Vinod Nair, Head of Research, Geojit Financial Services
Market ended on a flat note as investors turned more cautious on account of the US Fed policy meeting. Also, the concern on valuation and lack of supportive cues to outpace the resistance influenced investors to book some profit.
3:53 PM Sensex heatmap at close
3:49 PM Market breadth
The market breadth, indicating the overall health of the market, turned negative. On the BSE, 1,310 shares declined and 1,295 shares rose. A total of 162 shares were unchanged.
3:47 PM Broader markets outperform
The BSE Smallcap gained 0.3%, while the BSE Midcap added 0.1%.
3:38 PM Markets at close
The Sensex settled at 32,402, down 21 points, while the broader Nifty50 closed at 10,147, down 5 points.
3:27 PM Volatility index
India VIX rises marginally (up 0.2%) to 11.46.
3:16 PM European markets
European shares opened slightly lower as traders awaited clues from a Federal Reserve meeting on its plans to move towards unwinding its $4.2-trillion portfolio of Treasuries and mortgage-backed securities.
Despite Wall Street reaching new highs yet again, shares in Europe followed Asia’s overnight caution with the pan-European STOXX index down 0.2%, but still in range of six-week highs. German DAX traded lower by 0.09% at 12,546 levels, French CAC 40 slipped 0.16% at 5221 levels and IBEX 35 slipped 0.17% at 10,321 levels.
Orient Bell, Asian Granito hit new high
Shares of ceramic tiles maker were in focus in an otherwise range-bound market. Orient Bell, Murudeshwar Ceramics, Asian Granito India, Nitco, Kajaria Ceramics and Somany Ceramics were up in the range of 4% to 14% on BSE. READ MORE
3:04 PM Markets check
At 3:00 pm, the Sensex was trading at 32,419, down 4 points, while the broader Nifty50 was ruling at 10,151, down 1 points.
ICICI Lombard IPO gets fully subscribed
Indian insurer ICICI Lombard's initial public offering of shares to raise as much as 57 billion rupees ($888.40 million) was fully subscribed early on the last day of the sale on Tuesday, stock exchange data showed. READ MORE
Shares of four state-run gas transmission and distribution firms rose 1.13% to 2.33% at 12:55 IST on BSE after a global research firm reportedly presented a positive view on the sector.
GAIL (India) rose 2.33% to Rs 410. Indraprastha Gas rose 2.02% to Rs 1,469.20. Petronet LNG rose 1.13% to Rs 236.75. Gujarat State Petronet rose 1.42% to Rs 200.10. READ FULL REPORT
2:15 PM Top five gainers on Nifty
Reliance Securities on CDSL
CDSL’s business is characterised by a high degree of predictability and profitability, with the company earning >35% of revenue from annual issuer charges in FY17, which are likely to remain stable-to-growing.
The company has steadily gained market share in its core business vis-à-vis its lone competitor, NSDL and has enjoyed higher incremental market share 4 successive years on low operating cost, net worth criteria and technology investment.
CDSL has also invested in new business initiatives to drive growth, including KYC services, National Academic Depository, insurance repository services, e-voting to corporates, online drafting solutions, KYC search assistance for Aadhaar holders and GST Suvidha Provider.
At the CMP, the stock trades at a PE of 29.5x/26.4x FY19E/FY20E EPS, respectively.
We have a BUY rating on CDSL with a Target Price of Rs 450, which implies a PE of 35x average of FY19E and FY20E EPS.
Broader markets rebound
The BSE Midcap and the BSE Smallcap indices rebounded to add 0.3% and 0.5%, respectively.
At 1:30 pm, the Sensex was trading at 32,426, up 3 points, while the broader Nifty50 was ruling at 10,151, down 1 points.
1:22 PM Buzzing stocks
Graphite India, Himachal Futuristic Communications (HFCL), Centrum Capital, Apex Frozen Foods and Liberty Shoes are among 19 stocks that beat the Sensex after institutional investors, mutual funds and high networth individuals (HNIs) bought shares. READ FULL REPORT
Ideal portfolio mix by Mayuresh Joshi
When the equity markets across the globe are at an all-time high, I am reminded of the old adage ‘Do not put all your eggs in one basket’ The dilemma surrounding the timing of making an investment in a complex, dynamic environment, clobbered by geo-political escalations but aided aptly by abundant liquidity makes decision-making even more onerous. READ FULL ARTICLE HERE
Is rupee depreciation a good idea to perk up economy?
Given the resource crunch of the Centre and the states as well as the limitations of monetary policy tools, depreciating the rupee against the dollar to boost economic growth, which fell to 5.7 per cent in the April-June quarter, is an idea that has found favour among economists. The idea had been broached by former chief economic advisor Shankar Acharya. However, the economists say it could be just a limited option. READ FULL ANALYSIS
Tide Water Oil (India) hit a record high of Rs 6,809, up 5% on the National Stock Exchange (NSE) in intra-day trade, extending its previous day’s 16% rally after Standard Greases and Specialities Private Limited, a joint promoter acquired stake in the company through open market. READ MORE
Infosys inks 7-yr service pact with CMA CGM Group
Infosys, India’s second largest IT services provider, has signed a technology outsourcing deal with French container shipping major CMA CGM Group that mandates it to open a local delivery centre at Marseille ( the port city of France) for delivering services. READ FULL REPORT
Top picks in a bull market
The scaling of a new high by a broader index, such as the Nifty 50 (the S&P BSE Sensex is not far from its all-time high) is a reflection of the elevated investor sentiment and confidence of the Street. While some market experts say the rally in the stock markets is liquidity-driven, others believe it is already factoring in strong earnings growth, moving forward. Many also believe that the markets are being complacent in assuming possible risks. In this backdrop, stock-picking has become even more important. CLICK HERE FOR STOCK PICKS
11:42 AM Buzzing stock
Swan Energy gained nearly 5% to Rs 161 after the company executed agreement with Mitsui OSK Lines for its FSRU port project at Jafrabad, Gujarat.
Edelweiss Securities on TCS
Key highlights of our recent interaction with Tata Consultancy Services’ (TCS) management are: 1) sustained softness in BFSI and retail stemming from lower discretionary spending by large banks and online transition by large retailers, respectively; and 2) strong growth in rest of business (RoB) spearheaded by broad-based spending.
We believe, given substantial contribution of BFSI and retail segments (32.9% & 12.2%) to TCS’ revenue, overall growth in Q2FY18 is likely to remain subdued. Moreover, by virtue of traditionally being a first half revenue-driven company, overall FY18 growth too is likely to be muted. The anticipated soft revenue coupled with rupee strengthening is likely to lead to muted earnings growth in spite of strong execution and offerings.
Maintain ‘HOLD’ with target price of Rs 2,315.
Shares of Jaypee Group companies were under pressure with Jaiprakash (JP) Associates down more than 20% and Jaypee Infrastructure locked in lower circuit of 5% for the second straight day. CLICK HERE FOR DETAILS
Nitin Gadkari says NHAI IPO is 'in process'
The central government might decide to list the National Highways Authority of India (NHAI) on the stock exchanges, as a way to bypass the need for bank funding. And, perhaps also use the engineering, procurement and construction (EPC) model for financing road construction, said Nitin Gadkari, the minister in charge. READ FULL REPORT
Broader markets turn flat
The BSE Midcap and the BSE Smallcap indices pared morning gains and were trading on a flat line.
Markets pare gains
At 10:30 am, the Sensex was trading at 32,360, down 62 points, while the broader Nifty50 was ruling at 10,132, down 21 points.
10:24 AM Buzzing stock
InterGlobe Aviation shed 2% to Rs 1,138 after a share sale by the company, which runs the IndiGo airline, raised Rs 3,790 crore ($591 million), based on the final issue price announced on Monday.
Equinomics on Balmer Lawrie Company Ltd (BLC)
We expect BLC to consistently improve its EPS consistently from Rs.14.95/ in FY2017 to Rs.17/ in FY2018 and further to Rs.19/ in FY2019 due to aggressive expansion plans and anticipated turnaround in the industrial economy. Considering its net cash position, which is 19% of its current market cap and company’s rich real estate asset base, we assign a PE of 15.2x on FY2019E EPS of Rs.19/ and arrive at a target price of Rs.289/, Hence, we recommend a BUY on the stock with a conservative target price of Rs.289/. In case, the company is divested completely, then the stock could become a multi-bagger in the long run
Fundamental view: Tata Global Beverages
Tata Global Beverages Limited (TGBL) is world’s second largest branded Tea company with growing interest in Coffee and water. It has a global footprint and present in 40 countries. The company posted muted topline growth in Q1FY18 with 2% drop however adjusting for adverse forex movement; there was actually an underlying growth of 1%. Despite, the muted topline, the company posted healthy profits on the back of softer raw material prices, efficient cost management.
The stock has underperformed the broader markets for long time however the management is bringing back focus into portfolio of business. Hence, given the restructuring activities taken by the company and improving business prospects the stock is likely to catch up the valuation gap with other consumer players. At Rs 212, the stock is trading at 24.8x FY19E as compared to 34.0x Dabur and 42.4x Britannia. The stock can be bought for 15-20% gain in the near term.
(Source: Nirmal Bang)
Fundamental view: KPR Mill Ltd
KPR Mill Ltd (KPR) is a vertically integrated textile player with presence across the entire value chain from production of yarn to manufacturing readymade garments. The company has made strategic investments in wind and a co-gen power projects for captive consumption which has resulted in self sufficiency of power requirement for the company (majority of the facilities are located in Tamil Nadu, which faces power cuts frequently).
We believe, KPR’s steady financials and volume ramp up in the garment business would help continue generate better cash flows. Currently, KPR trades at 14.3x P/E on FY19E basis, which is justified given the healthy financials. We believe the stock is a good long term portfolio stock and we initiate coverage with a target price of Rs904, valuing it at 16x its FY19E EPS.
(Source: Centrum Wealth Research)
5 money making ideas in this market from Motilal Oswal Research
Continued inflow in domestic funds, benign interest rate environment, stable currency coupled with favorable global cues is driving markets higher. Anxiety in global markets over North Korea has tapered off. Meanwhile India has received Rs 20,000 crore of inflow in domestic mutual funds in Aug’17 – an all-time high.
We believe while valuations are not euphoric, they are rich vs. long period averages and therefore support from earnings pick up is critical to sustain these valuations, going forward. We prefer large-caps to mid-caps owing to valuation gaps. Earnings visibility and valuation comfort are key determinants for our preferred ideas
Tata Group shares in focus after huge block deals; Tata Motors up 4%
Shares of select Tata Group companies such as Tata Motors, Tata Chemicals and Tata Global Beverages were in focus and rallied by up to 4% on BSE in early morning trade after a huge block deals executed on these counters CLICK HERE FOR THE FULL STORY
Banks play 'mind games' to woo customers
Pradipta Sarkar, 37, is saving Rs 10,000 every month, one-fifth of his take-home salary, in a fixed income-linked systematic investment fund (SIP) to build his retirement corpus. But being a soccer fan, his dream is to cheer for his favourite team, Germany, from stadia in the World Cup matches some day. READ MORE
9:46 AM Nifty Auto leading sectoral gainers
Market outlook: Technical view
Continuing its winning spree, the Nifty added 67 points, scaling a fresh record high of 10171.70 after witnessing a gap-up opening and also settled with the highest close. It has given a decisive breakout above our mentioned level of 10150, which signifies further strength.
We had mentioned that “on crossing above 10130-10150 zone, the Nifty can extend its rally towards 10200 level”. This is unfolding nicely. Above 10200, the Nifty can extend gains up to 10240-10250 levels. Immediate support is seen at 10130 followed by 10090
(Source: Emkay Global)
Tata Motors added over 4% to Rs 423 after the auto major's parent firm Tata Sons offered to buy nearly 1.7% of Tata Motors shares worth Rs 2,000 crore at a premium of 4% over Monday's closing price.
9:28 AM Sensex heatmap at open
Broader markets outperform
The BSE Midcap and the BSE Smallcap indices outperformed to add 0.4% and 0.3%, respectively.
Markets at open
At 9:18 am, the Sensex was trading at 32,457, up 33 points, while the broader Nifty50 was ruling at 10,160, up 8 points.
'Frothy' assets spark concerns as cash floods Indian markets
From officials of India’s central bank and the market regulator to fund managers, people are fretting over elevated asset prices. The nation’s equities and bonds have rallied even as economic growth sags to its weakest since 2014, and earnings remain stubbornly weak. The reason: A surge in local flows after last year's cash ban and buoyant global markets.
This divergence is spiking valuations and inciting caution among authorities and strategists. Michael Patra, a member of the Reserve Bank of India’s rate-setting panel, described the conditions as “frothy and bubbly” in the minutes of last month’s meeting CLICK HERE FOR THE FULL STORY
Nifty outlook by Chandan Taparia
Nifty has to continue to hold above 10,138 to extend its move towards 10,200 then 10,270 zones, while on the downside supports are seen at 10,050 and 10,020 zones. READ MORE
The Sensex added nearly 100 points to 32,522, while Nifty hit a fresh high of 10,175, up 22 points in pre-open trade.
Top picks in a bull market
The scaling of a new high by a broader index, such as the Nifty 50 (the S&P BSE Sensex is not far from its all-time high) is a reflection of the elevated investor sentiment and confidence of the Street. While some market experts say the rally in the stock markets is liquidity-driven, others believe it is already factoring in strong earnings growth, moving forward Click here for the full story
bse, sensex, bull
Pick of the week: Astral Poly Technik
Astral Poly Technik (APTL) has increased its manufacturing capacity by ~3x in FY09-16 primarily to cater to the demand from housing and agriculture. APTL plans to enhance its piping capacity to 1.7 Lakh tonnes by FY19E
The company has set up a CPVC compounding plant in Gujarat. Cost savings led by backward integration (making its own CPVC compound) and improved profitability in the adhesive division will lead to EBITDA margin expanding 250 bps to 16.5 % over FY17-19E
Major government infrastructure push and replacement demand from tier II and tier III cities coupled with restocking post implementation of GST is expected to be triggers in near term. Management is confident to achieve double digit volume growth with improving margin in both adhesives and pipes. We maintain a BUY with a target of Rs 791
(Source: Axis Securities)
DSP Blackrock on interest rate outlook
Slow / sluggish growth calls for a case for reduction in rates whilst rise in core inflation doesn’t bode well for interest rates. The key drivers from the recent rise in inflation are primarily from supply side; ie, fuel prices and statistical impact of rise in HRA due to the central pay commission recommendations pushing up housing inflation coupled with GST implementation. Demand side inflation remains contained. Prospects of slow growth curtails rise in inflation as it curtails demand.
The pretext of slow / sluggish growth will keep the room open for rate cut. Limited availability of fiscal space (government spending) and lack / absence of private investment should aid to curb inflationary pressures keeping the room open for a rate cut.
Preview: US Fed meet
Nearly nine years since it began purchasing assets to stimulate the struggling US economy, the Fed appears ready to start shrinking the size of its balance sheet, with Goldman Sachs Research economists expecting an announcement of balance sheet "normalization" at this week's FOMC meeting. What this means for the economy and markets is Top of Mind.
Senior Strategist Allison Nathan explains that the uncharted process should be manageable even for sensitive assets like mortgage-backed securities, given the Fed's plans to shrink its balance sheet gradually by letting maturing assets "run off" from its portfolio rather than actively selling them. There are, of course, factors that could raise the risk of a more disruptive normalization process. Nathan points to changes in Fed leadership, inflation and rate expectations as key areas to watch.
(Source: Goldman Sachs)
Option strategy on Coal India by MOSL
COAL INDIA - BULL CALL SPREAD
IPO watch: SBI Life
At the higher end of the price band of Rs700, the issue is priced at 4.2x its FY17 embedded value of Rs165/share (vs. closest peer ICICI Pru trading at 3.8x its FY17 EV). At this valuation the issue seems fairly priced considering SBI Life is a market leader in most of the parameters.
Going ahead, the company is expected to benefit further from the vast bancassurance and private agent network along with its extensive reach and market share. We believe the company will be able to attract adequate investor interest on the basis of its leadership position and expected healthy growth compared to peers.
Given that the current valuations are mature, investors can subscribe to the issue from a long term perspective. However, it must be noted that, insurance being a steady business, it may not attract major listing gains.
(Source: Centrum Broking)
Market outlook from SMC Global
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 10100 on declines and 10250 on advances.
Nifty outlook and technical calls
With trend of all the periodicities being positive and Nifty closing at all time high levels; the bias is positive for the next projected target of 10,200-10,250. CLICK HERE FOR MORE
Centrum Broking on Sundaram Finance
We retain Buy on Sundaram Finance (SUF) with sum-of-the-parts based target price revised upwards to Rs2,000 (Rs1,740 earlier). The increase in our target price follows: a) revision in earnings estimates for the core - asset financing business and b) higher contribution from the subsidiaries following improved profitability and outlook therein.
Strong capital position, best-in-class asset quality and superior returns profile continue to remain key strengths. Value un-locking through demerger of non-financial investments into a separate entity could lead to further upside in the stock. Prefer Sundaram Finance in the NBFC space
Wall Street update
The S&P 500 ended slightly higher on Monday as financial stocks rose ahead of a Federal Reserve meeting, but the Nasdaq pared gains sharply as technology stocks lost ground late in the session.
The Dow Jones Industrial Average index rose 63.01 points, or 0.28% to 22,331, the S&P 500 gained 3.64 points, or 0.15% to 2,503.87 and the Nasdaq Composite index added 6.17 points, or 0.1% to 6,454.64.
The jubilant mood on the Street could ebb away as investors tune in to global developments. US President Donald Trump may take on North Korea and Iran in his first address to the United Nations today. Chinese President Xi Jinping and Trump spoke about keeping pressure on North Korea with economic sanctions imposed through the United Nations.
The US Federal Reserve’s two-day policy review commences today. While rates may remain unchanged, the Fed stand on policy normalisation is what investors would watch out for. The outlook is a flat start. Indices could swing as profit booking could set in later in the day. SEBI has allowed real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) to raise capital by issuing debt securities
(Source: Amar Ambani, head of research, IIFL)
8:53 AM Asian markets
Asian shares wavered on Tuesday. MSCI’s broadest index of Asia-Pacific shares outside Japan turned slightly higher after dipping into negative territory. Japan's Nikkei stock index surged 1.2% in early trade, catching up to global equities gains and responding to a weaker yen as Tokyo markets reopened after a public holiday on Monday. China's Shanghai Composite, meanwhile, dipped 0.3%, while Hong Kong's Hang Seng index remained little changed.
At 8:50 am, SGX Nifty, Nifty futures being traded on Singapore Stock Exchange, was trading at 10,166, up 13 points or 0.13%.
8:50 AM Good Morning!
Welcome to Business Standard's market liveblog.
First Published: Tue, September 19 2017. 15:36 IST