Jayant Manglik, President, Retail Distribution, Religare Securities
Nifty opened with an uptick and managed to settle with decent gains amid volatility. Buoyancy on the local front helped the index to make a firm start as participants took note of RIL's results and contraction in trade deficit figure. Some support also came in with further strengthening of rupee against the dollar combined with favorable global cues. However, traders really had a tough time on specific stocks due to excessive volatility. On sectoral front, noticeable buying was witnessed on metal, pharma, realty and auto stocks while PSU banks remained under pressure.
We reiterate our positive view on Nifty and expect 10,400 to be tested shortly. Any intermediate pause or decline should be considered as buying opportunity. Volatility is not new during the earnings season, so traders should focus on position management also.
3:48 PM Sectoral trend at close
3:46 PM Sensex heatmap at close
3:44 PM Bharti Airtel top gainer
Bharti Airtel hogged limelight with the stock rallying nearly 6% to Rs 457, its nine-year high. The telecom giant last week announced its decision to combine operations with Tata Teleservices and Tata Teleservices (Maharashtra).
3:36 PM Markets at close
The S&P BSE Sensex ended at 32,633, up 201 points, while the broader Nifty50 settled at 10,230, up 63 points.
Fundraising via IPOs at record high; crosses Rs 40,000 crore mark in CY17
With the initial public offering (IPO) of General Insurance Corporation of India (GIC Re) getting fully-subscribed, fund-raising through the IPO route has hit a record high so far in 2017, crossing Rs 40,000 crore mark. Thus far in the calendar year 2017 (CY17), 28 companies have collectively mopped up Rs 44,853 crore through IPOs, surpassing its previous high recorded seven year ago. In entire CY10, as many as 64 companies had raised Rs 37,535 crore via IPOs. CLICK HERE FOR THE FULL STORY
The average Sensex return for these months is a negative 1.55%
3:26 PM Buzzing stock
Visa Steel surged 19.78% to Rs 21.50 on BSE after the Reserve Bank of India hiked foreign investment limit in the company to 74% from 24%.
European markets edged slightly higher on Monday morning as investors monitored the latest in political news coming out of Austria, Spain and the UK.
The pan-European STOXX600 added 0.2%, while Spain's IBEX was down 0.7%. The MSCI world equity index, which tracks shares in 47 countries, was up 0.1%, fueled by the earlier gains in Asia and those in Europe.
3:02 PM Markets check
At 3:00 pm, the S&P BSE Sensex was trading at 32,641, up 208 points, while the broader Nifty50 was ruling at 10,233, up 65 points.
Competition in telecom sector to remain intense: Moody's
Competition in the Indian telecom sector is expected to remain intense over 12-18 months despite consolidation as leading operators look to safeguard their turf, according to Moody's.
"While consolidation activity is positive for the industry in the long-term, we still expect competition to remain intense over the next 12-18 months as leading operators - like Bharti, Vodafone India and Reliance Jio Infocomm Limited - look to protect and grow market share," it said. READ MORE
Federal Bank hits record high post Q2
Federal Bank hit a new high of Rs 124, up 6% on the BSE after the bank reported 31% year on year (yoy) growth in net profit at Rs 264 crore in September quarter (Q2FY18), on back of higher interest income. It had posted a net profit of Rs 201 crore in the same quarter last fiscal. READ FULL REPORT
Rupee trades strong vs dollar
The rupee gained for a sixth consecutive session, partly as inflows into debt markets remained strong, rising to as much as 64.69 per dollar, its strongest since September 21.
1:59 PM Stock recommendations by Angel Broking
Bulls make a case for book value
The bulls have now turned their attention away from corporate earnings and its derivative, the price-earnings (P/E) multiple, to valuations based on book value or net worth per share. While the P/E multiple of the market is near an all-time high, valuations still look reasonable on a price-to-book (P/B) value basis, say experts. READ FULL ANALYSIS
ICRA on WPI data
In line with our expectations, the WPI inflation corrected sharply to 2.6% in September 2017 from 3.2% in the previous month. The correction in vegetable prices was the chief driver of the decline in primary food inflation to 2.0% from 5.8%. A favourable base effect aided the moderation in inflation for fuel and power, despite the recent rise in prices of petrol, diesel, ATF and other fuels. While global crude oil prices remain firm, which would impact the WPI inflation, the recent cut in central excise duty on petrol and diesel by Rs. 2/litre, as well as reduction in VAT on these fuels by some state governments, would dampen inflation for mineral oils in October 2017.
1:23 PM Sectoral trend in noon deals
Prabhudas Lilladher on IndusInd Bank
IndusInd Bank (IIB) concluded its much speculated merger with Bharat Financial Inclusion (BFIL) with deal consideration of 639 shares of the IIB for every 1,000 shares of BFIL which implies a dilution of 14.7% for IIB shareholders at CMP and implies a premium of 12‐13% for BFIL shareholders on CMP.
The bank will continue existing operations of BFIL under a wholly owned subsidiary, though assets will move to IIB’s balance sheet. We see the deal slightly expensive, though it has positive bearing on return ratios in near term. In the medium to long term we see positive outcome as strong penetration of BFIL in rural with robust technology platform will help IIB cross sell both liability & asset products. We have retained our estimates (pre‐merger) and retain “BUY” with target price of Rs 1,952 based on 3.9x Sep‐19 ABV (pre‐merger).
Bharti Airtel hits two-year high
Bharti Airtel has hit a two-year high of Rs 441, up 2% in intra-day trade, extending its past four day gain on the BSE, after the company on Friday, October 13, said it had agreed with Tata Teleservices Limited (TTSL) and Tata Teleservices Maharashtra (TTML), to combine their consumer mobile business (Tata CMB) with Bharti. READ MORE
Will equities outshine other asset classes in Samvat 2074?
Equities have had a good run in Samvat 2073, with the Nifty rising about 16 per cent until October 9, 2017. Debt markets have given muted returns as the benchmark 10-year yield has remained flat at 6.7-6.8 per cent between the two dates. Interest rates for fixed income investors have also softened through the year. Even gold prices have not moved much over this period. Realty prices have either remained flat or softened. READ MORE
12:10 PM September WPI at 2.6%
12:01 PM Markets at Noon
Bharat Financial Inclusion hit its 52-week high of Rs 1,047, up 4.4%, while IndusInd Bank dipped 3% to Rs 1,700 on the BSE in intra-day trade after the board of respective companies approved a merger of the two entities to create a stronger and more sustainable platform for financial Inclusion. READ MORE
Morgan Stanley view on Asian economies
Japan will, in our view, generate the strongest earnings growth of any major region this year (+38%). The multiple has moved up since our last Almanac, but it is still the only major region to have de-rated in forward P/E terms since the end of 2016. China and Hong Kong earnings beat is much stronger than APxJ EM average, prompting investors to continue to reduce their Underweight positions. India's structural reduction in inflation and improved current account are leading to a secular reduction in interest rates, driving domestic flows toward equities. Weak GST implementation is the latest shock to hit near-term GDP growth, although some high-frequency data is starting to reverse.
We therefore continue to prefer Japan to the broad EM/AxJ universe. We also stay overweight China and India and UW South Africa and Australia ahead of the next update of our country model; noting India's shortfall in GDP growth relative to our expectations in recent quarters but recent signs of future improvement.
11:44 AM Broader markets
Broader markets were up marginally with the BSE Midcap and the BSE Smallcap indices gaining 0.1% each.
11:43 AM Markets check
At 11:40 am, the S&P BSE Sensex was trading at 32,538, up 105 points, while the broader Nifty50 was ruling at 10,202, up 35 points.
Nomura on IndusInd Bank
While the acquisition of an MFI business at +5x FY17 book is not cheap on an absolute basis, the finalised swap ratio will not be dilutive for IndusInd Bank either on a FY19F EPS or a book basis, on our calculations. We remain positive on IndusInd Bank and keep our target price of Rs 1,850 (implying 3.6x Sep-19F book of Rs 509)
Edelweiss on MCX
Multi Commodity Exchange’s (MCX) Q2FY18 earnings were stable and on expected lines (PAT at INR283mn). The quarter was characterised by good revival in volumes—ADTV up >17% QoQ (albeit, still below historical run rate)—but lower realisations restricted operating revenue growth to <13% YoY. Meanwhile, the company reported second consecutive quarter of controlled opex (flat QoQ), which bolstered earnings. This also vindicates our stance that as volume growth kicks in, MCX will reap benefit of operating leverage.
Post demonetisation and GST, volumes have rebased, but post that growth has been encouraging. Additionally, structural levers such as: a) introduction of options & institutional participation; and b) shift from dabba trading post demonetisation, will provide a leg up. Overall, structural growth visibility and MCX’s leadership are envisaged to drive the stock’s further re‐rating. Maintain ‘BUY’.
Diwali dhamaka: Stocks to buy in Samvat 2074
Markets have taken all developments – geopolitical tensions between the United States (US) and Korea, monetary policies of various central banks, outcome of US presidential election at the global level and impact of demonetisation, goods and services tax (GST) rollout back home – in their stride. During the year (Samvat 2073), benchmark indices, the S&P BSE Sensex and the Nifty 50, gained around 16% and 17%, respectively.
Here is a compilation of the top stocks that leading research houses and brokerages have recommended for Samvat 2074.
New kid on the block
Godrej Agrovet made a strong debut by listing at Rs 621, a 35% premium against its issue price of Rs 460 per share on the BSE. On the National Stock Exchange (NSE), the stock opened at Rs 616, 34% higher against issue price. READ MORE
10:04 AM Buzzing stock
Reliance Industries (RIL) hit a new high of Rs 890, up 1.6% on the BSE in early morning trade, after the company reported a 12.5% increase consolidated net profit at Rs 8,109 crore for the second-quarter ended September 2017 (Q2FY18) on back of higher margins from its core refining and petrochemical businesses. READ MORE DETAILS
Wipro top loser ahead of Q2
Wipro shed nearly 2% to Rs 287 and was the top loser ahead of its September quarter earnings due on Tuesday. The company is expected to report 2.2% dollar revenue growth, while constant currency (CC) growth is seen at 1.2% QoQ, says Prabhudas Lilladher.
INTERVIEW OF THE DAY
Given the strong growth in Asia and easy monetary stance taken by central banks other than the US Federal Reserve (US Fed), overseas investors will soon start re-investing in risky assets, says ABHIRAM ELESWARAPU, head of equity research, BNP Paribas Securities India. READ FULL INTERVIEW
Abhiram Eleswarapu, Head of equity research, BNP Paribas Securities India
Emkay Global on RIL Q2
We see less room for upgrade in our JIO TP (Rs125), as for FY19 we have already assumed ARPU of Rs163/month with active subscriber base of 180mn against current ARPU of Rs156/month with 131mn active subscribers. Upgrade can materialise going forward if the cost structure remains leaner than our estimates (like in Q2FY18). Moreover, recent rally in the stock (~10% in 10 days) has largely captured most of the positives from JIO’s performance. Thus, we maintain our HOLD rating with target price of Rs 843
Equinomics view on IndusInd-Bharat Financial Inclusion (BFI) deal
IndusInd Bank has formally announced acquisition of Bharat Financial Inclusion. (BFI). The valuation of this acquisition is at 5.4 times BFI’s adjusted book value as on March 31, 2017 and 53 times its net profit in FY2017. We believe that such huge valuation for a microfinance company could eventually trigger further consolidation of Old Private Sector Banks (OPSBs) like South Indian Bank. These banks have much bigger business sizes, have a successful history of 8 decades to hundred years and also have access to cheap public deposits. They also have diversified lending portfolios. Most importantly, they trade at valuation in the range of 1.2x to 2.5x their adjusted book values.
Some of the new large private banks are trading at 4x to 5x their book values. Till now they have been growing their business by around 35% yoy. However, the industry credit growth is now at poor single digit at around 7%. In our view, for some of these large private banks, it is going to be very difficult to maintain such high credit growth in the future and hence, it may be difficult to command such high valuation (4x to 5x adjusted book values) in the markets. Therefore, considering these two developments, we believe that the consolidation which started 2 decades in the OPSB space would get renewed thrust going forward. Hence, we continue to suggest our clients to focus on the OPSB segment for investments.
9:29 AM Sectoral trend
All sectoral indices on NSE were trading in green.
9:26 AM Sensex heatmap at open
9:24 AM Nifty opens at record high
At 9:20 am, the S&P BSE Sensex was trading at 32,648, up 215 points, while the broader Nifty50 was ruling at 10,230, up 62 points. The 50-share index hit an intraday high of 10,234, its fresh lifetime peak.
Technical calls by Angel Broking
Last Close: Rs 187.90
Technical calls by Prabhudas Lilladher
CMP: Rs 332.40
TARGET: Rs 375
STOP LOSS: Rs 310
At 9:05 am, the S&P BSE Sensex was trading at 32488, up 55 points, while the broader Nifty50 was ruling at 10,167, up 71 points.
9:06 AM Good Morning!
Welcome to Business Standard's market liveblog.
First Published: Mon, October 16 2017. 15:34 IST