9:51 AM
Valuation gap between public sector and private banks narrows
The rally in public sector bank (PSB) stocks after the announcement of the government’s recapitalisation plan have narrowed their valuation gap with private sector banks.
Earlier, a typical private bank was nearly four times as expensive as a PSB on average, the gap is now down to 3x. PSBs added Rs 1.19 lakh crore to their combined market capitalisation on Wednesday, taking it past their book value in 2016-17. In contrast, private banks saw a marginal dip in their market capitalisation, led by HDFC Bank.
PSBs are now trading at 1.15 times their book value or net worth per share during 2016-17 on average, up from a valuation multiple of 0.9x on Tuesday. In comparison, the private banks' valuation ratio declined marginally to 3.42x their book value from 3.45x.
READ FULL REPORT HERE9:41 AM Earnings Impact: HUL
9:33 AM Ahead of earnings: YES Bank
9:25 AM Sectoral Trend
Source: NSE
9:21 AM Nifty PSU Bank index extends gains
Source: NSE
9:20 AM Top Sensex gainers and losers
Source: BSE
9:18 AM Broader Markets
In broader markets, both BSE Midcap and BSE Smallcap indices were little changed
9:17 AM Markets Open
Benchmark indices opened marginally lower following negative global cues ahead of October F&O expiry scheduled later in the day.
At 9:17 am the S&P BSE Sensex was trading at 33,005, down 37 points while the broader Nifty50 index was ruling at 10,284, down 10 points
9:12 AM
Market view
The “Great Re-cap”, as it could possibly be remembered surprised the street positively. The finer details and whether the re-caps impact is neutral on the fiscal side are things which need to be evaluated. Having said that, the freeing up of credit in the PSU banking system is a positive. PSU banks were sitting on a huge pile of cash which was earlier parked in G Sec could now be better utilized toward a banks actual purpose i.e. borrow from savers and extend credit to industry. Further from a market participation perspective, this segment has been an underperformer.
In fact, the weight of the banking and financial services sector in the Nifty index is around 37%, of which the share of the PSU bank segment had fallen to below 5%. Todays move will see this number moving up with the PSU banks taking the indices to new highs. Unfortunately, the same bump up did not happen to so many stocks, especially in the non-PSU BFSI stocks. This possibly was because of the money rotation from non-PSU stocks to PSU stocks, led by under ownership as well as undervaluation
(Source: Kunj Bansal - Executive Director & CIO – Equity , Centrum Wealth Management)
9:11 AM
Today's Picks: 26 October, 2017
State Bank of India
Current price: Rs 325
Target price: Rs 315
Keep a stop at Rs 329 and go short. Add to the position between Rs 318 and Rs 320. Book profits at Rs 315.
Larsen & Toubro
Current price: Rs 1,204
Target price: Rs 1,225
Keep a stop at Rs 1,190 and go long. Add to the position between Rs 1,215 and Rs 1,220. Book profits at Rs 1,225.
Click here for more9:09 AM
Edelweiss on HCL Tech
Despite tepid revenue growth, management is confident of meeting lower-end of 10.5-12.5% CC revenue growth guidance owing to robust bookings during H1FY18 and strong pipeline. The company continued its strong focus on Mode-3 services, extending its relationship with IBM and restructuring its joint venture (JV) with DXC into IP-partnership.
With companies progressing to large IT-service providers from small boutique enterprises to scale up their digital journey, we remain confident on HCLT’s long-term growth prospects. Maintain ‘BUY’ with a revised target price of Rs 1,041 (Rs 1,058 earlier), as we marginally cut our revenue estimates to reflect weak Q2FY18.
9:08 AM
Stocks which may see some volatility on expiry day
HDFC Bank: On the D-1, the stock has witnessed low rollovers of 59% into November. The near month OI of ~10.23mn shares is 6 days average daily volume in cash market. With futures trading at a discount to cash market, the counter has seen reverse arbitrage positions (sell cash and buy futures) during the month. There are open positions left in the SLBM segment as well. Roll levels have expanded from ~12bps to ~28bps (profit to short roller) in the last couple of days. Hence we expect long roll arbitrage positions to buy back the underlying in the VWAP.
NTPC: Low rollovers of 34% have taken place on the D-1. With futures trading at a discount to cash, the counter has seen reverse arbitrage at the start of the series. Near month OI stands at ~20.5mn shares which is 3 days average daily volume in cash market. With roll level being a tad expensive at 47bps (profit to short roller), the stock is likely to see buying in the VWAP if rollovers don’t pick up.
Vedanta: 43% rollovers have taken place and ~28mn shares are outstanding in the near month which is ~3 days average daily volume in cash market. Roll levels in the counter were ~18bps (profit to short rollers unadjusted to dividend). The company has a history of declaring dividends in November. With uncertainty surrounding the amount and possibility of higher payout, we believe long rollers would not risk forgoing the dividend and hence would convert the positions into cash tomorrow in the VWAP.
GAIL: On the D-1, rollovers stand at 40% and ~16mn shares are outstanding in the near month which is ~2 days average daily volume in cash market. Roll levels in the counter were ~9bps (profit to short rollers). The counter offered opportunity to unwind cash and buy futures at the start of the series. Amidst low rollovers and the stock being part of Bharat22 ETF, we expect the long rollers to convert the positions to cash in VWAP.
(Source: Edelweiss)
Photo: Shutterstock
9:05 AM
Stay long on Nifty with stop at 10,150
The market hit new highs on Wednesday on the back of the massive recapitalisation plan. Bullish global trends also helped to keep sentiments high. The Nifty hit a high of 10,340 before seeing profit booking. Although FPIs (foreign portfolio investors) didn't really buy in meaningful quantity, retail and domestic institutional buying in PSU banks pushed the market to new highs.
Obviously, the new highs confirm the long trend remains bullish and momentum may have accelerated. However, this is a new zone so, target setting is near-impossible.
READ MORE9:01 AM
Top technical calls from Prabhudas Lilladher
BUY INDIA CEMENTS
CMP: Rs 189.95
TARGET: Rs 215
STOP LOSS: Rs 177
BUY JP ASSOCIATES
CMP: Rs 20.20
TARGET: Rs 23
8:57 AM
Nifty View by Prabhudas Lilladher
The trend of all periodicities are in green for Nifty, market once again sees participation from many sectors, as we are approaching the expiry of October future contracts. The support for the day is seen at 10,240 while resistance is seen at 10,350.
8:53 AM
HDFC Standard Life Insurance IPO to open on November 7
HDFC Standard Life Insurance Company, a subsidiary of mortgage lender HDFC, today said its initial public offer (IPO) will hit the market on November 7.
The public issue comprises sale of 1,91,246,050 equity shares, amounting to 9.55% stake, by HDFC Ltd and up to 1,08,581,768 scrips, or 5.42%, holding by Standard Life Mauritius, according to a regulatory filing on stock exchanges.
8:52 AM
36 companies to declare results on Thursday
As many as 36 companies are likely to declare results on Thursday including Biocon, Coromandel International, Crompton Greaves, Cummins India, Equitas Holdings, GIC Housing Finance, Indiabulls Ventures, ION Exchange, Jubilant Foodworks, L&T Finance Holdings, Mastek, Mphasis, Shoppers Stop, Yes Bank, United Spirits, Vijaya Bank etc. among others.
8:50 AM
RCom to shut 2G biz
Anil Ambani-led Reliance Communications (RCom) has asked 60 per cent of its 81 million customers to migrate from using second generation (2G) services to 4G services, as it was shutting down the 2G business. This comes a day after the beleaguered company said it was shutting down its direct-to-home TV business.
The company has also asked around 1,000 employees to leave by the end of November.
READ MORE8:46 AM
India should have 5-7 large banks ideally: Arvind Subramanian
A day after the government announced a massive Rs 2.11 lakh crore capital support initiative, Chief Economic Adviser Arvind Subramanian today made a case for consolidation in the banking space saying the country ideally should have 5-7 large lenders.
In an ideal banking world of tomorrow, India needs to have both large public sector and private sector banks, competing domestically and being competitive internationally, he said.
READ MORE8:44 AM
New India Assurance’s Rs 9.6K crore IPO to open on Nov 1
New India Assurance’s Rs 9,600 crore initial public offering (IPO) will open on November 1 and close on November 3. The price band has been fixed at Rs 770 to Rs 800 and the IPO will comprise of 120 million shares.
At Rs 9,600 crore for a 14.56% stake, the insurance company has been valued at almost Rs 66,000 crore.
8:42 AM
Reliance Nippon Life AMC IPO subscribed nearly five times on Day 1
The initial public offering (IPO) of Reliance Nippon Life Asset Management got an overwhelming response on day one, with the issue getting subscribed nearly five times.
In terms of day one subscription,this is highest-ever said investment bankers.
READ MORE8:37 AM Oil Check
US oil prices extended declines on Thursday after government data showed a surprise climb in US crude inventories.
NYMEX crude for December delivery CLc1 was down 2 cents at $52.16 a barrel, after ending the last session down 29 cents, or 0.6%. Brent hit an intraday high of $58.74 on Wednesday, moving back towards a 26-month peak marked in late September.
8:35 AM
SGX Nifty
The Nifty futures on the Singaporean stock exchange were trading lower by around 25.50 points at 10268, a fall of around 0.25% indicating a flat to negative start for the Indian markets
8:35 AM
Asian stocks stall on Wall Street pullback
Asian stocks stalled on Thursday, weighed as Wall Street shares pulled back from record highs, while the euro stretched gains ahead of a European Central Bank policy meeting at which it could take a major step away from accommodative policy
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.05%. Australian stocks dipped 0.2% while South Korea's KOSPI lost 0.1%.
Japan's Nikkei, which had snapped a 16-day winning run the previous day, rose 0.35%.
8:34 AM Wall Street ends lower
US stocks fell on Wednesday on a batch of soft quarterly earnings, with the Dow Jones Industrial Average suffering its worst day in seven weeks after rising to a record peak the previous session.
The Dow Jones Industrial Average fell 112.3 points, or 0.48%, to end at 23,329.46, the S&P 500 lost 11.98 points, or 0.47%, to 2,557.15 and the Nasdaq Composite dropped 34.54 points, or 0.52%, to 6,563.89.
8:32 AM Good Morning!
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First Published: Thu, October 26 2017. 09:26 IST
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