MARKET WRAP: Indices settle lower on weak rupee; TCS m-cap at Rs 8 trillion

The benchmark indices settled lower on Tuesday amid a weakening rupee, which fell to its fresh record low for the third straight session earlier in the day.

The S&P BSE Sensex ended at 38,158, down 155 points while the broader Nifty50 index settled at 11,520, down 62 points.

The Indian currency slipped to a new record low of 71.50 per dollar in intra-day trade. It has declined 3.3 per cent in August and over 10 per cent so far in year-to-date, to emerge as the worst-performing currency in Asia.

In individual stocks, banking shares such as HDFC Bank, State Bank of India (SBI), IndusInd Bank and ICICI Bank fell in the range of 1 per cent to 3.3 per cent.

Among sectoral indices, the Nifty IT index rose around 2 per cent led by a rise in Infosys, HCL Technologies, and Tata Consultancy Services (TCS).

TCS at new high; m-cap hits Rs 8 trillion

Shares of Tata Consultancy Services (TCS) hit a new high of Rs 2,099 per share in intra-day trade, rising 2% on the National Stock Exchange (NSE), trading close to their share buyback price of Rs 2,100 per share. The market-capitalisation hit the Rs 8-trillion mark on Tuesday, the third time it has achieved this feat ever in intra-day. READ MORE

FPIs ring alarm bells on Sebi ownership notice; Market regulator calls it "preposterous"

The sentiment was also affected after the foreign portfolio investors (FPIs) upped their ante against a circular issued by the market regulator, Securities and Exchange Board of India (Sebi), on beneficial ownership of offshore funds.

On April 10, SEBI modified the KYC norms applicable to Foreign Portfolio Investors. NRIs, OIC s and PIOs are now prevented from being "Beneficial Owners", or "in control", via the FPI route.

With a lobby of FPIs trying hard to get the proposed changes to KYC norms withdrawn, market regulator Sebi on Tuesday said it is "preposterous and highly irresponsible" to claim that $75 billion will move out of India because of the regulatory move.

Global Markets

Asian shares fell and the dollar turned higher on Tuesday as the trade dispute between the United States and China threatened to escalate this week, and as emergency austerity measures in Argentina underscored the turbulence gripping emerging markets.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent. Chinese blue-chips also fell 0.3 per cent, reversing earlier gains. Japan's Nikkei slid less than 0.1 per cent, while Australian shares were 0.4 per cent lower ahead of a central bank policy meeting.

(With inputs from Reuters)


Nifty IT index ends 2.06% up. Top gainers:

HCL TECHNOLOGIES 1077.60 1049.15 28.45 2.71
TECH MAHINDRA 764.55 745.65 18.90 2.53
TCS 2099.75 2052.90 46.85 2.28
INFOSYS 732.30 717.13 15.17 2.12
MINDTREE 1121.10 1100.55 20.55 1.87

Nifty sectoral losers of the day

BSE Sensex: Asian Paints, SBI, HUL among top losers of the day, Infosys, TCS top gainers

Market at close

The S&P BSE Sensex ended at 38,158, down 155 points while the broader Nifty50 index settled at 11,520, down 62 points.
Overseas investor eyes investment in Anil Ambani's Reliance Home Finance

An overseas institutional investor is in talks with Anil Ambani controlled Reliance Home Finance Ltd (RFHL) for potential equity investment in the mortgage lender.
The company did not specify if the investment was fresh infusion of capital or monetization of part of existing stake held by investors, including promoter entity. READ MORE

Falling rupee to keep base metals costlier in India despite global lull

Base metals prices are likely to remain under pressure in coming weeks due to a strengthening dollar and the negative impact on the global economy, following the ongoing trade war between the United States and China. READ MORE

Project pipeline and demand to drive JSW Steel growth; stock gains

JSW Steel (JSW), one of India’s largest steel makers, scaled fresh all-time high of Rs 408.65 last week. The recent rise is driven by the company’s inclusion in the Nifty50 index, boosting Street sentiment and pushing fund managers to add the stock to their portfolios. READ MORE

NEWS ALERT Rupee slips to fresh low of 71.41 per dollar
Preposterous to claim $75 billion FPI funds will move out of India: Sebi

With a lobby of FPIs trying hard to get the proposed changes to KYC norms withdrawn, market regulator Sebi Tuesday said it is "preposterous and highly irresponsible" to claim that $75 billion will move out of India because of the regulatory move.
Some foreign portfolio investors (FPIs) are believed to have earlier expressed concerns over the proposed changes in rules, for which Sebi has already granted more time. READ MORE
LIC may seek Sebi exemption for open offer to IDBI Bank shareholders

Department of Economic Affairs Secretary Subhash Chandra Garg on Tuesday hinted that the Life Insurance Corporation (LIC) may seek regulatory exemption from making an open offer to minority shareholders of state-owned IDBI Bank. READ MORE

Market Check

Index Current Pt. Change % Change
S&P BSE SENSEX 38,251.48 -61.04 -0.16
S&P BSE SENSEX 50 12,090.90 -41.87 -0.35
S&P BSE SENSEX Next 50 34,528.95 -830.22 -2.35
S&P BSE 100 11,842.39 -77.66 -0.65
S&P BSE Bharat 22 Index 3,671.30 -38.73 -1.04

Persistent Systems gains after acquisition

Persistent Systems rose 1.92% to Rs 853 on BSE after the company said its US arm acquired 100% stake in Herald Technologies for $5.2 million. The announcement was made after trading hours yesterday, 3 September 2018. READ MORE

Fund houses ease limits on small-cap plans; managers see opportunities

Small-cap schemes, which had imposed limits on investor inflows amid surging valuations, have started easing some of these restrictions. Fall in valuations to more reasonable levels and signs of earnings recovery are prompting money managers to deploy fresh funds into stocks in this space. “The entire small cap space has corrected. While the small cap index is down 12-13 per cent, a few stocks have corrected much more. READ MORE

TCS hits new high; stock nears share buyback price of Rs 2,100

Shares of Tata Consultancy Services (TCS) hit a new high of Rs 2,099 per share, up 2% on the National Stock Exchange (NSE), trading close to their share buyback price of Rs 2,100 per share.
TCS share buyback offer will open on Thursday, September 06, 2018 and closes on Friday, September 21, 2018. READ MORE

Here are the five ways to keep a track of your mutual fund's performance

Like every investor, you too wish to grow wealth by investing in mutual funds. For this, you need to keep a track of your portfolio’s performance. It becomes an easy task when you have a strategy in hand. All you need to know are a few parameters to evaluate fund performance. Additionally, decide a frequency at which you will analyse the portfolio performance. READ MORE
COMMENT Gaurang Somaiyaa, Currency Analyst- Commodities, Motilal Oswal

This month, rupee could continue to trade with high volatility, and with emerging market currencies like Mexican Peso and Turkish Lira having fallen sharply against the US dollar, gains for the rupee could be restricted. In the near future, market participants will also be keenly keeping an eye on Brent crude prices that rallied by over 15% (YTD) and which could further inflate India’s import bill. We expect the rupee to remain under pressure and test levels of 72 in the near term and on the higher side 70.30 will be an important resistance.
Reply to show cause notice in 3 weeks: Sebi to Motilal Oswal on NSEL scam

Markets regulator Securities and Exchange Board of India (Sebi) has ordered commodity broking firm Motilal Oswal Commodities Broker, an arm of India's leading equity broking and financial services firm Motilal Oswal Securities Ltd, to reply in three weeks to the regulator's show cause notice in the Rs 56 billion payment default at National Spot Exchange Ltd (NSEL). READ MORE

FMCG shares under pressure; HUL falls 9% in two days

Shares of fast moving consumer goods (FMCG) companies were under pressure for the second straight day with the sector major Hindustan Unilever (HUL) slipping 9% in past two trading sessions.
Jubilant FoodWorks, Dabur India, Nestle India, Britannia Industries, Godrej Consumer Products, Marico, and ITC were trading lower in the range of 2% to 5% on the National Stock Exchange (NSE). READ MORE

Mutual fund managers churn portfolios, go slow on purchase of equities

With benchmark indices hovering near record highs, mutual fund managers have slowed down their equity purchases. Fund houses bought shares worth Rs 38.1 billion in August, the lowest since February 2017.
This is similar to purchases of Rs 39 billion made last month. Net investments dropped 58 per cent over June’s purchases of Rs 92 billion, and 67 per cent lower than the one-year monthly average of Rs 103 billion. READ MORE

Markets at noon

Index Current Pt. Change % Change
S&P BSE SENSEX 38,316.82 +4.30 +0.01
S&P BSE SENSEX 50 12,116.19 -16.58 -0.14
S&P BSE SENSEX Next 50 34,784.04 -575.13 -1.63
S&P BSE 100 11,876.53 -43.52 -0.37
S&P BSE Bharat 22 Index 3,682.76 -27.27 -0.74

Devangshu Dutta Growth picks up, but concerns remain
Indian investors ignored the threat of escalation in the trade war as they pushed indices to new highs. There’s been no headway in US-China talks and the US may impose punitive tariffs on an additional $200 bn of Chinese exports. China will retaliate.
The beleaguered Trump administration is also threatening to scrap NAFTA as it tries to renegotiate trade terms with Canada and Mexico. This would mean an increase in global inflation and a downtrend in trading activity. While metals may soften on lower demand, crude prices will stay high as Iran sanctions bite and Venezuela collapses. READ MORE
No love for Indian rupee as technicals point to oversold currency
India’s rupee, Asia’s worst-performing currency this year, has slumped so much recently that a little respite may be in store.
Technical charts for the dollar-rupee show the pair’s relative strength index (RSI), a widely-followed momentum indicator, surpassed 76 on Monday after the rupee weakened to a new record low. The reading is highest since the spike in May to 77.78, which presaged a 1.5 percent advance in the Indian currency over the next three days. READ MORE

L&T Infotech surges 7% on strong response for OFS
Shares of Larsen & Toubro (L&T) Infotech surged 7% to Rs 1,888 on the BSE in early morning trade on Tuesday after the company’s offer for sale (OFS) on Monday got a strong response from the institutional investors. The stock was trading close to its 52-week high of Rs 1,911 touched on August 21, 2018, on the BSE in intra-day trade.
The share sale saw bids for 29.8 million shares as against 9.5 million on offer. The clearing price of Rs 1,751 fixed for non-retail bidding in L&T Infotech, the BSE data shows. READ MORE
Nifty FMCG index down nearly 2%

NSE in talks with Sebi, seeks inspection of documents in co-location case
The National Stock Exchange (NSE) has requested the markets regulator Securities and Exchange Board of India (Sebi) to provide access to documents based on which charges are being framed in the co-location case.
On July 4, Sebi had served fresh show cause notices to NSE and over 20 others for alleged violation of the Securities Contract Regulation Act and the Prevention of Unfair Trading Practices norms. READ MORE
Hikal hits 52-week high after Ashish Kacholia buys 1.6% stake
Shares of Hikal hit a 52-week high of Rs 192, up 4% on Tuesday, extending its previous day’s 15% surged on the National Stock Exchange (NSE), after investor Ashish Kacholia bought nearly 2% stake in the pharmaceutical company via open market.
On Monday, September 3, 2018, Ashish Kacholia purchased two million shares, or 1.6% of the Hikal’s equity at price of Rs 166.50 through bulk deal, the NSE data shows. The investor bought these shares for total consideration of Rs 333 million. READ MORE
Infosys turns ex-date for 1:1 bonus; stock hits new high

Shares of Infosys hit a new high of Rs 737, up 3% (adjusted to bonus issue) on the BSE. The stock of the country's second-largest information technology (IT) services company is trading ex-date for 1:1 bonus issue.
The board of directors of Infosys has fixed Wednesday, September 5, 2018, as the record date for the purpose of allotment of bonus shares/stock dividend. READ MORE

Market Check

Index Current Pt. Change % Change
S&P BSE SENSEX 38,271.28 -41.24 -0.11
S&P BSE SENSEX 50 12,111.41 -21.36 -0.18
S&P BSE SENSEX Next 50 35,029.85 -329.32 -0.93
S&P BSE 100 11,885.44 -34.61 -0.29
S&P BSE Bharat 22 Index 3,681.64 -28.39 -0.77

MCLR hike may not be sufficient for banks
The stock of State Bank of India (SBI) announced 20 basis points hike in marginal cost of funds-based lending rate (MCLR) from September 1. The hike, which was decided upon due to rising cost of funds and the hardening of policy rates, was not limited to India’s largest bank.
Other banks such as ICICI Bank and Axis Bank, too, increased their MCLR. Though the rise in MCLR should add to the topline and profitability of banks, there are couple of factors that would impact this, say experts. READ MORE
WEB EXCLUSIVE Why Sebi's new KYC norm may lead to the exit of many legitimate investors
A SEBI circular will cause a lot of market turmoil unless it is reviewed and reworded. On April 10, SEBI modified the KYC norms applicable to Foreign Portfolio Investors. NRIs, OIC s and PIOs are now prevented from being "Beneficial Owners", or "in control", via the FPI route.
This was done with the intent of preventing money-laundering and round-tripping, maybe with an eye to reduce hawala funding before the General Elections of 2019. Hence, FPIs are being told to disclose Beneficial Owners (BO). The threshold is set at 25 per cent for controlling ownership for companies, and 15 per cent for partnerships. The threshold is lower, at 10 per cent, for "high-risk" nations with a history of money-laundering and terrorism, etc. READ MORE
Sector watch: Metals

Aluminium (Al) has emerged as the best-performing base metal year to date owing to continued disruptions in supply chain for both Al and alumina.  We expect the Al price to be supported by uncertainty pertaining to: 1) tariff implementation; 2) extent of production cuts in China; and 3) Rusal sanctions. Besides, cost-push from alumina (again at a record 27% of LME Al) and thermal coal (up 13% YTD) is expected to keep capacity expansion/ramp-up in check.

While headway is possible for some of these issues, we believe that risk-reward in the near term favours integrated players such as Hindalco, Rio Tinto and Alcoa. Maintain ‘BUY’ on Hindalco.

(Source: Edelweiss Securities)
BOND ALERT 10-year bond yield at 3-month high of over 8%

We expect the Nifty to enter consolidation in the range of 11760–11470 to work off the overbought situation. We believe such a consolidation would help the Nifty to form a higher base that would set the stage for the next leg of the up move. While the benchmarks enter consolidation, we believe broader markets consisting of Nifty midcap and small caps are likely to outperform as both indices have broken out of bullish reversal patterns.

Therefore, we advise investors to participate in the broader market outperformance through quality midcap companies in coming sessions. In coming session, holding above last session low (11567) would keep pullback option open or else continuance of lacklustre move amid stock specific action.
Nifty sectoral trend

BSE Sensex gainers and losers in opening trade

Market at open
At 9:16 AM, the S&P BSE Sensex was trading at 38,390, up 77 points while the broader Nifty50 was ruling at 11,599, up 16 points.
Stocks in news 
·         State Bank of India to offer loans for repairs and renovation of homes in Kerala at 8.45%. 
·         Jet Airways’ long-term rating cut to ‘BB’ from ‘BB+’ at ICRA.
·         MTNL's plans to seek approval of shareholders for raising authorised share capital from Rs 800 crore to Rs 10,000 crore and borrowing powers by almost 40% will aid the state-owned corporation's 4G plans and provide it the firepower to compete in the market, its chairman PK Purwar has said. 
·         Hotel Leela Ventures clarifies that is evaluating various options to reduce debt. 
·         VST Tillers August sales data: Power tillers sales up 1.1% at 1,646 units versus 1,628 units and tractors sales down 49.7% at 517 units versus 1,028 units.
·         Yuken India fixes September 14 as the record date for its bonus issue. The ratio for this issue is set at 3:1.
·         Persistent Systems’ U.S. arm acquires 100% stake in Herald Technologies for $5.2 million. 
·         GTL Infrastructure’s certain distressed loans have been brought by Bank of America Merrill Lynch and Edelweiss Asset Reconstruction Co. for around $197 million. 
·         Muthoot Finance to consider raising Rs 5,000 crore vis non-convertible debentures.
·         Maruti Suzuki: Parent Suzuki aims to treble sales volume by 2030 in India, retain 50% of Indian car market 
(Source: IIFL report)
MARKET COMMENT Amar Ambani, head of research, IIFL

Weakness has set into the market and currency. Despite beginning on a positive note, the market succumbed to selling pressure in the closing hours of trade on Monday. Selling was seen in FMCG, banks, IT, energy and pharma. The Nikkei India Manufacturing Purchasing Managers' Index fell to 51.7 in August, from 52.3 in the previous month.

The outlook is a subdued start. Foreign investors and domestic funds were net sellers on Monday. Austerity measures in Argentina are being watched closely. Asian shares are trading mixed. The US market was closed for Labor Day. Automobile companies posted a mixed set of sales numbers for August. Sales of Maruti Suzuki were hit due to floods in Kerala, while Tata Motors and M&M witnessed strong growth. The Indian rupee closed at another record low of 71.21 to the dollar.
Markets at pre-open

Index Current Pt. Change % Change
S&P BSE SENSEX 38,477.06 +164.54 +0.43
S&P BSE SENSEX 50 12,185.00 +52.23 +0.43
S&P BSE SENSEX Next 50 35,417.58 +58.41 +0.17
S&P BSE 100 11,966.52 +46.47 +0.39
S&P BSE Bharat 22 Index 3,725.12 +15.09

NEWS ALERT Rupee at fresh record low of 71.32 per dollar

NEWS ALERT SEBI: Highly irresponsible for AMRI to claim $75 billion FPI investment will move out because of SEBI's circular issued in April 2018.
MUST READ FPIs ring alarm bells on Sebi ownership notice; $75 bn assets could be hit

Foreign portfolio investors (FPIs) have upped their ante against a circular issued by the market regulator, Securities and Exchange Board of India (Sebi), on beneficial ownership of offshore funds. At least a dozen FPIs, including Amansa Capital, Helios and Morgan Stanley Asset Management — which operate from outside India but have links to the county — wrote to the prime minister, finance minister and Sebi, saying that the move will hit a third of the overseas assets in the country READ MORE HERE

Illustration by Ajay Mohanty

10-year bond yield touches 8%, rupee falls to 71.18 against dollar
The 10-year bond yields touched 8 per cent for the first time since December 2014, while the rupee hit a record low at 71.18 against the dollar even as the local equities fell sharply on Monday.
The bond market has started showing some fatigue on prospects of the rising supply of paper. The second half borrowing, the calendar for which would come by the month end, is expected to be heavy from the Centre and states combined, and higher growth numbers also mean the central bank may find it encouraging to raise rates. READ MORE
Top trading ideas by Prabhudas Lilladher: Buy HPCL

CMP: Rs 257.50
TARGET: Rs 290
The stock has made a double bottom formation pattern in the daily chart at 250 levels and currently, a revival indication is witnessed and we anticipate a further rally from here on to scale till 285 -290 levels in the coming days. The RSI also has indicated a trend reversal from the oversold zone and has signaled a buy. With the chart looking attractive and with good volume participation witnessed, we recommend a buy in this stock for an upside target of 290 keeping a stop loss of 243.

Click here for more
Nifty outlook by Prabhudas Lilladher for today

Nifty on daily chart forms a bearish engulfing candle and also a trend line break brings in resistance at 11,750 levels for now, also RSI being at 60 still brings in hope for a bounce. Else market would witness a further corrective move to the level of 11,500-11,400 levels. The support for the day is seen at 38,080/11,520 while resistance at 38,530/11,640. Bank Nifty would have a range of 27,580-28,040. Most of the sectors have shown a good run up, so now some profit booking cannot be ruled out.

Today's picks
Bajaj Finance
Current price: Rs 2,724
Target price: Rs 2,680
Keep a stop at Rs 2,750 and go short. Add to the position between Rs 2685 and Rs 2700. Book profits at Rs 2,680.
Current price: Rs 195
Target price: Rs 190
Keep a stop at Rs 197 and go short. Add to the position between Rs 191 and Rs 192. Book profits at Rs 190.

Click here for more
Rupee ends at fresh record low of 71.21/$
The Indian rupee, on Monday, closed at a record closing low of 71.21 on the back of overseas fund outflows even as GDP data saw a robust growth for the April-June quarter of current fiscal. The currency touched an intraday low of 71.23 to the US dollar. This is in sharp contrast to the way it had begun trade. In the morning, the currency had started on a positive note as it opened higher by 19 paise to the previous close at 70.80 per dollar.
Oil prices higher as US sanctions limit Iran exports
Oil prices rose on Monday, supported by concerns that falling Iranian output will tighten markets once US sanctions bite from November, but gains were limited by higher supply from OPEC and the United States.
Brent crude oil was up 37 cents at $78.01 a barrel. US crude was 30 cents higher at $70.10.
SGX Nifty
Trends on SGX Nifty indicate a flat opening for the broader index in India, a fall of 1 point or 0.01 per cent. Nifty futures were trading around 11,629-level on the Singaporean Exchange.
Asian shares fall under pressure from trade, emerging markets worries
Asian shares fell in early trade on Tuesday, amid growing concerns over escalating international trade disputes and as emergency austerity measures in Argentina highlighted turbulence in emerging markets.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent after European shares ended mostly flat. Japan's Nikkei slid 0.3 percent and Australian shares were 0.2 percent lower. US markets were closed yesterday on account of Labor Day
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