Market Live: Sensex, Nifty, Midcap extend gains; Reliance Capital falls 17%

11:20 am Artificial intelligence impact: Billionaire tech executive Elon Musk has once again made an ominous warning about artificial intelligence (AI), this time suggesting that it could be the reason for a third world war.

His concerns were prompted by a statement made by Russian President Vladimir Putin on Friday in which he predicted that whoever takes the lead in AI will become the ruler of the world.

11:10 am Jaypee Infratech in focus: The Jaypee Infratech stock fell about 3 percent after the IDBI Bank moved to the Supreme Court to restore insolvency proceedings against the company.

The apex court will hear the bank’s plea on Monday.

11:04 am Buzzing: Manpasand Beverages shares gained 2 percent after it announced an exclusive tie-up for distribution network sharing and cross-promotion of brands with Parle Products.

Under the partnership, Manpasand Beverages will have access to Parle’s 4.5 million outlets across India for its flagship brand ‘Mango Sip’ juice.

11:02 am Management interview: Home finance business of Reliance Capital demerged today and the same will be listed with the name of Reliance Home Finance on exchanges soon. It meant Reliance Capital goes ex-demerger today.

“We will list home finance business in 15-20 days after September 6,” Ravindra Sudhalkar, CEO of Reliance Home Finance said in an interview with CNBC-TV18.

He believes net worth of the company will go up to Rs 1,500 crore after infusion and he expects net interest margin to be in the upper range of 3.5 percent.

According to him, return on assets can be upwards of 1.6 percent by FY20.

Sudhalkar expects gross non-performing assets in the region of 0.65-0.8 percent till FY20.

10:59 am IPO: Reliance Nippon Life Asset Management Company’s initial public offer is likely to hit the market by first week of November, sources in know of the development told Moneycontrol.

Anil Ambani-led Reliance Group’s asset management arm had filed draft papers with markets regulator Securities and Exchange Board of India to float an IPO on August 18 which is expected to value the company at about Rs 18,000 crore, according to merchant bankers said.
This would be the first initial public offering by an asset management company in India, although UTI Mutual Fund IPO have been in the works for a long time.

According to the draft papers filed with SEBI, the public issue of Reliance Nippon Life Asset Management comprises fresh issue of 2,44,80,000 equity shares, besides an offer for sale of 1,12,30,200 shares by Reliance Capital and 2,54,89,800 scrips by Nippon Life Insurance Company.

10:53 am North Korea Threat: US President Donald Trump discussed with leaders of Germany, South Korea and Japan the “reckless and dangerous behaviour” of North Korea and reaffirmed the importance of close coordination on the issue at the UN.

On Sunday, North Korea said it detonated a hydrogen bomb designed for a long-range missile and called its sixth and most powerful nuclear test a “perfect success”, sparking world condemnation and promises of tougher US sanctions.

In a separate phone call with German Chancellor Angela Merkel, South Korea President Moon Jae-In and Japan Prime Minister Shinzo Abe, Trump underscored the need to give a coordinated response to North Korea.

10:50 am Services PMI: Activity in India’s dominant services sector contracted for a second straight month in August as disruptions caused by a new tax policy hurt new orders, a private survey showed today.

August’s Nikkei/IHS Markit Services Purchasing Managers’ Index rose to 47.5, up from July’s 45.9 but still below the 50 mark that separates expansion from contraction.

The last time services activity shrunk for two or more consecutive months was after Prime Minister Narendra Modi banned high-value currency notes in November last year, which sapped consumer demand in the largely cash-reliant economy.

India’s economic growth rate unexpectedly cooled to a three-year low in the three months to end-June, so the latest PMI will no doubt add to the gloom for policymakers.

10:41 am Rupee falls further: The rupee dropped by 9 paise to 64.14 against the dollar at the interbank forex market today amid sustained foreign fund outflows.

The rupee opened at 64.10 per dollar against last close of 64.05 per dollar. It moved in a range of 64.08 per dollar and 64.18 per dollar in morning deals.

Traders said fresh demand for the US currency from importers and dollar’s recovery against some currencies overseas weighed on the rupee.

Foreign investors pulled out around Rs 683 crore from debt and equity markets yesterday amid geopolitical tensions.

10:31 am Buyback: Jenburkt Pharmaceuticals shares rallied 5 percent as a meeting of the board of directors of the company is scheduled to be held on September 9 to consider matters related to buyback of the fully paid-up equity shares.

10:26 am Market Check: Equity benchmarks extended gains in morning as the Sensex was up 86.68 points at 31,788.93 and the Nifty gained 22.80 points at 9,935.65 despite caution due to geopolitical tensions.

The BSE Midcap and Smallcap indices continued to outperform benchmarks, rising half a percent each on positive market breadth. About three shares advanced for every share falling on the BSE.

10:20 am Maruti in focus: India’s largest car-maker Maruti Suzuki India could potentially rise another 18 percent going forward despite a near 47 percent jump in 2017, Hong Kong headquartered brokerage CLSA said.

The brokerage has a target price of Rs 9,230 on the stock with a buy rating, which implies the 18.28 percent potential upside from current levels.

10:10 am Demerger: Reliance Capital shares fell more than 17 percent in pre-opening trade due to hiving off home finance business.

Today is the ex-date for demerger and the record date for the same is fixed as September 6, which means person who holds shares of Reliance Capital on September 6 will get shares of Reliance Home Finance.

Reliance Capital shareholders will receive one share of Reliance Home Finance for every share held. Post demerger, Reliance Capital will continue to hold a 51 percent stake in Reliance Home Finance.

Reliance Home Finance (RHF) is expected to be listed in the second half of September.

10:02 am Chart of the day: Over the last 12 months, midcaps have delivered 19% return and over the last 5 years, midcaps have outperformed the Nifty by 70%

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9:57 am HDFC Bank ‘too big to fail’: The Reserve Bank of India on Monday included HDFC Bank in the list of ‘too big to fail’ lenders, referred to as D-SIB or domestic systemically important bank.

India’s largest lender SBI and private sector major ICICI Bank were classified as D-SIBs in 2015.

With the inclusion of HDFC Bank in the list, there will now be three ‘too big to fail’ financial entities in the country.

9:35 am Market Outlook: Dhananjay Sinha of Emkay Global said the concerns on market valuation has been persisting with markets trading at boom time. The valuations across both benchmark and broader indices while the fundamentals reflect earnings recession.

Over the past three years, corporate India has seen virtually no growth at an aggregate level. Such a scenario naturally generate worries about the sustainability of market exuberance.

The situation is similar across the world with equity markets both emerging and developed are trading at peak levels even as earnings have remained stagnant since 2011. Few countries like China, Japan are undervalued.

Hence, it is pertinent to worry about global risk factors in such a scenario. The risk of geopolitical disruptions and protectionism etc. remains.

Importantly, with volatility measures still very depressed, markets appear to be complacent. Clearly, there is a possibility of a correction if any of this event go out of hand.

9:29 am FII View: Jonathan Garner of Morgan Stanley said the research house sees further upside in regional equity markets.

“We continue to be overweight on China, India and Japan versus the broader Asia Pacific Ex-Japan/EM universe,” he added.

Within sectors, the research house stayed overweight on IT and financials across the region.

“While we are cognizant of geopolitical risks, we don’t let it drive the portfolio,” he said.

India’s structural reduction in inflation and improved current account are leading to a secular reduction in interest rates, driving domestic flows towards equities, he feels.

9:15 am Market Check: Equity benchmarks rebounded with moderate gains amid volatility on Tuesday as investors remained cautious due to geopolitical tensions surrounding around North Korea.

The 30-share BSE Sensex was up 73.36 points at 31,775.61 and the 50-share NSE Nifty gained 20.65 points at 9,933.50.

Tech Mahindra, Tata Motors and HDFC Bank were early gainers while TCS, HCL Technologies, Bharti Airtel, ITC and HDFC were under pressure.

Nifty Midcap gained half a percent as about five shares advanced for every share falling on the NSE.

Tourism Finance Corporation of India gained 6.5 percent. Thomas Cook and IFCI gained more than 3 percent.

Sun TV added another 3 percent after CLSA raised target price to Rs 965 while Bharat Financial was up 2 percent as Credit Suisse raised target price to Rs 1,055.

Indraprastha Gas, Nandan Denim, Arvind, Sintex Industries, IRB Infrastructure, JM Financial, Manappuram Finance and Suzlon Energy gained up to 3 percent. Castrol India, Kwality, InterGlobe and Repco Home fell up to 14 percent
The Indian rupee depreciated further in opening trade on dollar demand. It started off trade at 64.10 a dollar, down 6 paise compared to previous day’s closing of 64.02.