S Ranganathan, Head of Research at LKP Securities
An FTSE rejig of the Index coupled with a border skirmish led to a pretty volatile trading session today.
Despite this the day truly belonged to the pharma bulls as several counters posted massive gains on the back of positive newsflow.
Market closing:
Sensex closed 134 points, or 0.34 percent, lower at 38,845.82 while Nifty closed 11 points, or 0.10 percent, down at 11,504.95.
BSE Midcap closed 0.26 percent higher while BSE Smallcap index closed 0.32 percent lower.
Sensex at the closing
Pharma stocks continue to shine
RBI has sufficient forex reserves again: BofA Securities
BofA Securities thinks the RBI will buy forex less aggressively than in the past, having achieved adequate forex reserves (over $500 bn BofAe) again.
As per BofA, RBI has stated that appreciation helps cool high CPI inflation, although we find 'imported' inflation relatively weak.
RBI will likely allow rupee to weaken if the USD strengthens, as it can sell up to $50bn to fend off any speculative attack on the rupee, BofA Securities said.
"We continue to expect RBI to consolidate the return to adequate forex reserves. The RBI has actually picked up $24.3bn since July until week ending September 11. Our BoP estimates suggest that it can buy $7.6bn more by March 2021," BofA Securities said.
On balance, BofA Securities expects the RBI to continue with its asymmetrical forex policy of buying forex when the USD weakens and letting rupee depreciate when it strengthens.
"As inflation peaks off, we think that there still will be a policy bias towards a weak rupee till growth revives. Our forex strategists see rupee at Rs 74 per dollar by December," said BofA Securities.
Marginal improvement in macroeconomic indicators
"We continue to see incremental improvement in high-frequency indicators. Daily average e-waybills were higher in the second week of September, compared to the previous week and August figures," said brokerage firm Kotak Institutional Equities.
The electricity consumption gap turned negative again, meaning India consumed more electricity in the past week than a similar period in CY2019. Payments data and import duty collection continue to be strong in September.
However, a cross-country comparison of Google mobility report shows that recovery in India lags behind the recovery in other countries, said Kotak.
Kotak tracked the number of property sales registered in Maharashtra and the daily number of vehicles registered in Regional Transport Offices under the Vahan4 umbrella.
The daily average of property registrations in Maharashtra in September is much higher than the daily average of March 2020. In terms of vehicle registrations, the number of cars and two-wheeler registrations did not increase in the first half of August, Kotak said.
Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services
: The mixed US data is losing the economic confidence and weighing on dollar. But in coming sessions the Indo-China border and Brexit uncertainty will occasionally keep the dollar bulls active. This week the spot respected both the crucial support of 73 and the resistance of 73.75. Even next week, we expect the sideways trend to continue. Unless the support zone of 72.90-73 doesn't break the spot will trade higher towards 73.75.
Sharp fall in markets
Sensex is down 214.74 points or 0.55% at 38765.11, and the Nifty shed 31.10 points or 0.27% at 11485. Among the sectors, the Nifty Pharma jumped 5 percent hitting a 5-year high while on the other hand, banks fell led by Kotak Mahindra Bank, HDFC Bank and SBI.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities:
Gold prices traded higher with COMEX spot gold rose by half a percent to USD 1,954 today. Gold October future contract at MCX were trading up by 0.3 percent to Rs 51,600 per 10 grams limiting upside on rupee appreciation. Gold prices kept the narrow trading range as traders and investors are awaiting for fresh triggers post US FOMC meet. The dollar fluctuations has kept prices in range with uncertainty over US aid package and concerns over US economic recovery.
We expect gold prices to trade sideways to up with support at USD 1,910 and resistance at USD 1,970. MCX Gold October support at Rs 51,100, resistance lies at Rs 51,900.
ICICIdirect on HUDCO
: The government’s focus on housing and shortage of dwelling provides an opportunity for balance sheet. However, muted construction activity amid pandemic is seen keeping near term credit offtake benign. Decline in cost of funds and revival in urban infrastructure activities is seen leading to uptick in margin (that remained under pressure due to incremental lending to low yield social housing projects). Higher PCR at ~87% provides comfort but given impact on state government revenue, volatility in asset quality cannot be ruled out.
We expect credit cost to remain higher in FY21E. Dividend yield of 8 percent or higher is attractive but sustainability of payment is to be seen ahead. Though exposure to state government entities provides comfort, anticipation of near term volatility in provisioning and, thereby, earnings makes us adopt a cautious stance. Therefore, we maintain hold rating with a target price of Rs 38, valuing the stock at 0.5x FY22E EPS.
European markets trade flat.
Most active stocks on NSE in terms of volumes
Abhishek Bansal, Founder Chairman, Abans Group:
A rally in oil prices is expected to be capped, with the US resuming its oil production, which was affected by hurricane Sally. Oil rallied as inventories fell, and the hurricane hit output. Crude oil prices are also supported by OPEC report of 101 percent compliance for oil production cuts. WTI crude oil could find support near the 10-days EMA at $39.71 per barrel and a critical resistance level is seen around $43.46-$43.68 per barrel.
CAMS sees over 30% premium in grey market ahead of IPO
: Private equity firm Warburg Pincus and NSE-backed Computer Age Management Services (CAMS) witnessed strong demand in the grey market ahead of its initial public offering (IPO). The public issue will open on September 21 at a price band of Rs 1,229-1,230 per share. It will close on September 23. The grey market premium has been in the range of Rs 375-400 per share, i.e. 30.5-32.5 percent over the upper end of its price band, Mehta Equities and Rudra Shares told Moneycontrol. Read More
Union Bank looks to initiate personal insolvency proceedings against DHFL promoters
: Union Bank looks to initiate personal insolvency proceedings against DHFL promoters. Bank looks to recover over RS 3,000 crore from promoters for DHFL dues. Union Bank gives 14-day notice to Kapil and Dheeraj Wadhawan to repay.
Bank issues demand notice to DHFL promoters under section 7(1) of IBC. Union Bank looks to recover dues on the basis of promoters’ personal guarantees
more banks can join personal insolvency plea against DHFL promoters if case admitted, CNBC-TV18 reported.
Nirali Shah, Senior Research Analyst,Samco Securities
: CAMS is coming out with an IPO looking to raise Rs 2,244 crore through an offer for sale. The price band is set at Rs 1,229-1,230 per share for a lot of 12 shares. We recommend investors to subscribe to the IPO for listing gains. The company has a robust business with strong market leadership indicated by a 70 percent market share in the mutual fund RTA industry.
With growth being linked to the rise in AUMs for mutual funds, the company is poised to generate consistent returns going forward. Investors just need to be cautious regarding the slower pace of growth as paper-based transactions which contribute a large part of revenues see a decline over time.
Market Update
: Sensex is up 67.54 points or 0.17 percent at 39047.39, and the Nifty gained 45.80 points or 0.4 percent at 11561.90. Dr Reddy's Labs, Sun Pharma, Tech Mahindra and HCL Tech are the top gainers while Essel Propack, AU Small Finance Bank, Cipla and Lupin are the most active stocks.
Among the sectors, the pharma index jumped over 5 percent followed by IT and metal sectors. The midcap and smallcap indices are also trading in the green.
HCL Technologies
Shares of HCL Technologies climbed about 2 percent to hit their 52-week high of Rs 820.75 on BSE on September 18, looking set to extend gains into the second consecutive session.
In a media release on September 16, HCL Technologies and Google Cloud announced the expansion of their strategic partnership to bring HCL’s Actian portfolio, starting with Actian Avalanche, to Google Cloud.
"Actian Avalanche is a high-performance hybrid cloud data warehouse designed to power an enterprise’s most demanding operational analytics workloads. Actian Avalanche enables a seamless path to migrate legacy data warehouses, including IBM Netezza and Oracle Exadata, to Google Cloud, through a hybrid-cloud offering leveraging Google Cloud’s Anthos application platform," the company informed.
"This latest announcement from HCL and Google Cloud expands a deep and growing partnership between the two companies to help organizations digitally transform," HCL said.
Dr Reddy's Labs shares surge 10% to hit record high
Shares of Dr Reddy's Laboratories surged almost 10 percent to hit their fresh record high of Rs 5,302.85 on BSE on September 18.
Shares of the company vaulted after the company said it had settled patent litigation with US-based Bristol-Myers Squibb's unit, Celgene, over cancer treatment Revlimid.
On September 16, the company said it had launched an over-the-counter (OTC) eye allergy drop Olopatadine Hydrochloride Ophthalmic Solution in the US market.
Buzzing Stock
Cadila Healthcare share price gained over 4 percent after reports indicated that Russian Direct Investment Fund (RDIF) and Zydus Cadila is also learnt to be in talks to bring coronavirus vaccine Sputnik V in India. Zydus Cadila said that it has received final approval from the USFDA to market Potassium Chloride ExtendedRelease Tablets (US RLD: K-Dur Extended-Release Tablets) in the strengths of 10 mEq (750 mg) and 20 mEq (1500 mg).
Buzzing Stocks
Shares of Lupin surged over 7 percent to hit their 52-week high while those of Cipla surged over 6 percent. Both stocks attracted traction after the Irish pharma company Perrigo voluntarily recalled albuterol sulfate inhalation aerosols over concerns that some may not dispense properly due to clogging. This is expected to benefit Cipla and Lupin and other pharma players too.
Nifty Pharma is the outperforming sector, jumping over 4 percent led by Dr Reddy's Labs, Lupin and Cipla
Rupee opens
The Indian rupee opened 18 paise higher at 73.47 per dollar on September 18 against the previous close at 73.65. The US dollar eased against its global peers after the US Fed signalled a prolonged low rate regime.
Anuj Gupta- DVP- Commodities and Currencies Research, Angel Broking:
Gold and silver prices closed on a negative note on September 17. MCX Gold closed 0.72 percent lower at Rs 51,453 levels and silver prices closed 0.93 percent lower at Rs 68,142 levels. In international market gold is trading at USD 1951 per ounce and silver is trading at USD 27.03 per ounce. Weakness is dollar on the back of Federal Reserve pledged to keep interest rates low for a long time but stopped short of offering further on stimulus to shore up a battered U.S. economy and they are also hold interest rates till 2023 with inflation never breaching 2 percent over the period. This is a positive for gold and silver in longer term as traders can park their money in safe heaven assets like gold.
Traders can buy gold at Rs 51,200 levels with the stop loss of Rs 50,700 levels for the target of 51,900. They can also buy silver at Rs 68,000 levels, with the stop loss of 67,000 and for target of Rs 69,800 levels.
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking:
We continue to remain cautious and still do not expect the Nifty to surpass the sturdy wall of 11,650-11,700 soon. Going forward, 11,480-11,450 would be seen as crucial support and a move below this would trigger some decent correction thereafter. Also, we would like to draw attention towards the 'US Dollar Index' which has corrected significantly in the last couple of months. Since US Dollar Index and Equity markets are inversely correlated, any surge in this would lead to correction in our markets. Hence, it is important to take a note of this development as well.
We did not see any broader market sell off yesterday. There were a number of themes who were bucking the trend throughout the day. But we still advise caution and even if one wants to participate in such potential movers, avoid aggressive bets and look to book timely profits or exit if it does not turn out to be a favorable trade.
Buzzing Stock
Finolex Cables share price gained 2 percent after Jefferies maintained a buy call on the stock. The research firm has retained buy on the stock with target of Rs 415 per share. It is of the view that the company posted 17 percent YoY growth in net profit despite March disruption in FY20, according to a CNBC-TV18 report.
Buzzing Stock
Essel Propack share price fell over 5 percent after Blackstone eyes selling stake in the packaging firm. The world’s biggest alternative asset manager is looking to sell a large chunk of its shareholding in the packaging firm through block trades. The deal could fetch the investor as much as USD 251 million.
Market opens
: Sensex is up 162.45 points or 0.42 percent at 39142.30, and the Nifty gained 62.90 points or 0.55 percent at 11579. Cipla, Dr Reddy's Labs, Sun Pharma and Tata Steel are the top gainers while Essel Propack, Reliance Industries and Lupin are the most active stocks.
Among the sectors, the pharma index gained 2 percent followed by auto and banks. The midcap and smallcap indices added half a percent each.
HDFC Bank in focus
Two US-based law firms announced filing of class action lawsuit against bank. Rosen & Schall Law Firms File Suits against Bank for false, misleading information. Both firms had announced probe into claims against HDFC Bank leading to lawsuit, CNBC-TV18 reported.
Top buy and sell ideas by Ashwani Gujral, Mitesh Thakkar for short term
Ashwani Gujral of ashwanigujral.com recommends buying Apollo Hospitals with a stop loss of Rs 1,750, target at Rs 1,830 and Zee Entertainment with a stop loss of Rs 215, target at Rs 232.... Read More
ICICIdirect on market outlook:
Nifty opened with a lower gap on September 17 and remained highly volatile with a negative bias throughout the day. Sectorally, action was seen in pharma and technology stocks while profit taking was seen in auto, BFSI and metal stocks. However, on the options front 11,500 Put has maximum OI. This should act as strong support on downsides. The major Put base is at 11,500 strike with almost 31 lakh shares while the major Call base is at the 11,600 strike with almost 29 lakh shares.
Bank Nifty future saw sideways trade but remained firm above 22,000 throughout the day. Most private and midcap banks witnessed supply from higher levels. From the options space, additions were seen in 23,000 and 23,500 strike Call, which is the resistance area, whereas support for the Bank Nifty is at 22,000.
Oil price update
Oil prices drifted lower on Friday, pausing after three days of gains, as producers prepared to resume operations in the Gulf of Mexico and data showed Saudi Arabian exports rose from record lows. Brent crude was down 6 cents at $43.24 a barrel by 0112 GMT, while US oil futures dropped 6 cents to $40.91 a barrel.
SGX Nifty
: Trends on SGX Nifty indicate a flat opening for the index in India with a 3 points loss. The Nifty futures were trading at 11,525 on the Singaporean Exchange
Asian markets are trading flat with Nikkei managing to stay in the green
US Markets
US stocks fell on Thursday as technology-related shares slid for a second day and as government data showed high levels of weekly jobless claims. The Dow Jones Industrial Average fell 130.4 points, or 0.47%, to 27,901.98, the S&P 500 lost 28.48 points, or 0.84%, to 3,357.01 and the Nasdaq Composite dropped 140.19 points, or 1.27%, to 10,910.28.
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