MARKET WRAP: Sensex gains for 4th day, up 163 pts; PSBs, pharma stocks jump

Topics Markets | MARKET WRAP

Continuing their northward journey, the benchmark indices gained for the fourth straight day on Thursday after the Reserve Bank of India (RBI) kept the repo rate unchanged at 5.15 per cent and maintained 'accommodative' stance in its sixth bi-monthly monetary policy review of the financial year 2019-20 (FY20). READ MORE

The S&P BSE Sensex added 163 points or 0.4 per cent to settle at 41,306 levels while the NSE's Nifty50 closed the session at 12,138, up 49 points or 0.4 per cent. On the NSE, the Nifty50 index ended at 12,138, up 49 points or 0.4 per cent. 

Bank and financial services stocks made impressive gains post the RBI policy announcement. Nifty Bank climbed 285 points or nearly a per cent to end at 31,287 while Nifty PSU Bank index closed at 2,312 levels, up 59 points or 2.63 per cent. Nifty Private Bank index rallied around a per cent to settle at 17,243 levels.

Volatility index India VIX slipped nearly 3 per cent to 13.75 levels. 

In the broader market, Nifty Midcap 100 index gained 0.7 per cent to 18,241 points and the Nifty Small Cap 100 index added 0.48 per cent to settle at 6,235.

BUZZING STOCKS

Bharti Airtel joined the elite club of Rs 3 trillion market capitalisation (market-cap) as shares of the telecom services provider hit a new high on the BSE in the intra-day trade. The stock settled at Rs 547, up nearly 2.5 per cent. READ MORE

Shares of Avenue Supermarts, which operates supermarket chain DMart, rallied 5 per cent to Rs 2,361, also its new high today, after its board approved the launch of a qualified institutional placement (QIP) by the promoters. The stock ended 2 per cent higher at Rs 2,294. 

GLOBAL MARKETS 

Global stocks extended their recovery on Thursday, cheered by record closes in Wall Street benchmarks following encouraging economic data, and after China announced a cut in tariffs on some imported goods from the United States.

MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 1.66 per cent while Japan’s Nikkei rose 2.38 per cent. Mainland Chinese shares also reacted positively, with the bluechip CSI300 index up 1.97 per cent. 

US stock futures rose 0.55 per cent in Asia while China’s onshore yuan rose 0.2 per cent to its strongest level since January 23 after the tariff cuts were announced.

In commodities, oil futures rose for a second day on Thursday amid investor optimism over unconfirmed reports of possible advances in combating the coronavirus outbreak in China which could cause fuel demand to rebound in the world’s biggest oil importer.

(With inputs from Reuters)

LIVE UPDATES

MARKET COMMENT | Vinod Nair, Head of Research, Geojit Financial Services

Monetary policy action from the central bank on rates came on expected line while measures to spur growth in credit came as a surprise. Removal of CRR for loans made to specific sector and open market operations will support the economy with more credits at lower rates.. Inflation rate is forecast to subsequently reduce in the coming months and provide more room for RBI to cut interest rates as and when necessary.

SECTOR WATCH | Top gainers and losers on the NSE


MARKET AT CLOSE | Top gainers and losers on the S&P BSE Sensex


CLOSING BELL

The S&P BSE Sensex gained 163 points or 0.4 per cent to settle at 41,306 while NSE's Nifty50 closed at 12,138, up 49 points or 0.4 per cent.

NEWS ALERT | Lupin slips over 1%; Q3 net loss at Rs 835 crore


NEWS ALERT | Sun Pharma logs profit of Rs 913 crore

- Cons revenue at Rs 8,155 crore

MARKET CHECK | Top 5 gainers on the BSE at this hour


BROKERAGE RADAR | Centrum Broking on HG Infra Engineering

Adjusted valuations at 6.7x/5.8x FY21/22E EPS are inexpensive considering HG's strong earnings growth outlook, low leverage and high return ratios. We initiate coverage with Buy rating and 12-month target price of Rs405, based on 10x FY22E EPS and Rs 45/share value of assets.

Key risks – delay in receipt of Appointed Dates for existing projects, prolonged slump in highway ordering, execution delays in big ticket projects.

MARKET CHECK


BROKERAGE RADAR | ICICI Securities on Engineers India

Target: Rs 105 (8%) Target Period: 12-15 months

EIL’s balance sheet continues to remain healthy with zero debt and cash balance of ~| 2660 crore. EIL’s bookto-bill is at healthy ~4.5x (order book at | 10164 crore). We value EIL at 13.5x P/E on FY21E EPS of | 7.7 with a target price of | 105 per share and maintain HOLD rating EIL. Key risks: Any project related headwinds or delays in turnkey segment may further affect revenue growth.

RESULTS CORNER:: Eicher Motors Q3 standalone net profit down 2.5% YoY at Rs 488.9 cr

-- Revenue at Rs 2,363.5 crore

-- Ebitda at Rs 595.2 crore

-- Tax expense at Rs 145.2 crore

FMCG stocks under pressure


Global Markets check

European shares rose to a record high on Thursday, helped by China’s plan to cut tariffs on some US goods and a swathe of strong earnings. The pan-European STOXX 600 index rose as much as 0.7 per cent to a record high of 426.700.

China said on Thursday it plans to halve tariffs on some US goods, which could help improve negotiating conditions for a second phase of a trade deal after the signing of a Phase 1 agreement between the two countries earlier this year. The initial agreement had signaled no further escalation in a prolonged trade war which had severely hampered global economic growth.

Asian stocks edged up on Thursday, a day after U.S. S&P 500 hit a record peak following encouraging economic data, while investors keep a wary eye on the impact of the coronavirus outbreak.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.39 per cent while Japan's Nikkei rose 1.63 per cent.

MARKET CHECK:: Sensex off day's high


Rupee check


MARKET COMMENT:: View On RBI Monetary Policy by Dhiraj Relli, MD & CEO, HDFC Securities

The MPC observed that the economy continues to be weak and the output gap remains negative. Although some high-frequency indicators have turned around and point to a lift in the momentum of economic activity, there is a need to await incoming data to gauge their sustainability. Agriculture shows the promise of faster revival going by the higher Rabi sowing, normal north east monsoon and healthy water storage reservoir level. Reliefs to MSMEs and real estate sector are welcome and will positively impact the valuations of lending companies and real estate companies. As far as the stock markets are concerned, the outcome is more or less in line with expectations and the markets will keep discounting other evolving developments.

MARKET COMMENT:: View On RBI Monetary Policy by Jimeet Modi, Founder & CEO, Samco Securities

Budget Part II was delivered by RBI in the form of lowering costs to MSMEs and bringing some life into realty wherein loans to commercial sector will be considered as standard (Projects which are just about to complete but are stuck due to last mile funding gaps). RBI indeed used all its might to force banks to lower interest rates to induce transmission for the benefit of end users, which it has partly achieved. New loans are now 69 basis points (bps) cheaper and old loans are cheaper by 13bps given the total 135 bps cut in 2019. Although, interest rates have maintained a status quo, but the RBI has smartly lubricated the slower moving parts of the economy.

BSE500 stocks that hit 52-week high today

COMPANY PRICE(rs) 52 WK HIGH CHG(rs) CHG(%)
ADANI ENTERP. 235.30 243.60 -0.95 -0.40
AJANTA PHARMA 1298.00 1322.85 103.60 8.67
ALEMBIC PHARMA 646.05 651.20 20.60 3.29
ATUL 4949.75 5050.00 -26.55 -0.53
AVENUE SUPER. 2320.00 2360.75 70.70 3.14
» More on 52 Week High

RBI policy: Monsoon and spending pattern hold key for economic revival

There has not been any surprise in the Monetary Policy Committee (MPC) action as the 7.4 per cent CPI inflation number for December provided little scope for going for a rate cut this time. The commentary of the Reserve Bank of India (RBI) is, however, important as it also takes into account the impact of the Union Budget while handing out the decision and here it is positive. READ MORE

Contribution to S&P BSE Sensex's gain today


BUZZING STOCK:: IndusInd Bank zooms 4%


MARKET COMMENT:: View On RBI Monetary Policy by Sujan Hajra, Chief Economist at Anand Rathi Shares

RBI’s sees rate cuts, we do not
 
As expected, the RBI kept all major policy rates unchanged in the Feb’20 Monetary Policy. RBI expects high inflation to continue in H1 FY21 but fall sharply below 4% thereafter. RBI also expects recovery of growth to continue. It has been categorically stated, “The MPC recognises that there is policy space available for future action”. We, however, are less sanguine on this as 12.2% in MSP hike during 2019 is likely to keep food inflation elevated despite continued softening of onion prices. Moreover, the base effects of fuel and manufactured product prices are also unfavourable. With retail inflation in 5-5.5% range in 2020, we do not expect any rate cut in the current year.

Sentiment boost
 
Despite our expectation of no rate cut in 2020, the categorical statement by MPC about the possibility of rate cut should boost sentiments. Minor fall in some lending rates, boost to bank NII. Linking credit to medium industries to external benchmark, removal of CRR requirement on fresh retail housing and auto loans and credit to MSME are positive steps. These steps may marginally reduce the interest rates on such fresh loans. The removal CRR select loans (~15% of banks’ outstanding loan book) is also likely to give a temporary boost to banks’ net interest income.

Financials in focus post RBI policy; SBI, BoB, Canara Bank up over 2%

Shares of financials, including banks and non-banking finance companies (NBFCs), bounced back from day’s low on Thursday after the RBI's monetary policy committee (MPC) decision. The Reserve Bank of India kept the repo rate unchanged at 5.15 per cent in its last policy review of the financial year 2019-20 (FY20). The MPC maintained the ‘accommodative’ stance, citing the lingering growth concerns and ensuring inflation remains within target. READ MORE

BUZZING STOCK:: Indiabulls Housing Finance surges 9%


Heatmap: S&P BSE Sensex


BUZZING STOCK:: Spandana Sphoorty gains over 3% post RBI policy announcement


COMMENT ON RBI POLICY :: Dr. Joseph Thomas, head of research, Emkay Wealth Management

It was widely expected that the RBI was likely to continue with the pause till there is greater visibility on the inflation front. At this juncture, rate modification is actually not required as the interbank market has a huge surplus of close Rs.3 Lakh Crs to support the liquidity requirements of the system, and this alone will ensure that the short-term rates do not move up. The status quo comes as a relief to the short end of the curve, but the pressures at the long end may persist for longer time

COMMENT ON RBI POLICY :: Suman Chowdhury, President – Ratings at Acuité Ratings & Research

The MPC's decision to hold the policy rate has been completely in line with our expectations. RBI believes that the inflation outlook remains uncertain and may remain elevated through the first half of FY21. Also, it expects the interest rate transmission to be more effective and act as a growth booster as more banks link their lending rates directly to the policy rate. Therefore, any further rate cut looks a little unlikely in the next two quarters though RBI has decided to 'persevere' with the ongoing accommodative policy. The central bank has also decided to incentivise banks' lending for retail and MSMEs further by giving equivalent benefit on their CRR requirement

Nifty sectoral indices at this hour


NEWS ALERT | Rabi sowing has been higher by 9.5 per cent up to January 31, 2020 compared with a year ago: RBI

"The north east monsoon rainfall was above normal. Storage in major reservoirs – the main source of irrigation during the rabi season – was 70 per cent of the full reservoir level (as on January 30, 2020) as compared with 45 per cent a year ago. Based on the first advance estimates, horticulture production is estimated to have risen 0.8 per cent to a record level in 2019-20. Production of vegetables is estimated to have increased by 2.6 per cent in 2019-20 due to higher production of onions, potatoes and tomatoes."
 

SECTOR CHECK:: PSU banks gain post RBI policy decision


NEWS ALERT | Economy remains weak, output gap is negative: RBI Guv

-- Investment sentiment showing signs of improvement

RBI policy: Repo rate unchanged at 5.15%; FY21 GDP growth projected at 6%

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) on Thursday kept the repo rate unchanged at 5.15 per cent — a 10-year low in its last policy review of the financial year 2019-20 (FY20). Consequently, the reverse repo rate stands unchanged at 4.90 per cent. Further, the bank said it will maintain 'accommodative' policy stance as long as it takes. READ MORE

Market check | Sensex jumps over 100 pts as RBI announces relief measures on credit side


Nifty Realty trades lower


NEWS ALERT | RBI keeps repo rate unchanged at 5.15%

-- to continue accomodative as long as it takes: RBI

SECTOR WATCH:: Nifty Bank index trades with slight cut ahead of RBI policy


MARKET CHECK:: Sensex flat ahead of RBI policy decision


RBI Policy Expectation :: Crisil

In fiscal 2020 so far, while the central bank cut rates by a cumulative 110 bps, 10-year G-Sec yields declined by a lower 81 bps. Term premium – or the difference between the yield on the 10-year G-Sec over short-term treasury bills – crossed 150 bps, much above the long-term trend of 40-50 bps. 

Even ‘Operation Twist’ by the RBI could not sustainably reduce this term premium. This shows that the RBI’s policy easing is not adequately getting transmitted to
long-term interest rates. 

We expect the RBI to keep rates unchanged in the near term, given the spike in inflation and fiscal slippage

RBI Policy Expectation :: Goldman Sachs

We maintain our view for the RBI to keep its policy rates on hold in its announcement on February 6th, with inflation inching up, and as it would get further comfort on some of the measures announced during the Budget.

MARKET CHECK:: Sensex off day's highs


RBI Policy Expectation :: Edelweiss Securities

We expect the MPC to hold rates, especially if one goes strictly by the guidance in the previous policy. After all, inflation has only moved higher since then. Yet, we do believe there is an outside chance of a rate cut.

However, in recent weeks, deflation has set in vegetable prices. Also, crude oil prices have dipped 12% since the previous policy. To that extent, inflation readings have peaked out. 

Rate cut to resume in FY21 

Amid improving inflation prospects, government maintaining fiscal prudence and lingering weakness in the economic activity, we perceive an outside chance of the RBI taking a proactive rate cut in the February policy review. Even if not, we maintain that rate easing will resume in FY21. We expect 50-75bps cut in repo rate in 2020.
 

Tech stocks gain in early trade


YES Bank gains 3%


NEWS ALERT | Dilip Buildcon declared as lowest bidder for HAM-based project: BSE filing


DLF declines 1.5%

>> Realty major DLF Ltd on Wednesday reported a 24 per cent increase in its consolidated net profit to Rs 414.01 crore for the quarter ended December despite fall in income. Its net profit stood at Rs 335.15 crore in the year-ago period.

Result Impact | Schneider Electric surges 17%

The company on Wednesday posted a Rs 30.02 crore net profit in the December 2019 quarter, mainly on account of higher revenues. The company had reported a net loss of Rs 6.29 crore in the year-ago quarter.


Result Impact | HPCL trades flat

>> industan Petroleum Corp Ltd (HPCL) on Wednesday reported trebling of net profit in December quarter as inventory gains made up for lower refinery margins


Result Impact | Adani Enterprises gains 2%

>> Adani Enterprises Ltd (AEL)'s consolidated profit before tax (PBT) for the quarter ended December 31, 2019 grew by 317.80 per cent to stand at Rs 440.16 crore. As against this, the company's consolidated PBT in Q3 of previous fiscal 2018-19 was Rs 105.35 crore.


Maruti Suzuki gains 1%

>>  The country’s largest carmaker, Maruti Suzuki India, will not be launching an electric vehicle (EV) anytime in the foreseeable future, as issues like range anxiety and the high cost of acquisition will put off buyers, Kenichi Ayukawa, its managing director and chief executive, told Business Standard.


Avenue Supermarts hits 52-week high

>> Avenue Supermarts has launched its qualified institutional placement (QIP) programme to raise at least Rs 4,000 crore. The QIP will help promoters of the company, led by Radhakishan Damani, pare their holdings, which currently stands at 79.73 per cent.


ITI zooms 11%


Sectoral trends at NSE during Opening trade


Top gainers and losers on S&P BSE Sensex during Opening trade


First Trade


Opening Bell


In unprecedented move, ITI withdraws Rs 1,300-crore FPO over poor demand

“The company has decided to withdraw the issue, due to the prevailing market conditions,” ITI said in a statement. The FPO had garnered only 62 per cent subscription, data provided by stock exchanges showed. ITI had extended the closing date twice and also had lowered the price band to attract investors. The FPO, was to originally close on January 28. The closing date was first extended to January 31 and later to February 5. The price band was lowered to Rs 71-Rs 77 per share from earlier band of Rs 72-Rs 77 per share. READ MORE

Rupee Opening Alert

Rupee opens lower at 71.24/$ vs Wednesday's close of 71.21 against the US dollar

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


Market at Pre-open


Market at Pre-open


Sebi embraces new-age tools for information to prevent insider trading

Heard of Black Edge? In her famous book on the hedge fund industry which has the same title, Sheelah Kolhatkar describes Black Edge as the “most valuable information of all” in that it is proprietary, non-public, and certain to move markets.
 
No doubt, securities regulators around the world are putting in huge efforts to prevent the flow of such information, as well as to punish those making illicit gains using these insights. READ MORE

Stocks to watch: Rate-sensitive counters, ITI, YES Bank, Avenue Supermarts

Rate-sensitive stocks such as financials, auto and realty are expected to hog the limelight today as the Reserve Bank of India (RBI) is slated to announce its last bi-monthly monetary policy of the financial year 2019-20 (FY20) later in the day.
 
Earnings today: A total of 135 companies are scheduled to announce their December quarter earnings today including Eicher Motors, Hero MotoCorp, Sun Pharma, and RITES. READ MORE

MCA inspection may spoil the show for Zee; stock sheds 15% in two sessions

The Zee Entertainment stock has shed close to 15 per cent from its highs over the last two trading sessions.
 
The sharp correction followed reports that the Ministry of Corporate Affairs (MCA) had ordered an inspection of the firm’s books on allegations of corporate governance lapses and also because of the resignations of some of its independent directors. READ MORE

Sebi tightens IPO norms; companies under investigation could face delays

The Securites and Exchange Board of India (Sebi) on Wednesday set rules under which it could hold back approvals for proposed share sales by companies that are under investigation for possible violations. The capital markets regulator has said that for current investigations, “observations” on the draft offer may be kept in abeyance for 30 days from filing of the draft offer. READ MORE

D-Street's bullet train: IRCTC climbs league table to be most-valued PSU

Currently, it is valued more than other marquee PSUs, such as The New India Assurance Company, Bharat Electronics, Oil India, and Bharat Heavy Electricals.
 
In the past fortnight, IRCTC has seen its m-cap swell by over Rs 10,000 crore — more than the combined market value of the bottom 20 listed PSUs. READ MORE

Market Outlook :: Deepak Jasani, Head - retail research, HDFC Securities

Outlook: Indian markets could open flat to negative despite in the US markets on Wednesday and largely positive Asian markets today that are following US cues.

>> The pullback rally continued at Dalal Street on Wednesday, after the sharp fall seen last Saturday, which was triggered due to lack of sufficient stimulus measures in the Union Budget. The gains came on the back of positive global cues and after a shaky start in the morning session. Sentiments were also boosted after India's Services PMI in January rose at quickest rates in seven years. The Nifty gained 109.5 points or 0.91% to close at 12,089.15
 
Technical cues: Nifty has pulled back sharply, the underlying short term trend still remains down. The Nifty would need to cross the previous intermediate high of 12170 for the downtrend to reverse. Traders may also remain cautious ahead of the Reserve Bank of India (RBI)'s policy outcome tomorrow. Immediate supports to watch for resumption of weakness are now at 11954.
 
Stocks to watch: Among stocks under coverage, Shree Cements, Bharti Airtel, PVR, Ujjivan, Dmart, AU SFB, Tata Motors, M&M, ICICI Bank, DLF, MCX, Indigo could do well.

Nifty view and top trading ideas by CapitalVia Global Research: Buy UBL

Market traded higher on Wednesday; Nifty regained 12,000 mark
 
Market traded higher on Thursday due to strong global cues along with soft crude prices and stable rupee. The Nifty closed at 12,089.20, gaining 109.50 points. Metal, realty and financial services stocks traded with positive sentiments through the day whereas media stocks witnessed some pressure. Nifty bank closed at 31,002, adding 315.30 points from the previous day’s closing. Today, markets will react to the RBI’s policy rate decision. READ MORE

Two stocks that Vaishali Parekh of Prabhudas Lilladher is bullish on

BUY HINDALCO
 
CMP: Rs 196.30
 
TARGET: Rs 220-225
 
STOP LOSS: Rs 180
 
The stock has made almost a double bottom formation near 180 levels forming a strong support base and has given a decent bounce to imply strength and has potential to rise further in the coming days. READ MORE

Bulk deals on NSE as on Wednesday

Bulk deals on BSE as on Wednesday

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


Rupee Check

Source: Bloomberg


Oil Check

>> Oil futures rose for a second day on Thursday as investors took optimism around unconfirmed reports of possible medical advances to combat the coronavirus outbreak in China as a sign fuel demand could rebound in the world’s biggest oil importer.
 
>> Prices also gained after a government report on Wednesday showed U.S. gasoline and diesel inventories fell.

>> At 8:10 am, Brent Crude Futures were at $55.95 per barrel-mark, up over 1 per cent.

SGX Nifty

>> At 8:08 am, the Singaporean Exchange for Nifty Futures was down 19 points,or 0.16 per cent, at 12,081.

Asian Market Check

Source: Reuters


US Market Check

Source: Reuters


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