Sensex up 82 points; metal stocks shine, Godfrey Phillips up 5%

18 Sep 2019

Market Outlook

"Going forward, market is likely to remain rangebound. The focus would be on Central banks globally with US Fed announcing its policy today evening and Bank of Japan and Bank of England meeting tomorrow. Markets would continue to track development in the Gulf region which could keep things volatile," Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services said.

On the domestic side, the GST council meeting on 20th Sept (Friday) will hold importance as markets are expecting some tax relief – especially for the auto sector – which looks difficult given the current revenue shortfall for the government, he added.

Sahaj Agrawal, Head of Derivatives, Kotak Securities:

Markets continue to witness range bound movement. Momentum failure got triggered as the Nifty 50 index breached 11,000 and since then the markets continues to consolidate. On the higher side 11,150-11,200 act as a significant resistance while support on the down side is seen at 10,600-10,650 levels.

Metals continue to consolidate. IT stocks remain resilient on the downside while Banking and Metals continue to consolidate. Our medium term outlook remains extremely positive with some short term volatility expected. Investors can gradually do selective accumulation as we have entered long term buying zone.

Ajit Mishra Vice President, Research, Religare Broking:

The Indian markets traded with a positive bias throughout the session amidst high intraday volatility. The correction in crude oil prices has definitely provided respite to investors. Nonetheless, geo-political developments would still be one of the key factors on investors’ radar as any further escalation would have an adverse impact on markets and economy.

Apart from this, the FOMC meet outcome tonight would be a key factor as there is a wide expectation of a rate cut. However, commentary on growth and rate outlook would be a crucial.

On the domestic front, the recommendations of GST Fitment committee to not reduce rates in certain sectors has impacted sentiments, however the final decision would be taken at the GST Council meet on September 20.

Market Close: Benchmark indices ended higher but off day's high after no major announcement from the Cabinet.

At close, the Sensex was up 82.79 points at 36,563.88, while Nifty was up 23.10 points at 10,840.70. About 1236 shares have advanced, 1227 shares declined, and 156 shares are unchanged

Tata Steel, BPCL, Vedanta, JSW Steel and IOC were among major gainers, while losers were Britannia Industries, Coal India, ONGC, Eicher Motors and Yes Bank.

Except pharma, all other sectoral indices ended in the green led by the metal, IT, infra, energy, auto and bank.

Buzzing: Hotel stocks have rallied as much as 12 percent intraday on September 18 after GST rate fitment committee proposed to cut tax from 28 percent to 18 percent on hotel tariff of Rs 7,500 and above, or to hike threshold tariff to Rs 10,000 with 28 percent.

Aperam selects HCL Technologies: HCL Technoloaies has secured a contract with Aperam, a global player in stainless, electrical and specialty steel. By partnering with HCL, Aperam aims to significantly enhance its employees’ end-user experience, foster business-IT collaboration, and increase business efficiency globally.

Market Update: Indian indices are trading off day's high with Nifty below 10,850 level.

The Sensex is up 65.44 points or 0.18% at 36,546.53, and the Nifty up 18.20 points or 0.17% at 10,835.80. About 1150 shares have advanced, 1078 shares declined, and 122 shares are unchanged.

Reliance Industries gains as promoter increases stake: Shares of Reliance Industries gained as much as 1.6 percent on September 18 after promoter Mukesh Ambani increased his stake in the company to 48.87 percent.

In a BSE filing, RIL said that Reliance Services and Holdings Limited, a private firm of Ambani, acquired more than 17.18 crore equity shares, or 2.71 percent stake on September 13, 2019, pursuant to a scheme of arrangement.

Buzzing: Shares of AU Small Finance Bank gained 1.6 percent on September 18 after brokerage firm Citi said the company has a stable asset quality of vehicle financing segment.

The brokerage has maintained buy call on AU Small Finance Bank with a target price at Rs 720 per share, implying 12.5 percent potential upside from current levels.

Sunteck Realty climbs 4%: Shares of Sunteck Realty rallied 3.7 percent on September 18 after acquiring a prime project near Mumbai's Lokhandwala, Andheri (West) with the potential for development of approximately 1.1 million square feet in saleable area and a revenue of over Rs 2,500 crore in the next 4-5 years.

Buzzing: Balmer Lawrie and Company shed 6.6 percent on September 18 after the company deferred the bonus issue plan in its meeting held on September 17.

Buzzing: Shares of Gujarat Alkalies and Chemicals rose 2.5 percent to Rs 481.45 on September 18 after the company completed the commissioning of its 20 MW AC solar power plant in Gujarat's Charanka.

Nifty Holds 10,800:

Benchmark indices traded with moderate gains in morning, driven by short covering in beaten down stocks in previous two sessions.

The Sensex gained 95.42 points at 36,576.51 and the Nifty rose 21.10 points to 10,838.70. About 914 shares advanced against 776 declining shares on the BSE.

CLSA on GAIL

Maintain buy rating with a target of Rs 165 per share

Gas-trading hub should pave the way for natuarl gas inclusion in GST

Stock trades at 7.1x despite much less equity supply risks

Credit Suisse on Reliance Industries

Neutral call, target at Rs 1,210 per share

Petchem margin weakening further

Higher refining margins should offset petchem weakness

Credit Suisse on Dr Reddy’s Laboratories

Outperform call, target at Rs 3,055 per share

Launch momentum stays strong in the US

Estimate FY19-22 EBITDA CAGR of 22% & RoCE to double to 22%

Stock has multiple option values from China injectable opportunity

Citi on Bharti Airtel

Buy rating, target cut to Rs 400 from Rs 405 per share

Make (-2% to +2%) changes to our EBITDA forecasts

Co remains our only buy in the sector

Diversified revenue stream has held it in good stead

India mobile business has started showing traction

It has firmly stablished itself as the No.2 player in 4G

Citi on AU Small Finance Bank

Buy call, target at Rs 720 per share

Asset quality of vehicle financing segment to be largely stable

Growth will likely slow from the >40% level of FY19

Used Vehicle, MSME are other large segments offering growth

Fuel price supportive so far; outlook is key

Morgan Stanley on TCS

Equal-weight call, target at Rs 1,980 per share

GM technical centre’s 1,300 employees will be transferred to co

Co will partner GM to provide next-generation engineering design services

Transaction is expected to complete by the end of September

CLSA on autos

Dealer survey shows continued demand weakness & high inventories

Dealers have not seen even the usual seasonal uptick in demand

Remain cautious on the sector on weak demand & regulatory pressures

Demand pick-up in balance part of festive season is crucial

Have negative stock ratings on 70% of our Indian auto coverage

CLSA on pharma

Concerns over sustained price erosion in the US seem to be abating

Threat of slowdown/substitution in the domestic pharma market is subsiding

Currency tailwind should drive mid-teen earnings growth in mid term

Sun Pharma, Dr Reddy’s & Cadila Health are best placed

There are signs of price erosion easing in the US

Fears of a slowdown and threat of substitution in India are receding

FY20 likely to be another double-digit profit growth year

Credit Suisse on FMCG

Worst slowdown in 15 years, no quick fix

Downgrade Britannia to neutral, target cut to Rs 2,750 from Rs 2,975 per share

Downgrade Pidilite to underperform from neutral, target cut to Rs 1,125 from Rs 1,175 per share

Prefer Nestle, Dabur, Colgate As they are turnaround stories on market share gains

Market Opens: Benchmark indices are trading higher in the early trading on September 18 with Nifty above 10,850.

The Sensex is up 195.08 points at 36676.17, while Nifty is up 58.80 points at 10876.40. About 598 shares have advanced, 181 shares declined, and 37 shares are unchanged.

Indian Hotels, Lemon Tree Hotels, HPCL, Graphite India, Jubilant Life, Wockhardt, NCC, IOC, BPCL, Yes Bank, Hero Moto, Eicher, Indiabulls housing, Bajaj Finance are among major gainers on the indices, while losers are Britannia and UPL.

On the sectoral front, buying seen in the auto, oil &gas, metal, pharma, energy and infra, while FMCG and IT indices are trading lower.

Rupee Opens: The Indian rupee opened higher by 28 paise at 71.50 per dollar on Wednesday against previous close 71.78.

Market at pre-open: Benchmark indices are trading positive in the pre-opening session with Nifty above 10,850.

At 09:01 hrs IST, the Sensex is up 178.92 points or 0.49% at 36660.01, and the Nifty up 65.90 points or 0.61% at 10883.50.

Crude Update: Oil prices cooled on Wednesday as Saudi Arabia said the kingdom had fully restored its oil supply following attacks on its crude facilities although caution ahead of an expected U.S. interest rate cut kept wider financial markets in tight ranges.

Gold Update: Gold prices were little changed on Wednesday as investors maintained a cautious stance ahead of the conclusion of U.S. Federal Reserve’s two-day meeting, where policymakers are expected to cut interest rates.

Wall Street ends higher: Wall Street ended higher on Tuesday as the impact of weekend attacks on Saudi Arabia's biggest oil refinery faded and investors awaited a widely expected Fed interest rate cut on Wednesday.

SGX Nifty: Trends on SGX Nifty indicate a positive opening for the broader indices in India, a gain of 46 points or 0.42 percent. Nifty futures were trading around 10,888-level on the Singaporean Exchange.