The benchmark indices ended higher on Friday with the Nifty50 settling above its crucial 9,950 mark, buoyed by a jump in Tata Steel on strong quarterly production numbers, while investors stayed cautious as Goods and Services Tax (GST) Council meeting went underway.
The Council is likely to give a major relief to exporters as well as small and medium enterprises (SMEs).
These segments have been affected the most by the new indirect tax regime, which has depressed the economic growth numbers in the first quarter of the current financial year because of destocking on account of uncertainties before the GST was introduced on July 1.
Overseas, Asian stocks rose on Friday and the dollar hit a seven-week peak, riding on economic optimism ahead of a US job report later in the day. European markets were also trading higher.
Expectations of more business-friendly reforms out of today's GST council meeting assisted the market to inch further closer to the 10,000 level. Positivity ahead of the festive season has also encouraged to take more risks. However, inflation numbers and upcoming earning season should keep investment optimism measured.
Sensex gainers and losers at close
The market breadth, indicating the overall health of the market, was strong. On the BSE, 1,703 shares rose and 963 shares fell. A total of 111 shares were unchanged.
The BSE Midcap and the BSE Smallcap indices outperformed to gain 1% each.
The Nifty Metal index was the leading sectoral gainer, followed by Nifty PSU Bank.
Markets at close
The S&P BSE Sensex settled at 31,814, up 222 points, while the broader Nifty50 ended at 9,979, up 91 points.
Granules India rose over 3% to Rs 118 on BSE after the company said that it has received establishment inspection report from the US drug regulator for Vizag facility.
USFDA had inspected this facility in December 2016 and had found seven observations during the inspection. This facility currently manufactures active pharmaceutical ingredient (API) intermediates.
Europe’s major benchmarks were set to end a tumultuous week on a slightly softer note, with investors’ focus turning from a separatist crisis in Catalonia to US jobs data expected later in the day.
The pan-European STOXX 600 dipped 0.1% in early trading, but remained on track for its fourth straight weekly gains. Spain's IBEX declined 0.2% after a strong rally in the previous session as nerves over Catalonian independence eased.
The main Spanish benchmark was set for a 1.7% fall on the week, having hit its lowest in more than six months on Wednesday as investors sold Spanish assets in the deepening political crisis.
Netflix shares hit record high
Online streaming platform Netflix has raised the monthly price of its most popular streaming plan in the US.
The two-stream HD tier is now available for $10.99 per month for new subscribers while existing customers will be moved to the new rate over the next few months. This is $1 per month more from the previous $9.99 monthly fee.
This led to shares of Netflix hitting a new all-time high, climbing more than 4 per cent and peaking at $192.80 per share in Thursday morning trading.
At 3:00 pm, the S&P BSE Sensex was trading at 31,754, up 162 points, while the broader Nifty50 was ruling at 9,958, up 70 points.
Jubilant FoodWorks, which runs Domino's and Dunkin' Donuts outlets, hit fresh 52-week high of Rs 1,552, gained 5% on BSE in intra-day trade, extending Thursday’s 5% gain, on expectation of revival in same-store sales growth (SSG) during the current financial year 2017-18 (FY18). READ MORE
Reliance Securities on HDFC Bank
The HDFC Bank has delivered a healthy performance on business growth and operating front in 1QFY18. Despite a mere 6.1% YoY growth in banking industry loan, its loan book grew by 23.4% YoY and 4.8% QoQ,. This outperformance on loan growth front with a huge margin vs the industry is really commendable as it is the second largest bank in India in terms of loan book size.
As a result, we have upwardly revised our earnings estimates by 1.9% and 3.1% for FY18E & FY19E, respectively. We maintain our BUY recommendation on the stock with an upwardly revised Target Price of Rs 1,940 (from Rs 1,833 earlier) based on 4x FY19E Adjusted Book Value.
Sensex heatmap in noon deals
Edelweiss Securities on Future Retail
On sustained strong SSG, improving margin and better inventory turns, we estimate ~690bps jump in RoE to 23.5% over FY17-19. We maintain ‘BUY/SO’ and revise our target multiple to 30x FY19E EV/EBITDA (earlier 25x) and arrive at TP of Rs 619 (earlier Rs 516) aided by synergy benefits and increase in market share in prime location. At CMP, the stock trades at 21.4x FY19E EV/EBITDA.
Top five Nifty gainers in noon deals
BSE Smallcap index up for 6th straight day
Jamna Auto Industries, Geojit Financial Services, Gufic Biosciences, HEG, KRBL, Meghmani Organics, NOCIL, Sanghi Industries and TVS Electronics Company are among 31 stocks from the S&P BSE Smallcap index that hit their respective record highs on the BSE.
The index is 2% away from its record high of 16,982 touched on September 20, 2017.
Since September 27, the smallcap index rallied 5.3% as compared to 4% rise in the S&P BSE Midcap and 2% gain in the benchmark S&P BSE Sensex. READ MORE
What makes joint ventures challenging in India
The past few weeks have seen several joint ventures between Indian and foreign companies come into the spotlight. While McDonald's and Indian entrepreneur Vikram Bakshi are fighting aggressively in courts, Tata Steel and German major ThyssenKrupp have come together to address the issue of overcapacity in Europe's steel market.
Experts say most business groups in India, including the Godrejs, Tatas and Mahindras have seen their patience tested in JVs, with some of them winding up quickly. READ MORE
Share price of Majestic Auto added 6.3% intraday on Friday as it has closed at fine blanking division due to lack of orders and profitability.
The company has shut down its fine blanking division which was a part of its manufacturing business vertical due to unviable business operations; lack of viable orders & profitability.
Govt's push to attract offshore fund managers fails to take off
Overseas funds are not showing any enthusiasm in relocating their fund managers to India despite a relaxed regulatory regime and several incentives provided by the government. According to experts, tough eligibility conditions and a high compliance burden were acting as impediments.
Since the beginning, all major foreign portfolio investors (FPIs) were wary of having their fund managers located in India as they would then become a tax resident here and hence, the money being managed would be subjected to multiple taxes. READ MORE
India's economic slowdown an aberration, GST will revive growth: World Bank
World Bank President Jim Yong Kim said the recent slowdown in India's economic growth is an "aberration" caused by temporary disruptions in preparation for the Goods and Service Tax (GST) and asserted that it will get corrected in the near future.
Kim while responding to questions on the slowdown in India's growth in the first quarter said GST is going to have a positive impact on the Indian economy.
"There's been a deceleration in the first quarter, but we think that's mostly due to temporary disruptions in preparation for the GST, which by the way is going to have a hugely positive impact on the economy," Kim told the media during a conference ahead of the annual meeting of the International Monetary Fund and the World Bank.
Benchmark indices continued trading higher with Sensex gaining over 200 points, while the Nifty traded comfortably above 9950-mark ahead of the GST Council meet.
At 11:54 am, the S&P BSE Sensex was trading at 21,798, up 206 points while the broader NIfty50 index was ruling at 9,962, up 73 points
Steel stocks in focus as Tata Steel posted good sales, production in Q2FY18
Shares of frontline steel companies were up in the range of 2% to 7% after the Tata Steel reported a good sales and production in July – September quarter of the current fiscal (Q2FY18).
Tata Steel, Steel Authority of India (SAIL), Jindal Steel & Power (JSPL), JSW Steel, Jindal Saw and Jindal Stainless (Hisar) from the S&P BSE500 index were up between 2% and 4% on the BSE. Vardhman Special Steels, Prakash Industries, Maharashtra Seamless, Surya Roshni, Sarda Energy & Minerals and Mukand were up in the range of 3% to 9%. READ MORE
Chemical stocks rally
Shares of chemical firms are on a roll with BASF India, India Glycols, Mysore Petrochemicals and Grauer & Weil (India) rallying up to 16% on the BSE in intra-day trade.
Gujarat Alkalies & Chemicals, Goa Carbon, Deepak Nitrite, NOCIL, Oriental Carbon & Chemicals, Phillips Carbon Black, Tata Chemicals and Ultramarine Pigments hit their respective record highs on the BSE. READ MORE
Rebounding volumes signal recovery for Coal India
A 16% year-on-year (y-o-y) growth in Coal India’s dispatches in September has not only pushed up the year-to-date run rate to 8%, but also signals an improvement in the company’s prospects.
The rise in September volumes follows a 19% uptick in August. This boosts confidence in the company’s overall volume growth and earnings for FY18. Analysts at JM Financial said offtake growth in the September quarter (Q2) was 14% (following a recovery in August and September) and it should reflect in the company’s earnings. READ MORE
Future Retail: Synergy gains in HyperCity acquisition
The deal between Shoppers Stop and Future Retail is a win-win outcome for both sides as it helps the former bring down its debt and focus on the departmental store format while enabling the Future Group expand its presence at a reasonable cost.
Manish Jain of Nomura believes there are a number of synergies between the two (Future Retail and HyperCity) given primary focus on food/grocery and fashion. READ MORE
MAS Financial Services IPO kicks off today: Should you subscribe?
MAS Financial Services (MAS), a Gujarat-based non-banking financial services company (NBFC), kicked off its Rs 460 crore initial public offer (IPO) on Friday with most brokerages suggesting 'subscribe' to the issue.
The two-decade-old NBFC's public issue comprises a fresh issue of shares worth up to Rs 233 crore and an offer for sale of up to Rs 227 crore by existing shareholders. It has fixed a price band of Rs 456-459 per share for its initial share sale offering.
Click here to find out what leading brokerages and research houses suggest
Bond bulls relish India as best story post September selloff
The first back-to-back monthly losses since 2015 for India’s bonds are giving bulls fresh reason to add to their positions in what’s one of the world's fastest-growing major economies.
Aberdeen Standard Investments says it's "thrilled" to see a pullback in Indian asset prices that provides good value, while Pacific Investment Management Co, which had been reducing its holdings in the country’s debt, is looking to add back. Morgan Stanley Investment Management says it favours rupee bonds, though prefers to hedge its currency exposure. READ MORE
Shoppers Stop, Future Retail rally on HyperCity deal
Shares of Shoppers Stop and Future Retail rallied by upto 9% on BSE after the Kishore Biyani-led Future Retail said it would buy Shoppers Stop-owned HyperCity for Rs 911 crore.
Shoppers Stop hit a fresh 52-week high of Rs 552, rallied 9% on BSE in intra-day trade, and Future Retail surged 6% to Rs 559 in early morning trade.
“The board of directors of Shoppers Stop, at its meeting held on Thursday, October 5, 2017, has approved sale of 77.16 million equity shares of Rs 10 each, constituting 51.09% of the paid up share capital of HyperCity Retail (India); (HyperCity / subsidiary company) to Future Retail,” Shoppers Stop said in a statement. READ MORE
Analysts expect Tata Motors' India business to turn around by FY19
The Tata Motors' stock has gained about six per cent since the start of the month, on expectation of improved volumes, both at Jaguar Land Rover (JLR), its entity abroad, and the standalone level (largely India operations).
What will help at JLR is that the management has retained its margin expectation of 14-15% for the medium term, citing a winding down of unfavourable foreign exchange hedging (likely over the next couple of quarters), higher scale from new launches such as the Discovery and Velar, and a better sales mix. READ MORE
More than 50% large-cap equity funds underperform their benchmark indices
More than 50 per cent of the large-cap and mid/small equity funds underperformed their respective benchmark indices for one year period ending June 30, says a report.
Asia Index's S&P Indices Versus Active (SPIVA) India Scorecard, 52.87 per cent of large-cap equity funds, 56.52 per cent of mid/small-cap equity funds underperformed their respective indices, in the past one year.
"As of June 2007, there were 118 large-cap equity funds available for investment. Out of these, 40 funds either merged or liquidated over the 10-year period ending June 30 2017 resulting in a survivorship rate of 66 per cent," Asia Index Associate Director (Global Research & Design) Akash Jain said. READ MORE
Views of top four fund managers
Sustained buying by MFs has provided a counterbalance to FPI selling, cushioning the market fall. While the record inflows at equity MFs have reduced the vulnerability of Indian equities to overseas hot money, it has created a problem of plenty as valuations remain lofty and earnings growth has failed to catch up. That hasn’t dampened the optimism of domestic fund managers, who remain bullish about India’s long-term growth prospects. They single out equities as the preferred asset class.
Sectoral Trend: All Sectoral indices were trading in green in the early-morning deals
Top Sensex losers and gainers
The broader markets outperformed the benchmark indices a bit with the BSE Midcap and BSE Smallcap indices up 0.7% and 0.8% respectively
Markets at open
Benchmark indices were trading higher with sensex up 100 points in the early-morning trade on Friday tracking Asian markets which were positive after optimism over US tax reform plans lifted Wall Street shares to new highs.
At 9:19 am, the S&P BSE Sensex was trading at 31,716, up 124 points while the broader Nifty50 index was ruling at 9,928, up 40 points
GST Council meet today to announce measures easing trader, exporter woes
Some measures to ease the difficulties being faced by traders owing to GST are likely to be announced after the GST Council's meeting on Friday after Prime Minister Narendra Modi met Finance Minister Arun Jaitley and BJP President Amit Shah here and discussed the state of the economy and steps to revive growth.
It is understood that after the GST Council meeting on Friday, there could be announcements like easier refund of input credit for exporters, deferring of reverse charge mechanism for unregistered traders and promise of no enquiry into the tax matters of the previous VAT regime of indirect taxes.
Sebi panel for more curbs on royalty payouts, information sharing
The corporate governance panel of the Securities and Exchange Board of India (Sebi) has recommended more checks and balances on royalty and brand payments, related-party transactions and sharing of information between management and entities not part of the board.
Among the key recommendations by the committee is one on the aspect of exchange of price-sensitive information between companies and a promoter no longer a part of the board or management. READ MORE
Nifty has been facing a resistance at around 9940 levels which is also where the significant moving average of 34 WMA lies and we anticipate a lower top formation pattern is in the making in the daily chart. However, Nifty is moving well within the range of 9,980 and 9,800 levels and only a decisive breach of 9,800 can bring in some correction. The support for the day lies at 9,840 whereas the resistance would be seen at 9,930 levels.
IPO activity headed for record year
The initial public offering (IPO) activity in the country is headed for a record year in 2017. The past quarter saw 26 IPOs raising $1.8 billion. The re-emergence of larger listings in the pipeline can also help India far exceed the initially expected target of $5 billion in proceeds for 2017.
There has been particularly strong activity in the insurance sector due to regulatory changes and a number of major insurance companies are getting ready for their IPOs.READ MORE
India Inc gets a governance push from Kotak panel
The Securities and Exchange Board of India’s (Sebi’s) high-profile committee on corporate governance on Thursday recommended several measures to enhance corporate governance standards at India Inc.
Batting for greater transparency, the panel said sound corporate governance helped companies generate “significantly greater returns” compared to those that exhibited poor corporate governance standards. It further said well-governed companies could command a premium between 10 and 40 per cent over the not-so-well-governed ones. READ MORE
Oil markets were cautious on Friday as traders monitored a tropical storm heading for the Gulf of Mexico and as China remained closed for a week-long public holiday.
But the prospect of extended oil production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia helped support prices.
US West Texas Intermediate (WTI) crude was trading at $50.71 per barrel, down 8 cents from its last close. Brent crude was down 10 cents at $56.90 a barrel.
The Nifty50 futures on the Singapore Stock Exchange were trading 17.50 points higher at 9938 indicating a flat opening for the domestic market.
Asian stocks rose on Friday after optimism over US tax reform plans lifted Wall Street shares to new highs. Japan's Nikkei climbed 0.3%, Australian stocks rose 0.7% and South Korea's KOSPI advanced 0.9%.
S&P hits record highs
The S&P 500 posted its sixth straight record high close on Thursday, its longest run since 1997, as investors cheered increased prospects for a tax overhaul with Congress moving closer to agreement on a budget resolution.
The Dow Jones Industrial Average rose 113.75 points, or 0.5%, to close at 22,775.39, while the S&P 500 gained 14.33 points, or 0.56%, to 2,552.07. The Nasdaq Composite added 50.73 points, or 0.78%, to 6,585.36.