumer loan growth at a 17% CAGR over the next decade,” the brokerage said.
Click here for more from the report
12:02 PM Top Sensex gainers and losers
Key takeaways from Morgan Stanley report
Global brokerage Morgan Stanley is bullish on India. It sees a multi-trillion-dollar opportunity in the country, riding on the government's digitisation drive.
In a report titled 'India's digital leap - The multi-trillion-dollar opportunity' released on Wednesday, the brokerage forecasts India's gross domestic product (GDP) to touch $6 trillion -- the third largest in the world -- in the next ten years, and expects Sensex to hit the 100,000 mark with an equity market capitalisation of $6.1 trillion during the same period.
for seven key takeaways from the report:
Ruchi Soya surges 14% post signing distribution pact with Patanjali
Ruchi Soya Industries surged 14% to Rs 25.30 on BSE on back of heavy volumes after the signing distribution partnership with Patanjali.
“The company has signed a memorandum of understanding (MOU) with Yoga Guru Baba Ramdevji promoted Patanjali Ayurved for an exclusive sales and distribution arrangement for the entire range of Patanjali edible oil in large packs,” Ruchi Soya Industries said in a statement. Read full report here
Direct tax receipts may be a spoiler for fiscal maths
Growth in advance tax collections slowed to 11% in the first half of the financial year, against 14% a year ago, posing a challenge to the government’s tax collection target for the year.
This may, in turn, disturb the fiscal maths in these difficult times when the economy is in need of additional expenditure.
Fiscal consolidation is facing challenges from the non-tax revenue side due to lower than expected receipts from spectrum. Besides, the income declaration scheme is likely to yield only Rs 7,000-8,000 crore in its third instalment, due by September 30, against Rs 15,000 crore in the first two. READ MORE
Morgan Stanley report on Consumption sector
We forecast market capitalization of the consumption sector to grow 4x from current levels, to US$2 trillion in the next ten years: Future consumption is being advanced through leveraging, and non-food consumption itself is likely to grow faster than overall consumption, setting this sector, especially discretionary consumption, up for strong performance in the coming ten years. Consumption-related sectors including consumer discretionary and consumer staples are just over 25% of the market. We estimate this ratio could rise to 33%.
10:46 AM Buzzing Stock
Divi's Laboratories rose 1.38% to Rs 861.85 at 10:04 IST on BSE on bargain hunting after yesterday's slide triggered by reports of US drug regulator issuing six observations to the company's Vizag unit.
HPCL, Indian Oil, BPCL hit 8-week lows
Shares of oil marketing companies (OMCs) Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOCL) hit their respective eight-week lows on the BSE.
At 9:49 am, HPCL, BPCL and IOCL were down in the range of 2% to 3%, as compared to 0.06% rise in the S&P BSE Sensex. In past one month these three stocks have underperformed the market by falling between 10% and 13% against 1.9% decline in the benchmark index. READ MORE
10:26 AM Market Check
Benchmark indices pared morning losses to turn flat ahead of September F&O expiry. At 10:25 am, the S&P BSE Sensex was trading at 31,216, up 57 points while the broader Nifty50 index was ruling at 9,731, down 4 points
Rupee at over 6-month low
The rupee took more blows today as it slipped 16 paise to a fresh six and a half month low of 65.88 against the dollar that gained clout overseas on talk of a US rate hike and the prospect of monetary stimulus pullout.
What If Digitization Fails? This means that:
1. GDP will likely settle at $ 5.5 trillion, implying a nominal growth rate of 9% over the next ten years.
2. India's market capitalization could grow more modestly at 9% to $ 5 trillion by 2027.
3. Loan growth by banks will likely be closer to 10% CAGR for the coming decade as MSMEs struggle to get loans and corporates move to bond markets compared to the current base case of ~13% CAGR.
4. Accordingly the financial and consumer sector returns may also be tempered and the respective market capitalizations will likely settle at lower levels somewhere between our bear and base case.
(Excerpt from Morgan Stanley report)
Financials and Consumption Sectors to Gain Share
Together the financials and consumer sectors could account for 63% of India's market by 2027, up from 47% currently, largely at the expense of global sectors such as software services, pharmaceuticals, materials and energy.
We forecast market capitalization of the financials sector to grow 4x from current levels, to $1.8 trillion in the next ten years
(Excerpt from Morgan Stanley report)
GST – Arguably India's Most Important Reform Since the Early 1990s
GST implementation and digitization should help government finances: India's brand new Goods and Services Tax (GST), with its ability to simplify India's complicated indirect taxation system and lift government revenues, has the potential to boost growth. GST com- pletely alters the way government finances are managed in India.
Hitherto, tax collection in India was decentralized, while expenditure was centralized through the Planning Commission, which set expenditure priorities for the states. GST centralizes India's taxation in the hands of the Central Government, while the abolition of the
Planning Commission in 2014 had already set the stage for decentral-ization of expenditure to the state governments. This shift, in our view, will provide a major boost to Indian government finances.
(Excerpt from Morgan Stanley report)
Recent approvals to help Glenmark Pharma scale up FY18 growth
The Glenmark Pharmaceuticals stock has gained over five per cent since its lows this month on brokerage upgrades, which highlight the upside from product launches in the US and the potential of out-licensing deals.
Prior to the upgrades, the stock was under pressure, given the expectations of a drug price erosion of 10-15 per cent in FY18 and a falling contribution from the generic version of Zetia, a drug used to reduce cholesterol levels. Click here for full story
MFs can use interest rate futures to hedge risks: Regulator
Providing more leeway, the Securities and Exchange Board of India (Sebi) on Wednesday allowed mutual funds (MF) to use interest rate futures (IRF) contracts to hedge risks from volatility in interest rates.
An IRF provides for future delivery of an interest- bearing security such as government bonds and such contracts provide an avenue to hedge against risks arising from fluctuations in interest rates.
“To reduce interest rate risk in a debt portfolio, mutual funds may hedge the portfolio or part of the portfolio (including one or more securities) on weighted average modified duration basis by using IRFs,” Sebi said in a circular. READ MORE
Most top equity schemes pip benchmarks
Most of the top equity mutual fund (MF) schemes — which cumulatively account for a fourth of the industry’s assets — have done well this year compared to the benchmark BSE Sensex and the National Stock Exchange’s Nifty.
The average return for the top 10 equity diversified schemes (as of September 26) is 22.34 per cent. In comparison, the Sensex and the Nifty are up 18 per cent and 20 per cent (as of September 26) on a year-to-date basis. Their large assets under management (average Rs 16,000 crore) haven’t impacted their performance. READ MORE
9:27 AM After falling nearly 3% yesterday, Nifty Realty was the top sectoral gainer, up over 1%
9:22 AM Sectoral Trend
9:21 AM Top Sensex gainers and losers
9:19 AM Broader Markets
In broader markets, both BSE Midcap and BSE smallcap indices were little changed
9:18 AM Markets open
Benchmark indices open flat tracking positive cues from the global markets but investors may remain cautious ahead of the September F&O expiry.
At 9:17 am, the S&P BSE Sensex was trading at 31,123, down 36 points while the broader Nifty50 index was ruling at 9,713, down 21 points
9:11 AM Stock recos by Prabhudas Lilladher:
BUY DEEPAK NITRATE
CMP: Rs 185.95
TARGET: Rs 206
STOP LOSS: Rs 174
The stock has been in a consolidation phase for some time at around Rs 175-180 and now it has given a breakout above the level of Rs 184 to indicate potential and strength to rally further in the coming days. The RSI indicator has shown a trend reversal recently and has signaled a buy in this stock. With tremendous rising volume witnessed, we recommend a buy in this stock for an upside target of Rs 206 keeping a stop loss of Rs 174.
Click for more recos
Nifty view by Prabhudas Lilladher:
Nifty, after opening higher on Wednesday, witnessed heavy profit-booking and the fall intensified in the second half of the session to see a close below 9,750 level. The sentiment has turned down and pessimism has crept in and for Nifty the next major support would be at around 9,550 levels. However, the support for the day is seen at 9,680 while resistance is seen at 9,775.
Top trading ideas for today's trade
eClerx - BUY
CMP: Rs 1226.70
Stop Loss: Rs 1169.30
Target: Rs 1320
Adani Ports (OCT Series) - SELL
CMP: Rs 374.8
Stop Loss: Rs 388.30
Nifty Outlook by Sacchitanand Uttekar of Tradebulls
On the daily scale the occurrence of a Marubozu near the support zone of 9,740-9,700 can be considered as the much awaited selling climax awaiting confirmation in terms of price close above 9,820 in the coming 2-3 trading sessions. A follow through move beyond 9,700 on closing basis would negate the setup & serves a key support for the day. We expect the Sept series to conclude within the range of 9,690-9,810 zone. While any follow through action below 9700 could add another 100 odd points to its tally.
Sebi may tighten MFs' risk monitoring practices
Increasing fears of debt default in Corporate India may prompt the Securities and Exchange Board of India (Sebi) to nudge the trustees and sponsors of asset management companies (AMCs) to play a more active role in managing risks.
The regulator is deliberating on making it mandatory for fund houses to form internal risk assessment committees comprising key AMC personnel and external consultants, according to two people familiar with the matter. READ MORE
Govt may sell up to 60% stake in producing oilfields of ONGC, OIL
India plans to offer stakes of up to 60% in oil and gas fields owned by state energy companies that are already under production to private firms, said five government and company sources with knowledge of the matter.
The government is making the decision after failing to draw investment from global oil majors in new fields. The plan would boost India's domestic oil and gas output and would meet Prime Minister Narendra Modi's target to reduce oil imports by 10% by 2022. However, the plan could reduce profits of state-owned companies. READ MORE
Rupee ended at fresh 6-month low on Wednesday
The Indian rupee on Wednesday closed at a fresh 6-month low of 65.71 against the US dollar, 0.4 percent lower than its previous close, as foreign investors continued pulling their money out of Indian securities on worries about ongoing tensions between US and North Korea and about the Indian government overshooting its fiscal deficit target for the year.
8:55 AM Sensex can cross 100,000 mark in 10 years: Morgan Stanley
The government thrust on digitisation could result in a threefold increase in India’s gross domestic product (GDP) and equity market capitalisation in the next 10 years, said Morgan Stanley.
“India’s digitisation drive has raised our confidence in long-term growth estimates. We forecast GDP to reach $6 trillion, equity market capitalisation to rise to $6.1 trillion and the market value of financials and consumer sectors to hit $1.8 trillion and $2 trillion, respectively, by 2027,” said the brokerage.
"We see the BSE Sensex crossing the 100,000 mark, albeit the bulk of the returns are likely to be front ended in the coming five years," Morgan Stanley added. READ MORE
Global oil prices trade mixed
Global oil prices fell on Wednesday while US crude rallied, after crude stockpiles unexpectedly drew with refiners coming back online following Hurricane Harvey last month.
US crude for November delivery ended Wednesday's session up 26 cents at $52.14, but stayed below five-month highs.
Brent crude futures were down 68 cents, or 1.2%, at $57.76 a barrel, slipping from 26-month highs.
Asian peers edge higher
Among global markets, most Asian peers rose in early Thursday trade, after US equities advanced and the greenback rose following the unveiling of a long-awaited tax reform plan stateside.
The Nikkei 225 climbed 0.49% in early trade as oil stocks and most financial names notched gains.
Across the Korean Strait, the Kospi shed 0.04% as automakers stumbled. The tech sector was mixed, but shares of heavyweight Samsung Electronics rose 0.77%.
The Nifty futures were trading largely flat with a hint of a negative bias on the Singaporean exchange, hinting at a similar start to the market here as well. They were trading at 9,731.5, down about 0.05%.
Trump proposes biggest tax overhaul in 3 decades
President Donald Trump on Wednesday proposed the biggest US tax overhaul in three decades, offering to cut taxes for most Americans but prompting criticism that the plan favors the rich and companies and could add trillions of dollars to the deficit.
The plan would lower corporate income tax rates, cut taxes for small businesses, reduce the top income tax rate for individuals and scrap some widely used tax breaks including one that benefits people in high-tax states dominated by Democrats. READ MORE
Wall Street end higher
US stocks closed higher Wednesday after the release of the GOP's tax plan framework and as investors eyed higher interest rates.
The Dow Jones industrial average closed about 56 points higher, after posting its first four-day losing streak since June on Tuesday. Goldman Sachs had the greatest positive impact on the index.
The S&P 500 hit an all-time high of 2,511.75 but failed to set a record close.
8:42 AM Good Morning and welcome to market's live blog. Catch all the live market action here
First Published: Thu, September 28 2017. 15:32 IST