Vinod Nair, Head of Research, Geojit Financial Services
The Market failed to hold the opening positive momentum as profit-booking emerged towards close due to caution ahead of CPI & IIP data. September CPI inflation is expected to surge to 3.52% from 3.36% while the rising crude oil price and volatility in rupee may limit RBI interference on key rate. Additionally, earnings season will kick-start tomorrow with the result of IT heavyweight and market will take direction from the expectations and the actual numbers.
3:55 PM Nifty IT sole sectoral gainer
3:52 PM Top Sensex gainers and losers at close
3:46 PM Market breadth
Market breadth, indicating the overall health of the market, turned negative. There were at least two losers for every gainer on the BSE. 1,806 shares declined, while 938 shares rose. 106 shares remained unchanged.
After hitting its fresh high, the BSE Smallcap index pared all its gains to end over 1% lower. The BSE Midcap index shed 0.8%.
3:40 PM Markets at close
The S&P BSE Sensex ended at 31,833, down 90 points, while the broader Nifty50 settled at 9,984, down 32 points.
Outlook on auto sector
We continue to believe that the stage is set for strong demand for automobiles across segments on the back of (1) An increase in the government’s capital spending and focus on the rural economy, (2) Higher rural income with well-spread normal monsoon, (3) Increasing per capita income and growing urbanisation, (4) Falling interest costs and (5) Low base effect. In our coverage universe, Maruti Suzuki, Hero Motocorp, M&M and Tata Motors are our top picks. This is owing to the fact that they have an extensive distribution network and strong rural franchise, and would be major beneficiaries of demand revival in the next two years. We also prefer Eicher and Force Motors, given the increasing preference for premium, stylish and differentiated vehicles. We continue to maintain our positive stance on Tata Motors, as JLR’s volume growth momentum is likely to continue with its healthy new product cycle and margin trajectory.
(Source: HDFC Securities)
Edelweiss Securities downgrades Coal India to 'HOLD'
Our target price of Rs 285 has been achieved and we see limited upside hereon as even price hikes of 6% (if taken) would merely nullify the adverse impact on EBITDA due to higher than expected wage increase. We have lowered our dividend yield estimate from 8% to 4-6% now in light of constrained cash accretion. The stock trades at top end of its peers and its own historical trading range. Hence, we downgrade to ‘HOLD/SP’ with revised TP of Rs 275, implying an exit multiple of 14.5x FY19E EPS.
3:16 PM Buzzing stock
Sical Logistics rose over 5% to Rs 213.45 on BSE after the company's board approved a proposal to initiate the buying of 26% stake held by MMTC in the company's subsidiary Sical Iron Ore Terminals.
3:11 PM Global markets
Spanish stocks and bonds rallied and the euro hit a two-week high on Wednesday as European markets took relief from Catalonia stopping short of declaring immediate independence from Madrid.
MSCI’s 47-country world stocks index briefly hit a fresh record high in opening European trading as a 1.5 percent jump in Spain’s IBEX added to a 10-year high set by Asian shares overnight.
The biggest surge came from Spanish banks which rallied as much as 4 percent, while the country’s government bond yields - which gauge political tension levels - saw their second biggest fall in a month.
3:07 PM Volatility index
India VIX rose over 4% to 12 in intraday trade.
India to lose fastest-growing economy tag?
Demonetisation and Goods and Services Tax (GST) seem set to hamper India's growth in 2017-18. The International Monetary Fund (IMF) is the latest to trim its 2017-18 economic growth forecast for India. Even as IMF raised its economic growth projections for most major economies, it did the opposite for India. Also, its projection of 6/& per cent growth for India is lower the 6.8 per cent for China. That means, IMF sees India losing its tag of the fastest-growing major economy. READ FULL REPORT
TCS trades firm ahead of Q2 results
Tata Consultancy Services (TCS) was trading 2% higher at Rs 2,510 on the BSE in an otherwise subdued market ahead of July-September quarter (Q2FY18) results on Thursday, October 12, 2017. READ MORE
2:46 PM Markets check
At 2:45 pm, the S&P BSE Sensex was trading at 31,862, down 67 points, while the broader Nifty50 was ruling at 9,998, down 18 points.
2:32 PM IPO watch: GIC Re
GIC subscription update at 2pm on day 1: Subscribed: Overall 0.72x, Retail 0.03x, QIB 1.41x and Employee 0.05x
Sept retail inflation at 6-month high on GST, public sector pay rise: Poll
India's retail inflation edged up in September, driven by higher salaries of government employees as well as the impact of the Goods and Services Tax (GST), a Reuters poll found, a development that would make further monetary policy easing unlikely. Consumer inflation is forecast to have risen to 3.60% in September from a year ago, above August's 3.36%, the poll of 36 economists showed. The data is due to be released on Oct. 12 at 1200 GMT. CLICK HERE FOR THE FULL STORY
A vegetable vendor counts currency notes as he waits for customers at a wholesale vegetable market in Ahmedabad (Photo: Reuters)
2:14 PM Buzzing stock
Shares of Prakash Industries surged over 3% in intraday trade after ace investor Rakesh Jhunjhunwala increased stake in the integrated steel and power company.
Following the development, the stock advanced 2.88% to Rs 134 on BSE.
1:55 PM Nifty slips below 10,050 in noon deals
Top five losers dragging the index down
1:29 PM Buzzing stock
State-run Dena Bank rose as much as 4.3 percent to its highest since September 26 after the bank sold shares to institutions to raise between Rs 2.75 billion rupees and 4.25 billion rupees.
In the last one year, India has witnessed 3 important structural reforms (Demonetisation, GST, RERA) which are impacting Indian economy and the banking sector. Banking Sector, which is the key driver of Indian economy, is currently going through challenging times due to low credit growth, deterioration in asset quality and low profitability.
Measuring the quantitative impact of implemented/to be implemented structural reforms is always difficult to assess considering its relevance to short-term economic and fiscal costs. Past empirical studies suggest that structural reforms increases the efficiency and competitiveness of the economy, with beneficial effects for long-term fiscal sustainability.
Studies shows that the short-term positive effects of some reforms are stronger during good economic times and weaker during bad times (exactly replicates Indian growth story now). However for benefits to realise, we have to have a little patience as experience of OECD and European countries show that the actual benefits on growth, unemployment and consumption begins to manifest after 2 years. In essence, there could be some postponement of immediate consumption leading to negative impact in short term
(Source: SBI Ecowrap report)
1:07 PM Broader markets
The BSE Midcap and the BSE Smallcap indices pared some gains to trade 0.3% and 0.5% higher, respectively.
Markets at 1pm
At 1:00 pm, the S&P BSE Sensex was trading at 32,036, up 111 points, while the broader Nifty50 was ruling at 10,055, up 38 points.
Shares of Bharti Infratel, Bharti Airtel and Idea Cellular advanced up to 4.5%, following media reports that the KKR-led consortium fund is in talks to buy the tower business. Bharti Airtel was the best performer on Sensex and Nifty.
9 IPOs that gained over 100% against issue price in last one year
Avenue Supermarts, Shankara Building Products, Central Depository Services India (CDSL), PSP Projects, Sheela Foam, Apex Frozen and Endurance Technologies are among nine initial public offers (IPO) that have given healthy returns to the investors over the last one year. READ FULL REPORT
Motilal Oswal on Tata Motors
The stock trades at 21.3x/6.9x FY18E/FY19E consolidated EPS. Maintain Buy with a target price of Rs 562 (Sep-19 SOTP-based) for ordinary shares and Rs 392 for DVR (~30% discount to TP for ordinary shares.
MARKET COMMENT: Rakesh Tarway, Head of Research, Reliance Securities
India continues to remain a popular investment destination and is an overweight in most global portfolios. However, over the past one year, it has underperformed other Asian indices like Hang Seng (up 24%) and Nikkei (up 19%).
Indian Equity markets are waiting for revival of corporate earnings after a very flattish performance over the last 4-5 years. Sub par performance on corporate earnings front coupled with rally in equity markets have taken the valuation to almost all time highs in India. There is a fundamental transition underway in the economy with several first time steps taken during the last one year.
Bad loans hit record $146 billion
Indian banks’ sour loans hit a record Rs 9.5 lakh crore ($145.56 billion) at the end of June, unpublished data show, suggesting Asia’s third-largest economy is no nearer to bringing its bad debt problems under control.
A review of the Reserve Bank of India (RBI) data obtained through right-to-information requests shows banks’ total stressed loans, including non-performing and restructured or rolled over loans, rose 4.5 per cent in the six months to end-June. In the previous six months they had risen 5.8 per cent. READ FULL REPORT
Sector watch: Cement
All-India cement prices declined by Rs8/bag mom in October 2017, maintaining the weak trend seen through the monsoon period. Price changes were marginal in North and West markets while South and East saw a sharp fall of Rs16-18/bag mom. Weak price trends threaten another year of earnings downgrades on the back of optimistic assumptions. Valuations for large-cap names are rich notwithstanding projected strong growth in earnings trajectory. We prefer Grasim Industries and select mid-cap names that offer relative valuation comfort.
(Source: Kotak Securities)
11:47 AM Buzzing stock
Lumax Industries rallied 8% to Rs 1,575 on BSE in intra-day trade on Wednesday, extending its Tuesday’s 6% gain, after the investor Ashish Kacholia bought nearly one percentage point stake in the company through open market. READ MORE
Motilal Oswal on Coal India
We expect the stock to get re-rated because of the many levers that can drive upside to our estimates. Currently, there is shortage of coal, as power plants have destocked heavily. We are raising the valuation multiple from 7.5x to 8x FY19E EV/EBITDA, and also increasing the target price to INR335 (from Rs 305), implying 17% upside. The stock is trading attractively at 7.2xEV/EBITDA, 13.6x P/E and 5.5% dividend yield. Maintain Buy.
11:17 AM Nifty Realty leading sectoral gainer
News digest: Air traffic data
Global air travel demand surged 7% last year to 3.8 billion passengers over 2015 with carriers from Asia-Pacific region accounting for more than one-thirds of the total market share, IATA said. As per the International Air Transport Association (IATA), airlines across the world added 242 million more passengers last year, taking the total number to 3.8 billion as against 3.6 billion in 2015. Significantly, India was the third largest market in terms of domestic passengers after the US and China, accounting for 5.2% in the total local traffic
(Source: Equinomics Research)
Macro data preview: Morgan Stanley
The macro indicators for August / September will be evaluated for signs of an improving growth trajectory and inflationary pressures (which will in turn influence the central bank's decision).
Specifically on the inflation front, we expect both CPI and WPI inflation to have picked up further in the month of September. For CPI inflation, we expect a further rise to 3.8% YoY, inching closer to the central bank's inflation target of 4%. Moreover, the acceleration is expected to have been broad-based for a second consecutive month. In turn, we think that the rising inflation trajectory will mean that the central bank will keep rates on hold. On growth, we expect an improvement in industrial production in August. This would be in line with the manufacturing PMI print which showed a bounce back in the month of August.
At 11:00 am, the S&P BSE Sensex was trading at 32,081, up 157 points, while the broader Nifty50 was ruling at 10,062, up 46 points.
Stock recommendations for today from Angel Broking
Expected to benefit from the lower capex requirement and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage at ICD as well CFS augurs well for the company
Siyaram Silk Mills
Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation.
Coal India Limited: Wage Hike Higher Than Expected
Price Target Rs 249 (from Rs 245)
Key Takeaways: Wage settlement for non executives implies higher than expected wage hike and will result in further rise in wage provisions, in our view. We cut our FY18-19E EPS by 4.9-4.6%. CIL may consider price hike to offset wage hike, but uncertainty remains. While earnings outlook appears unexciting, worst in terms of negative news flow (grade reset, wage hike) is likely behind us. Hopes of price hike and strong dividend yield may offer downside support. Maintain Hold.
(Source: Jefferies report)
Kotak Securities on Cochin Shipyard
Cochin Shipyard (COSH) is a public sector shipyard with an order book of around Rs 8,300 crore providing revenue visibility of 48 months. The current order-book comprises orders from the commercial segment, navy, coast guard and ship-repair segment. We estimate the company to continue to receive orders across segments with the order book growing at 20% CAGR perennially with orders primarily coming from the Navy and Coast Guard.
The company is also ramping up its capacity with a third dry-dock and an international ship-repair center. We are positive on the company for 1) Recurring orders from Navy and Coast guard and 2) Improvement in the prospects of commercial shipbuilding segment.
High margin ship-repairs business is value additive for the company. Expect prospects to improve for the company going forward especially with the Make in India initiative of GOI. Estimate 13% earnings CAGR over FY17 to FY20E with improvement in return ratios post full utilization of IPO money. Value the stock at 25x FY19E PE which is at discount to the mean one year forward PE of major international ship building companies in the current environment. Initiate coverage on the stock with a BUY rating and a target price of Rs 740.
10:46 AM Infosys share buyback: An arbitrage opportunity
HDFC Securities suggests investors use the buyback opportunity for arbitrage. Since the buyback price has been set at Rs 1150 per share, investor can buy from the secondary market now at Rs 935 and offer / tender shares in the buyback later – netting a cool 23% return. CLICK HERE FOR MORE
10:30 AM Buzzing stock
PSP Projects hit a new high of Rs 466, up 13% on BSE in intra-day trade after the company said it has been awarded main contract works at Surat Diamond Bourse, Khajod valued at Rs 1,575 crore. READ MORE
Investment calls should be based on market, not ministers' will: Jaitley
The series of reforms initiated by the Modi government like demonetisation and the GST has put the Indian economy on a "far more stronger track", said Union Finance Minister Arun Jaitley on Wednesday at the Columbia University in New York. READ MORE
Finance Minister Arun Jaitley with Arvind Panagariya at Columbia University. (Photo: Twitter)
BSE Smallcap index hits new high
The S&P BSE Smallcap index hit a new high of 17,020 on BSE in early morning trade on Wednesday, after a strong rally in chemicals, infrastructure, fertilisers, metals and auto parts & equipment stocks. The index surpassed its previous high of 16,982 touched on September 20, 2017 in intra-day trade. READ FULL REPORT
Oil prices extended gains with the US crude posting best daily gain in two weeks, after Saudi Arabia said it would cut oil exports in November.
The West Texas Intermediate for November delivery on Tuesday increased $1.34 to settle at $50.92 a barrel on the New York Mercantile Exchange, while Brent crude for December delivery rose $0.82 to close at $56.61 a barrel on the London ICE Futures Exchange. READ MORE
CLSA on Indian markets
The Indian market is unlikely to make big strides in the near term due to the huge line-up of equity capital raising and selling by foreign institutional investors (FIIs). “With the expected weak trend in FII flows and continued high equity supply, Indian markets will likely end 2017 on a flattish/subdued note,” said CLSA in note dated October 9. READ FULL REPORT
9:30 AM Sectoral trend
9:26 AM Sensex heatmap at open
9:23 AM Broader markets
The BSE Midcap and the BSE Smallcap indices gained 0.5% and 0.8%, respectively.
9:21 AM Markets at open
At 9:18 am, the S&P BSE Sensex was trading at 32016, up 91 points, while the broader Nifty50 was ruling at 10053, up 36 points.
Stocks in news
Bharti Infratel, Biocon, Coal India, Prakash Industries, Dena Bank, and more
The S&P BSE Sensex oepned positive in pre-open trade to trade above 31,900, while the broader Nifty held above 10,000.
Technical picks by HDFC Securities
Buy Sterlite Tech
CMP: Rs 244
Stop loss: Rs 230
Target: Rs 265
Nifty outlook by Chandan Taparia
Nifty formed a Doji candle for second day in a row and this candle suggests that Bulls and Bears are fighting hard near 10,000 mark. Now it has to continue the formation of higher lows to extend the move towards 10,080, and then 10,150 zones, while on the downside support is seen at 9,980 then 9,950 levels.
8:53 AM Technical calls by Prabhudas Lilladher
BUY CASTROL INDIA
CMP: Rs 367.95
TARGET: Rs 405
STOP LOSS: Rs 350
Devangshu Datta on Nifty, Bank Nifty, Tata Steel, Bharti Airtel, and Bajaj Auto
Kotak Securities on Engineers India
EIL management expects pickup in domestic order flows in 2HFY18-19 mainly driven by 1/ pick up in brownfield expansion of various small (sub 3mmtpa) refineries in India, 2/ integration of refineries with petrochemical units 3) awarding of Greenfield orders mainly Barmer Rajasthan and West Coast refinery and 4) other initiatives such as pipeline expansion by Gail and investment in strategic storage facilities by OMCs.
We reiterate our long term positive view on EIL; expect significant improvement in FY19 earnings driven by uptick in execution and margin expansion on back of operating leverage. We value EIL at PER 25x FY19 core earnings and maintain BUY rating with unchanged target price of Rs 182.
8:27 AM GIC Re IPO opens today. Should you invest? CLICK HERE TO READ MORE
Nirmal Bang on Natco Pharma
We expect Copaxone generic approval to provide Natco Pharma (NPL) a strong foundation for base earnings over the next four to five years after which Revlimid generic opportunity will kick in and help build over this base. In the near term, the extraordinary cash flow on account of limited competition nature of the opportunity will strengthen its balance sheet for executing growth plan on a rising earning base. We see the risk-reward profile as positive. Mylan has announced that they might get 180 days exclusivity. However if the same is not granted, the launch timeline can get delayed up to FY19.
After this approval, we have incorporated Copaxone generic sales in our estimate, which we had earlier excluded from our core business estimate and valued it separately. We have also revised our target price on NPL to Rs1,102 (from Rs940 earlier), rolling over our target EPS from March FY19 to September FY19. We have assigned a target P/E multiple of 20x based on FY20 earnings. We have lowered our target valuation multiple from 22x to 20x as we expect the growth rate to taper on a rising earning base. We have upgraded our rating to Buy (from Accumulate earlier).
8:08 AM MAS Financial Services Limited IPO subscribed overall 129.03x at 07.00 pm day 3 (October 10, 2017). Retail subscribed at 15.63x, QIB 149.31x, NII 381.02x and Employee 2.42x
Asian shares rose on Wednesday, tracking Wall Street’s rally to all-time highs, while the euro hovered near a 10-day peak after Catalonia’s leader talked down immediate plans to secede from Spain, easing near-term concerns about euro zone instability.
MSCI’s broadest index of Asia-Pacific shares outside Japan nudged 0.24% higher to test a recent decade peak of 545.56. Australian stocks jumped 0.6% to one-month highs and New Zealand's index climbed to a record. South Korea's KOSPI added 0.3% to a 2-1/2 month peak.
Wall Street up date
Wall Street hit fresh record intraday highs on Tuesday, helped by a jump in Wal-Mart and energy stocks, but the gains were limited by declines in Amazon and technology stocks.
The Dow Jones Industrial Average rose 0.31% to 22,830.68 points, a record-high close. It is up 15.5% in 2017. The S&P 500 gained 0.23% to 2,550.64 and the Nasdaq Composite added 0.11% to 6,587.25.
At 8:00 am, the SGX Nifty was trading at 10,074, up 31 points or 0.31%.
7:59 AM Good Morning!
Welcome to Business Standard's market liveblog.
7:58 AM Good Morning!
Welcome to Business Standard's market liveblog.
First Published: Wed, October 11 2017. 15:32 IST