Vinod Nair, Head of Research, Geojit Financial Services
The market continued to consolidate amid lack of fresh triggers for a decisive up-move. The global uncertainties are not completely out of the wood but the degree of threat is narrowing which will keep the long term outlook intact.
3:49 PM Nifty Auto slips 0.5% ahead of GST Council meet on car cess
3:43 PM Sensex heatmap at close
Broader markets underperformed with BSE Midcap and the BSE Smallcap indices losing 0.4% and 0.1%, respectively.
Markets at close
The Sensex ended at 31,687, up 24 points, while the broader Nifty50 settled at 9,934, up 5 points.
Saudi Aramco IPO
When oil giant Saudi Aramco discloses its financials for the first time next year, it must either surprise investors with world record profits or reduce its aspirations for a $2 trillion valuation in its initial public offering (IPO). READ FULL REPORT
3:19 PM European markets
European markets were trading lower as the stronger euro - a hit to exporters’ profits - continued to take the shine off one of the most favoured trades from earlier this year. The pan-European Stoxx 600 was down by around 0.29% after the opening bell, with almost all sectors and major bourses trading in the negative territory. FTSE 100 was down by 0.23% at 7,380. CAC 40 also was down by 0.21% at 5,103. DAX also reduced by 0.15% at 12,278.
3:13 PM Buzzing stock
Mahindra and Mahindra slipped over 3% and was the top index loser ahead of the GST Council meet to decide the quantum of cess hike in each variety of car on SUVs and luxury cars.
3:05 PM Top five losers on Nifty
At 3:00 pm, the Sensex was trading at 31,704, up 41 points, while the Nifty50 was ruling at 9,936, up 7 points.
2:45 PM Buzzing stock
8K Miles Software Services hit 52-week low of Rs 436, down 9%, extending its Thursday’s 3% fall on BSE. CLICK HERE FOR FULL REPORT
Motilal Oswal on Shree Cement
SRCM is the most cost-efficient cement producer in India. Its superior execution capability enables it to achieve RoIC of over ~50% (FY19E). SRCM’s gross-block-to-capacity (GB/capacity)-currently at ~USD53/tonne – has been structurally trending downward, as the proportion of brownfield expansion has increased. Its GB/capacity is at 28% discount to peers, which is also reflected in its superior RoCE.
We believe SRCM deserves to trade at premium valuations; we value the cement business at 15x FY20E EV/EBITDA to arrive at a target price of Rs 22,360. Buy.
China August imports beat forecasts
China posted stronger-than-expected import growth in August, reinforcing views that the world's second-largest economy is still expanding at a healthy pace despite tighter policy.
China's imports grew 13.3% from a year earlier, official data showed on Friday, handily beating analysts' forecast of 10%, after rising 11% in July. READ MORE
1:58 PM Buzzing stock
Tata Metaliks surged 5.57% to Rs 808 on BSE, with the stock extending its recent rally on sustained buying interest. CLICK HERE FOR MORE
Broader markets off day's high
The BSE Midcap and the BSE Smallcap indices were down 0.5% and 0.2%, respectively.
1:32 PM Markets check
At 1:30 pm, the Sensex was trading at 31,659, down 3 points, while the broader Nifty50 was ruling at 9,926, down 3 points.
1:23 PM 60 stocks rally over 25% so far this week
Bombay Dyeing and Manufacturing Company, Himachal Futuristic Communications (HFCL), Career Point, NDTV, Aarvee Denims, Jai Corp and Kolte Patil Developers are among 60 stocks that have rallied over 25% during the current week. At 12:39 AM; the S&P BSE Sensex was trading at 31,691, falling 0.63% thus far in the week. READ MORE
Sebi explores blockchain use for share market
The Securities and Exchange Board of India (Sebi) is exploring how blockchain technology could be used in the stock market.
Blockchain is a digital ledger technology, gaining popularity worldwide in the supply chain industry and for financial transactions. The technology is considered the backbone for use of crypto currencies such as Bitcoin.
According to sources, information technology major IBM, one of the pioneers of blockchain, gave a detailed presentation to Sebi on how the system could be put to use in stock markets. The meeting was attended by top Sebi officials. They were briefed on how blockchain could improve efficiency and transparency in the stock markets, sources add. READ MORE
The logo of the Securities and Exchange Board of India (SEBI) is pictured on the premises of its headquarters in Mumbai (Photo: Reuters)
Window for small businesses: Composition scheme under GST may return
The composition scheme, which is applicable to specific categories of small businesses whose turnover is Rs 75 lakh and below and had been closed on August 16, may return soon.
With just about a million taxpayers opting for the scheme, the goods and services tax (GST) Council will consider reopening the window in its meeting on Saturday in Hyderabad, giving another opportunity to small players to avail of it.
“Smaller players reportedly faced challenges with respect to registration. Some wanted more time to evaluate their business models to comply with the requirements of the composition scheme. So, we want to give them another chance,” said a senior government official.
Why voluntary PF is the best plan for salaried employees
With interest rates on bank deposits (both fixed and savings) and small savings instruments headed downward, fixed-income investors are on the lookout for a product that can give them an attractive rate of return without having to court risk. One instrument is Voluntary Provident Fund (VPF).
If you are a salaried employee, 12 per cent of your basic salary plus dearness allowance would already be going into the Employees' Provident Fund (EPF) each month. Your employer would be making a matching contribution. In addition, you can also invest up to 100 per cent of your basic salary plus dearness allowance in VPF. READ MORE
Dr Reddy’s Laboratories slumps
Dr Reddy’s Laboratories dipped 7% to Rs 2,066 on the National Stock Exchange (NSE) in intra-day trade after the company said its formulations manufacturing facility in Duvvada, Vishakhapatnam, got zero critical and six major observations from the Regulatory Authority of Germany.
“The products manufactured at the facility are not currently exported to EU. The company will be submitting a corrective and preventive action plan (CAPA) to the authorities,” Dr Reddy’s Laboratories said in a statement. READ MORE
Fund Pick: DSP BlackRock Opportunities Fund
Launched in May 2000, DSP BlackRock Opportunities Fund is classified under the diversified schemes of CRISIL Mutual Fund Ranking. The fund's quarterly average assets under management (AUM) tallied at Rs 2,450 crore in June 2017 under the guidance of Rohit Singhania.
The fund has consistently outperformed the benchmark (Nifty 500) and its category (funds ranked under the diversified category in June 2017 CRISIL Mutual Fund Ranking) in all time frames under analysis.
Out of six market phases, the fund outperformed the category in the two recent phases of Chinese slowdown and global liquidity, and the domestic reforms-driven rally. However, it outperformed the benchmark in all the market phases. During the recent rally, the fund outdid the benchmark and its peers with a significant margin. READ MORE
11:38 AM Buzzing Stock
Shares of Vista Pharmaceuticals was locked at 5% upper circuit on the back of EIR received from USFDA.
The company's formulation facility situated at Telangana has received Establishment Inspection Report (EIR) from USFDA, thereby confirming the closure of the inspection.
11:21 AM L&T up over 4%
L&T surged over 4%, becoming the top gainer on benchmark indices, on hopes of new defence contracts. arsen and Toubro (L&T) is planning to bid for $28 billion of orders, including warships and submarines, in India as Prime Minister Narendra Modi breaks with tradition to embrace private, local suppliers.
India’s new defence purchase policy that allows non-state local firms to compete for orders from the military is helping the nation’s biggest engineering firm to become more ambitious, Jayant Patil, head of L&T’s defence business, said in an earlier interview. The company is building on its success with a $700-million order for artillery guns in May, unprecedented in size for a local contractor, he added. READ THE EARLIER INTERVIEW HERE
Emami - Buy Target price – Rs. 1316
With flagship brands such as Navratna, Boroplus, Fair & Handsome and Zandu, Emami is the leading player in the FMCG sector with market leadership in all four categories. Some of its flagship brands have demand that is seasonal in nature.
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 31.7x 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.
(Source: Reliance Securities)
11:11 AM Broader Markets
In broader markets, the BSE Midcap was trading 0.1% lower while the BSE Smallcao index was up 0.22%
11:05 AM Market Check
Equity benchmarks were off opening highs due to lack of global as well as domestic cues.
At 11:04 pm, the S&P BSE Sensex was trading at 31,656, down 6 points while the Nifty50 index was trading at 9,937, up 7 points.
Bombay Dyeing extends rally
Bombay Dyeing and Manufacturing Company is locked in upper circuit for the third straight trading session, up 5% at Rs 161.05 on BSE.
The stock, trading at its fresh 52-week high, has gained more than double in past one month. It rallied 101% from Rs 80.20 on August 8, as compared to 1% decline in the S&P BSE Sensex. READ MORE
Focus on infra, power, exports to boost growth: Raghuram Rajan to govt
Former Reserve Bank of India governor Raghuram Rajan said the Centre should focus on the levers it has control over — namely infrastructure, power, and exports — to boost growth.
“Let us focus on things we have control over. Let us ensure that the infrastructure we have built actually gets completed. That is a lever that the government can push harder. Can we solve impediments like land acquisition, given the political capital this government has?” Rajan said at the launch of his new book I Do What I Do in New Delhi on Thursday. READ MORE
Punj Lloyd surges
Shares of Punj Lloyd sorged over 9% in early trade after the company received a letter of award for Rs 870 crore.
The company has been issued the letter of award (LOA) in respect of construction and commissioning of balance/left out canal work including cross drainage structures & design for Gosikhurd National Project in Bhandara, Nagpur and Chandrapur districts of Maharashtra for VIDC, Phase - I / Pkg - I.
IPO: Matrimony.com Ltd. – Subscribe
Issue Opens: 11-September-17, Issue Closes: 13-September-17, Price Band: Rs 983-985
Matrimony.com, India’s leading online matchmaking service, is all set to capitalise on a strong database of marriageable-age members. Given its strong brand recall and robust network of 140 retail centers besides growing awareness of internet usage, the company is perfectly poised to dominate the largely unorganised and fragmented matchmaking market.
IPO proceeds are expected to be gainfully utilised leading to higher revenues from increased brand awareness and lower rentals and interest expenses. Focused expansion of its marriage services business through cross selling and assisted services could also help the company move up the value chain.
The stock is available at ~51x FY17 P/E with a 10% discount to retail investors. It may be noted that the nature of the Matrimony.com business is not comparable to that of Just Dial and Info Edge. We recommend Subscribe for listing gains.
Biocon was up 5.3% to Rs 353 on BSE in early morning trade after the company’s insulin manufacturing facility in Malaysia received a Good Manufacturing Practices (GMP) compliance certificate from Europe’s drug regulator.
“Biocon’s subsidiary in Malaysia, Biocon Sdn. Bhd., has been issued Certificate of ‘GMP Compliance’ from Europe for its insulin manufacturing facility in Malaysia,” the company said in a regulatory filing.
Read full report here
Biocon's facility. Photo: Company's website
Chris Wood of CLSA in his weekly note, GREED & fear
The official narrative of financial markets this year is that G7 central bank policy is in the process of normalising. Bank of Japan officials are hoping that the extreme limits have already been reached in the Japanese central bank experiment in unconventional monetary policy. This is not just because BoJ Governor Kuroda’s term in office formally ends in April next year. It is also because there is growing comfort taken from the pickup in economic activity.
The Bank of Japan remains nowhere near meeting the 2% inflation target set by Kuroda when he became BoJ governor back in April 2013. No one expects the 2% target to be reached save for some dramatic short-term spike caused by a macro shock. Just how difficult 2% will be to achieve has become clear in the recent past given the lack of upward pressure on wages and prices despite the accumulating evidence of an ever tighter labour market.
A year after Jio launch, RIL sees more upgrades
Reliance Industries (RIL) is upbeat about its telecom venture Reliance Jio at the end of its first year of launch. RIL’s investments of over Rs 1,50,000 crore in telecom, seen as a drag on its return ratios earlier, could start bearing fruit earlier than expected, given the response to its services. Jio has set a record by crossing the 130-million customer mark.
Also, rising expectation of a cut in interconnect usage charge (IUC; paid by one operator to another for call termination) and the launch of Jio phones can accrue big gains for RIL. READ MORE
ICICI Lombard's Rs 5,700-cr IPO: Price band set at Rs 651-661 per share
ICICI Lombard General Insurance Company on Thursday set Rs 651-661 as the price band for its initial public offering (IPO), which will make it a Rs 5,700-crore issue.
"The price band has been set at Rs 651-661. At the upper end of the band, it will raise Rs 5,700 crore," a source said.
The issue, the first by any general insurance company, hits the market on September 15. The roadshows are kicking off on Friday in the financial capital.
NBFCs' share of retail loans at a 10-year high
Retail non-banking finance companies (NBFCs) are on a roll. Their share of total retail lending in India reached an all-time high of 36% at the end of March this year and they continue to grow faster than both public and private sector banks.
Advances by retail NBFCs were up 17 per cent last fiscal year over the previous year, against 15% growth reported by private sector banks and 2.5% decline in the loan book of public sector banks (PSBs). READ MORE
9:27 AM Nifty Metal
Extending gains for sixth straight session, Nifty Metals rose 0.7% in the early morning trade. All constituents except Nalco were in positive territory.
9:22 AM Sectoral Trend: All sectoral indices were trading in green
9:20 AM Top Sensex gainers and losers
Nomura on economy
India’s Q2 current account data are due within the next fortnight. We estimate that the current account deficit widened to a four-year high of 3% of GDP from a low of 0.6% in Q1. A sharp deterioration in the trade deficit is the main reason. According to monthly customs data, the trade deficit widened to 6.9% of GDP in Q2 from 4.5% in Q1.
9:18 AM Markets at open
Benchmark indices open marginally higher tracking Asian Markets in lack of any major cues. The S&P BSE Sensex was trading at 31,751, up 89 points while Nifty50 index was trading at 9,958 up 28 points.
Option strategy on Zee Entertainment by Chandan Taparia of MOSL
ZEE ENTERTAINMENT ENTERPRISES: BULL CALL SPREAD
1) Respected to its multiple support of 500-505 zones and has been consolidating near to support zones
2) Supports are slightly shifting higher and a small follow could lead it to 540 zones
3) Hovering near to its 50 DEMA
Edelweiss on SpiceJet
Our meeting with Mr. Koteshwar, CFO, SpiceJet (SJ), left us enthused about the company’s growth prospects. From a near collapse, SJ has managed to clock profits in past 10 consecutive quarters and continues to prune debt.
Following the turnaround, the company has now renewed focus on profitable growth reflected in a mega aircraft order to capitalise on promising industry dynamics (structural: demand growth to exceed capacity in underpenetrated market; cyclical: benign ATF prices).
We raise FY19E EV/EBITDAR to 8.5x (from 8.0x) and revise TP to Rs 150 (Rs 138 earlier) as we assume lower warrants dilution (50% probability versus 100% assumed earlier)
Few trading ideas from Prabhudas Lilladher:
SOBHA – BUY
CMP: Rs 409.50
TARGET: Rs 450
STOP LOSS: Rs 385
V-GUARD - BUY
CMP: Rs 200.70
TARGET: Rs 222
STOP LOSS: Rs 188
SYNGENE - BUY
CMP: Rs 473.20
TARGET: Rs 520
ECB: QE recalibration in October 2017
The Governing Council (GC) did not make any policy changes at its September meeting but announced that changes to its QE programme will likely be announced at the next meeting, in October. In the initial statement, President Draghi acknowledged that the recent exchange rate volatility is a source of uncertainty and requires monitoring.
He also stated that there was no discussion today within the GC about potential changes to the current policy sequencing embedded in the forward guidance or to the issue/issuer limits.
We do not change our call on QE and rates, but we acknowledge the risk that the ECB delays the increase in the negative depo rate should the euro appreciate further in the coming months.
Stock view: Shree Cement
Shree Cement is the most cost-efficient cement producer in India. Its superior execution capability enables it to achieve RoIC of over ~50% (FY19E). It's gross-block-to-capacity (GB/capacity) – currently at around $53/tonne – has been structurally trending downward, as the proportion of brownfield expansion has increased. The GB/capacity is at 28% discount to peers, which is also reflected in its superior RoCE. We believe Shree Cement deserves to trade at premium valuations; we value the cement business at 15x FY20E EV/EBITDA to arrive at a target price of Rs 22,360. Buy
Nifty View from Prabhudas Lilladher:
With yet again a range bound movement in Nifty, it is still a stock specific market, whereby selective stocks move in rotation each day. The support for the day is seen at 9880 while resistance is seen at 9,975.
Key Nifty levels to watch out for
Nifty closed in the positive territory in the last trading session. However, the daily momentum indicator is still in buy mode, which indicates that the short-term bias is positive whereas the weekly indicator is in sell mode, hence the medium-term bias is negative.
The crucial support on the lower side is pegged at 9870 and below that 9850 whereas the resistance is pegged at 9950 to 10000 levels. The broader range, however, is 9780 to 10000 levels and a breakout or a breakdown from this range will lead to a further trend.
(Source: Anand Rathi Research)
Nirmal Bang on real estate sector
We initiate coverage on the real estate sector with a negative view. The slowing residential sales momentum was further aggravated by demonetisation in November 2016. To add to the woes, a slew of new laws seeking to regulate the real estate sector are expected to dampen the already weak residential sector.
While the Real Estate (Regulatory & Development) Act 2016 or RERA is expected to increase the pressure on cash flow with the creation of escrow account, the Insolvency & Bankruptcy Act 2016 is expected to result in increased distress sales.
We do agree that in the long run both these regulations will be beneficial for the sector, in the short to medium term we expect the decline in sales volumes together with a fall in prices leading to pressure on margins. We have assigned Sell rating to Oberoi Realty and Sobha, the two companies in our coverage universe
Technical check on the markets
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 9850 on declines and 10050 on advances: SMC Global
8:55 AM Stock recos from Motilal Oswal
Last Close: Rs 1800
Stop Loss: Rs 1750
Target: Rs 1880
Last Close: Rs 32861
Stop Loss: Rs 32300
Sebi imposes Rs 2,423 cr fine on PACL, 4 directors
Regulator Sebi today imposed Rs 2,423 crore fine on PACL Ltd and its four directors for illegal fund mobilisation through various schemes that were used by the group to garner over Rs 49,000 crore from the public.
While the group, which had collected money in the name of real estate projects among other schemes, was asked by Sebi nearly three years ago to refund Rs 49,100 crore to the investors, the regulator has passed a fresh order to impose a monetary penalty for violation of Sebi's Prevention of Fraudulent and Unfair Trade Practices Regulations.
ECB maintains status quo on policy rate
Policy makers maintained asset purchases at 60 billion euros ($72 billion) a month until December, and reiterated their pledge to increase the size or duration if the economy worsens. They left interest rates unchanged and repeated that they expect borrowing costs to stay at present levels until well past the end of net asset buying.
The Nifty50 futures on the Singapore Stock Exchange were trading 18 points higher at 9,971 indicating a flat opening for the domestic market.
8:48 AM Asian Stocks
Asian shares edged up on Friday as investors kept a wary eye on another US storm, while the dollar skidded after European Central Bank chief Mario Draghi suggested the bank may begin tapering its massive stimulus programme this autumn.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.1%, but was still down 0.2% for the week.
Japan's Nikkei stock index was pressured by a stronger yen and slipped 0.5%, losing 2% for the week.
8:47 AM Wall Street
Wall Street ended little changed yesterday after a moderate late-day rally as media stocks, which slumped on negative business updates from Walt Disney and Comcast, were offset by gains in healthcare shares.
The Dow Jones Industrial Average fell 22.86 points, or 0.1%, to 21,784.78, the S&P 500 lost 0.44 points, or 0.02%, to 2,465.1 and the Nasdaq Composite added 4.56 points, or 0.07%, to 6,397.87.
8:46 AM Good Morning and welcome to market's live blog. Catch all live market action here
First Published: Fri, September 08 2017. 15:37 IST