NIFTY EXTENDS BROAD CONSOLIDATION; 8650 IS THE IMMEDIATE SUPPORT

NIFTY EXTENDS BROAD CONSOLIDATION; 8650 IS THE IMMEDIATE SUPPORT

WORLD MARKETS                             

US indices fell 0.3%-0.5% yesterday, digesting mixed earnings and a fall in oil.

Caterpillar and 3M posted mixed results, as both beat estimates on the bottom line, while missing on revenues. Caterpillar also lowered its 2016 earnings per share guidance.

US oil fell 1.1% to $49.96 a barrel and Brent lost 1.3% to $50.79 after data from the American Petroleum Institute showed U.S. crude stocks rose by 4.8 million barrels in the week ended October 21, higher than the 1.7 million barrel build forecast.

US consumer confidence came in at 98.6, lower than the expected 101.5 mark. Home prices rose slightly in August from July, with the S&P CoreLogic Case-Shiller 20-City Composite index gaining 5.1% year over year.

Dollar index came off the day high to end flat. Gold gained $10 to $1274 per ounce.

European markets, except a 0.4% higher FTSE, fell upto 0.8%

Apple posted a third straight quarter of year-on-year revenue declines after the bell, despite a better-than-expected iPhone sales. Revenue was in line with expectations

AT HOME

After falling about half a percent in the initial trade, benchmark indices recouped nearly half of the losses through the session to end modestly lower. Sensex settled at 28091, down 88 points while Nifty lost 18 points to finish at 8691. BSE mid-cap index fell 0.3% but the small-cap index managed to add 0.1%. BSE FMCG and IT indices fell 0.8% each, becoming top losers among the sectoral indices whereas Telecom index climbed 0.8%, becoming top gainer, followed by half a percent higher Healthcare and Consumer Durable indices.

FIIs net sold stocks and index futures worth Rs 606 cr and 764 cr respectively but net bought stock futures worth Rs 189 cr. DIIs were net buyers to the tune of Rs 389 cr.

Rupee appreciated 3 paise to end at 66.82/$.

HDFC Bank met expectations with second quarter profit rising 20.4% y-o-y to Rs 3,455.3 crore. Net interest income, the difference between interest earned and interest expended, grew by 19.6% to Rs 7,993 crorer, which missed estimates due to lower-than-expected loan growth. Asset quality was stable with gross non-performing assets as a percentage of gross advances falling to 1.02% from 1.04% and net NPAs down to 0.3% from 0.32% on sequential basis.

Dr Reddy's second quarter consolidated net profit plunged 60% y-o-y to Rs 309 crore on weak operational performance but sequential performance was quite strong. Revenue during the quarter declined 10.1% to Rs 3,616 crore on yearly basis, dented by US and emerging markets business. However, sequentially the same grew by 11.5%. EBITDA fell 44% to Rs 640 crore and margin contracted by 1050 basis points to 17.9% compared with year-ago period.

Kotak Mahindra Bank reported a 43% y-o-y growth in second quarter standalone profit at Rs 813.3 crore. Net interest income grew by 19% to Rs 1,995 cr. which was in-line with estimates. Net interest margin expanded to 4.47% from 4.3% YoY. Asset quality was stable with standalone gross non-performing assets (NPA) at 2.49% against 2.50% and net NPA at 1.2% against 1.21% on sequential basis.

Zee Entertainment's profit during July-September quarter increased 27% y-o-y to Rs 238.4 crore on strong revenue as well as operational performance but impacted by lower other income and higher tax cost. Revenue during the quarter grew by 23% to Rs 1,695.4 crore, driven by better-than-expected advertising and subscription revenue growth of 15.7% and 21.7%, respectively. EBITDA jumped 36.4% to Rs 489.2 crore and margin expanded by 290 basis points to 28.9%.

Adani Ports' second quarter earnings surpassed expectations with consolidated profit surging 61% y-o-y to Rs 1,091 crore on strong operational performance. Revenue grew by 20.7% to Rs 2,183 crore as cargo volumes increased by 17% and container volumes by 30%. EBITDA jumped 23.2% to Rs 1,451 crore and margin expanded by 130 basis points to 66.5% in Q2.

Axis Bank reported a whopping 83% y-o-y fall in profit at Rs 319 crore for July-September quarter, dented by big clean-up of bad loans. Provisions jumped more than 5-fold to Rs 3,623 crore compared with year-ago period. Net interest income grew by 11.1% to Rs 4,514 crore on a 18% growth in advances. Net interest margin fell to 3.64% from 3.79% q-o-q. Gross non-performing assets (NPA) as a percentage of gross advances rose to 4.17% from 2.54% and net NPA climbed to 2.02% from 1.08% on sequential basis. During the quarter, the bank added Rs 8,772 crore (fresh slippages) to gross NPAs, a significant rise compared with Rs 3,638 crore added in previous quarter.

Bharti Airtel reported profit of Rs 1461 cr which was flat q-o-q but much better-than-estimates. Revenue slipped 3.5% q-o-q to Rs 24652 cr. Consolidated EBIDTA fell 1.3% y-o-y to Rs 9466 cr but margin expanded by 90 bps to 38.4%, expanding for the fourth straight quarter.

OUTLOOK

Today morning Asian markets are trading with cuts of upto a percent and SGX Nifty is suggesting about 40 points lower start for our market.

After rebounding from the important 8540-8500 support area, Nifty has been facing resistance near 8750 which we had indicated as important immediate resistance as 34-DMA as well as a trendline adjoining recent tops on the daily chart is placed there.

A gap down opening today would take Nifty close to immediate support of 8650, which is the immediate previous bottom on the hourly chart, upon breach of which 8595, the 61.8% retracement level fo the recent 8506-8737 upmove, would be the next downside target to eye.

HDFC, Hero MotoCorp, HUL and ITC will report their quarterly earnings today.