MARKET WRAP: Sensex dips 333 pts; PMI data, proposed FPI norms spook Street

Among sectoral indices, the Nifty FMCG index settled over 2.5 per cent lower weighed by HUL and Britannia Industries.

3:45 PM

Nifty FMCG index ends 2.44% lower. Top losers:

COMPANY	LATEST	PREV CLOSE	LOSS( )	LOSS(%)
HIND. UNILEVER	1699.10	1780.10	-81.00	-4.55
UNITED SPIRITS	609.65	630.25	-20.60	-3.27
DABUR INDIA	466.35	478.75	-12.40	-2.59
GODREJ INDS.	629.95	646.65	-16.70	-2.58
BRITANNIA INDS.	6565.85	6736.75	-170.90	-2.54

3:43 PM

Nifty sectoral losers of the day

3:41 PM

BSE Sensex: HUL, Axis Bank among top losers of the day

3:34 PM

Market at close

The S&P BSE Sensex ended at 38,313, down 333 points while the broader Nifty50 index settled at 11,582, down 98 points.

3:14 PM

Vedanta Resources Chairman Anil Agarwal to take company private on Oct 1

Vedanta Resources Plc Chairman Anil Agarwal will take the London-listed miner private on October 1, after the holders of 26 per cent of shares agreed to sell to his family trust Volcan Investments.

 

Volcan now holds or has received acceptances for 92.31 per cent of Vedanta's shares, it said. READ MORE

3:11 PM

Bumper IPO year continues: 11 cos approach Sebi in Aug to raise Rs 70 bn

As many as 11 firms, including AGS Transact Technologies and ASK Investment Managers, have approached capital market regulator Sebi in August to raise over Rs 70 billion through IPOs largely to fund their expansion projects and working capital requirement. READ MORE

3:01 PM

India manufacturing growth eases in August on softer domestic demand: PMI

Growth in India's manufacturing sector unexpectedly slowed in August as domestic demand softened, a private business survey showed on Monday.

The activity gauge fell to a three-month low of 51.7 from July's 52.3. Analysts polled by Reuters had expected growth to pick up, forecasting a reading of 52.8. READ MORE

2:45 PM

LIC board to meet on Tuesday to decide raising stake in IDBI Bank to 51%

The LIC board will meet Tuesday to decide on the modalities for increasing stake in debt-ridden IDBI Bank to 51 per cent, a move that will provide the insurance behemoth entry into the banking space.

 

The board will discuss timeline for the open offer, board-level appointments and future strategy for revitalising IDBI Bank, sources said. READ MORE

2:31 PM

Coffee Board pegs crop loss due to rains in South India at 82,000 tonnes

The Coffee Board, under the Ministry of Commerce, has estimated a crop loss of around 82,000 tonnes due to heavy rains in the traditional coffee tracts across South India. Industry representatives, however, believe that these losses may not affect prices -- which are decided on the basis of international demand and supply -- as global supply is already more than the demand at present. READ MORE

2:16 PM

Pharma funds make a comeback; now rises 17.3% for a one-year period

The rally in pharmaceutical stocks owing to the rupee depreciation and easing regulatory environment in the US has boosted the returns of mutual fund (MF) schemes that invest in this sector. Pharma funds, which had been laggards for many months now, are now up 17.3 per cent for a one-year period, outperforming infrastructure and banking funds that gave returns of 2.3 per cent and 9.8 per cent, respectively, show data from Value Research. READ MORE

2:02 PM

Market Check

Index	Current	Pt. Change	% Change
S&P BSE SENSEX	38,597.84	-47.23	-0.12
S&P BSE SENSEX 50	12,224.83	-5.98	-0.05
S&P BSE SENSEX Next 50	35,745.65	+88.91	+0.25
S&P BSE 100	12,016.43	-0.54	0.00
S&P BSE Bharat 22 Index	3,748.31	-2.78	-0.07

(Source: BSE)

1:46 PM

Biggest bond inflow in 7 months fails to rescue rupee; headwinds to persist

Global investors in August bought the most Indian bonds in seven months, showing signs of returning to a market they’d abandoned for the better part of 2018. The inflow brought no joy for currency traders as the rupee hit multiple new lows in the past two weeks. READ MORE

1:30 PM

Valuations, premium, earnings: India stock market surge explained in charts

Another thousand-point milestone is within reach for India’s benchmark equity index.

 

Following the drubbing earlier this year, the S&P BSE Sensex is nearing the 39,000 level, the gauge’s third round-number mark since surpassing its life-time peak two months ago -- a rally that’s helped the gauge cement the tag of Asia’s best performer this year. READ MORE

1:18 PM

MARKET COMMENT Indranil Sen Gupta, India Economist, DSP Merrill Lynch (India)

The good news is that higher-than-anticipated GDP growth, at 8.2% (7.6% BoFAMLe, 7.8% consensus) re-affirms India's position as the fastest growing EM. We raise our FY19 growth forecast by 20bp to 7.4% in GVA terms. The reality is that high growth is largely driven by the base effects of last year's dip to 5.6% due to demonetiation and GST implementation.

Although base effects have driven growth to our estimated ‎8% potential this quarter, it is still 6.9% averaging across June 2017 and 2018. Not surprisingly, investment has slipped to 28.8% from 29.1% in March. Finally, we worry that rising lending rates will hit growth in the busy industrial season after October as base effects fade.

1:12 PM

Devangshu Datta Bullish on consumption

A comparison of foreign portfolio investor (FPI) and mutual fund portfolios can yield some interesting insights into the differences in their thought processes. FPIs have sold Rs 32 billion in calendar 2018, while domestic institutional investors (not just funds) have bought Rs 665 billion. The data reveals obvious differences in attitude.

 

There are more subtle differences in approach, too. Fund research house Value Research has some details of aggregated portfolios at end-June. READ MORE

1:01 PM

Top gainers in BSE 500:

COMPANY	PRICE( )	CHG( )	CHG(%)
NETWRK.18 MEDIA	54.20	6.65	13.99
MAHINDRA CIE	295.00	30.35	11.47
H D I L	35.15	2.40	7.33
HIND.CONSTRUCT.	15.12	0.91	6.40
ENGINEERS INDIA	135.90	7.80	6.09

12:58 PM

MARKET COMMENT Gautam Chhaochharia, head of India research, UBS Securities

The markets are worried that GST collections are falling a little short of the monthly run-rate implied by budgeted numbers, based on our investor discussions. However, using just the monthly run-rate is fundamentally wrong, in our view. The festive season ahead in September and October should be bigger months and will give better clarity. There may anyway be a fiscal shortfall of 20-30bp of GDP assuming 12-15% YoY growth from August onwards.

Our discussions in Delhi suggest that the government views direct tax collections as potentially ahead of budget. The number of returns filed under the GST also shows medium-term potential. Formalisation seems to have led to some improvement in tax compliance, as indicated by our survey responses

GAUTAM CHHAOCHHARIA

12:54 PM

HDFC Securities on EIL

We  expect EIL to deliver revenue, EBITDA and PAT CAGR of 23%, 16% and 16%, respectively,  in  FY18-20E. Currently, EIL  trades at ~16x FY20E EPS. We recommend  Engineers  India (EIL) as a Buy at CMP of Rs 128 and add on dips to  Rs 117 with sequential price targets of Rs 144 and Rs 165 over the next

4-6 quarters

12:54 PM

Nomura on PMI numbers

The moderation in headline PMI and price sub-indices support our view that the cyclical recovery likely peaked in Q2 while higher oil prices, tighter financial conditions and external and political uncertainty will constrain demand. The weaker rupee is not yet reflected in higher input costs, although this may become visible with a lag. However, we expect weaker demand to at least partly offset any increase in costs.

Given this trajectory, we expect the Reserve Bank of India to pause in its October policy review meeting (65% probability of no change; 35% chance of a hike), after delivering two consecutive hikes for a cumulative 50bp

12:43 PM

Pharma shares extend rally; Dr Reddy's, Sun Pharma hit 52-week high

Shares of pharmaceutical companies continued their upward journey with Nifty Pharma index quoting higher for 11 out of past 14 trading days on the National Stock Exchange (NSE).
 

Sun Pharmaceutical Industries, Dr Reddys Laboratories, Glenmark Pharmaceuticals, Torrent Pharmaceuticals, Abbott India, Merck, Sanofi India and GlaxoSmithKline Pharmaceuticals were among 11 stock that hit their respective 52-week highs on Monday. READ MORE

12:33 PM

COMMENT Dhananjay Sinha, Head, Institutional Research, Economist and Strategist, Emkay Global

The rebound in GDP growth is aligned with our reflationary recovery thesis, which incorporates the fiscal multiplier impact, favorable base effect, unwinding of GST and demonetization shocks and the revival in external trade. The impact of this reflationary recovery reflects in the strong Q1FY19 GDP print of 8.2% yoy, the results of consumer sector companies and the rapid pace of retail lending. We believe that this multiplier effect will gain pace in the foreseeable future before fading out in 2-3 quarters. Accordingly, we project FY19 GDP growth of 7.2-7.4%

12:31 PM

Kotak Securities on NMDC

NMDC has revised prices of domestic iron ore thrice YTD, adding up to Rs300 and Rs350 per tonne for iron ore fines and lump ore to Rs2,960/tonne and Rs3,350/tonne, respectively. We believe that the recent hike in the iron ore prices is backed by 4% month on month increase in international iron ore

prices, rupee depreciation and the surge in pellet prices (~4 years high / +25% YoY).

Though, we continue to remain cautious on the outlook of iron ore prices for the medium to long term perspective. But, expect it to remain strong in the coming months, as Odisha miners has also hiked prices in the range of Rs250-300/tonne.

12:30 PM

Stock idea from Anand Rathi

We initiate coverage on Khadim India with a Buy rating and a target price of Rs 976 based on 16x FY20e EV/EBITDA. We believe it is best positioned to benefit from the domestic footwear industry shifting towards branded footwear. We anticipate it reporting a 19% revenue CAGR over FY18-20 driven respectively by its dual strategy of expanding its retail network (a 16% revenue CAGR) and its distribution channel (a 25% revenue CAGR). Driven by operating leverage kicking in and lower interest costs, we expect Khadim to deliver a 28% PAT CAGR over FY18-20.

12:28 PM

Nomura on Coal India

On our FY20F adjusted earnings (adding back OB removal provisioning to EPS and EBITDA), the stock trades at 8.2x P/E (EPS: Rs 30.4) and 4.8x EV/EBITDA (9.4x P/E and 5.2x EV/EBITDA on reported earnings); on our FY19F dividend of INR23/share, the stock offers a yield of 8%. We maintain our Buy rating on the stock. 

12:26 PM

Edelweiss on Pidilite

Our recent interaction with Pidilite’s (PIDI) top management reaffirms our confidence in its ability to gain market share and create future growth drivers. The company expects the core portfolio (two-thirds) to grow 1–2x GDP, growth portfolio at 2–4x GDP, and pioneer portfolio to touch INR1bn in three years (implying 13–15% growth). Waterproofing segment has huge opportunity landscape (paint-to-waterproofing ratio at 1:15 vis-à-vis 1:6 globally).

We value other market leaders such as HUL and Britannia at 55x FY20E EPS each. Given strong demand recovery, PIDI’s market leadership and NPDs we are raising the target multiple to 50x (45x earlier) that yields a revised target price of Rs 1,334 (Rs 1200 earlier). We will however closely watch the VAM price trajectory. Maintain ‘BUY’.

12:16 PM

Cracking the MF code in rural India: Mahindra MF looks to expand markets

Somewhere close to Jalandhar, the chief executive of a fund house is trying to explain the patriarch of a wealthy Punjabi joint family the concept of mutual funds (MF). At first, this 50-year old mistakes the CEO for a share dalal or an agent of sorts. READ MORE

12:00 PM

Markets at noon

Index	Current	Pt. Change	% Change
S&P BSE SENSEX	38,736.69	+91.62	+0.24
S&P BSE SENSEX 50	12,264.34	+33.53	+0.27
S&P BSE SENSEX Next 50	35,855.97	+199.23	+0.56
S&P BSE 100	12,055.14	+38.17	+0.32
S&P BSE Bharat 22 Index	3,757.99	+6.90	+0.18

11:50 AM

Real estate stocks trade weak after SC stays construction in some states

 

Shares of real estate companies were trading lower by up to 3% in an otherwise range-bound market after the Supreme Court stayed construction in some states and union territories (UTs) till they frame policy on waste management.

 

Sunteck Realty, DLF, Indiabulls Real State, Mahindra Lifespace Developers, Ajmera Realty, Puravankara and Kolte Patil Developers were trading lower in the range of 1% to 3% on the BSE. Oberoi Realty and Godrej Properties, however, were trading higher by 3% and 1%, respectively. READ MORE

11:40 AM

Indian equities are off to best start to a financial year since Modi win

 

Indian equities are off to the best start to a financial year since 2014-15, when Narendra Modi-led National Democratic Alliance (NDA) government came to power. So far this fiscal year, the benchmark Sensex has gained 16.3 per cent, thanks to sharp gains in key stocks. In comparison, the index for the performance of 30 blue-chip stocks had gone up 19 per cent during the first five months of 2014-15.

 

The benchmark indices are currently hovering around their lifetime highs. Also, India is already among the best-performing markets globally this fiscal year. READ MORE

11:25 AM

ANALYSIS Many reasons why Bajaj Finance stock will remain an outperformer

 

Trading at about Rs 11 apiece and with thin volumes, Bajaj Finance was a neglected, unfavoured stock 10 years back.

 

Today, just a few points shy of the Rs 3,000-mark, the country’s leading consumer goods lender has transformed itself as the most sought-after scrip in the financials space. What’s more, despite the recently gone by June quarter (Q1) being a tough one for the non-banking finance companies (NBFCs) due to some instability in asset quality and adoption of new accounting norms, Bajaj Finance outperformed the pack maintaining its industry-best return on assets. READ MORE