MARKET WRAP: Sensex ends 140 pts down, FMCG stocks slip; Rupee hits new low

Markets, Stocks, BSE, NSE
The benchmark indices settled lower as investors stayed cautious due to sliding rupee, surging bond yields, and oil prices.

The S&P BSE Sensex ended at 38,018, down 140 points while the broader Nifty50 index settled at 11,477, down 43 points.

Earlier in the day, the rupee pared its initial gains to drop to a fresh all-time low of 71.97 against the US dollar in intra-day deals.

Among key stocks, Reliance Industries (RIL) fell around 1.5 per cent at Rs 1,224 levels and was among the top Sensex losers.

FMCG stocks weak

In sectors, the Nifty FMCG index slipped 0.9 per cent, weighed by fall in Godrej Consumer Products and Hindustan Unilever (HUL), which lost 2.7 per cent to end the day at Rs 1,606 levels.

While most analysts believe the fundamentals of FMCG stocks continue to be strong, the concern is largely on absolute valuations and the premium the sector gets, as compared to the broader markets. READ MORE HERE

India's services growth slows in August

India's dominant services sector expanded at a slower pace last month than in July as weaker demand and rising input costs kept a lid on hiring, a private survey showed on Wednesday.

The Nikkei/IHS Markit Services Purchasing Managers' Index (PMI) declined to 51.5 in August from a 21-month high of 54.2 in July.

Global Markets

Stock markets fell in Asia on Wednesday and the safe-haven dollar hovered near a two-week high as heightened worries over international trade conflicts and emerging market weakness curbed investors' appetite for riskier assets.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 1 per cent, hitting a two-week trough. Japan's Nikkei shed 0.25 per cent. The Shanghai Composite Index retreated 0.9 per cent, weighed down by expectations the United States will impose more tariffs on Chinese goods this month, adding to pressure on China's cooling economy.

(with wire inputs)

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Nifty FMCG index ends 0.87% lower. Top losers:

GODREJ CONSUMER 1350.05 1399.15 -49.10 -3.51
GLAXOSMITH C H L 7250.10 7499.45 -249.35 -3.32
HIND. UNILEVER 1606.25 1651.20 -44.95 -2.72
BRITANNIA INDS. 6196.50 6344.05 -147.55 -2.33
GODREJ INDS. 603.00 612.15 -9.15 -1.49

Nifty sectoral gainers and losers of the day

BSE Sensex: HUL, RIL among top losers of the day, YES Bank top gainer

Market at close

The S&P BSE Sensex ended at 38,018, down 140 points while the broader Nifty50 index settled at 11,477, down 43 points.
Reliance Infra rallies 6% as CRISIL changes ratings for NCDs

Shares of Reliance Infrastructure have moved 6% higher to Rs 479 on the BSE, after the company said the rating agency Crisil withdrawn its ‘D’ rating for non-convertible debentures (NCDs) worth of Rs 7.10 billion.
The company has repaid the NCDs from the funds received from the sale of Integrated Mumbai Distribution Business to Adani Transmission. READ MORE

Financial crisis explained: How greedy US banks crippled world economy

It has been 10 years since the Lehman Brothers shut shop. People who faced the global recession at that time say it was not their fault and still had to leave their homes. The housing market in the USA crashed and the whole world's economy went for a toss. Three million people in the US lost their jobs and five million lost their homes. But, how did it all happen? READ HERE
Lehman Brothers (Photo: Reuters)

Motilal Oswal Research on MAS Financial Services (MASFIN)

We believe MASFIN has all the ingredients of a good investment: (a) a small base and presence in well-developed states for strong growth, (b) relentless management focus on generating sustainable, high return ratios, (c) healthy capitalization and d) consistent and healthy asset quality, despite catering to the lower end of the socio-economic customer segment. We maintain our estimates for FY19/20 and reiterate Buy with a target price of Rs 780 (24x Jun’20E EPS, implied 4.3x Jun’20E BV).
Economists expect RBI to hike rates in Oct policy as rupee fall continues

With the continued fall in the rupee, economists and bond market participants expect the Reserve Bank of India (RBI) to hike rates in its October policy. The rupee closed at 71.57 a dollar, down from its previous record close of 71.18. Other emerging markets currencies also fell against the dollar. READ MORE

COMMENT Nomura on rupee

•  A deteriorating EM risk backdrop and pressure on current account deficit currencies has led USD/INR to multi-year highs. We see risk of continued INR depreciation in the near term and enter a short-dated long USD/ INR call spread position.
•  Local factors for depreciation include limited intervention by the Reserve Bank of India (RBI) and limited concerns, in our view, over FX depreciation (watch this space), a lack of urgency to hike rates, rising political risks, and a large trade deficit with a higher oil price and portfolio outflows.
•  However, there are reasons to expect INR depreciation to be controlled, given the substantial space for policy action by the RBI and government (if desired). Option positioning risk (selling of high strike INR puts) is also less of an RBI concern, while the dual deficits are a drag on INR, but have become less so over the past five years.
Stock view: Balkrishna Industries

The Board of Directors of Balkrishna Industries (BIL) has approved a capex outlay of Rs 1,700 crore, which will be completed over 30 months. Incorporating the revised capex outlay disclosed by the company and consequent decline in other income, we change our PAT estimates for FY18-20E. We now expect BIL to clock PAT CAGR of 24.4% vs. 30.3% in the past. We also reduce our valuation multiple, to value BIL at 21x P/E on FY20E EPS of Rs 59.2 and assign a target price of Rs 1250 with a HOLD rating on the stock.
(Source: ICICI Securities)
Amazon follows Apple Inc, hits $1 trillion market value milestone Inc on Tuesday became the second US company to reach $1 trillion in stock market value, just weeks after Apple Inc hit the same milestone on Aug 2.
Shares in the world's largest online retailer last traded up 1.4 per cent at $2,041.68. Its shares hit the $2050.2677 level to give its stock a value of $1 trillion. READ MORE
News rover

Centrum Financial Services Ltd, the NBFC arm of the Centrum Group, a leading domestic integrated financial services organisation, signed an agreement to acquire L&T Finance’s Supply Chain Finance business. The business has a loan book of approximately Rs. 800 crore, a staff strength of 50 professionals and operates out of 16 cities in India. L&T Finance Ltd. is a subsidiary of L&T Finance Holdings Ltd
Edelweiss on road construction sector

While FY18 marked stellar NHAI project awards (up ~100% by value), our recent meeting with the authority indicates FY19 may be a period of consolidation. While 84 out of the 104 hybrid annuity (HAM) projects awarded till date have achieved financial closure, banks/developers’ limited ability to absorb incremental HAM projects means EPC may be the preferred mode of project awards in FY19. NHAI is targeting FY19 spend of ~INR1.1tn, up 32%.

Factors such as upcoming elections and limited appetite for HAM projects are likely to limit FY19 project award to 4,000–5,000km (versus ~7,400km in FY18), in our view. That said, our analysis reveals reasonable revenue visibility for FY21 even after assuming conservative order inflows for FY19/20. Developers with strong financial health such as Sadbhav Engineering, KNR Constructions and Ashoka Buildcon remain the best plays on the Indian road space in our view.
Top losers in BSE Sensex:

HIND. UNILEVER 1601.20 1651.40 -50.20 -3.04
TATA MOTORS-DVR 139.00 142.65 -3.65 -2.56
BHARTI AIRTEL 368.55 377.75 -9.20 -2.44
KOTAK MAH. BANK 1236.00 1259.70 -23.70 -1.88
TATA MOTORS 257.15 262.05 -4.90 -1.87

Nifty FMCG index down over 1%

Bharat Electronics, Vodafone Idea, Force Motors, IndiGo hit 52-week lows

Shares of Bharat Electronics (BEL), Vodafone Idea, Force Motors, Castrol India, InterGlobe Aviation (IndiGo) and Tata Communications have hit their respective 52-week lows on the BSE as the benchmark indices are trading lower for the sixth trading days. READ MORE

Market Check

Index Current Pt. Change % Change
S&P BSE SENSEX 37,830.76 -327.16 -0.86
S&P BSE SENSEX 50 11,947.25 -114.45 -0.95
S&P BSE SENSEX Next 50 33,866.79 -433.85 -1.26
S&P BSE 100 11,688.69 -117.63 -1.00
S&P BSE Bharat 22 Index 3,625.41 -34.40 -0.94

(Source: BSE)
US, European banks divided over 'high-risk jurisdiction' list of nations

Global custodians are at loggerheads among themselves over preparing a list of nations that should be classified as “high-risk jurisdictions”. Sources said US-based banks had pushed for the inclusion of Mauritius in the list, but a few European ones are opposed to it. READ MORE

Top losers in BSE 500:

BHARAT ELECTRON 93.95 -15.10 -13.85
SHANKARA BUILD. 1451.20 -105.90 -6.80
ENGINEERS INDIA 124.35 -8.55 -6.43
M & M FIN. SERV. 440.30 -25.70 -5.52
ANDHRA BANK 30.70 -1.70 -5.25
» More on Top Losers
Global financial crisis: How US housing industry went bust, shattered lives

“It is not what you don’t know that gets you into trouble. It is what you know for sure that just ain't so.” Though the author of the quote is still unknown, there is nothing better than this to define the global financial crisis of 2008. READ MORE
Zydus Cadila gets USFDA nod to sell herpes viruses treatment drug

Drug firm Zydus Cadila Wednesday said it has received final approval from the US health regulator to market Acyclovir injecion, used to treat infections caused by herpes viruses, in the US market.

The stock of Cadila Healthcare was trading 1.18 per cent higher at Rs 396.90 apiece on the BSE. READ MORE

NEWS ALERT Rupee slips to new low of 71.94 per dollar
Merck falls 14% in two days after CCI nod for acquisition by P&G

Shares of Merck were locked in the lower circuit for the second straight day, down 5% at Rs 3,064 per share on the BSE, after the Competition Commission of India (CCI) approved the acquisition of 51.8% stake in the company by Procter and Gamble Overseas. READ MORE

Beneficial ownership norms: Centre, Sebi assuage FPI outflow concerns

The government and the Securities and Exchange Board of India (Sebi) on Tuesday assuaged fears of capital outflows from the country on account of the new beneficial ownership norms for foreign portfolio investors (FPIs). Economic Affairs Secretary SC Garg said there was nothing new in the Sebi circular of April 10. READ MORE

India's services growth slows in August on weaker demand, rising input prices

India's dominant services sector expanded at a slower pace last month than in July as weaker demand and rising input costs kept a lid on hiring, a private survey showed on Wednesday.
The Nikkei/IHS Markit Services Purchasing Managers' Index declined to 51.5 in August from a 21-month high of 54.2 in July. READ MORE

Market at Noon

Index Current Pt. Change % Change
S&P BSE SENSEX 38,025.56 -132.36 -0.35
S&P BSE SENSEX 50 12,009.30 -52.40 -0.43
S&P BSE SENSEX Next 50 33,976.04 -324.60 -0.95
S&P BSE 100 11,745.87 -60.45 -0.51
S&P BSE Bharat 22 Index 3,641.32 -18.49 -0.51

(Source: BSE)
The worst is not yet over for rupee, global headwinds to inflict more pain
India’s rupee owes its tag of Asia’s worst-performing currency this year to the selloff sweeping emerging markets. There’s more pain in store from beyond its borders.
While foreign currency debt has zoomed, various external vulnerability indicators paint a rather mixed picture, according to the Reserve Bank of India’s annual report. Indeed, data due as early as next week will probably show the nation’s current-account deficit widened in the June quarter to 2.6 per cent of gross domestic product, the highest in 4 1/2 years. READ MORE

Sical Logistics surges 14% on fund raising plan through preferential issue
Shares of Sical Logistics surged 14% to Rs 191 on the BSE on back of heavy volumes after the company announced fund raising plan through preferential issue.
“A meeting of the board of directors of the company will be held on September 7, 2018, to consider raising funds through issue of equity shares on a preferential basis, subject to the approval from shareholders and regulatory approvals,” Sical Logistics said in a statement. READ MORE
Sebi imposes Rs 7.45 million fine on 48 entities for fraudulent trading
Markets regulator Sebi has slapped a total fine of Rs 7.45 million on 48 entities for fraudulent trading in the shares of Vandana Knitwear. The entities have been fined for violating PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.
An investigation was conducted into the alleged irregularities in trading in the scrip of Knitwear from March to December 2012. It was found that the entities who are connected to each other executed repetitive on-market and off-market transactions amongst themselves. READ MORE
Nifty Realty index down over 1%

FMCG stocks: Fundamentals continue to be strong, but valuations too high
The BSE Fast-Moving Consumer Durables (FMCG) index fell 4.2 per cent in the last two sessions, on worries that valuations for the sector that has had a good run so far are in the bubble territory. The FMCG index surged over 19 per cent in 2018 (till August), outpacing the 13.5 per cent rise in the Sensex.
While most analysts believe the fundamentals continue to be strong, the concern is largely on absolute valuations and the premium the sector gets, as compared to the broader markets. READ MORE
LIC may seek Sebi exemption for open offer to IDBI Bank shareholders
The government hinted on Tuesday that Life Insurance Corporation might seek an exemption from the Securities and Exchange Board of India (Sebi) from making an open offer to the minority shareholders of state-owned IDBI Bank, in which the insurer is set to buy a 51 per cent stake.
“They (LIC) are exploring an open offer. It will either be exemption, otherwise an open offer,” Subhash Chandra Garg, secretary, Department of Economic Affairs, who is also a member on the LIC board, told reporters. READ MORE
RUPEE ALERT Rupee hits fresh low of Rs 71.74 against US dollar
Muthoot Finance gains 6% post Q1 results
Muthoot Finance was trading higher by 6% at Rs 424 on the BSE in an otherwise weak market after the company reported a 43% year on year growth in net profit at Rs 4.92 billion during the quarter ended June 30, 2018 (Q1FY19). The non-banking finance company had a profit of Rs 3.45 billion during the same quarter of previous year. READ MORE
Market Check

Index Current Pt. Change % Change
S&P BSE SENSEX 38,127.87 -30.05 -0.08
S&P BSE SENSEX 50 12,044.18 -17.52 -0.15
S&P BSE SENSEX Next 50 34,159.37 -141.27 -0.41
S&P BSE 100 11,784.52 -21.80 -0.18
S&P BSE Bharat 22 Index 3,646.16 -13.65 -0.37

Infosys investors selling shares may have to shell out 4-5 times higher tax
Investors offloading shares of Infosys following allotment of bonus shares will have to pay four to five times higher tax than what they would have if they had sold the shares before the record date. At its meeting held on July 13, Infosys’ board had recommended a bonus issue of one equity share for every equity share held (1:1) on the record date of September 5.
The issue of bonus shares was to celebrate the 25th year of the company’s public listing in India and to improve liquidity. READ MORE

Interview of the day Rupee fall a boon for IT and pharma stocks, says Saurabh Mukherjea
The sharp slide in the rupee will benefit stocks in export-oriented sectors such as information technology (IT) and pharmaceuticals, said Saurabh Mukherjea, founder of Marcellus Investment Managers. In an interview with Samie Modak during the CFA Society India’s third India Wealth Management conference, Mukherjea explains why the markets are set for an interesting nine months. Read full interview here

Nifty sectoral trend

BSE Sensex opening gainers and losers

Market at open
At 9:15 AM, the S&P BSE Sensex was trading at 38,181, up 23 points while the broader Nifty50 was ruling at 11,523, up 2 points.
Market outlook by Nirmal Bang

Nifty is expected to open on slightly negative note and likely to selling pressure during the day. Nifty is facing a resistance of 11600-11640 levels whereas support lies at 11470-11440 levels. If Nifty fails to sustain the support levels then we may witness the extension of the selling pressure towards 11400/11370 levels
Currency strategy by Motilal Oswal

Antique Stock Broking on Mahindra & Mahindra

We believe MM's auto segment is on the cusp of a major transformation, with high probability of getting its product learning right with upcoming launches. Company's farm equipment division has been pioneer in the industry in terms of innovation/launches and profitability.

We maintain a Buy rating, with a SOTP-based target price of Rs1,057 (valuing the core automotive business to 15x FY20e EPS), as we believe earnings momentum is likely to be sustained with more upgrades from the street expected. Looking at MM's overall business strategy (in both automotive and farm equipment segments), we believe it is on the path of strong and secular growth trajectory for next few years
F&O watch

Nifty index futures closed 0.59% lower at 11573.1 on Tuesday. Open interest addition was restricted to 74 thousand contracts while premium slipped marginally from 59.4 to 52.8. Nifty Call options continued to accumulate more positions compared to Put options and open interest addition was seen at 5% and 3% respectively, thus inducing a dip in PCR OI from 1.48 to 1.45. Volatility index continued its sharp rise and VIX closed at 13.78 compared to previous day's 13.39.

(Source: Geojit Financial)
RUPEE ALERT Rupee opens firm, up 14 paise at 71.41/$
Markets at pre-open

Index Current Pt. Change % Change
S&P BSE SENSEX 38,243.30 +85.38 +0.22
S&P BSE SENSEX 50 12,085.20 +23.50 +0.19
S&P BSE SENSEX Next 50 34,329.57 +28.93 +0.08
S&P BSE 100 11,827.30 +20.98 +0.18
S&P BSE Bharat 22 Index 3,663.89 +4.08 +0.11

TOP STORY OF THE DAY Shivinder Singh snaps ties with brother Malvinder, drags him to NCLT

The Singh brothers have been trying hard to maintain a public display of harmony for a long time. The cookie finally crumbled late Tuesday, with younger brother Shivinder, former Fortis Healthcare promoter, moving the National Company Law Tribunal (NCLT), accusing his elder brother, Malvinder, of “oppression” and mismanagement of RHC Holding, Religare and Fortis CLICK HERE FOR MORE

Shivinder Singh (left) with Malvinder Singh (right)

Centrum Broking recommends Dalmia Bharat

We initiate coverage on Dalmia Bharat (DBEL) – India’s 5th largest cement company  – with a BUY recommendation and target price of Rs3,300/share. We like DBEL for its leadership presence in the high growth east/north-east/south markets. Further, DBEL has kept its capital lean owing to prudent capex discipline. The company has been delivering industry leading profitability benefiting from its distribution and cost focus strategies. As DBEL is expected to become top-3 producer over next 3-4 years from top-5 currently, we estimate its superior profitability to sustain, leverage ratios to improve further and return ratios to strengthen
Edelweiss on Shankara Building Projects

Shankara delivered strong topline growth but margins were subdued. Sales at INR 785 cr grew by 33% YoY and were ahead of our expectations of a 24% growth YoY. The growth was driven by both the retail and the channel and enterprise segment. EBITDA at Rs 49 cr was up by 25% YoY and this was in line with estimates. EBITDA margins fell by 40 bps from 6.6% in Q1FY18 to 6.2% in Q1FY19 and this was below our expectations of a margin improvement to 7%. Reported PAT of Rs 19 Cr grew 11% YoY and was below our estimates
MARKET COMMENT Hemang Jani, Head - Advisory, Sharekhan by BNP Paribas

Indian shares closed on negative note on Tuesday as investors fretted about a weakening rupee, higher oil prices and SEBI's new rules barring non-resident Indians from controlling foreign fund. Global cues such as concerns about escalating US-China trade war and emergency austerity measures in Argentina also kept global investor nervous.

The long-term outlook for the Indian market continues to look good with Indian economy growing at 8.2% beating analyst expectations and Q1 FY19 numbers seeing some revival. We like certain private sector banks and feel that the major part of the NPA mess is behind us and are positive that credit growth will pick up in the coming quarters. HDFC Bank and RBL Bank remain some of our preferred picks in the banking space.
Today's picks
Current price: Rs 250
Target price: Rs 245
Keep a stop at Rs 252 and go short. Add to the position between Rs 246 and Rs 247. Book profits at Rs 245.
Adani Ports 
Current price: Rs 374
Target price: Rs 368
Keep a stop at Rs 378 and go short. Add to the position between Rs 370 and Rs 371. Book profits at Rs 368.

Click here for more
MARKET COMMENT Amar Ambani, head of research, IIFL

Investors acknowledge that the market is one of the best teachers and the developments these days are getting hard to comprehend. High crude prices, weak rupee and the resultant widening current account deficit weighed on market sentiment on Tuesday. The rupee fell for the fifth day in a row and touched a lifetime low against the dollar at 71.58. There was selling across sectors, barring IT. TCS hit a market capitalisation of Rs8 trillion again as it continues to race with Reliance to top the market cap rankings.

Meanwhile, Amazon's market value hit the USD 1 trillion mark briefly - the second company to do so after Apple. The outlook is a flat start with a negative bias. Wall Street ended lower with Facebook and Nike seeing pressure. Asian markets are trading lower. Oil prices fell as concerns over a hurricane impact on US oil production eased
Top trading ideas by Prabhudas Lilladher:
CMP: Rs 641.80
TARGET: Rs 690
The stock has indicated almost a higher bottom formation pattern in the daily chart taking support at around 620 levels and looks promising for an upside move in the coming days. The stock has indicated a positive candle to signify strength and has potential to carry on the momentum still further upside. With good volume participation witnessed, we recommend a buy in this stock for an upside target of 690 keeping a stop loss of 610.
Nifty view by Prabhudas Lilladher
Nifty continues to slide but as of now has taken support at 34WMA with RSI now at 54 levels implying further corrective move. The support for the day is seen at 37,920/11,450 while resistance is seen at 38,380/11,580. Bank Nifty would have a range of 27,180-27,670. Most of the frontline stocks from FMCG, Metals etc, except for Tech stocks witnessed corrective move. RIL too has held the market along with Axis Bank. Pharma sector needs to stabilize for the next round of momentum. Overall we maintain a cautious view.
Top trading ideas by Religare Broking for today:
Oil & Natural Gas Corporation
Last Close: Rs 174.05
Initiation range: Rs 176-178
Target: Rs 164
Stop loss: Rs 182
After retesting its monthly support zone around 150, ONGC has witnessed a decent recovery in the last two months but failed to cross the major resistance around 180, resulting in the formation of a fresh shorting pivot. We advise creating fresh shorts in the given range.
Amazon hits $1 tn market value milestone on Tuesday became the second US company to reach $1 trillion in stock market value, just weeks after Apple Inc hit the same milestone on Aug 2. Shares in the world's largest online retailer last traded up 1.4 per cent at $2,041.68. Its shares hit the $2050.2677 level to give its stock a value of $1 trillion.

Rupee closes at fresh record low of 71.58/$
The Indian rupee managed to end at a fresh record low of 71.58 per US dollar on Tuesday, owing to concerns on high crude prices and wariness among FPI investors for KYC norms. The currency had staged a recovery to trade positively around 71.19 per dollar range, after hitting a record low of 71.37 in the early trade on Tuesday.
SGX Nifty
Trends on SGX Nifty indicate a negative opening for the broader index in India, a fall of 22.5 points or 0.19 per cent. Nifty futures were trading around 11,560-level on the Singaporean Exchange.
Oil prices drop as storm threat eases on US Gulf coast
Oil prices fell on Wednesday, partly reversing a strong jump from the previous day, as the impact of a tropical storm on US Gulf coast production was not as strong as initially expected. US West Texas Intermediate (WTI) crude futures were at $69.34 per barrel at 0036 GMT, down 53 cents, or 0.8 per cent, from their last settlement. International Brent crude futures fell 34 cents, or 0.4 per cent, to $77.83 a barrel.
Asian markets follow global peers, trades lower
Asian stocks tracked their global peers lower while the safe-haven dollar was broadly higher on Wednesday as worries over persistent trade conflicts curbed investor appetite for riskier assets. 
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent. Australian stocks lost 0.4 per cent, South Korea's KOSPI dropped 0.3 per cent and Japan's Nikkei shed 0.25 per cent.
US markets end lower
US stocks fell on Tuesday as trade concerns lingered and declines in Facebook and Nike shares weighed on Wall Street’s major indexes, though data showing US manufacturing activity accelerated in August kept losses in check. 
The Dow Jones Industrial Average fell 12.34 points, or 0.05 per cent, to 25,952.48, the S&P 500 lost 4.8 points, or 0.17 per cent, to 2,896.72 and the Nasdaq Composite dropped 18.29 points, or 0.23 per cent, to 8,091.25.
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