Market Live: Midcap outperformance continues, Nifty nears 10,400; HDFC twins up

2:15 pm Rate cut likely?: HSBC said given inflation risks are tilting to the upside, the RBI will keep the repo rate on hold at 6 percent in the foreseeable future, giving primacy to the inflation target.

Also, embedded in its own forecasts is the view that growth over second half of FY18 will be more rapid, perhaps above 7 percent. To that end, the central bank’s support to growth via a rate cut at the risk of missing the inflation target may be unwarranted at the moment. And likewise, a hike would be detrimental to the fragile economic recovery, while other measures to revive private investment are being undertaken.

2:10 pm Bonus issue: Fiberweb India today informed BSE that the meeting of the board of directors of the company will be held on December 5 to consider the issue of bonus shares to the existing shareholders.

The trading window for dealing with the securities of the company will remain closed for Directors and other Employees covered under the Code from the closure of business hours of November 28, 2017 to the closure of business hours of December 06, 2017 (both days inclusive).

2:06 pm Order Win: State-owned power equipment maker BHEL has bagged an order worth Rs 64 crore for setting up six decentralised sewage treatment plants in Raipur, Chhattisgarh.

“Valued at over Rs 64 crore, the order for sewage treatment plants with a cumulative capacity of 25.4 million litres per day, has been placed on BHEL by Raipur Development Authority,” the company said in its filing.

Here are the top headlines at 2 pm from Moneycontrol News’ Anchal Pathak

1:58 pm Mega oil refinery: Oil Minister Dharmendra Pradhan today strongly defended plans to build the Rs 2.7 lakh crore oil refinery on the west coast by 2022 despite the push for electric vehicles, saying that India needs multi-source fuels to meet its fast-growing energy needs.

The plan to build the 60 million tonnes (MT) a year capacity refinery in Ratnagiri district of Maharashtra has come in for questioning after Transport Minister Nitin Gadkari announced that only electric cars would be produced in the country after 2030.

Besides, Railway Minister Piyush Goyal has said that diesel locomotives will be phased out by 2022.

“India consumes just 6 per cent of the global primary energy at present but it will account for 25 percent of incremental growth,” Pradhan said at a KPMG Energy Summit here.

In order to meet the vast growing energy needs, India needs “multi-source fuels,” he said, adding that there is a requirement for conventional fuels, coal, renewable sources as well as nuclear.
1:46 pm Govt transfer NLC shares: The government has transferred
Rs 39 crore worth shares of NLC India to Bharat 22 ETF, says a

regulatory filing.

“Ministry of Coal… on behalf of the President of India has transferred 39,74,665 equity shares to ‘Bharat 22 ETF’ at a value of Rs 39,39,98,737 which is 0.26 per cent of total equity share capital of the company,” NLC India said in a filing to BSE.

Post transfer, the share holding of the President is 128,46,03,208 shares, which is 84.04 per cent of equity shares of the company, the filing said.

On November 20, the government raised Rs 14,500 crore through the sale of blue-chip shares of PSUs via its newest exchange traded fund (ETF), Bharat-22, which received bids of about Rs 32,000 crore – a mutual fund record.

With this, the government has raised Rs 52,500 crore in the current fiscal through PSU disinvestment, including from listing of PSU insurance companies.

1:36 pm Europe Update: European bourses opened slightly higher as investors watch out for tax reform plans in the US and comments from the next Federal Reserve chair.

The pan-European Stoxx 600 was 0.11 percent higher with most sectors trading in positive territory.

In Asia, markets were mostly higher with money managers focused on US tax reform. The Senate is due to vote on a tax bill Thursday, which could be a key moment for President Donald Trump. In the meantime, Jerome Powell, the nominee to chair the Federal Reserve next year, will be questioned in the Senate. Markets players will be looking out for comments on inflation.

1:16 pm Market Update: The broader markets continued to outperform equity benchmarks in afternoon, with the Nifty Midcap index trading near its record high level.

The 30-share BSE Sensex was down 30.27 points at 33,694.17 and the 50-share NSE Nifty fell 4.80 points to 10,394.70.

About 1,428 shares advanced against 1,046 declining shares on the BSE.

HDFC (up 1.14 percent) and HDFC Bank (0.6 percent) continued to support the market while Reliance Industries, ICICI Bank, ITC, Infosys and L&T were down around a percent each.

1:05 pm Net neutrality: Telecom regulator, TRAI, has issued recommendations on net neutrality. The two major recommendations are: 1) Internet service providers must not engage in discriminatory treatment of content, and 2) Licensee can’t enter into an agreement that has any discriminatory content effect.

The Telecom Regulatory Authority of India (TRAI) on Tuesday also recommended an amendment to licence agreement with regard to internet services providers (ISPs), among other recommendations for the much-awaited net neutrality debate.

Upholding the basic principle that internet is an open platform and telecom pipe should not discriminate the access, the regulator has put forth a list of recommendations which includes services that will be exempted from this amendment.

12:55 pm PSUs to be profitable soon?: The Jammu and Kashmir government has asked the heads of various PSUs to make the corporations more viable and turn them into pure profit earning units.

“Government is providing all necessary support in terms of financial help or administrative support, but real responsibility lies with the persons heading these units to transform them into a pure profit earning unit,” Finance Minister Haseeb Drabu said reviewing the functioning of various PSUs in the state here.

The minister said there was a need for formulation of effective working plan with adoption of innovative measures for generation of revenue in a better way and to re-double efforts towards making the corporations more viable.

“The idea of calling this meeting is to understand the issues and to come up with a future plan for overall growth of these corporations,” he said.

12:40 pm Buzzing: Shares of Reliance Communications fell sharply by over 9 percent intraday today amid reports that China Development Bank has filed insolvency case against the telecom firm, which the company has denied.

BSE had sought clarification from Reliance Communications Ltd after market hours yesterday with respect to news that China Development Bank files insolvency case against it.

In a clarification to BSE, Reliance Communications spokesperson yesterday said, “The company has not been served any notice of the application filed by China Development Bank with NCLT, as reported in the media.”

However, in the interest of all stakeholders, the spokesperson said: “The company is engaged through the JLF (joint lenders forum) with all its lenders for a successful resolution of the SDR process. The China Development Bank has also been actively participating in the JLF.”

12:25 pm Motorcycle launch: TVS Motor Company has confirmed the launch of its most powerful motorcycle scheduled for December 6 in Chennai. Powered by a 310cc engine the Apache RR 310 (codenamed Akula) will finally make its debut after a delay of more than a year.

Developed alongside partner BMW the Apache 310RR will catapult the Chennai-headquartered company into the league of performance motorcycle segment presently dominated by Japanese brands.

The Apache RR 310 will have more than half a dozen competitors, all falling in the 300-400cc engine range having pricing between Rs 1.44 lakh-3.5 lakh. The market is expecting TVS to price its new bike between Rs 1.5-1.6 lakh (ex-showroom, Delhi).

12:15 pm Market Outlook: Ambit AMC said on trailing basis, market valuations are at a historic high. “In terms of earnings growth, we are near the bottom. We have seen the worst.”

The market might see few months of consolidation before moving upward.

12:05 pm China’s manufacturing growth: Activity in China’s manufacturing sector likely grew at a slightly slower pace in November, a Reuters poll showed, as export orders softened and tough pollution measures forced many northern steel mills and factories to curb production.

But expansion is forecast to have remained solid amid still-strong demand for steel and other construction materials, and as mills in southern provinces with less stringent smog restrictions cranked up production to gain market share.

China’s war on air pollution is clouding the outlook for the world’s second-largest economy at the same time that global markets are fretting over Beijing’s campaign to curb excesses in the financial sector and a rapid build-up in debt.

Here are the top headlines at 12 pm from Moneycontrol News’ Anchal Pathak

11:55 am Market Update: Benchmark indices remained mildly under pressure but the broader markets continued to outperform, with the Nifty Midcap index hitting a record high.

The 30-share BSE Sensex was down 49.50 points at 33,674.94 and the 50-share NSE Nifty fell 10.60 points to 10,388.90.

About 1,347 shares advanced against 1,020 declining shares on the BSE.

11:26 am Edelweiss on BEL: Shares of Bharat Electronics gained over 2 percent intraday as investors bet on positive view by Edelweiss on the stock.

The brokerage house said that the company successfully moved up the defence manufacturing value chain.

Going forward, rising demand for electronic warfare systems will augur well for the company, the brokerage added.

In fact, the focus on improving capabilities will provide competitive edge, it said.

Edelweiss does not foresee any major challenge on execution and operating margins over the next two to three years. It expects orders worth Rs 70,000 crore to be awarded over the next 2-3 years.

11:16 am Buzzing: Shares of Talbros Automotive Components touched 52-week high of Rs 298.40, gaining 19 percent intraday Tuesday as Ventura initiated coverage with a buy rating on the stock with a target of Rs 353 per share.

The research house feels the company is all set to resume its high growth trajectory after a period of consolidation and expects its revenue to grow to Rs 487.1 crore by FY20 from Rs 328.8 crore in FY17.

Ventura also expects revenue/EBITDA/net profit to grow at a CAGR of 14 percent/16.5 percent/33.5 percent over FY17-20.

It feels that the electric vehicles are a threat but impact coming into play post 2023, while forgings segment to boost because new international orders from OEMs.

The heat shields and aftermarket segment will help it to achieve high growth, it added.

11:01 am Reaction on GST collections: “Reported October GST collections fell much short of our estimate of the seasonally adjusted revenue neutral threshold. But, additional disclosures suggest it may be early to panic about fiscal health,” Neelkanth Mishra of Credit Suisse said.

The number of filings was higher than at this stage in prior months, but 15 percent smaller than the 5.9 million that July-August ended at.

This release is likely to add to the fog on macro-economic parameters in India, according to him.

“We acknowledge the uncertainty but remain comfortable with the aggregate collections of GST. At this stage the allocation of centre-state allocation issues are less important,” Mishra said.

10:50 am Rupee trade: The rupee pared initial losses to trade at Rs 64.39 per dollar, up by 11 paise, in late morning deals on bouts of dollar selling from banks and exporters amid a subdued dollar overseas.

The rupee opened lower at 64.53 against previous closing level of 64.50 per dollar at the interbank forex market. It slid further to 64.60 in early trade amid losses in stock markets.

10:36 am Management interview: Indian railways plan to float tenders for electrification of around 7000 kilometers of rail lines. This tender opens up new opportunities for electrical engineering procurement and construction (EPC) companies, something that managements have been vocal about in the last 2-3 quarters.

Throwing more light on the above development and the business outlook going forward, Manish Mohnot, MD, Kalpataru Power said they expect the above tenders to come out in the month of December or before January-end.

Typically, the share of electrification project has been in the range of 15-20 percent in the last couple of years, said Mohnot adding that today the order book of railways is around Rs 1000 crore, which is expected to go in excess of Rs 2000 crore in the next six months or so.

The margins in electrification business are similar to the other contracting business, which is around 10-11 percent, although they vary a bit from project to project, he said.

10:26 am Market Check: Equity benchmarks continued to consolidate ahead of expiry of November derivative contracts on Thursday.

The 30-share BSE Sensex was down 23.97 points at 33,700.47 and the 50-share NSE Nifty fell 4 points to 10,395.50.

The broader markets continued to outperform benchmarks as the BSE Midcap index was up 0.3 percent and Smallcap gained 0.5 percent. About two shares advanced for every share falling on the BSE.

10:16 am Realty stocks in focus: The stocks in focus this morning will be the realty pack – a media report suggests that there might be a tax on the unsold inventory held by developers.

In an interview to CNBC-TV18, Gulam Zia, Executive Director of Knight Frank said real estate industry is in a doldrums situation with so many changes; regulatory and goods and services tax (GST) etc. It was weathering those blows and this is supposed to be the next one.

He further said that unsold inventory was always there, now we just have more clarity on the data.

Talking about real estate locality in general, he said the worst affected market is National Capital Region (NCR) and on the other hand Bengaluru developers have always been doing well.

According to him, Mumbai real estate prices should correct further.

10:05 am Market Outlook: “We expect the market to consolidate from hereon and may see some minor upside,” Harsha Upadhyaya, CIO-Equity, Kotak Mutual Fund said in an interview to CNBC-TV18.

He feels the market is resilient now. September quarter earnings were largely in line and better-than-expected.

The Nifty 50 has rallied 26 percent in 2017 so far, which indicated that the market already discounted earnings, GST, PSU banks recapitalisation and infrastructure reforms.

On valuation front, midcap is relatively higher compared to largescaps. So pick quality stocks, he advised.

The mutual fund house is focussed on largecap stocks in multi-cap segment.

Here are the top headlines at 10 am from Moneycontrol News’ Anchal Pathak

9:55 am Buzzing: Credit Suisse has initiated coverage with outperform call on Eris Lifesciences and target price of Rs 770 per share. The stock was up 4 percent.

The research house believes existing business should grow at 15 percent CAGR and entry into new areas should boost growth.

According to Credit Suisse, turnaround of recent four-loss making acquisitions could rerate the stock.

“Estimates of 24 percent profit CAGR over FY17-20 is the highest in our coverage,” it said.

9:42 am Listing: ICICI Prudential Mutual Fund (Bharat 22 ETF) listed at Rs 36.30 on the BSE, a premium of nearly 1 percent over issue price of Rs 35.97 per share.

9:38 am Fiscal deficit: The success in divestments and encouraging goods and services tax collections will help government reduce pressure on the fiscal math, says a report.

“Disinvestment drive and GST rollout will reduce pressure on fiscal arithmetic,” domestic rating agency India Ratings said in a report today.

It can be noted that government has reiterated its commitment to narrow down the fiscal deficit to 3.2 per cent for fiscal 2018.

Front-loading of expenditure, where government has exhausted 96 per cent of the deficit by August, and also a slowdown in growth which led it to even mull a stimulus, had put question marks over whether it government will be able to meet the fiscal deficit target or not.

The report said successful subscription of Bharat 22 exchange traded fund launched last week has helped government move closer to its FY18 divestment target of Rs 72,500 crore and it has raised Rs 52,300 crore by the end of November.

9:26 am FII View: The economy is likely to clip at 8 percent next fiscal as the massive bank recapitalisation will help revive the long-stalled credit demand and private investments, says a brokerage report.

According to Wall Street brokerage Goldman Sachs, the Rs 2.11-trillion bank recapitalisation announced by government last month and a likely recovery in earnings are also likely to drive up the stock markets and has set the Nifty target of 11,600 by next December.

“We project above-consensus real GDP growth of 8 percent in 2018-19, while we see a growth of 6.4 percent for 2017-18, as the negative impact from shocks (demonetisation and GST implementation) this year fade and the bank recap programme unlocks credit and private investment growth,” it said today.

It said CPI inflation is likely to rise above the mid-point of RBI target to 5.3 percent in FY19 due to a pick-up in food and commodity prices, and so it expects RBI to hike policy rates by 75 basis points by mid-2019.

9:20 am Buzzing: Shares of Glenmark Pharma tumbled 3 percent in the early trade on the back of observations issued by USFDA.

The US Food and Drug Administration (USFDA) has issued 7 observations to company’s Baddi units as the company has failed to thoroughly review any unexplained discrepancy and also failure of a batch.

The observations includes, lack of written procedures for production & process controls and complaint records are deficient.

USFDA also mentioned that the records have not maintained so data can be reviewed annually to evaluate quality standards.

It also includes responsibilities & procedures applicable to quality control unit not fully followed, appropriate controls not exercised over computers/related systems and lack of employee training.

The USFDA had inspected Baddi unit from November 6-11.

The Baddi unit manufactures finished dosages and contributing less than 10 percent of total Glenmark’s US sales.

graph_glenmark

9:15 am Market Check: Equity benchmarks opened mildly lower on Tuesday, weighed by profit booking. The market rallied for previous eight consecutive sessions.

The 30-share BSE Sensex was down 32.62 points at 33,691.82 and the 50-share NSE Nifty fell 11 points to 10,388.50.

Power Grid, NTPC, ITC, IOC, Bharti Airtel, ICICI Bank, Tata Motors, Tech Mahindra, Bharti Infratel and Infosys were early losers.

Tata Power, HUL, Cipla, IndusInd Bank, HDFC Bank, Ambuja Cements and UltraTech Cement were early gainers

Reliance Communications plunged 8 percent. Reliance Capital, Reliance Naval and Reliance Infrastructure fall 1 percent each.

IGL, Gujarat Gas, Mahanagar Gas, Rallis India, IDBI Bank and Eris Life gained 1-5 percent.
PNB Housing Finance and Glenmark Pharma fell 3 percent.