MARKET WRAP: Sensex, Nifty end flat ahead of GDP nos; IT, pharma stks rally

The domestic equity market signed off the first day of December F&O series on a flat note with a positive bias on Friday amid buying in pharmaceutical, information technology (IT) and automobile counters.

The S&P BSE Sensex ended at 36,194, up 24 points, or 0.1 per cent, while the broader Nifty50 index settled at 10,877, up 18 points, or 0.2 per cent.

In the broader market, the S&P BSE MidCap rose 0.6 per cent to settle at 15,039 levels, while the S&P BSE SmallCap settled 0.5 per cent higher at 14,427 levels.

Going ahead, investors will look forward to key macroeconomic data such as GDP numbers for the September quarter, fiscal deficit and core sector growth, due later in the day. That apart, investors will also keep an eye on the meeting between Chinese President Xi Jinping and US President Donald Trump at the G20 summit in Buenos Aires this weekend.

The rupee traded on a firm note on Friday, rising to 69.59 against the US dollar in intra-day trade on the back of free fall in crude prices and heavy buying by foreign institutional investors (FIIs). The domestic unit on Thursday had breached the 70-mark for the first time since August 27 to end at a three-month high of 69.85 per US dollar.

Key stocks

Reliance Communications (RCom) rose 13 per cent to Rs 14.40 on the National Stock Exchange (NSE) on Friday after the Supreme Court asked RCom to furnish a corporate guarantee of Rs 14 billion within two days to get the No Objection Certificate (NOC) from the government. The corporate guarantee will be issued by Reliance Realty Ltd, a wholly-owned subsidiary of RCom.

The Nifty Pharma index rose 2 per cent led by a rise in shares of Biocon and Dr. Reddy's Laboratories. The Nifty IT index gained 1.2 per cent led by Infosys and Tata Consultancy Services (TCS).

YES Bank ended 6.3 per cent higher at Rs 170.50 after a TV report said that the private bank's promotor Rana Kapoor doesn’t have any ownership in Morgan Credits or Yes Capital.

In an exclusive interaction with CNBC-TV18, the bank's management clarified that the CEO Rana Kapoor doesn't have any ownership in Morgan Credits and YES Capital.

Global markets

Asian shares twitched either side of flat on Friday, reflecting investors' nervousness ahead of talks between US President Donald Trump and China's President Xi Jinping that could determine whether the Sino-US trade war gets any worse.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent, as an official survey pointed to a slowdown in China's manufacturing sector. The index was still set for its best month since January as it bounced from a bruising October.

In Japan, the Nikkei ended 0.4 per cent higher, while Korean shares dropped 0.8 per cent after the country's central bank lifted its policy interest rate in a widely expected decision. Chinese blue-chips advanced 1 per cent despite a survey showing China's factory growth stalled for the first time in more than two years in November.

Oil prices

Brent oil prices firmed on Friday on expectations that OPEC and Russia will agree to some form of production cut next week, while US crude was weaker due to swelling inventories. International Brent crude oil futures were at $59.68 per barrel, up 17 cents, or 0.3 per cent, from their last close. US West Texas Intermediate (WTI) crude futures were at 51.41, down 4 cents.

(with wire inputs)


Top sectoral gainers and losers on NSE
S&P BSE Sensex: Top gainers and losers
Market at close
The S&P BSE Sensex added 24 points to settle at 36,194 while NSE's Nifty50 index ended at 10,877, up 18 points
Vodafone Idea falls 6% as CRISIL downgrades NCD rating
Shares of Vodafone Idea dipped 6% to Rs 35.60 per share on the BSE after the rating agency CRISIL downgraded its rating on non-convertible debentures (NCD) of Rs 60 billion. READ MORE
Asia's Iran oil imports plunge to five-year low in October

Imports of Iranian crude oil by major buyers in Asia hit a five-year low in October, as China, Japan and South Korea sharply cut purchases ahead of U.S. sanctions on Tehran that took effect in early November, government and ship-tracking data showed.
China, India, Japan and South Korea last month imported about 762,000 barrels per day (bpd) from Iran, according to the data, down 56.4 percent from a year earlier. READ MORE

United Spirits hits 5-month high; stock rises 6%

Shares of United Spirits (USL) hit a five-month high of Rs 675, up 6% on BSE in an otherwise range-bound market, on the expectations of higher volume growth in the current quarter. The stock was trading at its highest level since June 28, 2018. In past five-weeks, USL outperformed the market by surging 33% after the company posted a strong 69% year-on-year jump in net profit at Rs 2.59 billion in September quarter (Q2FY19), on the back of robust sales of its premium brands. In comparison, the S&P BSE Sensex was up 5% during the same period. Read more

Oil set to see worst month in a decade on growing fears over supply glut
Oil’s on track for its worst month in a decade on growing fears over a global supply glut that’s been exacerbated by American waivers to Iranian crude buyers. Futures in New York are set to drop about 21 per cent in November, falling for a second month. While Russia showed a willingness to join Saudi Arabia in curbing output, the outcome of an OPEC meeting in Vienna next week is still unclear as the group is under pressure from President Donald Trump to lower prices. Meanwhile, the specter of expanding US crude stockpiles has also been haunting the market. Read more
MFs modify expense structure for direct plans to improve transparency
A month after the Securities and Exchange Board of India (Sebi) came up with guidelines for greater transparency in the way expenses are calculated, fund houses have both cut and raised expenses for their direct plans. By and large, expenses have reduced, which is a positive for investors as that may boost returns. Motilal Oswal Mutual Funds (MF) and Edelweiss MF have seen the expenses for their direct equity schemes drop by 20-30 basis points (bps). HDFC MF and Franklin Templeton MF, on the other hand, have raised the expenses of their direct plans by 2-10 bps. Read more
NEWS ALERT Inox Leisure board approves allotting 64 lakh shares to promoter Gujarat Fluoro
Market check

Index Current Pt. Change % Change
S&P BSE SENSEX 36,169.58 -0.83 0.00
S&P BSE SENSEX 50 11,352.61 +2.41 +0.02
S&P BSE SENSEX Next 50 32,157.24 -8.37 -0.03
S&P BSE 100 11,105.70 +1.57 +0.01
S&P BSE Bharat 22 Index 3,394.54 -26.06 -0.76

NEWS ALERT Allahabad Bank to consider fund raising up to Rs 3,054 crores by share issuance to government on December 6
Prabhudas Lilladher on NOCIL
Rating: BUY 
CMP: Rs 169 
TP: Rs 270
Nocil’s is expected to report 21% CAGR in earnings growth over FY18-21E led by 1) higher volumes post commissioning of new capacity 2) higher realisation and 3) benign raw material pricing. We have valued Nocil at 15x P/E FY21E which translates to EV/E of 8.0x FY21E.
Prabhudas Lilladher on Tech Mahindra
Rating: BUY
CMP: Rs 688
Target Price: Rs 885
We believe Tech Mahindra is poised for turnaround in revenue growth trajectory post three years of tepid performance led by a) Turnaround in Telecom vertical b) expansion in portfolio in Enterprise vertical through acquisitions which has broadened the service offerings. We believe margins have also reached a stable state (2QFY19 EBIDTA margin at 18.8%). Improving margin profile of subsidiaries and revival in growth should aid margin stability from hereon. Valuations remain cheap (12x FY20E EPS) and risk return remains favorable. Retain TP at Rs885/sh (15x Sep20E EPS). In this report, we analyze the key opportunities for Tech M in 5G which could drive growth revival.
Kesoram Industries climbs 10% on demerger of tyre business report

SC asks RCom to deposit Rs 14 bn guarantee for spectrum sale to RJio

Clearing the deck for sale of Reliance Communications Ltd's spectrum to Reliance Jio Infocomm Ltd, the Supreme Court on Friday asked Reliance Communications to furnish a corporate guarantee of Rs 14 billion within two days to get the No Objection Certificate (NOC) from the government. The corporate guarantee will be issued by Reliance Realty Ltd, a wholly-owned subsidiary of RCom. READ MORE

Top gainers in BSE500:

REL. COMM. 14.17 1.42 11.14 11403309
REPCO HOME FIN 366.00 25.05 7.35 1039014
PRESTIGE ESTATES 211.25 12.85 6.48 66042
OBEROI REALTY 452.95 23.15 5.39 28064
ITI 94.85 4.80 5.33 317000
» More on Top Gainers
Despite correction, keep SIPs in US funds going for diversification benefit

Over the past three months, international funds focused on the US markets have corrected 0.34-10.74 per cent (average decline has been 5.78 per cent). The average annual return from these funds over the past five years has been an attractive 11.36 per cent. Experts suggest investors should not allow themselves to get spooked by the recent market correction and keep their investments in these funds going. Several factors were responsible for the recent downturn. Read more
Real estate shares in focus; Prestige Estates, Oberoi Realty up over 5%

Shares of real estate companies are in focus, with Nifty Realty index gaining 2% on Friday, on hopes that liquidity may ease in the coming days after the Reserve Bank of India (RBI) on Thursday relaxed rules for non-banking financial companies (NBFCs).
Prestige Estates Projects and Oberoi Realty were up 8% and 6%, respectively, on the National Stock Exchange (NSE). Indiabulls Real Estates, Godrej Properties, Sobha, Kolte-Patil Developers Brigade Enterprises and Sunteck Realty gained 1% to 4%. READ MORE

Kotak Securities on Automobiles & Components

Our analysis of state-wise demand trends for 2QFY19 reflects that – (1) demand has slowed down significantly in passenger vehicle and two-wheeler segments, (2) scooter volume mix declined by 150 bps yoy in 2QFY19 and (3) Bajaj Auto, Maruti Suzuki and Ashok Leyland posted maximum gain in market
share during the quarter.
Reliance Securities on Larsen & Toubro
CMP: Rs 1,422
We are positive on L&T led by strong execution in core E&C business with robust order inflow momentum led by strong performance of key segments i.e. Infrastructure and Hydrocarbon. The plan to exit part of development assets especially monetisation of Hyderabad metro in a long-term is positive, in our view. We expect its revenue and earnings to clock 13% and 16% CAGR, respectively over FY18-21E. At CMP, the stock trades at 19.9xFY20E and 17.1xFY21E earnings. We initiate coverage on the stock with BUY recommendation and an SOTP-based Target Price of Rs 1,760.
SECTOR WATCH NBFCs in focus; Repco Home, DHFL rally up to 7%

Shares of housing finance companies DHFL, Repco Home Finance Reliance Home Finance, Can Fin Homes, Indiabulls Housing Finance rallied up to 7 per cent on BSE in the intra-day trade on Friday after the Reserve Bank of India (RBI) on Thursday halved the minimum holding period of their loans of above five years. According to the revised norms, loans of original maturity of more than five years can be securitised after receiving the repayment of six-month instalments or two quarterly instalments. Read more

MFs modify expense structure for direct plans to improve transparency

A month after the Securities and Exchange Board of India (Sebi) came up with guidelines for greater transparency in the way expenses are calculated, fund houses have both cut and raised expenses for their direct plans. By and large, expenses have reduced, which is a positive for investors as that may boost returns.
Motilal Oswal Mutual Funds (MF) and Edelweiss MF have seen the expenses for their direct equity schemes drop by 20-30 basis points (bps). HDFC MF and Franklin Templeton MF, on the other hand, have raised the expenses of their direct plans by 2-10 bps. READ MORE

Reliance Communications climbs 12%

Sun Pharma: Governance issues, margin pressures expected to weigh on stock
The Sun Pharma stock has declined 19 per cent from its highs touched earlier this month, on a muted performance in the September quarter and corporate governance-related issues. Analysts believe that pricing pressures, marketing costs in the US, and the sluggish performance in India are key negatives on the operational front. In addition, related party transactions, highlighted by foreign brokerage Macquarie, will keep the stock under pressure. Read more
S&P BSE Sensex top gainers and losers

YES Bank continues recovery, surges 6%

Continuing its recovery, shares of private sector lender YES Bank climbed as much as 5.92 per cent in the early morning deals on Friday. After plunging to a fresh 32-month low of Rs 147 apiece on BSE, the stock of YES Bank staged a recovery on Thursday to settle at Rs 160.45, down 0.77 per cent. During this week, the stock has shed 15 per cent (as of Thursday's close). Read more
Shares of Repco Homes recover, trading 4.45% higher

Oil India turns ex-date for share buyback; stock down 7%
Shares of Oil India have slipped 7% to Rs 188 per share on the BSE in an otherwise firm market as it turned ex-date for the proposed buy-back. The board of directors of Oil India in their meeting held on November 19, 2018, has fixed Monday, December 3, 2018, as the record date to determine the entitlement and names of the shareholders who are eligible to participate in the buyback; and the shareholders to whom the letter of offer and tender form will be delivered in relation to the buyback. Read more
From JSW to Tata, steel stocks gain on easing concerns and steady demand

Steel companies’ share prices, under pressure in the recent past on worries related to demand and falling prices, rebounded on Thursday. Those of JSW Steel and Tata Steel, which had fallen 16-26 per cent from their September highs, gained up to 3 per cent. READ MORE

Stock of the day Dr Reddy's Labs hits 52-week high; stock rallies 5% in two days

Shares of Dr Reddy’s Laboratories hit a 52-week high of Rs 2,700, up 2%, extending its previous day’s 3% gain on the BSE. The stock surpassed its previous high of Rs 2,687 recorded on September 28 in intra-day trade. Since November 20, in past six seven trading days, the stock of pharmaceutical company has moved up 10% after an appellate court in the US cleared the way for the company to resume sales of a Suboxone generic. READ MORE

Market check
Index Current Pt. Change % Change
S&P BSE SENSEX 36,322.60 +152.19 +0.42
S&P BSE SENSEX 50 11,399.40 +49.20 +0.43
S&P BSE SENSEX Next 50 32,257.48 +91.87 +0.29
S&P BSE 100 11,149.73 +45.60 +0.41
S&P BSE Bharat 22 Index 3,421.54 +0.94 +0.03

WHAT'S MOVING THE INDEX? Top contributors to Sensex today

INFOSYS 668.60 9.00 1.36 250681.50 31.13
H D F C 1975.00 19.45 0.99 335914.59 30.03
ITC 289.45 2.10 0.73 351862.95 23.40
TCS 1981.80 22.35 1.14 205873.92 21.37
RELIANCE INDS. 1176.00 6.00 0.51 400467.69 18.69

Click here for more
Repco Home Finance falls 8% in two days on fund selling

Shares of Repco Home Finance slipped 4% to Rs 327 on Friday, extending its yesterday’s 4% decline on BSE after value investor Mohnish Pabrai's fund sold more than one percentage point stake in home lender for Rs 319 million on Thursday via the bulk deal. On November 30, the Pabrai Investment Fund IV LP sold total 948,535 equity shares at an average market price of Rs 335.87 per share on the NSE and BSE. Read more

YES Bank snaps 5 day fall

NBFCs are trading higher after the RBI relaxes norms for securitisation

Tata Motors slips 3% in early deals

Sectoral indices on NSE

S&P BSE Sensex top gainers and losers

Market at open
At 9:15 AM, the S&P BSE Sensex was trading at 36,289, up 118 points, while the broader Nifty50 was ruling at 10,896, up 37 points.
Market at pre-open

Index Current Pt. Change % Change
S&P BSE SENSEX 36,276.78 +106.37 +0.29
S&P BSE SENSEX 50 11,385.79 +35.59 +0.31
S&P BSE SENSEX Next 50 32,193.79 +28.18 +0.09
S&P BSE 100 11,135.07 +30.94 +0.28
S&P BSE Bharat 22 Index 3,438.53 +17.93 +0.52

Rupee opening

Rupee opens at 69.67/$ vs its previous close of 69.85 per dollar.

The focus of investors in meetings in North America this week has, unsurprisingly, been on the outcome of the G20 Summit in Buenos Aires this weekend with regard to a possible US-Sino deal on trade. The presumed meeting between Donald Trump and Xi Jinping is important since it allows for some possibility of a defusing of tensions

GREED & fear remains more hopeful than the consensus that some kind of interim deal, or agreement, can be negotiated that at least reduces the likelihood of implementation of the next round of threatened tariff increases in January. This is important because, if this view is wrong and the tariff increases go ahead, then the risk rises of more aggressive retaliation from the Chinese side

A truce on the January tariff increase, or better a trade deal, is likely to precipitate a year-end equity rally led by Asia which would probably have the practical effect of delaying the end of monetary tightening. By contrast, no deal and the resulting imposition of the threatened tariff increases in January is likely to accelerate “risk off” action in markets thereby fast forwarding the end of monetary tightening. This is because in the post-quanto easing world asset prices drive economies and not the other way round

Christopher Wood, CLSA

Tata Motors, Asian Oilfield, JSW Energy among top stocks to track
The auto major's flagship company Jaguar Land Rover will reduce the workforce at its plant in Wolverhampton, central England, by about 500 in a temporary move, it said on Thursday. “The external environment remains challenging and the company is taking decisive actions to achieve the necessary operational efficiencies to safeguard long-term success,” it added in a statement. Click here to read more
Jefferies on gas companies

We expect IGL to deliver a stronger 13.5% volume CAGR in FY18-23E, therefore, helped also by the addition of adjacent Gurugram. We recently assumed coverage at BUY and a Rs340 price target, therefore, noting its 16% EPS CAGR and reasonable 23x FY19E P/E. We also like Gujarat Gas where volume growth (10-11% ex FY21E dip due to the new IMO regulations), a recovery in margins, and leverage benefits may result in a 22% EPS CAGR FY18-23E. Trading at 27x FY19E P/E, we reiterate our BUY rating & Rs 810 price target
CALENDAR Major economic releases in December

Today's picks
Current price: Rs 142
Target price: Rs 138
Keep a stop at 144 and go short. Add to the position between 139-140. Book profits at 138.
Current price: Rs 329
Target price: Rs 336
Keep a stop at 326 and go long. Add to the position between 334-335. Book profits at 336. Read more
Edelweiss on RBI policy expectation

In its forthcoming policy review on 5 December, 2018, the RBI would hold rates in our view. The backdrop this time is much more bengin than at the time of the October policy review when INR was falling sharply and crude oil was on a boil. This stoked concerns about inflation, driving the RBI to change its policy stance to ‘calibrated tightening’ from ‘Neutral’ even though it left the rates unchanged.
The situation has changed materially since then: firstly, inflation has been softer than expected and will likely undershoot the RBI’s projections and, secondly, crude oil prices have cooled off 30%. This not only improves inflation outlook, but notably eases the stress on the balance of payments (BoP) and INR. In light of this, a rate hike is unwarranted in our view. Indeed, the improved backdrop gives the RBI ample room to ramp up open market purchases  to inject durable liquidity in the economy. On balance, we believe the December policy review is likely to be a non-event with no change in policy rates
Prabhudas Lilladher on NOCIL

We initiate coverage on Nocil with a 'BUY' and a PT of Rs277, based on P/E of 15x FY21E or 8.0x EV/EBIDTA FY21E. Nocil is India's largest manufacturer of rubber chemicals, with over four decades of experience. The company's technical capabilities and reliability has helped develop deep relationship with leading global and domestic tyre players.

Nocil's earnings have increased 7x over FY14-18 led by 1) steady demand growth of 12.5% CAGR 2) higher share of specialty grade chemicals 3) benefit from Anti-Dumping Duty. Nocil remains well placed to capitalize on supply disruptions in China which accounts for 70% of global rubber chemicals supplies.

Going forward, Nocil plans to double its capacities by H2FY20E to capitalize on domestic tyre industry capex (Rs250bn over the next five years) and global opportunities from disruption in China. Also, US has imposed 10% duty on rubber chemicals imports from China and will add another 15% duty from January 2019. This will open new opportunities for Nocil even though some Chinese supplies might be diverted to India.
Nifty outlook by Prabhudas Lilladher
Nifty goes way beyond the 200DMA bringing in positive bias, with RSI at 61 confirming strength & Bank Nifty has met with near-term target levels of 26950 levels, one needs to be cautiously positive as some profit booking cannot be ruled out with political events to unfold. The support for the day is seen at 35880/10780 while resistance is seen at 36440/10940. Bank Nifty would have a range of 26650-27220. Kotak Bank and ICICI Bank look positive from here on. Click here to read more
Rupee check
The rupee vaulted 77 paise to a three-month high of 69.85 per US dollar on Thursday, propelled by easing crude oil prices and fresh foreign capital inflows.
Derivative strategy on Escorts by HDFC Securities

Buy ESCORTS December Future at Rs 698
Stop loss: Rs 685
Target: Rs 720

--We have seen Long build up in Escorts Futures’ yesterday where we have seen 6% Rise in Open Interest with Price rise of 2%
--We have seen a strong rollover of 93% to the December series as against the last series rollover of 90%
--After taking support at 5 day SMA, the stock price has given breakout on the daily charts by closing above the resistance level of 690 to close at two month high.
--Momentum Indicators and Oscillators like RSI and MACD are also showing strength in the Stock

SGX Nifty

At 8:36 am, the SGX Nifty was at 10,950, up 34 points or 0.31 per cent from the previous close.
Asian Markets

Share markets ticked slightly lower in early Asian trade on Friday as investors await a closely watched meeting between the Chinese and U.S. presidents in Argentina this weekend for signs of a trade war detente.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 per cent. In Japan, the Nikkei was up 0.2 per cent.
Wall Street

Wall Street closed slightly lower on Thursday as tech and financial shares slumped, erasing earlier gains stemming from Federal Reserve minutes showing the central bank opened the debate on when to pause further interest rate hikes. All three major US indexes ended the session down a fraction of a percent.

The Dow Jones Industrial Average fell 27.59 points, or 0.11 per cent, to 25,338.84, the S&P 500 lost 5.99 points, or 0.22 per cent, to 2,737.8 and the Nasdaq Composite dropped 18.51 points, or 0.25 per cent, to 7,273.08.
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