The benchmark indices settled at record closing highs on Monday as state-owned lenders extended a rally from the last week sparked by the government’s announcement of a Rs 2.11 lakh crore recapitalisation plan, while energy firms gained on higher crude prices.
State-run lenders drove the indices higher, with the Nifty PSU bank index rising as much as 4.3%. Its 30% gain last week was much larger than a 0.8% rise in the Nifty private bank index over the same period.
The Nifty50 rallied as much as 61 points to hit its fresh high of 10,384, while the Sensex rose 184 points to log its record high of 33,340 in intraday trade.
Overseas, European markets were trading sideways as earnings rolled in, while Asian markets climbed as the euro loitered around a 3-month low after the European Central Bank's decision to extend its stimulus further fattened the dollar's yield advantage.
Market wrap-up by Nikhil Kamath, Co-Founder and Head of Trading, Zerodha
Markets closed the session up for the day, on the back of domestic liquidity and positive global cues. FIIs continued to be net sellers, overall. YES Bank and Bharti Infratel were the best performers of the session, while cement and autos seemed to hold up. The overall market trend continues to remain bullish with the indices notching up fresh highs on a regular basis. Geopolitical tensions seem to have eased and the focus now remains on earning season. We expect the overall bullish trend to continue going into November, we would advocate caution at this juncture and not recommend entering fresh longs at this point.
Domestic indices marched to a new record high on continuing positivity from the PSU banks and support from Asian peers. But, volatility resurfaced at the record heights especially as investors await key IPO listings.
Broader markets outperform
Broader markets outperformed with the BSE Midcap and the BSE Smallcap indices gaining over 1% each.
Sensex heatmap at close
Markets at close
The S&P BSE Sensex settled at 33,266, up 109 points, while the broader Nifty50 ended at 10,363, up 40 points.
Centrum Research on Mahindra Logistics IPO
At the higher end of the price band of Rs 429, the issue is priced at P/E of 66.9x (post dilution) on FY17 basis, which appears to be expensive given the low financial performance (FY15-17 - revenue and PAT CAGR of 18% and 8%, respectively, with negative operating cash flows in the last 2 years. Even if money raised at such valuations was flowing into the company, it would have ultimately belonged to shareholders. But in this case 100% of the money raised is going to the selling shareholders and not into the company.
Recommendation: As already mentioned, the issue is at an expensive valuation. Clubbing that with the lackluster performance of other M&M group companies – it becomes difficult to logically recommend subscribing to the issue.
Issue opens on Tuesday and closes on Thursday.
HDFC Securities on ITC
ITC is a market leader in cigarettes (~70% market share), notebooks, valued-added paperboards and a critical player in biscuits. The company operates at EBITDA margin of 36%, along with core RoCE of ~40%. We have BUY rating with a target price of Rs 358, based on 32x Sep-19EPS.
Near-term outlook: With anticipation of improvement in operating performance, we expect healthy upside in the near-term too.
Top five gainers on Nifty
Spanish equities opened 1.4% higher on Monday, reassured by weekend demonstrations for a unified Spain and a poll showing a lead for parties opposed to Catalan independence.
Broader European shares traded sideways.
The pan-European STOXX 600 index was down 0.1%, but Spain’s IBEX benchmark rose, led by Caixabank and Banco de Sabadell, shares in which rose 4.2% and 3.6%, respectively.
At 3:00 pm, the S&P BSE Sensex was trading at 33,293, up 136 points, while the broader Nifty50 was ruling at 10,371, up 48 points.
Lupin rose 7% to Rs 1,074 on the BSE after the pharmaceutical company reported a consolidated net profit of Rs 455 crore for the quarter ended September 2017 (Q2FY18). The analyst an average had expected profit of Rs 433 crore for the quarter. READ MORE
Offshore India funds, ETFs pump in $6 bn in Jan-Sep
Optimistic of the country's long-term growth prospects, India-focussed offshore funds and exchange-traded funds (ETFs) have pumped in nearly $6 billion in the first nine months of the year. READ FULL REPORT
Nifty Energy index up nearly 1%
Mukesh Ambani on Indian economy
India represents the biggest investment opportunity in the world right now and its economy will treble in size to $7 trillion from $2.5 trillion in the next decade, Reliance Industries Chairman Mukesh Ambani said on Sunday. READ DETAILS HERE
At 1:30 pm, the S&P BSE Sensex was trading at 33,303, up 146 points, while the broader Nifty50 was ruling at 10,372, up 49 points.
Unichem Lab near record high on talks of Torrent Pharma eyeing domestic biz
Unichem Laboratories was trading 3% higher at Rs 315, extending its past two days 17% surge on the BSE, as media reports suggest that Torrent Pharma is in advanced talks to buy the company’s domestic business.
The stock of Unichem Laboratories hit a fresh 52-week high of Rs 323 on the BSE in early morning trade. It is trading close to its record high of Rs 334 touched on October 6, 2015 in intra-day trade. READ MORE
Engineers India extends rally on good Q2 earnings
Engineers India hit fresh 52-week high of Rs 190, up 5%, extending its 19% surge of the last three days on the BSE, after the company reported a good set of numbers with net profit and revenues growing more than 25% in July-September 2017 quarter (Q2FY18).
The net profit of the company increased by 27% at Rs 119 crore in Q2FY18 against Rs 94 crore in the corresponding quarter of the previous fiscal year. Revenue from operations grew 26% to Rs 429 crore from Rs 339 crore in the same quarter year ago. READ MORE
PSB rally has more legs; re-rating, more upside likely, say analysts
Even after a record rally in public sector bank (PSB) stocks since the announcement of recapitalisation plan, analysts covering the sector sees more upside as they believe the financial health of the PSBs will soon improve, triggering a re-rating of these bank stocks.
The analysts, however, see more value in larger PSU banks as the risk of equity dilution lies more in small and mid-sized PSU banks.
Since the announcement on October 24, the Nifty PSU Bank index has rallied over 23%, as compared to just 1% rise in the benchmark Nifty50 index, ACE Equity data show. READ MORE
TTML zooms over 100% in 12 trading days post deal with Bharti Airtel
Tata Teleservices (Maharashtra) Limited (TTML) is locked in upper circuit of 5% at Rs 8.22, extending its eleven-session long rally on the BSE, after the company announced it has entered into an agreement with Bharti Airtel to merge its and its group company Tata Teleservices (TTSL)'s consumer mobile business (CMB) with that of Airtel’s.
Bharti Airtel and Tata on October 12 said that the acquisition is subject to requisite regulatory approvals. As part of the Agreement, Bharti Airtel will absorb Tata CMB’s operations across the country in nineteen circles (17 under TTSL and 2 under TTML). READ MORE
Mahindra Logistics commands 20% premium in grey market
Shares of Mahindra Logistics are commanding a 20 per cent premium in the unofficial market. Mahindra and Mahindra’s (M&M’s) logistics arm’s Rs 830-crore IPO opens on Monday. The offering is a secondary share sale by parent M&M and private equity player Kedaara Capital.
“Shares are changing hands at Rs 520 against the IPO price band of Rs 425-429. Strong growth track record and big management banner are keeping investor sentiment buoyant,” says a broker. READ MORE
Gold demand remains dull post Diwali even after drop in prices
The physical gold market remained quiet in most Asian centres this week despite a drop in prices with India witnessing a lull in fresh purchases as key festival season demand cooled off in the world’s second biggest consumer.
Gold prices in India slipped to 29,209 rupees per 10 grams on Friday, the lowest level in about two months.
Prices in India were at a premium of up to $3 an ounce over official domestic prices this week, up from $2 last week. The slight increase in premiums was due to traders looking to cover for purchases made when rates were higher.
Sebi panel suggests independent regulator needed for auditors
The new norms proposed by the Securities and Exchange Board of India's (Sebi) corporate governance panel for auditors has strengthened the case for the establishment of an independent auditor as mooted by the government.
The Parliamentary Standing Committee on Finance had in 2012 specified the need for a quasi-regulatory body for supervising audit quality. This would in the form of a National Financial Reporting Authority (NFRA) provided for in Section 132 of the Companies Act, 2013 for matters relating to accounting and auditing.
UTI-Banking & PSU Debt Fund: Focused on safety, liquidity
The benchmark Nifty has recovered all its losses seen in September to end at a record high on Friday. Launched in January 2014, UTI-Banking & PSU Debt Fund is classified under the debt-short category of CRISIL Mutual Fund Ranking.
The fund has been constantly ranked in the top 30 percentile (CRISIL Fund Rank 1 or 2) over the past four quarters ended June 2017. It has been managed by Sudhir Agarwal since January 2014. It has quarterly average assets under management of Rs 1,324 crore at the end of June 2017 quarter. READ MORE
Interview of the day
Equity returns in 2018 will be lower: Jyotivardhan Jaipuria
Mutual fund investments in equities are near record highs at a time foreign institutional investors (FIIs) have been mostly fence-sitters.
Jyotivardhan Jaipuria, founder and managing director, Veda Investment Managers, says that FIIs are justified in investing in developed markets which look more attractive. Once growth picks up back home, we should see them come back to India, he adds. Click here for full interview
ONGC hits 5-month high as Q2 profit beats estimates
Oil and Natural Gas Corporation (ONGC) hit a five-month high of Rs 190, up 3% on the BSE in early morning trade after the country’s biggest oil and gas producer, reported a 3.1% increase in second-quarter profit at Rs 5,131 crore, on back of higher oil prices.
The net profit in September 2017 quarter (Q2FY18) was better than expected against an average analysts estimates of Rs 4,543 crore. The stock was trading at its highest level since May 11, 2017.
Revenue was up 3.1% at Rs 18,966 crore in Q2FY18 against Rs 18,395 crore in the corresponding quarter of previous fiscal. READ MORE
Nifty PSU Bank index up over 1%
HDFC Bank moves closer to top 10 global lenders' league
HDFC Bank is within kissing distance of breaking into the league of 10 most-valued global banks. A stellar 55% rally (in dollar terms) this year has helped the domestic lender improve its standing to 12th from 22nd at the start of the year.
At present, HDFC Bank is valued at $71.2 billion, 1.3% below Netherlands’ ING Group — the 10th most valuable bank. The domestic lender’s market capitalisation is more than that of marquee global banks such as Barclays, JP Morgan Chase and Credit Suisse. READ MORE
Top Sensex gainers and losers
In broader markets, both BSE Midcap and BSE Smallcap was trading higher by 0.7% each
Markets at open
Benchmark indices open at record highs following Asian markets as the European Central Bank’s decision to extend its stimulus further fattened the dollar’s yield advantage.
At 9:20 am, the S&P BSE Sensex was trading at 10,259, up 102 points while the broader Nifty50 was ruling at 10,355, up 31 points
Nifty Outlook from Angel Broking
Merry days continued for our market immediately post the festive week. Barring negligible cut on Friday, the index kept marching higher during the week and eventually reached yet another milestone of 10,300. There have been various heroes in this year’s relentless run; but, this week, undoubtedly all credit should go to laggards (PSU Banks), which turned into gold overnight by clocking whopping gains of more than 30% in a single day. Click for more
The daily and weekly trend in Nifty continues to be up while the monthly trend would turn up with a close above 9,950. The support for the week is seen at 10,150 while resistance is seen at 10,500. Nifty would now have near term resistance at 10,500. Click here for trading ideas
Market extended further in this euphoric rally across the board as expected. It has achieved almost my short term targets levels range between 10,350-104,00 levels on Nifty & 33,700-33,800 levels on Sensex as expected earlier. It closed weekly in positive territory. It made a high of 10,366.15 levels on Nifty & 33,286.51 levels on Sensex so far in this rally.
Traders should be stock specific & keep booking profit at regular intervals in short term. It looks like high possibility to extend this rally further towards revised short term target levels as mentioned below till it reverses. One should buy stock specific till it reverses. READ MORE
Reliance Nippon AMC IPO subscribed 81 times on last day
Country's first-ever mutual fund IPO by Reliance Nippon Asset Management Company (AMC) was lapped up by investors. The 43-million share offering saw 81 times more demand, with bids for 3,485 million shares, worth Rs 87,830 crore.
The Rs 1,540-crore offering saw healthy demand in all three investor categories. The institutional portion of the IPO was subscribed 118 times, high net worth individual (HNI) segment was subscribed 209 times and retail investor portion was subscribed five times.
The retail book was kept open till late as demand remained high, said investment bankers. The IPO saw over 1.5 million applications, one of the highest for IPOs this year.
The price band for the IPO was Rs 247 to 252 per share. At the top-end of the price band, Reliance Nippon AMC was valued at Rs 15,422 crore. READ MORE
68 companies to reports results for Sept quarter
As many as 68 companies are scheduled to report their September quarter numbers including BEL, Central Bank of India, Century Plyboards, EIH, HDFC, IDFC Ltd, IFB Industries, Bharti Infratel, KS Oil, Lakshmi Machine Works, LIC Housing, Lupin, Mahindra Lifespace, Marico, OnMobile Global, Sintex Industries, Tata Steel, Wockhardt, etc. among others.
Rs 11K crore worth of IPOs to hit D-Street this week
Three companies are scheduled to open their issue in this week starting from 30 October to 3 November which includes names like Mahindra Logistics, New India Assurance, and Khadim India. Another big boy, New India Insurance will hit D-Street on November 1 to raise up to Rs9,600 crores from primary markets.
The Nifty50 futures on the Singapore Stock Exchange were trading 32 points higher at 10,403 indicating a positive opening for the domestic market.
Asia shares trade higher, Nikkei up 0.2%
Asian shares climbed on Monday and crude oil rose to a 2-year top. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2%. The index is up 3.4% so far this month. Japan's Nikkei nudged 0.2% higher, while Seoul shares climbed 0.7%
US markets ends higher
Wall Street climbed on Friday as a surge in the tech sector and a rally in Amazon shares helped push the Nasdaq to its best day in nearly a year.
The Dow Jones Industrial Average rose 33.33 points, or 0.14%, to 23,434.19, the S&P 500 gained 20.67 points, or 0.81%, to 2,581.07 and the Nasdaq Composite added 144.49 points, or 2.2%, to 6,701.26.
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