Anand James, Chief Market Strategist, Geojit Financial Services
Domestic indices extended gains backed by a strong rally in IT and pharma midcap stocks. Pressure of the upcoming earnings season kept the investors on the edge which capped further gains, but dipping India VIX value indicates that volatility expectations are falling and that investors are not unduly worried.
3:47 PM Sctoral trend
All but Nifty Realty and Nifty FMCG settled in green.
Nikhil Kamath, Co-Founder and Head of Trading, Zerodha
Global markets continued to move up and provided considerable support to the overall market. Domestic money continued to gush in as well, adding further impetus to the market. The rupee seems to be strengthening again which is positive for the overall sentiment. Sector wise, Pharma and Banking held up for the session whereas oil marketing companies and FMCG underperformed. Midcap indices outperformed with nearly 200 stocks hitting fresh 52 week highs on the BSE.
Overall, we remain cautious on the markets and would not advise taking fresh positions at this juncture.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,587 shares rose and 1,135 shares fell. A total of 124 shares were unchanged.
3:40 PM Sensex heatmap at close
Broader markets outperform
The BSE Smallcap index added nearly 1%, while the BSE Midcap index gained 0.6%.
3:36 PM Markets at close
The S&P BSE Sensex ended at 31,924, up 77 points, while the broader Nifty50 closed at 10,019, up 31 points.
3:26 PM Top five Nifty gainers in last leg of trade
Cochin Shipyard surged 10% to Rs 568 on the National Stock Exchange (NSE) after the company bagged an order worth Rs 5,400 crore from the Indian Navy.
“The company has received communication from the Ministry of Defence (Navy) that the company has emerged as the L1 bidder for 16 X ASW SWC Project for the Indian Navy,” Cochin Shipyard said in a statement. READ FULL REPORT
MCX gets Sebi nod for gold options
The Multi Commodity Exchange (MCX) has received the Securities and Exchange Board of India's (Sebi's) approval for the launch of gold option contracts with 1 kg gold futures the underlying commodity. In a circular, the exchange said that the date for launching options in gold would be announced separately but traders expect it to start trading around Diwali time. READ MORE
2:55 PM Buzzing stock
Biocon moved higher by over 5% to Rs 363 on BSE in noon deals after the company said the US Food and Drug Administration (USFDA) has issued a Complete Response Letter (CRL) for proposed Biosimilar Pegfilgrastim. READ MORE
How diamonds can become 'the new gold' for investors
Diamonds can at last be an investor's best friend, the Singapore Diamond Investment Exchange (SDIX) said on Tuesday, as it launched a new standardised form of the precious stones to rival gold ingots as a safe-haven alternative to cash. READ FULL REPORT
2:21 PM Broader markets
Broader markets continued to trade strong with the BSE Midcap and the BSE Smallcap gaining 0.5% and 0.6%, respectively.
2:02 PM Markets check
At 2:00 pm, the Sensex was trading at 31,937, up 90 points, while the broader Nifty50 was ruling at 10,017, up 28 points.
Tata Tele, RCom, Dena Bank hit 52-week lows
Tata Teleservices (Maharashtra) dipped 15% to Rs 4.25, extending its 18% decline of the last three trading sessions, after the media reports suggested that Tata Teleservices is likely to shut down its operations this month. The stock is trading close to its all-time low of Rs 4 touched on March 26, 2013 on the BSE. READ MORE
Sebi diktat to impact large funds the most
Large fund houses will be impacted the most by the Securities and Exchange Board of India’s (Sebi’s) new diktat to bring all equity schemes under 10 sub-categories. An analysis of existing large-cap, mid-cap, small-cap, multi-cap and tax planning categories shows fund houses such as ICICI Prudential MF, Sundaram MF, Birla Sun Life MF and Reliance MF have the larger number of schemes between them, totalling in excess of 150. READ FULL ANALYSIS
1:10 PM Sectoral trend
Nomura on Future Retail
Future Retail recently announced the acquisition of HyperCity, one of India’s leading food & grocery retailers. We believe that the acquisition is the step in the right direction, and with Future group’s strong logistics ability and sourcing prowess, the turnaround should be quick. The acquisition is synergistic, in our view, and would give the company an opportunity to extend its reach in key metro areas, access to loyal membership-based shoppers and an opportunity to push its private labels.
We believe the acquisition should be EBITDA positive in FY19F and contribute positively to EPS from FY19F. Consequently, we have increased our revenue estimates by 2% and 6% for FY18F and FY19F, respectively; our EPS forecasts decrease due to additional share issuance. Our EBITDA assumption is unchanged for FY18F but increases by 3% for FY19F.
China may beat its 2017 growth target?
China will have no problem meeting its economic growth target of around 6.5% this year, and may even beat it, the head of the Statistics Bureau said on Tuesday, confirming widespread market expectations.
Steps taken by the government to rein in the overheated property market have also been effective and will remain in place, Ning Jizhe told reporters in a briefing in Beijing. READ MORE
Broader markets outperform
Broader markets outperformed with the BSE Midcap and the BSE Smallcap indices gaining 0.6% and 0.8%, respectively.
12:35 PM Markets check
At 12:30 am, the Sensex was trading at 31,932, up 85 points, while the broader Nifty50 was ruling at 10,014, up 25 points.
Nomura on banks
Q1FY18 slippages for corporate banks were affected by granular slippages (retail/agri), which we expect to normalise in Q2FY18F. Also, among large and mid-corporates, telecoms (Aircel and Rcom) should lead to some rise in slippages over the next two-three quarters, but otherwise we expect a meaningful reduction in slippage levels – we expect 2QFY18F slippages to drop by 45% for PSU banks over FY17 levels, while for Axis/ICICI, we expect slippages to drop by 15% vs. FY17. Provisioning will remain high as banks provide for National Company Law Tribunal cases (RBI requires + 50% provisioning) and ICICI/SBI will likely use capital gains from subsidiary stake sales to improve their overall provision coverage, in our view.
Stock watch: NBCC
NBCC management, during our recent interaction, indicated a shift in focus from order accretion to execution. The company is now geared to award design-build contracts/turnkey contracts of INR10bn plus and prune execution timeframe to 18-24 months. While it has already awarded Rs 60bn worth projects (Pragati Maidan, Ghosikhurd irrigation) over the past 1.5 months, tendering is underway for several large projects. We expect execution to gather pace in FY19 when work gathers steam on AIIMS, redevelopment projects in Delhi, among others. Maintain ‘HOLD’ with target price of Rs 223.
(Source: Edelweiss Research)
BSE Smallcap index nears record high
The S&P BSE Smallcap index, the largest gainer among broader indices, was up 1% at 16,890 at 11:15 AM today, gaining for the eight straight trading day. The index is just 0.5%, or 92 points, away from its record high of 16,982 touched on September 20, 2017 in intra-day trade. READ MORE
Reliance Securities on Skipper
Skipper continues to deliver a strong performance in its net revenue led by healthy performance in Engineering Products and Infra Projects segments.
Its outstanding order book stands at Rs 2640 crore, which is 1.5x of FY17 revenue. Robust order book provides revenue visibility in T&D business, while expansion in PVC business would aid Skipper to sustain healthy earnings profile, going ahead.
We expect Skipper’s Revenue & PAT to witness 15% & 24.6% CAGR, respectively over FY16-FY19E, while RoCE is seen at 22.9% by FY19E. we maintain our BUY recommendation and Target Price of Rs 254.
Earnings preview: Capital goods
Our coverage universe is likely to witness ~12% YoY growth in revenues. While AIA, Skipper and Engineers (EIL) India may clock healthy revenue growth at ~14% plus, Cummins India (CIL) is likely to witness lower growth at ~10% due to sluggish exports. While the growth in Skipper is aided by the capex in the Power Transmission segment, EIL’s growth is on the back of a strong orderbook mainly comprising of Hydrocarbon projects. Rolling forward the valuation methodology from Jun-19E to Sept-19E, the SOTP target price for Skipper has increased to Rs 261/share (vs 253/share earlier). The target price for CIL has increased to Rs 1,007 (vs Rs 974). Also the target price for EIL has increased to Rs 183 (vs Rs 174).
(Source: HDFC Securities)
Adani Transmission hit a new high of Rs 193, up 10% on BSE, after the company said it has entered into a period of exclusivity with Reliance Infrastructure (RInfra) until January 15, 2018 in relation to discussions for the proposed acquisition of the integrated business of generation, transmission and distribution of power for Mumbai City from RInfra. READ MORE
Markets extend gains
At 11:15 am, the Sensex was trading at 31,9831, up 36 points, while the broader Nifty50 was ruling at 10,029, up 40 points.
Edelweiss Securities on Tata Steel
We are upbeat on Tata Steel’s initiative to focus on domestic market by doubling capacity in next five years and enhance presence in value-added segments. On retail front, the focus on innovative products is expected to boost profitability through decommoditising steel besides opening up new avenues for growth. Maintain ‘BUY/SO’ with our SoTP-based target price of Rs 720, implying exit multiple of 6.4x FY19E EBITDA. At CMP, the stock is trading at 6.3x FY19E EBITDA.
Q2 Earnings preview
The corporate results for the September quarter (Q2FY18) are expected to be better than those in the June quarter (Q1FY18), which was a disaster, given that it saw a bigger earnings de-growth than anticipated. READ FULL PREVIEW
Infosys was up 2.4% to Rs 945 on BSE in intra-day trade, extending its 3% gains of the past three trading sessions, after the company fixed November 1, 2017 as record date for share buyback. READ FULL REPORT
Angel Broking on Dewan Housing Finance
Rating: Accumulate; Target price: Rs 610
With a focus on the low and medium income (LMI) consumer segment, the company has increased its presence in tier-II & III cities where the growth opportunity is immense.
Financials rule IPO scene this year
This has been a record year for initial public offerings (IPOs) with fundraising crossing the Rs 30,000 crore-mark in the first nine months itself. Typically, in a bumper year, fundraising is well-distributed across sectors. Unfortunately, that’s not the case with the primary markets this year. An analysis of sector-wise distribution of capital raised this year shows every second rupee has been raised by financial sector firms. READ FULL ANALYSIS HERE
Nifty outlook by Angel Broking
One should avoid aggressive longs in the index at this juncture and should rather focus on individual stocks that are offering trading opportunities in both directions. For Tuesday's session, 10,015-10,043 would be seen as immediate hurdles; whereas, on the lower side, any sustainable move below 9,959 would result into some weakness towards 9,930-9,880 levels.
Lupin gained nearly 3% to Rs 1,070 after the pharmaceutical company said it has received final approval from the US health regulator to market generic Nadolol tablets, used for treatment of hypertension, in the American market. CLICK HERE FOR DETAILS
MAS Financial Services Limited IPO subscribed overall 4.84x at 05.00 pm day 2 EOD (October 09, 2017). Retail subscribed at 6.32x, QIB 5.77x, NII 0.47x and Employee 1.85x.
Kotak Securiries downgrades Insecticides (India) to SELL
After a strong Q1FY18 with 15.9% yoy growth in revenue of Insecticides (India) Ltd (IIL), Q2FY18 is expected to be a flattish quarter due to weather concerns, high base of last year, etc. The monsoon weakened in the month of August 2017, after timely onset in the month of June 2017 followed by strong rainfall in July.
The uneven rainfall in the season with rainfall deficit of 5% of long period average (LPA) may negatively impact farm output and has also affected the growth expectations of the agrochemicals sector for FY18. This has also increases risk of downgrade in revenue guidance of IIL which was earlier at 15-20% growth for FY18. However, the company is confident of increasing EBITDA margins by 200 bps led by improved product mix. Based on revenue downgrade risk and stock trading above our target price, we downgrade our rating on the stock to SELL from (Buy earlier) with unchanged target price of Rs 830.
(Source: Kotak Securities report)
The BSE Midcap and the BSE Smallcap indices gained 0.4% and 0.5%, respectively.
9:26 AM Sensex heatmap at open
Technical check on the markets
Nifty closed in the positive territory in last trading and it achieved our short term target of 9990 which is 61.8% retracement of the fall from 10180 to 9687 levels. The momentum indicators have been into sell mode still which is a short term worry for the bulls. However, the indicators are showing signs of reversal on the daily charts. If the Index has completed the expanded flat pattern then a probability of a new high is quite high, hence on the lower side 9850 is a very crucial support. On the upside, 10020 is a crucial resistance in the short term, which when taken off will lead to further up move till 10100 levels and thereafter new highs i.e. till 10200 levels.
(Source: Anand Rathi Research)
Markets at open
At 9:19 am, the S&P BSE Sensex was trading at 31,920, up 74 points, while the broader Nifty50 was ruling at 10,015, up 26 points.
BUY JAIN IRRIGATION
CMP: Rs 99.65
TARGET: Rs 109
STOP LOSS: Rs 92.50
Technical view on Nifty, Bank Nifty, ONGC, Hindustan Unilever, NTPC by Devangshu Datta
9:00 AM Wall Street update
Wall Street fell from record levels on Monday as gains in Microsoft and other technology stocks failed to offset a drop in General Electric and a slide in healthcare stocks.
The Dow Jones Industrial Average declined 0.06 percent to end at 22,761.07, while the S&P 500 lost 0.18% to 2,544.73. The Nasdaq Composite dropped 0.16% to 6,579.73.
Asian markets rose on Tuesday. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5%. Japan’s Nikkei stock index reversed early losses and gained 0.4% as markets reopened after a public holiday on Monday.
Korean shares rallied 2% on their first day of trading this month, on expectations that tensions with Pyongyang could ease, and as tech shares led by Samsung Electronics Co Ltd caught up with gains made by global stock markets after a long break.
Seoul markets were closed last week and on Monday for public holidays.
8:55 AM Singapore Nifty
At 8:55 am, SGX Nifty was trading at 10,016, up 6 points or 0.06%.
8:54 AM Good Morning!
Welcome to Business Standard's market liveblog.
First Published: Tue, October 10 2017. 15:34 IST