Sensex rises 323 pts, Nifty closes at 10,491; Metal, Pharma stocks rally

The domestic indices ended 1% higher on Friday taking cues from the global markets.

The S&P BSE Sensex ended at 34,142, up 323 points while the broader Nifty50 index settled at 10,491, up 108 points.

Among sectoral indices, the Nifty Metal index ended nearly 3% higher on Friday led by a rise in the shares of Jindal Steel & Power, Tata Steel and National Aluminium Company. The Nifty Pharma index also ended over 2.5% higher led by suge in the stocks of Sun Pharmaceutical Industries and Divi's Laboratories.

In the global markets, Asian shares rebounded on Friday as comments from a Federal Reserve official eased worries about faster rate rises in the United States, while the dollar ticked higher as investors dipped their toes back into riskier assets.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.9 per cent on Friday to add on to the previous week’s 3.9 per cent gain.

Japan’s Nikkei rose 0.7 per cent.

On Wall Street, the Dow added 0.7 per cent, the S&P 500 ended a tad firmer while the Nasdaq lost 0.11 per cent.

(with Reuters inputs)


Nifty Pharma index ends 2.6% higher

Nifty Metal index ends 3.2% higher

Sectoral Trends

BSE Sensex gainers and losers

Market at close
The S&P BSE Sensex ended at 34,142, up 323 points while the broader Nifty50 index settled at 10,491, up 108 points.
Sun Pharma turns volatile after three observations for Halol facility

Sun Pharmaceutical Industries has turned volatile, trading 3.5% higher at Rs 561 on the BSE at 02:34 pm, after the company said the US Food and Drug Administration (USFDA) issued Form 483, with three observations, for its Halol facility in Gujarat. READ MORE
Reliance Securities on Tech Mahindra

Tech Mahindra’s Enterprise Business is expected to be the major revenue growth driver over the next few years, led by BFSI and Retail, apart from Digital initiatives; this business clocked healthy 4.2% QoQ revenue growth in 3QFY18. The company appears on track to perform well on margins in the near-term, with a 173bps QoQ expansion seen in 3QFY18, and management alluding to possibility of further expansion in the near-term. We have a BUY rating on the stock with a target price of Rs750
Arihant Capital on Ajanta Pharma
We believe that AJP’s long-term fundamentals continue to remain healthy driven by strong traction in the US business (post US FDA clearance to its Dahej unit) and above industry growth in domestic business. Sales, EBITDA and PAT witnessed 24%, 37% and 44% CAGR, respectively through FY12-17 owing to strong growth in domestic formulation business (22% CAGR) and healthy growth in exports (21% CAGR). We have HOLD rating on the stock with a Target Price of Rs1500, valuing the stock at 25x FY19E EPS of Rs60.
In the series gone by, the volatility index surged to 14-month high due to sudden sell-off ; courtesy to uncertainty in US markets. Stronger hands too tuned bearish as they sold equities worth Rs. 14360 crores. They also formed massive shorts in index futures and exited decent amount of their longs in the same segment. Now, the index futures ‘Long Short Ratio’ has declined from 80% to 49% series on series; which certainly does not bode well for the Bulls. Considering the above data points, we would advise traders avoiding any kind of bottom fishing as we may see further pain going ahead
Metal stocks rally. Nifty Metal index up over 3%

Sun Pharma turns volatile after three observations for Halol facility

Sun Pharmaceutical Industries has turned volatile, trading 3.5% higher at Rs 561 on the BSE at 02:34 pm, after the company said the US Food and Drug Administration (USFDA) issued Form 483, with three observations, for its Halol facility in Gujarat. READ MORE

Once bitten, JSW wants formal nod from banks to takeover Jaypee Infra

JSW Group, which has emerged as the highest bidder for Jaypee Infratech’s real estate assets, is waiting for a formal communication from the banks as it lost out in the race for stressed assets even after emerging as the highest bidder in other companies. The JSW group company, JSW Cement was pipped by Birla owned Ultratech after JSW emerged as the highest bidder in the first round of bidding for Binani Cement but the resolution professionals called for second round of bids. CLICK HERE FOR FULL STORY
Market Check
S&P BSE Sensex 34,118.35 0.88%
Nifty 50 10,484.00 0.98%
S&P BSE 200 4,579.19 1.02%
Nifty 500 9,238.20 1.09%
S&P BSE Mid-Cap 16,516.37 1.19%
S&P BSE Small-Cap 17,953.50 1.30%

NSE warns index compilers to not involve themselves in offshore dispute

India’s biggest exchange operator, which cut ties with its international counterparts in an effort to rein in offshore derivatives, warned index compilers about involving themselves in the dispute.
Vikram Limaye, chief executive officer of the National Stock Exchange of India Ltd., said in an interview that his company’s relationship with MSCI Inc. depends on the New York-based firm telling its clients to not use its data for futures and options contracts based on Indian stocks. READ MORE
Siemens extends fall on board nod for sale of mobility, rail traction ops

Siemens dipped 3% to Rs 1,159 in intra-day trade on Friday, extending its 4% fall on Thusday, in otherwise firm market after the company said its board approved to sell its mobility division and rail traction drives business. READ MORE
Photo: Reuters

Market Check

S&P BSE Sensex 34,110.07 0.86%
Nifty 50 10,486.45 1.00%
S&P BSE 200 4,577.45 0.99%
Nifty 500 9,238.55 1.09%
S&P BSE Mid-Cap 16,520.15 1.21%
S&P BSE Small-Cap 17,949.04 1.27%


ICICI Bank (Cautious optimism, BUY, target price Rs350): We met the management of ICICI Bank at the IIFL investor conference in Mumbai. The management presented its views on growth opportunities for the bank and the ongoing asset quality challenges. The management also discussed its views on the new NPA resolution framework by the RBI and the impact of implementation of Ind-AS on the bank. The management was especially upbeat on its low cost of funding, which at sub-5% is the lowest in the bank’s history, driven by strong CASA growth
(Source: IIFL report)
Sectoral Watch: Nifty Pharma up over 2%

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Want to lend some stability to your portfolio? Go for gold as a hedge

The price of gold recently touched a 15-month high of Rs 31,820 for 10 grammes. In doing so, it crossed the level seen in November 2016, the month when Prime Minister Narendra Modi announced his government’s ‘demonetisation’ decision revoking the legal-tender status of old Rs 500 and Rs 1,000 currency notes. In the global markets, it is trading at around $1,358.70 an ounce. READ MORE
BSE Sensex gainers and losers

India's 10-year bond yields hit two-year high on hawkish RBI minutes

Ten-year bond yields spiked 10 basis points (bps) after minutes of the February 5-6 meeting of the Monetary Policy Committee were revealed by its members on Wednesday.
This came with the US Federal Reserve cautioning for more rate hikes in the world’s largest economy. READ MORE
New watch Infosys shareholders approve appointment of Salil Parekh as CEO, MD

Infosys shareholders have approved the appointment of Salil S Parekh as chief executive officer and managing director of the company, the company has said in a regulatory filing. As per results of postal ballot and e-voting filed by the IT major, 97.96% shareholders through the physical ballot and electronic mode voted in favour of the appointment of Parekh on February 20, 2018. READ MORE

Nifty Pharma index trades nearly 2% higher

News watch PNB fraud: ED freezes deposits, shares worth Rs 440 mn of Nirav Modi Group

The ED on Friday said it has frozen bank deposits and shares worth about Rs 440 million of the Nirav Modi group, and seized a huge collection of imported watches from locations linked to the billionaire diamantaire. Officials said they have put freeze orders on bank accounts containing Rs 300 million and shares worth Rs 138.6 million of the group under the Prevention of Money Laundering Act. CLICK HERE FOR FULL STORY

Market Check

S&P BSE Sensex 34,078.70 0.77%
Nifty 50 10,460.05 0.75%
S&P BSE 200 4,575.26 0.94%
Nifty 500 9,219.15 0.88%
S&P BSE Mid-Cap 16,515.86 1.19%
S&P BSE Small-Cap 17,943.76 1.24%

Grasim: Healthy prospects of financial services, cement arms will help

Grasim Industries, which lagged the S&P BSE Sensex in recent months, will be a part of the Nifty50 index from April 1, a move that could lead to some buying as money managers tweak their portfolios to adjust for the changes. On the fundamental side, too, robust prospects of its businesses can provide some permanent triggers. READ MORE
Jubilant Life Sciences falls 11% after block deals

Jubilant Life Sciences has slipped 11% to Rs 883 on the National Stock Exchange (NSE) in intra-day trade on Friday after more than 7% of the total equity of pharmaceutical company changed hands on the NSE and BSE till noon deal.
The exchanges data showing that a multiple block deals executed on the counter in early trade. READ MORE

News watch Energy-sapping Bitcoin mining is here to stay despite the 'wasteful' method

The enormous use of energy needed to mine bitcoin and other cryptocurrencies is proving to be very contentious, but alternative methods pose far too much of a security risk. The recent warning that electricity use at bitcoin mining facilities in Iceland may exceed that consumed annually by the country’s homes, which could in turn lead to a potential energy shortage, was slightly alarmist in tone. But it showcases the huge amount of computational power needed to mine cryptocurrencies. CLICK HERE FOR FULL STORY
Phillip Capital on Siemens
We believed that like other MNCs in the sector, Siemens would be well‐placed to benefit from higher localisation in the current cycle compared to previous capex cycles. However, due to its greater sectoral reach, it was always pegged a notch higher than its peers such as ABB and GE T&D — but that needs a revaluation now. What is left in the listed entity is exposure to power (generation and T&D), building technologies, and digital and process-industry solutions.
Even as we expect Siemens’ earnings CAGR at 21% over FY17‐20, and core RoE (ex‐cash) of 36% in FY20 against 18% in FY17, we cut our target core PE to 32x (March 2020) from 40x, and revise our target to Rs 1,000 (Rs 1,210 earlier). Our target includes the value of a special dividend of Rs 28/share and net cash of Rs 211/share.
Dynamatic Technologies surges 16% on demerger plan of auto division

Dynamatic Technologies has surged 16% to Rs 1,875 on the BSE in intra-day trade after the company announced that its board will meet on Wednesday, February 28, 2018 to consider and approve de-merger of auto division. READ MORE
Nifty Metal index trades over 2% higher

Market Check

S&P BSE Sensex 33,943.34 0.37%
Nifty 50 10,428.45 0.44%
S&P BSE 200 4,558.70 0.57%
Nifty 500 9,198.40 0.66%
S&P BSE Mid-Cap 16,493.06 1.05%
S&P BSE Small-Cap 17,921.45 1.12%

D-Mart, Venky's, Cholamandalam Investment hit record highs

Shares of Avenue Supermarts, which runs the D-Mart supermarkets chain, poultry producer company Venky’s (India) and finance firm Cholamandalam Investment and Finance Company have hit their respective record highs on the BSE in intra-day trade on Friday. READ MORE
Future tense? Private fuel retailers may be scraping last of growth barrel

Private fuel retailers in the country saw sequential market share growth in the quarter ended December 2017. However, this could well be the saturation point for them. With upsides to growth via retail outlets now capped, private oil companies might look to further increase their share of the bulk diesel category, which uses the render process for procurement. CLICK HERE FOR FULL STORY
Move to gold amid selloff in Indian equity markets, says WGC

The ongoing selloff in Indian equity markets has opened an opportunity for portfolio diversification in favour of gold, to reduce risk and aim for better return.
So argues the World Gold Council (WGC), official market development body for the metal's mining industry. READ MORE

Volatility's return is making a haven of Asia's emerging markets

The specter of volatile financial markets is prompting investors to be more selective in emerging markets and Asia is stacking up to be among the most resilient when it comes to economic measures. READ MORE
Macquarie on IT sector
NASSCOM’s FY19E guidance of 7-9% yoy growth in Indian IT export revenues in FY19E (in constant currency) vs 7-8% yoy growth in FY18E indicates marginal improvement. It echoes our view of FY19E revenues being marginally better than FY18E for Indian IT companies. Our top picks in the large cap space are HCL Tech and Infosys, and in the mid-cap space we like L&T Infotech and Hexaware.
Jefferies on Consumer sector
Consumer goods companies posted decent Q3FY18 results albeit on a lower base. Q4FY18 till date has not seen much action as pricing hikes are largely absent and volume trends largely stable. Raw material basket has seen some stabilization MoM, however, non-food RM index up 18% in last 6 months remains a concern. Pace of rural recovery holds key for sustenance of premium valuations for the sector amidst rising bond yield. We have ITC, Nestle, Hindustan Unilever and Dabur as BUY's in staples.
Edelweiss on Supreme Infrastructure
Supreme Infrastructure's (SPII) Q3FY18 revenue, at Rs 2bn, declined 34% y-o-y, as lack of sufficient order inflow took its toll. Operating de-leverage led to EBITDA margin falling 550bps YoY to 10.5%. Consequently, SPII posted adjusted loss of Rs 466mn. SPII is undergoing restructuring of standalone debt under the S4A scheme. This, along with potential fund infusion by promoters will provide liquidity relief to the company, which is paramount to revive its EPC operations and complete its BOT projects. We await clarity on the S4A deal contours and continue to keep the stock ‘UNDER REVIEW’.
Sector watch: Textiles
India Ratings and Research (Ind-Ra) has maintained a stable outlook for cotton textiles and synthetics for FY19. This is in view of expected margin expansion due to softening in cotton prices, improved consumer spending outlook in key user countries and the low base effect of FY18. 
The slowdown in domestic demand growth for textiles, due to demonetisation and the goods and services tax (GST) implementation, seems to have bottomed out in 2HFY18. Better margins, modest reduction in working capital requirements and subdued capex in FY19 will lead to an improvement in the overall credit profile.

Morgan Stanley on inflation
In the near term, the impact of normalising food prices and house rent allowance will have a significant statistical impact on the headline CPI prints and hence we would continue to focus on watching the trends in core-core (inflation ex food, fuel and housing) to assess the trends in underlying inflation. In this context, a sustained rise in core-core inflation to above 4.5% or the materialisation of further upside risks to inflation would likely prompt the central bank to hike rates.
Market Check

S&P BSE Sensex 33,964.19 0.43%
Nifty 50 10,424.15 0.40%
S&P BSE 200 4,557.61 0.55%
Nifty 500 9,185.50 0.51%
S&P BSE Mid-Cap 16,466.43 0.88%
S&P BSE Small-Cap 17,887.17 0.92%

Federal Bank rises 5% on aquisition of 26% stake in Equirus Capital

Federal Bank was up 5% at Rs 94.15 on the BSE in early morning trade after the private sector lender said that it will pick up 26% strategic stake in Equirus Capital Pvt Ltd (ECPL), a financial services company. Bank did not disclose the deal value. READ MORE
Binani Ind up 5% on talks of UltraTech closer to acquire Binani Cement

Binani Industries is locked in upper circuit of 5% at Rs 109 on BSE in early morning trade after the media report suggested that UltraTech Cement sought permission from the Competition Commission of India (CCI) for the takeover of Binani Cement. Binani Cement is the subsidiary company of Binani Industries. READ MORE
Philip Capital on Pennar

BSE smallcap: Dynamatic Technologies, Binani Industries among top gainers, Jubilant Life Sciences top loser

BSE midcap: Federal Bank, Endurance Technologies among top gainers, Vanrangee top loser

Sectoral Trend

BSE Sensex gainers and losers

Market at open
At 9:17 am, the S&P BSE Sensex was trading at 33,886, up 66 points while the broader Nifty50 was ruling at 10,403, up 21 points.
F&O watch
Market-wide rollovers on the last day stands at 78% vs. average rollovers of 80% (last three series). March series will start with market-wide future OI of INR 1.37tn as against INR 1.65tn seen at the start of the February expiry. After remaining under pressure, stock futures roll cost levels moved upto ~50-52bps. Nifty futures rollover stands at 62% vs. average rollovers of 67% (last three series). Nifty roll levels (cost to long) were ~18-20bps (screen levels). Nifty futures will start the March series with an OI of INR 199bn (~19.2mn shares) compared to an OI of INR 287bn (~25.9mn shares) seen at the start of February series.
(Source: Edelweiss Report)
F&O watch
On the last day of Feb expiry the rollover activity picked up as long roller participation was seen in the market. With rollovers picking, the expected volatility in the last hour of the trading session receded. Nifty ended the session on a flat note. For the February series, index closed on a sour note as it lost ~6.2%. The major draggers have been banks, metals, energy and pharma. 
We hold a cautious view on the index for March expiry. On the upside, 10600-10650 will serve as a resistance while on the downside psychological level of 10,000 can’t be ruled out. Any breach of 10,000 mark will pave way for an immediate dip of further 100-150 points.
(Source: Edelweiss Report)
NSE drops plans to sell 'loss-making' Power Exchange India Limited

The National Stock Exchange (NSE) has decided to call off the sale of its power trading platform Power Exchange India Limited (PXIL). The move comes within months of NSE finding a consortium of buyers who were ready to pick up a stake of NSE at a nominal rate. READ MORE
Markets at pre-open

Index Current Pt. Change % Change
S&P BSE SENSEX 33,913.59 +94.09 +0.28
S&P BSE SENSEX 50 10,868.36 +28.88 +0.27
S&P BSE SENSEX Next 50 33,477.24 +89.47 +0.27
S&P BSE 100 10,767.98 +28.64 +0.27
S&P BSE Bharat 22 Index 3,551.95 +0.96 +0.03

(Source: BSE)
Recent rise in bond yields could spoil growth party for retail NBFCs

The recent rise in bond yields could spoil the growth party for retail non-banking finance companies (NBFCs). Retail NBFCs such as Housing Development Finance Corporation (HDFC), LIC Housing, Indiabulls Housing and Bajaj Finance, among others. The sector was one of the key beneficiaries of low bond yields and interest rates in the past three years, but now that yields are rising, the companies are likely to see a compression in their net interest margins (NIMs), translating into lower profitability. READ MORE
Result Update: Indo Count Industries Ltd – BUY – Target Price: Rs.135
Indo Count Industries Ltd (ICIL) reported inline Q3FY18 results, with volume remained flattish sequentially. Standalone net revenues for the quarter declined by 8.5% yoy to Rs 4.6 bn due to inhouse spinning transfer, rupee appreciation and change in incentive structure. On demand side, destocking continued to impact volume offtake in the US market, but the intensity of destocking has reduced. As per the management, the demand situation is improving on qoq and expect pickup in volume from existing as well as new clients.

We have cut our estimates for FY19E factoring in decline in realization and external yarn sales with lower EBITDA margin; and introduce FY20E estimates. We recommend BUY (Vs Accumulate earlier) as we see upside in the stock, after recent correction with revised target price of Rs 135 (Vs Rs 142 earlier), valuing the stock at 11x FY20E EPS

(Source: Kotak Securities report)
MARKET COMMENT: Equinomics Research

The minutes of the Fed's January 30-31 discussions showed that the officials were more optimistic about the economy than they had been in December. They noted a stronger US and global economy as well as expectations that the Republican tax cuts enacted in December would boost growth. The minutes released said a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate''. We can expect at least two rate hikes in 2018 from the US Fed

India’s three stock exchanges cancelled on 9 February all futures or market data licensing agreements with foreign exchanges, including Singapore Exchange (SGX). This move was seemingly prompted by the SGX’s decision to launch trading in Indian single-stock futures. The move will also mean the end of the existing trading of Indian stock index futures trading in Singapore once the licence expires in August.
The motive behind the Indian exchanges’ move is not hard to imagine since the threat was a considerable loss of control given that the stock market could to a significant extent have moved offshore. Still this news has hit the share price of SGX which has long been trying to find a new product that could revitalise an exchange which has continued to suffer from shrinking trading volumes and shrinking capitalisation.

GREED & fear will increase the weightings in MSCI China and Hong Kong in the Asia Pacific ex-Japan relative-return portfolio by a further one percentage point each. This will be paid for by reducing the overweight in India by two percentage points

(Source: Wood's weekly newsletter to investors)

CLSA Managing Director & Equity Strategist Christopher Wood

Today's picks: From Tata Motors to M&M, hot stocks to watch on Friday

Tata Motors
Current price: Rs 359
Target price: Rs 353
Keep a stop at Rs 362 and go short. Add to the position between Rs 354 and Rs 355. Book profits at Rs 353. READ MORE
MSCI will continue to get data for ETFs, says NSE's Vikram Limaye

The National Stock Exchange (NSE) plans to continue to provide data to global index providers, including the MSCI, to enable overseas investors to take exposure to the Indian market through their exchange-traded funds (ETFs). READ MORE
Markets on Thursday

S&P BSE Sensex 33,819.50 -0.07%
Nifty 50 10,382.70 -0.14%
S&P BSE 200 4,532.77 -0.27%
Nifty 500 9,138.50 -0.32%
S&P BSE Mid-Cap 16,322.14 -0.54%
S&P BSE Small-Cap 17,723.73 -0.43%

News Watch: Sebi plans safeguards for overseas investors taking private bank route

The Securities and Exchange Board of India (Sebi) is planning checks and balances on overseas investors taking the ‘private bank route’ to invest in domestic markets.
The move comes after several industry players expressed concerns that the new route allowed by the Sebi could be misused by investors, such as participatory notes (p-notes).  READ MORE
Trading ideas by Tradebulls for the day

Sell Zinc
Target: Rs 222
Stoploss: Rs 230
Emergency of negative divergence in daily chart of Zinc has warranted caution on the ongoing rally.
With base metals starting to slide down, we expect Zinc to follow pursuit. The upside momentum will start if Zinc manages to sustain above 230 closing basis as previously we saw fair bit of resistance around that area. The oscillators have started curving downwards which hints at profit booking. We recommend selling Zinc with target of 222 and stop loss of 230 on closing basis. CLICK HERE TO READ MORE
Commodities Outlook by Tradebulls

Gold and Silver continues to ignore US economic data with weaker than expected home sales data failed to push prices higher. The main culprit behind the weakness was rise in US Dollar as Fed meeting minutes showed that they are in line to raise interest rate atleast 3 times this year. We could see rise of 25 basis points in this March itself. Higher interest rates have flowed into a stronger dollar which has been negative for gold and investors are lightening up on the gold market. The US 10-Year Yield jumped after Fed minutes and is at 4 year high. We have seen negative co-relation between gold and US 10-Year Yield and rising yield will create headwinds for bullions in near term.
Derivative Strategy on Dish TV by HDFC Securities

Buy Dish TV 75 call at Rs 3.40
Stop loss: Rs 2.50
Target: Rs 6
Rationale: We have seen long positions being built in Dish futures today where we have seen sharp rise in open interest with price rise of 2%. READ MORE
SGX Nifty

The SGX Nifty was trading at 10,400.50, up 0.14% from the previous close.
Wall Street

On Wall Street, the Dow added 0.7%, the S&P 500 ended a tad firmer while the Nasdaq lost 0.11% on Thursday.
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