Weak global cues, sell-off in RIL, IT drag indices; Sensex tanks 1,066 pts

Topics Markets | Infosys  | Tata Elxsi

Global shares fell on Thursday as governments across Europe tightened restrictions to battle an accelerating second wave of Covid-19 infections.
Snapping its ten-day gaining streak, the domestic stock market came under selling pressure on Thursday amid weak global cues and profit-booking in recent outperformers such as RIL and information technology (IT) counters. 

The S&P BSE Sensex plunged 1,066 points, or 2.61 per cent to end the day at 39,728 levels while NSE's Nifty settled at 11,680, down 291 points, or 2.43 per cent. India Vix, the volatility index, jumped over 9 per cent to 22.05 levels. 

29 out of 30 constituents of BSE Sensex declined. Asian Paints (up 0.3 per cent) was the only stock in the index that ended in the green.

In the broader market, the S&P BSE MidCap index slipped 1.75 per cent and the S&P BSE SmallCap index fell 1.45 per cent. 

Global markets

Global shares fell on Thursday as governments across Europe tightened restrictions to battle an accelerating second wave of Covid-19 infections, dampening the prospects for economic recovery.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.6 per cent while Japan's Nikkei dropped 0.5 per cent.

Oil prices also fell as the renewed surge in the virus in large parts of the world underpinned concerns about economic activity.

(With inputs from Reuters)


LIVE UPDATES

SECTOR WATCH | Nifty Bank tumbles over 3%


MARKET AT CLOSE | Gainers and losers on the BSE Sensex


CLOSING BELL

The S&P BSE Sensex tumbled 1,066 points, or 2.61 per cent to settle at 39,728 levels while the NSE's Nifty index ended at 11,680, down 290 points, or 2.43 per cent.

Market update


RITES takes 24% stake in railway station firm, gets board representation

RITES Ltd, a company of the Indian Railways has taken 24 per cent equity stake in Indian Railway Stations Development Corporation (IRSDC) and has got a representation on the company board. READ MORE 


Nifty IT slips over 3% on profit booking; HCL Tech, Mindtree down over 5%

HCL Technologies, Mindtree, and Persistent Systems were down more than 5 per cent each at the bourses. Tech Mahindra, Mphasis, and Coforge were down 4 per cent, while Infosys, Wipro, Tata Consultancy Services (TCS), and Larsen & Toubro Infotech were down between 2 per cent and 3 per cent. READ MORE  


Stocks that hit 52-week high on BSE today in an otherwise feeble market

COMPANY PRICE(rs) 52 WK HIGH CHG(%)
AMBUJA CEMENTS 242.85 250.25 -1.54
ASIAN PAINTS 2084.10 2122.80 0.62
BERGER PAINTS 599.60 618.10 -1.05
HERO MOTOCORP 3338.90 3380.00 0.87
INFOSYS 1102.40 1185.00 -2.97
» More on 52 Week High

SECTOR WATCH:: Nifty Bank index falls 600 points


BSE Midcap index trades over 1.30% lower


MARKET CHECK


RIL, Infosys top contributors to Sensex's 900-point fall today


MARKET UPDATE:: India VIX rises 8%


UPDATE :: Nifty hovers above 11,700 level


Heatmap :: Sensex sinks 890 pts


Rupee Closing

Rupee ends lower at 73.38 per US dollar vs Wednesday's close of 73.30/$

Reliance deals accounted for 40% of all PE-VC investments in Jan-Sep 2020

Investments by private equity (PE) and venture capital (VC) firms in Indian companies between January and September 2020 were down 21 per cent in value terms when compared with the same period last year – at $28.9 billion in 2020, against $36.4 billion in 2019. And, the $11.7 billion of PE investments in Jio Platforms and Reliance Retail alone accounted for 40 per cent of all PE-VC investments during this period, show IVCA-EY data. READ MORE

HCL Tech declines over 4%


UPDATE :: Nifty slips below 11,800


NEWS ALERT :: India's fiscal position very weak, says Moody's

>> Says recent Rs46,675 cr (0.2% of GDP) stimulus will provide limited support to growth.

>> It acknowledges fiscal prudence but takes note of limited budgetary firepower to support economy, contracting sharply.

>> Move is credit negative.

Nifty IT index drops 3%


MARKET CHECK


Rane Brake advances 12% as board approves buyback at Rs 825 via open market

Shares of Rane Brake Linings moved higher by 12 per cent to Rs 715 on the BSE in the intra-day trade on Thursday after the company's board approved buyback of shares at Rs 825 per share via open market. In the past three days, the stock of auto ancillary company has rallied 23 per cent after the company announced the share buyback plan. READ MORE 


European markets open with sharp downtick


Apollo Hospitals gears up to administer 1 million Covid-19 vaccines daily

Apollo Hospitals has made preparations to administer 1 million Covid-19 vaccines daily and 300 million every year. The group will leverage its robust pan India web of 19 medicine supply hubs with cold chain facilities and use it’s 71 hospitals, 400 plus clinics, said the Group's Executive Vice-Chairperson Shobana Kamineni. READ MORE


Market at day's low

>> S&P BSE Sensex is at 40,333.80 level, down 460.94 points or 1.13%

>> Nifty50 index is at 11,855 level, down 116.05 points or 0.97%

These Tata, Birla, Ambani group stocks can make you rich. Check key levels

Reliance Industries Ltd (RELIANCE): Till this counter trades above Rs 2,000, the momentum can take it towards Rs 3,000. That said, there can be intermittent corrections, which can be used to accumulate the scrip. The consolidation breakout / 'Flag Pattern' breakout has affirmed an upside that can trigger a strong recovery in any corrective move, as per the weekly chart. The Relative Strength Index (RSI) has seen the strength in the overbought condition, which facilitates in building a strong bullish sentiment from a medium-term perspective READ MORE

NEWS ALERT :: Rane Brake Lining board approves buyback

>> The Board has approved buyback of the company's fully paid-up equity shares of Rs.10/- each, from the open market through stock exchange mechanism, for a maximum price of Rs. 825/- per equity share upto an aggregate amount not exceeding Rs. 22 Crores excluding transaction costs and applicable taxes. 


Auto shares trade firm in a weak market; Hero MotoCorp hits 52-week high

Hero MotoCorp, Ashok Leyland, Bajaj Auto, TVS Motor Company, Eicher Motors, Balkrishna Industries and Cummins India from the auto index were up in the range of 1 per cent to 4 per cent on the BSE. At 12:14 pm, the S&P BSE Auto index was up 0.5 per cent, as compared to 0.69 per cent decline in the S&P BSE Sensex. READ MORE

IT stks factor in most positives; pay hike, promotion surprising: Analysts

The announcement of a salary hike and promotions across the-board by Infosys on Wednesday and earlier by Tata Consultancy Services (TCS) have come in as a surprise for analysts. While announcing its financial performance for the September 2020 quarter of the current fiscal (Q2FY21), Infosys said it will roll out salary increases and promotions across all levels, effective January 1. The company also said it will give 100 per cent variable pay along with a special incentive for Q2. READ MORE

Tata Steel: Rising demand, steel prices and integrated ops bode well

Tata Steel’s provisional volume numbers for the September 2020 quarter (Q2) impressed the Street, and rising demand and steel prices also point towards an improving business outlook. Being an integrated steel producer, the company remains largely insulated from rising prices of key raw material such as iron ore. READ MORE

BUZZING STOCK:: Rakesh Jhunjhunwala picks 1.29% stake in TaMo


Indo Count Industries extends rally, stock zooms 230% in 3 months

Shares of Indo Count Industries continued at their northward movement, hitting a fresh 52-week high of Rs 135, up 8 per cent on the BSE on Thursday in an otherwise market. The stock was trading higher for the fifth straight day and has rallied 26 per cent during the period. In the past three months, the market price of the company engaged in textiles business, has zoomed 230 per cent, as against 12.5 per cent rise in the S&P BSE Sensex. In the six months, it has surged 402 per cent, as compared to 35.6 per cent gain in the benchmark index. READ MORE

SECTOR WATCH:: Auto stocks trade higher in an otherwise subdued market

COMPANY LATEST(rs) CHG(%)
ASHOK LEYLAND 73.85 0.89
TATA MOTORS 131.15 0.34
M & M 627.10 0.52
TATA MOTORS-DVR 56.40 1.35
EICHER MOTORS 2278.00 1.04
» More

NEWS ALERT :: Adani Green Energy expands TOTAL JV with Rs 1,632 Cr solar assets acquisition

>> The JV has today completed another acquisition as per JV agreement, by way of transfer of 205 MW of operating solar assets for an enterprise valuation of Rs 1,632 Cr. With the acquisition, the total operating renewable portfolio under the JV stands at 2,353 MW.

>> TOTAL, through its step-down subsidiary has invested Rs 310 Cr in the JV for 50% stake in the new acquisition


'Market risk is temporary, credit risk permanent'

At a time when market participants were struggling with concerns over rising inflation and large government borrowings, such an assuring policy statement would help bring stability, confidence, and renewed enthusiasm in the debt markets. The market now has one less worry on outlook, given the strong intent and demonstrated action by the RBI in the current environment. READ FULL INTERVIEW HERE


MARKET CHECK


World experiencing worst recessions since Great Depression due to Covid: WB

"The recession has been deep, one of the deepest since the Great Depression. And for many developing countries, and for the people in the poorest countries, it is truly a depression, a catastrophic event. It is continuing to add to the ranks of those in extreme poverty," said World Bank Group President David Malpass. READ MORE
World Bank Group President David Malpass

FPIs hike stake in SBI Cards for second quarter in a row; stock at new high

Foreign portfolio investors (FPIs) increased their stake in SBI Cards and Payment Services for second quarter in a row, buying an additional 16 million shares during July-September quarter (Q3CY20). FPI holding in the company increased to 5.93 per cent in Q3CY20 from 4.23 per cent at the end of June quarter (Q2CY20), according to shareholding pattern disclose by the company. READ MORE

Sovereign Gold Bond scheme a good hedge against rupee, rising inflation

The Sovereign Gold Bond (SBG) Scheme 2020-21 series has its seventh tranche (SBG 2020-21 Series VII) open and running till Friday. There will be another issue next month. If bought online, this tranche is offered at Rs 5,051/gram with a discounted price of Rs 5,001. The current spot price of gold is Rs 5,055. The SBG has an eight-year maturity period, with redemption allowed after five years. It offers interest unlike the physical metal and it’s dematerialised, which takes care of storage. It has fair liquidity. READ MORE

Here's why moving averages are a must for your trading model

One of the simplest techniques to gauge the trend of a stock/market is Moving Average. It is classified as the average value of a security over a specified period. Usually, when the price trades above the average, the trend is considered as bullish and when the price falls below the average, the sentiment is said to be bearish. READ MORE  


Private banks continue to remain the biggest overweight for equity MFs

Experts say the UW stance is on account of Reliance Industries (RIL). “RIL’s weight in the index is nearly 15 per cent. However, the stock remains under-owned, partly due to technical factors,” said a fund manager. Fast moving consumer goods (FMCG) is another space fund managers are underweight on. Experts say the stance stems from valuation and growth concerns. MFs have pruned their holdings in the non-banking financial companies (NBFC) too, going 240 basis points (bps) underweight. READ MORE

Top losers on BSE at this hour

COMPANY PRICE(rs) CHG(%)
MINDTREE 1483.60 -4.50
INFO EDG.(INDIA) 3601.85 -3.88
TECH MAHINDRA 817.75 -3.67
HCL TECHNOLOGIES 861.90 -3.17
PERSISTENT SYS 1326.05 -3.12
» More on Top Losers

Mindtree slips nearly 5% ahead of Q2 nos; here's what brokerages expect

Shares of mid-tier IT company Mindtree slipped as much as 4.73 per cent to Rs 1479.9 in the morning trade on the BSE on Thursday ahead of its September quarter results (Q2FY21) announcement due later in the day. At 10:25 AM, the stock was trading nearly 4.5 per cent lower at Rs 1484.70 on the BSE. In comparison, the benchmark S&P BSE Sensex was trading 151 points, or 0.37 per cent lower at 40,644 levels. READ MORE

Tata Elxsi surges 5%, hits record high on strong September quarter earnings

Shares of Tata Elxsi rallied 5 per cent and hit a record high of Rs 1,533.55 on the BSE on Thursday after reporting 56 per cent year on year (YoY) growth in profit before tax (PBT) at Rs 110 crore in the July-September quarter (Q2FY21). The company's operational revenues grew 11.5 per cent YoY at Rs 430 crore. On sequential basis, revenues and PBT jumped 7.4 per cent and 17 per cent, respectively. READ MORE

Wipro: Investors should await growth outperformance, margin gains

The stock of Wipro, the best performing tier-I information technology company over the past six months, was down close to 7 per cent on Wednesday. The Street believes that Wipro’s risk-reward trade-off might have turned unfavourable, given the sharp gains and higher valuation. READ MORE

Infosys turns flat after hitting new high post healthy Q2 results

Shares of Infosys hit a fresh record high of Rs 1,185, up 4 per cent on the BSE in early morning trade on Thursday after the company reported healthy set of July-September quarter (Q2FY21) numbers on revenue and profitability front. The company has revised its FY21E revenues guidance upwards from 0-2 per cent year on year (YoY) to 2-3 per cent YoY in constant currency basis & operating margin guidance to 23-24 per cent from 21- 23 per cent. READ MORE

NEW LISTING | Likhitha Infra lists at 8% premium over issue price of Rs 120 per share


Rupee Opening

Rupee opens at 73.32 per US dollar vs Wednesday's close of 73.30/$

Sovereign Gold Bond scheme a good hedge against rupee, rising inflation

The Sovereign Gold Bond (SBG) Scheme 2020-21 series has its seventh tranche (SBG 2020-21 Series VII) open and running till Friday. There will be another issue next month. If bought online, this tranche is offered at Rs 5,051/gram with a discounted price of Rs 5,001. The current spot price of gold is Rs 5,055.
 
The SBG has an eight-year maturity period, with redemption allowed after five years. It offers interest unlike the physical metal and it’s dematerialised, which takes care of storage. It has fair liquidity. READ MORE

Nifty IT index dips 1.3% in early deals


Wipro declines nearly 3%


PVR gains over half a per cent as Delhi, Haryana, UP to re-open cinema halls from today


Ajmera Realty surges 7%


Nifty Bank index drops 200 pts


MARKET CHECK


Bharat Forge up 2%


TCS dips 1%


Tata Elxsi hits fresh 52-week high

>> The company reported a profit of Rs 78.9 crore for Q2FY21 compared to Rs 49.8 crore YoY while revenue rose to Rs 430.2 crore from Rs 385.8 crore in the year-ago period.


Den Networks up around 3%

>> Cable and broadband services provider Den Networks reported a 61.41 per cent year-on-year decline in its consolidated net profit to Rs 36.77 crore in the second quarter.


Ashok Leyland leaps 5% in a weak market


Infosys up 2.6% post stellar Q2 nos

>> The IT services major on Wednesday reported a 20.5 per cent year-on-year (YoY) rise in its consolidated net profit at Rs 4,845 crore for the quarter ended September 30, 2020 (Q2FY21). The company's revenue came in at Rs 24,570 crore, up 8.5 per cent YoY and 3.8 per cent QoQ


Sectoral trends at Open


Sensex slips into the red


Opening Bell


Opening Bell


Commodity Heatmap


Top gainers and losers on the S&P BSE Sensex at Pre-open


Markets at Pre-open


Markets at Pre-open


BROKERAGE VIEW:: Antique Broking on RBL Bank

CMP: Rs 173 | Target price: Rs 240 | Reco: Buy

>> We initiate Buy on RBL Bank (RBK) with Target Price of INR240, 1x FY23 BVe as we expect earnings (on a lower base) to rebound by 4x over FY21-23E and ROAs to improve to 1.2%+ by FY22/23E. We believe investor’s concerns related to corporate exposure (recognized, provided for and de-bulked) and deposits (12% growth in 1HFY21 and LD ratio at several quarters low) are now less of a challenge.

>> High proportion of 30% of unsecured loans (credit card and MFI) to overall loans could impact FY21e earnings as asset quality challenges would rise in this disruptive environment, but fostering of these niche segments (market share of ~5% vs. loan market share of <0.6%) which are linked to consumption and grass root level recovery would provide springboard to earnings in FY22/23e. Superior CET 1 of 17.4% and management continuity would support execution.

>> Current valuations of 0.7x FY23 BV overlooks this potential and as comfort on unsecured businesses improve we see upsides to valuation multiples.

BROKERAGE VIEW :: Emkay Global on Infosys

CMP: Rs 1,137| Target price: Rs 1,360 | Reco: Buy

>> Infosys delivered another stellar quarter, beating consensus estimates on revenue and margins. Revenue grew 6.1% QoQ to $3.3bn. EBITM expanded 270bps to 25.3% (highest quarterly margin since Q4FY16). Strong operating performance led to a net profit beat.

>> For FY21, Infosys raised its revenue guidance to 2-3% YoY cc (from 0-2%) and EBIT margins range to 23-24% (from 21-23%). Its full-year outlook implies a 0.5-1.7% CQGR over the remaining two quarters.

>> Large deal signing remained robust with deal TCV of $3.15bn in Q2 (net new share 86%), highest ever for the company. Net new deal TCV grew ~59% YoY in H1.

>> Infosys continues to outperform TCS in terms of revenue growth (4.8% YoY cc on TTM basis vs. -0.1% for TCS), with the margin differential also narrowing. We expect Infosys valuation gap with TCS to narrow further (trades at ~15% discount vs. >30% in early CY20) with sustained strong operating performance. We assume coverage on the stock with Buy and a TP of Rs1,360 at 25x Sept’22E earnings.

BROKERAGE VIEW :: Kotak Institutional Equities on Construction Material sector

Outlook: Attractive

>> Channel checks with cement dealers suggest pan-India prices increased 2% mom in October after four consecutive months of correction. A price hike in October is also an aberration to historic trends. A strong demand recovery in September 2020 (10-12% yoy) and continued demand tailwinds in early October 2020 underpin the price strength. Cost headwinds should hit from end of 3QFY21 and price hikes, if sustained, would offset the impact on margins and drive earnings upgrades.

BROKERAGE VIEW :: Kotak Institutional Equities on Petronet LNG

CMP: Rs 210 | Fair value: Rs 300 | Reco: Buy

>> We believe availability of competitive long-term contracts in global LNG markets may deter PLNG from pursuing investment in Tellurian’s project, with the latter anyway facing several challenges in its progress. The sharp correction in PLNG stock offers an opportunity to BUY as it trades at a discount to NPV of long-term contracts, even as volumes remain robust and well above contractual commitments. We expect the robust earnings/FCF trajectory to translate into higher dividends, as PLNG may find limited investment avenues meeting its threshold IRR.

BROKERAGE VIEW :: Kotak Institutional Equities on Infosys

CMP: Rs 1,137 | Fair value: Rs 1,400 | Reco: Buy 

>> Infosys impressed with excellent results and a significant beat on revenues, EBIT and net profit. Large deal TCV hit a new high. The company raised FY2021E revenue and margin guidance. The results capture the success of turnaround efforts initiated by Salil Parekh in 2018. This has resulted in success in all dimensions viz: operations, large deals, capability augmentation and talent retention. Expect the company to lead the industry on growth. We raise FY2021-23E EPS by 8-9% and FV to Rs1,400/share valuing the stock at 25X December 2022E EPS. BUY 

Stocks to watch today

Infosys: The IT services major on Wednesday reported a 20.5 per cent year-on-year (YoY) rise in its consolidated net profit at Rs 4,845 crore for the quarter ended September 30, 2020 (Q2FY21). The company's revenue came in at Rs 24,570 crore, up 8.5 per cent YoY and 3.8 per cent QoQ. READ MORE
 
Earnings today: Today, a total of 15 companies including Mindtree, South Indian Bank, and Cyient are scheduled to announce their quarterly earnings. READ MORE

BROKERAGE VIEW :: MOFSL on Tata Steel

Target price: Rs 381 | Reco: Neutral

>> Tata Steel BSL (TSBSL), subsidiary of Tata Steel Ltd, reported EBITDA of INR11.1b v/s INR1.5b in 1QFY21 – above our est. of INR8.4b. The beat on EBITDA was driven by higher-than-expected volumes and realization.

>> Sales volumes increased +84% QoQ / 23% YoY to 1.28mt (est. 1.1mt). Domestic volumes stood at 0.86mt, +150% QoQ / 11% YoY. The share of exports declined to ~31% v/s ~50% in 1QFY21. Crude steel production also increased by 73% QoQ/ 7% YoY to 1.14mt.

>> Realization improved by 11% QoQ (4,260/t) to INR43,120/t on higher steel prices and a better product mix, and was ~INR950/t above our estimate. This drove the beat on EBITDA/t.

>> We value TATA on SoTP based on FY22 EV/EBITDA of 6.5x for India operations and 5.0x for Europe operations. We arrive at target price of INR381/sh. Maintain Neutral on concerns on European operations.

BROKERAGE VIEW :: MOFSL on Infosys

CMP: Rs 1,136 | TP: Rs 1,355 (+19%) | Reco: Buy

>> Infosys (INFO)’s 2QFY21 revenue and margin performance were above expectations. The company impressed with a second consecutive quarter of strong margin expansion (270bp QoQ in 2Q; ~420bp over 1HFY21).

>> We expect some margin benefits to be sustainable. On the other hand, tailwinds (such as increased offshoring, lower attrition, deferred wage hikes, and lower travel/SGA costs) as a result of the pandemic are likely to partly wane out later on as the situation normalizes further over the next few quarters.

>> The highest ever deal wins were reported (~USD3.15b), and the deal pipeline remains healthy. Upward revision to FY21 guidance – with revenue growth of 2–3% YoY CC (v/s 0–2% earlier) and margin guidance of 23–24% (v/s 21–23% earlier) – is positive, but still conservative. We expect Infosys to deliver above guidance in FY21 a) notwithstanding margin headwinds (wage hikes in 4Q, large deal ramp-up, seasonality, above margin factors, etc.) and b) based on strong deal wins.

>> We upgrade our FY21/FY22E EPS estimates by 9%/12% as we adjust our revenue and EBIT margin trajectory. Infosys should be a key beneficiary in terms of recovery in IT spends in FY22. Additionally, leading operational performance in 1HFY21, coupled with strong deal wins, should translate to strong outperformance on EPS growth (v/s the sector). 
 

Trading strategies for zinc and nickel

Nickel has witnessed breakout from the range of 1,078-1,042 with volume. The recent breakout confirms bullish trend as we have also seen cross over of 20 and 50 EMA on daily scale. Momentum oscillator ADX is quoting above 58 and RSI_14 is trading at 58, both confirming trending market and bullish bias. Nickel has also made rounding bottom chart pattern whose next resistance comes around 1135. So we recommend long positions with target of 1,135 and stoploss of 1,080. READ MORE

Nifty outlook and stock pick by Gaurav Garg of CapitalVia Global Research

As per weekly option data, handful of put writing on lower strikes ranging from 11,700 to 11,900 is witnessed which shows Nifty would face firm support in sub-11,800 zone.11,800 will act as support as maximum put OI is placed here. We can witness short-covering move along with addition of fresh position only if nifty breaches 12,000. Therefore, traders should try to create long position keeping close eye on 11,800. READ MORE

Bulk deals on BSE as on Wednesday

Bulk deals on NSE as on Wednesday

FII/FPI & DII trading activity on NSE, BSE and MSEI


Rupee check

Source: Bloomberg


Oil holds gains on shrinking US stockpiles

>> Oil prices rose slightly in early trade on Thursday after data showed US crude stockpiles fell last week, adding to 2% gains overnight, as OPEC and its allies were seen fully complying in September with their pact to curb output.
 
>> US West Texas Intermediate (WTI) crude futures picked up 4 cents, or 0.1%, to $41.08 a barrel, while Brent crude futures rose 5 cents, or 0.1% to $43.37 a barrel.

(Source: Reuters)

SGX Nifty update

>> At 8:25 am, the index was at 11,977 level, up 15 points.

Asia market check

Source: Reuters


Wall Street on Wednesday

Source: Reuters


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