MARKET WRAP: Sensex rises 97 pts, Nifty settles at 10,348 as banks rally

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The benchmark indices recovered sharply from their day's low to settle slightly higher on Monday led by a rise in the banking and OMC stocks.

The S&P BSE Sensex ended at 34,474, up 97 points, while the broader Nifty50 index settled at 10,348, up 32 points.

Among sectoral indices, the Nifty Bank index settled 0.7 per cent higher, led by a rise in YES Bank and State Bank of India (SBI). On the other hand, Nifty IT index fell 1.8 per cent led by fall in Tata Elxsi, Tata Consultancy Services (TCS) and Infosys.

During the day, the rupee slipped below the crucial 74 per dollar mark for the second time in two days hitting 74.09 against the greenback as the Reserve Bank of India (RBI) kept interest rates unchanged on Friday, surprising the markets that had expected a rate hike to support the tumbling rupee and combat inflationary pressures from high oil prices.

Shares of oil & gas and state-run oil marketing companies (OMCs) rose on Monday, after witnessing heavy sell-off in the last two trading sessions. Reliance Industries rose 5.5 per cent to Rs 1,108 on the BSE, while HPCL rose over 8 per cent to Rs 178.

 
Global Markets

Shares in Asia slumped Monday as China’s markets stumbled in their first trading day after a one-week holiday even though Beijing’s central bank increased liquidity to offset the impact of an escalating trade dispute with the United States. Asian shares were also hit on Monday as investors in Chinese stocks reacted for the first time to new pressure from Washington and a report that Chinese spies had compromised US hardware.

China’s blue-chip CSI300 index was 3.5 per cent lower while the main Shanghai Composite Index was down 2.9 per cent. The tech-heavy ChiNext board fell 3.08 per cent. The losses in China dragged down MSCI’s broadest index of Asia-Pacific shares outside Japan, which was 0.9 per cent lower.

(with wire inputs)


3:39 PM IST Sectoral gainers and losers on NSE

3:37 PM IST S&P BSE Sensex: Top gainers & losers

3:36 PM IST Market at close   The S&P BSE Sensex closed 97 points higher at 34,474 while the broader NSE's Nifty50 index settled at 10,348, up 32 points.

3:16 PM IST Gold slips as dollar gains after China eases policy Gold fell on Monday as the dollar firmed after China's central bank eased its domestic policy to support the economy amid concerns that an escalating trade dispute with the United States could hurt growth. Spot gold was down 0.6 per cent at $1,195.61 an ounce. US gold futures fell 0.5 per cent to $1,199.8 an ounce.

2:59 PM IST Time to increase gold allocation in your portfolio this Dussehra   This Dussehra can be different for your gold investment. Analysts are increasingly becoming positive on the outlook of gold over the next few months with oil prices rising and the risks in the global economy increasing. Last week, international gold prices crossed $1,200 after Italy said it will run a higher budget deficit that threatened the European currency. The ongoing trade tensions between the US and China has been increasing in impacting currencies. Read More  

2:44 PM IST NBFCs slip as RBI plans to strengthen norms; Edelweiss Financial cracks 13%   Shares of a few non-banking financial companies (NBFCs) took a hit on Monday after the Reserve Bank of India (RBI) said on Friday it was looking at strengthening guidelines for such entities to avoid rollover risks. Dewan Housing Finance Corporation Ltd's stock fell as much as 12.3 per cent, while that of Edelweiss Financial Services Ltd tumbled as much as 13.9 per cent. Shares of JM Financial Ltd and IIFL Holdings Ltd declined as much as 11.1 per cent and 11 per cent, respectively. Read More

2:29 PM IST The exchange rate is the shock absorber Foreign capital inflows finance the gap between investment and savings. The exchange rate is the price that adjusts to ensure that the capital inflow is exactly as large as is required. An important part of the capital flows into India is debt flows.   When the perceived credit risk of borrowing entities worsens, overseas debt investors become uncomfortable, and there is a shortfall of inbound capital. Rupee depreciation makes Indian assets more attractive, and compensates for deterioration in domestic credit quality. READ MORE

2:14 PM IST RBI gives nod for True North to pick up 26% stake in Federal Bank's NBFC   The Reserve Bank of India (RBI) has given its nod to private Equity firm True North to pick 26 per cent stake in Fedbank Financial Services Ltd (Fedfina), a subsidiary of Kerala-based Federal Bank. The deal value is estimated to be around Rs 4 billion, for 26 per cent stake, while True North can further acquire additional equity shares of Fedfina, constituting up to 45 per cent of the share capital in the company. Read More

2:01 PM IST Market Check Index Current Pt. Change % Change   S&P BSE SENSEX 34,245.89 -131.10 -0.38   S&P BSE SENSEX 50 10,761.43 -37.49 -0.35   S&P BSE SENSEX Next 50 29,723.81 -369.32 -1.23   S&P BSE 100 10,488.35 -50.14 -0.48   S&P BSE Bharat 22 Index 3,213.44 -33.96 -1.05 (Source: BSE)

1:42 PM IST DHFL skids over 16 percent

1:31 PM IST Q2FY19 result preview Profit for our coverage universe excluding volatile components such as commodities and corporate banks is likely to decelerate from 13% YoY in Q1FY19 to -1% YoY in Q2FY19. Barring IT, retail banks and NBFCs, almost all sectors are likely to witness a slowdown in profit growth. The slowdown is more pronounced in domestic auto, which is likely to post flat profit growth (versus 20% average growth over the past four years). Apart from this, growth in cement, pharma and industrials is likely to remain weak (<5%). Export auto, corporate banks, telecom and airlines are likely to report deep profit contraction (Source: Edelweiss Securities)

1:30 PM IST Axis Securities on Infosys ·         Strong deal wins in Financial services ( 32% of revenue): Growth is likely to revive from Q2 on the back of strong deal wins in the quarter (USD 446 mn) and continued momentum in tier-II and regional banks   ·         Margin to gradually improve: Given an array of margin levers on tap (offshore mix, onsite pyramid, stronger growth in high-margin digital business, automation, operating leverage with stronger revenue growth, and INR depreciation), we expect margin performance to gradually improve through the course of the year to the top of the guided range ( 22-24%)   ·         North America (60% of revenue) to witness broad-based recovery: Management highlighted, growth in Financial Services is likely to pick up on the back of healthy deal wins (USD 446 mn) with strong traction in regional and tier-2 banks. Further, Retail, Energy and Utilities are also seeing strong traction which should drive better growth in FY19.   ·         Infosys has signed a definitive agreement to acquire Fluido, a Salesforce advisor and consulting partner in Nordics. The acquisition will expand Infosys’ capabilities in key geographies like Finland (Espoo), Denmark (Copenhagen), Sweden (Gothenburg), Norway (Oslo) and Slovakia (Banská Bystrica) for services in Salesforce   ·         We maintain a BUY with a target of Rs 794.

LIVE UPDATES

Sectoral gainers and losers on NSE
S&P BSE Sensex: Top gainers & losers
Market at close
 
The S&P BSE Sensex closed 97 points higher at 34,474 while the broader NSE's Nifty50 index settled at 10,348, up 32 points.
Gold slips as dollar gains after China eases policy

Gold fell on Monday as the dollar firmed after China's central bank eased its domestic policy to support the economy amid concerns that an escalating trade dispute with the United States could hurt growth.

Spot gold was down 0.6 per cent at $1,195.61 an ounce. US gold futures fell 0.5 per cent to $1,199.8 an ounce.
Time to increase gold allocation in your portfolio this Dussehra
 
This Dussehra can be different for your gold investment. Analysts are increasingly becoming positive on the outlook of gold over the next few months with oil prices rising and the risks in the global economy increasing. Last week, international gold prices crossed $1,200 after Italy said it will run a higher budget deficit that threatened the European currency. The ongoing trade tensions between the US and China has been increasing in impacting currencies. Read More
 
NBFCs slip as RBI plans to strengthen norms; Edelweiss Financial cracks 13%
 
Shares of a few non-banking financial companies (NBFCs) took a hit on Monday after the Reserve Bank of India (RBI) said on Friday it was looking at strengthening guidelines for such entities to avoid rollover risks. Dewan Housing Finance Corporation Ltd's stock fell as much as 12.3 per cent, while that of Edelweiss Financial Services Ltd tumbled as much as 13.9 per cent. Shares of JM Financial Ltd and IIFL Holdings Ltd declined as much as 11.1 per cent and 11 per cent, respectively. Read More
The exchange rate is the shock absorber

Foreign capital inflows finance the gap between investment and savings. The exchange rate is the price that adjusts to ensure that the capital inflow is exactly as large as is required. An important part of the capital flows into India is debt flows.
 
When the perceived credit risk of borrowing entities worsens, overseas debt investors become uncomfortable, and there is a shortfall of inbound capital. Rupee depreciation makes Indian assets more attractive, and compensates for deterioration in domestic credit quality. READ MORE

RBI gives nod for True North to pick up 26% stake in Federal Bank's NBFC
 
The Reserve Bank of India (RBI) has given its nod to private Equity firm True North to pick 26 per cent stake in Fedbank Financial Services Ltd (Fedfina), a subsidiary of Kerala-based Federal Bank. The deal value is estimated to be around Rs 4 billion, for 26 per cent stake, while True North can further acquire additional equity shares of Fedfina, constituting up to 45 per cent of the share capital in the company. Read More

Market Check

Index Current Pt. Change % Change
 
S&P BSE SENSEX 34,245.89 -131.10 -0.38
 
S&P BSE SENSEX 50 10,761.43 -37.49 -0.35
 
S&P BSE SENSEX Next 50 29,723.81 -369.32 -1.23
 
S&P BSE 100 10,488.35 -50.14 -0.48
 
S&P BSE Bharat 22 Index 3,213.44 -33.96 -1.05

(Source: BSE)
DHFL skids over 16 percent



Q2FY19 result preview

Profit for our coverage universe excluding volatile components such as commodities and corporate banks is likely to decelerate from 13% YoY in Q1FY19 to -1% YoY in Q2FY19. Barring IT, retail banks and NBFCs, almost all sectors are likely to witness a slowdown in profit growth. The slowdown is more pronounced in domestic auto, which is likely to post flat profit growth (versus 20% average growth over the past four years). Apart from this, growth in cement, pharma and industrials is likely to remain weak (<5%). Export auto, corporate banks, telecom and airlines are likely to report deep profit contraction

(Source: Edelweiss Securities)
Axis Securities on Infosys

·         Strong deal wins in Financial services ( 32% of revenue): Growth is likely to revive from Q2 on the back of strong deal wins in the quarter (USD 446 mn) and continued momentum in tier-II and regional banks
 
·         Margin to gradually improve: Given an array of margin levers on tap (offshore mix, onsite pyramid, stronger growth in high-margin digital business, automation, operating leverage with stronger revenue growth, and INR depreciation), we expect margin performance to gradually improve through the course of the year to the top of the guided range ( 22-24%)
 
·         North America (60% of revenue) to witness broad-based recovery: Management highlighted, growth in Financial Services is likely to pick up on the back of healthy deal wins (USD 446 mn) with strong traction in regional and tier-2 banks. Further, Retail, Energy and Utilities are also seeing strong traction which should drive better growth in FY19.
 
·         Infosys has signed a definitive agreement to acquire Fluido, a Salesforce advisor and consulting partner in Nordics. The acquisition will expand Infosys’ capabilities in key geographies like Finland (Espoo), Denmark (Copenhagen), Sweden (Gothenburg), Norway (Oslo) and Slovakia (Banská Bystrica) for services in Salesforce
 
·         We maintain a BUY with a target of Rs 794.
Russia's VTB Group may bid for the debt-ridden Essar Steel alone
 
Russia's VTB Group is likely to bid alone for the debt-ridden Essar Steel. Earlier the Russian bank was making a plan to take over the company via Numetal Mauritius - which had a Ruia family interest. According to the Supreme Court order, both Numetal and ArcelorMittal will have to first clear all old dues and then bid for Essar Steel. Read More
NEWS ALERT
Rupee breaches 74/$ level for second time
NBFCs under pressure; DHFL, Edelweiss Financial fall over 10%
 
Shares of non-banking financial companies (NBFC) were reeling under pressure falling by up to 11% on the BSE after the Reserve Bank of India (RBI) on Friday said that it will revise NBFC asset-liability norms over borrowing-lending mismatch. Dewan Housing Finance Corporation (DHFL), JM Financial, Edelweiss Financial Services, Centrum Capital, Repco Home Finance, Reliance Home Finance, Aditya Birla Money and Indiabulls Ventures have fallen in the range of 5% to 11% on the BSE in intra-day trade on Monday. In comparison, the S&P BSE Sensex was up 0.37% at 34,502 points at 12:22 pm. Read More
Devangshu Datta Don't rush to invest: Good Q2 results may help improve sentiment

Reflexivity is an idea that George Soros drew from philosophy, and adapted to explain market sentiment. The philosopher Karl Popper used reflexivity to explain feedback loops that influence and reinforce social situations. For example, movies versus real-life.
 
Onscreen behaviour reflects prevailing fashions, social attitudes, musical tastes, etc. But audiences are influenced by what they watch onscreen, and often adopt fashions and behaviour drawn from the pictures. This is an example of reflexivity - movies and real-life influence each other. READ MORE

Two Indian companies to buy Iranian oil in November, says Pradhan
 
Two Indian companies have placed orders to buy Iranian oil in November, oil minister Dharmendra Pradhan said on Monday, adding that India did not yet know if it would be granted a waiver from US sanctions on Iran. Read More
YES Bank gains 5% as bank names experts to look for new managing director
 
Shares of YES Bank have moved higher by 5.5% to Rs 218 on the BSE after the board of private sector lender inducted TS Vijayan, former chairman of Insurance Regulatory and Development Authority of India (IRDAI) and Life Insurance Corporation of India (LIC), and OP Bhatt, former CMD of State Bank of India (SBI), as external experts in the committee. Read More
Q2FY19 preview: NBFCs' medium-term challenges to stay; not yet time for buy
 
Non-banking financial companies (NBFCs) in India or across the globe have a simple business model — borrow from banks or capital markets in the form of non-convertible debentures (NCD) or (commercial papers) CPs or any other financial instruments and lend to end users. While the regulator/nodal agencies like RBI/ NHB (National Housing Bank) also lend to the set of finance companies, a large part of the borrowing has to be done from the markets to meet their business growth. Read More
Market check
Index Current Pt. Change % Change
 
S&P BSE SENSEX 34,525.90 +148.91 +0.43
 
S&P BSE SENSEX 50 10,839.39 +40.47 +0.37
 
S&P BSE SENSEX Next 50 30,180.15 +87.02 +0.29
 
S&P BSE 100 10,576.68 +38.19 +0.36
 
S&P BSE Bharat 22 Index 3,243.77 -3.63 -0.11

New FPI route will appeal to long-term debt investors, says experts
 
The proposed new route for foreign portfolio investor (FPI) debt investments will be appeal to long-term investors and give regulatory authorities a better handle on flows, said experts. The voluntary retention route (VRR) proposed by the Reserve Bank of India (RBI) on Friday does away with regulatory restrictions, that are otherwise applicable, provided FPIs commit to lock-in two-thirds of their investment for a minimum three years.
 
Investments under the new route will be over and above the existing FPI limits set for government and corporate bonds. READ MORE
IL&FS effect: Tighter regulations may force smaller NBFCs to shut
 
The fastest pace of growth since 2013 at India’s non-bank financiers is about to come to a grinding halt
 
A spate of money market defaults by Infrastructure Leasing & Financial Services Ltd. has put the spotlight on non-bank finance companies. With banks struggling with bad loans and low capital buffers, non-bank lenders had rushed to tap demand for long-term financing to build roads, power plants and homes. But these lenders borrowed from the short-term money markets to finance long-term loans, raising the risk of defaults should cash flows take a hit. READ MORE
BSE Auto index hits 21-month low; Bajaj Auto, TVS Motor hit 52-week low
 
Shares of automobile companies continued trading lower with the S&P BSE Auto index hitting the 21-month low on concern of the decline in volumes, on the back of higher product prices and running costs. At 10:38 am; the S&P BSE Auto index was trading 0.52% lower at 19,871, as compared to 0.09% decline in the S&P BSE Sensex. The auto index hit an intra-day low of 19,627, recorded its lowest level since December 27, 2016. Read More
How India lost 'best-performing stock mkt in Asia' tag in less than a month
 
The best-performing stock market in Asia for much of this year has lost that title in less than a month. As the S&P BSE Sensex Index sank into a correction Friday, posting its biggest weekly plunge in more than two years, investors began paying up to hedge against more declines. The cost of bearish NSE Nifty 50 Index options jumped to its highest level since August of last year relative to the price of bullish contracts, data compiled by Bloomberg show. Read More
 
Fuel price cut may dent EBITDA of IOCL, HPCL, BPCL by Rs 65 bn: Moody's
 
The recent cut in petrol and diesel prices by Rs 2.50 by the Centre is estimated to reduce the combined EBITDA margins of IOCL, HPCL and BPCL by Rs 65 billion during current fiscal, rating agency Moody's said Monday. It also said on October 4, the government reduced petrol and diesel retail selling prices by Rs 2.50 per litre, through the lowering of excise duties by Rs 1.50 per litre and asking the country's oil marketing companies (OMCs) to absorb the remaining Rs 1 per litre ($2.1 per barrel) price cut. Read More
OMCs recover after two-day sell-off; HPCL jumps 6%, IOCL, Gail gain 4% each
 
Shares of oil & gas and state-run oil marketing companies (OMCs) rose in the early morning deals on Monday, after witnessing heavy sell-off in the last two trading sessions. At 09:52 am, Hindustan Petroleum Corporation (HPCL) was trading nearly six and a half per cent higher at Rs 176 a piece on BSE while Bharat Petroleum Corporation (BPCL) was trading at Rs 274, up 3.32 per cent. Shares of IndianOil was trading over 4 per cent higher at Rs 123.05. Read More
Aavas Financiers makes weak debut
 
Shares of housing finance company Aavas Financiers has made a weak debut, as the scrip got listed at Rs 750, 9% below its issue price of Rs 821 on the National Stock Exchange (NSE) on Monday.
 
The stock opened 8% lower at Rs 758 on the BSE, It dipped 14% to Rs 710 against its issue price post listing. READ MORE
IL&FS group shares locked in lower circuit
 
Shares of three listed IL&FS group companies are locked in their respective lower circuits on the BSE after the rating agency Brickwork Ratings downgraded the rating for the non-convertible debentures (NCDs).
 
IL&FS Engineering and Constructions (IECCL) and IL&FS Transportation Networks (ITNL) are frozen 10% lower circuits at Rs 22.70 and Rs 27.25, respectively, while IL&FS Investment Managers down 5% at Rs 9.81 on the BSE. There were only sellers seen on these counters. READ MORE
Market check
Index Current Pt. Change % Change
 
S&P BSE SENSEX 34,341.84 -35.15 -0.10
 
S&P BSE SENSEX 50 10,774.47 -24.45 -0.23
 
S&P BSE SENSEX Next 50 29,899.75 -193.38 -0.64
 
S&P BSE 100 10,508.07 -30.42 -0.29
 
S&P BSE Bharat 22 Index 3,245.74 -1.66 -0.05

Interview of the day This is a good time to invest in equity markets: Chandresh Kumar Nigam
 
Rising oil prices and a sliding rupee have rattled the markets over the past few weeks. CHANDRESH KUMAR NIGAM, managing director & chief executive officer, Axis Asset Management Company, tells Puneet Wadhwa that the recent fall presents an opportunity to investors who are yet to invest or have under-invested in equities. Read More
Chandresh Kumar Nigam Managing director & chief executive officer, Axis Asset Management Company

Stick to defensives: Investors should hunt for large-cap funds, say experts
 
It has been a harsh month for stock market investors. With the S&P BSE Sensex shedding over 4,000 points or 11 per cent since hitting the all-time high of 38,896 points in August, and the rupee hitting 74/$, investors would be worried if they were staring at a 2008-like situation. Deven Choksey, MD, K R Choksey, says: “After the mid-cap carnage last fortnight, now the fall has started in large-cap stocks. Read More
Nifty Bank trades flat. YES Bank gains nearly 4%


Sectoral trend on NSE


BSE Sensex opening gainers and losers


Market at open
 
At 9:15 AM, the S&P BSE Sensex was trading at 34,264, down 113 points while the broader Nifty50 was ruling at 10,278, down 38 points.
Market at pre-open

Index Current Pt. Change % Change
 
S&P BSE SENSEX 34,486.85 +109.86 +0.32
 
S&P BSE SENSEX 50 10,826.37 +27.45 +0.25
 
S&P BSE SENSEX Next 50 30,118.47 +25.34 +0.08
 
S&P BSE 100 10,562.63 +24.14 +0.23
 
S&P BSE Bharat 22 Index 3,265.72 +18.32 +0.56

(Source: BSE)
Rupee Alert

Rupee opens largely flat at 73.79 against the US dollar
Commodity picks: October 7, 2018

Chana
 
Chana prices at Bikaner are trading at Rs 4,220 per quintal and for the week ahead prices are expected to head towards Rs4,300 a quintal. Low availability in open market, upcoming festive demand for dal and besan would keep demand firm from millers. READ MORE

Nifty outlook by Devang Shah
 
Short-term outlook for the market remains negative till Nifty trades below 11,603 levels and expecting targets in the range of 9,950-10,000 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 9,951 levels and expecting targets in the range of 12,500-12,800 levels in medium term. READ MORE
RBI keeps policy rates unchanged, shifts stance to 'calibrated tightening'
 
The Reserve Bank of India (RBI) on Friday surprised the markets by keeping the policy rates unchanged even as it shifted its stance to “calibrated tightening”. The central bank indicated it was in no mood to stop the rupee slide in order to improve the country’s export competitiveness. Read More
Rupee slumps to all-time low of 73.76 as RBI holds rate
 
The rupee slidded by 18 paise to finish at a fresh lifetime low of 73.76 against the US dollar on October 5 after the RBI unexpectedly kept the policy rate unchanged. The domestic unit crashed below the 74-mark for the first time ever in intra-day trade on persistent capital outflows and high crude oil prices.
 
It recovered to a high of 73.42, but failed to sustain the momentum and plunged to 74.23 after RBI's policy announcement. It finally closed at 73.76, down by 18 paise or 0.24 per cent, marking its fourth straight session of decline.
Oil Check
 
Brent crude oil prices fell by more than 1 per cent on Monday after Washington said it may grant waivers to sanctions against Iran’s oil exports next month, and as Saudi Arabia was said to be replacing any potential shortfall from Iran.
 
International benchmark Brent crude oil futures were at $83.25 per barrel, down 91 cents, or 1.1 per cent, from their last close. US West Texas Intermediate (WTI) crude futures were down 57 cents, or 0.8 per cent, at $73.77 a barrel.
SGX Nifty
 
Trends on SGX Nifty indicate a negative opening for the broader index in India, a fall of 17.5 points or 0.17 per cent. Nifty futures were trading around 10,282-level on the Singaporean Exchange.
Asia Check
 
Shares in Asia stumbled in early trade on Monday as investors waited with bated breath as China’s markets prepare to reopen following a week-long holiday and after its central bank cut banks’ reserve requirements in a bid to support growth.
 
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent, after major stock markets around the world fell for a second straight day on Friday. Australian shares were down 1 per cent. Markets in Japan are closed for a holiday.
Wall Street falls as solid jobs report boosts bond yields
 
US stocks dropped for a second straight day on Friday, weighed down by another rise in Treasury yields in the wake of a solid jobs report that capped off a week of robust data.
 
The Dow Jones Industrial Average fell 180.43 points, or 0.68 per cent, to 26,447.05, the S&P 500 lost 16.04 points, or 0.55 per cent, to 2,885.57 and the Nasdaq Composite dropped 91.06 points, or 1.16 per cent, to 7,788.45.
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