Sensex, Nifty fall over 1% on Indo-Myanmar border tension; banks drag

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2:31 PM

Markets Check

The benchmark indices fell further, heading towards seventh straight session of losses after the rupee sank to a more than six-month low on foreign fund outflows.

At 2:33 pm, the S&P BSE Sensex was trading at 31,257, down 341 points while the broader Nifty50 index was ruling at 9,752, down 118 points

2:31 PM

Sector watch: Tea

 

Global tea production is likely to record a decline in CY2017, primarily on the back of crop losses in Kenya, which accounts for around 16% of the total black tea production globally. Given Kenya’s status as one of the world’s largest exporters of black tea, production levels from the country are likely to have a considerable impact on global demand-supply dynamics for the year. 
 

The Sri Lankan crop levels, which contribute to around 10% of global tea production, are also low. According to ICRA, the reduced global availability of tea is likely to result in the continuation of an upward price trajectory across most international auction centres, which, in turn, would support Indian price trends going forward. 

 

The likely increase in realisations over the near term is expected to have some favourable impact on the performance of Indian bulk tea players in FY2018, notwithstanding the continuing cost pressures, mainly attributable to increasing wage rates.

 

(Source: ICRA note)

2:25 PM

Prabhudas Lilladher on Persistent Systems

 

Persistent is showing waning margin trajectory over the past few quarters which is a concern. IBM's IoT deal led to a ~220bps YoY EBITDA margin drop in FY17 (EBITDA margin at 15.8% for FY17). We note that Q1FY18 EBITDA margin at 14.3% is at a multi-quarter low. Traction in Digital-led offerings might also necessitate higher onsite-led delivery which could be a margin headwind. Management guided that margins could expand sequentially over the next three quarters of FY18.

 

We model Persistent's USD revenues to grow by 11.3/13.1% for FY18/FY19E and EBITDA margins to 15.5/16.5% for FY18/FY19E (v/s 15.8% EBITDA margin in FY17). Our EPS estimates are at Rs41.1/47.5/sh for FY18/FY19E. Stock trades at 13.4x FY19E EPS, which is at premium to select large cap stocks. While Persistent is showing revenue growth momentum, margin discipline is key in our view. Our target price is retained at Rs710/sh (14x June19E EPS).

2:24 PM

Prabhudas Lilladher on BEL

 

We attended BEL's analyst meet and returned confident of maintaining our bullish stance on the company as the prospects remain firm in the near/medium term. BEL is a key beneficiary of increasing focus in modernization of current fleet and procurement of new capital equipment by government. We continue to believe BEL offers good investment opportunities to investors who want to invest in the Indian Defence sector with a long-term view. We expect stock to deliver earnings CAGR of 14.5% over FY16-19E. Maintain 'BUY' with a target price of Rs214.

2:23 PM

Global view

 

Largely as a result of an upgrade to the eurozone, we have revised up our global growth forecast by 0.1% to 2.8% in each of 2017 and 2018. This compares with a 2.5% average between 2011 and 2016 so is good news but much less spectacular than the recent stellar financial market performance. Our global inflation forecasts have ticked down fractionally - to 2.6% in 2017 and 2.5% in 2018

 

(Source: HSBC)

2:22 PM

Divi's Labs dips 9%

Divis Laboratories fell 9% to Rs 872 on BSE after media reports suggested that the company's Vizag unit 2 received six observations from the US drug regulator.

2:12 PM

Slips in trade

Hindustan Unilever (HUL) was down 2.4% to Rs 1,189 in intra-day trade, extending Tuesday’s 2.3% fall on the BSE. The fast moving consumer goods company (FMCG) on Monday, in investor presentation said that the early part of September quarter was affected by various myths in trade.

 

But, the trade situation improving gradually with wholesale channel now stabilizing, it added.

 

The stock has fallen 7.5% from its record high of Rs 1,286 touched on September 19, 2017. On comparison, the S&P BSE Sensex was down 3% during the same period.

2:03 PM

Europe Check

European markets opened higher on growing expectations of another rate hike in the United States before the year-end.

 

The pan-European Stoxx 600 was 0.16% higher with most sectors trading in positive territory.

 

Janet Yellen, the chair of the US Federal Reserve said Tuesday that it would be "imprudent" to keep monetary policy on hold waiting for inflation to reach 2 percent and that moving "too gradually" could be risky. The US dollar and bond yields jumped Wednesday on such remarks.

 

1:43 PM

RBI to keep rates unchanged in October, cut growth forecast: Poll

 

The Reserve Bank of India will hold policy steady at its Oct. 4 meeting, and well past next year, amid weak economic growth and signs inflation may soon overshoot its target, a Reuters poll found.

 

Asia's third-largest economy started losing momentum after the government scrapped 86 percent of currency in circulation late last year, hurting demand in India's cash-reliant economy, and the slowdown was compounded by the implementation of a new tax system.

 

The latest poll of 60 economists showed although the RBI will hold its key repo rate at a seven-year low of 6 percent next week, it will downgrade its growth forecast again following disruptions caused by the new tax. READ MORE

1:37 PM

Buzzing stock

Shriram Transport Finance Company jumped 5.63% to Rs 1,064 on BSE on reports that the company and IDFC decided to abandon the merger plan worked out in July this year.

1:22 PM

Nifty Bank falls over 1%: All constituents trade in red

Source: NSE

1:06 PM

Markets check

 

At 1:00 pm, the Sensex was trading at 31,366, down 232 points, while the broader Nifty50 was ruling at 9,799, down 71 points. 

12:57 PM

Mukesh Ambani at India Mobile Congress

 

India has potential to lead 4th industrial revolution

12:57 PM

Mukesh Ambani at India Mobile Congress

 

In next 10 years, Indian economy will grow to over $7 trillion

12:57 PM

Mukesh Ambani at India Mobile Congress

 

4G coverage in India will become larger than 2G in next 12 months