MARKET WRAP: Indices end flat even as RBI cuts repo rate by 25 bps to 6.25%

Photo: iStock
The benchmark indices settled on a flat note on Thursday even as the Reserve Bank of India (RBI) cut the repo rate by 25 basis points (bps) to 6.25 per cent in its bi-monthly monetary policy meeting.

The S&P BSE Sensex ended at 36,971, down 4 points or 0.01 per cent, while the broader Nifty50 index settled at 11,069, up 7 points or 0.06 per cent.

Among sectoral indices, the Nifty Auto index ended nearly 2 per cent higher led by gains in the share prices of Ashok Leyland and Apollo Tyres.

The broader market indices outperformed their frontline peers. The S&P BSE MidCap index ended 106 points or 0.74 per cent higher at 14,532, while S&P BSE SmallCap index settled at 13,778, up 110 points or 0.81 per cent.

RBI cuts repo rate by 25 bps

RBI, in its last bi-monthly monetary policy meeting of FY19, cut the repo rate by 25 bps to 6.25 per cent. The central bank also changed its monetary policy stance from "calibrated tightening" to "neutral". It adjusted the reverse repo rate to 6 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.5 per cent.

Monetary Policy Committee (MPC) voted 4-2 in favor of rate cut. 2 MPC members Chetan Ghate and Viral Acharya were for status-quo in rates; decision on changing stance to neutral was unanimous, the central bank said.

"These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth." the central bank said in its policy statement.

GDP projection for 2019-20 is projected at 7.4 per cent, the RBI said adding that the inflation rate was estimated at 3.2-3.4 per cent in the first half of the year 2019-20 and 3.9 per cent in the third quarter of 2019-20.

Buzzing Stocks

Shares of automobile companies rose up to 7 per cent on the National Stock Exchange (NSE), after the Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) in its sixth bi-monthly monetary policy meeting on Thursday cut the repo rate by 25 bps to 6.25 per cent from 6.50 per cent, earlier.

Shares of Manappuram Finance settled 7.79 per cent higher at Rs 104.45 and that of Muthoot Finance ended 6.61 per cent higher at Rs 517 on Thursday on back of heavy volumes after these companies reported a strong set of numbers for the quarter ended December 2018 (Q3FY19).

(with wire inputs)


3:57 PM IST Market turned volatile after the announcement of RBIs monetary policy as investors started booking profit from the recent rally. Market has gained well in the last one week by 5% while 10,950 – 10,850 will be the immediate support. The change in stance to neutral was in-line with expectation but rate cut was a surprise. Benign inflation outlook and possibility of further ease in key rates will help to revive credit growth which is positive for rate sensitive stocks

3:44 PM IST

3:36 PM IST

3:34 PM IST The S&P BSE Sensex ended at 36,971, down 4 points or 0.01 per cent, while the broader Nifty50 index settled at 11,069, up 7 points or 0.06 per cent.

3:16 PM IST

3:02 PM IST

2:49 PM IST Shares of Manappuram Finance and Muthoot Finance have rallied by up to 9 per cent on Thursday on back of heavy volumes after these companies reported a strong set of numbers for the quarter ended December 2018 (Q3FY19). Manappuram Finance soared 9 per cent to Rs 105 after it reported a 43 per cent year-on-year (YoY) growth in consolidated net profit at Rs 245 crore for December 2018 quarter (Q3FY19). The non-banking housing finance company (NBFC) had a profit of Rs 171 crore in a year ago quarter. READ MORE  

2:29 PM IST The decision to lower rates by 25 basis points (bps) does come as a surprise though the change in stance was on expected lines. Quite clearly, the Reserve Bank of India (RBI) and the Monetary Policy Committee (MPC) have decided to provide the final push to demand at the end of the fiscal by lowering rates. As four members have voted in favour, this is quite significant as it does indicate that this stance will continue in the new fiscal as well. READ MORE  

2:15 PM IST Repo rate cut will feed into key benchmark rates and the new lending norms for retail borrowers that becomes operational from 1st April 2019. This will boost retail demand for both housing and auto loans, which are in a majority of the cases priced on a floater basis. FPI limits for corporate bonds have been increased and External Borrowing conditionalities have been relaxed. This should serve to address to some extent the current funding distress faced by some of the NBFCs.

2:01 PM IST The reduction in Repo and Reverse Repo rates by the RBI by 25 bps is a welcome move, which we hope will provide a further fillip to the demand side for real estate. As a result of this reduction, we hope that banks will pass on the benefits of the revised rates to the end consumer of loans, thereby making it easier for them to make their purchase decision. For a sector which has been suffering from poor end user demand for some time now, this is a step in the right direction.

1:59 PM IST RBI’s decision to reduce the repo rate by 25 basis point from 6.5% to 6.25% and change of stance to ‘Neutral’ will give a boost to the economy, lead to affordable credit for small businesses, homebuyers etc. and further boost employment opportunities — Piyush Goyal (@PiyushGoyal) February 7, 2019

1:53 PM IST Adani Enterpries Q3 net profit at Rs 92.25 crore vs Rs 172.03 crores on QoQ 

LIVE UPDATES

MARKET COMMENT :: Vinod Nair, Head of Research, Geojit Financial Services

Market turned volatile after the announcement of RBIs monetary policy as investors started booking profit from the recent rally. Market has gained well in the last one week by 5% while 10,950 – 10,850 will be the immediate support. The change in stance to neutral was in-line with expectation but rate cut was a surprise. Benign inflation outlook and possibility of further ease in key rates will help to revive credit growth which is positive for rate sensitive stocks

Sectoral gainers and losers of the day on NSE


Gainers and losers of the day on S&P BSE Sensex


Market at close

The S&P BSE Sensex ended at 36,971, down 4 points or 0.01 per cent, while the broader Nifty50 index settled at 11,069, up 7 points or 0.06 per cent.

Nifty Auto index is trading over 2% higher


Top gainers and losers on S&P BSE Sensex


Manappuram, Muthoot Finance rally up to 9% post Q3 result, RBI policy

Shares of Manappuram Finance and Muthoot Finance have rallied by up to 9 per cent on Thursday on back of heavy volumes after these companies reported a strong set of numbers for the quarter ended December 2018 (Q3FY19). Manappuram Finance soared 9 per cent to Rs 105 after it reported a 43 per cent year-on-year (YoY) growth in consolidated net profit at Rs 245 crore for December 2018 quarter (Q3FY19). The non-banking housing finance company (NBFC) had a profit of Rs 171 crore in a year ago quarter. READ MORE
 

RBI's new market-friendly policy indicates there could be more cuts ahead

The decision to lower rates by 25 basis points (bps) does come as a surprise though the change in stance was on expected lines. Quite clearly, the Reserve Bank of India (RBI) and the Monetary Policy Committee (MPC) have decided to provide the final push to demand at the end of the fiscal by lowering rates. As four members have voted in favour, this is quite significant as it does indicate that this stance will continue in the new fiscal as well. READ MORE
 

COMMENT ON RBI POLICY: RK Gurumurthy, Head – Treasury, Lakshmi Vilas Bank

Repo rate cut will feed into key benchmark rates and the new lending norms for retail borrowers that becomes operational from 1st April 2019. This will boost retail demand for both housing and auto loans, which are in a majority of the cases priced on a floater basis. FPI limits for corporate bonds have been increased and External Borrowing conditionalities have been relaxed. This should serve to address to some extent the current funding distress faced by some of the NBFCs.

COMMENT ON RBI POLICY: Shishir Baijal, Chairman & Managing Director, Knight Frank

The reduction in Repo and Reverse Repo rates by the RBI by 25 bps is a welcome move, which we hope will provide a further fillip to the demand side for real estate. As a result of this reduction, we hope that banks will pass on the benefits of the revised rates to the end consumer of loans, thereby making it easier for them to make their purchase decision. For a sector which has been suffering from poor end user demand for some time now, this is a step in the right direction.

Piyush Goyal on RBI rate cut

NEWS ALERT

Adani Enterpries Q3 net profit at Rs 92.25 crore vs Rs 172.03 crores on QoQ 

ADAG stocks continue to fall; RInfra, RCom tank over 50% in four days

Shares of Anil Dhirubhai Ambani Group (ADAG) companies are under pressure yet again today. Reliance Infrastructure (RInfra), Reliance Communications (RCom) and Reliance Power (RPower) have lost over 50 per cent in past four trading days on the BSE.
 
Reliance Capital, Reliance Home Finance and Reliance Naval and Engineering (R-Naval) were down between 33 per cent and 35 per cent. Reliance Nippon Life Asset Management, however, bucked the trend and gained 12 per cent during the period. In comparison, the S&P BSE Sensex has moved up 1.7 per cent thus far in the week. READ MORE

Nomura on RBI Policy outcome

The MPC’s U-turn – from ‘calibrated tightening’ in December (which effectively rules out a rate cut) to a decision to cut rates in February – is a surprise. We expected a rate cut later this year, but the front-ended delivery was a surprise, even relative to our expectations. The RBI has seen through the expansionary budget, as well as sticky core inflation, and viewed the recent softness in inflation prints as “open[ing] up space for policy action”.

On growth, the RBI continues to sound optimistic, in contrast to our assessment that weak global growth, the lagged impact of tighter financial conditions and domestic political uncertainty will trigger a cyclical slowdown. Interestingly, the MPC also notes that “actual output has inched lower than potential”. We are reviewing our call on the policy rate trajectory, but the governor’s statement that “there is room to act” clearly suggests this is not a one and done cut

Top gainers on BSE500

COMPANY PRICE(rupees) CHG(rupees) CHG(%) VOLUME
ASTRAZENECA PHAR 1773.45 167.35 10.42 15031
VODAFONE IDEA 32.50 2.70 9.06 3079269
CG POWER & INDU. 35.40 2.90 8.92 931865
BOMBAY DYEING 112.80 8.80 8.46 684227
MEGHMANI ORGAN. 48.25 3.55 7.94 154496
» More on Top Gainers

Reserve Bank turns dovish, cuts repo rate to 6.25%: Key takeaways

The Reserve Bank of India (RBI) in its first policy meet under the new RBI chief Shaktikanta Das, decided to cut the repo rate by 25 basis points (bps) or 0.25 per cent to 6.25 per cent on Thursday. In line with expectations, the monetary policy committee (MPC) members also unanimously voted to change the policy stance to neutral whereas rate cut was voted 4-2. RBI Deputy Governor, Viral Acharya voted to keep the interest rates unchanged.
 
Gaurav Dua, Head of Research at Sharekhan by BNP Paribas, said the change in stance to “Neutral” and dovish commentary open doors for further rate cuts going ahead. The monetary policy support along with the fiscal stimuli of one trillion rupee in the Union Budget comes as a booster dose for the economy. READ MORE
RBI Governor Shaktikanta Das Interacting with media persons during the Press Conference at Reserve Bank of India in New Delhi on Monday | Photo-Dalip Kumar

COMMENT ON RBI POLICY :: VK Vijaykumar, Chief Investment Strategist, Geojit Financial Services

The unusual turnaround in RBI’s monetary policy from calibrated tightening to rate cut stems from the benign inflation, both current and expected. Since the RBI doesn’t expect the headline inflation to cross 4 percent in CY2019, one can realistically expect one more rate cut this calendar year. It appears that since the RBI believes that the "pathway of inflation has moved down substantially” the central bank is shifting its immediate  goal to stimulating the economy with rate cuts. This is appropriate in the context of the slowing investment in the economy and since crude can be expected to remain soft in the context of the global growth and trade slowdown. 
 
The rate cut is good news from the capital market perspective since it can reinforce the resilience seen in the key bench mark indices.

COMMENT ON RBI POLICY :: Dhiraj Relli, MD & CEO, HDFC Securities

The RBI MPC has delighted market participants by changing stance to neutral and cutting repo rate by 25 bps. Q3FY20 inflation expectation cut to 3.9% means some more rate cuts can be expected in the course of the next few meetings. While Bond yields are yet to respond to the rate cut, we think they may start to fall materially when FPIs revise their short term view on India (overcoming their fears on fiscal situation). Equity markets could rise some more, welcoming an attempt to address recent issues in the credit markets, ultimately leading to higher growth

MARKET CHECK


RBI policy outcome: Nifty Bank down 0.23%


RBI policy outcome: Nifty Auto up 1.5%


RBI MPC cuts Q4 retail inflation forecast to 2.8%, thanks to benign monsoon

The Reserve Bank of India Thursday revised downwards the retail inflation forecast to 2.8 per cent for the last quarter of the current fiscal on account of favourable factors including benign monsoon.
 
The RBI in its last bi-monthly monetary policy announcement for the current fiscal also lowered the retail inflation forecast for the first half of next fiscal beginning April, to 3.2-3.4 per. For the third quarter of 2019-20, the inflation target is set at 3.9 per cent. READ MORE

COMMENT ON RBI POLICY :: Rajni Thakur, economist, RBL Bank

MPC has clearly responded to the slack in financial markets in its credit policy. As the political cycle intensifies, monetary authorities have the onus to ensure financial sector stability and RBI seems to be focussed on it in deciding to cut the rates and complimenting it with other announcements regarding NBFCs credit assessment, raising limits for FPI for CP investments etc.

There was a space created by lower headline inflation and RBI has used that space to support financial activities. With lower projections of inflation and growth going forward, there are all indications that MPC will look for opportunities to cut further in the cycle if space is available

COMMENT ON RBI POLICY :: Anuj Puri, chairman, ANAROCK Property Consultants

RBI’s decision to slash the repo rate by 25 basis point to 6.25 % is a welcome and unexpectedly positive move, given the sops that the recent expansionary budget gave to farmers at an additional cost of Rs 75,000 crore per annum. It was also overdue, as this has been the first cut in a long time. It definitely augurs well for the real estate sector which also received a budget bonanza in the previous week. 
 
However, the real estate market does not depend only on marginally improved buyer sentiment - there are larger issues that hold the sector hostage right now. The liquidity issues post the NBFC crisis are a bigger concern. NBFCs and HFCs have seriously curtailed disbursements to developers. Moreover, the repayment capabilities of many developers are also in question
 

RBI policy: Bankrupt companies can repay debt using foreign borrowings

In its bi-monthly monetary policy review on Thursday, the Reserve Bank of India (RBI) said companies under the insolvency process can borrow abroad to repay the existing lenders. However, such companies can't use this relaxation to borrow from overseas branches/subsidiaries of Indian banks. READ MORE

COMMENT ON RBI POLICY :: Gaurav Dua, Head of Research, Sharekhan by BNP Paribas

The Reserve Bank of India comes up with unexpected cut in the policy rates given the benign outlook on inflation. What’s  more, the change in stance to “Neutral” and dovish commentary also opens doors for further rate cuts going ahead. The monetary policy support along with the fiscal stimuli of one trillion rupee in the Union Budget comes as a booster dose for the economy. The coordinated policy efforts is extremely supportive for consumption demand and equities in general. We expect non banking finance companies and consumer demand led companies to immensely benefit from the policy action

RBI Governor says

System liquidity position in surplus in Feburary

RBI Governor says

Will ensure there is no liquidity scarcity

Shaktikanta Das says

Need to strengthen private investment activity

NEWS ALERT

Farm output expected to decelerate in FY19

RBI Governor says

Forex reserves at $400.2 billion as on Feb 1

RBI Governor says

Decisions of MPC on Policy rates will be data driven

RBI Governor says

Import growth turned negative in December 2018

RBI Policy: Viral Acharya voted to keep the rates unchanged

The decision to change the monetary policy stance was unanimous. As regards the reduction in the policy repo rate, Dr. Ravindra H. Dholakia, Dr. Pami Dua, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted in favour of the decision. Dr. Chetan Ghate and Dr. Viral V. Acharya voted to keep the policy rate unchanged. The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 per cent on a durable basis. The minutes of the MPC’s meeting will be published by February 21, 2019.

NEWS ALERT

Private consumption needs to be buttressed

RBI Governor says

Credit flows in the industry is slowing down

RBI Governor says

Investment demand lost pace in Q3

RBI MPC outcome

NEWS ALERT

RBI revises down headline inflation estimates to 2.8% in March quarter, 3.2-3.4% in first half of next fiscal and 3.9% in Q3 of FY20.

RBI says

2 MPC members Chetan Ghate and Viral Acharya were for status-quo in rates; decision on changing stance to neutral was unanimous

RBI says

H1FY20 CPI inflation forecast lower to 3.2-3.4% from 3.8-4.2%

RBI Policy :: 6 factors likely to shape inflation trajectory

First, food inflation has continued to surprise on the downside with continuing deflation across several items and a significant moderation in inflation in cereals. Several food groups are experiencing excess supply conditions domestically as well as internationally. Hence, the short-term outlook for food inflation appears particularly benign, despite adverse base effects.

Secondly, the moderation in the fuel group was larger than anticipated. Inflation in items of rural consumption such as firewood and chips, which had remained sticky and at elevated levels, has collapsed in recent months. Electricity prices also showed an unexpected moderation, providing a softer outlook for the fuel group.

Thirdly, while inflation excluding food and fuel remains elevated, the recent unusual pick-up in the prices of health and education could be a one-off phenomenon.

Fourthly, the crude oil price outlook remains broadly the same as in the December policy.

Fifthly, the Reserve Bank’s surveys show that inflation expectations of households as well as input and output price expectations of producers have moderated significantly.

Finally, the effect of the HRA increase for central government employees has dissipated completely along expected lines.

RBI Policy :: Inflation, GDP projection


NEWS ALERT

MPC notes that the output gap has opened up modestly

MARKET CHECK


MPC voted 4-2 in favor of rate cut

RBI Policy in GDP growth

GDP growth for 2018-19 in the December policy was projected at 7.4 per cent (7.2-7.3 per cent in H2) and at 7.5 per cent for H1:2019-20, with risks somewhat to the downside.

NEWS ALERT

RBI raises collateral-free farm loan limit by Rs 60,000

RBI Policy on inflation

CPI inflation for 2018-19 was projected in the range of 2.7-3.2 per cent in H2:2018-19 and 3.8-4.2 per cent in H1:2019-20, with risks tilted to the upside. The actual inflation outcome at 2.6 per cent in Q3:2018-19 was marginally lower than the projection. There have been downward revisions in inflation projections during the course of the year, reflecting mainly the unprecedented soft inflation recorded across food sub-groups.

NEWS ALERT

RBI says FY20 GDP growth seen at 7.4%

NEWS ALERT

MPC's decision to change the policy stance to 'neutral' was unanimously

NEWS ALERT

Reverse repo rate stands at 6%

NEWS ALERT

MSF, Bank rates adjusted to 6.5%

NEWS ALERT

CPI seen at 2.8% in Jan-March 2019

RBI says

Stance changed to Neutral

NEWS ALERT

RBI cuts repo rates by 25bps to 6.25%

Tata Motors Q3: Demand trends for JLR, impact of forex hedge loss eyed

Automobile major Tata Motors is scheduled to report it December quarter earnings today. The result will be watched for current demand trends for JLR and outlook for key markets.
 
Tata Motors posted a consolidated net loss of Rs 1,009 crore for the second quarter ended September 30, 2018, mainly due to a weak performance by its British arm Jaguar Land Rover (JLR). READ MORE

Sun Pharma surges 5% as US arm Taro posts healthy December quarter results

Shares of Sun Pharmaceuticals were trading 5 per cent higher at Rs 436 on the BSE in intra-day trade on Thursday after its US subsidiary Taro Pharmaceutical reported strong results for the quarter ended December 2018. READ MORE
 

Top gainers on BSE500

COMPANY PRICE(rupees) CHG(rupees) CHG(%) VOLUME
ASTRAZENECA PHAR 1809.65 203.55 12.67 12906
BOMBAY DYEING 114.00 10.00 9.62 576566
CG POWER & INDU. 35.35 2.85 8.77 620845
RAIN INDUSTRIES 115.45 8.50 7.95 134271
ADANI GREEN 35.80 2.55 7.67 72170
» More on Top Gainers

Vodafone Idea jumps over 5% post December quarter results

Shares of Vodafone Idea (VIL) rose as much as 5.53 per cent to Rs 31.45 per share on the BSE in the morning trade even as the telecom major, in its second quarterly result after the merger, posted a net loss of Rs 5,004 crore, which was higher than Street estimates. READ MORE
 

Cabinet okays single regulator for international financial services centres

According to the draft Bill, prepared by the finance ministry, the proposed authority will be headed by a chairperson and will have one member each nominated by the RBI, Sebi, Irdai and the Pension Fund Regulatory and Development Authority (PFRDA). Two members will be nominated by the central government. There will be two other full-time or part-time members. READ MORE

Chalet Hotels turns volatile on market debut; up 4% against issue price

Shares of Chalet Hotels have turned volatile on the bourses after making a decent debut on the exchange. On the National Stock Exchange (NSE), Chalet Hotels opened at Rs 294 apiece, a 5 per cent premium against its issue price of Rs 280 per share. The stock hit an intra-day low of Rs 250, falling 15 per cent after few minutes of its listing. On the BSE, Chalet Hotels opened at Rs 291 per share, a 4 per cent higher against issue price. It has fallen 11 per cent to Rs 250, in intra-day trade so far. READ MORE

Momentum Picks by ICICI Securities


YES Securities on Minda Industries

We expect Minda Industries (MIL) to continue to outperform domestic auto sales growth over the medium term. This is premised on regulatory requirements such as safety and emission standards will increase the content per vehicle for MIL, new parts that the company is developing have large market potential, and potential of cross selling of existing products. On the margins front, we expect sustained improvement as share of higher value-added products continue to rise in overall revenues.

Stocks near all-time low

COMPANY LATEST ALL TIME LOW PREV LOW PREV DATE VOLUME
ALPS MOTOR FIN 0.80 0.80 0.81 06-FEB-2019 1558
APOLLO MICRO SYS 99.35 97.50 99.20 06-FEB-2019 778
ASHARI AGENCIES 5.88 5.88 5.99 06-FEB-2019 11202
CAMSON SEEDS 4.49 4.49 4.52 10-DEC-2018 441
CELESTIAL BIOLAB 6.25 6.25 6.27 06-FEB-2019 1

Click here for the full list

INDEX WATCH :: Financials

COMPANY LATEST (Rs) CHG (rs) CHG(%) VOLUME
YES BANK 178.65 2.35 1.33 608471
PUNJAB NATL.BANK 75.85 0.65 0.86 524599
IDFC FIRST BANK 43.30 1.65 3.96 288441
IDBI BANK 44.60 0.70 1.59 259166
ST BK OF INDIA 290.75 2.55 0.88 136616
 
 

MARKET CHECK


Centrum on Star Cement

In Q3FY19, Star Cement’s cement sales volume rose 14% YoY. Total volume growth, however, moderated to 6% YoY as the company’s focus on cement sales saw clinker sales fall 74% YoY. While pricing remained strong (NSR +5% YoY), unitary EBITDA fell 18% to Rs1,864/MT due to the absence of freight subsidy (since Feb’2018) and higher diesel and packing costs. Star continues to gain market share in the growing NE region. We remain bullish on the company owing to its regional leadership in the lucrative NE market and strong cash flow outlook. We reiterate Buy with an unchanged target price of Rs162.

Emkay Global on Century Plyboards

We downgrade our EPS estimates by 6.3%/19.4% for FY19/FY20 and introduce FY21 estimates. The focus on Mid-end plywood may put margins of this segment under pressure. We downgrade our rating to Accumulate from Buy, with a revised target price of Rs 193.

ICICI Securities on DLF

We retain our BUY rating with an unchanged target price of Rs280/share based on 1x FY19E NAV. As we have highlighted earlier, with the shift to the project completion method under INDAS 115 from Q1FY19, DLF is rebooking revenues and profits as projects complete and hence the income statement analysis is irrelevant and investors should focus on underlying cash flows of the different business verticals.

ICICI Securities on Siemens

Shift towards electric locomotives under railways and headwinds under mechanical drive continue to drag the overall growth outlook of mobility. The recent news flow regarding European competition commission prohibiting the global merger of Alstom and Siemens rail business should give fillip to the overall valuation of Siemens India. We expect earnings to grow at 16% CAGR over FY18-20 and we maintain our BUY rating on the stock with a target price of Rs1,238.

RBI monetary policy: Bond market awaits cues on liquidity support

Bond dealers and economists would keenly watch the Reserve Bank of India’s (RBI’s) stance on liquidity in the monetary policy statement on Thursday, as there seems to be a mismatch between what the central bank perceives as comfortable liquidity and what the market expects the liquidity to be to keep bond yields under check. READ MORE
RBI Governor Shaktikanta Das Interacting with media persons during the Press Conference at Reserve Bank of India in New Delhi on Monday | Photo-Dalip Kumar

Tata Motors trades over 1% higher ahead of December-quarter results



Sectoral trend on NSE


Opening gainers and losers on S&P BSE Sensex


Market at open

At 9:15 AM, the S&P BSE Sensex was trading at 36,999, up 23 points, while the broader Nifty50 was ruling at 11,059, down 3 points.

Market at pre-open


Rupee opening

Rupee opens at 71.72/$ vs its previous close of 71.56 per US dollar 

MPC meet: RBI likely to drop hawkish bias, keep interest rates steady

The Reserve Bank of India headed by a new chief, Shaktikanta Das, will probably drop its hawkish bias on Thursday, the first step toward a possible interest-rate cut this year as inflation drifts lower and the economy slows. The repurchase rate will probably be kept steady at 6.5 per cent, according to 32 of the 43 economists surveyed by Bloomberg as of Wednesday, with the rest expecting a 25 basis-point reduction. READ MORE
 

Stock calls by Tradebulls Securities

Stock: Tata Chemicals
Reco: SELL
CMP : Rs 593.25
 
The stock witnessed sharp correction post breach below the neck line of “head and shoulders” formation that occurred near life highs. On the weekly scale, the pattern indicates distribution in progress since December 2017. Pattern target post breach of neck line is around Rs 500 levels and the stock is expected to drift lower in coming sessions. Shorts can be initiated for Rs 500 pattern targets to be obtained in coming sessions with a stop placed above Rs 635 levels. READ MORE

Expectations from the RBI MPC :: HSBC

The inflation data is confusing. Food is falling (-1.5% y-o-y), core is rising (6% y-o-y) and we expect headline inflation to stay below the 4% target for 12 consecutive months. Data suggests that there are equally good reasons for a pause and a cut. The fiscal details from the budget, an elevated core inflation, a sudden spike in rural health and education inflation, and expectations of the headline rising above 4% in 2H2019 call for a pause.

On the other hand, changing global dynamics (lower oil prices and expectations of lesser Fed rate hikes) and headline inflation under 4% till mid-2019, suggest that some space for rate cut exists. A rate cut in February could sit uncomfortably with the recently announced expansionary budget. As such, we expect a change in stance to neutral, but rates on hold. Thereafter, some space for easing could open up. We are pencilling in a 25bps rate cut in April, taking the policy repo rate to 6.25%.


Edelweiss on HPCL Q3

Key takeaways: 1)GRM slid 23% QoQ to USD3.7/bbl due to inventory losses; 2)marketing margin declined 28% QoQ with higher auto fuel margin offset by inventory losses; 3)normalised integrated margin (adjusted for inventory/RTP revision lag), which give the best picture of core profitability, were a significant beat; and 4) marketing volumes ( up 2.3% YoY) came in line, lower than industry growth of 2.6%. Although marketing margins have recovered due to lower oil prices, recovery in benchmark GRM remains critical to earnings growth. Maintain ‘HOLD’ with SOTP-based target of Rs 225/share

Edelweiss on ACC

ACC’s Q4CY18 performance failed to impress with volume gains being offset, yet again, by weak cement prices. While volume grew 8.4% YoY (6% estimate), realisation tripped 2.6% QoQ (1.0% dip estimate). With impact of increased raw material cost (due to surge in landed price of slag) being partially offset by high other operating income (up 39% YoY), EBITDA at INR4.9bn (up 10% YoY) stood 4% below estimate. Factoring current weakness in cement prices (though partially offset by recent decline in fuel cost), we prune our CY19E EBITDA 12%.

Yet, we stay positive on ACC as it will be a major beneficiary of our positive view on the industry—sustained demand growth, imminent rise in industry’s clinker utilisation and controlled fuel cost. Underpinned by this optimism, we introduce CY20E with EBITDA/t of INR790 (INR720 for CY18 and INR728 for CY19E). Rolling over valuations to Q2CY20E, we maintain ‘BUY’ with revised target price of Rs 1,653 (Rs 1,735 earlier)

MARKET TECHNICALS :: Mustafa Nadeem, CEO, Epic Research

Nifty forms a rising window as it breaks out from the resistance placed at 10970 with a long green candlestick. A decisive breakout is seen on the charts on Nifty along with buying across the sectors. Auto, Media, IT, PSU along with Midcap and small cap have added gains as much as 1% - 4%. This is an indication of improved breadth which was much needed for bulls to clear this hurdle. 
 
A rising window is a gap up formation with prices opening in a range that is higher than previous day range. A sustained move post a gap up is seen confirming the initial breakout and a buying with a decisive close is seen. The crucial support which was placed at 10800 levels is now been shifted to 10950. Hence which was resistance is now support for this trend to continue. We do not see any resistance for Nifty in short term till 11170 - 11180 mark. That is an important resistance as a level.
 
Derivatives data was much decisive as compared to what we have seen in the last few weeks. Long built up is now seen at 11300 - 11200 and 11500 as well. While short covering is seen in calls at 11200 -  11100. That is a good reading since the hurdle we believe also coincides with derivatives reading. Huge short built up is seen in PE across the strikes from 11100 - 11500. The trend may further increase its momentum with upside potential to 11150 - 11160 initially. 
 

MARKET COMMENT :: Rabobank International

We no longer expect the US Fed to raise rates this year and instead we expect a pause to balance sheet reduction in the second half of this year before an easing cycle begins in June of next year

Edelweiss on Berger Paints

Berger Paints' (Berger) Q3FY19 revenue and EBITDA growth of 20.8% and 6.0% YoY, respectively, came in line with our estimates, while PAT (up 2.7% YoY) belied it. Domestic volume grew ~19% YoY, surpassing our estimate (Asian Paints’ decorative volume grew 22% YoY) led by delayed festive season.

Standalone gross margin contracted 448bps YoY and 87bps QoQ (Asian Paints’ saw 142bps YoY gross margin compression but expanded 130bps QoQ) owing to sharp spike in input cost and higher cost inventory levels. EBITDA margin slipped 203bps YoY due to cost rationalisation measures. Going ahead, with cooling of raw material prices and price hikes, we expect margin to rebound. Maintain ‘BUY’

Nifty outlook by Tradebulls Securities

The index closed above the resistance zone (10,950-10,970) of ongoing consolidation. The witnessed breach from four- month long consolidation is expected to attract short further, short covering that can accelerate move on the upside till 11,300 levels in the coming sessions. Daily relative strength index (RSI) breached above its resistance zone placed around 60 levels paving way for higher prices. Occurrence of a large bullish candle post breach above consolidation range resonates the underlying bullish strength. Traders should continue holding longs and add on dips, if any, for 11,300 levels to be obtained in the coming sessions with stops placed below 10,740 levels. READ MORE

Emkay Global on Tata Chemicals

Due to the latest one-offs and a rise in interest expenditures and tax rate, we trim our FY19/FY20E EPS by 10.4%/4.1%. As a result, we reduce our SoTP-based target price of Rs723 (7.2x FY21E EV/EBITDA) from Rs804, and roll forward our valuation to FY21. We continue to maintain Accumulate rating on the stock

Emkay Global on JSW Steel

Management emphasized that if JSW is declared the highest bidder for Bhushan Power and Steel, it will ensure that before the end of the relevant quarter where the resolution plan is implemented, a structure is in place which will not result in a consolidation of the debt attributable to the buyout of Bhushan Steel. Given that for the near term, the best of the steel margins is behind us and hardly any volume growth over the next 12 months, we downgrade the stock to Hold, with a revised target price of Rs300 based on 6x our FY20 EV/EBITDA estimates

Jefferies on Lupin

Base business is seeing challenges. It is, in our view, trailing peers in building a complex generic pipeline. Its R&D execution has been weak, raising concerns about medium-term growth. A warning letter at its key facility remains the other overhang. With recovery largely reliant on a few key products and largely back-ended, risks to earnings are still high. The stock is trading at 20x FY21E PE and looks expensive given the weak medium-term outlook and the reliance on a few products for growth. Retain Underperform

Jefferies on Cipla

Cipla is now trading at 19x FY21 PE leaving no room for error. Execution for the company has been mixed. While US sales have seen pick-up, it has been below expectation and failed to drive margin improvement. With challenges in EM and tender market to sustain in near term, US becomes key where visibility is low. We expect the US ramp-up to be gradual and margin improvement to be below expectations. Retain Hold.

Today's picks

Tech Mahindra 
Current price: Rs 812
Target price: Rs 825
 
Keep a stop at Rs 805 and go long. Add to the position between Rs 820 and Rs 823. Book profits at Rs 825.
 
Adani Ports 
Current price: Rs 330
Target price: Rs 324
 
Keep a stop at Rs 333 and go short. Add to the position between Rs 325 and Rs 326. Book profits at Rs 324. READ MORE

Rate-sensitive stocks, Tata Motors and Chalet Hotels to hog the limelight

Earnings today: Over 200 companies are scheduled to release their December quarter earnings later in the day. Some of the notable names include Britannia Industries, Abbott India, Suzlon Energy, Tata Motors, SAIL, MRF, HCC, Cadila Healthcare, Coffee Day Enterprises, Adani Enterprises and Adani Green Energy.
 
Rate-sensitive stocks: Shares of financials, auto and realty sectors are likely to remain in focus today as the RBI will unveil its monetary policy. READ MORE

Rupee check

The rupee on Wednesday ended almost flat at 71.56 per US dollar as participants preferred to wait for the Reserve Bank's interest rate decision for further cues.

Oil dips on rising US supply, but OPEC cuts lend support

Oil prices fell on Thursday after US crude inventories rose and as production levels in the country held at record levels, but OPEC-led supply cuts and a crisis in Venezuela supported markets.
 
US West Texas Intermediate (WTI) crude futures were at $53.83 per barrel, down 18 cents, or 0.3 per cent, from their last settlement. International Brent crude oil futures were down by 30 cents, or 0.5 per cent, at $62.39 per barrel.

SGX Nifty

Nifty futures on Singapore Exchange (SGX) were trading at 11,077, down 28 points or 0.25 per cent in early trade.

Asian shares doze in data lull

Asian share markets were in a muted mood on Thursday and looked set for a sleepy session with China still on holiday and no major economic data on the diary.

MSCI’s broadest index of Asia-Pacific shares outside Japan was little moved in early trade after ending almost unchanged on Wednesday. Japan’s Nikkei dipped 0.2 percent

Wall Street check

US stocks ended lower lower in the overnight trade.

The Dow fell 0.08 per cent, while the S&P 500 lost 0.22 per cent and the Nasdaq 0.36 per cent.
Good morning

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