Sensex, Nifty Decline On RIL Letdown; Tech Stocks Rebound

Indian shares declined along with the rest of global equities as traders braced themselves for British Prime Minister Theresa May to set out her plan for leaving the European Union.

The S&P BSE Sensex fell 0.2 percent to 27,211 while the NSE Nifty lost 0.3 percent to 8,389. Both the indices have shown quite a bit of resilience in the last couple of sessions despite weak global cues. The Sensex has risen 1.2 percent since January 10, compared to a gain of 0.4 percent in the MSCI Emerging Market index.

The S&P BSE Metal and S&P BSE Oil & Gas indexes underperformed the broader market most. The Nifty Bank index too declined, snapping a eight-day winning streak. Meanwhile, the S&P BSE Information Technology Index made a comeback, rising 0.3 percent, after two-day decline.

At close, the market breadth was skewed in favour of the bears. About 842 stocks declined, 779 advanced and 286 remained unchanged on the NSE.

Shares of the technology firm dropped as much as 4 percent after its third quarter earnings that matched street expectations.

The midcap company clocked net sales of Rs 694 crore for the three-month period ending December, compared to Rs 693 crore anticipated by analysts polled by Bloomberg. It made a profit of Rs 62.4 crore for the period versus an estimate of Rs 63.2 crore.

Bullion for immediate delivery rose as much as 0.9 percent to $1,212.99 an ounce, the highest level since Nov. 23, and traded at $1,211.32 at 2:59 p.m. in Singapore, according to Bloomberg generic pricing. The metal is up for a seventh straight day.

Gold has rallied 5.6 percent this year as investors moved toward safer assets amid concern over Trump’s policies and the U.K.’s impending break from the European Union.

Prime Minister Theresa May is due to deliver a major speech on Tuesday in which she may say that the U.K. is likely to pull out of the single market for goods and services and seek a completely new trading relationship with the bloc. Trump will be sworn in as U.S. president on Friday.

Exchange traded fund of the top 10 state-owned firms has returned 31 percent in the past year, more than double the gains in the benchmark stock index, data compiled by Bloomberg show. Investors who missed buying the fund three years ago will get an opportunity on Wednesday as Modi seeks to raise Rs 4,500 crore ($660 million) selling new units.

Read the full report HERE

Chinese stocks fell for a sixth day, with the benchmark gauge poised for its longest losing streak since December 2013, as tightening liquidity sends tremors through the nation’s financial markets.

Shares have slumped since the start of December along with the nation’s bonds as monetary conditions tightened. The Chinese central bank has been driving up funding costs in order to avert asset bubbles. At the same time, a weakening yuan may also be prompting policy makers to keep rates elevated in order to support the exchange rate.

Read more about the Chinese markets HERE

Even as a banking system awash with cash continues to spur local demand for sovereign notes, Citigroup Inc. sees gains fizzling out in the second half of 2017 as the central bank’s monetary easing cycle draws to a close. Standard Chartered Plc expects a pick-up in inflation to spur bond losses in the July-December period, while Societe Generale cites rising U.S. yields as a key external threat for emerging Asia’s best-performing local-currency debt.

Read the full report HERE

Shares of tyre makers gained anywhere between 11 percent and 1 percent.

Top gainers

• Balkrishna Industries (+11%)
• Ceat (+2.4%)
• Modi Rubber (+2%)
• MRF (+1.6%)
• TVS Srichakra (+1.2%)
• Elgi Rubber Company (+1.9%)
• Goodyear India (+1%)

Movers & Shakers: TCS, Asian Paints, Delta Corp And More

Shares of the country’s largest private sector company dropped as much as 2.5 percent, the most since November 24 last year, after it announced its third quarter earnings.

While the Mukesh Ambani-led firm managed to beat analysts’ estimates, a closer look at the numbers revealed that it was due to a 33 percent jump in other income.

RIL’s core business, however, registered a flattish growth with a sequential decline of around 45 basis points to 16 percent in its EBITDA margin. (Click HERE for full report on the oil major’s earnings)

Also Read: RIL Takes $6-Billion Writedown On Oil & Gas Assets Under New Accounting Standards

Indian shares gained for a second straight session, shrugging off weak trade in Asian peers, as initial set of third quarter earnings from India Inc. suggest that the fears of slowdown from demonetisation may be overdone.

The S&P BSE Sensex climbed 0.3 percent to 27,361 and the NSE Nifty advanced 0.3 percent as well to 8,436. While the 50-share index gained five out of the last six trading sessions, it’s now finding it tough to break above the 8,450-mark.

The market breadth, meanwhile, was firmly in favour of the buyers with 1,007 stocks advancing, 420 declining and 445 remaining unchanged on the NSE.

• Delta Corp: Gets license for casino operation in Gangtok
• Jagran Prakashan: Says unit starts Jamshedpur radio broadcast
• Reliance Industries: Q3 net income rose 10 percent YoY to Rs 8,020 crore, beats estimate of Rs 7,850 crore as earnings jump to 9-year high. The company sees firm oil-refining margins on demand, shutdowns

• Shriram EPC: To consider issue of shares to CDR lenders, another private company on January 19
• Tata Global: Approves selling stake in Zhejiang JV at an enterprise value of Rs 33 crore
• Titan: To merge gold plus network as part of Tanishq

For a complete list of stocks to watch, click HERE

Offerings

• Muthoot Finance public sale of bonds opens, close Feb. 17
• BSE shareholders seek up to $182 million in India IPO; offers 15.4 million shares at Rs 805-806 each starting January 23

Earnings To Watch

• Can Fin Homes
• Delta Corp
• Havells India
• Mastek
• NIIT Technologies

Indian rupee closed higher on Monday and trading may be ranged today after the IMF cut the nation’s growth forecast by 0.4 percentage point to 7.2 percent in 2017. That's mainly because of the demonetisation effect.

Investors will also be cautious ahead of U.K. Prime Minister Theresa May's speech later today, in which she will propose her Brexit plans.

In Bonds, India's three-year bond rally may fizzle out as RBI ends monetary easing, amid rising U.S. yields and a drawdown of bank deposits, according to Citigroup and Standard Chartered.

The bond market will be closely watching how much liquidity remains in the system as the central bank yesterday raised the limit on withdrawals from ATMs and current accounts.

• IMF lowered forecast for India’s growth by 0.4 percentage point to 7.2 percent in 2017
• India GST tax base to be shared between centre, states: Jaitley
• Next meeting of GST meeting on February 18
• Tata Group said to explore boosting stakes in key listed units; aims to increase ownership of Tata Motors, Tata Steel
• India in pact with U.S. company to recover warship that had accident
• RBI raises limit on withdrawals from ATMs, current accounts
• Modi-backed ETF hooks investors as fund beats India stock gauge
• Vedanta Resources new bond to tackle refinancing on commodity bounce back
• Global funds sell Rs 347 crore of local stocks; domestic funds buy Rs 203 crore yesterday: Provisional data
• Election Commission of India awards ‘Cycle’ symbol to Akhilesh Yadav group ahead of polls to key Uttar Pradesh state assembly (PTI)
• Hitachi Construction to raise India excavator output by 40 percent: Nikkei
• Prime Minister Modi to address inauguration of Raisina Dialogue in New Delhi

Good Morning!

The Nifty futures on the Singapore Stock Exchange, an early indicator of Nifty’s performance in India, climbed 0.1 percent to to 8,441.

Asian stocks extended losses this morning, as trepidation over Donald Trump’s polices and the U.K.’s position in the European Union triggered a move toward safer assets. Gold climbed 0.2 percent, extending last week’s surge to trade at $1,205.15 an ounce.

The yen climbed for a seventh day, the longest streak since the run-up to the U.K.’s Brexit vote in June. The pound maintained losses before a speech by the U.K. Prime Minister Theresa May in London on Tuesday where she will say that the country is likely to pull out of the EU’s single market for goods and services and seek a completely new trading relation with the bloc.

U.S. stock markets were shut on Monday on account of a holiday. Stock investors are assessing whether the market has run too far during its two-month rally leading up to Donald Trump’s inauguration as U.S. president on Friday.

The International Monetary Fund is taking a cautious stance toward Trump’s polices, assuming a modest boost to the American economy from his promise of fiscal stimulus. It upgraded its growth forecast for China’s economy in 2017 to 6.5 percent.

Brent crude pared some of its gained but continued to trade above $55.70 a barrel after Saudi Arabia’s energy minister said that the cuts initiated by members of the OPEC (Organization of Petroleum Exporting Countries) are likely to help balance the over-supplied market by June, implying that the deal may not have to be extended.