Sensex gains 281 pts, Nifty above 11,050; banks, auto stocks lead

CNBC

Market Outlook

"Subdued inflation kept hopes alive for rate cut and positive vibes to support the auto sector lifted the markets. Broad based recovery in rate sensitive stocks fueled domestic market while additional policy measures from European Central bank powered global peers," Vinod Nair, Head of Research, Geojit Financial Services said.
Technical View
"The undertone continues to remain on the positive side. Index is in a recovery mode and there are more legs on the upside. Nifty is likely to test the 11,300-11,500 zone on the upside. Traders should look to position on the long side. We have been contra  on the index since 10,750 and have been recommending long for 11,300-11,500. We continue to maintain our bullish stance," Amit Shah, Technical Research Analyst with Indiabulls Ventures said.
Market Closing
Benchmark indices rebounded and recouped all previous day's losses amid hope of more reforms from government.
The BSE Sensex was up 280.71 points at 37,384.99 as 25 out of 30 stocks closed in green, while the Nifty50 climbed 93.10 points to 11,075.90.
About three shares advanced for every two shares falling on the BSE.
India Market Strategy
“Our Nifty target for June 2020 is 11,100 with upside/downside scenarios of 13,200/9,200, implying the risk-reward is not attractive for the market. We still expect a narrow market ahead and remain Underweight small-mid caps, industrials and autos," Gautam Chhaochharia, Analyst, UBS Securities India said.
Lupin Gains
Pharma major Lupin said it has received approval for its Propranolol Hydrochloride extended-release (ER) capsules from Health Canada.
Lupin is the first generic company to receive an approval for generic lnderai111-LA capsules for the Canadian market and the product has been approved and will be manufactured from Lupin's Pithampur Unit-2 Facility, it added.
Market at Day's High:
Benchmark indices traded at day's high with the Sensex rising 268.98 points to 37,373.26 and the Nifty50 climbing 89.10 points to 11,071.90.
Debt Reduction
Reliance Capital said it would receive Rs 6,000 crore through Reliance Nippon's offer for sale and transaction with Nippon Life.
Entire proceeds of Rs 6,000 crore would be utilised for reducing debt, it added.
UK Regulator Reinstates Full GMP Status of Indoco Remedies Goa facility
Drug firm Indoco Remedies said the UK health regulator has fully-reinstated the good manufacturing practice (GMP) status of its Goa facility.
The status has been updated following a full GMP inspection by the Medicines and Healthcare Products Regulatory Agency of the United Kingdom during May 21-23, 2019, the company said in a filing to BSE.
The Inspection Action Group (lAG) of the UK has confirmed that the GMP status of its Goa Plant I has been fully reinstated by the Medicines and Healthcare Products Regulatory Agency of the United Kingdom, Indoco Remedies said.
With this development, the company's operations in Europe will now take off on a fast-track, Indoco Remedies MD Aditi Panandikar said. (Source: PTI)
Sensex Extends Gains:
Benchmark indices extended gains in afternoon with the Sensex rising 141.08 points to 37,245.36 and the Nifty50 climbing 43.60 points to 11,026.40.
About 1,238 shares advanced against 968 declining shares on the BSE.
Govt Spending on Infrastructure
"With the economy in a slowdown and subdued private sector investment, frontloading of spends on infrastructure and related industries is a welcome and much needed move that our FM Nirmala Sitharaman has announced. This immediate investment booster should help in kick starting next round of capex cycle to drive growth. Emphasis on investments in areas such as affordable housing, railroads, water supply and distribution, expressway programs, airports, power availability and mass rapid transit system will improve quality of life and performance of related companies," Arun Thukral, MD & CEO, Axis Securities said.
NBFC crisis deepens; Altico defaults on interest payment to Mashreqbank
Worries over the crisis in the NBFC sector grew stronger after Altico Capital India defaulted on the interest payment obligation on External Commercial Borrowing availed from the UAE-based Mashreqbank.
The company, in a regulatory filing, said it defaulted on the interest payment of Rs 19.97 crore.
"Our failure to repay the amounts set out above may result in an acceleration of interest repayment or redemption obligations in respect of non-convertible debt securities issued by us and may trigger a default in their timely repayments," the company said in a statement.
Recommendation
ICICI Direct advised buying Mahanagar Gas in the range of Rs 835-855 and for a target at Rs 985 with a time frame of three months.
"Stocks from the gas space have remained largely immune to the current market weakness and witnessed momentum with a market recovery. Stocks like IGL and Petronet LNG are trading near their life-time highs indicating the ongoing resilience in the space. We believe Mahanagar Gas (MGL) may also witness fresh upward momentum after the underperformance of more than a year with respect to its peers," the brokerage explained.
"Green shoots of recovery of the stock were seen as it has outperformed the market in the broader market weakness seen in the last series. Since July 2019, while the stock is up almost 15 percent, markets have declined over 10 percent in the same time frame. Moreover, a sharp increase in delivery volume was observed post its quarterly results. We believe lower levels have been utilised to accumulate the stock. It is likely to exhibit a fresh up trend in the coming weeks," it said.
Gravita India Jumps 5%
Shares of Gravita India rallied 5 percent intraday after the increase in production capacity of lead recycling plant in Ghana.
Gravita India informed exchanges that its step down subsidiary Recyclers Ghana in West Africa has enhanced the production capacity of its existing lead recycling plant from 6,000 MTPA to 12,000 MTPA.
The group has made investment of approximately Rs 21 crore from its internal accruals for establishment of this recycling plant, company said.
PI Industries Climbs 4%
Shares of PI Industries rallied 4 percent intraday after acquisition of 100 percent stake in Isagro Asia.
"PI Industries has executed an offer with promoter Isagro SpA (a company incorporated in Italy) for acquisition of Isagro Asia, who is engaged in contract manufacturing, local distribution and exports of agrochemicals," the agri-sciences company said in its BSE filing.
The transaction value is estimated around Rs 345 crore net of cash and debt subject to closing adjustments, it added.
India Inc's revenue growth falls to 11-quarter low in Q1FY20
As per the rating agency, cement volume growth slowed to 1.8 percent due to slowdown in project execution on account of general elections, economic slowdown impacting private sector capex, as well as liquidity issues and labour scarcity.
SRF Gains 2%
Shares of SRF gained 2 percent intraday after IDFC Securities has initiated coverage on the stock with an outperform call and target price at Rs 3,347 per share, implying 23.5 percent potential upside from current levels.
According to IDFC, the backward-integrated refrigerants business may post healthy 15 percent revenue CAGR, though growth in package films should moderate over FY20-21 before picking up in FY22.
The research house feels technical textiles will remain a cash cow and it expects overall 14.2 percent revenue and 19.5 percent EBITDA CAGR over FY19-21.
DHFL shares crack 5% after the firm reports fresh default
Dewan Housing Finance Corporation cracked 5 percent on BSE to Rs 49.40 on September 13 after it reported a fresh default towards the payment of principal and interest on non-convertible debentures (NCDs). The company, in a BSE filing on September 12, reported default of Rs 196.65 crore towards Rs 350-crore worth of NCDs issued by it.
The lenders of the debt-ridden company are working on a resolution plan but media reports indicated that the banks might miss the September 25 deadline, as they need more time to approve it.
Market Volatile:
Benchmark indices remained volatile after inflation and industrial output data. The BSE Sensex rose 24.89 points to 37,129.17 and the Nifty gained 2 points at 10,984.80.
USFDA Concludes Inspection of Unichem Lab's Roha Facility
Drug firm Unichem Laboratories said the US health regulator has concluded inspection of its Roha facility in Maharashra without making any observations.
The United States Food and Drug Administration (USFDA) conducted inspection at the company's active pharmaceutical ingredients facility at Roha from September 9-12, 2019.
The inspection was a post-approval inspection and successfully concluded without any USFDA form 483 being issued, Unichem Laboratories said in a regulatory filing. (Source: PTI)
Midcap Outlook
"Midcaps will continue to trade in a tight range with a positive bias. We expect 15 percent earnings growth for midcaps in FY20," Akash Singhania, Executive Group Vice President & Fund Manager at Motilal Oswal AMC said in an interview to CNBC-TV18.
He further said he is looking at picking stocks with high growth rate & good corporate governance. He is looking at companies who are market leaders & report at least 20 percent growth.
Expert's Take on Inflation, IIP
"With benign inflation, low YTD industrial and GDP growth, we expect RBI to continue with rate cuts (40 bps more in FY20), liquidity injection and focus on policy rate transmission by banks. Global industry trend equity positive. Barring China and US, industry in most major economies including Japan, Germany, UK and India seem to be only cyclical recovery. De-escalation of trade war, signs of which are emerging, would be a big plus for the global economy and equity markets," Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares & Stock Brokers said.
Repo Rate Cut Likely After CPI Data
"The August CPI came in at 3.21 percent against 3.15 percent in July. The marginal increase in CPI is mainly due to increase in food inflation. However, for the 13th consecutive month, CPI has come below RBI’s medium term target of 4 percent. This is mainly due to subdued crude prices. Also, India’s growth has slumped significantly, the recent GDP figure of 5 percent was so alarming that along with muted inflation it has kept the door open for at least one more rate cut by RBI," Rahul Gupta, Currency Research Head, Emkay Global Financial Services said.
Market Update
Benchmark indices erased gains with the Sensex rising 2.26 points to 37,106.54 and the Nifty falling 3.90 points to 10,978.90.
Macro Data
CPI inflation in August increased to 3.21 percent against 3.15 percent in previous month, but was better than a poll of analysts conducted by CNBC-TV18  at 3.28 percent.
Industrial output in July came in at 4.3 percent against 2 percent growth in previous month.
Market Update
Benchmark indices recouped its early losses with the Sensex rising 99.01 points to 37,203.29 and the Nifty50 climbing 28.80 points to 11,011.60.
Market Opening:
Benchmark indices opened flat with a negative bias. The Sensex was down 16.93 points at 37,087.35 and the Nifty50 fell 4.40 points to 10,978.40.
Pre-opening Trade:
Benchmark indices traded flat with a positive bias in pre-opening. The BSE Sensex rose 71.58 points to 37,175.86 and the Nifty50 gained 4 points at 10,986.80.
Wall Street ends higher on trade, ECB stimulus hopes
Wall Street advanced on Thursday, and the S&P 500 ended the session within striking distance of its all-time closing high, buoyed by positive developments on the US-China trade front and a promise of continued stimulus from the European Central Bank.
Technology gains led the S&P 500 and the Nasdaq higher, while financials gave the biggest boost to the blue-chip Dow, which closed up for the seventh consecutive session, its longest winning streak since May.
The Dow Jones Industrial Average rose 45.41 points, or 0.17%, to 27,182.45, the S&P 500 gained 8.64 points, or 0.29%, to 3,009.57 and the Nasdaq Composite added 24.79 points, or 0.3%, to 8,194.47.
A morning walk down Dalal Street: Selling pressure could accelerate if Nifty slips below 10,850
Macro data will drive the markets - IIP data and CPI data. Nifty formed a Bearish Engulfing pattern on daily charts. A bearish candlestick pattern suggests that bears were able to regain control after the index moved in a narrow range for the past few sessions.
It is usually seen as the end of an uptrend but if index breaks below its crucial support level of 10,850, selling pressure could accelerate.
Asian shares advance on US-China trade hopes, ECB stimulus
Asian stocks advanced on Friday as hints of progress in the US-China trade dispute and aggressive stimulus from the European Central Bank helped to counter worries about a global economic slowdown.
MSCI’s broadest index of Asia-Pacific shares outside Japan ticked up 0.2%, while Japan’s Nikkei rose 0.4%.