Anand James, Chief Market Strategist, Geojit Financial Services
Domestic indices couldn't sustain the momentum from a positive opening and exhibited volatility on the backdrop of BSE putting a noose around the neck of 200 illicit companies by announcing compulsory delisting from Wednesday. On the other hand, FIIs persistent selling also seems to have impeded the general strength of the market. However, oil marketing companies continued to show strength fuelled by upbeat gross refining margins and the recent developments in the re-organization of heavy weights from the sector.
3:52 PM Sectoral trend
3:46 PM Sensex gainers and losers at close
3:42 PM Market breadth
The breadth, indicating the overall health of the market, was weak. On the BSE, 1,649 shares declined and 925 shares rose. A total of 128 shares were unchanged.
Broader markets underperform
The BSE Midcap and the BSE Smallcap indices closed 0.4% and 0.3% lower.
Markets at close
Sensex closed at 31,291, up 33 points, while the broader Nifty50 ended at 9,765, up 11 points.
3:22 PM Energy stocks gained with HPCL, BPCL and IOC rallying up to 3%.
Stock trading volume light but don't blame the eclipse
US stock futures trading volume fell during the two hours on Monday that people across a large portion of the United States donned special glasses to catch a glimpse of the first total solar eclipse to unfold across the country in nearly a century. READ FULL STORY HERE
3:12 PM Infosys turmoil
The Securities and Exchange Board of India (Sebi) will keep a close watch on the share price movement of information technology bellwether Infosys, the market regulator's chairman Ajay Tyagi said on Tuesday. READ MORE
European markets trade higher
European stocks broke a three-day losing streak on Tuesday, building on gains in other markets boosted by signs of a global economic recovery and rising commodity prices. Gains for heavyweight miners boosted European shares after strong commodities prices steadied Asian markets earlier in the session.
The FTSE 100 rose 0.7%, led higher by mining stocks. The Stoxx 600 was up 0.5% and the Xetra Dax was 0.7% higher.
At 3:00 pm, the Sensex was trading at 31,322, up 63 points, while the broader Nifty50 was ruling at 9,773, up 19 points.
2:55 PM Buzzing stock
Hercules Hoists surged over 14% to Rs 152 on BSE after a bulk deal of 12.89 lakh shares was executed on the scrip at Rs 144 per share in the opening trade.
FPIs turn net sellers of equity
Foreign Portfolio Investors (FPIs) have turned net sellers of Indian equities in the past seven trading sessions, offloading a net amount of over Rs 10,000 crore. READ FULL REPORT HERE
2:04 PM Buzzing stock
Dr Reddy's Laboratories rose over 3% to Rs 2,011 and was the top gainer on Sensex after the company announced the out-licensing of DFD-06 to Encore Dermatology.
DBS CIO Investment Insights: EM Outperforms DM on Mounting US Political Turmoil
The writing has been on the wall – Developed Markets (DM) equities valuation is expensive and global investors have been hesitant to add on positions. Valuation for the S&P 500, in particular, is looking stretched and it should not come as a surprise that portfolio allocators pare down their exposure in the face of the rising turmoil in US President Donald Trump’s fledging presidency.
Emerging Markets (EM), on the other hand, managed to outperform DM as the North Korean tension eased while investors look for cheaper exposure to equities. Meanwhile in currencies, the US Dollar Index (DXY) has seen a massive correction this year and the prevailing dollar weakness will have meaningful implications on the earnings trajectory of US corporates. Geared beneficiaries include the technology and materials sectors. This week, all eyes will be on the Jackson Hole meeting
At 1:30 pm, the S&P BSE Sensex was trading at 31,370, up 112 points, while the broader Nifty50 was ruling at 9,790, up 36 points.
NOMURA ON ECONOMIC GROWTH
high-frequency data suggest that while survey-related indicators slowed sharply after the GST, real activity data were more mixed. Consumption and services growth indicators bounced back in July, but industry, investment and external sector data remain weak, or have slowed at the margin.
Leading indicators, though, are clearly signalling a growth recovery by year-end, aided by remonetisation and an improvement in financial conditions. Given the impact of the GST and in line with our indicators, we expect only a modest recovery in GDP growth to 6.6% y-o-y in Q2 compared to 6.1% in Q1, which was affected by demonetisation. However, in H2 2017, we expect growth to accelerate sharply to 7.4%
RELIANCE SECURITIES ON EMAMI
We believe that adverse impact of GST is transitory in nature and will correct itself in coming quarters with steady up-stocking by the trade, good monsoons and other favourable macroeconomic factors. We expect the Company to witness a gradual recovery in 2QFY18 and a full-fledged recovery from 3QFY18 onwards.
Based on estimated adjusted EPS of Rs35.3, the stock currently trades at reasonable valuation of 31.4x FY19E earnings. We maintain our BUY recommendation on the stock with a revised rolled forward Target Price of Rs1316, based on 35x June’19 earnings.
IPO WATCH: Apex Frozen Foods Ltd
AFFL has shown consistent growth in sales as well as profitability. Sales have grown at 28.6% CAGR between FY13-17 while PAT grew by 27.6% during the same period with consistently higher RoE of over 25%. Shrimp business in India is growing and the company has vast opportunities for exports as well. With the expansion the company is likely to maintain the sales and profitability momentum in coming years.
Though there is no direct comparable listed company, we have taken Avanti Feeds (engaged in Shrimp feeding), Waterbase (Shrimp feeding) and Zeal Aqua (Shrimp farming) as peers. We like the business model of the company given its high asset turnover, customer stickiness and integrated business operations. At upper price band of Rs 175, the stock looks attractive and hence recommends investors to subscribe the issue for listing as well as long term gains
(Source: Nirmal Bang)
ECONOMY WATCH: ICRA ON GDP GROWTH
ICRA expects the growth of the Indian gross value added (GVA) at basic prices in year-on-year (YoY) terms to moderate to 6.3% in Q1 FY2018 from 7.6% in Q1 FY2017, with a slowdown in expansion of the industry (to 3.9% from 7.4%) and services (to 8.2% from 9.0%) outweighing the impact of the anticipated pickup in agriculture (to 4.0% from 2.5%)
Industrial growth is expected to slow to a modest 3.9% in Q1 FY2018 from the healthy 7.4% in Q1 FY2017, led by manufacturing, electricity, gas, water supply and other utility services and construction.
services sector growth is expected to ease to 8.2% in Q1 FY2018 from 9.0% in Q1 FY2017, led by the weak trend in earnings, displayed by two of the key sub-sectors, namely banks and telecom, as well as the sluggish momentum recorded by non-food bank credit, commercial paper etc
HDFC SECURITIES ON JAIN IRRIGATION
Jain Irrigation Systems Ltd (JISL), for Q1FY18 on a consolidated basis, reported subdued numbers. Revenue grew 1% YoY to Rs1,681 crore, owing to the impact of GST on businesses and currency headwinds. Although near term growth is expected to be subdued, we believe the long term triggers are intact. We maintain our Accumulate rating and target price of Rs112 (12x FY19E EPS). Key growth drivers: Better investment in the infra space (Smart cities), mandatory micro-irrigation systems, improving balance sheet position.
Indian Hotels Company slips
Indian Hotels Company was trading 6% lower at Rs 112.50, extending its Monday’s 3% fall on BSE, after the company said its board approved the fund raising of upto Rs 1,500 crore through rights issue.
Tata Group hospitality firm said the objective of the rights issue is to meet the long-term financing needs for capital expenditure, growth plans and debt repayment.
Indian Hotels has a consolidated gross debt of Rs 3,383 crore. After taking into account liquidity of Rs 161 crore, the net debt was Rs 3,221 crore as at June 30, 2017 (Q1FY18).
Fortis Healthcare erased losses after hitting 30-month low of Rs 126, down 13% on the National Stock Exchange (NSE) in intra-day trade, on the back of heavy volumes. At 12:43 pm the stocks was trading 2.5% lower as against 0.4% rise in BSE Sensex
GDP growth seen at 6.6% for April-June quarter: Nomura
India is expected to see a modest recovery in GDP growth at 6.6% for the April-June quarter as compared to 6.1% in January-March, which was affected by demonetisation, says a Nomura report.
Economic activity in the country, which had lost some momentum in the run up to the Goods and Services Tax (GST) rollout, has started to recover, according to Nomura.
"Given the impact of the GST and in line with our indicators, we expect only a modest recovery in GDP growth to 6.6% year-on-year in Q2 (April-June) compared to 6.1% in January-March, which was affected by demonetisation. However, in the second half of 2017, we expect growth to accelerate sharply to 7.4%," it said in a research note.
12:13 PM Realty drags
Extending fall for third consecutive session, Nifty Realty fell 0.5% dragged by DLF, Sobha, Unitech and IndiaBulls Real Estate
Balakrishnan seeks exit of Infosys chairman, co-chairman
Former Infosys chief financial officer (CFO) and N R Narayana Murthy supporter V Balakrishnan has sought the resignation of four members of the company board, including Chairman R Seshasayee and Co-chairman Ravi Venkatesan, over alleged governance failure.
Following last week’s public spat at the information technology (IT) bellwether, he suggested that the board be reshuffled before a new chief executive is named to replace Vishal Sikka, who resigned on Friday after three years at the helm over “malicious personal attacks amplified by the very people from whom we all expected the most steadfast support”.
Click here for full story
V Balakrishnan, former Infosys, chief financial officer
11:39 AM Buzzing stock
Westlife Development surged 15% to Rs 283, also its 52-week high on BSE in intra-day trade, on back of heavy volumes. The company is owner of the Master Franchisee of McDonald’s restaurants in West and South India.
The trading volumes on the counter jumped more than eight-fold with 179,000 shares changed hands on BSE till 11:17 am as against an average 21,000 shares were traded daily in past two weeks.
HDFC Life IPO: Not much room to bargain
A finer reading of HDFC Life’s draft red herring prospectus could prompt investors to question if the mega-merger of HDFC Life and Max Life is truly a missed opportunity, particularly for HDFC Life.
That may seem justified looking at the way the insurer's financials stack up against ICICI Prudential Life (I-Pru Life) and SBI Life, which are ahead in terms of income and net profit. HDFC Life’s market share has receded from 7.6% in FY16 to 6.9% as of July 31, 2017.
Click here for full report
Fortis Healthcare at 30-month low
Fortis Healthcare has hit 30-month low of Rs 126, down 13% on the National Stock Exchange (NSE) in intra-day trade, on the back of heavy volumes. The stock was trading at its lowest level since February 11, 2015.
On August 14, Fortis Healthcare had informed the stock exchanges that, Fortis Healthcare Holdings Private Limited, the promoter of the company, sold 5.46 million (1.05%) equity shares on August 10, through off-market.
India-focussed offshore funds, ETFs mop up $2.6 billion in Q1
India-focussed offshore funds and exchange-traded funds (ETFs) continued to receive robust flows during the June quarter (Q1), with inflows of $2.6 billion, higher than the $2 billion received in the previous quarter.
The total assets of the 10 largest India-focussed offshore funds and ETFs grew 7.5% to $27.3 billion. Two Japan-domiciled funds mopped up $1.2 billion of the inflows, the most within the category.
In the six months to June, the category received net inflows of $4.6 billion compared with net outflows of $2.3 billion in Q1 of FY17, according to a note put out by fund tracker Morningstar India.
Click here for full story
10:27 AM Infosys slips in red
Infosys erased morning gains to fall over 1%, to hit a fesh 52-week low of Rs 862
Things to know avout Apex Frozen Foods IPO
The company will hit the capital market today to raise up to Rs 152 crore through its initial public offer (IPO). It will close on August 24.
The IPO of up to 87 lakh equity shares of face value of Rs 10 each will be offered through a book-building route at a price band of Rs 171-175 per share. At the upper end, the shares can fetch up to Rs 152.25 crore while at the lower limit, the company will raise at least Rs 148.77 crore.
The issue will comprise of fresh issue of 72.50 lakh shares and an offer for sale of 14.50 lakh shares by promoters.
Click here for more details
HCL Infosystems surged 17% to Rs 50.50 on BSE in early morning trade after the company on Monday said it will distribute Apple products, including the iconic iPhone, in the Indian market.
“The Distributor Agreement for distribution of iPhone and other Apple Products has been signed with M/s Apple India Private Limited (M/s Apple),” HCL Infosystems said in a statement.
The company had said in July that it was in discussion with the US-based tech giant to distribute its products in India.
Click here for more
9:54 AM Buzzing stock
Share price of Lupin advanced as much as 3% in intra-day trade after it received an establishment inspection report (EIR) from the US Food and Drug Administration (USFDA) for its Aurangabad facility in Maharashtra indicating closure of inspection.
The facility was inspected by the USFDA in April this year.
9:50 AM Broader markets
Broader markets erased all gains to slip in red with BSE Midcap little changed while BSE Smallcap fell 0.3%
9:49 AM Market check
Benchmark indices erased opening gains to turn flat with Nifty50 slipping below the 9,800 levels.
At 9:48, the S&P BSE Sensex was trading at 31,305, up 46 points while the Nifty50 was ruling at 9,764, up 10 points.
9:37 AM Stock in news
HPCL gained over 3% after ONGC on Monday gave ‘in-principle’ approval to acquire government’s 51.11% stake in the company.
9:34 AM Infosys gains
Infosys gained over 1% on value buying, snapping its 2-day losing streak. The stock lost over 14% in 2 sessions after the Vishal SIkka resigned as company's CEO and MD on Friday.
9:27 AM Sectoral Chart
9:24 AM All sectoral indices were trading in green in the early morning trade. Metal, pharma and realty indices were the top sectoral gainers
9:23 AM Top gainers and losers on BSE Sensex
9:21 AM Broader Markets
Broader Markets were trading in line with the benchmark indices with BSE Midcap and BSE Smallcap up 0.6% each
9:20 AM Markets at open
Benchmark indices opened higher with Nifty reclaiming its 9,800-mark tracking gains in Asian markets after Wall Street ended higher in the overnight trade.
At 9:18 am, the S&P BSE Sensex was trading at 31,426, up 167 points while the broader Nifty50 index was ruling at 9,810, up 56 points.
ONGC board approves HPCL takeover
ONGC and HPCL will be in focus after the board of state-owned ONGC on Monday gave ‘in-principle’ approval to acquire government’s 51.11% stake in HPCL, the company said in a regulatory filing.
Option strategy on Tata Steel by Chandan Taparia of MOSL
BUY 1 LOT OF 630 CALL
SELL 1 LOT OF 640 CALL
1. Positive sector outlook with sustained buying at every small decline
2. It has been making higher top – higher bottom on weekly chart and given a decent weekly close
3. A hold above 630 could take the stock towards 640-645 zones
Trading ideas from Prabhudas Lilladher for today's trade:
CMP: Rs 448.75
TARGET: Rs 480
STOP LOSS: Rs 430
BUY MAX INDIA
CMP: Rs 139.20
TARGET: Rs 150
STOP LOSS: Rs 134
BUY TECH MAHINDRA
CMP: Rs 431.10
TARGET: Rs 465
STOP LOSS: Rs 415
Nifty Outlook from MOSL
Nifty index failed to hold above its crucial hurdle of 9,880 and corrected sharply after breaking its immediate support of 9,775 mark. It formed a bearish candle on the daily chart and closed below to its 50 DEMA which has a negative implication if follow up selling continues.
The index is just few points away from the major support trend line by connecting the lows of 9,088, 9,448, 9,685 and 9,720. If this trend line is broken decisively then short term trend may continue its pace of selling pressure towards 9,600 zones while on the upside resistances are shifting lower to 9,820
Click here for stock recos from MOSL
9:03 AM Intraday support for Nifty seen at 9,700, says Prabhudas Lilladher. CHECK OUT THEIR STOCK PICKS FOR THE DAY
9:01 AM Nifty to witness selling pressure in the short-term, says Chandan Taparia CLICK HERE FOR MORE
9:00 AM Gold falls
Gold prices were a touch lower amid a steady dollar early on Tuesday, with investors eying developments on the geopolitical front and remaining cautious ahead of an annual central banking meeting in Jackson Hole later this week.
ICICI SECURITIES ON AVIATION SECTOR
The July 2017 preliminary monthly traffic data shows passenger growth of ~13% in July. Doubting Thomases would suspect a slowdown in domestic aviation. Our belief rests on the contrary; because the lower traffic growth is only a reflection of the engine problems faced by neo engines which are operated by InterGlobe Aviation (IndiGo) and Go airlines (Go). The underlying growth of the market remains strong. This can be checked by the traffic growth ex-IndiGo, ex-Go.
With airline companies reporting a strong Q1FY18 (IndiGo and SJet reported 37%/18% PAT growth), there are tailwinds of lower base due to demonetisation in Q3FY17 and higher fare momentum in FY18 YTD. Reiterate BUY on IndiGo (target Rs 1,446) and SpiceJet (target Rs 150).
BSE to 'compulsorily' delist 200 companies on Wednesday
Leading stock exchange BSE will 'compulsorily' delist 200 firms this week and bar their promoters from the markets for 10 years as trading in these shares have remained suspended for over a decade. All these companies will be delisted from August 23.
The move also comes at a time when authorities are clamping down on shell companies -- listed as well as unlisted -- for allegedly being used as conduits for illicit fund flows, said a report.
Among the firms to be delisted are Eupharma Laboratories, Athena Financial Services, Magnus Rubber Industries, Rajasthan Polyesters, Transpower Engineering, Dupont Sportswear, Dynavox Industries and GDR Media. A majority of these companies have remained suspended for more than 10 years and are “under liquidation”.
Click here for more details
MOTILAL OSWAL RESEARCH ON INFOSYS
Return of business stability may be prolonged till Infosys is settled on dual fronts of:  New CEO search, and  Peace between the current Board and Mr. Narayana Murthy, amid what is a battle out in the open. Given that Panaya acquisition and the associated corporate governance issues have been at the center of the saga, we believe there may be calls for significant Board changes as well.
These factors may limit upside despite attractive valuations. Our price target of Rs 1,030 (15x forward earnings) implies a 17% upside, driving our Buy rating. We will revisit the same as developments around the differences and appointment of the new CEO unfold.
Infosys headquarters in Bengaluru
The Nifty50 futures on the Singapore Stock Exchange were trading 39 points higher at 9812 indicating a flat to positive opening for the domestic market.
EDELWEISS RESEARCH ON NIFTY EARNINGS
Nifty earnings contracted 12% (2% contraction estimate) in Q1FY18. As a result, FY18/19E EPS was downgraded by 3-4%. Current FY17/FY18E/FY19E Nifty EPS is pegged at Rs 450/515/630 (consensus: Rs 450/500/605), implying 16-18% earnings CAGR over next two years.
Post the earnings downgrade, the implied asking rate for next 9 months in FY18 is 20% EPS growth (Consensus: 16%). While earnings are likely to bounce back (owing to low base effect of demonetisation and GST re-stocking) from current subdued levels, there are risks to FY18E earnings.
We maintain our bullish stance on markets despite subdued earnings outlook, with Nifty target of 11,100 by June 2018. This is mainly premised on fundamental transitions taking place in the economy, along with much higher than anticipated interest rate cuts and strong domestic flows, which warrant higher valuations in our view
Market outlook for the day
Today the markets are likely to open on flat note. All emerging markets are trading mixed. The coming session is likely to witness a range of 9650 (Nifty) on declines and 9850 on advances: SMC Global
Asian shares edged higher following Wall Street
Asian shares edged higher on Tuesday, taking solace from modest gains on Wall Street even as investors remained wary ahead of the annual central banking conference in Jackson Hole later this week.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1%.
South Korean shares added 0.5%, despite lingering worries about tensions on the Korean peninsula.
Japan's Nikkei stock index dipped 0.1%, while Australian shares added 0.2%.
8:46 AM Wall Street gains in overnight trade
US stocks rose after two days of declines, though a drop in oil prices weighed on energy shares and tensions between the United States and North Korea kept investors on edge.
Market participants began to turn their focus to the Federal Reserve meeting at Jackson Hole, Wyoming later this week which will be attended by Fed Chair Janet Yellen, European Central Bank president, Mario Draghi, and other global central bankers.
The Dow Jones Industrial Average rose 29.24 points, or 0.13%, to 21,703.75, the S&P 500 gained 2.82 points, or 0.12%, to 2,428.37 and the Nasdaq Composite dropped 3.40 points, or 0.05%, to 6,213.13.
8:44 AM Good morning and welcome to market's libe blog. Catch all the live market action here.
First Published: Tue, August 22 2017. 15:35 IST